LONDON, Nov. 12, 2014 /PRNewswire/ -- VTTI Energy
Partners LP ("VTTI" or the "Partnership") (NYSE: VTTI) today
reported its financial results for the third quarter ended
September 30, 2014.
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Highlights
- Priced our initial public offering ("IPO") at $21.00 per unit on July
31, 2014 and closed on August 6,
2014.
- Issued 20,125,000 common units, including overallotment option,
representing limited partner interests and commenced trading on the
New York Stock Exchange.
- Generated Adjusted EBITDA(1) of $45.4 million for the third quarter of 2014.
- Generated prorated distributable cash flow(1) of
$6.6 million for the period from
August 6, 2014, the closing date of
the IPO, to September 30, 2014.
- Declared a prorated cash distribution to unitholders of
$0.159783 per unit for the period
from August 6, 2014 to September 30, 2014, equivalent to our minimum
quarterly distribution of $0.2625 per
unit per quarter and $1.05 per unit
on an annual basis.
- Appointed Robert Abbott as chief
financial officer on October 31,
2014.
- Appointed Ian Farmer to the
board of directors of our general partner on October 31, 2014.
(1) Adjusted EBITDA and distributable cash flow are
non-GAAP financial measures. See Appendix A for a reconciliation to
the most directly comparable U.S. GAAP financial measure.
Successful Completion of the Partnership's IPO
On August 6, 2014, VTTI completed
its IPO with the sale and issuance of 20,125,000 common units
representing limited partner interests (including 2,625,000 common
units in relation to the overallotment option exercised in full by
the underwriters). The common units sold to the public represent a
49.0% limited partner interest in VTTI. VTTI B.V., our indirect
parent company, indirectly owns a 2.0% general partner interest and
the remaining limited partner interest in VTTI. In connection with
the IPO, VTTI acquired a 36.0% ownership interest in VTTI MLP B.V.,
which owns a portfolio of six terminals with approximately 400
tanks and 35 million barrels of refined petroleum product and crude
oil storage capacity located in Europe, the Middle
East, Asia and North America.
Financial and Operating Results Overview
The operating results of VTTI for the third quarter ended
September 30, 2014 were consistent
with expectations for VTTI's initial operating period following the
completion of the IPO. Mr. Rob
Nijst, Chief Executive Officer of VTTI, stated: "The strong
results demonstrate the strength of our business model, which is
built on providing fee-based services under long-term contracts and
leveraging our network of strategically located, state-of-the-art
terminals in key energy hubs around the world."
Net income for the third quarter ended September 30, 2014 was $29.3 million and operating income was
$28.4 million. Our key cash flow
metrics, Adjusted EBITDA and distributable cash flow, were in line
with guidance provided at the time of the IPO. Adjusted EBITDA for
the third quarter ended September 30,
2014 was $45.4 million. The
Partnership generated $6.6 million of
distributable cash flow for the period from August 6, 2014 through September 30, 2014 .
In the third quarter ended September 30,
2014, the Partnership reported its lowest recorded total
injury rate to date of 1.3 injuries per million hours.
Cash Distribution
On October 31, 2014, the board of
directors (the "Board") of VTTI Energy Partners GP LLC (the
"General Partner"), the sole general partner of the Partnership,
declared a prorated quarterly cash distribution of $0.159783 per unit with respect to the third
quarter of 2014. The implied distributable cash flow coverage ratio
was 1.01x. The distribution was prorated for the period beginning
on August 6, 2014, which was the
closing date of our initial public offering, and ending on
September 30, 2014, and is equivalent
to our minimum quarterly distribution of $0.2625 per unit, or $1.05 per unit on an annualized basis. The
prorated cash distribution is payable on November 14, 2014 to unitholders of record as of
the close of business on November 10,
2014.
Financing and Liquidity
In connection with the IPO, VTTI MLP B.V., of which the
Partnership owns a 36.0% economic interest and majority voting
interest, entered into a new €500.0 million revolving credit
facility (the "VTTI Operating Revolving Credit Facility").
As of September 30, 2014, the
Partnership had cash and cash equivalents of $52.4 million and total bank debt outstanding of
$585.4 million (excluding restricted
cash and debt held by affiliates), implying a net debt to Adjusted
EBITDA ratio of 2.9x. There is an undrawn amount of approximately
$50 million in place. Further, our
sponsor VTTI B.V. has the ability to lend money to the Partnership
from its available sources of liquidity.
We believe that our current resources, including cash generated
by the operations of the Partnership, are sufficient to meet our
working capital requirements for our current business.
