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<strong>Annual</strong> <strong>Report</strong><br />
DELTA N.V. 2014<br />
The English translation of the annual report is for information purposes only<br />
The <strong>Annual</strong> <strong>Report</strong> 2014 comprises of the Dutch text including the<br />
independent auditor’s report in Dutch<br />
1
Contents<br />
<strong>Annual</strong> <strong>Report</strong><br />
1 Management Board <strong>Report</strong> 2014 3<br />
1.1 2014 – a dynamic year for DELTA 3<br />
1.2 Profile and key figures 6<br />
1.3 Notes to the results 10<br />
1.4 Ambitions 13<br />
1.5 Energy & Multimedia 15<br />
1.6 Grids, mains and networks 22<br />
1.7 Waste management 24<br />
1.8 DELTA and corporate social responsibility 25<br />
1.9 DELTA and its employees 28<br />
1.10 DELTA and corporate governance 32<br />
1.11 Opportunities and risks 42<br />
1.12 Statement by the Executive Board 46<br />
2 Financial statements for 2014 47<br />
3 Other information 141<br />
4 DELTA in financial figures 143<br />
2
1 Management Board <strong>Report</strong> 2014<br />
1.1 2014 – a dynamic year for DELTA<br />
DELTA formulated its strategy in 2014. At the start of the year, it set up a consultation body<br />
consisting of the Executive Board, Supervisory Board, and Shareholders’ Committee. After<br />
intensive exploration, the decision was made to continue as an independent company and<br />
to sell the company’s waste management business Indaver. DELTA also defined two focal<br />
points within our business strategy, more specifically to reduce our carbon footprint and<br />
integrate our energy and multimedia products so as to make life easier for the DELTAcustomers.<br />
Position<br />
To successfully operate as a business, it is important that DELTA has its financial house in order.<br />
In the past few years, we have laid a solid foundation to withstand the headwinds affecting the<br />
energy market. Energy prices are low because of overcapacity and the recession. This is unlikely<br />
to change over the next three years. DELTA has made the necessary preparations to deal with<br />
these market conditions and remain an independent company. In 2014, we used EUR 74 million<br />
from our cash flow to pay off part of our debts, reducing our debt position to EUR 559 million at<br />
year-end. After the strategic sale of the Kreekraksluis wind farm and Indaver (in which DELTA<br />
owns a 75% interest), our net debt will reduce to nil by mid-2015.<br />
The process of selling Indaver has been successful. Negotiations were held with several<br />
prospective buyers within a short space of time and, eventually, in March 2015, it became clear<br />
that Indaver would become a group company of the leading Belgian-based logistics provider<br />
Katoen Natie. Once approved by the shareholders, the sale will be completed by mid-2015.<br />
DELTA Group’s underlying operating profit is strong, especially when taking into consideration the<br />
poor market conditions for the production and sale of energy. Its cash flow was particularly strong,<br />
standing at EUR 94 million, EUR 20 million of which was used to pay a dividend and EUR 74<br />
million to pay off debts. We ended 2014 with a net underlying profit of EUR 65 million. Due to the<br />
necessary impairment of Indaver’s environmental business and a change in tax position, net profit<br />
came to EUR 4 million.<br />
The write-down on the Indaver sale was necessary because we had bought the company for a<br />
higher price in 2007, when market conditions were different. DELTA’s different divisions all<br />
reported good results.<br />
CO 2 reduction<br />
Regardless of DELTA’s future, we are convinced that the last days of coal as fuel to generate<br />
power are approaching. The coal-fired power plant operated by EPZ (in which DELTA owns a 70%<br />
stake) will be closed down by the end of 2015. This decision is also based on our conviction that<br />
burning coal harms the environment and there are other types of fuel, such as natural gas, nuclear,<br />
wind, solar, biomass and water, which make up a better mix for power generation.<br />
By 1 January 2016, DELTA will be the Netherlands’ cleanest energy producer. With the closure of<br />
the coal-fired power plant in Borssele, emissions will reduce to 130g/kWh, making DELTA the best<br />
performing major energy producer of the Netherlands. A year later, emissions will even reduce to<br />
90g/kWh.<br />
By that time, the Gemini wind farm will have started delivering wind power, as shown in the chart<br />
on page 14.<br />
‘By 1 January 2016, DELTA will be the Netherlands’<br />
cleanest energy producer.’<br />
3
Integration of energy and multimedia products<br />
On the domestic market in Zeeland, we have begun integrating our retail products, building on the<br />
unique position of our energy and multimedia products. Our aim is to offer consumers a<br />
comfortable home, served by a single provider. An offering that is unique.<br />
What consumers want now more than ever is to get their energy bills down and, at the same time,<br />
contribute to a sustainable society. In 2014, we therefore focused on expanding DELTA's position<br />
as an intermediary and promoting value-adding services, such as the Comfort Indicator<br />
(ComfortWijzer) and our Guaranteed Solar (ZonGarant) programme. With our Scoring Together<br />
(Samen scoren) campaign, consumers in Zeeland can benefit from having an energy supplier and<br />
multimedia service provider being located under one roof.<br />
In 2014, we made preparations for the launch of our Home Advice (Woningadvies) online platform.<br />
Visitors can use the platform to access information about potential savings in and around their<br />
home. They can compare the investment required with the proceeds and ask directly for a quote.<br />
With DELTA Home Advice, we have taken a major step towards becoming an intermediary. We will<br />
continue integrating our energy and multimedia products and services in 2015. Ultimately, DELTA<br />
will occupy a special role in the lives of its customers, providing a range of useful services.<br />
Good energy production mix ensures flexibility<br />
DELTA’s energy production operations were severely affected by continued poor market conditions<br />
in 2014. The gas-fired power station SloeCentrale is one of the most efficient plants in the<br />
Netherlands, delivering a relatively high output, but margins were too low. The ELSTA gas-fired<br />
power station continually operated baseload to deliver steam and power to Dow in Terneuzen, but<br />
could not be deployed to generate extra power profitably due to market conditions. The biomass<br />
plant in Moerdijk, which converts poultry litter into energy, performed well despite a period of bird<br />
flu, when supply of poultry litter was limited.<br />
The diversity of our energy production mix allows us to respond flexibly to market developments.<br />
We will stop burning coal and close our coal-fired power plant by the end of 2015. EPZ’s nuclear<br />
power station made a substantial contribution to reducing carbon emissions. 2014 was a good year<br />
for EPZ. Availability was high, with the units achieving a historically high aggregate monthly output.<br />
EPZ also for the first time used MOX fuel, closing the fuel cycle. MOX is a fuel composed of<br />
residual products. It reduces the use of finite natural resources, as well as providing more fuel load<br />
alternatives.<br />
Synergy and efficiency<br />
1 January 2014 saw the merger of DELTA Infra and DELTA Netwerkbedrijf. The two companies<br />
are now trading as DELTA Netwerkgroep (DNWG). The new set-up has provided greater synergy<br />
and improved operational efficiency. Not surprisingly, DNWG performed well in 2014. The merger<br />
of the two divisions allows us to work even more efficiently and respond proactively to market<br />
developments.<br />
Water company Evides (in which DELTA owns a 50% interest) also reported good results for 2014.<br />
Evides supplies drinking and industrial water in Zeeland and other areas. Its performance again<br />
showed that Evides operates a solid and efficient organisation.<br />
’The diversity of our energy production mix allows<br />
us to respond flexibly to market developments.’<br />
4
DELTA’s future<br />
DELTA saw many changes in 2014. This will not be different in 2015. Thanks in part to the<br />
dedication of our employees, we ended the year with a profit and have every confidence for 2015.<br />
Reducing our carbon footprint is an important focal point for DELTA. This is why we are<br />
uncomfortable with the coal section in the National Energy Agreement. We cannot endorse the<br />
substantial amount in compensation paid to coal companies for phasing out their old power plants.<br />
The compensation involves abolishing the coal tax and making extra grants available to co-fire<br />
biomass. This comes down to extra support being provided for coal power generation. And that<br />
was not the intention of the National Energy Agreement. It certainly runs counter to our ambition to<br />
provide low carbon energy.<br />
Many of the possibilities for DELTA to shape its future depend on the Dutch Supreme Court’s<br />
decision on the mandatory separation of its grid operation business and the response of politicians<br />
if the decision were to go against DELTA. In the past few years, we have made no bones about the<br />
fact that such a split would mean the end of DELTA in its current form and would be bad news for<br />
jobs in Zeeland.<br />
Separating the grid business is a poor solution to a non-existent problem. The Independent Grid<br />
Operation Act (WON) is already doing its job. Moreover, there is not a single power company<br />
outside the Netherlands that is being required to hive off its grid operations. In fact, most European<br />
providers are full-service companies at holding company level, including those with subsidiaries in<br />
the Netherlands. We trust that the Dutch government will ultimately take the sensible decision.<br />
Executive Board of DELTA N.V.<br />
Arnoud Kamerbeek, CEO<br />
Frank Verhagen, CFO<br />
5
1.2 Profile and key figures<br />
DELTA is an independent supplier of energy and waste management services. The<br />
company provides energy, waste processing, infrastructure, and digital services. We want<br />
to make life for our customers as easy as possible and are constantly looking for ways to<br />
add value. The company’s shares are held by municipal and provincial authorities in the<br />
provinces of Zeeland, Noord-Brabant, and Zuid-Holland. DELTA’s head office is located in<br />
Middelburg, The Netherlands. The company and its subsidiaries employ a total of 3,349<br />
FTEs.<br />
1.2.1 What we do<br />
Group companies<br />
DELTA N.V.<br />
DELTA<br />
Netwerkgroep<br />
Energy &<br />
Multimedia<br />
Waste Management<br />
DELTA<br />
Netwerkgroep<br />
DELTA<br />
Comfort<br />
Indaver N.V.<br />
DELTA<br />
Netwerkgroep<br />
DELTA<br />
Energy<br />
DELTA<br />
Netwerkgroep<br />
EPZ (70%)<br />
SloeCentrale (50%)<br />
For a list of consolidated and non-consolidated subsidiaries, please refer to page 123 of the <strong>Annual</strong><br />
<strong>Report</strong>.<br />
Products and services<br />
DELTA generates electricity, trades in energy, and supplies gas, power and digital services to retail<br />
and corporate customers in Zeeland and other areas. The company also supplies drinking water<br />
and industrial water services through its subsidiary Evides. ZRD (Zeeland Sanitation Department),<br />
a subsidiary of Indaver, operates household waste processing facilities across Zeeland, collecting<br />
household refuse in nearly all towns and cities in Zeeland.<br />
Grid operator<br />
On 1 January 2014, DELTA Netwerkbedrijf B.V. (DNWB) and DELTA Infra B.V. were combined to<br />
form DELTA Netwerkgroep. DNWB is the regional power and gas grid operator. It is responsible for<br />
managing the gas and electricity distribution grids in Zeeland. DNWB has entrusted the<br />
construction and maintenance of these grids to DELTA Infra B.V., which is also responsible for<br />
constructing and servicing the water mains networks operated by water company Evides and<br />
DELTA’s cable network (Zeelandnet). DELTA Infra’s other areas of expertise include high-voltage<br />
applications and metering technology, with services being delivered in Zeeland and other areas.<br />
6
Waste management<br />
DELTA’s waste management operations have been brought together in Indaver N.V., a subsidiary<br />
company in which DELTA owns a 75% share interest. Indaver offers high-quality, sustainable<br />
waste management solutions to industry and local authorities. focusing on environmentally safe<br />
ways of processing all sorts of waste materials and maximising the reuse of energy and materials.<br />
Part of the waste is processed at its own facilities, but some is treated at other plants. The<br />
company selects the best processing method for each type of waste: recycling, processing into<br />
biomass, or waste-to-energy (incineration).<br />
In recent years, Indaver has grown into a leading European provider, with operations and facilities<br />
in Belgium, Germany, Ireland, and the Netherlands. The company processes 5 million tonnes of<br />
waste a year and employs around 1,700 employees. In 2014, DELTA took the decision to sell its<br />
interest in Indaver.<br />
1.2.2 What we stand for<br />
DELTA offers its customers the convenience of sustainable and innovative multi-utility solutions.<br />
The company seeks to ensure continuity of supply and is committed to long-term customer<br />
relationships. We are the partner of choice for buyers of utility products and services, such as<br />
power, water, digital services, and waste collection and processing, on both a small and large<br />
scale.<br />
DELTA is aware that conventional energy resources are finite. That is why we are investing in<br />
making our processes more sustainable and, in particular, reducing our carbon emissions. This<br />
covers our waste processing and water operations, as well as our power generation activities. In an<br />
environment that is becoming increasingly complex, we will continue to integrate our products and<br />
services so as to meet the information and convenience requirements of our customers.<br />
DELTA seeks to make its power generation activities carbon neutral by 2050. Carbon neutral<br />
means that all the energy produced is generated by carbon-free generation methods. If additional<br />
measures are taken to offset carbon emissions, power generation is also said to be carbon neutral.<br />
We do not believe that a fully sustainable power generation system will be feasible over the next<br />
few decades.<br />
Committed to cutting carbon emissions, DELTA aims to have the smallest carbon footprint of all<br />
Dutch power companies by 1 January 2016. With the closure of the coal-fired power plant in<br />
Borssele, emissions will reduce to 130g/kWh, making us the cleanest major energy producer of the<br />
Netherlands. A year later, emissions will even reduce to 90g/kWh. By that time, the Gemini wind<br />
farm will start delivering wind power.<br />
DELTA takes the view that a balanced mix of different generation methods is necessary to ensure<br />
continuity of supply. We believe that this mix should include wind, solar, biomass, natural gas, and<br />
nuclear power.<br />
Nuclear power is needed to keep the reliability of supply at an acceptable level and prevent<br />
unnecessary greenhouse gas emissions. Nuclear power generation releases no carbon emissions<br />
and emits fewer other pollutants, such as nitrogen oxides (NOx), sulphur dioxide (SO2), and soot.<br />
That is why DELTA consider this to be a responsible way of generating power.<br />
7
1.2.3 The world we operate in<br />
Having public-sector shareholders and a regional customer base, DELTA has strong ties with its<br />
home market. The company is firmly rooted in society and readily accepts its social responsibilities.<br />
What is good for us is good for the South Western delta region.<br />
‘DELTA is firmly rooted in society and readily accepts<br />
its social responsibilities.’<br />
DELTA’s commitment to society is reflected in its strong reputation in Zeeland. The company has<br />
commissioned the Reputation Institute to conduct monthly reputation surveys. The survey findings<br />
are used to identify market and regional trends. DELTA has a solid reputation in Zeeland and<br />
achieves high scores because of its connection with local communities as a supplier, employer,<br />
business relation, or customer. Our reputation is therefore a key indicator. We use the monthly<br />
survey findings to identify market and regional trends and developments at an early stage. We can<br />
then adjust our external communications accordingly.<br />
In 2014, we focused in particular on improving our financial ratios. By taking a variety of measures,<br />
we successfully reduced our debt by EUR 74 million within one year. The proposed sale of our<br />
interest in waste management company Indaver should also contribute to improving our financial<br />
ratios.<br />
1.2.4 Corporate social responsibility<br />
Corporate social responsibility mainly involves DELTA’s energy operations, particularly those<br />
conducted by its group companies and joint ventures. All its waste management activities have<br />
been transferred to Indaver, which publishes its own CSR report (available as a download at<br />
www.indaver.com). Water company Evides, in which DELTA owns a 50% share interest, is not<br />
included in the report. Evides reports on its CSR policy and related activities on its website at<br />
www.evides.nl. Below is a summary of the key statistics on DELTA’s power generation activities.<br />
More detailed information is available at www.epz.nl , www.sloecentrale.nl and<br />
www.bmcmoerdijk.nl.<br />
Share of carbon neutral and renewables 2014 2013 2012<br />
Carbon neutral 24.1% 29.3% 27.2%<br />
Nuclear 8.3% 16.2% 17.3%<br />
Renewables* 15.8% 13.1% 9.9%<br />
(* wind/water/biomass)<br />
DELTA’s carbon emissions (g/kWh) 2014 2013 2012<br />
389.7 437.4 421.3<br />
Social performance (in EUR) 2014 2013 2012<br />
Distributions to shareholders 15,000,000 20,000,000 40,000,000<br />
Roosevelt Academy 379,083 398,854 418,950<br />
Sponsoring and donations 834,282 900,000 928,326<br />
8
1.2.5 Accounting standards<br />
The financial statements have been prepared in accordance with International Financial <strong>Report</strong>ing<br />
Standards (IFRS) and the relevant provisions of the Dutch Civil Code (DCC). DELTA conducts<br />
some of its major operations with others in the form of joint ventures. Our share of assets,<br />
liabilities, income and expenses associated with operations conducted by separate legal entities in<br />
which DELTA, in its capacity as a shareholder and customer, has the same rights and obligations<br />
as its partners, have been included in our financial information since 2013. This provides a greater<br />
insight into the structure of our capital base and profits.<br />
Financial highlights (EURm) 2014 2013 2012<br />
Revenue 1,931 2,104 2,168<br />
Gross margin 789 786 826<br />
EBITDA 312 301 379<br />
Net profit 4 75 81<br />
Investment in (in)tangible fixed assets 102 168 141<br />
Net debt 559 633 630<br />
Share of revenue ( EURm) 2014 2013 2012<br />
Sale of electricity and electricity trading 882 970 1,046<br />
Sale of natural gas and natural gas trading 268 344 332<br />
Electricity & natural gas transmission 106 118 112<br />
Cable, Internet, and telecommunications 81 79 75<br />
Waste logistics and environmental services 517 514 519<br />
Other revenue 77 79 84<br />
Total revenue 1,931 2,104 2,168<br />
For full details of the financial statements 2014, please refer to page 47.<br />
9
1.3 Notes to the results<br />
DELTA performed well in 2014, driven by its variety of activities on different markets and a<br />
clear focus on profit and cash generation. In spite of falling market prices and lower<br />
volumes due to mild winter conditions, the company reported EUR 1.9 billion in revenue.<br />
Net profit came to EUR 3.8 million. However, this was after recognising an impairment of<br />
DELTA’s share interest in waste company Indaver, which is likely to be sold in 2015 and the<br />
book value of which had to be revised downwards to reflect its expected market value, and<br />
after recognising an increase in tax loss carryforwards due to decreasing interest charges<br />
after debt repayment. We are proud to report an underlying pre-impairment profit of EUR<br />
64.6 million. Net cash flow was even more robust, at EUR 94 million, before EUR 20 million<br />
in dividends paid to shareholders. Mild temperatures at the start and end of the year were<br />
helpful making the prepaid gas purchases lower.<br />
The energy market continued to deteriorate in 2014. Although the economy showed tentative signs<br />
of a recovery, prices remained under pressure from existing spare capacity. This effect was<br />
exacerbated by more renewable generation capacity arriving on the market. Although this is a<br />
socially desirable trend which we endorse, conventional generation facilities, which remain the<br />
basis of a reliable energy supply, continued to fare poorly. Electricity prices continued to decline in<br />
2014, with gas prices falling at an even faster pace. Our gas-fired power station SloeCentrale<br />
supplied power to the grid for the best part of the year, but margins were too modest to cover the<br />
fixed costs. EPZ’s production units achieved record availability levels. DELTA has for many years<br />
been conducting a combination of activities which are mutually reinforcing in different areas. This is<br />
also financially beneficial to the group as a whole. Driven by the solid performance of Indaver,<br />
water company Evides, and DELTA Netwerkgroep's combined infrastructure and grid operations,<br />
we saw strong underlying profits, despite difficult market conditions. Our multimedia and cable<br />
business also performed well during the year, thanks to the introduction of combinations of new<br />
and existing products and services.<br />
Revenue and profit<br />
Revenue fell in 2014 compared with 2013. This was felt mainly in the energy business, including<br />
both the trading floor and sales to corporate and retail customers. In the grid segment, we<br />
achieved strong cost savings by combining our grid and infrastructure operations into a single<br />
entity, which partly compensated for the drop in revenue arising from the adjustment to what are<br />
known as the statutory ‘X factors’. The multimedia business saw a slight increase in revenue.<br />
Waste management company Indaver, in which DELTA owns a 75% share interest, reported good<br />
results, despite a number of unplanned outages at its incineration plants in Belgium and Germany.<br />
The Irish operations reported growth, driven by the expanded scope of its permit. Market prices<br />
remained under pressure, both in the waste business and in terms of energy generation revenues.<br />
The newly constructed incineration plant in the Dutch town of Alphen aan den Rijn operated in line<br />
with expectations. The Dutch operations performed above budget, driven mainly by higher<br />
composting and landfill volumes. 2014 proved to be another strong year for water company<br />
Evides, in which DELTA owns a 50% stake.<br />
Total gross margin rose by EUR 8 million on the previous financial year (up 1%), partly owing to<br />
the fact that the EPZ nuclear power plant was out of operation for a few weeks in 2013 because of<br />
a failure in the conventional section of the plant, which had a negative impact on the 2013 results.<br />
Operating costs remained contained, driven by the ongoing focus on cost control and smart<br />
purchasing and consumption solutions. Combining the grid operations delivered an efficiency gain<br />
of around EUR 5 million. Depreciation and amortisation costs increased by EUR 8.5 million, before<br />
the necessary impairment of our share interest in Indaver. This impairment amounted to EUR 92.8<br />
million. Because Indaver is a fully consolidated subsidiary, the amount is shown fully within<br />
‘depreciation and amortisation’, with Indaver’s minority shareholders shouldering their share of the<br />
impairment charge, i.e. EUR 24.2 million. This amount is shown within ‘non-controlling interests’ in<br />
the profit and loss account. The impairment led to the value of the put option shown in DELTA’s<br />
balance sheet being reduced by the same amount.<br />
10
As the company becomes leaner, it has seen the number of employees fall for several years now.<br />
At the end of 2014, the different group companies employed a total of 3,349 FTEs, compared with<br />
3,394 at the end of 2013. These numbers also cover employees working in ‘joint business<br />
operations’. The underlying drivers included a limitation on the number of new hires, a mobility<br />
programme for employees who could not remain in their existing jobs, and relocations to job<br />
openings at other group companies. It became clear in 2014 that the EPZ coal-fired power plant<br />
would be closed down by the end of 2015. Staff at the power plant will be subject to a<br />
restructuring, which unfortunately will see many of our colleagues in Operations and Support lose<br />
their jobs with EPZ. In 2014, we recognised a provision of EUR 10 million (70% share) to cover the<br />
costs of the proposed closure in 2015.<br />
Our share of associates and joint ventures amounted to EUR 41.2 million in 2014, similar to 2013<br />
(EUR 41.5 million).<br />
The external funding requirement improved by EUR 90.4 million during the year. During the year,<br />
interest-bearing debt net of available cash and cash equivalents (net debt) fell by EUR 74.1 million<br />
to EUR 558.6 million at the end of 2014.<br />
Interest charges were EUR 24.3 million, with EUR 21.1 million in interest income being added to<br />
the provisions, up EUR 2.7 million on 2013. Financial income rose in 2014, driven by the funds<br />
received from the last tranche of the Lansbanki claim and the positive return delivered by the<br />
Borssele Nuclear Power Plant Dismantling Fees Management Fund. Net financial income was<br />
down EUR 6.8 million on 2013.<br />
In consultation with the Dutch Tax and Customs Administration, the commercial operations in the<br />
energy segment, including multimedia, were transferred to a separate fiscal unity for corporate<br />
income tax purposes. Initially, the separation was to be effective from 31 December 2013 but, in<br />
consultation with the Tax Administration, we decided to move the start date for both fiscal unities to<br />
1 January 2014. This immediately led to tax loss carry forwards being used in 2014. Unlike in<br />
2013, there were no unforeseen refunds from previous financial years in 2014.<br />
A further EUR 0.6 million in proceeds from the sale of our share interest in Fesil Sunergy AS in<br />
2012 is shown within ‘discontinued operations.’ Also in 2014, proceeds were recognised from<br />
assets and liabilities of DELTA Industriële Reiniging B.V. (sold in 2013) that had not been included<br />
in the sale.<br />
We ended 2014 with a net profit of EUR 3.8 million, compared with a profit of EUR 74.8 million in<br />
2013, attributable to the shareholders of DELTA N.V.<br />
Cash flow and investments<br />
Cash flow from operating activities was boosted by working capital control, leading to good results<br />
particularly in the corporate energy segment. Cash flow from operating activities totalled EUR<br />
209.8 million. Cash flow from investing activities stood at EUR 115.7 million, compared with EUR<br />
187.2 million in 2013, due mainly to substantial investments in the Kreekraksluis wind farm.<br />
Investments in grid operations remained stable at EUR 39.4 million (2013: EUR 37.9 million), with<br />
the rollout of smart meters contributing EUR 4.4 million. Investments in the EPZ production<br />
facilities fell compared with the previous year, because part of the planned investments had<br />
already been made during the prolonged product stoppage at the nuclear power plant in 2013.<br />
Investments totalled EUR 19.3 million, compared with EUR 33.7 million in 2013. As the coal-fired<br />
power station is nearing the end of its useful life in 2015, any necessary operating costs are now<br />
included in the budget, rather than being recognised as investments. Indaver invested EUR 36.7<br />
million in its plants and software, mainly in Belgium and the Netherlands.<br />
Free cash flow came to EUR 74.1 million, net of a EUR 20 million dividend payout. It was used to<br />
reduce our debt position.<br />
11
Financial position and solvency<br />
Net realised gains stood at EUR 64.1 million in 2014. The addition of these net gains to the<br />
reserves, the decline in value of the Indaver put option of EUR 18.2 million, and the EUR 20 million<br />
in dividends paid to our shareholders combined to reduce the equity attributable to DELTA N.V.’s<br />
shareholders to EUR 1,104 million.<br />
Our solvency ratio was 31.3% at the end of 2014 (2013: 31.8%).<br />
The profit we made in 2014, coupled with the favourable development of our debt position and the<br />
available reserves, allowed us to distribute EUR 15 million to our shareholders. Although this is<br />
less than the EUR 20 million payout last year, we are pleased to have been able to do this. Earlier,<br />
we had indicated, on the basis of the weak prospects for the energy market, that it would be very<br />
difficult to pay a dividend for 2014 because we needed to strengthen our reserves for the uncertain<br />
times ahead. We are pleased that our strong performance in 2014 allows us to accommodate our<br />
shareholders in what for them are difficult economic conditions as well.<br />
Rating<br />
We are making every effort to keep our credit rating at an acceptable level of BBB or higher.<br />
Outlook<br />
The outlook for the energy market has not improved.<br />
The sale of Indaver and the Kreekraksluis wind farm will provide sufficient financial leeway to tide<br />
us over the next few years, in which we are likely to see negative margins on energy production<br />
and will continue to invest in our existing and sustainable production facilities. Ensuring security of<br />
supply by having high-quality grids in place remains one of our main objectives. The necessary<br />
investments are funded from the cash flows from our grid operations. The rollout of smart meters<br />
will be accelerated in the coming years. Adding greater depth to and broadening our retail offerings<br />
(traditional gas, power and water supplies and services, decentralised renewable energy<br />
generation, and multimedia services, or a combination of these) will strengthen our ties with<br />
customers in Zeeland.<br />
The issue of whether we will be required to split up our business remains a key point of attention.<br />
We expect to end 2015 with a profit. It will be very difficult to pay a dividend to our shareholders for<br />
the years 2015 to 2017. We will nonetheless try our very best to make this happen.<br />
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1.4 Ambitions<br />
In 2014, DELTA undertook a strategy search, consulting its shareholders on numerous<br />
occasions. There were nine official strategy meetings with our shareholders to discuss a<br />
range of strategic choices so as to maintain high-quality jobs, ensure returns, and mitigate<br />
risks. The scenarios of a merger, full or partial sale of operations and continuing as an<br />
independent company were considered, as were the views of our shareholders and the<br />
expected economic conditions.<br />
Looking to the future<br />
The strategy will be shaped further in 2015. We will keep our eyes and ears open to any<br />
opportunities.<br />
DELTA: frontrunner in low carbon-efficient power generation<br />
DELTA seeks to be carbon neutral in terms of its power generation operations by 2050. To achieve<br />
this aspiration, we will need a varied and balanced production mix, including not only natural gas<br />
as a fossil fuel, but also nuclear power, wind power, and biomass. Our guiding principle is<br />
‘renewable where possible, low carbon where necessary.’ In April 2014, we therefore decided to<br />
purchase power and green certificates from the Gemini wind farm. This, the Netherlands’ largest<br />
wind farm, will become operational in 2016.<br />
With the opening of the wind farm and closure of the coal-fired power station in 2016, DELTA will<br />
become the frontrunner in low carbon energy production in the Netherlands, taking a big leap<br />
towards achieving its goal of generating carbon neutral power by 2050.<br />
The chart on the following page shows the carbon emissions of DELTA’s entire asset portfolio.<br />
Facts & figures on the Gemini wind farm<br />
With a capacity of 600 MW and supplying 2.6 TWh of electricity, Gemini will be the Netherlands’<br />
largest wind farm, operational in 2016. This is enough to provide more than 785,000 homes with<br />
green power sourced from within in the Netherlands. Gemini will contribute to reducing carbon<br />
emissions by 1.25 million tonnes.<br />
Today’s energy company<br />
Over the years, expectations of consumers, business customers and local authorities in their<br />
dealings with energy companies have changed. Options to cut energy bills have become widely<br />
available. Being sustainable is not a trend anymore, it is a requirement. DELTA has responded to<br />
this development in its own way. Its multi-utility concept, which has always set the company apart<br />
from the competition, is helping shape DELTA’s energy business to meet today’s demand.<br />
‘In 2016, DELTA will be the frontrunner in low carbon energy<br />
production in the Netherlands.’<br />
DELTA’s unique basis – its ability to combine energy and multimedia products and services – has<br />
allowed the company to transform into the business it is today. From producer and supplier to<br />
producer, supplier, intermediary, and adviser. A Zeeland-based company that helps its customers<br />
to be sustainable and control their energy bills, without having to cut back on convenience.<br />
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1.5 Energy & Multimedia<br />
DELTA produces energy, is involved in commodities (natural gas, coal, oil), electricity and<br />
emissions trading on various markets, and delivers gas and power to businesses and<br />
consumers. Its energy operations account for around two thirds of its revenue. In addition<br />
to energy, the company provides multimedia services, including Internet access and<br />
telephony services through its subsidiary company ZeelandNet. DELTA also transmits<br />
television and radio signals via its cable network. Because of this mix of service offerings,<br />
customers buy more than four products from DELTA on average. This, in turn, has led to<br />
high customer loyalty.<br />
That said, the energy market has come under severe pressure due to spare capacity and low<br />
prices. This makes it difficult for us to deliver strong margins. We expected these market conditions<br />
to continue for a number of years.<br />
The company will need to adapt to these conditions. Prices are expected to pick up in 2017. Until<br />
then, we will need to be flexible and versatile. Our retail and wholesale operations should be able<br />
to respond to changing customer requirements, market trends, and moves by the competition. To<br />
do just that, our energy and multimedia division launched its Future Proof programme in 2014.<br />
Zooming in on cost control and customer focus, the programme will be completed by mid-2015 and<br />
result in a revamped E&M organisation.<br />
1.5.1 Energy and the corporate market<br />
Unfavourable energy market conditions continued in 2014. Spare capacity and the arrival of new<br />
coal-fired power plants, low electricity prices (relative to fuel prices), and the ongoing growth of<br />
subsidised renewable energy continued their grip on the market. However, due to the delayed<br />
commercial operation of newly constructed coal-fired power stations, problems with the temporary<br />
closure of Belgian nuclear power facilities, and relatively low gas prices (because of mild winter<br />
conditions and sufficient supply), the Sloe power station in particular was up and running during the<br />
best of the year. Unfortunately, this highly efficient gas-fired power station delivered positive but<br />
very modest margins, which were not enough to cover fixed costs. The mild winter also had a<br />
considerable impact on gas deliveries. With the high temperatures we had, our customers required<br />
less heating and so gas consumption fell. DELTA’s trading operations delivered good results<br />
during the year by responding flexibly to market fluctuations.<br />
Volatile and uncertain market conditions call for smart energy purchasing strategies that enable us<br />
to control costs and risks while at the same time improving returns. That is why in 2014 we focused<br />
on being the partner of choice for entrepreneurs, drawing on our specific knowledge of their<br />
business and the energy market. Since its liberalisation, the energy market has become a dynamic<br />
environment of supply and demand and competition. Ten years on, DELTA wants to take its<br />
activities to the next level by being a utility partner for its customers. This cuts both ways. On the<br />
one hand, we can help them define the best possible energy purchasing strategy, which goes<br />
beyond ‘merely’ buying cheap electricity. On the other, we distinguish ourselves from the<br />
competition through our commitment to long-term customer relationships and unique energy<br />
products In line with our partnership thinking, the DELTA Advisory Board met for the third time at<br />
Nyenrode Business University in Breukelen in 2014. During the meeting, presentations were given<br />
by and for the benefit of our customers about strategic and innovative energy purchasing, coupled<br />
with our new Profit-Sharing product. A perfect example of a joint undertaking.<br />
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Sustainability awareness<br />
Sustainability was one of the other topics discussed at length during the DELTA Advisory Board<br />
meeting. We consider it our social duty to continue to raise awareness of energy consumption. In<br />
2014, DELTA Corporate offered green products based on biomass and wind, with the option to<br />
select the origin (the Netherlands or otherwise), and hydro power.<br />
With the Gemini project, DELTA is making a big leap in terms of renewable power generation. We<br />
