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annualreport<br />

Results <strong>2011</strong>


2<br />

Waste management plant, Doel (Belgium)


<strong>Annual</strong> <strong>Report</strong><br />

1. Profile and key figures 5<br />

2. Focus and consolidation 7<br />

3. Financial performance 11<br />

4. Grids and networks 15<br />

5. Energy19<br />

6. Waste management 25<br />

7. Corporate governance 27<br />

8. Risk and risk management 29<br />

9. <strong>Report</strong> of the Supervisory Board 31<br />

10. Personal particulars 33<br />

11. Financial statements 37<br />

3


DELTA is an independent multi-utility company<br />

specialising in grids and networks, energy and<br />

waste management. Most of its shares (96.55%)<br />

are held by municipal and provincial authorities<br />

in the Province of Zeeland. DELTA’s head office is<br />

located in Middelburg, the Netherlands.<br />

The company employs around 3,000 people.<br />

4


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Profile<br />

and key figures 1<br />

Grids and networks<br />

DELTA Netwerkbedrijf (DNWB) and DELTA Infra form a part of<br />

the Networks division. DNWB is the grid operator for Zeeland<br />

Province and performs its statutory tasks autonomously within<br />

the DELTA organisation. It is responsible for managing the<br />

regional gas and electricity distribution grids. Grid construction<br />

and maintenance is entrusted to DELTA Infra. DELTA Infra is also<br />

responsible for constructing and servicing the water mains<br />

network operated by Evides and DELTA’s cable network.<br />

Its other areas of expertise include high-voltage applications<br />

and measurement technology.<br />

Key figures <strong>2011</strong> 2010<br />

Revenue 2,185 2,073<br />

Electricity supply 1,002 1,073<br />

Gas supply 415 312<br />

Electricity & gas transmission 113 101<br />

Cable, Internet, telecommunication 83 83<br />

Waste management 509 462<br />

Other 63 42<br />

x EUR million<br />

Energy<br />

In addition to electricity generation and energy trading,<br />

DELTA supplies gas and electricity to private and business<br />

customers. DELTA serves the consumer market in Zeeland<br />

as a provider of digital services (Internet access, telephony,<br />

TV and radio signals) as well as energy and, through its share<br />

interest in Evides, as a water supplier. Its multi-utility approach<br />

has enabled DELTA to secure a large share of these markets<br />

in Zeeland.<br />

Waste management<br />

All the waste management operations have been brought<br />

together in DELTA’s subsidiary Indaver, in which it owns 75% of<br />

the shares. Indaver focuses on the public sector (mainly in the<br />

Netherlands, Belgium and Ireland) and industrial companies<br />

(North-West Europe). Most of the waste is processed at<br />

Indaver’s own facilities, but some is treated at other plants.<br />

The company uses a variety of waste treatment methods,<br />

including recycling, biomass production and waste-to-energy<br />

(energy produced from waste incineration).<br />

Fuel mix in <strong>2011</strong>: supplied to consumers and businesses<br />

Coal 22.6%<br />

Natural gas 46.6%<br />

Other 2.5%<br />

Carbon neutral 28.3%,<br />

of which Nuclear 18.0%<br />

Renewable 10.3%<br />

of which Wind 2.4%<br />

Solar 0.0%<br />

Hydro 2.3%<br />

Biomass 5.6%<br />

5


In the autumn of 2010, DELTA moved back to focus on its core activities –<br />

grids and networks, energy, and waste management. Its organisational<br />

model is based on a logical clustering of activities within those three<br />

business segments. Management responsibilities are taken care of<br />

within the three core segments, as close to the workplace as possible.<br />

Activities unrelated to the three segments have been sold off.<br />

We decided, for example, to discontinue all of our solar energy<br />

operations. This decision was implemented in <strong>2011</strong>. In July, solar<br />

cell manufacturer Solland Solar, based in Heerlen, was sold in a<br />

management buyout. Other activities in the solar energy market were<br />

also discontinued in the course of <strong>2011</strong>.<br />

6<br />

Biomass processing plant, Moerdijk


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Focus<br />

and consolidation 2<br />

Business and economic basis strengthened<br />

In <strong>2011</strong> we worked hard to improve DELTA’s financial structure.<br />

Our credit rating upgrade (from BBB to BBB+) shows that<br />

this effort has inspired trust and confidence. Rating agency<br />

Standard & Poor’s announced the upgrade in June, citing<br />

DELTA’s solid performance in energy, water and waste<br />

management as the main drivers. Other favourable factors<br />

included our restrictive investment policy, strong focus on<br />

working capital management, cost reductions, and ongoing<br />

efficiency programme.<br />

Margins under pressure<br />

DELTA reported a satisfactory profit on ordinary activities<br />

for the first half of the year, with energy operations performing<br />

in line with what were less favourable expectations, due mainly<br />

to relatively low electricity prices. The fall in prices was caused<br />

by existing overcapacity in northwestern Europe.<br />

The overcapacity situation coincided, however, with an<br />

economic downturn in Europe and buoyant economic growth<br />

in Asia and South-America. As a result, fuel prices in Europe<br />

remained elevated. These factors combined to put considerable<br />

pressure on our margins. The decline in the energy segment<br />

was offset by better-than-expected results in the waste<br />

management and grid and network segments. Water company<br />

Evides also performed very well in <strong>2011</strong>.<br />

The grid operator will continue to be a part of DELTA for the time<br />

being. The Dutch Supreme Court has deferred final judgment<br />

pending a preliminary ruling from the European Court of Justice.<br />

Nuclear energy<br />

DELTA regards nuclear energy as an important source of CO 2<br />

-low<br />

electricity on our way to a society that will largely be making<br />

use of renewable energy. Clearly, this requires investment<br />

conditions that inspire trust and confidence, and political<br />

backing. Because there is not enough political support as yet,<br />

the plans for a new nuclear power plant have been postponed<br />

for the time being.<br />

In <strong>2011</strong> there was also news involving the existing nuclear<br />

power station in Borssele, with DELTA increasing its share in<br />

the plant’s operator N.V. EPZ from 50% to 70%. During the<br />

year, the parties involved – Essent, RWE and DELTA – reached<br />

agreement on the issue of ownership of the nuclear power<br />

plant. As a majority shareholder, we can now adequately<br />

protect the public interest in the nuclear power station.<br />

Value for money<br />

in <strong>2011</strong> DELTA reinforced its leading position as a service<br />

provider. Several independent agencies praised the company’s<br />

energy and Internet access services. The Dutch Consumer<br />

Association monitors the quality of Internet service providers<br />

through a user panel, with ten thousand of its members<br />

reporting their experiences once every two months. On the<br />

basis of this survey, the Association wrote: “Just as it did last<br />

time, ZeelandNet tops the list with a score of 8.2. The provider<br />

has been achieving consistently higher scores than those<br />

that come after – Solcon, Tele2, and XS4All – all of which<br />

scored a 7.7.” In <strong>2011</strong> substantial investment was also made in<br />

infrastructure quality. To enable faster connections and deliver<br />

new services, much of the technical backbone of the Zeeland<br />

network was upgraded in <strong>2011</strong>. Work on the last section will be<br />

completed in 2012.<br />

7


2. Focus and consolidation<br />

In addition to high service levels, we are also keen to charge<br />

favourable energy rates to consumers in Zeeland. In November<br />

we announced our new rates for 2012. Compared with our major<br />

competitors (Eneco, Nuon, and Essent), we offer the lowest<br />

prices.<br />

Low CO 2<br />

emissions<br />

In 2010 DELTA’s carbon dioxide emissions averaged 0.33 tons<br />

per megawatt hour. Energy companies in the Netherlands emit<br />

an average of around 0.40 tons of CO 2<br />

per MWh. These figures<br />

were published in our corporate social responsibility (CRO)<br />

report on 11 November <strong>2011</strong> – Sustainability Day. Our carbon<br />

dioxide emissions are low because we use nuclear energy and<br />

biomass.<br />

The coal-fired power station in Borssele co-fires biomass<br />

(20% maximum), while the biomass power station in Moerdijk<br />

fully operates on chicken manure. DELTA also generates<br />

electricity with low carbon dioxide emissions, using wind<br />

energy and CHP. In our first CSR report, we account for our<br />

policy choices and strategy. In addition to environmental<br />

aspects, the report also looks at our position in society and<br />

our social policies.<br />

Outlook<br />

In 2012 revenue is likely to increase due to the acquisition of<br />

the additional 20% share interest in N.V. EPZ. This is expected<br />

to be offset by lower earnings on energy sales due to narrowing<br />

margins caused by lower electricity prices and higher fuel<br />

prices worldwide.<br />

We wish to retain our existing energy retail customer base.<br />

The company has a substantial market share in Zeeland.<br />

The challenge is to maintain that share. We intend to do so by<br />

offering a variety of utility services. The launch of new digital<br />

TV and mobile telephone services will boost revenue from the<br />

multimedia segment. DELTA Corporate is expected to show<br />

steady growth, as contracts are renewed and margins<br />

closely monitored.<br />

Unlike the domestic waste market, the industrial waste market<br />

is sensitive to economic downturns and upturns.<br />

The growing re-use of materials and reduction in waste are<br />

likely to dampen the demand for waste treatment plant.<br />

On the upside, Indaver’s newly constructed waste treatment<br />

plan in Co. Meath, Ireland, and the Medipower medical<br />

waste treatment plant in Antwerpen, Belgium, will lead<br />

to higher sales.<br />

8


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

The grids and networks segment is also expected<br />

to perform well. DELTA Netwerkbedrijf is likely to report better<br />

results, if only because it will not have to incur the level of costs<br />

experienced in recent years as a result of the Independent<br />

Grid Operation Act.<br />

DELTA remains committed to controlling its cost base and<br />

strengthening its core activities – energy, waste, and grids and<br />

networks. Due to unfavourable market conditions, particularly<br />

in the energy market, we expect to end 2012 with a lower profit<br />

on ordinary activities.<br />

DELTA will continue to pursue the policy to further improve the<br />

internal processes with a view to providing first-rate services<br />

to our customers. ‘Operational Excellence’ should lead to<br />

products that meet the needs of our customers and provide<br />

value for money. Expanding and implementing our multi-utility<br />

strategy will not only make us stand out from the competition,<br />

but also allow us to better connect with our customers.<br />

This strategy, and our diversified product portfolio, should<br />

enable the company to withstand the unfavourable market<br />

conditions in the next few years.<br />

Frank Verhagen<br />

CEO<br />

Frank Verhagen, CEO<br />

9


<strong>2011</strong> was a good year for DELTA, despite the economic slowdown in the<br />

consumer and industrial markets.<br />

Falling electricity prices and rising fuel prices led to a substantially lower profit<br />

on ordinary activities in the energy segment in <strong>2011</strong>, whereas profit on ordinary<br />

activities in the waste management and grids and network segments improved<br />

markedly. Corporate expenses were down more than 45% on the previous year,<br />

partly due to non-recurring items recognised in 2010 (EUR 25 million).<br />

In <strong>2011</strong> DELTA acquired an additional 20% share interest in N.V. EPZ, generating<br />

a one-off book profit, offset by an increase in deferred tax liabilities.<br />

10<br />

Windturbines near Kreekrak, Zeeland


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Financial<br />

performance3<br />

Revenue and profit<br />

During the year, revenue from continuing operations rose by<br />

around 5% to just under EUR 2.2 billion. The rise reflected<br />

higher gas sales and revenues and an increase in revenue from<br />

waste management operations of well over EUR 50 million.<br />

The satisfactory performance of the waste business was driven<br />

by high incineration capacity usage, and the commissioning<br />

of the newly-constructed incineration plant in Ireland.<br />

DELTA successfully improved its gross margin by several<br />

millions of euros, entirely due to the increase in revenue from<br />

its waste business. Added to the pressure on gross margins<br />

in the energy business, the value of our trading portfolio<br />

decreased by EUR 13 million. In 2010 the trading portfolio<br />

made a positive contribution of more than EUR 3 million.<br />

The increase in gross margin from the waste business mirrored<br />

an increase in waste operating expenses. Due to the ongoing<br />

focus on cost control and efficiency improvements, and lower<br />

impairments compared with 2010, net operating expenses<br />

were down nearly EUR 8 million on last year.<br />

The number of employees increased only slightly to 2,960<br />

FTEs at year-end <strong>2011</strong> (2010: 2,927 FTEs), as a result of the<br />

commissioning of the waste incineration plant in Ireland,<br />

partly offset by strict recruitment policies and efficiency<br />

programmes implemented elsewhere at the company.<br />

Our share of profits in joint ventures and associates rose<br />

substantially in <strong>2011</strong>, mainly driven by the book profit we<br />

made on acquiring the additional share interest in N.V. EPZ.<br />

Due to electricity price developments, our power stations<br />

(EPZ, Elsta, Sloe, BMC, wind farms, and CHP plants) operated<br />

below capacity, which led to lower net profits (EPZ, Elsta)<br />

or a net loss (Sloe) compared with 2010. Moreover, provisions<br />

were made for loss-making contracts in the energy business.<br />

These provisions are recognised in this section because of<br />

the causal link with the entities in question.<br />

In <strong>2011</strong> waste incineration companies Sleco and AZN reported<br />

better results than in 2010, due to high capacity usage.<br />

Water company Evides reported a considerable one-off profit<br />

after completing a number of major projects.<br />

The cash flow from operating activities improved approximately<br />

EUR 30 million compared with 2010. The additional investment<br />

expenditure on the newly constructed plant in Co.<br />

Meath, Ireland, and the purchase of the 20% interest in N.V. EPZ<br />

led to a higher cash flow from financing activities. As a result,<br />

external borrowing costs were up more than EUR 2.5 million<br />

on the previous year.<br />

Following the decision to sell the company’s solar energy<br />

operations, the corresponding assets and liabilities were<br />

written down in full in 2010. The ensuing financial implications,<br />

the profit on ordinary activities for 2010, and the expected sales<br />

proceeds were recognised in ‘Post-tax profit on discontinued<br />

operations.’ Operating expenses were recognised in <strong>2011</strong> to<br />

the extent that they arose in the period until the discontinuance<br />

and/or sale of these operations. The same applies to<br />

the redundancy costs incurred in providing a social safety net.<br />

All this led to a net profit for <strong>2011</strong> of EUR 82.7 million, available<br />

to DELTA N.V.’s shareholders.<br />

11


3. Financial performance<br />

Cash flow and investment<br />

In 2010 DELTA reported a net loss, mainly due to write-downs<br />

in its solar business. Because this involved only limited cash<br />

outflows, the negative effect of this decision in 2010 was more<br />

than offset by the positive contribution made by ‘Depreciation<br />

and amortisation’. In <strong>2011</strong>, however, cash outflows were<br />

necessary in relation to the solar business in order to fund<br />

the provisions made in 2010 and the ordinary operating<br />

activities in <strong>2011</strong>. These cash outflows are recognised in<br />

‘Movements in other receivables/payables’ and<br />

‘Other movements.’<br />

Investments in tangible and intangible fixed assets<br />

(EUR 165 million) increased by around EUR 24 million compared<br />

with 2010 (EUR 141 million), mainly driven by the construction of<br />

a new incinerator (EUR 51 million). Other expenditure concerned<br />

regular investments to expand and replace operating<br />

equipment and grids and networks.<br />

Investments in group companies and associates primarily<br />

concerned the purchase of the additional 20% share interest<br />

in EPZ.<br />

The net cash flow resulting from these movements led to an<br />

increase in the company’s net debt position by EUR 130 million<br />

compared with 2010.<br />

Financial position and solvency<br />

In <strong>2011</strong> net realised gains stood at EUR 54.3 million. As result<br />

of these gains, coupled with the increase in value of the put<br />

option (EUR 8 million) and the dividend payout for 2010<br />

(EUR 50 million), shareholders’ equity remained virtually<br />

unchanged.<br />

The balance sheet increase arising from the purchase of<br />

the additional 20% interest in EPZ and higher trading activity<br />

(debtor/creditor position and derivates exposure) led to<br />

a reduction in DELTA Group’s solvency ratio to 36.7%<br />

(2010: 42.2%).<br />

Prospects for 2012<br />

In 2012 we will continue to focus on cost control and efficiency<br />

improvements so as to be able to withstand negative market<br />

conditions. Margins are expected to remain under pressure<br />

over the next few years, due to lower energy prices and elevated<br />

fuel prices. Considering that several power stations are still<br />

under construction, overcapacity is unlikely to be resolved in<br />

the near future. We therefore believe that the sector as a whole<br />

is facing difficult years ahead. In addition to improving the<br />

profitability of our three core segments, we will continue<br />

to work to improve the company’s financing structure by<br />

matching long-term investment with long-term funding and<br />

through other measures.<br />

On balance, DELTA’s financial performance was satisfactory<br />

in <strong>2011</strong> – adjusted for the expansion of its share interest in<br />

EPZ, its debt position improved in <strong>2011</strong>. The company also<br />

paid EUR 50 million in dividends, recognised long-term cash<br />

outflows that had been provided for in 2010, and completed<br />

the construction of the waste incineration plant in Co. Meath,<br />

Ireland.<br />

12


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

13


In <strong>2011</strong> the number of outage minutes in Zeeland was lower<br />

than in the rest of the country: the average outage time was<br />

a little under 15 minutes, compared with a national average<br />

of well over 20 minutes. Homes, businesses and industrial<br />

companies can count on a reliable supply of energy, 24 hours<br />

a day, 365 days a year. The close cooperation between the<br />

grid operator (DELTA Netwerkbedrijf) and the construction and<br />

maintenance division (DELTA Infra), the relatively limited size<br />

of both entities, and their in-depth knowledge of the regional<br />

grids and networks have all contributed to this success.<br />

14<br />

Suntrackers, near Biobase Europe, Terneuzen


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Grids<br />

and networks 4<br />

DELTA Netwerkbedrijf (DNWB) occupies an independent<br />

position within the DELTA organisation, its independent<br />

status being ensured by law. DNWB provides safe and secure,<br />

dependable and efficient management of the gas and electricity<br />

grids. Grid construction and maintenance is entrusted to<br />

DELTA Infra. DELTA Infra also services the water mains and<br />

cable networks in southwestern Netherlands. It also renders<br />

services to industrial customers.<br />

Increased cooperation, better quality<br />

In January <strong>2011</strong> DNWB moved from Middelburg to Goes, where<br />

DELTA Infra is located. The relocation has shortened the lines<br />

of communication, enabling better decision-making and<br />

response times and intensifying cooperation between the<br />

companies. Efficiency has improved due to this close proximity<br />

and because further commercialisation efforts were made<br />

in <strong>2011</strong>. The companies are a perfect fit in terms of their<br />

knowledge and expertise. Their customer/supplier relationship<br />

also benefits from a commercial and transparent approach.<br />

Existing and new customers<br />

Shortly before the start of <strong>2011</strong>, DELTA Infra acquired several<br />

major new projects, including maintenance of the gas and<br />

electricity distribution networks for grid operator Stedin.<br />

Implementation of this new project in the island of Goeree<br />

Overflakkee, in the southwestern part of South Holland<br />

Province, began in the course of <strong>2011</strong>. Also in <strong>2011</strong>, we began<br />

work on the renewed contract with water company Evides.<br />

DELTA Infra also acquired new customers, including Schiphol<br />

Airport, for which it provides metering services. Commissioned<br />

by Zeeland Refinery, Delta Infra made a draft design for a new<br />

15/50 kV substation, as a result of which less use needs to<br />

be made in future of electricity generated by diesel engines,<br />

thus reducing carbon dioxide emissions. In <strong>2011</strong> the decision<br />

was made to discontinue the Infra division’s technical lighting<br />

operations. Most of the staff at this unit were relocated to other<br />

business units.<br />

Improvements in quality were also made in other fields in<br />

<strong>2011</strong>. In September, DNWB received an NTA 8120 certificate<br />

from Dutch-based quality assurance institute KIWA. NTA<br />

(Netherlands Technical Agreement) 8120 involves compliance<br />

with a number of agreements and rules adopted by the industry<br />

to improve the safety and quality of the distribution networks.<br />

In October DNWB was awarded another certificate by KIWA,<br />

ISO 9001, evidencing the grid operator’s focus on quality<br />

management and customer satisfaction. In <strong>2011</strong> DELTA Infra<br />

qualified as a bidder for new projects initiated by national<br />

grid operator TenneT and regional grid operator Stedin.<br />

It also succeeded in maintaining its VCA**, VCA-P, CKB,<br />

and ISO 9001 certificates.<br />

15


4. Grids and networks<br />

Sustainability<br />

At Bio Base Europe in Terneuzen, DELTA Infra is constructing<br />

a ‘solar forest’: nine moving solar panels that provide maximum<br />

efficiency as they follow the position of the sun. DNWB too went<br />

sustainable in <strong>2011</strong>. In early April, an agreement was signed<br />

by municipal authorities in Zeeland, the Scheldestromen<br />

Water Board and the E-Laad Foundation for the construction of<br />

75 charging poles for electrical vehicles. A co-founder of E-Laad,<br />

DNWB was one of the driving forces behind the agreement.<br />

April also saw the publication of ‘Network for the Future’,<br />

in which the joint grid operators expressed their commitment to<br />

energy transition – the move towards more sustainable energy<br />

generation – promising to modify their distribution networks<br />

for that purpose. Over the next few years, grid capacity will be<br />

increased to enable decentralised energy generation<br />

and accommodate the growing use of electrical cars.<br />

Using smarter energy networks will achieve a better match<br />

between supply and demand.<br />

Working apart together<br />

After two and a half years’ work, DNWB and DELTA Infra are<br />

now in compliance with the Independent Grid Operation Act<br />

[Wet onfhankelijk netbeheer]. Introduced in 2006, the Act aims<br />

to separate grid operation from production and supply.<br />

This involved a considerable effort, with multiple computer<br />

systems having to be disentangled. With all this out of<br />

the way, DNWB is now in a position to carry out its tasks<br />

as an independent entity.<br />

In 2010 the Hague Court of Appeal set aside the group<br />

prohibition provided for under the Independent Grid Operation<br />

Act, permitting DNWB to continue to be a DELTA group company.<br />

It should be added, however, that the Dutch government filed<br />

an appeal with the Dutch Supreme Court, which has adjourned<br />

the case pending a response from the European Court of Justice<br />

in Luxembourg.<br />

16


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

17


Around three quarters of DELTA’s revenue comes from<br />

its energy operations, which cover a variety of activities up<br />

and down the energy value chain. Through its operating<br />

companies, DELTA produces energy and trades in fuels<br />

(natural gas, coal, oil), electricity and emission allowances<br />

in various markets, as well as supplying gas and electricity<br />

to businesses and consumers.<br />

18<br />

Sloe power plant, Vlissingen


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Energy5<br />

5.1 Business customers and consumers<br />

The new Consumer & Business tot Business division was set up<br />

in <strong>2011</strong>. The integration of end user-based activities has created<br />

a more logical organisational structure, allowing for more<br />

entrepreneurship. In addition, several computer systems<br />

will be streamlined and also provide for more integration and<br />

synergies. These combined efforts are designed to support the<br />

Consumer & Business tot Business strategy, which is to create a<br />

close relationship between supplier and customer by combining<br />

a high-quality service with multi-utility product offerings.<br />

Ongoing focus on customer service<br />

In <strong>2011</strong> DELTA again stood out by providing an excellent quality<br />

of service. Several independent agencies praised DELTA’s<br />

excellent service performance. In February, the Dutch Consumer<br />

Association announced that DELTA had achieved a score of<br />

7.5 on a scale of 1 to 10 in terms of its service. This placed<br />

the company in fourth position in the national service level<br />

league table, ahead of its main competitors.<br />

In March, DELTA achieved a high ranking in the Customer<br />

Performance Award Top 10 for the second year running,<br />

taking second place within the energy industry, after Shell.<br />

This prestigious prize is awarded annually by the University of<br />

Groningen. The winner is selected according to several criteria,<br />

the key ones being customer loyalty and customer service.<br />

Sales-seductive promotional techniques<br />

“The promotional methods of energy companies are<br />

regularly perceived as aggressive or a nuisance”<br />

(source: The Dutch Consumer Guide , March <strong>2011</strong>).<br />

Energy companies’ promotional campaigns have come<br />

under criticism from the Dutch Consumer Association.<br />

The companies are increasingly becoming a topic of<br />

conversation as people receive the umpteenth sales<br />

phone call or cold-call doorstep visit. DELTA has<br />

deliberately opted for a different approach: no cold-calling,<br />

but ‘transparent seduction’…<br />

Commercial director Jaap Rieter: “It is important to have<br />

a visible presence in the market, you have to work actively<br />

to support brand awareness. The question is how you go<br />

about doing that. Unlike most of its rivals, DELTA has<br />

chosen to use less aggressive methods and focus on<br />

optimising customer service. To build an excellent<br />

reputation through advertising only to go back down the<br />

track applying cold-call sales practices and poor service is<br />

simply a waste of capital. We have chosen a well-thought<br />

out approach: no prolonged and expensive radio and<br />

TV commercials, but short-term promotions with a clear<br />

goal instead. Through our consumer magazine ‘Zeeland’,<br />

we actively pursue the kind of relationship we are keen<br />

to have with our customers: to be close to home, provide<br />

relevant information about Zeeland, and to offer attractive<br />

deals for energy and Internet services.”<br />

19


5. Energy<br />

Service levels in television, Internet access and telephony were<br />

also satisfactory in <strong>2011</strong>. In February, the Dutch Consumer<br />

Association crowned ZeelandNet best Internet service provider<br />

of the Netherlands, sharing first place. Since April, however,<br />

ZeelandNet has taken poll position. The quality of its Internet<br />

access services received a score of 8.2. It also achieved<br />

the highest ‘failure free’ percentage of all ISPs - 84%.<br />

Customer satisfaction was also reflected in the number of<br />

energy customers remaining loyal to DELTA, with less than<br />

2% of its retail customers switching suppliers. The national<br />

switching rate is much higher (11%).<br />

Website of the year<br />

At a festive gala event at the Beurs van Berlage in<br />

Amsterdam on 10 November, ZeelandNet received the<br />

annual people’s choice award for best website of the year.<br />

The title ‘Website of the Year’ is ultimate proof of the site’s<br />

transparency and ease of use.<br />

This year votes were cast over 21 categories, with voters<br />

being asked to comment on the content, navigation and<br />

design of the websites nominated. More than 700,000 votes<br />

were cast.<br />

Market trends<br />

Since the energy market was opened up to competition,<br />

we have been careful not to take our customers for granted.<br />

To maintain our share of the consumer market in Zeeland and<br />

strengthen our position in the corporate markets in Zeeland<br />

and elsewhere, we need to have a clear focus on customer<br />

requirements. Providing a high-quality service requires<br />

permanent and active maintenance. In <strong>2011</strong> we did so by<br />

conducting a closed-loop feedback survey. All customers<br />

who had called our customer service department and had<br />

agreed to being contacted later on were approached and asked<br />

whether they were satisfied with the way in which their query<br />

or complaint had been handled. The survey enabled us,<br />

if no adequate response had been given, to properly deal with<br />

the query and obtain information about areas for improvement.<br />

In the corporate energy market, there is an increasing trend for<br />

suppliers and larger customers to work together to put in place<br />

a tailored supply contract. Contractual relationships<br />

are increasingly evolving into a strategic partnership.<br />

In this market segment, it is no longer just about volumes.<br />

Customised services have become a vital element as well.<br />

This approach, and DELTA’s mid-size format, have led to shorter<br />

lines and improved flexibility, benefiting our customers and<br />

reinforcing our position in the corporate market.<br />

In the multi-media market, consumers and businesses are<br />

increasingly accessing the Internet using multiple devices<br />

(mobile phones, tablets, desktop PCs). To meet the growing<br />

demand for faster connections, we need to ensure that our<br />

infrastructure is up to date. That is why in <strong>2011</strong> we began<br />

upgrading the backbone of the cable network in Zeeland.<br />

The project is scheduled for completion in early 2012.<br />

As the Internet, television and telephony (landline and mobile)<br />

are becoming more and more integrated, the decision was made<br />

to start preparing for the introduction of mobile telephony.<br />

A pilot will be launched in the course of 2012. We are also<br />

working on the introduction of interactive television.<br />

As a result of these efforts, DELTA will soon be able to offer<br />

a full-service package to consumers and become a truly<br />

multi-utility service provider.<br />

20


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

5.2 Electricity generation<br />

Electricity prices are low and are expected to remain subdued<br />

in the coming period; weakened economic conditions have led<br />

to a fall in demand. At the same time, fuel prices, including<br />

gas prices, are elevated driven by the growing demand from<br />

Asia and elsewhere. This has put pressure on margins and<br />

increased the need for cost-effective and efficient production.<br />

We endeavour to do so through precision purchasing and<br />

by reducing our operating costs and making flexible use of<br />

our production capacity. Flexibilisation allows us to generate<br />

electricity at the most profitable times.<br />

Coal-fired power station<br />

EPZ’s coal-fired power station is facing difficulties as it will<br />

need to pay for carbon dioxide emission allocations from 2012<br />

onwards. This will substantially increase its production costs,<br />

with revenue from electricity sales unlikely to show much<br />

growth. The power station is expected to become loss-making<br />

as a result, and the option to close it down is a real one.<br />

Technical changes to the power station could make it suitable<br />

for biomass incineration. Biomass is a renewable fuel which<br />

does not come under the CO 2<br />

trading scheme. However, the<br />

cost of biomass is so high as to rule out profitable operations.<br />

Introducing a green certificate trading system to encourage<br />

renewable electricity generation would change this situation,<br />

but the Government’s policy on the issue is still unclear.<br />

To give biomass a chance, the decision was made at the end<br />

of <strong>2011</strong> not to close down the coal-fired station, and instead<br />

to let it continue operating until 2015. Meanwhile, cost-saving<br />

measures will be taken to keep losses to a minimum, including<br />

downsizing the workforce by 35 FTEs.<br />

Nuclear power plant<br />

In the wake of the events in Fukushima in March, the nuclear<br />

power plant was tested by operator EPZ to check whether it<br />

could withstand a combination of risks, including flooding,<br />

earthquakes, power outages, and terrorist attacks. All 143<br />

nuclear power stations in the European Union were subjected<br />

to similar ‘robustness tests’. The nuclear power station proved<br />

well capable of withstanding the risks tested for. For example,<br />

it can withstand floods of up to 8.55 metres. The design<br />

requirement is 7.3 metres. The Dutch Minister of Economic<br />

Affairs, Agriculture and Innovation (EL&I), Maxime Verhagen,<br />

stated that “the initial results provided no reason whatsoever<br />

to question the safety of the Borssele nuclear power plant.”<br />

In its test report, EPZ wrote that over and above the safety<br />

requirements set by the government there were possibilities<br />

for increasing the margins even further. Accordingly, EPZ will<br />

tighten its work instructions and purchase extra pumps. In June<br />

2012, the European Commission will release its final report<br />

on the tests. The EU member states will subsequently decide<br />

whether any nuclear power stations need to be closed down<br />

and where any measures need to be taken.<br />

In <strong>2011</strong> DELTA became a majority shareholder in EPZ,<br />

after reaching agreement with the former Essent shareholders<br />

and breaking the deadlock over the allocation of the shares<br />

in EPZ. DELTA increased its share interest by 20% to 70%.<br />

German-based RWE indirectly holds the remaining 30% .<br />

21


5. Energy<br />

Plans for a second nuclear power plant<br />

Despite the events in Japan of March <strong>2011</strong>, there is still fairly<br />