Management
On October 31, 2014, Robert Abbott was appointed by the Board as
Chief Financial Officer of our General Partner. Mr. Abbott replaces
Rubel Yilmaz who will continue to hold the position of Head of
Business Development and Strategy and remain an executive officer
of the Partnership. Mr. Abbott was previously a director in the
Energy Corporate Finance team of Deutsche Bank AG (London) and has over a decade of experience in
energy-focused investment banking. Mr. Abbott is a qualified
Chartered Accountant having trained at Deloitte and holds a
Bachelor of Arts degree in History from the University of Cambridge.
Additionally, on October 31, 2014,
Ian Farmer was appointed by VTTI MLP
Partners B.V., the sole member of the General Partner, as an
independent director to the Board and chairman of the Audit
Committee of the Board. Mr. Farmer served as the Chief Executive
Officer of Lonmin Plc from 2008 to 2012, having previously held
several positions at Lonmin Plc including as Chief Strategic
Officer and as the Finance Director of Lonmin Platinum. He joined
Lonmin Plc in 1986. Mr. Farmer is a past President of the
International Platinum Association. He currently serves as a
Non-Executive Director and Chairman of the Audit Committee at The
Royal Marsden NHS Foundation Trust. Mr. Farmer is a qualified
Chartered Accountant and holds a Bachelor of Accounting Science
from the University of South
Africa.
Outlook
Mr. Rob Nijst, Chief Executive
Officer of VTTI commented: "VTTI's growth strategy is underpinned
by multiple sources of potential expansion. These include drop
downs from VTTI B.V., a global leader in the independent energy
storage business, with whom VTTI has a right of first offer on all
current and future assets; organic development opportunities at
existing assets; and potential strategic greenfield development and
brownfield acquisitions in the highly fragmented international
terminaling market. Our overall weighted average contract tenor as
of September 30, 2014 of
approximately four years provides a very stable outlook for the
existing assets and we are confident that VTTI Energy Partners is
well-positioned to deliver future distribution growth to its
unitholders."
About VTTI Energy Partners LP
VTTI Energy Partners LP is a publicly-traded master limited
partnership formed in April 2014 by
VTTI B.V. to own, operate, develop and acquire refined petroleum
product and crude oil terminaling and related energy infrastructure
assets on a global scale.
Forward Looking Statements
This press release contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
The reader is cautioned not to rely on these forward-looking
statements. All statements, other than statements of historical
facts, that address activities, events or developments that the
Partnership expects, projects, believes or anticipates will or may
occur in the future, including, without limitation, future
operating or financial results and future revenues and expenses,
future, pending or recent acquisitions, general market conditions
and industry trends, the financial condition and liquidity, cash
available for distribution and future capital expenditures are
forward-looking statements. These statements are based on current
expectations of future events. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual
results could vary materially from our expectations and
projections. Risks and uncertainties include, but are not limited
to, the following: future supply of, and demand for, refined
petroleum products and crude oil; general economic conditions; our
future financial condition and liquidity; significant interruptions
in the operations of our customer; dependence on a relatively
limited number of key customers; operational hazards and unforeseen
interruptions, including interruptions from terrorist attacks,
hurricanes, floods or severe storms; reduced volatility in energy
prices; competition from other terminals; changes in trade patterns
and the global flow of oil; uncertain integration of future
acquisitions of terminals or other assets; the ability of our
customers to obtain access to shipping, barge facilities, third
party pipelines or other transportation facilities; maintenance or
remediation capital expenditures on our terminals; environmental
and regulatory conditions, including changes in such laws relating
to climate change or greenhouse gases; health and safety regulatory
conditions, including changes in such laws; costs and liabilities
in responding to contamination at our facilities; our ability to
obtain financing; restrictions in our credit facilities;
fluctuations in currencies and interest rates; our ability to
retain key officers and personnel; the expected cost of, and our
ability to comply with, governmental regulations and
self-regulatory organization standards, as well as standard
regulations imposed by our customers applicable to our business;
risks associated with our international operations; compliance with
the U.S. Foreign Corrupt Practices Act or the U.K. Bribery Act; and
tax liabilities associated with indirect taxes on the products we
service. A further list and description of these risks,
uncertainties and other factors can be found in our Registration
Statement on Form F-1 for the IPO which was declared effective by
the United States Securities Exchange Commission on August 1, 2014 and is available via the SEC's
website at www.sec.gov. VTTI undertakes no obligation and does not
intend to update these forward-looking statements to reflect events
or circumstances occurring after this press release. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press
release.
