Koninklijke Vopak N.V.

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00:46 Good morning, everyone, and welcome to our twenty twenty one Q3 results. Today, we are joining the call by our CEO, Eelco Hoekstra; CFO, Gerard Paulides; and Commercial, global director commercial and business development, who has been nominated to take over the function of Chairman of the Executive Board and CEO as of first of January twenty twenty two.

Eelco will provide an update on the CEO succession and will highlight the portfolio items and market conditions. While Dick will give a brief introduction about his past experiences.

As usual, Gerard will guide us through Q3 results. We will refer to the Q3 twenty twenty one analyst presentation, which you can follow on screen and download from our website.

After the presentation, we will have the opportunity for Q&A. A replay of the call will be made available on our website.

Before we start, I would like to refer to the disclaimer content of the forward-looking statements, which you are familiar with. I would like to remind you that we may make forward-looking statements during today's presentation which involves certain risks and uncertainties.

Accordingly, this disclaimer is applicable to the entire call, including the answers provide to questions during the Q&A session. 02:03 With that, I would like to turn over the call to Eelco.

02:07 Thank you, Fatjona. Good morning, everyone.

It's a pleasure to have you all in the call. And what I will do, I will briefly talk about the CEO succession and introduce Dick Richelle to you.

And thereafter, I will provide some insights on the current market conditions and our portfolio developments. 02:28 As mentioned, I would like to share a few points about the recent announcement on the CEO succession of Royal Vopak.

As you've read, I’ve decided not to seek a forward term and hand over the company's leadership following eleven years as Chairman of the Executive Board as CEO of Royal Vopak. You will not be surprised that it's been a huge privilege to serve Vopak for such a long time.

Vopak is a great place to work and I'm really grateful to our Board and all my colleagues, the customers, business partners, shareholders for their trust commitments and contribution. 03:12 I will remain committed to Royal Vopak by securing a smooth transition in the coming months.

And I'm very pleased that my successor will be Dick Richelle, who has been working at Vopak for twenty five years, we had the pleasure to work very closely together in the past years. 03:30 I will now hand over to Dick for short introduction.

03:35 Thank you very much, Eelco. Good morning, everyone.

My name is Dick Richelle and it's a pleasure to be with you today in this call. I started my carrier at Vopak a little bit over twenty five years ago, and I have experience serving in a variety of management roles in the company.

The last twelve years, I specifically led our divisions in Americas and Asia and Middle East, and most recently I headed the global commercial and business development activities for the company. And I have been part of the strategic committee since twenty nine.

04:10 After many years with Vopak it's an honor to be nominated for the position of Chairman of the Executive Board and CEO of Royal Vopak. And I'm passionate for the future of our company on the basis of who we are, what we do, and most importantly, where we have our locations across the network.

04:33 The world is at the same time it’s changing rapidly, and I look forward working with all stakeholders on the priorities for the period ahead. Today, I won't be in a position to take any questions related to Vopak current of future performance, but I look forward doing that at our capital markets today after the AGM in twenty twenty two.

4:55 Over to you Eelco.T

4:57 Thanks, Dick, and thanks for joining us and listening in. Let's move on to the market conditions and reflect a bit on the Q3 results.

05:09 As you've noticed in the developed world, stimulus packages, high vaccination rates and the easing of lockdowns has resulted in a strong demand recovery in oil products market combinations. However, pent up demand that is reemerging has the unprecedented disruption of twenty twenty is putting strain on the balance of the markets.

And this is reflected in exceptional price gains across almost all energy and chemical commodities. 05:40 The marker for chemicals remain tight as supply continues to be affected and is not able to meet growing demand.

All oil markets has seen recovering consumption. Oil supplies gradually increasing as OpEx is raising output but the increase in supply growth is not yet meeting the amount of growth.

And as a consequence, the tank storage industry continues to face supply tightness leading to a lower requirement for excess storage of products. We believe that twenty twenty two will be a year of recovery for the tank storage industry as global vaccination rates increase and supply chains rebalance.

06:27 I'm pleased with the transformation of our portfolio towards more sustainable forms of energy and feedstocks. And I want to highlight a few proof points of Q3.

We recently announced that we are investigating the strategic options for our terminals in Australia, located in Sydney and Darwin with a total capacity of five hundred and forty five thousand cubic meters. Our growth momentum continue with the delivery of new industrial, chemical and gas storage capacity reaching almost half a million cubic meters year to date.

07:03 We've successfully and timely delivered a new Vopak industrial terminal on the United States Gulf Coast with a total capacity of one hundred and forty four thousand cubic meters, including pipelines connecting the terminal to the petrochemical complex. The new terminal has been designed and built by Vopak’s customers such as ExxonMobil and SABIC under a twenty year long term contract.

07:31 Our energy portfolio is solid, with high levels of utilization in our existing assets and expansion momentum. Furthermore, our pipeline of LNG business development opportunities is aimed at capturing the growth in this particular market.

07:48 Despite continued -- despite continuing Vopak active participation in the German LNG projects as announced in our press release, we have various other opportunities such as Hong Kong, which are progressing well. And finally, we are repurposing existing infrastructure to lighter fuels, so we're planning to invest in the conversion from fuel oil to clean petroleum products in Los Angeles terminals in the United States.

08:13 And with that, I'll now hand over to Gerard Paulides, our CFP to elaborate on our third quarter financial results.

08:23 Thank you Eelco for your introduction. However, also a special thanks Eelco for guiding the company over the last few years and your leadership, including your personal friendship.

Thank you. Dick, welcome.

Look forward to working with you and deliver the results that we aim for. 08:52 Back to the results.

As Eelco said, we have a portfolio that we are actively positioning for the future. This makes our investment case exciting and part of the new world.

Meanwhile, we also focus on our performance today. I will update you on the financial performance of the third quarter in the following few minutes.

09:20 Let's begin with slide seven and review the highlights. In the third quarter, financial performance was strong.

EBITDA grew to six nineteen million euros in soft market conditions. Adjusted for thirteen million negative currency translation effects, EBITDA increased by five percent or twenty nine million.