broad-based support for a second nuclear power plan in the<br />

town of Borssele and elsewhere in Zeeland Province.<br />

On 2 December, PZC wrote: “The nuclear disaster at the<br />

Fukushima power plant in Japan seems to have had little impact<br />

on the views of people in Zeeland about the construction<br />

of a second nuclear power station at Borssele. In December<br />

2010 72% did not object to a second nuclear power plant at<br />

Borssele, given that there was one already. A year on, 66% of<br />

respondents in Zeeland do not object.”<br />

In December DELTA changed its strategy in terms of its<br />

preparations for the new nuclear plant. Instead of leading the<br />

project, the company wishes to assume the role of facilitator.<br />

DELTA still regards nuclear energy as an unmissable source of<br />

low carbon dioxide electricity on our way to a society that will,<br />

to a great extent, be making use of renewable energy. This will,<br />

of course, require healthy investment conditions and political<br />

support.<br />

Tidal power plant<br />

In <strong>2011</strong> it became clear that it was technically possible to<br />

construct a tidal power plant at Brouwer Dam that could supply<br />

60,000 to 70,000 homes. The project would also bring back<br />

tidal movements in Grevelingen Lake, restoring the quality<br />

of the water and natural environment, which has seriously<br />

deteriorated after the lake was dammed in 1971.<br />

Wind power<br />

In late of <strong>2011</strong> DELTA decided on a radical upgrade and<br />

expansion of its wind farm at Kreekrak. In the summer of <strong>2011</strong><br />

the company received an SDE Plus grant under an incentive<br />

scheme aimed at encouraging the production of renewable<br />

energy. The expanded wind farm is expected to be operational<br />

by the end of 2012, supplying electricity to 60,000 homes,<br />

around five times more than previously. It will have 29 state-ofthe-art<br />

turbines, operated in part by DELTA. Sixteen turbines<br />

will be constructed north of the A58 and thirteen south<br />

of the motorway. The 29 new wind turbines will be larger<br />

and house modern generators, allowing the wind farm<br />

to produce more power than before.<br />

The vicinity of the military airfield at Woensdrecht initially<br />

caused a problem. The radar at the airport threatened<br />

to be affected by the height of the new turbines. DELTA enabled<br />

an innovative technical solution that solved the problem.<br />

Also, the town of Woensdrecht and local residents in<br />

Volckerdorp initially objected to the plans. The relocation of<br />

a section of the wind farm south of the A58 fell foul with local<br />

residents, because they feared noise nuisance and visual<br />

pollution of the horizon. On DELTA’s initiative, an external and<br />

independent mediator was engaged. Close consultations with<br />

local residents and actual measures to prevent noise nuisance<br />

and visual pollution eventually led to the objections being<br />

withdrawn. The process has inspired mutual trust and the final<br />

result is the best possible solution all round.<br />

If inlets are built into Brouwer Dam, turbines could be fitted<br />

to generate energy as the water flows in and out with the tide.<br />

DELTA commissioned Delft University of Technology to conduct<br />

a study. The findings show that a water level variation of<br />

one metre is enough for a tidal station to be able to operate<br />

effectively.<br />

In the coming period evidence will have to be gained<br />

whether the tidal power plant can deliver a sufficient<br />

return on investment.<br />

22


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

DELTA’s generating capacity<br />

EPZ (70% owned)<br />

Nuclear power plant – fuel: uranium<br />

Output: 512 MW (DELTA: 70%)<br />

Coal-fired power station – fuel: coal and biomass<br />

Output: 426 MW (DELTA: 70%)<br />

ELSTA (25% owned)<br />

Fuel: gas<br />

Output: 405 MW (DELTA: 50%)<br />

Sloe power station (50% owned)<br />

Fuel: gas<br />

Output: 870 MW (DELTA: 50%)<br />

Biomass power station (50% owned)<br />

Fuel: chicken manure<br />

Output: 36.5 MW (DELTA: 100%)<br />

Wind farms (full ownership, share interests, contracts)<br />

DELTA owned: 30 MW<br />

Share interests: 42 MW<br />

Contracts: 27 MW<br />

Total output: 99 MW<br />

Combined heat and power<br />

Total output: 60 MW (DELTA: 100%)<br />

Willebroek solar farm (Belgium) (49% owned)<br />

Total output: 2.6 MWp (DELTA: 100%)<br />

Availability of generating capacity<br />

In general, capacity at the power plants was available according<br />

to schedule in <strong>2011</strong>. The gas-fired Sloe power station at the port<br />

of Vlissingen generated lower volumes than expected due to<br />

low availability caused by problems with the air inlet. These<br />

problems have been resolved. Similarly, the biomass power<br />

station at Moerdijk was operational for a shorter period than<br />

planned because of a number of technical problems.<br />

In <strong>2011</strong> we sold or removed several of our CHP systems as they<br />

neared the end of their economic useful lives. The wind turbines<br />

generated electricity in line with expectations, at a fairly<br />

constant wind level, although the winds picked up considerably<br />

in December. The solar farm at Willebroek (Belgium) produced<br />

well (10%) above expectations.<br />

5.3 Trading<br />

Prices were stable until February, when oil prices rose sharply<br />

due to the Arab spring protests. On the back of this rise, coal<br />

and gas prices also went up. Electricity prices followed suit,<br />

albeit to a lesser extent. Margins narrowed as a result.<br />

After the events in Japan, Germany decided to decommission<br />

its seven oldest nuclear power stations. This set the prices of<br />

gas, coal, electricity and CO 2<br />

soaring. The price of CO 2<br />

emission<br />

allowances dropped in May as the EU announced measures to<br />

promote energy efficiency.<br />

In September, energy and emission trading prices came down<br />

as the debt crisis in the euro zone deepened, fuelling fears<br />

of a renewed recession. Electricity prices fell too. This trend<br />

continued until the end of the year putting added pressure on<br />

margins.<br />

23


DELTA’s waste management operations have been brought<br />

together in Indaver, in which we own 75% of the shares.<br />

Headquartered in Mechelen, Belgium, Indaver has developed<br />

into an international group of companies, with offices and<br />

operations across Europe. Outside Belgium, Indaver operates<br />

in the Netherlands, Ireland, Portugal, Italy, and Germany.<br />

The company focuses on the public sector (Belgium,<br />

the Netherlands, Ireland) and industrial businesses<br />

(northwestern Europe), mainly in the chemical,<br />

pharmaceutical, automotive and electronics sectors.<br />

24<br />

Waste management plant, Antwerpen (Belgium)


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Waste<br />

management6<br />

Indaver handles just under five million tons of waste per year,<br />

largely at its own plants, most of which are located in Belgium,<br />

but also at third-party facilities. The company uses a variety<br />

of waste treatment methods, including recycling, biomass<br />

production and waste-to-energy (energy produced from<br />

waste incineration).<br />

A word of thanks to CEO Ronny Ansoms<br />

On 1 May, Indaver’s CEO Ronny Ansoms passed on the flame<br />

to Paul De Bruycker. Ronny Ansoms was one of the key figures<br />

behind Indaver’s expansion into an international sustainable<br />

waste management business. At the goodbye event in Antwerp<br />

on 6 May, Paul De Bruycker, Peter Boerma, and Flemish prime<br />

minister Kris Peeters spoke words of thanks. The prime minister<br />

praised the way in which Indaver assumed responsibility for<br />

the environment. “Disposing of hazardous waste through<br />

incineration, without releasing toxic flue gases into the<br />

environment, still is Indaver’s speciality. But it does not take<br />

the easy way out and go for full incineration or landfilling in<br />

order to maximise its profits. On the contrary, the company is<br />

participating in a variety of recycling initiatives as we speak,<br />

showing its commitment to Lansink’s ladder, according to which<br />

landfill and incineration are the last-resort options, with re-use<br />

and recycling being the first options on the ladder.”<br />

New plants<br />

In 2010 Indaver mainly focused on organisational development<br />

and new projects. In that year, DELTA Milieu’s operations were<br />

transferred to Indaver and a new country-based organisation<br />

was introduced. These changes were put in place in the course<br />

of <strong>2011</strong>.<br />

In <strong>2011</strong> the company completed a major construction project.<br />

The new waste incineration plant in Co. Meath, near Dublin<br />

in Ireland, went operational in September, handling 200,000<br />

tons of domestic and equivalent industrial waste per year<br />

and generating electricity in the process. The 20 MW turbine<br />

generates enough power to supply 20,000 homes.<br />

In <strong>2011</strong> work continued on the Medipower processing plant at<br />

Indaver’s premises in Antwerp, Belgium. Medical and hospital<br />

waste was previously treated by Indaver Medical Services in<br />

Leuven, Belgium. This treatment plant was decommissioned<br />

in April 2012. Medical and hospital waste from Flanders and<br />

elsewhere in the Benelux countries is now treated at the new<br />

plant, which also supplies heat and power (2.5 MW).<br />

Two service concepts<br />

Indaver operates two different service concepts for<br />

two different markets. In the Industrial & Hazardous<br />

Waste business, the company aims to achieve a leading<br />

position on the European market applying its Total Waste<br />

Management concept. This involves offering a full-service<br />

package, ranging from advice and waste prevention through<br />

to processing and, if required, the full operation of facilities.<br />

Its treatment plants recycle as much material as possible,<br />

with residual waste being incinerated and electricity<br />

generated at the same time.<br />

Public Waste Partnerships is the service concept aimed at<br />

the domestic and equivalent industrial waste market. In<br />

this area, Indaver is a key partner of the central and local<br />

authorities in Belgium, the Netherlands and Ireland.<br />

The main treatment methods used in this market are<br />

recycling and incineration coupled with energy production.<br />

25


Sound business practices, integrity, respect, supervision, transparent reporting and other forms of accountability<br />

constitute the main pillars of DELTA’s corporate governance policy. We are mindful of the interests of the communities<br />

in which we operate. We are in compliance with the Dutch Corporate Governance Code, which applies to listed<br />

companies in the Netherlands, although several of its provisions are less relevant for us. We have adopted the Code’s<br />

best-practice provisions in so far as they apply to the company. Because DELTA is a public limited liability company<br />

whose shares are registered, the provisions on, for example, anti-takeover measures are not applicable.<br />

Structure, policy, and compliance<br />

DELTA N.V. is a company with a two-tier board as referred<br />

to in Section 2:154 of the Dutch Civil Code (DCC) [Burgerlijk<br />

Wetboek]. The legal consequences which the DCC attaches<br />

to this status are not entirely appropriate to the company’s<br />

governance structure. The involvement of the (General Meeting<br />

of) Shareholders (GMS) and the Supervisory Board with<br />

the company’s operations is reflected in its articles of<br />

association and various sets of regulations. These documents<br />

also set out when the Executive Board requires (additional)<br />

approval from either the Supervisory Board or the GMS for<br />

resolutions on investments and/or takeovers or the sale of<br />

all or any part of the business. If the amount involved exceeds<br />

five million euros, the proposed resolution requires approval<br />

from the Supervisory Board. If the proposal involves an<br />

investment in excess of 55 million euros, it requires the prior<br />

approval of DELTA’s shareholders.<br />

Executive Board<br />

The powers and responsibilities of DELTA’s Executive Board<br />

are defined in the Executive Board Regulations. These provide<br />

for a division of duties among the members of the Executive<br />

Board, define internal powers of attorney, lay down decisionmaking<br />

procedures, and contain rules that are consistent<br />

with the Dutch Corporate Code, including those dealing with<br />

conflicts of interest of Executive Board members.<br />

Supervisory Board<br />

DELTA’s Supervisory Board oversees the company’s overall<br />

performance, including compliance with its policies,<br />

the results achieved by the Executive Board, the company’s<br />

financial position and risk profile, and its financial reporting.<br />

The Supervisory Board also acts as a sounding board for<br />

the Executive Board. In order for the Supervisory Board<br />

to properly fulfil its role, its profile must be consistent with that<br />

of the company.<br />

The profile drawn up by the Supervisory Board in the course of<br />

2010 describes the capabilities required of its – prospective –<br />

members, having regard to the expanded powers of nomination<br />

vested in the Central Works Council. Against the background<br />

of the details given in the profile, the new Supervisory Board<br />

chairman, who had been appointed in June 2010, initiated and<br />

completed the process of appointing an almost entirely new<br />

Supervisory Board, which took office on 1 January <strong>2011</strong>.<br />

The Supervisory Board is also in compliance with the Code<br />

in terms of its membership composition (independence,<br />

age diversity, background, and expertise). However, gender<br />

diversity remains a focal point, particularly in view of the<br />

Dutch Corporate Management & Supervision Act [Wet bestuur &<br />

toezicht], which is expected to come into force in the course of<br />

2012 and will require an effort on the part of DELTA to increase<br />

the share of women on its Executive and Supervisory Boards.<br />

The Supervisory Board’s powers and duties and internal<br />

decision-making and the role of its chairman are set out in<br />

the Supervisory Board Regulations.<br />

These also provide for matters such as periodic reviews of<br />

the Supervisory Board’s own performance, in accordance<br />

with the Code. Special regulations have been drawn up<br />

for the Supervisory Board’s Audit Committee. The Audit<br />

Committee’s mandate covers financial and tax matters and<br />

oversight of the risks which the company is willing to take.<br />

Risk management and risk policy are regular items on<br />

the agendas of both the Audit Committee and the Supervisory<br />

Board’s plenary meetings.<br />

26


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Corporate<br />

governance7<br />

Shareholders<br />

The role of DELTA’s shareholders and the powers of<br />

the General Meeting of Shareholder are set out in the<br />

company’s Articles of Association. The shareholders are<br />

committed and dedicated, in part because they are public<br />

sector entities (all being municipalities or provincial<br />

authorities). In line with the Code, DELTA’s shareholders may<br />

act in their own interests, but must comply with the regulatory<br />

requirement of fairness and reasonableness. However, owing<br />

to the wide-ranging powers entrusted to the GMS under the<br />

Articles of Association, the way in which the shareholders<br />

exercise their voting rights has a significant influence on<br />

the company’s policies and operations.<br />

In a broader context, the Frijns Committee encountered<br />

the same situation at numerous other companies in<br />

the Netherlands, and has recommended pursuing a policy<br />

to promote bilateral contacts between companies and<br />

their shareholders. At DELTA, we have introduced a policy<br />

that provides for periodic and informal talks between<br />

the Executive Board and our shareholders, which were held<br />

at very regular intervals during the year.<br />

Dividend policy<br />

The Executive Board, Supervisory Board and shareholders<br />

agreed on a dividend policy for the <strong>2011</strong> and 2012 financial<br />

years under a workable long-term plan that was<br />

acceptable to all.<br />

Works Council<br />

Amidst the Articles of Association, regulations and other<br />

arrangements, the relationship between DELTA Group and<br />

its Works Council and Central Works Council should not<br />

go unmentioned. This is a relationship built on mutual respect,<br />

as reflected in the standing consultations between<br />

the company/Executive Board and the Works Council and<br />

Central Works Council on a range of issues which both parties<br />

have agreed are open to discussion, and the facilities made<br />

available to the members of the Works Council, Central Works<br />

Council, and European Works Council, which was set up in<br />

2009. At divisional level, standing consultations are held<br />

with the divisional works councils.<br />

Compliance<br />

DELTA operates a ‘whistleblower scheme’, adopted by<br />

the Supervisory Board, which, in addition to the compliance<br />

officer’s activities, enables employees to raise concerns about<br />

malpractice with the Executive Board and/or a counsellor<br />

without running the risk of reprisals. In the course of <strong>2011</strong>,<br />

an external party was appointed with whom concerns can be<br />

raised in accordance with the scheme.<br />

Contacts with external stakeholders<br />

In view of the company’s importance and position,<br />

DELTA regularly publishes its financial results and announces<br />

important events by means of press releases and publications<br />

on its website.<br />

Regulations<br />

DELTA has introduced regulations that define the framework<br />

within which its corporate bodies must operate or explain in<br />

greater detail the rules that apply at the company.<br />

These regulations are reviewed and, where necessary,<br />

amended from time to time. They include:<br />

• the Articles of Association<br />

• the Executive Board Regulations<br />

• the Code of Conduct<br />

• the procedure for dealing with suspicions of misconduct<br />

(‘whistleblower scheme’)<br />

The following has also been posted on the website:<br />

• the Supervisory Board Regulations<br />

• the retirement rota for Supervisory Board members<br />

27


DELTA operates in a variety of markets and is exposed to<br />

a large number of risks. Some of these risks arise from<br />

the composition of its trading portfolio, others evolve<br />

from economic, financial and legal developments.<br />

These risks are inherent to DELTA’s strategic choices and<br />

operations and hence form a part of the company’s risk profile.<br />

DELTA seeks to identify these risks at an early stage.<br />

Risks are identified and assessed, and controls defined,<br />

systematically. Using the COSO Enterprise Risk Management<br />

Integrated Framework (COSO-ERM), DELTA makes a deliberate<br />

choice as to which risks it is willing to accept and which can<br />

better be borne by others .<br />

DELTA trades on the international gas and electricity markets.<br />

Prices on these markets fluctuate widely. Because of<br />

the economic slowdown, sales volumes are also an uncertain<br />

factor. Then there is the risk of trading partners and producers<br />

defaulting on their obligations to DELTA. In order to control<br />

these risks, the Risk Management Committee (RMC) worked<br />

closely with the Origination, Trade and Supply (OTS) division<br />

during the year. Chaired by the CEO, the RMC ensures that<br />

DELTA’s energy trading activities remain with the defined<br />

risk margins.<br />

Risk management at divisional level is subject to periodic<br />

audits performed by the independent Internal Audit division,<br />

which looks at the quality assurance system and the risk<br />

management, control and compliance procedures.<br />

A separate compliance function ensures that DELTA adheres<br />

to applicable laws, and compliance risks are identified and<br />

controlled to the greatest possible extent. The company’s<br />

operations are intertwined with regulatory requirements,<br />

grant schemes, and laws and regulations. Recognising the risks<br />

associated with its operations, which touch upon aspects of<br />

public and private law, DELTA controls those risks by actively<br />

taking part in the public debate and through its contacts with<br />

its public sector shareholders.<br />

Given the importance of most of DELTA’s operations to society,<br />

the law imposes high standards on its services in terms of<br />

their quality and safety. To meet these standards, the company<br />

makes substantial investments in adequate processes<br />

and systems.<br />

During the year, we improved our risk management<br />

framework and set up a Group Internal Control division.<br />

The division reports to the CFO and is responsible for rolling<br />

out an internal control framework across the organisation<br />

to address strategic, operational and compliance risks as well<br />

as financial reporting risks.<br />

Corporate Risk Management was integrated into Group Internal<br />

Control, bringing together risk identification and risk control.<br />

These changes will strengthen and further professionalise<br />

the internal risk control system.<br />

During the year, various other developments combined to<br />

improve our financial and operational risk profile. Deleveraging<br />

and cost reductions were again firmly on the agenda in <strong>2011</strong>.<br />

This enabled DELTA to continue to meet the credit requirements<br />

imposed by the financial and energy markets.<br />

It has recently become clear that grid operator DNWB will<br />

remain a member of the DELTA Group for the next few years,<br />

pending a preliminary ruling by the European Court of Justice<br />

in response to questions put by the Dutch Supreme Court on<br />

whether the Independent Grid Operation Act (‘unbundling act’)<br />

is compatible with EU law.<br />

We also continued to review and optimise the composition of<br />

our overall portfolio of products and operations, selling our<br />

interest in the solar business. We succeeded in maintaining<br />

a stable position in the energy and multimedia retail markets<br />

during the year.<br />

In <strong>2011</strong> DELTA’s improved financial and operational risk profile<br />

led to a rating upgrade by S&P.<br />

28


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Risk and<br />

risk management 8<br />

In Control Statement<br />

DELTA’s Executive Board is responsible for the design and<br />

operational effectiveness of the company’s internal risk<br />

management and control system. This system is designed to:<br />

• provide management with timely information on the progress<br />

made towards achieving the company’s strategic, operational<br />

and financial goals;<br />

• ensure reliable financial reporting;<br />

• ensure compliance with applicable laws.<br />

Risk-taking is inextricably linked to the company’s operations<br />

and the implementation of its strategy. The risk management<br />

and control system allows DELTA to accept calculated business<br />

risks by identifying, controlling and monitoring risks and taking<br />

appropriate action where necessary.<br />

The Executive Board reports on, and accounts for,<br />

the design and operational effectiveness of the internal<br />

risk management and control system to the Audit Committee<br />

and the Supervisory Board.<br />

On the basis of its evaluation in accordance with<br />

the Dutch Corporate Governance Code, the Executive Board<br />

believes that, in terms of financial reporting risks, the internal<br />

risk management and control system provides reasonable<br />

assurance that the financial statements for the year under<br />

review contain no material errors and that the system<br />

functioned properly during the year.<br />

In 2012 the Executive Board will continue to further strengthen<br />

and professionalise the internal risk management and control<br />

system by, among other things, implementing the Internal<br />

Control Framework.<br />

The likelihood and impact of errors, wrong decisions and<br />

unforeseen events are mitigated to the greatest possible<br />

extent. However, there is no single internal risk management<br />

and control system that can provide absolute certainty that<br />

business targets will be achieved or that inaccuracies, losses,<br />

fraud or regulatory breaches can be fully prevented.<br />

In auditing the financial statements, the independent auditors<br />

also investigate the design, existence and operation of internal<br />

controls on financial reporting. The independent auditors<br />

report their findings to the Executive Board, Audit Committee,<br />

and Supervisory Board. The independent auditors’ report is<br />

included in the financial statements.<br />

29


The Supervisory Board is pleased to report on its activities<br />

undertaken in <strong>2011</strong>, and the way in which it has performed<br />

its supervisory and advisory duties.<br />

Membership composition<br />

In <strong>2011</strong>, the Supervisory Board comprised:<br />

• Mr D. van Doorn (chairman);<br />

• Mr J. Bout;<br />

• Mr R. Frohn;<br />

• Mr J.G. van der Werf;<br />

• Mr B.P.T. de Wit.<br />

Meetings and other activities<br />

of the Supervisory Board<br />

In <strong>2011</strong> the Supervisory Board met seven times, with the<br />

Executive Board attending. The matters discussed included:<br />

• Appointments to the Supervisory Board and its committees.<br />

• Financial matters, including the quarterly reports and<br />

financial statements, and the company’s business plan and<br />

operational and financial goals.<br />

• Strategic issues, including acquisitions, investments<br />

and disposals. An important issue was the Executive Board’s<br />

resolution to withdraw from solar cell production.<br />

Other items included the plans for a second nuclear power<br />

station, the current status of the Borssele Agreement,<br />

the acquisition of additional shares in EPZ, and the<br />

introduction of the new organisational model. Apart from<br />

strategic matters, the Supervisory Board also looked at the<br />

major risks inherent in the policies pursued.<br />

• Dividend policy, investment and financing policies<br />

(including Kreekrak wind farm and construction of new<br />

premises), risk management, and corporate governance.<br />

• Developments regarding the Independent Grid Operation<br />

Act and talks with shareholders about the events involving<br />

Evides.<br />

Audit Committee<br />

With effect from 1 January <strong>2011</strong>, the company has only had<br />

an Audit Committee. Other matters are discussed directly by<br />

the Supervisory Board.<br />

The Audit Committee has been reduced two members and<br />

met five times during the year. The issues discussed included<br />

the management letter, group plan, quarterly reports, half-year<br />

report, financial statements, financial returns on projects and<br />

investments, risk management, IFRS, solar energy, and several<br />

other proposals to invest or divest. The Audit Committee<br />

consisted of Mr Frohn (chairman) and Mr J. Bout. Its meetings<br />

were attended by Messrs P.G. Boerma, F. Verhagen, H.S.C.<br />

Snijders (secretary), and W. de Leeuw (Deloitte).<br />

Executive Board membership<br />

Until 1 May <strong>2011</strong>, the Executive Board comprised Messrs P.G.<br />

Boerma (Chief Executive Officer), A.S. Louter (Chief Operating<br />

Officer), J.J. Rieter (Chief Commercial Officer), and F. Verhagen<br />

(Chief Financial Officer). The Executive Board was subsequently<br />

reduced to two members, i.e. the CEO and CFO.<br />

The Supervisory Board also convened to review its own<br />

performance, without the Executive Board attending,<br />

discussing matters such as its main duties and responsibilities<br />

(oversight and advice) and cultural and behavioural aspects.<br />

30


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

<strong>Report</strong> of the<br />

Supervisory Board 9<br />

Executive Board remuneration<br />

In May 2005, the GMS adopted the remuneration policy<br />

for the members of the Executive Board, as proposed by<br />

the Supervisory Board. The policy’s guiding principle is that<br />

DELTA should be able to offer a pay package that allows<br />

the right people to be recruited and retained by the company.<br />

The Supervisory Board determines the remuneration of<br />

Executive Board members annually. Since 1 March 2010,<br />

when the CEO’s new four-year term began, the benchmark<br />

for calculating gross base salaries has been the median level<br />

of board pay in the Netherlands, meaning that half of those<br />

in comparable jobs (as graded by Hay) are paid less and half<br />

are paid more. The annual remuneration also has a variable<br />

component as an incentive for achieving a number of agreed<br />

targets during the year. The variable component is capped<br />

at 30% of the gross base annual salary.<br />

Final note<br />

In <strong>2011</strong> DELTA discontinued its solar operations (Solland Solar,<br />

Fesil, and RGS) and postponed its plans for a new nuclear<br />

power station in Borssele. Due to this change of the company’s<br />

nuclear energy policy, CEO Peter Boerma decided, in good<br />

consultation with the Supervisory Board, to step down with<br />

effect from 1 January 2012. The Supervisory Board respects<br />

Mr Boerma’s decision and would like to thank him for his<br />

dedication and efforts in the past few years. A word of thanks is<br />

also due to all other DELTA employees. The Supervisory Board<br />

recognises that <strong>2011</strong> was a turbulent year, and will make every<br />

effort to nominate a new CEO as soon as possible.<br />

On behalf of the Supervisory Board of DELTA N.V.<br />

D. van Doorn,<br />

Chairman<br />

Financial statements<br />

The Supervisory Board has reviewed the annual report,<br />

financial statements and notes for the <strong>2011</strong> financial year,<br />

as submitted by the Executive Board. It has also read<br />

the management letter, the audit findings, and the auditors’<br />

report issued by Deloitte Accountants. On the basis of that<br />

information, the Supervisory Board has approved the <strong>2011</strong><br />

financial statements and has recommended their unqualified<br />

adoption by the General Meeting of Shareholders.<br />

31


SUPERVISORY BOARD<br />

Mr D. (Daan) van Doorn (1948), chairman<br />

Nationality: Dutch<br />

First appointed: 21 June 2010<br />

Current term: until 20 June 2014<br />

Profession/principal position: former Executive Board chairman<br />

of VION Food Group<br />

Outside interests: Supervisory Board member of Brunel<br />

International, chairman of the Wageningen University<br />

Fundraising Committee, chairman of the Science Group<br />

Advisory Council at Wageningen University, chairman of the<br />

Netherlands Mussels Farmers’ Association, chairman of the<br />

Van Doorn Committee<br />

Mr J. (Jan) Bout (1946)<br />

Nationality: Dutch<br />

First appointed: 1 January <strong>2011</strong><br />

Current term: until the end of 2014<br />

Profession/principal position: former Executive Board chairman<br />

of Royal Haskoning<br />

Outside interests: coordinator at Topsector Water,<br />

Supervisory Board member of Ballast-Nedam N.V.,<br />

Supervisory Board member of Royal Haskoning Group B.V.,<br />

member of the Board of Trustees of Deltares, Executive<br />

Committee member of Ubbo Emmius Fonds.<br />

Mr R.J. (Rob) Frohn (1960)<br />

Nationality: Dutch<br />

First appointed: 1 January <strong>2011</strong><br />

Current term: until the end of 2013<br />

Profession/principal position: Board member at AkzoNobel<br />

responsible for Specialty Chemicals<br />

Outside interests: non-executive director of Nutreco N.V.,<br />

board member of CEFIC (European Chemical Industry),<br />

member of the Board of Trustees at the Arnhem/Nijmegen<br />

University of Applied Sciences.<br />

Mr J.G. (Johan) van der Werf (1952), vice-chairman<br />

Nationality: Dutch<br />

First appointed: 2001<br />

Current term: until 3 June 2012<br />

Profession/principal position: former Management Board<br />

member of AEGON N.V.<br />

Outside interests: Supervisory Board chairman of Ordina,<br />

chairman of the Board of Trustees of NOS, Supervisory Board<br />

chairman of Blauwtrust Group, vice-chairman of the Board<br />

of Trustees of Utrecht University Hospital, Supervisory Board<br />

member of De Lotto, Supervisory Board member of ONVZ,<br />

chairman of the Arts and Culture Pension Fund,<br />

Advisory Council member of SVB, vice-chairman of the<br />

Board of Trustees of Nederlands DansTheater, Executive<br />

Board of Right to Play<br />

32


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

Personal<br />

particulars10<br />

EXECUTIVE BOARD<br />

Mr B.P.T. (Peter) de Wit (1949)<br />

Nationality: Dutch<br />

First appointed: 1 January <strong>2011</strong><br />

Current term: until the end of 2014<br />

Profession/principal position: former President of Shell<br />

Nederland B.V.<br />

Outside interest: non-executive Board Director of Caithness<br />

Petroleum, London<br />

Mr P.G. (Peter) Boerma (1954), Chief Executive Officer (CEO)<br />

Nationality: Dutch<br />

First appointed: 1 March 2006<br />

Outside interests: Executive Board member of<br />

Energie-Nederland, Executive Committee member of<br />

Brabants-Zeeuwse Werkgeversvereniging Zeeland, chairman<br />

of the Board of Trustees of Zeeuwse Bibliotheek, chairman of<br />

the Board of Trustees of Emergis<br />

Mr F. (Frank) Verhagen (1961), Chief Financial Officer (CFO)<br />

Nationality: Dutch<br />

First appointed: 1 February 2009<br />

Outside interests: member of the Board of Trustees of Admiraal<br />

de Ruiter Hospitals<br />

Mr A.S. (Ad) Louter (1963), Chief Operational Officer (COO)*<br />

Nationality: Dutch<br />

First appointed: 1 May 2008<br />

Outside interests: advisory council member of Nyenrode Energy<br />

Academy, advisory board member of Lean Manufacturing,<br />

member of Innovatienetwerk Zeeland<br />

Mr J.J. (Jaap) Rieter (1962), Chief Commercial Officer (CCO)*<br />

Nationality: Dutch<br />

First appointed: 1 November 2009<br />

* On 1 May <strong>2011</strong>, the Executive Board consisted of Peter Boerma and Frank<br />

