Temasek reports impressive returns
For the first time, holding firm details its performance over 30
years; for the year ended March 31, net profits were $7.4b
By Lee Su Shyan
SINGAPORE investment company Temasek Holdings has lifted its veil
of secrecy by providing detailed figures on its financial
performance to the public for the first time in its 30-year
history.
In an eagerly-awaited 72-page annual report issued yesterday, it
disclosed, among other things, that for the year to March 31 this
year, net profits shot up to $7.4 billion from just $241 million a
year earlier as the economic recovery kicked in.
The low figure for the year to March 31, 2003, was also partly
caused by a $2.5 billion cut in the value of telecoms and power
plant assets in its accounts that year.
Temasek, with controlling stakes in seven of Singapore's biggest
companies including SingTel, DBS Group Holdings and Singapore
Airlines, also gave figures stretching back 30 years to show the
returns from its vast investment portfolio.
As at March 31 this year, Temasek's investments were worth $90
billion. Just over half were in Singapore, with the rest spread
across Australia, India, Malaysia, Indonesia and the United States,
among others, reflecting its recent push overseas.
Earlier this year, Temasek, set up in 1974, said that it would open
its books to the public as 'part of our efforts to demystify
Temasek and to be more transparent'.
It wanted to become more transparent given that it may sell bonds
to the public for the first time to raise funds. Bonds offer
investors a fixed rate of return.
Temasek's unprecedented disclosure reaped immediate rewards. Both
the world's leading ratings agencies, Standard & Poor's and
Moody's, yesterday gave it top ratings in terms of financial
stability, AAA and Aaa.
In the report, Temasek stated the rate of return on its investments
for the past 30 years, using a measure known as total shareholder
return. This refers to how much the share price of Temasek's
various companies have gone up, plus any dividends paid.
Over the past year, Temasek achieved a spectacular return of 46 per
cent. And over the full 30 years since it was set up, its annual
return was an impressive 18 per cent.
But in the intervening years, the return was weaker. Over the last
10 years, it was only 3 per cent, explained by events such as Sars
and the 1997-98 Asian financial crisis.
Earlier this year, Temasek's executive director and chief
executive, Ms Ho Ching, gave a hint of the strong performance when
she said Temasek had posted annual returns of more than 16 per cent
over the past 30 years, though using a slightly different
measure.
While the report included details of its profits for the past three
financial years, it also went beyond the numbers to give a picture
of the company, detailing Temasek's strategy, profiling its senior
management, and describing how it manages its risk.
In his chairman's statement, Mr S. Dhanabalan said: 'With a
diversified industry portfolio of $90 billion today, Temasek is
poised as an Asia investment company committed to delivering
shareholder value as an active investor and shareholder.'
Temasek is interested in five areas: transportation and logistics;
services such as banking and education; resources such as power,
energy and water; pharmaceuticals and information technology; and
lastly, small and promising companies.
Ang Mo Kio GRC MP Inderjit Singh said of the report: 'It's
impressive and there is a lot of information. It's a good start as
it gives Singaporeans visibility as to how well Temasek is
doing.'
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WHAT YOU DIDN'T KNOW ABOUT TEMASEK:
TEMASEK manages a portfolio worth $90 billion.
Senior management includes 21 managing directors, each focusing on
different areas such as strategic investments, private equity funds
and strategic development.
Its 200 in-house staff are mostly young and fairly new to Temasek.
Only 4 per cent are over 50 while 55 per cent are 35 and under.
Nearly two-thirds have worked at Temasek for three years or less.
Only 8 per cent have been with it for 10 years or more.
Across the 34 major Temasek-linked companies, 71 per cent of its
directors are independent, that is, with no other ties to the
companies they serve. And 15 per cent are non-Singaporean. Only 8
per cent are female and 7 per cent are from Temasek
management.
Over the past two years, Temasek has invested $3.3 billion in 35
companies in Singapore, India, Indonesia, South Korea and Malaysia.
In the same period, it sold off 36 investments for $1.6 billion at
a profit of $765 million.
Half of its investments are in Singapore, the rest are in
Australia, the US, Europe, Japan, India and Pakistan, China,
Taiwan, South Korea and the Asean countries.
