Annual report 2012 - Aquafin

Green light for green waterAnnual report 2012Joined-up thinking with the clientBE-GAAP

Annual report 2012Joined-up thinking with the clientBE-GAAP

4Annual report 2012Aquafinin briefA STRONG PARTNER FORTHE FLEMISH REGIONAquafin works each day to ensure clean water in streamsand rivers and to optimally transport rainwater. The companywas established by the Flemish Region in 1990 for the purposeof expanding, operating and financing the sewage treatmentinfrastructure in Flanders.Aquafin collects household wastewater from the municipalsewers in collector sewers and transports it to treatmentplants where it is treated in accordance with European andFlemish standards.The costs of the infrastructure works carried out andAquafin’s operating costs are partially passed on to drinkingwaterconsumers through the water companies. The differenceis paid via an operating premium from the MINA fund.Aquafin wants to add real value to society and our naturalenvironment, which requires an integral approach to watermanagement. A smart use of energy, recuperation of rawmaterials in wastewater and limitation of emissions in thewastewater treatment process are essential for us. Based onthe expertise it has built up over the years, Aquafin hasbecome a much sought after partner in research projectsboth in Belgium and abroad. The knowledge that Aquafingains in that way benefits both the Flemish Region andthe municipalities.

6Annual report 2012PRODUCTS AND SERVICES BEYONDTHE SCOPE OF THE AGREEMENTWITH THE FLEMISH REGION■For Flemish municipalitiesAquafin offers its services for the expansion andmanagement of the local municipal system. A municipalitymay choose to have a long-term partnership by means of aconcession or award contracts to Aquafin on an ad hoc basis.In addition, there is the possibility of the municipalities joiningthe joint ventures that Aquafin has with the water companiesAWW and TMVW(rio-link), De Watergroep (RioAct and RioP)and Vivaqua.■For industry in Flanders and foreign partnersAquafin’s subsidiary, Aquaplus NV, focuses in Belgium onthe operation of industrial wastewater treatment plants tomeet the European standards. Internationally, Aquaplus offerstechnological assistance and conducts a wide range of studies.Abroad the company mostly operates through partners andjoint ventures.INFRASTRUCTURE MANAGED ON BEHALF OFTHE FLEMISH REGION26696.5 %wastewatertreatment plants5,172 kmof supra-municipal collectorsof the plantsmet all standards1,333supra-municipal pumping stations and detention basinsKEY FIGURESAmounts in 000 Euros 2008 2009 2010 2011 2012Operating Income 326,340 352,047 362,540 426,391 483,441Profit for appropriation 6,289 6,531 7,084 9,585 9,705Balance total 2,280,359 2,429,354 2,671,015 3,021,359 3,163,989Net equity 169,908 167,236 216,561 230,545 231,022Short-term financing 82,994 30,500 140,600 82,006 127,000Long-term financing 1,192,967 1,303,608 1,355,393 1,724,036 1,755,663Aquafin employees 820 854 882 892 921VMM employees 95 92 89 87 81Total employees (number) 915 946 971 979 1,002PROJECTS IN PORTFOLIO FOR THE FLEMISH REGION31 December 2012 No. of projects Value (million Euros)Delivered 2,416 3,141.35Awarded and contracted out 343 402.14In design phase 833 813.17Total 3,592 4,356.66

Aquafin in brief7

8Annual report 20122012 The year at a glance1.January> The Flemish Government approvesthe optimisation program for 2013,for 250 million Euros.2.February> Aquafin now has an active presenceon Twitter, YouTube and Facebook.> Establishment of a contact centreas point of contact for issues raisedby citizens.5.May> Aquafin inspires at Flanders Synergy,with our story of how our organisationis now reorienting itself to a processorientedapproach.6.June> Our expertise in the impact ofclimate change and the removal ofmicropollutants makes its markduring an exhibition in South Korea.9.September> Flanders meets the European UrbanWastewater Directive. The lastcollector sewer is commissioned.> Third Aquafin satellite officeis opened in Leuven, after Drongenand Herentals.10.October> Conclusion of a loan agreement for200 million Euros with the EIB.> The Flemish Government approvesthe optimisation program for 2014,for an amount of 250 million Euros.

3.March> First stage in the rollout of our newIT architecture.4.April> Neighbourhood residents visit theAsse-Bekkerzeel sewage works,the first open door from a seriesof nine.7.July> Introduction of an objectivemeasurement system for contractorsto get their certificates of goodperformance. The aim is to furtherimprove the quality of work.8.August> The first sludge digester achieveda production of 1,000,000 kWh,which was matched by another fourdigesters later on. Aquafin aims togenerate 13% green electricityby 2020.11.November> A new rolling credit for 100 millionEuros is signed for a period of threeyears.12.December> Expansion of the managementcommittee after Aquafin'stransformation into a customerfocusedorganisation.> Start of multilateral agreementswith consultancy firms to guaranteequality.Aquafin in brief 9

10Annual report 2012

ForewordJOINED-UP THINKING WITH THE CLIENTAquafin is a reliable partner for the Flemish Region and itsmunicipalities. The company collaborates on and anticipatespossible changes in regulations and social and economicdevelopments.The active order portfolio of investment projects for theFlemish Region was worth over 1.2 billion Euros for 1,176 projectsas of 31 December 2012. To that date, Aquafin delivered2,416 investment and renovation projects for 3.1 billion Euros.A new framework agreement was signed with the EuropeanInvestment Bank in 2012 for a long-term loan of 200 millionEuros for the further execution of the projects in our portfolio.The revolving credit facility of 100 million Euros was alsorefinanced.Aquafin achieved good water treatment results for householdwastewater, with 96.5% of the water treatment plantsmeeting all the standards. The weather conditions were muchless favourable than in the previous year, but our meticulousprocess monitoring strongly limited the impact of this.The last collector project that was still needed for Flandersto fully satisfy the European Urban Wastewater Directivewas completed in 2012. The next challenge for the FlemishRegion is to satisfy the European Water Framework Directive.The Flemish Government assigned new optimisationprogrammes to Aquafin in 2012 and early 2013, for 250 millionEuros each. In addition to this, the expanded infrastructuremust also be maintained and renovated to maximise itslifespan. Information from neighbouring countries indicatesthat 1 to 2% of the total capital invested should be reservedfor this each year.11

Foreword13

14Annual report 2012

Report of the Boardof Directors onthe financial year 2012in accordance with the relevant provisionsof the Companies CodeCorporate Governance Statement 16Report of the Board of Directors 25Most important developments during the financial year 26Expansion of the wastewater treatment infrastructure for the Flemish Region 30Construction activity per water basin in 2012 34Management of the treatment infrastructure for the Flemish Region 38Services beyond the scope of the agreement with the Flemish Region 45Research and product development 47Main risk factors 49Main developments after the accounting year 51Comments on the balance sheet 52Comments on the profit and loss account 54Proposal to the General Meeting 5515

16Annual report 2012CorporateGovernanceStatementGENERALAquafin's first corporate governance charter was approvedby the Board of Directors on 26th January 2006. That charterwas prepared in accordance with the provisions of theBelgian Corporate Governance Code of 9th December 2004.The amendment of the Charter was necessitated by thepromulgation of the new version of the code in March 2009and by the issue of a debenture loan. The Board of Directorsapproved this Charter on 14th January 2010. The most recentversion of this Charter is available for perusal atwww.aquafin.be.

BOARD OF DIRECTORS■CompositionSince 3rd August 2010, the composition of the Board of Directors is as follows:Name Type of mandate/Independent/(Non-)executive End of mandateVOF Thedes, represented by Marc van den Abeelen Chairman, non-executive 2014Luc Bossyns Managing Director, executive 2014Alain Bernard Non-executive 2014Pol Cools Non-executive 2014Marijke Mahieu Independent, non-executive 2014VOF Materie, represented by Erik Matthijs Independent, non-executive 2014Francine Swiggers Non-executive 2014Jhony Van Steen Independent, non-executive 2014Ivo Van Vaerenbergh Non-executive 2014Flemish Environmental Holding Company NV Non-executive 2014(Vlaamse Milieuholding NV), represented by Matrix NV,represented by R. Van DierdonckThe Board of Directors of Aquafin has three non-executive directors who satisfy the criteria of Section 526(b) of the CompaniesCode: VOF Materie, represented by Erik Matthijs, Jhony Van Steen and Marijke Mahieu.These directors also meet the independence criteria set out in Annex A of the Belgian Corporate Governance Code. As a result,the Board of Directors satisfies Clause 2.3 of the Corporate Governance Code that at least three members of the Board of Directorsshould be independent.The Board is assisted by the Secretary, Alain Vanden Bon.Report of the Board of Directors17

18Annual report 2012■Presentation of the DirectorsMarc van den AbeelenMarc van den Abeelen has a doctor'sdegree in Law from the University ofBrussels. He became a professor of tax lawand he was the Director-General of theHigh Diamond Council. Between 1995 and2009, he was a Member of Parliament.From 1999 to 2004, he was the Chairmanof the Finance Committee and from 2004 to 2009, Chairmanof the Committee for Public Works, Mobility and Energy ofthe Flemish Parliament. Since 2004, he has been a Director ofthe Pension Fund of the Flemish Parliament and, since 2008,he has been a Director at CEGEKA NV. In addition, he isChairman of the Antwerp World Trade Centre. He becamethe Chairman of Aquafin in 2009.Luc BossynsLuc Bossyns holds a degree in CivilMarine Engineering from the Universityof Ghent. He was awarded a postgraduatediploma in Business Administration byUFSIA University (Antwerp). He began hisprofessional career with the Cockerill YardsHoboken in 1977. He subsequently workedfor CMB (head of the New Construction Division) and Boelwerf(Technical Director). From 1993 to 1995 he was GeneralManager and Director of Boelwerf Vlaanderen. He then joinedStork MEC to become Managing Director. From 1995 to 2011,he was also liquidator of all of the mid-sized shipyards inFlanders. In addition, he has also been the Director of BambossBVBA since 1995 and, since 2003, a Director of Etap NV. He isalso a member of the Board of Directors of the VlaamsKenniscentrum Water VZW, rio-link NV and ASEWaterTechnologies Pvt. Ltd. He was appointed Managing Directorof Aquafin NV in May 2000.Alain BernardAlain Bernard studied Civil Engineeringand Civil Engineering Industrial Policy atthe University of Louvain. He started hiscareer at T.V. Zeezand with the expansionof the outer port of Zeebrugge. Between1982 and 1985 he worked as a ProjectManager for NV Dredging International.He then was appointed as General Manager at NV Hydro SoilServices. In 1990, he returned to work for NV DredgingInternational, initially as Manager of the Benelux division andfrom 1995 to 2006 as General Manager. From 1997 to 2006 hewas also active as the Chief Operating Officer of the D.E.M.E.Group (Dredging Environmental & Marine Engineering).Since 2006, he has been the Chief Executive Officer of D.E.M.E.Group and Director of various D.E.M.E. Group subsidiaries:DEC, C-POWER, Scaldis, GEOSEA…He has also been Chairman of the Belgian DredgingFederation since 2004. He was appointed as a Director ofAquafin NV in 2007.Pol CoolsPol Cools graduated from the Universityof Ghent as a Civil Engineer-Architectand Engineer in Environmental Sanitation.He started his career in 1972 with theBelgian Roads Fund, and in 1976 he wasan attaché to the personal office ofthe Minister of Public Works, Mr. Defraigne.In 1977 he set up his own architect’s practice, initially as Bureauir Pol Cools, and from 1990 with the co-partnership Arch &Teco NV, of which he was a Director. He expanded the originalarchitectural office into the Arch & Teco Group. The aforesaidmultidisciplinary study and consulting group comprises eightautonomous business units that were established by Pol Coolsbetween 1977 and 2005. Its activities include: architecture,restoration and spatial planning; stability studies, civilengineering and hydraulic engineering; general infrastructure,design of road and sewer infrastructure projects; equipmenttechniques; energy performance calculation and certificate; safetyco-ordination and expertise, environmental technologies;telecom networks and GIS projects; change management;facility management; consulting; project management andcoordination. Pol Cools expanded his activities at aninternational level as of 2005, with the establishment ofthe joint venture Ase Structure Design Pvt Ltd in Chennai,India, of which he is a Director. Since 2006, he has also been amember of the Board of Liquidators at Berlaymont NV 2000.He was appointed as a Director of Aquafin NV in 2007.Marijke MahieuMarijke Mahieu holds a Licentiate in Lawfrom the University of Ghent. She workedas a lawyer in Ghent from 1975 to 1981.Since 1981, she has worked as an official forthe City of Ghent. Until 1995 she workedin the Legal Department in various posts.She was later promoted to the positionof Manager of the Technical Services Department. In 1999,she became the Director-Manager of the Environment andNature Development Department, and in 2001 she becamethe acting Director-General of the Economics, Environmentand Public Health Department. Since 2003, she has been Headof the Department of Work and Economy and a member ofthe management team of the City of Ghent. By virtue of thepost she holds, she is also a member of the managementcommittee of the Innovation and Incubation Centre NV ofthe University of Ghent, a member of the managementcommittee and a Director of the NV De Punt Gent, Chairmanof the Board of Directors of VZW Labeur Gent, and a memberof the Board of Directors of Max Mobiel Gent. She wasappointed as a Director of Aquafin NV in 2007.

Erik MatthijsErik Matthijs graduated as a doctor inveterinary medicine from the Universityof Ghent. He was a practising veterinarianuntil October 1992. In 1986 he becamethe alderman responsible for finance inthe city of Eeklo. In October 1992, he wasco-opted as a senator in the NationalParliament. He sat in the Belgian Senate until June 1995.On 1st January 1995, he also became the mayor of the city ofEeklo, an office that he held until the end of December 2006.During that period he was also a member of the Board ofDirectors of KAHOG (the Catholic University for Healthcare) inGhent. In 1995 and 1999, he was directly elected as a memberof the Flemish Parliament for the district Ghent-Eeklo. In June2004, he was once more elected as a member of the FlemishParliament, this time however for the Province of East-Flanders. In the Senate, he was a member of the Educationand Science Commission, and of the Advisory Committee forEuropean Affairs. In the Flemish Parliament, he was apermanent member of the Environment, Nature and UrbanPlanning Commission for more than 10 years. From 2004 until2009, he was Vice-Chairman of the General Policy, Financesand Budgeting Commission of the Flemish Parliament. He isthe co-author of the updated Soil Decontamination Decree,and, at the end of 2004, he also participated in thereorganisation of the water sector in Flanders. In May 2009,he was appointed as a Director of Aquafin NV and as theChairman of the Audit Committee.Francine SwiggersFrancine Swiggers holds a licentiate inApplied Economics and a master inBusiness Administration from the CatholicUniversity of Louvain. She began herprofessional career with the National Fundfor Scientific Research. In 1977 she movedto Bacob Bank. In 1997 she was appointedas member of the Management Board of the Arco Group,where she became Chairman of the management committeein November 2007. She is now a member of the Board ofLiquidators of Arcopar/Arcofin/Arcoplus. Apart from director -ships in Auxipar NV and Interfinance, she is the Censor ofthe National Bank of Belgium. She was appointed as a Directorof Aquafin NV in 1998.Roland Van DierdonckProf. Dr. Roland Van Dierdonck holdsa Civil Mechanical & ElectrotechicalEngineering degree from the Universityof Ghent and a Ph.D. in BusinessAdministration from Harvard University.From 1978 to 1980, he lectured at IMD inLausanne. In 1980, he returned to Belgiumto teach at the University of Ghent. He was Chairman ofthe School for Management of the University of Ghent from1987 to 1990 and from 1996 to 1998. He was visiting professorat Insead, Ecole National des Ponts et Chaussées in Paris andthe University of North Carolina at Chapel Hill between 1985-1992. From 1995 to 2001 he was guest lecturer at theRotterdam School of Management of the Erasmus University.From 1998 to 2007 he was dean of the independent VlerickLeuven Gent Management School. On 1st October 2007 hebecame Professor Emeritus at the University of Ghent. He wasa member of the Boards of Directors of several profit and nonprofitorganisations. He has been associate Director of theEuropean Foundation for Management Development sinceSeptember 2010. At present, he is the Chairman of the Boardof Directors of the Vlaamse Milieuholding NV and member ofthe Board of Directors of Indaver NV and Aquafin NV.Jhony Van SteenAfter completing his Economics studiesat the Free University of Brussels in 1970,Jhony Van Steen was a research assistantat the university until 1978. In 1978, hejoined the ASLK, where he was responsiblefor youth policy and introduced homebanking in 1985. From 1989 to 1992, he wasfirst adviser, then head of the cabinet and deputy head ofcabinet of the PTT cabinet, and of the Government Agenciescabinet. He was executive Director at ASLK Insurancesbetween 1992 and 1993. From January 1994 he was managerPublic and Social Profit Sector at Fortis Bank. He held a varietyof Directorships in insurance companies in Belgium andLuxembourg, including ES-finance, Belgacom, GIMV, PMV/VPM,VIOM and the Dender schooling group. He is still a directortoday in a variety of Boards in the public and the social profitsector. He was appointed as a Director of Aquafin NV in 2001and is currently also Chairman of the Appointments andRemuneration Committee.Report of the Board of Directors19

20Annual report 2012Ivo Van VaerenberghIvo Van Vaerenbergh holds degreesin Civil Mechanical Engineering andEnvironmental Sanitation at the Universityof Ghent. He has a postgraduate degree inBusiness Management and a Master’s inBusiness Administration from the CatholicUniversity of Louvain. He started his careerin the service departments of the Prime Minister withresponsibility for Science Policy Programming. As operationalmanager, he was responsible for the national R&D programmesfor Energy, Environment and Secondary Raw Materials. He wasthe Managing Director of Metallo Chimique NV from 1979 to1994. He was the Chairman of the Board of Directors of the StudyCentre for Nuclear Energy in Mol (1986-1989) and of the FlemishEnvironmental Holding (1994-2002). As an entrepreneur, he hasbeen the Chairman-Managing Director of the REM.B HydraulicsGroup (Beerse, Roosdaal) since 1986 and is a Director ofRenewable Ventures Fund cvba, ENERGIUS NV, Thenergo NV andW-Kracht NV. He is also a Director of Reynaers Aluminium NV,Ziekenhuis Netwerk Antwerpen vzw, and Lanbokas and EdanBusiness Systems NV. For twenty years he was the Chairmanof the Voka-Kempen Chamber of Commerce, and he still chairsthe Regional Nuclear Coordination Cell (RNC). He has beenDirector at Aquafin NV since 1995. He was the Chairman ofthe Board of Directors between 1999 and May 2009.■Report of activities and attendanceIn addition to exercising the powers as defined in thecharter, the Board of Directors has during the previousaccounting year, also worked on the adaptation of the fundingto the changed market conditions, the reorientation of a jointventure, a viable funding for the development andmaintenance of the infrastructure of the Flemish Region,and the further development of Aquafin as a process-orientedorganisation.During 2012, the Board of Directors met eight times.Nine Directors were in attendance at five meetings and eightDirectors were in attendance at the other three meetings.Five directors were present at all the meetings. A director wasexcused from attending one meeting, and three directorswere each excused from attending two meetings. One otherdirector was excused from attending four meetings.AUDIT COMMITTEE■CompositionChairmanVOF Materie, represented by Erik MatthijsPol CoolsMarijke MahieuFrancine SwiggersVlaamse Milieuholding, represented byMatrix NV, represented by Roland Van Dierdonck■Report of activities and attendanceThe Audit Committee monitored the integrity of thefinancial information in accordance with the tasks entrustedto it. As part of the internal monitoring and risk management,the committee discussed the audit plan and the interestmanagement, with particular attention to the results of hedging.A thorough analysis and recommendations were made inrespect of (half-yearly) annual report, the management letterand business continuity management.In 2012, the Audit Committee met four times. At threemeetings, all the members of the Committee were present,while at one meeting, one director was absent.