will, in fact, become the largest purchaser of offshore wind power. With a 600 MW capacity, Gemini<br />
is around five times the size of the biggest wind farm currently operating in the Netherlands. Its<br />
total output will be around 2.6 TWh a year, enough to supply 785,000 homes.<br />
‘DELTA has provided its customers in Zeeland with a comfortable<br />
home for nearly a century.’<br />
We are also working with our business customers on a smaller scale. Examples include our<br />
cooperation with Heineken to construct four wind turbines at its Zoeterwoude brewery, and with<br />
Kloosterboer to build the first wind turbine on its site in Vlissingen Oost. Kloosterboer began<br />
generating its own green power in early 2014. We have also teamed up with Tebodin to deliver<br />
energy advice to industrial companies.<br />
1.5.2 Energy and the retail market<br />
DELTA has provided its customers in Zeeland with comfortable homes for nearly a century. The<br />
majority of people in Zeeland are trusted customers of DELTA. At 3.3%, the switch rate in 2014<br />
was far below the national average of 13.2%. Because we have become increasingly better at<br />
winning customers back, our customer base remained virtually unchanged in 2014.<br />
Gas and power margins were low, due in part to mild winter conditions, and consumption volumes<br />
fell as a result of improved insulation and the construction of solar panels on homes and at<br />
industrial premises. DELTA seeks to retain customers and generate additional margins by offering<br />
value-added services, such as the Comfort Indicator (Comfort Wijzer) and Guaranteed Solar<br />
(ZonGarant) programme.<br />
In late 2013, we introduced a new billing system so as to comply with changes in the law for the<br />
energy industry. In the first few months of 2014, the implementation of this new system adversely<br />
affected service levels and customer experience. However, improved efforts during the year and a<br />
personalised communications approach led to an increase in customer satisfaction by 0.1% by the<br />
end of 2014 compared to 2013.<br />
Scoring Together (Samen Scoren)<br />
In 2014, DELTA launched its Scoring Together campaign, inviting sports clubs to encourage their<br />
members to buy an All-in-1 package (including multimedia services from DELTA). In return, DELTA<br />
helped the clubs become greener by, for example, fitting solar panels. This is a perfect example of<br />
the synergy benefits offered by DELTA as a provider of multimedia products and services as well<br />
as energy.<br />
Smart Joint Savings (Samen slim besparen)<br />
DELTA takes its role as an energy savings adviser seriously. During 2014, we offered a range of<br />
different products and services to help consumers reduce their energy usage. Customers signing a<br />
new energy contract received a discount when buying a smart thermostat at the same time. At<br />
different times during the year, we offered solar panels under a Guaranteed Solar generation<br />
contract. We also successfully sold and rented out central heating boilers.<br />
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The new frugality<br />
People in Zeeland have a reputation for being thrifty. But is that really true? DELTA put the<br />
question to a significant number of residents as part of an independent study. The answer? Up to a<br />
certain extent. People are careful with the money they spend. However, this cautious attitude is<br />
largely lacking when it comes to energy savings. For example, people in Zeeland tend to cling on<br />
to their hot water boilers until they break down, instead of buying a more efficient and basically<br />
cheaper one earlier. DELTA wrote about ‘the new frugality’ and smart products and services to<br />
save on energy costs in its Energy Magazine. Packed with interesting did-you-knows about the<br />
‘New Frugality' study and top saving tips, the magazine was sent to all our customers in November<br />
2014. We also developed the New Frugality online game, which has been played by more than<br />
12,500 people in Zeeland.<br />
Energy saving is the way to go<br />
Encouraging energy savings remains one of DELTA’s main goals on the consumer market. We will<br />
continue to develop new products and services and improve existing ones. Another key objective is<br />
to provide consumers with information. This why in 2014 we introduced our digital Energy<br />
Newsletter, a monthly newsletter with tips and facts and figures about energy and energy saving.<br />
We also set up the DELTA Home Advice online platform. Consumers can access the platform and,<br />
based on their personal data, explore ways of saving energy and read up on the equipment or<br />
devices they need to do so and the payback periods. They can also the platform to ask for a direct<br />
quote or to purchase equipment. We are operating the platform together with other regional<br />
companies, which is good for jobs. DELTA Home Advice went live in January 2015.<br />
1.5.3 Multimedia<br />
DELTA believes in the power of connecting. Instead of offering individual products and services<br />
such as energy, Internet, telephony and television, DELTA wants to provides its customers with a<br />
full-service solution. Our aim is to make daily life more comfortable. As consumers have an<br />
increasing need for more convenience and ease, we again contacted our customers about whether<br />
they would like to switch from buying three separate products (TV, Internet, telephony) to using an<br />
all-in-one package. Of the 28,000 customers contacted, more than 9,000 accepted our offer. As a<br />
result, we ended the year with more than 30,000 All-in-One customers, double the number<br />
reported for the previous year.<br />
Leisure<br />
The leisure industry is important to DELTA. By defining a clearer focus, upscaling resources, and<br />
streamlining processes, we made major progress within this industry in 2014. We asked a group of<br />
customers and selected business partners to review our services. Co-creation leads to improved<br />
customer services, which in turn support leisure companies in serving their guests. The<br />
refurbishment and upgrade of our customer networks constituted a major improvement in 2014,<br />
with 3,000 access points being improved and made suitable for fast wireless Internet. In 2013, we<br />
had made similar improvements at holiday parks with static holiday lodges. In 2014, we added<br />
static tents and caravans at campsites and caravan parks to our portfolio.<br />
Healthcare<br />
In 2014, DELTA strengthened its ties with the healthcare sector in terms of value-added services.<br />
We successfully hosted a series of ‘Digital Local Cafes’ at different locations across Zeeland,<br />
teaming up with libraries, so as to help senior citizens use a tablet and smartphone. Moreover, at<br />
different locations, we tested mobile applications that could be the solution to some of the changes<br />
and challenges in the healthcare sector. The results have been positive, so much so that a major<br />
rollout has been scheduled across Zeeland for 2015. The growing use of outpatient systems and<br />
greater freedom of choice in the healthcare sector are creating opportunities for DELTA to enter<br />
into new partnerships and provide senior citizens in Zeeland with even more comfortable homes.<br />
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WifiSpots<br />
In the summer of 2014, DELTA launched a WifiSpots pilot in the town of Vlissingen. WifiSpots<br />
provides secure WiFi access to ZeelandNet customers who have a cable Internet subscription. For<br />
customers using a cable modem with a built-in WiFi router, we not only transmit a WiFi signal for<br />
the customer but also a second WiFi signal called DELTA WifiSpots. This allows customers to<br />
access the Internet at more than 25,000 locations across Zeeland through DELTA’s reliable<br />
network, while at the same timing saving on mobile data costs. Following the successful pilot in<br />
Vlissingen, WifiSpots was rolled out from August. More than 100,000 customers now have access<br />
to WifiSpots at more than 25,000 locations across Zeeland.<br />
Rural locations<br />
Throughout the Netherlands, there are homes and businesses that do not have a broadband<br />
connection and hence cannot use the Internet. There are several such rural locations in Zeeland.<br />
DELTA previously provided cable Internet access to a number of small towns with upwards of 20<br />
connections. Compared with the national average, coverage in rural locations in Zeeland is very<br />
good. That said, there are still a number of rural places with no Internet connection. This is due<br />
mainly to expensive excavation costs and hence high connection costs. We have looked at a<br />
number of wireless technologies for these locations, such as WiFi, satellite and wireless Docsis,<br />
and have run pilots with the latter two. These showed that neither technology is reliable enough to<br />
be used as an alternative in rural locations. Working with the provincial and municipal authorities,<br />
providers and residents, we are continuing to explore ways to connect these places to our Internet<br />
services.<br />
Content and portals<br />
ZeelandNet.nl remained highly popular in 2014. With 8,270,845 unique visits a year, each lasting<br />
an average of 8 minutes, ZeelandNet.nl is the most frequented website in Zeeland. Popular pages<br />
include the notice board, where 339,556 ads were placed in 2014, and the job vacancy section,<br />
with 8,811 vacancies posted in 2014. In 2014, ZeelandNet.nl was again awarded the<br />
telecommunications industry’s best and most popular website of the year.<br />
Interactive services on the Zeeland Portal were expanded substantially, with the interactive TV<br />
channel providing 22 apps by the end of 2014. DELTA also launched the Zeeland Live TV app,<br />
which can be used to broadcast live events in Zeeland. Red carpet night at the Film by the Sea<br />
festival and the arrival of Santa Claus were broadcast live in 2014. We also introduced DELTA<br />
Church live, allowing services at three churches to be watched live.<br />
Thirty-five channels were available through Second Screen by the end of 2014. DELTA also<br />
supports FOX Sports GO. Since the spring of 2014, subscribers to this channel pack have been<br />
able to watch football live on their laptops, tablets of smartphones.<br />
Service level<br />
In the autumn of 2014, as part of Zeelandnet.nl, DELTA launched its Service Forum, a platform at<br />
which customers can ask and provide answers to questions about multimedia products and<br />
services. The platform is run by ZeelandNet (a DELTA group company) and available 24/7. There<br />
is also a FAQ section. ZeelandNet moderators respond to any unanswered questions during office<br />
hours. By the end of 2014, the forum had more than 800 members and more than 500 questions<br />
had been posted.<br />
1.5.4 Energy generation<br />
Alongside fossil fuels and renewable energy sources, DELTA uses nuclear power to produce<br />
electricity. Around a third of its electricity is carbon neutral and generated by operating companies<br />
under joint arrangements.<br />
DELTA wants to be an entirely carbon neutral energy company by 2015. To achieve this aim, we<br />
focus strongly on wind energy. In 2014, we signed a contract for the purchase of electricity and<br />
green certificates from the Gemini offshore wind farm. This means that, with effect from 2016, we<br />
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will be the wind farm’s exclusive Dutch purchaser of wind power. As a result, renewable energy will<br />
account for more than 40% of our production portfolio, with the remainder being comprised of<br />
nuclear baseload production and efficient and flexible gas-fired production to compensate for the<br />
irregular and unpredictable availability of wind power.<br />
Working with other parties, DELTA operates the following power stations and wind farms:<br />
Coal-fired power station (Borssele 12);<br />
Nuclear power plant (Borssele 30);<br />
Gas-fired power station (SloeCentrale);<br />
Combined heat and power plants (including Elsta);<br />
Biomass power station (BMC);<br />
Wind farms.<br />
Coal-fired power station<br />
The arrangements initially made under the National Energy Agreement to close the 1980s coalfired<br />
power stations were held to be invalid in July 2014 on the grounds that they ran counter to the<br />
Dutch Competition Act. The Dutch government is now considering introducing efficiency<br />
requirements for coal-fired plants in the Activities Decree (Activiteitenbesluit) so as to meet the<br />
targets of the National Energy Agreement. A minimum efficiency requirement of 38% is likely to<br />
apply to coal-fired power stations from 2016.<br />
On 31 December 2015, EPZ will stop burning coal at its power plant in Borssele. The plant will<br />
subsequently be decommissioned and dismantled. This will be a major step towards a low carbon<br />
energy supply system.<br />
We are also exploring the possibilities for extending the useful life of the power plant's existing<br />
infrastructure and converting it into a biomass and/or residual waste treatment plant (the waste<br />
being supplied by local industrial companies) so as to get a bio-based economy off the ground.<br />
EPZ obtained the necessary licences to operate a 100% biomass-fired power station in mid-2013.<br />
Although the coal-fired power station did not generate a profit in 2014, the return for 2014 was<br />
better than expected, driven mainly by lower coal input prices and operational cost savings.<br />
Nuclear power plant<br />
In February 2014, the Council of State declared the long-term operational permit for the Borssele<br />
nuclear power plant to be irrevocable. On behalf of its shareholders DELTA and RWE, EPZ can<br />
now continue to operate the plant until the end of 2033. As a condition for extending its operations<br />
until 2033, the Borssele nuclear power must demonstrate that it is one of the 25% safest nuclear<br />
power plants in the Western world. This is in line with a previous agreement between EPZ, its<br />
shareholders, and the Dutch government. To achieve this, EPZ will implement a challenging and<br />
sizeable investment programme in the coming years, as well as carrying out careful maintenance<br />
and inspections. The programme also comprises necessary investments arising from various<br />
international benchmarks and safety reviews, in which the nuclear power plant is compared with<br />
international trends in terms of nuclear safety and protection from radiation.<br />
When changing the fissile rods in June 2014, EPZ for the first time added mixed oxide (MOX)<br />
nuclear fuel to the reactor alongside the regular fissile rods. Mixed oxide consists of a mix of<br />
uranium and plutonium oxides. Plutonium is a residual product released when recycling used<br />
nuclear fuel. Using plutonium will make EPZ less vulnerable to fluctuations in natural uranium<br />
prices. It will also reduce the use of natural uranium ore at the nuclear facility. Moreover, EPZ will<br />
no longer have to transfer its plutonium to third parties and so a by-product is put to useful use.<br />
Gas-fired power stations<br />
The Sloe gas-fired power station in Vlissingen-Oost and the ELSTA power plant in Hoek again<br />
went through a difficult year due to unfavourable market conditions. The Sloe power station was up<br />
and running for relatively long periods of time, but margins were modest. The ELSTA power station<br />
operated continually to supply steam to Dow in Terneuzen. However, additional power generation<br />
was minimal due to difficult market conditions.<br />
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Sloe power station<br />
In 2014, DELTA submitted a bid as part of a Belgian tender to construct new power stations to<br />
replace the country’s nuclear power plants, which will be phased out over time. The bid involved<br />
one of the units at the Sloe power station. The new power stations were to be efficient gas-fired<br />
power stations so as to meet the growing need for flexible power generation in Belgium. They<br />
would receive a fixed fee in Belgium if they were connected to the Belgian grid and available for the<br />
Belgian market. This would considerably improve the profitability of the Sloe power station. In its<br />
bid, DELTA presented two options to directly connect to the Belgian grid. However, in the course of<br />
2015, the Belgian government decided to withdraw the tender because it was found to be in<br />
violation of EU competition rules.<br />
Moerdijk biomass power station<br />
The biomass power station in Moerdijk (BMC) again had a good year, despite a period of bird flu,<br />
when supply of poultry litter was limited. It is the only power station on the European mainland to<br />
convert poultry litter into green electricity. In 2017, the Environmental Quality of Electricity<br />
Production (MEP) subsidy will come to an end. Since this will put pressure on profitability, DELTA<br />
is exploring ways to ensure a second future for the power plant.<br />
We have plans to extend the useful life of the BMC plant after 2017, but BMC will then have to<br />
succeed in obtaining a subsidy under the SDE+ Extended Useful Live Scheme. However, one of<br />
the requirements is that BMC will need to provide combined heat and power, but there is no<br />
demand for heat locally. Supported by the ministry of Economic Affairs and the RVO, DELTA is<br />
looking at other ways to ensure that BMC will be eligible for this subsidy even if it only supplies<br />
power. If this works out well, BMC will be able to process poultry litter and supply renewable<br />
electricity to the grid for another 12 years.<br />
Wind farms<br />
In 2014, DELTA was involved in developing various onshore wind farm projects. At least one of<br />
these projects will be implemented in 2015.<br />
The sale of the Kreekraksluis wind farm took up the best part of 2014 and will be completed in<br />
2015. Although it prefers not to own any existing or future wind farms, DELTA does wish to<br />
continue to sell the wind power generated.<br />
DELTA’s fuel mix for energy generation in 2014<br />
Fuel GWh %<br />
Natural gas 1,916.2 25.42%<br />
Natural CoGen 642,0 8.52%<br />
Coal 1,604.4 21.29%<br />
Nuclear 2,711.4 35.97%<br />
Wind 420.0 5.57%<br />
Solar 2.4 0.03%<br />
Biomass 241.1 3.20%<br />
Total 7,537.5 100.00%<br />
1.5.5 Sustainable projects under the Borssele Agreement<br />
In 2006, the Dutch ministry of Economic Affairs and the owners of the nuclear power station in<br />
Borssele (DELTA and RWE/Essent) signed what is known as the Borssele Agreement, pursuant to<br />
which permission was granted for the nuclear facility to remain open until 2034.<br />
DELTA and RWE/Essent each agreed to invest at least EUR 125 million in new and innovative<br />
projects to produce sustainable energy and reduce carbon emissions.<br />
DELTA is committed to achieving these innovation and reduction goals and has devoted a great<br />
deal of attention to performing the agreement.<br />
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The agreement consist of two parts:<br />
the AIP part, under which DELTA is obliged to carry out Additional Innovative Projects<br />
worth at least EUR 100 million in investments and has a reasonable efforts obligation to cut<br />
its carbon emissions by at least 235 ktonnes/year.<br />
an investment fund (SET fund) to support energy innovation start-ups, into which DELTA<br />
and Essent must each pay EUR 25 million.<br />
DELTA previously submitted a number of additional innovative projects to the external AIP<br />
Committee for approval and qualification as AIP projects. The company was reluctant to disclose<br />
the details of these projects because they involved competitively sensitive information. With DELTA<br />
and Essent adjusting their share interests in EPZ, from 50/50 to 70/30, the same ratio has been<br />
applied to their AIP project obligations. This means that DELTA’s target is now to invest EUR 140<br />
million and to cut its carbon emissions by 329 ktonnes. Essent’s target is to invest EUR 60 million<br />
and reduce emissions by 141 ktonnes.<br />
In 2013, we decided to be more transparent about the projects submitted to and approved by the<br />
AIP Committee. A number of these projects have since been implemented. Due to worsening<br />
economic conditions, we have not been able to achieve all of the proposed projects. One of the<br />
conditions set out in the agreement is that projects must be economically viable.<br />
The AIP Committee has to date approved ten project proposals, four of which have actually been<br />
carried out. Two projects fell through because the companies involved went bankrupt, and four<br />
projects were based on insufficiently solid business cases.<br />
Projects can be submitted to the AIP Committee until 2017.<br />
Pyrolysis project<br />
EPZ wind project<br />
STBE project<br />
Solar wafer project<br />
Green gas<br />
Wind farm<br />
Solsilc<br />
Kreekraksluis wind farm<br />
Guaranteed Solar<br />
Oosterschelde hydro<br />
power<br />
This project involves developing a pyrolysis plant which can co-fire far<br />
greater quantities of biomass than the coal-fired power station.<br />
The project involves constructing two large wind turbines at a coal<br />
storage facility operated by OVET and owned by Zeeland Seaports.<br />
The project involves developing and marketing a patent pursuant to which<br />
glycerine (a biodiesel byproduct) is converted into STBE, a diesel<br />
substitute that can be mixed with biodiesel.<br />
The project involves devising an entirely new procedure to manufacture<br />
wafers (the chip used in solar cells), including investments in large-scale<br />
production (constructing and fitting out a production facility).<br />
Green gas is one of the pillars of the government’s transition policy. The<br />
aim is to replace 10% of natural gas with green gas by 2020, produced<br />
from biomass fermentation and gasification. DELTA wants to make a<br />
contribution by submitting two project proposals.<br />
This is a pilot project to construct one or two very large turbines, to be<br />
followed by a larger project involving eight or nine of these turbines on<br />
other locations in Zeeland.<br />
This is a pilot project, the first factory to produce this semi-finished<br />
product for the solar cell industry from special raw materials in a new way.<br />
This is a new wind farm located 8 km from the Woensdrecht airbase,<br />
consisting of four sub-farms owned by DELTA, Eneco, Winvast, and<br />
Scheldewind, respectively. The project will have a spin-off effect, in that it<br />
improves the business case for potential wind farm projects near other<br />
Dutch airfields.<br />
This project involves leasing solar panel systems to consumers in<br />
Zeeland, coupled with an Energy Management System and active<br />
monitoring, so as to take all the hassle away from customers.<br />
This is a pilot project in which three turbines will be fitted on to the tidal<br />
barrier in the river Oosterschelde. The hydro power is generated by<br />
horizontal (currents) and vertical (waves) movements.<br />
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1.6 Grids, mains, and networks<br />
On 1 January 2014, DELTA Netwerkbedrijf (DNWB) and DELTA Infra merged into DELTA<br />
Netwerkgroep (DNWG). The organisational change had been prompted by the need to<br />
achieve greater synergy benefits and to operate more efficiently. The new company went<br />
full steam ahead surprisingly quickly. In 2014, several processes were adjusted to further<br />
optimise the organisation. Proposed cost-saving targets were achieved as a result. In 2014,<br />
much time and effort was devoted to aligning the different cultures at DNWB and DELTA<br />
Infra. One of the measures taken by DNWG was to bring under one roof the organisational<br />
units that needed to work closely together. DNWG also launched a Management<br />
Development programme for all executive staff. 2014 proved to be a good year for DNWG all<br />
around, both financially and in terms of safety and reliability of supply.<br />
DNWG<br />
Within the DELTA Group, DELTA Netwerkbedrijf (DNWB) occupies an independent position<br />
conferred by law. As a grid operator, DNWB ensures the safe, reliable and efficient<br />
operation of the gas and power grids. DNWB’s Supervisory Board is responsible for<br />
supervising its operations.<br />
Within DELTA Netwerkgroep, DELTA Infra is responsible for constructing and servicing the gas<br />
and power grids, water mains and data networks. It also renders services to industrial<br />
customers, including outside Zeeland.<br />
Safety<br />
Safety is and remains DNWG’s top priority. DNWG distinguishes between two types of safety.<br />
Safety at work refers to the safety of staff when carrying out their duties Staff includes our own<br />
employees but also those of third-party contractors. Process safety refers to the gas and power<br />
grids and their impact on local residents and the environment. Process safety is firmly embedded in<br />
the planning phase. By designing, constructing, operating and decommissioning the grids safely,<br />
DNWG minimises existing and future risks to local residents and visitors as well as staff working<br />
the grids.<br />
Personal safety is ensured through training and education. DNWG seeks to provide a proactive<br />
safety culture. Safety awareness at work is the key to achieving this. Amongst other things, DNWG<br />
hosted a safety workshop about how to learn from incidents.<br />
Reliability of supply<br />
As in previous years, reliability of gas and power supply was good. The number of outage minutes<br />
was well below our target and below the national average. Reliability of supply is all to do with the<br />
quality of the grids and having an effective maintenance policy in place. Moreover, DNWG<br />
operates an efficient emergency procedure that identifies any breakdowns or outages quickly,<br />
enabling its service engineers to resolve any problems quickly, 24 hours a day.<br />
<strong>Annual</strong> power outage times<br />
DNWB<br />
DNWB<br />
National<br />
Achieved<br />
Target<br />
2014 16.5 21 20<br />
2013 17.6 21 23<br />
<strong>Annual</strong> outage time (in minutes per connection) = average disruption time (in minutes) x disruption<br />
frequency.<br />
22
<strong>Annual</strong> gas outage times<br />
DNWB<br />
DNWB<br />
National<br />
Achieved<br />
Target<br />
2014 21 seconds 30 seconds 3 minutes and<br />
14 seconds<br />
2013 18 seconds 30 seconds 1 minute<br />
and 1 second<br />
Staff<br />
Because of the age distribution of its service engineers, in particular, DNWG will see a relatively<br />
large number of technical staff leave the company in the next few years. Teaming up with<br />
InstallatieWerk Brabant-Zeeland (training company) and ROC Markiezaat College (regional training<br />
centre) in Bergen op Zoom, DNWG has set up a combined work and training programme called the<br />
DELTA Infra Vocational Training Course (DIVO). Technically talented students are trained to<br />
become an electricity/COAX service engineer or a gas/water service engineer in a two-year<br />
programme. The on-the-job-training programme allows the ‘old guard’ to pass on their knowledge<br />
to the young engineers in the making. A milestone was reached when the first group of service<br />
engineers completed the course in 2014. Eleven students got a job at DNWG as well as receiving<br />
a certificate.<br />
In addition to hiring new staff, DNWG invested substantially in its existing employees. Managerial<br />
staff have a key role to play in achieving the company’s objectives and ensuring that their team<br />
members are motivated and performing well. This is why DNWG launched a Management<br />
Development programme. The MD programme focuses on culture, personal leadership, and<br />
integrated management. It provides all managers with the same set of tools. An added benefit is<br />
that they get to know each other in a different setting. The Management Development programme<br />
consisted of five modules:<br />
1. Performance management<br />
2. Result-oriented arrangements and reviews<br />
3. Leadership<br />
4. Communication skills<br />
5. Team development<br />
Smart meters<br />
Since 2012, DELTA Netwerkbedrijf has been replacing old-style meters by smart meters. By the<br />
end of 2014, more than 15% of Zeeland households had been fitted with a smart meter. This smallscale<br />
promotional project involved installing smart meters in new-built homes, major renovations,<br />
and regular replacements.<br />
Preparations are underway to offer smart meters on a large scale. This large-scale approach will<br />
be launched in 2015. All households and small business customers in Zeeland will be provided<br />
with smart meters by 2020.<br />
Outlook<br />
DNWG reported a solid performance in 2014. By investing smartly, joining forces with others where<br />
possible, and keeping costs at an acceptable level, it is expected to continue to perform well in<br />
future.<br />
‘By investing smartly, joining forces with others where possible, and keeping costs at an acceptable<br />
level, DNWG is expected to continue to perform well in future.’<br />
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1.7 Waste management<br />
With a 75% interest, DELTA is the largest shareholder in Indaver. Vlaamse Milieuholding<br />
holds 16% of the shares, with a group of industrial shareholders owning the remaining 9%.<br />
In 2014, DELTA set in motion the process of selling its share interest so as to allow Indaver<br />
to grow its business. The sale is expected to be completed by the end of the second quarter<br />
of 2015.<br />
Indaver has a clear mission, strategy, and geographical focus. Its core activities and service<br />
offerings are sharply defined and geared to a variety of industrial companies and local authorities,<br />
its geographical focus also clearly delineated. Indaver is committed to sustainable waste<br />
management, based on sustainable materials and energy management.<br />
Core activities<br />
Intelligent waste management systems and complex and innovative treatment plants are Indaver’s<br />
core activities. The company processes industrial and hazardous waste, domestic and commercial<br />
waste and organic waste, while consistently focusing on sustainable materials and energy<br />
management. Indaver has been helping to build a circular economy for many years.<br />
Quality, safety, sustainability, and cost efficiency Indaver has a clear policy. The company provides<br />
high-quality, safe, sustainable and cost-efficient waste management solutions to industrial<br />
companies and local authorities, specifically tailored to their needs. Indaver offers a flexible<br />
solution for any type of waste, thanks to its wide range of waste processing facilities. Where<br />
necessary, waste will be treated at third-party facilities, but under its directions.<br />
Service concepts<br />
Indaver pursues two strategic service concepts. In the industrial and hazardous waste segment,<br />
the company seeks to be a leading European provider of Total Waste Management solutions for<br />
major industries (chemical, life sciences, and metallurgical), providing environmentally safe thermal<br />
processing at state-of-the-art treatment plants. If required, Indaver can provide full-service waste<br />
management, from on-site collection to treatment through to administrative handling, so that its<br />
customers can fully focus on their own business. In the domestic and commercial waste segment,<br />
the company seeks to be the preferred partner of local authorities in Belgium, the Netherlands,<br />
Ireland and other countries through its Public Waste Partnership concept, offering thermal<br />
processing, energy recuperation, and high-quality recycling services.<br />
Based on this strategy and approach, Indaver has developed into a European-wide company,<br />
treating around 5 million tonnes of waste every year. In recent years, it has expanded its business<br />
substantially through acquisitions, strategic partnerships, and new operations. Indaver is the<br />
number two hazardous waste treatment company in Europe. All geographical units (Belgium, the<br />
Netherlands, Ireland & the UK, and Germany) made a substantial contribution to the company’s<br />
profit.<br />
In 2014, the focus was on consolidation. New projects were implemented and improvements made<br />
at various sites. This allows Indaver to deliver continuous, safe, cost-efficient and sustainable<br />
services to its customers – local authorities and businesses – at state-of-the-art facilities.<br />
Indaver is fully committed to conducting all of its business activities in a socially responsible way.<br />
Ensuring the health and safety of its 1,685 employees and everyone else involved is its number<br />
one priority. Indaver also seeks to minimise the environmental impact of its operations. These<br />
pillars of Corporate Social Responsibility are also Indaver’s priorities. They have been embedded<br />
in all of its operations and commercial decisions.<br />
Indaver reports annually on its performance in terms of health, safety, quality, and transparency. Its<br />
sustainability reports are available at its websites.<br />
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1.8 DELTA and corporate social responsibility<br />
DELTA is inextricably connected with Zeeland. It is connected by the pipes and cables that<br />
supply gas, power and Internet access to local residents, but also because we are one of<br />
the region’s major employers and because we take our responsibility to society seriously<br />
by sponsoring projects and events. We want to be open about this too.<br />
In 2014, we focused specifically on CSR policy and will continue to shape our policy and focal<br />
points in 2015. We will discuss this process and the outcomes in more detail in our 2015 report.<br />
At DELTA, CSR is reflected in three areas: energy transition, responsible operational management,<br />
and a dedicated organisation based in Zeeland. This section looks at our CSR performance at<br />
company level in 2014. The individual divisions are responsible for defining and achieving their<br />
own CSR targets. Details of their CSR performance are given in the relevant sections.<br />
We are aware that gains can still be made in the field of CSR. Our policy is modelled on the ISO<br />
26000 guidance standard, which defines seven key principles of social responsibility:<br />
accountability, transparency, ethical behaviour, respect for stakeholder interests, respect for the<br />
rule of law, respect for international norms of behaviour, and respect for human rights.<br />
Communication<br />
DELTA has organised its communication channels in such a way as to allow its stakeholders to<br />
engage with the company at any time. Its Communications and Public Affairs department publishes<br />
information on key events, reports on the company’s financial performance, maintains contact with<br />
stakeholders through the press and social media, and also face to face.<br />
Socioeconomic impact<br />
DELTA contributes EUR 600 million to Zeeland’s gross regional product through its head office and<br />
consumer spending on the part of its employees. As such, DELTA is a key driver of employment in<br />
the region and makes a substantial contribution to the regional economy.<br />
‘We are aware that gains can still be made in the field of CSR.’<br />
Responsible operational management<br />
DELTA seeks to make responsible choices in conducting its business. These choices concern not<br />
only procurement, energy usage, recycling, and car use, but also the way in which we deal with our<br />
employees and issues such as safety, personal development, and absenteeism. For more<br />
information, please refer to the section ‘DELTA and its employees’.<br />
1.8.1 Carbon footprint<br />
DELTA will start developing a CSR policy with measurable targets in 2015. As part of the policy,<br />
we will also calculate and benchmark our carbon footprint.<br />
1.8.2 Stakeholder engagement<br />
At DELTA, we are happy to enter into a dialogue with anyone who is in any way involved with our<br />
organisation and operations. Our customer service desk is still located at the company’s head<br />
office in Middelburg. Customers can call our customer service team free of charge, but will also be<br />
given an opportunity to visit the customer service desk at our head office.<br />
We ensure that the company engages with all of its stakeholders and everyone’s interests are<br />
considered when making policy choices. We are proud of, and have every intention of preserving,<br />
our role and reputation in local communities in Zeeland.<br />
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This requires exercising due care when interacting with our stakeholders. We actively approach<br />
stakeholders who are directly involved so as to consult them on particular issues. They must have<br />
or represent a clear interest in those issues. We regularly explore new and important themes with<br />
our stakeholders during regular or ad-hoc meetings. We try to act as proactively as possible by<br />
attending regional sporting or cultural events and professional meetings that are linked to the<br />
company’s areas of work or which are relevant to the region.<br />
DELTA’s stakeholders include its customers (businesses and consumers), professional and trade<br />
associations and networking organisations (energy, waste, grids, multimedia, general), the<br />
authorities (local, national, EU), societal organisations, suppliers and business partners,<br />
educational institutions, sports clubs, cultural and other organisations, regulators, financiers, and,<br />
of course, our shareholders. Our employees are also a very important group of stakeholders, see<br />
page 32.<br />
Coal dialogue<br />
In June 2010, EnergieNederland took the initiative to set up a ‘coal dialogue’ in order for energy<br />
companies, mining companies, NGOs and trade unions to discuss what supply chain responsibility<br />
should be about. The reason for this initiative were publications about Dutch energy companies<br />
buying coal from mining companies in Colombia and South Africa that were allegedly involved in<br />
serious human rights violations. DELTA is taking part in the coal dialogue, which continued in<br />
2014.<br />
‘We actively approach stakeholders who are directly involved<br />
so as to consult them on particular issues.’<br />
Smart DELTA Resources<br />
In early 2013, DELTA was the driving force behind a manifesto to have its coal-fired power station<br />
