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SHAPING OUR
TEMASEK REVIEW 2009
JOURNEY
TEMASEK REVIEW 2009
Shaping Our Journey
www.temasek.com.sg
Cover Mt Kinabalu Keeping safe as one team
Our Journeys of Discovery Progress is made when man journeys across unexplored seas, scales impossible mountains, and reaches deep within to know courage in fear. In Temasek, we too make our journeys of ideas and discovery through uncharted time and space, growing with our people, breaking new grounds, and above all, knowing our goal is to bring everyone home safely. Last April, breaking away for a refreshing challenge, 21 of our colleagues, rookies and experienced mountaineers, scaled Mt Kinabalu in East Malaysia. At over 13,000 ft, this is Southeast Asia’s tallest mountain. In the process, they raised over S$200,000 to support educational causes. Taking a leaf from this achievement, nine colleagues set out this July to climb Mt Kilimanjaro in Tanzania, Africa, after some two months of hard training. They raised over S$300,000 with their 19,000 ft climb, this time for the Make-a-Wish Foundation (Singapore) to support more than 100 children with life-threatening illnesses. Drawing on untested reserves from within as they battled altitude sickness and the sub-zero cold, each team succeeded by working together, planning meticulously, and supporting each other along the way. They epitomise the spirit of excellence and community in Temasek. The photographs in this review were taken by our colleagues during their mountaineering adventures.
2 Temasek Review 2009
Shaping Our Journey
It has been a 35-year journey for Temasek
since our founding on 25 June 1974.
Like Singapore, we embarked on a persistent
search for practical solutions, a patient building
of an institution, and an accumulation of talent
as we walked to make our own path, feeling
the stones as we crossed rivers.
Our journey has been driven by a constant hunger
and passion to learn and relearn, to think and to
do, to build and rebuild, and ultimately to find
solutions with tomorrow very clearly in our minds.
Our tomorrow is a continuing journey to build a
shared future embracing all creeds and colours,
which we shape together with the steps we
choose to take today.
Flourish
People are the heartbeat of Temasek’s
growth globally. The symbolic rendition of people
in ‘tree-form’ signifies our growth and continuity,
connoting teamwork and symbolising
flourishing abundance.
TEMASEK REVIEW 2009 3
CONTENTS
TEMASEK @ 35 4 SHAPING our INSTITUTION 38
Governance Framework 40
Our Board of Directors 44
Risk Framework 46
YEAR IN REVIEW 6
Our Leadership 51
Compensation Framework 52
Our Team 54
FROM our CHAIRMAN 8
shaping our ideas 56
PORTFOLIO HIGHLIGHTS 14 Engaging Friends 58
Temasek International Panel 60
Portfolio by Geography, Sector & Liquidity 16
Temasek Advisory Panel 61
Portfolio Value since Inception 18
Total Shareholder Return 19
Wealth Added 20
building a shared future 62
Strengthening our Community Care 64
GROUP FINANCIAL SUMMARY 22 Touching Lives 68
Statement by Auditors 24
Statement by Directors 25
Group Financial Highlights 26
MAJOR PORTFOLIO companies 70
Group Income Statements 28
Group Balance Sheets 29
Group Cash Flow Statements 30
Group Statements of Changes in Equity 31
Our contact points 78
SHAPING OUR PORTFOLIO 32
Investment Highlights 35
Investment Framework 37
Investment Outlook 37
4 Temasek Review 2009
Temasek @ 35
“We draw sustenance not only from the region but also from the
international economic system to which we belong and which will
be the final arbiter of whether we prosper or decline.”
S Rajaratnam
Singapore Foreign Minister
Address to the Singapore Press Club
6 February 1972
The success of Temasek Holdings is closely Many of our core portfolio companies are
intertwined with Asia and the global economic interwoven with Singapore’s economic fabric,
system through its 35 years of history. benefitting from as well as contributing to
Singapore’s economic survival, progress
Seeded initially by the Singapore Government and prosperity. They were rooted in the
with an eclectic mix of 35 companies, from developments of post-independence Singapore.
a detergent maker to a bird park, Temasek Sembcorp Marine found footing at the old naval
also took over companies such as SingTel, dockyard facilities left behind by the British
PSA International and SingPower, when forces when they withdrew from Singapore,
the Government decided in the early 1990s while Singapore Airlines was spun out when
to corporatise and devolve responsibility for Malaysia-Singapore Airlines was separated
telecommunications, ports, and electricity into two national carriers.
infrastructure and services.
Just as Temasek drew its strengths from a
Temasek has grown and transformed with modernising Singapore in the early years, the
Singapore, and pulses with the heartbeat economic integration of Asia with the global
of Asia. market over the last two decades has opened
up new vistas of opportunities for our portfolio
companies, and also for ourselves as investors.
We aim to create and deliver
Our direct investments over the last decade
sustainable long-term value for have been centred on four themes:
our stakeholders as an active
• Transforming economies
investor and shareholder of • Growing middle class
successful enterprises • Deepening comparative advantages
• Emerging champions
TEMASEK @ 35 5
We invest in a broad spectrum of industries. We succeed because we draw sustenance and
Banking & financial services, transport & logistics, support from our community. In return, we have
and infrastructure are industries which mirror the a commitment to contribute to the progress and
transformation of economies, while we track well-being of our community.
the demands of a growing middle class through
sectors such as real estate, telecommunications Since 2003, we have given substance to this
& media, bioscience & healthcare, and education, commitment, by setting aside a share of our
consumer & lifestyle. Energy & resources, returns for each year of positive Wealth Added to
engineering, as well as technology are sectors support community programmes. Donations
with value-driven comparative advantages or from these community provisions included an
transformational potential. endowment of S$500 million to the Temasek
Trust in 2007 to launch Temasek Foundation for
We finance our investments from divestment community programmes in Asia. More recently,
proceeds, dividends from our portfolio to mark our 35th anniversary, we gifted another
companies and commercial leverage. S$100 million to the Temasek Trust, this time
to support Temasek Cares for community
programmes in Singapore.
16% More than our institutional commitment,
we are proud of the volunteer spirit of our 380
employees. Coming from diverse cultures and
Total Shareholder Return
compounded annually since inception 24 countries, they volunteer their time, energy
and heart for the community in Singapore and
across the world. With their tireless support
Through the years, Temasek has both divested for the less advantaged and their passion for
and invested in companies, patiently reshaping personal excellence and commitment to deliver,
its portfolio. Today, over 70% of our underlying they epitomise the spirit of Temasek, as
portfolio exposure is to Asia, including individuals and as one team.
Singapore. Most of our portfolio companies
are thriving Singapore and Asia blue chips.