Contacts
Hill + Knowlton Strategies New York,
Peter Poulos, +1 212 885 0588
Hill + Knowlton Strategies Amsterdam,
Tanno Massar , +31 20 4044707
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VTTI ENERGY
PARTNERS LP
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UNAUDITED
CONDENSED INTERIM CONSOLIDATED STATEMENT OF
OPERATIONS
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for the
three months ended September 30, 2014 and 2013
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(in US$
millions)
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Three Months
Ended, September 30,
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2014
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2013
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Revenues, third
parties
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17.9
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19.6
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Revenues,
affiliates
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57.5
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56.3
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Total
revenues
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75.4
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75.9
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Operating costs
and expenses:
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Operating
costs
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22.4
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24.1
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Depreciation
and amortization
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17.5
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16.5
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Selling,
general and administrative
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7.0
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6.1
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Loss on
disposal of property, plant and equipment
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0.1
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0.9
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Loss on
write-off of assets
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-
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-
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Total operating
expenses
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47.0
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47.6
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Total operating
income
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28.4
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28.3
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Other income
(expense):
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Interest
income/(expense), including related party
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(5.9)
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(7.6)
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Other finance
expense
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(0.4)
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(0.2)
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Net
profit/(loss) on foreign currency transactions
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0.7
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(0.1)
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Fair value
movements derivatives
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15.1
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-
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Total other
expense, net
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9.5
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(7.9)
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Income before
income tax expense
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37.9
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20.4
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Income tax
expense
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(8.6)
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(3.7)
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Net
income
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29.3
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16.7
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Non-controlling
interest
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(12.4)
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(1.5)
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Net (loss)
income attributable to parents' equity
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16.9
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15.2
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VTTI ENERGY
PARTNERS LP
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UNAUDITED
CONDENSED INTERIM CONSOLIDATED BALANCE SHEET
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as of September
30, 2014 and December 31, 2013
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(in US$
millions)
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September
30,
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December
31,
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2014
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2013
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ASSETS
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Current
assets:
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Cash and cash
equivalents
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52.4
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54.5
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Restricted
cash
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4.0
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8.0
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Trade accounts
receivable
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5.1
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9.8
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Affiliates
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36.0
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22.8
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Other receivables and
current assets
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24.1
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15.8
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Prepaid
expenses
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4.8
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3.2
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Deferred tax
assets
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1.5
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2.6
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Derivative
assets
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5.1
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0.0
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Total current
assets
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133.0
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116.7
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Long-term
assets:
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Long-term
receivables
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3.2
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14.0
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Long-term prepaid
expenses
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23.3
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23.8
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Deferred tax
assets
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34.3
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40.8
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Property, plant and
equipment
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1,279.6
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1,283.4
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Lease
rights
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41.8
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46.2
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Goodwill
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123.5
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131.4
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Derivative
assets
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9.9
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0.0
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Deferred debt
issuance costs
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2.0
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2.2
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Total long-term
assets
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1,517.6
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1,541.8
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Total
assets
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1,650.6
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1,658.5
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LIABILITIES AND
OWNERS' EQUITY
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Current
liabilities:
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Trade accounts
payable
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19.5
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22.7
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Affiliates
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10.8
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44.8
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Current installments
of long-term debt
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0.0
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25.1
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Derivative
liabilities
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6.0
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3.6
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Other liabilities and
accrued expenses
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37.9
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26.6
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Total current
liabilities
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74.2
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122.8
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Long-term
liabilities:
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Long-term debt,
excluding current installments
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585.4
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175.6
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Derivative
liabilities
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7.2
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3.5
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Long-term debt,
affiliates
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37.5
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611.8
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Postretirement
benefit and post employment obligation
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12.6
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12.4
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Environmental
provisions
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24.9
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30.1
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Deferred tax
liabilities
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39.5
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46.0
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Other long-term
liabilities
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12.6
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10.6
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Total long-term
liabilities
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719.7
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890.0
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Total
liabilities
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793.9
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1,012.8
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Owner's
equity:
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Parent's
equity
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296.6
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594.8
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Non controlling
interest
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560.1
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50.9
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Total owners'
equity
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856.7
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645.7
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Total liabilities
and owners' equity
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1,650.6
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1,658.5
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Basis of Preparation and Presentation
The accompanying unaudited interim financial statements are
prepared in accordance with accounting principles generally
accepted in the United States of
America ("U.S. GAAP") and applicable rules and regulations
of the U.S. Securities and Exchange Commission (the "SEC") for
interim financial information. The Partnership is currently in the
process of finalizing amounts under the long-term incentive plan
(the "LTIP"). The Balance Sheet and the Statement of Operations
does currently not reflect the allocable non-cash costs to the
Partnership of the LTIP.