APPOINTMENTS AND REMUNERATIONCOMMITTEE■CompositionChairmanJhony Van SteenAlain BernardIvo Van Vaerenbergh■Report of activities and attendanceIn addition to the ordinary matters such as remunerationpolicy, extra-legal benefits, collective bargaining negotiationsand the formulation of the objectives for the managementcommittee and the evaluation of the results of thoseobjectives, the committee advised the Board of Directors onthe replacement of a member of the management committee,and the structure of the new organogram. The implicationsof the federal governmental agreement on labour costs werealso analysed. The results of the Works Council elections,the results of the internal survey ‘Aquafin as Employer’,and the attractiveness of the company in the market werealso discussed. In addition, guidelines were developed forthe award of honorary titles to former members of themanagement committee or the Board of Directors (withoutmonetary benefits).The Appointments and Remuneration Committee met fivetimes during the past financial year. Two members were inattendance at all meetings; one Director was excused fromattending two meetings.MANAGEMENT COMMITTEE■CompositionManaging DirectorLuc BossynsOperations Manager Erik PoppeInfrastructure Manager Dirk De WaeleCommercial Manager Boudewijn Van De Steene(up to 30/06/2012)Process Innovation and Danny BaetenInformation Systems ManagerOn 27th April 2012, the Flemish Government appointedBoudewijn Van De Steene to senior civil servant with the rankof Director General of the Vlaamse Maatschappij voorWatervoorziening (Flemish Water Supply Company), now knownas De Watergroep (Water Group). The Board of Directors andthe management would like to thank Mr. Van De Steene forhis years of dedication to the Company.F.l.t.r., in the back: Hans Bruynooghe, Danny Baeten, Dirk De Waele andJohan Maes. In front: Sabine Schellens, Luc Bossyns and Erik Poppe.Pending the recommendations of the BRC and the decisionof the Board of Directors concerning the new organisationalchart and the related new composition of the managementcommittee, his responsibilities were temporarily dividedamongst the other departments.Since 1st January 2013, the composition of themanagement committee is as follows:Managing DirectorAsset managementInfrastructure ManagerMarketing & IT ManagerOperations ManagerFinance ManagerOrganisational Development ManagerLuc BossynsErik PoppeDirk De WaeleDanny BaetenHans BruynoogheJohan MaesSabine SchellensIMPORTANT ELEMENTS OF THE EVALUATIONPROCESS OF THE BOARD OF DIRECTORS,THE COMMITTEES AND THE INDIVIDUALDIRECTORSThe members of the Board of Directors regularly evaluatethe size, composition and functioning of this body. The currentcomposition is evaluated in terms of the desired composition.The relationship and interaction with the ManagementCommittee is also reviewed. The Appointments andRemuneration Committee provides the Directors with ananalysis concerning this matter. The non-executive Directorsmeet at least once every year without the Managing Directorbeing present to evaluate this interaction.Report of the Board of Directors21

22Annual report 2012The following elements are assessed during the evaluationby the audit committee: internal regulations, composition andappointments, meetings, training of members and fundsavailable for such training, the whistleblower procedure andrelations with the Board of Directors. An evaluation is alsomade of the responsibilities with regard to financial reportingof the company, internal control and risk managementsystems, and, finally, the internal and external audits.The Appointments and Remuneration Committee drawsup an evaluation of its own effectiveness and efficiency everytwo years. For this self-evaluation, an individual questionnaireis submitted to the members of the committee. The resultsof this are discussed during a committee meeting andsubsequently submitted to the Board of Directors. An analysisis also made of the interaction between the ManagementCommittee and the Board of Directors. Finally, the committeealso provides advice concerning the performance of theindividual directors, particularly with a view to their potentialreappointment and with especial attention to an evaluationof the various chairmen.REMUNERATION REPORT■Non-executive DirectorsThe General Meeting decided in 2005 to pay a fixedremuneration per year, supplemented by a variable fee forevery meeting of the Board of Directors or one of itscommittees, attended by a Director. These amounts shall beincreased by 20% for the Chairman of the Board of Directorsand for the chairmen of the various committees.If the Directors carry out a task that is distinct from theirnormal tasks as Directors, remuneration shall be paid inaccordance with the decision of 2009. This only relates toassignments commissioned by the Board of Directors orthe management committee from time to time, to individualDirectors. The aforesaid types of remuneration shall becharged against general expenses.■Executive DirectorThe total gross remuneration invoiced for 2012 by BambossBVBA, the Managing Director of which is also the Executive(Managing) Director of Aquafin, comprises the following:Basic remuneration: € 398,914.32Variable portion: € 142,637.66Pension entitlement:naOther remuneration components: € 1,359.30He receives no remuneration as a Director (within theBoard of Directors).■Management committeeThe total gross remuneration that was paid to themembers of the Management Committee 1 for 2012, withexception of the Managing Director, is as follows:Basic remuneration: € 565,631.34Variable portion 2 : € 50,671.98pension entitlement: € 143,490.07Other remuneration components: € 105,324.84NameTotal amount receivedVOF Thedes, represented by Marc van den Abeelen (C) € 38,865.45Alain Bernard € 11,095.37Pol Cools € 13,155.95Marijke Mahieu € 13,472.96VOF Materie, represented by Erik Matthijs (C) € 16,896.67Francine Swiggers € 11,782.23Jhony Van Steen (C) € 15,311.62Ivo Van Vaerenbergh € 12,786.10VMH NV, represented by Matrix NV, represented by Roland Van Dierdonck € 11,782.23((C) = Chairman)1 Gross remuneration Boudewijn Van De Steene up until 30 June 2012.2 The total amount of this income component is divided into one amount that is paid out as a gross bonus and is included under this heading,and another amount is part of the pension scheme entitlements, which are included under a heading of that name.

■GeneralFollowing the advice of the Appointments andRemuneration Committee, the Board of Directors approvedthe remuneration policy for both the management teamand the Managing Director. The aim of this policy is to attract,retain and motivate competent and skilled persons.The amount of the remuneration takes into account theindividual tasks and responsibilities of the members ofthe Management Committee.The performance of the management team is evaluatedonce a year in the presence of the Managing Director.The Managing Director is, of course, not present during theassessment of his own performance. The appointments andremuneration committee closely follows the procedureapproved by the Board of Directors. The operational, personaland commercial objectives are formulated each year, based onthe regulations. A specific weight is assigned in the evaluation,to each of those objectives, in advance. For 2012, the componentsof the evaluation related among other things to organisational,budgetary, economic and environmental aspects and/orresults. The overall performance of each manager is alsoevaluated, apart from an evaluation based on the formulatedobjectives. The evaluation relates to the performance from1st January 2012 to 31st December 2012.No shares (options) and/or rights for the acquisition ofshares were granted to the members of the executivemanagement (including the Managing Director).IMPORTANT CHARACTERISTICS OFTHE INTERNAL MONITORING AND RISKMANAGEMENT SYSTEMS OF THE COMPANYThe Board of Directors is aware of its responsibilitiesand takes all possible risks into account in the determinationof the strategic direction of the company. Risk-related subjectsare discussed at its meetings. The Management Committeeis also aware of the importance of good internal monitoringand risk management. Risk-related subjects are discussed atthe weekly meetings.All departments implement a risk-management policy, inwhich policy lines, procedures, signing authorities, built-inalarms and checklists are defined and used. Changes inlegislation are also followed up. The necessary measuresfor ensuring information security have also been taken.Several specific departments focus closely on risks:Occupational Health & Safety, Environment and Quality,Compliance Management, the Less Nuisance Manager, theombudsman and the internal auditor. In addition, thecompany also focuses on monitoring and reporting on risks.In this connection, use is made of a reliable informationsystem and the Balanced Scorecard, both as a measurementinstrument and as a reporting system. Internal quality auditsare carried out on the implemented procedures. The internalauditor, external auditor and the Economic SurveillanceAuthority of the Flemish Region effectively monitor thecompany.No employment contracts were concluded with theManaging Director or any other member of the ManagementCommittee up to or after 1st July 2009.Report of the Board of Directors23

24Annual report 2012AUDIT OF THE COMPANYOn 8th June 2011, the general meeting of the Companyappointed Ernst & Young Bedrijfsrevisoren BCVBA,J. Englishstraat 52, Borgerhout, represented by Ronald Vanden Ecker, as the external auditor of the company. The termof office of the external auditor shall end at the conclusion ofthe general meeting that votes on the annual accounts in 2014.The annual remuneration of the auditor, for the statutoryaudit of the annual financial statements of the company,is 45,675 Euros (exclusive of VAT).A sum of 4,715 Euros was paid during the previous financialyear to the auditor and to persons with whom he collaboratedprofessionally in connection with a tax case, as a specialassignment. This assignment was discussed by the AuditCommittee.SHAREHOLDING STRUCTURE ANDCROSS-PARTICIPATIONSThe Vlaamse Milieuholding is the owner of all shares ofAquafin NV. There are no cross-participations.EXPLANATIONS RELATING TO DEVIATIONSFROM THE CODEAquafin applies the provisions that have been defined inthe “Belgian Corporate Governance Code”, which applies topublicly listed companies. Deviations from the Code arepossible in certain instances, due to the individual characterof the shareholding in the company. The provisions of thisCode with which the company has not complied with, will beexplained below.• Section 5.2/4 : majority of independent directors in the AuditCommittee.The Audit Committee consists of five members who arenon-executive directors. Two members are independent,in conformity with the Belgian Corporate Governance Code.The majority of the Audit Committee therefore does notconsist of independent directors. The Board of Directorsbelieves that with the current number of independentdirectors, the audit committee has a balanced structure,consisting of stakeholders who are interested in a proper andindependent functioning of the audit committee, and thatthis offers sufficient guarantee for the proper and efficientfunctioning of the Committee.• Section 5.4/1 : majority of independent directors in theAppointments and Remuneration Committee.The Appointments and Remuneration committee consistsof three non-executive directors, of which one director may beregarded as independent as per the criteria laid down inthe Belgian Corporate Governance Code. The reason for this isthat a meaningful contribution to the Appointment andRemuneration committee is only possible if the membersthoroughly know the company and the specific context inwhich it has to operate.• Section 8.8: calling/ submitting proposals at GeneralMeetings.The Articles of Association of the Company lay down a legalthreshold of 20% for calling a General Meeting. In view ofthe specific shareholdership characteristics of the Company,there is no ground to lower the threshold for calling a generalmeeting at this point.INSIDER TRADING AND MARKETMANIPULATIONInasmuch as Directive 2003/6/EC on insider trading andmarket manipulation (market abuse) applies to the Companysince the issue of the debenture loan, the amended Charter(approved by the Board of Directors on 14th January 2010)includes measures to comply with the provisions of the saidDirective. The role of the compliance officer in ensuringcompliance with the applicable provisions and the necessaryreporting requirements has been described. The Board ofDirectors shall draw up trading rules if so required.Mr. A. Vanden Bon, Secretary of the Board of Directors,has been appointed as the Compliance Officer.No reports to which these provisions would be applicablewere made during 2012.

Report ofthe Boardof DirectorsFOR THE FINANCIAL YEAR 2012Aquafin works each day to ensure clean water in streamsand rivers. Our focus today is not merely on the treatment andthe optimal transport of domestic wastewater. For ourcustomers, we also wish to contribute in a broader sense toclean water solutions. In the previous year, we continued withthe implementation of our strategic plan and have now fullyoriented the organisation towards the customer. The initialresults can be clearly seen. We have achieved all our targetsfor the procurement and delivery of projects for the FlemishRegion. We have also had excellent wastewater treatmentresults, given the heavy rainfall during the year. Furthermore,we are the only operator in the commercial market thatmanaged to increase the number of municipal customers lastyear. In the medium term, we want to offer new products tothe region as well as to our municipal customers, aimed atadapting to the changing climate in Flanders.Report of the Board of Directors25

26Annual report 2012Most importantdevelopmentsduring thefinancial yearFOCUS ON THE CUSTOMERWhat makes Aquafin special within Europe, is our thoroughgoingknowledge of the wastewater cycle. We are able to offer theFlemish Region and our customer municipalities a total packageof services, from local knowledge, technical and technologicalknowledge, to operational experience, asset management andfinancial expertise.As a knowledge-based company, we want to continuallydevelop more innovative products in collaboration with ourcustomers, in order to meet their real needs. This ambitionrequired a redesign of the organisation and a smart use of data.In order to be versatile, we have enriched our organisationwith a process-oriented approach. Wherever necessary, staff fromdifferent departments were brought together in variousmultidisciplinary teams. We no longer have separate silos withinour organisation.The core processes Financing, Vision development on the network,Accelerated project implementation and Transport and treatmentof wastewater had already been mapped during the previousyears. In 2012, we outlined our fifth core process, ensuring Reliableand efficient plants.

NEW DIRECTIONS FOR MORE TARGETEDMANAGEMENTAfter reorienting Aquafin into a customer-focusedorganisation, the existing departments were transformed andextended in order to be able to better control the definedprocesses.Due to the size and age of the treatment infrastructure inFlanders, Asset Management became a separate managemententity. In addition, Financing acquired the position thatreflects its importance to the organisation. The managementprocesses that are externally focused were brought togetherin the Marketing and IT department, while the processeswith a focus on internal development were grouped underthe Organisational development department.After a rigorous selection process, and on therecommendation of the Appointment and RemunerationCommittee, the Board of Directors decided on 6th December,2012 to appoint the following new managers/members ofthe management committee: Hans Bruynooghe, Johan Maesand Sabine Schellens.BETTER COLLABORATION THROUGH SMARTERDATA MANAGEMENTIn order to be able to provide work that is truly tailor-madeto the customer, the ICT facilities must also be able to satisfychanging needs. The rollout of the new documentmanagement system Alfresco was the first step in thereorientation of the IT architecture that is now taking place.The portal environment was simultaneously modernised.The design of a business process modelling system takes placeat the underlying level, that increases the manoeuvrability ofthe IT environment. The digitisation of incoming invoices andcredit notes and the associated approval flow in AS400 wasalso started in 2012. Geopunt, a user interface for visualisingour central geographic database, was also launched.The best software naturally offers no added value withoutreliable source data. In 2012, an internal working group workedhard on data and information management within theorganisation, since we want to guarantee that our reportingon IFRS and our invoicing is totally reliable. We also continuedour work on the optimisation of our data and informationmanagement in 2013.NEW DEPARTMENTSFINANCING AQUAFIN IN A CHANGING MARKET■MANAGING DIRECTORFINANCECost-efficient financingJohan MaesINFRASTRUCTUREVision of the network - Accelerated project executionDirk De WaeleOPERATIONSTransportation and treatment of wastewaterHans BruynoogheASSET MANAGEMENTReliable and efficient plantsErik PoppeMARKETING AND ICTSteering processesDanny BaetenORGANISATIONAL DEVELOPMENTSteering processesSabine SchellensFurther shift towards institutional investorsThe Basel III agreement of the Basel Committee on BankingSupervision has placed more stringent capital requirements onbanks, in response to the credit crisis. One consequence of thisis that banks have continuously less scope to provide loans.This makes it increasingly more difficult and expensive forcompanies to obtain long-term financing. Aquafin hastherefore started looking for alternative financing in recentyears. We have found financing from institutional investorssuch as pension funds and insurance companies. Their sharein the financing of Aquafin is rising.Report of the Board of Directors27

28Annual report 2012■Additional framework agreement with the EuropeanInvestment BankThe European Investment Bank (EIB) is responsible for halfthe financing needs of Aquafin, and still provides long-termloans. A new framework agreement for 200 million Euros wassigned in 2012. Of this, the first instalment of 50 million Eurosfor 30 years has been availed. Based on this loan, an audit wasconducted, in which Aquafin was screened as regards itsfuture-orientedness, its efforts to anticipate climate change,its technological performance, and innovative strength. This isthe eighth EIB loan to Aquafin since 1994, for investmentsin the Flemish water treatment infrastructure. With this,this institution has already provided 1.4 billion in support forthe expansion of the treatment infrastructure in Flanders.Aquafin is extremely grateful to EIB for the collaboration,advice and support it has given all this time. It is highlyprobable that in 2013, the agreement for second part of thisloan amounting to 150 million Euros will be signed.■Renewal of short-term funding linesOur need for short-term financing is largely satisfiedthrough commercial paper, which still can be easily placed inthe market. The rest of our requirement is covered by severalshort-term lines, since the banks also have to meet newprovisions to grant short-term loans. The impact is noticeableon the cost of credit lines held, both as regards the reservationcommissions as well as the uptake margins.In order to maintain a balance between the cost of theseinstruments and the scope of the same, the Board of Directorsapproved a new strategy in 2012, to continue to be able toguarantee a part of the required (short-term) financing, andtherefore to continue to have adequate potential additionalfunding sources available. All credit lines will be renegotiatedin accordance with the new strategy, an operation that will becompleted by the first quarter of 2013.The revolving credit facility was also refinanced in 2012.Several banks had a neck and neck race to take the lead.With KBC as Mandated Lead Arranger, the line was subscribedfor an amount of 100 million Euros. Aquafin can look backon a partnership that goes back to 2003, the year in whichthe first revolving credit facility was signed.■Active interest management reduces the financing costsAquafin wishes to optimise the financing costs throughactive management of the interest risk. The Board of Directorsapproved the outlines of a dynamic management procedurefor interest-rate risks in 2006. The interest policy was modifiedin 2008. In 2009, it was primarily the descriptions anddefinitions that were modified. No changes were made tothe principles themselves.Active interest management may be applied to amaximum of 35% of the underlying debt of Aquafin’s totallong-term debts. For the future interest burden, a maximumof 50% of the budgeted future long-term debts with a 5-yearhorizon may be covered. The risks are always covered and anunderlying loan always matches the coverage structure.

The financial results of the interest management arecalculated on the basis of individual benchmarks (the result ofan individual strategy in comparison to the applicable interestswap at the time of establishing/implementing the structure).The interest cost of the underlying loan must be takentogether with the results of the structure superimposed on it,in order to see Aquafin's ultimate debt burden. The savingsthus achieved, were also set-off with the water companies in2012, in accordance with agreements.The environment within which the hedging structures areset up is also subject to the Basel III regulations, so that banksare bound to take into account their own – limited – resources.Aquafin will therefore also prepare for the systematictightening of the conditions of these financial institutions.■Rating remains stableThe review of Aquafin’s creditworthiness is monitoredannually by Moody’s. The rating remains unchangedcompared to last year. The analysis clearly shows the closerelationship with the Flemish Region. With its Aa2 rating forlong-term loans, the organisation therefore enjoys the samerating as the Flemish Region, which is higher than the ratingfor the whole of Belgium. Aquafin has a P-1 rating for shorttermloans. This makes Aquafin the top of creditworthycompanies, which is also reflected in the confidence thatthe organisation continues to enjoy from various lenders.CHANGES TO THE JOINT VENTURE RIO-LINKSince 2004, Aquafin has been permitted to compete withother sewer operators in the municipal market. Aquafin joinedrio-link in March 2011, a joint venture between the drinkingwater companies TMVW and AWW, by the acquisition of onethird of the shares. The other shares are held by water-linkcvba. In this manner, the previous cooperation betweenAWW and Aquafin (under the RI-ANT name) could be valorisedfurther within rio-link.On 6th December 2012 the Board took several decisionsrelating to the activation of rio-link. Thus for example, aproposal relating to the reduction of the number of directorswas approved, the distribution of seats on the Board ofDirectors amongst the shareholders, the chairmanship of theBoard of Directors, and the appointment of a managingdirector. Furthermore, the Service Agreement betweenAWW and Aquafin was replaced by one between rio-link andAquafin. The guidelines are the same as those that applied inthe first agreement. Smaller adjustments formalised practicalagreements concerning work distribution, without anyfundamental impact on Aquafin’s position. The shareholders’agreement was also modified.PURCHASE OF PLANTS AND LANDS OFTHE VLAAMSE MILIEUMAATSCHAPPIJIn 1994, under the terms of the Management Agreementbetween the Flemish Region and Aquafin, the companyacquired the user rights for the plants that had alreadybeen established before the Company was in operation.These plants do not appear in the Aquafin balance sheet.The investments made by Aquafin over the past few yearsfor the renovations and expansion of these plants,do appear in our balance sheet. Inasmuch as the managementof these assets by two parties proved to be inefficient,the Flemish Government decided to allow Aquafin topurchase, operate and finance the plants and the assetsthat were in the possession of the VMM. To make possiblethe financing of the purchases of the VMM plants,the Management Agreement and the allocation agreementwere appropriately amended.The acquisition took place in two phases, spread out over2010 and 2011. In January 2012, the second phase of the saleof the North-Antwerp and Ostend WWTPs was completedfor a total of almost € 58 million.EU FINE FOR BELGIUM – THE LATEST STATEOF AFFAIRSAt the moment, Belgium is not compliant with theprovisions of the European Urban Wastewater Directive foragglomerations of more than 10,000 residents. In this dossier,Europe has filed an application with the European Court toestablish that Belgium is in violation.Although penalties will be imposed on Belgium, the finesif any must be distributed between the three Regions.They, however, made no agreement yet concerning a possibledistribution of the same.Flanders has only one agglomeration/treatment plant– the one in Beersel – that was not completely compliant.That plant was operational, but it had not been possible tosubmit the mandatory samples for a full year. As regardsFlanders, the Court now seems inclined to accept that thenecessary sampling for the Beersel agglomeration did takeplace. Given this finding, Flanders will possibly not have to payany penalty.Report of the Board of Directors29

30Annual report 2012Expansion ofthe wastewatertreatment infrastructurefor theFlemish RegionIn 2012, Aquafin achieved all the targets set for hydronautstudies, tenders and project completions. The changeover oneyear ago to process-oriented operations in geographicallydeterminedbusiness units, has meanwhile clearly proven its addedvalue. In the next few years, we will focus on an optimalimplementation of the design phase and risk management inproject implementation.

