Welcome to the FOPAC Analyst Presentation FY 2020. Today, I'm pleased I'll hand over the call to Laurence Head of Investor Relations. Please go ahead with your meeting. Good morning, everyone, and welcome to our twenty twenty Q4 and full year results. My name
is Laurence de de Graaf, Head of Investor Relations. And today, our CEO, Ilkka Hoekstra our CFO, Gerard Pauldides, will guide you through our latest results. Also, COO, Fritz Elderink, is here and will be available for questions during the Q and A session. We will refer to the full year 2020 analyst presentation, which you can follow on screen and download from our website. After the presentation, we will have the opportunity for Q and A, and a replay of the call will be made available on our website.
Well, before we start, I would like to remind you of our safe harbor for forward looking statements. This disclaimer is also applicable for Q and A throughout the entire conference call. With that, I would like to turn the call over to Ilkov. Thank you, Laurence, and a very good morning, everyone of you who's joining us in the call here today. It is my pleasure to share with you our fourth quarter and full year results of 2020.
As usual, I will give a short introduction on the results and the execution of our strategy, and Gerard will update you on the financial performance. So let's begin with Slide four and review the highlights. 2020 has been an exceptional year in which we have grown EBITDA post divestments. We delivered good results in a more volatile business environment, and we have outperformed on costs to defend EBITDA and delivered growth through expansion projects despite construction delays as a result of COVID-nineteen. The pandemic has impacted the industries we serve.
We've seen unprecedented changes in the supply and demand of gas, chemicals and oil and subsequently a response of our customers to their portfolios and supply We've experienced an acceleration in the energy transition, and we've seen the high dependency on digital infrastructure. Our strategy is aligned with these trends, and strategy delivery progressed well in 2020. We continue transforming our portfolio for the future and invested more than $500,000,000 in growth, resulting in an additional 1,600,000 cubic meters of capacity to meet growing customer demand, particularly in Asia and The Americas. Good progress was especially made in our industrial terminal portfolio with the acquisition of the Dow terminals on The U. S.
Gulf Coast with our partner BlackRock. Our digital transformation is progressing well and the pandemic highlighted the benefits of our leading digital infrastructure. We continued the rollout our cloud based system for our terminals as part of our broader efforts to deliver our digital architectures to support the industrial logistic chains. We're excited by the future prospects and keep our focus on performance and long term value creation. We have momentum in capturing opportunities to serve large scale industrial clusters, and we are advancing our efforts in developing infrastructure to support the energy transition.
We will transform our portfolio and position our company strategically towards more sustainable forms of energy and feedstock. We continue investing in growth and aim to allocate the majority of our growth investments to industrial, gas and new energies infrastructure. Our positive views on chemicals have not changed. New growth investments in oil infrastructure are expected to be reduced and will mostly be targeted towards strengthening our leading hub positions. We're also determined to bolster our leading position in our industry, both in service and sustainability towards customers and society.
We continue to seek opportunities to reduce our environmental footprint and implement our sustainability road map towards our ambition to be climate neutral by 02/1950. For 2021 and beyond, we will keep storing Vital Polish with care to make a meaningful contribution to more sustainable society enabled by our financial performance. Allow me to give you an update on the COVID-nineteen impact on our company. 2020 has been an exceptional year for everyone. All of our lives have been touched by the global pandemic that came suddenly and abruptly.
Everybody within Vopak has responded very well to keep all our terminals operation in operation and deliver uninterrupted service to our customers. I sincerely want to thank all employees and their partners and also our customers, contractors, authorities for working constructively and in good cooperative spirit together in these challenging times. Measures we have taken to manage this pandemic have proven to be effective. Our first priority is and has been to protect the health and well-being of our people, their families, the communities in which we operate and strictly follow the local governmental instructions. Our strategy has remained unchanged, and we work on the basis of business as usual in unusual time in order not to delay decision making.
And we have already in 2020 put extra emphasis on governance. We continue to manage our performance and execute our strategy. As I mentioned, Vopak's strategy remains unchanged and is aligned with the trends that we experience today. Let me recap our strategic objectives. Our key objective is to deliver on a portfolio transformation, focused on growing our portfolio towards gas and industrial terminals and strengthen our chemical and oil hub positions, and our aim is to add new energies and feedstocks in that mix.
We closed the strategic divestment of five oil assets in Europe and China at attractive prices, and we have successfully announced significant projects in the last years. This year, we have delivered 1,600,000 cubic meters of new capacity despite the current challenges. In New Energies and Feedstocks, we're expanding our capabilities and aim to allocate more growth capital to this segment. We already store ammonia in our network and have made our first investments in the hydrogen value chain and continue exploring opportunities globally. We aim to be the digital leader in the tank storage industry and strengthen our position as the leading independent tank storage company.
We continue the rollout of our digital terminal management system and are exploring ways to integrate some of our innovations with our digital setup. These strategic objectives are geared to manage and progress the long term value creation of Vopak. To deliver on performance, we've provided some guidance at the 2020. First of all, we mentioned we aim to grow EBITDA over time. New contributions from our growth portfolio will replace the 70,000,000 EBITDA from recent divestments.
We aim to operate our portfolio with an occupancy rate between 8595% depending on the commercial and operational circumstances. And finally, we aim to deliver a return on capital employed between 1015%. This year, our financial performance has been influenced by multiple events and a volatile business environment. Market conditions in oil markets were supportive with contango and IMO 2020 converted capacity. This is positively visible in revenue, contract portfolio and occupancy rates in oil.
At the same time, market conditions in chemicals were mixed. And although occupancy rates have been stable, variable revenues were impacted by lower throughput activity levels. And as a response, we managed our costs further down this year with operating costs below €600,000,000 in 2020. We delivered new contributions from growth projects in 2020. However, COVID-nineteen restrictions led to delays in commissioning of some of our growth and maintenance projects.
The value of these growth projects is not affected. In 2021, new EBITDA from growth projects will therefore have replaced the divested EBITDA subject to market conditions. Lastly, our performance was influenced by the currency exchange movements and a one off negative accounting result in Malaysia. Despite this all, we delivered good results and have grown revenues. We've also grown EBITDA by 3% post divestments.
Continuing to our next slide. So let me recap our view on the business environment and product markets in which we operate. Let me start with chemicals. The COVID-nineteen pandemic intensified the chemical industry's down cycle, as I mentioned, in Q2. Impact on the demand for chemicals was very different.
Consumable goods have been in high demand throughout the year, but demand for durable products suffered. Although in the 2020, we saw improvements in the key end markets like automotive and construction with supply chains that started to restock. We've benefited from our portfolio composition, and as a result, experienced relative stable occupancy rates at our chemical terminals. However, chemical throughputs have been lagging in 2020, impacting the variable component of our revenues. The oil markets have seen extreme high volatility during the year.
