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 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
O V E R V I E W O F T E M A S E K 100% Singov Owned Investment Company; 100% Commercially Operated 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
O V E R V I E W O F T E M A S E K Predominantly Equities Investor 630 Staff; Offices in 11 Cities United Singapore China India Vietnam United States Brazil Mexico Kingdom Top 10 Investments (44% of S$275b Portfolio) Listed / 52% stake Listed / 29% stake Listed / 4% stake Unlisted / 100% stake Unlisted / 100% stake Unlisted / 100% stake Unlisted / 25% stake Unlisted / 100% stake Listed / 2% stake Listed / 16% stake (as at 31 Mar 17) 4
O V E R V I E W O F T E M A S E K Guided by Investment Themes 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 5
O V E R V I E W O F T E M A S E K Bottom-up Intrinsic Value Investor Active Investor & Owner Investment decisions based on Temasek s view of intrinsic values and fundamental understanding of companies Each investment assessed against its risk-adjusted cost of capital No limits or targets for shareholding or concentration No top down strategic asset allocation Full flexibility to shift portfolio weight Engaged Shareholder Promote sound corporate governance in portfolio companies Support formation of high calibre, experienced and diverse boards Advocate that boards be independent of management Do not direct business decisions or operations of portfolio companies Do not issue any financial guarantees for the obligations of portfolio companies 6
P O R T F O L I O Portfolio of S$275b (US$197b) as at 31 March 2017 275 239 1 2 3 3 3 1 Incorporation of Temasek on 25 June 1974. 2 Financial year 75 began on 25 June 1974 and ended on 31 December 1975. 3 Financial year-end was changed from 31 December before 1993 to 31 March from 1994 onwards. (as at 31 Mar) 7
P O R T F O L I O Asia Weighted Portfolio at 68% Portfolio by underlying assets (%) 8 2 2 29 8 Top 3 Countries % 12 By Geography Singapore 29 China 25 The US 11 14 25 Singapore China Rest of Asia North America Australia & New Zealand Europe Africa, Central Asia & the Middle East Latin America Mature economies: 60% Comprises Singapore, Japan & Korea, North America, Europe, Australia & New Zealand. Growth regions: 40% Comprises Asia (excluding Singapore, Japan & Korea), Latin America, Africa, Central Asia & the Middle East. (as at 31 Mar 17) 8
P O R T F O L I O Portfolio of Many Blue-Chip Companies Portfolio by underlying assets (%) 4 3 8 3 25 Financial Services Telecommunications, Media & Technology 17 By Sector Transportation & Industrials 17 23 Consumer & Real Estate Life Sciences & Agribusiness Multi-sector Funds Others (including Credit) Energy & Resources (as at 31 Mar 17) 9
P O R T F O L I O Liquid Portfolio, Mostly Denominated in Singapore Dollars Portfolio (%) 2 2 5 40 33 12 By Liquidity 19 By Currency of Denomination 60 18 Liquid & sub-20% listed assets 1 Listed large blocs ( 20% and <50% share) Listed large blocs ( 50% share) Unlisted assets 1 Mainly cash and cash equivalents, and sub-20% listed assets 9 Singapore dollars US dollars Hong Kong dollars Indian rupees British pound sterling Others (as at 31 Mar 17) 10
P E R F O R M A N C E Robust Long Term Returns to Shareholder 15% compounded annualised S$ return to shareholder since inception Period (in years) TSR 1 in S$ (%) Since Inception (1974) 15 30 13 20 6 10 4 1 13 Rolling S$ TSR 1 (%) 43 17 13 16 15 15 10 6 6 9 7 10 5 1 14 13 9 9 6 2 19 9 6 6 7 (9) 13 6 4 (30) 08 09 10 11 12 13 14 15 16 17 One-year 10-year 20-year (as at 31 Mar 17) 1 Total Shareholder Return 11
P E R F O R M A N C E Active Investor with S$2b Net Divestment Investments S$16b Divestments S$18b 12
P U B L I C M A R K E R S Public Markers for Institutional Discipline 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 13
P U B L I C M A R K E R S Credit Profile Snapshot of Credit Quality 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) 16 18 19 19 19 21 3 3 5 15 16 17 15 16 17 15 16 17 Credit Ratings by S&P and Moody s Rated AAA/Aaa by S&P and Moody s respectively since inaugural ratings in 2004 1 Covers Temasek Holdings (Private) Limited and its wholly owned Investment Holding Companies 2 Cash and cash equivalents, and short term investments 14
P U B L I C M A R K E R S Sources and Uses of Funds Investments and Associated Costs Dividends to Shareholder Taxes Community Initiatives 15
P U B L I C M A R K E R S S$12.8b (US$9.2b) Debt Outstanding under MTN & ECP Programmes Temasek Bonds: US$15b Guaranteed Global Medium Term Note (MTN) Programme, rated AAA/Aaa 14 AAA/Aaa Temasek Bonds, totalling S$11.6b (US$8.3b) 1 Weighted average maturity of over 12 years Temasek ECP: US$5b Euro-commercial Paper (ECP) Programme, rated A-1+/P-1 S$1.2b (US$0.9b) 1 ECP outstanding Weighted average maturity of about one month ( 1 Exchange rates and all figures as at 31 Mar 17) 16