. Vopak share from 29% to 44% in ETPL
Rotterdam, the Netherlands, 27 November 2018
Royal Vopak today announces that it will acquire in total 44% in Elengy Terminal Pakistan Ltd (ETPL) in separate transactions with International Finance Corporation (IFC) and Engro Corporation Ltd (Engro Corporation). This includes the acquisition of a 29% share announced in the press release of 20 July 2018.
ETPL's wholly owned subsidiary, Engro Elengy Terminal (Pvt) Ltd (EETPL) owns an LNG facility which is located in Port Qasim in Pakistan, adjacent to the Engro Vopak chemical terminal on the mainland side of the channel into Port Qasim. The facility has been in operation since 2015 and is the first LNG import facility in Pakistan.The facility consists of an LNG jetty including a 7.5 km high pressure gas pipeline. This pipeline is connected to the grid of EETPL's sole customer Sui Southern Gas Company Ltd, a Pakistan government owned entity. EETPL holds a 15 year Floating Storage and Regasification Unit (FSRU) time charter.
The liquified gas is supplied, under long-term contracts, via LNG carriers from various exporting countries to the FSRU, which is moored to the EETPL jetty and connected to its pipeline. The regasification takes place on the FSRU and the gas is transferred to the mainland where, under high pressure, it enters the grid of the customer. Pakistan is a market with more than 200 million people and has a growing energy demand in which the share of gas is expected to increase. Gas is mainly used for power supply for the growing population, industrial usage and as feedstock for fertilizers. After completion of this transaction, the shareholders in ETPL will be Engro Corporation and Royal Vopak.
This acquisition is subject to certain conditions, including customary regulatory and shareholder approvals, and closing is anticipated to take place in the first quarter of 2019. Closing of the first transaction as announced 20 July 2018 is still envisaged in the fourth quarter of 2018.
Engro Corporation (PSX: ENGRO) is a Pakistani, home-grown multinational corporation widely regarded as one of the largest conglomerates in Pakistan. Engro's portfolio consists of a variety of businesses including fertilizers, energy, mining, chemicals storage & handling, petrochemicals, and foods. Fueled by the vision of becoming a digital-first group in the country, Engro's investments are all designed to deploy inclusive business models to pursue an integrated and inclusive growth for all who interact with its businesses. For more information, please visit www.engro.com
Royal Vopak: Capital Markets Update
Today, Royal Vopak (Euronext: VPK) hosts its Capital Markets Day for shareholders, investors and analysts in Houston, the United States. The update features presentations on Vopak's strategy execution and financial framework. The presentations are available through Vopak's website.
Vopak's strategy execution
The 2017-2019 strategy execution, set towards further growth and performance delivery is well on track. Capital allocation decisions are shifting the portfolio further towards industrial, chemicals and LNG, LPG and chemical gases terminals with access to further growth opportunities.
Vopak is confident that it will deliver short-term performance through focus on commercial efforts and cost management while managing long-term value through execution of growth projects, new business development and portfolio management together with its digital investment program. Major expansion projects are currently under development in Malaysia, Canada, Brazil, and South Africa. Commissioning of new chemical capacity in Deer Park, Houston, the United States, starts this week.
Robust financial framework
Vopak aims to deliver strong cash flow generation and is committed to a disciplined capital allocation. The focus on capital efficiency results in an expected return on capital employed (ROCE) between 10% and 15%. Vopak targets a robust balance sheet with sufficient financial flexibility within a leverage range of 2.5 to 3.0 times net debt to EBITDA and can for a period be outside this range depending on capital allocation choices. The strategy is executed with a balanced approach between allocating capital to growth opportunities, an efficient and robust capital structure and distributing cash to shareholders. In the 2017-2019 period, Vopak will invest a minimum of EUR 950 million in growing its well-diversified portfolio and new investment decisions may add to this number.
Vopak will continue to manage the portfolio in line with its strategy and create shareholder value through further allocation of free cash flows to value accretive growth. To reflect its strong cash flow generation and growth opportunities, Vopak will update its dividend policy to pay an annual stable to rising cash dividend in balance with a management view on a payout ratio range of 25-75% of the net profit and subject to market circumstances.
Vopak's strategic review and testing of the market value of its terminals in Algeciras, Amsterdam, Hamburg and Tallinn, as announced in the Q2 2018 press release, is progressing on schedule.
Direct link to the page where the Capital Markets Day presentations are published including an update on the financial effect of applying IFRS 16 Lease accounting as per 1 January 2019.
Plenary management presentations in Houston will start at 08:30 am CST (15:30 CET) until approximately 11:30 am CST (18:30 CET) and can be followed via an on-demand audio webcast on Vopak's corporate website www.vopak.com
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