The global drop in oil demand resulted in a supportive oil market structure for storage and improved occupancy rates. During the second half of the year, the contango curve flattened compared to extreme high levels of Q2 and currently is in backwardation for most oil products with the exception of jet fuels. We've benefited from the contango market and have contracted capacity with a solid contract portfolio in terms of pricing and contract tenure running into 2021. The gas markets were also impacted by lockdown measures and the dynamic oil markets. Global LNG demand declined for the first time in five years and saw volatile LNG prices.
In recent months, LNG prices peaked, also supported by cold weather and global LNG demand has taken a bullish start in 2021. The demand for Vopak's gas infrastructure has been resilient this year. Moving on to new energy. Momentum in renewable energies continued despite COVID-nineteen. The speed of the transition to New Energies might be further influenced by the government stimulus.
Opportunities for Vopak will emerge for storage of renewable energy in liquids or gas. Therefore, we focus our business development efforts on opportunities in hydrogen and other liquids that can store energy like ammonia. Within the dynamic business environment across products, our objective is to create long term sustainable portfolio of assets. Now let me say a few words on our portfolio positioning. We've made significant steps in our portfolio to create long term value aligned with long term trends.
We've chosen for a portfolio with a focus on gas and industrial terminals and aim to add new energies and feedstocks in that mix. The current market dynamics support our belief that we are making the right choices and we made them timely. Now let me expand on that point. The current market dynamics have a lot of companies question their portfolio. We, as Vopak, have already made those choices.
And in the last five years, we kept the core and directed business development efforts towards new priorities. We will continue transforming our portfolio and position our company towards more sustainable forms of energy and feedstock. We're excited by the future prospects and are committed to continue investing in growth. We have momentum in capturing opportunities to serve large scale industrial clusters and are advancing our efforts in developing infrastructure to support the energy transition. Our aim is to allocate the majority of our growth investments to industrial, gas and new energy infrastructure.
Our positive views on chemicals have not changed. New growth investments in oil infrastructure are expected to be reduced and will most likely be targeted towards strengthening our leading hub positions. Today's announcement to invest infrastructure in storage of renewable feedstocks in the Port Of Rotterdam is fully in line with our capital allocation outlook. Allow me to share some details on our industrial terminal and new energy developments. In December, we acquired three industrial terminals from Dow Chemicals for the total consideration of $620,000,000 We've done this with our joint venture partner, BlackRock.
The acquisition strengthens Vopak leadership in industrial terminals globally and is a transformative change for The U. S, expanding our capacity for 2,300,000 cubic meters post project completion. We have momentum in capturing opportunities to serve large scale industrial clusters. The industry sees advantages of outsourcing industrial storage activities to specialists like Vopak, and we aim to expand our leadership in industrial terminals. We're continuing our efforts and progressing well with another industrial terminal development in China.
Moving on to new energy. Vopak will play an important role in facilitating the new energy transition. Our portfolio is uniquely well positioned to capture opportunities for investments in new energies and feedstocks. First of all, we currently own and operate assets at major industrial sites in all major global energy centers. Location presence is crucial as we are the incumbent energy infrastructure operator.
Secondly, we have the know how and the experience in energy infrastructure. Today, we already own and operate ammonia at five terminals and methanol infrastructure at more than 10 locations, and these are considered the energy carriers of the future. Thirdly, we have a strong brand and strong reputation as the independent and efficient quality operator. Scale is required to make ammonia, methanol and hydrogen infrastructure projects feasible. An independent operator like Vopak supports investments in infrastructure for multiple users.
As a member of the Global Hydrogen Council, Vopak sees the potential of hydrogen as a new energy carrier. Hydrogen has great potential to support decarbonized energy systems in a range of sectors. Vopak will align its business development efforts with the most likely road map for hydrogen introduction in our global energy system. Each sector will follow a different pathway to include hydrogen. The industrial sector is already consuming a lot of hydrogen, and we expect hydrogen consumption to grow in this sector for feedstock and as a power source.
Initially, this could be sourced from locally produced hydrogen from blue and green hydrogen production sites. The power sector will transition and use hydrogen as a buffer to cater for surplus and deficit renewable generation. And once sufficient hydrogen becomes available, hydrogen will also have a growing importance in the transportation sector for heavy vehicle and also for the Maritime segment. Access renewable hydrogen that is not locally consumed will be moved regionally and later on globally. Hydrogen import infrastructure will be required to accommodate these hydrogen production flows.
We believe that hydrogen will ultimately develop into a global traded energy commodity, my apologies, in which Vopak's infrastructure will play a crucial role to facilitate and balance global supply and demand. Now let me give some insight in what you can expect from Vopak. We have a dedicated new energy team driving a range of options in our new business development funnel, following a new energy road map. As for industry, we are part of the H Vision consortium, working on infrastructure solutions to help the industry in the Port Of Rotterdam decarbonize through large scale use of blue hydrogen. As for power, in Singapore, we are exploring the potential use of hydrogen to power data centers with Keppel and explore the use of low carbon ammonia for shipping.
And as for transport sector and distribution, we are exploring ammonia and maritime transport fuel and develop infrastructure for the necessary supply chains. So we are currently exploring how to facilitate imports of hydrogen to The Netherlands and Germany with potential supply chains originating in Southern Europe, Morocco, The Middle East and South America. In total, we currently pursue more than 10 infrastructure projects and studies, including participating in technology developments. In the second half of this decade, our aim is to invest sizable amounts in infrastructure to facilitate large scale imports and distribution of hydrogen and ammonia in key energy demand centers and industrial consumption areas. Let me summarize our key messages before I hand over to Gerard.
We have grown EBITDA post divestments in a volatile business environment. Customers value our consistent service delivery. Our strategy execution progressed well, and we continue to invest in 2021 with confidence. We have a unique global portfolio, and we have momentum in capturing opportunities in industrial terminal opportunities and new energy developments. So moving on to the next part of this presentation, I would like to hand over to Gerard, who will explain more about our financial results.
Thank you, Elko, and a very good morning to everyone. As Elko said, we are actively positioning ourselves for the future. This makes our investment case exciting and part of the new economy. Meanwhile, we also focus on performance today, and I will update you on the financial performance of 2020. For more details, I refer to the Vopak 2020 Annual Report as published this morning.
And it is also worthwhile to note that we have formatted the Annual Report in line with the European single electronic format requirements, which is a unique first position of Vopak even in Europe to do this. Let's turn to the financial highlights. Vopak has adjusted quickly to the changing business dynamics of 2020, and EBITDA post divestments increased €20,000,000 absorbing negative currency effects and a one off negative accounting result related to our joint venture in Malaysia. We increased revenues post divestments and delivered our cost efficiency measures to defend EBITDA. Earnings per share came in at €2.42 for 2020.
