Storing vital products with care Full Year Roadshow Presentation Royal Vopak
Forward-looking statement This presentation contains forward-looking statements, based on currently available plans and forecasts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future, and Vopak cannot guarantee the accuracy and completeness of forward-looking statements. These risks and uncertainties include, but are not limited to, factors affecting the realization of ambitions and financial expectations, developments regarding the potential capital raising, exceptional income and expense items, operational developments and trading conditions, economic, political and foreign exchange developments and changes to IFRS reporting rules. Vopak s outlook does not represent a forecast or any expectation of future results or financial performance. Statements of a forward-looking nature issued by the company must always be assessed in the context of the events, risks and uncertainties of the markets and environments in which Vopak operates. These factors could lead to actual results being materially different from those expected, and Vopak does not undertake to publicly update or revise any of these forward-looking statements. FY Roadshow Presentation 2
Key message Capital Markets Day Confidence in short-term performance delivery and managing long-term value Global well-diversified portfolio Strong competitive position Clear and robust financial framework Strategy execution -2019 is well on track FY Roadshow Presentation 3
External developments -2019 Structural business drivers influenced by two global trends Storage demand drivers Structural demand drivers for storage of vital products, driven by growth in population and global energy consumption Increasing global imbalances resulting from concentration of supply and demand Energy transition Facilitate the introduction of lighter, cleaner fuels Pursue potential infrastructure solutions for a low-carbon energy future Competition Competitive landscape changed as a result of new storage capacity worldwide Digital transformation Real-time data and transparent processes are required by customers Vopak strategic capabilities of more importance Connectivity with external parties FY Roadshow Presentation 4
Business environment update Diversified portfolio, well positioned for future opportunities Chemicals Focus on operational delivery Strong underlying demand for chemicals Oil products Prepare for the uptick Oil hubs: solid long-term demand drivers despite short-term weakness Positive investment climate petrochemical industry Fuel oil: unsettled market Import-distribution markets: Solid growth in markets with structural deficits Gases Steady cash flows Strong growth in LNG imports in Asia (including China) Strong growing demand in LPG for residential and petrochemical markets Vegoils & biofuels Reap the benefit of current market Strong biofuels market despite volatility due to changes in government policies Incremental vegoil demand fueled by price competitiveness FY Roadshow Presentation 5
Vopak at a glance FY Roadshow Presentation 6
Robust Vopak strategy Leadership in 5 pillars with clear strategy execution Storing vital products with care Service leadership Operational leadership Leading asset in leading locations Technology leadership People leadership Founder s mentality Vopak Values FY Roadshow Presentation 7
Strategic terminal types Industrial terminals LNG, LPG and chemical gases Chemical terminals Oil terminals Vopak has more than 40 years of experience with industrial terminals. These often large terminals exclusively support chemical clusters in the Americas, Europe, Middle East and Asia. We also operate terminals that have significant long-term pipeline connections and serve global and regional plants. We provide a centralized fit-for-purpose solution and deliver value to customers and local authorities through economies of scale. Demand for gas is increasing, driven by petrochemical and plastics production, for gas-fired power plants and for transportation purposes. This led Vopak to increase its focus on facilitating growth in global gas markets. By introducing infrastructure and logistic solutions for cleaner and efficient fuels like LPG and LNG, Vopak is contributing to the energy transition. We own and operate LPG storage terminals for example in the Netherlands, China and Singapore. Vopak operates LNG facilities in Mexico, the Netherlands and Pakistan. The strong growth of global chemicals demand is leading to an increased need for chemical storage capacity. Vopak has a strong presence in key chemical hub locations, including Antwerp, Rotterdam, Singapore and Houston and operates a global chemical distribution network. Besides our growth opportunities in chemicals, we are continuously