We aim to create and deliver sustainable
long-term value for our stakeholders as an
active investor and shareholder of successful
enterprises. Our Total Shareholder Return
since inception is a healthy 16%
compounded annually.
6 Temasek Review 2009
YEAR IN REVIEW
Beginning with the collapse of Bear Stearns in March 2008,
and ending with the sharp market lows of March 2009, it has
been an unprecedented year of financial and liquidity stress
particularly in the US and Europe. Amidst the ensuing global
turbulence, we adopted a cautious stance, strengthened our
portfolio, and invested in our people and institution.
Portfolio Value Shareholder Return Group Financial Highlights
Our portfolio retracted three Our Total Shareholder Return We delivered a group net
years in value to S$130 billion (TSR) since inception is profit of S$6 billion.
as at 31 March 2009. more than 16% compounded
annually, by both market
value (MV) and shareholder
funds (SHF).
Portfolio Value (S$b) One-year TSR (%) (S$b)
46
28
185 24 27 25 Revenue 80
164 16 17
15 Net profit attributable
12
129 130 7 to equity holder 6
103 09 09
90 04 05 06 07 08 04 05 06 07 08
(18)
(30)
04 05 06 07 08 09 By MV By SHF
As at 31 Mar For year ended 31 Mar For year ended 31 Mar 09
S$ 130b
Portfolio down 30% in value
-18%
One-year TSR by shareholder funds
S$ b 6
Group net profit
Page Page Page
18 For more information 19 For more information 27 For more information
YEAR IN REVIEW 7
Investments Our Team Our Community
Divestments exceeded We reaffirmed our core We launched Temasek Cares
investments as we adopted values as we continued on 25 June 2009 to support
a cautious stance. to learn and build a the needy and rebuild lives
diverse team. in Singapore.
(S$b) Staff Origin (%)
• S$100 million was gifted for
Temasek Cares via Temasek Trust
Investments 9 8 19 27 31 34 36 • Temasek Foundation expanded
its outreach from five to
Divestments 16
11 countries in Asia
92 81 73 69 66 64
• Our TOUCH volunteers
supported chef training under
Other the Yellow Ribbon Project
Countries
reintegration programme
Singapore
04 05 06 07 08 09
For year ended 31 Mar 09 As at 31 Mar
S$ b 7
Net divestments
380 people
The Temasek team
S$ 100m
Contribution for Temasek Cares
Page Page Page
35 For more information 54 For more information 64 For more information
8 Temasek Review 2009
FROM
our CHAIRMAN
On 25 June this year, Temasek turned 35. We published
our first Temasek Review five years ago.
During the five years since March 2004, we Returns to our Shareholder
made S$90 billion of new investments and Our Value-at-Risk (VaR) as reported in our
divested S$56 billion of assets. Our portfolio previous Review had been a volatile S$40 billion 1
value grew from S$90 billion to S$130 billion. as at 31 March 2008. With the sharp corrections
in the capital markets, our portfolio retraced its
In the process, we proportionately reduced our value by about three years to S$130 billion at
underlying exposure to Singapore and the OECD the market lows of 31 March 2009.
economies from over 80% to just over 50%,
even as we held steady in value our underlying The 10 largest Singapore-listed companies in
exposure to Singapore. our portfolio accounted for S$30 billion of the
total value decline of S$55 billion, while the
As at 31 March 2009, our Singapore exposure 10 largest non-Singapore listed investments
was 31% with rest of Asia at 43%. OECD accounted for S$18 billion.
economies account for just over 20% of our
portfolio, primarily in Australia. We have also
56b
added an emerging 4% exposure to new
markets such as Latin America and Russia.
S$
Divestments since 2004
S$ 90b Over the last five years, our Total Shareholder
Return (TSR) on a marked-to-market basis was
Investments since 2004
6% compounded annually, while our TSR by
shareholder funds was 11%. These medium-
The growth and composition of our portfolio term TSRs were impacted by a 30% fall in our
reflect the transformation of Singapore and Asia. one-year TSR by market value and a one-year
Companies in our portfolio include Singapore decline of 18% in our TSR by shareholder funds.
blue chips such as Singapore Airlines, and
emerging champions in Asia such as Bharti Our TSRs since inception by both shareholder
Airtel, China Construction Bank and Bank funds and market value held steady at 16%.
of China. Our 20-year and 30-year TSRs by market value
were stable at 13% and 16% respectively.
Despite a year of extreme volatility, we are
confident that we have a robust portfolio for
the long term.
1 This means a 16% probability that Temasek’s portfolio value
will decline by S$40 billion or more on a marked-to-market
basis by 31 March 2009.FROM OUR CHAIRMAN 9
We delivered a negative Wealth Added (WA) Against the backdrop of a global credit crunch,
of S$68 billion below our risk-adjusted cost we maintained a steady course, and remained
of capital hurdle on our opening portfolio value cautiously active on the investment front.
for the last financial year. We rebalanced our portfolio with S$9 billion
of investments and S$16 billion of divestments
Since 31 March 2009, the markets have during the year.
steadied. For the four months up to 31 July 2009
in S$ terms, the MSCI World Index rebounded Investments last year included S$3 billion
25%, while MSCI (Asia ex Japan) Index rose for rights issues in our portfolio companies
42%. Our portfolio value and TSR have such as Standard Chartered, DBS Group, and
recovered broadly in line with the markets. CapitaLand. Including subscriptions post
31 March 2009, we have invested almost
At the bottom line, we delivered a Group net S$5 billion in the rights issues of our portfolio
profit of S$6 billion compared to a profit of companies over the last nine months to
S$18 billion in the previous year. This drop in 31 July 2009.
group profit reflected the generally weaker
operating performances of our portfolio New investments included about S$700 million
companies as well as realised gains and losses in September 2008 for a sub-5% stake in Hong
from our divestments during the year. Kong-based Li & Fung, a leading supply chain
manager for brands and retailers worldwide. In
July 2009, we also reinvested over S$400 million
6
in Olam International, a Singapore-based market
S$ b leader in the supply chain management of
agricultural products and food ingredients.
Group Net Profit
for year ended 31 Mar 09 During the year, we completed the long-planned
divestment of our three power generating
companies in Singapore. The process attracted
Investment Activities bids from Singapore and international players.
