Green light for clear water. Consolidated half-yearly report

Transcription

1 Gree light for clear water Cosolidated half-yearly report Aquafi 2012

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3 Cotet 5 Key figures 2 Statemet by resposible persos 3 Iterim maagemet report 6 Operatioal activities 7 Summary cosolidated fiacial statemets 38 Auditor s Report 39 Geeral iformatio 1

4 2 Cosolidated half-yearly report Aquafi 2012 Statemet by resposible persos The udersiged declare that: The summary cosolidated fiacial statemets appearig i this report have bee prepared i accordace with the applicable IFRS stadards, ad provide a true ad fair view of the assets, fiacial positio ad profits of Aquafi. The iterim fiacial report provides a true ad fair view of the developmet, the results, ad the positio of Aquafi, alog with a descriptio of the pricipal risks ad ucertaities facig Aquafi. Aartselaar, 28th August 2012 Luc Bossys Maagig Director Marc va de Abeele Chairma

5 Iterim maagemet report SIGNIFICANT EVENTS BETWEEN 1ST JANUARY 2012 AND 30TH JUNE 2012 Busiess i motio Aquafi wats to offer its customers a total package of services withi a busiess model of customer itimacy. The compay has opted for a process-orieted approach to eable it to deliver customisatio withi a trasparet budget ad a clear timetable. I the first half of 2012, a survey was coducted of the last core process that has ot yet bee fully elaborated, amely Reliable ad Efficiet Treatmet Plats. Boudewij Va De Steee crosses over to VMW The Flemish Govermet appoited Boudewij Va De Steee, the commercial director of Aquafi, to the seior rak of Director-Geeral of the Flemish Water Supply Compay, from 27th April 2012 owards. The Board of Directors ad maagemet would like to thak Mr. Va De Steee for his years of dedicatio to the compay ad wish him all the best with his ew challeges. The Board of Directors shall appoit a successor i cosultatio with the Appoitmet ad Remueratio Committee. Approval of the optimisatio program 2013 O 16th December 2011, the Flemish Govermet revised the budget for the developmet of supra-muicipal treatmet ifrastructure for the program year 2013, to 250 millio Euros. O 31st Jauary 2012, the Flemish Miister for Eviromet Joke Schauvliege commissioed Aquafi to implemet this program. The optimisatio program 2013 provides a budget for 134 ew projects ad 21 projects that were trasferred to this program. Furthermore, for 10 projects, oly studies (drawig up the techical pla) were commissioed. The iitial estimate for these projects was 112 millio Euros, of which 74 millio Euros are allocated for ivestmets uder the local agreemet with the muicipalities. 88 millio Euros were earmarked to absorb future price icreases for these projects. The remaiig 50 millio Euros i this program were explicitly provided to reduce the accumulated excess of the ivestmet ad for the reovatio program of previous program years. The optimisatio programs will be draw up by the Flemish Eviromet Agecy, i cosultatio with Aquafi, the provicial executives ad the local basi authorities. They iclude projects aimed at the additioal saitatio of discharge poits, the costructio of small-scale treatmet plats, ad the costructio of strategic rai water pipes to improve the existig ifrastructure. The ecological ad ecoomic efficiecy of the project was kept i mid durig project selectio. Purchase of VMM assets I executio of various decisios of the Flemish Govermet ad the implemetatio of Addedum 7 of the Maagemet Agreemet, two more plats were acquired at the ed of Jauary 2012, oe i Osted for a amout of approximately 60.9 millio, ad aother i Atwerp North for a amout of 2.6 millio. IMPORTANT EVENTS FOLLOWING THE CONCLUSION OF THE PERIOD FROM 1ST JANUARY TH JUNE 2012 Approval of the Fiacial Report 2010 O 20th July 2012, the Flemish Govermet decided to approve the fiacial report for the year This report was prepared i accordace with Clause 5 bis-1 of the maagemet agreemet. This fiacial report examies the fiacial icome ad expeses i detail. It outlies how the resources allocated to Aquafi will be utilised i a reasoable maer. RioAct ad RioP uder RioPAct From 1st September 2012 owards, existig services uder RioAct ad RioP will be budled together uder the ame RioPAct. The sewerage activities will be placed uder a separate busiess uit of VMM, which will work very closely with Aquafi. While there will be o chage i the product rage uder RioAct ad RioP, the ew structure offers a clearer poit of cotact for the cliet-muicipalities ad also allows a faster respose to their eeds. Tussetijds beheersverslag 3