converted into a bioenergy power plant. On Tuesday 15 January 2013, the manifesto was signed<br />
by prominent representatives of eight organisations in Zeeland, calling on politicians to subsidise<br />
what was a unique sustainable project in the Netherlands. In early 2014, the manifesto was<br />
followed up by the setting up of the Smart DELTA Resources platform, in which twelve companies<br />
that make intensive use of energy and raw materials, including DELTA, joined forces<br />
to strengthen industry in Zeeland. Between them, they account for around 25% of total gas<br />
consumption in the Netherlands. This offers many opportunities for synergy and innovation. The<br />
companies taking part in the Smart DELTA Resources platform are jointly exploring smart solutions<br />
to address their current international competitive disadvantage and the loss of jobs resulting from<br />
adverse energy and commodities conditions.<br />
Customer focus<br />
DELTA wants to know what is important to its customers and how they value our services. To gain<br />
an insight into this, we perform qualitative and quantitative studies and surveys and receive<br />
feedback from customers during regular contact times. Advisory boards were set up in 2013. In<br />
2014, ZeelandNet.nl was awarded the telecommunication industry’s best and most popular website<br />
of the year for the fourth year running. This time around, awards were also given in the energy<br />
industry. DELTA landed the award for best website.<br />
Government authorities<br />
The energy industry operates on a strongly regulated market, with rules being imposed by both the<br />
national and EU legislatures. Sustainability challenges and security of supply are high on the<br />
political agenda. To properly define our position in these debates and to inform political and official<br />
stakeholders, DELTA has a Public Affairs department. The department’s responsibilities are not<br />
just national or European, but also regional in nature. DELTA maintains close contact with political<br />
and official stakeholders in Zeeland, and carries out various projects in collaboration with local<br />
authorities.<br />
26
Society<br />
DELTA engaged in various dialogues with its stakeholders in 2014. DELTA is also involved with<br />
the ‘Celebrate Life' foundation, which helps elderly people to get out and about.<br />
Knowledge<br />
DELTA is taking part in discussions hosted by the Zeeland Scientific Council (WRZ) about the<br />
knowledge infrastructure in Zeeland as a driver of innovation and regional economic growth. A new<br />
batch of service engineers completed DELTA Infra’s professional training course (DIVO), set up in<br />
partnership with InstallatieWerk Brabant-Zeeland (training company) and Markiezaat College<br />
(regional training centre) in Bergen op Zoom in 2012.<br />
Shareholders<br />
Similar to 2013, DELTA’s future was the most important topic of discussion in 2014. Three options<br />
were discussed: to continue as an independent business or to engage in a merger or takeover. It<br />
was ultimately decided, on the basis of these talks, that DELTA would continue as an independent<br />
business, but we will keep an open mind on any alternatives that may benefit the company.<br />
1.8.3 Donations and sponsorships<br />
DELTA is closely involved with keeping local communities in Zeeland liveable. This is not just<br />
because we are an employer, but because we consider this to be our social responsibility. One of<br />
the ways in which we make a contribution to society is by funding the DELTA Zeeland Fund. In<br />
2014, a number of new initiatives were funded, ranging from arts, nature, sports to healthcare.<br />
The fund selected 96 applications which it expects will make a long-term contribution to local<br />
communities, paying out a total of EUR 302,950. The fund seeks to allocate its funds<br />
proportionately, but there are not enough applications in some categories. It should perhaps be<br />
added that it is not DELTA that decides where the money should go. The fund has a board<br />
consisting of seven members, with only the vice chairman being a DELTA employee. The other six<br />
board members come from all parts of Zeeland and are experts in at least one of four main areas.<br />
Amounts in euros 2014 2013 2012 2011<br />
Arts & Culture 98,800 132,850 133,000 131,500<br />
Nature & Environment 24,000 11,500 32,500 43,500<br />
Sports & Leisure 93,150 99,500 139,576 120,000<br />
Healthcare & Wellness 87,000 76,250 93,250 87,200<br />
Total 302,950 320,100 398,326 382,200<br />
Sponsorships<br />
DELTA sponsored three major events in Zeeland in 2014. It was one of the main sponsors of the<br />
Concert at Sea and one of the sponsors of the Ride Before the Roses. The national Ride for the<br />
Roses bike ride started and finished in Goes this year. It is not just DELTA, but the whole of<br />
Zeeland that embraces this event. We therefore decided to also host a Ride Before the Roses.<br />
One of the aims of sponsoring these events is to showcase the essential services, such as power<br />
and water, that we can supply to events of this size.<br />
‘The ultimate aim is to strengthen our ties with Zeeland.’’<br />
At the Concert at Sea, DELTA supplied water, power and Internet facilities and cleaned up the<br />
venue after the event. The 2014 Ride for the Roses generated no less than EUR 1,176,336.05.<br />
That is including the proceeds from the DELTA Ride Before the Roses. In addition, we support<br />
annual activities that focus on two specific groups: vulnerable elderly people and young people with<br />
a disability.<br />
We review our sponsorship policy once every three years. In 2014, we started on a review of our<br />
current policy and brainstormed about any changes we might want to make. The ultimate aim is to<br />
strengthen our ties with Zeeland and show how we can add value to the region.<br />
27
1.9 DELTA and its employees<br />
DELTA and Zeeland are inextricably linked. People in Zeeland buy our products and<br />
services, and we are one of the largest employers in the region. We provide a safe and<br />
pleasant working environment for our employees, as well as many career opportunities.<br />
1.9.1 Number of employees<br />
At 31 December 2014, DELTA (including its subsidiaries) employed a total of 3,349 staff (FTEs). Of<br />
this total, 1,270 were employed by its divisions in Goes, Middelburg, and Vlissingen.<br />
Number of FTEs (including subsidiaries)<br />
2014 2013 2012 2011<br />
3,349 3,394 2,954 2,975<br />
Key staff figures for EPZ and Indaver are not included in this report. Both subsidiaries publish their<br />
own reports.<br />
‘DELTA will continue to critically review its policy on<br />
having staff on loan from third parties.’<br />
In DELTA’s divisions in Zeeland, 74% of the workforce are men. This is mainly because of the<br />
large proportion of technical staff. This percentage is reflected in management positions. The<br />
average age rose slightly to 45.3 in 2014 compared to 2013. With the exception of several board<br />
members and heads of department, all our staff fall within the scope of the collective agreement for<br />
production and supply companies.<br />
1.9.2 Inflow/outflow<br />
The number of employees in our divisions in Zeeland fell last year, due in part to the restructuring<br />
of the divisions and staff at the holding company. In 2014, 84 employees left the company and we<br />
welcomed 72 new staff, 15 of whom are on work experience placements and 11 are newly<br />
recruited service engineers who completed our DIVO training programme. We will continue to<br />
critically review our policy on having staff on loan from third parties. We want to provide more<br />
career advancement opportunities for our own employees so as to develop and make more use of<br />
their potential. They are also more likely to stay on if they can move up through the organisation.<br />
Not only will they have more opportunities, but we will also save on costs because we will need<br />
fewer expensive hired-in staff.<br />
Because a considerable number of employees are approaching retirement, a relatively large group<br />
of colleagues will be leaving the company in the coming years. About 20% of staff will retire over<br />
the next five years. Teaming up with InstallatieWerk Brabant-Zeeland (training company) and<br />
Markiezaat College (regional training centre) in Bergen op Zoom, DELTA Netwerkgroep has set up<br />
a combined work and training programme to recruit and train young service engineers. Eleven new<br />
service engineers completed the programme and were subsequently hired by DELTA in 2014.<br />
There are also close contacts with other schools. DELTA organises annual introduction meetings<br />
for potential trainees. We also take responsibility by offering work experience placements to people<br />
at a distance from the job market. DELTA is also a member of the Employment Market and<br />
Training Committee of the Brabant-Zeeland Employers’ Association.<br />
1.9.3 Key HR objectives<br />
28
The holding company defines DELTA’s HR policy. Policy implementation has been entrusted to the<br />
individual divisions. Each division has its own HR manager, who reports to the divisional director.<br />
In 2013, HR policy focused mainly on internal mobility. In 2014, we set ourselves the challenge of<br />
improving the quality of our operations so as to become a more flexible and more professional<br />
business that is ready for the future. We defined three key HR objectives for 2014.<br />
Mobility & Strategic HR Planning<br />
At DELTA, we believe that strategic HR planning is one of the most important ways to achieve our<br />
strategy and offer our staff a suitably challenging working environment. It allows us to assess the<br />
feasibility of operational choices by analysing which employees will be needed at a particular<br />
location at a particular time relative to current capacity. This way, we can take timely action to<br />
address any discrepancies.<br />
Internal mobility remains important in order to ensure DELTA’s future. Development opportunities<br />
motivate our staff and enhance their dedication and employability. We therefore prefer promoting<br />
our own (redundant) staff to higher positions, even if they do not initially meet all the job<br />
requirements, and giving them priority in the event of any vacancies, rather than recruiting external<br />
personnel. This policy covers the entire organisation, including the group companies in which<br />
DELTA owns a majority interest. Arrangements have been made with Indaver and EPZ to share<br />
job vacancies and relocate redundant employees.<br />
Personal leadership & culture<br />
Personal leadership and culture constitute the link between business targets and personal targets.<br />
They are, in fact, one of the critical success factors for achieving DELTA’s strategic goals.<br />
Personal leadership means that everyone within the organisation (across all levels) takes<br />
responsibility for the value they add to the company. The key indicators are flexibility and<br />
employability.<br />
The team managers play an important role in promoting personal leadership. Working with their<br />
team members and based on a dialogue, they are the ones that translate the company’s strategy<br />
and objectives into straightforward individual targets and behaviour. The team managers are<br />
provided with a range of tools to achieve this. Through tailored management development<br />
programmes, DELTA ensures that its managers develop appropriate skills to be able to<br />
successfully perform these tasks.<br />
‘DELTA wants its employees to remain<br />
employable in the long term.’<br />
Long-term employability & performance management<br />
We expect all of our employees to contribute to achieving DELTA’s strategy by adding value. The<br />
value they add varies from one position to another. This is why the company’s targets are<br />
converted into individual operational targets. The performance appraisal system is one of the tools<br />
used to guide this process.<br />
Aside from the company’s interests, it is also important that the appraisal cycle considers the<br />
employees' individual targets. DELTA wants its employees to remain employable in the long term<br />
and to have the flexibility and skills to be able to move with market dynamics. To us, long-term<br />
employability means that our employees remain fit, motivated and skilled, regardless of their age or<br />
life phase, whether they are employed by us or others. That is why we promote employability,<br />
motivation and aspirations, as well as skills development.<br />
29
Not everyone is able to respond to changes or keep up with the pace of changes. Employees may<br />
lack the knowledge, skills and/or required attitude or mindset. In these situations, in particular, the<br />
team manager should recognise the problem in a timely fashion and discuss it with the employee<br />
so as to find a solution and agree on improvements together. DELTA uses the potential appraisal<br />
method as a tool to measure the performance and potential of its employees and identify any<br />
necessary follow-on actions.<br />
1.9.4 Employee satisfaction<br />
In 2014, as in 2012, an employee satisfaction survey was conducted among DELTA employees<br />
based in Middelburg, Goes, and Vlissingen. The aim of the survey was to establish whether the<br />
measures implemented on the basis of the previous survey had actually led to improvements. The<br />
scores were the same on some subjects, but lower on others.<br />
The survey also provided an insight into the ‘mental well-being’ of our staff. It included questions<br />
such as ‘how satisfied and dedicated are the employees?’ and ‘how many employees suffer from<br />
stress or, worse, run the risk of a burnout?’ 73% of our employees took part in the survey<br />
(anonymously). That is up 10% on 2012.<br />
‘Safety comes first. Safety awareness improved further in 2014.’<br />
The main survey findings were:<br />
Employees were as much involved with the organisation in 2014 as in 2012 (64%). That is<br />
a higher percentage than the national average (59%).<br />
Employee satisfaction fell slightly from 86% in 2012 to 82% in 2014.<br />
Employees’ sense of social safety remained the same (score of 7.2).<br />
Employee dedication was dampened due to unclear task definitions, but encouraged by<br />
development opportunities and variation of work.<br />
The likelihood of a burnout increased due to unclear task definitions and emotional stress,<br />
but decreased as development opportunities were provided.<br />
Generational variations were identified in terms of employability and dedication.<br />
Common thread<br />
Based on the 2014 survey findings, we defined three themes to be worked out in greater detail:<br />
1. Grip on working environment and stress<br />
2. Perspective; and<br />
3. Generational diversity.<br />
Follow-up process<br />
DELTA’s divisional directors and heads of department have been instructed to actively use the<br />
survey findings. They will select a top three areas of improvement for each division/department,<br />
coupled with improvement actions. Progress will be monitored on a quarterly basis by a special<br />
working group comprised of representatives of, amongst other things, the Central Works Council<br />
and the HR department.<br />
30
1.9.5 Safety<br />
At DELTA, we put safety first. Safety is not only an important issue for our grid and production<br />
operations, but it is also highlighted within the office organisation. Examples include mandatory<br />
workplace inspections and annual safety drills.<br />
Because we expect our managers to lead by example, we have made their variable pay conditional<br />
on their making a contribution to a safer organisation.<br />
The HSE portal shows that the number of lessons learned continued to increase in 2014. At the<br />
same time, the number of incidents with injuries fell. We therefore conclude that safety awareness<br />
in the divisions improved further in 2014. All the divisions achieved their safety targets in 2014.<br />
Number of safety incidents reported by the E&M, DNWG, and staff divisions<br />
2014 2013 2012 2011<br />
Number of injuries with<br />
6 5 7 9<br />
absenteeism<br />
Number of injuries without<br />
5 9 16 14<br />
absenteeism<br />
TOTAL 11 14 23 23<br />
Other lessons learned 467 435 238 90<br />
1.9.6 Social safety<br />
In 2012, DELTA introduced a code of conduct laying down the standards and values applicable<br />
across the company. Counsellors were appointed to enhance employees’ sense of social safety. In<br />
2014, they received 34 reports relating to social safety.<br />
1.9.7 Sickness absence<br />
Sickness absence at the Zeeland-based divisions rose from 4.1% in 2013 to 4.6% in 2014. That is<br />
in excess of the 4.5% target rate and a reason for DELTA to pay extra attention to long-term<br />
employability and health management. In 2014, we ran a pilot to reduce frequent absenteeism. A<br />
companywide programme was launched, with team managers speaking with staff who had been<br />
on sick leave more than three times a year. These interviews zoomed in on the causes of<br />
absenteeism. The pilot proved successful and led to a reduction in frequent spells of short-term<br />
absence.<br />
However, long-term absenteeism rose in 2014. To curb long-term absenteeism, we developed a<br />
long-term employability plan in 2014. It provides for measures in the areas of physical health,<br />
mental health, and ‘career-long fitness’. These will be worked out in greater detail in 2015.<br />
2014 2013 2012 2011 Target<br />
Sickness absence 4.6% 4.1% 4.1% 4.2% 4.5%<br />
31
1.10 DELTA and corporate governance<br />
Sound business practices, integrity, respect, supervision, transparent reporting and other<br />
forms of accountability are the cornerstones of DELTA’s corporate governance policy. We<br />
are in compliance with the Dutch Corporate Governance Code, which applies to listed<br />
companies in the Netherlands. We have adopted the Code’s best-practice provisions in so<br />
far as they apply to us.<br />
Corporate governance structure<br />
DELTA N.V. is a company with a two-tier board as referred to in Section 2:154 of the Dutch Civil<br />
Code (DCC). The involvement of the General Meeting of Shareholders (GMS) and the Supervisory<br />
Board with the company’s operations is reflected in its articles of association and various sets of<br />
regulations. These are available at www.DELTA.nl/RvC. They also identify the situations in which<br />
the Executive Board requires the approval of either the Supervisory Board or the GMS for<br />
proposed board resolutions relating to DELTA and corporate governance,<br />
investments and/or takeovers or the sale of all or any part of the company. If the amount involved<br />
exceeds EUR 5 million, the proposed resolution requires approval from the Supervisory Board. If<br />
the proposal involves an investment in excess of EUR 55 million, it requires the prior approval of<br />
the shareholders.<br />
Shareholders<br />
Articles of<br />
Association<br />
Independent Auditors<br />
Supervisory Board<br />
- Supervisory Board<br />
Regulations<br />
- Audit, Risk & Compliance<br />
Committee<br />
- Remuneration & Nomination<br />
Committee<br />
Executive Board<br />
- Executive Board Regulations<br />
- Group governance framework<br />
Divisions<br />
- Divisional governance<br />
framework<br />
- DELTA Code of Conduct<br />
Executive Board<br />
The powers and responsibilities of the Executive Board are defined in the Executive Board<br />
Regulations. These provide for a division of duties among the Executive Board members, define<br />
internal powers of attorney, lay down decision-making procedures, and contain rules that are<br />
consistent with the Dutch Corporate Code, including rules dealing with conflicts of interest involving<br />
Executive Board members.<br />
32
DELTA endorses the rules on a balanced composition of the Executive Board as referred to in<br />
Section 391.7, Title 9, Book 2 of the Dutch Civil Code, as introduced on 1 January 2013. These<br />
guidelines are considered as and when necessary.<br />
Supervisory Board<br />
DELTA’s Supervisory Board oversees the company’s overall performance, including compliance<br />
with its policies, the results achieved by the Executive Board, the company’s financial position and<br />
risk profile, and its financial reporting. The Supervisory Board also acts as a sparring partner for the<br />
Executive Board. In order for the Supervisory Board to properly fulfil its role, its profile should be<br />
consistent with that of the company. The profile drawn up by the Supervisory Board in the course<br />
of 2010 describes the capabilities required of its members, having regard to the extended powers<br />
of nomination vested in the Central Works Council.<br />
The Supervisory Board is also in compliance with the Code in terms of its membership composition<br />
(independence, age diversity, background, and expertise), although gender diversity remains a<br />
concern. The Supervisory Board’s powers and duties and internal decision-making and the role of<br />
its chair are set out in the Supervisory Board Regulations. These also provide for matters such as<br />
periodic reviews of the Supervisory Board’s own performance, in accordance with the Code.<br />
Audit, Risk & Compliance Committee<br />
One of the duties of the Audit, Risk & Compliance Committee, in addition to financial and tax<br />
matters, is to monitor the risks that the company wishes to take. Risk management and risk policy<br />
are regular items on the agendas of both the Audit, Risk & Compliance Committee and the<br />
Supervisory Board’s plenary meetings.<br />
Shareholders<br />
The role of DELTA’s shareholders and the powers of the General Meeting of Shareholders are set<br />
out in the company’s Articles of Association. DELTA’s shareholders are committed and dedicated,<br />
in part because they are public sector entities (all being municipalities or provincial authorities).<br />
Owing to the wide-ranging powers entrusted to the GMS under the Articles of Association, the way<br />
in which the shareholders exercise their voting rights has a significant influence on the company’s<br />
policies and operations.<br />
Two formal and three informal general meetings were held during the year.<br />
Works Council<br />
Amidst the Articles of Association, board regulations and similar arrangements, the relationship<br />
between DELTA N.V. and its Works Council and Central Works Council should not go<br />
unmentioned. It is a relationship built on mutual respect, as reflected in standing consultations<br />
between the Executive Board and (Central) Works Council.<br />
At divisional level, standing consultations are held with the divisional works councils.<br />
Compliance<br />
DELTA operates a ‘whistleblower scheme’, adopted by the Supervisory Board, which, in addition to<br />
the compliance officer’s activities, enables employees to raise concerns about malpractice with the<br />
Executive Board and/or a counsellor without running the risk of reprisals. If preferred, reports can<br />
be made to an external party.<br />
‘DELTA’s shareholders are committed and dedicated, in part<br />
because they are public sector entities (all being municipalities or<br />
provincial authorities).’<br />
33
1.10.1 The members of the Executive Board<br />
In 2014, the Executive Board of DELTA N.V. comprised Arnoud Kamerbeek (CEO) and Frank<br />
Verhagen (CFO).<br />
Arnoud Kamerbeek<br />
(1973), CEO<br />
Nationality: Dutch<br />
First appointed: 16 January 2014<br />
Frank Verhagen<br />
(1961), CFO<br />
Nationality: Dutch<br />
First appointed: 1 February 2009,<br />
reappointed for four years until 1 February<br />
2017<br />
Other board memberships:<br />
Advisory Board member of ADRZ<br />
hospitals<br />
Board member of employers’<br />
assocation WENb<br />
Advisory Board member of HZ<br />
University of Applied Sciences<br />
Audit Committee member at ADRZ<br />
Audit Committee member at HZ<br />
University of Applied Sciences<br />
34
1.10.2 <strong>Report</strong> of the Supervisory Board<br />
The Supervisory Board is pleased to report on its activities undertaken in 2014, and the way in<br />
which it has performed its supervisory and advisory duties.<br />
Membership composition<br />
In 2014, the Supervisory Board comprised:<br />
Mr C. Maas (since 16 May 2014, appointed chairman on 26 September);<br />
Mr D. van Doorn (chairman until 26 September 2014); Mr J. Bout;<br />
Mr B.P.T. de Wit (secretary);<br />
Ms A.M.H. Schöningh (vice chairman);<br />
Mr J.G. van der Werf (until 1 May 2014).<br />
Cees Maas was newly appointed to the Supervisory Board on 16 May 2014. Daan van Doorn<br />
stepped down as Supervisory Board chairman on 26 September 2014. He made a huge<br />
contribution to the company. In the turbulent times that followed Peter Boerma’s retirement as CEO<br />
and the scrapping of plans to build a second nuclear power station, Mr Van Doorn performed his<br />
supervisory tasks with vigour. We have accepted his decision to step down with respect and regret.<br />
Mr Maas was appointed to succeed Mr Van Doorn as Supervisory Board chairman on 26<br />
September.<br />
Division of duties within the Supervisory Board and its committees<br />
It is Supervisory Board policy that all matters should preferably be discussed at its plenary<br />
meetings. From this perspective of collective responsibility, we believe that there is no place for<br />
numerous committees consisting of Supervisory Board members entrusted with primary<br />
responsibility for individual areas of work. In line with the Dutch Corporate Governance Code, we<br />
have made an exception for the Audit, Risk & Compliance Committee and the Remuneration &<br />
Nomination Committee.<br />
Meetings and other activities of the Supervisory Board<br />
In 2014, the Supervisory Board met nine times, with the Executive Board attending. The matters<br />
discussed included:<br />
Financial matters, including the quarterly reports and financial statements, and the<br />
company’s business plan and operational and financial goals.<br />
DELTA’s business strategy and related strategic issues, such as acquisitions and<br />
investments and disposals;<br />
The main risks arising from the policies implemented;<br />
Risk management;<br />
Dividend policy;<br />
Investment policy and key investments and disposals;<br />
Finance policy;<br />
Tax issues;<br />
Corporate governance.<br />
The Supervisory Board held extensive consultations with the Executive Board about the company's<br />
business strategy, in much the same way as it discussed strategy with the shareholders. It<br />
attended the meetings between the Executive Board and the shareholders’ committee to go over<br />
the various options which the shareholders previously submitted to the Supervisory Board and<br />
Executive Board.<br />
The Supervisory Board also concerned itself at great length with the proposed decisions to sell<br />
DELTA’s sizeable share interests in, for example, the Kreekraksluis wind farm and Indaver N.V.<br />
During the year, the Supervisory Board was periodically informed by the Executive Board and the<br />
board of EPZ about the situation at EPZ and the safety and other operational aspects of its nuclear<br />
power plant in Borssele.<br />
35
The Supervisory Board also convened several times without the Executive Board attending. The<br />
main issues discussed included:<br />
The appointment of Mr Kamerbeek as the new CEO;<br />
Mr Van Doorn’s resignation as chairman of the Supervisory Board. The Supervisory Board<br />
appointed Mr Cees Maas as its new chairman;<br />
The review of the Executive Board;<br />
The recommendation to appoint the independent auditors;<br />
The formation of the Remuneration & Nomination Committee and appointment of Ms<br />
Marieke Schöning as its chair.<br />
The Supervisory Board also convened to review its own performance, without the Executive Board<br />
attending, discussing matters such as its main duties and responsibilities (oversight and advice)<br />
and cultural and behavioural aspects.<br />
Audit, Risk & Compliance Committee<br />
During the year, the Audit Committee’s mandate was expanded to include Risk & Compliance.<br />
Comprised of two members, Mr Bout (chairman) and Mr Maas, the ARCC met four times during the<br />
year. The issues discussed included the management letter, group plan, quarterly reports, halfyear<br />
report, financial statements, financial returns on projects and investments, risk management,<br />
IFRSs, tax issues, definition and details of financial functions, and several other proposals to invest<br />
or divest. The meetings were attended by the members of the Executive Board, the Group Internal<br />
Control Manager, and the independent auditors. The ARCC also spoke with the independent<br />
auditors, without the Executive Board attending.<br />
Remuneration & Nomination Committee<br />
Comprised of Ms Schöningh (chair) and Mr Maas, the Remuneration & Nomination Committee met<br />
twice during the year. On the Committee’s proposal, the General Meeting of Shareholders was<br />
asked to provide a candidate to fill the vacancy on the Supervisory Board that had arisen with the<br />
departure of Mr Van Doorn. The Governance Committee of the General Meeting of Shareholders<br />
issued its recommendation in November 2014.<br />
Executive Board membership composition<br />
In 2014, the Executive Board comprised Mr A. Kamerbeek (CEO) and Mr F. Verhagen (CFO).<br />
Executive Board remuneration<br />
The remuneration policy for Executive Board members was adopted by the General Meeting of<br />
Shareholders, in line with the Supervisory Board’s proposal. The policy’s guiding principle is that<br />
DELTA should be able to offer a pay package that allows the right people to be recruited and<br />
retained by the company. The Supervisory Board determines the remuneration of Executive Board<br />
members annually, within the limits set by this policy.<br />
Financial statements<br />
The Supervisory Board has reviewed and approved the annual report, financial statements, and<br />
notes for the 2014 financial year, as submitted by the Executive Board. The Executive Board<br />
prepared the financial statements 2014 on that basis, and the Supervisory Board recommends<br />
their unqualified adoption by the General Meeting of Shareholders. The dividend proposal,<br />
submitted for approval to the General Meeting of Shareholders, involved a pay-out of EUR 15<br />
million, to be funded from the profit and the other reserves.<br />
On behalf of DELTA N.V.’s Supervisory Board,<br />
C. Maas<br />
Chairman<br />
36
The members of the Supervisory Board<br />
Cees Maas (1947)<br />
Nationality: Dutch<br />
First appointed: 16 May 2014, appointed chairman on 26 September<br />
Current term: until 15 May 2018<br />
Profession/main position: Former CFO of ING Group N.V.<br />
Other board memberships: Senior adviser to Cerberus Global Investment Advisors, LLC;<br />
Supervisory Board vice chairman of BAWAG P.S.K; non-executive director of HAYA Real Estate<br />
S.L.U.; Supervisory Board vice chairman of BCD Holding N.V.; Supervisory Board vice chairman of<br />
Stadion Feijenoord N.V.; Board member of Stichting Preferente Aandelen DSM; Board member of<br />
Stichting Administratiekantoor Hoofdplaat; Advisory Board member of Erasmus University Hospital;<br />
and chairman of the Nationaal Fonds 4 en 5 mei.<br />
Jan Bout (1946)<br />
Nationality: Dutch<br />
First appointed: 1 January 2011<br />
Current term: until 12 December 2018<br />
Profession/main position: former Executive Board chairman of Royal Haskoning<br />
Other board memberships: Supervisory Board member of Ballast-Nedam N.V.; Supervisory Board<br />
chairman of Brunel International N.V., and Audit Committee chairman; Supervisory Board member<br />
of Royal Haskoning DHV Groep B.V.<br />
and Audit Committee chairman; co-founder of Bout & Co strategic consultants; chairman of the<br />
Advisory Council on sustainable healthcare at Nijmegen University Hospital.<br />
Peter de Wit (1949)<br />
Nationality: Dutch<br />
First appointed: 1 January 2011<br />
Current term: until 12 December 2018<br />
Profession/main position: former CEO of Shell Netherlands B.V.<br />
Other board memberships: non-executive board director of Caithness Petroleum, London; advisory<br />
council member of Energy Delta Gas Research (EDGaR); Board Director of GlassPoint Solar Inc.,<br />
California; adviser to the Mozambique government; chairman of the FreFlyers Multi Sports Club,<br />
London.<br />
Marieke Schöningh (1963)<br />
Nationality: Dutch<br />
First appointed: 17 May 2013<br />
Current term: until 16 May 2017<br />
Profession/main position: Global Vice President of M&S - DSM Sinochem Pharmaceuticals<br />
38
Remuneration<br />
On the basis of the Average Household Consumer Price Index (CPI) for 2013, the remuneration of<br />
the members of the Supervisory Board was increased by 2.51%.<br />
The following amounts were paid in 2014:<br />
Cees Maas (Supervisory Board member since 16-05-2014, chairman since 26-09-2014, Audit, Risk<br />
& Compliance Committee member since 1-10-2014, Remuneration & Nomination Committee<br />
member): EUR 20,925<br />
Jan Bout (Supervisory Board member and Audit, Risk & Compliance Committee chairman):<br />
EUR 32,400<br />
Peter de Wit (Supervisory Board member, secretary to the Supervisory Board, Audit, Risk &<br />
Compliance Committee member until 1-10-2014):<br />
EUR 31,050<br />
Marieke Schöningh (Supervisory Board vice chairman, Remuneration & Nomination Committee<br />
chairman since 1-10-2014):<br />
EUR 27,810<br />
Daan van Doorn (Supervisory Board chairman until 26-09-2014):<br />
EUR 32,400<br />
Johan van der Werf (Supervisory Board member until 1-5-2014):<br />
EUR 10,100<br />
1.10.3 <strong>Report</strong> of the Works Council<br />
On 20, 21 and 22 May 2014, early elections were called for the Works Councils in the Energy &<br />
MultiMedia division, DELTA Netwerkgroep, and the holding company. The elections had been<br />
necessitated by the Redesign restructuring in 2013, which led to considerable changes being made<br />
in the structure and staffing of several divisions. Because there were more candidates than seats<br />
on the Works Council of DELTA Netwerkgroep, this was the only entity where elections were<br />
actually held.<br />
At DELTA, workers’ participation is organised as follows:<br />
European Works Council<br />
Central Works Council<br />
(COR)<br />
Works Council<br />
Energy & MultiMedia<br />
Works Council<br />
DNWG<br />
Works Council EPZ<br />
Works Council Staf<br />
39
Central Works Council<br />
Composition of the Central Works Council after the elections on 28 May 2014<br />
Executive Committee:<br />
Bram Nonnekes chairman E&M<br />
Bart van Houte vice chairman E&M<br />
Harrie Martens secretary DNWG<br />
Huub Knoors vice secretary EPZ<br />
Other members:<br />
Stephan de Beer<br />
Leen Boer<br />
Jack van Bruggen<br />
Martijn Hofman<br />
Peter Maljers<br />
Theo Nieuwburg<br />
Jan Scheele<br />
Hans van Stel<br />
E&M<br />
DNWG<br />
EPZ<br />
DNWG<br />
EPZ<br />
DNWG<br />
E&M<br />
Group Staff<br />
Formal secretary:<br />
Joop Janse<br />
Communications assistant:<br />
Gerard Schuur<br />
In 2014, the Central Works Council convened eight times and held eight formal meetings with the<br />
Executive Board and the HR director in 2014.<br />
The individual Works Councils each convened six times and held six meetings with their board.<br />
They discussed issues relating to their own division. The Central Works Council mainly discussed<br />
cross-divisional matters and issues that impacted the company as a whole. The Works Council<br />
support scheme provides how many hours employees are exempt from work to carry out their<br />
duties as works council members.<br />
The main issues discussed were:<br />
Advice on the appointment of a new CEO<br />
Advice on the sale of the Kreekraksluis wind farm<br />
Strategy discussions with the shareholders<br />
Explore future scenarios for DELTA N.V.<br />
Changes to workers’ participation agreement<br />
Consent to changes in Employee Data Privacy regulations<br />
Consent to changes in regulations on Workwear and Personal Protective Gear<br />
Corporate culture initiative<br />
Consent to HSSE manager position<br />
Composition of the European Works Council in 2014<br />
Employee representatives:<br />
Stephan de Beer DELTA N.V. Netherlands<br />
Huub Knoors DELTA N.V. Netherlands<br />
Bram Nonnekes DELTA N.V. Netherlands<br />
Leen Boer DELTA N.V. Netherlands<br />
Karin Aspeslagh Indaver Netherlands<br />
Kristof Colman Indaver Belgium<br />
Guy Smits Indaver Belgium (secretary)<br />
Rainer Martens Indaver Deutschland Germany<br />
Rudi Wachtel Indaver Deutschland Germany<br />
40
Employer representatives:<br />
Arnoud Kamerbeek CEO of DELTA N.V. (chairman)<br />
Paul de Bruycker CEO of Indaver<br />
Michel van Neutigem DELTA N.V.’s HR Director<br />
Karin Smet<br />
Indaver’s Group HR Manager<br />
André van Os DELTA N.V.’s secretary<br />
Main issues discussed:<br />
Proposed sale of Indaver<br />
Progress on budget 2014<br />
Operational Plan 2015-2017<br />
Long-term employability<br />
41
1.11 Opportunities and risks<br />
DELTA wants to seize market opportunities while at the same time minimising risks. To<br />
achieve this, we have an intelligent risk management system in place, which we ensure is<br />
applied and complied with across the company. The system factors in the specific features<br />
of the markets in which the individual divisions operate and which are consolidated at<br />
company level. Responsibility lies primarily with the divisions, whose staff and<br />
management are responsible for properly performing risk management and internal control<br />
activities. The Executive Board has ultimate responsibility for risk management at DELTA.<br />
DELTA’s internal control framework<br />
To help the divisions perform these responsibilities, the Group Internal Control department has<br />
developed and implemented the DELTA Internal Control Framework (DICF), based on the COSO<br />
ERM model.<br />
As part of the framework, divisional management and the heads of department prepare a<br />
Management in Control Statement (MiCS) once every six months. The MiCS is substantiated by<br />
validating (i.e. establishing the effectiveness of) key controls. These controls are identified during<br />
annual Strategic Risk Assessments and multiple Process Risk Assessments. The divisional<br />
directors discuss any developments likely to impact risk levels with the Executive Board at least<br />
twice a year.<br />
Group Internal Control monitors compliance with the internal control framework, which has been<br />
designed to ensure that:<br />