From the demise of Bear Stearns in March 2008, The first was the sale of Tuas Power in March
to the collapse of Lehman Brothers and the US 2008 to SinoSing Power, a wholly-owned
government rescue of AIG in September 2008, subsidiary of China Huaneng Group, followed
and the market tremors of March 2009, the by the September 2008 sale of Senoko Power
global financial turmoil was the worst since the to Lion Power Holdings, a consortium led by
Great Depression. The ensuing credit contagion Marubeni Corporation of Japan. The sale of our
was swift and sharp. World trade plunged, last generating company, PowerSeraya, to YTL
declining 20% in the six months ended March Power International of Malaysia, was sealed
2009 compared to a year before. Oil prices in December 2008, and completed in March
plummeted from US$146 a barrel in July 2008 2009. Total proceeds from these divestments
to US$31 in December 2008. amounted to just over S$11 billion.10 Temasek Review 2009
The divestment was the culmination of a Singapore-based divestments included printing
14-year journey during which we significantly company SNP Corporation, IT services company
enhanced the value of our assets by working Singapore Computer Systems, and Singapore
with many stakeholders including the regulator, Food Industries.
the boards and managements of the power
generating companies and their labour union,
Union of Power & Gas Employees (UPAGE). Against the backdrop
The thoughtful tenacity of our team through
the different generations speaks well of their of a global credit crunch,
resilience and their persistent commitment. we maintained a steady course,
and remained cautiously active
We are also pleased that each of the three on the investment front
successful buyers inherited a well-managed
company with a strong balance sheet
and operating within a sustainable Building our Institution
regulatory framework. Beyond purpose, people and passion, the
success of an institution also rests on the culture
we nurture in our people and the discipline we
16b
instil through our systems and processes.
S$ A critical building block aimed at fostering
Divestments an owner mindset among our staff is our
for year ended 31 Mar 09 incentive framework which puts the institution
before the individual, emphasises long term
over short term, and aligns employee and
Other divestments during the year included shareholder interests.
our positions in Bank Internasional Indonesia,
Bank of America and China Minsheng Bank. It has two dimensions – performance hurdles,
Our initial position in Merrill Lynch had been and time horizons, for short, medium and long-
exchanged into shares in Bank of America in term payouts. Deferred components are subject
January 2009, when the latter completed an to market risks with values rising or falling with
offer to buy the former. Our exposure thus portfolio returns, and a clawback against future
changed from specific Merrill exposures to the negative Wealth Added.
diversified exposure of Bank of America to the
US economy. The risk-return profile had also
shifted substantially. After considering various We tested and refined the
factors, a decision was made to divest out of
Bank of America, and redeploy our funds principles of allocating negative
elsewhere, notwithstanding the expected bonuses to align our staff to
realised loss. sustainable long-term performanceFROM OUR CHAIRMAN 11
While the downturn has been uncomfortable, the long term, treading carefully and thoughtfully,
it gave us the opportunity to test our framework thinking and rethinking, testing and retesting.
over the last two years through the negative While we have no wish to re-invent the wheel,
Wealth Added cycle. We tested and refined the we have charted our own course with patience
principles of allocating negative bonuses, and and courage, while drawing experiences
finalised the remaining long-term components and knowledge from within and outside
of a robust incentive framework to align our staff the organisation.
to sustainable long-term performance.
My colleagues and I are encouraged by the
No incentive plan is perfect, and nothing can Temasek journey. We have been walking to
substitute for values, culture and commitment make our own paths and byways, keeping the
to the institution. We are gratified that the team future clearly in our mind, and knowing we can
has shown a willingness to take decisions which take nothing for granted. We continue to move
have short-term negative impact, in the interest forward with hope and confidence.
of the larger whole. This augurs well for
our future.
As we invest and manage
our portfolio, we continue
We have stayed the course to shape and build our
and kept the future in our mind institution for the long term
in everything that we have done
Leadership Continuity
Charting our Waypoints In early 2005, our Board instituted an annual CEO
Temasek celebrates its 35 anniversary this
th
succession review to track potential successors
year. The world has evolved since 1974, and from within and outside Temasek. Charles “Chip”
so have we. We have stayed the course and Goodyear joined our Board on 1 February 2009,
kept the future in our mind in everything that and was slated to succeed Ho Ching as CEO with
we have done. effect from 1 October 2009.
We first published our Temasek Charter in However, in July, both the Board and Chip
2002 as a living document that outlines our agreed mutually and amicably that it was in the
relationship with our stakeholders. We have interest of both parties not to proceed with the
reviewed and updated our Charter in conjunction CEO transition.
with our 35th anniversary.
The Board and I are pleased that Ho Ching
As we invest and manage our portfolio, we has agreed to continue her responsibilities as
continue to shape and build our institution for Executive Director and CEO.12 Temasek Review 2009
Looking Ahead We will work with our portfolio companies to
The worst of the meltdown risks is behind us. focus on value preservation and creation.
Extraordinary fiscal and monetary measures
have been set in place by the US and other Engaging with our Community
governments. These moves have averted To mark our 35th anniversary, we donated
extreme meltdown risks, but added the risks S$100 million in June this year to the Temasek
of inflation and asset misallocations in the Trust through a deed of gift as an endowment
medium term. The structural issues still need to for Temasek Cares.
be resolved as deleveraging continues to take
place and demand adjusts to a new base. Set up as a new charity, Temasek Cares
supports the underserved in Singapore,
particularly to train the disadvantaged and their
We remain optimistic about caregivers to be self-reliant, and help rebuild
lives. This initiative complements the coverage
Asia’s potential for the long term of other non-profit philanthropic organisations
such as Temasek Foundation and Singapore
Millennium Foundation that we have sponsored.
Global GDP growth is expected to be weak
in 2009, with a sluggish recovery in 2010. Our donations come from funds we had set
Uncertainties abound beyond that. aside for community contribution during the
years when we delivered positive Wealth Added.
We remain optimistic about Asia’s potential Donations to Temasek Trust are reinvested with
for the long term. As Asia continues to make Temasek on a commingled basis. This reinforces
progress, it will continue to de-risk. We are the mission for Temasek to deliver sustainable
comfortable to maintain an overweight in Asia, long-term value, not just for our shareholder,
with a directional portfolio mix of 40:30:20:10. but also for the wider community.
This means exposure to Asia of 40% or more
(including China at around 20%), keeping In Appreciation
Singapore at about 30%, maintaining OECD I am grateful to the many friends and partners,
exposure at 20%, largely via Australia, and in Singapore and around the world, who have
adding exposure of up to 10% to other contributed tremendously to Temasek’s success
geographies such as Latin America, Eastern and ongoing development.
Europe, the Middle East, and Africa.
To the past and present members of the Board,
This portfolio mix provides a 50:50 exposure management and staff, I am thankful for their
between slower growth developed economies unstinting dedication and commitment to shape
and higher risk emerging economies. We will and reshape the institution for the future.
exercise full flexibility to shift the weight of our I wish to thank too the boards, management and
portfolio in dynamic and practical ways in the staff of our portfolio companies. Through their
short term, while maintaining a balanced risk leadership and hard work, they have developed
posture for the longer term. sustainable and competitive businesses that are
vital to our collective success.FROM OUR CHAIRMAN 13
I also deeply appreciate the thoughtful Temasek Charter
counsel and insightful advice of our Temasek
Temasek Holdings is an investment
International Panel and the Temasek Advisory
company managed on commercial principles
Panel. They have provided very useful
to create and deliver sustainable long-term
perspectives which helped to nuance our
value for our stakeholders.
thinking and decisions over the years.