Our financial framework and capital allocation priorities are unchanged, and we continue to invest in growth, sustaining and service CapEx and our digital infrastructure. In 2020, we invested €525,000,000 in growth and aim to invest 300,000,000 to €350,000,000 in 2021. On the returns to shareholders, we executed and completed our share buyback program of 100,000,000 demonstrating our commitment to shareholder distribution. Our cash performance and balance sheet supports continued growth and increased distributions to shareholders. And we are growing our dividend to €1.2 Before I update you on the 2020 results, I would like to first address the performance of the fourth quarter.
Fourth quarter twenty twenty EBITDA of €189,000,000 was negatively impacted by a €20,000,000 one off negative accounting result reported in our joint venture in Malaysia as part of Asia and Middle East division. Excluding this item, EBITDA would have been $2.00 €9,000,000 and that would have been in line with that is in line with consensus. Our industrial terminal PT2SB in Malaysia is a strong asset. It is a high value constructed and delivered at significantly lower construction costs. Incident at our customers' asset resulted in some delays in final commissioning.
And the fourth quarter is impacted by a one off negative accounting result derived from final discussions on commissioning, tariffs, fixed asset charges and deferred tax implications. The commercial model of the terminal is very strong based on the long term industrial terminal concept. And next year, I. E, this year, 2021, we plan for more stable performance than we have seen throughout 2019 and 2020 for this particular asset. And we also expect a €50,000,000 cash inflow for Vopak from share capital repayments in 2021.
This may actually possibly delay into 2022. Now on top of all those moving parts, early twenty twenty, we also received a distribution of €85,000,000 sorry, in cash early twenty twenty. So a lot of moving parts on this joint venture, as I also emphasized in our Q3 earnings update call. EBITDA growth was supported by strong performance in the Americas division from improved chemical contributions at Deer Park. Positive performance of the Europe and Africa division was supported by contributions from our new assets in Durban and Lesedi in South Africa that are now in operation after construction delays in 2020, which partly related to COVID-nineteen.
Let's look at the divisional performance and the trends in the quarters. The America division continued its strong performance in occupancy rates and results. The Asia and Middle East results were impacted by the one off negative accounting result in Q4. The occupancy rate was influenced by out of service capacity in Singapore and a challenging chemical market. Some oil tanks have been brought back into operation in the fourth quarter in Singapore.
The China and North Asia division continued to benefit from a good chemical storage market driven by supply chain opportunities. And performance of Europe and Africa reflected the upswing in occupancy in the oil segment and contribution from new assets. Let me take you through our financial performance of the year in a bit more detail. In our last call, we highlighted the various levers that we that have impacted our performance in 2020. And the starting point to look at these numbers is the new portfolio after having divested five oil terminals against an attractive value.
Changes in the business environment resulted in a net negative contribution. Market dynamics in oil markets and chemical markets for consumable products were positive. However, currency headwinds and reduced chemical throughput have reduced our performance. In response, we've taken cost measures to defend EBITDA and we've delivered on growth projects despite the construction delays that I already mentioned. Excluding the Malaysia item, was €812,000,000 in 2020.
On the next page, we will have a look at 2020 versus 2019 EBITDA, but now with a divisional performance angle. The European and Africa division post divestments had a strong performance supported by higher occupancy rates throughout the year and contribution from new assets. Strong performance in the Americas division was supported by the good contribution of growth investments in Canada, Mexico and Brazil, and some of these were commissioned in 2019, some in 2020. EBITDA came in at €792,000,000 an increase of €20,000,000 post investments and absorbing the currency headwinds and the Malaysia item. The portfolio delivered a return on average capital employed of 11.6% in 2020.
Let's move on to cash flow. This year, we increased our cash flow from operations and pushed for higher dividends from our joint ventures. On top of that, we strictly managed working capital and benefited from derivative settlements reported in operating cash flow. Sustaining Service and IT investments were €315,000,000 in line with last year and including investment for maintenance and inspections of out of service capacity in Rotterdam and Singapore. Our investment momentum continues and resulted in €525,000,000 gross investments for the year, in line with our ambition and including the noteworthy Dow transaction in Q4.
Continuing with investment phasing. We aim to create value by allocating capital to attractive growth projects. In the last years, we've announced and delivered a significant number of projects focused on growing our portfolio towards industrial and gas terminals. We continue to invest in growth and aim to allocate the majority of our growth investments to industrial, gas and new energy infrastructures. Our positive view on chemicals has not changed.
New growth investments, however, in oil infrastructure are expected to be reduced and will mostly be targeted towards strengthening our existing leading hub positions. For 2021, gross investment could amount to a range of 300,000,000 to €350,000,000 as I mentioned. And guidance for sustaining service and IT CapEx remains unchanged. For the period twenty twenty to twenty twenty two, we may spend $750,000,000 to €850,000,000 on sustaining CapEx, and we expect to spend annually 30,000,000 to €50,000,000 in IT CapEx to complete and roll out our Vopak digital terminal management system by the 2022 or early twenty twenty three. We're confident with the ranges that we've set earlier.
We expect to remain within these limits for 2021 and 2022. Let's look at the balance sheet. Our total debt position at the December was €1,900,000,000 This excludes lease liabilities. Our total net debt to EBITDA ratio was 2.72, in the target range of 2.5 to three and compared to 2.75 at the start of the year. The senior net debt to EBITDA ratio was 2.52.
With our portfolio performance and robust balance sheet, we are well positioned to support investments. Moving to shareholder distributions. Our dividend policy is to pay an annual stable to rising cash dividend in balance with the management fuel on the payout ratio. Earnings per share resulted in €2.42 and we announced a 4% increase in our cash dividend to €1.2 per ordinary share, reflecting our continued resilient performance in a turbulent year of 2020. Let me summarize once again the financial highlights for this year.
We delivered 3% EBITDA increase post divestments, supported by growth projects and good cost management absorbing foreign exchange movements. Our financial framework and capital allocation are unchanged and we deliver on the strategy execution. We have changed the segment capital allocation as I explained earlier across the different business segments. We will continue to allocate our capital to value accretive growth opportunities in balance with an efficient and robust capital structure and distributing cash to shareholders. Now looking ahead, and I'm almost wrapping up, and then we will move to Q and A.
So let me close out with a few comments on what 2021 may bring. New contributions from growth projects that we commissioned in 2020 and will commission in 2021 to replace EBITDA from divested terminals could add between 30,000,000 to €50,000,000 in 2021. This is subject to market conditions and currency exchange movements. We continue our cost focus into 2020, and our outlook for 2021 is a cost level of €615,000,000 subject to currency movements. This reflects additional cost for growth assets coming on stream.
We reiterate our ambition to allocate between 300,000,000 and €350,000,000 to growth. And in the coming years, the majority of our growth investments will be allocated to industrial gas and new energy infrastructure. With that, I want to hand back to Ilkol, and we move to Q and A. Ilkol, back to you.