Verhagen. Ad Louter and Jaap Rieter were appointed Director AD & O and<br />

Director Consumer & Corporate, respectively.<br />

33


10. Personal particulars<br />

CENTRAL WORKS COUNCIL<br />

Executive Committee:<br />

Mr J.M. (Hans) de Feijter<br />

Staff Services/SSCs Works Council (chairman)<br />

Mr A. (Bram) Nonnekes<br />

OTS Works Council (secretary)<br />

Mr C. (Kees) Joosse<br />

Staff Services/SSCs Works Council (vice-chairman)<br />

Mr H.A.M. (Harrie) Martens<br />

Infra Division Works Council (vice-chairman)<br />

Mr J. (Joop) Janse<br />

Formal secretary<br />

Other members<br />

Mr L. (Leen) Boer<br />

Infra Division Works Council<br />

Mr L. (Leon) Fondse<br />

Comfort Division Works Council<br />

Mr B. (Bart) van Houte<br />

Comfort Division Works Council<br />

Ms (Tonny) Jobse-Griep,<br />

Central Works Council member since November <strong>2011</strong><br />

EPZ Works Council<br />

Mr M. (Maurice) de Jong,<br />

Central Works Council member until July <strong>2011</strong><br />

Solland Solar Works Council<br />

Mr H.E.A. (Huub) Knoors,<br />

Central Works Council member since November <strong>2011</strong><br />

EPZ Works Council<br />

Mr P. (Peter) Maljers,<br />

Central Works Council member since November <strong>2011</strong><br />

EPZ Works Council<br />

Mr J.G.T. (Theo) Nieuwburg<br />

Infra Division Works Council<br />

Mr. E.Y.M. (Etienne) Poppe<br />

IR Works Council<br />

Mr A. (Axel) Schäfer,<br />

Central Works Council member until July <strong>2011</strong><br />

Solland Solar Works Council<br />

34


DELTA <strong>Annual</strong> report <strong>2011</strong><br />

EUROPEAN WORKS COUNCIL<br />

Mr J.M. (Hans) de Feijter, DELTA N.V. Netherlands Central Works<br />

Council, European Works Council chairman<br />

Mr L. (Leen) Boer, DELTA N.V. Netherlands Central Works Council<br />

Mr A. (Bram) Nonnekes, DELTA N.V. Netherlands Central Works<br />

Council<br />

Mr C. (Kees) Joosse, DELTA N.V. Netherlands Central Works<br />

Council<br />

Ms K. (Karin) Aspeslagh, Indaver Netherlands Works Council<br />

Mr A. (Axel) Schäfer, Solland Solar Works Council<br />

Ms E. (Eric) Demaertelaere, Indaver Belgium Works Council<br />

Ms G. (Guy) Smits, Indaver Belgium Works Council, European<br />

Works Council secretary<br />

Mr R. (Rainer) Martens, SAV Germany Works Council<br />

Mr R. (Rudi) Wachtel, SAV Germany Works Council<br />

Employer representatives:<br />

Mr P.G. (Peter) Boerma, DELTA N.V.’s Chief Executive Officer<br />

Mr P.B. (Paul) van Raay, DELTA N.V.’s Director of HRM<br />

A.J. van Os, formal secretary, DELTA N.V.<br />

35


Financial<br />

statements11<br />

Consolidated financial statements 38<br />

Consolidated balance sheet as at 31 December <strong>2011</strong> (before profit appropriation)38<br />

Consolidated income statement 39<br />

Consolidated statement of comprehensive income 40<br />

Consolidated statement of changes in equity 41<br />

Consolidated cash flow statement 42<br />

Accounting policies 43<br />

Notes to the consolidated balance sheet 56<br />

Notes to the consolidated income statement 94<br />

Notes to the consolidated cash flow statement 105<br />

Post-balance-sheet events 106<br />

Segment information 107<br />

Consolidated companies 110<br />

Non-consolidated companies 112<br />

Company financial statements 114<br />

Company balance sheet as at 31 December <strong>2011</strong> (before profit appropriation)114<br />

Company income statement 115<br />

Notes to the company financial statements 116<br />

Other information 128<br />

Profit appropriation 128<br />

Independent auditor’s report 129<br />

DELTA in financial figures, consolidated 130<br />

DELTA key figures 131<br />

37


Consolidated financial statements<br />

Consolidated balance sheet as at 31 December <strong>2011</strong> (before profit appropriation)<br />

(x EUR 1,000)<br />

Ref. no. 31-12-<strong>2011</strong> 31-12-2010<br />

Non-current assets<br />

Intangible assets 1 394,801 419,949<br />

Property, plant and equipment 2 1,035,754 977,407<br />

Joint ventures, associates and other investments 3 867,809 521,563<br />

Loans to joint ventures, associates, etc. 4 14,370 13,775<br />

Other financial assets 4 9,305 22,295<br />

Deferred tax assets 4 75,851 91,056<br />

Derivatives 5 68,007 51,574<br />

Financial assets 1,035,342 700,263<br />

Total non-current assets 2,465,897 2,097,619<br />

Current assets<br />

Inventories 6 17,303 14,975<br />

Trade receivables 7 390,303 310,179<br />

Current tax assets 7 7,324 61,065<br />

Other receivables 7 46,629 43,791<br />

Derivatives 5 230,250 219,470<br />

Total receivables 674,506 634,505<br />

Assets held for sale 24 2,647 3,964<br />

Total current assets 694,456 653,444<br />

Cash 8 52,390 49,410<br />

Total assets 3,212,743 2,800,473<br />

38<br />

Shareholders’ equity 1,043,039 1,307,601<br />

Profit for the year 82,690 (177,787)<br />

Equity attributable to shareholders of DELTA N.V. 1,125,729 1,129,814<br />

Non-controlling interests 54,091 53,270<br />

Group equity 1,179,820 1,183,084<br />

Provisions 9 236,824 95,504<br />

Pension liabilities 9 21,869 21,874<br />

Long-term debt 10 588,606 451,007<br />

Deferred tax liabilities 11 57,470 62,688<br />

Deferred revenue 11 70,999 68,843<br />

Other non-current liabilities 11 25,472 161,460<br />

Derivatives 5 77,149 31,209<br />

Non-current liabilities 1,078,389 892,585<br />

Trade payables 12 324,381 227,303<br />

Current tax liabilities 12 59,191 109,796<br />

Deferred revenue 12 13,401 12,268<br />

Work in progress for third parties 0 964<br />

Current portion of provisions 12 15,876 17,331<br />

Other liabilities 12 247,082 97,136<br />

Bank borrowings 5 66,429 65,329<br />

Derivatives 223,724 164,677<br />

Current liabilities 950,084 694,804<br />

Liabilities held for sale 24 4,450 30,000<br />

Current liabilities 954,534 724,804<br />

Total equity and liabilities 3,212,743 2,800,473


DELTA Financial statements <strong>2011</strong><br />

Consolidated income statement<br />

(x EUR 1,000)<br />

Ref. no. <strong>2011</strong> 2010<br />

Revenue 13 2,185,099 2,073,051<br />

Cost of sales 14 (1,549,359) (1,454,047)<br />

Gross operating margin 635,740 619,004<br />

Other gains and losses (third parties) 15 32,408 28,618<br />

Fair value gains and losses on the trading portfolio 16 (12,955) 3,248<br />

Gross margin 655,193 650,870<br />

Third-party services 17 242,771 249,759<br />

Staff costs 18 211,606 197,958<br />

Depreciation, amortisation and impairment 19 114,002 125,490<br />

Other operating expenses 20 9,801 12,811<br />

Total net operating expenses 578,180 586,018<br />

Earnings from operations 77,013 64,852<br />

Result aquisition 20% interest N.V. EPZ 153,979 -<br />

Added provision tolling contracts (140,544) -<br />

Share in results of joint ventures and associates 21 71,778 62,993<br />

Operating result 162,226 127,845<br />

Net finance income (expense) 22 (24,315) (21,863)<br />

Profit before tax 137,911 105,982<br />

Corporate income tax 23 (35,541) (16,383)<br />

Profit after tax from continuing operations 102,370 89,599<br />

Profit after tax from discontinued operations 24 (11,665) (265,393)<br />

Profit for the year 90,705 (175,794)<br />

Attributable to:<br />

Non-controlling interests 8,015 1,993<br />

Shareholders of DELTA N.V. 82,690 (177,787)<br />

39


Consolidated financial statements<br />

Consolidated statement of comprehensive income<br />

(x EUR 1,000)<br />

Ref. no. <strong>2011</strong> 2010<br />

Profit after tax for the year 90.705 (175.794)<br />

Other comprehensive income:<br />

5<br />

Effective portion of gains and losses on cash<br />

(21,340) 82,857<br />

flow hedges<br />

Energy derivatives (45,976) 51,735<br />

Reclassification - adjustments (67,316) 134,592<br />

(970) (4,001)<br />

Interest rate derivatives 5,168 8,386<br />

Reclassification - adjustments 4,198 4,385<br />

15,701 (35,205)<br />

Corporate income tax (47,417) 103,772<br />

Share of other comprehensive income of<br />

(10,736) (4,475)<br />

joint ventures and associates<br />

Share of other comprehensive income of<br />

(591) -<br />

joint ventures and associates<br />

Reclassification - adjustments - -<br />

(11,327) (4,475)<br />

Translation reserve differences<br />

Translation reserve differences 139 (60)<br />

Reclassification - adjustments (506) (13)<br />

(367) (73)<br />

Corporate income tax - -<br />

(367) (73)<br />

Other movements<br />

Other movements 23,115 33<br />

Reclassification - adjustments (372) -<br />

22,743 33<br />

Corporate income tax - -<br />

22,743 33<br />

Other comprehensive income from<br />

- 520<br />

available-for-sale financial assets<br />

- 520<br />

Total other comprehensive income (36,368) 99,777<br />

Total comprehensive income 54,337 (76,017)<br />

Total comprehensive income attributable<br />

to:<br />

Non-controlling interests 8,422 2,274<br />

Shareholders of DELTA N.V. 45,915 (78,291)<br />

For an explanation of the changes in energy and interest rate derivatives, see section 5.<br />

The share in the other comprehensive income of joint ventures relates almost entirely to movements in the hedge reserves of joint ventures.<br />

DELTA has a shareholding of 7.6% in N.V. KEMA, which has hitherto been recognised at cost. In <strong>2011</strong>, the shares of KEMA were offered for sale, allowing the market value<br />

(fair value) of the shares held by DELTA to be measured reliably. Included in other movements is the fair value revaluation of the investment in N.V. KEMA.<br />

40


DELTA Financial statements <strong>2011</strong><br />

Consolidated statement of changes in equity<br />

(x EUR 1,000)<br />

Total<br />

Paid-up<br />

capital<br />

Statutory<br />

reserve<br />

Hedge<br />

reserve<br />

Assets<br />

held<br />

for sale<br />

Other<br />

reserves<br />

Unappropriated<br />

profit<br />

Noncontrolling<br />

interests<br />

Carrying amount as<br />

1,312,474 6,937 54,908 (61,636) - 1,250,805 7,091 54,369<br />

at 31 December 2009<br />

Profit appropriation for 2009 - - 40,581 - - (33,490) (7,091) -<br />

Payment of dividend (50,000) - - - - (50,000) - -<br />

Movement concerning capitalised<br />

- - (587) - - 587 -<br />

development costs<br />

Other changes - - 1,005 - - (1,005) -<br />

Transfer to liabilities due to put (3,373) - - - - - - (3,373)<br />

options<br />

Total comprehensive income (76,017) - (4,475) 103,473 - 498 (177,787) 2,274<br />

Carrying amount as<br />

1,183,084 6,937 91,432 41,837 - 1,167,395 (177,787) 53,270<br />

at 31 December 2010<br />

Profit appropriation for 2010 - - (3,620) - - (174,167) 177,787 -<br />

Payment of dividend (50,000) - - - - (50,000) - -<br />

Transfer to liabilities due to put (7,601) - - - - - - (7,601)<br />

options<br />

Total comprehensive income 54,337 - (11,327) (47,881) 23,115 (682) 82,690 8,422<br />

Carrying amount as<br />

at 31 December <strong>2011</strong><br />

1,179,820 6,937 76,485 (6,044) 23,115 942,546 82,690 54,091<br />

The statutory reserve is made up of undistributed profits from non-controlling interests. The statutory reserve and the hedge reserve are not freely distributable.<br />

The transfer to liabilities in connection with put options relates to the non-controlling interests in Indaver N.V.<br />

A put option, included in current liabilities, has been granted to the shareholders concerned, who own 25% of the shares of Indaver N.V.<br />

The non-controlling interests in the consolidated equity of DELTA mainly concerns the interest held by NEIF (NIBC European Infrastructure Fund) in the German waste<br />

processing company Indaver Deutschland GMBH. (previously: SAV Beteiligungs GmbH)<br />

41


Consolidated financial statements<br />

Consolidated cash flow statement<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

From operating activities<br />

Earnings from operations 77,013 (234,221)<br />

Fair value gains and losses on the trading portfolio 12,955 (3,248)<br />

Adjustment for deferred income 3,289 (3,783)<br />

Depreciation, amortisation and impairment 114,002 382,251<br />

Provisions (19,089) 17,834<br />

Inventories (3,292) 10,728<br />

Trade receivables (80,124) 25,167<br />

Trade payables 97,078 (49,028)<br />

Other receivables/payables (31,122) 17,450<br />

Other (8,262) (2,907)<br />

From operating activities 162,447 160,243<br />

Cash flows arising from dividends received from joint ventures and associates 59,311 65,712<br />

Cash flows from finance income and expense (17,264) (24,283)<br />

Cash flows from taxes on profits 6,845 (19,802)<br />

Cash flow from operating activities 211,340 181,870<br />

From investing activities<br />

Acquisition and disposal of intangible assets and property,<br />

plant and equipment (after deduction of cash acquired) (164,725) (141,417)<br />

Acquisition of investments in subsidiaries and associates and interests in joint ventures<br />

(137,226) (14,307)<br />

(after deduction of cash disposed)<br />

Disposal of investments in subsidiaries and associates and interests in joint ventures 1,358 10,435<br />

Other financial assets 12,881 4,162<br />

Cash flow from investing activities (287,712) (141,127)<br />

From financing activities<br />

Bank borrowings 1,100 (30,745)<br />

Long-term liabilities 174,532 252,621<br />

Paying off borrowings (46,279) (222,346)<br />

Dividend payments (50,000) (50,000)<br />

Cash flow from financing activities 79,353 (50,470)<br />

Cash flow during the year 2,980 (9,727)<br />

Cash as at 1 January 49,410 59,137<br />

Cash as at 31 December 52,390 49,410<br />

Exchange differences - -<br />

Net cash in the consolidated balance sheet 52,390 49,410<br />

42


DELTA Financial statements <strong>2011</strong><br />

Accounting policies<br />

DELTA N.V.is public limited liability company formed under<br />

Dutch law, and is the parent company of a number of<br />

subsidiaries active in:<br />

• electricity generation and the transportation<br />

and supply of energy,<br />

• environmental services concerned with waste management<br />

and industrial cleaning,<br />

• provision of cable services for both analogue and digital<br />

television as well as for internet and digital telephony<br />

over cable,<br />

• development and production of sustainable energy<br />

relating to wind,<br />

• water activities.<br />

The group also has interests in a number of joint ventures<br />

and various investments in associates.<br />

The owners of DELTA N.V. are the Province of Zeeland,<br />

the municipalities of Zeeland, certain municipalities of<br />

South Holland and North Brabant and the Provinces of<br />

South Holland and North Brabant.<br />

DELTA N.V.is domiciled, in accordance with its Articles<br />

of Association, at Poelendaelesingel 10, Middelburg.<br />

The following changes occurred in the consolidation in <strong>2011</strong>:<br />

1. PVNED Holding B.V., in which DELTA Energy B.V. has a 50%<br />

interest, acquired 99.9 percentile of the shares of Arbel N.V.<br />

(Belgium) on 6 January <strong>2011</strong>.<br />

2. Promar B.V. was wound up at the end of February <strong>2011</strong>.<br />

3. The 35% interest held by Indaver N.V. in GRL Glasrecycling<br />

N.V. (Belgium) was sold on 6 May <strong>2011</strong>.<br />

4 All the shares of Solland Solar Energy Holding B.V. were sold<br />

on 22 July <strong>2011</strong>.<br />

5. With effect from 26 Augustus <strong>2011</strong>, DELTA Energy B.V. has<br />

held 99.9% of the shares of DELTA Energy Belgium N.V.,<br />

the single remaining share being held by DELTA N.V.<br />

6. On 30 September <strong>2011</strong>, the shareholding of DELTA Energy<br />

B.V. in N.V. EPZ was increased from 50% to 70%.<br />

7. All the shares of RGS Development B.V. and Solwafer B.V.<br />

were sold on 18 October <strong>2011</strong>.<br />

8. The company Laarakker Landbouw B.V. was incorporated<br />

on 18 November <strong>2011</strong>. The company is a wholly-owned<br />

subsidiary of Ecofuels B.V., which is in turn 50%-owned<br />

by DELTA Milieu Biofuels B.V.<br />

9. Indaver N.V. acquired a 40% interest in N.V. Brussel<br />

Compost in November <strong>2011</strong>.<br />

10. DELTA Milieu Industriële Reiniging N.V. (Belgium) was<br />

wound up on 23 December <strong>2011</strong>.<br />

11. SET Fund II C.V. was established on 23 December <strong>2011</strong>;<br />

DELTA Investeringsmaatschappij B.V. has a 70% interest<br />

in the capital of this limited partnership.<br />

The functional currency is the euro. Unless otherwise stated,<br />

all amounts are presented in thousands of euros.<br />

DELTA N.V. availed itself of the option in Part 9, Book 2,<br />

of the Netherlands Civil Code to prepare the company financial<br />

statements in accordance with the IFRS accounting policies<br />

used in the consolidated financial statements with the<br />

exception of the equity-accounted subsidiaries, joint ventures<br />

and associates. The company income statement is presented<br />

in abridged form in accordance with article 402, Title 9, Book 2,<br />

of the Netherlands Civil Code.<br />

The Supervisory Board signed these <strong>2011</strong> financial statements<br />

on 2 April 2012 and released them for publication.<br />

The Supervisory Board will present the financial statements<br />

to the General Meeting of Shareholders for adoption on<br />

25 June 2012.<br />

43


Consolidated financial statements<br />

1. Compliance with IFRS and summary of changes in IFRS recognition and measurement rules<br />

The company’s consolidated financial statements have been<br />

drawn up in compliance with the International Financial<br />

<strong>Report</strong>ing Standards (IFRS) issued by the International<br />

Accounting Standards Board (IASB) and the interpretations<br />

published by the International Financial <strong>Report</strong>ing<br />

Interpretation Committee (IFRIC) of the IASB, as endorsed by<br />

the European Commission up to year-end <strong>2011</strong>.<br />

In comparison with the previous financial year, new standards,<br />

interpretations or supplements/improvements were issued<br />

by the IASB and approved by the European Commission for<br />

adoption within the European Union in <strong>2011</strong>. Those changes<br />

not yet adopted by the EC are not mentioned.<br />

IFRS 3 Business Combinations, measurement of NCI<br />

Equity components of non-controlling interests in<br />

the acquiree whose holders have a right to a proportionate<br />

share of the net assets of the entity on liquidation are<br />

measured at acquisition date:<br />

a) either at fair value<br />

b) or at the proportionate share of the equity instruments<br />

in the recognised amounts of the acquiree’s identifiable<br />

net assets.<br />

All other equity components of non-controlling interests are<br />

measured at acquisition-date fair value unless a different<br />

measurement basis is to be used according to another IFRS.<br />

The option of measuring non-controlling interests either at fair<br />

value or at the proportionate share of the equity instruments is<br />

restricted to actual equity instruments and gives the holders<br />

of those instruments the right to a proportionate share of<br />

the net assets on the liquidation.<br />

IFRS 3 Business Combinations, exceptions to the recognition and<br />

measurement principles for share-based payments<br />

This change states that the existing requirements that awards<br />

by the acquirer that are replaced by share-based payments<br />

are to be recognised at acquisition-date amounts (marketbased<br />

measurement) in accordance with IFRS 2 (Share-Based<br />

Payments) also apply to share-based payments that are<br />

not replaced. The amendment also states that the existing<br />

requirements that the market-based amounts of replacement<br />

awards are to be allocated between the acquisition cost of<br />

the business combination and the subsequent award also<br />

apply to all replacement awards regardless of whether the<br />

acquirer is obliged to replace the rewards or does so voluntarily.<br />

This is also covered in an amendment to the implementation<br />

guidelines, in the form of a clarification.<br />

44


DELTA Financial statements <strong>2011</strong><br />

IFRS 7 Financial Instruments: Disclosures, nature and extent of<br />

risks arising from financial instruments.<br />

The amendments encourage the disclosure of qualitative<br />

information in the context of required quantitative disclosures<br />

in order to give users an overall picture of the nature and extent<br />

of risks connected with financial instruments. The amendments<br />

also clarify that the required level of information to be provided<br />

in relation to credit risk and security obtained sheds light on<br />

the information to be provided in relation to renegotiated loans.<br />

IAS 1 Presentation of Financial Statements, information to be<br />

included in the statement of changes in equity.<br />

This amendment clarifies that the analysis of the unrealised<br />

income in each component can be included either in<br />

the statement of changes in equity or in the notes. There is also<br />

an addition concerning the presentation of dividend per share.<br />

Also, statement of changes in unrealised income may<br />

be presented as part of the statement of changes in equity or<br />

may be disclosed separately in the notes.<br />

Transitional requirements for IAS 21, IAS 28 and IAS 31,<br />

due to changes arising from IAS 27 Consolidated and<br />

Separate Financial Statements.<br />

The amendments to IAS 21 (The Effects of Changes in<br />

Foreign Exchange Rates) concern the disposal of all or part<br />

of a foreign operation.<br />

In IAS 28 (Investments in Associates), the amendments<br />

concern the loss of significant influence over an investee and<br />

the recognition of investments in associates in the separate<br />

financial statements.<br />

In IAS 31 (Interests in Joint Ventures), the amendments concern<br />

the loss of joint control and recognition of an interest in a joint<br />

venture in the separate financial statements.<br />

The following new standards, interpretations or revisions have<br />

been approved for use within the European Union but do not<br />

have any effect or any material effect on the <strong>2011</strong> financial<br />

statements of DELTA N.V.<br />

1. Amendments to IFRS 1 and IFRS 7, to provide limited<br />

exemption from comparative IFRS 7 disclosures on first-time<br />

adoption.<br />

2. IAS 24 revised, Third-Party Disclosures.<br />

3. Amendments to IAS 32, Financial Instruments, Presentation<br />

of Classification of Rights Issues.<br />

4. Amendment to IFRIC 14, Prepayments of Minimum Funding<br />

Requirements.<br />

5. IFRIC 19, Extinguishing Financial Liabilities with Equity<br />

Instruments.<br />

6. <strong>Annual</strong> improvements to the IFRS standards: IFRS 1<br />

First-Time Adoption of IFRS<br />

7. IAS 34 Interim Financial <strong>Report</strong>ing<br />

8. IFRIC 13 Customer Loyalty Programmes.<br />

The change to IFRS 7 Financial Instruments concerning transfer<br />

of financial assets first becomes applicable with effect from<br />

1 January 2012. Not adopting this amendment early, in the<br />

opinion of the Executive Board, is not detrimental to the view<br />

which is presented of DELTA’s financial position.<br />

45


Consolidated financial statements<br />

2. General<br />

2.1 Government grants<br />

Government grants are recognised as soon as it is reasonably<br />

certain that the conditions for obtaining the subsidy are or<br />

will be met and that the grants have been or will be received.<br />

On capitalisation of investment projects, grants received<br />

and contributions to construction costs are deducted from<br />

the acquisition cost of the assets. Operating subsidies are<br />

generally deducted from the procurement costs.<br />

Subsidies in the form of tax breaks are taken into account<br />

when calculating the taxable amount.<br />

2.2 Estimates and assumptions<br />

The preparation of financial statements entails the used of<br />

estimates and assumptions based on past experience and on<br />

factors considered acceptable in the management’s judgement.<br />

These estimates mainly relate to the revenues from supplying<br />

and transporting electricity and gas to the domestic and smallbusiness<br />

market, owing to staggered meter readings, to the<br />

deferred tax assets and to the amount of the provisions.<br />

They affect the figures in the financial statements, which may<br />

vary from the actual figures. The effects of changes in estimates<br />

are recognised prospectively in the income statement.<br />

Changes in estimates can also lead to adjustments in assets<br />

and liabilities or in components of equity. Such changes in<br />

estimates are recognised in the period in which they occur.<br />

In the notes to the balance sheet and the income statement,<br />

separate disclosures are made of special aspects relating to<br />

estimates and assumptions.<br />

2.3 Impairment of assets<br />

During the year, assessments are made for indications<br />

that assets may be impaired. If so, an estimate is made of<br />

the asset’s recoverable amount, equal to the higher of fair value<br />

less costs to sell and value in use. If the fair value less costs to<br />

sell results in unavoidable costs, the carrying amount is written<br />

down accordingly. Value in use represents the present value of<br />

estimated future cash flows, based on internal business plans<br />

approved by management, discounted using a pre-tax discount<br />

rate that reflects current market assessments of the time value<br />

of money and the risks specific to the asset. <strong>Annual</strong> impairment<br />

tests are performed for recognised goodwill.<br />

Impairment losses are recognised if the carrying amount of<br />

an asset or the cash-generating unit to which the asset belongs<br />

exceeds the recoverable amount. Impairment of assets<br />

attributed to cash-generating units is first deducted from<br />

the carrying amount of the goodwill attributed to the cashgenerating<br />

units (or groups of units) and then, pro rata, from<br />

the carrying amount of the other assets of the unit or group of<br />

units. The carrying amount of the assets concerned is never<br />

less than their individual recoverable amount.<br />

An impairment loss is reversed if it is established that there<br />

has been a change in the basis on which the recoverable<br />

amount was previously determined, but only to the extent that<br />

the carrying amount of the asset after such reversal does not<br />

exceed the carrying amount of the asset, less depreciation,<br />

if no impairment had occurred. Impairment of goodwill is<br />

not reversed. Impairment losses and reversals thereof are<br />

recognised through profit or loss.<br />

46


DELTA Financial statements <strong>2011</strong><br />

3. Basis of consolidation<br />

2.4 Segment information<br />

Further information is provided by business segment.<br />

Segmentation reflects DELTA N.V.’s management and internal<br />

reporting structure. Inter-segment supplies are settled at<br />

market prices.<br />

2.5 Foreign currencies<br />

Assets and liabilities denominated in foreign currencies<br />

are translated into euros at the exchange rates prevailing at<br />

year-end. Differences resulting from movements in exchange<br />

rates are recognised in profit or loss in so far as they do not<br />

relate to the net investment in foreign entities, in which case<br />

they are recognised in equity as part of other comprehensive<br />

income. Income and expenses denominated in foreign<br />

currencies are translated into euros at the exchange rates<br />

prevailing at the time of the transaction.<br />

The consolidated financial statements comprise the financial<br />

data of DELTA N.V.and its subsidiaries.<br />

Subsidiaries are legal entities and partnerships in which DELTA<br />

controls the operating and financial policy decisions. Existing<br />

and potential voting rights that can currently be exercised or<br />

converted are taken into account in assessing control.<br />

The existence of other agreements that allow DELTA N.V.to<br />

govern the operating and financial policy are also taken into<br />

account.<br />

Subsidiaries are included in the consolidation from the date<br />

on which control is obtained. Consolidation is discontinued<br />

with effect from the date on which control no longer exists.<br />

Subsidiaries are fully consolidated, with 100% of equity and<br />

results included in the consolidation. If DELTA’s interest in a<br />

subsidiary is less than 100%, the non-controlling interest is<br />

recognised separately in the balance sheet and the income<br />

statement.<br />

In the case of put options, the corresponding non-controlling<br />

interest is classified as current or non-current liabilities.<br />

The exercise of the put option, acquired in 2007, is seen as<br />

part of the purchase price, ultimately affecting the amount of<br />

goodwill. Put options are accordingly treated in the same way<br />

as an earn-out clause, in accordance with IFRS 3. Acquisitions<br />

are accounted for using the purchase method. Subsidiaries’<br />

accounting policies are changed where necessary to ensure<br />

consistency with the policies applied by DELTA.<br />

47


Consolidated financial statements<br />

4. Basis of recognition and measurement of assets and liabilities<br />

The financial statements have been prepared according to<br />

the historical cost convention, except for measurement of the<br />

carrying amount of derivatives (financial instruments), which is<br />

based on fair value. All transactions in financial instruments are<br />

accounted for on the transaction date.<br />

4.1 Intangible assets<br />

Intangible assets comprise goodwill arising on acquisition,<br />

development costs, software, customer records and acquired<br />

transport rights.<br />

Goodwill<br />

The goodwill represents the positive difference between<br />

the acquisition cost of subsidiaries and the fair value of the<br />

acquisition. Goodwill paid on the acquisition of subsidiaries<br />

is recognised as an intangible asset. Goodwill arising on the<br />

acquisition of an interest in a joint venture or an investment in<br />

an associate is included in the cost of the relevant investments.<br />

If the cost is lower than the fair value of the identifiable<br />

assets, liabilities and contingent liabilities acquired (negative<br />

goodwill), the difference is recognised directly as income.<br />

Development costs<br />

Development expenditure is measured at historical cost and<br />

amortised over a period of 10 years according to the pattern of<br />

the additional cash flows generated by the acquired process<br />

knowledge.<br />

Software<br />

Capitalised software is carried at historical cost less<br />

amortisation. In principle, straight-line amortisation is applied<br />

over a five-year period. The useful life is assessed annually. Any<br />

adjustments are accounted for prospectively.<br />

Customer contracts<br />

Customer contracts are measured at cost and amortised<br />

according the pattern of the additional cash flows generated by<br />

the acquired accounts.<br />

Transport rights<br />

Transport rights are measured at cost and amortised on a<br />

straight-line basis over a period of 20 years. The useful life<br />

is assessed annually. Any adjustments are accounted for<br />

prospectively.<br />

The carrying amount of goodwill comprises the historical<br />

cost less the accumulated impairment. Goodwill is not<br />

amortised. <strong>Annual</strong> impairment tests are performed to identify<br />