Temasek is an active value-oriented
Finally, I must thank our many stakeholders,
investor and may increase, reduce or hold
including our shareholder and bondholders as
its investments in companies or other
well as the broader public, for their interest in
assets, or pioneer innovative products or
our progress and success. Our engagement
businesses in order to create and maximise
with them, and the feedback they have
shareholder value.
provided us, have enriched Temasek and
contributed to our continued progress.
Temasek is an active shareholder and aims
to achieve sustainable returns by engaging
the boards and managements of its portfolio
companies to:
• Values
Foster a deep culture of integrity, meritocracy
and excellence;
S DHANABALAN • Focus
Chairman Maintain a clear focus on core competence,
September 2009 customer fulfilment, innovation, commercial
discipline and consistent value creation;
• Human Capital
Cultivate high calibre board and management
leadership, as well as committed and
responsible employees;
• Sustainable Growth
Institutionalise superior business leadership,
financial discipline, operational excellence and
sound corporate governance;
• Strategic Options
Create strategic options to build significant
international or regional brands or businesses.
Temasek is a responsible corporate citizen
and is committed to contributing part of
its returns to encourage the growth and
development of the wider community.
2009Mt Kinabalu Returning home carefully across treacherous terrain
PORTFOLIO HIGHLIGHTS 15
Portfolio by Geography, Sector & Liquidity
Portfolio Value since Inception
Total Shareholder Return
Wealth Added
Portfolio
highlights
The weight of our portfolio is focused on
Asia, tracking its purposeful development as
it betters the lives of its people and continues
to de-risk.16 Temasek Review 2009
PORTFOLIO BY GEOGRAPHY1 (%)
(As at 31 Mar)
Singapore
North Asia
(China, Taiwan, Korea)
ASEAN
(excluding Singapore)
South Asia
(India, Pakistan)
OECD Economies
(excluding Korea and Mexico)
Latin America & Others 2
(As at 31 Mar)
Portfolio in 2004 Portfolio in 2009
Singapore 52 Singapore 31
Latin America & Others 2 4
OECD Economies 2 32 OECD Economies 2 22
S$90b S$130b
South Asia 7
South Asia 1
ASEAN 9 ASEAN 9
North Asia 6 North Asia 27
1 Distribution based on underlying assets. 2 Mexico is classified under “OECD Economies” in 2004
and under “Latin America and Others” in 2009.PORTFOLIO HIGHLIGHTS 17
PORTFOLIO By Sector1 (%)
(As at 31 Mar)
Financial Services 21 Financial Services 33
Real Estate 6 Real Estate 9
Others 3 6
Life Sciences, Consumer 6
& Lifestyle, Others 3 Life Sciences, Consumer 1
& Lifestyle
Infrastructure, Industrial 10
& Engineering, Technology 3 Technology 3 1
Infrastructure, Industrial 6
& Engineering
2004 2009
Energy & 5
Energy & Resources 7 Resources
Transportation & Logistics 14 Transportation & Logistics 13
Telecommunications & Media 36 Telecommunications & Media 26
PORTFOLIO By Liquidity (%)
(As at 31 Mar)
Other listed & liquid assets 18 Other listed & liquid assets 34
Unlisted assets 20 Unlisted assets 28
2004 2009
Listed large blocs 62 Listed large blocs 38
(>20% share) (>20% share)
3 “Others” and “Technology” are classified separately
as standalone sectors in 2009.18 Temasek Review 2009
PORTFOLIO VALUE
SINCE INCEPTION
Seeded in 1974 by the Singapore government The market values of our portfolio over the years
with an initial portfolio of 35 companies worth reflect both the performance of our underlying
S$354 million, or US$134 million, we have investments and the effects of external events.
grown with the Singapore economy since the For example, the listing of SingTel in 1993
early years. Additional assets such as SingTel, contributed to the biggest single-year rise in
SingPower and PSA were transferred to portfolio value, while the global credit crisis
Temasek in the early 1990s when the triggered by the US led to our steepest one-year
Government decided to liberalise the provision fall last financial year.
of basic telecommunications, power and
port services. The book value of our portfolio declined from
S$144 billion the year before to S$118 billion,
As at 31 March 2009, our net portfolio market primarily due to a drop in marked-to-market
value retraced to S$130 billion or US$86 billion, fair value of available-for-sale investments.
down from S$185 billion a year earlier, and up
from S$90 billion five years ago.
Value of Temasek’s Portfolio (FY1974 – FY2008)
(in S$ billion)
200
Global Financial Crisis
180
160
140
120
Dotcom Peak Dotcom
100 Correction
80 9/11
Listing of
60 SingTel
SARS
40 Epidemic
20
0
741 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
December 1 March 2
Year End Market Value Year End Book Value
1 First financial year ended in December 1975. 2 Financial year-end was changed from 31 December before
1993 to 31 March from 1994 onwards.PORTFOLIO HIGHLIGHTS 19
Total Shareholder Return
(For year ended 31 Mar)
Our one-year Total Shareholder Return by market value
for the year ended 31 March 2009 was a negative 29.57%.
We measure Total Shareholder Return (TSR) TSR by shareholder funds measures the
by market value and by shareholder funds. compounded annual growth in shareholder
funds due to the underlying profitability of our
TSR by market value is the compounded annual portfolio companies and the returns from our
return over a specified period, taking into account investment activities.
changes in the market value of our portfolio,
dividends we paid, and netting off any new Our TSR by shareholder funds remains a
capital we receive. For unlisted investments, robust 16% since inception. Medium-term
we track the movements in shareholder funds TSRs over five and ten-year periods were
in lieu of market price changes. above 10%, reflecting the strong fundamentals
of our portfolio companies and returns from
Our long-term 20-year and 30-year TSRs our investments.
remained stable at 13% and 16% respectively,
notwithstanding the short-term volatility. TSR
since inception remained a healthy 16%.
