2004 results

• Net turnover EUR 642.1 million (2003: EUR 749.6 million)
• Operating profit EUR 152.9 million on core activities excluding exceptional items (2003: EUR 148.3 million)
• Net profit EUR 88.6 million (2003: EUR 104.5 million)
• Net profit EUR 81.6 million excluding exceptional items (2003: EUR 81.8 million)

Effect of currency translation differences and disposals 

• Adjusted for currency translation and disposal effects, net turnover increased EUR 31.0 million (5%) compared with 2003
• Adjusted for currency translation effects, operating profit on core activities excluding exceptional items rose EUR 13.3 million (10%) compared with 2003

Outlook

• Storage market for oil and chemical products is developing favourably
• Outlook for 2005: increase in operating profit on core activities excluding exceptional items

Other

• Net interest-bearing debt at year-end 2004 reduced by 18% to EUR 500.7 million
• Proposed dividend: optional dividend of EUR 0.50 per ordinary share, in cash or in shares

Result and turnover
In 2004, Royal Vopak realised a net turnover of EUR 642.1 million. Net turnover for 2003 amounted to EUR 749.6 million, including EUR 117.4 million on operating activities that have since been sold. After adjustments for currency translation differences (EUR 21.1 million) and disposals, net turnover increased by EUR 31.0 million compared with 2003.

In 2004, the operating profit totalled EUR 146.9 million (2003: EUR 192.2 million). The difference compared with the previous year can be partly explained by the non-recurring income recognised in 2003 from the release of a provision relating to a guarantee issued to Univar (EUR 33.2 million). In addition, the operating profit on non-core activities fell by more than EUR 20 million as a result of divestments. Accordingly, the operating profit on core activities excluding exceptional items increased from EUR 148.3 million in 2003 to EUR 152.9 million in 2004.

This increase was partly thanks to favourable market developments in the fourth quarter of 2004. The results of the Oil EMEA, Asia and Latin America divisions improved in 2004, which more than offset the combined drop in operating profit reported by the North America and Chemical EMEA divisions. After adjustments for currency translation differences (EUR 8.7 million), operating profit on core activities excluding exceptional items rose by EUR 13.3 million (10%).

A non-recurring tax credit of EUR 14.1 million was recognised in 2004, the result of the settlement of tax positions of previous years. As a result, net profit reached EUR 88.6 million (2003: EUR 104.5 million). Excluding exceptional items, net profit amounted to EUR 81.6 million (2003: EUR 81.8 million).

Oil market developments
The oil market in 2004 was characterised by high and rising prices. In addition, the geographical imbalance between supply and demand strongly affected the flow of oil products internationally. This imbalance became more pronounced in 2004. The medium-term outlook now is that it will increase even more. 
The expanding energy needs of Asia, especially China, is accelerating the flow of oil products from the Middle East and even Europe to this region, with Singapore functioning as the hub for the regional distribution of products. In Europe, the surplus of Russian fuel oil is, among other things, seeping into the expanding bunker market. Moreover, European gasoline is being increasingly shipped to North America owing to a lack of refining capacity there. Vopak benefited in 2004 from these favourable market developments thanks to strategically situated terminals at key hub locations mainly in Rotterdam and Singapore.
 
Chemical market developments
The high price of oil in 2004 led to high prices for raw materials on the chemical market. As a result, the chemical industries, particularly in the more mature markets such as North America and Europe, came under pressure during the first half of the year. The economic recovery in the second half of 2004 produced an increase in the demand for chemicals, which caused production to increase and the margins in the chemical industry to improve. Vopak felt the effects of these favourable developments only at the end of the 4th quarter. Consequently, the disappointing trend during 2004 in the results of the chemical hub terminals in Rotterdam and North America was halted in the last quarter of the year.
The strong economic growth in Asia and, to a lesser extent, Latin America is fuelling the demand for chemicals, so that imports by these regions are increasing. Thanks to its extensive network, Vopak can reap the benefits of this situation in both regions. Moreover, the production capacity in Asia is expanding rapidly, which offers good opportunities to develop new terminals, often industrial ones. 
 