DELTA is notified in a timely fashion as to when strategic, operational and financial targets<br />
have been achieved;<br />
financial reporting is reliable;<br />
DELTA operates in accordance with applicable laws and regulations;<br />
the company’s property and assets are protected;<br />
DELTA has a clear understanding of its obligations;<br />
the company’s processes are effective and efficient.<br />
Management in Control Statements<br />
Management submitted two Management in Control Statements to the Executive Board for 2014.<br />
In these statements, they confirmed that they were ‘in control’ in 2014. These statements were the<br />
basis for the Executive Board’s In Control Statement as included in this annual report.<br />
Internal audits<br />
Risk control at divisional level and various other processes are subject to regular audits by the<br />
independent Internal Audit department. Internal Audit looks at the quality assurance system and<br />
the risk management, control and compliance procedures.<br />
Independent auditors<br />
When auditing the financial statements, the independent auditors investigate the design, existence<br />
and effectiveness of the company’s internal controls on financial reporting. The audit findings and<br />
recommendations are set out in an annual Management Letter and reported to the Executive<br />
Board, Audit, Risk & Compliance Committee, and Supervisory Board. The Management Letter may<br />
lead to controls being tightened further.<br />
Supervisory Board<br />
DELTA’s Executive Board reports on, and accounts for, the design and operational effectiveness of<br />
the internal risk control system to the Audit, Risk & Compliance Committee and the Supervisory<br />
Board. External parties, including the Consumer & Markets Authority, monitor compliance with<br />
applicable laws and regulations.<br />
42
Risks and controls in 2014<br />
Ensuring security of supply, waste treatment, and providing access to the Internet are essential to<br />
society. DELTA is also a major employer in Zeeland and an important economic partner to the<br />
public and private sector. DELTA identifies any risks that may threaten the provision of these<br />
services and seeks to mitigate such risks where appropriate and economically feasible.<br />
DELTA is involved in international gas and electricity trading. Prices on these international markets<br />
fluctuate strongly. DELTA uses financial instruments to mitigate commodity, foreign exchange,<br />
interest rate, liquidity and credit risks, subject to the requirements set out in its Risk Policy<br />
Document and Treasury Charter.<br />
Under the auspices of the Executive Board, the E&M division’s Risk Management Committee has<br />
put in place general procedures and limits and is responsible for ensuring that DELTA’s energy<br />
trading and sales activities remain within the defined risk margins.<br />
The following paragraphs describe the different types of risk and the way in which DELTA<br />
manages the related exposures.<br />
Commodity price risk<br />
Market risks arise from price movements in the markets where DELTA buys and sells (gas,<br />
electricity, coal, oil, emission allowances, currencies, transmission capacity, imports/exports<br />
capacity, etc.). It is DELTA’s policy to mitigate the impact of price movements in the short term and<br />
track prevailing market prices in the long term. For systematic risk control purposes, asset<br />
allocations and positions are determined on the basis of expected price developments. These<br />
positions are monitored on a daily basis. Trading risks are mitigated by strictly enforcing a system<br />
of limits.<br />
Value-at-Risk<br />
DELTA uses the Value-at-Risk (VaR) method to calculate and assess market risks on its<br />
commodity markets. This method involves using various assumptions regarding possible changes<br />
in market conditions. VaR identifies the maximum portfolio losses likely to be incurred as a result of<br />
price changes over a three-day period with a confidence level of 95% (i.e. in 5% of cases the<br />
portfolio losses may exceed the VaR limit). VaR is calculated using Monte Carlo simulations based<br />
on historical volatilities and correlations. Because portfolios include opposing positions and there is<br />
an underlying correlation, the VaR of the total portfolio is smaller than the sum of sub-portfolio<br />
VaRs.<br />
VaR is an important tool for DELTA to manage its portfolios and it is therefore calculated and<br />
reported on a daily basis.<br />
Cash flow hedges<br />
DELTA uses financial instruments to minimise fluctuations in expected cash flows. The company<br />
uses derivatives, including forward contracts, options, and swaps, to control the risks of future<br />
changes in market prices. These hedging instruments are derivatives of commodities traded by<br />
DELTA and they are entered into to mitigate cash flow, price and currency risks. Hedge<br />
accounting is applied to cushion the total change in value of these derivatives.<br />
To the extent permitted, DELTA accounts for these financial instruments and the physical purchase<br />
and sale contracts in a cash flow hedge relationship in accordance with IAS 39.<br />
Currency risk<br />
Currency risk is the risk that the value of assets will change due to movements in foreign exchange<br />
rates. DELTA’s risk policy is to hedge currency risks associated with positions denominated in<br />
foreign currencies. To hedge this risk, the company uses financial instruments (forward contracts)<br />
to minimise fluctuations in expected cash flows. Currency positions arising from commodity and<br />
other contracts are reported to the Treasury department on a daily basis to be hedged at group<br />
level. Currency risk limits are set periodically in consultation with the Risk Management Committee<br />
and are monitored by the Treasury department.<br />
43
Interest rate risk<br />
DELTA’s interest rate risk policy is to mitigate the effects of interest rate fluctuations. To hedge this<br />
risk, the company uses derivatives, including interest rate swaps. These swaps allow a floating rate<br />
to be exchanged for a fixed rate.<br />
Liquidity risk<br />
Liquidity risk is the risk that DELTA may have insufficient funds available to meet its short-term<br />
liabilities. DELTA’s capital management policy focuses on centralising its cash management and<br />
borrowing and repayment operations at holding company level as much as possible. On the basis<br />
of its business plan, the company prepares an annual financing plan to give direction to the<br />
activities undertaken by the Treasury department, and to determine the ratio of short-term to longterm<br />
debt. DELTA also ensures that it more than meets banking ratios and other ratios necessary<br />
to maintain its corporate credit rating and to optimise working capital management. The company<br />
also pursues a very strict policy in terms of providing guarantees and cash collateral.<br />
In order to meet its working capital requirement, DELTA has access to a stand-by credit facility. It<br />
allows the company the flexibility, for example, to absorb seasonal cash flow fluctuations and prefinance<br />
projects. There are separate lines of credit for independent projects, for entities that are not<br />
wholly-owned by DELTA , and for entities for which the law so requires. There is no recourse to<br />
DELTA N.V. under these facilities.<br />
Standard & Poor's downgraded the company’s credit rating to BBB with a negative outlook in 2014,<br />
due in part to difficult market conditions and poor prospects. The Executive Board is taking steps to<br />
avoid any further downgrade, for example by selling the company’s share interests in Indaver and<br />
the Kreekraksluis wind farm.<br />
Summary of the main risks<br />
The table below describes some of the main risks facing DELTA. It also shows how the company<br />
mitigates the probability and impact of these risks.<br />
We will continue to monitor any major risks in 2015 and mitigate such risks where appropriate and<br />
economically feasible. Safety risks will remain a focal point in 2015. DELTA ensures good working<br />
conditions, robust and reliable business processes, and skilled staff. At DELTA, we have a rule that<br />
says “I work safely or I don‘t work at all.”<br />
Riskk<br />
Downgrade of S&P credit rating prompted<br />
by mandatory separation of grid operations<br />
There is a chance that the grid operations may<br />
have to be hived off pursuant to a court order.<br />
This may lead to an S&P rating downgrade,<br />
which in turn could adversely affect DELTA’s<br />
trading position.<br />
Continued decline in power generation<br />
spreads<br />
Falling sales prices for electricity and input<br />
prices that are not declining at the same pace<br />
are putting pressure on the returns generated<br />
by power stations.<br />
Unplanned outages at power stations<br />
Unplanned outages at power stations may lead<br />
to planned volumes not being achieved. This<br />
could, in turn, lead to lower revenue, the need<br />
to buy back energy previously sold, and<br />
imbalance costs being incurred.<br />
Uncollectible accounts receivable<br />
As economic conditions deteriorate, there is an<br />
Control<br />
DELTA has engaged the support of top<br />
lawyers and tries to convince policymakers that<br />
the intended effects of the legislation are<br />
negligible and the negative impact will be<br />
great.<br />
Future positions are locked in, on the basis of<br />
market forecasts and models. This mitigates<br />
some of the risk of spreads declining further,<br />
but also reduces the possibility of benefiting<br />
from favourable market developments.<br />
Adequate maintenance programmes and a<br />
sufficient supply of spare parts should prevent<br />
or limit the duration of any outages. DELTA<br />
may nonetheless be confronted with prolonged<br />
unplanned outages, as events showed in<br />
2013.<br />
DELTA operates strict procedures and credit<br />
limits for trading partners and customers. Major<br />
44
increased risk of customers not being able to<br />
meet their financial obligations. Amounts owed<br />
by such customers may become uncollectible.<br />
Elevated risk in terms of data security<br />
Cyber attacks may cause damage to ICT<br />
systems or lead to confidential information<br />
being stolen.<br />
Unfavourable changes in the law on waste<br />
incineration<br />
Changes in the law may cause revenues from<br />
Green Steam Certificates to fall or disappear<br />
altogether and/or lead to a reduction in gate<br />
fees received.<br />
accounts are accepted only if the credit<br />
insurance company issues a limit. We also<br />
closely monitor the payment behaviour of<br />
customers and will take immediate action if<br />
necessary.<br />
In 2014, we performed an analysis of data<br />
security at the company. and, on the basis of<br />
the findings, tightened our action plans. DELTA<br />
also takes part in national public-private<br />
partnerships to share information and<br />
experiences.<br />
The board of Indaver has presented a wellargued<br />
case for leaving the legislation<br />
unchanged. Indaver also transports waste to<br />
incineration plants in the Netherlands, which<br />
reduces spare capacity there and lessens the<br />
need to amend (EU) legislation.<br />
45
1.12 Statement by the Executive Board<br />
In Control Statement<br />
The Executive Board is responsible for the design and operating effectiveness of the company’s<br />
risk management and internal control system: the DELTA Internal Control Framework (DICF). We<br />
reviewed its design and operation during 2014, based in part on the Management in Control<br />
Statements submitted by the divisions, the internal audit report, and the independent auditors’<br />
report.<br />
Risk-taking is inextricably linked to the company’s operations and the implementation of its<br />
strategy. The DICF framework allows DELTA to take risks by identifying, controlling, and actively<br />
monitoring those risks, and taking appropriate action where necessary. We seek to minimise the<br />
probability and impact of any errors, incorrect decisions or unforeseen events. We are aware that<br />
this does not provide absolute assurance that business targets will be achieved and<br />
misstatements, loss, fraud or breaches of the law eliminated.<br />
When auditing the financial statements 2014, the independent auditors tested the design,<br />
existence and operating effectiveness of the company’s internal controls on financial reporting.<br />
They reported their findings to the Executive Board, Audit, Risk & Compliance Committee, and<br />
Supervisory Board.<br />
On the basis of the foregoing, the Executive Board believes that the risk management and internal<br />
control system operated effectively during 2014 and provides reasonable assurance that the<br />
financial statements for the year under review contain no material inaccuracies.<br />
The Executive Board will ensure that the company will continue to strengthen and professionalise<br />
its DICF framework in 2015.<br />
Management statement<br />
To our knowledge:<br />
the financial statements give a true and fair view of the assets, liabilities, financial position<br />
and profit of DELTA N.V.;<br />
the additional information, as contained in this annual report, gives a proper view of the<br />
state of affairs as at 31 December 2014 and of DELTA N.V.’s operations during the 2014<br />
financial year;<br />
the Opportunities and Risks section, as contained in this annual report, provides a<br />
description of potential material risks facing DELTA N.V.<br />
Middelburg, The Netherlands, 11 May 2015<br />
The Executive Board,<br />
Arnoud Kamerbeek, CEO<br />
Frank Verhagen, CFO<br />
46
2 Financial statements 2014<br />
DELTA N.V.<br />
The English translation of the annual report is for information purposes only<br />
The <strong>Annual</strong> <strong>Report</strong> 2014 comprises of the Dutch text including the independent<br />
auditor’s report in Dutch<br />
47
Contents<br />
Consolidated financial statements<br />
Consolidated balance sheet as at 31 December 2014 ......................................................................... 49<br />
Consolidated income statement .......................................................................................................... 50<br />
Consolidated statement of comprehensive income .............................................................................. 51<br />
Consolidated statement of changes in equity ....................................................................................... 52<br />
Consolidated cash-flow statement ....................................................................................................... 53<br />
Accounting policies ............................................................................................................................. 54<br />
Notes to the consolidated balance sheet ............................................................................................. 73<br />
Notes to the consolidated income statement ..................................................................................... 110<br />
Notes to the consolidated cash flow statement .................................................................................. 121<br />
Post-balance sheet events ................................................................................................................ 122<br />
Consolidated companies ................................................................................................................... 123<br />
Non-consolidated companies ............................................................................................................ 125<br />
Company financial statements 2014<br />
Company balance sheet as at 31 December 2014............................................................................. 128<br />
Company income statement .............................................................................................................. 129<br />
Notes to the company balance sheet ................................................................................................. 130<br />
Notes to the company income statement ........................................................................................... 139<br />
Other information<br />
Profit appropriation ............................................................................................................................ 141<br />
Independent auditors’ report.............................................................................................................. 142<br />
DELTA in financial figures, consolidated ............................................................................................ 143<br />
DELTA in key figures ........................................................................................................................ 144<br />
48
Consolidated balance sheet as at 31 December 2014<br />
(before profit appropriation)<br />
(EUR 1,000) Ref. nr. 31-12-2014 31-12-2013<br />
Non-current assets<br />
Intangible assets 1 366,945 473,189<br />
Property, plant and equipment 2 1,713,812 1,783,585<br />
Joint ventures, associates and other investments 3 429,005 412,522<br />
Loans to joint ventures, associates, etc. 4 14,269 15,366<br />
Deferred tax assets 4 90,996 90,671<br />
Other financial assets 4 109,262 89,725<br />
Derivatives 5 78,679 88,080<br />
Financial assets 722,211 696,364<br />
Total non-current assets 2,802,968 2,953,138<br />
Current assets<br />
Inventories 6 106,318 87,445<br />
Trade receivables 7 339,668 384,408<br />
Current tax assets 7 22,087 24,814<br />
Other receivables 7 48,434 52,758<br />
Derivatives 5 187,655 141,856<br />
Total receivables 597,844 603,836<br />
Assets held for sale 24 - 143<br />
Total current assets 704,162 691,424<br />
Cash 8 157,844 174,115<br />
Total assets 3,664,974 3,818,677<br />
Shareholders’ equity 1,100,608 1,093,289<br />
Profit for the year 3,760 74,788<br />
Equity attributable to shareholders of DELTA N.V. 1,104,368 1,168,077<br />
Non-controlling interests 41,426 45,352<br />
Group equity 1,145,794 1,213,429<br />
Provisions 9 504,159 522,265<br />
Pension liabilities 9 39,104 31,322<br />
Long-term debt 10 509,953 616,361<br />
Deferred tax liabilities 11 64,375 60,689<br />
Deferred revenue 11 84,880 87,381<br />
Other non-current liabilities 11 43,007 198,578<br />
Derivatives 5 133,806 115,839<br />
Non-current liabilities 1,379,284 1,632,435<br />
Trade payables 12 313,626 341,048<br />
Current tax liabilities 12 89,628 100,548<br />
Deferred revenue 12 15,612 15,130<br />
Work in progress for third parties 12 147 -<br />
Current portion of provisions 12 64,855 85,430<br />
Other liabilities 12 290,517 148,343<br />
Bank borrowings 12 141,533 120,998<br />
Derivatives 5 223,978 160,555<br />
Current liabilities 1,139,896 972,052<br />
Liabilities held for sale 24 - 761<br />
Current liabilities 1,139,896 972,813<br />
Total equity and liabilities 3,664,974 3,818,677<br />
49
Consolidated income statement<br />
(EUR 1,000) Ref. nr. 2014 2013<br />
Revenue 13 1,930,836 2,103,593<br />
Cost of sales 14 (1,141,576) (1,317,921)<br />
Gross operating margin 789,260 785,672<br />
Other gains and losses (third parties) 15 29,230 24,676<br />
Fair value gains and losses on the trading portfolio 16 (615) (683)<br />
Gross margin 817,875 809,665<br />
Third-party services 17 275,997 287,786<br />
Staff costs 18 258,044 256,725<br />
Depreciation, amortisation and impairment 19 275,857 174,262<br />
Other operating expenses 20 16,278 9,337<br />
Total net operating expenses 826,176 728,110<br />
Earnings from operations (8,301) 81,555<br />
Share in results of joint ventures and associates 21 41,209 41,548<br />
Operating result 32,908 123,103<br />
Net finance income (expense) 22 (32,736) (39,584)<br />
Profit before tax 172 83,519<br />
Corporate income tax 23 (15,959) (3,278)<br />
Profit after tax from continuing operations (15,787) 80,241<br />
Profit after tax from discontinued operations 24 642 (705)<br />
Profit for the year (15,145) 79,536<br />
Attributable to:<br />
Non-controlling interests (18,905) 4,748<br />
Shareholders of DELTA N.V. 3,760 74,788<br />
50
Consolidated statement of comprehensive income<br />
Consolidated statement of comprehensive income<br />
(EUR 1,000) 2014 2013<br />
Profit after tax for the year (15,145) 79,536<br />
Other comprehensive income:<br />
- items not transferred to income statement<br />
Remeasurements of defined benefit obligations<br />
Remeasurements of defined benefit obligations<br />
(Deferred) corporate income tax (6,579) (3,409)<br />
2,110 1,000<br />
(4,469) (2,409)<br />
Total other comprehensive income<br />
not transferred to income statement (4,469) (2,409)<br />
- items to be transferred to income statement<br />
Effective portion of gains and losses on cash flow hedges<br />
Energy deravitives<br />
Reclassification adjustments (46,550) (14,737)<br />
13,717 2,112<br />
Interest rate derivatives (32,833) (12,625)<br />
Reclassification adjustments (18,804) 22,011<br />
7,403 (9,235)<br />
(Deferred) corporate income tax (11,401) 12,776<br />
(705) (97)<br />
(44,939) 54<br />
Share of other comprehensive income of<br />
joint ventures and associates<br />
Share of other comprehensive income of<br />
joint ventures and associates 377 2,597<br />
Reclassification adjustments - -<br />
377 2,597<br />
(Deferred) corporate income tax 20 -<br />
397 2,597<br />
Translation reserve differences<br />
Translation reserve differences 32 (10)<br />
Reclassification adjustments - -<br />
32 (10)<br />
(Deferred) corporate income tax - -<br />
32 (10)<br />
Other movements<br />
Other movements 4 -<br />
Reclassification adjustments - -<br />
4 -<br />
(Deferred) corporate income tax - -<br />
4 -<br />
Other comprehensive income of assets held for sale - -<br />
Total other comprehensive income to be transferred<br />
to income statement (44,506) 2,641<br />
Total other comprehensive income (48,975) 232<br />
Total comprehensive income (64,120) 79,768<br />
Total comprehensive income attributable to:<br />
Non-controlling interests (20,408) 4,310<br />
Shareholders of DELTA N.V. (43,712) 75,458<br />
For an explanation of movements in energy and interest-rate derivatives, please refer to Section 5.<br />
Remeasurements of defined benefit obligations under IAS 19 Employee Benefits entirely concerns<br />
changes at Indaver N.V.<br />
51
Consolidated statement of changes in equity<br />
(EUR 1,000) Total Paid-up capital<br />
Statutory<br />
reserve<br />
Hedge<br />
reserve<br />
Revaluation<br />
Unappropriated Non-controlling<br />
reserve Other reserves<br />
profit interests<br />
Carrying amount as at 31 december 2012 1,185,140 6,937 225,828 (34,317) (3,132) 863,466 73,837 52,521<br />
Profit appropriation for 2012 - - - - - 33,837 (33,837) -<br />
Payment of dividend (40,000) - - - - - (40,000) -<br />
Other changes (4,900) - (13,565) - - 13,565 - (4,900)<br />
Transfer to liablilities due to put options<br />
Total comprehensive income<br />
(6,579) - - - - - - (6,579)<br />
79,768 - 2,603 (341) (1,592) - 74,788 4,310<br />
Carrying amount as at 31 december 2013 1,213,429 6,937 214,866 (34,658) (4,724) 910,868 74,788 45,352<br />
Profit appropriation for 2013 - - - - - 54,788 (54,788) -<br />
Payment of dividend (20,000) - - - - - (20,000) -<br />
Other changes 61 - (5,488) 1 - 5,490 - 58<br />
Transfer to liablilities due to put options<br />
Total comprehensive income<br />
16,424 - - - - - - 16,424<br />
(64,120) - 436 (45,321) (2,587) - 3,760 (20,408)<br />
Carrying amount as at 31 december 2014 1,145,794 6,937 209,814 (79,978) (7,311) 971,146 3,760 41,426<br />
The statutory reserve comprises undistributed profits of associates and is therefore not freely<br />
distributable. This also applies to the hedge reserve, which should be seen in relation to the unrealised<br />
income from fair value changes in derivatives used for hedging purposes.<br />
Fair value changes in derivatives after tax are shown within the hedge reserve, which is a nondistributable<br />
reserve. For more information, please refer to Section 5 Principles for the valuation of<br />
financial instruments, and 5.1.3. of the Notes to the consolidated balance sheet. Other non-distributable<br />
reserves comprise the foreign currency translation reserve (in connection with translation differences)<br />
and remeasurements of defined benefit obligations under IAS 19 Employee Benefits.<br />
Other reserves mainly comprise retained earnings.<br />
The transfer to liabilities arising from put options in 2014 concerned third-party minority interests in<br />
Indaver N.V. These shareholders, who own 25% of the shares in Indaver N.V., had previously been<br />
granted a put option. The put option is shown within non-current liabilities.<br />
Non-controlling interests in DELTA N.V.’s consolidated equity mainly comprise the share interest owned<br />
by NEIF (NIBC European Infrastructure Fund) in the German-based waste processing company Indaver<br />
Deutschland GmbH.<br />
52
Consolidated cash-flow statement<br />
(EUR 1,000) 2014 2013<br />
From operating activities<br />
Earnings from operations (8,301) 81,555<br />
Fair value gains and losses on the trading portfolio 615 682<br />
Adjustment for deferred income (4,004) 2,263<br />
Depreciation, amortisation and impairment 275,857 174,262<br />
Provisions (63,783) (62,657)<br />
Inventories (18,523) (4,038)<br />
Trade receivables 44,739 (13,133)<br />
Trade payables (27,423) 37,434<br />
Other receivables/payables 7,961 8,823<br />
Other 4,856 (3,812)<br />
From operating activities 211,994 221,379<br />
Cash flows arising from dividends received from joint ventures and associates 35,664 33,975<br />
Cash flows from finance income and expense (21,317) (20,991)<br />
Cash flows from taxes on profits (16,508) (9,728)<br />
Cash flow from operating activities 209,833 224,635<br />
From investing activities<br />
Acquisition and disposal of intangible assets and property, plant and equipment (101,925) (after deduction (167,751) of cash acquired)<br />
Acquisition of investments in subsidiaries and associates and interests in<br />
joint ventures (after deduction of cash disposed) (5,825) (10,765)<br />
Disposal of investments in subsidiaries and associates and interests in<br />
joint ventures 485 (77)<br />
Other financial assets (8,435) (8,610)<br />
Kasstroom uit investeringsactiviteiten (115,700) (187,203)<br />
From financing activities<br />
Bank borrowings 20,535 (4,805)<br />
Long-term liabilities 21,139 47,257<br />
Paying off borrowings (132,078) (59,837)<br />
Dividend payments (20,000) (40,000)<br />
Cash flow from financing activities (110,404) (57,385)<br />
Evolvement cash flow during the year (16,271) (19,953)<br />
Cash as at 1 January 174,115 194,068<br />
Evolvement cash position during the year (16,271) (19,953)<br />
Cash as at 31 December 157,844 174,115<br />
Free cash flow before dividend 94,133 37,432<br />
Movement net debt 74,133 (2,568)<br />
53
Accounting policies<br />
DELTA N.V. is a public limited liability company organised and existing under Dutch law and the parent<br />
company of a number of subsidiary companies involved in:<br />
energy generation, transmission, trading, and supply;<br />
environmental services (waste management);<br />
the delivery of cable services for analogue and digital TV, the Internet, and mobile and digital<br />
telephony;<br />
the development and production of renewable energy, including wind power, and water<br />
services.<br />
With a view to these activities, the Group owns interests in a number of joint arrangements, associates<br />
and other investments.<br />
DELTA N.V.’s shareholders are the Zeeland provincial authorities, the towns and cities in Zeeland,<br />
several towns and cities in the provinces of Zuid-Holland and Noord-Brabant, and the Zuid-Holland and<br />
Noord-Brabant provincial authorities.<br />
DELTA N.V.’s registered office is situated at Poelendaelesingel 10, Middelburg, The Netherlands.<br />
The following changes occurred within the group during 2014:<br />
1. DNWG Staff B.V. was incorporated on 1 January 2014;<br />
2. Windpark Barrepolder B.V. was incorporated on 12 June 2014;<br />
3. The share interest in SET Fund II was reduced from 60.22% to 54.22% on 30 July 2014;<br />
4. The share interest in IVIO cvba was increased from 1.5% to 11.93% on 8 September 2014;<br />
5. Indaver N.V. and SLECO Centrale N.V. each acquired a 33.33% share in Ecluse cvba on 9<br />
October 2014;<br />
6. A 100% interest in Produval bvba was acquired on 30 December 2014;<br />
7. The share interest in NPG Willebroek N.V. was raised from 49% to 50%.<br />
The following transactions and related instruments dated 31 December 2013 had an impact on the<br />
Group’s structure in 2014:<br />
DELTA N.V. transferred its shares in DELTA Energy B.V. to DELTA Com B.V. on 1 January<br />
2014;<br />
DELTA Energy B.V. sold its shares in DELTA Comfort B.V. to DELTA Com B.V. on 1 January<br />
2014;<br />
DELTA N.V. sold its shares in DELTA Infra B.V. to Zeeuwse Netwerkholding N.V. on 1 January<br />
2014.<br />
The financial statements 2013 presented the changes as at 31 December 2013.<br />
The company’s functional currency is the euro. Unless otherwise stated, all amounts are presented in<br />
thousands of euros.<br />
DELTA N.V. used the option available under Part 9, Book 2, of the Dutch Civil Code to prepare the<br />
company financial statements in accordance with the International Financial <strong>Report</strong>ing Standards<br />
applied to the consolidated financial statements, with the exception of equity-accounted group<br />
companies and investments.<br />
The company income statement is presented in abridged form in accordance with Section 402, Part 9,<br />
Book 2, of the Dutch Civil Code.<br />
The financial statements 2014 were signed and released for publication by the Supervisory Board on<br />
11 May 2015. The Supervisory Board will present the financial statements for adoption by the General<br />
Meeting on 4 June 2015.<br />
54
1A. Compliance with IFRSs and summary of changes in IFRS<br />
recognition and measurement rules<br />
The company’s consolidated financial statements have been prepared in compliance with the<br />
International Financial <strong>Report</strong>ing Standards (IFRSs) issued by the International Accounting Standards<br />
Board (IASB) and the interpretations issued by the IFRS Interpretations Committee (IFRS IC) of the<br />
IASB, as endorsed by the European Commission (EC) up to and including 31 December 2014.<br />
New standards and/or supplements/improvements in relation to the previous financial year were issued<br />
by the IASB and approved by the European Commission for adoption within the European Union.<br />
Changes not yet adopted by the EC are omitted from the summary below.<br />
1A.1. DELTA adopted the following new standards and improvements in its financial statements<br />
2014<br />
1. Amendments to IAS 32, Financial Instruments: Presentation - Offsetting Financial Assets<br />
and Financial Liabilities<br />
IAS 32 was amended to provide additional guidance to reduce inconsistent application of the<br />
standard in practice.<br />
2. Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of<br />
Interests in Other Entities, and IAS 27 (revised) Separate Financial Statements –<br />
Investment Entities<br />
IFRS 10 was amended in order to better reflect the business model of investment entities. IFRS<br />
10 requires that investment entities account for their investments in subsidiaries at fair value<br />
through profit or loss rather than consolidating them. IFRS 12 was amended in order to require<br />
specific disclosure about such investments in subsidiaries by investment entities. Due to<br />
changes in IAS 27 (revised), investment entities also no longer have the option to account for<br />
their investments in certain subsidiaries either at cost or at fair value in their separate financial<br />
statements. They must be recognised in the entity’s separate financial statements (in<br />
accordance with IAS 39, Financial Instruments: Recognition and Measurement) at fair value<br />
with fair value changes in profit or loss.<br />
3. Amendments to IAS 36 Impairments of Assets – Recoverable amount disclosures for<br />
non-financial assets<br />
The objective of the amendments is to clarify that the scope of the recoverable amount<br />
disclosures for assets is limited to impaired assets if the recoverable amount is based on fair<br />
value less costs of disposal.<br />
4. Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Novation<br />
of derivatives and continuation of hedge accounting<br />
The objective of the amendments is to provide relief in situations where a derivative that has<br />
been designated as a hedging instrument is required to be novated from one counterparty to a<br />
central counterparty as a result of laws or regulations. This means that hedge accounting can<br />
continue irrespective of the novation which, without the amendment, would not be allowed.<br />
55
1A.2. DELTA adopted the following new standards and improvements in its financial<br />
statements 2013. Adoption is mandatory from the financial year starting on 1 January 2014<br />
The following new standards, supplements and/or improvements were adopted by DELTA as early as 1<br />
January 2013 because of their relevance to its financial information. The effects of the adoption were<br />
explained in DELTA N.V.’s consolidated financial statements 2013.<br />
1) IFRS 10 Consolidated Financial Statements;<br />
2) IFRS 11 Joint Arrangements;<br />
3) IFRS 12 Disclosure of Interests in Other Entities;<br />
4) IAS 27 Separate Financial Statements;<br />
5) IAS 28 Investments in associates and joint ventures;<br />
6) IFRS 10, IFRS 11 and IFRS 12 Transition Guidance.<br />
1A.3. DELTA did not adopt the following new standards and improvements in its financial<br />
statements 2014. Adoption is mandatory from the financial year starting 1 January 2015 and<br />
subsequent financial years<br />
1) IFRIC 21 Levies<br />
Effective for annual periods beginning on or after 17 June 2014. For DELTA, that will be the 2015<br />
financial year. The objective of IFRIC Interpretation 21 is to provide guidance on how to properly<br />
account for levies that fall within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent<br />
Assets, so as to make it easier for users to compare financial statements. More specifically, it answers<br />
the question as to when to recognise a liability for the payment of a levy that is accounted for in<br />
accordance with IAS 37. We do not expect this to have any material impact on our financial information.<br />
2) <strong>Annual</strong> improvements to IFRSs, 2011-2013 Cycle (originally published by the IASB on 12<br />
December 2013)<br />
Effective for annual periods beginning on or after 1 June 2015. For DELTA, that will be the 2015<br />
financial year.<br />
The following approved amendments to IFRS 3 and IFRS 13 constitute clarifications or corrections.<br />
IFRS 3 Business Combinations<br />
This amendment affects the scope. The definition of the scope was adjusted to reflect the definitions in<br />
IFRS 11 Joint Arrangements. IFRS 3 excludes from its scope the accounting for the formation of a joint<br />
arrangement in the financial statements of the joint arrangement itself. This amendment will be applied<br />
as and when such a situation arises.<br />
IFRS 13 Fair Value Measurement<br />
This amendment clarifies the scope of the ‘portfolio exception’. It provides that the portfolio exception<br />
includes all contracts accounted for within the scope of IAS 39 Financial Instruments: Recognition and<br />
Measurement, regardless of whether they meet the definition of financial assets or financial liabilities in<br />
IAS 32 Financial Instruments: Presentation.<br />
We do not expect this to have any material impact on our financial information.<br />
The following approved amendments to IAS40 concern changes to existing requirements or additional<br />
guidance to comply with those requirements.<br />
IAS 40 Investment Property<br />
This amendment concerns the classification of property as investment property or as property for own<br />
use, and clarifies the relationship between IAS 40 Investment Property and IFRS 3 Business<br />
Combinations.<br />
We do not expect this to have any material impact on our financial information.<br />
56
3) <strong>Annual</strong> improvements to IFRSs, 2010-2012 Cycle (originally published by the IASB on 12<br />
December 2013)<br />
Effective for annual periods beginning on or after 1 June 2015. For DELTA, that will be the 2016<br />
financial year.<br />
The following approved amendments to IFRS 2 and IFRS 3 concern changes to existing requirements<br />
or additional guidance to comply with those requirements.<br />
IFRS 2 Share-based Payment provides a clarification of the definition of ‘vesting condition.’<br />
This clarification had no impact on the financial information because DELTA had no share-based<br />
payments.<br />
IFRS 3 Business Combinations<br />
Clarifies the accounting for ‘contingent consideration’ in a business combination.<br />
This clarification also affects IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IAS 39<br />
Financial Instruments: Recognition and Measurement.<br />
This amendment will be applied as and when such a situation arises.<br />
The following approved amendments to IFRS 8, IAS 16, IAS 24 and IAS 38 constitute clarifications or<br />
corrections.<br />
IFRS 8 Operating Segments<br />
Requires the entity to disclose the judgments made by management in applying to operating segments<br />
the aggregation criteria listed in IFRS 8.12.<br />
DELTA is not required to apply IFRS 8, nor does it apply IFRS 8 on a voluntary basis.<br />
IFRS 8 Operating Segments<br />
Clarifies the provisions set out in IFRS 8.28 regarding the ‘reconciliations’ to be provided.<br />
DELTA is not required to apply IFRS 8, nor does it apply IFRS 8 on a voluntary basis.<br />
IAS 16 Property, Plant and Equipment<br />
The amendments concern the ‘revaluation method.’<br />
They had no impact on the financial information because DELTA applies a cost model.<br />
IAS 24 Related Party Disclosures<br />
The amendments concern ‘key management personnel.’ IAS 24 was found to be<br />
unclear about the disclosures to be provided about key management personnel who<br />
were not employees of the reporting entity.<br />
The definition of related parties has been widened. A related party of the reporting entity includes ‘the<br />
entity, or any member of a group of which it is a part, provides key management personnel services to<br />
the reporting entity or to the parent of the reporting entity.'<br />
