DP World London Gateway Capital Markets Day - Update July 2017
Agenda Section 1 Introduction & overview 2 UK two-port strategy 3 London Gateway Port update 4 Logistics Park update 5 Positioned for growth 2
DP World London Gateway DP World Capital Markets Day: DP World London Gateway Update 01 Introduction & overview 3
DP World London Gateway: Established, reaching critical mass London Gateway Port is now proven Freehold port, 25 miles from central London Deepwater, tri-modal, adjacent to a logistics park Reliable, future-proofed infrastructure (semi-automated / automated) Scalable, 3 operational berths, readily expanded to 6 homogenous berths London Gateway Logistics Park is a valuable real-estate asset, positioning LG as a major logistic hub 9.25million ft 2 developable land under umbrella planning regime (LDO) Port/Park combination enables LG and DPW to further integrate in to the supply chain. 4
Why? Proximity to market = supply chain savings 5
DP World Capital Markets Day - DP World London Gateway Update How & What: Delivery of complex infrastructure on budget Hugely complex, including Government negotiations Environmental credentials (largest translocation, 74Ha compensation sites etc.) Deepwater with 80km dredge / 27m cubic metres April 2013 Offsite connections (road & 25km rail track) March 2010 Top left, A13/Manorway junction before works, bottom left after works. Top, Sorrells roundabout Delivered on-time & under Budget 7
DP World London Gateway Port: Progress & maturity Timeline DPW UK commences active co-operation Jan 2016 Exceed 2015 FY volume (461k TEU) Aug 2016 LGLC: Phase 1 agreed with LIDL; Phase 2 construction Nov/Dec 2016 China Train departs LG April 2017 2015 volume: 461k TEU 66% increase 2016 2016 volume: 708k TEU 54% increase 2017 Closed re-financing March / June 2016 July 2017: Updates Strong Q1: 213k TEU vs 112k TEU in 2015 (+90%) CMA FAL 23 Regular Asia- Europe call announced Oct 2016 THE Alliance confirms DPW- UK: LG wins 4 new services February 2017 THEA commences April/May 2017 8
DP World in the UK & DP World London Gateway: Key management DPW - UK Chris Lewis CEO, London Gateway & MD DPW-UK 34 years in UK port industry MD DPW Southampton CEO Hutchison Ports UK (Felixstowe) London Gateway Port London Gateway Logistics Park Southampton Container Terminal CNS Community Network Services Oliver Treneman Park Development Director, London Gateway Over 25 years in international real-estate MD Redwood Group, China Senior Operations Director, Prologis Ian Malcolm Finance Director, London Gateway Over 20 years in Finance, accountancy & port industry (JP Morgan, PwC, P&O Ports) London Gateway Board member since 2010 Andrew Bowen Head of Technical (Engineering & IT), London Gateway Over 25 years experience in port planning, design, supervision & project management Lead Technical role at LG since 2006 Luis Turbides Head of Operations, London Gateway 20 years experience in terminal management Sealand, CSX World Terminals & DP World Head of Operations Embraport & Callao 8
DP World London Gateway DP World Capital Markets Day: DP World London Gateway Update UK two-port strategy 02 9
DP World in the UK: Two-port offering and Park Supply Chain Team Market Access Two ports allow alliances to maintain existing markets - grow in new markets DP World offer 2 deep water facilities Best possible UK coverage for shipping lines and cargo owners Aligns with BCO strategy to use 2 ports to minimize risks e.g. weather / congestion Extensive logistics facilities available as required Service Delivery Best UK terminals for productivity (Shipside & Landside) Shortest road distances to London, South East & Midlands (cost advantage) Best inland connections by road and rail Spare rail capacity available (including network paths) Flexibility & Network resiliency Supply Chain expertise able to model supply chain savings 10
Structural change in alliances: Opportunity for DP World in the UK Ex Felixstowe & Southampton Future opportunity for DPW-UK Alliance reshaping created an opportunity for DPW UK which was captured 11
DP World in the UK: overall objective DPW-UK objectives 1. Market share aligned with capacity 2. Exceed capacity share 3. Competitive pricing UK market dynamics 1 UK: 9.9m TEU (2016 est) 2010 16 CAGR: 3.2% SE UK market: 6.8m TEU 2010 16 CAGR DPWS: 4.6% DPW-UK: 10.0% 2020 2020 SE-UK capacity utilisation: 69% Deep sea capacity utilisation: 75% 80% 1 Source: DfT/DPW 12
DP World London Gateway DP World Capital Markets Day: DP World London Gateway Update Port update 03 13
Berth 3 opened 1 st April 2017: Productive, reliable capacity, with excellent landside performance 3 x deep water berths 17m chart datum 12 x QCs; 25 across, each crane 2,000 tons, 138m high Waterside productivity > 30gmph on ULCS; 130+ BMPH 30 ASC modules (10 per berth) 12 Hybrid shuttles Truck Turn Time average: < 35 mins More reliable: LG open 99.99% of the time since opening November 2013 14
Proven ultra-large container ship performance (vessels >1500 moves) 7,000 6,000 5,000 4,000 3,000 2,000 5,378 24.4 3,397 147 bmph 34.1 1,906 26.2 27.1 25.3 4,486 2,345 21.6 19.4 2,904 2,288 3,556 27.9 24.9 3,878 2,269 22.6 2,775 29.9 3,843 31.9 25.2 3,392 3,383 4,265 20.1 29.8 28.1 2,558 5,683 28.4 2,996 142 bmph 5,676 31.4 26.9 27.1 1,586 1,579 1,648 29.2 28.0 31.0 27.5 4,807 4,867 6,552 31.1 2,269 21.7 140 bmph 1,750 32.0 29.3 5,077 28.0 1,514 5,695 29.2 4,740 31.4 2,340 23.4 20.3 1,690 136 bmph 4,438 33.8 1,511 31.2 31.7 21.6 2,080 4,558 1,658 34.5 26.8 4,666 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 1,000 0.0 Total Moves SLA Linear (SLA) 15