searching for opportunities to improve our competitive position by further optimization of our infrastructure to service customers better. Oil import, distribution and hub terminals remain an important part of our business. Oil hub terminals are strategically located along major shipping routes, where many suppliers, customers and traders are active and where efficient supply chain solutions are of utmost importance. Our oil hubs are located in Rotterdam, Fujairah and the Singapore Strait. GDP and population growth drive the consumption of energy products. Vopak plays an important role in the import and distribution of energy products in major oil markets with structural deficits. FY Roadshow Presentation 8
Portfolio transformation Shift towards gases and industrial terminals and focus on the East of Suez Proportionate revenue per product 2014-2016 Period Reshaping the portfolio Divestment of 19 terminals Focus on 4 strategic terminal types ~10% ~15% 35-40% 40-45% ~10% 20-25% 25-30% 40-45% 10-15% 25-30% 25-30% 35-40% LNG, LPG & Chemical Gases Industrial terminals Chemicals Oil 2014 2019 2019* Proportionate revenue per region -2019 Period Portfolio management & delivering growth Major announcements of new projects adding toward 2019 Strategic review and testing of market value of 4 assets 15-20% 5-10% 20-25% 50-55% 2014 ~20% 5-10% ~25% 45-50% 20-25% 5-10% 25-30% 40-45% 2019 2019* Americas China Asia & Middle East Europe & Africa * Excluding terminals under strategic review Note: keeping all market conditionals equal and only taking announced projects into account FY Roadshow Presentation 9
Digital transformation Improve safety performance, better service for our customers and more efficient use of our assets resulting in lower costs Cyber security Centralized cyber security program to protect our systems In progress Significant reduction in response time to cyber attacks Digital Modernization In progress Replacing and modernizing our company-wide IT and OT systems Developed own software for core processes and standardize non-core processes Digital Innovation Early phase Connecting our assets to generate real-time data with smart sensoring Digitizing our maintenance Platforms Create digital platforms around smart terminals enabling efficient and reliable information sharing Early phase Engage in new ventures related to technology & innovation FY Roadshow Presentation 10
Value creation - sustainability Safety and sustainability developments Safety Leading safety performance in storage industry Personnel Safety (TIR) Total injuries per 200,000 hours worked Sustainability UN Sustainability Development Goals (SDGs) 1.5 1.0 0.5 0.30 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Process Safety (PSER) Tier 1 and Tier 2 incidents per 200,000 hours worked Task-force on Climate-related Financial Disclosures Investing in emission-reducing methods 0.20 0.27 0.23 0.26 0.12 2014 2015 2016 FY Roadshow Presentation 11
Strategy execution well on track Strategic direction is set towards growth and productivity improvements Capture growth 14 expansion projects announced in last years New projects in Canada, Malaysia, Indonesia, Singapore, South Africa, Brazil, Pakistan and the Netherlands Spend EUR 750 million on sustaining and service improvement capex Sustaining and service improvement capex budget include investments in our fuel oil network Invest EUR 100 million in new technology, innovation programs and replacing IT systems Global roll-out of Terminal Management Software started Cybersecurity controls implemented Drive further productivity and reduce the cost base with at least EUR 25 million by 2019 Efficiency program delivered at and subsequently increased to EUR 40 million by 2019 FY Roadshow Presentation 12
Summary financial performance FY strategic direction Capture growth Spend EUR 750m on sustaining and service capex Invest EUR 100m in technology & innovation Drive further productivity EBITDA of EUR 734 million, adjusted for currency translation effects, EBITDA was EUR 10 million lower than prior year Resilient CFFO with investment momentum (CFFI) In line with our growth strategy, our growth investments increased to 1 billion for the period to 2019 Vopak completed the acquisition of the LNG import facility Engro Elengy Terminal Pakistan Cash dividend increased to EUR 1.10 FY Roadshow Presentation 13
vs EBITDA Adjusted for currency translation effects EBITDA was EUR 10 million lower than prior year 763.2 19.2 744.0 23.2 15.4 2.5 8.0 30.8 12.4 734.3 FX-effect Adjusted Europe & Asia & LNG Americas China & Africa Middle East North Asia Global functions, corporate activities and others Figures in EUR million, excluding exceptional items including net result from joint ventures and associates FY Roadshow Presentation 14