any impairment of goodwill. For the purposes of these tests,<br />

goodwill is allocated to cash-generating units. If a transaction<br />

qualifies as a transaction between owners, the difference<br />

between acquisition cost and fair value is recognised in equity.<br />

48


DELTA Financial statements <strong>2011</strong><br />

4.2 Property, plant and equipment<br />

Property, plant and equipment is stated at cost less<br />

accumulated depreciation on a straight-line basis over the<br />

estimated useful life, determined on the basis of technical and<br />

economic criteria, taking account of the estimated residual<br />

value, less any accumulated impairment losses. In accordance<br />

with IFRIC 18, third-party contributions to construction costs of<br />

property, plant and equipment are no longer deducted from the<br />

carrying amount of the assets but recognised under liabilities<br />

as deferred revenue.<br />

Also included in property, plant and equipment is the<br />

discounted amount that is expected to be necessary for<br />

capping landfill sites when landfill activities come to an end.<br />

Depreciation is based on the actual period for which the landfill<br />

capacity is used. Changes in residual values as a result of<br />

technical and economic developments and the consequences of<br />

applying a different discount rate are recognised in the carrying<br />

amounts of the assets concerned and recognised in profit or<br />

loss in future years by means of depreciation. In the case of<br />

assets which have been fully depreciated, the difference is<br />

expensed immediately.<br />

Directly attributable external financing expenses for assets<br />

(construction period interest) are included in the cost. If assets<br />

consist of components with different depreciation periods and<br />

residual values, the components are recognised separately.<br />

Investments for the replacement of components are capitalised,<br />

with simultaneous write-down of the component to be replaced.<br />

The estimated life and the estimated residual value are<br />

assessed annually when the business plan is produced. The<br />

carrying amount is adjusted accordingly if impairment tests<br />

indicate impairment.<br />

Property, plant and equipment under construction is stated<br />

at the costs incurred as at the balance sheet date, including<br />

the costs of materials and services, direct staff costs and an<br />

appropriate share of directly attributable overhead costs.<br />

In 1999, Indaver entered into a cross-border lease with an<br />

American investor for the use of lines 1 and 2 of the incineration<br />

plant in Doel, whereby the legal and economic ownership<br />

of the assets remained with the company. These assets are<br />

accordingly recognised in the consolidated financial statements<br />

on the basis of the accounting policies applied for property,<br />

plant and equipment.<br />

4.3 Financial assets<br />

General<br />

A business combination is the bringing together of separate<br />

entities or businesses into one reporting entity. A business<br />

combination as defined is accounted for by applying the<br />

purchase method, which involves the following steps:<br />

1. identifying an acquirer;<br />

2. measuring the cost of the business combination; and<br />

3. allocating the acquisition-date cost of the business<br />

combination.<br />

The cost of a business combination is the aggregate of the<br />

fair values, at the date of exchange, of assets given, liabilities<br />

incurred or assumed and equity instruments issued by the<br />

acquirer plus any costs directly attributable to the business<br />

combination. Under IFRS 3 (as approved by the EU in 2004),<br />

the sum was increased for costs directly attributable to the<br />

business combination. Since the revision of IFRS 3 (applied<br />

with effect from 2009) the costs directly attributable to the<br />

acquisition are no longer recognised as cost of the business<br />

combination but are recognised directly in profit or loss.<br />

Goodwill is measured as the value by which the cost of the<br />

business combination exceeds the acquirer’s interest in the<br />

net fair value of identifiable assets, liabilities and contingent<br />

liabilities. Negative goodwill is recognised directly in profit or<br />

loss and non-controlling interests are recognised in equity.<br />

Joint ventures, associates and other investments<br />

Joint ventures are contractual arrangements whereby DELTA and<br />

one or more other parties undertake economic activities that<br />

are subject to joint control by all parties.<br />

Associates are entities over which DELTA N.V. directly or<br />

indirectly has significant influence, but not control. Generally<br />

speaking, this refers to entities in which DELTA N.V. can exercise<br />

between 20% and 50% of the voting rights.<br />

49


Consolidated financial statements<br />

Interests in joint ventures and investments in associates are<br />

recognised in the consolidated financial statements using the<br />

“equity method”. According to this method, the investments are<br />

initially carried at cost, i.e. the fair value of the underlying asset<br />

or liability, including goodwill. If the fair value is higher than the<br />

cost price, the result will be added to the equity participation.<br />

The share in the profits or losses is recognised in the carrying<br />

amount each year and dividend distributions are deducted.<br />

Accumulated losses of a joint venture or associate in excess of<br />

the carrying amount are not recognised unless DELTA N.V. has<br />

an obligation or has made payments to settle such losses.<br />

Other investments are entities in which DELTA N.V. has an<br />

interest of less than 20%. In the consolidated financial<br />

statements, they are recognised at fair value unless insufficient<br />

information is available, in which case they are carried at cost.<br />

Undistributed profits of a joint venture or an associate and<br />

direct increases in equity at a joint venture or associate, whose<br />

distributions cannot be received without restriction, are added<br />

to the statutory reserve.<br />

Loans to other investment entities<br />

Loans granted to investees or third parties are carried at face<br />

value, i.e. amortised cost. Where necessary, provisions are<br />

recognised for bad debts and are deducted from the carrying<br />

amount.<br />

Deferred tax<br />

Financial assets also includes deferred tax assets, arising<br />

from the difference between reported amounts and recognised<br />

amounts for tax purposes and from tax loss carryforwards.<br />

Deferred tax assets and liabilities are recognised at face value<br />

calculated at standard corporate income tax rates enacted<br />

or substantially enacted at the end of the reporting period.<br />

Deferred tax assets are recognised if it is reasonable to assume<br />

that future taxable profits will be available, permitting them<br />

to be realised. The recognition of a deferred tax asset is<br />

reassessed each year.<br />

4.4 Inventories<br />

Construction and maintenance materials are stated at the<br />

lower of cost, on the basis of the first-in first-out (FIFO) method,<br />

and the net selling price, less a provision for obsolescence.<br />

Impairment losses on inventories are expensed and disclosed<br />

separately.<br />

4.5 Receivables<br />

Trade receivables are measured at fair value on initial<br />

recognition and subsequently carried at amortised cost less<br />

impairment. The short time horizon means that amortised cost<br />

is the same as the face value of the receivables as a rule.<br />

4.6 Construction contracts<br />

DELTA applies the percentage of completion method to<br />

determine construction contract costs and revenues to<br />

be recognised in the income statement for the reporting<br />

period. The percentage of completion is based on production<br />

measurements. Work in progress on construction contracts is<br />

recognised at cost less a provision for expected losses and<br />

less invoiced instalments. The profit realised in proportion to<br />

the percentage of completion is included in the carrying amount<br />

if it can be reliably measured.<br />

4.7 Non-current assets held for sale and discontinued<br />

operations<br />

DELTA classifies an asset (or disposal group) as held for sale<br />

if its carrying amount will be recovered principally through a<br />

sale transaction rather than through its continued use. For this<br />

to be the case, the asset (or disposal group) must be available<br />

for immediate sale in its present condition and its sale must be<br />

highly probable and expected to take place within one year.<br />

On recognition of a group of assets as being held for probable<br />

or definite sale, the liabilities directly associated with those<br />

assets will be included in the carrying amount. Immediately<br />

after classification as held for sale, the amount of the assets<br />

is measured at the lower of carrying amount and fair value less<br />

costs to sell and depreciation is discontinued. Any impairment<br />

losses are expensed.<br />

50


DELTA Financial statements <strong>2011</strong><br />

4.8 Cash<br />

Cash includes not only cash but also cash equivalents that can<br />

be converted into cash with no material risk of impairment.<br />

Cash is carried at fair value.<br />

4.9 Shareholders’ equity<br />

Movements in shareholders’ equity are presented in the<br />

consolidated statement of changes in equity.<br />

The company’s authorised capital amounts to EUR 9,080,000<br />

divided into 20,000 shares, each with a nominal value of<br />

EUR 454. As at 31 December <strong>2011</strong>, EUR 6,937,120 was issued<br />

and paid up. Dividends are recognised as a liability in the<br />

period in which they are declared.<br />

4.10 Provisions<br />

Provisions are recognised in respect of legal or constructive<br />

obligations relating to operations. The provisions are carried<br />

at the present value of the expected expenditure. The present<br />

value is computed using a discount rate before tax reflecting<br />

the current market view of the time value of money.<br />

The expected expenditure within one year of the balance sheet<br />

date is included in current liabilities.<br />

4.11 Employee benefits<br />

Provisions relating to pension obligations and health insurance<br />

costs are determined on an actuarial basis. The related<br />

liabilities are presented separately in the balance sheet.<br />

This is only the case at the subsidiary Indaver. Indaver provides<br />

post-employment benefits for most of its employees. These<br />

benefits are paid under defined contribution plans and defined<br />

benefit plans involving both pension insurance and unfunded<br />

arrangements. The contributions payable under the defined<br />

contribution plan are recognised immediately in the income<br />

statement. For the defined benefit plan, the cost of each benefit<br />

payment is determined separately using the actuarial Projected<br />

Unit Credit Method.<br />

The company recognises part of the actuarial gains or losses in<br />

profit or loss if the accumulated unrecognised gains and losses<br />

at the end of the prior reporting period exceeded 10% of:<br />

• the present value of the gross amount of the defined benefit<br />

obligation at that date; and<br />

• the fair value of the plan assets at that date,<br />

any such excess or deficit being divided by the expected<br />

average remaining working lives of the employees participating<br />

in the plan.<br />

4.12 Non-current liabilities<br />

Non-current liabilities are measured at amortised cost, applying<br />

the effective interest method. Repayment commitments on noncurrent<br />

liabilities due within one year are included in current<br />

liabilities.<br />

With finance leases (in which all the risks and rewards of<br />

ownership are borne by the lessee), the finance lease is<br />

recognised as an asset at the start of the lease period and the<br />

liabilities are included in equity and liabilities at fair value. The<br />

depreciation of the asset is calculated according to the rules for<br />

property, plant and equipment.<br />

With operating leases (in which all the risks and rewards of<br />

ownership are borne by the lessor) the lease payments are<br />

recognised in the income statement on a straight-line basis<br />

over the lease term.<br />

The non-current portion of deferred revenue is classified as a<br />

non-current liability. The portion that is released in the next<br />

reporting period is included in current liabilities. The portion<br />

relating to the current reporting period is included in revenue.<br />

4.13 Put options<br />

The put options are recognised at fair value attributable to the<br />

put option holder concerned, less any dividends paid. The value<br />

is based on the indirect recoverable amount of the appropriate<br />

non-controlling interest.<br />

51


Consolidated financial statements<br />

5. Basis of recognition and measurement of financial instruments<br />

5.1 Financial instruments<br />

DELTA uses financial instruments to manage and optimise<br />

normal market risks associated with the company’s energy,<br />

currency and interest rate positions. DELTA applies IAS 32<br />

Financial Instruments: Disclosure and Presentation and IAS 39<br />

Financial Instruments: Recognition and Measurement. These<br />

standards require derivatives to be measured and recognised<br />

at fair value through profit or loss and the trading contracts are<br />

accounted for in the income statement on this basis.<br />

Definition<br />

A derivative is a financial instrument or other contract falling<br />

within the scope of IAS 39, with the following three features:<br />

• the value changes as a result of movements in a particular<br />

interest rate, price of a financial instrument, commodity<br />

price, exchange rate, index of prices or interest rates or other<br />

variable, provided that, in the case of non-financial variables,<br />

the variable is not specific to a contract party (also known as<br />

the ‘underlying asset’);<br />

• no or only a minor net initial investment is required in relation<br />

to other types of contract that respond in similar ways to<br />

movements in market factors; and<br />

• settlement takes place in the future.<br />

5.2 Derivatives<br />

DELTA trades in contracts for electricity, gas, coal, oil, CO 2<br />

certificates and currencies relating to the current year and the<br />

three following years. DELTA regards the markets for these<br />

commodities to be liquid over this time horizon, reliable<br />

prices being available from brokers, markets and suppliers<br />

of price information. The fair value of commodity contracts is<br />

calculated on the basis of these published prices; in-house<br />

valuation models are not used. Adjustments are only made to<br />

the published prices for the months, quarters or years ahead<br />

in order to match the relative periods in the trading systems.<br />

DELTA also uses derivatives such as interest rate swaps. The<br />

fair value of interest rate swaps is measured on the basis of<br />

yield curves provided by, amongst others, brokers and De<br />

Nederlandsche Bank.<br />

Classification and netting<br />

Derivatives are classed as current or non-current assets if<br />

the fair value represents a gain and as current or non-current<br />

liabilities if the fair value represents a loss. Receivables and<br />

payables in respect of derivatives for different transactions<br />

with the same party are shown net where there is a contractual<br />

or legally enforceable right of set-off and DELTA also settles the<br />

relevant cash flows on a net basis.<br />

Recognition of fair value gains and losses<br />

Pursuant to IAS 39, energy commodity contracts (electricity,<br />

gas, coal, oil and CO 2<br />

certificates, as well as the related foreign<br />

currency positions) and interest rate swap contracts are<br />

regarded as derivatives. IAS 32 required and IAS 39 and IFRS<br />

7 require all derivatives to be measured at fair value from the<br />

time of initial recognition.<br />

The general principle is that adjustments to the fair value of<br />

derivatives should be recognised through profit or loss.<br />

There are, however, two exceptions.:<br />

1. accrual accounting: DELTA accounts for commodity<br />

contracts intended for its own use on an accruals basis,<br />

which means that interim increases in value are not<br />

reflected in the results. Such transactions are recognised as<br />

purchases or sales at the time of settlement, at the prices<br />

obtaining at that time;<br />

2. hedge accounting: this affords the possibility of limiting the<br />

effect of fair value gains and losses on the results by taking<br />

account of opposite effects on results due to fair value gains<br />

and losses on the hedge and on the hedged position. With<br />

hedge accounting, fair value gains and losses on derivatives<br />

are recognised (via the statement of changes in unrealised<br />

income) in equity until the hedged position/transaction is<br />

settled.<br />

52


DELTA Financial statements <strong>2011</strong><br />

Hedge accounting<br />

DELTA uses derivatives to hedge price and currency risks arising<br />

from energy commodity contracts (electricity, gas, coal and<br />

oil). Interest rate swaps are also used to hedge the risk of cash<br />

flow volatility due to interest rate movements. DELTA uses cash<br />

flow hedging for this purpose, contracting hedging instruments<br />

to offset the exposure to variations in existing and future cash<br />

flows that could ultimately affect the results. The hedges are<br />

attributed to a specific risk relating to a balance sheet item or<br />

a highly probable forecast transaction. The effective portion<br />

of the fair value gain or loss is recognised directly in hedge<br />

reserves in equity (through the statement of comprehensive<br />

income). The ineffective portion of the gain or loss on the<br />

hedging instrument is recognised in the income statement.<br />

The cumulative amounts recognised in equity are taken to the<br />

income statement in the same period as the hedged transaction<br />

Criteria for the application of hedge accounting<br />

For hedge accounting to be applied, there are strict rules with<br />

regard to documentation and assessment of effectiveness. A<br />

derivative can be included in hedge accounting if it complies<br />

with the following criteria:<br />

1. at the inception of the hedge there is formal designation<br />

and documentation of the hedging relationship and the risk<br />

management objective and strategy for undertaking the<br />

hedge;<br />

2. for cash flow hedges, a forecast transaction that is the<br />

subject of the hedge must be highly probable and must<br />

present an exposure to variations in existing or future cash<br />

flows that could ultimately affect the results;<br />

3. the effectiveness of the hedge can be reliably measured;<br />

4. the hedge is expected to be highly effective;<br />

5. the hedge is assessed on an ongoing basis and determined<br />

actually to have been highly effective.<br />

Assessment of hedge effectiveness<br />

DELTA formally assesses whether the derivatives used as<br />

hedging instruments have been highly effective in mitigating<br />

changes in the fair value or cash flows attributable to the<br />

hedged position, both at the inception of the hedge and during<br />

its life. To this end, DELTA assesses and determines whether<br />

changes in the fair value or cash flows attributable to the<br />

hedged position are offset by changes in the fair value or cash<br />

flows attributable to the hedge within a range of 80% to 125%.<br />

The ineffective portion of a hedging relationship, in a fair<br />

value hedge, is the extent to which changes in the fair value of<br />

the derivative differ from the changes in the fair value of the<br />

hedged position or, in a cash flow hedge, the extent to which<br />

changes in the fair value of the derivative exceed the fair value<br />

movements in the expected cash flow.<br />

Ineffective hedges and gains and losses on components of<br />

derivatives that are disregarded in the assessment of the<br />

effectiveness of a hedge are recognised directly in the income<br />

statement. DELTA discontinues hedge accounting if the hedging<br />

relationship is no longer effective or is no longer expected to<br />

remain effective.<br />

53


Consolidated financial statements<br />

6. Basis of determination of results<br />

In the income statement, all financial consequences arising<br />

from decisions to dispose of or wind up operations, including<br />

normal trading results for <strong>2011</strong>, are accounted for in profit after<br />

tax from discontinued operations.<br />

6.1 Revenue<br />

Revenue represents income arising directly from the supply of<br />

goods and services to third parties, net of any discounts and<br />

net of sales taxes, such as VAT and regulating energy tax (REB).<br />

Revenue is recognised when the material risks and benefits<br />

of ownership of the goods have been transferred to the buyer.<br />

Revenue from services is recognised proportionate to the<br />

service delivered at the end of the reporting period.<br />

Recognition of revenue from transport services and the<br />

supply of electricity and gas is based on supplies during the<br />

calendar year. Revenue from supplies to domestic and smallbusiness<br />

users is partly estimated as meter readings are taken<br />

throughout the year.<br />

Recognition of revenue from electricity sales is based on the<br />

assumption that electricity generated by the group’s own<br />

production facilities (including joint ventures) will be supplied<br />

to third parties, while the power supplied to end-users will be<br />

procured entirely from third parties.<br />

In the case of gas and electricity trading contracts, which do<br />

not involve physical delivery, the amounts of purchases and<br />

sales are netted off.<br />

6.2 Net operating expenses<br />

Net operating expenses are recognised and measured on the<br />

basis of actual performance and according to the accounting<br />

policies set out above. The operating expenses are accounted<br />

for in the year to which they relate. Gains are recognised in the<br />

year in which they are realised; losses are recognised in the<br />

year in which they are identified.<br />

6.3 Net finance income (expense)<br />

Finance income and expense is attributed to the period to<br />

which it relates, in accordance with the effective interest<br />

method. DELTA capitalises the costs of external financing<br />

(construction period interest) as appropriate.<br />

6.4 Corporate income tax<br />

Corporate income tax on the result is calculated by applying<br />

the standard current rate to the profit before tax shown in the<br />

financial statements, taking account of permanent differences<br />

between this result and the result based on tax valuations.<br />

Within the DELTA N.V. tax group, DELTA uses the no-settlement<br />

method, except in the case of transferable tax-loss<br />

carryforwards predating the date of inclusion in a tax group. For<br />

the network operations, the separate return approach is used<br />

because of the special regulatory regime.<br />

Revenue from telecommunications covers subscription fees for<br />

signal distribution as well as income from internet services and<br />

other data transmission services.<br />

Income from environmental services and directly related<br />

expenses over environmental services and operations in the<br />

renewables segment are allocated to the period in which the<br />

services are supplied.<br />

Revenue from construction contracts is recognised in the<br />

income statement in accordance with the percentage of<br />

completion method.<br />

54


DELTA Financial statements <strong>2011</strong><br />

7. Basis of the cash flow statement<br />

The cash flow statement is prepared using the indirect method,<br />

based on the actual cash flows. A distinction is made between<br />

operating, investing and financing activities. Although the<br />

current portion of the non-current liabilities is recognised in<br />

the balance sheet as part of other liabilities (under current<br />

liabilities), the corresponding movement in the current portion<br />

of the non-current liabilities in the cash flow statement is<br />

included in the cash flow from financing activities.<br />

The share in the profits of associates (in the form of dividend<br />

payments), movements in finance income and expense (due to<br />

added interest on provisions) and tax on profits are based on<br />

realised cash flows.<br />

55


Consolidated financial statements<br />

Notes to the consolidated balance sheet<br />

1. Intangible assets<br />

(x EUR 1,000)<br />

Total Goodwill R&D Software Customer<br />

contracts<br />

Transport<br />

rights<br />

2010<br />

Carrying amount as at 1 January 2010 514,878 425,116 712 56,913 5,637 9,831 16,671<br />

Investments 18,595 - 1,717 16,878 - - -<br />

Amortisation (26,794) - (32) (24,591) (1,160) (1,011) -<br />

Impairment (89,028) (85,906) (2,271) (851) - - -<br />

Disposals (358) - - (358) - - -<br />

Acquisitie 472 472 - - - - -<br />

Earn-out 465 465 - - - - -<br />

Other movements 1,719 - (1) 1,720 - - -<br />

Carrying amount as at 31 December 2010 419,949 340,147 125 49,710 4,477 8,820 16,671<br />

Accumulated amortisation and impairment 277,927 99,458 15,405 127,825 21,015 10,488 3,736<br />

Acquisition cost as at 31 December 2010 697,876 439,605 15,530 177,535 25,492 19,308 20,407<br />

Other<br />

<strong>2011</strong><br />

Carrying amount as at 1 January <strong>2011</strong> 419,949 340,147 125 49,710 4,477 8,820 16,671<br />

Investments 16,507 - - 14,188 - - 2,319<br />

Amortisation (25,894) - - (24,138) (745) (1,011) -<br />

Impairment (125) - (125) - - - -<br />

Disposals (251) - - - - - (251)<br />

Earn-out (149) (149) - - - - -<br />

Other movements (15,236) - - (939) - - (14,297)<br />

Carrying amount as at 31 December <strong>2011</strong> 394,801 339,998 0 38,821 3,732 7,809 4,442<br />

Accumulated amortisation and impairment 303,946 99,458 15,530 151,963 21,760 11,499 3,736<br />

Acquisition cost as at 31 December <strong>2011</strong> 698,747 439,456 15,530 190,784 25,492 19,308 8,178<br />

Amortisation periods in years n/a variable 5 variable 20 variable<br />

(x EUR 1,000)<br />

Allocation of goodwill to cash-generating units 31-12-<strong>2011</strong> 31-12-2010<br />

Indaver 326,279 326,428<br />

Milieu 2,486 2,486<br />

Kreekraksluis 1,390 1,390<br />

Zeelandnet 9,843 9,843<br />

Total goodwill 339,998 340,147<br />

56


DELTA Financial statements <strong>2011</strong><br />

General<br />

The economic crisis and a combination of market developments<br />

and product developments led in prior years to a reappraisal of<br />

the recoverable amount of operations in the field of sustainable<br />

energy, resulting in 2010 in a decision to discontinue the solar<br />

energy activities and therefore to write off the entire amount of<br />

the associated intangible assets.<br />

In <strong>2011</strong> there were no significant impairment losses.<br />

Goodwill<br />

IFRS requires an impairment test to be performed each year to<br />

determine whether the carrying amount of goodwill paid in the<br />

past for subsidiaries should be written down.<br />

Software<br />

In connection with the enhancement and replacement of<br />

several important software applications, mainly in connection<br />

with the commercial activities, ICT assets were again phased<br />

out and written down in <strong>2011</strong>, involving a total amount of EUR<br />

9.5 million.<br />

Other movements<br />

The other movements, of EUR 14.3 million negative, concern<br />

the reclassification of the SET Fund investment from intangible<br />

assets to financial assets, owing to measuring the amount of<br />

the investment in the limited partnership at fair value.<br />

Indaver<br />

With regard to Indaver’s activities, impairment calculations<br />

were made at the level of its cash flow generating units. The<br />

management based cash flow predictions on the business<br />

plans for 2012-2014 and in a number of cases on a longer time<br />

frame. An infinite series was used as from the end of the time<br />

frame, taking account of the available information relating to<br />

market developments. No use was made of extrapolations with<br />

growth rates in excess of inflation.<br />

The impairment tests were carried out using a specific discount<br />

rate for each entity. Allowing for the ratio of debt to equity that<br />

is customary in the market and the risk perceptions in each<br />

country and sector, a number of scenarios were worked out with<br />

regard to the discount rate. The discount rate per entity ranged<br />

from 8.1% to 9.7% before tax, account being taken of tax rates<br />

applicable locally.<br />

These calculations gave no grounds for recognising any<br />

impairment.<br />

57


Consolidated financial statements<br />

2. Property, plant and equipment<br />

(x EUR 1,000)<br />

Total<br />

Land and<br />

buildings<br />

Plant and<br />

equipment<br />

Other<br />

assets<br />

Assets<br />

under<br />

construction<br />

Third-party<br />

contributions<br />

2010<br />

Carrying amount as at 1 January 1,032,810 215,626 863,328 27,031 89,778 (162,946)<br />

Investments 131,170 2,215 36,095 2,271 92,299 (1,710)<br />

Capitalized interest 2,112 - - - 2,112 -<br />

Depreciation (97,408) (12,893) (86,267) (4,284) (401) 6,437<br />

Impairements (88,212) (23,415) (49,404) (3,652) (11,741) -<br />

Disposals (6,797) (4,605) (329) (424) (2,102) 663<br />

Change in consolidation 9,949 - 9,949 - - -<br />

Other movements (6,217) 1,638 18,265 (6,854) (15,962) (3,304)<br />

Carrying amount as at 31 December 977,407 178,566 791,637 14,081 153,983 (160,860)<br />

Carrying amount before deduction of contributions 1,138,267 178,566 791,637 14,081 153,983<br />

Accumulated depreciation and impairment 1,203,936 150,930 998,023 54,582 401<br />

Acquisition cost as at 31 December 2,342,203 329,496 1,789,660 68,663 154,384<br />

<strong>2011</strong><br />

Carrying amount as at 1 January 977,407 178,566 791,637 14,081 153,983 (160,860)<br />

Investments 151,329 4,236 20,723 160 127,122 (912)<br />

Capitalized interest 249 - - - 249 -<br />

Depreciation (83,567) (10,931) (76,451) (2,850) - 6,665<br />

Impairements (6,245) (1,218) (2,054) 1,104 (4,077) -<br />

Disposals (3,243) (372) (221) (60) (3,054) 464<br />

Other movements (176) 21,294 166,292 1,862 (190,104) 480<br />

Carrying amount as at 31 December 1,035,754 191,575 899,926 14,297 84,119 (154,163)<br />

Carrying amount before deduction of contributions 1,189,917 191,575 899,926 14,297 84,119<br />

Accumulated depreciation and impairment 1,300,413 163,079 1,076,528 56,328 4,478<br />

Acquisition cost as at 31 December 2,490,330 354,654 1,976,454 70,625 88,597<br />

Depreciation periods in years 10 - 40 7 - 40 5 - 15 n/a<br />

The investments in plant and equipment (including the movements in assets under construction) mainly relate to the expansion and replacement of electricity and gas<br />

network assets (network operations) and the expansion and upgrading of waste processing plant and equipment (Indaver). The completion of the Meath Waste-to-Energy<br />

Facility (in Ireland) at the end of September <strong>2011</strong> explains the large movement from assets under construction to plant and equipment.<br />

The impairment mainly relates to the preparation costs capitalised in the past in connection with obtaining permits for a second waste-to-energy facility in Ireland<br />

(EUR 4.1 million). By contrast, the write-down of the assets of DELTA Industriële Reiniging made in 2010 has been reversed on the basis of the latest development in the<br />

value in use.<br />

As required by IFRIC 18, with effect from 1 January 2009, contributions received from third parties towards the costs of constructing property, plant and equipment are no<br />

longer deducted from the carrying amount of the assets concerned but recognised instead as deferred revenue.<br />

58


DELTA Financial statements <strong>2011</strong><br />

3. Interests in joint ventures, investments in associates and other investments<br />

(x EUR 1,000)<br />

Total Joint Ventures Associates Other investments<br />

Carrying amount as at 1 January 2010 548,271 485,776 54,780 7,715<br />

Investments/Disposals 1,035 - 1,035 -<br />

Dividends received (65,711) (61,621) (3,669) (421)<br />

Repayments of capital (13,584) (13,584) - -<br />

Share of profits 62,993 56,693 5,415 886<br />

Impairment (10,755) - (10,755) -<br />

Other movements (687) (1,174) 487 0<br />

Carrying amount as at 31 December 2010 521,563 466,090 47,294 8,179<br />

Carrying amount as at 1 January <strong>2011</strong> 521,563 466,090 47,294 8,179<br />

Fair Value adjustments 23,115 - - 23,115<br />

Acquisitions 137,226 137,000 226 -<br />

Negative goodwill 153,979 153,979 - -<br />

Investments/Disposals (1,300) - - (1,300)<br />

Dividends received (59,311) (48,505) (5,217) (5,589)<br />

Share of profits 71,778 60,901 10,602 275<br />

Other movements 20,759 7,046 (78) 13,791<br />

Carrying amount as at 31 December <strong>2011</strong> 867,809 776,511 52,827 38,471<br />

On 30 September <strong>2011</strong>, DELTA acquired an additional interest of 20% in N.V. EPZ, realising a significant book profit (negative goodwill) on the transaction.<br />

DELTA simultaneously acquired additional tolling agreement rights to take EPZ’s electricity generation output. In view of an expected decision in 2012 concerning<br />

proportionate consolidation, for the present DELTA opted to value the interest in EPZ on an equity basis. IAS 28 requires fair value gains and losses relating to investments<br />

in associates and joint ventures to be recognised in the share in the results of joint ventures and associates. Therefore, the bookprofit on realisation was justified.<br />

The consequences in connection with the recognition of deferred tax liabilities are accounted for in the balance sheet as tax assets or tax liabilities as the case may be.<br />

In <strong>2011</strong>, the shares of KEMA were offered for sale, allowing the market value of the shares held by DELTA to be measured reliably and recognised at fair value.<br />

The revaluation of the investment in N.V. KEMA is included in other investments.<br />

Initially, the investment in SET Fund was based on a zero-return basis. As per <strong>2011</strong>, that is no longer reality. Therefore, the investment in SET Fund has been relocated from<br />

‘intangible assets’ to ‘other investments’ and is priced at fair value. This has resulted in an impairment of EUR 5 million, lowering the net result by the same number.<br />

59


Consolidated financial statements<br />

3.1 Joint ventures<br />

Summarised balance sheet and income statement information relating to the principal joint ventures (based on 100% interest):<br />

(x EUR 1,000)<br />

Balance sheet 31-12-<strong>2011</strong> 31-12-2010<br />

Property, plant and equipment 1,850,442 1,884,471<br />

Financial assets 193,739 164,648<br />

Current assets 208,739 223,985<br />

Cash and cash equivalents 330,892 330,685<br />

Total assets 2,583,812 2,603,789<br />

Shareholders’ equity 553,857 550,435<br />

Provisions 608,289 521,440<br />

Non-current liabilities 923,570 1,080,082<br />

Current liabilities 498,095 451,832<br />

Total equity and liabilities 2,583,812 2,603,789<br />

Result <strong>2011</strong> 2010<br />

Total income 875,504 810,447<br />

Total expenses 738,541 687,863<br />

Balance 136,963 122,584<br />

The above information relates to the principal joint ventures in which DELTA has an interest, viz.: the electricity generators N.V. EPZ, Elsta B.V. and Sloe Centrale Holding<br />

B.V., the water company Evides N.V. and the waste-to-energy company Sleco-Centrale N.V.<br />

60


DELTA Financial statements <strong>2011</strong><br />

3.2 Associates<br />

Summarised balance sheet and income statement information relating to the principal associates (based on 100% interest):<br />

(x EUR 1,000)<br />

Balance sheet 31-12-<strong>2011</strong> 31-12-2010<br />

Property, plant and equipment 325,025 184,042<br />

Financial assets 602 7,259<br />

Current assets 28,483 22,710<br />

Cash and cash equivalents 25,804 65,627<br />

Total assets 379,913 279,638<br />

Shareholders’ equity 168,127 86,956<br />

Provisions 7,910 11,458<br />

Non-current liabilities 102,531 144,560<br />

Current liabilities 101,346 36,664<br />

Total equity and liabilities 379,913 279,638<br />

Result <strong>2011</strong> 2010<br />

Total income 151,587 153,560<br />

Total expenses 121,709 124,716<br />

Balance 29,877 28,844<br />

This information relates to the principal associates in which DELTA has an interest, viz.: landfill company Intercommunale Hooge Maey cvba and waste-to-energy company<br />

AZN Holding B.V.<br />

In 2010, the numbers were based on the final annual report figures of concerning entities. In <strong>2011</strong>, numbers are based on the last known information within DELTA.<br />

61


Consolidated financial statements<br />

3.3 Other investments<br />

All reported entities presented as other investments are<br />

included in the list of non-consolidated companies. The<br />

interests in Decu Beheer B.V. (60%) and Decu C.V. (60%) are<br />

also classed as ‘financial instrument’ as DELTA is unable to<br />

influence the operating processes at all.<br />

In May <strong>2011</strong>, the subsidiary Indaver sold its interest in GRL<br />

