PRESS HOLDINGS 12 ANNUAL REPORT 2019

CEO’S BUSINESS REVIEW

Over the past FY, we have been constantly innovating and expanding our product offerings and services to acquire and retain customers.

NG YAT CHUNG Chief Executive Officer

The last Financial Year (FY) has been challenging for SPH. We continued to be impacted by media disruption. Global trade tensions between the United States and China, protests in Hong Kong and risk of a no- deal Brexit weighed on the overall economic outlook and roiled financial markets. in strengthening its fundamentals and seizing growth opportunities for Under such challenging economic transformation. new subscriptions as at 31 August climate, our operating profit 2019, a growth of 8% year-on-year. was S$186.9 million for the year #readwithST Campaign, a movement ended 31 August 2019 (FY2019) as GROWING DIGITAL MEDIA that encourages families to get operating revenue declined S$23.3 together by reading and sharing the million or 2.4% to S$959.3 million. Over the past FY, we have been real life stories in ST which ran for The Group’s net profit attributable constantly innovating and expanding three months, successfully garnered to shareholders fell S$65.2 million or our product offerings and services 6,900 new sign-ups. 23.4% to S$213.2 million. to acquire and retain customers. In March 2019, SPH launched an Despite facing economic ’ (ST) premium innovative news tablet app via the uncertainties and technological subscription packages launched Samsung Knox solution for our disruptions to the media business last year continued to gain Chinese news products. With the in the last FY, SPH stayed focused momentum with a total of 23,000 news tablet, subscribers were able ANNUAL REPORT 2019 13

to identify news readers who would likely buy a subscription. A conversion score is generated by taking into consideration several metrics from the users’ actions on our website. This score can then be used to segment these users and present unique experiences on the page as they continue their user journey, so as to increase the conversion rates of those who show a higher tendency to subscribe.

Digital media remains on the upswing with newspaper digital ad revenue rising 6% compared to a year ago.

We have come up with new initiatives and innovations to drive business value and provide media solutions for customers.

A revamped biometric login was A new online ad format called launched for SPH subscribers to “social cards” was launched. A first seamlessly log in on their SPH of its kind in Singapore, it allows any mobile and tablet apps using social media posts to be displayed Touch ID or Face-ID. Users are no as a normal online display ad for longer required to re-enter their brands to extend their reach on passwords for subsequent logins. Facebook and Instagram. The revamped login system resulted in better usability for users and To better monitor advertisers and shortened login time. It also allows sales activities, we adopted the for seamless biometric payment for Salesforce CRM system which mobile ecommerce in future. allowed the sales teams to have a comprehensive view of each The SPH Rewards programme customer and collaboration across launched a mobile app to reward divisions. AdPoint, a sales selling loyal subscribers with exclusive integrated solutions system which to enjoy easy no-login access to benefits and privileges ranging went live in February 2019, helped e-paper editions of , from retail giveaways to wellness staff to take in bookings for all four and Shin Min Daily getaways. platforms. It is linked to Salesforce News, which would be updated to monitor sales activities, as well automatically daily. The device We also strengthened our vending as to integrate with the pagination allows users to read in an offline machine network with an additional and scheduling systems for print and mode and encourages social 65 machines this year. Readers digital platforms. sharing. A total of 10,000 subscribers can now purchase one of our daily signed up for this package as at newspapers from any of the 115 The Agency Self-Service Portal mid-October 2019, a record high machines that are conveniently (Addy), launched in July 2019, was for digital packages for Chinese located island-wide. conceived to consolidate the many publications. There are plans to sales systems and sites that our roll out our news tablets to other SPH is now developing a agency partners access on a daily newspaper titles in the new FY. subscription propensity model basis. They can access Addy for SINGAPORE PRESS HOLDINGS 14 ANNUAL REPORT 2019