09:44 Gross project contribution of thirty five million and efficiency, I'm driving positive EBITDA performance. We continue transforming our portfolio for the future and invested two twenty six million euros in gross year to date.

10:05 Cost efficiency measures are tracking well, and the cost lever for the third quarter year to date amounted to four forty eight million euros, which is including the cost for growth and business development efforts. This is in line with our cost outlook for the year of six fifty million euros.

And we're confident to reach that level even in the current inflationary environment and despite higher costs for utilities that we have observed in the last quarter and will observe in the fourth quarter. 10:43 Our proportional occupancy rate remains at eighty eight percent, but the occupancy move -- the occupancy rate didn't move, but the EBITDA has grown.

We've made good progress on our strategy execution by successfully commissioning industrial chemical and gas terminals, in which I -- on which I will elaborate further later in the presentation. 11:09 A positive valuation effect in Vopak ventures of thirty nine million euros was recorded in other comprehensive income in equity, therefore directly in the balance sheet at the end of Q3.

So not through the P&L, but directly in the balance sheet. 11:31 Let's move on to the next slide and look at the financial performance per efficient year to date.

Strong performance in Europe and Africa mainly driven by growth project contributions in South Africa and partly improved occupancy in the Netherlands and Belgium. 11:52 In the Americas, solid performance is driven by new capacity in Mexico.

China and North Asia reflects new capacity commissioned in twenty twenty one. In LNG, soft LNG performance reflects the maintenance turnaround which we've discussed on the previous quarters at our LNG import facility in the Netherlands and Gate.

This has now successfully been completed. 12:25 Rig performance in Asia and Middle East is a combination of factors.

First of all, tight chemical markets and the recent COVID-nineteen surge is impacting our Singapore terminals. Secondly, tight oil markets are having an impact of our occupancy in Fujairah and in Indonesia.

12:50 Moving on to the second quarter -- third quarter versus the second quarter. I’m continuing with our EBITDA performance.

Also here, you see the EBITDA momentum in absolute terms. The third quarter amounted to two thirteen million euros reflecting solid performance across all regions.

Overall, a strong quarter with a six million euros increase. 13:17 In the next slide, some details per region.

The Americas division benefited from growth in the third quarter primarily driven by our new industrial terminal in Corpus Christi. Furthermore there is a more uptick in occupancy as the U.S.

economy is running at full speed and this is reflected in several terminals across our U.S. network, Deer Park and .

13:46 In Asia and the Middle East, occupancy reflects soft business conditions, as I mentioned already in oil, showing up in Fujairah and Indonesia, but also the chemical markets, particularly impacting Singapore. China and North Asia division is relatively stable quarter on quarter.

Performance of Europe and Africa reflects the commissioning of new capacity in Antwerp, what we call the Linkeroever and improved occupancy in the Netherlands. LNG performance is solid.

However, second and third quarter were impacted by the Gate maintenance turnaround program. So year to date, it looks different from a year ago.

14:36 Moving on, let me take you through our financial performance year to date in a bit more detail. In the last calls we highlighted various levers that have impacted our performance.

Starting point is the year to date Q3 twenty twenty EBITDA of six hundred and three million euros. Changes in business environment resulted in a net negative contribution.

Market dynamics in the oil markets were positive, however, currency headwinds and tight chemical markets have reduced our performance. 15:12 In response, we have delivered on our growth projects, which year to date have contributed thirty five million euros.

Our costs were higher compared to last year driven by higher energy and utility cost. However, we remain on track and confident in achieving our cost performance and outlook of six hundred and fifty million euros.

15:36 Let's move to the cash flow. Cash flow generation was solid and increased by five percent year on year to five sixty two million euros, adjusted for derivatives and working capital movements.

This five percent is in line with the EBITDA momentum. Our cash flow overview in twenty twenty was mainly driven by the cash flow inflow from the divestments and the additional gain for the two thousand and nineteen divestment of the joint venture terminal in Hainan, China and the eighty five million repayment of our preference share capital in the industrial terminal in Malaysia, although its effects cash flow wise played out in twenty twenty.

16:23 Year on year performance was influenced by the impact of derivatives related to our intercompany loans and working capital movements. Sustaining surface and IT investments were investments were two twenty two million euro, slightly higher compared to last year and included investments for maintenance and inspections of out of surface capacity.

Investment in growth projects continued and resulted in two hundred and twenty six million investment year to date. 16:57 As mentioned, we're investing in growth and have shown our ability to grow EBITDA and cash flow and equity at healthy rates.

EBITDA has grown by seven percent in the period twenty four to twenty twenty. I mean, seven percent as a CAGR and capital employed and equity by nine percent and thirteen percent, respectively.

This reflects our ambition to grow EBITDA over time and reduce our portfolio. 17:29 Previously, we've guided the market of the growth project contribution for twenty twenty one being at the higher end of the thirty million euro to fifty million euro range.

Last quarter, we added to that guideline -- to that guidance an outlook to twenty twenty three. Those numbers are unchanged.

17:51 The growth CapEx involved with this one hundred and ten million euro to one twenty five million euro is in the order of one billion euro. Additional projects, which are not yet approved will further contribute to EBITDA and to our CapEx spend.

18:10 Moving on to the portfolio. During the quarter, we announced the opening of a new Vopak industrial terminal in the U.S.

Gulf Coast as mentioned by Eelco, with a capacity of one hundred and forty four thousand cubic meters and we are proud to strengthen our industrial terminal portfolio, which is a growth market for Vopak and where we are an industry leader. 18:36 Furthermore, the commissioning of our ammonia operations in the Vopak Moda Houston terminal was successful, adding to our ammonia network in the world.

Vopak already operates various ammonia of terminals across its network and ammonia we believe is a fighter product of today and of the future as green ammonia made from renewable energy can be directly used in our existing ammonia infrastructure. We believe the shift of our portfolio will support us to the acceleration of new energy and feedstock projects.

19:13 Let's move to LNG. Gate LNG terminal has experienced a very high utilization in twenty twenty one and it successfully manage its maintenance around program.

We are also increasing the regas capacity of Gate by twelve point five percent as of twenty twenty four. 19:36 Mexico has shown as stable commercial performance, and we've recently signed a new ten year contract for Mexico for the entire capacity.