Glasrecycling N.V<br />

In connection with the implementation of the Borssele<br />

convenant, the Sustainable Energy Technology Fund<br />

(SET-Fund I C.V.) was set up in 2007, with the then energy<br />

companies DELTA (via DELTA Investeringsmaatschappij B.V.<br />

as silent partner) and Essent both having an interest of 50%.<br />

Having regard to the Fund’s articles of association and the<br />

altered shareholding in N.V. EPZ, a new SET-Fund II CV was<br />

established on 23 December <strong>2011</strong> in which DELTA has a 70%<br />

interest and Essent (RWE) a 30% interest in the initial capital<br />

of EUR 10 million. In view of the limited degree of control,<br />

the investments in both entities are classed as financial<br />

instruments and recognised at fair value.<br />

62


DELTA Financial statements <strong>2011</strong><br />

3.4 Transactions with related parties<br />

(x EUR 1,000)<br />

Elsta B.V en Co C.V.<br />

Elsta B.V.<br />

Sales Purchases Trade Trade payables Loans granted Interest<br />

receivables<br />

% Interest <strong>2011</strong> 2010 <strong>2011</strong> 2010 31-12-<strong>2011</strong> 31-12-2010 31-12-<strong>2011</strong> 31-12-2010 31-12-<strong>2011</strong> 31-12-2010 <strong>2011</strong> 2010<br />

24.75%<br />

25.00%<br />

3,524 3,726 27,107 27,021 359 13,915 2,757 303 132 - - -<br />

N.V. EPZ 70.00% 18,421 42,983 184,775 140,709 262 2,973 3,084 3,807 - - - (2,471)<br />

Sloecentrale Holding B.V. 50.00% 524 1,174 32,616 39,032 47 185 10,021 10,135 - - - -<br />

BMC Moerdijk B.V. 50.00% 2,473 1,616 5,014 5,605 441 133 1,334 524 14,823 16,004 1,087 1,091<br />

Zebra Gasnetwerk B.V. 33.33% 830 - 3,808 233 403 - 375 15 - - 570 -<br />

IC Hooge Maey cvba 30.00% 825 1,090 771 178 115 330 299 118 - - - -<br />

Sleco Centrale N.V. 50.00% 18,730 45,702 55,986 50,629 3,153 2,766 4,948 5,066 4,000 (13,300) - (15)<br />

Evides N.V. 50.00% 33,786 17,233 - - 2,750 4,428 - 4,660 - - - -<br />

Total 79,115 113,524 310,077 263,408 7,530 24,730 22,818 24,628 18,955 2,704 1,657 (1,395)<br />

Transactions with related parties are conducted at arm’s length prices. N.V. EPZ, Elsta B.V. and Sloe Centrale B.V. operate on the basis of telling agreements<br />

(effectively on a cost-plus basis).<br />

Sleco Centrale N.V. also has an internal pricing structure not related to current market prices. Other transactions are at arm’s length.<br />

No allowance for doubtful receivables has been recognised for receivables from related parties since there is no need to do so.<br />

Although DELTA’s shareholders (provincial and municipal authorities) are related parties, there are no material transactions between DELTA and its shareholders.<br />

63


Consolidated financial statements<br />

4. Other financial assets<br />

(x EUR 1,000)<br />

Total<br />

Loans to joint ventures<br />

and associates etc,<br />

Deferred tax<br />

asset<br />

Other financial<br />

assets<br />

Carrying amount as at 1 January 2010 158,845 15,797 88,580 54,468<br />

Change in consolidation (1,785) - (1,785) -<br />

Reversal of current portion 5,561 1,051 - 4,510<br />

New loans 2,342 1,914 - 428<br />

Results 3,428 (2,964) 28,282 (21,890)<br />

Repayments (14,059) (1,003) - (13,056)<br />

Transferred to equity as hedge reserve (35,206) - (35,206) -<br />

Impairment (3,598) - (3,598) -<br />

Other movements 15,628 130 14,783 715<br />

Carrying amount as at 1 January <strong>2011</strong> (long term) 131,156 14,925 91,056 25,175<br />

Current portion of financial assets (4,029) (1,150) - (2,879)<br />

Carrying amount as at 1 January <strong>2011</strong> 127,126 13,775 91,056 22,295<br />

Reversal of current portion 4,030 1,150 - 2,880<br />

New loans 5,407 4,818 - 589<br />

Results (30,761) - (30,761) -<br />

Repayments (14,555) (23) - (14,532)<br />

Transferred to equity as hedge reserve 16,098 - 16,098 -<br />

Impairment (2,300) - - (2,300)<br />

Other movements (129) - (543) 413<br />

Carrying amount as at 31 December <strong>2011</strong> (long-term) 104,916 19,720 75,851 9,345<br />

Current portion of financial assets (5,390) (5,350) - (40)<br />

Carrying amount as at 31 December <strong>2011</strong> 99,526 14,370 75,851 9,305<br />

4.1 Loans to joint ventures, associates etc.<br />

This concerns loans to joint ventures, associates and other<br />

investment entities. The loans are stated at face value. Of<br />

these loans, an amount of EUR 13.4 million is in the form of<br />

subordinated loans. As at year-end <strong>2011</strong>, the weighted average<br />

interest rate was 7.3% (2010:7.3%).<br />

64


DELTA Financial statements <strong>2011</strong><br />

4.2 Deferred tax assets<br />

(x EUR 1,000)<br />

31-12-<strong>2011</strong> 31-12-2010<br />

Intangible assets and property, plant and equipment 50,090 53,124<br />

Financial assets (55,718) -<br />

Provisions 53,882 18,580<br />

Unutilised tax losses 24,567 31,923<br />

Hedge reserve pursuant to IAS39/derivatives 2,674 (13,027)<br />

Other 355 457<br />

Total deferred tax asset 75,851 91,056<br />

Deferred tax assets relate to the carrying amounts of intangible<br />

assets, property, plant and equipment and previously<br />

recognised provisions. The deferred tax asset relating<br />

to intangible assets and property, plant and equipment is<br />

largely the result of differences between the tax bases and<br />

the carrying amounts for reporting purposes in the balance<br />

sheet at 1 January 1998 (opening balance sheet for tax purposes<br />

for DELTA).<br />

The deferred tax liability is related to the acquisition of the 20%<br />

interest in N.V. EPZ, due to the negative goodwill that has been<br />

processed in the result.<br />

A deferred tax asset is recognised at some companies for tax<br />

loss carry forwards that can be expected to be set against<br />

taxable profits in the years ahead. Talks were being held with<br />

the Dutch Tax Administration at the end of the reporting period<br />

to reach agreement on the amount of these carry forward<br />

losses.<br />

The outcome of these talks may lead to changes in the deferred<br />

tax asset. The deferred tax assets in respect of tax loss carry<br />

forwards are reviewed each year and recognised to the extent<br />

that the losses can be expected to be set against future taxable<br />

profits.<br />

Since 2006, a hedge reserve for unrealised fair value gains<br />

and losses on derivatives/trading contracts has also been<br />

recognised in compliance with IAS 39/32. A deferred tax asset<br />

is also recognised in respect of these unrealised fair value<br />

gains and losses. As at year-end <strong>2011</strong>, this hedge reserve was<br />

negative (therefore an asset), resulting in an increase in the<br />

deferred tax asset.<br />

As at year-end <strong>2011</strong>, a deferred tax asset amounting to<br />

EUR 21.9 million was not recognised in the balance sheet<br />

because of uncertainty as to when the related tax loss carry<br />

forwards (in the Netherlands and in other countries) might be<br />

utilised or the asset might be realised.<br />

4.3 Other financial assets<br />

In <strong>2011</strong>, sale-and-leaseback contracts were terminated. The<br />

repayments received relate to the return of funds placed on<br />

deposit; under the terms of the sale-and-leaseback contracts,<br />

the purchase prices were placed on deposit in favour of the<br />

lessor by way of security. The other financial assets as at yearend<br />

<strong>2011</strong> are mainly made up of prepayments.<br />

65


Consolidated financial statements<br />

5. Derivatives and risk management<br />

DELTA N.V. trades in contracts for gas, electricity, coal, oil,<br />

CO 2<br />

certificates and currencies relating to the current year and<br />

the three following years. DELTA N.V. regards the markets for<br />

these commodities to be liquid over this time horizon: reliable<br />

prices are available for them from brokers, markets and<br />

suppliers of price information. Fair values for these contracts<br />

are calculated on the basis of these published prices; in-house<br />

valuation models are not used. Adjustments are only made to<br />

the published prices for the months, quarters or years ahead<br />

in order to match the relative periods in the trading systems.<br />

The prices for delivery beyond 36 months are arrived at by<br />

extrapolation.<br />

DELTA has a contractual obligation to settle forward contracts<br />

on maturity.<br />

This section covers the following topics:<br />

5.1. Derivatives<br />

5.1.1. Relationships of derivatives in the financial statements<br />

5.1.2. Derivatives position<br />

5.1.3. Changes in the hedge reserve<br />

5.1.4. Hierarchy of financial instruments<br />

5.2. Risk management<br />

5.2.1. Risk management<br />

5.2.2. Market risks<br />

5.2.3. Liquidity risk<br />

5.2.4. Credit risk<br />

To hedge interest rate risks, DELTA makes use of derivatives<br />

such as interest rate swaps. The effect of this type of swap<br />

contract is to change loans contracted at floating rates into<br />

fixed-rate loans.<br />

66


DELTA Financial statements <strong>2011</strong><br />

5.1 Derivatives<br />

5.1.1 Relationships of derivatives in the financial statements<br />

(x EUR 1,000)<br />

Assets<br />

<strong>2011</strong><br />

Balance of derivatives<br />

Assets<br />

2010<br />

Liabilities<br />

<strong>2011</strong><br />

Liabilities<br />

2010<br />

Changes in derivatives<br />

Change in <strong>2011</strong>,<br />

assets<br />

Derivatives on the balance sheet (see 5.1.2)<br />

Non-current assets 68,007 51,575 16,432<br />

Current assets 230,250 219,469 10,781<br />

298,257 271,044 27,213<br />

Change in <strong>2011</strong>,<br />

liabilities<br />

Non-current liabilities 77,149 31,209 45,940<br />

Current liabilities 223,724 164,677 59,047<br />

300,873 195,886 104,987<br />

Other balance sheet items relating to<br />

derivatives<br />

Hedge reserve (see 5.1.3) (6,044) 41,837 (47,881)<br />

Deferred tax (see 5.1.3) (2,674) 13,027 (15,701)<br />

Non-controlling interest connected with swaps<br />

(904) (1,366) 462<br />

(see 5.1.3)<br />

Sub total (9,622) 53,498 (63,120)<br />

Purchase of interest rate derivatives by DNWB 2,250 2,250<br />

Changes in equity through profit or loss (1,453) 247 (1,700)<br />

Fair value changes in equity through profit or<br />

6,209 19,163 (12,954)<br />

loss<br />

(2,616) 75,158 (77,774)<br />

Total 298,257 271,044 298,257 271,044 27,213 27,213<br />

67


Consolidated financial statements<br />

5.1.2 Derivatives position<br />

(x EUR 1,000)<br />

Assets Liabilities Net<br />

Non-current Current Non-current Current<br />

<strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010<br />

Commodity contracts<br />

Gas 23,194 29,844 152,004 151,606 (33,408) (10,164) (145,584) (111,135) (3,794) 60,151<br />

Electricity 27,101 4,604 27,446 26,972 (19,508) (10,631) (28,277) (20,691) 6,762 254<br />

Coal 428 5,951 5,523 25,466 (1,733) (2,798) (11,219) (18,480) (7,001) 10,139<br />

Oil 2,013 509 5,368 3,461 (623) - (2,498) (871) 4,260 3,099<br />

Other 1,306 961 10,592 2,001 (13,722) (2,195) (16,218) (5,924) (18,042) (5,157)<br />

Other derivatives<br />

Foreign exchange<br />

13,167 7,162 29,176 9,963 (5,667) (878) (16,807) (2,406) 19,869 13,841<br />

contracts<br />

Interest rate swaps 798 2,544 141 - (2,488) (4,543) (3,121) (5,169) (4,670) (7,168)<br />

Total 68,007 51,575 230,250 219,469 (77,149) (31,209) (223,724) (164,676) (2,616) 75,159<br />

An amount of EUR 63.1 million negative (2010: EUR 139.0 million positive) of the gains and losses on these contracts has been recognised in the hedge reserve.<br />

68


DELTA Financial statements <strong>2011</strong><br />

5.1.3 Changes in the hedge reserve<br />

The changes in the fair value after tax of the derivatives are included in the hedge reserve. This reserve is not freely distributable.<br />

The movements in the hedge reserve over the past two years are presented below.<br />

(x EUR 1,000)<br />

COMMODITY CONTRACTS<br />

SWAPS<br />

Gas Electricity<br />

Coal Oil CO 2<br />

Forex Total Interest Total<br />

rate<br />

swaps<br />

2010<br />

Hedge reserve at 1-1-2010 (gross) (88,908) 45,217 (12,099) (113) (12,972) (2,554) (71,429) (14,051) (85,480)<br />

Changes in 2010<br />

Recognised directly in equity 73,268 (11,668) 12,335 (21) 2,888 6,054 82,856 (4,001) 78,855<br />

Released to income 76,682 (42,321) 9,801 9 6,061 1,503 51,735 8,386 60,121<br />

Total changes in 2010 149,950 (53,989) 22,136 (12) 8,949 7,557 134,591 4,385 138,976<br />

Hedge reserve at 31-12-2010<br />

61,042 (8,772) 10,037 (125) (4,023) 5,003 63,162 (9,666) 53,496<br />

(gross)<br />

Deferred tax (15,260) 2,193 (2,509) 31 1,006 (1,251) (15,790) 2,764 (13,026)<br />

Non-controlling interest 1,366 1,366<br />

Hedge reserve at 31-12-2010 45,783 (6,579) 7,528 (94) (3,017) 3,752 47,373 (5,536) 41,837<br />

<strong>2011</strong><br />

Hedge reserve 1-1-<strong>2011</strong> (gross) 61,042 (8,772) 10,037 (125) (4,023) 5,003 63,162 (9,666) 53,496<br />

Changes in <strong>2011</strong><br />

Recognised directly in equity (22,373) 9,530 (8,196) 1,645 (14,482) 12,536 (21,340) (970) (22,310)<br />

Released to income (37,560) 1,517 (5,649) 1,386 (3,007) (2,663) (45,976) 5,168 (40,808)<br />

Total changes <strong>2011</strong> (59,933) 11,047 (13,845) 3,031 (17,489) 9,873 (67,316) 4,198 (63,118)<br />

Hedge reserve 31-12-<strong>2011</strong> (gross) 1,109 2,275 (3,808) 2,906 (21,512) 14,876 (4,154) (5,468) (9,622)<br />

Deferred tax (277) (569) 952 (727) 5,378 (3,719) 1,039 1,636 2,675<br />

Non-controlling interest 904 904<br />

Hedge reserve at 31-12-<strong>2011</strong> 832 1,706 (2,856) 2,180 (16,134) 11,157 (3,116) (2,928) (6,044)<br />

69


Consolidated financial statements<br />

The composition of the hedge reserve in relation to the commodities, on a gross basis, as at year-end <strong>2011</strong> is attributable as follows<br />

to the years ahead:<br />

(x EUR 1,000)<br />

COMMODITY CONTRACTS<br />

Gas Electricity Coal Oil CO 2<br />

Forex Total<br />

2012 7,367 (5,245) (3,098) 2,457 (7,532) 8,204 2,154<br />

2013 2,204 701 (710) 200 (9,236) 4,139 (2,701)<br />

2014 (8,608) 6,879 - 248 (4,744) 2,533 (3,692)<br />

2015 145 (60) - - - - 85<br />

Total 1,109 2,275 (3,808) 2,906 (21,512) 14,876 (4,154)<br />

The release from the hedge reserve to profit or loss is recognised in the gross operating margin.<br />

The timing of the expected cash flows does not always coincide<br />

with their recognition in the income statement. This is because<br />

some hedges have a ‘timing effect’. This is the case, for<br />

example, with the majority of gas hedges, in that the gas price<br />

for the first quarter of a year may be determined by the average<br />

oil price over the six months preceding that quarter. The value<br />

of the swaps used in such a hedging relationship, settlement<br />

of which takes place in the six months preceding the quarter<br />

in which delivery is made, is recognised in the hedge reserve<br />

up to the beginning of the delivery quarter, with the gain or<br />

loss recognised in income in the first quarter of delivery. The<br />

maximum time lag on contracts in a hedging relationship is nine<br />

months. During the reporting period, there were no hedging<br />

relationships that were discontinued because an expected<br />

transaction did not go ahead.<br />

70


DELTA Financial statements <strong>2011</strong><br />

5.1.4 Hierarchy of financial instruments<br />

The financial instruments, measured at fair value, are classified in accordance with the following hierarchy<br />

as required by IFRS 7 Financial Instruments:<br />

Level 1:<br />

Quoted prices (not adjusted) in active markets for identical assets or liabilities;<br />

Level 2:<br />

Inputs other than the quoted prices in level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly<br />

(i.e. derived from prices);<br />

Level 3:<br />

Inputs for the asset or liability that are not based on observable market data (unobservable inputs).<br />

(x EUR 1,000)<br />

Fair value hierarchy<br />

Total as at 31 December Level 1: Level 2: Level 3:<br />

<strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010<br />

Assets<br />

Derivatives 298,257 271,044 - - 298,257 271,044 - -<br />

Equity investments < 20% 29,273 7,795 - - - - 29,273 7,795<br />

Total assets 327,530 278,839 - - 298,257 271,044 29,273 7,795<br />

Equity and liabilities<br />

Derivatives 300,873 195,885 - - 300,873 195,885 - -<br />

Put options 146,511 138,913 - - - - 146,511 138,913<br />

Total equity and liabilities 447,384 334,798 - - 300,873 195,885 146,511 138,913<br />

The fair value of financial instruments (< 20%) rose compared<br />

with the position as at year-end 2010, mainly owing to the<br />

revaluation of the investment in N.V. KEMA.<br />

The put options were distributed to the minority shareholders<br />

with regard to the acquisition of Indaver in 2007. The options<br />

can be exercised from March 2012 to the end of 2014.<br />

Profit attributable to non-controlling interests is added to the<br />

value of the put-option. The exercise price of the put option can<br />

be determined using the discounted cashflow method, taking<br />

several estimates into account. For this reason, DELTA uses a<br />

bandwidth determining the fair value of the put options. The<br />

valuation as at balance date falls within this bandwidth.<br />

There were no reclassifications in <strong>2011</strong> from one level of the fair<br />

value hierarchy to another.<br />

71


Consolidated financial statements<br />

5.2 Risk management<br />

5.2.1 Risk management<br />

DELTA’s risk management policy is designed to limit the<br />

consequences of price volatility in the short term and to track<br />

current market prices in the long term. The Risk Management<br />

Committee, which reports direct to the Executive Board, has<br />

adopted a system of procedures and limits for controlling risks.<br />

These include risk management procedures and guidelines<br />

relating to the company as a whole and procedures and<br />

guidelines covering specific areas.<br />

5.2.2 Market risks<br />

5.2.2.1 Commodity prices<br />

Market risks arise from price movements on the markets on<br />

which DELTA buys and sells (gas, electricity, coal, oil, CO 2<br />

emission rights, currencies, transport capacity, import/export<br />

capacity etc.) These risks are managed systematically, by<br />

buying or selling forward, depending on expected price trends.<br />

The positions are monitored on a daily basis. Trading risks are<br />

mitigated by strictly enforcing a system of limits.<br />

The Risk Management Committee is responsible for enforcing<br />

the risk management policy. The Group Internal Control<br />

department is responsible for the operational conduct of the<br />

oversight and reports to the Risk Management Committee.<br />

DELTA mitigates commodity market risks, currency risks,<br />

interest rate risks, liquidity risks and credit risks by means of<br />

financial instruments, subject to the conditions laid down in the<br />

Risk Policy Document and the Treasury Charter.<br />

The following paragraphs describe the various types of risk and<br />

the way in which DELTA manages the related exposures.<br />

72


DELTA Financial statements <strong>2011</strong><br />

5.2.2.2 Value at Risk<br />

DELTA uses the Value at Risk (VaR) method to assess market<br />

risks on the commodity markets in which it operates. The<br />

method involves various assumptions regarding possible<br />

changes in market conditions. The VaR method is an important<br />

tool to assess market risks within DELTA. The method identifies<br />

the maximum losses likely to be incurred as a result of price<br />

changes over a three-day period with a confidence level of<br />

95% (i.e. the maximum loss might exceed the VaR limit in<br />

just 5% of cases). The VaR is calculated using Monte Carlo<br />

simulations based on historical volatilities and correlations.<br />

Since portfolios include opposing positions and there is an<br />

underlying correlation, the VaR on the total portfolio is smaller<br />

than the sum of that on the individual portfolios.<br />

The VaR method is an important tool for managing the<br />

portfolios within DELTA and the value at risk is therefore<br />

calculated and reported each day. In mid-<strong>2011</strong>, the basis<br />

on which the total portfolio is subdivided was changed. For<br />

comparison purposes, the VaR on the total portfolio as at yearend<br />

<strong>2011</strong> is presented according to both the old and the new<br />

subdivision.<br />

Although the VaR for the Asset Book and for the total portfolio<br />

is reported on a daily basis, it is not used as a management<br />

parameter. The Asset Book is hedged on the basis of a<br />

predetermined disposal schedule to establish the average<br />

market value. Departures from the disposal schedule come<br />

into Trade Books, for which the VaR is the key measure of risk.<br />

During the year, the parameter was within limits.<br />

(x EUR 1,000)<br />

Previous methodology<br />

Value at Risk<br />

31/12/2010 31/12/<strong>2011</strong><br />

Trading portfolio 2,275 1,537<br />

Gas hedge portfolio 1,768 2,223<br />

Sales portfolio 747 83<br />

Generation & Allocation-portfolio 13,099 12,479<br />

Diversification across portfolios (5,383) (4,894)<br />

Total 12,506 11,428<br />

New methodology<br />

Value at Risk<br />

31/12/<strong>2011</strong><br />

Asset Book 11,436<br />

Trade Books 2,097<br />

Diversification Portfolio’s (2,105)<br />

Total 11,428<br />

73


Consolidated financial statements<br />

5.2.2.3 Cash flow hedges<br />

DELTA uses financial instruments to prevent fluctuations in<br />

expected cash flows in so far as possible. In order to control<br />

the consequences of future movements in market prices, DELTA<br />

uses derivatives such as forwards, options and swaps. The<br />

hedging instruments are derivatives in the commodities traded<br />

by DELTA that are concluded to mitigate cash flow, price and<br />

currency risks. Hedge accounting is applied to cushion the total<br />

change in value of these derivatives.<br />

Where permitted, DELTA accounts for these financial<br />

instruments and physical purchase and sale contracts in a<br />

cash flow hedge in accordance with IAS 39. The item hedged<br />

is the future purchase transaction (power stations, long-term<br />

sourcing) or gas and electricity sales transaction.<br />

(x EUR 1,000)<br />

AMOUNT AT FAIR VALUE<br />

<strong>2011</strong> 2012 2013 2014 2015 and beyond Total Average price Contract value<br />

Gas forwards (3,805) 752 (10,561) - (13,614) 0.249 (379,492)<br />

Electricity forwards (505) 1,549 9,812 - 10,855 56.043 194,225<br />

Coal swaps (1,622) (687) - - (2,309) 89.742 (67,092)<br />

Oil swaps 1,781 658 367 - 2,807 664.125 (151,765)<br />

CO 2<br />

forwards (5,903) (8,189) (4,747) - (18,839) 14.476 (42,423)<br />

Currency swaps 9,070 3,694 3,070 - 15,834 0.865 (357,443)<br />

Total (984) (2,223) (2,060) - (5,266)<br />

2010 <strong>2011</strong> 2012 2013 2014 and beyond Total Average price Contract value<br />

Gas swaps 1,560 - - - 1,560 0.24 54,880<br />

Gas swap (Heren) 3,903 - - - 3,903 0.22 (60,644)<br />

Gas forwards 26,437 14,892 1,297 - 42,626 0.21 (322,471)<br />

Electricity forwards 7,825 (1,234) (2,289) - 4,302 56.24 33,179<br />

Coal swaps 6,491 1,797 747 - 9,035 75.85 (66,194)<br />

Oil forwards (196) - - - (196) 563.29 5,971<br />

Oil swaps 320 196 - - 516 573.64 (11,139)<br />

CO 2<br />

forwards (3,443) (753) (668) - (4,864) 16.71 (37,675)<br />

Currency swaps 1,952 3,496 279 - 5,727 0.97 (194,508)<br />

Total 44,849 18,394 (634) - 62,609<br />

74


DELTA Financial statements <strong>2011</strong><br />

The hedge reserve includes changes in the value of underlying<br />

derivatives in the period in which they are included in an<br />

effective hedge. The derivatives presented in the analysis of<br />

cash flow hedges concern the derivatives that were part of a<br />

hedging relationship on the balance sheet date.<br />

A mismatch occurs because:<br />

• the analysis of cash flow hedges also includes the ineffective<br />

portion of the hedging instrument;<br />

• the gains and losses on the hedging instrument prior to the<br />

inception of a hedging relationship are also included in the<br />

analysis of cash flow hedges;<br />

• also included in the hedging reserve are the gains and losses<br />

on the hedging instruments which were part of a hedging<br />

relationship in the past but which were no longer part of such<br />

a relationship at year-end.<br />

The amounts recognised in the hedge reserve take account<br />

of the date on which an instrument was designated as part<br />

of a hedging relationship, which may be different from the<br />

date of the associated trade. In addition, only the gains and<br />

losses in the fair value of the effective portion of the hedging<br />

instruments are recognised in the hedge reserve.<br />

5.2.2.4 Currency risk<br />

Currency risk concerns the price risk related to exchange rate<br />

movements. DELTA’s risk policy is to hedge currency risks on<br />

positions in foreign currencies. To hedge the risks, DELTA uses<br />

financial instruments to prevent fluctuations in expected cash<br />

flows in so far as possible. Currency positions resulting from<br />

contracts, including commodity contracts, are reported to the<br />

Treasury Department on a daily basis for hedging at group level.<br />

Currency risk limits are set periodically in consultation with the<br />

Risk Management Committee and monitored by the Treasury<br />

Department.<br />

The following exchange rates were used for translating the<br />

amounts of items denominated in foreign currencies on the face<br />

of the balance sheet:<br />

30/12/<strong>2011</strong> 31/12/2010<br />

Middle rates<br />

US dollar 1.2933 1.3375<br />

Pound sterling 0.8353 0.8616<br />

75


Consolidated financial statements<br />

5.2.2.5 Interest rate risk<br />

DELTA’s interest rate risk policy is to limit the effect of interest<br />

rate fluctuations. To hedge the risks, DELTA makes use of<br />

derivatives such as interest rate swaps.<br />

Hedged loans<br />

DELTA has a number of interest rate swaps. All the swaps<br />

were effective at the end of the reporting period. Sensitivity is<br />

measured by increasing or decreasing the floating spot by 10%.<br />

The swaps remained effective. Several of these interest rate<br />

derivatives can be classified as option contracts, which qualify<br />

for the exemption referred to in IAS 39, paragraph 74. The<br />

change in the fair value is accounted for in the hedge reserve<br />

with the change in the time value recognised through profit or<br />

loss. The following table shows the effect of a 10% increase and<br />

a 10% decrease compared with the carrying amounts as at 31<br />

December <strong>2011</strong>.<br />

(x EUR 1,000)<br />

Position as at<br />

31 December<br />

Value based<br />

on yield curve<br />

10% increase 10% decrease<br />

Increase in value<br />

relative to<br />

carrying amount<br />

Value based<br />

on yield curve<br />

Decrease in value<br />

relative to<br />

carrying amount<br />

<strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010<br />

Derivatives<br />

Derivatives (4,670) (7,168) (4,103) (5,656) 568 1,512 (5,196) (8,564) (526) (1,396)<br />

Deferred tax on derivatives 1,636 2,765 1,545 2,419 (91) (346) 1,728 2,975 92 210<br />

Total (3,034) (4,403) (2,558) (3,237) 476 1,166 (3,469) (5,589) (434) (1,186)<br />

Interest rate swaps<br />

Hedge reserve 2,928 5,534 2,757 4,737 (171) (797) 3,100 5,929 172 395<br />

Non-controllig interest 904 1,366 854 1,238 (50) (128) 955 1,486 50 120<br />

Total 3,832 6,900 3,611 5,975 (222) (925) 4,055 7,415 222 515<br />

Gains and losses on swaps<br />

Total 1,453 (246) 1,198 (487) (255) (241) 1,665 425 212 671<br />

76


DELTA Financial statements <strong>2011</strong><br />

As at 31 December <strong>2011</strong>, the interest rate derivatives position<br />

represented a loss. An upward movement of the yield curve<br />

reduces this loss.<br />

The hedge reserve relating to interest rate swaps as at 31<br />

December <strong>2011</strong> represented a debit item in equity. An upward<br />

movement of the yield curve reduces the amount of this debit.<br />

Unhedged loans<br />

If the interest rates on unhedged variable rate loans had been<br />

10% higher or lower at the end of the reporting period and<br />

all other variables remain constant, the profit or loss (before<br />

non-controlling interests) would have been EUR 0.6 million per<br />

annum lower or higher, respectively.<br />

5.2.3. Liquidity risk<br />

Liquidity risk is the risk that DELTA might not have sufficient<br />

funds available to settle its liabilities.<br />

DELTA’s capital management policy focuses on centralising<br />

cash management and funding and borrowing repayment<br />

operations at holding company level as far as possible. A<br />

financing plan is prepared each year on the basis of the<br />

business plan, giving direction to the activities of the DELTA<br />

N.V. Treasury department.<br />

This includes the annual determination of the ratio of current to<br />

non-current borrowings.<br />

In order to provide the flexibility required for executing strategic<br />

projects, DELTA has standby credit facilities available up to<br />

a limit of EUR 500 million, from which an amount of EUR 300<br />

million was drawn down as at year-end <strong>2011</strong>.<br />

Two businesses within the DELTA group look after their own<br />

finances, viz.:<br />

1. The Indaver group manages the liquidity risk and<br />

funding risk within the framework of the DELTA policy, by<br />

maintaining adequate reserves and ample committed credit<br />

lines. The Indaver group had borrowings and credit facilities<br />

totalling EUR 324 million as at year-end <strong>2011</strong>, of which EUR<br />

107.8 million remains to be drawn down.<br />

2. DELTA Netwerkbedrijf, as required by the Independent<br />

Network Management Act (WON), had a separate credit<br />

facility of EUR 190 million as at balance sheet date.<br />

DELTA’s corporate credit rating by Standard & Poor’s improved<br />

in <strong>2011</strong> from BBB to BBB + with a stable outlook.<br />

77


Consolidated financial statements<br />

In order to provide a view of the liquidity risk, the following<br />

table presents the contractual maturities of the financial<br />

liabilities.<br />

The contractual maturities of the financial obligations reflect<br />

the expected outgoing cash flows relating to the financial<br />

commitments entered into as at balance sheet date. ‘Other’<br />

contractual maturities contains mainly tax, deferred revenue<br />

and the put option.<br />

(x EUR 1,000)<br />

Contractual maturities of financial obligations as at 31 december <strong>2011</strong><br />