CEO’S BUSINESS REVIEW all matters relating to ad booking, from to build its podcast bidding for premium advertisement infrastructure, split equally between EMTM’s social media positions and packages, transmission EMTM and the Chinese Media continued to grow of materials, finance / accounts, Group (CMG). EMTM’s social media rate cards, latest promotions and continued to grow with Instagram Instagram followers campaign brief templates. followers surging from 103,000 in surged from 103,000 in May 2018 to more than 217,000 in May 2018 to more than Transforming newsrooms August 2019. Facebook followers grew from 1.2 million in 2018 to 1.3 217,000 The newsrooms at English, Malay million in August 2019. in August 2019 and Tamil Media (EMTM) Group underwent significant physical and Berita Harian (BH) is forging ahead organisational revamps to meet as the voice of the Malay community Facebook followers grew the new demands of consumers. and the go-to platform for from 1.2 million in 2018 to The new set-up allows journalists Singaporean Malays. Its podcast series 1.3 MILLION and editors from different desks #NoTapis climbed to No.3 on Spotify in August 2019 to collaborate and work more within 2 months after launch. BH is seamlessly across platforms, also gearing up for a website and app producing content for digital, mobile, revamp at the end of the year. video, radio and print products. (TM) refreshed its CMG restructured its newsrooms EMTM podcasts’ monthly downloads digital identity and unveiled a new last year, embedding digital rose from 5,000 in October 2018 website in January 2019. The site’s capabilities into the core of its to over 20,500 in July 2019. SPH user base grew more than threefold Lianhe Zaobao and Lianhe Wanbao secured US$100,000 in funding (to about 63,000) and pageviews NewsHub workflow to facilitate increased more than fourfold (to digital content creation across desks about 240,000) between September and drive audience-centric content 2018 and July 2019. development and delivery. CMG also set up an Audiences Development team to grow new audiences and deepen audience engagement across its platforms.

CMG was the sole winner from Singapore in the first Google News Initiative (GNI) Asia Pacific Innovation Challenge, which aims to support digital innovations and new business models in news organisations. Zaobao.sg explored different storytelling elements and new interactive techniques to engage readers. It developed memorable characters in “Ah Boy & Friends”, a short-form video series to highlight Singapore’s customs and traditions, and used 3D technology to create a virtual museum in “Treasures Before Us”, a video series which mark Singapore’s Bicentennial.

In the era of fake news, our customers while logged into their journalists continued to produce Wi-Fi network, had since been quality journalism and trusted rolled out successfully in Singapore, media products, sweeping local and Malaysia, Indonesia, Thailand and global accolades for their editorial the Philippines. excellence. The Straits Times Asia Report bagged two top honours at More listeners on digital radio the prestigious International News Media Association (INMA) Global Audiences are spending a longer Media Awards 2019. Our financial time listening to SPH Radio, and BOOSTING PRINT journalists from Lianhe Zaobao and more of them are tuning in digitally. TECHNOLOGY The Business Times also clinched The five radio stations maintained awards for excellent reporting at the their overall share of audience in The new Digital Inkjet Press System SIAS Investors’ Choice Awards 2018. the first half of 2019, based on at Print Centre enabled SPH to the findings of Nielsen radio diary expand its print capabilities beyond Innovative initiatives survey. The half-yearly survey, newspaper production to include from magazines which measures the listenership of digital print solutions for SPH’s traditional analog radio stations, also internal products, advertisers and Our magazines have also been showed that audiences are tuning in brand owners. developing digital media content. to SPH Radio’s stations for a longer For example, Augmented Reality duration each time. The new digital press provided (AR) technology was used in Nuyou greater content customisation magazine for a more immersive SPH Radio’s listenership continued across text, graphics and images storytelling. Brand Lab, SPH to expand at a healthy rate. Analytics and delivered more targeted ads to Magazine’s in-house boutique tracked by SPH showed that most of readers via personalised messages, content agency, was repositioned to its stations registered double-digit wraparound and unique codes. deliver more video-centric solutions growth in digital audiences over the for advertisers. last half-year in 2019. More than In terms of cost savings, the 890,000 people tuned in digitally manpower requirement to operate SPH Magazines also continued to through either the SPH Radio app the digital printing system is around expand its distribution networks or website to at least one of SPH’s 35% as compared to that of a single and platforms for retaining existing radio stations in May 2019, up 10% newspaper press. SPH can now in- and attracting new readers. WIFI from October 2018. Podcasts are source print jobs. The digital printing Library, SPH Magazines’ proprietary also emerging as a highly popular system reduces cash outflow from solution which allowed out-of- format among listeners, as total the company by allowing SPH to be home establishments to serve downloads increased by 45% across a vendor for the business consumers magazine content free to their all five stations, as compared to to consider printing products other October 2018. than newspapers. SINGAPORE PRESS HOLDINGS 16 ANNUAL REPORT 2019

CEO’S BUSINESS REVIEW

SPH signed a memorandum of understanding with Times Printers on 31 July 2019 to further strengthen our printing capabilities in digital and offset printing and post-finishing production, pooling together relevant expertise and resources. With combined experience and sales network, this partnership allows both parties to achieve a comprehensive and cost- effective commercial print service.

EXPANDING PBSA PORTFOLIO AND OTHER PROPERTY ASSETS

Since our initial acquisition of Purpose-Built Student Accommodation (PBSA) in September 2018, we have grown our portfolio significantly. Our latest acquisition was in April this year, adding £133.7 million (S$236.5 million) worth of assets, bringing our total portfolio to 5,059 beds across 20 assets in 10 cities in the United Kingdom (UK).