Columbia serves as a strategic backup facility when hydro power supply is low and it is in good shape. Pakistan has received its four hundred ship to ship LNG transfer, reflecting good utilization.

LNG is a growth market and Vopak aims to grow in the regasification of LNG. 20:10 Our business development activities are primarily aimed east of Suez, and that is where the majority of gas and LNG demand growth will incur -- will occur over the coming periods.

We are currently working on several projects, and I want to highlight a few as I've done in the last calls as well. 20:30 We are in advanced negotiations to participate jointly with MOL on the ownership operation and maintenance of a floating stores and regas unit in Hong Kong.

The FSH collaboration follows MOL's earlier announcement in twenty nineteen, whereby MOL has entered into a long-term contract with the Hong Kong LNG Terminal Limited, together with Vopak's jetty operation and maintenance support. The project will support Hong Kong's energy transition and increase the percentage of power generation with natural gas.

The project will support Hong Kong’s energy transition and increase the percentage of power generation with natural gas. 21:10 We written off eleven point one million euros for business development activities at Germany LNG.

After a review we've decided to focus on our project elsewhere as well as continued participation in Germany LNG, however, at a more passive manner. Then our various opportunities which are currently being pursued in South Africa, Singapore and Australia and we will update you as these projects mature.

21:44 Some portfolio highlights. So our network will contribute to society by ensuring access to products that meet people's everyday needs.

We store fighter products with care. We aim to be a sustainability leader and live up to our purpose.

We care for safe, clean and efficient storage as well as for safety, health and well-being of our employees, contractors and neighbors. And we care for the capital, our investors and ultimately we care for a resilient and sustainable society.

22:21 Our focus on environmental, social and governance, ESG topics is reflected in the ESG benchmarks where we do very well. Recently, we joined first forces to open a twenty five megawatt solar park in the Netherlands together with Groningen Seaports, and Whitehelm Capital.

Shown in the picture. 22:43 The opening of the park marks Vopak’s transition to green energy in the Netherlands actively contributing to the greening of logistic exchange of our customers and our role in society.

22:56 Moving on to new energy and some focus areas. We recognize the acceleration of energy transition.

Our portfolio is well positioned to capture opportunities for new investments. We earmarked four areas in new energy, hydrogen, Co2 infrastructure, sustainable feedstocks and flow batteries.

Hydrogen could play an important role in the decarburization of our energy system and we focus our business efforts on opportunities in hydrogen and other liquids that can store energy like green ammonia. 23:34 The industrial sector is already consuming a lot of hydrogen and we expect hydrogen consumption to grow for feedstock and as an energy source.

We are part of efficient consortium working on infrastructure solutions in the Port of Rotterdam to decarbonize and through large-scale use of blue hydrogen. 23:57 Another important pilot project that we are focusing on is the first of its kind, liquid organic hydrogen carriers supply chain.

Additionally, we are involved in CO2 infrastructure in various ports, which would allow industrial clusters to source CO2 -- to store CO2 in deplete gas fields. 24:22 Finally, Finally, we believe that in the changing energy market, there is more need for electricity storage to deal with flexible supply as well as higher and more flexible demand.

Flow batteries are a promising solution as they are scalable and non-flammable. In total, we currently pursue more than ten infrastructure project in new energy.

24:50 We also recognize the importance of supporting and working with start-ups and scale-ups to innovate supply chains. And in that spirit, we've set up Vopak ventures to identify opportunities in new technology and emerging value chains.

In our ventures, we focus on three areas. New energies and feedstock sustainability; Second area, operational excellence and asset maintenance; and the third area platforms, data and digital.

We believe our ambitions are complementary to our Vopak portfolio, which includes investments into hydrogen such as heterogeneous technologies and high at hydrogen. 25:34 In line with the future potential of positive valuation effect in Vopak ventures of thirty nine million euros was recorded in comprehensive and income in equity in the balance sheet at the end of Q3.

25:50 Turning to proportional results, performance of joint ventures and associates is becoming more important in our portfolio and our proportional EBITDA is two fifty nine million euro this quarter, of which joint ventures contribute one hundred million euro. Our proportional occupancy rate was eighty eight percent.

26:14 Turning to our debt profile. I would like to remind you that debt servicing, of course, is one of our top priorities in our cash waterfall priority management.

As you can see from the debt repayment schedule, our reform in credit facility is up for renewal in twenty twenty three. And we're looking into the possibility to introduce a sustainability linked debt instrument in the coming year when we focus on the renewal of the credit facility.

26:49 Let me close out just looking ahead. In twenty twenty one reported EBITDA contributions from twenty twenty and twenty twenty one growth projects are expected to be at the higher end of the range of thirty million euro to fifty million euro.

27:03 In twenty twenty three, reported EBITDA contribution for twenty twenty and currently approved growth projects is unchanged at one hundred and ten million euro to one hundred twenty five million euro. Additional projects may contribute to further EBITDA growth.

27:22 We continue to focus at cost and continue to aim at six fifty million euro for twenty twenty one. In twenty twenty one, we also update you on the growth investment expected, and we now estimate that to be around two seventy five million euros below our previously announced range of three hundred million euro to three fifty million euro.

In the coming years, the majority of growth investments will be allocated towards industrial gas and new energy infrastructures, and we will keep looking for the best and optimal portfolio. 27:57 Let me wrap up.

We delivered strong financial performance with five percent EBITDA growth and CFFO growth. Growth project contributions stand at thirty five million euro and our response to cost management and dedication is unchanged with the target of six fifteen with pressure on utilities in the third and fourth quarter, but the target is unchanged.

And in this quarter, we've delivered strategy execution by commissioning capacity as mentioned. 28:31 With that, we will move to Q&A which Eelco will lead.

And we will probably -- both of us take some of the questions. Obviously, I will concentrate on the majority of them given that this is a Q3 update.

Eelco, over to you.

28:52 Thanks Gerard for that elaborate update. So that concludes the presentation and our prepared remarks.

And as Gerard mentioned, I would like to invite the operator to open the call for questions.

29:33 Yes. Thank you very much.