Thank you very much, Gerard. So let me summarize our key messages before we go to Q and A. We delivered good financial results in a volatile business environment. Most importantly, our strategy is working. We are well positioned and have momentum in capturing opportunities to serve large scale industrial clusters.
And therefore, we continue to invest in 2021 with confidence. So that concludes our presentation and prepared remarks. And with that, I would like to hand it back to the operator and to open the call for those who have questions after this presentation.
Thank Our first question comes from the line of David Karstens of Jefferies International. Please go ahead. Your line is now open.
Hi, good morning, gentlemen. Hope you're well. I've got three questions, please. First, on capacity out of service for maintenance. I understand that there was a large headwind in 2020.
And I was wondering where in the bridge on Page 17 that is included. Is that in the growth contribution from new projects? And related to this is I understand that you said in Singapore and now you took back into service some of that capacity. Will this imply a material tailwind to EBITDA in full year 2021? Then the second question, I think you highlighted on the slide that the growth projects generate or are done at around seven times EBITDA.
I estimate that implies a total EBITDA contribution from growth projects of at least €200,000,000 over the period 2019 to 2022. And I think you said in the presentation around 35,000,000 to €40,000,000 was in 2020 and you expect 30,000,000 to €50,000,000 in 2021. If you assume that €50,000,000 was already done in full year 2019, that would imply a material pickup in 2022. Is that correct? And is it around 60,000,000 to €80,000,000 and caused by the fact that you had some delays to the commissioning of capacity in 2020.
And then finally, Maersk announced their first carbon neutral vessel this morning using methanol, biomethanol. And I think they've moved away from hydrogen and ammonia as transport fuel. How does it affect your investment decisions in these areas? Thank you very much.
Good morning, David. Good to hear you again. I think the first two questions, I think, is our questions to the presentation of Gerard. So I think that he can answer that best. I think if we talk about future fuels, particularly technology readiness and the choices, I think Gerard sorry, Fritz is very well positioned to give an answer there.
So I think why don't we start with the last one, which is the choices for the different fuels in the maritime sector. So Fritz, could you enlighten Davin, please?
Yes. Thanks, Davin, for the question, and good morning to everybody also from my side. This is Fritz Aldrinck speaking. I think we see a lot of, I would say, movement in candidates for potential future shipping fuels. And certainly, methanol and particularly biomethanol is one of them.
And I think it's actually a fuel that would suit us as Vopak very well. But we do believe that if you look at the quantities required that it is likely that there will also be alternatives developed. So whereas biomethanol for us is something that we could very well supply to our infrastructure, we also believe we have to continue looking for fuels that may have their own set of advantages. For instance, a higher energy density, the energy density of methanol is not the best. So therefore, we do think that we want to remain open minded.
We certainly don't rule out that over time, things like ammonia or the liquid organic hydrogen carriers that we have invested in through Hydrogenius start to play a role, because they are particularly suitable to ships, because they combine relatively low danger level with a relatively high energy volumetric densities, in other words, content per amount of volume. So we could also see these in future play a role in ships. But for now, I think we see this market developing in all sorts of, I would say, areas and time will tell which one will become the most dominant. But for sure, this is not a game that is clearly settled and over.
Thank you, Fritz. Then I turn to Gerard for the first two questions about the out of service capacity and how that's represented for 'twenty one in the numbers and the growth projects and contribution in EBITDA. So Gerard, please.
Yeah. Thank you. Thank you, David. Good morning. The out of service is not in the contribution from growth.
So the movement in out of service is what you see in the movement in occupancy. We have the occupancy increased nicely in the course of 2020 over the quarters. Average consolidated occupancy, 88% and proportional 90%. And the exit rate for consolidated occupancy was 90, so higher than the average of the quarters in 2020. That was mainly as a result of the movements in oil, less movement in chemicals.
The chemicals variability came mostly from the variable income rather than occupancy. We did bring down out of service capacity, which was indeed, as you point out, very high when we started the year 2020 and managed to bring that down considerably over the year. The start of the year out of service was about 1.6 in Q1 in cubic meters, and we have more or less halved that in Q4. So we will continue to manage that. The most out of service actually is at the moment in Singapore and in Botlek.
Botlek continues with an intense program to reposition its assets. That is partly sustaining CapEx where you have to take pipes and tanks out of service, and it's partly new capital for Botlek, which is adding new capacity. So the movement, as I said, is not in growth. It is in our regular results, and it has contributed to the 3% increase in EBITDA in aggregate. So hopefully, that positions that.
On the EBITDA multiple, the when we build ourselves, we typically can indeed build at that type of range as you indicate. And what we have clarified is the contribution of €35,000,000 to €40,000,000 in 2020 and the expectation of 30,000,000 to 50,000,000 in 2021 from projects commissioned in 2020 and projects that will be commissioned in 2021. Of course, there's continued contribution and additional contributions over time from new investments in 2022. And of course, we also saw contributions from our investment over the past three years in 2029 sorry, yes, in 2019. So that is the spread of the contributions, 35% to 40 in twenty twenty, thirty percent to 50% in 2021.
And that is reflective of those type of multiples. Now what you also see is that the construction period, I. E, allocating your capital and actually commissioning for industrial terminals is longer than, let's say, traditional brownfield extensions or smaller projects. So you need to build in a little bit more time for the industrial component to come through. But the essence of what these multiples imply is correct.
And hopefully, we've given you some insight. We invested €500,000,000 in 2020. We expect to invest another 300,000,000 to 03/2021.
Great. Thank you very much. Can I ask one quick question? Do you roughly know what the contribution was in 2019 from new growth projects?
I will look that up, and we'll get back to you, David. I don't have that with me.
Okay. Okay, great. Thank you very much.
Thank you. Our next question comes from the line of Luuk Van Berg of Degroof Petercam. Please go ahead. Your line is now open.
Yes. Good morning. Well, first, a question about your cost guidance. You have quite some new projects coming online in 2021. Should you expect a significant free operating expenses or start up costs for that?
And is that included in your guidance? And my second question is on the impairment in Panama. Can you give a bit more background there and indicate if we should expect a negative impact on the contribution from the terminal going forward? Thank you, Luc. Gerard, I think you can easily answer these questions.
Floor is yours.
Okay. Bit of perspective on cost. The cost that we guide to is $6.15. We operated the company in 2019 at $6.33. We've replaced some assets, added some new assets.
All these numbers are inclusive of all the consolidated assets. So it is all assets that are operational and they are running costs and they may also be costs that are expensed in commissioning or starting up. So it's an all inclusive number. And so far, we've managed to continue to put healthy pressure on the cost levels to, as Ilkos said earlier, defend our EBITDA. In terms of Panama, Panama is an asset where we have a setup where we own capacity of 375,000 cubic meters and we operate another, let's say, 100,000 for Chef Ron, the party who's also present on the site.