The Assets Under Management (AUM) for PBSA are now in excess of S$600 million, establishing SPH as a leading PBSA player in the UK. We started operationalising our asset international acquisitions and We recognised a fair value gain management capabilities for PBSA cash-yielding property investments on investment properties of S$35 under the new Capitol Students in defensive sectors with strong million on our PBSA portfolio. brand. It has a dedicated team of recurring income potential. The gain comes within a year of five in the UK and eight in Singapore the Group’s expansion into the overseeing the portfolio together Back on the home front, we launched student accommodation sector, with more than 100 employees The Woodleigh Residences together reflecting strong investor demand managing these assets. with Kajima Development in May for the assets. 2019. The development, which is There are plans to ramp up Singapore’s only premium integrated The growth was supported by positive marketing capabilities in China development that combines Japanese demand-supply dynamics in the UK, through partnerships. We have also design and quality, is around 20% sold driven by an increase in the number of transformed our PBSA’s operational as at September 2019. 18-year-olds as well as demand from capabilities by building Capitol international students. Applications Students into a brand of choice in SPH also invested US$60m for a from China rose more than 30% the PBSA sector. We aim to establish 7.38% stake in the Prime US REIT last year to a record high, fuelled by service differentiation and brand IPO and a 20% stake in the REIT United States’ visa restrictions over presence in the competitive industry. manager. The forecasted 2019 students from China. Another factor distribution yield of Prime US REIT is supporting growth has been the Riding on the growth of our PBSA 7.4% based on IPO price of US$0.88. attractive value of Sterling. portfolio, we will continue to seek We divested our investment in SINGAPORE PRESS HOLDINGS ANNUAL REPORT 2019 17

Chinatown Point and recognised a S$10.4m gain in May 2019.

Riding on the growth In the face of a challenging retail of our PBSA portfolio, environment, SPH REIT turned in a commendable performance this we will continue to FY. Its net property income (NPI) seek international for FY2019 was S$179.8 million, an acquisitions and cash- increase of S$13.8million or 8.3% yielding property compared to last year. investments in Paragon and The defensive sectors continued to deliver steady with strong recurring performance and contributed an increase in NPI of approximately income potential. S$2 million.

SPH REIT expanded overseas for the first time by acquiring an 85% stake in Figtree Grove Shopping Centre in Australia in December 2018, following its acquisition of The Rail Mall in June 2018. For FY2019, NPI contribution from The Rail Mall and Figtree Grove Shopping Centre were S$3.8 million and S$8.5 million, respectively.

SPH REIT established a S$1 billion multi-currency debt issuance programme in August 2019. The debt programme involved the REIT issuing notes and perpetual securities. It was very well received with a good mix of both institutional and private investors. Net proceeds will be used for general working capital, capital expenditure, corporate requirements such as acquisitions and investments, and refinancing borrowings.

SPH REIT’s properties maintained high occupancy at 99.1% as at FY2019. Paragon continued to record positive rental reversion of 9.7% for new and renewed leases. This represented 26.6% of Paragon’s net lettable area. The Clementi Mall and The Rail Mall recorded positive rental reversion of 5% and 9.4% respectively. The overall portfolio registered a positive rental reversion SINGAPORE PRESS HOLDINGS 18 ANNUAL REPORT 2019