It's David Kerstens from Jefferies. First of all.

Eelco, I would like to thank you for your support and insights over the past eleven years, quite an impressive achievement in such a volatile market environments. I wish you all the best in your future career at (ph).

I’m looking forward to working with Dick again from next year onwards. 29:56 Then a few questions, maybe if I may.

First of all, are you seeing early signs of the underlying momentum in the business improving in the third quarter. I think if you take out FX and growth projects, EBITDA was down by five million, but I think there were some one offs in the quarter such as further maintenance related to Gate LNG.

And also I think hurricane impacts in the U.S. Do you see an improvement in underlying momentum already?

30:23 And then secondly, you talked about the potential rebalancing of supply chain -- supply chains in twenty twenty two. What is the potential recovery effect that you're seeing there?

Is that mainly the five million euro to ten million euros lower contribution that you highlighted for chemicals year to date? Or is that impact much larger?

30:42 Finally, we reduced expectation for growth CapEx of two sevent five million euros does that reflect the equity that you had in mind to invest in the Gate LNG – the LNG terminal in Germany? Thank you very much.

30:57 Thanks, David for your questions and remarks. I suggest that Gerard takes the question on the growth CapEx and the difference between our earlier -- early remarks and the year following.

I will give a bit of color on the market David. 31:16 As I made in my -- the comment in prepared remarks is that, indeed we have seen quite an unprecedented development in commodity markets globally.

We were this could not be sustained for a longer period of time, because we know by definition that markets will fall again back into equilibrium. 31:35 What we've have seen happening in the second and the third quarter, which also we guided on two quarters ago, last quarter as well, but we see already a normalization happening in the chemical markets.

And with that I mean is that, that more and more manufacturing capability come back. We didn't mention the winter freeze anymore, because in the third quarter we have seen in the United States manufacturing base coming back into operation.

And what we've seen is that, that has led to additional sort of volume entering into the markets. 32:12 We've seen a trend towards normalized environment in chemicals in several parts of our businesses.

One is the United States. As of the third quarter if you look at the throughput levels that we are now experiencing, for instance, in or in our Huston terminal, they're are very close to pre-covid levels.

We've seen also that the requests for storage for chemicals, for instance, in Singapore and the amount of requests that we're obtaining are increasing quarter by quarter. So we are not there yet, David.

But I think that the trend that we envisage is indeed happening and I would believe and that's what we made a comment on is that, for the year twenty twenty two for chemicals we should see relatively normal environment. All things being equal, obviously.

33:11 Then for oil, we see a little bit of the reverse trend happening unfortunately. We haven't seen a major recovery of the oil price.

We haven't seen more stocks being taken globally, particularly for middle districts. And despite the occupancy being relatively stable in oil, also across the globe, we see that there's a bit of price erosion happening in the major hubs.

So for us, it's a little bit too early to say that the market is turning into a complete normal position again. So those are the two factors that probably will be taken into consideration mostly for the year twenty twenty two.

33:59 What I can say is that, let's again -- very nice to see that our long term contracts and I think that Gerard alluded to that. We've signed again a long term contract for TLA in Mexico, we see that our industrial contracts are running well.

Our gas contracts are running well. So in other words, we still have sort of a large part of our business, which is very stable, and very supportive of our earning.

34:30 So for me, I think it underlines the results of this quarter, underlines the strength of our existing portfolio, but despite relatively weak markets and eighty eight percent occupancy we can provide such a strong earning call to support our view on Vopak. So that's my view on the market David.

34:58 Yes. Let me pick it up from there Eelco and David.

First of all, on the CapEx. The CapEx is not related to Germany.

The CapEx is related to our total growth portfolio, the assets that we are developing and phasing thereof. 35:24 The outlook for the earnings contribution is unchanged.

So it's a matter of facing of CapEx and cash rather than anything else. That’s not more behind the statement than indicating the cash momentum of the CapEx involved.

All the underlying scans are unchanged. 35:46 For Germany, we will offer our active participation in Germany to a more passive one.

We will remain partner in the JV together and Oil Tank Inc. The JV will continue to pursue its goal to build and operate an LNG terminal in Germany.

36:20 The basis for the progress, there has been some successes in terms of the regulatory and planning progress that we also have some mixed successes on the commercial side. All combined, we've taken this view and as result, we've made the statement that we've made.

36:47 In terms of business momentum, I think the business momentum all things together give us confidence in the earnings reported today. It's good momentum compared to last year, it’s good momentum compared to the second quarter.

As you point out, yes, there are a whole lot of moving parts in there and that is typical of the last six or seven quarters where we've seen such unsettled markets moving through our portfolio. 37:23 If I look through that and I look at our momentum in cash flow from ops our portfolio transition, our business momentum, I think we're doing the right things and there is some early signs of the market as Eelco Indicated a bit more clear in chemicals, little bit more mix in oil.

If we throw that all altogether in on statement, then what we said is looking at twenty twenty two it might be that that is a recovery of tank storage industry relative to twenty twenty and twenty twenty one. 38:03 So with that, I think we've answered your questions.

Gate, you pointed out disturbing the momentum a bit of second and third quarter. That's correct.

Maintenance charges were in second and third quarter. So year to date that influences, but it's not a factor between the two quarters.

And I think that's the complete answer to your questions. So let's move to the next question operator.

38:33 Thank you, Gerard.

38:41 Great. Thank you.

Good morning, everyone. I had a couple of questions if I may.

So, I was hoping whether you could provide a bit more guidance on where you think that growth CapEx number could be going to in twenty twenty two? I know previously it's been a sort three hundred million euro to three fifty million euro range.

So any guidance you can provide there would be great. 39:05 And the second question is on the cost outlook for twenty twenty two.

I guess, did you have any hedging in place that helps mitigate some of the utility costs for this quarter and how does that play out next year? 39:21 And then thirdly just any update on the oil storage the Terminal, I know you had a contract that had rolled off there.

So any update there would be great. Thank you very much.

39:35 Okay. Thank you Amy.

First the CapEx question. The guidance for next year, we haven't really formalized yet, but I have given indication, that is correct.