vs EBITDA Net EUR 7 million one-off cost items included in 182.7 0.4 183.1 7.0 5.3 6.5 5.5 180.7 5.2 3.5 FX-effect Adjusted Europe & Africa Americas LNG China & North Asia Asia & Middle East Global functions, corporate activities and others Figures in EUR million, excluding exceptional items including net result from joint ventures and associates FY Roadshow Presentation 15
Cash flow overview Investment momentum driven by growth project phasing towards 2019 687 47 640 266 374 714 45 669 239 430 127 45 348 341 17 50 CFFO (gross) Tax & other operating items CFFO (net) Sustaining, service & IT investments FCF before growth Growth investments Other CFFI Free Cash Flow before financing CFFO (gross) Tax & other operating items CFFO (net) Sustaining, service & IT investments FCF before growth Growth investments Other CFFI Free Cash Flow before financing Figures in EUR million FY Roadshow Presentation 16
Divisional segmentation Europe & Africa and Asia & Middle East impacted by oil hub weakness; Americas and China & North Asia benefit from strong chemical and gas markets Europe & Africa 90 86 83 86 85 Asia & Middle East 88 89 86 85 85 Americas 89 90 90 89 89 85.2 80.8 74.5 77.2 70.3 66.3 64.0 66.5 59.6 65.9 30.3 32.2 34.9 33.4 28.5 China & North Asia LNG 70 77 79 73 73 95 95 95 95 95 Occupancy rate (in percent) for subsidiaries only, with the exception of LNG 4.8 8.9 11.9 13.6 19.0 6.7 8.3 9.6 6.8 10.2 EBITDA (in EUR million) excluding exceptional items and including net result from JVs & associates and currency effects FY Roadshow Presentation 17
NON-IFRS PROPORTIONATE IFRS BASED Non-IFRS proportionate information Occupancy rate In percent EBITDA Maintenance, Service & IT Capex 93 90 86 822 763 734 258 239 266 Non-IFRS proportionate 2016 2016 2016 information provides transparency in Vopak s Occupancy rate* In percent 94 90 86 EBITDA 917 853 822 Maintenance, Service & IT Capex underlying performance and free cash flow generating capacity 276 245 280 2016 2016 2016 Excluding exceptional items * Proportionate occupancy rate excluding fully impaired joint venture terminals in Estonia and Hainan FY Roadshow Presentation 18
Overview financial framework Performance delivery and managing value Clear financial framework to support strategy Balanced portfolio management with focus on strong operational cash flow generation with a disciplined capital investment approach Aimed towards a strong investment case Return on capital employed (ROCE) between 10% and 15% Long term net debt to EBITDA ratio between 2.5 and 3.0 Annual stable to rising cash dividend in balance with a management view on a payout ratio range of 25-75% of net profit FY Roadshow Presentation 19
Financial framework Focus on cash flow generation to create shareholder value Cash Flow From Operations (CFFO) Consolidated terminals: EBITDA -/- tax + asset disposals Joint ventures: dividends received + shareholder loans repaid Cash Flow From Investments (CFFI) Consolidated terminals: sustaining + service + IT + growth capex Joint ventures: equity injection + shareholder loans granted Free Cash Flow (FCF) = CFFO-CFFI Cash flow from operations minus the cash flow from investments 1 2 3 4 Debt servicing Growth opportunities Shareholder dividend Capital optimization FY Roadshow Presentation 20
Well-balanced global portfolio Strong resilient cash flow generation Industrial terminals LNG, LPG & chemical gases Chemical terminals Oil terminals 5-20 years 10-20 years 0-5 years 0-5 years Typical contract duration per product / terminal category 20-25% ~10% 25-30% ~40% Share of proportionate revenues * Europe & Africa Asia & Middle East China & North Asia Americas LNG EUR 303 million EUR 256 million EUR 53 million EUR 129 million EUR 35 million EBITDA** *Joint ventures, associates and subsidiaries with non-controlling interests are consolidated based on the economic ownership interests of the Group in these entities. ** Including net result from joint ventures and associates and excluding exceptional items FY Roadshow Presentation 21
Significant capacity to be delivered in 2019 Shift towards industrial terminals and LNG, LPG and chemical gases terminals Vlissingen RIPET 96,000 cbm Panama 360,000 cbm LNG, LPG and chemical gases Industrial Chemicals Oil * Fully or partly commissioned in Deer Park 138,000 cbm * Alemoa Mexico 110,000 cbm 106,000 cbm German LNG 9,200 cbm Botlek 63,000 cbm Richards Bay 15,000 cbm Open season completed EETPL 151,000 cbm * Sebarok 67,000 cbm Merak Lesedi 50,000 cbm 100,000 cbm Durban 130,000 cbm Vietnam 20,000 cbm PT2SB 1,496,000 cbm * PITSB 430,000 cbm Jakarta 100,000 cbm FY Roadshow Presentation 22