The reporting entity’s obligations to furnish detailed information on key management personnel<br />
compensation in total and for the different categories have been relaxed for those situations in which the<br />
compensation is paid to a separate ‘management entity’ (an entity which provides key management<br />
personnel services). Instead, the reporting entity discloses the amounts it incurred for the provision of<br />
key management personnel services delivered by the separate management entity. We do not expect<br />
this to have any material impact on our financial information.<br />
IAS 38 Intangible Assets<br />
The amendments concern the ‘revaluation model.’<br />
They had no impact on the financial information because DELTA applies a cost model.<br />
57
4) Amendments to IAS 19 Employee Benefits, Defined Benefit Plans: Employee Contributions<br />
Effective for annual periods beginning on or after 1 June 2015. For DELTA, that will be the 2016<br />
financial year. The amendments are intended to simplify and clarify the accounting for employee or<br />
third-party contributions to defined benefit plans.<br />
We do not expect this to have any material impact on our financial information.<br />
1B. Post-balance sheet events that are material to the financial<br />
statements 2014<br />
As part of its new business strategy and in order improve its financial ratios, DELTA is selling two of its<br />
business divisions, more specifically its 75% (rounded-off) share interest in Indaver N.V. and its 100%<br />
stake in Windpark Kreekraksluis B.V.<br />
Talks are being held with the bodies involved in the decision-making process, including DELTA<br />
Group’s European Works Council and DELTA’s shareholders.<br />
On 6 March 2015, we reached an agreement with the buyer on the sale of our interest in Indaver N.V.,<br />
subject to the usual resolutive conditions, including obtaining approval from the competition authorities<br />
and the European Works Council, and securing the consent of DELTA’s shareholders. The contract for<br />
the sale of the Kreekraksluis wind farm was signed on 5 February 2015, subject to the condition that the<br />
buyer obtains external financing and DELTA obtains the consent of its shareholders. The shareholders<br />
authorised the sale on 9 March 2015.<br />
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations<br />
Given the proposed sale of these assets, the issue arises as to whether IFRS 5 Non-current Assets<br />
Held for Sale and Discontinued Operations applies to the situation at the balance sheet date.<br />
IFRS 5 provides that an asset must be classified as held for sale if the carrying amount is to be received<br />
mainly through a sale rather than the continued use of the asset.<br />
The criteria are as follows:<br />
o The asset, in its current form, is available for immediate sale;<br />
o The sale is subject only to conditions that are usual for the sale of this type of asset;<br />
o The sale is highly probable;<br />
o Management is committed to a plan for sale;<br />
o An active programme to locate a buyer and actions to complete the plan are initiated;<br />
o The asset is being actively marketed for sale at a sales price reasonable in relation to its fair value;<br />
o The sale is expected to occur within twelve months of classification as held for sale;<br />
o Actions required to complete the plan indicate that it is unlikely that the plan will be significantly<br />
changed or withdrawn.<br />
In late 2014, as part of the ongoing strategic review, DELTA’s shareholders indicated that the full or<br />
partial sale of a business division would be tested against the relevant guiding principles and that its<br />
impact would also be assessed. It also became clear that permission from the shareholders to sell our<br />
share interests in Indaver N.V. and Windpark Kreekraksluis B.V. could be based on principles other<br />
than just business and economic considerations. In view of the ongoing dialogue and the importance of<br />
ensuring the continuity of both DELTA and its subsidiaries, we expect to be able to reach agreement<br />
with the shareholders. That said, it was uncertain as at the balance sheet date as to whether the<br />
shareholders would authorise the sale of Indaver N.V. and Windpark Kreekraksluis B.V. and so we<br />
classified their consent as ‘probable’ rather than ‘highly probable.’ On that basis, we concluded that,<br />
given the approval of the sale sought from DELTA’s shareholders, Indaver N.V. and Windpark<br />
Kreekraksluis B.V. did not have to be classified under IFRS 5 as at 31 December 2014.<br />
58
IAS 36 Impairment of Assets<br />
IAS 36 provides that, for group companies for which goodwill has been paid in the past, value in<br />
use must be measured annually so as to determine whether to recognise an impairment loss on<br />
the goodwill.<br />
If, and only if, the recoverable amount of the asset is lower than the carrying amount, the carrying<br />
amount must be reduced to the recoverable value. This reduction constitutes an impairment loss<br />
and must immediately be recognised in the profit or loss, unless the asset is revalued according to<br />
a different standard (which is not the case for DELTA).<br />
Indaver<br />
In view of the proposed sale of the Indaver Group, DELTA classified the Indaver Group as a single<br />
cash-generating unit (CGU) for impairment testing purposes as at 31 December 2014. On 6 March<br />
2015, DELTA and Katoen Natie announced that they had signed an agreement for the sale of DELTA’s<br />
75% share interest in Indaver N.V. to Katoen Natie.<br />
At their General Meeting on 9 March 2015, the shareholders approved the review framework for the<br />
sale of Indaver and so authorised DELTA to continue the sales process. The sale proper will still require<br />
approval from DELTA’s shareholders.<br />
The selling value less costs associated with the sale was defined in the impairment test as fair value<br />
less costs of disposal.<br />
The agreed selling price less costs of disposal was lower than the amount at which the Indaver Group<br />
was carried in DELTA Group’s financial statements. An impairment loss was therefore recognised.<br />
In the case of a CGU to which goodwill is allocated, the impairment loss is allocated first to reduce the<br />
goodwill allocated to the CGU and then to reduce its other assets.<br />
This is why the impairment loss is shown within 'Indaver goodwill’ in DELTA Group’s balance sheet. As<br />
a result, the carrying amount of its 75% share interest in the Indaver Group at 31 December 2014<br />
equalled the agreed selling price less costs of disposal.<br />
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Impairment Indaver Groep as at 31 december 2014<br />
Carrying ammount Impairment Carrying ammount<br />
(EUR 1,000) before impairment carrying ammount after impairment<br />
at at at<br />
selling value selling value selling value<br />
Non-current assets<br />
Intangible assets 423.5 (92.8) 330.7<br />
Property, plant and equipment 483.2 - 483.2<br />
Deffered tax assets 19.9 - 19.9<br />
Other financial assets 61.7 - 61.7<br />
Total non-current assets 988.3 (92.8) 895.5<br />
Current assets<br />
Inventories 13.9 - 13.9<br />
Total receivables 121.6 - 121.6<br />
Cash 29.0 - 29.0<br />
Total current assets 164.5 - 164.5<br />
Total assets 1,152.8 (92.8) 1,060.0<br />
Deffered tax liabilities 47.4 - 47.4<br />
Provisions 67.0 - 67.0<br />
Other liabilities 90.8 - 90.8<br />
Bank borrowings 105.7 - 105.7<br />
Other current liabilities 157.6 - 157.6<br />
Total liabilities 468.5 - 468.5<br />
Carrying amount net assets Indaver Groep 684.3 (92.8) 591.5<br />
Attributable to non-controlling interests<br />
which resulted in a decrease of the value of the put option 24.2<br />
Impairment for Indaver attributable to DELTA (68.6)<br />
The Indaver sale will reduce interest charges in future years and hence improve the possibilities for the<br />
DELTA N.V. fiscal unity to offset losses, as a result which an additional gain of EUR 7.8 million was<br />
recognised.<br />
Kreekraksluis wind farm<br />
There were no indicators of impairment as regards Windpark Kreekraksluis B.V. On the basis of the<br />
information available in connection with the sale of Windpark Kreekraksluis B.V., fair value less costs of<br />
disposal exceeds the carrying amount, including the goodwill allocated to this CGU.<br />
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2. General accounting policies<br />
2.1 Estimates and assumptions<br />
The preparation of financial statements entails the use of estimates and assumptions based on past<br />
experience and on factors considered acceptable in management’s judgement. These estimates relate<br />
primarily to the proceeds from the sale and transmission of gas and power to domestic consumers due<br />
to staggered meter readings, deferred tax assets, and the level of provisions. These estimates and<br />
assumptions will affect the information in the financial statements and the actual figures may be<br />
different. The effects of changes in estimates are recognised prospectively in the income statement.<br />
Changes in estimates may also lead to changes in assets and liabilities or equity components. Such<br />
changes in estimates are recognised in the period in which they occur. Any specific disclosures about<br />
estimates and assumptions are provided in the notes to the balance sheet and income statement.<br />
2.2 Impairment of assets<br />
Tests are conducted annually to check for indications that assets may be impaired. If that is the case,<br />
an estimate is made of the asset’s recoverable amount, which is the higher of its fair value less costs to<br />
sell and its value in use. If the fair value less costs to sell leads to unavoidable costs, a liability is<br />
recognised. Value in use is measured as the present value of the estimated future cash flows, based on<br />
the business plans drawn up internally and approved by the Executive Board, using a pre-tax discount<br />
rate that reflects current market interest rates. Specific risks relating to the asset or the cash-generating<br />
unit are incorporated into the estimated future cash flows. <strong>Annual</strong> impairment tests are conducted for<br />
recognised goodwill.<br />
An impairment loss is recognised if the carrying amount of an asset or the cash-generating unit to which<br />
the asset belongs exceeds its recoverable amount.<br />
The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the<br />
cash-generating unit (or group of units) and then to reduce the carrying amounts of the other assets of<br />
the unit (or group of units) on a pro rata basis. The carrying amount of an asset should not be reduced<br />
to below its recoverable amount.<br />
An impairment loss is reversed if it there has been a change in the basis on which the recoverable<br />
amount was previously determined. An impairment loss is reversed only to the extent that the carrying<br />
amount of the asset due to reversal does not exceed its carrying amount less depreciation or<br />
amortisation if no impairment loss had been recognised. An impairment loss or reversal of an<br />
impairment loss is recognised in the profit or loss. Impairment losses for goodwill are not reversed.<br />
2.3 Valuation of financial instruments<br />
Unless stated otherwise in the notes to the individual items in the financial statements, management<br />
believes that the carrying amounts of financial instruments are reasonable approximations of the fair<br />
value of those instruments.<br />
2.4 Government grants<br />
Government grants are recognised as soon as it is reasonably certain that the conditions for obtaining<br />
the grant have been or will be met and the grants have been or will be received. When investment<br />
projects are capitalised, grants received and contributions to the construction costs are deducted from<br />
the acquisition cost of the assets. Operating grants are shown within revenue. Subsidies in the form of<br />
tax breaks are factored into the calculation of the taxable amount.<br />
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2.5 Foreign currencies<br />
Assets and liabilities denominated in foreign currencies are translated into euros at the exchange rates<br />
prevailing at the end of the reporting period. Differences arising from movements in exchange rates are<br />
recognised in profit or loss, unless relating to the net investment in foreign entities, in which case they<br />
are recognised in equity as part of other comprehensive income. Income and expenses denominated in<br />
foreign currencies are translated into euros at the exchange rates prevailing at the time of the<br />
transaction.<br />
2.6 Taxation<br />
2.6.1 Income taxes<br />
Income taxes comprise current taxes and movements in deferred taxes. These amounts are taken to<br />
the income statement or recognised in equity as part of other comprehensive income.<br />
Current taxes comprise amounts that are probably due and capable of being offset against the taxable<br />
profit for the year. They are calculated on the basis of the prevailing tax legislation and rates.<br />
2.6.2 Deferred taxes<br />
Deferred taxes are recognised for differences between the carrying amount and the tax base of assets<br />
and liabilities.<br />
Deferred taxes are measured at the tax rates that are expected to apply to the period when the asset is<br />
realised or the liability is settled, based on the prevailing tax legislation and rates. Deferred taxes are<br />
stated at face value. Deferred tax assets are recognised only if and to the extent that it is probable that<br />
sufficient taxable profits and/or other temporary differences will be available against which they can be<br />
utilised.<br />
A deferred tax asset is recognised for unused tax losses and unused tax credits if and to the extent that<br />
it is probable that taxable profits will be available against which such unused losses or credits can be<br />
utilised.<br />
2.7 Comparative information<br />
Comparatives are adjusted, where necessary, for presentation purposes.<br />
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3. Basis of consolidation<br />
The consolidated financial statements comprise the financial information of DELTA N.V. and its group<br />
companies. Group companies are legal entities and companies over which control is exercised in terms<br />
of their governance and operational and financial policies. IFRS 10 provides that an investor controls an<br />
investee if the investor is exposed, or has rights, to variable returns from its involvement with the<br />
investee and has the ability to use its power over the investee to affect the amount of the investor’s<br />
returns. Existing and potential voting rights that were exercisable or convertible as at the balance sheet<br />
date are considered when determining whether DELTA N.V. controls an entity. Any other agreements<br />
that allow DELTA N.V. to determine operating and financial policy are also taken into account.<br />
Group companies are included in the consolidation from the date when control is obtained.<br />
Consolidation is discontinued from the date when control over the group company ceases. Group<br />
companies are fully consolidated, with 100% of their equity and profits included in the consolidation. If<br />
the share interest in a group company is less than 100%, the non-controlling interest is shown<br />
separately in the balance sheet and income statement.<br />
Joint arrangements are recognised in proportion to DELTA’s (group company’s) interest in the<br />
arrangement if the arrangement involves a joint operation. They are included in the consolidation from<br />
the date when the arrangement is made. Consolidation discontinues from the date when the<br />
arrangement ceases. Joint arrangements that take the form of ‘joint operations’ are consolidated<br />
according to the partial method.<br />
The investor recognises its interest in its consolidated financial statements as follows:<br />
Assets to which the investor has direct rights are recognised fully in the financial statements;<br />
Liabilities for which the investor is directly responsible are recognised fully in the financial<br />
statements;<br />
Revenue from the sale of the investor's share of the output of the joint operation by the joint<br />
operation itself is recognised fully in the financial statements (the joint operation itself being<br />
responsible for the sale of the output);<br />
Revenue from the sale of the investor's share of the output of the joint operation by the investor is<br />
recognised fully in the financial statements;<br />
Expenses allocated directly to the investor are fully recognised in the financial statements;<br />
Assets, liabilities, revenue and expenses that are not directly attributable to the investors are<br />
allocated to the investors indirectly in proportion to their interest in the joint operation.<br />
Joint arrangements that take the form of ‘joint ventures’ are accounted for according to the equity<br />
method.<br />
Associates are also recognised using the equity method.<br />
The acquisition of a group company is accounted for using the purchase accounting method. The<br />
accounting policies adopted by group companies are adjusted, where necessary, to ensure consistency<br />
with the policies applied by DELTA. In the case of put options, the corresponding non-controlling<br />
interest are classified as current or non-current liabilities.<br />
Scope of consolidation<br />
The financial statements include a separate overview of the main subsidiaries, associates and joint<br />
ventures, including the relevant share interests.<br />
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4. Basis of recognition and measurement of assets and liabilities<br />
The financial statements have been prepared according to the historical cost convention, with the<br />
exception of derivatives (financial instruments), which are carried at fair value, and the differences<br />
referred to below. All transactions in financial instruments are accounted for on the transaction date.<br />
4.1 Intangible assets<br />
Intangible fixed assets comprise goodwill arising on acquisition, development costs, software, customer<br />
contracts, and acquired transport rights.<br />
Goodwill<br />
Goodwill represents the positive difference between the acquisition cost of a group company and the<br />
fair value of the acquisition. Goodwill paid on the acquisition of a group company or joint arrangement is<br />
recognised as an intangible fixed asset. Goodwill paid on the acquisition of an interest in a joint venture<br />
or investment in an associate is included in the cost of the interest or investment. If the cost is lower<br />
than the fair value of the identifiable assets, liabilities and contingent liabilities acquired (negative<br />
goodwill), the difference is recognised directly in profit or loss.<br />
The carrying amount of goodwill is measured at historical cost less accumulated impairment losses.<br />
Goodwill is not amortised. <strong>Annual</strong> impairment tests are conducted to identify any impairment of goodwill.<br />
For the purposes of these tests, goodwill is allocated to cash-generating units. If a transaction qualifies<br />
as a transaction between owners, the difference between the acquisition cost and fair value is<br />
recognised in equity.<br />
Development costs<br />
Development expenditure is measured at historical cost and amortised over a period of 10 years<br />
according to the pattern of the additional cash flows generated by the acquired process knowledge.<br />
Software<br />
Capitalised software is carried at historical cost less amortisation. Amortisation is on a straight-line basis<br />
over a period of 5 years. The useful life is assessed annually, with any adjustments being accounted for<br />
prospectively.<br />
Customer contracts<br />
Customer contracts are measured at cost and amortised according to the pattern of the additional cash<br />
flows generated by the acquired accounts.<br />
Transport rights<br />
Transport rights are measured at cost and amortised on a straight-line basis over a period of 20 years.<br />
The useful life is assessed annually, with any adjustments being accounted for prospectively.<br />
4.2 Property, plant and equipment<br />
Property, plant and equipment is stated at cost less accumulated depreciation on a straight-line basis<br />
over its estimated useful life, determined on the basis of technical and economic criteria, taking account<br />
of its estimated residual value, less any accumulated impairment losses. Land is not depreciated. In<br />
accordance with IFRIC 18, third-party contributions to the construction costs of an item of property, plant<br />
or equipment are no longer deducted from the carrying amount of the asset; instead, they are<br />
recognised within deferred revenue (liability).<br />
Property, plant and equipment also comprises the discounted amount that is expected to be necessary<br />
to cap landfill sites when landfill operations come to an end. Depreciation is based on the actual landfill<br />
capacity used during the period. Changes in residual value arising from technical or economic<br />
developments or the use of a different discount rate are shown within property, plant and equipment and<br />
recognised in profit or loss in future years through depreciation. If an asset has been fully depreciated,<br />
the difference is recognised directly in profit or loss.<br />
64
External financing expenses for assets (construction period interest) are included in the cost if they can<br />
be allocated directly to the asset.<br />
If an asset consists of various components with different depreciation periods and residual values, the<br />
components are recognised separately. Investments to replace components are capitalised, with the<br />
replaced component being written down simultaneously. Estimated useful lives and estimated residual<br />
values are assessed annually when the business plan is prepared. If an impairment test shows an<br />
impairment loss, the carrying amount is adjusted accordingly.<br />
Property, plant and equipment under construction is stated at costs incurred as at the balance sheet<br />
date, including the costs of materials and services, direct staff costs, an appropriate share of directly<br />
attributable overhead costs, and the financing costs allocated directly to the asset.<br />
In 1999, Indaver N.V. signed a cross-border lease with a U.S. investor for the use of lines 1 and 2 at its<br />
incineration plant in Doel (Belgium). Title to and beneficial ownership of the assets remained with the<br />
company.<br />
Accordingly, these assets are shown in the consolidated financial statements on the basis of the<br />
accounting policies applied to property, plant and equipment.<br />
4.3 Financial fixed assets<br />
General<br />
A business combination involves bringing together separate entities or businesses into one reporting<br />
entity. Business combinations are accounted for using the acquisition method. Steps in applying the<br />
acquisition method are:<br />
1. Identification of the acquirer;<br />
2. Measurement of the cost of the business combination;<br />
3. Allocation of the cost of the business combination as at the acquisition date.<br />
The cost of a business combination is the aggregate of the acquisition-date fair values of the assets<br />
acquired, liabilities incurred or assumed and equity instruments issued by the acquirer. Under IFRS 3<br />
(as approved by the EU in 2004), the aggregate is increased by the costs directly attributable to the<br />
business combination. With the revision of IFRS 3 (applied with effect from 2009), the costs directly<br />
attributable to the acquisition are no longer shown within the cost of the business combination, but<br />
recognised directly in profit or loss. Goodwill is measured as the value by which the cost of the business<br />
combination exceeds the acquirer’s interest in the net fair value of identifiable assets, liabilities and<br />
contingent liabilities.<br />
Negative goodwill is recognised directly in profit or loss, and non-controlling interests are recognised in<br />
equity.<br />
Joint ventures, associates and other investments<br />
Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement<br />
have rights to the net assets of the arrangement. The parties are called joint venturers.<br />
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement<br />
(such as DELTA N.V. or any of its subsidiaries) have rights to the assets, and obligations for the<br />
liabilities, relating to the arrangement. These parties are called joint operators. In the case of a joint<br />
operation, DELTA recognises a proportion of the assets and liabilities, revenue and expenditure<br />
equivalent to its interest in the joint operation; its share in the joint operation’s equity is therefore not<br />
recognised as a financial non-current asset.<br />
Associates are entities over which DELTA N.V. exercises significant influence, whether directly or<br />
indirectly, but which it does not control. Generally speaking, this is the case if DELTA N.V. can exercise<br />
between 20% and 50% of the voting rights.<br />
Other investments are non-associated investments in which DELTA N.V. has an interest of less than<br />
20%. The financial statements include an overview of the main joint arrangements and investments.<br />
65
Valuation of joint ventures, associates and other investments<br />
Investments in joint ventures and associates are recognised in the consolidated financial statements<br />
using the equity method. Under the equity method, on initial recognition the investment is recognised at<br />
cost, i.e. the fair value of the underlying assets and liabilities, including goodwill. If the fair value<br />
exceeds the cost, the positive difference will be added to the equity participation. The share of profits or<br />
losses is recognised in the carrying amount each year and dividend distributions are deducted. If the<br />
(cumulative) losses of the joint venture and/or associate lead to a negative book value, these losses are<br />
not recognised, unless DELTA N.V. has an obligation to clear these losses or has made payments to do<br />
so.<br />
Movements in other investments are recognised in other comprehensive income, unless they involve a<br />
permanent impairment, which is then recognised directly in profit or loss. If insufficient information is<br />
available, valuation is at cost.<br />
Undistributed profits of joint ventures and associates and direct increases in equity at a joint venture or<br />
associate which cannot readily be distributed are added to the statutory reserve.<br />
The accounting policies of joint ventures and investments are adjusted, where necessary, to ensure<br />
consistent application of the accounting policies throughout the DELTA group.<br />
Loans to other investees<br />
On initial recognition, loans to investees or third parties are stated at fair value and, subsequently, at<br />
amortised cost. Amortised cost is usually equivalent to the face value of loans because they are shortterm.<br />
Where necessary, a provision is recognised for bad debts and deducted from this value.<br />
4.4 Inventories<br />
Inventories are stated at the lower of weighted average cost, based on first-in first-out (FIFO), and net<br />
realisable value, less a provision for obsolescence. Impairment losses on inventories are recognised as<br />
an expense and disclosed separately.<br />
4.5 Receivables<br />
On initial recognition, trade receivables are stated at fair value and, subsequently, at amortised cost less<br />
impairment losses. Amortised cost is usually equivalent to the face value of receivables because they<br />
are short-term.<br />
4.6 Construction contracts<br />
DELTA applies the percentage-of-completion method to measure and recognise contract cost and<br />
revenue in the income statement for the reporting period. The stage of completion is based on<br />
production measurements. Contracts in progress are recognised at cost less a provision for probable<br />
losses and invoiced instalments. Profits are recognised in proportion to the percentage of completion if<br />
they can be reliably measured.<br />
4.7 Non-current assets held for sale and discontinued operations<br />
DELTA classifies an asset (or disposal group) as held for sale if its carrying amount is recovered<br />
principally through sale rather than continued use. For this to be the case, the asset must be available<br />
for immediate sale in its present condition and the sale must be highly probable and expected to take<br />
place within one year.<br />
In the event of a (proposed) sale of a group of assets, the liabilities directly associated with those assets<br />
are also included in the carrying amount. Immediately after classification as held for sale, the assets are<br />
measured at the lower of their carrying amount and fair value less costs to sell, and depreciation<br />
ceases. Impairment losses are recognised in profit or loss.<br />
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4.8 Cash<br />
Cash includes not only cash but also cash equivalents that can be converted into cash with no material<br />
risk of impairment. Cash is stated at fair value.<br />
4.9 Shareholders’ equity<br />
Movements in shareholders’ equity are presented in the consolidated statement of changes in equity.<br />
The company’s authorised capital amounts to EUR 9,080,000, divided into 20,000 shares with a par<br />
value of EUR 454. As at 31 December 2014, EUR 6,937,120 worth of shares had been issued and paid<br />
up. Dividends are recognised as a liability in the period in which they are declared. No changes<br />
occurred during the year. None of the shares come with pre-emptive rights or restrictions.<br />
4.10 Provisions<br />
Provisions are recognised for legally enforceable, present obligations relating to operations. Provisions<br />
are carried at the present value of the expected expenditure. The present value is calculated using a<br />
pre-tax discount rate that reflects current market assessments of the time value of money. Expenditures<br />
expected to be incurred within one year of the balance sheet date are shown within current liabilities.<br />
4.11 Employee benefits<br />
Provisions relating to pension liabilities and health insurance costs are determined on an actuarial basis.<br />
The corresponding liabilities are presented separately in the balance sheet. This is only the case for the<br />
group company Indaver. Indaver provides post-employment benefits for most of its employees. These<br />
benefits are paid under defined-contribution plans and defined-benefit plans through an insurance plan<br />
or through unfunded arrangements. Contributions paid under defined contribution plans are recognised<br />
directly in the income statement. The provision for defined benefit plans is measured separately, using<br />
the actuarial projected unit credit method.<br />
<strong>Annual</strong> pension costs comprise:<br />
costs of annual pension accruals (service costs);<br />
net finance expense or income on the pension balance (net interest);<br />
other changes in the pension balance (remeasurements).<br />
The costs of annual pension accruals, including the expenditure for past pensionable service, are<br />
recognised in the income statement. Net finance expense or income on the pension balance is<br />
recognised in the income statement. Other changes, such as actuarial results, differences between<br />
actual and expected returns on investments and changes in the effect of the limit on the pension<br />
receivable to be recognised, are shown in other comprehensive income. Differences due to<br />
remeasurements are recognised directly in equity through other comprehensive income, and will not be<br />
recognised in profit or loss in future years either.<br />
4.12 Non-current liabilities<br />
Non-current liabilities are measured at amortised cost using the effective interest method. Repayment<br />
obligations for non-current liabilities due within one year are shown within current liabilities.<br />
In the case of a finance lease (in which all the risks and rewards of ownership are borne by the lessee),<br />
at the start of the lease term the finance lease is recorded as an asset and the obligations are<br />
recognised as a liability and measured at fair value. The asset is depreciated in accordance with the<br />
prevailing rules for property, plant and equipment.<br />
In the case of an operating lease (in which all the risks and rewards of ownership are borne by the<br />
lessor), the lease payments are recognised in the income statement over the lease term on a straightline<br />
basis.<br />
67
The non-current portion of deferred revenue is classified as a non-current liability. The portion to be<br />
released during the next reporting period is shown within current liabilities. The portion relating to the<br />
current reporting period is shown within revenue.<br />
4.13 Put options<br />
Put options are stated at fair value attributable to the put option holder, less any dividends paid.<br />
68
5. Basis of recognition and measurement of financial instruments<br />
5.1 Financial instruments<br />
DELTA uses financial instruments to manage and optimise normal market risks associated with the<br />
company’s commodities, currency and interest-rate exposures. DELTA applies IAS 32 Financial<br />
Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement. Under<br />
these standards, derivatives (derivative financial instruments) are measured at fair value and trading<br />
contracts are recognised in the income statement at fair value through profit or loss.<br />
Definition<br />
A derivative is a financial instrument or other contract that falls within the scope of IAS 39. It has the<br />
following three features:<br />
its value changes as a result of movements in a particular interest rate, price of a financial<br />
instrument, commodity price, exchange rate, or index of prices, interest rates or other variables,<br />
provided that, in the case of non-financial variables, the variable is not specific to a contract party<br />
(also known as the ‘underlying asset’);<br />
No, or only a minor, net initial investment is required in relation to other types of contract that<br />
respond in similar ways to movements in market factors;<br />
Settlement takes place in the future.<br />
5.2 Derivatives<br />
DELTA is involved in gas, electricity, coal, oil, emission and currency trading contracts for the current<br />
calendar year and the following four years. The company considers the markets for these commodities<br />
to be liquid over this time horizon because reliable prices are available from brokers, markets, and data<br />
providers. The fair value of a commodity contract is calculated according to the DCF method using<br />
these prices; no in-house valuation models are used. The monthly, quarterly and annual prices<br />
published are adjusted only to reconcile them with the relative periods in the trade systems. DELTA<br />
uses derivatives, such as interest rate swaps, to hedge its interest rate risk exposure. These swaps<br />
allow a floating rate to be exchanged for a fixed rate. The fair value of interest-rate derivatives is also<br />
calculated according to the DCF method, using a yield curve that is based on data from the European<br />
Central Bank (ECB).<br />
Classification and netting<br />
A derivative is classified as a current asset if its fair value represents a gain and as a non-current liability<br />
if its fair value represents a loss. Receivables and payables in respect of derivatives for different<br />
transactions with the same counterparty are netted, if there is a contractual or legally enforceable right<br />
of set-off and DELTA also settles the relevant cash flows on a net basis.<br />
Recognition of fair value gains and losses<br />
Under IAS 39, energy commodity contracts (electricity, gas, coal, oil, emission allowances and related<br />
foreign exchange exposures) and interest rate swaps are classified as derivatives. Under IAS 32, IAS<br />
39 and IFRS 7, all derivatives are measured at fair value on initial recognition.<br />
As a general rule, fair value changes in derivatives are recognised through profit or loss. The exceptions<br />
to this rule are:<br />
1a. Own use: DELTA applies accrual accounting for commodity contracts intended for its own use or<br />
production and for sales and purchasing contracts entered into for the purpose of delivering<br />
physical commodities to end users. This means that any changes in value are not shown in the<br />
income statement. These transactions are recognised as sales or purchase transactions at the<br />
prevailing prices at the time of settlement;<br />
2a. Derivatives used to hedge an own-use contract. Hedge accounting may be applied for these<br />
derivatives on certain conditions<br />
2b. Interest rate derivatives. Hedge accounting may be applied for these derivatives on certain<br />
conditions.<br />
69
Hedge accounting<br />
Hedge accounting allows the impact of fair value changes on profit or loss to be mitigated by taking into<br />
account the opposing effects on the profit or loss of fair value changes in the hedges and the hedged<br />
items. Fair value gains and losses on derivatives are recognised in equity (through the statement of<br />
comprehensive income) until the hedged position/transaction is settled.<br />
DELTA uses derivatives to hedge price and currency risks arising from energy commodity contracts<br />
(electricity, gas, coal, oil, and carbon emissions).<br />
Interest rate swaps are used to hedge the risk of cash-flow volatility due to movements in interest rates.<br />
DELTA uses cash-flow hedging, which involves entering into hedges to mitigate its exposure to<br />
variability of existing and future cash flows that could ultimately affect profit or loss. The hedges are<br />
allocated to a specific risk relating to a balance sheet item or highly probable forecast transaction.<br />
Criteria for applying hedge accounting<br />
Hedge accounting is subject to strict rules in terms of documentation and effectiveness testing. Hedge<br />
accounting is permitted if a derivative meets the following criteria:<br />
1. At the time of entering into the transaction, the derivative is formally classified as a hedge, and<br />
the hedging relationship, the objectives of the hedge, and the risk management strategy are<br />
documented;<br />
2. In the case of a cash-flow hedge, the forecast transaction that is the subject of the hedge is<br />
highly probable and expected to expose the entity to variability in existing or future cash flows<br />
that could ultimately affect profit or loss;<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 to have been highly effective.<br />
Hedge effectiveness testing and recognition of changes<br />