6 4 Cosolidated half-yearly report Aquafi 2012 SUMMARY OF THE MOST SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES There were o trasactios with related parties that had ay material impact o the fiacial positio or o the profits of Aquafi, durig the period 1st Jauary th Jue THE PRINCIPAL RISKS AND UNCERTAINTIES FOR THE REMAINING MONTHS OF THE FINANCIAL YEAR Legal disputes FLOODING IN A RESIDENTIAL AREA No further decisios were take with regard to this dispute, ad therefore there is o chage i the aalysis published i the 2011 aual report. Thus there is as yet o reaso to set aside a provisio. Isurace dossiers INSUFFICIENT CONCRETE REINFORCEMENT AT DEURNE WWTP The recovery procedures metioed i the 2011 aual report were further actively moitored. The provisio set aside for the recovery of these amouts were retaied. CONCRETE PROBLEMS IN THE BRUGES WWTP At preset, there are still o idicatios that the costs for the repair ad protectio work that remais to be carried out will exceed the amout curretly available. Thus there is o eed to set aside a provisio. Fiacial reports Sice the structure of the maagemet agreemet provides for a posteriori approval of Aquafi s aual fiacial report, it caot be ruled out that the Flemish Regio may ultimately ot approve certai compesatios. OUTLOOK FOR THE FINANCIAL YEAR Completios ad tederig The target for tederig i 2012 is 170 millio Euros. The origially plaed amout of 183 millio Euros was revised after a budget cosultatio with the Flemish Regio. Of this, 56 millio Euros was tedered i late August. The target for completio was revised from 183 to 180 millio Euros i cosultatio with the Flemish Regio. Of this, 57 millio Euros were completed by late August. There is still a lot of work remaiig to be doe with regard to tederig ad completios, but we expect to closely meet these ambitious targets. Effluet results The effluet results i the first half of 2012 have bee excellet, but slightly less tha the results for the same period i the two previous years, due to bad weather. However, it may well be possible to make up these mior deficits by the ed of the caledar year. Profit forecast Aquafi is cofroted with tight cliet budgets i the supra-muicipal as well as muicipal activities. This requires the compay to adopt a flexible attitude i order to maximise added value at a reasoable cost. I spite of these limitatios, however, our sales ad profits cotiue to remai i lie with forecasts. Fulfillig fiacig eeds The fiacial ladscape has chaged dramatically after the bakig ad fiacial crisis. The cost of fuds of baks has rise sharply ad there is a major diversificatio amog baks. They are therefore limited i their ability to grat further loas. This problem has its origi i the regulatio of fiacial istitutios, as per the provisios of the Basel III guidelies. As i previous years, Aquafi has cotiued to directly approach ivestors to cotract bilateral loas. I the first half of the fiacial year 2012, the compay agai fialised two redemptive loas with a term of thirty years, for a amout of 25 millio Euros. Aquafi will cotiue to use this optio i the future as well, i order to meet a part of its fudig requiremets. Secodly, Aquafi has received the approval of the Europea Ivestmet Bak for a eighth loa. This is for a amout of 200 millio Euros, of which the first trache, of 50 millio Euros, will be siged i the fall of Drawigs uder this facility ca cotiue for up to 30 years. The short-term fiacig is maily through commercial paper, which is still easy to place. I this cotext, Aquafi has to refiace a backup facility. The first idicatios from the market are that this ca be implemeted without ay problems. Aquafi has agai udergoe a ratig audit this sprig, the report of which is expected i early September.

7 LATEST PROJECT AS PER THE URBAN WASTEWATER TREATMENT DIRECTIVE TO BE COMPLETED SOON At the start of September, the last piece of the puzzle of the water treatmet ifrastructure was put i place i Kruibeke, as a result of which the Flemish Regio satisfies the requiremets of the Europea Urba Wastewater Directive. This was celebrated with a press coferece ad a ceremoious closure of the project by the Flemish Miister for Eviromet o 6th September. While this is a milestoe for Fladers, it is the Member State as a whole that must qualify i order to avoid Europea pealties. Aquafi is ow maily executig projects uder the Water Framework Directive, aimed at optimisig the fuctioig of the supra-muicipal treatmet ifrastructure. Although the quality of water i our streams ad rivers has goe up dramatically i recet years, much work still remais to be doe i this regard. I the future, work ad resources will also have to be allocated for reovatios to the existig treatmet ifrastructure. Ulike the regioal ifrastructure, the muicipal sewerage etwork still eeds to be sigificatly expaded. More ad more muicipalities are also applyig their ow resources to approach Aquafi, as they ca greatly beefit from support from a professioal parter for the developmet ad maagemet of their sewerage systems. Key figures KEY FIGURES (amouts i EUR 000) Operatig icome 233, ,391 Profit to be appropriated 4,579 9,585 Balace total 3,103,640 3,021,359 Equity 235, ,545 Fiacig short term 114,740 82,006 Fiacig log term 1,719,293 1,724,036 Employees Aquafi Employees VMM Employees total PORTFOLIO (SUPRA-MUNICIPAL) No. of projects Value (millio euro) Completed projects (1) 2,309 3,016 Grated ad tedered (2) Desig (3) Total i executio (2) + (3) 1,291 1,343 Aquafi was resposible for the operatio of 263 sewage treatmet plats o 30th Jue Aquafi also maages 5,059 km pipelies, for the trasportatio of wastewater to the treatmet plats. Aquafi has 1,292 supramuicipal pumpig statios ad sedimetatio basis. Kercijfers 5

8 6 Cosolidated half-yearly report Aquafi 2012 Operatioal activities DEVELOPMENT AND OPERATION OF THE TREATMENT INFRASTRUCTURE Completios ad tederig The target for tederig i 2012 is 170 millio Euros. The origially plaed amout of 183 millio Euros was revised after a budget cosultatio with the Flemish Regio. Of this, 56 millio Euros was tedered i late August. The target for completio was revised from 183 to 180 millio Euros i cosultatio with the Flemish Regio. Of this, 57 millio Euros were completed by late August. There is still a lot of work remaiig to be doe with regard to tederig ad completios, but we expect to closely meet these ambitious targets. COMMERCIAL ACTIVITIES Apart from its operatios uder the maagemet agreemet with the Flemish Regio, Aquafi also offers its services to the muicipalities. Aquafi operates i the market for muicipal saitatio alog with a umber of other players. Aquafi has secured a place for itself i this market. Keepig i mid that 2012 is a muicipal electio year, Aquafi wo a large umber of ew projects, which esures a assured icome stream for the future. Aquafi s commercial operatios cotribute to its profits, but i terms of turover, these muicipal projects offer limited scope. Effluet results The effluet results i the first half of 2012 have bee excellet, but slightly less tha the results for the same period i the two previous years, due to bad weather. However, it may well be possible to make up these mior deficits by the ed of the caledar year.