What I've said in the past is in the last three years, we invested about one billion euro divided by three hundred to three hundred and fifty is a reasonable number for us to use. 40:08 This year we under that at the moment, for next year we also significantly under that in terms of committed number of projects.

There is always a bit of noise in that because you never know when you actually spend money on M&A type of activity like the India transaction that we now think is heading the right way for completion. The integration efforts are very supportive and the teams are working together extremely well.

So all the signs are positive on that. But the guidance for next year at the moment, I would say with the committed level is below that range that you in indicate.

40:59 If we were to announce new projects or M&A type of activity, then we will update you on that number. So below the range is what I give you as a statement today.

41:20 The cost outlook, there's always a bit of sort of noise in there, because we bring new assets online, of course, that comes with new cost. We stay within the six fifteen that we guided for this year, including the high utility energy costs we have observed in Q3 and we'll see in Q4, no doubt.

We do hedge part of it we also pass through part of it to our customers. And when I say hedge, it's not really maybe literally a hedge, but it could be that we conclude fixed price agreement versus variable.

However, there is certainly a part that sticks and then we will see in our numbers and have seen in our numbers. So for twenty twenty two on a relative basis to full year twenty twenty one, I would expect utility costs to be higher.

42:30 And year to date, the utility cost and I'm looking a little bit at Fatjona to correct me if I get it wrong. But I think year to date, we had nine million euros increase in utilities.

Fatjona is noting at me, so that the number is okay. Then that's the year to date number.

But in short, as I said in the six fifteen that we gave you earlier. 43:01 Than Fujairah.

Fujairah is obviously an asset that is perhaps even more than some other assets in our portfolio, subject to the markets rather than an industrial complex for instance. We did see in the Middle East Asia occupancy, a drop in the occupancy reported at the end of Q3.

And Fujairah is has seen some positive contract renewals which will kick in at the start of next year.

43:51 Let me if you allow me here to add a few words to that and a bit of color, Amy. Is that, in Fujairah the occupancy drop that we've seen this year was related to crude oil contract that expired on its term.

There was a five year deal that we had previously that came off this summer. 44:21 We've invested in crude oil in Fujairah because we always believe that Fujairah will be an excellent collection point for crude in the Middle East.

And that was supported by the introduction of the intercontinental exchange or the ICE, which delivers a future contract for RBWcrude, it’s IFAD. It this is a crude future that has been starting to trade.

So the United Arab Emirates has an interest to develop that pricing point for crude over the coming years. 44:59 I'm very pleased to inform you that at least the crude tanks that we then have developed and came off will be rented out again next year.

And now again a commitment basically tied in to that few -- that future contracts for crude. So yes, we had an occupancy, let's say, a lower occupancy in Fujairah, but I would expect that at least for crude we have that covered as of next year.

45:29 Okay. Fantastic.

Thank you very much for the extra detail on all of these. Very helpful.

45:35 Thank you, Amy. Operator, if we could move to the next question.

45:50 Good morning. .

First word for Eelco. Eelco I really want to thank you for the corporation in the past eleven years, .

I wish you good luch SHC. 46:09 And as for of new CEO, Dick, welcome in the spotlights.

I hope you can indeed through this challenging energy transition. I have three topics, maybe more topics but let’s focus on three topics.

Australia strategic review can you give us the EBITDA level of Australia, let's say, this year, roughly and twenty two roughly. My calculations is for twenty two around seventy five million euros twenty twenty two you will start within minus thirty five million euro of EBITDA if you decide to sell the entity.

46:58 Then related to Australia, occupancy in Asia, Middle East is down to eighty five percent in this quarter. Then the second topic, Malaysia.

Should you increased your stake in in the industrial terminal? Can you explain the financial dynamics and strategy plants related to the huge claim against your JV, is there an update on that cort case, because that was planned for end of October.

It’s only my understanding. 47:50 And then third topic, new energy.

Good see that you were able to do with thirty nine million valuation, I presume externally related to LLHC. My understanding is, you had a ten percent stake.

So roughly, should I assume value for hundred percent LLHC of about five hundred million euro.

48:27 Thank you, Thijs for those questions. I suggest that we start with Gerard, who gives guidance on the Australia question and on the new energy one.

And then I will dive into PT2SB.

48:39 Yes. And let me start with the court case.

I think the court case is progressing. It’s in the final stages, we've not changed our opinion on that whole dynamic.

And don't expect anything to come out from that. So it will be hopefully neutralized at the final stage with this discussion with to court.

49:14 On the thirty nine million, I can confirm that the majority of that valuation update is in the sustainability energy fund of the Vopak ventures activities. That's where the main movement is, and indeed the main movement is related to heterogeneous, but there are other small moving parts in the portfolio.

We are extremely happy and proud, we set movement. And you're right our holding in heterogeneous is about ten percent.

50:00 On Australia, we are not going to break out the numbers, Thijs. I understand the question.

I understand the appetite. But we will not break out numbers.

Occupancy has always been good in Australia, that I can say. We've also recently started an expansion in Australia in Sydney, so the assets are good shape.

And I will refrain from giving you the financial breakdown of the numbers. So, sorry for that, Thijs.

50:41 Eelco, will you ask -- explain a bit to PT2SB.

50:46 Well, first of all, Thijs, let's make corrections. It’s not PT2SB it’s PITSB.

So, and as you can recall, we have two terminals there, actually we're have three in Malaysia, but that’s not part of this, that's industrial terminal. 51:02 Now with PT2SB, which is the industrial terminal with Petronaz in dialogue to serve refinery complex and we have PI2SB and PI2SB is our independent terminal for fuel storage in Malaysia located next to PT2SB .So I hope I have not you confused.

51:26 But PI2SB, which has been the first terminal we constructed there are, let's say, the primary partners are in dialogue and there's also a small percentage held by the Malaysian, the local government, the province. That was a ten percent economic ownership, which was, let's say, set up early on, and it has now been distributed economically to the partners.

So we just increased our economic ownership by ten percent or that was -- that ten percent was divided and it was nothing more than that that we executed on agreements previously. 52:17 The second thing I can tell you about the court case against the joint venture that is a court case against PT2SB.

