Information as at 1 August Temasek Investor Presentation

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Cory Todd
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1 Information as at 1 August 2018 Temasek Investor Presentation

2 Disclaimer Investor Presentation This presentation is current only as at its date and the availability or use of this presentation subsequent to its date shall not create any implication that there has been no change in our affairs since the date of this presentation or that the information, statements or opinions contained herein is current as at any time subsequent to its date. This presentation is not and does not constitute or form part of, and is not made in connection with, any offer, invitation or recommendation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of any entity, and neither this presentation nor anything contained in it shall form the basis of, or be relied upon in connection with, any contract or investment decision. This presentation includes forward-looking statements / projections, which are based on current expectations and forecasts about future events. Such statements / projections involve known / unknown risks, uncertainties and other factors, which could cause actual results to differ materially from historical results or those anticipated. Such factors include, among others, the condition of, and changes in, the local, regional or global economy. We can give no assurance that our expectations will be attained. The information contained in this document is intended for information purpose only. We accept no liability or responsibility whatsoever with respect to the use of this presentation or its contents. 2

3 100% Singov Owned Investment Company; 100% Commercially Operated Overview of Temasek Temasek: History & Parentage Purpose Established in 1974 Separate Singapore Government s ( Singov ) policy making role from management of commercial assets Set-up & Mandate Incorporated under Singapore Companies Act Professional management team guided by Temasek Board Own and manage assets on commercial basis Deliver sustainable value over the long term Interactions with Singov Singov not involved in investment or business decisions Singov does not guarantee Temasek s debt Temasek declares dividends annually to shareholder One of three Singov investment entities Temasek GIC Monetary Authority of Singapore Investment Company Sovereign Wealth Fund Central Bank 3

4 Predominantly Equities Investor Overview of Temasek 730 Staff; Offices in 11 Cities United Singapore China India Vietnam United States Brazil Mexico Kingdom Top 10 Investments (41% of S$308b Portfolio) Listed / 52% stake Listed / 29% stake Listed / 4% stake Unlisted / 100% stake Unlisted / 100% stake Unlisted / 100% stake Listed / 1% stake Unlisted / 25% stake Listed / 2% stake Listed / 56% stake (as at 31 Mar 18) 4

5 Temasek s Investment Approach Overview of Temasek 5

Guided by Investment Themes Overview of Temasek Transforming Economies Companies

6 Guided by Investment Themes Overview of Temasek Transforming Economies Companies that are proxies to transforming economies like China, India, South East Asia and Latin America, e.g. financial services, infrastructure & logistics Growing Middle Income Populations Companies that meet needs of growing middle income populations, e.g. telecommunications, media & technology, and consumer & real estate Deepening Comparative Advantages Companies with distinctive intellectual property and other competitive advantages Emerging Champions Companies with strong home base, or at inflexion points, with potential to be regional or global champions 6

Identifying and Capitalising on Cross Sectoral Trends Overview of Temasek Better, Smarter & More Connected World Longer Lifespans Markets and industries are developing to meet growing needs as we

patterns and attitudes in emerging markets Sustainable Living Increasingly eco-conscious solutions will create up to US$12 trillion 1 of business opportunities by 2030 More Connected World Digital

7 Identifying and Capitalising on Cross Sectoral Trends Overview of Temasek Better, Smarter & More Connected World Longer Lifespans Markets and industries are developing to meet growing needs as we live longer Smarter Systems Artificial intelligence and robotics are enabling groundbreaking capabilities Rising Affluence The combination of rising affluence and technology is redefining consumption patterns and attitudes in emerging markets Sustainable Living Increasingly eco-conscious solutions will create up to US$12 trillion 1 of business opportunities by 2030 More Connected World Digital connectivity and solutions are redefining how we communicate and interact around the world Sharing Economy Peer-to-peer networks are promoting more efficient use of resources and greater convenience for businesses and consumers 1 Source: Business and Sustainable Development Commission, Better Business, Better World, January

8 Bottom-up Intrinsic Value Investor Overview of Temasek Delivering Sustainable Risk-adjusted Returns Over The Long Term Fundamental understanding of companies 1 Expected returns incorporating our view of intrinsic values 2 Target s risk-adjusted cost of capital factoring in country and sector risks 3 8

9 Relating to Our Portfolio Companies Overview of Temasek Temasek s Governance Model as an Engaged Shareholder Do not direct business decisions or operations of portfolio companies Do not guarantee obligations of portfolio companies Hold boards and management accountable for activities of portfolio companies Support formation of high calibre, experienced and diverse boards Protect our interests by exercising shareholder rights Advocate that boards be independent of management Expect portfolio companies to comply with obligations under laws and regulations 9