9 Summary cosolidated fiacial statemets BASIS FOR THE PRESENTATION OF THE FINANCIAL STATEMENTS From the year eded 31st December 2011, Aquafi has bee reportig as per the applicable IFRS stadards. Cosolidated IFRS fiacial statemets are prepared i additio to the reports accordig to geerally accepted Belgia accoutig priciples (Belgia GAAP). They iclude a balace sheet, a statemet of realised ad urealised profits, a statemet of chages i equity, a cash flow statemet ad detailed explaatory otes, icludig valuatio rules. COMMENTS ON THE CONSOLIDATED BALANCE SHEET At the ed of the first half of 2012, the balace sheet total was 2,376 millio Euros, 80 millio Euros higher tha last year. This icrease is largely due to the icrease i the log term debt uder the maagemet agreemet. As such, this debt icreased due to the et growth of the ivestmets i water treatmet ifrastructure, commissioed by the Flemish Regio. Ivestmet ad optimisatio projects of a total value of almost 51 millio were completed durig the 1st half of Aquafi also purchased plats from the Vlaamse Milieu - maatschappij (Flemish Eviromet Agecy) durig the 1st half of 2012 for almost 64 millio Euros to implemet addedum No. 7 to the maagemet agreemet. All istallatios shall remai the property of Aquafi util the ed of the maagemet agreemet with the Flemish Regio. This claim also icludes the assets uder costructio, which icreased durig the 1st half year 2012 by 29%, to become 349 millio Euros. The other fiacial assets iclude the uivoiced fees for activities outside the framework of the maagemet agreemet. The icrease i this item is the result of icreased costructio activity for such commercial projects. I 2011, Aquafi faced greater fiacig eeds tha previous years, due to the purchase of lad ad istallatios from VMM uder addedum No. 7 to the maagemet agreemet. The baks were restricted i their ability to provide additioal loas, sice they were themselves faced with icreased costs ad ew regulatios. O the other had, Belgia istitutioal ivestors were keely iterested i fiacig Aquafi. This opportuity was therefore fully exploited: 285 millio Euros i fiacig was obtaied through this chael. Sice this etire amout could ot be used immediately for the fiacig of projects, a temporary cash surplus was geerated, ad almost 53 millio Euros was ivested. I the first half of 2012, these fuds were used to fiace projects. The provisio for risks ad charges relate to legal disputes, isurace dossiers, disputes relatig to the implemetatio of the maagemet agreemet ad processig of the sludge buffered i the plats. Log-term fiacig is based o the allocatio agreemet. It provides that the balace of log-term loas should be less tha the future claims that Aquafi has agaist drikig water compaies, respectively, the Flemish Regio. These claims cosist of the upaid portio of the ivestmet projects that have already bee completed. At the ed of Jue 2012, this amout was 1,638 millio Euros. I the 1st half year of 2012, Aquafi had take 65 millio Euros i log-term loas, of which 50 millio Euros was from the Europea Ivestmet Bak ad 15 millio Euros was from a commercial bak. Takig ito accout the repaymets of earlier loas, the balace of the log-term bak loas uder allocatio is 1,455 millio Euros, of which 146 millio Euros has to be repaid durig the year. At the ed of 2011, the short-term fiacig was greatly reduced due to the log-term fiacig of the purchased VMM assets. There was a icrease i short-term fiacig via commercial paper durig the past six moths, from 73 millio Euros at the ed of 2011 to 99 millio Euros at the ed of Jue Aquafi has a credit lie of 180 millio Euros, icludig the sydicated loa to fiace short-term activities covered uder the maagemet agreemet. No additios were made to this credit lie up to the ed of Jue Aquafi has a credit lie of 17 millio Euros for the short-term fiacig of muicipal projects. Of this, 15.7 millio Euros were take up at the ed of Jue Aquafi uses derivatives to hedge iterest rate risks arisig from fiacig operatios. The (egative) market value of the hedgig structures is icluded i other log-term fiacial obligatios. Summary cosolidated fiacial statemets 7

10 8 Cosolidated half-yearly report Aquafi 2012 COMMENTS ON THE CONSOLIDATED PROFIT AND LOSS ACCOUNT AND THE STATEMENT OF REALISED AND UNREALISED RESULTS The maagemet agreemet with the Flemish Regio provides that the remueratio to Aquafi is based o the oward chargig of all reasoable costs, plus a compesatio to the shareholders based o their cotributio to equity. It follows from this that the costs ad reveues are largely a mirror image of each other. The icrease i costs ad i particular the costs of raw materials ad cosumables, various goods ad services ad persoel costs, is i lie with the growth i the ifrastructure that Aquafi exploits ad develops, both withi ad outside the framework of the maagemet agreemet. The sharp icrease i debt fiacig has icreased the fiacig costs by 8.1 millio Euros compared to the same period last year. O the other had, a part of the chage i the market value of the hedgig structures over the 1st half year of 2012 is icluded i the profit ad loss accout. Sice the fiscal year 2007, the cocept of deductio of otioal iterest has bee itroduced i corporate tax, thereby keepig the cost of water treatmet at a restricted level for citizes. The portio of the corporate tax payable for the activities withi the maagemet agreemet may be charged to the drikig water compaies as a reasoable cost. The bulk of the chage i the market value of the hedgig structures over the 1st half year of 2012 a part that relates to qualifyig cash flow hedgig is icluded i the statemet of comprehesive icome/statemet of realised ad urealised results. Sice Aquafi withi the maagemet agreemet is etitled to receive compesatio for fiacig costs, chages i market value of the fiacial istrumets shall be recogised as a claim i relatio to the urealised results. Aquafi wats to optimise the fiacig cost through the active maagemet of iterest rate risk. Sice 2006, the Board of Directors has approved the implemetatio of dyamic iterest rate risk maagemet, which broadly defies the iterest maagemet approach. After deductig the commissios, the value reductios ad the costs ad reveues ot charged to the Flemish Regio, icludig the results of the commercial operatios, the profit before tax from ogoig busiess operatios is 4.58 millio Euros.

