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Rotterdam, the Netherlands, 31 August 2007
Highlights for first half 2007:
Near-term outlook:
John Paul Broeders, Chairman of the Executive Board of Royal Vopak: ‘Vopak will make full use of its opportunities for growth as a specialised tank storage company in the current market and convert them into a good result. Demand for storage services continues to be high and this offers attractive opportunities for growth in several parts of the world. I am particularly proud of our people in China who commissioned the new terminal in Zhangjiagang in June. This allows us to offer our customers the excellent service that they expect from Vopak at yet another site within our global network. Vopak continues to search for new opportunities in the growing market for storage services and I am therefore delighted to announce that we will be expanding the Zhangjiagang terminal. Also capacity will be added in Brazil (Alemoa) and the Netherlands (Botlek). The growth strategy, which provides for an increase in the rendering of excellent storage services at locations where our customers have a demand, is taking shape, while the organisation is also working continuously on further improvements in safety, quality and efficiency.’ Market developments
Demand for storage services continues to be high in all sectors and geographical areas. This is driven partly by increases in the consumption of raw materials and semi manufactured goods, and partly because the distances between production locations and consumption locations are continually increasing. This is leading to more marine transport, with the temporary storage of goods in strategically located port facilities having an essential role in this transport chain. Vopak offers its customers a way to optimise logistics by offering storage services in import and export harbour, and also in hub locations where smaller quantities of goods are held for shipping as part of a larger cargo to the next destination. Demand for biofuels is also increasing and Vopak is responding to this by working with manufacturers and traders in these goods to develop specific services at various sites around the world. Growth
A new chemicals terminal with a storage capacity of 124,600 cbm is commissioned in Zhangjiagang (China) in June 2007. Vopak has full ownership of this Chinese terminal and expects further expansion in the next few years. New storage tanks are also added during this period at the terminals in Sydney (Australia), Lanshan (China), Ulsan (Korea) and Vlaardingen (Netherlands). Based on increased demand from our customers, Vopak also announced new construction plans during the period under review, including further expansion of the oil and chemicals terminals in Singapore. Initial expansion started at the terminal acquired last year in Ho Chi Minh City (Vietnam) specifically for chemical products. In addition, expansions will be made at the terminals at the Botlek (Netherlands) and Alemoa (Brazil), and the Teesside (United Kingdom) terminal is being expanded for biofuels and other products. In Brazil, Vopak has announced the acquisition of a terminal in Suape. The due diligence review is underway and the purchase is expected to be completed this year. Vopak expects to have made a final investment decision on the development of the LNG terminal on the Maasvlakte near Rotterdam within a few months. Please see enclosure 1 for a list of completed, ongoing and planned growth projects.
Notes to the condensed interim consolidated financial statements
Income from rendering of services In the first six months of 2007, Vopak’s income from rendering of services was EUR 423.7 million, an increase of 11% compared with the first half of 2006 (EUR 382.8 million). This was despite an adverse currency translation effect of EUR 7.7 million. All divisions contributed to the increase, which came from a combination of a further improvement in occupancy rate at the terminals, capacity expansion at existing terminals, new terminals coming on stream and an increase in turnover per cubic metre of storage capacity. Group operating profit
Group operating profit rose by 45% to EUR 149.3 million (1H 2006: EUR 103.3 million), including an adverse currency translation effect of EUR 2.3 million compared with the same period of 2006. After adjusting for exceptional items, group operating profit rose 31% to EUR 139.4 million (1H 2006: EUR 106.8 million) as a result of the strategic focus on growth, both in existing businesses and in the form of grass root terminal development. Several divisions improved their profitability by responding actively to the wishes of our customers and by cost control measures. The joint venture terminal in Estonia suffered from stagnation in the flow of products from Russia. Exceptional items recognised in the first half of 2007 were net gains on the sales of the participating interest in VOTG Tanktainer GmbH (EUR 6.6 million), the tank car cleaning stations in Sweden (EUR 1.4 million) and the terminal in Westwego in the US (EUR 2.8 million). An impairment loss of EUR 0.9 million was recognised in connection with the sale of the terminal in Hemiksem (Belgium) in 2008. In total, these disposals contributed EUR 9.9 million to the group operating profit (exceptional items 1H 2006: EUR 3.5 million loss). Net profit attributable to holders of ordinary shares