Growth projects under development 1 Terminal capacity available for customers. 2 In January 2019, Vopak acquired an additional 35% equity share in Vopak Terminal Ningbo (China) bringing the total share in equity to 85% and effectively obtaining control. The storage capacity of this terminal was already part of the capacity of the Vopak network. 3 On 5 November, Vopak and its partner Reatile announced that they will invest in a new LPG import and distribution terminal in Richards Bay, subject to final conditions. FY Roadshow Presentation 23
Global fuel oil network EUR 40 million investments to be fully ready to support new market requirements in 2020 Hamburg Fuel Oil capacity ~35% 10% 45% 15% 60% ~65% 45% 30% 2020 2020* VLSFO Flexible (HSFO/VLSFO/MGO) HSFO * Fuel oil capacity excluding terminals under strategic review Rotterdam Conversion Los Angeles Panama Algeciras Strategic review Strategic review Fuel oil hub terminal Fuel oil bunker terminal Terminal under strategic review Estonia Strategic review Fujairah Conversion Singapore MGO Expansion FY Roadshow Presentation 24
Cash flow from investments Balanced approach for growth, sustaining, service improvement and IT investments Investments 2008-2019 1,899 2,012 1,729 New projects* Investments -2019 Investments Growth investments with clear return criteria based on future cash flow and risk profile 2008-2010 2011-2013 2014-2016 ~1bn 850-2019 Growth investments** Other investments*** ~340 ~125 ~240 ~265 2019 Sustaining and service improvement investments influenced by (environmental) legislation and portfolio developments IT investments for rolling out digital systems and create value by digital opportunities * For illustration purposes only, new announcements might increase future growth investments ** Growth capex at subsidiaries and equity injections for JV s and associates for among others all project announced until 13 February 2019, subject to currency changes *** Forecasted sustaining, service improvement and IT capex including investments in fuel oil network FY Roadshow Presentation 25
Maintain a return on capital Expected ROCE between 10% and 15% Capital employed In EUR billion Return on capital employed In percent 4.1 4.0 4.0 4.0 4.1 12.0% 12.3% 11.5% 11.8% 10.8% 10-15% 2019 2020 2021 2019 2020 2021 Disciplined capital for sustaining, service improvement and IT capex Value accretive growth opportunities FY Roadshow Presentation 26
Priorities for cash Balanced approach between allocating capital to growth opportunities, an efficient and robust capital structure and distributions to shareholders 1 Debt servicing EUR 1.6 billion, remaining maturity ~7 years, average interest 4.1% 2 Growth opportunities Value accretive growth 3 Shareholder dividend Annual stable to rising cash dividend in balance with a management view on a payout ratio range of 25-75% of the net profit 4 Capital optimization Efficient and robust capital structure FY Roadshow Presentation 27
Capital structure Financial flexibility to support growth Ordinary shares Private placement program Syndicated Revolving Credit Facility Equity(-like) Listed on Euronext Market capitalization: EUR ~5.1 billion (31 December ) USD 1.55 billion JPY 20 billion EUR 1.0 billion 15 participating banks duration until June 2023 Subordinated loans: USD 75 million EUR 25 million FY Roadshow Presentation 28
Financial flexibility The solid operational cash flow generation, strong balance sheet and sufficient financial flexibility, provides an excellent platform to continue our capital disciplined growth journey Equity and net liabilities In percent Senior net debt* : EBITDA ratio Equity Net liabilities Maximum ratio under other private placements programs and syndicated revolving credit facility 36% 40% 49% 53% 52% 3.75 64% 60% 51% 47% 48% 2.83 2.73 2.04 2.02 2.49 2014 2015 2016 2014 2015 2016 *For certain joint ventures, limited guarantees are provided, affecting the Senior net debt FY Roadshow Presentation 29
Debt repayment schedule Debt repayment schedule 1,300 1,200 600 500 400 RCF flexibility RCF drawn Other Subordinated loans Asian PP US PP 300 200 100 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2040 As per 25 February 2019 FY Roadshow Presentation 30
Increase in dividend to EUR 1.10 per share Continued rising cash dividends Dividend and EPS* In EUR Dividend policy: 2.31 2.55 2.56 2.25 2.27 Annual stable to rising cash dividend in balance with a management view on a payout ratio of 0.90 1.00 1.05 1.05 1.10 25-75% of net profit and subject to market circumstances 2014 2015 2016 39% 39% 41% 47% 48% payout ratio EPS *Excluding exceptional items; attributable to holders of ordinary shares FY Roadshow Presentation 31