TSR by Market Value (%) TSR by Shareholder Funds (%)
(Period in years) (Period in years)
Since Since
inception 16 inception 16
30 16 30 14
20 13 20 14
10 5 10 10
5 6 5 11
3 (2) 3 6
2 (14) 2 (2)
1 (30) 1 (18)
0 020 Temasek Review 2009
WEALTH ADDED
Wealth Added measures excess returns over hurdle
+ Dividend – Net capital
paid to our injection
shareholder by our
shareholder
= Total return – Capital
to our Charge
shareholder on Opening
Market
Closing = Change Value
Market in Market
Value Value
– Change in
perpetuity value of
our operating cost
= Wealth Added
– Opening
Market
Value
Wealth Added = Change in Market Value
+ Dividend Paid
– Net Capital Injection
– Capital Charge
– Perpetuity Value of Operating Cost
Not to scale
Wealth Added (WA) is the excess returns above In computing WA to our shareholder, the
the risk-adjusted cost of capital. Also known changes in our recurring operating costs
as economic profit, it factors in the capital taken into perpetuity are also accounted for.
employed to produce the returns and the risks
associated with each investment.
The capital employed is the opening market
value of our portfolio at the start of the year,
adjusted for any net capital movements.PORTFOLIO HIGHLIGHTS 21
Calculating WA Illustrative Example:
The total return to the shareholder is the change Consider a listed investment with an opening
in the market value of investments, or the market value of $1,000, which has risen to
change in book value for unlisted assets, plus $1,200 at the end of the year. During the year,
dividends paid to him, adjusted for any net new the shareholder received dividends of $40,
capital invested. and invested $130 of new equity at the end
of the year. His risk-adjusted cost of capital
The capital charge is the minimum risk-adjusted is 10%.
return that the shareholder expects from the
opening market value of his portfolio at the start Thus,
of the year.
Total return ($1,200 - $1,000) + $40 - $130
=
= $110
WA is the total return to a shareholder less the
capital charge. Capital charge = 10% cost of capital x $1,000
= $100
Wealth Added = total return - capital charge
= $10
Annual Wealth Added 1 (in S$ billion)
30 In the following year, the capital charge is
20 19.2 19.9
23.4 calculated on the latest opening market
15.6
10 value of $1,200. Assuming no net capital
7.2
0 movements or dividends, the portfolio value
-10 must increase by a hurdle of at least $120
(6.4) (6.3)
-20 (10.0) (i.e. 10% of $1,200) to achieve positive WA,
-30 (20.2) compared to a capital charge of $100 the
-40 (30.2) year before.
-50
-60 Thus, if the market value rises to $1,300 at
-70 the end of the following year, with no new
(68.1)
-80 capital or dividends, the WA would be a
99 00 01 02 03 04 05 06 07 08 09
negative $20, i.e. change in market value less
cost of capital charge or ($1,300 – $1,200) –
For year ended 31 Mar
(10% x $1,200), even though the market
value has increased.
Cumulative Wealth Added since 1999
1 Prior to 2003, WA was calculated on an aggregate top-down
basis. From 2003 onwards, WA is calculated on a bottom-up
basis, and on a monthly hurdle, investment by investment.Mt Kilimanjaro Strategising tomorrow’s summit ascent
GROUP FINANCIAL SUMMARY 23
Statement by Auditors
Statement by Directors
Group Financial Highlights
Group Income Statements
Group Balance Sheets
Group Cash Flow Statements
Group Statements of Changes in Equity
GROUP FINANCIAL
SUMMARY
Our group financial summary and highlights
are based on annual statutory financial
statements audited by international audit firms.24 Temasek Review 2009
STATEMENT
BY AUDITORS
We are the auditors of Temasek Holdings We conducted our examination in accordance
(Private) Limited (“Temasek”). We have audited with Singapore Standard on Auditing SSA 800
the statutory consolidated financial statements – The Independent Auditor’s Report on Special
of Temasek and its subsidiary companies (the Purpose Audit Engagements. This standard
“Group”) for the financial years ended 31 March requires that we comply with ethical
2008 and 2009 and have issued unqualified audit requirements and plan and perform the
reports dated 16 July 2008 and 15 July 2009, examination to obtain reasonable assurance on
respectively. The audited statutory consolidated whether the Group Financial Summary is free
financial statements of the Group for the from material inconsistency with the audited
financial years ended 31 March 2004 to 2007 statutory consolidated financial statements of
were audited by PricewaterhouseCoopers the Group. Our work included examining, on a
whose auditors’ reports contained test basis, evidence supporting the consistency
unqualified opinions. of the amounts and disclosures in the Group
Financial Summary to the audited statutory
Under the Singapore Companies Act, consolidated financial statements of the Group.
Chapter 50 (the Act), Temasek is an exempt
private company and is not required to In our opinion, the Group Financial Summary is
publish its audited statutory consolidated summarised and presented consistently, in all
financial statements. material respects, with the audited statutory
consolidated financial statements of the Group
Management is responsible for the preparation from which they are derived.
and presentation of the Group Financial
Summary set out from pages 26 to 31 based
on the audited statutory consolidated financial
statements of the Group for the financial
years ended 31 March 2004 to 2009. The Group
Financial Summary consists of the Group
Financial Highlights, Group Income Statements, KPMG LLP
Group Balance Sheets, and Group Cash Flow Public Accountants and
Statements as at and for the financial years Certified Public Accountants
ended 31 March 2004 to 2009 and Group Singapore
Statements of Changes in Equity for the financial 15 July 2009
years ended 31 March 2008 and 2009.
Our responsibility is to express an opinion on
whether the Group Financial Summary has been
summarised and presented consistently, in all
material respects, with the audited statutory
consolidated financial statements of the Group
for the financial years ended 31 March 2004
to 2009.GROUP FINANCIAL SUMMARY 25 STATEMENT BY DIRECTORS Our auditors, KPMG LLP, have expressed unqualified opinions on the audited statutory consolidated financial statements of Temasek Holdings (Private) Limited and its subsidiary companies (the “Group”) for the financial years ended 31 March 2008 and 2009. Our auditors for the financial years ended 31 March 2004 to 2007, PricewaterhouseCoopers, have expressed unqualified opinions on the audited statutory consolidated financial statements of the Group for the financial years ended 31 March 2004 to 2007. On behalf of the directors S DHANABALAN Chairman 15 July 2009 HO CHING Executive Director & Chief Executive Officer 15 July 2009
26 Temasek Review 2009
GROUP FINANCIAL
HIGHLIGHTS1
For year ended 31 Mar
Profit Margin 2 (%) VA/Employment Cost 3
24.2 3.4
3.2
3.0
18.7 18.2 2.6 2.7 2.5
13.1 13.9
9.0
04 05 06 07 08 09 04 05 06 07 08 09
Return on Average Equity 4 (%) Return on Average Assets 5 (%)
15.9 9.2 9.5
14.1
12.4
11.1 7.1 6.8
6.6
8.9
4.3
4.7
04 05 06 07 08 09 04 05 06 07 08 09
Net Debt to Capital 6 (%) EBITDA Interest Coverage 7
21.8 12.2 11.9 11.5
19.9 10.7
9.4
16.6
14.6 7.7
13.5
12.6
04 05 06 07 08 09 04 05 06 07 08 09
1 The Group Financial Summary including highlights as set 3 Gross value added per dollar of employment cost.
out from pages 26 to 31, was prepared and presented based 4 Net profit attributable to equity holder of the company
on the audited statutory consolidated financial statements of expressed as a percentage of average shareholder equity.
the Group for the financial years ended 31 March 2004 5 Total profit, add back financing cost, expressed as a
to 2009. percentage of average total assets.