11 Cosolidated fiacial statemets as at 30th Jue 2012 CONSOLIDATED BALANCE SHEET (as at 30th Jue 2012) (i 000 euro) Explaatory ote Jue ASSETS FIXED ASSETS Log-term receivables Maagemet agreemet 5.0 2,169,733 2,056,559 Other fiacial assets ,212 27,440 Total 2,200,945 2,083,999 CURRENT ASSETS Short-term receivables uder Maagemet agreemet , ,643 Trade receivables ad other receivables ,242 27,188 Other fiacial liquid assets 5.3 1,387 1,476 Cash ad cash equivalets ,614 71,763 TOTAL ASSETS 2,376,402 2,296,068 EQUITY CAPITAL AND LIABILITIES EQUITY CAPITAL AND RESERVES Subscribed capital , ,900 Group reserves 5.6 & ,224 27,741 Total equity capital 235, ,641 LONG-TERM LIABILITIES Iterest-bearig loas 5.8 1,474,291 1,568,254 Other log-term fiacial liabilities , ,401 Provisios ,418 7,064 Pesio liabilities ,065 6,827 Total 1,658,008 1,717,546 SHORT-TERM LIABILITIES Trade debts ad other payables ,291 83,115 Iterest-bearig loas , ,910 Other short-term fiacial liabilities ,437 15,086 Taxes payable ,770 Total 483, ,881 Total liabilities 2,141,278 2,057,427 TOTAL EQUITY CAPITAL AND LIABILITIES 2,376,402 2,296,068 Summary cosolidated fiacial statemets 9

12 10 Cosolidated half-yearly report Aquafi 2012 CONSOLIDATED PROFIT AND LOSS ACCOUNT (for the 1st half of 2012) (i 000 euro) Explaatory ote Jue 2012 Jue 2011 ONGOING BUSINESS ACTIVITIES Services redered , ,256 Reveues 163, ,256 Other busiess icome 6.1 8,297 7,194 Raw materials ad auxiliary materials, services ad miscellaeous goods ,655-79,930 Persoel costs ,095-29,033 Write-offs, amortisatios ad special devaluatios Other charges 6.5-1,715-2,432 Costs of fiacig ,141-33,958 Fiacig icome 6.7 2, Profit before taxes from ogoig busiess activities 4,579 3,681 Taxes 6.8-1,181-1,347 Charge-through via Maagemet agreemet receivables 6.8 1,181 1,347 Profit from ogoig busiess activities 4,579 3,681 NET PROFIT 4,579 3,681 To be allocated to: Owers of equity istrumets of the paret compay 4,579 3,681 Profits per share ( ) ordiary profits per share, to be allocated to holders of ordiary shares of the paret compay diluted profit per share, to be allocated to holders of ordiary shares of the paret compay Profit per share from ogoig busiess activities ( ) ordiary profits per share from ogoig busiess activities, to be allocated to holders of ordiary shares of the paret compay diluted profits per share from ogoig busiess activities, to be allocated to holders of ordiary shares of the paret compay

13 CONSOLIDATED STATEMENT OF REALISED AND UNREALISED RESULTS (for the 1st half of 2012) (i 000 euro) Explaatory ote Jue NET PROFIT UNREALISED RESULTS Net icrease i value of cash flow hedges ,278-79,711 Charge-through via maagemet agreemet receivables ,278 79,711 Actuarial profits ad losses o defied beefit plas Charge-through via Maagemet agreemet receivables Urealised results after taxes 0 0 TOTAL REALISED AND UNREALISED RESULTS AFTER TAXES 4,579 8,028 To be allocated to: Owers of equity istrumets of the paret compay 4,579 8,028 CONSOLIDATED STATEMENT OF CHANGES IN THE EQUITY (as at 30th Jue 2012) EQUITY ATTRIBUTABLE TO THE HOLDERS OF EQUITY INSTRUMENTS OF THE PARENT COMPANY (i 000 euro) Capital Group reserves Total equity AS AT 1ST JANUARY ,641 Profits for the fiacial year 4,579 4,579 Urealised results 0 0 REALISED AND UNREALISED RESULTS 0 4,579 4,579 Paid-up capital Divideds -8,096-8,096 AS AT 30TH JUNE ,900 24, ,124 Summary cosolidated fiacial statemets 11

14 12 Cosolidated half-yearly report Aquafi 2012 CONSOLIDATED CASH FLOW STATEMENT (for the 1st half of 2012) (i 000 euro) Explaatory ote Jue 2012 Jue 2011 OPERATIONAL ACTIVITIES Paymets to suppliers -77,645-71,777 Paymets to persoel -31,095-29,033 Receipts from customers , ,584 Corporate tax paid -1, Net operatig cash flow 112,196 90,950 INVESTMENT OPERATIONS Acquisitios uder claim as per maagemet agreemet -162, ,257 Net ivestmet cash flow -162, ,257 FINANCING ACTIVITIES Fiacig receipts 97, ,700 Fiacig redemptio -69,743-68,047 Iterest paid -23,301-24,402 Proceeds from capital icrease 0 0 Divideds paid -8,096-6,724 Other ivestmet trasactios (et) -4,006-1,724 Net fiacig cash flow -7,412 13,803 Net icrease i cash ad cash equivalets -58,149 1,496 CASH AND CASH EQUIVALENTS AT THE START OF THE PERIOD 71,763 4,259 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 13,614 5,755

15 Notes to the iterim cosolidated fiacial statemets as at 30th Jue 2012 Geeral iformatio The iterim summary fiacial statemets do ot provide all the iformatio ad disclosures required i the aual fiacial statemets, ad should therefore be read i cojuctio with the most recet aual fiacial statemets. As the iterim cosolidated fiacial statemets are reported for the first time at 30 Jue 2012, we opted to provide more detailed iformatios tha strictly ecessary. INFORMATION ABOUT THE COMPANY Aquafi is a public limited compay ad was icorporated o 25th April The compay has its Registered Office i Belgium, at 2630 Aartselaar. Aquafi had a bod issue o 29th September 2009, which was listed o Euroext Brussels ( File/pdf/KT_-_Fortis_Aquafi_-_Prospectus fial.pdf). Please refer to the aual report for a descriptio of our mai activities. The iterim cosolidated fiacial statemets for the 1st half year of 2012 were approved for publicatio by the Board of Directors o 28th August Aquafi NV is a 100% subsidiary of the Vlaamse Milieu - holdig. The mai priciples for fiacial reportig, icludig crucial assessmets ad key sources of ucertaities i estimates BASIS FOR PREPARATION, VALUATION RULES AND CONSOLIDATION Basis for presetatio The iterim cosolidated fiacial statemets were draw up o the basis of historical cost method, except for derivatives, which were valued at their actual market value. The accouts have bee preseted i (thousads of) Euros. Coformity declaratio The iterim fiacial statemets of the group were draw up i accordace with the Iteratioal Fiacial Reportig Stadards (IFRS), as published by the IASB ad accepted withi the Europea Uio. Basis for the cosolidatio The iterim cosolidated fiacial statemets for the 1st half year 2012, edig o 30/06/2012, comprises the compay ad its subsidiaries (hereiafter referred to as: the group ), ad the iterests of the group i related participatios. All the etities of the group apply the same fiacial reportig priciples. a. Subsidiaries Subsidiaries are etities over which the group has a decisive cotrollig ifluece ('cotrol ). Cotrol is said to exist whe the group has the power to directly or idirectly cotrol the fiacial ad operatioal policies of a etity i order to obtai beefits from the activities of the etity.the aual accouts of a subsidiary are icluded i the cosolidated aual accouts with effect from the date of acquirig cotrol, up to the date o which such cotrol eds. Summary cosolidated fiacial statemets 13