On 31st December 2012, the active order portfolio forinvestment projects for the Flemish Region amounted to morethan 1.2 billion Euros, for a total of 1,176 projects. By that date,Aquafin had delivered 2,416 investment and renovationprojects worth 3.1 billion Euros.As at 31st December 2012, Aquafin was responsible forthe operation of 265 sewage treatment plants*. Aquafin hasunder its management 5,172 km of pipelines for thetransportation of the wastewater to the treatment plants.Aquafin also manages 1,333 supra-municipal pumpingstations and sedimentation basins.VALUE OF PROJECT PORTFOLIOAT 31 DEC 2012DELIVERIES OF HYDRONAUTS (mio Euros)4.03.53.02.52.01.51.00.502008 2009 2010 2011 2012■Deliveries3,141.35Requests for tendersand awarded contracts402.14In design phase813.17mioEurosmioEurosmioEurosVision development concerning the expansion andmanagement of the wastewater treatment infrastructureThe physical parameters of the system are registered andformalised through hydraulic studies. In 2012, Aquafindelivered 59 hydronaut studies projects worth a total of 3.4million Euros. 46 of those were needed for the expansion ofthe sewer system, while the remaining 13 studies wereintended to obtain deeper knowledge about the wastewatertreatment areas. The target for 2013 is again 3.4 million Euros.■Multilateral agreements with engineering bureaus in forceAquafin developed a concept in recent years, with which itwants to build lasting relationships with engineering bureaus.After a period of extensive consultation with industryrepresentatives, we have been allocating a certain percentageof our portfolio for transport projects to selected engineeringbureaus each year since late 2012, through multilateralagreements.The percentage shall be fixed for four to six years, and isproportional to the price, the quality, and the capacity ofthe engineering bureau in question. In this manner, Aquafinguarantees reserve capacity which it can always call on at veryshort notice and thereby reduce the duration of the project.A more structural cooperation with Aquafin gives consultanciesthe certainty that it is worthwhile to invest in specialisation,which again is good for quality. The splitting-up of Flandersinto regional areas also makes it possible for smaller researchbureaus, which often have good local knowledge, to enter intoa partnership with Aquafin.Thanks to setting-up a targeted cooperation betweenour core processes Vision on the Network, Transport andwastewater treatment, and the Reliable and efficient Plantsdefined last year, we have organised ourselves better in orderto achieve treatment areas that work optimally. Of course,we therefore also have to work closely with governments,local administrations and other bodies.* The Laarne WWTP is not included, which is operated by third parties.Report of the Board of Directors31

32Annual report 2012FLANDERS MEETS THE REQUIREMENTSOF THE EUROPEAN DIRECTIVE ON URBANWASTEWATERIn September 2012, the Flemish Minister for EnvironmentJoke Schauvliege activated the last collector sewer in Flanders,required to comply with the European Urban WastewaterDirective. The domestic wastewater from all agglomerationsfrom 2,000 residents will now be treated before it isdischarged into watercourses. The implementation of theUrban Wastewater Directive does not in any event mean thatno further investment is to be made in the supra-municipalsewerage infrastructure. The next challenge is indeed to alsocomply with the European Water Framework Directive,which aims to achieve good surface water quality by 2015.Although our streams and rivers have undergone vastimprovements due to strenuous efforts over the past twodecades, many optimisations in the sewer system still have tobe implemented in order to improve water quality. Naturally,all treatment infrastructure also has to be maintained andoperated. Information from our neighbouring countries showsthat each year, 1 to 2% of the total invested capital has to bereserved for structural maintenance of the assets.In 2012, 10 new treatment plants were delivered: in Moelingen,Overslag, Stavele, Gistel-Moere, Sint-Jan-in-Eremo, Brakel-Michelbeke, Beauvoorde, Lovie, Ninove–Rendestede andMelsbroek. Nine treatment plants were renovated or expanded.These are the plants in Wichelen, Tongeren, Mol, Merksplas,Eisden, Beverlo, Ninove, Lichtaart and Bruges.● New treatment plants● Renovated treatment plants

TENDERING VOLUME (mio Euros)DELIVERY VOLUME (mio Euros)2001801601401201008060402002008 2009 2010 2011 20122001801601401201008060402002008 2009 2010 2011 2012■ Dossiers submitted■ Total of dossiers delivered■ Highest tender volume since 2002In 2012, Aquafin brought the agreed project volume inthe market to 177 million Euros. Due to the favourable pricesin the second half of the year, the planned projects could beawarded for a total of 163 million Euros. There was a totalof 120 projects.For 2013, the target was 170 million Euros, subject tothe condition that the objective should fit within the budgetsof the Flemish Region.Through cooperation with municipalities and inter-municipalcollaborations, the amount that Aquafin realised for the regionincreased from 163 million to over 260 million Euros.■Highest delivery volume for the last four yearsThe execution of infrastructural projects is taking place inan increasingly more complex environment. Thus for example,licensing authorities are increasingly becoming moredemanding, there are more and more parties in the projects,and citizens are becoming more critical. Still, in 2012, Aquafinexecuted projects amounting to 195 million Euros. Since theprojects are becoming smaller, a record number of 130 dossiershad to be submitted to the Flemish Region.Aquafin shall be examining the formal aspects of thedossiers that we submit, even more closely in 2013.The target for deliveries for 2013 is 160 million Euros,again subject to the approval of the necessary resourcesand budgets.In the near future, we wish to evolve into a fixed deliveryvolume. In the first stage, the necessary project proposals havebeen submitted to the Flemish Region. Apart from the focuson deliverables and procurement, we will be focusing moreon the design phase, in order to enable the maximumanticipation of possible risks of delays or difficulties inimplementation, from that very stage. Internal materialexperts were already designated for technical knowledgedomains in 2012. Furthermore, a system was developed fora project-specific communication plan for works in progress.In 2013, further work shall be made on pro-active riskmanagement in implementation projects and an optimalimplementation of project management. Our cooperationwith the utility companies remains an important concern.Aquafin concluded a cooperation protocol with Eandis in early2013, to set up clear agreements concerning the relocationof utility lines and reporting power outages.In 2012, as in the previous year, the Flemish Region was verystrict concerning the administrative correctness of thedossiers. As a result, the customer only regarded projects foran amount of 175 million Euros as having been completed.The other files will be administratively updated whereverrequired, during the course of 2013.Report of the Board of Directors 33

34Annual report 2012Construction activity per water basin in 2012YSER - BRUGES POLDERS - GHENT CANALS - LEIEKNOKKE●●HEISTWATERVLIET●BOEKHOUTE●BRUGGE ●●MALDEGEMSINT-JAN-IN-EREMO●MOERBEKE -OOSTENDE ●KRUISSTRAAT●ZELZATE ● ● ●● BRUGES POLDERSEEKLO● STEKENEOVERSLAGJABBEKE●●●ERTVELDEMOERBEKESINT-NIKLAAS●GISTEL - MOEREYSERBEERNEMSINAAI SINT-NIKLAAS -●GHENT CANALS●●ZOMERGEM●HEIMOLENWULPENAALTER●●RUDDERVOORDE ●●● EVERGEMLOKEREN - DOORSLAAR●● PERVIJZE KOEKELAREBALIEBRUGGE ●● SINT-PIETERSVELDADINKERKE●KORTEMARKWINGENENEVELE●● GENTBEAUVOORDE●●WOUMEN● LATEM●●TIELTSTADEN● DEURLELO ●●●DEINZEPITTEMSTAVELE●ROESELARE● VLETEREN●●●ROESBRUGGELANGEMARKOLSENELOVIE●● INGELMUNSTER●IEPER● WAREGEM●●WATOUPOPERINGEZONNEBEKE MOORSLEDELEIE●●● BEVEREN-LEIE● VLAMERTINGE●●● HARELBEKEHEUVELLANDLEDEGEMWESTOUTER-CENTRUMIEPER - HOLLEBEKEHEULE● KRUISEKE●●KEMMELMENENLOKER●●●●●KRUISEKE●● taken into operation in 2012YSERTreatment level: 77.08% (76.5% in 2011)Supra-municipal infrastructure under management:● 23 wastewater treatment plants● 113 pumping stations● 399 km pipe workNUMBERTENDER SUMProjects in progress 32 21,961,424 €NUMBERDELIVERY SUMProjects delivered 11 6,699,430 €GHENT CANALS (GENTSE KANALEN)Treatment level: 82.37% (80.6% in 2011)Supra-municipal infrastructure under management:● 18 wastewater treatment plants● 85 pumping stations● 420 km pipe workNUMBERTENDER SUMProjects in progress 10 4,796,526 €NUMBERDELIVERY SUMProjects delivered 8 4,760,589 €BRUGES POLDERS (BRUGSE POLDERS)Treatment level: 85.99% (84.9% in 2011)Supra-municipal infrastructure under management:● 12 wastewater treatment plants● 106 pumping stations● 352 km pipe workNUMBERTENDER SUMProjects in progress 9 3,376,886 €NUMBERDELIVERY SUMProjects delivered 14 9,474,900 €LEIETreatment level: 75.03% (72.8% in 2011)Supra-municipal infrastructure under management:● 17 wastewater treatment plants● 67 pumping stations● 370 km pipe workNUMBERTENDER SUMProjects in progress 22 11,121,737 €NUMBERDELIVERY SUMProjects delivered 9 9,325,239 €

LOWER SCHELDT - UPPER SCHELDT - DENDERBERENDRECHTANTWERPEN - NOORDLOWER SCHELDT● BRASSCHAATKIELDRECHT ●KALLOSCHOTENDE KLINGE ●MERKSEM ● ●●●●SCHILDEBEVERENDEURNEBURCHT ●●WOMMELGEMANTWERPEN - ZUID ●● BOECHOUT●●●AALBEKE -TOLPENHOEK● ●ROLLEGEM●●●●TEMSE●● ●HAMME BORNEM●● ● EDEGEMAARTSELAAR● BOOM●LOKERENDESTELBERGEN● ●BLAASVELDZELE SINT-AMANDS●●●RUISBROEKBERLAREOVERSCHELDE●●DENDERMONDEMERELBEKE●●●● ●WICHELENLONDERZEELMELLE ●WETTERENDE PINTE - ZEVERGEM ●●LEDE ●LEBBEKE - ROOIEN●EKE ●OOSTERZELEAALSTBAMBRUGGE●MERCHTEM●GAVERE ●BAVEGEM ●●●● ASSE - BOLLEBEEKKRUISHOUTEMDIKKELVENNELIEDEKERKEHELDERGEM●ASSE - BEKKERZEELUPPER SCHELDT● ZWALM●DENDEROUDENAARDEBRAKEL-MICHELBEKE SINT-ANTELINKSSINT-MARIA-LIERDE● NINOVE● ELSEGEM BRAKEL ● ● ZANDBERGEN●NINOVE - RENDESTEDESCHORISSE ●● KLUISBERGENPARIKE● GERAARDSBERGEN●AVELGEM●●RONSE● GALMAARDENHELKIJN●● NINOVE - RENDESTEDE● taken into operation in 2012LOWER SCHELDT (BENEDEN-SCHELDE)Treatment level: 90.6% (88.3% in 2011)Supra-municipal infrastructure under management:● 41 wastewater treatment plants● 205 pumping stations● 835 km pipe workNUMBERTENDER SUMProjects in progress 26 23,222,261 €NUMBERDELIVERY SUMProjects delivered 37 44,384,045 €DENDERTreatment level: 79.63% (79.4% in 2011)Supra-municipal infrastructure under management:● 13 wastewater treatment plants● 101 pumping stations● 450 km pipe workNUMBERTENDER SUMProjects in progress 18 13,499,951 €NUMBERDELIVERY SUMProjects delivered 8 4,936,827 €UPPER SCHELDT (BOVEN-SCHELDE)* The Laarne WWTP is included, which is operated by third parties.Treatment level: 69.32% (68.1% in 2011)Supra-municipal infrastructure under management:● 18 wastewater treatment plants*● 46 pumping stations● 188 km pipe workNUMBERTENDER SUMProjects in progress 17 11,742,677 €NUMBERDELIVERY SUMProjects delivered 12 7,824,109 €Report of the Board of Directors35

36Annual report 2012DIJLE - NETERAVELS●OUD-TURNHOUTBEERSE ●●● TURNHOUT● ARENDONK●MALLE ●●VOSSELAARMOL-POSTEL● ZOERSEL● RETIE● LICHTAART● DESSELPULDERBOS●GROBBENDONK ● GEEL - MOSSELGORENVIERSEL ● ● ●●●HERENTALSMOLNIJLENNETEHOVE ●● ●MORKHOVENLIER● GEEL●DUFFEL - MIJLSTRAATBERLAAR● ITEGEMDUFFEL ●HEIST-OP-DEN-BERG ●●● WESTERLOMECHELEN - NOORD ●HULSHOUTBONHEIDEN●WOLFSDONK●ZEMST - KESTERBEEK ZEMST - HOFSTADE●ZEMST - LAREBEEK ● ●● BOORTMEERBEEK●HUMBEEKMELSBROEK● KAMPENHOUT●GRIMBERGEN ●STEENOKKERZEEL - NOORD●KORTENBERG ● LEUVEN●●LENNIK - VARENBERGBEEK●NEGENMANNEKE●SINT-PIETERS-LEEUW●BEERSELDIJLETERVUREN●●BIERBEEK● OUD-HEVERLEE●HULDENBERG● taken into operation in 2012DIJLETreatment level: 73.11% (72.0% in 2011)Supra-municipal infrastructure under management:● 20 wastewater treatment plants● 183 pumping stations● 509 km pipe workNUMBERTENDER SUMProjects in progress 23 29,356,641 €NUMBERDELIVERY SUMProjects delivered 18 31,198,860 €NETETreatment level: 75.93% (75.7% in 2011)Supra-municipal infrastructure under management:● 31 wastewater treatment plants● 132 pumping stations● 528 km pipe workNUMBERTENDER SUMProjects in progress 21 7,749,545 €NUMBERDELIVERY SUMProjects delivered 7 14,886,869 €

DEMER - MEUSEESSEN ●KALMTHOUT ●MEER ●HOOGSTRATEN●POPPEL●●●ZONDEREIGENMEUSELOENHOUT●MERKSPLAS●BRECHTACHEL●● HAMONTLOMMEL ● ●OVERPELT●LOZEN●BOCHOLTEKSEL ●KINROOI●● ●KESSENICH●BREEPEER● NEEROETERENBEVERLOMEUSE●TESSENDERLO● KOERSEL● DILSEN●ENGSBERGENHEUSDENHOUTHALEN - CENTRUM●ZICHEM●●MESSELBROEK●● LUMMEN - GENEIKENHOUTHALEN - OOSTZONHOVEN● ●●AARSCHOT ● ●DIEST ZOLDER ● HASSELT - KIEWIT●EISDENRILLAAR●●●● ●●HALENKERMTBOORSEM ●●HASSELT BOKRIJK GENKROTSELAAR●LANAKEN● GEETBETSSINT-JORIS-WINGE DEMER● BILZENALKEN ●●VISSENAKENSINT-TRUIDEN WIMMERTINGENROOSBEEK●●HOESELT ●RIEMSTNEERVELPZOUTLEEUW ●BORGLOON - TIVOLIBIERBEEK - KLEINBEEK ●●HOEPERTINGEN ●TIENEN ● OPLINTER ●●●RIKSINGENBORGLOON - NEREM●ZICHEN●●●●HOEGAARDENGELMENTONGERENLANDEN -RUMSDORPMOELINGEN●VOEREN - VEURS●●●●●●● taken into operation in 2012DEMERTreatment level: 71.28% (70.7% in 2011)Supra-municipal infrastructure under management:● 43 wastewater treatment plants● 177 pumping stations● 645 km pipe workNUMBERTENDER SUMProjects in progress 50 35,751,667 €NUMBERDELIVERY SUMProjects delivered 16 19,094,118 €MEUSE (MAAS)Treatment level: 85.08% (84.4% in 2011)Supra-municipal infrastructure under management:● 30 wastewater treatment plants● 115 pumping stations● 470 km pipe workNUMBERTENDER SUMProjects in progress 4 551,704 €NUMBERDELIVERY SUMProjects delivered 11 21,999,196 €Report of the Board of Directors37

38Annual report 2012Managementof the treatmentinfrastructurefor the FlemishRegionIn 2012, Aquafin achieved good treatment results for receiveddomestic wastewater, with 96.5% of the treatment plants meetingall the standards. The weather conditions were much lessfavourable than in the previous year, but our good processmonitoring greatly limited the impact of the same.The effluent results of 2012 were evaluated for 257 wastewatertreatment plants (WWTPs). These are the treatment plants theoperation of which the Flemish Region entrusted to Aquafin in1994, and plants that Aquafin itself constructed and delivered tothe contractor prior to July 2012 and for which the VlaamseMilieumaatschappij has an ongoing monitoring program.