2 Profit before exceptional items, expressed as a percentage 6 Net debt expressed as a percentage of the sum of
of revenue. shareholder equity, minority interests and net debt.GROUP FINANCIAL SUMMARY 27
GROUP INCOME STATEMENTS (IN S$ BILLION)
For year ended 31 Mar 2004 2005 2006 2007 2008 2009
Revenue 56.5 67.5 79.8 74.6 83.3 79.6
Profit before exceptional items 7.4 9.4 14.9 13.6 20.2 7.2
Net profit attributable to equity holder 7.4 7.5 12.8 9.1 18.2 6.2
GROUP BALANCE SHEETS (IN S$ BILLION)
As at 31 Mar 2004 2005 2006 2007 2008 2009
Total assets 180.8 199.1 213.7 242.4 295.5 247.9
Shareholder equity 64.5 70.9 90.6 114.0 144.1 118.4
Net debt 8 21.9 26.9 16.7 23.6 33.8 22.1
7 Profit before income tax, finance expenses, depreciation,
amortisation and impairment loss on property, plant and
equipment and intangibles, divided by finance expenses.
8 Total debt less cash and cash equivalents.28 Temasek Review 2009
GROUP INCOME
STATEMENTS
IN S$ MILLION
For year ended 31 Mar 2004 2005 2006 2007 2008 2009
Revenue 56,468 67,520 79,822 74,563 83,284 79,615
Cost of sales (37,659) (43,780) (53,309) (49,282) (53,290) (57,477)
Gross profit 18,809 23,740 26,513 25,281 29,994 22,138
Other operating income 1,482 3,334 7,678 8,370 15,870 16,198
Expenses: Selling & Distribution (3,559) (3,939) (4,086) (4,278) (5,197) (5,042)
Administrative (5,722) (7,003) (8,040) (8,104) (8,619) (8,068)
Finance – (2,120) (2,415) (2,611) (3,207) (2,727)
Other operating expenses (3,633) (4,648) (4,758) (5,053) (8,681) (15,333)
Profit before exceptional items 7,377 9,364 14,892 13,605 20,160 7,166
Exceptional items 2,165 404 1,666 – – –
Profit after exceptional items 9,542 9,768 16,558 13,605 20,160 7,166
Non-operating items 1,077 – – – – –
Finance income 619 – – – – –
Finance costs (1,724) – – – – –
Share of results of associated
companies and partnerships 1,472 1,410 1,163 (830) 3,187 1,333
Share of results of joint ventures 787 1,037 1,263 1,566 2,182 1,870
Profit before income tax 11,773 12,215 18,984 14,341 25,529 10,369
Income tax expense (2,050) (1,837) (2,518) (1,381) (3,055) (1,280)
Profit from continuing operations 9,723 10,378 16,466 12,960 22,474 9,089
Profit from discontinued operations – 31 67 16 – –
Total profit 9,723 10,409 16,533 12,976 22,474 9,089
Attributable to:
Equity holder of the Company 7,365 7,521 12,827 9,112 18,240 6,183
Minority interests 2,358 2,888 3,706 3,864 4,234 2,906
Total profit for the financial year 9,723 10,409 16,533 12,976 22,474 9,089GROUP FINANCIAL SUMMARY 29 GROUP BALANCE SHEETS IN S$ MILLION As at 31 Mar 2004 2005 2006 2007 2008 2009 Shareholder equity 64,522 70,890 90,630 113,958 144,058 118,398 Minority interests 23,862 25,325 25,412 24,447 25,786 22,555 88,384 96,215 116,042 138,405 169,844 140,953 Property, plant and equipment 61,558 69,268 65,552 65,486 75,302 68,206 Intangibles 13,543 14,714 14,481 14,805 21,382 19,891 Investments 27,339 16,976 27,137 34,965 39,513 41,105 Financial assets – 13,829 27,529 52,341 73,850 40,234 Investment properties 8,159 7,848 1,817 3,632 5,035 5,331 Properties under development 370 453 518 158 626 759 Other non-current assets 6,488 8,266 9,972 10,446 9,393 9,505 Deferred tax assets 1,645 2,138 1,735 1,628 1,849 1,960 Current assets 61,695 65,614 64,987 58,979 68,568 60,958 Current liabilities (45,779) (50,901) (52,269) (45,350) (66,454) (42,558) Net current assets 15,916 14,713 12,718 13,629 2,114 18,400 135,018 148,205 161,459 197,090 229,064 205,391 Non-current liabilities (46,634) (51,990) (45,417) (58,685) (59,220) (64,438) 88,384 96,215 116,042 138,405 169,844 140,953
30 Temasek Review 2009 GROUP CASH FLOW STATEMENTS IN S$ MILLION For year ended 31 Mar 2004 2005 2006 2007 2008 2009 Operating cash flow before working capital changes 13,936 16,854 18,661 17,557 21,213 14,072 Change in working capital (2,535) (4,353) 2,577 2,508 (287) 1,484 Cash generated from operations 11,401 12,501 21,238 20,065 20,926 15,556 Income tax paid (1,151) (1,480) (1,558) (1,592) (1,942) (1,826) Net cash inflow from operating activities 10,250 11,021 19,680 18,473 18,984 13,730 Net cash (outflow)/inflow from investing activities (7,701) (4,765) (16,509) (23,344) (30,431) 95 Net cash inflow/(outflow) from financing activities 6,770 (4,793) (238) 2,259 13,277 (6,398) Net increase/(decrease) in cash and cash equivalents held 9,319 1,463 2,933 (2,612) 1,830 7,427
GROUP FINANCIAL SUMMARY 31
GROUP STATEMENTS
OF CHANGES IN EQUITY
IN S$ MILLION
Attributable to Equity Holder
of the Company
Share Capital Currency
and Other Revenue Translation Minority
Reserves Reserves Reserves Interests Total
Balance at 1 Apr 2008 70,917 74,638 (1,497) 25,786 169,844
Net profit for the financial year – 6,183 – 2,906 9,089
Others, net 1 (25,139) (3,859) (2,845) (6,137) (37,980)
Balance at 31 Mar 2009 45,778 76,962 (4,342) 22,555 140,953
Balance at 1 Apr 2007, as previously stated 57,079 57,383 (504) 24,447 138,405
Effect of adopting FRS 40 (1,231) 1,037 – 32 (162)
Balance at 1 Apr 2007, restated 55,848 58,420 (504) 24,479 138,243
Net profit for the financial year – 18,240 – 4,234 22,474
Others, net 1 15,069 (2,022) (993) (2,927) 9,127
Balance at 31 Mar 2008 70,917 74,638 (1,497) 25,786 169,844
1 Comprise movements during the financial year including but not limited to:
– Issuance of ordinary shares;
– Change in fair value of financial assets;
– Dividends paid, net of tax;
– Share of associated companies’ and joint ventures’ reserves; and
– Currency translation differences.Mt Kinabalu Overcoming challenges, charting the way forward
SHAPING OUR PORTFOLIO 33
Investment Highlights
Investment Framework
Investment Outlook
Shaping Our
Portfolio
“The decisive factor is not knowledge
but the determination and courage
to act upon it.”