DP World in the UK: CNS Community System Customs clearance/electronic trading UK Customs CHIEF London Gateway Port Systems Community System CNS-Compass Southampton Port Systems Public End Users Hauliers Freight Forwarders Shipping Lines/Agents Statutory Bodies Train Operators Public End Users 16
DP World in the UK: CNS Community System Customs clearance/electronic trading Imports example: 1) Manifest subset is sent to terminal when received from the shipping line 2) Customs entries can be submitted prior to vessel arrival 3) Vessel arrival prompts customs processing (95% cleared within 15 mins) 4) Customs clearance or hold/exam message sent to shipping line, forwarder, terminal for each consignment or container 5) Container landed message (COARRI) sent to shipping line in real time 6) Container out-gate message (CODECO) sent to shipping line in real time 7) Other holds are sent to line and forwarder as appropriate 8) Rail messaging (train discharge/load lists) sent between rail operator (FreightLiner, DB Cargo) the terminal 17
DP World in the UK: Supply Chain Visibility Where s My Container: Developed to meet beneficial cargo owner needs (outside the Community System) - Estimated time of discharge - Customs status (clear / hold / other e.g. Port Health) - Container location (Yard / Rail / Inspection) - Time landed - Time out-gated (Road /Rail) - Restitution leg (time returned / empty / full etc.) - Auto refresh for up to 20 containers Vehicle Booking System - VBS Premium: Can handle a list containers (can be imported from Excel) Interactive system that produces in real time a list of containers that can be booked e.g. Import Container is customs cleared / released to Haulier Export Container is pre-exec d into CNS and hence known by Terminal 18
DP World London Gateway DP World Capital Markets Day: DP World London Gateway Update Logistics Park update 04 19
New Campus /West Zone development 100k-200k sq ft UPS B2B/B2C DC Logistics Centre (Phase One & Two) Maritime Transport HGV yard Hireco truck & trailer engineering centre Joint venture building with Prologis Significant uplift in land values through value creation Achieving solid rental value: Achieving > 8/ft London/SE: 7 to 10 Midlands: 6.50/ft Heathrow: 15/ft Ancillary/ complementary services to Port Solent Stevedores offdock container yard HGV transport parking yards Pentalver off-dock container yard 20
Developed warehousing with short lead time on new facilities DP World London Gateway Logistics Centre 185,000 sq.ft let Phase 2 (150,000 sqft) ready for letting 316,561 sq. ft. Ready to occupy. Tenant expected from 1 August A unique planning regime Logistics Park covered by a local development order (LDO) Granted November 2013 Permitting, subject to a range of controls, a total of 9.25m ft 2 of commercial floor space Consent can be granted in less than 28 days UPS is the first large tenant to benefit consent granted in 17 days Campus Development Semi-speculative, 100 200,000 sq. ft. buildings 6 month delivery. Currently proceeding to AFL with tenant 21
UPS development: opening Q3/Q4 2017 UPS parcel sorting hub Largest infrastructure investment outside of the USA. High-tech, parcel sorting and distribution facility. On course for Q3/4 2017 opening 22
DP World London Gateway DP World Capital Markets Day: DP World London Gateway Update Positioned for profitable growth 05 23
Global connections: 16 weekly calls Connected to 90 ports, 51 countries Including: China Thailand Vietnam Australia USA South America Mediterranean West Africa Russia India Middle East 24
The benefits of a two-port strategy & automation: Volume & margins 2016 saw a significant step-up in EBITDA margins as volume increased beyond break-even 2018 : visible volume increase Margin step-up as labour/overheads absorbed Fixed cost absorption, pricing remains solid LG s EBITDA margins comparatively strong even at relatively low volume/capacity utilisation (0.7m TEU) 2017 sees LG increasing labour force ahead of AE-driven volume increase Full year benefit of volume, with minimal labour increase drives margins in 2018 onwards 25
The benefits of a two-port strategy & automation: Pricing & margins (Indexed) Margin > 50% 2016 saw some unwind/dilution of early discounts, plus good storage revenue in Q4 THEA volume was contracted at good rates in LG & DPWS 2018 and onwards is largely contracted based on long-term contracts with escalation The combination of UK pricing & recovery of overheads, plus benefits of semi-automation will drive margins in 2017 onwards. 26
More than a port: Freehold asset, supply chain solutions & trade enabler Port & Park is unique Port & Park feed off each other: Supply Chain Team & DPW UK Commercial team reinforce each other Port is slightly ahead of Park: now a catalytic effect Park can push Port to next level Critical window: 2016-2019: the basis and platform for success 27
DP World London Gateway DP World Capital Markets Day: DP World London Gateway Update In summary 05 28
DP World London Gateway: Established, reaching critical mass DP World London Gateway Port is now a proven product Clear sustainable advantages over principal competitor: Location Infrastructure & capacity Reliability Scalability Flexibility (with DPWS) DP World London Gateway Logistics Park becoming firmly established in its market The Port/Park combination in SE England will be unique and a market differentiator Confident of Success 29
Thank you 30