That court case is ongoing. We've had a strike out already, let’s say, conclude, but it has been gone to higher in the judiciary it has been response.

We just need to wait for next year to get a further outcome of that. But nothing has changed from the content.

We very much still think, as we said in our press release, that it’s a vertical pursuit against the joint trying partners. So, we still need to wait for that to be resolved.

53:04 Just to clarify that, sorry to interrupt Eelco. Strike out is therefore in our favour, right?

The case was unbiased. And therefore, we said we should not even hear this case in court.

And the court actually agreed with the statements of the joint venture saying that they had two weak case actually to bring into court. So it has not servicing core yet.

We are so hopeful that we can keep it outside the court and let's wait for that to continue.

53:39 Okay. Very good.

Thanks.

53:43 Okay, thanks. Thanks for asking the questions.

And again, apologies for not being willing to give the Australia detail. Who’s next

54:03 Yeah. Good morning everyone.

First, I would like to thank Eelco for his eleven year as the CEO. Nice to speak to you not only on the business, but also on, let me say, family matters and other things like the future of the society, so I like your discussions.

Even at the breakfast, as I remember, so thank you -- thanks a lot for all this interesting discussions. And of course, welcome to Dick, we have spoken quite often I think two thousand and four, two thousand and five and thereafter.

So that's okay. I think.

The biggest picking up here. 54:44 With regard to my questions.

First about the CapEx. So the CapEx, let me say, below the range of three, three fifty, but that does not include in yet.

Is that the correct assumption, that’s my first question? 55:00 And then two.

Americas and that is about the LNG. About Americas, can you maybe update us with regards to Dow developments there?

What you are seeing there and how is the business going? And maybe to elaborate more on the impact of Ida on the third quarter.

And then finally just on the conversion in is taking place and how long it will take and was the CapEx using is and is it expansion or is it maintenance? 55:34 And then on LNG, still guess it above Germany, because in my view it’s a a question of -- it's not a question of clients, but it’s a question of environment of permits and maybe it takes a long time, but it will come.

And given all the political -- the geopolitical things we are seeing now it cannot allow a delayed there. I think, in my view.

So maybe stepping out and have a passive role, it's very inclear to me, who's picking up it, then is that -- are you not happy with oil tanking? So all that sort of things?

56:11 And then finally about your presentation, you said about Singapore, Hong Kong LNG, but I miss is there maybe some -- is that also removed from the list? That's all are my questions.

56:28 Okay. Let me open up Eelco and then see how far we get and then you pick - shake up Dow I think and one or two other points.

Yes. 56:42 First of all, Ida, do we did take some charges in terms of cost in the gulf of Mexico network for -- which wouldn't be covered by insurance.

So delta there in -- that we saw in the year to date number, not material, but there was a negative charge of I think about two million euro. There is other positives by the way in the numbers, so it's a mix of -- not on Ida, but on the total numbers of Vopak, but Ida specific was a charge of two million.

57:32 From a damaged point of view, there's nothing to highlight, which is remarkable. The conversion in LA, it's relative low CapEx conversion, we will label it as probably as growth CapEx, it going into jets.

The multiple in terms of debt to EBITDA is as we indicate before this type of brownfield expansion can be very attractive and that is reflected in the numbers. So it's consistent with how we guide on that and progress, etcetera.

And then you say what about China as I said in the last, I think two quarters already has come to slowdown. I think we'll not see a lot of progress on that in the foreseeable future.

58:53 And therefore, as a business development opportunity, it's no longer on the list of very active, we do have other NBT ctivities which are active as I already highlighted. I think in the context of the LNG portfolio because then the logical question is, okay, how about the total.

I think the momentum is actually very positive, you always have a whole lot of opportunities. And then eventually, you lend a number of them.

The one we are lending is Hong Kong. We've done the Gate expansion, as I said, twelve point five percent to contract renewal.

And Mexico, we are actually quite happy about the LNG portfolio relative to our plan of developing the portfolio. So we are on track, but not all of them are winners all the time.

That is true. 59:56 Then Eelco, will you pick up CR and Germany again, the LNG point.

60:03 Thanks for your remarks Gerard. It tells me how well ING and Vopak investing relations are.

The fact that you already did two thousand and four. So that's a nice story.

60:17 Let me start off with the VR insights. I think as you're can imagine, there are three distinctive phases we have to go through.

So the first phase is just to get the deal, while we announced that already a year ago, second phase is to integrate VR into to Vopak network and to obtain control of the assets. We run it as we run all other terminals and obviously being a carve out and the first one on this industrial scale, I think, it took a lot of effort and a lot of support from the network to get that organized.

61:01 And the third phase is a phase growth and further development of that location, of those three locations. If I first turn the attention to the second phase, because I think that we are sort of ending that period.

I think if you look at -- since September we started to run it and it's coming close to a year. 61:23 I think I have to complement the VR team and the management team there wholeheartedly, because I think they have done an absolutely fantastic job in integrating VT into Vopak.

61:38 If you look at the -- I had a discussion with Dow only recently, senior management said that throughout the whole year, not a single safety or surface incident was reported to the higher and the C suite of Dow. Meaning that we have been able to create grip and control to the levels that we expect and set ourselves a standard too, but also us by Dow.

62:08 In addition to that, if you look at the integration of -- obviously the financial systems, the IT systems, safety systems. I think that is all behind us or mostly behind us.

I think we run it now as a fully integrated terminal. And that resonates a great deal of comfort, particularly if you look at the fact that we've seen also, Ida rates of Louisiana, in which, again, several months of uncertainty from manufacturing perspective had to be managed.

So that phase has gone very well. 62:50 And I think I'm happy to say that also listening to the conversations with Dow, I think we had recent meetings is that the attention of Dow is turning towards growth.

So I'm very excited about the sort of the future prospects of how Dow was to manage those manufacturing sites in the next twenty years. And that we are in a very strong position to jointly see how we can further develop those sides, both in the traditional fighter products, but also look at new feedstocks, and new opportunities that might come up there.

So, I'm excited about VR. 63:28 I'll actually be that next week here at Quite, borders are opening up to have again the own hand look together with Dick and see what's going on there.

So I hope that gives you a sense of how we've manage Dow. 63:44 Then on German LNG.