As of August 6, 2014, the
financial statements of the Partnership as a separate legal entity
are presented on a consolidated basis. Prior to August 6, 2014, the statement of operations and
balance sheet have been prepared on a "carve out" basis from the
accounting records of the VTTI Group using actual results of
operations, assets and liabilities attributable to the Partnership,
including allocation of expenses from VTTI and are recorded at
VTTI's historical book value. The Partnership's unaudited interim
financial statements include the assets, liabilities, revenues,
expenses and cash flows directly attributable to the Partnership's
terminal-owning and operating subsidiaries. See Note 2 of the
audited combined carve-out financial statements for the year ended
December 31, 2013, as found in the
Partnership's Registration Statement on Form F-1 for the IPO which
was declared effective by the United States Securities Exchange
Commission on August 1, 2014 and is
available via the SEC's website at www.sec.gov.
APPENDIX A - RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Adjusted EBITDA
We define Adjusted EBITDA as net income (loss) before interest
expense, income tax expense, depreciation and amortization expense,
as further adjusted to reflect certain other non-cash and
non-recurring items.
Adjusted EBITDA is a non-GAAP supplemental financial measure
that management and external users of our combined financial
statements, such as industry analysts, investors, lenders and
rating agencies, may use to assess our operating performance as
compared to other publicly traded partnerships in the midstream
energy industry, without regard to historical cost basis or
financing methods, and the viability of acquisitions and other
capital expenditure projects and the returns on investment in
various opportunities.
We believe that the presentation of Adjusted EBITDA provides
useful information to management in assessing our financial
condition and results of operations. The U.S. GAAP measure most
directly comparable to Adjusted EBITDA is net income. Our non-GAAP
financial measure of Adjusted EBITDA should not be considered as an
alternative to U.S. GAAP net income. Adjusted EBITDA has important
limitations as an analytical tool because it excludes some but not
all items that affect net income. You should not consider Adjusted
EBITDA in isolation or as a substitute for analysis of our results
as reported under U.S. GAAP. Because Adjusted EBITDA may be defined
differently by other companies in our industry, our definitions of
Adjusted EBITDA may not be comparable to similarly titled measures
of other companies, thereby diminishing its utility. The following
table reconciles net income to Adjusted EBITDA for the third
quarter ended September 30, 2014.
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Three Months
Ended, September
30,
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(in US$
millions)
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2014
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Net
income
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29.3
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Interest expense,
including affiliates
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5.9
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Other items
(a)
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-15.9
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Depreciation and
amortization
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17.5
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Income tax
expense
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8.6
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Adjusted EBITDA
(b)
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45.4
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(a)
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Other items consist
of non-cash items in operating expenses, anticipated timing
differences between the recognition and receipt of revenues and
unrealized gains and losses on foreign currency and interest
financial derivatives.
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(b)
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Adjusted EBITDA
contains the realized foreign currency gain of US$ 0.5 million from
the financial instrument we have in place to hedge EUR/USD
movements in our operating cash flows.
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Distributable Cash Flow ("DCF")
Distributable cash flow represents Adjusted EBITDA after
considering period financial costs including estimated maintenance
and replacement capital expenditures and other reserves established
by the Partnership. Estimated maintenance and replacement capital
expenditures represent capital expenditures required to maintain
over the long-term the operating capacity of, or the revenue
generated by, our capital assets. Distributable cash flow is a
quantitative standard used by investors in publicly-traded
partnerships to assist in evaluating a partnership's ability to
make quarterly cash distributions. Distributable cash flow is a
non-GAAP financial measure and should not be considered as an
alternative to net income or any other indicator of the
Partnership's performance calculated in accordance with U.S. GAAP.
The table below reconciles Adjusted EBITDA to distributable cash
flow for the third quarter ended September
30, 2014.
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Three Months
Ended,
September 30,
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(in US$
millions)
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2014
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Adjusted
EBITDA
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45.4
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Cash interest
expense
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-5.9
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Cash income tax
expense
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-
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Maintenance capital
expenditures
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-5.5
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Cash flow
attributable to non-controlling interest
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-23.2
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Distributable cash
flow
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10.8
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Adjustment for the
period 6 August - 30 September 2014 (56 days)
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-4.2
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Distributable cash
flow
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6.6
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Total
distribution
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6.6
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Coverage
ratio
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1.01x
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