96.5% OF THE WASTEWATER TREATMENTPLANTS MET ALL THE APPLICABLE STANDARDSIn 2012, 248 plants or 96.5% of the plants met all theemission limits imposed (white bar in the figure). The graphshows the pattern over a period of ten years. It is the first timesince the creation of Aquafin that all the treatment plantsevaluated meet the standards of the European UrbanWastewater Directive, which until April 2004, were alsothe sectoral standards of the Flemish Region. Nine plants didnot meet the currently more stringent Flemish standards.They are indicated in the figure with an orange bar.The WWTPs Lede, Ertvelde, Aalter, Maldegem and Jabbekefell short of the compulsory removal percentage for nitrogen,whereby Jabbeke also fell short in respect of the removalpercentage for BOD. The Pervijze small-scale works did notmeet the removal percentage for COD, while the VlamertingeWWTP did not meet the required results for suspended solidsand phosphorus. The reed bed of Zemst-Larebeek received suchlarge quantities of diluted sewage for processing that it wasunable to meet the mandatory removal rates for BOD andCOD. The Hamont WWTP was renovated in 2012.The plant fell just short of meeting the annual averagefor phosphorus, and had also exceeded the daily maximum fornitrogen.ANNUAL RAINFALL AFFECTS TREATMENTRESULTSEvery three litres of water received at a treatment plantmay roughly be classified into one litre of wastewater, one litreof rainwater, and one litre of parasitic flow. The wastewater inthe sewer is therefore equally diluted by rainwater that runsoff paved surfaces, as by ‘parasitic flows’: connected surfaceand groundwater that seeps into the sewers.Clean water present in the sewer dilutes the wastewaterthat is received in the treatment plants. This may soundparadoxical, but the cleaner – or more dilute – the wastewater,the greater is the adverse impact on the treatment process.In wet weather, larger volumes of water will be transportedto the treatment plants, thereby reducing the dwell time ofthe supplied water, and in turn, placing pressure on thesedimentation process.EVALUATION OF THE COMPLIANCE OF OUR WASTEWATER TREATMENT PLANTS100%90%80%70%60%50%40%30%20%10%0%2003 2004 2005 2006 2007 2008 2009 2010 2011 2012■ Compliant with all the standards■ Not compliant (according to the more stringent standards of Vlarem Kleine trein)■ Not compliant (according to the 2003 standards)Report of the Board of Directors39

40Annual report 2012In addition, there will be faster overflows into the sewersystem, due to which raw water will pass into ourwatercourses more frequently. This additional flow will alsogive rise to additional pumping costs at the treatment plantsand the intermediate pumping stations.Until 2004, the standards for treated wastewater inFlanders were identical to the European standards laid downunder the Urban Wastewater Directive (ERSA). They were mademore rigorous in Flanders through a VLAREM amendmentbetween 2004 and 2006. VLAREM targets are often morestringent than those imposed under the WWTP licences.The legislation enables the use of temporary deviations fromthe strict requirements, as long as minimum compliance withEuropean standards is maintained. In consultation withthe permit issuing authorities and the Vlaamse Milieu -maatschappij, relaxations were made for each sewage plant inrecent years, depending on the capabilities of the system andits load. Very often however, the dilution of the influent isthe main reason for not meeting the targets. If the wastewateris already highly diluted when it arrives in the wastewatertreatment plant, it is often impossible to achieve the removalrates imposed by VLAREM.The first series of relaxations of the removal percentages(2006-2010) was partly based on the effluent results and theremoval percentages of the year 2002, which had very heavyrainfall. The current relaxed values no longer take into accountan extremely heavy rainfall during the year, since only thethree previous calendar years are considered. Nevertheless,the precipitation has a clear impact on the efficiency of thewastewater collection and on water treatment results.REMOVAL RESULTS REMAIN WELL ABOVETARGETThe average removal rate has remained stable over the lastfew years for BOD (biochemical oxygen demand) with 97%,COD (chemical oxygen demand) with 89% and suspendedsolids with 95%. The removal percentages for nutrientsdecreased by 2% in 2012 as compared to the previous year.However, at 5% for nitrogen and 9% for phosphorus, they arewell above the target of 75% laid down by the Flemishgovernment in 1995, for the totality of the public treatmentplants. This slight decrease was caused by the high rainfallduring the previous year.With 976.5 mm rainfall, 2012 was the eleventh wettest yearsince the start of the measurements of the KMI (RoyalMeteorological Institute of Belgium). 2002 and 2001 are in thesecond and first place. In 2002, the rainfall was 1077.8 mm.2001 was even wetter, with 1088.5 mm rainfall.MORE SUSPENDED SOLIDS WERE RECEIVEDAND REMOVEDAnother side effect of the rain is that sludge that hassettled into the sewer system is partly flushed towardsthe treatment plants. 2012 was also a record year as regardssuspended solids. Never were so many suspended solidsreceived and removed from the treatment plants.

REMOVED POLLUTANT LOAD AND TREATMENT EFFICACYOF WASTEWATER TREATMENT PLANTS■Biological oxygen demand■ Suspended solids75100120100Pollutant load removed(1,000 tonnes/year)70656095908580Removal percentagePollutant load removed(1,000 tonnes/year)1101009095908580Removal percentage55758075‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12■Chemical oxygen demand■Nitrogen2001002085190951880Pollutant load removed(1,000 tonnes/year)180170160908580Removal percentagePollutant load removed(1,000 tonnes/year)161412757065Removal percentage150751060‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12■PhosphorousPollutant load removed(1,000 tonnes/year)3.22.82.49085807570Removal percentageThe diagrams show the removed pollutant load of thetotality of the sewage treatment plants as well as theremoval percentage. The difference between the biologicallytreated pollutant load and the residual pollution loaddischarged after biological treatment is determined in respectof each measured parameter (BOD, COD, suspended solids,nitrogen and phosphorus). The difference is the removedpollutant load, expressed in 1,000 tons/year. The removalpercentage is equal to the pollutant load removed during thebiological treatment, divided by the total biologically treatedpollutant load.2.0‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘1265■●Pollutant load removedRemoval percentageReport of the Board of Directors41

42Annual report 2012MORE POLLUTANT LOAD WAS RECEIVEDAND BIOLOGICALLY PROCESSEDBENCHMARKS REAFFIRM OUR STRONGOPERATIONAL APPROACHIn 2012, Aquafin again participated in EBC andAquabench studies. The results are, as expected, in linewith previous years, but the process offers interestingopportunities for the exchange of knowledge with otherparticipants.The European Benchmarking Cooperation is a nonprofitorganisation that compares the performance of(waste) water companies to each other. Thirty one mainlyEuropean wastewater operators participated in theirlatest project. The exercise again demonstrated thatAquafin maintains a very high investment rate, comparedto other companies. Our personnel costs per cubic meterof treated wastewater is still among the lowest.This means that we are working efficiently, especiallytaking into account the high labour costs in Belgium.Aquabench is an organisation similar to EBC, butspecifically focuses on German (waste)water companies.Eight wastewater treatment operators of different sizesparticipated. In this exercise, Aquafin again scored well(as the only foreign participant) at the operational level,as regards our cost per treated inhabitant equivalent.In case of Aquafin, this is about 20% lower than forthe other participants, though this is partly caused bydifferent local conditions. The figures very clearly showthat our plants are heavily loaded, taking into accounttheir design capacity. We are average in terms of electricalenergy consumption. The German companies still haveremarkably higher scores for green power generation,but that is largely due to a different influent compositionand more co-digestion opportunities.The measured pollutant loads that are fed into thetreatment plants, could be converted into the number ofinhabitants who were already connected to the treatmentinfrastructure. The Flemish Region has more than 6.35 millioninhabitants. Since the treatment level was more than 80% in2012, this means that in theory, 5.1 million inhabitants must beconnected to the public water treatment system. If we deductthe Flemish households, of which the wastewater is treated inthe two Brussels treatment plants, the number of inhabitantswhose pollutant load is presumably connected to the Aquafinplants should be around 5.0 million. This does not take intoaccount the pollution load of the companies connected tothe collective treatment plants.The theoretical daily pollution load of every Fleming is takeninto account when designing sewage treatment systems:54 g BOD, 135 g COD, 90 g suspended solids, 10 g of nitrogen,and 2 g of phosphorus. If we recalculate the pollutant loadsreceived in 2012 to these quantities, a pollutant load of4.7 million inhabitants would currently be received (averageof the estimates based on the five parameters). The data onnutrients provide an overestimate; the data on BOD andsuspended solids represent an underestimate. These figuresindicate that the pollution load that is theoretically fed intothe sewage treatment plants actually does arrive.There are two explanations for the underestimation basedon the BOD data. Measurements carried out in the Tieltsewer system have shown a decrease of 18% in the BODconcentration as a result of biodegradation: micro-organismsbreak down the BOD in the sewer. In addition, the theoreticaldaily pollution load that has been assumed, does not appearto be accurate. According to an EPAS study commissioned byVMM, an inhabitant does not discharge 54 g of BOD per day,but only 44 g. Subsequent EPAS studies specify an averageBOD load of only 38 g per inhabitant. If the number ofconnected population equivalents are determined based on44 g/IU/day, then the result for BOD is also 4.6 million PE.The overestimation of nutrients can be explained by seepageor discharge of nutrient-rich groundwater, and water fromconnected canals. There is no nutrient removal during thewastewater transport. It is true that organic nitrogen isconverted to ammonium through bacterial action, but thisdoes not reduce the total nitrogen load.

FISH POPULATIONS ARE RECOVERINGThe raising of the treatment level in Flanders from 30% to 80%has led to much less pollution finding its way directly into thewatercourses. As a result, the condition of the Flemish watercourseshas greatly improved in recent years. In addition, the quality ofthe treatment process itself has increasingly improved in the courseof the years.In contrast to our neighbours, phosphorus and nitrogen for morethan 2,000 inhabitants are removed from wastewater in all Flemishtreatment plants. Aquafin performs even better than is prescribed bythe Flemish standards, with an efficiency of 80% for nitrogen and 84%for phosphorus. In addition, the full flow that enters is biologicallytreated in over 80% of our WWTPs. The choice that Aquafin made in2000, of biological treatment of a flow rate of ten times the receivedsupply in dry weather conditions, is unique even today in Europe andperhaps in the world as well.The result of all the efforts is that three to five times less pollutionnow enters our streams and rivers. The last measurements of theBelgian Biotic Index showed that 35% of the watercourses now have agood biological water quality, and 20% have a poor one. Two decadesback, only 15% had a good biological water quality and as much as 60%had a bad one. Since the measurements of 2000, no watercoursewas qualified as ‘very bad’, while the proportion of ‘very good’ scoreshas steadily increased.The fact that the improvement of water quality is also reviving thebiodiversity is evident in the Scheldt estuary, for example. Marine andbrackish water fish such as herring, sprat, cod fish and sole are findingtheir way back to the Scheldt. Smelt, a typical estuarine species, hasbeen increasingly found in the upward part of the Scheldt since 2001,along with migratory fish such as the river lamprey. The fish areinevitably followed by their hunters. This summer, a record number ofseals were counted in the Western Scheldt. There are not only manymore sightings, but they are also found spread out much more.The recovery in the fish populations is most striking in the rivers.The species protected by the Habitats Directive are an importantindicator. In the early 90s, species such as the brook lamprey,the bullhead and spined loach had almost died out due to theincreasing pollution. Through the Habitats Directive their habitatbecame a protected area. Twenty years later, various populations areagain spreading in the tributaries of the Yser, the Dender, the Neteand the Meuse. The improvement of water quality came just in timeto save the remaining populations.Report of the Board of Directors 43

44Annual report 2012STANDARDS FOR TREATED DOMESTIC WASTEWATERThe treated wastewater (effluent) must satisfy certainstandards that depend on the size of the agglomeration forwhich the plant was constructed. Until 2004, these standardsfor treated wastewater in Flanders were identical to theEuropean standards laid down under the Urban WastewaterDirective (ERSA). They were made more rigorous in Flandersthrough a VLAREM amendment between 2004 and 2006.Aquafin keeps track of five parameters: biochemical oxygendemand (BOD), chemical oxygen demand (COD), total nitrogen,total phosphorus, and suspended solids. The biochemicaloxygen demand indicates the amount of oxygen that bacteriarequire to break down the organic pollution load in 1 litre ofpurified water within 5 days, at 20°C.In case of high BOD values, the bacteria grow so fast thatthere is a risk that they will deplete all the oxygen in the waterthrough their breathing. The chemical oxygen demandindicates how much oxygen is required to completely oxidisethe existing pollution load. The suspended solids parameterprovides a measure of the floating (non-soluble) substancesthat may remain behind in the treated wastewater. An excessof nitrogen and phosphorus in the water will lead to explosivegrowth of algae. These algae extract oxygen from the water atnight, thereby making conditions difficult for fish, aquaticplants and other organisms.

Services beyondthe scope ofthe agreementwith the FlemishRegionThe Minister of Environment encourages Aquafin to valorise ourexpertise in the Flemish municipalities and the industry, as well asabroad. An increasing number of municipalities rely on Aquafin forthe development and management of their sewer system, whetheror not through a partnership with a drinking water company.In 2012, we were in fact the only player in the municipal marketthat was able to conclude new contracts. Subsidiary Aquaplus hasdeveloped a new strategic plan in the past year, and becamefurther involved in the operation of industrial treatment plantsin the interior. Abroad, we are still working on the launching ofASEWater Technologies, a joint venture with an Indian partner.RELIABLE PARTNERS FOR THE DEVELOPMENTAND MANAGEMENT OF MUNICIPAL WATERTREATMENT INFRASTRUCTUREIn order to meet the requirements of the Water FrameworkDirective, the municipalities still have to make an investment ofnearly 7 billion Euros. The region has taken over a part of this(0.7 billion Euros) through the Local Pact with the municipalities.However, huge investments, for which most municipalities do nothave the necessary technical expertise in-house, remain necessary.Report of the Board of Directors45

46Annual report 2012Since 2004, Aquafin has been permitted to competewith other sewer operators in the municipal market.Municipalities can choose between a direct concessionagreement with Aquafin, or joining one of the joint venturesthat Aquafin has entered into with Vivaqua, TMVW and AWW(rio-link), and De Watergroep (RioAct and RioP).DISTRIBUTION OF FLEMISH INHABITANTSPER SEWER SYSTEM OPERATORWhile RioAct assists municipalities in the development,management and maintenance of their sewage systems,RioP is a structure that totally takes over the municipal sewersystem. In early July, VMW (now De Watergroep) has internallyset up a separate business unit for sanitation activities, calledRioPACT. Both RioAct and RioP were brought under this newbusiness unit. The services however remain unchanged,and there are no changes for Aquafin as well. By establishingRioPACT, De Watergroep has strengthened the collaborationwith Aquafin, in order to better respond to the needs ofour customers.We provided services to 196 municipalities during thelast year. Another seven municipalities became our customersunder a long-term agreement, bringing the total to 92 inearly 2013. We reach 2.25 million inhabitants through these92 municipalities.■ Aquafin (incl. RTD*) 44%■ AquaRio (TMVW) 21%■ IWVA 1%■ Vivaqua (BIWM) 2%■ Hidrorio/Hidrosan/Hidrogem (Pidpa) 8%■ Infrax (incl. RioBra) 24%* Rio Total Service Agreement■ Rio-Pact(De Watergroep-AQF) 19%■ Aquafin (concession) 6%■ Aquafin (RTD) 5%■ rio-link (AWW-AQF) 14%In 2012 a new concession was launched and threemunicipalities opted for comprehensive Rio Total Contractswith various modules. Three municipalities joined RioAct.One municipality terminated its cooperation with Aquafin.Aquafin will be expanding its service offerings for customermunicipalities over the next few years. Through the currentchange in climate, it will be increasingly important for citiesand municipalities to develop a plan to achieve optimalinfiltration, buffering and drainage of rainwater. From 2013,we will also focus on the drafting of rainwater plans, whichwill show how best to infiltrate or discharge the water thatfalls on public highways or on public property. They will offerrealistic solutions, tailored to the local situation, with accurateestimates and schedules for highest-priority projects. At thesame time, we will assist our customer municipalities toimplement their disconnection policy, by laying down anecological-economic optimum, and investigating the feasibilityof rainwater principal axes. Asset management is becomingincreasingly important for the municipalities as well. For thisreason, we will focus more on the implementation of wearand-tearstudies for municipal sewer systems.SUPPORT OF INDUSTRY AND FOREIGNPROJECTS VIA AQUAPLUSA new business plan was drawn up in 2012 for Aquaplus NV,the commercial subsidiary of Aquafin. In the interior,the company continues to focus on the needs of the industry,through the operation and maintenance of water treatmentplants, the conduct of studies and audits, and theimplementation of new constructions or project management.Abroad, Aquaplus is focusing on the launch of ASEWaterTechnologies, and on products and services that are deliveredin collaboration with partners.In Flanders, Aquaplus has good orders in progress, that arein line with the core activities of Aquafin. A number of theexisting operating contracts were extended in 2012.ASEWater Technologies made its entry in India inNovember 2011, through a joint venture between Aquaplusand the Indo-Belgian ASE Structure Design. Through thiscollaboration with a foreign partner, which is firmly rooted inthe local market, Aquaplus expects to penetrate a largermarket. The company established wants to present itself as anIndian company – with European expertise. In view of localadministrative problems, the orientation period for thisoperation has been longer than was anticipated.

Researchand productdevelopmentResearch and product development has acquired an importantplace within the company since the establishment of Aquafin.We remain committed to improvement and innovation tooptimally extend and manage the treatment infrastructureentrusted to us, with the minimum possible impact on theenvironment. At the same time, we anticipate future issues, inorder to be able to support the Flemish Region and our customermunicipalities with the knowledge that we have accumulated.Since Aquafin wishes to intensify its focus on responding tothe consequences of climate change, Strategic Innovation andClimate were made into a separate staff function in late 2012.Thus, the company can follow up the latest developments at thenational and international level, and detect opportunities early.Our research, capable of direct implementation, continues to focuson cost control, the guarantee of effluent standards, and on theintroduction of best available technologies. The strategic researchis grouped around sustainable water treatment, integrated watermanagement, and asset management of the (sewer) infrastructure.Report of the Board of Directors47

48Annual report 2012CONTRIBUTION TO INTEGRAL WATERMANAGEMENTThe Flemish government is working on implementing theEuropean Bathing Water Directive. One of the action pointsis mapping the bacteriological pollution that reaches the seavia various routes. Aquafin has experience in the qualitativemeasurement of overflow water from the sewer, and was ableto assist the Vlaamse Milieumaatschappij in its investigationslast year by executing a measurement campaign for a spillwayat the coast.Preventing the occurrence of unnecessary overflows is aprerequisite for a properly functioning sewage system.Systematic overflow measurements can detect blockages inrestrictive constructions early. The EPIGONE network wasdeveloped for this reason, in which overflow measurementsare coupled to information from a rainshower radar in orderto detect overflow occurrences during dry weather.We acquired further experience with Computational FluidDynamics modelling during 2012. We use this method amongother things, to study sludge leaching in secondary settlingtanks, trying to find solutions to sand accumulation inaeration basins, or to analyse problems with circulation speedor mixing.ASSET MANAGEMENTAll kinds of vapours or gases can form in the sewer, of whichhydrogen sulphide is perhaps best known. Concrete corrosioncaused by the production of hydrogen sulphide is a worldwideproblem in sewer systems. Using model-based analysis andmeasurements, we developed a decision tree that calculatesthe required length of corrosion resistant pipe in each case.In this manner, it is possible to deal with issues of concretecorrosion right from the design stage itself. In existingsituations, operational measures should be taken, such asthe dosage of iron or nitrate, to prevent or reduce sulphideformation, and the damage that arises from the same.The determination of these measures also forms part ofthe new approach.EUROPEAN AND FLEMISH PROJECTSAquafin was involved in seven research projects withexternal partners in 2012. Four projects are financed by Europeand were newly launched last year. In an urban environment,the heat that is still present in the sewers can be reused in auseful manner. Under the INNERS project, Aquafin is studyingthe potential environmental benefits of a large-scaleapplication. Minotaur is testing new technologies to removeorganic pollutants from wastewater, groundwater and soil.In the future, the standards that treated wastewater shouldmeet will only become more stringent. Sanitas is aimed atminimising the impact of climate change on the urban watersystem and dealing with future changes in water quantityand quality. Raingain is concerned with the availability ofdetailed rainfall and flooding data. These are intended toenable operational water managers in the city to adequaterespond to heavy precipitation and prevent flooding damage.Furthermore, Aquafin is participating in three Flemishprojects that commenced in 2012. From waste heat toprocess heat is a Flemish research project funded by theCollege of West Flanders, which aims to upgrade industrialresidual heat for various applications. The blue circle is aFlemish collective innovation of a broad group of largecompanies and SMEs centring around the sustainable reuse ofwater and recovery of waste streams with a high concentrationof salts. The aim is to assess the valorisation potential ofinorganic salt flows, including for Aquafin sludge water fromsludge digestion. Innovative nitrogen removal in activated sludgeis a Flemish funded research project aimed at optimisingthe Anammox process. In this process, the biological nitrogenremoval takes place via an abbreviated nitrogen cycle,which leads to a higher energy efficiency.