< 1 year 1-5 years > 5 years Total<br />

Trade payables 324,381 - - 324,381<br />

Interest-bearing loans 97,801 468,649 116,857 683,307<br />

Derivatives 223,724 77,149 - 300,873<br />

Other 308,628 97,298 2,273 408,199<br />

Total 954,534 643,096 119,130 1,716,760<br />

Related interest payable 13,100 39,222 9,393 61,716<br />

Contractual maturities of financial obligations as at 31 december 2010<br />

< 1 year 1-5 years > 5 years Total<br />

Trade payables 227,303 - - 227,303<br />

Interest-bearing loans 86,069 235,414 215,594 537,077<br />

Derivatives 164,677 31,209 - 195,886<br />

Other 246,755 230,303 - 477,058<br />

Total 724,804 496,926 215,594 1,437,324<br />

Related interest payable 10,987 38,003 12,971 61,960<br />

78


DELTA Financial statements <strong>2011</strong><br />

5.2.4. Credit risk<br />

Credit risk concerns the losses that could arise if a counterparty<br />

defaults on a contractual obligation. DELTA has set credit limits<br />

for its external counterparties in order to limit the credit risk.<br />

An internal rating system sets a credit limit for each external<br />

counterparty. This system uses publicly available information<br />

on the company concerned or the guarantor (such as financial<br />

statements and credit ratings). In the case of previous DELTA<br />

customers, their payment history is a major factor in agreeing<br />

to supply them.<br />

DELTA uses various instruments to manage credit risks,<br />

including trading on the basis of standard forms of contract and<br />

terms of business, trading via exchanges, ensuring a diversified<br />

portfolio of customers and requiring guarantees. If the credit<br />

rating of an external counterparty or guarantor is not or is no<br />

longer investment grade, no additional credit risk is accepted.<br />

As at year-end <strong>2011</strong>, the credit ratings of the external<br />

counterparties showed the following distribution across the<br />

rating classes on a percentage basis:<br />

Credit rating counterparties<br />

<strong>2011</strong><br />

2010<br />

30%<br />

25%<br />

20%<br />

15%<br />

10%<br />

5%<br />

0%<br />

AA+ AA AA- A+ A A- BBB+ BBB BBB-<br />

79


Consolidated financial statements<br />

6. Inventories<br />

(x EUR 1,000)<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Raw materials 9,979 9,212<br />

Consumables 4,429 3,501<br />

Finished products 654 277<br />

Goods for resale 4,440 4,371<br />

19,502 17,361<br />

Less: Provision for obsolescence (2,199) (2,386)<br />

Total inventories 17,303 14,975<br />

80


DELTA Financial statements <strong>2011</strong><br />

7. Receivables<br />

(x EUR 1,000)<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Trade receivables 390,303 310,179<br />

Current corporate income tax 0 15,898<br />

Other current taxes 7,324 45,167<br />

Total taxes 7,324 61,065<br />

Cash not available on demand 19,075 2,884<br />

Current portion of long-term loans granted 5,390 4,029<br />

Other receivables, prepayments and accrued income 22,164 36,878<br />

Total other receivables 46,629 43,791<br />

Total receivables (excluding derivates) 444,256 415,035<br />

The cash not available on demand consists of deposits relating<br />

to the trading activities on the Endex energy futures exchange.<br />

The trade receivables rose sharply in <strong>2011</strong>, owing to the<br />

increased volume of trading activities on Endex. The trade<br />

payables position was also sharply higher for the same reason.<br />

A provision for possible bad debts totalling EUR 13.8 million<br />

(2010: EUR 15.2 million) was recognised in respect of the trade<br />

receivables.<br />

81


Consolidated financial statements<br />

Aged analysis of trade receivables<br />

per 31/12/<strong>2011</strong><br />

(x EUR 1,000)<br />

Age <strong>2011</strong> 2010<br />

(in days) (EUR 1,000)<br />

< 30 365,520 288,615<br />

31-60 18,050 15,403<br />

61-90 2,827 2,990<br />

91-120 2,038 2,273<br />

> 120 15,663 16,115<br />

Total 404,097 325,395<br />

Bad debt provision (13,794) (15,216)<br />

Total trade receivables 390,303 310,179<br />

The


DELTA Financial statements <strong>2011</strong><br />

8. Cash<br />

Cash comprises not only cash but also cash equivalents that<br />

can be converted into cash with no material risk of impairment.<br />

(x EUR 1,000)<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Deposits 29,308 28,307<br />

Cash 23,082 21,103<br />

Total cash 52,390 49,410<br />

83


Consolidated financial statements<br />

9. Provisions<br />

(x EUR 1,000)<br />

Total<br />

Site<br />

reconstruction<br />

costs<br />

Unprofitable<br />

contracts<br />

Employee<br />

benefits<br />

Dismantling<br />

costs<br />

Other<br />

provisions<br />

Carrying amount as at 1 January 2010 92,538 62,500 13,250 4,989 1,828 9,971<br />

Reversal of current portion of provision 4,364 524 - 851 - 2,989<br />

Added 16,260 - 11,900 360 4,000 -<br />

Interest added 4,220 3,101 663 119 - 337<br />

Utilised (4,063) (410) (1,211) (652) - (1,789)<br />

Other movements (484) (9) 9 (2) (1,828) 1,345<br />

Carrying amount as at 31 December 2010 112,835 65,705 24,611 5,665 4,000 12,854<br />

Current portion of provisions (17,331) (10,157) - (886) (4,000) (2,288)<br />

Carrying amount as at 1 January <strong>2011</strong> 95,504 55,548 24,611 4,780 - 10,565<br />

Reversal of current portion of provisions 17,331 10,157 - 886 4,000 2,288<br />

Added 159,265 158,954 311 - -<br />

Interest added 3,717 3,262 - 114 - 341<br />

Released (19,938) - (18,006) (390) (526) (1,016)<br />

Utilised (3,039) (440) - (816) - (1,783)<br />

Other movements (140) (166) 1 202 - (177)<br />

Carrying amount as at 31 December <strong>2011</strong> 252,700 68,361 165,560 5,086 3,474 10,219<br />

Current portion of provisions (15,876) (9,710) - (830) (3,474) (1,862)<br />

Carrying amount as at 31 December <strong>2011</strong> 236,824 58,651 165,560 4,256 - 8,357<br />

84


DELTA Financial statements <strong>2011</strong><br />

The amount of the provisions which it is probable will be<br />

utilised within one year, being EUR 15.9 million<br />

(2010: EUR 17.3 million), has been included in current liabilities.<br />

Site restoration costs<br />

Indaver has recognised provisions for the capping and aftercare<br />

of its current landfill sites. An amount of approximately EUR<br />

15.0 million of these provisions is expected to be utilised<br />

over the next five years. The costs have been estimated by<br />

the management using best estimates based on existing<br />

technology. The discount rate was 4.67% (2010: 4.67%) for the<br />

Belgian landfill sites and 5.0% for the German and Dutch landfill<br />

sites (2010: 5.0%).<br />

Between now and 2020, an estimated EUR 31.9 million (<strong>2011</strong><br />

price levels) will be required for the preparatory aftercare,<br />

capping and landscaping of the Derde Merwedehaven landfill<br />

site. Utilisation of the provisions recognised for this purpose<br />

will occur as from 2017. In the period up to 2025, an estimated<br />

EUR 22.5 million (<strong>2011</strong> price levels) will be required for the<br />

preparatory aftercare and capping of the Noord- en Midden<br />

Zeeland landfill site. Utilisation of the provisions recognised for<br />

this purpose will occur as from 2017.<br />

The current portion of the provision mainly relates to the<br />

Koegorspolder landfill site, which ceased to be used in 2005.<br />

Unprofitable contracts<br />

In the light of current developments in market prices, a number<br />

of energy procurement/sales contracts entered into in the past<br />

are no longer profitable. In addition, legislation on emissions<br />

has adversely affected the cost base of several power stations,<br />

eroding the gross margin on supply contracts. A provision is<br />

recognised to cover the unprofitable part of these contracts.<br />

The annual utilisation is recognised in the gross margin. The<br />

provisions are reviewed each year in the light of developments<br />

in the electricity and fuel markets and emissions legislation.<br />

The heavy pressure on electricity prices in north-west Europe<br />

due to the state of the economy in relation to available<br />

generating capacity compounded by the rise in fuel prices<br />

due to growing worldwide demand, resulted in a provision<br />

for unprofitable contracts; where appropriate related to a<br />

joint venture or assiociates, the added provision is justified<br />

under ‘results of joint ventures and associates’ because of the<br />

causality between the results of joint ventures and associates<br />

and the addition to the provision. On the basis of a discount<br />

rate of 4.5% (2010:4.5%), this has resulted in an addition of<br />

more than EUR 158 million to the provision.<br />

Employee benefits<br />

These provisions have been recognised in order to be able to<br />

meet existing future financial obligations. Under the terms of<br />

the CLA, DELTA pays employees long-service benefits. From the<br />

date on which an employee joins the company, a provision is<br />

recognised for these benefits, based on the number of years<br />

of service, expected price and wage inflation and statistical<br />

severance, invalidity and mortality rates. The discount rate is<br />

4.5% (2010: 4.5%).<br />

In addition, a provision has been recognised in connection with<br />

the transitional arrangements relating to IZA/IZR (public sector)<br />

health insurance schemes for former employees that were<br />

agreed with the unions in 2006 covering a period of 10 years.<br />

85


Consolidated financial statements<br />

Other provisions<br />

Other provisions include a provision for the Environmental<br />

Action Plan for Industry (BMAP). Remaining liabilities<br />

connected with BMAP activities undertaken in the past are<br />

settled from this provision.<br />

Indaver has recognised provisions for the expected cost of<br />

cleaning up pollution identified at certain locations.<br />

Retirement benefits<br />

DELTA has transferred its retirement benefit obligations to<br />

pension funds in the Netherlands, primarily ABP. The pension<br />

contributions that DELTA pays to the pension funds are based<br />

on expectations regarding inflation and pay rises, the ageing<br />

of the workforce, mortality rates and the return on the plan<br />

assets. The ABP industry-wide pension fund has stated that<br />

there is no consistent and reliable basis for attributing the<br />

pension liabilities, plan assets and costs to the individual<br />

participating entities. DELTA consequently makes use of the<br />

exemption provided by IAS 19 to treat the defined benefit plan<br />

as a defined contribution plan.<br />

Retirement benefit obligations at Indaver<br />

Indaver provides a defined benefit plan for the employees of the<br />

Indaver holding company and some subsidiaries that were part<br />

of the Indaver group before 31 December 2007. This concerns<br />

two plans contracted with various insurance companies.<br />

Indaver also operates unfunded defined benefit plans for the<br />

employees of Indaver Deutschland GmbH in Germany. For new<br />

employees who have joined the holding company and some<br />

subsidiaries in Belgium since 1 January 2008, as well as for the<br />

employees of Indaver Ireland, Indaver also provides defined<br />

contribution plans.<br />

On the above basis, Indaver has the following long-term<br />

pension liabilities:<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Pension liabilities 21,869 21,874<br />

Total pension liabilities 21,869 21,874<br />

The current portion of the pension liabilities relating to Indaver,<br />

amounting to EUR 1.0 million (2010: EUR 1.1 million), has been<br />

included in current liabilities.<br />

Retirement benefit provisions at Indaver<br />

(x EUR 1,000)<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Belgium Germany Belgium Germany<br />

1 Net liability<br />

Present value of defined benefit obligation 24,189 12,877 21,908 13,543<br />

Fair value of plan assets (19,922) - (19,136) -<br />

Present value of net obligation 4,267 12,877 2,772 13,543<br />

Unrecognised past service cost - - - -<br />

Actuarial gains and losses 6,313 (1,526) 7,813 (2,347)<br />

Defined benefit plan based on simple actuarial calculations 175 759 115 1,121<br />

Net liability on the face of the balance sheet 10,755 12,110 10,700 12,317<br />

86


DELTA Financial statements <strong>2011</strong><br />

(x EUR 1,000)<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Belgium Germany Belgium Germany<br />

2 Movements in present value<br />

Opening defined benefit obligation 21,908 13,543 23,116 12,273<br />

Constributions by employer 1,579 329 1,854 280<br />

Interest cost 1,031 651 1,200 660<br />

Other 1,007 (765) (3,962) 775<br />

Actuarial gains and losses 263 - 261 -<br />

Contributions by employees (55) - (53) -<br />

Costs paid (272) - (262) -<br />

Insurance premiums paid (1,267) (881) (275) (351)<br />

Benefits paid - - 41 -<br />

Net transfer in/out (5) - (12) -<br />

Curtailments and settlements - - - (94)<br />

Closing defined benefit obligation 24,189 12,877 21,908 13,543<br />

3 Movements in fair value<br />

Opening fair value of plan assets 19,136 - 17,373 -<br />

Expected return 967 - 965 -<br />

Actuarial gains and losses (224) - (215) -<br />

Contributions by employer 1,379 - 1,322 -<br />

Contributions by employees 263 - 261 -<br />

Expenses paid (55) - (53) -<br />

Premiums paid (272) - (262) -<br />

Benefits paid (1,267) - (275) -<br />

Settlements (4) - (9) -<br />

Business combinations - - 28 -<br />

Closing fair value of plan assets 19,922 - 19,136 -<br />

4 Retirement benefit costs<br />

Current service cost 1,579 329 1,854 280<br />

Interest cost 1,031 651 1,200 660<br />

Other (967) - (965) -<br />

Expected return on plan assets (269) - (76) -<br />

Actuarial gains and losses - 57 - (62)<br />

Net benefit expense recognised in staff costs 1,374 1,037 2,013 878<br />

5 Actuarial valuation assumptions<br />

Employee benefit plan obligations<br />

Discount rate 5.5% 5.5% 5.0% 5.0%<br />

Expected return 5.5% 5.0%<br />

Future pay rises 3.5% 1.8% 4.0% 1.8%<br />

Increases in medical expenses 2.0% 2.0% 2.0% 2.0%<br />

6 Actual return on fund investments<br />

The actual return on fund investments in <strong>2011</strong> was EUR 0,7 million (2010: EUR 0,8 million)<br />

87


Consolidated financial statements<br />

10. Movements in long-term debt<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Carrying amount as at 1 January 482,474 459,622<br />

Loans drawn down 171,612 245,198<br />

Movements in cross-border leases 3,100 -<br />

Repayments (46,279) (222,346)<br />

610,907 482,474<br />

Current portion (22,301) (31,467)<br />

Long-term debt 588,606 451,007<br />

The liabilities include bank borrowings. The average interest<br />

rate on the debt as at year-end <strong>2011</strong> was 2.3% (2010: 2.3%).<br />

EUR 117.0 million of the carrying amount falls due after more<br />

than five years.<br />

DELTA has a bilateral standby credit facility amounting to<br />

EUR 500 million with five banks. No security has been provided<br />

for this facility.<br />

DELTA Netwerkbedrijf B.V. and Indaver have their own credit<br />

lines.<br />

The financial crisis has meant that additional security has<br />

been demanded for the liabilities under the cross-border lease<br />

contracted by Indaver in the past. This led to the provision of<br />

an extra bank guarantee in <strong>2011</strong>. The net present value of the<br />

associated future costs has been charged to income.<br />

In the past, revenues have been added to the result.<br />

The intangible assets and property, plant and equipment<br />

as well as the receivables, inventories and cash of SAV<br />

(EUR 83.5 million) have been pledged as security for the<br />

liabilities of Indaver Deutschland (SAV).<br />

88


DELTA Financial statements <strong>2011</strong><br />

11. Other non-current liabilities<br />

(x EUR 1,000)<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Deferred tax liabilities 57,470 62,688<br />

Deferred revenue 70,999 68,843<br />

Indaver put option 0 138,913<br />

Other non-current liabilities 25,472 22,547<br />

Total other non-current liabilities 153,941 292,991<br />

Movements in other non-current liabilities<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Carrying amount as at 1 January 292,991 285,373<br />

Released deferred tax liability (recognised in profit or loss) (3,793) 70<br />

Other movements in deferred tax liabilities (1,425) 2,164<br />

Movement in deferred tax position (5,218) 2,234<br />

Released deferred revenue (recognised in profit or loss) (8,666) (7,800)<br />

Deferred revenue (resulting from IFRIC 18) 10,822 6,699<br />

Change in Indaver put option (138,913) 3,373<br />

Other movements 2,925 3,111<br />

Total other non-current liabilities 153,941 292,991<br />

The deferred tax liability arises mainly from past acquisitions.<br />

When an equity interest is acquired, the acquired property<br />

plant and equipment and intangible assets are recognised<br />

at fair value. Fair value adjustments are not tax-allowable,<br />

necessitating the recognition of a deferred tax liability in<br />

connection with the adjustment to fair value of the acquired<br />

assets. The amount of the tax liability decreases at the same<br />

rate as the fair value adjustments are written down, except for<br />

the fair value adjustments on land.<br />

Equally, additions to provisions lead to a deferred tax asset.<br />

The movement of the tax asset is dependable on the utilised<br />

provisions.<br />

The deferred tax liability is attributable to:<br />

(x EUR 1,000)<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Intangible assets 4,014 4,191<br />

Property, plant and equipment 51,399 51,331<br />

Other 2,057 7,165<br />

Total 57,470 62,688<br />

Deferred revenue relates to payments already received in<br />

respect of waste which still has to be processed by Indaver. In<br />

both <strong>2011</strong> and 2010, the deferred revenue was aggregated with<br />

the contributions received from third parties for new capital<br />

projects (in accordance with IFRIC 18).<br />

89


Consolidated financial statements<br />

12. Current liabilities<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Trade payables 324,381 227,303<br />

Current tax liabilities 9,148 7,848<br />

Other current tax liabilities 50,043 101,948<br />

Deferred revenue 13,401 12,268<br />

Work in progress for third parties 0 964<br />

Current portion of provision 15,876 17,331<br />

Current portion of long-term debt 22,301 31,467<br />

Put option Indaver 146,511 0<br />

Accruals and deferred income 78,270 65,669<br />

Other current liabilites 247,082 97,136<br />

Bank borrowings 66,429 65,329<br />

Total current liabilities (excluding derivatives) 726,360 530,127<br />

The trade payables rose sharply in <strong>2011</strong>, owing to the increased<br />

volume of trading activities on Endex. The increase is in direct<br />

proportion to the increase in trade receivables.<br />

The current tax liabilities are largely made up of value-added<br />

tax payable. In addition, the current tax liabilities include wage<br />

tax and social security contributions, corporate income tax and<br />

energy tax payable.<br />

In addition to the other payables and accruals and deferred<br />

income, current liabilities includes the scheduled repayments<br />

on long-term loans and provisions due to be utilised in 2012.<br />

In 2007, DELTA increased its interest in Indaver to 75%. A put<br />

option has been given to the owners of the outstanding 25%.<br />

This put option can be exercised between the end of the fifth<br />

year and the end of the seventh year after closing in 2007;<br />

the put option is recognised in non-current liabilities and is<br />

measured at fair value as at 31 December.<br />

Profit attributable to non-controlling interests is added to the<br />

value of the put-option.<br />

The exercise price of the put option can be determined using<br />

the discounted cashflow method, taking several estimates into<br />

account. For this reason, DELTA uses a bandwidth determining<br />

the fair value of the put options. The valuation as at balance<br />

date falls within this bandwidth.<br />

90


DELTA Financial statements <strong>2011</strong><br />

Commitments and contingent liabilities<br />

A. Operational<br />

DELTA Energy B.V. trading portfolio<br />

DELTA’s risk management policy aims to actively control the risk<br />

exposures connected with production assets and long-term<br />

procurement contracts. Positions arising from trading activities<br />

are controlled through a strict system of limits, using both<br />

financial and energy derivatives, including swaps and options.<br />

The sales contracts in the portfolio relate to energy supplied<br />

to end users and trading partners and associated financial<br />

instruments. The value of the <strong>2011</strong> sales contracts at the end of<br />

the reporting period was EUR 1,068 million<br />

(2010: EUR 1,107 million).<br />

Procurement contracts in the portfolio relate to production<br />

and purchasing agreements with trading partners and<br />

associated contracts for financial instruments. The value of<br />

the procurement contracts as at the balance sheet date was<br />

EUR 3,751 million (2010: EUR 2,746 million). The value of the<br />

financial instruments is determined on the basis of market<br />

values derived from transactions contracted in the physical<br />

commodities trade.<br />

Long-term waste processing contracts<br />

Indaver has entered into various long-term contracts for<br />

processing waste. They are covered by payments upfront,<br />

which have been recognised in the balance sheet (<strong>2011</strong>: EUR<br />

48.9 million; 2010: EUR 52.8 million). In some cases, the client<br />

has been given a put option conferring the right to sell some<br />

of the rights concerned back to Indaver. No liability has been<br />

recognised in respect of these put options since exercise of the<br />

options is not considered to be a probability.<br />

Rent commitments<br />

To provide premises for various business units, DELTA has<br />

contracted leases for various periods. The total exposure is<br />

approximately EUR 6.0 million, based on contractual maturities.<br />

Investment commitments<br />

As at year-end <strong>2011</strong>, the company had outstanding financial<br />

commitments totalling approximately EUR 59.9 million (2010:<br />

EUR 76.3 million). These commitments relate chiefly to capital<br />

projects under construction.<br />

Borssele covenant<br />

In 2006, a covenant was agreed with the central government<br />

on the extension of the service life of the nuclear power station<br />

until 2033. As part of the covenant, agreements were also<br />

reached on the efforts that DELTA (and Essent) would make to<br />

address and provide technical and financial support for new<br />

renewable energy developments. In addition to their interests<br />

in Sustainable Energy Technology (SET) Fund C.V., these<br />

commitments include investments in Additional Innovative<br />

Projects.<br />

Sale-and-leaseback contracts<br />

In recent years DELTA has built several combined heat and<br />

power stations and wind farms. Some of these assets were<br />

covered by sale-and-leaseback contracts. In December <strong>2011</strong>,<br />

DELTA repurchased the remaining installations from Rabobank,<br />

eliminating the position.<br />

Cross-border lease on waste incineration plant<br />

On 17 August 1999, Indaver entered into a cross-border lease<br />

with an American investor for the use of lines 1 and 2 of the<br />

incinerator plant in Doel. The initial lease term was 25.4 years,<br />

with an option of a maintenance contract for a further 13 years.<br />

Under the terms of the lease, Indaver received an amount of<br />

USD 135 million and placed USD 129.4 million on deposit on<br />

the date of inception of the contract. On the strength of this<br />

deposit, a payment agreement covering the cost of the lease<br />

almost entirely was concluded with banks enjoying a high credit<br />

rating. In <strong>2011</strong>, an additional bank guarantee was provided on<br />

behalf of the American counterparty.<br />

91


Consolidated financial statements<br />

B. Collateral and guarantees<br />

DELTA has issued and received the following financial collateral<br />

to guarantee transactions entered into:<br />

(x EUR 1,000)<br />

Collateral granted<br />

Term in years<br />

< 1 year 1 – 5 years > 5 years Total<br />

Collateral granted for associates and joint ventures 58,751 13,554 3,946 76,250<br />

Other collateral granted 35,821 4,259 71,907 111,987<br />

Total collateral granted 94,572 17,813 75,852 188,237<br />

Collateral received<br />

Collateral received for associates and joint<br />

ventures<br />

Term in years<br />

< 1 year 1 – 5 years > 5 years Total<br />

- - - -<br />

Other collateral received 69,140 16,567 112,144 197,850<br />

Total collateral received 69,140 16,567 112,144 197,850<br />

Principal collateral granted<br />

DELTA has given guarantees totalling EUR 22.3 million to<br />

the Zeeland provincial authority in respect of the financial<br />

obligations connected with the capping of the Koegorspolder<br />

and Noord- en Midden Zeeland landfill sites. DELTA has<br />

also given guarantees totalling EUR 24.6 million to the Zuid-<br />

Holland provincial authority for the cost of capping the Derde<br />

Merwedehaven landfill site in Dordrecht.<br />

Indaver has also issued a number of bank guarantees, totalling<br />

EUR 93.2 million, the majority of which relate to the transport<br />

and treatment of waste flows.<br />

Indaver has also underwritten the bank loans contracted by<br />

the joint venture Sleco Centrale, which totalled EUR 33.3 million<br />

as at 31 December <strong>2011</strong>.<br />

Principal collateral received<br />

Of the collateral received, an amount of EUR 110.0 million<br />

relates to bank guarantees received in connection with<br />

DELTA’s trading activities.<br />

Indaver has received bank guarantees from customers and<br />

suppliers totalling EUR 84.8 million, mainly relating to turnkey<br />

projects in Ireland and Belgium.<br />

92


DELTA Financial statements <strong>2011</strong><br />

C. Lawsuits and claims<br />

NEA claim against EPZ<br />

In February 2008, NEA claimed approximately EUR 200 million<br />

from EPZ relating to benefits of the nuclear power plant as a<br />

result of the extension of the plant’s useful life from 2013 to<br />

2033. Judgement was passed in <strong>2011</strong> and the claim was thrown<br />

out.<br />

REB claim<br />

In 2009, the Dutch Tax Administration imposed an additional<br />

tax assessment on DELTA for payment of regulating energy tax<br />

(REB) in respect of 2001 and 2002, whereupon DELTA initiated<br />

legal proceedings with the Netherlands Arbitration Institute<br />

relating to one of its suppliers at the time in an attempt to<br />

recover that supplier’s share of the additional assessment.<br />

A decision is expected early in 2012.<br />

DELTA Netwerkbedrijf B.V.<br />

DNWB has to allow for a possible compensation claim<br />

in relation to wind farms connected to the 150/20/10kV<br />

transformer if the Trade and Industry Appeals Tribunal rules<br />

that DNWB had a statutory duty to build redundancy into the<br />

design of this type of transformer. The Tribunal will probably<br />

deliver its verdict in 2012.<br />

Unbundling plan – Independent Network Management Act<br />

(WON)<br />

The Minister approved the plan to unbundle the company on<br />

2 December 2009. However, on 22 June 2010, the Court in<br />

The Hague declared parts of the unbundling act non-binding.<br />

In the light of this judgement, the unbundling did not go<br />

ahead, although the conditions stipulated by the Minister<br />

have been complied with as far as possible and necessary.<br />

The government took the case to the Supreme Court in an<br />

attempt to get the decision overturned. On 24 February 2012,<br />

the Supreme Court referred the case to the European Court of<br />

Justice in Luxembourg.<br />

Indaver N.V.<br />

In Germany, Indaver was confronted with a legal procedure<br />

against a former employee, who worked for a joint venture’s<br />

subcontractor. At this moment, Indaver’s management has no<br />

reason to assume that Indaver, as being the last employer of<br />

the former employee, will be found guilty. Indaver has added a<br />

provision to cover the defending costs in this case.<br />

Court cases<br />

Legal proceedings have been initiated against DELTA by a<br />

former non-controlling shareholder in a subsidiary with a claim<br />

for compensation for alleged losses from DELTA. The court<br />

has since delivered its judgement (February 2012), completely<br />

exonerating DELTA. It is possible that the case may be taken<br />

to appeal.<br />

Legal proceedings have been initiated against DELTA by<br />

two former co-shareholders in a former subsidiary that are<br />

contesting a binding recommendation establishing the value<br />

of the shares held by them which they were required to offer<br />

to DELTA when they ceased to be members of the executive<br />

board of the company concerned and DELTA duly bought the<br />

shares from them. The case has been brought before the<br />

Court in Amsterdam. The amount of the claim is several<br />

millions of Euros.<br />

93


Consolidated financial statements<br />

Notes to the consolidated income statement<br />

13. Revenue<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Electricity supply 1,001,782 1,073,084<br />

Gas supply 415,328 312,273<br />

Electricity and gas transport 113,552 100,586<br />

Cable, internet and telecommunications 83,182 82,889<br />

Waste management and environmental services 508,683 461,848<br />

Other revenue 62,572 42,371<br />

Total revenue 2,185,099 2,073,051<br />

Revenues from gas and electricity supplies to domestic and<br />

small-business users are partly estimated, as staggered meter<br />

readings are taken throughout the year.<br />

The depressed market prices resulted in lower electricityrevenues<br />

in <strong>2011</strong> compared to 2010. Gas-revenues went up due<br />

to new activities in <strong>2011</strong>.<br />

The revenue from waste logistics and environmental services<br />

shows an increase that is entirely attributable to the high<br />

capacity utilisation of the incinerators and the commissioning<br />

of the new waste-to-energy facility in Meath (Ireland). The<br />

effect of the depressed prices, which, due to the state of the<br />

economy, is also noticeable in this business, was therefore<br />

cancelled out.<br />

94


DELTA Financial statements <strong>2011</strong><br />

14. Cost of sales<br />

17. Third-party services, materials and other<br />

external charges<br />

Part of the electricity requirement was purchased from the<br />

related parties EPZ, the Sloe power station, Elsta and BMC<br />

Moerdijk, in which DELTA has an equity interest. This electricity<br />

is mainly procured on a cost-plus basis.<br />

15. Other gains and losses<br />

Other gains and losses consist chiefly of payments received for<br />

third-party services.<br />

16. Fair value gains and losses on the trading<br />

portfolio<br />

DELTA uses derivatives to hedge price and currency risks arising<br />

from energy commodity contracts (electricity, gas, coal and<br />

oil). DELTA uses cash flow hedging for this purpose, contracting<br />

hedging instruments to offset the exposure to variations in<br />

existing and future cash flows that could ultimately affect the<br />

results.<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Consumption of materials 56,562 51,514<br />

Third-party work and services 167,045 179,874<br />

Other external charges 19,164 18,371<br />

Total 242,771 249,759<br />

A large part of the external charges is related to the operations<br />

of Indaver. The costs of materials used by Indaver amounted<br />

to EUR 52.6 million in <strong>2011</strong>, costs for third-party services<br />

amounted to EUR 92.9 million and other external charges<br />

totalled EUR 5.9 million.<br />

The other third-party work and services largely concerns costs<br />

connected with the electricity, gas and digital infrastructure.<br />

Also included in third-party work and services are ICT costs.<br />

The hedges are attributed to a specific risk relating to an item<br />

in the balance sheet or a highly probable forecast transaction.<br />

The effective portion of the fair value gain or loss on the hedge<br />

reserve is recognised directly in hedge reserves in equity.<br />

The cumulative amounts recognised in equity are taken to<br />

the income statement in the same period as the hedged<br />

transaction.<br />

The portion of the gain or loss on the contract portfolio that is<br />

not hedged by means of hedging instruments (the non-effective<br />

hedges) is recognised in the income statement as a fair value<br />

gain or loss.<br />

Energy market price movements in <strong>2011</strong> resulted in a net loss<br />

on the fair value of the portfolio of contracts amounting to EUR<br />

80.3 million, of which approximately EUR 13.0 million has been<br />

recognised in income and approximately EUR 67.3 million has<br />

been recognised directly in equity.<br />

95


Consolidated financial statements<br />

18. Staff costs<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Salaries 156,184 151,399<br />

Social securities contributions 24,631 23,793<br />

Pension charges 16,420 15,862<br />

Other staff costs 16,516 11,574<br />

Staff costs 213,751 202,628<br />

Capitalised staff costs (2,145) (4,670)<br />

Total staff costs 211,606 197,958<br />

Number of employees (FTEs) as at 31 December 2,977 3,197<br />

FTEs related to discontinued operations/assets held for sale 17 270<br />

Number of FTEs related to the above total staff costs 2,960 2,927<br />

Average number of FTEs (related to the above total staff costs) 2,993 2,977<br />