IFRS 16 Leases No changes in economics, only changes in accounting (reporting) IFRS 16 Leases No changes in economics and cash flows only in accounting (reporting) IFRS implementation is substantially completed and Vopak is ready to apply IFRS 16 starting per 1 January 2019 Vopak does normally not act as a lessor Vopak, as lessee, has a sizeable portfolio of long-term land leases and leases of other non-current assets Material land leases are in the process of being renewed and will later be included in the lease liability Net debt to EBITDA ratio calculation is based on Frozen GAAP and are not impacted by IFRS 16 Indicative impact Vopak 1 Key figures EBITDA 40 50 Net profit 0 (10) IFRS 16 Lease liabilities 678 Return on Capital Employed (ROCE) Net debt to EBITDA ratio Cash Flows reported on adjusted basis Frozen GAAP Cash flows from operating activities 45 55 Cash flows from financing activities (45) (55) Total cash flows No impact 1. Actual financial impact will change due to sensitivities and assumptions applied; Impact presented is based on modified retrospective approach where lease assets equal lease liabilities. Vopak is finalizing its assessment whether it can measure the assets of its largest contracts as if the standard had been applied since historical commencement date. This may lower the amount of the lease assets and subsequently the depreciation expenses. Comparative figures are not required to be restated. Vopak intends to voluntarily disclose like-for-like comparative figures FY Roadshow Presentation 32
Storing vital products with care Full Year Roadshow Presentation Appendix
Europe & Africa developments Storage capacity In million cbm Occupancy rate* In percent Revenues* 2.3 Total 13.7 million cbm 90 86 83 86 85 165.8 158.9 153.2 155.8 158.2 11.4 Subsidiaries Joint ventures & associates Operatorship 19 Terminals (6 countries) EBITDA** EBIT** 85.1 80.8 74.5 77.2 70.3 45.5 42.8 36.4 38.9 31.3 * Subsidiaries only ** EBIT(DA) including net result from joint ventures and associates and excluding exceptional items FY Roadshow Presentation 34
Asia & Middle East developments Storage capacity In million cbm Occupancy rate* In percent Revenues* 3.3 4.2 Total 14.1 million cbm 88 89 86 85 85 81.8 80.2 76.4 77.2 79.1 6.6 Subsidiaries Joint ventures & associates Operatorship 19 Terminals (9 countries) EBITDA** EBIT** 66.3 64.0 66.5 59.6 65.9 53.1 51.1 53.6 46.9 52.4 * Subsidiaries only ** EBIT(DA) including net result from joint ventures and associates and excluding exceptional items FY Roadshow Presentation 35
China & North Asia developments Storage capacity In million cbm Occupancy rate* In percent Revenues* 0.7 Total 4.2 million cbm 70 77 79 73 73 7.2 8.4 8.6 7.9 8.3 3.5 Subsidiaries Joint ventures & associates Operatorship 9 Terminals (3 countries) EBITDA** EBIT** 4.8 8.9 11.9 13.6 19.0 2.6 6.8 9.6 11.3 16.6 * Subsidiaries only ** EBIT(DA) including net result from joint ventures and associates and excluding exceptional items FY Roadshow Presentation 36
Americas developments Storage capacity In million cbm Occupancy rate* In percent Revenues* 0.1 0.6 Total 4.0 million cbm 89 90 90 89 89 69.3 68.4 71.5 70.3 71.1 3.3 Subsidiaries Joint ventures & associates Operatorship 18 Terminals (7 countries) EBITDA** EBIT** 30.3 32.2 34.9 33.4 28.5 19.0 21.0 24.2 23.5 16.9 * Subsidiaries only ** EBIT(DA) including net result from joint ventures and associates and excluding exceptional items FY Roadshow Presentation 37
JVs & associates developments Net result JVs and associates* Europe & Africa* Asia & Middle East* 23.8 25.4 25.0 26.9 36.6-0.1 0.5 0.9 0.6 0.7 12.4 9.6 7.7 6.6 10.7 China & North Asia* Americas* LNG* 3.1 5.6 6.9 8.7 14.5 0.3 0.3 0.3 0.2 0.2 8.1 9.4 9.2 10.6 10.5 * Excluding exceptional items FY Roadshow Presentation 38
Key developments Occupancy rate* In percent 88 92 93 90 86 EBITDA development** 763 812 822 763 734 2014 2015 2016 2014 2015 2016 Cash flow from operating activities (gross) Dividend In EUR per ordinary share 787 867 783 714 687 0.90 1.00 1.05 1.05 1.10 2014 2015 2016 2014 2015 2016 *Subsidiaries only / **Excluding exceptional items; including net result of joint ventures FY Roadshow Presentation 39
Occupancy rate developments Occupancy rate of 86% (FY ) explained by lower rented capacity at the oil hub terminals caused by a less favorable oil market structure. Other product-market segments showed stable demand for storage services Occupancy rate* In percent FY 90% FY 86% 90-95% 85-90% 91 90 89 89 87 85 86 85 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *Occupancy rate figures include subsidiaries only FY Roadshow Presentation 40
EBITDA to Net profit overview Increase in Earning per Share EBITDA 734.3 763.2 Depreciation and amortization 271.0 272.8 EBIT 463.3 490.4 Net finance costs 82.4 98.5 Income tax 55.4 64.7 Non-controlling interests Net profit to holders of ordinary shares 36.0 289.5 39.8 287.4 EPS 2.27 EPS 2.25 Excluding exceptional items including net result from joint ventures and associates FY Roadshow Presentation 41