Main riskfactorsACCOUNTS OF THE FINANCIAL YEARS 2010AND 2011 BY THE ECONOMIC SURVEILLANCEAUTHORITYOn 20th July 2012, the Flemish Government approved theaccounts for the year 2010. A very limited amount was rejected.The recommendations relating to the financial year 2011 weretransferred by the economic surveillance authority to the Ministerof Environment. The proposal was taken under consideration bythe Minister. After analysing the recommendations, Aquafinresponded to the questions and the clarifications that had beenrequested. In our opinion, we have adequately demonstrated thereasonableness of the costs incurred. For this reason, no provisionhas therefore been made for any rejection costs.DELIVERY DOSSIERS FOR THE REGIONDuring the closing months of 2012, it was found at the timeof delivering new projects that the Flemish Region challengedthe reasonableness of costs to a greater extent than ever before.Aquafin is well aware of this change in attitude and is engaged inan attempt to proactively respond by modifying its dossiers andbetter preparing the same.Aquafin is taking appropriate remedial action wherever itbelieves that the Flemish Region is not rightly refusing to acceptcertain costs.Report of the Board of Directors49

50Annual report 2012LEGAL DISPUTESINSURANCE FILES■Flooding in a residential area■Insufficient concrete reinforcement at Deurne WWTPThis dossier relates to damage caused by flooding inconnection with around four hundred residents of aresidential area in 1998. At the end of 2010, the court issueda verdict favourable to Aquafin, in which the majority ofthe requirements were adjudged as being time-barred,inadmissible or unfounded. The counterparties appealedagainst this ruling in April 2011. This appeal procedure isstill ongoing.The above developments do not give rise to the need toalter the earlier decision not to create a provision.■Deurne WWTP – collapse of intermediate wallIn September 2012, the wall between the anaerobic pondand the aeration basin in the Deurne WWTP collapsed.The collapse caused considerable material damages.After further investigation, Aquafin implemented additionalsecurity measures, such as pumping out an extra basin.These measures in turn had an impact on water and sludgetreatment in the dryer. Apart from the damage, Aquafintherefore also suffered significant operational damage.In order to limit this consequential damage withoutcompromising our chances to claim damage compensationfrom such third parties as may be liable, Aquafin took theinitiative to appoint a court expert. His terms of referenceconsist in making possible the quickest possible re-use andrepair of the plant, apart from an investigation into thepossible causes.In January 2013, the court expert granted his consentto restarting the basin and the dryer. In the meanwhile,research was made into possible causes, and the first stepswere taken to enable the repair of the system.Since there are clear indications that third parties aretechnically liable, there is at present no ground to create aprovision.It was discovered in 2007 that due to a design flaw,the walls of some of the sewage aeration basins of Deurnehad been insufficiently reinforced. According to Aquafin,this damage claim is partly covered by our Construction AllRisk Insurance (ABR) and partly by the professional liability ofthe relevant engineering bureau.The amount that was not paid by the ABR insurer waspartially recovered from the engineering bureau in 2011that was responsible for the design fault, and partly fromthe inspection authority active at the site. These recoveryprocedures are actively being pursued but are still in process.A provision was set aside for this part of the cost.■Concrete problem in the Bruges WWTPOn provisional acceptance of the renovation of WWTPBruges, a record of the concrete reinforcement was made in anaeration basin. Later on, it was found that this damagecontinues and is not limited to this basin. Aquafin orderedan analysis, which indicated two causes: insufficient concretecover and increased chloride values. Based on the study,a repair method was worked out in consultation with thecontractor. Wherever necessary, the concrete must be repairedand supplemented, and ‘cathodic protection’ must also beinstalled. The actual repairs were carried out in the last fewyears. They will be completed in 2013. The cost of the firstmentionedpart of the repairs shall be borne by the contractor,while the cost of the last section shall be borne by Aquafin.A settlement was concluded between the insurer andthe insured and between the insured amongst themselves.The ABR insurer ACI contributed a substantial amount.This amount covered the repair and protection measures onthe one hand, and will also serve to cover the cost of the workstill to be carried out. In this dossier, the facts do not indicatea need to create a provision.

Main developmentsafter the accounting yearAPPROVAL OF THE OPTIMISATION PROGRAM 2014On 19th October 2012, the Flemish Government approvedthe budget for the development of supra-municipal treatmentinfrastructure for the program year 2014, namely 250 millionEuros. On 4th January 2013, the Flemish Minister forEnvironment Joke Schauvliege commissioned the task ofimplementing this program to Aquafin.The optimisation program 2014 provides a budget for126 new projects and 21 projects that were transferred to thisprogram. Furthermore, only studies (drawing up the technicalplan) were assigned for 9 projects. The assigned amount forall these projects amounts to 139.5 million Euros, of which71.5 million Euros was allocated for investments in connectionwith the framework of the local pact with the municipalities.60 million Euros were earmarked to absorb future priceincreases for these projects. The remaining 50 million Eurosin this program have explicitly been provided to reduce theaccumulated excess of the investment and the renovationprogram of previous program years.The optimisation programs are drawn up by theVlaamse Milieumaatschappij (Flemish Environment Agency),in consultation with Aquafin, the provincial executives,and the local basin authorities. They include projectsaimed at the additional sanitation of discharge points,the construction of small-scale treatment works, and theconstruction of strategic rainwater pipes to improve theexisting infrastructure. The ecological and economic efficiencyof the projects was kept in mind during project selection.ASSIGNED PROGRAMS (mio Euros)300250200150100500IP20042002-2003IP20052004OP20062005OP20072005OP20082006-2007OP20092008OP20102009OP20112010OP20122011OP20132012OP20142013■ Value of projects■ Local pact■ Approved budgetReport of the Board of Directors 51

52Annual report 2012Commentson the balancesheetAt the end of the financial year, the balance sheet total is3.164 million Euros, 143 million Euros higher than during the lastfinancial year.This increase is the result of the net growth in investments inwater treatment infrastructure, commissioned by the FlemishRegion. For example, investment and optimisation projects for atotal value of almost 175 million Euros were delivered in 2012.On the other hand, Aquafin purchased VMM plants in 2012,for nearly 64 million Euros as part of the implementation ofAddendum No. 7 to the Management Agreement (amountincluding registration fees and costs). All plants shall remain theproperty of Aquafin until the end of the Management Agreementwith the Flemish Region.In 2012, there was a decrease by 6% in assets under constructionto 255 million Euros. The assets under construction included allthe supra-municipal projects in progress. The decrease in this itemis due to the fall in market prices in 2012.The financial fixed assets include among other things themajority stake of Aquafin in Aquaplus, amounting to 0.704 millionEuros. As at 31st December 2012, this participation in Aquafin wasvalued based on the most recent financial information.Work in progress that falls outside the framework of theManagement Agreement shall be found under the heading ‘Work inProgress’. Due to the increased construction activity outside theframework of the Management Agreement, the stocks and work inprogress increased by 64% to 136 million Euros.

The increase in trade receivables is partially the result ofthe faster invoicing of operating costs in the 1st quarter of2013, and subsequent costs of project deliveries. These claimswere not yet payable at the end of 2012.On the other hand, there is a decrease in temporary cashsurpluses (investments) which at the end of 2011 were only53 million Euros. In January 2012, these funds were used forthe aforesaid purchase of VMM plants.If the General Meeting accepts the proposed profitdistribution, the statutory reserve will be increased by 0.486million Euros.In execution of the Management Agreement with theFlemish Region, the investments were initially repaid over15 years. Since this reimbursement rate was faster than thedepreciation, there was a positive balance for the continuedfunding of depreciation left over after the repayment period.This positive balance was approved by the AccountingStandards Committee and registered in a special liabilityaccount, namely the ‘compensation to the Flemish Region’.At the end of 2008, the period of the annual fee for civilengineering contracts was changed from 15 to 30 years fordeliveries starting from 1st January 2009. This was done viaan addendum to the Management Agreement between theFlemish Region and Aquafin. This new term better reflectsthe economic life of the infrastructure. In 2009, the remainingrepayment period of construction projects completed before1st January, 2009 was doubled. This adjustment took effecton 1st January, 2010.In 2012, there was a slight increase in the ‘compensation tothe Flemish Region’ from 800 million Euros to 811 million Euros.The provision for risks and charges increased slightlycompared to 2011. The necessary adjustments were madebased on the most recent data. The provision for risks andcharges relate to legal disputes, insurance files, disputes inconnection with the implementation of the ManagementAgreement, processing of the sludge buffered in the plants,and early retirement pensions.Long-term financing is based on the allocation agreement.It provides that the balance of long-term loans should be lessthan the future claims that Aquafin has against drinkingwater companies, respectively, the Flemish Region. These claimsconsist of the unpaid portion of the investment projects thathave already been completed. By the end of 2012, this figurewas 1,721 million Euros. In 2012, Aquafin had availed of190 million long-term Euro credits, of which 100 million Euroswere with the European Investment Bank and 90 million withcommercial banks and/or institutional investors. Taking intoaccount the repayments of earlier loans, the balance of thelong-term bank loans under assignment was 1,491 millionEuros, of which nearly 146 million Euros must be repaid duringthe year.In the last year, there was an increase in short-termfinancing through commercial paper, from 73 million Eurosat the end of 2011 to 127 million by the end of 2012.Aquafin has a credit line of 165 million Euros, including thesyndicated loan for short-term financing of activities underthe Management Agreement. Aquafin has a credit line of17 million for short-term financing of municipal transportationprojects. No availments were made under the two credit linesby the end of 2012.Report of the Board of Directors53

54Annual report 2012Comments on the profitand loss accountThe Management Agreement with the Flemish Regionprovides that the remuneration of Aquafin is based on theonward charging of all reasonable expenses, plus acompensation to the shareholders based on their contributionto equity. It follows from this that the costs and revenues arelargely a mirror image of each other.The increase in costs and in particular the costs ofthe commercial goods, raw materials and consumables,miscellaneous services and goods, salaries, social security andpensions, is in line with the growth of the infrastructure thatAquafin is operating and developing, both within and outsidethe scope of the Management Agreement. The ever-growingassets also explains the continuous increase in depreciation.The movement in the value impairment and provisionsrelates to value impairments and provisions in respect ofamounts disputed by the Flemish Region during the year justended. It was decided to create a provision for new litigation,equivalent to the value of the reasonable estimate of theclaim, taking into account the chance of success.The sharp increase in debt financing during 2011 and 2012,resulted in an increase in the cost of debt by 12.8 million Euroscompared to the accounting year 2011.Aquafin is aiming to optimise the financing cost throughactive management of the interest rate risk. Since 2006,the Board of Directors has approved the implementation ofa dynamic management of the interest rate, providing theoutlines for interest management.The profit before tax is 12.08 million Euros after deductingthe provisions, the value impairments and costs and revenuesnot charged onward to the Flemish Region, including the resultsof commercial activities.The concept of notional interest deduction was introducedsince the assessment year 2007, thereby lowering the cost ofwater treatment for citizens.

Proposal tothe GeneralMeetingTaking into account the profit after taxes of 9,695,405.26 Eurosfor the financial year, as well as a profit brought forward of 9,302.86Euros, the profit to be allocated amounts to 9,704,708.12 Euros.● addition to the statutory reserve: 486,000.00 Euros● compensation of capital: 9,218,371.23 Euros● profit carried forward: 336.89 EurosIf the General Meeting approves the proposed profitdistribution, a gross dividend will be paid on 22nd April, of:●●10.84 Euros on fully-paid shares2.71 Euros for shares that have not been fully paid up.Report of the Board of Directors55

56Annual report 2012

Corporate socialresponsibilityCommitments to stakeholders 58Proactive financial policy for our shareholder 59Building on a sustainable relationship with our clients 60Respect for the environment 61An eye for society 66Caring for our employees 7057

58 Annual report 2012Commitmentsto stakeholdersAquafin wants to add real value to society, to the naturalenvironment and future generations. Therefore we have translatedour company values into clear commitments to our shareholders,clients, society, the environment and our employees.We want to enter into a dialogue and cooperate with ourstakeholders wherever possible. For an optimal development andmanagement of the wastewater treatment infrastructure, it isimportant that all the actors and stakeholders involved cooperateconstructively to achieve the best possible solutions for people andthe environment.

“Over nearly 20 years ofcollaboration, we at the EuropeanInvestment Bank have witnessedAquafin growing as a state-of-theart company in its field, strivingfor excellence and optimallyfulfilling its mission.The company’s continuouspreparation for the future,its efforts to anticipate climatechange, its technologicalperformance and its capacity forinnovation have been crucial totaking our partnership forward.The new schemes that Aquafin iscarrying out with funding fromthe European Investment Bankwill help to further improve waterquality in the Flemish Region’swater courses, the River Scheldtand the North Sea.”Proactive financialpolicy for ourshareholderAquafin is committed to constantly bear in mind the interests ofshareholders, while maintaining equilibrium with the other defineddomains.Aquafin is extremely prudent with respect to the financial resourcesinvested in the treatment infrastructure of the region. We take allpossible care of this infrastructure. We obtain finance for the expansionof the treatment infrastructure at the most economical rates possible.We also deal very cautiously with the limited resources available for theoperation of the treatment plants, but of course we make sure that thewastewater treatment standards are always respected. We apply interestmanagement to a part of our long-term loans, even though the companyitself does not direct benefit from the same.Aquafin is always quick to follow interesting developments in thefinancial markets, and adapting to the changing financial world.The company was among the first in the industry to set up a commercialpaper program, or to issue bonds that were open to subscription byindividuals as well. Aquafin enjoys the full confidence of the bankingworld due to our high rating, but also in view of the fact that wealways fulfil our commitments in the financial world. This allows usto optimally finance heavy investments in the treatment infrastructureof the Flemish Region.Through exercises relating to activity-based costing, Aquafin is todayin a position to quickly respond to questions related to cost price andbudget models.EIB Vice-PresidentPim Van BallekomCorporate social responsibility59

60 Annual report 2012Building ona sustainablerelationshipwith our clientsAquafin wants to offer products and services that have anadded value in the long term both for the Flemish Region and theFlemish municipalities. We think collaboratively with our clientsand keep an eye open on the world around us, to enableanticipation of ecological, administrative or regulatory changes.A comprehensive vision of water management is currentlygaining ever increasing importance. Instead of constructingconcrete buffer basins or reservoirs, we search for natural solutionswhenever possible. In addition, Flanders is also facing thechallenge of responding to the consequences of climate changes.At the same time, sustainable operations remain high on the agenda.Intelligently coping with energy consumption, energy recovery,recovery of raw materials from the wastewater, and reducingemissions from the wastewater treatment process are the subjectsof considerable research work within Aquafin. The company is alsopreparing itself for stricter European standards that must be metby the treated wastewater in the future, such as the removal ofparticularly difficult soluble organic materials.Aquafin wants to perform tailor-cut work for the municipalitiesin the coming years by specialising in the make-up of stormwaterplans and asset management tools. We continue to ensure thatour products and services for the municipalities remain in linewith our mission and our core activities for the Flemish region.“Because of the changingclimate, the municipality wantsto act proactively to preventflooding. We want to be a leaderin this area with the preparationof a stormwater plan, for whichwe are calling on the know-howof Aquafin.”Nico D´Haese,Head of Infrastructure Department at Wetteren, Belgium“Without giving up controland within our city’s budgetarylimitations, we manage theexisting sewers and new projectstogether with Aquafin. Our spatialknowledge and Aquafin’sexpertise make up the perfectmix for a professional seweragemanagement. Recently we alsomade use of the financingpossibilities that are offered.An extensive market researchled us to the right sewer operatorthree years ago.”Leen Beke,Alderman Public Works Ghent

Respect forthe environment“The return of beautiful watercreatures like the otter or theseal shows that the water qualityin Flanders is getting better.Aquafin’s efforts in the pastdecades were essential forthis improvement.”Chris Steenwegen,manager NatuurpuntWe always weigh up what is the best choice for theenvironment in all our decisions. We strive to achieve sustainableuse of materials, raw materials, energy and space, to keep theecological footprint of the wastewater treatment process as lowas possible.REDUCING ENERGY CONSUMPTION INTHE WASTEWATER TREATMENT PLANTSAudits have shown that our wastewater treatment plants havebeen designed very efficiently in terms of energy consumption.However, the wastewater treatment process is still relativelyenergy intensive. The energy cost for treating wastewater,for instance, amounts to some 25 million Euros a year, whichrepresents 25% of Aquafin's total operating costs.In terms of online management of the wastewater treatmentprocess, we are already among the leaders in Europe. Sensors foroxygen, nitrates, ammonia, phosphates, and turbidity measurementshelp to manage the treatment process at the plants as precisely aspossible, so that no costly energy is wasted.Aquafin wants to implement even more intensive energymanagement. The company wants to save on all its energy billsevery year. Therefore Aquafin will spend at least 500,000 Euros onenergy projects every year.We achieve the largest energy savings with projects thatoptimise the aeration of wastewater, because that process makes useof almost half the energy consumption of a wastewater treatmentplant. We also realise not quite so large, but no less significantsavings by tackling the heating of ourbuildings in a more environmentally friendlymanner. These types of projects are at thesame time a major awareness generating forcefor our employees, because they demonstratethat saving energy is a priority for Aquafin.Corporate social responsibility61

62 Annual report 2012Aquafin has an aim of generating 13% green electricity by2020. This commitment was clearly active within the companyin 2012. In 2011, there were two sludge digestion plantsthat produced more than 1 million kWh a year, which wasalready a very good achievement. In 2012, no less than fivedigestion plants exceeded this limit, in Antwerp South,Hasselt, Harelbeke, Ghent and Leuven.Our efforts to reduce electricity consumption by 20% havealso been taken to heart by all the employees at the watertreatment plants. The specific energy consumption (kWh/person equivalent) of all the plants combined decreasescontinuously, even though in 2012 we had to pump morewater than in 2011 because it was such a wet year.ENERGY POLICY DECLARATIONTo reduce energy consumption, Aquafin is followingthe philosophy of the Trias Energetica. This model isbased on three steps that must be gone through insequence. The first and most important step is findingways to avoid using energy. Every kWh that we do not usealso does not have to be generated. We want everyemployee to always have energy consumption in mindwhen developing processes, buying materials, andbuilding or operating our systems. The next step is togenerate the energy required as sustainably as possible.We want to get maximum returns from our sludgedigestion in an ethically responsible manner. We willaugment the green energy that we are not able to generateourselves by buying green energy to achieve savings ofat least 20% on primary energy and 13% of greenelectricity production. Step three is most efficient usepossible of the 'finite' fossil fuel resources. To achieve this,we are constantly searching for improvements in boththe processes and in the equipment that we are using.Aquafin's energy policy declarationis based on the European ClimateObjectives. By 2020, we want to save20% on primary energy, 20% ontransportation, and generate 13%in green electricity, which are alsothe objectives for Belgium asan EU Member State.By 2020, we want to have reduced our transportationenergy by 20%. In 2012, we focused on one sub-aspect of thetransportation: liquid sludge. Each year, Aquafin transportsnearly one million cubic metres of liquid sludge over a totaldistance of almost two million kilometres. We want to reducethis transportation by 20% by obtaining a 1% increase in thedry material content of the sludge, which will reduce thevolume of this liquid sludge by 20%. In 2012, the dry materialcontent already increased by 0.3%, with which in one year’stime we have already taken some 2,000 shipments off theroads. In 2013, we will also begin to focus more on other formsof transportation energy, especially the commuting and workto work transportation.Aquafin wants not only to save energy, but also to broadenits focus onto the CO 2 -issue. In 2013, we will start by makingan inventory of the activities that the cause the largestCO 2 emissions.ENERGY RECOVERY AND PRODUCTIONFROM SLUDGEDuring the wastewater treatment process, large quantitiesof treatment sludge are produced. This activated sludge ishome to billions of bacteria and other micro-organisms.They extract their nutrients from the pollutants in the sewagewater. The favourable living conditions in the wastewaterlead to rapid growth of the micro-organism populations.This surplus of sludge is limited to a great extent throughconcentration by evaporation, digestion, dehydration, and drying.Due to the many thousands of transports of liquid sludgeand dried sludge each year, the processing and disposal ofthe residual sludge is not only a major expense for Aquafin,but also a burden for the environment. A mathematical modeloptimises the logistics chain of the sludge processing.