Remuneration of the members of the Executive Board<br />

of DELTA N.V. registered as directors with the Chamber<br />

of Commerce<br />

The remuneration policy for the members of the company’s<br />

Executive Board was adopted by the General Meeting of<br />

Shareholders on the recommendation of the Supervisory Board.<br />

The underlying principle of the remuneration policy is that<br />

DELTA N.V. should be able to offer a sufficiently competitive<br />

remuneration package to attract and retain people with the<br />

right expertise and experience.<br />

The members of the Executive Board are employed on a<br />

permanent basis and are appointed as directors for a period<br />

of four years. Their contracts of employment are drafted<br />

accordingly and contain, in addition to a minimum period of<br />

notice, a clause providing for termination pay amounting to a<br />

maximum of one year’s salary, in conformity with the Dutch<br />

Corporate Governance Code.<br />

The Supervisory Board decides the remuneration for the<br />

individual Executive Board members each year. Commencing<br />

with the new four-year appointment period for the CEO, which<br />

began on 1 March 2010, the benchmark is taken as the median<br />

level of the market for company directors in the Netherlands,<br />

i.e. half of those in comparable positions (as graded by Hay) are<br />

paid less and half are paid more.<br />

The annual pay also has a variable component, which is related<br />

to the achievement of a number of agreed targets in the current<br />

year. The maximum amount of this variable remuneration is<br />

30% of the gross basic annual salary. Each year, the targets to<br />

be achieved are set by the Supervisory Board and the CEO. They<br />

are partly financial (net profit and cash flows) and partly in the<br />

form of personal targets and related to personal performance<br />

and contribution to the achievement of group-wide HR<br />

objectives.<br />

The Executive Board members are also covered by the pension<br />

plan applicable to all the company’s employees (administered<br />

by Stichting Pensioenfonds ABP). The CEO also receives an<br />

additional annual pension payment to make up for the loss of<br />

early retirement and retirement benefits which ceased to be<br />

payable on joining DELTA N.V.<br />

96


DELTA Financial statements <strong>2011</strong><br />

Executive Board pay<br />

(x EUR 1,000)<br />

2010 P.G. Boerma CEO F. Verhagen CFO J.J. Rieter CCO A.S. Louter COO<br />

Gross basic annual salary 378,261 1) 220,893 193,836 233,640<br />

Pension contributions by employer 115,516 30,842 27,589 €34,094<br />

Variable remuneration - 2) - 2) - 2) - 2)<br />

Total 493,777 251,735 221,425 267,734<br />

1) excluding supplementary payment in 2010 relating to 2009, amounting to EUR 14,330<br />

2) in view of the heavy loss reported for 2010, the members of the Executive Board have decided to waive their variable remuneration for 2010.<br />

<strong>2011</strong> P,G, Boerma 5) CEO F, Verhagen CFO J,J, Rieter 3) CCO A,S, Louter 3) COO<br />

Gross basic annual salary 384,969 260,000 64,612 77,880<br />

Termination payment (incl, Pension charges) 760,000<br />

Pension contributions by employer 121,757 37,992 10,264 12,495<br />

Variable remuneration4) 117,450 78,919 17,056 20,440<br />

Total 1,384,176 376,911 91,932 110,815<br />

3) up to 30 April <strong>2011</strong><br />

4) paid in 2012<br />

5) until December <strong>2011</strong><br />

After the termination of Mr Boerma’s labour agreement,<br />

Mr Boerma, in addition to the above remuneration, will remain<br />

available for the Supervisory Board, on a advisory basis.<br />

During this period, which is in line with Mr Boerma’s original<br />

appointment period and running up to the end of February<br />

2014, Mr Boerma will be available to provide DELTA N.V. and<br />

the group’s businesses and companies with advices in<br />

connection with the settlement of matters stemming from<br />

the recent and more distant past on which his input and<br />

involvement is indispensable. The consultancy fee has been<br />

fixed at EUR 410,000<br />

97


Consolidated financial statements<br />

19. Depreciation, amortisation and impairment<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Intangible assets<br />

Amortisation 25,894 26,794<br />

Impairment 125 89,028<br />

Property, plant and equipment<br />

Depreciation 90,232 103,845<br />

Impairment 7,349 88,212<br />

Terugname impairments (1,104) -<br />

Third-party contributions released (received prior to 2010) (6,665) (6,437)<br />

Brought to result from discontinued operations (1,829) (175,952)<br />

Total depreciation, amortisation and impairment 114,002 125,490<br />

The impairment under property, plant and equipment relates<br />

to the write-down to fair value of the costs of construction<br />

contracts in Cork (Ireland) and several smaller write-downs<br />

of assets. The reversal of impairment losses relates to the<br />

increased value in use of DELTA Industriële Reiniging.<br />

98


DELTA Financial statements <strong>2011</strong><br />

20. Other operating expenses<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Added to provision for bad debts 2,365 2,279<br />

Debt collection costs - 2,365<br />

Other operating expenses 7,125 3,807<br />

Added to other provisions - 50,305<br />

Total other operating expenses 9,801 12,811<br />

An amount was added to the provision for bad debts following<br />

several business failures.<br />

The amount added to other provisions relates to additions to<br />

provisions for employee benefits.<br />

Other operating expenses includes the directors’ fees for<br />

members of the company’s Supervisory Board.<br />

Remuneration of the Supervisory Board <strong>2011</strong><br />

With effect from 1 January <strong>2011</strong>, the Supervisory Board has been<br />

made up of the chairman and four members (2010: a total of<br />

nine members). The remuneration was revised with effect from<br />

the same date and currently amounts to annual fees of:<br />

Chairman<br />

€40,000<br />

Ordinary member € 25,000<br />

Audit Committee member € 5,000<br />

Other Committee member € 3,000<br />

The total amount paid to members of the Supervisory Board in<br />

<strong>2011</strong> was 153,000 (2010: 215,423).<br />

99


Consolidated financial statements<br />

21. Share in the profit of joint ventures and associates<br />

This concerns the results attributable to DELTA from its<br />

interests in joint ventures and investments in associates.<br />

In <strong>2011</strong>, the share in the profit of joint ventures and associates<br />

was EUR 9 million higher compared to 2010, mainly because a<br />

good result from Evides. The share in the Evides N.V. profit in<br />

<strong>2011</strong> was higher, owing to incidental income from an external<br />

contract. The figure for Sloe Centrale B.V. by contrast was down,<br />

owing to the movements in the price of electricity and gas and,<br />

linked to that, the limited utilisation of the power station.<br />

100


DELTA Financial statements <strong>2011</strong><br />

22. Net finance income (expense)<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

External finance income 5,669 4,322<br />

External finance expense (23,727) (22,350)<br />

Interest added to provisions (3,716) (4,221)<br />

Purchase of / Interest added to cross-border lease (3,100) -<br />

Bank borrowing arrangement fees (249) (213)<br />

Exchange differences 476 525<br />

Other finance income (expense) 83 (1,768)<br />

(24,564) (23,705)<br />

Capitalised interest 249 1,842<br />

Total finance income (expense) (24,315) (21,863)<br />

In May 2010, in preparation for possible unbundling, DELTA<br />

Netwerkbedrijf converted the intercompany financing provided<br />

by DELTA N.V. into an external long-term financing arrangement.<br />

The interest rate on this finance is higher than the corporate<br />

funding, which explains the increased interest expense in<br />

<strong>2011</strong> compared with 2010. Additionally, the financing of the<br />

additional 20% interest acquired in N.V. EPZ accounts for a<br />

further increase in the external finance expense in <strong>2011</strong>.<br />

Despite this higher finance expense, the net finance expense<br />

was not greatly increased because of lower external interest<br />

rates on the one hand and higher finance income than in the<br />

previous year on the other, as a result of more funds being lent<br />

to non-consolidated companies.<br />

The interest rate applied for the capitalisation of constructionperiod<br />

interest in <strong>2011</strong> was 2.3% (2010: 2.3%).<br />

101


Consolidated financial statements<br />

23. Corporate income tax<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Current corporate income tax liability (10.944) (8.340)<br />

Movements in deferred tax assets and liabilities (24,772) 28,211<br />

Total tax (35,716) 19,871<br />

Of which reported under discontinued operations (175) 36,254<br />

Tax expense recognised in profit or loss (35,541) (35,541)<br />

Effective tax burden (including discontinued operations) 28,3% 10,2%<br />

Current corporate income tax liability<br />

The reconciliation of the profit before tax and the actual taxable amount<br />

with the resulting tax burden, is as follows:<br />

Result before corporate income tax (including discontinued operations) 126,421 (195,701)<br />

Substantial-holding privilege (237,255) (63,548)<br />

EIA/MIA schemes (1,857) (229)<br />

Temporary differences connected with the carrying amounts of assets and provisions (incl. VAMIL) 60,515 46,898<br />

Operating expenses recognised in previous years - -<br />

Transferable tax loss carryforwards predating tax group - -<br />

Goodwill - 87,584<br />

Other differences 458 372<br />

Taxable amount, Netherlands (51,718) (124,624)<br />

Standard tax rate in the Netherlands 2010 / 2009 25.50%<br />

Standard tax rate in the Netherlands as from <strong>2011</strong> 25.00%<br />

Tax for the year - -<br />

Adjustment for prior years (728) (1,125)<br />

Tax paid by subsidiaries outside the Netherlands (10,216) (7,215)<br />

Current corporate income tax liability (10,944) (8,340)<br />

102


DELTA Financial statements <strong>2011</strong><br />

Movements in deferred tax assets and liabilities<br />

The tax income results from differences between the reported profit and the profit calculated for tax<br />

purposes plus utilisation of tax loss carryforwards.<br />

<strong>2011</strong> 2010<br />

Applicable tax loss carryforwards 12,186 18,325<br />

Temporary differences (20,480) 9,643<br />

Movements in deferred tax for deductible tax losses (19,041) (1,661)<br />

Movements in deferred tax due to tax loss carryforwards - -<br />

Movements in deferred tax due to change in tax rate in the Netherlands - (1,359)<br />

Adjustment for prior years 440 (203)<br />

Movements in tax provisions recognised by subsidiaries (including outside the Netherlands) 2,123 3,466<br />

Movements in tax provisions (24,772) 28,211<br />

Consolidated statement of changes in equity<br />

Deferred tax assets related to items recognised directly in equity:<br />

Fair value gains and losses on hedges (16,098) (35,496)<br />

Movements in deferred tax on hedges due to change in tax rate in the Netherlands 0 291<br />

(16,098) (35,205)<br />

103


Consolidated financial statements<br />

24. Assets held for sale and discontinued operations<br />

In November 2010, a decision was taken by the DELTA Executive<br />

Board to sell off the group companies Solland Solar Holding B.V.<br />

and Sunergy Investco B.V. In addition, on 14 December 2010,<br />

the business of DELTA Biovalue B.V. and its subsidiaries was<br />

declared insolvent.<br />

The sale of Solland was completed in July <strong>2011</strong> via a<br />

management buyout. RGS Development B.V. and Solwafer B.V.<br />

(both wholly-owned subsidiaries of Sunergy Investco B.V.)<br />

were sold in <strong>2011</strong> and a transaction involving an asset-liability<br />

transaction was concluded in relation to the investment in Fesil<br />

Sunergy AS.<br />

In November <strong>2011</strong>, the DELTA Executive Board decided to<br />

dispose of the group companies Triqua B.V. and DELTA MBR B.V.<br />

24.2 Balance sheet<br />

The carrying amount of the assets held for sale is presented as<br />

a net amount of approximately EUR 3 million in conformity with<br />

IFRS 5. This amount is an estimate of the selling price less costs<br />

to sell.<br />

The liabilities held for sale mainly relate to the former<br />

subsidiary Solland. As part of the management buyout, it was<br />

contractually agreed that DELTA would provide limited funds for<br />

the continuation of operations and the social plan.<br />

24.3 Cash flow statement<br />

These developments led to the recognition, in the income<br />

statement, of all the consequent financial implications as profit<br />

after tax from discontinued operations and, in the balance<br />

sheet, as assets/liabilities held for sale.<br />

24.1 Income statement<br />

The combined effect of Solland, Sunergy, Biovalue,<br />

Triqua and DELTA MBR on the income statement is as follows:<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Profit before tax (11,490) (301,647)<br />

Tax (175) 36,254<br />

Profit after tax (11,665) (265,393)<br />

The following amounts have been included in the consolidated<br />

cash flow statement of DELTA N.V. in respect of Solland,<br />

Sunergy, Biovalue, Triqua and DELTA MBR:<br />

In total, the cash flow from operating activities relating to<br />

discontinued operations is approximately EUR 11 million<br />

negative. This figure includes a loss for Solland representing<br />

an additional liability/payout (on top of the EUR 30 million for<br />

which provision was recognised as at year-end 2010). These<br />

expenditures are accounted for in other movements.<br />

The cash flow from other receivables/payables includes the<br />

payments made out of the provision recognised as at yearend<br />

2010. The total amount is approximately EUR 24 million<br />

negative.<br />

The largest share of the negative result from discontinued<br />

operations in <strong>2011</strong> is accounted for by the group companies<br />

Solland and Sunergy. Both entities were already classified as<br />

assets/liabilities held for sale as at year-end 2010. The costs<br />

with respect to Sunergy in <strong>2011</strong> mainly relate to the financing<br />

of operating losses in the current year. All remaining financial<br />

consequences were accounted for in <strong>2011</strong> although there will be<br />

some of the actual related expense in 2012.<br />

104


DELTA Financial statements <strong>2011</strong><br />

Notes to the consolidated cash flow statement<br />

The statement of cash flows has been prepared in accordance with the indirect method. As some items in the income statement<br />

and the balance sheet do not generate direct cash flow effects, the cash flow for these items has been neutralised. This essentially<br />

concerns three items:<br />

Treatment of derivatives<br />

Fair value gains and losses on the trading portfolio lead to current and non-current movements on both the assets and the liabilities<br />

sides of the balance sheet. Some of these gains and losses are also included in the operating result and some in the hedge reserve,<br />

forming part of group equity. However, none of these movements results directly in cash flow. For this reason, all movements are<br />

included in the operating cash flow, with positive and negative movements cancelling each other out.<br />

Share in profits of joint ventures and associates<br />

Not all of the share in the profits of joint ventures and associates is distributed as dividends; the undistributed portion results in an<br />

increase in the equity of the company concerned and therefore in a change in the amount of the financial assets recognised on the<br />

face of DELTA’s balance sheet. Consequently, only the actual dividend receipts are recognised in the cash flow.<br />

Corporate income tax<br />

The profit after tax takes account not only of the corporate income tax payable on the profit before tax but also of the deferred tax<br />

assets and liabilities resulting from the agreement with the Dutch Tax Administration concerning the opening balance sheet for tax<br />

purposes in 1998. As movements in deferred tax do not lead to actual cash flow, movements in deferred tax assets and liabilities<br />

have been eliminated in the cash flow.<br />

In the cash flow from operating activities, other movements includes the expenditure connected with the discontinuation of the<br />

operations of Solland, Sunergy and Biovalue not already provided for as at year-end 2010. Expenditure for which provisions were<br />

recognised as at year-end 2010 is accounted for as movements in other receivables/payables. The figures concerned are EUR 11<br />

million negative and EUR 24 million negative, respectively.<br />

In addition to expenditure on expansion and replacement of property plant and equipment, the cash flow from investing activities is<br />

largely made up of the amount paid out to acquire the additional 20% interest in N.V. EPZ. The other movements in financial assets<br />

largely relate to the return of deposits (see section 4.3: other financial assets).<br />

Chiefly owing to the increased interest in N.V. EPZ, the cash flow from investing activities exceeds that from operating activities,<br />

meaning that the distribution of the dividend in <strong>2011</strong> was funded entirely with borrowed capital.<br />

105


Consolidated financial statements<br />

Post-balance-sheet events<br />

Sale of investment in KEMA<br />

On 28 February 2012, the sale took place of the shares held in N.V. KEMA.<br />

Unbundling plan – Independent Network Management Act (WON)<br />

On 24 February 2012, the Supreme Court delivered its verdict in the appeal brought by the government against the decision of the<br />

Court in The Hague given in June 2009, overturning the decision of the Court in The Hague. The Supreme Court refered the case to<br />

the European Union’s Court of Justice in Luxembourg.<br />

Lawsuit<br />

On 22 February 2012, the Court in Amsterdam delivered its verdict in a case brought by s’Energy B.V. and its managing director,<br />

throwing out the claim in its entirety.<br />

106


DELTA Financial statements <strong>2011</strong><br />

Segment information<br />

In <strong>2011</strong>, DELTA altered the structure of the organisation with<br />

the object of making it more responsive to changing market<br />

conditions and the economic climate. The Executive Board has<br />

been reduced in number from four members to two members<br />

(CEO and CFO) and responsibilities have been delegated more<br />

to segment level.<br />

DELTA distinguishes the following segments:<br />

• Energy<br />

• Networks<br />

• Waste Management<br />

• Corporate<br />

Each segment is generally subdivided into divisions.<br />

Energy<br />

The Energy segment is active throughout the energy chain,<br />

from production to the supply of energy to the customer.<br />

Commercial operations range from the procurement of the<br />

required fuels, through electricity generation to supplying<br />

energy (gas and electricity) to the wholesale market. As regards<br />

retail operations, the supply of electricity, gas, water, radio<br />

and television channels and telephony via cable as well as<br />

internet access to consumers and the small-business market<br />

also comes under this segment. Other activities are supplying<br />

heating equipment (central heating systems) on a rental basis<br />

and providing public information, undertaking research and<br />

engaging in projects relating to renewable energy and energy<br />

saving.<br />

Networks<br />

The network operator (DELTA Netwerkbedrijf) looks after the<br />

transport of electricity and gas in the province of Zeeland<br />

and is responsible for the construction, management and<br />

maintenance of the various related networks. The Infrastructure<br />

Division builds, manages and maintains electricity, gas, water,<br />

heat and telecommunication networks. The division is also<br />

responsible for the installation and management of electricity,<br />

gas and water meters and for meter reading.<br />

Waste Management<br />

All activities in this field are carried on by the DELTA subsidiary<br />

Indaver N.V., which specialises in all activities in the waste<br />

management chain, including waste collection, recycling and<br />

processing.<br />

Corporate<br />

This segment essentially comprises the central staff<br />

departments. The subsidiary DELTA Industriële Reiniging is also<br />

reported as part of this segment.<br />

The subsidiaries Triqua and DELTA MBR are held for sale.<br />

Also reported as discontinued operations are the costs of<br />

disengaging from the activities of Solland, Sunergy and<br />

Biovalue.<br />

Transactions between segments are conducted at prices similar<br />

to those for transactions with third parties.<br />

107


Consolidated financial statements<br />

Segment revenue and operating results<br />

(x EUR 1,000)<br />

Revenue<br />

Profit<br />

<strong>2011</strong> 2010 <strong>2011</strong> 2010<br />

Energy 1,518.7 1,474.5 46.6 81.6<br />

Networks 149.0 134.8 27.9 17.8<br />

Waste Management 498.9 442.4 31.3 24.3<br />

Corporate 18.5 21.3 (28.7) (58.9)<br />

Total 2,185.1 2,073.1 EBIT 77.0 64.9<br />

Share in results of joint<br />

ventures and associates 85.2 63.0<br />

Finance income and expense (24.3) (21.9)<br />

Corporate income tax (35.5) (16.4)<br />

Non-controlling interests (8.0) (2.0)<br />

Discontinued operations (11.7) (265.4)<br />

Profit after tax 82.7 (177.8)<br />

Segment assets<br />

(x EUR 1,000)<br />

Assets<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Energy 1,271.9 952.2<br />

Networks 355.8 325.0<br />

Waste Management 1,150.2 1,086.9<br />

Corporate 379.7 383.0<br />

Unallocated assets 52.4 49.4<br />

Assets held for sale 2.6 4.0<br />

Total 3,212.7 2,800.5<br />

108


DELTA Financial statements <strong>2011</strong><br />

Other segment information<br />

(x EUR 1,000)<br />

Depreciation<br />

Impairment<br />

<strong>2011</strong> 2010 <strong>2011</strong> 2010<br />

Energy 24.9 20.0 1.2 -<br />

Networks 18.4 18.8 - -<br />

Waste Management 50.2 38.9 4.4 10.0<br />

Corporate 15.9 33.4 (1.1) 4.5<br />

Total 109.5 111.0 4.5 14.4<br />

The level of depreciation in <strong>2011</strong> is in line with that in 2010.<br />

The impairment losses for Waste Management concern the<br />

write-down on land in Cork (Ireland). The reversal in <strong>2011</strong> of<br />

impairment losses recognised in 2010 on the vehicle fleet of the<br />

subsidiary DELTA Industriële Reiniging has been included in the<br />

Corporate segment.<br />

Geographical segmentation<br />

(x EUR 1,000)<br />

Revenue by country<br />

<strong>2011</strong> 2010<br />

Netherlands 1,285.6 1,368.6<br />

Belgium 220.4 191.9<br />

UK and Ireland 265.3 201.3<br />

Germany 271.8 214.1<br />

Rest of EU 142.1 96.8<br />

Non-EU - 0.5<br />

Totaal 2,185.1 2,073.1<br />

The revenue per country is made up entirely of external<br />

revenue. Revenue outside the Netherlands is almost entirely<br />

realised within the Energy and Waste Management segments.<br />

109


Consolidated financial statements<br />

Consolidated companies<br />

Company<br />

1) Shareholding of the parent company in the entity<br />

110<br />

Headquarters<br />

DELTA’s interest<br />

31/12/<strong>2011</strong> 31/12/2010<br />

DELTA Infra B.V. Middelburg 100% 100% 100%<br />

Zeeuwse Netwerkholding N.V. Middelburg 100% 100% 100%<br />

DELTA Netwerkbedrijf B.V. Middelburg 100% 100% 100%<br />

DELTA Energy B.V. Middelburg 100% 100% 100%<br />

DELTA Ficus Holding B.V. Middelburg 100% 100% 100%<br />

DELTA Pipe B.V. Middelburg 100% 1) 100% 1) 100%<br />

Deltius B.V. Ritthem 100% 100% 100%<br />

Windpark Kreekraksluis B.V. Middelburg 100% 100% 100%<br />

DELTA Tolling Sloe B.V. Middelburg 100% 100% 100%<br />

DELTA Saefthinge N.V. Doel, Belgium 99.9% 99.9% 99.9%<br />

Limo Energie Nederland B.V. Middelburg 100% 100% 100%<br />

Litro Energie Nederland B.V. Middelburg 100% 100% 100%<br />

DELTA Comfort B.V. Middelburg 100% 100% 100%<br />

DELTA Kabelcomfort Netten B.V. Middelburg 100% 1) 100% 100%<br />

ZeelandNet B.V. Kamperland 100% 1) 100% 100%<br />

Voting<br />

rights<br />

Internetservices Zeeland B.V. Kamperland 100% 1) 100% 1) 100%<br />

Internetplatform Zeeland B.V. Kamperland 100% 1) 100% 1) 100%<br />

DELTA Energy Belgium N.V. Doel, België 99.9% n/a 99.9%<br />

DELTA Industriële Reiniging B.V. Bergen op Zoom 100% 100% 100%<br />

DELTA Milieu Industriële Reiniging N.V.<br />

Sint-Kruis-Winkel,<br />

n/a 100% n/a<br />

Belgium<br />

DELTA Investerings Maatschappij B.V. Middelburg 100% 100% 100%<br />

DELTA Onroerend Goed Ontwikkelingsmaatschappij B.V. Middelburg 100% 100% 100%<br />

Stichting DELTA Zeeland Fonds Middelburg 100% 100% 100%<br />

DELTA Development & Water B.V. Middelburg 100% 100% 100%<br />

DELTA MBR B.V. Middelburg 100% 100% 100%<br />

Triqua B.V. Wageningen 100% 100% 100%<br />

DELTA Biovalue B.V. (into liquidation) Eemshaven 100% 100% 100%<br />

DELTA Biovalue Nederland B.V. (into liquidation) Eemshaven 100% 1) 100% 1) 100%<br />

DELTA Biopat B.V. (into liquidation) Eemshaven 100% 1) 100% 1) 100%<br />

DELTA Solar B.V. Middelburg 100% 100% 100%<br />

Solland Solar Energy Holding B.V. Heerlen n/a 100% 1) n/a<br />

Solland Solar Energy B.V. Heerlen n/a 100% 1) n/a<br />

Solland Solar Real Estate B.V. Heerlen n/a 100% 1) n/a<br />

Solland Solar Cells B.V. Heerlen n/a 100% 1) n/a<br />

Solland Solar Cells GmbH Aachen, Germany n/a 100% 1) n/a<br />

Sunergy Investco B.V. Rotterdam 100% 100% 100%<br />

Solsic Development Company AS Norway 60% 60% 60%<br />

RGS Development B.V. Petten n/a 100% n/a<br />

Solwafer B.V. Middelburg n/a 100% n/a


DELTA Financial statements <strong>2011</strong><br />

Company<br />

Headquarters<br />

DELTA’s interest<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Voting<br />

rights<br />

Indaver N.V. Belgium 75% 75% 75%<br />

Indaver Participaties N.V. Belgium 99.9% 100% 99.9%<br />

Indaver Logistics N.V. Belgium 99.9% 100% 99.9%<br />

Indaver Medical Services N.V. Belgium 99.9% 100% 99.9%<br />

Indaver Italia S.R.L. Italy 100% 100% 100%<br />

Indaver Ireland Ltd Ireland 100% 100% 100%<br />

Indaver Energy Ltd Ireland 100% 1) n/a 100%<br />

Indaver Nederland B.V. Netherlands 100% 100% 100%<br />

Indaver Gevaarlijk Afval B.V. Netherlands 100% 1) 100% 1) 100%<br />

Indaver Personeel B.V. Netherlands 100% 1) 100% 1) 100%<br />

AROC B.V. Netherlands 100% 1) 100% 1) 100%<br />

DELTA Milieu B.V. Terneuzen 100% 1) 100% 1) 100%<br />

Promar B.V. Terneuzen n/a 100% 1) n/a<br />

DELTA Milieu Compost en Biomassa B.V. Terneuzen 100% 1) 100% 1) 100%<br />

DELTA Milieu Biofuels B.V. Terneuzen 100% 1) 100% 1) 100%<br />

DELTA Milieu Groencompost B.V. Terneuzen 100% 1) 100% 1) 100%<br />

DELTA Milieu Composteren B.V. Terneuzen 100% 1) 100% 1) 100%<br />

DELTA Impex B.V. ‘s-Gravenpolder 100% 1) 100% 1) 100%<br />

Zeeuwse Reinigingsdienst B.V. Terneuzen 99% 1) 99% 1) 99%<br />

DELTA Milieu Verwerking B.V. Terneuzen 100% 1) 100% 1) 100%<br />

DELTA Milieu Recycling B.V. Terneuzen 100% 1) 100% 1) 100%<br />

Perex B.V. Terneuzen 100% 1) 100% 1) 100%<br />

DELTA Milieu Afvalbergingen B.V. Terneuzen 100% 1) 100% 1) 100%<br />

Derde Merwedehaven B.V. Terneuzen 100% 1) 100% 1) 100%<br />

Stortplaats Koegorspolder B.V. Terneuzen 100% 1) 100% 1) 100%<br />

Stortplaats Noord en Midden Zeeland B.V. Terneuzen 100% 1) 100% 1) 100%<br />

DELTA Milieu Verbranding & Handel B.V. Terneuzen 100% 1) 100% 1) 100%<br />

BTC Zoetermeer B.V. Terneuzen n/a 100% 1) n/a<br />

DELTA Milieu Personeel B.V. Terneuzen 100% 1) 100% 1) 100%<br />

Indaver Portugal S.A. Portugal 100% 100% 100%<br />

Indaver Schweiz A.G. Switzerland 100% 100% 100%<br />

Indaver UK Ltd UK 100% 100% 100%<br />

Indaver Deutschland GmbH (was:SAV Beteiligungs GmbH) Germany 51% 51% 51%<br />

SAV Zweite Beteiligungs GmbH & Co. KG Germany 94.90% 1) 94.90% 1) 94.90%<br />

AVG Abfall-Verwertungs-Gesellschaft mbH Germany 99.74% 1) 99.74% 1) 99.74%<br />

Gareg Umwelt-Logistik GmbH Germany 100.00% 1) 100.00% 1) 100.00%<br />

HIM GmbH Germany 93.83% 1) 93.83% 1) 93.83%<br />

Frassur GmbH Umweltschutz-Dienstleistungen Germany 100.00% 1) 100.00% 1) 100.00%<br />

Panse Wetzlar Entsorgung GmbH Germany 100.00% 1) 100.00% 1) 100.00%<br />

AVA Abwasser- und Verwertungsanlagen GmbH Germany 100.00% 1) 100.00% 1) 100.00%<br />

1) Shareholding of the parent company in the entity<br />

111


Consolidated financial statements<br />

Non-consolidated companies<br />

Company<br />

Headquarters<br />

DELTA’s interest<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Voting<br />

rights<br />

Joint Ventures<br />

DELTA Infra B.V.<br />

vof Diepp Etten-Leur 50.00% 50.00% 50.00%<br />

DELTA Energy B.V.<br />

N.V. EPZ Borssele 70.00% 50.00% 70.00%<br />

Sloewind B.V. Middelburg 50.00% 50.00% 50.00%<br />

Windpark Distridam vof Terneuzen 50.00% 50.00% 50.00%<br />

PVNed Holding B.V. Middelburg 50.00% 50.00% 50.00%<br />

PVNed B.V. Middelburg 100.00% 1) 100.00% 1) 100.00%<br />

Arbel N.V. (België) Mechelen, Belgium 99.90% 1) n/a 99.90%<br />

BMC Moerdijk B.V. Moerdijk 50.00% 50.00% 50.00%<br />

Sloe Centrale Holding B.V. Vlissingen 50.00% 50.00% 50.00%<br />

Sloe Centrale B.V. Vlissingen 100.00% 1) 100.00% 1) 100.00%<br />

DELTA Industriële Reiniging B.V.<br />

Vedis Reiniging B.V. Terneuzen 50.00% 50.00% 50.00%<br />

DELTA Mourik Industrial Services (DEMIS) vof Terneuzen 50.00% 50.00% 50.00%<br />