In the own setup, we have a total of nine tanks. And the occupancy of those tanks has been influenced by the pace at which we were able to develop the market in Panama. So this is a greenfield activity for fuel oil on the Atlantic side of the Ocean Of Panama, sorry. And for that operation, you also need to have your offshore bunkering permitting arrangements organized, and that has been delayed. That has been delayed in discussions with the government.
It's constructive discussions, but obviously, everybody wants to be very careful that this is handled properly. And that has proven to be taken longer than we anticipated, probably also not helped by governments being distracted with COVID pandemics and you name it. So the short of it is that where we are now commercially is not where we planned to be for Panama. So we are, from that point of view, behind. And therefore, the business plan reflects that.
And because the business plan reflects that, you need to impair the asset. It doesn't really change the fundamentals of the asset. The strategic location is a sound location, but it does take longer to commercialize it. So we have partly impaired it. It is part of our fuel oil network worldwide.
As you know, we've trimmed that significantly in 2020, where we intervened with our fuel oil exposure, bringing it down from 5,000,000 to 3,500,000 cubes and fit for IMO 2020. There's a small element of that is Panama. And as I explained, Panama is behind its business plan as we had hoped it would be.
Okay. Thank you. That's clear.
Thank you. Our next question comes from the line of Thomas Adolff Please go ahead. Your line is now open.
Good morning. I've got a few questions as well, please. Firstly, just on the oil contracts. You mentioned in the call that the contracts run into 2021. Perhaps if you don't mind being a little bit more specific, is it a good coverage throughout 2021?
Or presumably, these are shorter term contracts, which require renegotiations? So some color on that would be great. And then secondly, going back to Slide 17, you show a very nice bridge and you also show that the portfolio decisions have impacted your EBITDA by €58,000,000 But do you could you perhaps say how much of the old assets you sold actually contributed to EBITDA in 2020? And then my final question is in terms of the new energy businesses, what sort of an EBITDA margin are we seeing there? Thank
Thank you, Thomas. I suggest that I'll say a few words about the oil contracts question globally, and then I think the questions on particularly the margin of new energy that I would leave to Gerard. And then also the bridge that you mentioned, I'll leave to Gerard. So let me start giving you some insights on the oil contracts and the comment that I made in my presentation. We highlighted that in 2019 sorry, apologies, in 2020, we got momentum in the oil markets.
And there were two reasons for that. It's first of all, that we delivered the IMO capacity that we converted for the low sulfur fuel oil, particularly in Rotterdam and in Singapore. And therefore, we could return capacity that was out of service in the early parts of 2020 and the 2019. And second of all is that we saw that there that the markets were supportive of storage in the early part of twenty twenty because of the COVID pandemic, because demand substantially reduced. Obviously, the need for storage increased and we saw quite a strong contango structure appear in the markets.
We benefited from that. I think you've seen that in the results. And you've seen the occupancy in those locations to go to levels which we deem to be very healthy between the 9095% occupancy on available capacity. There is the markets that you see now, I think are substantially more balanced. And with that, we've seen a response on the supply side by OPEC and non OPEC companies collectively to reduce the output of products.
And similarly, we've seen also that the take up of new demand or returning demand has been managed well. So we've seen that the oil price has been relatively stable in the last quarter and also in the start of 2021. So with that, we have seen an environment which is more stable. But we have still sort of continued our contract portfolio from 2020 into 2021. So we feel if you look at our coverage for oil in the oil contracts in 2021 compared to 2020, We look at that positively or through advantageous in the sense that the contracts that we have today in our portfolio is a very solid basis to start from.
So I think this is the guidance we've given. We haven't given any indication on, obviously, price levels or occupancy going forward. I think that's as you know from us, we always report on the actual performance. So we will continue to do that. But as I said, if you look at the effects of the contango and the strong oil markets, we qualitatively can say that we will benefit from that as well in the year 2021.
So with that, I hand it over to Gerard to answer the other two questions.
Yeah. Hi, Thomas. Hope you're doing well. Thanks for the question and thanks for your time. The EBITDA bridge shows the €58,000,000 for divested terminals.
And what's in there is the effect of nine months of 2019, yeah, contribution that was in our numbers. And then we sold a big chunk, and we missed the fourth quarter. So the total number for divestments that you need to calibrate on is €70,000,000 That is the €70,000,000 that we gave as a sort of indicator of the EBITDA that we wanted to replace with new capacity coming on stream. And as I said earlier, if we only isolate the 2020 and 2021 contribution from new projects, then that is respectively 35 to forty and thirty to 50. Now what you need to also bear in mind, of course, is that in between these numbers that I just quote, you have and that goes a bit back to the earlier question on multiples as well, how do you tie it all together.
This year, we've also seen quite a big effect on foreign exchange. And if you just step back and look at the EBITDA profile for the year, so if we correct for the divestments, we start at an increase for this year of EUR 20,000,000. If you then say, okay, what is the effect of FX? And if you were to ignore that, you have an increase of EUR 40,000,000. And then if you take Malaysia into account, you have another dimension again on these numbers.
So I do think it ties back to the multiple question that we had earlier. But obviously, business conditions in the year and foreign exchange also influence these bridges. But again, the question you asked was how do I place the '58? It's nine months of 2019, and then one missing month bridges it to 2020. How much of that is in 2020?
Almost nothing. So the contribution of divested assets in 2020 is almost nothing. Thank you. Back to the operator.
Thank you. Our next question comes from the line of Quirijn Mulder of ING. Please go ahead. Your line is now open.
Good morning, everyone. This is Quirijn from ING. A couple of questions. First about the Chemicals. As we understood, of course, that second quarter was the worst.
So can you give me some comparison between the first half twenty twenty and the second half? And looking forward, what's view is on the throughput? Have you seen the bottom there? That's my first question. Then with regard to the accounting issue for the PT2SB, do I understand correctly that the numbers in 2019 and 2020 contribution from the PT2SB were overstated?
And can you maybe explain, let me say, the volatility in these results as well? And what are we going to see forward for this for the numbers? Do we have to take into account lower contribution from this terminal? That's why my two questions for this moment. Thank you.
Thank you, Christian. I will ask Gerard to answer the accounting issue, P2SB. And then I'll take I'll answer your chemicals throughput question. So Gerard, would you enlighten, please?
Yes. Thank you, Corrine. And I do appreciate that we've given a lot of information on PT2SB, but still it's also a difficult one to dissect. The effects in Malaysia are the combination of commissioning an asset in a period where also the sponsoring asset or the client was commissioning its own asset and had several incidents. So the focus on the completion and commissioning of the assets has to be seen in the context of a delayed prolonged commissioning effort trying to bring not only the commissioning, but also the final CapEx spend on the assets, the commercial decisions, the tax true up as a result of that in terms of deferred taxes into a sort of completion area and commissioning area rather than into work in progress.