FINAL DISPOSAL OF DEHYDRATED WATER-TREATMENT SLUDGE100%80%60%40%■ Fertilisation/agriculture■ Tipping (possibly aftersolidification)■ Sealing waste tip site■ Incineration■ Co-incinerationafter drying20%0%1997199819992000200120022003200420052006200720082009201020112012This model simplifies the process of making strategicdecisions, while also offering the possibility of minimisingweekly fluctuations in sludge transportation.DISPOSAL OF WATER TREATMENT SLUDGEIN 2012 IN TONNES OF DRY MATERIAL■Electricity and heat from biogas productionSealing waste tip site1,609Aquafin incineration22,840External incineration40,160External co-incinerationafter drying32,381When water-treatment sludge is digested, organic materialis broken down by bacteria and converted to biogas.This reduces the volume of sludge that still remains to beprocessed. This biogas is moreover a source of energy: it containsabout 65% methane, which can be converted to both heatand electricity.The generation of electricity is achieved by using gasengines with an electrical capacity of 200 to 500 kW ofelectrical power. The cooling heat of the gas engines isadditionally used for the heating of the sludge digesters,and in a number of instances also for the heating of thedepartmental buildings. The green electricity that is generatedis always used at the treatment plant itself. This means thatAquafin does not have to buy as much electricity, and thecompany has already been earning green electricitycertificates since 2002.A green electricity certificate shows that 1,000 kWh ofelectricity were generated from a renewable energy source.However, with effect from 2013, new legislation has come intoeffect that reduces the (financial) importance of the greenelectricity certificates. A single MWh of green electricity willthen no longer be rewarded with a single green electricitycertificate. This does not mean that Aquafin will not continuestriving to promote the increased production of greenelectricity.At the Deurne WWTP, the biogas is not used to generateelectricity. Instead it is burned in a boiler to dry sludge.The biogas produced replaces the natural gas in theincineration process.In 2012, 50% of the 110,229 tonnes of wastewater treatmentdry sludge was digested. This created biogas with which all ofour gas engines combined generated 9,500,000 kWh of greenelectricity.Corporate social responsibility63

64 Annual report 2012That was again 1,200,000 kWh, or 14.5% more than theprevious year, while no additional sludge digesters were putinto operation. Our increased attention to the generation ofgreen energy has thus resulted in three years’ time to almost100% more green electricity being generated than before thestart of the energy management. There currently remainanother two digesters from which we can expect that theycould exceed the peak of more than 1 million kWh of greenelectricity. The Dendermonde digester must succeed in this in2013, and the Genk digester, which is currently at a standstillbecause it is being renovated, will probably also be added tothis in 2014 or 2015.■Sludge pellets as a source of thermal energyTo dry the sludge that is not digested and the sludgeremaining after the sludge digestion process, Aquafin usesfour drying plants. They constitute an environmental technicalunit together with the treatment plants of Deurne,Houthalen, Leuven and Bruges. Since the start-up of thesludge-dryer in Leuven in 2003, Aquafin's sludge-dryinginfrastructure has been fully developed. The dryers in Brugesand Houthalen date from 2001, and the one in Deurne from1998. Where 10 years ago, 100% of the drying was done inthird-party installations, today 99.96% of the sludge is driedin Aquafin's own dryers.The sludge drying, which only accounted for 5% of thedisposal in 1997 became more important, with the proportionof sludge being dried amounting to 33% in 2012. This does notincluded the sludge that is dried in Bruges before beingincinerated on site, which is included in the ‘incineration’category. Drying dehydrated sludge results in a dry materialcontent of some 90%. When dried, the sludge is transformedinto pellets with a calorific value equivalent to that of browncoal or lignite. This means that the dried sludge can be used toreplace other fuels, in coal or lignite-stoked power stationsand in cement furnaces. In 2012, that amounted to morethan 32,381 tonnes of dry material. This process is referredto as co-incineration. Dehydrated undried sludge can also beco-incinerated.■Incineration of sludgeIn 2012, a total of 62,999 tonnes of sludge, converted todry material, was incinerated. Of this, 61.6 % was incineratedin the SLECO incinerator in Beveren and 37.9 % in Aquafin'ssludge incinerator in Bruges. The remainder went to two otherincinerators.REUSING WASTE HEAT OF THIRD PARTIESIn the sludge drying plant at Houthalen, no biogas ornatural gas is used. Instead, Aquafin uses the heat from theadjoining household waste incinerator of Bionerga. The heatthat is generated by the incineration of the residual waste isconverted to steam, which is then sold to Aquafin. Bionergasupplied almost 24 million kWh of thermal energy in 2012.PRODUCER OF GREY WATERThe pressure on the natural water sources is not onlyhigh in the south of Europe, but in the north as well.Treated household wastewater can be an additional sourceof water for businesses in various sectors that are close toa wastewater treatment plant.To protect our natural water supplies, the government hastightened up the conditions for pumping up groundwaterand the use of surface water. Companies that use a lot ofwater in their production process must therefore go in searchof alternate sources of water supply. One option is the use oftreated household wastewater, which is supplied by Aquafin'swastewater treatment plants.Aquafin has 265 sewage water-treatment plants (SWTPs)operating throughout Flanders. Combined, they producemore than 800 million cubic metres of treated water a year.In principle, this water can be upgraded to any level of waterquality, if the right technologies are used.With a little pre-treatment, the treated wastewater can beused for low-grade industrial applications that do not requiredrinking water quality, such as cleaning water or coolingwater. There are currently 5 companies and inter-municipalutilities that use the treated water from Aquafin. We also havecontracts with 17 cleaning companies, which collect waterfrom the wastewater treatment plants themselves forcleaning purposes.With more pre-treatment, the treated sewer water can beupgraded to drinking water, which is what the drinking watersupplier IWVA does with the effluent from the Wulpen WWTP.In principle, effluent water can even be purified further toultrapure water that exceeds the quality of drinking water.This kind of water is needed for the production of electronics.Reuse of treated wastewater is therefore an environmentallyfriendly way of reducing the pressure on the natural waterresources. Aquafin wants to continue to emphasise this optionin the future, with both businesses and the government.

PRODUCER OF RAW MATERIALSA wastewater treatment plant provides more to societythan treated water and energy; it is also a producer of rawmaterials.Dehydrated sludge can be used usefully in the sealinglayers of waste-tip sites. Such layers are designed to keepwater from penetrating into the rubbish. Hydrostab® is analternative for the materials traditionally used as sealants,such as sand-bentonite mixtures. In the Hydrostab process,waste materials are used instead of natural soil materials.Converted into dry material, 1,609 tonnes of sludge were soldfor use as a sealant layer in 2012, which were used in theremediated Hooge Maey waste-tip site in Antwerp. Fly ashfrom the sludge incineration furnace in Bruges is also givena useful application in this respect.The treatment of household wastewater can alsocontribute to the maintenance of the phosphorous cycle.Although the emphasis is now on an excess of phosphatein the soil and water, the biggest problem is actually ashortage of phosphates to be able to continue to feedthe global population. The dephosphorisation of thewastewater is performed biologically rather than chemicallyat 33 of our largest treatment plants (good for 2,480,000 PE).During construction, an anaerobic tank is installed to removesufficient quantities of phosphor from the wastewater withthe aid of a specific type of bacteria. Because this techniquedoes not bind phosphor chemically, the possibility of phosphorrecovery is an additional ecological advantage.Aquafin is already planning to make the Leuven WWTPavailable in 2013 for a pilot project on the recovery of struvite(magnesium ammonium phosphate) from the treatmentsludge. Struvite is a mineral that is created by the precipitationof phosphorus, one of the nutrients that are removed fromthe wastewater in the treatment process. The project wasselected by VLAKWA after a call for innovative projects inthe water sector. Four West Flanders SMEs are responsiblefor the construction, installation and operation of the boilersat our treatment plant. VITO, the Flemish Institute forTechnological Development, is also involved and will supervisethe measurement campaigns together with Aquafin.DEMAND FOR A BETTER EFFLUENTQUALITY IN HABITAT GUIDELINE AREAVlarem II does not provide nutrient standards forsmall-scale wastewater treatment works with a capacityup to 1,000 PE. A biorotor or an SAF with connecteddownstream root-zone reed bed are therefore the mostcommon techniques for these works. However, at anumber of sites in Flanders, treatment works must bebuilt in Habitat Guideline Areas. Such areas are Europeanprotected areas for the preservation of their biodiversity.The discharging of nutrients would be detrimental forthe sensitive fauna and flora. In consultation with theVMM (Flemish Environment Agency) and the Region,Aquafin was allowed to opt for works that could meetstricter treatment standards. For Bornem Oude Schelde,Zwalm Rozebeke, Lapscheure, Oudenhove-Maarkedal andTeuven, the technique selected is a combination of activesludge with membrane technology. The first works arecurrently in the tendering and contracting phase.KITCHEN WASTE ENHANCESENERGY RECOVERYThe MIP Sewage Plus project was completed in 2012.In this project, in cooperation with others including VITO,new technological concepts were evaluated formaximum energy recovery from concentrated wastestreams diluted with domestic wastewater. Aquafin’scontribution consisted of pilot tests for co-digestion ofWWTP sludge with kitchen garbage and roadside grassmowings. The tests showed that adding limited amountsof kitchen waste could increase both [bio]degradabilityand methane production. However, the application ofthese concepts in practice is currently not possible forAquafin due to legal restrictions.Corporate social responsibility65

66 Annual report 2012An eye forsocietyDuring recent years, attention to the social impact in theplanning and implementation of infrastructure is almost taken forgranted. This is largely due to the pioneering work that Aquafin hasdone in this area. We inform the citizens who are affected bythe work as extensively as possible, but we also allow the generalpublic to become familiar with what the company does. In this waywe hope to obtain the widest possible support for our activities.The more we understand each other, the better we can work togetherand the faster we can achieve the desired environmental results.SOCIETY FRIENDLY WORKING“The Aquafin people haveespecially extensive experience.They have already encounteredalmost any situation andresolved it.”Marc T’Syen,alderman for public works in OlenAquafin is recognised as a leader in the area of nuisancelimitationby various umbrella organisations, municipalities, publicutilities, and technical partners. Aquafin has a 'less nuisance’scenario for both the installation of sewers and for the constructionof wastewater treatment plants. This scenario is updated regularlyto reflect our experience and that of our partners. In 2012 we alsodeveloped a tool which enables project managers to quicklygenerate a communication plan tailored for each specific project,taking into account the effect of the upcoming work on thesurroundings.

A project succeeds or fails of course as a result of thequality of the design and the work performed. Engineering firmshave a major effect on the timing, quality, and costs of ourprojects and studies. Through the allocation of multilateralagreements, since the end of 2012 we can more swiftly call onan engineering firm that meets our quality standards.Aquafin is committed to allocating the selected engineeringfirms a fixed percentage of our portfolio for transportationprojects. This share is fixed for the coming four to six yearsand is proportional to the price, quality, and capacity of theengineering firm. In turn, the engineering firms guaranteethat they will always reserve sufficient capacity to realise ourprojects in a high-quality manner.In cooperation with the construction sector, Aquafin hasdeveloped a system to enable the setting of higher qualityrequirements for contractors. We have done this by linking theissuing of the certificate of good execution to the quality ofthe work performed. Contractors need these certificates to beawarded government contracts within a specific designationand class. Projects that have been contracted from July 2012onwards must meet objective criteria to enable them toobtain their certificate. These criteria include technical,measurable values from the standard specification 250,implementation times, and the prerequisite conditions fordetermining a state of default, which the engineering firmsdraw up for flagrant shortcomings or breaches on the site.At the same time, Aquafin has elaborated a second, purelyinternal quality measurement based on our risk matrix. In aninitial first phase, we will only use the information collected tocoach the contractors during the performance of their work.Now the link between quality and the certificate is a fact,we want to go a step further and select contractors on thebasis of quality by 2016. With effect from 2017, we want toapply quality as a criterion for awarding contracts.Aquafin is also cooperating in the GIPOD (public domaingeneric information platform), a project that centralises theplanned work of the utility companies with the aim of bettermutual coordination of the various activities. The basis forthis platform was established in 2012.Quality monitoringEngineering firms > framework contractsContractors > conditions for certificate ofgood executionINTERNAL EFFORTSTo inform the neighbourhood residents as soon as possible,an initial information evening is organised during the designphase. The second information evening takes place at leastone week before the start of the work and must present thespecific project proposals to the neighbourhood. A total of173 information evenings took place in 2012. During the work,the citizens can closely monitor the progress via our website.Each year, more than 25,000 unique visitors check thisinformation.Corporate social responsibility67

68 Annual report 2012After the execution of a sewage project, Aquafin conductsa survey with the leading engineer from the engineering firm,the project manager, the site supervisor, the person responsiblefrom the technical department of the municipality/city,and the people responsible from the other administrationsthat were involved with the work. Aquafin also conductssatisfaction surveys among neighbourhood residents after aproject has been completed in a densely populated area.Both the internal project manager and the technicalimplementers receive the results to enable them to learn fromthese results.The renewed protocol between Aquafin and the farmers’organisations, the Boerenbond and Algemeen Boeren syndicaat,was assessed and brought into line with those agreed by theFluxys mains gas and Elia mains electricity companies withthe same organisations. This protocol regulates the fees forfarmers who have suffered damage as a result of the work:crop damage, land damage, difficult operation because of thepresence of inspection pits in the land, etc. The finalised textwas formally ratified in 2013.Surveys conducted in 2012> 56 technical surveys, for which235 forms were sent out.The response rate was 75%.> 45 satisfaction surveys, for which6,103 forms were sent out.The response rate was 11.5%.AWARD FOR CONTRACTORS ANDENGINEERING FIRMSIn October, Aquafin again presented the annualawards to acknowledge high-quality and society friendlywork. The Less Nuisance Award was presented for thefifth time to the sewage-works contractor that was mostconsiderate of the neighbourhood in which the workmust be carried out. The jury used five criteria to rank thecontractors that had performed more than one project forthe company: the Less Nuisance efforts of the contractorin combination with the safety record, damage incidents,emergency calls, and the number of complaints. This wasthe third time VBG NV from Herentals won the award.For the third time, Aquafin also presented an awardto the engineering firm that used the best qualitative,cost-conscious and customer-focused design for asewage system project. The Cnockaert firm took thisaward home for the second time.THE OMBUDSMAN AS A MEDIATOR BETWEENCITIZEN AND COMPANYIn 2012, the ombudsman registered 296 admissiblecomplaints, 70 fewer than the year before. Three quarters ofthese concerned the work in progress and a quarter concernedthe existing infrastructure. Two types of complaints stand out:noise, vibration and odour nuisance, followed by inadequaterestoration of private property or public grounds to theiroriginal state. A small group of complaints concerned thedifficulties of accessibility to streets and homes. In spite ofour efforts, part of the complaints still concerned inadequateor not up-to-date communications concerning the start,duration and further scheduling of the work.75% work,25% existing infrastructure> noise, vibration and odour nuisance> inadequate restoration> accessibility

DIALOGUE WITH THE GENERAL PUBLICThe general public remains an important target group forcreating support for Aquafin’s infrastructure projects. In 2012,the company organised six neighbourhood visits to new orrenovated wastewater treatment plants. Neighbourhood visitsare small scale and the budget is limited, but the ROI is huge.Three open-house days were organised in 2012, each time atthe request of a third party. On 8 July, Aquafin participated asmain sponsor in the Big Jump event again. There were standsat 19 locations in Flanders at which Aquafin’s own employeesexplained Aquafin’s activities and the company’s link withclean surface water. Announcement advertisements, posters,leaflets, and social media were actively used by Aquafin topromote the event, while our own activities also acquiredmore brand awareness.Schools and clubs can take a guided tour at any of 24 plantson weekdays. During such visits, we explain how the plantoperates and what has been done to ensure that it integratesas much as possible into the neighbourhood.There were slightly fewer group visits in 2012: 687 comparedto 750 in 2011. With a view to the budgetary effect for thecompany, there were no additional promotions concerningvisiting plants.CONTACT CENTREAn important step in the context of our accessibilitywas the launch of the contact centre in January 2012.Citizens can contact us with their questions, complaintsand comments by email or by telephone on weekdays.The number of calls received by the end of 2012 shows thatthe existence of the contact centre was not sufficiently wellknown. Continued intensive communications by means ofinformation letters in the context of projects and withinthe client municipalities must be used to tackle this issue.The first steps in setting up social media channels hadalready been taken by the company in 2011. The real launchcame in the first quarter of 2012. Aquafin has active profiles onFacebook, LinkedIn, Twitter, and YouTube.In 2012, we issued 65 press releases, most of which wereconcerned with project announcements or work in progress.During recent years, the local media have acquired a betteridea of what Aquafin actually does. The national mediaincreasingly considers us to be a centre of expertise forquestions about sewage management, water treatment andall other aspects of the wastewater treatment cycle.Corporate social responsibility69

70 Annual report 2012Caring for ouremployeesThe major strength of Aquafin lies in its accumulatedknowledge and experience. Attracting, strategically deploying andallowing development of talented employees is therefore a pivotalprocess in the organisation. To create jobs in which each employeefeels comfortable, the company has set up an HRM policy thatapproaches working at Aquafin from various perspectives.Safety and a sense of responsibility form the foundation for thecompany policy.During the course of 2012, four perspectives were determinedfor the HRM policy: time and place of the work performed(where and when we work), leadership and culture (how we work),job and career (what does the work entail), and structure andorganisation (with whom and in what way). These weredetermined in consultation with the managers and presented tothe works council.■Time and placeWhere the work can take place is flexible within Aquafin.In 2012, a third satellite office in Louvain was added to supplementthe offices in Herentals and Drongen. A pilot project with use of theteam centres as hotspots was successfully completed in the Dijleriver basin. Colleagues from all over Flanders, who travel for ameeting, can log onto such a hotspot to continue working beforeor after the meeting. A study group was also set up last year,which gathers inspiration for opportunities to expand the workindependently of time and place within Aquafin.“94% of our employees wouldrecommend Aquafin to familyand friends as an employer.”

■Leadership and cultureHow we work, is always determined by our company valuesand our commitments. There were additional training coursesprovided for managers to continue working on the transitionfrom a traditional hierarchical leadership style to the coachingleadership style of a process-oriented organisation. Since 2012,each employee has also had the opportunity to visit a teamor a group with which there is direct or indirect cooperation,to enable broader insight to be obtained into the context inwhich he or she performs his or her job. Last year, the companygave form to the Alcohol and Drugs Prevention policy andthe Stress Prevention policy. This is a statutory obligation,which also fits in completely with the commitments ofAquafin towards its employees. The application will continueto be encouraged and monitored through the Committeefor Prevention and Protection at Work.■Structure and organisationIn 2012, the company’s focus was on ‘smarter working’.With the rollout of the fifth core process of Aquafin, theorganisation is now ready to start working entirely processoriented.The goal is not only to increase the productivity,but also to create 'healthier jobs’ for all the employees. With therollout of process-oriented working, we endeavour to provideeveryone with enough room within their jobs to performtheir duties as well as possible according to their own personalinsight. The new way of working makes it clear to everyemployee what his or her contribution provides for Aquafin.■Job and careerSufficient career range, a tangible effect on the result, andopportunities for development are important prerequisitesfor job satisfaction. We provide employees not only withthe opportunity to develop in their job, but also to developbreadth wise by taking on a role in the organisation in addition totheir position. The framework for this will be formalised in 2013.A total of more than 3,200 training days were organised, whichequates to an average of 3.25 days for each employee. 95% ofour technical training courses are provided by internal trainers.AQUAFIN REMAINS A RENOWNED NAMEON THE LABOUR MARKETA survey of 300 engineers carried out by a researchbureau in 2012 showed that the brand awareness ofAquafin had increased higher. The company has becomethe leader among our competitors in the labour marketagainst which the comparison was made. Aquafin wasconsidered by 52% of the participants as a company withvision and 45% mentioned the company’s technologicalleadership. Just as in previous years, the social relevanceof our task and the relative job security were identifiedas important strengths.In 2012, we also conducted an internal survey, which showedthat no less than 94% of our people would recommend thecompany to family or friends who are seeking employment.This is an extremely high score, of which we are very proud.Time and place> Where and when we workLeadership and culture> How we workStructure and organisation> With whom and in what wayJob and career> What does the work entailThe existing job classification within the company receiveda major overhaul to keep the system transparent andmanageable. A new general collective labour agreement wassigned for working in shifts and around the clock as well,which also integrates the separate collective labouragreements for the dryers of Deurne, Leuven and Houthalen.In January 2012, the starter’s route was introduced. This isa route tailored for specific young employees and schoolleavers, which aims to integrate them as quickly as possibleinto Aquafin and allow them to climb financially as quickly aspossible to a market-level wage.Corporate social responsibility71

72 Annual report 2012SAFE WORKING CONDITIONSThe prevention policy is mainly managed on the work floor.Safety instructions and rules are not only passed down viathe hierarchical line, but are also communicated personallyby the Prevention and Safety Department at every level ofthe company.In 2012 there was a reassuring downward trend in thenumber of occupational accidents. The severity of the accidentswas also clearly within our defined target. This enabled us tocontinue to do better than the averages from the chemicalindustry and the energy sector. However, we do note thatthe Deurne WWTP escaped by a hair’s breadth from accidentthat could have been fatal if the basin wall that collapsedhad done so eight hours later. This realisation has only furtherincreased the commitment of all employees to the safetyaction plan.DIALOGUE BETWEEN PERSONNELAND MANAGEMENTThe results of study groups are notified via posters,newsletters and afternoon meetings, which are also recordedand later disseminated via the intranet. On request, subjectscan also be explained verbally outside the headquarters.Every week, the agenda of the items that were discussedduring the meeting of the executive committee is distributedinternally. The managers are given a verbal report of the itemsdealt with; a summary is posted on the intranet for the otheremployees. This enables everyone to keep up to date withthe organisation’s news and changes to the organisation.At the same time, Aquafin is also encouraging bottom-upparticipation in thinking exercises. During recent years,hundreds of employees have thus participated in improvementprojects that directly or indirectly concerned their jobs.The prevention department provides a half-yearly exchangeof safety information in a hundred interactive sessions withthe basic operational people. In addition, a number ofsafety training sessions were held for a total of 396 people.New employees receive eight hours of safety training and areassigned a supervising mentor or coach in their immediateworking environment to help them.In 2012, we started safety coordination when designing108 transportation projects and 5 water-treatment projects.The safety coordination for work in progress was done for97 projects. We carried out commissioning studies on 11treatment plans, 53 pumping stations and sedimentationbasins, 8 2DWF pipeline projects, and as part of 17 plantmodifications. An additional 10 audits were conducted atexisting plants.We also promote safe working among our technicalpartners. In 2012, in cooperation with contractors andmanufacturers, an Aquafin study group drew up guidelines tominimise the risks with the blocking of large volumes of water,following a fatal accident that occurred at a third-party site.The guideline for the safe use of sewage blockers has beenadded to Aquafin’s Health and Safety plan. It has also beenexplained to engineering firms and contractors’ federationsand is available to everyone in the sector. The safety trackrecords of the contractors are also considered annually forthe granting of Aquafin’s Less Nuisance Award.