Portfolio Portfolio of S$308b (US$235b) as at 31 Mar 2018 308 273 228 1 2 3 3 3 Net Portfolio Value Shareholder equity Shareholder equity excluding mark to market movement 4 1 Incorporation of

10 Portfolio Portfolio of S$308b (US$235b) as at 31 Mar Net Portfolio Value Shareholder equity Shareholder equity excluding mark to market movement 4 1 Incorporation of Temasek on 25 June Financial year 75 began on 25 June 1974 and ended on 31 December Financial year-end was changed from 31 December before 1993 to 31 March from 1994 onwards. 4 For the financial year ended 31 March 2006, the accounting standards require sub-20% investments to be marked to market. (as at 31 Mar) 10

11 Portfolio Asia Weighted Portfolio at 68% Portfolio by underlying assets (%) Top 3 Countries % 13 By Geography Singapore 27 China The US 13 Singapore China Rest of Asia North America Europe Australia & New Zealand Africa, Central Asia & the Middle East Latin America Mature economies: 60% Comprises Singapore, Japan & Korea, North America, Europe, Australia & New Zealand. Growth regions: 40% Comprises Asia (excluding Singapore, Japan & Korea), Latin America, Africa, Central Asia & the Middle East. (as at 31 Mar 18) 11

Portfolio Many Quality Companies within each Sector

6 16 4 8 By Sector 26 Telecommunications, Media &

Industrials Life Sciences & Agribusiness Multi-sector

12 Portfolio Many Quality Companies within each Sector Portfolio by underlying assets (%) Financial Services By Sector 26 Telecommunications, Media & Technology Consumer & Real Estate Transportation & Industrials Life Sciences & Agribusiness Multi-sector Funds Others (including Credit) Energy & Resources (as at 31 Mar 18) 12

13 Liquid Portfolio, Mostly Denominated in Singapore Dollars Portfolio Portfolio (%) By Liquidity By Currency of Denomination Liquid & sub-20% listed assets 1 Listed large blocs ( 20% and <50% share) Listed large blocs ( 50% share) Unlisted assets 1 Mainly cash and cash equivalents, and sub-20% listed assets Singapore dollars US dollars Hong Kong dollars Korean won Indian rupees Others (as at 31 Mar 18) 13

14 Performance Robust Long Term Returns to Shareholder 15% compounded annualised S$ return to shareholder since inception Period (in years) TSR 1 in S$ (%) Since Inception (1974) Rolling S$ TSR 1 (%) (9) (30) Global Financial Crisis Total Shareholder Return One-year 10-year 20-year (as at 31 Mar 18) 14

15 Performance Active Investor with S$13b Net Investment Invested S$29b Divested S$16b Brazil 15

Public Markers for Institutional Discipline Public

Expanded stakeholder base Public Marker Function

financial parameters Temasek Bonds Singing canaries

16 Public Markers for Institutional Discipline Public Markers Credit quality Long term financial discipline Expanded stakeholder base Public Marker Function Indicator Temasek Review Performance scoreboard Portfolio strategy and performance Credit Profile Snapshot of credit quality Credit ratios and key financial parameters Temasek Bonds Singing canaries in coal mines Real time market signals of changes in Temasek s credit 16

17 Credit Profile Snapshot of Credit Quality Public Markers Key Temasek Credit Ratios 1 (for years ended 31 Mar) Dividend Income over Interest Expense (x) Liquidity Balance 2 over Total Debt due in next 10 Years (x) Net Portfolio Value over Total Debt (x) Credit Ratings by S&P and Moody s Rated AAA/Aaa by S&P and Moody s respectively since inaugural ratings in Covers Temasek Holdings (Private) Limited and its wholly owned Investment Holding Companies 2 Cash and cash equivalents, and short term investments 17

18 Sources and Uses of Funds Public Markers Investments and Associated Costs Dividends to Shareholder Taxes Community Initiatives 18

19 S$12.8b (US$9.8b) Debt Outstanding under MTN & ECP Programmes Public Markers Temasek Bonds: US$20b Guaranteed Global Medium Term Note (MTN) Programme, rated AAA/Aaa 14 AAA/Aaa Temasek Bonds, totalling S$11.4b (US$8.7b) 1 Weighted average maturity of over 11 years 1 Aug 2018: Issued 10-year US$1.35b bond at 3.625% Temasek ECP: US$5b Euro-commercial Paper (ECP) Programme, rated A-1+/P-1 S$1.4b (US$1.1b) 1 ECP outstanding Weighted average maturity of about two months ( 1 Exchange rates and all figures as at 31 Mar 18) 19

20 Thank You

Temasek Investor Presentation

Temasek Investor Presentation Information as at 11 July 2017 I N V E S T O R P R E S E N T A T I O N Disclaimer This presentation is current only as at its date and the availability or use of this presentation