S Rajaratnam
Singapore Foreign Minister
Speech at the Singapore Association for
the Advancement of Science Seminar
20 December 197934 Temasek Review 2009
Shaping
Our Portfolio
As a long-term investor, we act to enhance sustainable value.
We invest, rationalise, consolidate or divest where it makes sense
and where we can achieve clear shareholder value.
As an owner with a lightly geared balance Mindful of a possible downturn since early 2007,
sheet, we have the flexibility of taking we have been building up our liquidity steadily
concentrated positions or investing with over the last two years. However, we did not
a long or short horizon. anticipate the speed and ferocity of the worst
global financial crisis since the Great Depression.
We have increased our exposure to Asia since
2002, riding with its deep and long wave of
growth and transformation. We have been building up
Our investments centre around four themes: our liquidity steadily over
the last two years
• Transforming economies
• Growing middle class
• Deepening comparative advantages Our immediate priority was to ensure that our
• Emerging champions portfolio companies were well positioned to ride
out the crisis, especially in terms of their liquidity
and financing needs. At the same time, we
continued to invest cautiously and selectively
during the year.
Market Value of Portfolio (S$b) Seven-Year Annualised Returns to Temasek (%)
(As at 31 Mar 09) (31 Mar 02 to 31 Mar 09)
50 19
9
80
Investment after end Mar 02 Investment before end Mar 02SHAPING OUR PORTFOLIO 35
Investment Highlights divestment of Tuas Power, the sales raised total
During the year ended 31 March 2009, we proceeds of just over S$11 billion.
divested S$16 billion of assets. We made
S$9 billion of new investments, of which The completion of the divestment programme
S$3 billion were into the rights offerings marked the end of a 14-year journey to fully
of our portfolio companies, such as Standard liberalise the power generating market in
Chartered, DBS Group and CapitaLand. Singapore. The support and cooperation of the
boards, managements and union of these power
Post March 2009, we further invested over generating companies contributed significantly
S$1 billion in the rights issues of Bank Danamon, to the successful outcomes.
Neptune Orient Lines and Chartered
Semiconductor Manufacturing. While we took steps to mitigate sector and
company-specific risks in our portfolio, we also
During the year, we rebalanced our portfolio and continued to review investment opportunities
fully divested our stakes in Bank Internasional in various sectors. Of particular interest were
Indonesia, Bank of America, Barclays, China several companies with the potential to become
Minsheng Bank, E.SUN Financial Holding, champions in their respective businesses.
Singapore Food Industries, SCS Computer
Systems and SNP Corporation. In September 2008, we invested about
S$700 million for a sub-5% stake in Li & Fung,
We completed the divestment of our remaining a global leader in supply chain management for
two power generating companies in Singapore, brands and retailers worldwide. The company’s
Senoko Power and PowerSeraya to Lion Power growth, despite the downturn in the retail sector,
Holdings and YTL Power International underlines the strength of its business model
respectively. Together with the earlier and operations.
Recapitalisations Investments Divestments
S$3b S$9b1 S$16b
For year ended 31 Mar 09
1 Includes recapitalisations of S$3b.36 Temasek Review 2009
Value Creation Framework
Evaluating our anaging our
M Maximising our
Investments Portfolio Value
• Value test • Value test • Value test
• Flexible investment • Sound governance • Buy/sell
stance • Capable leadership • Trade/swap
• Optimise leverage • Operational excellence • Rationalise/restructure
• Create optionality • Human capital • Co-invest
• Mitigate risks • Competitive strategy • Monitor
Consistent with our theme of supporting In the infrastructure, industrial & engineering
emerging global champions, we reinvested space, we took a 19.5% stake in ENK of Korea,
in Singapore-based Olam International. The which supplies cylinders for compressed natural
investment of S$438 million for a 13.8% stake gas (CNG). ENK is well positioned to benefit
was approved by shareholders in June 2009. from strong global demand for CNG as markets
Olam has a strong presence in the supply chain and consumers search for an attractive and
management of agricultural products and environmentally friendly alternative fuel source.
food ingredients.
In Brazil, we provided growth capital with a
In keeping with our theme of deepening 15.4% stake in San Antonio International, the
comparative advantages, Temasek holds leading onshore oilfield service company in
an investment of about S$150 million as of Latin America.
31 March 2009 in Lung Ming, an independent
iron ore company that owns and operates the
Eruu Gol iron ore mine in Mongolia.SHAPING OUR PORTFOLIO 37
Investment Framework Investment Outlook
Our investment framework covers how we The worst of the meltdown risks is over, though
evaluate and structure our investments, engage structural issues remain. The decisive fiscal
our portfolio companies, and optimise the responses by various governments around
risk-adjusted return of our overall portfolio. the world cushioned the real economy and the
Our decision to hold, invest or divest is based populace. Going forward, governments still need
on the value test. to address the structural issues of overcapacity
and excessive leverage. Global recovery is
We have a flexible investment horizon, and expected to be sluggish.
look to create optionalities for future value. We
mitigate risks in various ways, including bringing Asia steadied itself and should continue on a
in value-adding partners or structuring downside steady trajectory of growth for the next decade
protection on our investments. or two. Economies like Brazil remain sound,
though Mexico may see more fallout in the short
term from its US linkages.
Our decision to hold, invest
The expanding middle class continues to present
or divest is based on the good long-term investment prospects in Asia,
value test Latin America and other economic regions.
Post-crisis, drivers of long-term secular trends
While we are not involved in the day-to-day remain valid. Demographics will underpin
operations or commercial decisions of our urbanisation, industrialisation, demand for
portfolio companies, we engage them as a resources and environmental awareness, while
shareholder to promote robust governance politics will drive protectionism or regulatory
and foster a strong culture of excellence changes either nationally or globally.
and integrity, as well as to build sustainable
competitive advantages, and maximise These long-term drivers will inform our
long-term shareholder returns. investment posture in the decade ahead.