Corporate social responsibility73

74Annual report 2012

Annual acountStatutory auditor’s report 76Balance sheet and Profit & Loss account 78Valuation rules 90Additional information 93Major risk factors 94Allocation agreement 9575

76Annual report 2012Statutory auditor’s reportSTATUTORY AUDITOR’S REPORT TO THEGENERAL MEETING OF SHAREHOLDERSOF AQUAFIN NV FOR THE YEAR ENDED31 DECEMBER 2012In accordance with the legal and statutory requirements,we report to you on the performance of our mandate of statutoryauditor. This report contains our opinion on the financialstatements for the year ended 31 December 2012, and includesthe required additional statements.REPORT ON THE FINANCIAL STATEMENTS –UNQUALIFIED OPINIONWe have audited the financial statements of Aquafin NVfor the year ended 31 December 2012, prepared in accordancewith the financial reporting framework applicable in Belgium,which show a balance sheet total of € 3.163.988.705,88 anda profit for the year of € 9.695.405,24.■Responsibility of the board of directors for the preparationof the financial statementsThe board of directors is responsible for the preparation andfair presentation of the financial statements in accordance withthe financial reporting framework applicable in Belgium as wellas the implementation of internal control, which it considersnecessary for the preparation of the financial statements that arefree from material misstatement, whether due to fraud or error.In making those risk assessments, we have consideredinternal control relevant to the company’s preparation and fairpresentation of the financial statements in order to designaudit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on theeffectiveness of the company’s internal control. We haveevaluated the appropriateness of accounting policies used,the reasonableness of significant accounting estimates madeby the company and the presentation of the financialstatements, taken as a whole.We have obtained from the board of directors and fromthe company’s officials the explanations and informationnecessary for executing our audit procedures.We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.■Unqualified opinionIn our opinion, the financial statements for the year ended31 December 2012 give a true and fair view of the company’sfinancial position and the results of its operations inaccordance with the financial reporting framework applicablein Belgium.■Responsibility of the statutory auditorIt is our responsibility is to express an opinion on thesefinancial statements based on our audit. We conducted ouraudit in accordance with the International Standards onAuditing (ISA). Those standards require that we comply withthe ethical requirements, plan and perform the audit to obtainreasonable assurance whether the financial statements arefree from material misstatement.We have performed procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements.The procedures selected depend on our judgment, includingthe assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error.

REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTSThe preparation and the assessment of the informationthat should be included in the directors’ report on the financialstatements are the responsibility of the board of directors.Within the context of our assignment, it is ourresponsibility to verify in all material respects, the compliancewith certain statutory and regulatory obligations. On thisbasis, we make the following comments which do not modifythe scope of our opinion on the financial statements:• The directors’ report deals with the information requiredby law and is consistent with the financial statementsand does not present any obvious inconsistencies withthe information that we became aware of duringthe performance of our mandate.• Without prejudice to formal aspects of minorimportance, the accounting records were maintained inaccordance with the legal and regulatory requirementsapplicable in Belgium.• The appropriation of the results proposed to theshareholders’ meeting complies with the legal andstatutory provisions.• We do not have to report any transactions undertakenor decisions taken in violation of the company's articlesof association or the Company Code.Antwerp, 2 April 2013Ernst & Young Bedrijfsrevisoren BCVBAStatutory auditor, represented byRonald Van den EckerPartnerRef: 13RVE0091Annual acount77

78Annual report 2012Balance sheet and Profit & Loss accountASSETS (in Euros)FIXED ASSETS Codes Period Preceding periodFIXED ASSETS 20/28Tangible assets 22/27Land and buildings 22Plant, machinery and equipment 23Furniture and vehicles 24Leasing and other similar rights 25Other tangible assets 26Assets under construction and advance payments 27Financial fixed assets 28Affiliated enterprises 280/1Participating interests 280Other financial assets 284/8Shares 284Amounts receivable and cash guarantees 285/8CURRENT ASSETS 29/58Stocks and contracts in progress 3Contracts in progress 37Amounts receivable within one year 40/41Trade debtors 40Other amounts receivable 41Current investments 50/53Other investments and deposits 51/53Cash at bank and in hand 54/58Deferrred charges and accrued income 490/1TOTAL ASSETS 20/582,970,031,3412,969,215,140191,113,8572,518,781,7652,396,941713,3691,272,225254,936,983816,202704,049704,049112,152100,06212,090193,957,365136,179,372136,179,37242,950,41542,864,72385,6931,478,0001,478,0002,329,84811,019,7303,163,988,7062,841,823,6462,841,027,061177,472,1272,387,830,3112,412,177932,0581,394,815270,985,574796,585693,753693,753102,832100,0622,770179,535,08783,067,38183,067,38116,767,38011,790,5494,976,83152,976,31652,976,31618,435,7878,288,2233,021,358,733

EQUITY AND LIABILITIES Codes Period Preceding periodEQUITY 10/15Capital 10Issued capital 100Uncalled capital 101Reserves 13Legal reserve 130Available reserves 133Accumulated profits 14Investment grants 15PROVISIONS AND DEFERRED TAXATION 16Provisions for liabilities and charges 160/5Pensions and similar obligations 160Other liabilities and charges 163/5AMOUNTS PAYABLE 17/49Amounts payable after more than one year 17Financial debts 170/4Leasing and other similar obligations 172Credit institutions 173Other amounts payable 178/9Amounts payable within one year 42/48Current portion of amounts payable after more than one year 42Financial debts 43Credit institutions 430/8Trade debts 44Suppliers 440/4Advances received on contracts in progress 46Taxes, remuneration and social security 45Taxes 450/3Remuneration and social security 454/9Other amounts payable 47/48Deferred charges and accrued income 492/3TOTAL LIABILITIES 10/491,042,158,275210,900,006248,400,02437,500,01820,121,85511,522,3368,599,519337811,136,0772,519,1662,519,166828,3351,690,8312,119,311,2651,510,772,5301,510,593,7621,351,9371,509,241,826178,768593,120,687246,826,960131,552,186131,552,18673,758,04273,758,042109,092,83422,672,29315,265,8337,406,4609,218,37115,418,0483,163,988,7061,030,788,194210,900,006248,400,02437,500,01819,635,85511,036,3368,599,5199,303800,243,0302,257,3662,257,366513,9811,743,3861,988,313,1721,568,387,5241,568,254,0561,757,6581,566,496,398133,468403,816,284157,904,15184,145,08084,145,08075,572,24975,572,24969,073,5939,010,4571,760,6697,249,7898,110,75416,109,3653,021,358,733Annual acount79

80 Annual report 2012PROFIT AND LOSS ACCOUNT (in Euros)Codes Period Preceding periodOperating income 70/74 483,440,568 426,391,389Turnover 70 428,877,734 382,196,646Decrease in stocks of finished goods, work and contracts in progress 7153,111,990 38,813,962Other operating income 741,450,8445,380,782Operating charges 60/64 393,281,730 350,261,834Raw materials, consumables and goods for resale 60 95,362,893 89,980,165Purchases 600/8 95,362,893 89,980,165Services and other goods 61 89,809,134 72,992,685Remuneration, social security costs and pensions 62 61,694,266 59,187,009Depreciation of and other amounts written off formation expenses,intangible and tangible fixed assets 630 140,890,259 123,917,384Amounts written down stocks, contracts in progress andtrade debtors (appropriations +, write-backs -) 631/4-342,174255,269Provisions for risks and charges (appropriations +, uses and write-backs -) 635/7261,800-144,961Other operating charges 640/85,605,5514,074,283Operating profit 9901 90,158,83976,129,555Financial income 756,174,2642,232,214Income from current assets 7516,160,4682,184,562Other financial income 752/913,79647,652Financial charges 65 84,260,413 66,803,254Debt charges 650 76,581,865 63,827,754Other financial charges 652/97,678,5472,975,500Profit on ordinary activities before taxes 9902 12,072,68911,558,515Extraordinary income 7610,2971,779Write-back of amounts written down financial fixed assets 76110,2971,779Profit for the period before taxes 9903 12,082,986 11,560,294Income taxes 67/772,387,5811,980,028Income taxes 670/32,503,7361,980,028Adjustment of income taxes and write-back of tax provisions 77116,155Profit for the period 99049,695,4059,580,265PROFIT FOR THE PERIOD AVAILABLE FOR APPROPRIATION 99059,695,4059,580,265

APPROPRIATION ACCOUNT (in Euros)Codes Period Preceding periodProfit to be appropriated 9906 9,704,708 9,585,496Profit for the period available for appropriation 9905 9,695,405 9,580,265Profit brought forward 14P 9,303 5,231Transfers to capital and reserves 691/2 486,000 1,480,000To the legal reserve 6920 486,000 480,000To other reserves 6921 1,000,000Profit to be carried forward 14 337 9,303Distribution of profit 694/6 9,218,371 8,096,194Dividends 694 9,218,371 8,096,194Annual acount81

82 Annual report 2012STATEMENT (in Euros)STATEMENT OF TANGIBLE FIXED ASSETS Codes Period Preceding periodLAND AND BUILDINGSAcquisition value at the end of the period 8191P 208,867,327Movements during the periodAcquisitions, including produced fixed assets 8161 16,186,115Acquisition value at the end of the period 8191 225,053,442Depreciation and amounts written down at the end of the period 8321P 31,395,200Movements during the periodRecorded 8271 2,544,385Depreciation and amounts written down at the end of the period 8321 33,939,585NET BOOK VALUE AT THE END OF THE PERIOD 22 191,113,857PLANTS, MACHINERY AND EQUIPMENTAcquisition value at the end of the period 8192P 3,751,068,322Movements during the periodAcquisitions, including produced fixed assets 8162 57,784,351Transfers from one heading to another 8182 209,811,381Acquisition cost at the end of the period 8192 4,018,664,054Depreciation and amounts written down at the end of the period 8322P 1,363,238,011Movements during the periodRecorded 8272 136,644,278Depreciation and amounts written down at the end of the period 8322 1,499,882,289NET BOOK VALUE AT THE END OF THE PERIOD 23 2,518,781,765FURNITURE AND VEHICLESAcquisition value at the end of the period 8193P 15,029,810Movements during the periodAcquisitions, including produced fixed assets 8163 1,203,138Acquisition cost at the end of the period 8193 16,232,948Depreciation and amounts written down at the end of the period 8323P 12,617,633Movements during the periodRecorded 8273 1,218,375Depreciation and amounts written down at the end of the period 8323 13,836,007NET BOOK VALUE AT THE END OF THE PERIOD 24 2,396,941LEASING AND OTHER SIMILAR RIGHTSAcquisition cost at the end of the period 8194P 4,373,770Acquisition cost at the end of the period 8194 4,373,770Depreciation and amounts written down at the end of the period 8324P 3,441,713Movements during the periodRecorded 8274 218,689Depreciation and amounts written down at the end of the period 8324 3,660,401NET BOOK VALUE AT THE END OF THE PERIOD 25 713,369Of which land and buildings 250 713,369

STATEMENTSTATEMENT OF TANGIBLE FIXED ASSETS Codes Period Preceding periodOTHER TANGIBLE ASSETSAcquisition value at the end of the period 8195P 5,485,907Movements during the periodAcquisitions, including produced fixed assets 8165 141,944Acquisition cost at the end of the period 8195 5,627,851Depreciation and amounts written down at the end of the period 8325P 4,091,092Movements during the periodRecorded 8275 264,534Depreciation and amounts written down at the end of the period 8325 4,355,626NET BOOK VALUE AT THE END OF THE PERIOD 26 1,272,225ASSETS UNDER CONSTRUCTION AND ADVANCE PAYMENTSAcquisition value at the end of the period 8196P 270,985,574Movements during the periodAcquisitions, including produced fixed assets 8166 193,762,790Transfers from one heading to another 8186 -209,811,381Acquisition cost at the end of the period 8196 254,936,983NET BOOK VALUE AT THE END OF THE PERIOD 27 254,936,983STATEMENT OF FINANCIAL FIXED ASSETS Codes Period Preceding periodAFFILIATED ENTERPRISES - PARTICIPATING INTERESTS AND SHARESAcquisition value at the end of the period 8391P 1,938,284Acquisition value at the end of the period 8391 1,938,284Depreciation at the end of the period 8521P 1,244,531Movements during the periodWritten back 8481 10,297Depreciation at the end of the period 8521 1,234,234NET BOOK VALUE AT THE END OF THE PERIOD 280 704,049OTHER ENTERPRISES - PARTICIPATING INTERESTS AND SHARESAcquisition value at the end of the periond 8393P 100,062Acquisition value at the end of the periond 8393 100,062NET BOOK VALUE AT THE END OF THE PERIOD 284 100,062OTHER ENTERPRISES - AMOUNTS RECEIVABLENET BOOK VALUE AT THE END OF THE PERIOD 285/8P 2,770Movements during the periodAdditions 8583 9,320NET BOOK VALUE AT THE END OF THE PERIOD 285/8 12,090Annual acount83

84 Annual report 2012STATEMENTINFORMATION ON PARTICIPATING INTERESTSPARTICIPATING INTERESTS AND CORPORATE RIGHTS IN OTHER COMPANIESAquaplus NVIngberthoeveweg 21B-2630 Aartselaar0462.755.821Corporate rights - registered sharesdirect number: 39,999direct %: 99.99Information from the most recent period per 31 December 2012Capital and reserves:704,049 eurosNet result:10,297 eurosOTHER INVESTMENTS AND DEFERRED CHARGES Codes Period Preceding periodOTHER INVESTMENTS AND DEPOSITSShort-term accounts with credit instutions 53 1,478,000 52,976,316Payable within one month 8686 1,478,000 52,976,316DEFERRED CHARGES AND ACCRUED INCOMEAllocation of heading 490/1 of assetsPrepaid costs 335,048Projects apart from the agreement with the Flemisch Region 439,992Purchase VMM equity part 5,626,148Accrued interest 4,618,543STATEMENT AND STRUCTURE OF CAPITAL Codes Period Preceding periodSTATEMENT OF CAPITALCAPITALIssued capital at the end of the period 100P 248,400,024Issued capital at the end of the period 100 248,400,024Changes during the period Codes Amounts Number of sharesRegular shares 248,400,024 1,001,613Registered shares 8702 1,001,613Codes Uncalled amountUnpaid capital 101 37,500,018Uncalled capitalShareholders having yet to pay up in full: Vlaamse Milieuholding NV 37,500,018

STATEMENTPROVISIONS FOR OTHER LIABILITIES AND CHARGESDetails of code 163/5PeriodCosts anticipated for late deliveries 13,984Costs anticipated for legal disputes 1,301,179Costs anticipated for disputes with regard to the agreement with the Flemish Region 160,000Costs anticipated for disputes 40,000Costs anticipated for sludge disposal 175,668STATEMENT OF AMOUNTS PAYABLE AND ACCRUALS Codes PeriodANALYSIS BY CURRENT PORTIONS OF AMOUNTS INITIALLY PAYABLEAFTER MORE THAN ONE YEARAmounts payable after more than one year expiring within the yearFinancial debts 8801 246,826,960Leasing and other similar obligations 8831 405,721Credit institutions 8841 246,421,239TOTAL OF AMOUNTS PAYABLE AFTER MORE THAN ONE YEAR EXPIRING WITHIN THE YEAR 42 246,826,960Amounts payable expiring after more than one year but within 5 yearsFinancial debts 8802 762,908,577Leasing and other similar obligations 8832 1,351,937Credit institutions 8842 761,556,640Other amounts payable 8902 178,768TOTAL OF AMOUNTS PAYABLE EXPIRING AFTER MORE THAN ONE YEAR BUT WITHIN 5 YEARS 8912 763,087,345Amounts payable expiring after more than 5 yearsFinancial debts 8803 747,685,185Credit institutions 8843 747,685,185TOTAL OF AMOUNTS PAYABLE EXPIRING AFTER MORE THAN 5 YEARS 8913 747,685,185AMOUNTS PAYABLE FOR TAXES, REMUNERATION AND SOCIAL SECURITYTaxesNon-expired taxes payable 9073 15,265,833Remuneration and social securityOther amounts payable relating to remuneration and social security 9077 7,406,460ACCRUED CHARGES AND DEFFERED INCOMEDetails of code 492/3Interest to be paid 14,153,147Interest management 1,112,764Other accruals 152,136Annual acount85

86 Annual report 2012STATEMENTOPERATING RESULTS Codes Period Preceding periodOPERATING COSTSEmployees recorded in the personnel registerTotal number at the closing date 9086 921 892Average number of employees in full-time equivalents 9087 863 846Number of actual working hours 9088 1,415,619 1,384,725Personnel chargesRemuneration and direct social benefits 620 44,055,164 42,552,326Employers' contribution for social security 621 12,306,709 11,597,101Employers' premium for extra statutory insurance 622 3,125,747 2,710,733Other personnel charges 623 2,093,721 2,216,388Pensions 624 112,924 110,462Provisions for pensionsIncrease 635 314,355 250,737Amounts written offTrade debtorsRecorded 9112 209,457 653,077Write back 9113 551,631 397,808Provisions for risks and chargesIncreases 9115 759,533 1,048,072Decreases 9116 497,733 1,193,034Other operating costsTaxes related to operations 640 4,919,025 3,666,860Other charges 641/8 686,526 407,424Temporary personnel and persons placed at the disposal of the enterpriseTotal number at the closing date 9096 5 12Average number of employees in full-time equivalents 9097 8 9Number of actual working hours 9098 14,868 17,338Charges to the enterprise 617 393,287 463,557FINANCIAL AND EXTRAORDINARY RESULTSDetails of financial incomeOther financial income 13,795.94 47,652Details of other financial chargesBank costs 2,073,793 2,650,930Other financial charges 16,903 173Costs of interest management 5,587,851 324,396INCOME TAXES AND OTHER TAXES Codes PeriodINCOME TAXESIncome taxes of the current period 9134 2,416,107Taxes and withholding taxes due or paid 9135 2,416,107Income taxed om previous periods 9138 87,629Taxes and withholding taxes due or paid 9139 87,629