That has been protracted and delayed. And therefore, we had to take final stock of that discussion in Q4. So from my perspective, that is the way it's been recorded to make it even a bit more complex. We also had a capital distribution in Q1 twenty twenty of €85,000,000 in our favor, so cash coming to us. And we will have another cash contribution to us of €50,000,000 in 'twenty one, possibly 'twenty two, maybe the end of 'twenty one.
And in between, we have this €20,000,000 charge, which relates to, as I said before, the depreciation charges of fixed assets commissioning, deferred tax liabilities, finalizing the completion accounts for the fixed assets, I. E, what did we build, what part of infrastructure for, that results in further commercial discussions on the tariffs that you have agreed, including when was the asset available, yes or no for servicing, when was the customer ready to receive the services, were there certain dispensation allowances in the contracts to have commercial discussions around that? All of that is in the mix. And I'm deliberately giving you all those moving parts to underscore the point that this is a whole lot of things coming together on a major industrial complex, which is as good an asset as the Dow asset for us in The U. S.
So it's a highly valued industrial terminal position for Vopak. We will now start looking forward to a more stable performing assets. And I don't see the need for you to make any corrections in 2021 on account of this. Only thing that is still remaining is the capital structure of the venture. And we will update you on that as it happens.
And that has to do with the capital distribution that I mentioned. So perhaps a very long, long sentence or a few sentences to hopefully give you some more clarity on this item.
The capital structure of the joint venture might have an impact on your participation in the total, the 26.5%. So it might have an impact on your on the stake you have at the end?
Yes, because we have a range for this asset that oscillates between the number that you quoted and a few percentage points around that. That has to do with the fact that there are different classes of shares in that venture. The different classes of shares relate to the different setup of the infrastructure, where there is general infrastructure and specific infrastructure, it's all in one commercial setup with the sponsor. And that is the way that an industrial terminal may be organized. It is much more dependent on the relationship with your sponsor.
In this particular case, it played out as it played out. I think the only comparable one that comes to my mind that had a similar complication, not complexity, but complication was, if you remember, Haiteng in China. Haiteng, we also had an incident. We had a long period of settlement to stabilize and start up the venture. That's now behind us.
And also, that volatility is gone. So the message I have to you is this is a good asset that has shown volatility on the cash side and now in the results that you should look through and concentrate on the earnings going forward.
Thank you. Okay, Corine. Maybe a comment from my side, and that is that it is for me really hard to give you a definitive answer on chemical volume, particularly in the year 2021. And let me explain you why that is. I think in last year, you're well aware of the differences that we've seen in volume of the durables and nondurables.
We've seen a stark difference there. Occupancy held up in the year. And what we've seen by the end of two thousand and one is that there was renewed confidence in the durable goods that came back. And generally, chemical producers reported solid year end results, and they signaled continued momentum for them sort of early twenty twenty one because demand in electronics, automotive and appliances led recovery supported for them their prices and their margins. So they radiated sort of a positive view on the markets ahead of them.
But for
it's really hard to see how that will affect will be sustained because I think we haven't seen the full effect of the pandemic and the recovery. There's still some uncertainty in whether the spirit in consumption in Q4 is a temporary one or whether we see that continued. So that's why there's a bit of caution on my part. If I look at the portfolio of Vopak, I'm the ITL business that we have, the industrial terminal business that we have is has performed and will perform well. I think plants are running.
And we've seen that, therefore, with the long term structure, we have confidence in the continuation of that performance in 2021. I think if you look at the throughputs, that for me is indeed a question mark. And I think particularly at the as I said, at the hub locations on how much throughput we can generate in those locations for me is still question mark of all the aspects that I mentioned. So I'm afraid that I need to leave you hanging, but there are just too many uncertainties in how 2021 will play out that I think we just need to wait and see on how that pans out. Okay.
Thank you.
Thank you. And our next question comes from the line of Andre Mulder of Kepler Cheuvreux. Okay,
one question.
In oil, said that you would only strengthen your current hubs. Should we expect also some disposals? Okay, Corine, I'll take that answer. Thanks for the question. I think what we've done is we have made the strategy that we have pursued already for a while more explicit, Andre.
And that means that if you look at the capital allocations that we've made and also the business development funnel that we've developed, it is directed more towards industrial chemicals and gas and hopefully new energy. Oil will remain important for us. So I'm happy that you answered that question. But what we see is that if you look at our network, and we've said that already a few years ago, is that we will look at an oil network, which is centered around the hubs. So we are divesting the secondary locations around those hubs, and we've done so.
You've seen us selling off Hamburg, Sweden, UK and for instance, Spain. But we also made the comment is that we will continue to invest in what we consider the large and most important import distribution locations for oil. So that's where we have invested in Mexico, in Indonesia, in South Africa, and actually expanded that recently. I think that strategy still holds true today. So I think what we've done is we sort of made the strategy execution that we had in the last few years just more explicit.
And what you can expect is that if we move on that portfolio, it will be indeed to strengthen the hubs to expand those major shorts. So that will be part and parcel of our thinking.
Our next question comes from the line of Tys Bergelder of Abnormo.
Thijs Berkelder, ABN AMRO, WHF. Longer name than usual, and I won't keep it on one question because I think that's ridiculous. We spent a lot of time on you as a company, and we deserve more than, just one question or maybe two questions per analyst. I'm really getting pissed off here. Sorry for that comment.
But, going back to Slide 17, that's a great slide, really a big help on getting the bridge on 2020. Still a question there. If I look at your product movement revenues and your storage and handling related services revenues, they've dropped by 45,000,000 to €50,000,000 year on year and not only the chemical throughput 20,000,000 to €25,000,000 So whereas the other throughputs related to? Then secondly, what now really is the starting point for your guidance for 2021? Is it $792,000,000 is it $812,000,000 or is it, let's say, four times the $2.00 8,000,000 EBITDA you delivered in Q4?
And four times Q4 is already, let's say, 32. So it's already delivering, your guidance compared to the July, meaning nothing extra can be expected. Please fill the guidance for 02/2021, which giving the same bridge as you give for 02/2020. So on oil marks, I heard a small positive, probably because of a better occupancy and better contracting level right now. Chemical throughputs, well, at the second half, if I look at the product movement, to be seems to have been weaker even than H1.
So if I hear your response, you are afraid that it will stay at the low level of the second half. Is that correct? Then in 2021, what at this month is already the forecast effect or ForEx effect you expect to affect the EBITDA in 2021? And it's clear that the costs will rise. On the cost, I have a question, why the costs are going up?
Why you signed a CLA with substantial rises in salaries and on cost? Why was the OpEx in Q4 so much higher than in previous quarters? Was that maybe related to bonus payments? And if so, will this will that cost level continue into the first and second quarter? Or will they fall back again?
