Consolidated financial statement 2011 - Aquafin

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Consolidated financial statement 2011
Comments on the consolidated profit and loss
statement and the overview of realised
and unrealised results
The management contract with the Flemish Region
stipulates that the compensation of Aquafin will take place
on the basis of passing on all reasonable costs, increased by
a compensation for the shareholders that is based on their
contribution to the company’s equity capital. From this, it follows
that to a large extent the costs and revenues are a reflection
of each other.
The increase in costs, and in particular the costs of raw
materials and additives, services and various goods, and
personnel costs is in line with the growth of the infrastructure
that is being operated and extended by Aquafin, both within
and outside the management agreement.
The part of the income tax that relates to the activities
under the Management Agreement can be charged to the
drinking water companies as a reasonable cost.
The biggest part of the changes to the market value of
the hedging structures over 2011 – the part that relates to
the qualifying cash-flow hedges – is included in the overview
of the realised and unrealised results. Inasmuch as Aquafin
is entitled under the management agreement to receive
compensation for the costs of financing, changes in
the market value of the financial instruments are recognised
as receivables vis-à-vis the unrealised results.
The major increase in financing through borrowing resulted
in an increase of the costs of debt by €7.3 million in comparison
with the financial year 2010. On the other hand, some of the
change to the market value of the hedging structures over 2011
has been included in the profit and loss statement.
With the active management of the interest risk, Aquafin
wishes to optimise the financing costs. Since 2006, the Board
of Directors has approved the implementation of the dynamic
management of the interest risk, with the outlines for interest
management being defined.
After booking the provisions, the value depreciation, the costs
not passed on to the Flemish Region and the revenues, and
with the inclusion of the results of the commercial activities,
profits before taxes amount to €8.03 million.
Starting with tax year 2007, the concept of notional
interest deduction was introduced in the corporate tax, so that
the cost of wastewater treatment is limited for residents.
Also the application of the increased investment deduction
for energy-saving and environmentally friendly investments
for Research and Development has a favourable effect on
the corporate tax.