16 14 Cosolidated half-yearly report Aquafi 2012 b. Trasactios elimiated by the cosolidatio All of the iter-compay balaces, profits ad losses, ad urealised results, expeses ad divideds arisig from trasactios withi the group will be fully elimiated o drawig up the cosolidated aual accouts. IMPORTANT ACCOUNTANT ASSESSMENTS, ESTIMATES AND ASSUMPTIONS Assessmets The maagemet is of the opiio that provisios for persoel remueratio, extraordiary devaluatios, etc., have bee assessed based o parameters applicable withi the market. The early retiremet pesio scheme has also bee show as a defied beefit pla, sice the group has a actual liability toward the employees cocered. The group recogises a provisio i the balace sheet, calculated as per the projected uit credit method. Estimates ad assumptios Aquafi NV etered ito a maagemet agreemet with the Flemish Regio for the executio of its (supra-muicipal) cotracts. The maagemet agreemet specifies the tasks of Aquafi NV ad the fees that the compay will be paid for the same. The followig elemets from the said maagemet agreemet are crucial for the further assessmet of the accouts. All of the reasoable costs that Aquafi NV icurs i coectio with the aforesaid supra-muicipal saitatio will be compesated by the Flemish Regio through the drikig water compaies. The maagemet agreemet is a rollig agreemet, ad is therefore automatically exteded each year uless oe of the parties termiates the agreemet. The termiatio otice period is 20 years. Durig the executio of the maagemet agreemet, Aquafi NV shall have the right of use ad ejoymet of the ifrastructure costructed, purchased or leased by the compay. Whe the maagemet agreemet comes to a ed after the paymet of all remaiig dues the owership ifrastructure shall be trasferred to the Flemish Regio, free of cost. Durig the executio of the maagemet agreemet, the costructio ad operatios risks shall be bore by Aquafi NV. The iterpretatio of the IFRIC 12 Provisio of Services uder Cocessio Agreemets shall apply to public-private agreemets, if the followig coditios are satisfied: the grator of the cocessio cotrols or regulates the services that the operator is required to provide with the ifrastructure ad the party to which the said services are to be delivered to, ad at what price; the grator cotrols the ultimate right through owership. I other words, the grator has cotrol over the sigificat residual value of the ifrastructure whe the agreemet comes to a ed The ature of the services is the most importat characteristic of the iterpretatio metioed above. The activities of the operator must be of public utility (the 'public service obligatio'). Aquafi provides the services relatig to the ifrastructure to the public (i the broadest sese of the term) uder a pre-defied policy, amely the maagemet agreemet. This agreemet lays dow which 'public' services are to be provided, amely the expasio ad maagemet of the supra-muicipal ifrastructure for the treatmet of household wastewater. Ifrastructural assets withi the scope of applicatio of the agreemet are assets that were costructed or purchased for use i coectio with the cocessio agreemet, or are existig ifrastructure to which the operator has bee grated access. All of the ifrastructure costructed, purchased or leased by Aquafi NV i coectio with the maagemet agreemet with the Flemish Regio falls withi the scope of applicatio of this iterpretatio. Cosequetly, the related ifrastructure is ot treated as tagible fixed assets i the aual accouts of the compay. PRINCIPLES FOR THE ITEMS IN THE BALANCE SHEET Itagible assets Research ad Developmet Expeditures o research activities are charged agaist the profits for the period i which they were icurred.