Is the cost guidance finally, is that current Forex? Is that 2020 average Forex level? Or is that, yeah, whatever cost guidance expectation level? Those were for now my questions, sorry.
Thank you, Thijs. You don't have to apologize, Thijs. I think everyone has right to emotion. So it's we absolutely listen to your guidance. You have several questions.
I would like to give that to Gerard to fill you in on the questions that you have.
Okay. Let's deal with that. Morning, Thijs. Hope you're doing well. First, the currency.
You're absolutely right. The currency is a difficult one to pin down. If you look at the sensitivity of the company, then we've given guidance on that on the EBITDA sensitivity level. And particularly, we've always highlighted the U. S.
Dollar and the Singapore dollar. In 2020, we also had a quite remarkable move of the Brazilian real, but we don't typically give guidance on that, but it was a noticeable effect. On the U. S. Dollar, the EBITDA sensitivity is approximately €16,000,000 for €0.10 movement.
On the Singapore dollar, the move is about €11,000,000 at the EBITDA level for €0.10 movement. The average U. S. Dollar in 2020 was $1.14 And the current rate of the dollar, as you know, is $1.22 Well, 1.22. Now I don't know and you don't know where the U.
S. Dollar will go in the course of 2021. But we do know that starting the year compared to last year, there is a delta between the average of last year and the current prevailing rate. For the Singapore dollar, the actual in 2020 was 1.57. And I believe the current rate is 1.6 or so, a little bit weaker.
The Brazilian real and the Australian currency that took such a high movement, the Brazilian real and the South African one, I think they've recovered quite a bit, but they also fell quite a bit. And the South African real is particularly relevant for the Mercedes and the Durban assets. So there's a bit of gymnastics that I'm afraid you still have to do in terms of estimating and trying to neutralize that FX effect.
As it is now, let's say, roughly, we're starting with a minus of €25,000,000
If the rates prevail, then well, I said what I said. So
I believe you yes.
In terms of the Chemicals throughput number, I think you said why are you showing 20% to 25%, whereas you can identify only a lower number. I couldn't quite as quickly as you did find the lower number that you spotted But
in your annual report, you gave a breakdown of revenues per product group, and they are only already in the consolidated operations, you have a minus year on year of about €46,000,000 in in product movements and storage and handling related services. And, of course, on top are coming then then all the the moves in in associates. So the the the net then the total effect, 90 was much bigger than the EUR 20,000,000 to 25,000,000. Maybe it's only EUR 20,000,000, 25,000,000 in Chemicals, then there has been a similar amount of negative profit movements in on the oil side.
That's correct, Thijs. This is the throughput numbers in the chemicals
business
that we've shown here. So I can only confirm that.
Yeah. Okay. Yeah. And going forward, so are we expecting then the low second half to continue?
What you have seen in the chemicals business, but perhaps Fritz or Elko can say a little bit more about that is, I think the chemicals companies have seen they were cautiously getting more enthusiastic towards the end of the year in 2020. And I think the start of the year, depending on which product group you are in chemicals, people see seem to be more confident. Now for us that would be good, because obviously, if their throughput levels and product movements increase, we benefit from that. So I can only say that whether it's what 2021 or 2022 will bring and how quickly the GDPs in countries because that is often what is driving this actually in aggregate reestablish themselves, the better it is for us. 2020 has just not been a good year for throughputs.
So to see it go down, I think, would be unlikely over time. To see it go up would be logical. But I want to quickly check-in with Ilco whether he wants to qualify this more. Otherwise, I go back to the remainder of your questions. Ilkov, do you have anything else to say on that chemicals activity?
No, think I did in the previous question, Neffeera. Thank you.
Okay. Let me then go on to cost. I think the cost performance is influenced also by the fact that what we see in many ports worldwide is we see pressure as a result from port fees and leases. So that's not helping. We need to compensate that in our overall cost performance together with indeed pressure that we get from regular salary increases and salary rounds.
So whatever we give away on that, we need to somehow make good in the rest of the cost base. In terms of a Q4 effect that was not incentive related. We aggregate the multiyear incentive programs and calibrate that throughout the year, so to reduce volatility. And we make also an estimate on the short term incentives and calibrate that for the year itself. That normally, that would not be a big move unless we have a surprise in the fourth quarter.
So it's not incentive related, Thijs. It is related to either one off items in the quarter, which are often insurance or claim or legal settlements. We had quite a few legal settlements in Q4 that we're going through the numbers.
Sorry, I think Felix. In your report, indeed show advisory fees of €29,000,000 versus €20,000,000 a year ago. So that could be that that primarily has landed in the Q4 results.
Yes. That is partly is that correct? And that is also some other advisory work that we conducted to develop our new business development position. So in many ways, that is good money, but it hurts in the P and L. But it's deliberate money that we spent on new business development or on optimizing existing positions.
Those advisory fees also were impacting Q4.
Yes. And maybe one add on question on expenses. In personnel expenses, you capitalized a lot of personnel expenses, 74,000,000. That's, let's say, 25% of what you report, and and you indicate that it's related to more or less as a spinner constriction. But over the years, it only has gone higher and higher.
Of course, logical, you have a lot of assets in the construction. But 25% of total, how can it run so high?
Yeah. A valid point. We did spend 500 plus million on new business development or growth CapEx, if you wish. So that was also consistent with a peak in CapEx investment. So from that point of view, logical.
We also do have quite a flexible workforce on projects. So if all is well, then that workforce contracts again with projects rolling off. So if you're over the peak of that investment, then you capitalize labor or for that matter, capitalize interest, because you have the same effect there. But capitalized labor reduces, but also the total labor bill on account of flexible people that work on projects would come down again. But it is correct, we are spending a lot of people, resources in our investment program.
And it is high on account of the 500 plus million that we are spending. So yes, that is correct,
Or is it also related to your IT expenditures, your IT personnel?
Does Fair enough. Fair enough. We do have if you look at our total numbers in the company, we do have quite an investment for IT. But I think for IT, perhaps the stage at which we are and what we are doing, maybe it's good to hand over briefly to Fritz. Fritz, would you care to make a few comments on IT?
Yes. Thanks, Gerard. I think, yes, on IT, indeed, are capitalizing quite few personnel costs. And that is related, I would say, to two main things. One is we are, as you know, developing our own terminal management software, what we call the MyService package under Moose.
So obviously, that has development cost, which is being capitalized through personnel. And then we are also in the middle of our cybersecurity upgrade program, which we call COINS, which also has a similar effect. So you're absolutely right, Thijs, that as we have a philosophy of ultimately thinking that the total cost of ownership for quite a few packages is lower, when we develop them ourselves, you see some of this cost being capitalized rather than end up just straight in the P and L when like you have when you effectively buy a license for an existing package.