Growth
In 2004, Vopak made additions to tangible fixed assets amounting to EUR 125.7 million (2003: EUR 106.5 million).
The storage capacity of the global terminal network grew by over 200,000 cbm in 2004. Expansion and acquisitions were made in Sweden (Malmö), Brazil (Santos), Estonia (Tallinn), China (Tianjin) and Belgium (Antwerp). The first section of the Shanghai industrial terminal also came on stream, with the initial phase completed early in 2006. Vopak has also commenced the construction of an oil terminal in Darwin (Australia), which is expected to come into operation during the second half of 2005. In Singapore, Vopak is constructing a fourth terminal, a combined oil and chemical terminal on Banyan, which is expected to begin operating in the second quarter of 2006.

With its solid financial base and clear strategy, Vopak can focus totally on sustainable growth. Alongside SHE, the key success factors are entrepreneurship, quality and service. New projects, mainly in China, the Middle East and Australia, are emerging and offer sound prospects for growth by Vopak’s core activity of tank storage.

Safety, Health and Environment (SHE) 
Progress was also made in the area of safety, health and the environment (SHE), including the optimalisation important rules of conduct for Vopak terminals, known as ‘Vopak Fundamentals on Safety’. Absenteeism due to accidents (Lost Time Injury Rate, LTIR) per million hours worked dropped for the fifth year in a row, falling to 2.8 (2003: 4).
 
 
Outlook
The outlook for Vopak regarding the oil market is favourable and should remain so. In the light of this, capacity is being expanded further. Most of the expansion in capacity will become available in 2006, apart from Darwin (scheduled for the second half of 2005). For this reason, and the already high occupancy rate in 2004 of the oil terminals in Singapore, Rotterdam and Tallinn in particular, the results of the oil activities are expected to increase slightly in 2005.
For the time being, the outlook for the chemical market remains good. Although Vopak’s results are not especially sensitive to economic cycles, they do feel the impact of large fluctuations in the economies of Europe, the United States and China. Vopak is also exposed to movements in the US dollar against the euro, as its results are translated from the dollar and from currencies pegged to it.
As a reflection of the favourable market conditions, Vopak began 2005 on an encouraging note. Against this background, and barring unforeseen circumstances, Vopak expects its operating profit on core activities excluding exceptional items to increase in 2005 compared with the previous year. 
 
Based on existing projects, investments in tangible fixed assets during 2005 will amount to some EUR 200 million.
 
Net debt
The cash flow from operating activities and the income from disposals together exceeded EUR 300 million, which pushed net interest-bearing debt further down to EUR 500.7 million (2003: EUR 608.5 million). The ratio of net debt to EBITDA came to 2.17 at year-end 2004, representing a further improvement (2003: 2.42).
 
Dividend
It will be proposed to the General Meeting of Shareholders on 28 April 2005 that an optional dividend of EUR 0.50 per ordinary share be distributed in cash or in shares. This is equivalent to 36% of the net earnings per ordinary share.
 
Key figures

Owing to the disposal programme begun in 2003 as part of the tank terminal plus strategy, the turnover, operating profit and net profit for 2003 and 2004 cannot be directly compared. For a breakdown of the group operating profit, please refer to enclosure 3.

Number of shares outstanding

Net debt

Financial calendar

• 28 April 2005 Annual General Meeting of Shareholders at the offices of the company 
• 28 April 2005 publication of 2005 first quarter results in the form of a trading update 
• 25 May 2005 dividend payable
• 26 August 2005 publication of the results for the first half of 2005 
• 28 October 2005 publication of 2005 third quarter results in the form of a trading update 

Profile
Royal Vopak is a global, independent tank storage provider specialising in the storage and transhipment of liquid and gaseous chemical products and oil products. Upon request, Vopak can provide logistics services for customers of the terminal.
Vopak operates 72 terminals with a combined storage capacity of over 20 million cbm in 29 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 whom Vopak stores a large variety of products destined for a wide range of industries. 
 
For more information
Koninklijke Vopak N.V. (Royal Vopak)
Corporate Communication & Investor Relations
Dick Richelle
Telephone : +31 (0)10 400 2777
 
E-mail  : corporate.communication@vopak.com
Website : www.vopak.com
 
 
The analyst presentation can be viewed on the company’s website (www.vopak.com) as an on-demand audio broadcast from 2 p.m. on 4 March 2005. 
 