I think that Gerard already elaborated quite well on that. I would like to say that we very much like the – we very much like the site, we see a line of sight on how to turn that particular location into an LNG storage facility.

I would like to also turn your attention not only to the, I would say, the licensing and permitting part. We also see that the momentum commercially is not in full swing today.

So I just wanted to bring that as well to your attention is that, we said now there are many good attributes to the project, we will support it, but we do that in a more passive manner until conditions might change. Hope for the better.

64:38 Thank you, Eelco. Quirijn I forgot to answer your India question.

The India number will very likely fall in twenty twenty two. However, it doesn't change anything to the statements I already made.

So CapEx this year, two seventy five and next year are committed numbers are below the range that you asked about and Amy earlier asked about. So it’s absorbed in the numbers that I gave you.

It's also – I want i repeat it, it doesn't change the growth statements that we made on the EBITDA. All are matter facing and where it will fall and cash flow wise, this year two seventy five next year at the moment currently approved below the range, including India.

65:36 Last comment, Gerard I can’t help. I can't stress enough the strength of our network where we are located.

I think Gerard, made that comment Los Angeles. You see that we can turn fuel oil into het fuel tanks.

And if you look at LAX, that needs to be given -- needs to be supplied with jet fuel for a longer period of time or if you look at sliding it where we convert tanks into biodiesel or if you look other industrial sites where we have new energy opportunities. I cannot stress enough the excitement that at least I feel in the existing locations and where the industry is heading towards.

So thanks for the question.

66:21 Great. Thanks a lot.

66:27 The next question please.

66:36 Yes, good morning. First of all, I’m last in the row to thank Eelco for the corporation and you're very friendly management style.

I wish you success your next carrier step. Dick after all those years we're meeting in, obviously you are great a bit, I’ve lost a few hairs.

But I'm looking forward to talk to you again after such a long period. 67:05 A couple of questions from my side.

First question. Gerard, you mentioned this impact of the energy cost, the nine million euro, is that a gross or a net amount?

67:19 Sorry, Finish your question, apologies. I'll will answer it in a second.

Yes.

67:24 Okay. On Gate, the has now been finalized, can you remind us about what the total cost has been.

On the contribution of growth projects, can you remind us what's the twenty twenty contribution was? And can you give us a bit more detail on how you see the split for twenty two and twenty three?

67:51 Looking at the columns that you provided in the presentations on H1 and Q3 it seems like most of the impact of a positive effect of the oil markets, negative effect on chemicals occurred in the first half. Any big changes there that you saw in Q3?

It looks like that situation has been about flat? Then the numbers question, you mentioning ForEx effects in the first all, it was fifteen million euros in the nine months number, I see thirteen.

So that means it should be two. But in the presentation, I see only zero point two.

So I'm missing that two million euros there. 68:38 The last question on the reduced CapEx, can you give us a bit more detail on where that occurred.

68:47 Okay. A lot of questions.

I hope I can remember them all. The gross utility or net utility, this is a gross number.

So this is as recorded in the cost. In terms of ForEx, I think you are correct that second to third quarter was one point five to two.

So Fatjona is going to check whether the side doesn’t state that or whether we showed something different. But intuitively, I think you're right on that.

69:34 The momentum of chemicals and oil between Q2 and Q3, you're right. I don't think there is a lot of difference, a bit of picking up as Eelco earlier said on the evidence points, a bit of more confidence in chemicals and throughput.

In oil, lot of inquiry, but very high volatility on the rates. So you can see extremely low rates.

And then occasionally, you see a higher rate, but lot of the volatility on that between, I think, the quarters, as I said, a bit more momentum on chemicals between the years twenty twenty and twenty twenty one year to date. The whole same statement as we've made several times still holds which is soft market conditions.

If you combine it all. 70:36 So the momentum in the company has been from growth and cost management rather than from markets sort of kicking in.

And the growth element could have been bigger if the markets of course, were stronger at the moment as the growth comes in. So that about – then about Gate, you said how much approximately, I think, in terms of cost about a number somewhere below five spread over the two quarters.

Q2 and Q3 in terms of cost in the LNG portfolio. 71:25 Then I think you asked one more, but I have forgotten.

71:30 Yes, the first is on the growth contribution. So, can you remind us of the number for twenty twenty and possibly some details from the split between twenty two and twenty three?

And then the last question was indeed the CapEx.

71:49 Yes, the growth momentum is thirty five year to date. It's relatively build up evenly over the quarters so far.

We have seen a bit of an acceleration in Q, but that is for the. In terms of -- now I forgot the fourth question again, or the last question that was on the CapEx.

72:33 First of all, it’s question on growth, can you give a bit more detail on how you see it developing in twenty two and twenty three? Any statements on split?

72:41 No, we don't split that out. We have thirty to thirty five to fifty or thirty to fifty this year top end of the range.

And we have -- in twenty three, we have one ten to one twenty five. We don't split that out to not get overly focused on the year in between.

It is a proper build up in between. So it's not exactly proportional, but I'm not going to break out the number in twenty twenty two.

73:20 And growth CapEx, the question was on the two seventy five.

73:25 Why is it's facing. It's just facing of projects and momentum of the number of projects that are making up the totality.

So we're adding a few, we always make a bit of accommodation of new FIDs in our outlook for twenty twenty two. That's why I said three hundred to three fifty on previous occasions might be possible.

At the moment, we don't have that portfolio that qualifies for our investment criteria. However, it's not less than what we said before, so the growth momentum is the same, the one ten to one twenty five is kept hold.

It is just the additions that we might see and we'll -- and may still see, I not yet in the number.

74:27 Okay. Thanks.

74:28 So there's nothing mysterious behind it. But it's difficult to explain something that's not mysterious.

It's routine. It's a routine update as far as I'm concerned.

It's phasing of CapEx and spend.

74:44 Thanks. Modurator, is there another question or have we reached the end of the queue.

74:57 We can take one more question. Yes.

75:18 Yeah. It was still on mute.

Well, thanks Eelco for the time spent in this call and Dick as well. 75:28 Small follow-up questions.

First, on other operating income especially in the U.S. is quite high.