Net profit attributable to holders of ordinary shares rose by 73% to EUR 91.5 million (1H 2006: EUR 52.9 million). The net profit rose more than the operating profit as a result of a non-recurring gain from the release of a tax provision in Singapore (EUR 3.0 million) and relatively lower finance costs. The lower dollar exchange rate had a favourable effect on finance costs and a relatively larger portion of the interest was allocated to projects under construction. Property, plant and equipment
Total capital expenditure during the first half of 2007 was EUR 155.5 million, of which EUR 113.4 million was invested in the expansion of existing terminals. Please see the growth perspective in enclosure 1 for further details of the approved plans. Shareholders’ equity
Shareholders’ equity increased by EUR 48.6 million in the first half of the year, the main sources being the net profit for the first half year and the movements recognised directly in equity. In addition, a dividend of EUR 49.2 million was distributed in the first half year. A detailed breakdown is given in enclosure 3e. Interest-bearing loans
To finance its growth strategy, Vopak issued a new private loan of USD 375 million on the American Private Placement Market. USD 275 million of the loan was drawn on 19 June and the remainder will be drawn in December 2007. The private loan is made up of various tranches with terms of 8, 10, 12 and 15 years, all repayable at the end of their respective terms. The 8-year tranche (USD 75 million) carries a variable interest rate, while the other three tranches of USD 100 million each have a fixed interest rate of about 6% on average.
As a result of the investment program the total interest-bearing loans at 30 June 2007 were EUR 672.7 million (31 December 2006: EUR 514.1 million).
On 24 July, Vopak entered into an agreement with the Hamburg Port Authority Anstalt for relocating the activities of Vopak Dupeg Tank Terminal to Vopak Terminal Hamburg so that the authorities can use the site for other activities. Vopak will receive compensation of EUR 101 million for the cost of the relocation. According current expectations the result on the net profit will be negligible. Of the compensation EUR 27 million was paid on 15 August. The remainder will be paid in two tranches: EUR 59 million on 2 January 2008 and EUR 15 million on 2 January 2009. On 1 August, Vopak agreed a EUR 1 billion multicurrency revolving credit facility with a syndicate of twelve international banks. This new credit facility has an initial term of 5 years with two renewal options of 1 year each. There is also an option to increase the facility to EUR 1.2 billion. This new facility replaces a EUR 500 million credit facility concluded in July 2005 and never drawn on. Forward-looking statements
This document contains statements of a forward-looking nature, based on currently available plans and forecasts. Given the dynamics of the markets and the environments of the 30 countries in which Vopak renders logistics services, the company cannot guarantee the accuracy or completeness of such statements. Unforeseen circumstances include, but are not limited to, exceptional income and expense items, unexpected economic, political and foreign exchange developments, and possible changes to IFRS reporting rules. 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. Key figures*
* unaudited
** including exceptional items
Financial calendar
Profile
Royal Vopak is the world's largest independent tank terminal operator specialising in the storage and handling of liquid and gaseous chemical and oil products. On request, Vopak can provide complementary logistics services for customers at its terminals. Vopak operates 75 terminals with a storage capacity of more than 21 million cbm in 30 countries. The terminals are strategically located for users and the major shipping routes. The majority of its customers are companies operating in the chemical and oil industries, for which Vopak stores a large variety of products destined for a wide range of industries. For more information Royal Vopak Telephone : +31 (0)10 4002777 The analysts’ presentation will take the form of an on-demand audio broadcast on Vopak’s website (http://www.vopak.com/) from 1.00 pm onwards on 31 August 2007. Press photos of Vopak's Executive Board, new terminals and activities can be downloaded from http://www.vopak.nl/press/142_460.php. Enclosures:
1. Growth perspective 2. Notes on the results by division 3. Condensed interim consolidated financial statements a. Consolidated income statement b. Breakdown of income from rendering of services and group operating profit c. Condensed consolidated balance sheet d. Condensed consolidated cash flow statement e. Consolidated statement of recognised income and expense 4. Vopak consolidated including proportionate consolidation of joint ventures in tank storage activities Enclosure 1: Growth perspective*