 
Enclosures:
 
1. Review of the results by market region
2. Consolidated profit and loss account
3. Breakdown group operating profit
4. Consolidated balance sheet at 31 December before proposed profit appropriation
5. Consolidated cash flow statement
6. Breakdown of participating interests
7. Application of International Financial Reporting Standards (IFRS):
- Condensed (provisional) consolidated profit and loss account  
- Condensed (provisional) consolidated balance sheet at 31 December before proposed profit appropriation  
- Condensed (provisional) cash flow statement for 2004  
- Effect of the application of IAS 32 and IAS 39 (financial instruments) on the opening balance sheet at 1 January 2005
 
 

Enclosure 1:  Review of the results by market region
Chemicals Europe, Middle East & Africa (Chemicals EMEA)

The chemical terminals in Rotterdam had a particularly tough time in the first half of 2004 owing to the unfavourable market conditions for the spot storage of commodity chemicals. The improvement in market conditions was only felt by the fourth quarter, in the form of a clear increase in turnover and result. On balance, the 2004 result was down on the previous year.
Turnover at the terminals in Belgium, the UK, Finland and South Africa grew during the year under review, thanks to higher throughput and a higher occupancy rate. 
The Vlissingen (the Netherlands) gas terminal reported good results, while the Vlaardingen (the Netherlands) terminal for edible oils performed better than in 2003. The turnover for inland shipping was virtually unchanged.
 
 
Oil Europe, Middle East & Africa (Oil EMEA)

The oil terminals in Rotterdam had an exceptionally good year, mainly thanks to the strong increase in the storage and throughput of fuel oil. Moreover, the additional capacity created by Vopak was fully utilised, often on the basis of long-term contracts. This additional capacity was the result of converting 240,000 cbm to the storage of fuel oil. The infrastructure in Rotterdam was also enhanced by installing more jetty capacity and pipelines. Records were broken mainly in the second half of the year in terms of throughput and occupancy rate, with the average in Rotterdam exceeding 90% in 2004.
The terminal in Tallinn (Estonia) succeeded in increasing throughput once again during the year. In the year under review, Vopak began a project to expand the storage and reception capacity for arrivals by rail, to meet the unceasing growth in exports of crude oil and fuel oil from Russia. The Hamburg oil terminal also benefited from the increasing supply of oil products from the refineries close by, with the strong growth in the bunker market adding to the demand for storage in Hamburg.
The Gotenburg and Basel terminals turned in disappointing performances, partly owing to the results on the storage of gasoline in the first half of 2004.
In Fujairah, the extra capacity that came on stream during 2003 was better utilised during the year under review. Finally, Vopak concluded an important long-term contract in Fujairah during 2004 for the storage of bunker oil. 
 
 
Asia

Virtually across the board, Vopak's results in Asia for 2004 were excellent. The average utilisation capacity for the oil and the chemical terminals was over 90% in both cases, with a few even attaining 100%.
The Sebarok terminal in Singapore (oil storage) had a record year, with a high occupancy rate and extremely high throughput. The combination of the two produced a marked increase in turnover measured in the local currency. The Sakra chemical terminal reported a good year once again, thanks to a large number of long-term contracts. The Penjuru terminal (also chemical storage) turned in a more than reasonable performance.
In China, Vopak concentrates on the chemical market. The Ningbo, Tianjin, Lanshan and Xiamen terminals all performed better than in 2003, contributing positively to Vopak’s result in China. 
Turning to Australia, the oil terminal performed well. Chemical storage in that country experienced only a mediocre year, however, as rates came under pressure owing to the rationalisation of the supply chain in the Australian chemical sector.
The terminals in Korea, Malaysia and Thailand produced better results thanks to higher volumes. Vopak is further expanding the capacity in Thailand.
Japan recovered in 2004, following a weak 2003 caused by the bankruptcy of a major customer. Higher volumes of LPG and phosphoric acid ensured further growth of the Engro terminal in Pakistan. 
 
 
North America

Turnover for North America measured in local currencies remained on forecast during 2004. Although capacity utilisation was down owing to uncertainties in the chemical industry, higher throughput volumes more than offset this. The turnover on railcar cleaning also showed clear growth, although costs exerted an adverse impact, particularly in the form of higher insurance rates and increased staff costs. The tighter safety standards (under the International Ship and Port Security Code) also entailed additional costs. The increased expenses exerted significant pressure on the operating margin of the North American division. Vopak has already begun a number of improvement programmes to raise the level of efficiency. 
 