17 Lease agreemets a. The group as lessee The group has etered ito a umber of operatioal lease agreemets. They therefore do ot ivolve a trasfer of the actual risks ad rewards of owership. I case of operatioal leases, the lease paymets are show as costs ad are distributed liearly over the lease period. b. The group as lessor Lease agreemets i which the group acts as lessor are classified as fiacial leases if the group trasfers almost all the risks ad rewards of owership of a asset to the lessee. The group will iclude a claim i the balace sheet, equal to the et ivestmet i the lease. Fiacial assets a. Receivables uder the cocessio agreemet The group has applied the fiacial asset model i coformity with IFRIC 12. The said model applies whe the operator has a ucoditioal right to receive cash or other fiacial asset from the grator. I exchage for the services provided uder the cocessio agreemet, the group, as a operator, has a ucoditioal right ad is cotractually remuerated by the grator (the Flemish Regio) uder the maagemet agreemet. The group will regard the fiacial asset as a receivable, to be icluded uder the category of Loas ad receivables. It is valued at the amortised cost price, which is calculated accordig to the effective iterest method. I view of the specific cotext withi which the group coducts its operatios, ad sice the group may ot charge iterest, the calculatio of the effective iterest rate is devoid of ay impact. b. Trade ad other receivables These fiacial assets are valued at the amortised cost price as per IAS39 46 (a) - at actual market value plus trasactio costs if ay, whe the same are etered i the accoutig records for the first time. The valuatio of the fixed-icome securities is subject to the same rules. The ucollectable receivables are writte off agaist the relevat provisio accout o each balace sheet date. The profit ad loss accout shows additios to ad withdrawals from this provisio accout. c. Cash ad cash equivalets Cash icludes cash ad deposits, the repaymet of which ca be immediately demaded. Cash equivalets are shortterm, extremely liquid ivestmets that ca immediately be coverted ito cash, the amout of which is kow, ad which do ot have ay iheret material risk of a chage i value. d. Fiacial assets available for sale Fiacial assets available for sale are o-derived fiacial assets that are desigated as beig available for sale or that are ot classified as (a) loas ad receivables, (b) ivestmets retaied util the ed of the maturity period, or (c) fiacial assets valued at actual market value, with the chages i value beig show i the profit ad loss accout. They are valued at the actual market value i the balace sheet, with chages i value beig icorporated i the urealised results. Debts a. Fiacial debts Whe first icluded i the balace sheet, fiacial liabilities are valued at actual market value, together with the trasactio costs that ca be directly attributed to the issue of the fiacial liability. These fiacial obligatios are valued at the amortised cost price accordig to the effective iterest method after the iclusio i the accouts for the first time. b. Trade ad other short-term debts Trade ad other short-term debts are valued at the amortised cost price. Provisios Provisios are show i the balace sheet if: the group has a existig (legal or costructive) liability o the grouds of a past evet; it is probable that a outflow of resources that embody ecoomic beefits will be required i order to extiguish the liability; a reliable estimate of the amout of the liability is possible. I other words, provisios are show if they are probable, ad if there is a curret liability o the date of the balace sheet. Summary cosolidated fiacial statemets 15

18 16 Cosolidated half-yearly report Aquafi 2012 Provisioal assets are ot show i the balace sheet but will appear i the Explaatory Notes, if a iflow of ecoomic rewards is probable. Provisioal liabilities will ot appear i the balace sheet, but i the Explaatory Notes, uless there is egligible chace of a loss. The expese relatig to a provisio will appear i the profit ad loss accout. The group shows the defiite paymets (from the Flemish Regio or the isurace compay) as a asset. If there is material impact due to discoutig of ecessary future cash outflows, the provisios are updated each year based o the discoutig rates that express the time value of moey, geerally applicable o the date of the balace sheet. Provisios for employee remueratio There are two types of pesio schemes withi the group: the defied cotributio pla ad the defied beefit pla. Liabilities relatig to the defied cotributio pla are immediately charged agaist the profit ad loss accout. The periodic premium paymet is recorded as a period cost. The liability or possible receivable from the defied beefit pla will appear i the balace sheet. I such schemes, the amout i the balace sheet (the et liability) represets the cash value of the gross liability, mius the actual market value of the fud ivestmets, adjusted for pesio costs for past employmet that have ot bee take ito accout. I order to be able to accurately estimate future liabilities, a specific actuarial calculatio, called the projected uit credit is used. For the accoutig treatmet of actuarial profits ad losses, the method used to make a immediately deductio from the equity via a equity chage statemet. Early retiremet schemes are also treated as defied beefit plas. The group provides for a provisio that is calculated accordig to the projected uit credit method. Taxes a. Tax o profits Curret tax receivables ad liabilities for the curret ad previous periods are valued at the amout that is expected to be received from or paid to the (Belgia) tax authorities. As per Clause 43 of the maagemet agreemet with the Flemish Regio, all of the reasoable costs icurred by the group for this agreemet will be compesated by the drikig water compaies/the Flemish Regio, icludig all levies ad taxes payable by the group for the executio of this agreemet. b. VAT Reveues, costs ad assets are show after deductig the value-added tax, except: where the value-added tax o the purchase of assets or services caot be claimed back from the tax authorities, i which case the value-added tax will be show as part of the cost of the acquisitio of the asset or as part of the cost item; receivables ad claims that are accouted for iclusive of the value-added tax. The et amout of the value-added tax that ca be recovered or that is payable to the tax authorities is show as part of the receivables or of the liabilities i the balace sheet. c. Deferred taxes I view of the specific provisios of the maagemet agreemet, the group does ot have ay temporary differeces i assets or liabilities that could give cause to the establishmet of a deferred tax liability or receivable claim. PRINCIPLES RELATING TO ELEMENTS OF THE PROFIT AND LOSS ACCOUNT Reveues As per the maagemet agreemet, all reasoable costs of the compay are compesated by the Flemish Regio via the drikig water compaies.

19 Reveues are show if it is probable that the ecoomic rewards associated with the trasactio will flow to the compay, ad if the amout of the reveues ca be measured i a reliable maer. Turover is show after deductig the value-added taxes ad discouts. Reveues from the sale of goods or the provisio of services are show after the completio of the delivery ad the full trasfer of risks ad rewards. Divideds are show after the right of the shareholder to receive the divided is established. a. Ogoig projects o behalf of third parties For projects i progress o behalf of third parties that are ot covered uder the cocessio agreemet, the reveues appear i the profit ad loss accout depedig o the stage of completio of the project activities (the percetage of completio method). This method may oly be used if it is possible to reliably estimate the result of a ogoig project o behalf of third parties. O the balace sheet date, the group estimates the results of the project: the differece betwee the expected cotract reveues ad the cotract costs, apart from the stage of completio of the project activities. O the reportig date, this completio level is applied to the total of the expected reveues ad costs i order to determie the amout of costs ad reveues that are to appear i the profit ad loss accout for the period. If the group expects a loss o the ogoig project o behalf of third parties, the same will be immediately charged agaist the profits. If the result of a ogoig project o behalf of third parties caot be reliably estimated, oly some of the reveues will be show, equal to the value of the costs that will probably be recoverable. Costs of fiacig The group will immediately show fiacig costs as a expese durig the period i which they are icurred. The group has o assets for which fiacig costs have to be icluded i the cost of assets. Hedgig The group uses derivatives to hedge iterest rate risks arisig from fiacig activities. Active iterest maagemet is doe i accordace with the objectives ad rules laid dow by the maagig body. It is group policy ot to eter ito speculative or leverage trasactios. Hedge categories A distictio is made betwee two hedge categories: actual market value hedges ad cash flow hedges. Actual market value hedges are hedges for the risk of chages to the actual market value of assets ad liabilities show. Both the derivatives that were desigated as realvalue hedges ad their hedged assets or liabilities are valued at actual market value i the balace sheet ad chages i actual market value are show i the profit ad loss accout. If a hedge o loger appears to be very effective, the hedge accoutig will be stopped ad the adjustmet to the book value of the covered iterestbearig fiacial istrumet will be writte off liearly i the profit ad loss accout up to the expiry date of the covered positio. Cash flow hedges are hedges for the possible variability of future cash flows that relate to the assets or liabilities show, very probable expected future trasactios or fixed commitmets that have ot bee take. Chages to the actual market value of a hedgig istrumet that serves as a highly effective cash flow hedge are show i the list of urealised results, more specifically, i the hedge reserve. The ieffective part of the same is immediately show i the profit ad loss accout. If the hedged cash flow leads to the iclusio of a o-fiacial asset or liability, the cumulative actual market value adjustmets of the derivative will o loger be show i the list of the urealised results, but will be icluded i the iitial valuatio of the cost price or the book value of the asset or liability. I all other cases, the cumulative actual market value adjustmets of the derivative will be trasferred from the overview of the urealised results to the profit ad loss accout at the momet that the hedged fixed commitmet or the plaed trasactio results i the postig of a profit or a loss. Summary cosolidated fiacial statemets 17