Indaver N.V.<br />

Sleco-Centrale N.V. Belgium 50.00% 50.00% 50.00%<br />

Svex N.V. Belgium 50.00% 50.00% 50.00%<br />

Wips N.V. Belgium 50.00% 50.00% 50.00%<br />

HIM GmbH<br />

Gesellschaft fur die Verwertung<br />

von Sonderabfallen mbH& Co. K.G.<br />

Germany 50.00% 50.00% 50.00%<br />

DELTA Milieu Verbranding & Handel B.V.<br />

Depmer B.V. Dordrecht 50.00% 50.00% 50.00%<br />

DELTA Milieu Afvalbergingen B.V.<br />

Zeeuwgrond B.V. Nieuwdorp 50.00% 50.00% 50.00%<br />

DELTA Milieu Biofuels B.V.<br />

Ecofuels B.V. Well, Limburg 50.00% 50.00% 50.00%<br />

Laarakker Landbouw B.V. Well, Limburg 100.00% 1) n/a 100.00%<br />

DELTA N.V.<br />

Evides N.V. Rotterdam 50.00% 50.00% 50.00%<br />

Elsta B.V. Middelburg 25.00% 25.00% 25.00%<br />

Elsta B.V.& CoCV Middelburg 24.75% 24.75% 24.75%<br />

DELTA/Essent Lighting vof Goes 50.00% 50.00% 50.00%<br />

Associates<br />

DELTA Netwerkbedrijf B.V.<br />

Zebra GasNetwerk B.V. Middelburg 33.33% 33.33% 33.33%<br />

Zebra Activa B.V. Middelburg 100.00% 1) 100.00% 1) 100.00%<br />

Zebra Pijpleiding vof Middelburg 33.33% 1) 33.33% 1) 33.33%<br />

Entrade Pipe B.V. Vught 100.00% 1) 100.00% 1) 100.00%<br />

Zebra Pijpleiding vof Middelburg 66.67% 1) 66.67% 1) 66.67%<br />

112 1) Shareholding of the parent company in the entity


DELTA Financial statements <strong>2011</strong><br />

Company<br />

DELTA Energy B.V.<br />

Headquarters<br />

DELTA’s interest<br />

31/12/<strong>2011</strong> 31/12/2010<br />

Windpark Neeltje-Jans B.V. Veere 40.00% 40.00% 40.00%<br />

Windpark Zeeland 1 B.V. Vlissingen/Kapelle-Schore 40.00% 40.00% 40.00%<br />

NPG Willebroek N.V. Antwerpen, Belgium 49.00% 49.00% 49.00%<br />

DELTA N.V.<br />

Sunergy Investco B.V.<br />

Fesil Sunergy AS Norway 49.00% 1) 49.00% 1) 49.00%<br />

Partners Vliegveld Zeeland B.V. Middelburg 40.91% 45.00% 40.91%<br />

Zeeland Airport B.V. Middelburg 46.00% 1) 48.00% 1) 46.00%<br />

Indaver N.V.<br />

IHM cvba Belgium 30.00% 30.00% 30.00%<br />

Ibogem cvba Belgium 35.12% 35.12% 35.12%<br />

Intercommunale vereniging Verko N.V. Belgium 39.90% 39.90% 39.90%<br />

Ecowest N.V. Belgium 42.61% 42.61% 42.61%<br />

Indaver Participaties N.V.<br />

Sita Decontamination Services N.V. Belgium 26.00% 1) 26.00% 1) 26.00%<br />

Ecov N.V. Belgium 50.00% 1) 50.00% 1) 50.00%<br />

Voting<br />

rights<br />

Ivago cvba Belgium 50.00% 1) 50.00% 1) 50.00%<br />

N.V. Brussel Compost Belgium 40.00% n/a 40.00%<br />

DELTA Milieu B.V.<br />

AZN Holding B.V. Wijster 20.00% 20.00% 20.00%<br />

B.V. Grondbezit AVI Moerdijk Moerdijk 100.00% 1) 100.00% 1) 100.00%<br />

B.V. Grondbezit AVI Moerdijk II Moerdijk 100.00% 1) 100.00% 1) 100.00%<br />

N.V. AZN Den Bosch 100.00% 1) 100.00% 1) 100.00%<br />

Others<br />

DELTA Netwerkbedrijf B.V.<br />

Energie Data Services Nederland B.V. 1.65% 1.65% 1.65%<br />

DELTA Energy B.V.<br />

Decu Beheer B.V. 60.00% 60.00% 60.00%<br />

Decu CV 59.76% 59.76% 59.76%<br />

DELTA N.V.<br />

N.V. Kema 7.60% 7.60% 7.60%<br />

Synergia Capital Partners B.V. 5.00% 5.00% 5.00%<br />

DELTA Investerings Maatschappij B.V.<br />

Sustainable Energy Technology Fund C.V. 49.93% 1) 49.93% 1) 49.93%<br />

Sustainable Energy Technology Fund II C.V. 70.00% 1) n/a 70.00%<br />

Business Park Terneuzen B.V. 15.00% 15.00% 15.00%<br />

Indaver N.V.<br />

GRL Glasrecycling N.V. n/a 34.99% n/a<br />

Vlar Papier N.V. 34.96% 34.96% 34.96%<br />

Spanin N.V. 50.00% 50.00% 50.00%<br />

Ecowest N.V.<br />

IVIO cvba 1.50% 1) 1.50% 1) 1.50%<br />

Ivvo cvba 3.46% 3.46% 3.46%<br />

1) Shareholding of the parent company in the entity<br />

113


Company financial statements<br />

Company balance sheet as at 31 December <strong>2011</strong> (before profit appropriation)<br />

(x EUR 1,000)<br />

ASSETS<br />

Notes 31-12-<strong>2011</strong> 31-12-2010<br />

Non-current assets<br />

Intangible assets 1 3,470 28,415<br />

Property, plant and equipment 2 26,681 27,510<br />

Financial assets<br />

Investments in subsidiaries 3 996,809 1,001,826<br />

Other investments 3 327,997 288,567<br />

Receivables from subsidiaries 3 59,567 29,550<br />

Loans to other investment entities 3 418 -<br />

Other loans 3 360 13,342<br />

Deferred tax assets 4 60,638 74,440<br />

1,445,789 1,407,725<br />

1,475,940 1,463,650<br />

Current assets<br />

Receivables from subsidiaries 115,458 113,548<br />

Other receivables 5 10,364 26,781<br />

125,822 140,329<br />

Cash 10,157 1,385<br />

1,611,919 1,605,364<br />

EQUITY AND LIABILITIES<br />

Notes 31-12-<strong>2011</strong> 31-12-2010<br />

Shareholders’ equity<br />

Shareholders’ equity 6 1,043,039 1,307,601<br />

Profit for the year 6 82,690 (177,787)<br />

1,125,729 1,129,814<br />

Provisions 7 2,822 3,372<br />

Non-current liabilities 8 306,533 146,383<br />

Current liabilities<br />

Payables to subsidiaries 130,462 248,637<br />

Other payables 9 46,373 77,158<br />

176,835 325,795<br />

1,611,919 1,605,364<br />

114


DELTA Financial statements <strong>2011</strong><br />

Company income statement<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Profit on parent company activities (75,500) (7,537)<br />

Share in profits of subsidiaries, joint ventures and associates 158,190 (170,250)<br />

Profit for the year 82,690 (177,787)<br />

115


Company financial statements<br />

Notes to the company financial statements<br />

DELTA N.V. is the holding company, incorporated under Dutch<br />

law, of a number of the subsidiaries active in the generation of<br />

electricity, in the transportation and supply of energy and in the<br />

provision of environmental and cable services. The functional<br />

currency is the euro. Unless otherwise stated, all amounts are<br />

presented in thousands of euros.<br />

DELTA availed itself of the option in Part 9, Book 2, of the<br />

Netherlands Civil Code to prepare the company financial<br />

statements in accordance with the IFRS accounting policies<br />

used in the consolidated financial statements with the<br />

exception of the equity-accounted subsidiaries, joint ventures<br />

and associates. The company income statement is presented in<br />

abridged form in accordance with article 402, Part 9, Book 2, of<br />

the Netherlands Civil Code.<br />

Accounting policies<br />

The investments in the equity of other entities are stated at net<br />

asset value, measured in accordance with the IFRS accounting<br />

policies applied in the consolidated financial statements,<br />

adjusted for the goodwill paid on acquisition and any<br />

impairment of goodwill. No account is taken of non-controlling<br />

interests which are recognised in the carrying amount of the<br />

subsidiary concerned.<br />

For the other accounting policies, reference is made to the notes<br />

to the consolidated financial statements.<br />

116


DELTA Financial statements <strong>2011</strong><br />

1. Intangible assets<br />

(x EUR 1,000)<br />

Total Software<br />

2010<br />

Carrying amount as at 1 January 42,352 42,352<br />

Investments 3,751 3,751<br />

Amortisation (17,101) (17,101)<br />

Reclassification/other changes (587) (587)<br />

Carrying amount as at 31 December 28,415 28,415<br />

Total Software<br />

<strong>2011</strong><br />

Carrying amount as at 1 January 28,415 28,415<br />

Investments 688 688<br />

Amortisation (14,145) (14,145)<br />

Reclassification/other changes (11,488) (11,488)<br />

Carrying amount as at 31 December 3,470 3,470<br />

Amortisation period in years 5<br />

The movement in intangible assets is entirely due to investments in and amortisation of IT software.<br />

In <strong>2011</strong>, several IT applications purchased exclusively for use by one of DELTA’s subsidiaries were transferred to the company<br />

concerned. The amount of the assets carried on the balance sheet of DELTA N.V. was reduced accordingly.<br />

117


Company financial statements<br />

2. Property, plant and equipment<br />

(x EUR 1,000)<br />

Total<br />

Land and<br />

buildings<br />

Plant and<br />

equipment<br />

Other assets<br />

Assets under<br />

construction<br />

Third-party<br />

contributions<br />

2010<br />

Carrying amount as at 1 January 35,489 21,117 7,636 1,467 9,315 (4,046)<br />

Investments 721 - - - 730 (9)<br />

Depreciation (1,034) (803) - (231) - -<br />

Disposals (4,605) (4,605) - - - -<br />

Other movements (3,061) 2,547 (713) 326 (8,309) 3,088<br />

Carrying amount as at 31 December 27,510 18,256 6,923 1,562 1,736 (967)<br />

Carrying amount before deduction of 28,478 18,256 6,923 1,562 1,736<br />

contributions<br />

Accumulated depreciation and<br />

96,106 24,735 51,815 19,556<br />

impairment<br />

Acquisition cost as at 31 December 124,582 42,991 58,737 21,118 1,736<br />

Total<br />

Land and<br />

buildings<br />

Plant and<br />

equipment<br />

Other assets<br />

Assets under<br />

construction<br />

Third-party<br />

contributions<br />

<strong>2011</strong><br />

Carrying amount as at 1 January 27,510 18,256 6,923 1,562 1,736 (967)<br />

Investments - - - - - -<br />

Depreciation (914) (733) - (181) - -<br />

Disposals - - - - - -<br />

Other movements 85 1,585 (678) (91) (980) 249<br />

Carrying amount as at 31 December 26,681 19,108 6,245 1,290 756 (718)<br />

Carrying amount before deduction of 27,399 19,108 6,245 1,290 756<br />

contributions<br />

Accumulated depreciation and<br />

97,020 25,468 51,815 19,737<br />

impairment<br />

Acquisition cost as at 31 December 124,418 44,576 58,059 21,027 756<br />

Depreciation periods in years 10 - 40 7 - 40 5 - 15 n/a<br />

Property, plant and equipment consists chiefly of investments in premises. There were no new investments or disposals in <strong>2011</strong>.<br />

118


DELTA Financial statements <strong>2011</strong><br />

3. Financial assets (excluding tax assets)<br />

(x EUR 1,000)<br />

Receivables<br />

Investments<br />

Receivables from other<br />

in<br />

Other<br />

from investment<br />

Other<br />

Total subsidiaries investments subsidiaries entities receivables<br />

Carrying amount as at 1 January 2010 1,078,891 725,649 289,016 36,876 1,202 26,145<br />

Movements relating to subsidiaries (42,276) (42,276) - - - -<br />

Reversal of current portion 1,231 - - - (399) 1,630<br />

Acquisition/grant of loans 28,128 - (10,197) 37,855 450 20<br />

Share in profits (170,250) (200,570) 30,320 - - -<br />

Disposals/repayments/dividends (47,629) 15,452 (20,677) (29,838) (51) (12,515)<br />

Movements in hedge reserve 124,866 124,866 - - - -<br />

Other movements 360,327 378,705 105 (15,344) (1,202) (1,937)<br />

Carrying amount as at 31 December 2010 1,333,285 1,001,826 288,567 29,550 0 13,342<br />

Reversal of current portion 2,839 - - - - 2,839<br />

Acquisition/grant of loans (2,271) - - (3,000) 418 311<br />

Share in profits 158,190 114,720 43470 - - -<br />

Disposals/repayments/dividends (57,307) (49,695) (26,098) 33,017 - (14,532)<br />

Movements in hedge reserve (77,314) (77,314) - - - -<br />

Other movements 27,729 7,272 22,058 (1) - (1,600)<br />

Carrying amount as at 31 December <strong>2011</strong> 1,385,151 996,808 327,997 59,567 418 360<br />

In <strong>2011</strong>, the subsidiary DELTA Comfort B.V. was sold to DELTA Energy B.V. This was a sale under common control.<br />

The hedge reserve decreased in <strong>2011</strong>, solely on account of the related deferred tax.<br />

The revaluation of the investment in N.V. KEMA to fair value is included in other movements.<br />

119


Company financial statements<br />

4. Deferred tax assets<br />

Deferred tax assets have arisen as a result of temporary<br />

differences between the carrying amount in the financial<br />

statements and the corresponding tax bases. Amounts are<br />

also included in connection with loss carryforwards.<br />

DELTA also recognises a hedge reserve for unrealised<br />

movements in the value of derivatives/trade contracts in<br />

accordance with IAS 39/32.<br />

120


DELTA Financial statements <strong>2011</strong><br />

5. Other receivables<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Trade receivables 1,835 5,570<br />

Current corporate income tax 0 15,898<br />

Other current taxes 2,972 20<br />

Total current taxes 2,972 15,918<br />

Derivatives 141 0<br />

Other receivables, prepayments and accrued income 4,926 1,964<br />

Current portion of long-term loans granted 490 3,329<br />

Other receivables 5,416 5,293<br />

Total 10,364 26,781<br />

121


Company financial statements<br />

6. Statement of changes in equity<br />

(x EUR 1,000)<br />

Total<br />

Paid-up<br />

capital<br />

Statutory<br />

reserve<br />

Hedge reserve<br />

Assets held<br />

for sale<br />

Other<br />

reserves<br />

Unappropriated<br />

profit<br />

Carrying amount as at 31<br />

December 2009<br />

1,258,105 6,937 54,908 (61,636) - 1,250,805 7,091<br />

Profit appropriation for<br />

2009<br />

(50,000) - 40,581 - - (83,490) (7,091)<br />

Other movements (3,977) - (3,470) - - (507) -<br />

Movements in connection<br />

with capitalised<br />

- - (587) - - 587 -<br />

development costs<br />

Movement in hedge<br />

reserve for energy<br />

134,592 - - 134,592 - - -<br />

derivatives<br />

Movement in hedge<br />

reserve for interest rate<br />

4,086 - - 4,086 - - -<br />

derivatives<br />

Add: Corporate income<br />

tax effect<br />

(35,205) - - (35,205) - - -<br />

Net profit for 2010 (177,787) - - - - - (177,787)<br />

Carrying amount as at 31<br />

December 2010<br />

1,129,814 6,937 91,432 41,837 - 1,167,395 (177,787)<br />

Profit appropriation for<br />

2010<br />

(50,000) - (3,620) - - (224,167) 177,787<br />

Other movements 11,106 - (11,327) - 23,115 (682) -<br />

Movement in hedge<br />

reserve for energy<br />

(66,950) - - (66,950) - - -<br />

derivatives<br />

Movement in hedge<br />

reserve for interest rate<br />

2,971 - - 2,971 - - -<br />

derivatives<br />

Add: Corporate income<br />

tax effect<br />

16,098 - - 16,098 - - -<br />

Net profit for <strong>2011</strong> 82,690 - - - - - 82,690<br />

Carrying amount as at 31<br />

December <strong>2011</strong><br />

1,125,729 6,937 76,485 (6,044) 23,115 942,546 82,690<br />

The statutory reserve comprises the undistributed profits of<br />

subsidiaries, joint ventures and associates. It is consequently<br />

not freely distributable. The hedge reserve is also not freely<br />

distributable inasmuch as it relates to the unrealised fair value<br />

gains and losses on the trading portfolio. The hedge resulting<br />

from assets held for sale is also not freely distributable. For<br />

an explanation of changes in equity, reference is made to the<br />

consolidated financial statements.<br />

In contrast to the consolidated financial statements, noncontrolling<br />

interests in subsidiaries are deducted directly from<br />

the carrying amounts of the investments concerned (equity<br />

method).<br />

122


DELTA Financial statements <strong>2011</strong><br />

7. Provisions<br />

(x EUR 1,000)<br />

Total<br />

BMAP<br />

Employee<br />

benefits<br />

Other<br />

provisions<br />

Carrying amount as at 1 January 2010 3,702 494 3,208 -<br />

Reversal of current portion of provisions 1,498 650 848 -<br />

Added 4,360 360 4,000<br />

Interest added 122 3 119 -<br />

Released - - - -<br />

Utilised (776) (89) (687) -<br />

Other movements - -<br />

Carrying amount as at 31 December 2010 8,906 1,058 3,848 4,000<br />

Current portion of provisions (5,534) (650) (884) (4,000)<br />

Carrying amount as at 31 December 2010 3,372 408 2,964 -<br />

Reversal of current portion of provisions 5,534 650 884 4,000<br />

Added 260 260 -<br />

Interest added 122 8 114 -<br />

Released (913) - (387) (526)<br />

Utilised (848) (70) (778) -<br />

Other movements (1) (1) -<br />

Carrying amount as at 31 December <strong>2011</strong> 7,526 995 3,057 3,474<br />

Current portion of provisions (4,704) (400) (830) (3,474)<br />

Carrying amount as at 31 December <strong>2011</strong> 2,822 595 2,227 -<br />

Provisions relate chiefly to employee benefits and to BMAP.<br />

These provisions are recognised in order to settle future<br />

financial obligations.<br />

The BMAP provision relates to a provision in connection<br />

with the Environmental Action Plan for Industry (BMAP).<br />

The environmental surcharge on electricity and gas supplies<br />

charged to certaingroups of users in the period 1991–1999<br />

constitutes the basis of this provision. Remaining liabilities<br />

connected with activities undertaken in the past under BMAP<br />

are settled out of this provision.<br />

Following the introduction of the new health insurance system<br />

on 1 January 2006, the obligations underlying the provision<br />

for health care have changed substantially. An amount of<br />

EUR 0.8 million of the provision formed in the past continues<br />

to be recognised.<br />

Under the terms of the collective labour agreement (CLA),<br />

DELTA also pays employees long-service benefits.<br />

From the date on which an employee joins the company,<br />

a provision is recognised for these benefits based on the<br />

number of years of service, expected price and salary inflation<br />

(averaging 1.5%) and statistical severance, invalidity and<br />

mortality rates. The relevant discount rate is 4.5% (2010: 4.5%).<br />

123


Company financial statements<br />

8. Non-current liabilities<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Carrying amount as at 1 January 146,383 314,295<br />

Reversal of current portion 2,157 2,616<br />

Loans drawn down 165,000 115,000<br />

Repayments (2,157) (282,616)<br />

Movements in interest rate swap (2,050) (789)<br />

Other movements (499) 34<br />

308,834 148,540<br />

Repayments due in the next year (2,301) (2,157)<br />

Long-term debt 306,533 146,383<br />

124


DELTA Financial statements <strong>2011</strong><br />

9. Other payables<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Trade payables 12,692 12,382<br />

Current tax liabilities 5,571 4,976<br />

Derivatives 2,107 2,887<br />

Current portion of non-current liabilities 2,301 2,157<br />

Current portion of provisions 4,704 5,534<br />

Accruals and deferred income 14,998 44,323<br />

Total other payables 22,003 52,014<br />

Bank borrowings 4,000 4,900<br />

Carrying amount as at 31 December 46,373 77,158<br />

The other payables include the current portion of the<br />

provisions, the current portion of borrowings and outstanding<br />

supplier accounts. The current tax liabilities include VAT and<br />

energy tax payable.<br />

125


Company financial statements<br />

Commitments and contingent liabilities<br />

403 Declarations<br />

DELTA N.V. has filed a statement with the Chamber of Commerce<br />

as required by the provisions of Section 403, Book 2, of the<br />

Netherlands Civil Code assuming joint and several liability for<br />

any debts arising from the legally binding transactions of any of<br />

the following subsidiaries as at balance sheet date:<br />

• DELTA Comfort B.V.<br />

• DELTA Tolling Sloe B.V.<br />

• DELTA Energy B.V.<br />

• DELTIUS B.V.<br />

• DELTA Ficus Holding B.V.<br />

• Internetplatform Zeeland B.V.<br />

• DELTA Infra B.V.<br />

• Internetservice Zeeland B.V.<br />

• DELTA Kabelcomfort Netten B.V.<br />

• LIMO Energie Nederland B.V.<br />

• DELTA MBR B.V.<br />

• LITRO Energie Nederland B.V.<br />

• DELTA Netwerkbedrijf B.V.<br />

• ZeelandNet B.V.<br />

• DELTA Onroerend Goed Ontwikkelingsmaatschappij B.V.<br />

• Zeeuwse Netwerkholding N.V.<br />

• DELTA Pipe B.V.<br />

Given the filing of this statement and the declarations of<br />

agreement on the part of the shareholders filed annually<br />

with the Chamber of Commerce, these companies are exempt<br />

from using the prescribed format in preparing their financial<br />

statements.<br />

DELTA N.V. forms a tax group with some of its subsidiaries.<br />

On that basis, DELTA N.V. is jointly and severally liable for the<br />

various tax liabilities of those companies.<br />

Put options<br />

DELTA has issued put options to the non-controlling<br />

shareholders of Indaver. For a more detailed discussion,<br />

reference is made to the consolidated financial statements.<br />

Unbundling plan –<br />

Independent Network Management Act (WON)<br />

The Minister approved the plan to unbundle the company on<br />

2 December 2009. However, on 22 June 2010, the Court in<br />

The Hague declared parts of the unbundling act non-binding.<br />

In the light of this judgement, the unbundling did not go<br />

ahead, although the conditions stipulated by the Minister<br />

have been complied with as far as possible and necessary.<br />

The government took the case to the Supreme Court in an<br />

attempt to get the decision overturned. On 24 February 2012,<br />

the Supreme Court referred the case to the European Court of<br />

Justice.<br />

126


DELTA Financial statements <strong>2011</strong><br />

Audit fees<br />

In <strong>2011</strong>, DELTA N.V. paid the following fees to auditors:<br />

(x EUR 1,000)<br />

DELOITTE ACCOUNTANTS B.V.<br />

OTHER PARTS<br />

DELOITTE NETWERK NLD<br />

TOTAL<br />

<strong>2011</strong> 2010 <strong>2011</strong> 2010 <strong>2011</strong> 2010<br />

751 739 - - 751 739<br />

Other analysis assignments 67 38 - - 67 38<br />

Tax-related advice services 19 - - - 19 -<br />

Other non-analysis services 93 124 135 303 228 427<br />

930 901 135 303 1,065 1,204<br />

Performance-related fees are not paid.<br />

The audit of the financial statements of the members of the<br />

DELTA group in <strong>2011</strong> related to the completion of the 2010<br />

financial statements (19 sets of accounts in total) and the<br />

interim <strong>2011</strong> audit.<br />

Signed:<br />

Executive board:<br />

Supervisory Board:<br />

F. Verhagen, General Manager (acting) D. van Doorn, Chairman<br />

J. Bout<br />

R. Frohn<br />

F. Verhagen, CFO J.G. van der Werf<br />

B.P. de Wit, MA<br />

127


Other information<br />

Profit appropriation<br />

Profit appropriation under the Articles of Association.<br />

Article 39 of the Articles of Association provides for the<br />

appropriation of profits as follows.<br />

1. Any loss reported in the income statement, as included<br />

in the adopted financial statements, shall be taken to the<br />

general reserve. If the general reserve holds insufficient<br />

funds to cover said loss, the remainder of the loss shall be<br />

charged to any profits achieved in future years.<br />

2. If the income statement, as included in the adopted<br />

financial statements, reports any profit, the Supervisory<br />

Board may use this profit to allocate funds to the general<br />

reserves. Any profit remaining shall be at the disposal of the<br />

General Meeting of Shareholders.<br />

3. The General Meeting has the authority to declare one<br />

or more interim dividends and/or make other interim<br />

distributions, provided the requirements of Section 2:105,<br />

subsection 2, of the Netherlands Civil Code are satisfied<br />

on the evidence of an interim statement of financial<br />

position as referred to in Section 2:105, subsection 4, of the<br />

Netherlands Civil Code.<br />

Profit appropriation<br />

(x EUR 1,000)<br />

<strong>2011</strong> 2010<br />

Profit after tax 82,690 (177,787)<br />

Charged/added to the statutory reserve (125,522) 3,620<br />

Profit available for appropriation (42,832) (174,167)<br />

Charged/added to the general reserves (82,832) (224,167)<br />

Proposed dividend 40,000 50,000<br />

128


DELTA Financial statements <strong>2011</strong><br />

Independent auditor’s report<br />

To: the shareholders of DELTA N.V.<br />

<strong>Report</strong> on the financial statements<br />

We have audited the accompanying financial statements of<br />

DELTA N.V. , Middelburg. The financial statements include the<br />

consolidated financial statements and the company financial<br />

statements. The consolidated fi nancial statements comprise<br />

the consolidated balance sheet as at 31 December <strong>2011</strong>, the<br />

consolidated statements of comprehensive income, changes<br />

in equity and cash flows for the year then ended, and notes,<br />

comprising a summary of the significant accounting policies<br />

and other explanatory information. The com pany financial<br />

statements comprise the company balance sheet as at 31<br />

December <strong>2011</strong>, the company income statement for the year<br />

then ended and the notes, comprising a summary of the<br />

accounting policies and other explanatory information.<br />

Management’s responsibility<br />

Management is responsible for the preparation and fair<br />

presentation of these financial statements in ac cordance with<br />

International Financial <strong>Report</strong>ing Standards as adopted by<br />

the European Union and with Part 9 of Book 2 of the Dutch<br />

Civil Code, and for the preparation of the annual report in<br />

accordance with Part 9 of Book 2 of the Dutch Civil Code.<br />

Furthermore management is responsible for such internal<br />

control as it determines is necessary to enable the preparation<br />

of the financial statements that are free from material<br />

misstatement, whether due to fraud or error.<br />

Auditor’s responsibility<br />

Our responsibility is to express an opinion on these financial<br />

statements based on our audit. We conducted our audit in<br />

accordance with Dutch law, including the Dutch Standards<br />

on Auditing. This requires that we comply with ethical<br />

requirements and plan and perform the audit to obtain<br />

reasonable assurance about whether the financial statements<br />

are free from material misstatement.<br />

An audit involves performing procedures to obtain audit<br />

evidence about the amounts and disclosures in the financial<br />

statements. The procedures selected depend on the auditor’s<br />

judgment, including the assessment of the risks of material<br />

misstatement of the financial statements, whether due to fraud<br />

or error.<br />

In making those risk assessments, the auditor considers<br />

internal control relevant to the entity’s preparation and fair<br />

presentation of the financial statements in order to design audit<br />

procedures that are appropriate in the circumstances, but not<br />

for the purpose of expressing an opinion on the effectiveness of<br />

the entity’s internal control. An audit also includes evaluating<br />

the appropriateness of accounting policies used and the<br />

reasonableness of accounting estimates made by management,<br />

as well as evaluating the overall presenta tion of the financial<br />

statements.<br />

We believe that the audit evidence we have obtained is<br />

sufficient and appropriate to provide a basis for our audit<br />

opinion.<br />

Opinion with respect to the consolidated financial<br />

statements<br />

In our opinion, the consolidated financial statements give a<br />

true and fair view of the financial position of DELTA N.V. as at<br />

December 31, <strong>2011</strong> and of its result and its cashflows for the<br />

year then ended in accordance with International Financial<br />

<strong>Report</strong>ing Standards as adopted by the European Union and<br />

with Part 9 of Book 2 of the Dutch Civil Code.<br />

Opinion with respect to the company financial statements<br />

In our opinion, the company financial statements give a true<br />

and fair view of the financial position of DELTA N.V. as at<br />

December 31, <strong>2011</strong> and of its result for the year then ended in<br />

accordance with Part 9 of Book 2 of the Dutch Civil Code.<br />

<strong>Report</strong> on other legal and regulatory requirements<br />

Pursuant to the legal requirement under Section 2:393 sub 5<br />

at e and f of the Dutch Civil Code, we have no deficiencies to<br />

report as a result of our examination whether the annual report,<br />

to the extent we can assess, has been prepared in accordance<br />

with Part 9 of Book 2 of this Code, and whether the information<br />

as required under Section 2:392 sub 1 at b-h has been annexed.<br />

Further we report that the annual report, to the extent we can<br />

assess, is consistent with the financial statements as required<br />

by Section 2:391 sub 4 of the Dutch Civil Code.<br />

Middelburg, 2 april 2012<br />

Deloitte Accountants B.V.<br />

Was Signed: W.A. de Leeuw RA<br />

129


Other information<br />

DELTA in financial figures, consolidated<br />

(x EUR million)<br />

<strong>2011</strong> 2010<br />

Assets<br />

Intangible assets 395 420<br />

Property, plant and equipment 1,036 977<br />

Financial assets 1,035 700<br />

Current assets 694 653<br />

Cash 52 49<br />

3,213 2,800<br />

Equity and liabilities<br />

Group equity 1,180 1,183<br />

Provisions 237 96<br />

Non-current liabilities 842 797<br />

Current liabilities 955 725<br />

3,213 2,800<br />

Revenue<br />

Electricity 1,002 1,073<br />

Gas 415 312<br />

Electricity and gas transport 114 101<br />

Telecommunications 83 83<br />

Waste management and environmental services 509 462<br />

Miscellaneous 63 42<br />

Total revenue 2,185 2,073<br />

Expenses<br />

Cost of sales 1,549 1,454<br />

Fair value gains and losses on the trading portfolio 13 (3)<br />

Other operating income (32) (29)<br />

Net operating expenses 578 586<br />

Total operating expenses 2,108 2,008<br />

Earnings from operations 77 65<br />

Share in results of joint ventures and associates 85 63<br />

Operating result 162 128<br />

Net finance income (expense) (24) (22)<br />

Profit before tax 138 106<br />

Corporate income tax (36) (16)<br />

Profit from discontinued operations (12) (265)<br />

Non-controlling interests (8) (2)<br />

Profit after tax 83 (178)<br />

Proposed dividend 40 50<br />

130


DELTA Financial statements <strong>2011</strong><br />

DELTA key figures<br />

(x EUR million)<br />

<strong>2011</strong> 2010<br />

Revenue 2,185.1 2,073.1<br />

of which:<br />

Electricity supply 1,001.8 1,073.1<br />

Gas supply 415.3 312.3<br />

Electricity and gas transport 113.6 100.6<br />

Cable, internet and telecommunications 83.2 82.9<br />

Waste management and environmental services 508.7 461.8<br />

Other revenue 62.6 42.4<br />

Finances<br />

Gross margin 655.2 650.9<br />

Operating result 162.2 127.8<br />

Profit before tax 137.9 106.0<br />

Profit after tax 82.7 (177.8)<br />

Group equity (excluding dividend) 1,179.8 1,183.1<br />

Balance sheet total 3,212.7 2,800.5<br />

Ratios<br />

Return on investment 7.0% 6.5%<br />

Return on equity attributable to the shareholders 7.3% -15.7%<br />

Equity ratio 36.7% 42.2%<br />

Interest coverage ratio 14.9 14.3<br />

Definition of financial ratios<br />

Return on capital employed (ROCE)<br />

Earnings from operations plus interest income from financial assets and the share in the profit of joint ventures and associates<br />

divided by capital employed x 100.<br />

Capital employed<br />

The sum of non-current assets and net working capital as at balance sheet date.<br />

Return on equity (ROE)<br />

Profit attributable to shareholders of DELTA N.V.,<br />

divided by the shareholders’ equity attributable<br />

to the equity holders of DELTA N.V.<br />

Equity ratio<br />

Group equity divided by total assets x 100.<br />

Interest coverage ratio<br />

Operating result + depreciation/amortisation charges + interest income divided by net external finance income and expense.<br />

131


<strong>Annual</strong> <strong>Report</strong> <strong>2011</strong><br />

<br />

DELTA N.V. | Poelendaelesingel 10 | 4335 JA Middelburg<br />

T +31 (0)118 88 20 00 | F + 31 (0)118 88 21 00 | E info@DELTA.nl | W www.DELTA.nl<br />

Entered in the trade register of the Chamber of Commerce in Middelburg under number 22031457.

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