STATEMENTCodes Period Preceding periodVALUE ADDED TAX AND TAXES BORNE BY THIRD PARTIESValue added tax charged during the periodTo the enterprise (deductible) 9145 153,804,435 129,169,161By the enterprise 9146 80,861,474 78,389,947Amounts retained on behalf of third parties forPayroll withholding taxes 9147 12,762,683 12,168,810RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEETPeriodSUBSTANTIAL COMMITMENTS TO ACQUIRE FIXED ASSETSContracted projects not yet activated 296,898,187Obligations to purchase land 3,825,554AARD EN ZAKELIJK DOEL VAN BUITENLANDSE REGELINGENTegoeden contracten drinkwatermaatschappijen 1,721,281,527RELATIONSHIPS WITH AFFILIATED ENTERPRISES Codes Period Preceding periodAFFILIATED ENTERPRISESFinancial fixed assets 280/1 704,049 693,753Investments 280 704,049 693,753Amounts receivable 9291 169,906 183,990Within the year 9311 169,906 183,990CodesBoekjaarFINANCIAL POSITIONS WITH THE COMPANY AUDITOR AND THE PERSONS CONNECTED TO HIMAuditor's fees 9505 45,675Remunerations for exceptional activities or special assignments executedwithin the company by the company auditorTax consultancy 95062 4,715PeriodDERIVATES NOT MEASURED AT FAIR VALUEFair value of financial derivatesHedging Strategies -187,011,199The enterprise has not published a consolidated annual statement of accounts and a management report, since it is exempt for thisobligation for the following reason: the enterprise itself is a subsidiary of an enterprise which does prepare and publish consolidatedaccounts, in which her yearly statement of accounts is included.Mother companyVlaamse Milieuholding NVOude Graanmarkt 631000 Brussel 10440.019.813Annual acount87

88 Annual report 2012SOCIAL BALANCE SHEETSTATEMENT OF EMPLOYEES Codes Total Men WomenEMPLOYERS RECORDED IN THE GENERAL PERSONEL REGISTERDuring the periodAverage number of employeesFull-time 1001 728,3 599,0 129,3Part-time 1002 177,3 69,1 108,2Total in fulltime equivalents (FTE) 1003 862,9 651,9 211,0Number of hours actually workedFull-time 1011 1,203,371 991,016 212,355Part-time 1012 212,248 84,139 128,109Total 1013 1,415,619 1,075,155 340,464Personnel costsFull-time 1021 52,288,766.63 43,758,383.63 8,530,383.00Part-time 1022 9,292,575.00 3,774,158.00 5,518,417.00Total 1023 61,581,341,63 47,532,541.63 14,048,800.00Advantages in addition to wages 1033 1,029,953.43 780,155.46 249,797.97During the previous periodCodes P. Total 1P. Men 2P. WomenAverage number of employees 1003 845.8 638.0 207.8Number of hours actually worked 1013 1,384,725 1,051,691 333,034Personnel costs 1023 59,076,547.79 45,599,175.72 13,477,372.07Advantages in addition to wages 1033 488,692.85 377,183.00 111,509.85As at the closing date of the periodTotal inCodes Full-time Part-time full-time equivalentsNumber of employees recorded in the personnel register 105 745 176 878.0By nature of the employment contractContract of unlimited duration 110 734 175 866.3Contract of limited duration 111 11 1 11.7By sexMale 120 613 66 661.7Secondary education 1201 364 51 402.3Higher education (non-university) 1202 162 11 171.3University education 120 87 4 88.1Female 121 132 110 216.3Secondary education 1211 37 34 62.3Higher education (non-university) 1212 43 46 77.7University education 1213 52 30 76.3By professional categoryEmployees 134 745 176 878

SOCIAL BALANCE SHEETTEMPORARY PERSONNEL Codes Temporary personnelDURING THE PERIODAverage number of personnel employed 150 7.50Number of actual working hours 151 14,868Charges to the company 152 393,287.23LIST OF PERSONNEL MOVEMENTSTotal inDURING THE PERIOD Codes Full-time Part-time full-time equivalentsENTRIESNumber of employed persons recorded in the personnelregister during the financial period 205 50 4 53.1By nature of the employment contractContract for an indefinite period 210 39 3 41.4Contract for a definite period 211 11 1 11.7DEPARTURESNumber of employed persons of which the date of terminationof the contracts has been recorded in the personnel registerduring the financial period 305 20 5 24.5By nature of the employment contractContract for an indefinite period 310 19 4 22.7Contract for a definite period 311 1 1 1.8By reason of termination of contractPrepension 341 2 2.0Dismissal 342 3 3.0Other reasons 343 15 5 19.5INFORMATION ON VOCATIONAL TRAININGFOR EMPLOYED PERSONS DURING THE PERIOD Codes Male Codes FemaleTotal of training initiatives at the expense of the employerNumber of participating employees 5801 676 5811 189Number of training hours 5802 18,596 5812 4,696Costs for the company 5803 1,568,596 5813 404,202of which gross costs directly linked to the training 58031 1,497,193 58131 378,118of which paid contributions and deposits in collective funds 58032 146,132 58132 44,956of which received subsidies (to be deducted) 58033 74,729 58133 18,873Total number of the less official and unofficial advanceprofessional training projects at company expenseNumber of participating employees 5821 152 5831 68Number of training hours 5822 173,864 5832 82,464Costs for the company 5823 165,604 5833 78,546Total number of initial professional training projects at company expenseNumber of participating employees 5841 0 5851 0Number of training hours 5842 0 5852 0Costs for the company 5843 0 5853 0Annual acount89

90Annual report 2012Valuation rules1. STARTING-UP COSTS - COSTS OF CAPITALINCREASESStarting-up costs are booked at acquisition value in theyear in which they are incurred or in which commitmentswere made.Costs for capital increases are booked in the year in whichthe increase has taken place.2. TANGIBLE FIXED ASSETSTangible fixed assets are booked at their acquisition price,i.e. purchase price plus related costs.As from the 2003 financial period it was stipulated underArticle 196, $ 2 WIB 92, that the first depreciation annuity ofassets acquired or established during the financial periodare considered professional costs proportionally to the partof the financial period in which the assets were requiredor established.For the 2003, the 2004 and 2005 financial year an exceptionwas allowed to Aquafin. As from the 2006 financial period thisarticle was fully applied. The investments were proportionallywritten down on monthly basis.■Following depreciation percentages are applied:for permanent assets proper to the main office:- office materials: linear 20%- furniture: linear 15%- vehicles and mobile equipment: linear 25%- telephone installation: linear 20%- computer hard- and software: linear 33%- installation and furnishing costsof rented buildings: linear 33%- machines and equipment: linear 20%- establishment of laboratory: linear 20%- leased office buildings: linear 5%- installation and furnishing costsof leased buildings: linear 33%- hydronaut projects after delivery: linear 6,667%■for permanent assets proper to the projects:These assets are transferred from work in progress totangible fixed assets when the project is delivered.Four classes are distinguished in function of their economiclife, for which the following depreciation percentages areapplied:- class 1: linear 25%- class 2: linear 14.25%- class 3: linear 6.66%- class 4: linear 3.03%The following investments belong to class 1:Computers, office machines, software, telemetry equipment,portable equipment, radio transmitters, telecommunicationequipment, sampling equipment, measuring equipment,lawn mowers, laboratory equipment, private cars, lightcompany vehicles. Also to class 1 belong the expenses that areactivated since 1 January 2010, concerning improvements andadaptations, part light equipment. This list is non-limitative.The following investments belong to class 2:Portable pumps, aerators, mixers and generators of < 25 KW,agricultural machinery, renovation of the buildings, furniture,heavy mobile equipment such as vehicles for transportingsludge, lorries, tractors and small bulldozers. Also to class 2belong the expenses that are activated since 1 January 2010,concerning improvements and adaptations, part heavyequipment. This list is non-limitative.The following investments belong to class 3:Fences, sampling and measuring instruments, workshopmachinery, movable cranes, or pumps and generators > 25 KW,steel storage tanks, immovable electrical and mechanicalequipment of new installations. Also belonging to class 3 arethe once-made costs (as called till 1 January 2005) exceptinsurance costs, claim costs, costs control office and sitedescription. Also to class 3 belong the expenses that areactivated since 1 January 2010, concerning replacementinvestments and improvements and adaptations, part EM.This list is non-limitative.

The following investments belong to class 4:■For purchase of VMM assetsRoads, constructions for wastewater treatment plants andpumping stations, buildings, discharging constructions,sewers, collector sewers, priority sewers, pressure pipelines,manholes, roller bridges, plants. Also to class 4 belong theexpenses that are activated since 1 January 2010, concerningimprovements and adaptations, part construction. This listis non-limitative.Annual account related costs – except for land – are takeninto P & L in the year of delivery.■For permanent assets of the Operations department:The following depreciation percentages are applied:- for investments with regard to the renovation ofbuildings at Aquafin’s disposal: linear 14.25%- for investments with regard to the construction ofservice or office buildings: linear 3.03%Moreover, two classes are distinguished in function oftheir economic life, for which the following depreciationpercentages are applied:- class 1: linear 25%- class 2: linear 14.25%.The non-limitative list with the contents of classes 1 and 2can be found above.■ For the renovation of VMM plants:The reparation works for which a technical plan is beingestablished will be reactivated. These are the reparationworks with an estimated minimum life of more than 7 years,in accordance with the agreement with the Flemish Region.Following addendum no.7 to the management agreement,VMM (Flemish Environmental Agency) assets were purchasedover 2010, 2011 en 2012. For the purchased VMM assets anadaptation of the existing valuation rules was necessary.As it concerns existing, operational plants, the economic lifeis estimated at 20 years.In correspondence with the report of the Board of Directors2010/101 the valuation rules for these assets are set as follows:assets, land excluded, purchased from VMM, related costsincluded, are written down linearly over a 20 year period.No depreciation is applied to tangible fixed assets underconstruction.Additional or exceptional depreciation is allowed formaterial fixed assets when their utility for the company isbelow the book value due to economical or technologicalconditions.Fixed assets which are no longer used or no longerpermanently contribute to the activity are depreciated so thatthe book value corresponds to the estimated disposal value.Invoices of assets with a value of less than € 2,500 areimmediately taken into P & L, except for:- assets that are acquired under an approved technical plan,- advance invoices,- invoices related to parts or expansions of assets.Assets bought for specific projects are written downlinearly over the course of these projects.These assets are transferred from ‘works in progress’ to‘other tangible fixed assets’ when the project is delivered.The division into classes and the relating depreciationrates correspond to the rates for permanent assets proper tothe projects.Annual acount91

92Annual report 20123. FINANCIAL FIXED ASSETSParticipations, shares and fixed income securities titles arebooked at purchase price. Related costs are immediately takeninto P & L. In case of permanent depreciation or devaluation,the reduction in value of participations and shares may bewritten off when this is warranted by the status, the probabilityor the prospects of the company concerned.4. LONG-TERM RECEIVABLESReceivables are booked at nominal value except forfixed rate instruments which are booked at the lowest ofthe following values: purchase price or repayment price.Related costs are immediately booked against P & L.A depreciation is applied when repayment at the expirydate becomes uncertain.5. RECEIVABLES WITHIN ONE YEARReceivables are shown in the account at their nominalvalue. Fixed rate instruments are booked at the lowest ofthe following values: purchase price or repayment price.Additional costs are immediately booked at the charge ofthe result.Depreciations are applied when for the whole or a partof the receivable payment on the expiry date is uncertain.6. DEPOSITSDeposits at financial institutions are booked at nominalvalue. Paper instruments are booked at the lowest ofeither purchase price or repayment price. Related costs areimmediately booked at the charge of the result.At the closing of the financial year depreciation is bookedwhen the market value is lower than the booked value.7. CASHCash is booked at nominal value. At the closing of thefinancial year depreciation is booked when the market valueis lower than the booked value.8. DEBTSDebt are booked at nominal value.9. FOREIGN CURRENCYDebts and receivables in foreign currency are converted atthe exchange rate of the last day of the financial year whenclosing the financial year.10. ACCRUALSAccruals are booked at acquisition value and posted tothe balance sheet for the part which refers to the followingfinancial year(s).11. ORDERS IN PROGRESS - VALUATION OFPROJECTS BEYOND THE EXECUTION OF THEAGREEMENT WITH THE FLEMISH REGIONCosts incurred in the framework of projects beyond theagreement with the Flemish Region are booked as orders inprogress. Orders in progress are booked at manufacturing price.■ Valuation method up until financial year 2010:The positive difference between the selling price andthe manufacturing price (profit) is only taken into P & L oncethe order has been fully executed. Upon the closing ofthe financial year orders in progress are depreciated if theirmanufacturing price plus the estimated amount of the costsstill to be made are higher than the net purchasing price orthe price stipulated in the contract.■ Valuation method as of financial year 2011:Upon the closing of the financial year an estimate is madeof the project result – difference between the budgeted sellingprice and manufacturing price, as well as the project activities’finishing degree. This finishing degree is applied to thebudgeted manufacturing an selling price to determine theamount of costs and revenues taken into P&L. If at closingdate a loss is expected on a commercial project, it isimmediately taken into P&L.

Additional informationEQUITY CAPITAL: CAPITAL SUBSIDIES REPLACEDBY REIMBURSEMENTS FLEMISH REGION/DRINKING WATER COMPANIESThe reimbursements received from the Flemish Region/drinking water companies are the reimbursements assigned bythe Flemish Region to the company by virtue of the wastewatertreatment plants completed by the company to the FlemishRegion during the past fiscal year. This reimbursement willbe to the credit of the result for the same amount of thedepreciation cost to which the reimbursement is related.■Rights and obligations not included in the balance sheetClaims on the drinking water companies/Flemish Region:1,721,281,527 Euros.These claims are the investment costs that are not yetreimbursed by the Flemish Region of projects that werealready completed to the Flemish Region.TRANSFER OF ASSETS UPON THE EXPIRYOF THE MANAGEMENT AGREEMENT WITHTHE FLEMISH REGIONAquafin NV shall keep the full ownership of thewastewater treatment plants which will be established onterrains forming part of the public domain, because theFlemish Region relinquishes its right of accession for the fullperiod of the management agreement. From the momentwhen the management agreement expires, the title toownership of these plants and other constructions shall betransferred to the Flemish Region, for which transfer theFlemish Region shall not be due any payment whatsoever.If Aquafin NV erects all kinds of installations or otherbuildings on its own terrains which are indispensable forthe execution of a technical plan, such installations and/orbuildings shall be transferred to the Flemish Region after theexpiry of the agreement, for which transfer the Flemish Regionshall not be due any payment whatsoever.Annual acount93

94Annual report 2012Major risk factorsACCOUNTS OF THE FINANCIAL YEARS 2010AND 2011 BY THE ECONOMIC SURVEILLANCEAUTHORITYOn 20th July 2012, the Flemish Government approvedthe accounts for the year 2010. A very limited amount wasrejected.The recommendations relating to the financial year 2011was transferred by the economic surveillance authorityto the Minister of Environment. The proposal was takenunder consideration by the Minister. After analysing therecommendations, Aquafin responded to the questions andthe clarifications that had been requested. In our opinion,we have adequately demonstrated the reasonableness ofthe costs incurred. For this reason, no provision has thereforebeen made for any rejection costs.DELIVERY DOSSIERS FOR THE REGIONDuring the closing months of 2012, it was found at the timeof delivering new projects that the Flemish Region challengedthe reasonableness of costs to a greater extent than everbefore. Aquafin is well aware of this change in attitude andis engaged in an attempt to proactively respond by modifyingits dossiers and better preparing the same.Aquafin is taking appropriate remedial action wherever itbelieves that the Flemish Region is not rightly refusing toaccept certain costs.LEGAL DISPUTES■Flooding in a residential areaThis dossier relates to damage caused by flooding inconnection with around four hundred residents of aresidential area in 1998. At the end of 2010, the court issueda verdict favourable to Aquafin, in which the majority ofthe requirements were adjudged as being time-barred,inadmissible or unfounded. The counterparties appealedagainst this ruling in April 2011. This appeal procedure is stillongoing.■Deurne WWTP – collapse of intermediate wallIn September 2012, the wall between the anaerobic pondand the aeration basin in the Deurne WWTP collapsed.The collapse caused considerable material damages. Afterfurther investigation, Aquafin implemented additionalsecurity measures, such as pumping out an extra basin.These measures in turn had an impact on water and sludgetreatment in the dryer. Apart from the damage, Aquafintherefore also suffered significant operational damage.In order to limit this consequential damage withoutcompromising our chances to claim damage compensationfrom such third parties as may be liable, Aquafin took theinitiative to appoint a court expert. His terms of referenceconsist in making possible the quickest possible re-use andrepair of the plant, apart from an investigation into thepossible causes.In January 2013, the court expert’s granted his consentto restarting the basin and the dryer. In the meanwhile,research was made into possible causes, and the first stepswere taken to enable the repair of the system. Since there areclear indications that third parties are techni cally liable,there is at present no ground to create a provision.INSURANCE FILES■Insufficient concrete reinforcement at Deurne WWTPIt was discovered in 2007 that due to a design flaw,the walls of some of the sewage aeration basins of Deurnehad been insufficiently reinforced. According to Aquafin,this damage claim is partly covered by our Construction AllRisk Insurance (ABR) and partly by the professional liability ofthe relevant engineering bureau.The amount that was not paid by the ABR insurer waspartially recovered from the engineering bureau in 2011 thatwas responsible for the design fault, and partly from theinspection authority active at the site. These recoveryprocedures are actively being pursued but are still in process.A provision was set aside for this part of the cost.The above developments do not give rise to the need toalter the earlier decision not to create a provision.

■Concrete problem in the Bruges WWTPOn provisional acceptance of the renovation of WWTPBruges, a record of the concrete reinforcement was made in anaeration basin. Later on, it was found that this damagecontinues and is not limited to this basin. Aquafin ordered ananalysis, which indicated two causes: insufficient concretecover and increased chloride values. Based on the study,a repair method was worked out in consultation with thecontractor. Wherever necessary, the concrete must be repairedand supplemented, and ‘cathodic protection’ must also beinstalled. The actual repairs were carried out in the last fewyears. They will be completed in 2013.The cost of the first-mentioned part of the repairs shall beborne by the contractor, while the cost of the last section shallbe borne by Aquafin. A settlement was concluded betweenthe insurer and the insured and between the insured amongstthemselves.The ABR insurer ACI contributed a substantial amount.This amount covered the repair and protection measures onthe one hand, and will also serve to cover the cost of the workstill to be carried out. In this dossier, the facts do not indicatea need to create a provision.Allocation agreementAquafin NV has signed an allocation agreement duringthe 1994 financial year. The agreement between Aquafin NV,the Flemish Region, the European Investment Bank and Belfiusstipulates that, in case Aquafin NV fails to fulfil its obligationsto its long-term financiers, the claims on the Flemish Regionfor the investments and the interests on loans will not be paidto Aquafin by the Flemish Region any longer. These claims willbe paid by the Flemish Region as the solvens from Aquafin toBelfius, which acts as the agent of the long-term grantors ofAquafin NV. Long-term credits with an original term longerthan or equal to 5 year come under this agreement.Annual acount95

AQUAFIN NVCreditsPublisher: Luc Bossyns, Managing Director Aquafin NVGraphic design: AlteraPhotography: fotovdb.com, Jan Locus, Misjel Decleer and employees of Aquafin NVThe 2012 annual report is also available in DutchLanguage versions are available for download at www.aquafin.beAdditional paper copies can be ordered via info@aquafin.be

Aquafin develops and implementseffective solutions that provide cleanerwatercourses and sustainable water(re)use. We respond pro-actively toexpected developments in the watersector. As a result, and in a closerelationship with our customers,we bring a customised realisation ofEuropean objectives nearer every day.Aquafin NV, Dijkstraat 8, B-2630 AartselaarTel. 03 450 45 11 ■ fax 03 458 30 20e-mail: info@aquafin.be ■ www.aquafin.bePublisher : Luc BossynsAlso available in Dutch