We remain open to increase, reduce or maintain
our holdings, based on our value test and market
opportunities, regularly reviewing our portfolio
to rebalance our risk-return stance.Mt Kilimanjaro Persevering steadily towards our shared vision
Shaping our Institution 39
Governance Framework
Our Board of Directors
Risk Framework
Our Leadership
Compensation Framework
Our Team
Shaping our
Institution
Beyond purpose, people and passion,
the success of an institution also rests
on the culture we nurture in our people
and the discipline we instil through our
systems and processes.40 Temasek Review 2009
Governance
Framework
The world has evolved since 1974, and so have we. We have
stayed the course and kept the future in our mind in everything
we have done.
Governance in and of itself does not create Neither the President of Singapore nor
or sustain value, but it lays the foundation for the Singapore government is involved in
building an institution to create and deliver our investment, divestment or other
sustainable long-term value. business decisions.
A robust and pragmatic governance framework Relating to Our Shareholder
provides a balance between accountability and Incorporated on 25 June 1974, Temasek
responsiveness, between empowerment and is a Singapore exempt private company 1
organisational alignment, and between risks wholly owned by the Minister for Finance
and returns. (Incorporated). Subject to the President’s
concurrence, our shareholder has the right
We espouse the principles of commercial to appoint, remove or renew Board members
discipline, built on a culture of meritocracy, at shareholder meetings.
excellence and integrity, and aligned through a
performance incentive framework that reinforces We operate under the purview of the Singapore
sustainable long-term value. Companies Act and all other applicable laws and
regulations governing companies incorporated
in Singapore. Within this regulatory framework,
Temasek owns and Temasek operates with full commercial
discretion and flexibility, under the direction
manages its assets on of our Board.
a commercial basis
We provide annual statutory financial statements
audited by an international audit firm, as well as
Directed by our Board and management, periodic updates to our shareholder. While not
Temasek owns and manages its assets on required to release any financial information
a commercial basis. Investment, divestment, publicly as an exempt private company, we have
business and commercial decisions are the published our group financial summary and
responsibility of our Board and management. highlights based on the audited financial
statements in our annual Temasek Review
since 2004.
1 Under the Singapore Companies Act (Chapter 50), an exempt
private company has no more than 20 shareholders and no
corporate shareholder, and is exempted from filing its audited
financials with the public registry.Shaping our Institution 41
We declare dividends annually to our reserves. We will need to seek the President’s
shareholder, balancing cash returns to our concurrence before such a situation occurs.
shareholder against reinvestments to sustain
future returns. Our Chairman and CEO are required to certify
our Statement of Reserves and Statement of
Past Reserves to the President on a half-yearly
We espouse the principles basis as part of our governance discipline.
of commercial discipline, built Thus, the President acts as a check under a
on a culture of meritocracy, ‘two-key’ concept to safeguard Temasek’s past
excellence and integrity reserves 3 as a Fifth Schedule Company.
The President’s concurrence is required for
Relating to the President the appointment, renewal or removal of our
Under the Singapore Constitution, the President Board members. The appointment or removal
of the Republic of Singapore has an independent of our CEO by our Board is also subject to
role as the elected Head of State to safeguard the concurrence of the President. This is
Singapore’s critical assets and past reserves. to safeguard the integrity of these key
appointments involved in directing and
Likewise, Temasek is designated a Fifth managing Temasek’s reserves.
Schedule Company 2 under the Singapore
Constitution with a special responsibility to Apart from its normal fiduciary duties to the
safeguard our past reserves. Reserves in company, our Board is also accountable to
Temasek are categorised as current or past the President to ensure that every disposal of
reserves, depending on when these have investment is transacted at fair market value.
been accumulated.
Relating to Our Portfolio Companies
Profits accumulated before the term of the Companies in our portfolio are managed by
current Government, and any government their respective management, and guided and
asset transfers, form our past reserves. Current supervised by their respective boards. Temasek
reserves are primarily profits accumulated after a does not direct the commercial or operational
newly elected government is sworn into power. decisions of its portfolio companies.
If our total reserves are less than our past We exercise our shareholder rights fully,
reserves, or if our current reserves are negative, including voting at shareholders’ meetings,
this will be considered a draw on our past to protect our commercial interests.
2 Other Fifth Schedule entities include Government of 3 Temasek does not manage the foreign exchange reserves of
Singapore Investment Corporation Pte Ltd (GIC), which Singapore, or the reserves of any other Fifth Schedule entity.
manages the reserves of the Singapore Government, and Each Fifth Schedule entity is managed independently, and
statutory boards involved in managing critical assets, such is separately accountable to the President through its own
as the Central Provident Fund Board and the Monetary Board and CEO for the protection of its own past reserves.
Authority of Singapore.42 Temasek Review 2009
We promote sound corporate governance They bring a wealth of experience from the
in our portfolio companies. We support the private sector and industry to our deliberations.
formation of high calibre, commercially
experienced and diverse boards to complement The roles of Chairman and CEO are substantively
and guide management leadership. different and therefore separated to provide the
proper checks and balances, and better
accountability within the Board.
We exercise our shareholder
Our Board provides overall guidance and policy
rights fully to protect our directions to our management. Each year, the
commercial interests Board is scheduled to meet on a quarterly basis
for sessions of 1.5 days each, but meets more
often when necessary. Twelve Board meetings
Relating to the Wider Community
were held in the year ended 31 March 2009.
Our management participates in dialogues
with regulators, multilateral agencies and other
Our Board has delegated certain specific
market participants on governance and other
authority to various Board committees:
regulatory issues to help promote fair and
practical market oversight, and to keep abreast • Executive Committee (EXCO)
of governance issues and trends. • Audit Committee (AC)
• Leadership
Development & Compensation
In particular, we share our experiences and Committee (LDCC)
governance practices, and in turn learn from
others, so that together we can contribute Each committee is chaired by an independent,
to better corporate governance standards. non-executive Director.
Additionally, we have endowed the Temasek
Trust to support Temasek Foundation. Set up Our Board comprises a
as a non-profit philanthropic organisation, one
of the mandates of the Foundation is to foster majority of non-executive
and promote sound and honest governance. independent private sector
business leaders
As a long-term investor, we are mindful of the
social, environmental and development needs of
the community, which can impact the long-term On the recommendation of the AC, our Board
sustainability of businesses. approves the annual audited statutory accounts
prior to submission to the shareholder for
Temasek Board and Committees adoption at its Annual General Meeting.
Our Board comprises a majority of non-executive
independent private sector business leaders.You can also read