Can you explain where that other operating income is coming from? Secondly, Mexico, the new ten year contract are they raise higher or lower than previous rates.

Maybe then for Gerard only question of Andre, I would say, look at slide thirteen, you give a quite clear guidance for gross EBITDA twenty twenty two being, let's say, thirty million euros. Maybe finally Gerard with strategic fuel Australia now ongoing does it mean that you stoped the depreciation of Australia in reporting?

76:36 No, We've not stopped depreciation in Australia. It's early stage so it’s not stopped.

I'm just looking at your point on slide thirteen. What is that.

Well we didn't give an intermediate for it, where we shared something that is absolutely correct. But we didn't bridge it to give you a sort of sense of trying to measure that.

So maybe we shouldn't have shared that. What we indicated is, yes, there is a contribution, but don't start measuring it and then recalculating it because it's just holding covering not an indication of the size.

So apologies if that is read differently. 77:30 I’m a bit poor at remember the question.

77:32 Mexico ten year contract.

77:34 On Mexico. I can tell you it’s -- we're very pleased with it.

That's for sure. It’s an extremely important renewal where we can place the shareholder and the customer, which is always excellent, all the stakeholders are extremely happy about it.

Everybody satisfied from the strategic and financial perspective. 78:01 It's fair to say that I think it's arguably a critical renewal in the market that needs step gas.

And I think they are at fair prices to everybody concerned. We're not commenting on whether it's better or worse than previous contracts.

Thijs, I'm afraid.

78:29 Last one here is the other operating income.

78:32 The other operating income, I have to back on, because I don't know that of the top of my head, But Thijs, we will take that separately. Apologies for that.

78:44 Okay. No problem.

78:46 I think -- but we'll look into it. I think it has to do with the way that the Corpus Christi income is recorded, which is the new asset that has come on stream.

I think that's the majority of it, but we'll come back to it. of Corpus Christi.

79:11 Okay. Thanks, Thijs.

And Molly, is this the last question or one more. The last one.

The last last one.

79:31 Yeah. Thanks.

I tried to submit the question really a couple of times, but apparently it was not being taken. Well, of course, most of the question were already answered.

I just had a very quick follow-up, but before that I wanted to congrats Eelco for being such a solid pillar at Vopak for so many years. And of course, I'm wishing you all the best for your future adventure.

79:58 One of the follow-up would have been on the strategic option for the Australian terminal. Do you consider to divest even more of the others minor terminals you have across your network?

And especially for oil? And I was wondering if you can give a bit of color on why Deer Park terminals have been postpone commissioning and whether you're comfortable to reach to commission it by year end and Q1.

Any colors in general would be much appreciated. Thank you.

80:48 Okay. Thanks, Juri.

Let me take Australia and then Gerard will take the Deer Park question. 80:57 Let me put Australia in a wider context.

I think that already strategically we've taken the choice several years ago that we would move the network of Vopak more towards chemicals, gas and industrial. And the reason why we had that view is that, we think that chemicals has a long longevity, because it's used in so many manufacturing applications that we think it will have a long future ahead.

Particularly if you look at the energy saw a chemical density per capita in different growth markets. 81:36 I think second of all, we wanted to invest more than gas, because if you look at where the energy transition is heading, you see that the heavier hydrocarbons are replaced by lighter hundred carbon change, but most importantly, I think if you look at new energy and you look at products like hydrogen or you look at Co2 or you take ammonia, that a lot of the new energy applications are in a gas form.

So it means that if you have gas capabilities, a gad opportunity, it plays very well into that new energy mindset and the same holds for industrial terminals. 82:17 I think if you look at how the energy transition will take place.

It is our humble opinion that it is most likely not first in the transport sector but more on the industrial sector, because the hard to base sectors need to move first and have the balance sheet to invest against that idea. So us being in those industrial sites globally puts us at the forefront of the transition.

So that has always been our thinking in the last few years. With the oil terminal and obviously, the question is, how do you deal with those?

82:51 I think -- and there are two ways of looking at that. I think first of all, we still believe that oil has a role to play and that there is a -- and with the increased volatility in the refining sector.

We expect that the oil opportunities will be quite interesting. It will be a more volatile environment.

And therefore companies like will be in essential part of trading outfits and refiners to balance out their positions. So I think we want to still have an opportunity in oil.

83:22 But obviously, you need to take also a long term view on what oil assets you have. So we've taken the decision first of all to -- if you look at that to sell, oil assets which are in OECD countries whereby the change in the energy balance will be the quickest.

So that's why we sold UK, we sold Sweden, we sold Estonia, Hamburg, Spain and our view is that, we need to be mindful of position of our distribution terminals in OECD countries. And I think Australia plays just into .

It's a well-run asset, we're even expanding it. It has, let's say, an exceptional good position in Australia.

But we just like to test sort of what is the long term strategic value of Australia and the network of Vopak looking at where we're heading. So that gives a little bit of color on -- to Australia.

And there is not much more to say than that at this stage.

84:34 Okay. Juri, apologies if you didn't manage to get in the queue for the question, but you're in now.

So I think that makes that good. In terms of the Deer Park, there's not a lot more than that it is today.

Partial commissioning, part of Deer Park is now live, and from thirty three thousand cubic meters that is twenty three. So it's a partial commissioning which is operationally driven.

85:15 Thanks, Gerard. And with your permission Molly, I expect that there is no further questions that are on the register.

So with that, I would like to take this opportunity to close off the call. 85:31 First of all, my gratitude and thanks to everyone in the call.

It's been a eleven great year in which we had an opportunities to exchange ideas and folks, not only indeed as Gerard was mentioning within the setting of video calls or Capital Market Days, but also I fully enjoyed all of your presence during the different trips that we had or the lunch is that we enjoyed. So I just wanted to thank you for that.

I feel very grateful having the opportunity to work in mutual. And this is also a good opportunity just to wish Dick a great deal of success and a great deal of good opportunities again to elevate Vopak to a higher level, because I'm sure that with his background, his energy and dedication Vopak is again in exceptionally good hands.

So thanks again and we'll see each other no doubt in another time in another place. Till then, goodbye.