DELTA formally tests whether derivatives used as hedging instruments have been highly effective in<br />
achieving offsetting changes in fair value or cash flows attributable to the hedged item, both at the<br />
inception of the hedge and during its life. DELTA tests and determines whether changes in fair value or<br />
cash flows attributable to the hedged item are offset by changes in fair value or cash flows attributable<br />
to the hedging instrument. A range of between 80% and 125% is used to regard a hedging relationship<br />
as being effective.<br />
The effective portion of fair value changes is recognised in equity and shown within the hedge reserve<br />
(through the statement of comprehensive income).<br />
The ineffective portion of a hedging relationship, in a fair value hedge, is the extent to which changes in<br />
the fair value of the derivative differ from the changes in the fair value of the hedged item or, in a cash<br />
flow hedge, the extent to which changes in the fair value of the derivative differ from the fair value<br />
change in the expected cash flow. Ineffective hedges, the ineffective portion of a hedge and gains and<br />
losses on components of derivatives that are disregarded when testing the effectiveness of a hedge are<br />
recognised directly in the income statement.<br />
The cumulative amounts recognised in equity are taken to the income statement in the same period as<br />
the hedged transaction.<br />
DELTA discontinues hedge accounting if the hedging relationship is no longer effective or no longer<br />
expected to remain effective.<br />
70
6. Accounting policies for the income statement<br />
6.1 Revenue<br />
Revenue represents income arising directly from the supply of goods and services to third parties, net of<br />
any discounts and net of sales taxes, such as VAT and regulating energy tax (regulerende<br />
energiebelasting; REB) in the Netherlands.<br />
Revenue is recognised when the material risks and benefits of ownership of the goods have passed to<br />
the buyer. Revenue from services is recognised in proportion to the services delivered as at the end of<br />
the reporting period.<br />
Recognition of revenue from transport services and the supply of electricity and gas is based on<br />
supplies during the calendar year. Revenue from supplies to domestic and small-business users is<br />
partly estimated as meter readings are taken throughout the year.<br />
Recognition of revenue from electricity sales is based on the assumption that power generated by the<br />
group’s own production facilities (including joint arrangements) is supplied to third parties, while power<br />
supplied to end-users is procured entirely from third parties.<br />
For gas and electricity trading contracts that do not involve physical delivery, purchases and sales are<br />
netted if this was contractually agreed.<br />
Revenue from telecommunications covers subscription fees for signal distribution as well as revenue<br />
from Internet services and other data transmission services.<br />
Revenue from waste management services are allocated to the period in which the services are<br />
supplied.<br />
Revenue from construction contracts is recognised in the income statement using the percentage-ofcompletion<br />
method.<br />
6.2 Net operating expenses<br />
Net operating expenses are measured on the basis of products and services purchased and in<br />
accordance with the measurement and depreciation rules set out above. Expenses are allocated to the<br />
financial year in which they are incurred. Gains are recognised in the year in which they are realised;<br />
losses are recognised in the year in which they are foreseeable.<br />
6.3 Net finance income (expense)<br />
Finance income and expense is allocated to the period to which it relates, using the effective interest<br />
method. Costs of external financing associated with the construction or acquisition of property, plant and<br />
equipment (construction period interest) are capitalised as and when appropriate.<br />
6.4 Discontinued operations<br />
All financial consequences of final decisions to sell and discontinue operations are shown within profit<br />
after tax from discontinued operations.<br />
Profits or losses on activities previously classified as discontinued operations for the current year are<br />
also shown within this item.<br />
71
7. Accounting policies for the cash flow statement<br />
The cash flow statement has been prepared according to the indirect method, based on actual<br />
balance sheet movements. A distinction is made between operating, investing, and financing<br />
activities. Although the current portion of non-current liabilities is recognised in the balance sheet<br />
as part of other current liabilities, movements in the current portion of non-current liabilities is<br />
shown within the cash flow from financing activities in the cash flow statement.<br />
Cash flows relating to minority interests (dividend payments), finance income or expense, and<br />
corporate income taxes (tax assessments) are based on the actual receipts and payments.<br />
72
Notes to the consolidated balance sheet<br />
1. Intangible assets<br />
(EUR 1,000) Total Goodwill Software Costumer Transport Other<br />
contracts rights<br />
2013<br />
Carrying amount as at 1 January 480,919 430,049 36,779 3,254 6,798 4,039<br />
Investments 7,365 - 7,365 - - -<br />
Depreciation (14,308) - (12,691) (435) (1,182) -<br />
Disposals (87) - - - - (87)<br />
Other (700) (9) (691) - - -<br />
Carrying amount as at 31 December 473,189 430,040 30,762 2,819 5,616 3,952<br />
Accumulated depreciation and impairment 339,705 103,744 180,330 22,673 13,692 19,266<br />
Acquisition cost as at 31 December 812,894 533,784 211,092 25,492 19,308 23,218<br />
2014<br />
Carrying amount as at 1 January 473,189 430,040 30,762 2,819 5,616 3,952<br />
Investments 1,984 - 1,984 - - -<br />
Depreciation (12,959) - (8,966) (2,811) (1,182) -<br />
Impairments (95,129) (95,129)<br />
Other (140) 38 (3,480) 7,254 - (3,952)<br />
Carrying amount as at 31 December 366,945 334,949 20,300 7,262 4,434 -<br />
Accumulated depreciation and impairment 256,157 104,459 112,559 24,265 14,874 -<br />
Acquisition cost as at 31 December 623,102 439,408 132,859 31,527 19,308 -<br />
Depreciation periods in years nvt 5 divers 20 divers<br />
Allocation of goodwill to cash-generating units 31-12-2014 31-12-2013<br />
(EUR 1,000) Total Goodwill Software Costumer Transport Other<br />
contracts rights<br />
Indaver 323,716 418,807<br />
Kreekraksluis 1,390 1,390<br />
2013<br />
Zeelandnet 9,843 9,843<br />
Totaal Goodwill 334,949 430,040<br />
Carrying amount as at 1 January 480,919 430,049 36,779 3,254 6,798 4,039<br />
Investments 7,365 - 7,365 - - -<br />
Depreciation (14,308) - (12,691) (435) (1,182) -<br />
Disposals (87) - - - - (87)<br />
Other (700) (9) (691) - - -<br />
Carrying amount as at 31 December 473,189 430,040 30,762 2,819 5,616 3,952<br />
Accumulated depreciation and impairment 339,705 103,744 180,330 22,673 13,692 19,266<br />
Acquisition cost as at 31 December 812,894 533,784 211,092 25,492 19,308 23,218<br />
2014<br />
Carrying amount as at 1 January 473,189 430,040 30,762 2,819 5,616 3,952<br />
Investments 1,984 - 1,984 - - -<br />
Depreciation (12,959) - (8,966) (2,811) (1,182) -<br />
Impairments (95,129) (95,129)<br />
Other (140) 38 (3,480) 7,254 - (3,952)<br />
Carrying amount as at 31 December 366,945 334,949 20,300 7,262 4,434 -<br />
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Goodwill<br />
Under IFRS (IAS 36 Impairment of Assets), for group companies for which goodwill has been paid in the<br />
past, value in use is measured annually so as to determine whether to recognise an impairment loss on<br />
the goodwill. If the recoverable amount of the asset is lower than the carrying amount, the carrying<br />
amount is reduced to reflect the recoverable value. This reduction constitutes an impairment loss and is<br />
immediately recognised in the profit or loss, unless the asset is revalued according to a different<br />
standard (which is not the case for DELTA).<br />
The recoverable value of an asset or a cash-generating unit (CGU) is the highest of its fair value less<br />
costs of disposal and its value in use. Value in use is the present value of the future cash flows<br />
expected to be derived from an asset or a cash-generating unit. The DELTA Group measures the value<br />
in use of classifiable assets, i.e. assets, groups of assets, and/or cash-generating units, through<br />
impairment tests.<br />
Use of inflation expectations<br />
The impairment tests are based on an expected annual inflation rate of 2%. The ECB’s policy is to<br />
achieve an annual inflation rate of 2% or just under 2%. The ECB’s inflation objective is used to<br />
calculate cash flows projections in impairment testing, taking into account a minimum three-year horizon<br />
as reflected in the underlying business plans, and what basically is then an infinite series of those cash<br />
flow projections.<br />
Indaver<br />
As regards Indaver’s operations, impairment tests were conducted at the level of its cash-flow<br />
generating units. Management based its cash flow projections on the business plans for 2015-2019 and,<br />
in a number of cases, on a longer time horizon. For the period after this time horizon, an infinite series<br />
was used for nearly all CGUs, taking into account the available information about market developments.<br />
No use was made of extrapolations with growth rates in excess of inflation.<br />
The impairment tests were conducted using a specific discount rate for each entity. Allowing for debt-toequity<br />
ratios generally accepted by market participants, a number of discount rate scenarios were<br />
looked at, using a discount rate per CGU ranging from 7.6% to 9.1% before tax. These tests revealed<br />
an impairment loss of EUR 2.4 million for the cash-generating unit Indaver Deutschland GmbH. No<br />
impairment losses were identified for the Indaver Group’s other CGUs. The carrying amount of the<br />
assets of Indaver Deutschland GmbH included in the impairment test was lower than the value in use so<br />
calculated. The difference between the carrying amount and value in use is applied against the goodwill<br />
for KGE Indaver Deutschland GmbH. In the case of a cash-generating unit to which goodwill is<br />
allocated, the impairment loss is allocated to reduce the goodwill allocated to the unit and then to<br />
reduce the other assets of the unit (IAS 36.104).<br />
In the light of its proposed sale of the Indaver Group, DELTA classified the Indaver Group as a single<br />
cash-generating unit as at 31 December 2014. On 6 March 2015, DELTA and Katoen Natie announced<br />
that they had signed an agreement for the sale of DELTA’s 75% share interest in Indaver N.V.to Katoen<br />
Natie. The sale still requires approval from DELTA’s General meeting. The price agreed (net of selling<br />
costs) is lower than the carrying amount of the Indaver Group as shown in DELTA Group’s financial<br />
statements. The difference between the carrying amount and sales price (net of selling costs) reduces<br />
the goodwill allocated to Indaver as shown in DELTA Group’s balance sheet. In the case of a cashgenerating<br />
unit to which goodwill is allocated, the impairment loss is allocated to reduce the goodwill<br />
allocated to the unit and then to reduce the other assets of the unit (IAS 36.104). As a result, the<br />
carrying amount of the 75% share interest in the Indaver Group at 31 December 2014 is consistent with<br />
the sales price (net of selling costs) announced for the 75% interest.<br />
See also note 1B Post-balance sheet events that are material to the financial statements 2014.<br />
74
Windpark Kreekraksluis B.V.<br />
There were no indicators of impairment as regards Windpark Kreekraksluis B.V. On the basis of the<br />
information available in connection with the sale of Windpark Kreekraksluis B.V., its fair value less costs<br />
of disposal exceeds the carrying amount, including the goodwill allocated to this cash-generating unit.<br />
Zeelandnet B.V.<br />
Impairment tests were conducted for the operations of ZeelandNet, with management basing its cash<br />
flow projections on the business plans for 2015-2017. An infinite series was used for the period after this<br />
time horizon, taking into account the available information about market developments. No use was<br />
made of extrapolations with growth rates in excess of inflation.<br />
The impairment tests were conducted using a discount rate, based on debt-to-equity ratios generally<br />
accepted by market participants, more specifically a pre-tax discount rate of 9.9%. No impairment loss<br />
was identified for this CGU.<br />
Software<br />
Investment expenses were lower in 2014 than in 2013, when the new customer registration and<br />
invoicing system for the retail market was implemented. Key investment expenses in 2014 involved<br />
extending and improving the online environment.<br />
Cleaning out fixed assets records<br />
During the year, fixed assets records were cleaned out, with assets that had already been written down<br />
and were no longer serving the production process being deleted from the accounts and records.<br />
75
2. Property, plant and equipment<br />
(EUR 1,000) Total Land and Plant and Other Assets under Third-party<br />
buildings equipment assets construction contributions<br />
2013<br />
Carrying amount as at 1 January 1,780,017 295,960 1,497,347 41,497 91,099 (145,886)<br />
Investments 162,379 1,578 30,354 21 132,424 (1,997)<br />
Capitalized interest 364 - - - 364 -<br />
Depreciation (159,409) (19,632) (135,098) (10,705) - 6,026<br />
Impairments (545) (545) - - - -<br />
Disposals (2,116) (369) (1,526) (18) (203) -<br />
Other investments 2,895 (3,097) 123,777 33,830 (154,448) 2,832<br />
Carrying amount as at 31 December 1,783,585 273,895 1,514,854 64,625 69,236 (139,025)<br />
Carrying amount before deduction of contributions 1,922,610 273,895 1,514,854 64,625 69,236<br />
Accumulated depreciation and impairment 1,663,888 203,987 1,380,212 75,211 4,478<br />
Acquisition cost as at 31 December 3,586,498 477,882 2,895,066 139,836 73,714<br />
2014<br />
Carrying amount as at 1 January 1,783,585 273,895 1,514,854 64,625 69,236 (139,025)<br />
Investments 103,793 1,879 30,891 176 70,924 (77)<br />
Depreciation (167,359) (19,218) (137,838) (15,981) (21) 5,699<br />
Impairments (410) (410)<br />
Disposals (4,007) (2,425) (1,477) (109) - 4<br />
Other investments (1,790) (263) 50,694 20,187 (74,483) 2,075<br />
Carrying amount as at 31 December 1,713,812 253,458 1,457,124 68,898 65,656 (131,324)<br />
Carrying amount before deduction of contributions 1,845,136 253,458 1,457,124 68,898 65,656<br />
Accumulated depreciation and impairment 1,782,542 223,276 1,494,380 63,566 1,320<br />
Acquisition cost as at 31 December 3,627,678 476,734 2,951,504 132,464 66,976<br />
Depreciation periods in years 0 - 40 7 - 40 5 - 15 n/a<br />
76
Investments were significantly lower in 2014 than 2013, when major investments were made in<br />
Windpark Kreekraksluis B.V. (Zeeland).<br />
Investments in plant and equipment (including changes in assets under construction) mainly involved<br />
expanding and replacing gas and power grids (Netwerkbedrijf), extending and renovating waste<br />
processing plants, and investments in EPZ’s nuclear power station.<br />
Investment by type of operation:<br />
Grids<br />
Indaver<br />
EPZ<br />
Energy & Multimedia<br />
EUR 39.4 million<br />
EUR 36.6 million<br />
EUR 19.3 million<br />
EUR 8.5 million<br />
Tolling rights obtained on acquisition and allocated to the relevant production unit are amortised over<br />
the remaining useful life of the operation in question. This led to an amortisation charge of EUR 16<br />
million during the year.<br />
In 2012, an impairment loss was recognised for the write-down of combined heat and power systems<br />
(CHP) and the write-down of a supply connection to an industrial estate. Similar to 2013, a test was<br />
conducted in 2014 to determine whether to reverse the write-down of CHPs on the basis of the portfolio<br />
of CHPs and related contract terms and expected energy price developments. However, no reversal<br />
was in order at year-end 2014 (similar to 2013). The test used a pre-tax discount rate of 8.6%.<br />
The impairment loss on the supply connection, arising from a sharp decline in purchases by businesses<br />
located on the industrial estate, was also maintained. The tests conducted in 2014 did not lead to the<br />
reversal of previous impairment losses.<br />
In accordance with IFRIC 18, third-party contributions to the construction costs of an item of property,<br />
plant and equipment are no longer deducted from the carrying amount of the asset (for which the<br />
contribution was received), and instead are shown within deferred revenue.<br />
Cleaning out fixed assets records<br />
During the year, fixed assets records were cleaned out, with assets that had already been written down<br />
and were no longer serving the production process being deleted from the accounts and records.<br />
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3. Interests in joint ventures, investments in associates and other<br />
investments<br />
(EUR 1,000) Total Joint Ventures Associates Other Investments<br />
Carrying amount as at 1 January 2013 391,642 326,354 52,623 12,665<br />
Acquisitions 492 265 227 -<br />
Investments/Disposals 3,817 143 - 3,674<br />
Dividends received (33,975) (25,621) (8,104) (250)<br />
Share of proftis 41,548 33,411 8,884 (747)<br />
Other movements 8,998 9,054 (254) 198<br />
Carrying amount as at 31 December 2013 412,522 343,606 53,376 15,540<br />
Carrying amount as at 1 January 2014 412,522 343,606 53,376 15,540<br />
Acquisitions - - -<br />
Investments/Disposals 3,393 - (403) 3,796<br />
Dividends received (35,664) (30,326) (5,244) (94)<br />
Share of proftis 41,209 32,130 7,590 1,489<br />
Other movements 7,545 8,068 (516) (7)<br />
Carrying amount as at 31 December 2014 429,005 353,478 54,803 20,724<br />
Dividends received mainly comprise the water company Evides, several smaller joint ventures and<br />
associates in the field of energy generation that operate under tolling agreements with DELTA, grids<br />
and waste processing.<br />
Other movements mainly comprise a change in shareholders’ equity of a joint venture and the payments<br />
made into SET (Sustainable Energy Technology) Fund C.V. and SET Fund II C.V., and changes in their<br />
value during the year.<br />
78
3.1 Joint ventures<br />
A summary of the information in the balance sheet and income statement relating to joint ventures<br />
(under IFRS, based on a 100% interest)<br />
EVIDES N.V.<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Current assets 68,188 68,096<br />
Non-current assets 1,026,690 1,025,661<br />
Current liabilities (178,537) (154,133)<br />
Non-current liabilities (460,533) (500,555)<br />
2014 2013<br />
Revenue 296,558 295,303<br />
Profit form continuing operations 60,731 56,802<br />
Profit from discontinued operations - -<br />
Profit for the year 60,731 56,802<br />
Other comprehensive income - -<br />
Total comprehensive income 60,731 56,802<br />
Dividend received by DELTA 22,400 23,550<br />
Abovementioned income statement consists among others of the following:<br />
Depreciation, amortisation and impairment 67,068 65,837<br />
External finance income/expenses 7,865 9,286<br />
Corporate income tax 1,573 1,321<br />
31-12-2014 31-12-2013<br />
Equity 455,808 439,069<br />
DELTA's interest 50% 50%<br />
Goodwill 95,502 95,502<br />
Carrying amount as at 323,406 315,037<br />
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3.2 Associates<br />
A summary of the information in the balance sheet and income statement relating to associates<br />
(based on a 100% interest).<br />
AZN Holding B.V.<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Current assets 40,000 29,058<br />
Non-current assets 225,000 227,222<br />
Current liabilities (50,000) (38,514)<br />
Non-current liabilities (58,597) (79,213)<br />
2014 2013<br />
Revenue 125,251 140,000<br />
Profit form continuing operations 21,582 24,148<br />
Profit from discontinued operations - -<br />
Profit for the year 21,582 24,148<br />
Other comprehensive income - -<br />
Total comprehensive income 21,582 24,148<br />
Dividend received by DELTA 1,721 2,341<br />
31-12-2014 31-12-2013<br />
Equity 156,403 138,553<br />
DELTA's interest 20% 20%<br />
Goodwill - -<br />
Other 8,219 11,861<br />
Carrying amount as at 39,500 39,572<br />
IHM cvba<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Current assets 10,038 10,032<br />
Non-current assets 30,984 30,379<br />
Current liabilities (1,836) (1,999)<br />
Non-current liabilities (4,779) (6,765)<br />
2014 2013<br />
Revenue 8,044 8,130<br />
Profit form continuing operations 1,837 1,421<br />
Profit from discontinued operations - -<br />
Profit for the year 1,837 1,421<br />
Other comprehensive income - -<br />
Total comprehensive income 1,837 1,421<br />
Dividend received by DELTA 309 457<br />
31-12-2014 31-12-2013<br />
Equity 34,407 31,647<br />
DELTA's interest 30% 30%<br />
Goodwill - -<br />
Other (747) (11)<br />
Carrying amount as at 9,575 9,483<br />
81
Other associates<br />
(Bedragen x EUR 1.000) 31-12-2014 31-12-2013<br />
Profit from continuing operations attributable to DELTA N.V. 2,723 3,628<br />
Profit from discontinued operations attributable to DELTA N.V. - -<br />
Other comprehensive income attributable to DELTA N.V. - -<br />
Total comprehensive income attributable to DELTA N.V. 2,723 3,628<br />
Total carrying amount as at 5,728 4,321<br />
3.3 Other investments<br />
All entities presented as other investments are included in the list of non-consolidated companies.<br />
In 2007, as part of the Borssele Agreement, DELTA (with DELTA Investeringsmaatschappij B.V. acting<br />
as limited partner) and Essent (now an RWE company) set up the Sustainable Energy Technology Fund<br />
(SET-Fund I C.V.). Both partners own a 50% interest in the partnership.<br />
Given the Fund’s articles of association and the change in ownership interests in N.V. EPZ, a new fund<br />
(SET-Fund II C.V.) was launched on 23 December 2011. DELTA owned a 69.65% interest and Essent<br />
(RWE) a 29.85% interest in SET Fund II C.V.'s initial share capital. In view of the limited degree of<br />
control, the investments in both entities are classified as financial instruments and stated at fair value.<br />
Due in part to the entry of a new limited partner, DELTA's interest in SET Fund II C.V. (with DELTA<br />
Investeringsmaatschappij B.V. acting as a limited partner) stood at 54.22% as at 31 December 2014.<br />
3.4 Transactions with related parties<br />
Transactions with related parties are recognised if the value of the related party is material to DELTA’s<br />
financial information and sales and purchase transactions, receivables and payables, and loans granted<br />
involve at least EUR 5 million. Transactions with Elsta B.V. are based on tolling agreements (cost-plus<br />
method). Other transactions are at arm’s length.<br />
No provision for bad debts is recognised for amounts owed by related parties because there is no need<br />
to do so. Although DELTA’s shareholders (provincial and municipal authorities) are related parties, no<br />
material transactions are conducted between DELTA and its shareholders. The remuneration paid to<br />
the Executive Board and Supervisory Board is shown within staff costs and other operating expenses.<br />
(EUR 1,000)<br />
Elsta B.V & Co C.V. 24.75%<br />
Elsta B.V. 25.00%<br />
Sales Purchases Trade receivables Trade payables Loans granted Interest<br />
Loans<br />
%<br />
Interest 2014 2013 2014 2013 31-12-2014 31-12-2013 31-12-2014 31-12-2013 31-12-2014 31-12-2013 2014 2013 31-12-2014 31-12-2013<br />
- - 25,318 25,315 -<br />
12 141 2,664 - -<br />
- -<br />
- -<br />
BMC Moerdijk B.V. 50.00% 1,864 1,767 5,567 5,829 266 136 1,054 1,000 12,564 12,703 996 1,275 - -<br />
Zebra Gasnetw erk B.V. 33.33% - - 408 495 - - 35 9 - - - - - -<br />
IHM cvba 30.00% 982 983 315 401 283 379 15 150 - - - - - -<br />
Vlaamse Milieu Holding N.V. na - - - - - - - - - - - - 20,000 20,000<br />
Evides N.V. 50.00% - - - - - - - - - - - - - -<br />
Totaal 38,324 39,023 32,094 32,374 549 3,735 9,761 7,975 12,564 12,703 996 1,275 20,000 20,000<br />
82
3.5 Consolidated company with a significant minority interest (based on a 100% interest)<br />
Indaver Deutschland GmbH<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Current assets 34,329 34,690<br />
Non-current assets 195,297 209,037<br />
Current liabilities (38,633) (37,303)<br />
Non-current liablities (106,551) (113,846)<br />
Equity attributable to DELTA N.V. 43,065 47,273<br />
Equity attributable to non-controlling interests 41,377 45,305<br />
2014 2013<br />
Revenue 141,865 131,916<br />
Costs (148,184) (136,537)<br />
Profit for the year (6,319) (4,621)<br />
Profit attributable to DELTA N.V. (3,223) (2,359)<br />
Profit attributable to non-controlling interests (3,096) (2,262)<br />
Profit for the year (6,319) (4,621)<br />
Other comprehensive income attributable to DELTA N.V. (927) (10)<br />
Other comprehensive income attributable to non-controlling interests (890) (9)<br />
Other comprehensive income (1,817) (19)<br />
Total comprehensive income attributable to DELTA N.V. (4,150) (2,369)<br />
Total comprehensive income attributable to non-controlling interests (3,986) (2,271)<br />
Total comprehensive income (8,136) (4,640)<br />
Dividend paid to non-controlling interests - -<br />
Cash flow from operating activities 13,636 15,987<br />
Cash flow from investing activities (5,971) (6,739)<br />
Cash flow from financing activities (10,369) (4,948)<br />
Evolvement cash position during the year (2,704) 4,300<br />
83
4. Other financial assets<br />
Total Loans to joint Deferred tax Other<br />
ventures and asset financial<br />
(EUR 1,000) associates etc. assets<br />
Carrying amount as at 1 January 2013 181,727 14,352 89,094 78,281<br />
Reversal of current portion 4,025 3,985 - 40<br />
New loans 11,702 1,257 - 10,445<br />
Results (7,368) - (9,351) 1,983<br />
Repayments (3,342) (2,643) - (699)<br />
Transferred to equity as hedge reserve (235) - (235) -<br />
Other movements 10,988 - 11,163 (175)<br />
Carrying amount as at 31 December 2013 197,497 16,951 90,671 89,875<br />
Current portion of financial assets (1,735) (1,585) - (150)<br />
Carrying amount as at 1 January 2014 (long term) 195,762 15,366 90,671 89,725<br />
Reversal of current portion 1,735 1,585 - 150<br />
New loans 10,586 184 - 10,402<br />
Results 7,016 - (2,368) 9,384<br />
Repayments (2,555) (1,565) (990)<br />
Transferred to equity as hedge reserve 2,693 - 2,693 -<br />
Other movements 600 (1) - 601<br />
Carrying amount as at 31 December 2014 215,837 15,569 90,996 109,272<br />
Current portion of financial assets (1,310) (1,300) - (10)<br />
Carrying amount as at 31 December 2014 (long term) 214,527 14,269 90,996 109,262<br />
4.1 Loans to joint ventures, associates etc.<br />
These comprise loans to joint ventures, associates and other investments. Loans are stated at face<br />
value. Subordinated loans amount to EUR 12.5 million.<br />
At year-end 2014, the weighted average interest rate was 6.9% (2013: 6.9%).<br />
4.2 Deferred tax assets<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Intangible assets and property, plant and equipment 28,547 29,419<br />
Financial assets 6,570 6,352<br />
Provisions 17,030 18,986<br />
Unutilised tax losses 29,182 27,177<br />
Hedge reserve pursuant to IAS39/derivatives 11,474 8,723<br />
Other (1,807) 14<br />
Total deferred tax asset 90,996 90,671<br />
The deferred tax asset relating to intangible assets and property, plant and equipment largely arises<br />
from differences between the tax bases and carrying amounts for reporting purposes of assets as at 1<br />
January 1998 (the opening balance sheet for tax purposes for DELTA N.V.)<br />
The deferred tax asset relating to provisions arises from liabilities recognised in the financial statements<br />
which are either not recognised or recognised in a different manner for tax purposes. In all cases, these<br />
are temporary differences which will be reflected in the effective tax rate in the coming years.<br />
84
A deferred tax asset is also recognised for unused tax losses that are expected to be offsettable in the<br />
coming years. The losses are attributable mainly to DELTA N.V. and arose during the period when the<br />
DELTA N.V. fiscal unity comprised all of its Dutch-based wholly-owned subsidiaries.<br />
The deferred tax asset for unused tax losses is measured annually and recognised if it is expected that<br />
the losses can be set off against future taxable profits. On 1 January 2014 (previously 31 December<br />
2013), after consulting the Dutch Tax and Customs Administration, DELTA N.V. formed a fiscal unity for<br />
corporate income tax purposes only with its grid operation subsidiary. Profits made by the grid business<br />
can be set off against losses incurred in the past and attributable to DELTA N.V. Taking into account<br />
known differences between the commercial profit and taxable profit calculations, an estimate was made<br />
of future losses offsettable within the statutory period. A mandatory separation of the grid operations<br />
under the Independent Grid Management Act (Wet Onafhankelijk Netbeheer) could affect the valuation<br />
of this deferred tax asset.<br />
Since 2006, a hedge reserve for unrealised fair value gains or losses on derivatives and trading<br />
contracts has been recognised in compliance with IAS 39/32. A deferred tax asset is recognised for<br />
unrealised fair value gains or losses. At year-end 2014, the hedge reserve was negative (hence an<br />
asset), resulting in a deferred tax asset.<br />
At 31 December 2014, no deferred tax asset was recognised for EUR 118 million in tax loss<br />
carryforwards due to uncertainty over whether and when the unused tax losses or unused tax credits<br />
might be utilised (in the Netherlands or abroad). EUR 34 million in unused tax losses will expire within 5<br />
years. The remaining losses have a carry-forward period of more than five years.<br />
4.3 Other financial assets<br />
At 31 December 2014, other financial assets mainly comprised prepayments. Other financial noncurrent<br />
assets also include the Foundation that provides the financial security required by the Nuclear<br />
Energy Act to ensure the presence of sufficient funds to dismantle the nuclear power station after its<br />
expected closure date. Keeping the money in a separate foundation covers the risk of the available<br />
funds being part of the assets of the permit holder in the event of the company going into liquidation.<br />
85
5. Derivatives and risk management<br />
DELTA is involved in gas, electricity, coal, oil, emission and currency trading contracts for the current<br />
calendar year and the following four years. DELTA considers the markets for these commodities to be<br />
liquid over this time horizon because reliable prices are available from brokers, markets, and data<br />
providers. The fair value of commodity contracts is calculated on the basis of these published prices; no<br />
in-house valuation models are used. The monthly, quarterly and annual prices published are adjusted<br />
only to reconcile them with the relative periods in the trade systems.<br />
DELTA uses derivatives, such as interest rate swaps, to hedge its interest rate risk exposure. These<br />
swaps allow a floating rate to be exchanged for a fixed rate.<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 />
5.1 Derivatives<br />
5.1.1 Relationships of derivatives in the financial statements 2014<br />
(EUR 1,000)<br />
Derivatives on the balance sheet (see 5.1.2)<br />
Assets<br />
2014<br />
Balance of derivatives<br />
Assets<br />
2013<br />
Liabilities<br />
2014<br />
Liabilities<br />
2013<br />
Change in<br />
2014, assets<br />
Non-current assets 78,679 88,080 (9,401)<br />
Current assets 187,655 141,856 45,799<br />
266,334 229,936 36,398<br />
Changes in derivatives<br />
Change in<br />
2013, liabilities<br />
Non-current liabilities 133,806 115,839 17,967<br />
Current liabilities 223,978 160,555 63,423<br />
357,784 276,394 81,390<br />
Other balance sheet items relating to derivatives<br />
Hedge reserve (see 5.1.3) (79,978) (34,657) (45,321)<br />
Deferred tax (see 5.1.3) 11474 8723 264 (3,192) 2751 3,456<br />
Non-controlling interest connected with swaps (see 5.1.3) (174) (556) 382<br />
Subtotal 11,474 8,723 (79,888) (38,405) 2,751 (41,483)<br />
-<br />
Purchase of interest rate derivatives by DNWB 1,439 2,250 (811)<br />
Changes in equity through profit or loss (1,436) (2,104) 668<br />
Fair value changes in equity through profit or loss (91) 524 (615)<br />
11,474 8,723 (79,976) (37,735) 2,751 (42,241)<br />
Total 277,808 238,659 277,808 238,659 39,149 39,149<br />
86
5.1.2 Derivatives position<br />
ASSETS<br />
(EUR 1,000)<br />
Non-current<br />
Current<br />
2013 2012 2013 2012<br />
Commodity contracts<br />
Gas 52,416 33,532 88,605 43,946<br />
Electricity 19,579 51,502 66,424 75,770<br />
Coal 148 - - 4,398<br />
Oil - - - 2,981<br />
Other 8 - 3,578 -<br />
Other derivatives<br />
Foreign exchange contracts 6,520 2,827 29,010 14,715<br />
Interest rate swaps 8 219 38 46<br />
Total 78,679 88,080 187,655 141,856<br />
(EUR 1,000)<br />
LIABILITIES<br />
NET<br />
Non-current<br />
Current<br />
2013 2012 2013 2012 2013 2012<br />
Commodity contracts<br />
Gas (55,374) (30,577) (114,912) (50,923) (29,265) (4,022)<br />
Electricity (27,853) (47,898) (59,128) (64,146) (978) 15,228<br />
Coal - (2,337) (17,008) (13,285) (16,860) (11,224)<br />
Oil (175) - (243) (84) (418) 2,897<br />
Other - (1,239) - (7,261) 3,586 (8,500)<br />
Other derivatives<br />
Foreign exchange contracts (11,886) (6,886) (25,529) (17,408) (1,885) (6,752)<br />
Interest rate swaps (38,518) (26,902) (7,158) (7,448) (45,630) (34,085)<br />
Total (133,806) (115,839) (223,978) (160,555) (91,450) (46,458)<br />
A loss of EUR 44.2 million (2013: gain of EUR 0.2 million) on these contracts is recognised in the hedge<br />
reserve.<br />
87
5.1.2a Offsetting financial assets<br />
(EUR 1,000)<br />
Assets<br />
Non-current assets<br />
Current assets<br />
Gross amount Offsetting Net amount Gross amount Offsetting Net amount<br />
Commodity contracts<br />
Gas 117,729 65,313 52,416 550,816 462,211 88,605<br />
Electricity 136,038 116,459 19,579 541,913 475,489 66,424<br />
Coal 523 375 148 45,651 45,651 -<br />
Oil 2,141 2,141 - 16,204 16,204 -<br />
Other 8 - 8 6,429 2,851 3,578<br />
Other derivatives<br />
Foreign exchange contracts 6,520 - 6,520 29,010 - 29,010<br />
Interest rate swaps 8 - 8 38 - 38<br />
Total 262,967 184,288 78,679 1,190,061 1,002,406 187,655<br />
5.1.2b Offsetting financial liabilities<br />
(EUR 1,000)<br />
Liabilities<br />
Non-current liabilities<br />
Current liabilities<br />
Gross amount Offsetting Net amount Gross amount Offsetting Net amount<br />
Commodity contracts<br />
Gas (120,687) (65,313) (55,374) (577,124) (462,212) (114,912)<br />
Electricity (144,311) (116,458) (27,853) (534,617) (475,489) (59,128)<br />
Coal (376) (376) - (62,659) (45,651) (17,008)<br />
Oil (2,316) (2,141) (175) (16,446) (16,203) (243)<br />
Other - - - (2,851) (2,851) -<br />
Other derivatives<br />
Foreign exchange contracts (11,886) - (11,886) (25,529) - (25,529)<br />
Interest rate swaps (38,518) - (38,518) (7,158) - (7,158)<br />
Total (318,094) (184,288) (133,806) (1,226,384) (1,002,406) (223,978)<br />
88
5.1.3 Changes in the hedge reserve<br />
Changes in the fair value of derivatives after tax of the following derivatives are included in the hedge<br />
reserve. This reserve is not freely distributable. Movements in the hedge reserve in the past two years<br />
are presented below.<br />
(EUR 1,000)<br />
Commodity contracten<br />
Gas Electricity Coal Oil CO 2 Exchange<br />
Foreign<br />
Total<br />
Swaps<br />
Interest<br />
rate<br />
swaps<br />
Total<br />
2013<br />
Hedge reserve 1-1-2013 (gross) (11,133) 18,997 (6,840) 6,012 (18,532) 11,225 (271) (47,008) (47,279)<br />
Changes in 2013<br />
Recognised directly in equity 1,994 33 (9,818) 2,060 (1,563) (7,443) (14,737) 22,011 7,274<br />
Released to income 1,872 (5,287) 6,718 (5,844) 10,811 (6,158) 2,112 (9,235) (7,123)<br />
Total changes 2013 3,866 (5,254) (3,100) (3,784) 9,248 (13,601) (12,625) 12,776 151<br />
Hedge reserve 31-12-2013 (gross) (7,267) 13,743 (9,940) 2,228 (9,284) (2,376) (12,896) (34,232) (47,128)<br />
Deferred tax 1,817 (3,438) 2,485 (557) 2,321 594 3,222 8,693 11,915<br />
Non-controlling interest - (5) - - - - (5) 561 555<br />
Hedge reserve at 31-12-2013 (5,450) 10,300 (7,455) 1,671 (6,963) (1,782) (9,679) (24,978) (34,658)<br />
2014<br />
Hedge reserve 1-1-2014 (gross) (7,267) 13,743 (9,940) 2,228 (9,284) (2,376) (12,896) (34,232) (47,128)<br />
Changes in 2014<br />
Recognised directly in equity (42,494) (6,321) (13,985) - 4,293 11,957 (46,550) (18,804) (65,354)<br />
Released to income 7,463 (7,919) 7,232 (2,228) 7,711 1,458 13,717 7,403 21,120<br />
Total changes 2014 (35,031) (14,240) (6,753) (2,228) 12,004 13,415 (32,833) (11,401) (44,234)<br />
Hedge reserve 31-12-2014 (gross) (42,298) (497) (16,693) - 2,720 11,039 (45,729) (45,633) (91,362)<br />
Deferred tax - (264) - - - - (264) 11,474 11,210<br />
Non-controlling interest - (128) - - - - (128) 302 174<br />
Hedge reserve at 31-12-2014 (42,298) (889) (16,693) - 2,720 11,039 (46,121) (33,857) (79,978)<br />
89
The composition of the hedge reserve in relation to commodities, on a gross basis, at year-end 2014 is<br />
attributable to the years ahead as follows:<br />
Commodities hedge reserve (on a gross basis)<br />
COMMODITY CONTRACTS<br />
(EUR 1,000) Gas Electricity Coal Oil CO 2 Exchange<br />
Foreign<br />
Total<br />
2015 (29,913) 3,967 (16,693) - 2,711 10,644 (29,284)<br />
2016 (8,417) (4,514) - 9 314 (12,608)<br />
2017 (3,968) 142 - - - 81 (3,745)<br />
2018 - (92) - - - - (92)<br />
Total (42,298) (497) (16,693) - 2,720 11,039 (45,729)<br />
The release from the hedge reserve to profit or loss is shown within gross operating margin.<br />
The timing of expected cash flows does not always coincide with their recognition in the income<br />
statement. This is because some hedges have a ‘timing effect.’ This is the case, for example, with the<br />
majority of gas hedges, in which the gas price for the first quarter of a year can be determined on the<br />
basis of the average oil price over the six months preceding that quarter. The value of the swaps used<br />
in such a hedging relationship, settlement of which takes place in the six months preceding the quarter<br />
in which delivery is made, is recognised in the hedge reserve up to the beginning of the delivery quarter,<br />
with the gain or loss being recognised in profit or loss in the first quarter of delivery. The maximum time<br />