CEO’S BUSINESS REVIEW of 8.4%. The newly-acquired Figtree an award-winning website offering FastJobs strengthened its market Grove enjoyed a high occupancy high-quality stock images on Asia. foothold in the region with more rate of 99.2%. than 2.5 million downloads across On 19 August 2019, SPHTech Singapore, Malaysia and the SPH REIT will continue to explore organised the inaugural SPH Tech Philippines, and gained industry growth opportunities in Singapore Day to raise the awareness on recognition with three awards at and the Asia-Pacific region. It will technology disruption and help the HR Vendors of the Year 2018, adopt a disciplined approach to staff understand new tech trends, Singapore. invest and grow recurring income in embrace the right technologies and Singapore and beyond. develop new business models. OctoRocket was launched as a joint venture with Y3 Technologies in January 2019 to enable cross- INVESTING IN BUILDING DIGITAL border trade between suppliers and TECHNOLOGY BUSINESSES buyers from Singapore, Indonesia, Malaysia, Thailand and Vietnam. To transform SPH into an innovative, On 7 January 2019, SPH and Keppel tech-savvy and progressive Corporation, through our joint Seven regional media publishers and company, SPH announced venture company, Konnectivity marketplace owners were added to the merger of the Information Pte Ltd, made a formal Voluntary Singapore Media Exchange (SMX). Technology Division and the Conditional General Offer for all the The expansion offers advertisers technology unit of Digital Division to issued and paid up ordinary shares increased options to reach form SPHTech in 2018. in the capital of telco Limited. audiences in the region. The Offer closed successfully on With an increasing pressure to 18 March 2019. SPH’s stake in SPH Ventures continued to invest in ensure organisational cybersecurity Konnectivity is 20% and effective promising startups in sectors such as and protection of customers’ data stake in M1 is 16% post transaction. Digital Media, Marketing Technology against cyber attacks, the Group and Consumer Internet. Its investments has implemented a series of IT The successful execution of the include SoCash and Pouchnation. programmes such as source code general offer was followed by the SoCash enabled Buzz convenience scanning tools, secure coding delisting of M1 on 24 April 2019. stores to conduct cash services, benchmarking system and the SPH and Keppel are working attracting footfall to the stores. integration of a gamified secure closely with M1 on a multi-year coding training platform to increase transformational journey to enhance our proficiency in dealing with its competitiveness, creating greater STRENGTHENING AGED cyber threats. value for M1’s customers. We will CARE BUSINESS fully leverage synergies between The Mainframe Replacement Keppel and SPH’s comprehensive Orange Valley (OV) Nursing Homes Project was successfully completed, suite of product offerings with M1’s leveraged on its market positioning facilitating improvements in mobile platform to offer on demand as one of Singapore’s largest private operational performance and and ready digital content to better sector players to pilot new initiatives. scalability, and ensuring future serve our customers. It focused on enhancing operational growth and stability of our core capabilities and rationalising costs to media business. SPHTech also sgCarMart, the leading marketplace be more efficient. created new apps such as eClaims, for cars, generated a steady eMemo and eCSAR to promote revenue growth and profit margins OV continued to improve bed environmentally friendly practices throughout the year. The company’s occupancy rate supported by 2.5% and improve internal workflow Quotz bidding system, which puts year-on-year growth in average efficiencies. used cars up for bidding, is a key bill size. It introduced age-care growth driver. It also launched technologies for its smart nursing For external audiences, the team sgCarMart Financial Services in late home in Balestier. Partnering developed innovative products 2018 to offer loans for car dealers StarHub, the Balestier Care Centre such as news tablets to enhance and buyers. commenced a living lab concept users’ experience and Photonico, involving installation of the Fall & Motion sensors on residents’ beds. SINGAPORE PRESS HOLDINGS ANNUAL REPORT 2019 19

The Balestier Care Centre also launched the Longevity Day Care services for the elderly to care for and engage them with activities in the day. The Day Care programmes include coordinated activities and a dementia centric therapy programme known as Namaste Care, targeted at clients with dementia. OV also renovated its facilities at the Changi branch.

VALUING OUR HUMAN CAPITAL

We invest in the training and development of our staff. This includes helping them to strengthen career and training roadmap was their multimedia competencies in the launched for the newsrooms in face of the changing demands from a 2019. We are currently reviewing new generation of media consumers. the training roadmaps for the other media and SPHTech divisions. In FY2019, close to 700 staff attended digital-based courses such as WOW SPH participated in the Singapore- We strive to strengthen our Innovation Foundation training, Industry Scholarship (SgIS) scheme, management bench with strategic Google Analytics, Digital Marketing supported by IMDA to build a new hires, review overall cost structure and Social Media Content training. talent pipeline for SPHTech and and exercise cost management where Production divisions by sponsoring necessary and relevant. We will continue with our undergraduates to study technology Innovation Foundation Training. We or engineering in local universities. I would like to take this opportunity have developed 30 practitioner- We actively participated in career to thank shareholders, readers, level employees from over 300 talks and fairs at junior colleges and advertisers, colleagues, unions employees who went through the universities in Singapore to create and other stakeholders for your training programme. Out of the awareness and highlight career unstinting support as we continue to 30 staff, three will be developed as opportunities in the company. seize opportunities to transform for coaches. These employees will form greater growth. the backbone of the company’s SPH also provided bond-free transformational efforts. scholarships to deserving children of employees and newspaper vendors The emphasis over the next few for higher education. years is to roll out core skills training to all staff to equip them with the Ng Yat Chung relevant skills to take on challenges LOOKING AHEAD Chief Executive Officer in the media industry. We will continue to execute our We will also continue to refresh media transformation strategy, grow and update our on-boarding and our recurring income and diversify induction programmes, on-the- our revenue streams. We have been job training, soft skills training, reviewing our existing businesses functional skills training, managerial and investments regularly with a view and leadership development to recycling capital and enhancing programmes to meet the training capital management to deliver needs of employees. An updated sustainable shareholder returns.