* This list provides only an indication of the expansion efforts within the network and is not exhaustive. Enclosure 2: Notes on the results by division
Chemicals Europe Middle East & Africa (CEMEA) - ‘Ongoing active response to new market developments’
Income from rendering of services rose by 10% to EUR 161.2 million as a result of improved occupancy rate, changes in products and rate changes. It was possible to respond to strong demand for storage in almost every market. Additional demand for storage of oleochemicals and bio-ethanol and good cost management contributed to the increase in operating profit to EUR 43.5 million. The Hemiksem terminal in Antwerp (Belgium) is being sold to further improve the network of terminals in Europe and will be transferred in 2008; this created an impairment loss of EUR 0.9 million. Oil Europe, Middle East & Africa (OEMEA) - ‘Effective response to increasing market demand’
A combination of another increase in occupancy rate and rate changes led to a 22% increase in income from rendering of services to EUR 95.9 million. The joint venture terminal in Estonia suffered from stagnating product flows. These factors combined with rising costs and an exceptional item relating to the sale of the tank car cleaning stations in Sweden (gain of EUR 1.4 million) produced a further rise in operating profit, of 37%, to EUR 43.3 million. Asia - ‘Continuing growth with good results’
Despite an adverse currency translation effect of EUR 1.1 million, income from rendering of services rose by 13% to EUR 67.1 million, thanks mainly to capacity expansion at new and existing terminals, including those in Banyan (Singapore), Darwin and Sydney (Australia). The new terminal in Zhangjiagang (China) came on stream in June 2007. This resulted in a 6% rise in operating profit to EUR 39.0 million, including higher costs in connection with the new terminals in Banyan (Singapore) and Zhangjiagang (China) and an adverse currency translation effect of EUR 0.8 million. Work on a possible sale of the participating interest in the Xiamen (China) terminal has ceased. North America - ‘Focus on improving results is bearing fruit’
Income from rendering of services rose to EUR 66.0 million despite an adverse currency translation effect of EUR 4.8 million. This was due to a combination of an increase as a result of greater storage of biofuel-related products and rate changes, which more than offset the fall due to the closure of the rail car cleaning plant and third-party wastewater treatment at the Deer Park terminal in Houston (US). Operating profit rose by 51% to EUR 18.3 million, including exceptional income of EUR 2.8 million on the sale of the terminal in Westwego (US) and an adverse currency translation effect of EUR 0.9 million. Latin America - ‘Continuing steady performance’
Income from rendering of services rose slightly to EUR 31.3 million despite lower occupancy rate and an adverse currency translation effect of EUR 1.4 million. Operating profit rose slightly to EUR 10.5 million, including an adverse currency translation effect of EUR 0.5 million. The completion of the due diligence review connected with the purchase of a terminal in Suape (Brazil) of 83,000 cbm is under way. It is expected that this acquisition will be completed this year. Enclosure 3: Condensed interim consolidated financial statements General
Koninklijke Vopak N.V. (‘Vopak’) is a listed company registered in the Netherlands. The condensed interim consolidated financial statements for the first half of 2007 include the figures of Vopak and its subsidiaries (jointly referred to as the ‘Group’) and the Group’s interests in joint ventures and associates, derived using the equity method. These condensed interim consolidated financial statements have been prepared in accordance with IAS 34 Interim financial reporting. They do not contain all the information required for full financial statements and should be read in conjunction with the audited financial statements included in the 2006 Annual Report. The accounting policies and measurement principles used to prepare these condensed interim consolidated financial statements are the same as those used for the balance sheet at 31 December 2006 and the 2006 income statement. The Group’s objectives and policy on financial risks and risk management are also unchanged compared with those set out in the consolidated financial statements for the 2006 financial year. These condensed interim consolidated financial statements were approved by the Executive Board and the Supervisory Board on 30 August. The consolidated half year results have not been audited. Enclosure 3a: Consolidated income statement*
* unaudited
1) including exceptional items of EUR 10.8 million
2) including impairment loss of EUR 0.9 million
3) including exceptional items of EUR 3.5 million negative
Enclosure 3b: Breakdown of income from rendering of services and group operating profit*
* unaudited
Enclosure 3c: Condensed consolidated balance sheet*
* unaudited
Enclosure 3d: Condensed consolidated cash flow statement*
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Vopak: First half 2007 group operating profit excluding exceptional items up 31% to EUR 139.4 million