 
Latin America

The Vopak terminals operated at virtually full capacity, with especially good results reported for the storage of edible oils. In Brazil, the market is expected to grow further. To exploit this opportunity, Vopak is expanding the capacity of the Santos terminal by 10%.
Activities in Mexico showed strong growth in 2004 once again compared with the previous year. The occupancy rate climbed to over 85% thanks to higher volumes for the storage of chemicals, the export of molasses and higher import volumes of edible oils and alcohol.
In the first complete year since Vopak acquired the terminals in Venezuela, Colombia and Ecuador, their respective performances all exceeded expectations. The steep rise in import volumes of edible oils and an increase in imports of chemical products led to the Venezuelan terminal attaining a occupancy rate of more than 90%. 
The Chilean terminal performed well, too, by increasing its occupancy rate. 
The activities in Peru were disappointing in 2004. Owing to the high price of oil on world markets and the slow progress with liberalising the domestic oil market, the oil trade is limited in Peru. 

Enclosure 2:  Consolidated profit and loss account

(*) See enclosure 3 for breakdown of group operating profit

Enclosure 3:  Breakdown group operating profit

(*)  Before reclassification of core activities in 2004, the comparable figure for 2003 is EUR 150.2 million.

Enclosure 4:  Consolidated balance sheet at 31 December before proposed profit appropriation

Enclosure 5:  Consolidated cash flow statement

Enclosure 6:      Breakdown of participating interests

Enclosure 7:  Application of International Financial Reporting Standards (IFRS)
 
Introduction
With effect from the 2005 financial year, Royal Vopak will prepare its financial reports in accordance with IFRS. The comparative figures for 2004 will therefore also be presented on the basis of the applicable IFRS principles.
 
The IFRS standards that should or can be applied in the 2005 financial statements have not all been finalised and endorsed by the European Commission yet. As the standards might be changed in 2005, this is the reason, the only reason in fact, why the figures in this enclosure are provisional.
 
IFRS 1 contains the transition rules for the first-time adoption of IFRS by companies to their financial statements for the year commencing on or after 1 January 2004. The underlying assumption is that IFRS has to be applied retrospectively, which is not feasible in all cases. Accordingly, IFRS 1 contains a number of compulsory exceptions and a number of optional exceptions. The optional exceptions that Vopak considered are explained below.

• Goodwill paid on mergers and acquisitions before 1 January 2004 and charged to reserves in the past can still be capitalised (see IFRS 3). Vopak has not made use of this possibility.
• For the carrying value of a defined benefit scheme, the value of the net pension obligations on the IFRS transition date can be used. In line with the full adoption of IFRS, Vopak has employed this provision.
• Tangible and intangible fixed assets can be carried at fair value on the IFRS opening balance sheet, irrespective of the accounting policies applied until then under Dutch GAAP. The fair value then becomes the new deemed cost at date. Vopak has not made use of this possibility.
• In accordance with IAS 21, a separate record of cumulative currency translation differences on foreign participating interests must be kept for each of the interests. On the disposal of a foreign participating interest, the applicable cumulative currency translation difference must then be taken to the profit and loss account. Under IFRS 1, it is possible to set the value of cumulative currency translation differences on foreign participating interests to nil on the IFRS opening balance sheet. Vopak has made use of this possibility.
• Under IFRS 1, it is possible to apply IFRS 2 (Share-based Payment) to all existing share options plans or only to those that came into effect after 7 November 2002. Vopak has opted for the second alternative.

Vopak has made use of the temporary exemption available in respect of IAS 32 and IAS 39 regarding financial instruments, including loans to third parties and instruments for hedging financial risks. This means that neither standard can be applied until 1 January 2005.
 
Effect of IFRS on shareholders’ equity at 1 January 2004
As communicated earlier, the net effect on shareholders’ equity at 1 January 2004 is a reduction of EUR 43.3 million, mainly relating to pensions. Vopak is employing the above-mentioned transition provision in the case of pensions. All actuarial profits and losses not yet recognised at 31 December 2003 under Dutch GAAP (a net loss of EUR 65.5 million) will be charged net of tax to reserves.
 
Condensed (provisional) 2004 results
The following pages show:

• Condensed (provisional) consolidated profit and loss account, with notes
• Condensed (provisional) balance sheet, including a reconciliation summary for shareholders’ equity at 31 December under Dutch GAAP
• Condensed (provisional) cash flow statement
• Effect of the application of IAS 32 and IAS 39 (for financial instruments) on the opening balance sheet at 1 January 2005

Condensed (provisional) consolidated profit and loss account