lag on contracts in a hedging relationship is nine months.<br />
During the year, no hedging relationships were discontinued on the basis that an expected transaction<br />
did not go ahead.<br />
5.1.4 Hierarchy of financial instruments<br />
Financial instruments are all recurring valuations, measured at fair value, and classified according to the<br />
following hierarchy as required by IFRS 13 Fair Value Measurement:<br />
Level 1: Level 1 inputs are (unadjusted) prices quoted on active markets for identical assets or liabilities<br />
that the entity can access at the measurement date.<br />
Level 2: Level 2 inputs are inputs other than quoted market prices included within Level 1 that are<br />
observable for the asset or liability, either directly or indirectly.<br />
Level 2 inputs include:<br />
a) Quoted prices for similar assets or liabilities in active markets;<br />
b) Quoted prices for identical or similar assets or liabilities in markets that are not active;<br />
c) Inputs other than quoted prices that are observable for the asset or liability in question, for<br />
example: i) Interest rates and yield curves that are published on a regular basis<br />
ii) Implied volatilities and iii) credit spreads (differences in interest rates); d) Market-corroborated<br />
inputs.<br />
Level 3: Level 3 inputs are unobservable inputs for the asset or liability.<br />
90
Assets and liabilities measured at fair value<br />
(EUR 1,000)<br />
FAIR VALUE HIERARCHY<br />
Total as at 31<br />
December Level 1: Level 2: Level 3:<br />
2014 2013 2014 2013 2014 2013 2014 2013<br />
Assets<br />
Derivatives 266,334 229,936 - - 266,334 229,936 - -<br />
Part of other investments and other<br />
financial assets 120,221 95,566 100,929 81,236 - - 19,292 14,330<br />
Total assets 386,555 325,502 100,929 81,236 266,334 229,936 19,292 14,330<br />
Equity and liabilities<br />
Derivatives 357,784 276,394 - - 357,784 276,394 - -<br />
Put options 138,732 156,905 - - - - 138,732 156,905<br />
Total equity and liabilities 496,516 433,299 - - 357,784 276,394 138,732 156,905<br />
Movements in ‘Part of other investments and other financial assets’ in 2014 comprised EUR 24.7<br />
million, EUR 14.6 million of which related to investments/new receivables, and EUR 10.1 million<br />
concerned a gain.<br />
Other investments comprised, inter alia, the share interest in SET Fund C.V. and SET Fund II C.V. (see<br />
also note 3.3).<br />
Other financial assets comprised , inter alia, the Foundation for managing the funds for dismantling the<br />
Borssele nuclear power station (see also note 4.3).<br />
The fair values are based on:<br />
Measurements in accordance with the International Private Equity and Venture Capital Valuation<br />
Guidelines issued by International Private Equity and Venture Capital (IPEVC) and approved by the<br />
European Private Equity and Venture Capital Association (EVCA);<br />
Specially established asset funds with their own market value per unit.<br />
<br />
A reclassification from level 3 to level 1 occurred on the basis of additional information in 2014. The<br />
reclassification was also applied to the comparatives for 2013. Several assets shown within other<br />
financial non-current assets are measured on the basis of quoted prices in active markets, and hence<br />
are categorised into level 1.<br />
Put options<br />
Put options were granted to minority shareholders in connection with the Indaver acquisition in 2007.<br />
The put options are exercisable in 2015.<br />
The share of the company’s profit attributable to non-controlling interests in Indaver is added to the<br />
obligations relating to the put options.<br />
In view of the agreement reached with Katoen Natie on the sale of DELTA’s 75% share interest in<br />
Indaver, the put option was valued at the price agreed for the 75% interest at 31 December 2014 (see<br />
also 1B Post-balance sheet events that are material to the financial statements 2014)<br />
5.2 Risk management<br />
5.2.1 Risk management<br />
DELTA is involved in international gas and electricity trading. Prices on these international markets<br />
fluctuate strongly. DELTA uses financial instruments to mitigate commodity, foreign exchange, interest<br />
rate, liquidity and credit risks, subject to the conditions laid down in the Risk Policy Document and<br />
Treasury Charter.<br />
Under the auspices of the Executive Board, the Risk Management Committee has put in place general<br />
procedures and limits and is responsible for ensuring that DELTA’s energy trading and sales activities<br />
remain within the defined risk margins.<br />
The following paragraphs describe the different types of risk and the way in which DELTA manages the<br />
related exposures.<br />
91
5.2.2 Market risks<br />
5.2.2.1 Commodity price risk<br />
Market risks arise from price movements in the markets where DELTA buys and sells (gas, electricity,<br />
coal, oil, emission allowances, currencies, transmission capacity, imports/exports capacity, etc.). It is<br />
DELTA’s policy to mitigate the impact of price movements in the short term and track prevailing market<br />
prices in the long term. For systematic risk control purposes, asset allocations and positions are<br />
determined on the basis of expected price developments. These positions are monitored on a daily<br />
basis. Trading risks are mitigated by strictly enforcing a system of limits.<br />
5.2.2.2 Value-at-Risk<br />
DELTA uses the Value-at-Risk (VaR) method to calculate and assess market risks on its commodity<br />
markets. This method involves using various assumptions regarding possible changes in market<br />
conditions. The VaR method is an important tool to assess the company’s exposure to market risk. VaR<br />
identifies the maximum portfolio losses likely to be incurred as a result of price changes over a threeday<br />
period with a confidence level of 95% (i.e. in 5% of cases the portfolio losses may exceed the VaR<br />
limit). VaR is calculated using Monte Carlo simulations based on historical volatilities and correlations.<br />
Because portfolios include opposing positions and there is an underlying correlation, the VaR of the<br />
total portfolio is smaller than the sum of sub-portfolio VaRs.<br />
Value at Risk<br />
(EUR 1,000)<br />
Value at Risk<br />
31-12-2013 31-12-2012<br />
Asset Book 6,193 8,539<br />
Trade Books 994 1,137<br />
Diversification over Books (1,553) (1,837)<br />
Total 5,634 7,839<br />
VaR is an important tool for DELTA to manage its portfolios and it is therefore calculated and<br />
reported on a daily basis. Although the VaRs for the Asset Book and total portfolio are reported on<br />
a daily basis, they are not used as a management parameter. The Asset Book is hedged on the<br />
basis of a predetermined disposal schedule to establish average market value. Variations from the<br />
disposal schedule fall within the Trade Books, for which VaR is the key measure of risk.<br />
5.2.2.3 Cash flow hedges<br />
DELTA uses financial instruments to minimise fluctuations in expected cash flows. The company<br />
uses derivatives, including forward contracts, options and swaps, to control the effects of future<br />
changes in market prices. These hedging instruments are derivatives of commodities traded by<br />
DELTA and they are entered into to mitigate cash flow, price and currency risks. Hedge accounting<br />
is applied to cushion the total change in value of these derivatives.<br />
To the extent permitted, DELTA accounts for these financial instruments and the physical purchase<br />
and sale contracts in a cash flow hedge in accordance with IAS 39. The hedged item is the future<br />
purchase transaction (power stations, long-term sourcing) or sales transaction for gas or electricity.<br />
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Cash<br />
Cash<br />
flow<br />
flow<br />
hegdges<br />
hedges<br />
electricity and fuel<br />
(EUR 1,000)<br />
AMOUNT AT FAIR VALUE<br />
2014 2015 2016 2017<br />
2018 and<br />
beyond<br />
Total<br />
Average<br />
price<br />
Contract<br />
value<br />
Gas forwards (28,416) (9,849) (4,243) - (42,508) 0.249 (254,139)<br />
Electricity forwards 2,310 (3,831) 206 (177) (1,492) 44.551 (105,051)<br />
Coal swaps (16,747) - (16,747) 72.227 (67,604)<br />
Oil swaps - -<br />
CO 2- forwards 1,965 8 - 1,973 6.552 (16,459)<br />
Currency swaps 9,966 414 178 - 10,558 0.893 (109,673)<br />
Total (30,922) (13,258) (3,859) (177.00) (48,216)<br />
2013 2014 2015 2016<br />
2017 and<br />
beyond<br />
Total<br />
Average<br />
price<br />
Contract<br />
value<br />
Gas forwards (8,752) (15) 163 - (8,605) 0.266 (226,135)<br />
Electricity forwards 6,887 3,252 577 - 10,716 48.395 (460)<br />
Coal swaps (9,264) (2,183) - - (11,447) 68.622 (100,669)<br />
Oil swaps 2,981 - - - 2,981 626.694 (33,841)<br />
CO 2- forwards (4,565) (2,649) - - (7,214) 6.832 (27,219)<br />
Currency swaps 1,525 (871) - - 654 0.899 (263,676)<br />
Total (11,189) (2,466) 740 - (12,914)<br />
The hedge reserve comprises value changes in derivatives in the period in which they are included in<br />
an effective hedging relationship. Derivatives shown in the analysis of cash flow hedges comprise<br />
derivatives that were part of a hedging relationship as at the balance sheet date.<br />
A mismatch occurs because:<br />
the analysis of cash flow hedges also includes the ineffective portion of the hedging instrument;<br />
the gains and losses on the hedging instruments entered into to form a hedging relationship are<br />
also included in the analysis of cash flow hedges;<br />
the hedge reserve also includes the gains and losses on hedging instruments that were part of a<br />
hedging relationship in the past but were no longer included in a hedging relationship at the end of<br />
the financial year.<br />
The amounts recognised in the hedge reserve take account of the date on which an instrument was<br />
designated as part of a hedging relationship, which may be different from the date of the associated<br />
trade. In addition, the hedge reserve comprises only the effective portion of the total fair value of<br />
hedging instruments recognised in the hedge reserve.<br />
5.2.2.4 Currency risk<br />
Currency risk is the risk that the value of assets will change due to movements in foreign exchange<br />
rates. DELTA’s risk policy is to hedge currency risks associated with positions denominated in foreign<br />
currencies. To hedge this risk, the company uses financial instruments (forward contracts) to minimise<br />
fluctuations in expected cash flows. Currency positions arising from commodity and other contracts are<br />
reported to the Treasury department on a daily basis to be hedged at group level. Currency risk limits<br />
are set periodically in consultation with the Risk Management Committee and are monitored by the<br />
Treasury department.<br />
The following exchange rates against the euro were used to convert currency positions as shown in the<br />
balance sheet:<br />
MIDDLE RATES 31-12-2014 31-12-2013<br />
US dollar 1.2153 1.3770<br />
Pound sterling 0.7797 0.8322<br />
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5.2.2.5 Interest rate risk<br />
DELTA’s interest rate risk policy is to mitigate the effects of interest rate fluctuations. To hedge this risk,<br />
the company uses derivatives, including interest rate swaps.<br />
Hedged loans<br />
DELTA holds a number of interest rate swaps, all of which were effective at the balance sheet date.<br />
Sensitivity is measured by increasing or reducing the floating spot by 10%. Several of these interest-rate<br />
derivatives can be classified as option contracts, which qualify for the exemption referred to in IAS<br />
39.74. Changes in fair value are accounted for in the hedge reserve, with changes in the time value<br />
being recognised through profit or loss. The table shows the effects of a 10% increase and 10%<br />
decrease compared with the carrying amounts as at 31 December 2014. No Value-at-Risk (VaR) is<br />
calculated for interest rate derivatives.<br />
Sensitivity interest rate<br />
(EUR 1,000)<br />
10% increase<br />
Increase in value<br />
10% decrease<br />
Decrease in value<br />
Position as at 31 Value based on relative to carrying Value based on relative to carrying<br />
December<br />
yield curve<br />
amount<br />
yield curve<br />
amount<br />
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013<br />
Derivatives<br />
Derivatives (45,630) (34,084) (44,798) (31,400) 832 2,684 (46,466) (36,768) (836) (2,684)<br />
Deferred tax on derivatives 11,474 8,693 11,266 8,014 (208) (679) 11,684 9,372 210 679<br />
Total (34,156) (25,391) (33,532) (23,386) 624 2,005 (34,782) (27,396) (626) (2,005)<br />
Interest rate swaps<br />
Hedge reserve 33,857 24,978 33,240 22,982 (617) (1,996) 34,476 26,972 619 1,994<br />
Non-controllig interest 302 561 295 536 (7) (25) 309 586 7 25<br />
Total 34,159 25,539 33,535 23,518 (624) (2,021) 34,785 27,558 626 2,019<br />
Gains and losses on swaps<br />
Total 1,436 2,104 1,436 2,118 0 14 1,436 2,088 0 (16)<br />
At 31 December 2014, interest-rate derivatives represented a loss. An upward movement in the yield<br />
curve will reduce this loss.<br />
The hedge reserve relating to interest-rate swaps as at 31 December 2014 constituted a debit item in<br />
equity. An upward movement in the yield curve will reduce the amount of this debit item.<br />
Unhedged loans<br />
If interest rates on unhedged variable-rate loans had been 10% higher or lower at 31 December 2014,<br />
with all other variables remaining constant, the profit or loss (before allowing for non-controlling<br />
interests) would have been EUR 0.5 million per annum lower or higher, respectively.<br />
5.2.3 Liquidity risk<br />
Liquidity risk is the risk that DELTA may have insufficient funds available to meet its liabilities.<br />
DELTA’s capital management policy focuses on centralising its cash management and borrowing and<br />
repayment operations at holding company level (DELTA N.V.) as much as possible. On the basis of its<br />
business plan, the company prepares an annual financing plan to give direction to the activities<br />
undertaken by DELTA N.V.'s Treasury department, and to determine the ratio of short-term to long-term<br />
debt. DELTA also ensures that it more than meets banking ratios and other ratios necessary to<br />
maintain its corporate credit rating and optimise working capital management. It also operates a very<br />
strict policy on issuing guarantees and assuming obligations that carry liquidity risk.<br />
In March 2013, DELTA refinanced its revolving credit facility for a period of five years to March 2018.<br />
The RCF amounts to EUR 450 million. The facility includes an accordion option that allows the principal<br />
to be increased by EUR 50 million. The RCF is partly a standby facility and partly to be used to finance<br />
working capital and absorb seasonal fluctuations. Investments in long-term assets are financed by longterm<br />
loans.<br />
94
In 2012, DELTA N.V. obtained EUR 180 million worth of long-term private loans, divided into tranches<br />
with different maturities. In December 2014, the term of one EUR 40 million tranche was extended to<br />
mid-2015 so as to keep the cash position at an appropriate level until it is certain that the sales<br />
proceeds of assets will be received in 2015.<br />
A number of DELTA Group companies have their own financing facilities, more specifically:<br />
1. Indaver has access to lines of credit to finance its working capital requirements.<br />
At year-end 2014, it had withdrawn EUR 170 million under its existing lines of credit;<br />
1. DELTA Netwerkbedrijf B.V. has had a separate line of credit since 2010. The amount of the<br />
financing remained unchanged at around EUR 150 million in 2014;<br />
2. Sloe Centrale B.V. has been financed through project funding. At year-end 2014, an amount of<br />
EUR 192 million was outstanding (based on a 50% share interest).<br />
DELTA saw its credit rating issued by Standard & Poor's downgraded to BBB with a negative outlook in<br />
2014. The downgrade was prompted by a deterioration of the company’s profile, driven in turn by the<br />
deteriorated outlook for the energy industry and adjustments to the regulatory frameworks for both the<br />
grid and water operations. Other reasons included adjustments to the system to allocate debt-related<br />
items, which led to an increase in the company’s debt position.<br />
To provide an insight into DELTA’s liquidity risk exposure, the following table presents the contractual<br />
maturities of its financial obligations:<br />
Contractual maturities of financial obligations as at 31 december 2014<br />
(EUR 1,000) < 1 year 1-5 years > 5 years Total<br />
Trade payables 313,626 - - 313,626<br />
Interest-bearing loans 260,049 321,667 134,685 716,401<br />
Derivatives 223,978 133,806 - 357,784<br />
Other 393,442 128,688 1,602 523,732<br />
Total 1,191,095 584,161 136,287 1,911,543<br />
Related interest payable 9,676 18,845 4,229 32,750<br />
Contractual maturities of financial obligations as at 31 december 2013<br />
(EUR 1,000) < 1 jaar 1-5 jaar > 5 jaar Totaal<br />
Trade payables 341,048 - - 341,048<br />
Interest-bearing loans 285,799 277,570 243,436 806,805<br />
Derivatives 160,555 115,839 - 276,394<br />
Other 278,371 286,696 1,658 566,725<br />
Total 1,065,773 680,105 245,094 1,990,972<br />
Related interest payable 11,033 26,239 5,581 42,853<br />
The contractual maturities of financial obligations reflect the expected outgoing cash flows relating to<br />
outstanding financial commitments as at the balance sheet date.<br />
Other contractual maturities mainly comprise deferred revenue, current taxation, and the Indaver put<br />
option.<br />
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5.2.4 Credit risk<br />
Credit risk is the risk that a counterparty will default on its contractual obligations. In order to mitigate its<br />
credit risk exposure, DELTA has set credit limits for external counterparties. Its internal rating system<br />
sets a credit limit for each external counterparty. The system uses publicly available information about<br />
the companies or guarantors concerned (financial statements, credit ratings, etc.). If the external<br />
counterparty’s or guarantor’s credit rating is not, or no longer, investment grade, no additional credit risk<br />
will be accepted. In 2014, the last few outstanding positions involving a number of such counterparties<br />
were settled, reducing the number of external counterparties with ratings below investment grade<br />
compared with 2013.<br />
The chart below shows the percentage distribution of DELTA’s external counterparties by credit rating<br />
class at 31 December 2014:<br />
AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+<br />
In addition to credit limits based on credit ratings, DELTA uses various other instruments to mitigate<br />
credit risk, including standard contracts and standard terms of business, market trading, end-user<br />
diversification, and additional collateral.<br />
The creditworthiness of end-users is determined on the basis of information from external data<br />
providers. As regards existing customers, their payment record is also taken into consideration when<br />
deciding whether or not to enter into a supply contract. DELTA has hedged its credit risk exposure to<br />
some corporate end-users through credit insurance.<br />
Additional collateral in the form of a bank guarantee, deposit or advance payment is requested where<br />
necessary.<br />
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6. Inventories<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Raw materials 91,915 71,347<br />
CO 2 rights 1,204 -<br />
Consumables 5,975 5,883<br />
Finished products 3,836 6,241<br />
Goods for resale 4,389 4,582<br />
Total 107,319 88,053<br />
Less: Provision for obsolescence (1,001) (608)<br />
Total inventories 106,318 87,445<br />
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7. Receivables<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Trade receivables 339,668 384,408<br />
Current tax assets 22,087 24,814<br />
Work in progress for third parties - 202<br />
Cash not available on demand 28,569 26,739<br />
Current portion of long-term loans granted 1,310 1,735<br />
Other receivables, prepayments and accrued income 18,555 24,082<br />
Total other receivables 48,434 52,556<br />
Total receivables (excluding derivates) 410,189 461,980<br />
Cash not available on demand comprises deposits relating to trading activities.<br />
A provision for possible bad debts totalling EUR 20.5 million (2013: EUR 20.1 million) is recognised for<br />
trade receivables.<br />
Aged analysis of trade receivables<br />
Age<br />
(in days)<br />
31-12-2014 31-12-2013<br />
< 30 319,022 364,254<br />
31-60 15,925 13,228<br />
61-90 4,038 2,966<br />
91-120 1,262 2,450<br />
> 120 19,872 21,593<br />
Total 360,119 404,491<br />
Bad debt provision (20,451) (20,083)<br />
Total trade receivables 339,668 384,408<br />
The
8. Cash<br />
Cash includes not only cash but also cash equivalents that can be converted into cash with no material<br />
risk of impairment.<br />
(EUR 1, 000) 31-12-2014 31-12-2013<br />
Deposits 87,022 77,130<br />
Cash / Bank 70,822 96,985<br />
Total cash 157,844 174,115<br />
The amounts placed on deposit become available within three months.<br />
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9. Provisions<br />
(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 provisions<br />
Carrying amount as at 1 January 2013 567,666 68,990 119,008 5,742 213,543 160,383<br />
Reversal of current portion of provision 77,996 9,299 33,543 461 1,370 33,323<br />
Added 39,826 89 17,530 5,282 (328) 17,253<br />
Interest added 18,398 2,970 5,765 150 4,999 4,514<br />
Released (19,307) (44) (17,489) - (4) (1,770)<br />
Utilised (81,214) (1,238) (40,314) (784) - (38,878)<br />
Other movements 4,330 4,329 - - - 1<br />
Carrying amount as at 31 December 2013 607,695 84,395 118,043 10,851 219,580 174,826<br />
Current portion of provisions (85,430) (10,199) (29,033) (2,910) (1,664) (41,624)<br />
Carrying amount as at 31 December 2013 522,265 74,196 89,010 7,941 217,916 133,202<br />
Reversal of current portion of provision 85,430 10,199 29,033 2,910 1,664 41,624<br />
Added 51,201 30 13,261 10,927 (2,763) 29,746<br />
Interest added 21,091 2,715 4,352 154 9,747 4,123<br />
Released (9,213) - (7,491) (2,565) - 843<br />
Utilised (93,154) (7,339) (37,414) (1,257) (29) (47,115)<br />
Other movements (8,606) (8,047) - (89) - (470)<br />
Carrying amount as at 31 December 2014 569,014 71,754 90,751 18,021 226,535 161,953<br />
Current portion of provisions (64,855) (7,912) (38,108) (929) (10,225) (7,681)<br />
Carrying amount as at 31 December 2014 504,159 63,842 52,643 17,092 216,310 154,272<br />
The release of provisions scheduled within one year involving an amount of EUR 64.9 million (2013:<br />
EUR 85.4 million) is shown within current liabilities.<br />
Use of inflation expectations<br />
Provisions are measured using an expected annual inflation rate of 2%. The ECB’s policy is to achieve<br />
an annual inflation rate of 2% or just under 2%.<br />
Use of discount rates<br />
The description of provisions specifies the discount rate used for each type of provision. The discount<br />
rates used are based on IAS 37, which, under Measurement of provisions, stipulates that a pre-tax<br />
discount rate should be used that reflects the current market assessments of the time value of money<br />
and the risks specific to the liability. The discount rate should not factor in risks which are already<br />
factored into the estimate of future cash flows.<br />
The discount rate is based on market interest rates (from different sources), plus a mark-up that<br />
depends on the nature, duration, amount and profile of the provision and related cash flow.<br />
100
Provisions amounting to more than EUR 5 million are clarified below.<br />
Environmental costs<br />
Indaver recognises a provision for the capping and aftercare of its current landfill sites. An amount of<br />
approximately EUR 19.6 million is expected to be withdrawn from this provision over the next five years.<br />
The associated costs have been estimated by management using best estimates, based on existing<br />
technology and knowledge of technology developments. A discount rate of 4.0% (2013: 4.0%) was<br />
used.<br />
Indaver recognises a provision of EUR 1.9 million to cover expected costs due to contamination<br />
identified at certain sites.<br />
Unprofitable contracts<br />
In the light of current market prices for electricity (which are under pressure from economic<br />
developments in relation to available production capacity, on the one hand, and the rise in fuel prices<br />
due to growing global demand, on the other), several energy purchase/sales contracts made in the past<br />
are no longer profitable. A provision is therefore recognised for onerous contracts to cover the<br />
unprofitable part of some contracts. Withdrawals are made annually to offset the accumulated negative<br />
gross margin. Profits made by any of the production units involved are added to the provision annually<br />
because of the causal link between those profits and the recognition of the provision. Provisions are<br />
reviewed each year in the light of developments on the electricity and fuel markets, relevant legislation,<br />
and contractual agreements. Movements in electricity and fuel prices are based on the independent<br />
Pöyry mid-price curves.<br />
This provision was calculated at a discount rate of 4.25% (2013: 4.25%).<br />
The provision remaining at 31 December 2014 mainly comprises contracts with a joint operation and<br />
joint venture.<br />
As regards the gas portfolio, a separate review of related gas operations was conducted, given the<br />
strong correlation between the different assets and contracts. The main combined portfolio is the 'gas<br />
flex' portfolio, which consists of gas purchases (contracts and market trading) as fuel to generate power,<br />
and related transmission and storage capacity. The review also considered the assumed proceeds from<br />
gas-fired energy production (Sloe power plant). Movements in gas and electricity prices are based on<br />
the independent Pöyry mid-price curves. The costs of transmission (including the Zuid-Beveland<br />
pipeline) and storage capacity (Zuidwending) are based on long-term contractual arrangements. Other<br />
operations reviewed included the commercial gas customer operations, i.e. the combined heat and<br />
power systems and plants, to the extent that they are gas-fired and their main output is electricity.<br />
The review showed that there was no need to recognise a provision for unprofitable contracts for any of<br />
these (combined) operations.<br />
Employee benefits<br />
These provisions are recognised so as to be able to meet existing future financial obligations. Under the<br />
terms of the collective agreement, employees are paid long-service benefits. From the start date of<br />
employment, a provision is recognised for these benefits, based on past years of service, expected<br />
price and pay rises and probability of dismissals, invalidity and mortality rates. In addition, a provision is<br />
recognised in connection with transitional arrangements for IZA/IZR health insurance schemes (publicsector<br />
schemes) for former employees. These transitional arrangements were agreed with the unions in<br />
2006 and cover a period of ten years.<br />
The discount rate is 4.5% (2013: 4.5%). The discount rate remained unchanged because of the longterm<br />
nature of these obligations.<br />
This provision also covers liabilities relating to staff redundancies in connection with the closure of<br />
EPZ’s conventional power station on 31 December 2015. In 2014, the decision was made to launch a<br />
restructuring. As regards staff who cannot be relocated to jobs within the Group, their employment<br />
contracts will terminate on 1 January 2016.<br />
101
Negotiations about the details of a Social Plan were still ongoing as at the balance sheet date. The<br />
provision covers the expected costs of terminating the employment contracts, support and coaching<br />
expenses, and direct reorganisation costs.<br />
Demolition of energy generation units<br />
This provision covers the costs of future demolition of units once they stop operating. The expected<br />
ultimate demolition costs are based on the findings of periodic studies, allowing for price developments,<br />
recent insights, and an estimate of potential environmental impacts. The provision for the demolition of<br />
the nuclear power station is structured in such a way that demolition work on the nuclear power station<br />
can start as soon as it stops operating in 2034, in accordance with the arrangements made with central<br />
government under the Borssele Nuclear Power Station Agreement. The provisions are discounted using<br />
a discount rate of 4.5% (2013: 4.5%).<br />
Other provisions<br />
Other provisions comprise<br />
a provision for processing and storage costs. This provision covers current existing obligations. It is<br />
determined as the present value of the estimated future processing and storage costs, less the<br />
estimated present value of the residual products released in future and the net value of the amounts<br />
payable and receivable. The discount rate is 4.5% (2013: 4.5%).<br />
Pension liabilities<br />
Pension liabilities in the Netherlands<br />
Nearly all employees of DELTA Group’s Dutch-based operations are members of the ABP pension fund<br />
(Stichting Pensioenfonds ABP). The ABP plan is a multi-employer plan. The members bear nearly all of<br />
the actuarial and investment risks in the plan. Employers taking part in this plan have no obligation to<br />
make supplementary contributions in the event of a funding shortfall.<br />
Our obligations are limited to paying contributions as determined by the fund. The ABP Board of<br />
Trustees determines this contribution annually, based on its own data and with due observance of the<br />
parameters and requirements set by the regulator, the Dutch Central Bank (De Nederlandsche Bank).<br />
The obligation to pay contributions ensues from DELTA’s participation in the fund during the year and<br />
not from its participation in previous years. For reporting purposes, the ABP plan is classified as a<br />
defined contribution plan. The contributions are therefore recognised as an expense and no further<br />
explanatory notes are required.<br />
Pension liabilities abroad<br />
Indaver provides defined benefit plans for employees of the Indaver holding company and some of its<br />
subsidiaries that were part of the Indaver group before 1 July 2007. They involve two plans<br />
administered by different insurance companies. Indaver also operates unfunded defined benefit plans<br />
for the employees of Indaver Deutschland GmbH in Germany, largely without any assets being held in a<br />
separate fund or an insurance contract being signed for the purpose. Indaver provides defined<br />
contribution plans for new employees who joined the holding company and some of its Belgian-based<br />
subsidiaries after 1 July 2007, and for the employees of Indaver Ireland.<br />
On that basis, Indaver’s long-term pension liabilities were as follows:<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Pension liabilities 39,104 31,322<br />
Total pension liabilities 39,104 31,322<br />
In addition, an amount of EUR 0.8 million (2013: EUR 0.8 million) in pension liabilities for Indaver is<br />
shown within current liabilities.<br />
102
Retirement benefit provisions outside the Netherlands (Indaver)<br />
(EUR 1,000)<br />
31-12-2014 31-12-2013<br />
1 Net liability<br />
Belgium Germany Belgium Germany<br />
Present value of defined benefit obligation 46,667 20,149 38,416 16,792<br />
Fair value of plan assets (26,264) (1,923) (24,114) (1,549)<br />
Present value of net obligation 20,403 18,226 14,302 15,243<br />
Provision for taxes and social contributions * - - 1,968 -<br />
Defined benefit plan based on simplified actuarial calculation 1,187 74 457 190<br />
Net liability on the face of the balance sheet 21,590 18,300 16,727 15,433<br />
* From 2014 onw ards, provision for taxes and social contributions is not longer presented seperatly<br />
2 Movements in present value<br />
Defined benefit obligation at beginning of the year 40,151 16,792 32,835 15,594<br />
Current servies costs 2,507 342 2,264 316<br />
Interest costs 1,399 619 1,354 650<br />
Actuarial gains and losses 2,692 2,998 2,567 835<br />
Experience adjustments (2,847) (44) (653) (464)<br />
actuarial (gains)/losses from changes in demographic assumptions - (7) 627 -<br />
actuarial (gains)/losses from changes in financial assumptions 5,539 3,049 2,593 1,299<br />
Contributions by employees 280 - 282 -<br />
Costs paid (84) - (83) -<br />
Insurance premiums paid (324) - (306) -<br />
Benefits paid (2,100) (602) (497) (603)<br />
Net transfer in/out 2,208 - - -<br />
Curtailments and settlements (62) - - -<br />
Defined benefit obligation at end of year 46,667 20,149 38,416 16,792<br />
3 Movements in fair value<br />
Fair value of plan assets at beginning of year 23,881 1,549 21,352 1,427<br />
Return on plan assets 690 13 1,276 30<br />
expected return 927 60 938 62<br />
gain/(loss) (237) (47) 338 (32)<br />
Contributions by employer 2,139 365 2,090 92<br />
Contributions by employees 280 - 282 -<br />
Expenses paid (84) - (83) -<br />
Premiums paid (324) - (306) -<br />
Benefits paid (2,100) - (497) -<br />
Settlements (30) (4) - -<br />
Other 1,812 - - -<br />
Fair value of plan assets at end of year 26,264 1,923 24,114 1,549<br />
4 Retirement benefit costs<br />
Current services costs 2,507 342 2,264 315<br />
Net interest defined benefit liability 473 559 416 576<br />
Net benefit expense recognised in staff costs 2,980 901 2,680 891<br />
5 Actuarial valuation assumptions<br />
Employee benefit plan obligations<br />
Discount rate 2.75% 2.75% 3.75% 3.75%<br />
Future salary increase 3.50% 2.00% 3.50% 2.00%<br />
Medical costs trend rate 3.00% n/a 3.00% n/a<br />
6 Actual return on fund investments<br />
The actual return on fund investments in 2014 was EUR 0.7 million (2013: EUR 1.3 million)<br />
7 Sensitivity<br />
1% increase of:<br />
Discount rate (6,170) (3,064) (5,934) (2,366)<br />
Future salary increase 4,516 93 3,555 91<br />
Medical cost trend rate 488 n/a 349 n/a<br />
1% decrease of:<br />
Discount rate 7,559 3,988 5,281 3,036<br />
Future salary increase (3,946) (87) (4,739) (85)<br />
Medical cost trend rate (357) n/a (266) n/a<br />
103
10. Movements in long-term debt<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Carrying amount as at 1 January 688,202 701,149<br />
Loans drawn down 21,139 47,257<br />
Movements in cross-border leases 8 (367)<br />
Repayments (132,078) (59,837)<br />
577,271 688,202<br />
Current portion (67,318) (71,841)<br />
Long-term debt 509,953 616,361<br />
Long-term debt comprises amounts owed to credit institutions, EUR 122 million of which falls due after<br />
more than five years. At 31 December 2014, long-term debt carried an average rate of interest of 1.5%<br />
(2013: 1.7%). DELTA has EUR 450 million worth of corporate standby credit facilities with five banks.<br />
No security has been provided for these facilities.<br />
104
11. Other non-current liabilities<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Deferred tax liabilities 64,375 60,689<br />
Deferred revenue 84,880 87,381<br />
Indaver put option - 156,905<br />
Other non-current liabilities 43,007 41,673<br />
Total other non-current liabilities 192,262 346,648<br />
Deferred tax liabilities<br />
Deferred tax liabilities comprise valuation differences between the commercial balance sheet and tax<br />
balance sheet.<br />
Deferred tax liabilities arise mainly from past acquisitions. When a share interest is acquired, property,<br />
plant and equipment and intangible assets are stated at fair value. Fair-value adjustments are not<br />
allowed for tax purposes, necessitating the recognition of a deferred tax liability for fair value<br />
adjustments to the assets acquired. This tax liability decreases in proportion to the fair-value<br />
adjustments.<br />
A considerable part of deferred tax liabilities comprise property, plant and equipment and intangible<br />
assets relating to the DELTA Com B.V. fiscal unity. After consulting the Dutch Tax and Customs<br />
Administration, DELTA decided to transfer its production and supply operations to this fiscal unity as<br />
of 1 January 2014 (previously 31 December 2013). The fiscal unity’s (i.e. DELTA Com B.V.’s)<br />
deferred tax assets and liabilities are netted. In measuring net deferred tax liabilities, consideration<br />
was given to the extent to which the temporary differences would produce expected economic<br />
benefits and whether temporary differences would be settled net or simultaneously (partly in view of<br />
the statutory time limits on offsetting). Unlike in previous years, the joint valuation of deferred tax<br />
assets and liabilities by and within DELTA Com B.V. led to no deferred tax item being recognised for<br />
unrealised changes in the value of derivatives and trading contracts under IAS 39/32.<br />
Deferred tax liabilities comprised<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Intangible assets 1,813 2,347<br />
Property, plant and equipment 90,715 95,638<br />
FVA (116) -<br />
Other (28,037) (37,296)<br />
Total 64,375 60,689<br />
Deferred revenue<br />
Deferred revenue partly comprises payments already received for waste that still has to be processed<br />
by Indaver. In 2014 as well as 2013, contributions received from third parties for new investments led to<br />
an increase in deferred revenue from grid operations.<br />
Indaver put option<br />
In 2008, DELTA increased its share interest in Indaver to 75%. In connection with the Indaver<br />
acquisition in 2007, put options were granted to the minority shareholders. These options are<br />
exercisable in 2015, which is why the put option is shown within non-current liabilities as at 31<br />
December 2014.<br />
Other non-current liabilities<br />
These comprise N.V. EPZ’s liability for the costs of the final nuclear fuel load located in the reactor core<br />
when the nuclear power station comes to the end of its lifespan. The liability shown is based on the<br />
known nuclear fuel costs for the final fuel load at year-end 2014, and determined as the present value<br />
(at a discount rate of 4.5%) of the estimated future value of the remaining core, including reprocessing<br />
and storage costs.<br />
105
12. Current liabilities<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Trade payables 313,626 341,048<br />
Current tax liabilities 3,474 6,122<br />
Other current tax liabilities 86,154 94,426<br />
Deferred revenue 15,612 15,130<br />
Work in progress for third parties 147 -<br />