20 18 Cosolidated half-yearly report Aquafi 2012 Actual market value hedge Cash flow hedge Qualified Variatio i time value = Variatio i time value = impact o profit ad loss accout impact o profit ad loss accout Variatio i itrisic value = Variatio i itrisic value = to be compesated mutually compoet of urealised results Coupo: calculated pro rata over the year Coupo: calculated pro rata over the year Uqualified Variatio i total value = Variatio i total value = impact o profit ad loss accout impact o profit ad loss accout Coupo: cash flow i that year Coupo: cash flow i that year If a hedge o loger appears to be very effective, the hedge accoutig will be stopped, but ot retroactively. I such case, the cumulative actual market value adjustmets of the hedge istrumet will be retaied i the list of urealised results util the defied or expected trasactio occurs. If a defied or scheduled trasactio is o loger expected to take place, the cumulative actual market value adjustmets will be trasferred from the list of the urealised results to the profit ad loss accout. Accoutig for movemets The distictio betwee qualified ad uqualified fiacial istrumets determies the methodology to be used. Evets after the balace sheet date Evets occurrig after the date of the balace sheet that provide additioal iformatio cocerig the compay's situatio o the balace sheet date ('adjustig evets') are icluded i the aual accouts. Other evets that occur after the balace sheet date ('o-adjustig evets ) are oly show i the Explaatory Notes if they are cosidered importat. Segmeted iformatio For maagemet purposes, the group is orgaised ito two operatioal segmets. Oe segmet comprises the compay activities uder the cocessio agreemet (maagemet agreemet) with the Flemish Regio, while o the other had, commercial activities are carried out primarily for (Flemish) cities ad muicipalities. I the latter segmet, the group is i direct competitio with other sewerage treatmet operators. NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS APPLIED BY THE GROUP The accoutig policies that were applied i the preparatio of the iterim cosolidated fiacial statemets are i coformity with those applied whe preparig the fiacial statemets for the year edig 31st December 2011, with the exceptio of the first applicatio of the ew stadards ad iterpretatios with effect from 1st Jauary 2012, described below: IAS 12 - Deferred taxes: Recovery of uderlyig assets (Amedmets) This amedmet to IAS 12 itroduces a rebuttable presumptio that the book value of the real estate ivestmet that are valued at the actual market value (as per IAS 40) will be recovered through the sale ad, cosequetly, that every cocered deferred tax should be valued i terms of this sale. This presumptio may be rebutted if the property ivestmet ca be depreciated ad is held with the aim of availig the maximum ecoomic beefits from the property ivestmet. Moreover, the chage will esure that the deferred tax arisig from a o-depreciable asset measured o the basis of the revaluatio model i IAS 16 shall always reflect the tax cosequeces of the recovery of the book value of the asset through a sale. The amedmet shall apply to accoutig periods commecig o or after 1st Jauary The Group has ot valued ay property ivestmets at fair market value ad does ot apply the revaluatio model of IAS 16. Cosequetly, the chage has o impact o the fiacial statemets of the Group. The followig amedmets to stadards i IFRS had o impact o the accoutig policies, balace sheet or the performace of the Group, ad are ot applicable:

21 IFRS 7 Disclosures - Trasfer of Fiacial Assets (Amedmets) The IASB ameded IFRS 7 by expadig the disclosures for fiacial assets. The additioal disclosures relate to assets that were trasferred (as defied i IAS 39). If the trasferred assets were ot fully writte off, the etity is boud to provide iformatio that eables users uderstad the relatioship betwee the assets that were ot writte off, ad the obligatios relatig thereto. If such assets were fully writte off, but there is still a cotiuig ivolvemet, disclosures should eable users to uderstad the ature ad risks associated with this cotiuig ivolvemet i the asset writte off. The amedmet applies to accoutig years commecig o or after 1st July There are o obligatios relatig to the comparative figures. IFRS 1 - Strog Hyperiflatio ad Removal of Fixed Dates for First-time Users (Amedmet) If the trasitio date of a etity to IFRS lies o or after the ormalisatio date of the fuctioal currecy, the etity may value all assets ad liabilities that were held before the ormalisatio date of the fuctioal currecy, o the date of trasitio to IFRS. This actual market value ca be used as the deemed purchase price of these assets ad liabilities i the opeig balace sheet. However, this exemptio ca oly apply to assets ad liabilities that were subject to severe hyperiflatio. The amedmet shall apply to accoutig periods commecig o or after 1st Jauary The Group has ot prematurely applied ay other stadard, iterpretatio or amedmet that was issued but is ot yet i force. Notes o the cosolidated balace sheet EXPLANATORY NOTE 5.0. CONCESSION CONTRACTS (IFRIC 12) IFRIC 12 relatig to services uder cocessio agreemets, is applied i the cosolidated aual accouts of Aquafi. Activities of Aquafi Aquafi NV was established i 1990 by the Flemish Regio to accelerate the developmet of the supra-muicipal sewerage ifrastructure. I order to achieve that objective, the Flemish Regio draws up a program of Aquafi's tasks each year. The Vlaamse Milieumaatschappij (Flemish Evirometal Agecy) moitors Aquafi's ecoomic ad ecological results. A maagemet agreemet has bee draw up betwee Aquafi ad the Flemish Regio for the executio of this task. Amedmets to the origial maagemet agreemet will be foud i addeda. Uder the maagemet agreemet, Aquafi collects the wastewater from the Flemish households i mai sewers ad trasports it to treatmet plats. For that purpose, Aquafi first expads the required ifrastructure: collectors for wastewater, pumpig statios ad wastewater treatmet plats. Aquafi pre-fiaces the projects awarded, while the drikig water compaies repay the ivestmets made. For projects delivered from 1st Jauary 2009 owards, the repaymet term is 15 years for the electromechaical works, ad 30 years for the costructio works. Aquafi is also resposible for the maiteace ad operatio of the supra-muicipal sewer system ad the wastewater treatmet plats. The treated wastewater must comply with Flemish ad Europea stadards. Outside the maagemet agreemet, Aquafi has also developed a specific offerig for cities ad muicipalities. Several cities ad muicipalities have outsourced the complete istallatio ad maiteace of their sewers to Aquafi. Aquafi also treats the wastewater of several compaies. The greatest part of Aquafi s assets is used to execute a cocessio agreemet. More specifically, it relates to assets that are used to execute the tasks uder the maagemet agreemet with the Flemish Regio. Applicability of IFRIC 12 The iterpretatio of the IFRIC 12 Provisio of Services uder Cocessio Agreemets applies to public-private agreemets, if the followig coditios are satisfied: the grator cotrols or regulates the services that the operator is required to provide with the ifrastructure, to whom those services are to be delivered, ad at what price; the grator cotrols the ultimate right through owership; i other words, the grator has cotrol over ay sigificat residual value i the ifrastructure at the ed of the agreemet. Summary cosolidated fiacial statemets 19

22 20 Cosolidated half-yearly report Aquafi 2012 Ifrastructure assets withi the scope of the agreemet are assets costructed or acquired for use i coectio with the cocessio agreemet, or existig ifrastructure to which the operator has bee grated access. The iterpretatio is based o the cocept of 'cotrol', i other words who cotrols the right to use the ifrastructure. I summary, we ca therefore state that the followig criteria must be satisfied i order to be covered uder the scope of the iterpretatio (IFRIC 12 5,7); the agreemet must be a public-to-private cocessio; the grator must have cotrol over or must be able to decide which services the operator must provide usig the ifrastructure; the grator must have cotrol over ay sigificat remaiig iterest i the ifrastructure; the ifrastructure must be built or acquired by the operator for the purpose of usig it i coectio with the cocessio agreemet; the cotract betwee the operator ad the grator determies the price at which the services are to be provided. A third coditio cocers the paymets for the services. Clause 48 of the maagemet agreemet provides how paymets are to be made (amely, a ivoicig agreemet betwee Aquafi ad the user, i particular, the Flemish drikig water compaies) ad, implicitly, also the price that Aquafi may charge. Fially, there is also a coditio relatig to the owership of the ifrastructure whe the agreemet comes to a ed. The etire ifrastructure will be haded over the govermet free of cost, after the cocessio agreemet comes to a ed. This meas that Aquafi does ot, i fact, 'cotrol' the ifrastructure as defied by the IFRS ad caot sell or pledge it, for example. The expected ecoomic life of the assets is loger tha the period of the cocessio. The iterpretatio of the IFRIC 12 Provisio of Services uder Cocessio Agreemets as ratified by the Europea Commissio o 25th May 2009, applies to Aquafi with regard to the activities uder the maagemet agreemet. Uder IFRIC 12, such ifrastructure is ot recogised as tagible fixed assets, but as fiacial assets (fiacial asset model) i Aquafi's case. Aalysis of the cocessio agreemet Fiacial assets model Provisio of Service uder Cocessio Agreemet Oe of the characteristics of a cocessio agreemet for the provisio of a service is the ature of the services. The operator must provide a public service. (the public service ature of the obligatio ). The services relatig to the ifrastructure must be provided by the operator to the public (i the broadest sese of the term) withi a pre-determied policy. The maagemet agreemet lays dow which 'public' services are to be provided by Aquafi to the govermet, amely the expasio ad maagemet of the supra-muicipal ifrastructure for the treatmet of household wastewater. A secod coditio is that Aquafi shall be resposible for at least a part of the maagemet of the ifrastructure ad related services ad does ot operate solely as a aget o behalf of the Flemish Regio. I that respect, we would like to report that Aquafi does, ideed, ru a operatioal risk, although a limited oe, for example whe it fails to achieve the scheduled delivery of ifrastructural work. The operator will post a fiacial asset isofar as there is a ucoditioal cotractual right to cash or other fiacial assets for the delivery of services. A cotractual right is said to exist if the grator cotractually guaratees the paymet of: a) specified or calculable amouts, or b) the egative differece if ay betwee amouts received from users of the public utility, ad specified or calculable amouts, eve if the paymet is made cotiget o the coditio that the operator is boud to esure that the ifrastructure fulfils specified quality or efficiecy requiremets. The various compesatios that the Flemish Regio owes to Aquafi are stipulated i Clause 43 of the maagemet agreemet betwee Aquafi ad the Flemish Regio ad fit withi the required coditios aforesaid i order to satisfy the defiitio of fiacial assets.