Yes. But your guidance is for 30,000,000 to €50,000,000 IT expenses. Other operating expense, I see $28,000,000 Those are probably normal external IT expenses. And this should be then those 30,000,000 to €50,000,000 Or now you also have probably assets.
Thijs, this is Ilkol. May I suggest that this is a question I think that we can accommodate outside the meeting and just get back to you with IR on going through that going through these numbers?
Yes, Okay.
I think we have room for one more question. Is that correct, Laurence?
Me just I'll go sorry to interrupt you. I do want to check with Thijs whether because of his opening statement that he was very disappointed with the time that we actually dealt with all his questions, because he is investing and has invested a lot in the company analysis. So I do want to check back, Thijs, whether we have given you the time that you were hoping to get.
Yes, you have. Of course, I have a lot more questions, but it's simply that that you're spending one hour per buy side investor. And and I would say for for the whole sell side community, We need more Q and A time. That's simply it.
Okay. That's appreciated, the feedback. We'll deal with that. And thanks for being so upfront on that as we listen to you. Thank you, Thijs.
Elko? Thank you, Thijs.
You. Our final question comes from the line of Yuri Zanieri of Kempen. Please go ahead. Your line is now open.
Hi. Thanks, gentlemen. I hope you're all doing well. So well, I will limit one question on my end, mainly on the New Energy business. I was wondering what type of returns are you looking at?
You have mentioned that you are assessing roughly more than 10 infrastructure projects. So would it be good to have any idea on the returns that you are looking at, the competitive landscape. And I was also wondering if the guidance on 300,000,000 to $350,000,000 CapEx already include part of allocation to new energy. Maybe it would be good to know up to what percentage of this CapEx guidance could be allocated to this sector. And still on the on the CapEx for 2021, I feel that you definitely have more rooms to invest on new growth project.
But in case you cannot find other interesting attractive project, would you consider to opt for a new share buyback?
Thanks. Thank you, Yuri. I think what we can do best is first listen to Fritz to lay the land on what type of new energy investments we are reconsidering, so you can get a bit of an idea on the relationship between sort of how the markets will function. And then I'll probably hand it over to Gerd to give you a sense on the return and most and also on your question on the capital the use of capital in the company. So the floor is yours, Fritz.
Okay. Thanks, Ilkka, and thanks, Yuri, for the question. I think what we see in the new energy space, Yuri, is obviously a very interesting and multifaceted landscape. But if you ask me what are some of the developments that we expect to take place first from our perspective, then I would say it's our involvement with the liquid organic hydrogen carrier technology development. So some of the things that could become interesting on a shorter time scale there are some sort of a scale up pilot demo to show to society that this technology is getting ready for larger deployment.
If you then say what's next, then I think you're aware that leading ports, including Rotterdam are looking at taking care of carbon dioxide capture and storage. So we also expect that whereas a lot of the perhaps port carbon dioxide could be captured through pipelines, eventually other industrial areas will want to be connected to also deliver their carbon dioxide to the sinks in, for instance, the North Sea. So we do see terminalling opportunities in carbon dioxide capture and storage as a next phase. And then already quite a number of countries, which are richly endowed with renewable energy are thinking of exporting that energy in some renewable form, be it either a mode to ammonia or to liquid hydrogen to what are expected to be short markets of the future, including Europe. So we are in discussions there.
And I think if you look at the readiness level of the various technologies that it's likely that their ammonia will be before liquid hydrogen, simply because ammonia, as we already alluded to also in the presentation, is a substance that has been handled before on large scale. And so we have most of the technology. And if it is industrial use, would say we have all the technology. So and then eventually, you'd be looking at hydrogen and you may have heard, if I take the example well, there are two examples here. We're looking in Singapore with Keppel at running a data center on hydrogen.
And where is that still some time away, it's certainly extremely interesting from a development perspective. And closer to home here in Rotterdam, is the so called H Vision project of the port of which we are a partner, where we are looking to basically supply hydrogen to the existing industry. So those are some of the developments that are ongoing. Now I think you've heard a little bit in what I said, I don't expect that they will really take off in a very significant way already in this year 2021. There may be some first smaller investments, but certainly, as soon as the opportunity is there, we would like to invest.
And I do expect that within the coming five years, those opportunities will really become substantial. That was it from my side, Elko.
You. Gerard?
Okay. Thank you, Yuri. Of course, the buyback question or distribution to shareholders or if I step back even further, the financial framework, the principles remain exactly the same, Juri. If we feel that there is a balance sheet, which is not fit for purpose and overcapitalized, then we will not obviously lower the requirement on returns to pursue investments and or take more risk. No, we will stay disciplined.
We will stay exactly to our strategy, which is storing vital products with care with a focus on digital and new energy and feedstocks. We've given you the allocation for industrial terminals, gas and our enthusiasm for chemicals and less allocation to oil. We will stick to that. And if we see opportunity to create value, we will absolutely do that. For if there's money left, then we have proven that dividend is high on our list, will always be high on our list, but we've also proven that we are prepared to use distribution tools like buybacks.
So we will seriously consider if and when it happens. On the returns, well, Fritz already gave you the answer answer on new energy and feedstock. The way I look at it, maybe it's repetitive to what Fritz said is at the moment, this is coming at us with a force, much more intense than two years ago or five years ago. Supply chains are complex. You need to get into that supply chain and find your sweet spot where you can create value.
In the first instance, this will be a value discussion, being in ammonia, being in methanol, being in new energy flow batteries or what have you. In first instance, will be a value discussion and seen as such by, I also think, the investment community. And then you have to look through the revenues over time. But in first instance, this will be a capital allocation discussion, and we will not compromise the portfolio return on our capital investment. So hopefully, that gives you the sentiment, Juri, because I think that's what you need to hit on this topic.
Back to Elka.
Thank you. Thank you very much, Gerard, Fritz and everyone in the call. I think with this, I think I would like to conclude the call that we had here today. I think, first of all, apologies for taking a bit more time than we had originally planned for, but I think it was very much worth the effort. I think second of all, I think we'll take good notice of the comments made by Thijs that we plan for sufficient time in the Q and A session that we can go through the questions in due course.
And lastly, I think it's been probably taking a bit more time also to moderate it from our side because I think Fritz Firth and myself are sitting in different rooms. So we needed to coordinate it a little bit due to COVID. So therefore, it's taken a little bit more. But I think it was a good call. We've been able to handle and give you a handle on most of the developments that are taking place in the industry.
And thank you again for your attention, and I'm sure that we'll speak to each other again in the not too distant future. So with that, I hand it back to Lawrence, if there's anything left for you to be said. Thanks, Yuko. Thanks, everybody, for participating. I think that closes the round off the call.
See you in see you for the next update, will be the Q1 update, April 21. Bye bye.