Current portion of provision 64,855 85,430<br />
Current portion of long-term debt 67,318 71,841<br />
Put option Indaver 138,732 -<br />
Accruals and deferred income 84,467 76,502<br />
Other current liabilites 290,517 148,343<br />
Bank borrowings 141,533 120,998<br />
Total current liabilities (excluding derivatives) 915,918 811,497<br />
Other current tax liabilities mainly comprise VAT payable. Current tax liabilities also comprise wage tax<br />
and social security contributions, corporate income tax, and energy taxes payable.<br />
In addition to other current liabilities and accruals and deferred income, current liabilities also include<br />
repayments on long-term loans and withdrawals from provisions scheduled for 2015.<br />
Indaver put option<br />
Put options were granted to the minority shareholders in connection with the Indaver acquisition in<br />
2007. The put options are exercisable in 2015.<br />
The share of the company’s profit attributable to non-controlling interests in Indaver is added to the<br />
obligations relating to the put options.<br />
In view of the agreement reached with Katoen Natie on the sale of DELTA’s 75% share interest in<br />
Indaver, the put option was valued at the price agreed for the 75% interest at 31 December 2014 (see<br />
also 1B Post-balance sheet events that are material to the financial statements 2014).<br />
106
Off-balance sheet assets and liabilities<br />
A summary of off-balance sheet assets and liabilities is given below, to the extent that they have an<br />
estimated (potential) impact on the profit or loss in excess of EUR 5 million.<br />
A. Operational<br />
Energy, energy production and commodities contracts<br />
DELTA’s risk management policy aims to actively control the risk exposures arising from its production<br />
assets and long-term procurement contracts. Positions arising from trading activities are controlled<br />
through a strictly enforced system of limits, using both financial and energy derivatives, including swaps,<br />
options and forwards. Sales contracts included in the portfolio comprise energy supplies to end-users<br />
and trading partners and associated financial instruments. As at the balance sheet date, sales contracts<br />
were worth EUR 1,411 million (2013: EUR 1,314 million).<br />
Procurement contracts included in the portfolio comprise production and purchase contracts with trading<br />
partners and associated contracts for financial instruments. As at the balance sheet date, procurement<br />
contracts were worth EUR 3,039 million (2013: EUR 3,329 million).<br />
Financial instruments are measured on the basis of market values, having regard to transactions<br />
entered into for purposes of physical commodities trading. Major contracts involve existing tolling<br />
liabilities for power stations, related fuel purchases, and gas transmission and storage capacity in the<br />
Netherlands. Loss-making tolling liabilities already provided for in the balance sheet at 31 December are<br />
not included in the liabilities referred to in this section.<br />
Long-term waste processing contracts<br />
Indaver has entered into various long-term contracts for processing waste. At 31 December 2014,<br />
commitments arising from these contracts amounted to EUR 32.1 million (2013: EUR 39.9 million).<br />
These commitments are covered by upfront payments as shown in the balance sheet. In some cases,<br />
clients were granted put options conferring the right to sell part of these rights back to Indaver. No<br />
liability is recognised for these put options because it is considered unlikely that they will be exercised.<br />
Investment commitments<br />
At 31 December 2014, the company’s financial commitments for capital projects under construction<br />
involved an amount of around EUR 55.9 million (2013: EUR 55.5 million).<br />
107
Borssele Agreement<br />
In 2006, an agreement was reached with central government to extend the service life of the nuclear<br />
power station until 2033. As part of the agreement, arrangements were also made in terms of the efforts<br />
which DELTA (and Essent) were to make to embrace and provide technical and financial support for<br />
new renewable energy developments. In addition to purchasing an interest in Sustainable Energy<br />
Technology (SET) Fund C.V., these commitments also comprise investments in additional innovative<br />
projects. In 2012, DELTA acquired an interest in Sustainable Energy Technology (SET) Fund II C.V.<br />
The remaining commitment relating to SET Fund II is EUR 6 million. There is also a re-investment<br />
commitment in relation to a future exit from both SET Funds.<br />
Stranded costs<br />
The Transitional Act for the Electricity Generation Industry (Overgangswet elektriciteitsproductiesector)<br />
came into force on 1 January 2001. Under Section 2 of the Act, Dutch power generation companies are<br />
jointly liable for the costs arising from, inter alia, contracts for gas and electricity imports entered into by<br />
NEA (formerly SEP). These stranded costs are allocated to the different power generation companies<br />
according to a formula adopted at the time by the Herkströter Commission. For EPZ, this comes down<br />
to a sizeable 28.5% share. In recent years, these stranded costs have largely been settled by<br />
commuting import contracts for the supply of electricity. Taking into account NEA’s remaining<br />
shareholders’ equity, the decision was made to continue current policy and not to recognise a provision<br />
for stranded costs.<br />
Cross-border lease on incineration plant<br />
On 17 August 1999, Indaver signed a cross-border lease with a U.S. investor for the use of lines 1 and<br />
2 at its incineration plant in Doel (Belgium). The initial lease term was 25.4 years, with the option to<br />
enter into a maintenance contract for a further 13 years. Under the terms of the lease, Indaver received<br />
USD 135 million on the start date of the lease, USD 129.4 million of which was placed on deposit.<br />
These deposits are hedged by institutions with a high credit rating.<br />
An additional bank guarantee was provided from a reputable bank. At 16 August 2014, the bank<br />
guarantee was USD 47.8 million. Cash collateral was provided in May 2009. At 31 December 2014, the<br />
cash collateral amounted to USD 21.5 million.<br />
B. Collateral and guarantees<br />
DELTA has issued and received financial collateral as security for transactions it has entered into:<br />
Collateral granted<br />
Term in years<br />
< 1 year 1 – 5 years > 5 years Total<br />
Collateral granted for associates and joint ventures 16,995 2,833 13,726 33,554<br />
Other collateral granded 32,737 8,785 98,542 140,064<br />
Total collateral granted 49,732 11,618 112,268 173,618<br />
Collateral received<br />
Term in years<br />
< 1 year 1 – 5 years > 5 years Total<br />
Collateral received for associates and joint ventures - - - -<br />
Other collatetal received 16,101 45,971 139,798 201,870<br />
Total collateral received 16,101 45,971 139,798 201,870<br />
108
Main collateral granted<br />
DELTA has issued guarantees to the Zeeland provincial authorities for financial obligations relating to<br />
the capping of the Koegorspolder and North and Central Zeeland landfill sites. These guarantees<br />
involve a total amount of EUR 22.3 million. Similarly, DELTA has issued EUR 24.6 million worth of<br />
guarantees to the Zuid-Holland provincial authorities for the costs of capping the Derde Merwedehaven<br />
landfill site in Dordrecht.<br />
Indaver has issued EUR 99.5 million worth of bank guarantees, EUR 50.9 million of which relating to the<br />
transport and treatment of waste streams and EUR 35.5 million to a cross-border lease previously<br />
entered into.<br />
Main collateral received<br />
Collateral received comprises EUR 172.8 million in bank and other guarantees received mainly in<br />
connection with DELTA’s trading activities.<br />
EPZ received 21.1 million (70% share) in collateral, mainly in connection with advance fuel payments.<br />
Indaver has received bank guarantees from customers and suppliers totalling EUR 8.0 million.<br />
C. Lawsuits and claims<br />
Independent Grid Management Act (Wet Onafhankelijk Netbeheer; WON)<br />
The Dutch Minister of Transport approved the plans to split up energy companies on 2 December 2009.<br />
However, on 22 June 2010, the Hague Court of Appeal declared several sections of the Independent<br />
Grid Management Act to be non-binding. In the light of this judgment, the grid and supply operations<br />
were not split off, although the conditions stipulated by the Minister were complied with, where possible<br />
and necessary. The Dutch government took the case to the Supreme Court in an attempt to get the<br />
decision overturned. On 24 February 2012, the Supreme Court referred the case to the European Court<br />
of Justice in Luxembourg. On 14 January 2013, the parties presented their cases at a hearing before<br />
the ECJ. The ECJ issued its ruling on the questions presented in late 2013, after which the case was<br />
referred back to the Supreme Court. The Supreme Court has since adjourned its decision twice. It is<br />
now expected to hand down its decision on 26 June 2015.<br />
In recent years, DELTA has also been involved in two separate lawsuits filed by its former solar power<br />
business partners. The courts have found in favour of DELTA several times. However, our former<br />
partners continue pursuing their cases.<br />
109
Notes to the consolidated income statement<br />
13. Revenue<br />
(EUR 1,000) 2014 2013<br />
Electricity supply 881,981 970,030<br />
Gas supply 268,450 343,938<br />
Electricity and gas transport 106,411 118,270<br />
Cable, internet and telecommunications 80,983 78,995<br />
Waste management and environmental<br />
services 517,041 514,441<br />
Other revenue 75,970 77,919<br />
Total revenue 1,930,836 2,103,593<br />
The growth in revenue from Internet and telephony services continued in 2014, showing an increase of<br />
EUR 2 million. Total revenue from gas and electricity supplies to domestic and small-business users is<br />
partly estimated as staggered meter readings are taken throughout the year (similar to 2013). Gas and<br />
electricity supplies and trading declined due to relatively mild winter conditions in 2014. Despite<br />
increased price pressures, Indaver’s capacity utilisation rates remained at an acceptable level, with<br />
revenues remaining in excess of EUR 500 million.<br />
Revenue can be broken down geographically as follows:<br />
(EUR 1,000)<br />
Revenue per country<br />
2014 2013<br />
The Netherlands 1,235,967 1,375,217<br />
Belgium 206,891 217,855<br />
Great Britian & Ireland 121,122 134,685<br />
Germany 348,744 359,894<br />
Other EU 18,112 15,942<br />
Total 1,930,836 2,103,593<br />
Revenue by country is made up entirely of external revenue. Revenues outside the Netherlands were<br />
generated almost entirely by the energy and waste management operations.<br />
110
14. Cost of sales<br />
DELTA buys part of its electricity requirement from Elsta and BMC Moerdijk, both of which are related<br />
parties (and recognised as joint ventures for reporting purposes) in which DELTA owns a share interest.<br />
The electricity is procured largely on a cost-plus basis.<br />
15. Other gains and losses<br />
Other gains mainly comprise payments received from third parties for services rendered and<br />
compensation payments for losses.<br />
16. Fair value gains and losses on the trading portfolio<br />
DELTA uses derivatives to hedge price and currency risks arising from energy commodity contracts<br />
(electricity, gas, coal, and oil). More specifically, the company applies cash-flow hedging, which involves<br />
entering into hedges to mitigate its exposure to variability of existing and future cash flows that could<br />
ultimately affect profit or loss. The hedges are allocated to a specific risk relating to a balance sheet<br />
item or highly probable forecast transaction. The effective portion of fair value changes is recognised in<br />
equity and shown within the hedge reserve. The cumulative amounts recognised in equity are taken to<br />
the income statement in the same period as the hedged transaction. Movements in the value of the<br />
trading portfolio that are not hedged (non-effective hedges) is recognised as a fair value change in profit<br />
or loss.<br />
Movements in energy prices in 2014 led to a net loss on the fair value of the trading portfolio of EUR<br />
33.4 million, EUR 0.6 million of which is expensed and EUR 32.8 million of which is recognised in<br />
equity.<br />
17. Third-party services, materials and other external charges<br />
(EUR 1,000) 2014 2013<br />
Third-party work and services 187,361 184,751<br />
Consumption of materials 61,880 65,909<br />
Other external charges 26,756 37,126<br />
Total 275,997 287,786<br />
Third-party work and services mainly comprises costs associated with electricity, gas and digital<br />
infrastructure. They also comprise ICT costs.<br />
A large part of external charges relates to the operations of Indaver, EPZ and Sloe. Costs of materials<br />
used by Indaver, EPZ and Sloe amounted to EUR 58.5 million in 2014, costs for third-party services<br />
came to EUR 123.0 million, and other external charges totalled EUR 12.2 million.<br />
111
18. Staff costs<br />
(EUR 1,000) 2014 2013<br />
Salaries 187,659 187,109<br />
Social securities contributions 31,061 31,305<br />
Pension charges 21,442 21,416<br />
Other staff costs 19,990 20,438<br />
Staff costs 260,152 260,268<br />
Capitalised staff costs (2,108) (3,543)<br />
Totaal 258,044 256,725<br />
Number of employees (FTEs) as at 31 December 3,182 3,216<br />
Average number of FTEs (related to the above total staff costs) 3,189 3,256<br />
The number of FTEs working for DELTA, including all FTEs under the joint arrangements (N.V. EPZ,<br />
Sloe Centrale B.V., SLECO Centrale N.V., and Svex N.V.) totalled 3,349 (2013: 3,394).<br />
FTE average: segment 2014<br />
Energy + Corporate 614<br />
62<br />
EPZ 351<br />
Waste management 1,532<br />
Grids and Networks 630<br />
Total 3,189<br />
FTE average: geographical 2014<br />
the Netherlands 1,861<br />
Foreign 1,328<br />
Total 3,189<br />
DELTA is ‘own risk bearer' in terms of its financial obligations under the Dutch Unemployment Benefit<br />
Act (Werkloosheidwet; WW). This means that it remits no unemployment benefit contributions to the<br />
UWV social security payment agency, and that unemployment benefits paid to former employees will be<br />
claimed back from DELTA. IFRS does not allow a general provision to be recognised for these liabilities.<br />
Instead, DELTA determines for each entity whether current recourse obligations as at the balance sheet<br />
date provide a reason for recognising a separate provision.<br />
112
Remuneration of DELTA N.V.’s Executive Board members registered with the Chamber of<br />
Commerce<br />
The remuneration policy for Executive Board members was adopted by the General meeting on the<br />
recommendation of the Supervisory Board. The Supervisory Board determines the remuneration of the<br />
executive directors annually on the basis of this policy.<br />
The guiding principle of DELTA N.V.’s remuneration policy is that it should allow the company to offer a<br />
competitive pay package to attract and retain people with the right expertise and experience.<br />
The members of the Executive Board are employed on a permanent basis, with the CEO being<br />
appointed for a period of three years and the CFO for a four-year term. Their employment contracts are<br />
drafted accordingly and, in addition to a minimum notice period, provide for severance pay amounting to<br />
a maximum of one year’s salary in line with the Dutch Corporate Governance Code.<br />
No variable pay was agreed with the CEO, Arnoud Kamerbeek, for 2014.<br />
The CFO, Frank Verhagen, is entitled to variable pay, based on a number of agreed targets being<br />
achieved during the year. Variable pay is capped at 30% of the gross fixed annual salary. The targets to<br />
be achieved are defined and set annually by the Supervisory Board and the CEO. These are partly<br />
financial in nature (net profit and cash flows) and partly related to personal targets, personal<br />
performance, and the contribution made to achieving companywide objectives.<br />
The Executive Board members are covered by the same pension plan applicable to all the company’s<br />
other employees, administered by Stichting Pensioenfonds ABP.<br />
Executive Board remuneration<br />
A. Kamerbeek F. Verhagen<br />
(EUR 1,000) CEO CFO<br />
Gross basic annual salary 383,870 280,000<br />
Taxed expense allowances 15,853 19,364<br />
Pension contributions by employer 69,344 60,233<br />
Variable remuneration - 77,700<br />
Total 469,067 437,298<br />
On 16 January 2014, Arnoud Kamerbeek was appointed CEO of DELTA N.V.<br />
The variable pay component comprises the amount granted for 2014. On the basis of prior agreements,<br />
Frank Verhagen is entitled to a maximum of 30% variable pay,<br />
92.5% of which has been granted due to agreed targets being achieved. The variable pay component<br />
will be paid in the next financial year.<br />
The total remuneration of the Executive Board members in 2013 amounted to EUR 879,343.<br />
113
19. Depreciation, amortisation and impairment<br />
(EUR 1,000) 2014 2013<br />
Intangible assets<br />
Amortisation 12,959 14,308<br />
Impairment 95,129 -<br />
Property, plant and equipment<br />
Depreciation 173,058 165,435<br />
Impairment 410 545<br />
Third-party contributions released (5,699) (6,026)<br />
Total 275,857 174,262<br />
The impairment of intangible assets in 2014 mainly comprised the difference between the selling price<br />
less costs of disposal and the carrying amount of the share interest in Indaver.<br />
114
20. Other operating expenses<br />
(EUR 1,000) 2014 2013<br />
Added to provision for bad debts 1,742 2,616<br />
Other operating expenses 633 3,004<br />
Added to other provisions 13,903 3,717<br />
Total other operating expenses 16,278 9,337<br />
Other operating expenses also comprises the remuneration paid to members of the company’s<br />
Supervisory Board.<br />
Additions to other provisions mainly comprise additions to provisions for EPZ in relation to the nuclear<br />
power station.<br />
Remuneration of the Supervisory Board in 2014<br />
With effect from 1 January 2011, the Supervisory Board consists of a chairman and four members.<br />
Since the chairman stepped down in September 2014, there has been a vacancy on the Supervisory<br />
Board.<br />
Supervisory Board chairman EUR 43,200<br />
Supervisory Board members EUR 27,000<br />
Audit, Risk & Compliance Committee members EUR 5,400<br />
Remuneration Committee and Nomination Committee members EUR 3,240<br />
The total remuneration of Supervisory Board members in 2014 amounted to EUR 154,685<br />
(2013: EUR 161,100).<br />
115
21. Share of profits in joint ventures and associates<br />
This comprises DELTA’s share of profits in joint ventures and associates.<br />
In 2014, the company’s share of profits in joint ventures and associates was EUR 41.2 million, virtually<br />
unchanged from 2013 (EUR 41.5 million).<br />
116
22. Net finance income (expense)<br />
(EUR 1,000) 2014 2013<br />
External finance income 2,977 3,709<br />
External finance expense (24,311) (26,602)<br />
Interest added to provisions (21,090) (18,398)<br />
Other finance income (expense) 9,688 1,343<br />
(32,736) (39,948)<br />
Capitalised interest - 364<br />
Total finance income (expense) (32,736) (39,584)<br />
At EUR 24.3 million, finance expenses were down EUR 2.3 million on 2013, driven mainly by lower debt<br />
in 2014.<br />
117
23. Corporate income tax<br />
(EUR 1,000) 2014 2013<br />
Corporate income tax<br />
Current corporate income tax liability (11,194) (1,834)<br />
Movements in deferred tax assets and liabilities (4,766) (953)<br />
Total tax (15,960) (2,787)<br />
Of which reported under discontinued operations - 491<br />
Tax expense recognised in profit or loss (15,960) (3,278)<br />
Current corporate tax liability<br />
The reconciliation of the profit before tax and the actual taxable amount with the resulting tax burden, is as<br />
follows:<br />
Result before corporate tax (including discontined operations) 172 83,519<br />
Substantial-holding privilege (94,902) (98,422)<br />
Temporary differences connected with carrying amounts of assets<br />
and provisions (incl. VAMIL) 67,476 (38,094)<br />
Other differences 2,822 1,577<br />
Taxable amount, Netherlands (24,432) (51,420)<br />
Standard tax rate in the Netherlands as from 2011 25.00% 25.00%<br />
Tax for the year - -<br />
Adjustment for prior years - 8,267<br />
Taxes domestic joint operations (IFRS 11) (1,178) (3,744)<br />
Tax paid by subsidiaries outside the Netherlands (10,016) (6,356)<br />
Current corporate income tax liability (11,194) (1,833)<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 purposes<br />
plus utilisation of tax loss caffyforwards<br />
Applicable tax loss carryforwards 3,283 6,317<br />
Temporary differences (8,464) (8,957)<br />
Movements in deferred tax for deductible tax losses 6,460 643<br />
Movements in deferred tax for deductible tax in current year (4,755)<br />
Adjustment for prior years (1,344)<br />
Changes in deferred tax position related to domestic joint operations<br />
(3,395) (1,284)<br />
(IFRS 11)<br />
Changes in deffered tax position related to foreign consolidated and<br />
partial consolidated companies 3,450 2,328<br />
(4,765) (953)<br />
118
Movements in deferred tax assets and liabilities<br />
(EUR 1,000) Net 31-12-2013<br />
Recognised in<br />
result<br />
Recognised in<br />
unrealised gains<br />
and losses Net 31-12-2014<br />
Intangible Assets and Property, plant and equipment (68,566) 4,584 - (63,982)<br />
Financial assets 6,462 223 - 6,685<br />
Provisions 53,804 (13,012) 2,110 42,902<br />
Unutilised tax losses 27,177 5,287 - 32,464<br />
Hedge 11,945 - (735) 11,210<br />
Other (840) (1,847) 30 (2,657)<br />
Total 29,982 (4,765) 1,405 26,623<br />
Recognised under other assets 90,671 90,996<br />
Recognised under other liabilities (60,689) (64,375)<br />
Total 29,982 26,621<br />
Conciliation of current and effective tax rates<br />
31-12-2014 31-12-2013<br />
(EUR 1,000) Amount % Amount %<br />
Tax at applicable rate (43) (20,880)<br />
Profit before tax 172 83,519<br />
Applicabel rate (NL) 25% 25%<br />
Impact through substantial-holding privilege 7,898 8,555<br />
Impact tax paid by subsidiaries outside the Netherlands 3,478 6,927<br />
Impact of tax rate applicable in other jurisdictions calculation of<br />
deferred taxes 397 436<br />
Impact of non-deductible amounts (including goodwill impairment) (25,417) (1,744)<br />
Impact of repossessed or use unrecognized tax losses (1,222) (6,538)<br />
Impact of adjustment of prior years (1,341) 10,710<br />
Other 291 (253)<br />
Taxes at effective tax (15,959) (2,787)<br />
119
24. Assets held for sale and discontinued operations<br />
Discontinued operations in 2014 comprised a further EUR 0.6 million in proceeds from the sale of<br />
DELTA’s share interest in Fesil Sunergy AS in 2012. Also in 2014, proceeds were recognised for assets<br />
and liabilities of DELTA Industriële Reiniging B.V. which had not been included in the sale of its<br />
operations in 2013. Total cash flow from operating activities for discontinued operations amounted to<br />
EUR 0.6 million. These proceeds are shown within the line item other movements.<br />
24.1 Income statement<br />
The combined effect of the above activities on DELTA’s income statement is as follows:<br />
(EUR 1,000) 2014 2013<br />
Profit before tax 642 (1,196)<br />
Income tax - 491<br />
Profit for the year 642 (705)<br />
The loss on discontinued operations in 2013 was largely attributable to the settlement of the assets and<br />
liabilities of DELTA Industriële Reiniging B.V.<br />
120
Notes to the consolidated cash flow statement<br />
The cash flow statement has been prepared according to the indirect method. Given that a number of<br />
items in the income statement and balance sheet generate no direct cash-flow effects, cash flows for<br />
these items have been neutralised. This essentially concerns three items:<br />
Treatment of derivatives<br />
Fair value gains and losses on the trading portfolio lead to current and non-current movements in assets<br />
and liabilities in the balance sheet. Some of these gains and losses are also partly included in the<br />
operating profit or loss, and some in the hedge reserve as part of group equity. However, none of these<br />
changes generate a direct cash flow. This is why all changes are recognised in the cash flow from<br />
operating activities so that positive and negative changes cancel each other out.<br />
Share of profits in joint ventures and associates<br />
Share of profits in joint ventures and associates is only partly distributed as dividends. The undistributed<br />
profits lead to an increase in the entity’s shareholders’ equity and, accordingly, to a movement in<br />
financial fixed assets in DELTA’s balance sheet. The decision was therefore made to recognise only the<br />
actual dividends received in the cash flow.<br />
Corporate income tax<br />
Profit after taxation takes into account not only corporate income tax payable on the pre-tax profit, but<br />
also deferred tax assets and liabilities arising from unused tax losses and the agreement with the Dutch<br />
Tax and Customs Administration regarding the opening balance sheet for tax purposes in 1998.<br />
Because they generate no actual cash flows, movements in deferred tax assets and liabilities are<br />
eliminated from the cash flow.<br />
The cash flow from operating activities declined in 2014, due to lower movements in working capital.<br />
Capital expenditure was significantly lower than in 2013, when major investments were made in the<br />
Kreekraksluis wind farm and a fermentation plant in Alphen aan den Rijn.<br />
121
Post-balance sheet events<br />
Progress on the sale of Indaver N.V. and Windpark Kreekraksluis B.V.<br />
DELTA is selling two of its business divisions, more specifically its 75% (rounded-off) share interest in<br />
Indaver N.V. and its 100% stake in Windpark Kreekraksluis B.V. The events after the balance sheet<br />
date relating to the sale of both entities are explained in section 1B.<br />
The sale of the share interest in Indaver N.V. will be discussed by the General meeting on 4 June 2015.<br />
The shareholders authorised the sale of the Kreekraksluis wind farm on 9 March 2015.<br />
Independent Grid Management Act (Wet Onafhankelijk Netbeheer; WON)<br />
Details of the legal proceedings pending on this issue are given in Off-balance sheet assets and<br />
liabilities, C - Lawsuits and claims. The Dutch Supreme Court is expected to hand down its decision on<br />
26 June 2015.<br />
Agreement with Dow Terneuzen on the sale of a combined heat and power plant<br />
Agreement has been reached with Dow on the sale of the ‘Elsta’ combined heat and power plant which<br />
they use in their production process. Title will be transferred on expiry of the contractual term in 2018.<br />
Aside from the events described above, there were no events after the balance sheet date.<br />
122
Consolidated companies<br />
Company Main activity Headquarters<br />
Interest in company<br />
31-12-2014 31-12-2013<br />
Voting<br />
rights<br />
Zeeuwse Netwerkholding N.V. Grids and networks Middelburg 100% 100% 100%<br />
DELTA Netwerkbedrijf B.V. Grids and networks Middelburg 100% 100% 100%<br />
DELTA Infra B.V. Infrastructural Middelburg 100% 100% 100%<br />
DNWG Staff B.V. Other Middelburg 100% n/a 100%<br />
DELTA Personeel B.V. Other Middelburg 100% 100% 100%<br />
DELTA Com B.V. Energy Middelburg 100% 100% 100%<br />
DELTA Energy B.V. Energy Middelburg 100% 100% 100%<br />
DELTA Ficus Holding B.V. Energy Middelburg 100% 100% 100%<br />
DELTA Pipe B.V. Energy Middelburg 100% 100% 100%<br />
Deltius B.V. Energy Ritthem 100% 100% 100%<br />
Windpark Kreekraksluis B.V. Energy Middelburg 100% 100% 100%<br />
DELTA Tolling Sloe B.V. Energy Middelburg 100% 100% 100%<br />
DELTA Saefthinge N.V. Energy Doel, Belgium 99.9% 99.9% 99.9%<br />
Limo Energie Nederland B.V. Energy Middelburg 100% 100% 100%<br />
Litro Energie Nederland B.V. Energy Middelburg 100% 100% 100%<br />
DELTA Energy Belgium N.V. Energy Doel, Belgium 99.9% 99.9% 99.9%<br />
Windpark Barrepolder B.V. Energy Middelburg 100% n/a 100.0%<br />
DELTA Comfort B.V. Multimedia Middelburg 100% 100% 100%<br />
DELTA Kabelcomfort Netten B.V. Multimedia Middelburg 100% 100% 100%<br />
ZeelandNet B.V. Multimedia Kamperland 100% 100% 100%<br />
DELTA Industriële Reiniging B.V. Bergen op Zoom 100% 100% 100%<br />
DELTA Investerings Maatschappij B.V. Other Middelburg 100% 100% 100%<br />
DELTA Onroerend Goed Ontwikkelingsmaatschappij B.V. Other Middelburg 100% 100% 100%<br />
Stichting DELTA Zeeland Fonds Other Middelburg 100% 100% 100%<br />
DELTA Development & Water B.V. Middelburg 100% 100% 100%<br />
Triqua B.V. Wageningen 100% 100% 100%<br />
DELTA Biovalue B.V. (declared bankrupt) Eemshaven 100% 100% 100%<br />
DELTA Biovalue Nederland B.V. (declared bankrupt) Eemshaven 100% 100% 100%<br />
DELTA Biopat B.V. (declared bankrupt) Eemshaven 100% 100% 100%<br />
DELTA Solar B.V. Middelburg 100% 100% 100%<br />
Sunergy Investco B.V. Middelburg 100% 100% 100%<br />
Shareholding of the parent company in the entity<br />
123
Consolidated companies (continued)<br />
Company Main activity Headquarters<br />
Interest in company<br />
31-12-2014 31-12-2013<br />
Voting<br />
rights<br />
Indaver N.V. Waste Belgium 75% 75% 75%<br />
Indaver Participaties N.V. Other Belgium 99.9% 99.9% 99.9%<br />
Indaver Logistics N.V. Waste & Transport Belgium 99.9% 99.9% 99.9%<br />
Indaver Medical Services N.V. Other Belgium 99.9% 99.9% 99.9%<br />
Indaver Italia S.R.L. Waste Italy 100% 100% 100%<br />
Indaver Ireland Ltd Waste Ireland 100% 100% 100%<br />
Indaver Energy Ltd Other Ireland 100% 100% 100%<br />
Indaver Nederland B.V. Other the Netherlands 100% 100% 100%<br />
Indaver Gevaarlijk Afval B.V. Waste the Netherlands 100% 100% 100%<br />
Indaver Personeel B.V. Other the Netherlands 100% 100% 100%<br />
Indaver ARP B.V. Waste the Netherlands 100% 100% 100%<br />
Indaver Compost & Biomassa B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Bio Energie B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Groencompost B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Compost B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Impex B.V. Waste 's-Gravenpolder 100% 100% 100%<br />
Produval bvba Waste Westerlo, Belgium 100% n/a 100%<br />
Zeeuwse Reinigingsdienst B.V. Waste Terneuzen 99% 99% 99%<br />
Indaver Verwerking B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Recycling B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Perex B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Afvalberging B.V. Waste Terneuzen 100% 100% 100%<br />
Derde Merwedehaven B.V. Waste Terneuzen 100% 100% 100%<br />
Stortplaats Koegorspolder B.V. Waste Terneuzen 100% 100% 100%<br />
Stortplaats Noord en Midden Zeeland B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Waste to Energy B.V. Waste Terneuzen 100% 100% 100%<br />
Depmer B.V. Waste Terneuzen 100% 100% 100%<br />
Indaver Afval & Milieu Personeel B.V. Other Terneuzen 100% 100% 100%<br />
Indaver Portugal SA Waste Portugal 100% 100% 100%<br />
Indaver Schweiz AG Other Switzerland 100% 100% 100%<br />
Indaver UK Ltd Waste UK 100% 100% 100%<br />
Indaver Deutschland GmbH Other Germany 51% 51% 51%<br />
SAV Zweite Beteiligungs GmbH & Co. KGHIM GmbH Other Germany 94.90% 94.90% 94.90%<br />
AVG Abfall-Verwertungs-Gesellschaft GmbH Waste Germany 99.74% 99.74% 99.74%<br />
Gareg Umwelt-Logistik GmbH Waste & Transport Germany 100% 100% 100%<br />
HIM GmbH Waste Germany 93.83% 93.83% 93.83%<br />
Panse Wetzlar Entsorgung GmbH Waste & Transport Germany 100% 100% 100%<br />
DE Ingenieurgesellschaft mbH Other Germany 100% 100% 100%<br />
Joint arrangements<br />
Joint operations<br />
DELTA Energy B.V.:<br />
N.V. EPZ Energy Borsele 70% 70% 70%<br />
Sloe Centrale Holding B.V. Energy Vlissingen 50% 50% 50%<br />
Sloe Centrale B.V. Energy Vlissingen 100% 100% 100%<br />
Indaver N.V.:<br />
SLECO Centrale nv Waste Belgium 50% 50% 50%<br />
Svex nv Waste Belgium 50% 50% 50%<br />
Shareholding of the parent company in the entity<br />
124
Non-consolidated companies<br />
Non-consolidated companies<br />
Company Main activity Headquarters<br />
Interest in company<br />
31-12-2014 31-12-2013<br />
Voting<br />
rights<br />
Joint arrangements<br />
Joint Ventures<br />
DELTA Energy B.V.:<br />
Sloewind B.V. Energy Middelburg 50.00% 50.00% 50.00%<br />
Windpark Distridam vof Energy Terneuzen 50.00% 50.00% 50.00%<br />
PVNed Holding B.V. Energy Middelburg 50.00% 50.00% 50.00%<br />
PVNed B.V. Energy Middelburg 100.00% 100.00% 100.00%<br />
Arbel N.V. (Belgium) Energy Mechelen, Belgium 99.90% 99.90% 99.90%<br />
PVNed UK Ltd Energy UK 100.00% 100.00% 100.00%<br />
BMC Moerdijk B.V. Energy Moerdijk 50.00% 50.00% 50.00%<br />
Sloe Centrale 3 B.V. Energy Middelburg 50.00% 50.00% 50.00%<br />
Windpark Kloosterboer B.V. Energy Middelburg 50.00% 50.00% 50.00%<br />
NPG Willebroek N.V. Energy Antwerpen, Belgium 50.00% n/a 50.00%<br />
Indaver N.V.:<br />
Wips N.V. Waste Belgium 50.00% 50.00% 50.00%<br />
HIM GmbH:<br />
Gesellschaft für die Verwertung von Sonderabfallen mbH& Co. KG Waste Germany 50.00% 50.00% 50.00%<br />
Gesellschaft für die Verwertung von Sonderabfallen mbH Waste Germany 50.00% 50.00% 50.00%<br />
Indaver Bio Energie B.V.:<br />
Ecofuels B.V. Waste Well, Limburg 50.00% 50.00% 50.00%<br />
Laarakker Landbouw B.V. Waste Well, Limburg 100.00% 100.00% 100.00%<br />
DELTA N.V.:<br />
Evides N.V. Water Rotterdam 50.00% 50.00% 50.00%<br />
Elsta B.V. Energy Middelburg 25.00% 25.00% 25.00%<br />
Elsta B.V. & Co C.V. Energy Middelburg 24.75% 24.75% 24.75%<br />
Shareholding of the parent company in the entity<br />
125
Company Main activity Headquarters<br />
Interest in company<br />
31-12-2014 31-12-2013<br />
Voting<br />
rights<br />
Associates<br />
DELTA Netwerkbedrijf B.V.:<br />
Zebra GasNetwerk B.V. Grids and networks Middelburg 33.33% 33.33% 33.33%<br />
Zebra Activa B.V. Grids and networks Middelburg 100.00% 100.00% 100.00%<br />
Zebra Pijpleiding vof Grids and networks Middelburg 33.33% 33.33% 33.33%<br />
Entrade Pipe B.V. Grids and networks Vught 100.00% 100.00% 100.00%<br />
Zebra Pijpleiding vof Grids and networks Middelburg 66.67% 66.67% 66.67%<br />
DELTA Energy B.V.:<br />
Windpark Neeltje-Jans B.V. Energy Veere 40.00% 40.00% 40.00%<br />
Windpark Zeeland 1 B.V. Energy Vlissingen/Kapelle-Schore 40.00% 40.00% 40.00%<br />
NPG Willebroek N.V. Energy Antwerpen, Belgium n/a 49.00% n/a<br />
WT I B.V. Other Amersfoort 40.00% 40.00% 40.00%<br />
Indaver N.V.:<br />
IHM cvba Waste Belgium 30.00% 30.00% 30.00%<br />
Ibogem cvba Waste Belgium 35.12% 35.12% 35.12%<br />
Intercommunale vereniging Verko N.V. Waste Belgium 39.90% 39.90% 39.90%<br />
Ecowest N.V. Other Belgium 42.61% 42.61% 42.61%<br />
Indaver Participaties N.V.<br />
Sita Decontamination Services N.V. Waste Belgium 26.00% 26.00% 26.00%<br />
Ecov N.V. Other Belgium 50.00% 50.00% 50.00%<br />
Ivago cvba Waste Belgium 49.90% 49.90% 49.90%<br />
N.V. Brussel Compost Waste Belgium 40.00% 40.00% 40.00%<br />
Indaver Nederland B.V.:<br />
AZN Holding B.V. Waste Wijster 20.00% 20.00% 20.00%<br />
B.V. Grondbezit AVI Moerdijk Other Moerdijk 100.00% 100.00% 100.00%<br />
B.V. Grondbezit AVI Moerdijk II Other Moerdijk 100.00% 100.00% 100.00%<br />
N.V. AZN Waste Moerdijk 100.00% 100.00% 100.00%<br />
Others<br />
DELTA Netwerkbedrijf B.V.:<br />
Energie Data Services Nederland B.V. Grids and networks the Netherlands 1.65% 1.65% 1.65%<br />
DELTA N.V.:<br />
Synergia Capital Partners B.V. Other the Netherlands 5.00% 5.00% 5.00%<br />
DELTA Investerings Maatschappij B.V.<br />
Sustainable Energy Technology Fund C.V. Other the Netherlands 49.93% 49.93% 49.93%<br />
Sustainable Energy Technology Fund II C.V. Other the Netherlands 54.22% 60.28% 54.22%<br />
Business Park Terneuzen B.V. Other the Netherlands 15.00% 15.00% 15.00%<br />
Zeeland Airport B.V. Other the Netherlands 18.80% 18.80% 18.80%<br />
N.V. EPZ:<br />
B.V. NEA Energy Arnhem 28.50% 28.50% 28.50%<br />
Electrorisk Verzekeringsmaatschappij N.V. Energy Arnhem 4.13% 4.13% 4.13%<br />
Vliegasunie B.V. Energy Nieuwegein 14.29% 14.29% 14.29%<br />
KSG Kraftwerks-Simulator-Gesellschaft mbH Energy Germany 2.05% 2.05% 2.05%<br />
GfS Gesellschaft für Simulatorschulung mbH Energy Germany 2.05% 2.05% 2.05%<br />
Indaver N.V.:<br />
Vlar Papier N.V. Waste Belgium 34.96% 34.96% 34.96%<br />
Ecowest N.V.<br />
IVIO cvba Waste Belgium 11.93% 1.50% 11.93%<br />
Ivvo cvba Waste Belgium 3.46% 3.46% 3.46%<br />
Ecluse cvba Waste Belgium 33.33% n/a 33.33%<br />
Sleco Centrale N.V.:<br />
Ecluse cvba Waste Belgium 33.33% n/a 33.33%<br />
Indaver Deutschland GmbH:<br />
GSB Sonderabfall-Entsorgung Bayern GmbH Waste Germany 0.036% 0.036% 0.036%<br />
Shareholding of the parent company in the entity<br />
126
Company financial statements<br />
2014<br />
127
Company balance sheet as at 31 December 2014<br />
(before profit appropriation)<br />
(EUR 1,000) Ref. nr 31-12-2014 31-12-2013<br />
ASSETS<br />
Non-current assets<br />
Intangible assets 1 864 1,515<br />
Property, plant and equipment 2 11,907 22,287<br />
Financial assets<br />
Investments in subsidiaries 3 837,768 952,987<br />
Other investments 3 341,969 332,052<br />
Receivables from subsidiaries 3 68,490 60,619<br />
Loans to other investment entities 3 457 457<br />
Other loans 3 60 9<br />
Deferred tax assets 4 58,897 50,903<br />
1,307,641 1,397,027<br />
1,320,412 1,420,829<br />
Current assets<br />
Receivables from subsidiaries 203,112 177,762<br />
Other receivables 5 2,770 4,141<br />
205,882 181,903<br />
Cash 419 7,676<br />
1,526,713 1,610,408<br />
EQUITY AND LIABILITIES<br />
Shareholders' equity<br />
Shareholders' equity 6 1,100,608 1,093,289<br />
Profit for the year 6 3,760 74,788<br />
1,104,368 1,168,077<br />
Provisions 7 1,396 3,493<br />
Non-current liabilities<br />
Payables to subsidiaries - -<br />
Other non-current liabilities 8 174,497 240,624<br />
174,497 240,624<br />
Current liabilities<br />
Payables to subsidiaries 157,322 130,093<br />
Other payables 9 89,130 68,121<br />
246,452 198,214<br />
1,526,713 1,610,408<br />
128
Company income statement<br />
(EUR 1,000) 2014 2013<br />
Profit on parent company activities (559) (637)<br />
Share in profits of subsidiaries, joint<br />
ventures and associates 4,319 75,425<br />
Profit for the year 3,760 74,788<br />
Notes to the company financial statements<br />
DELTA N.V. is the Dutch-based holding company of a number of group companies involved in<br />
generating, transmitting and supplying energy and delivering environmental and cable services. The<br />
company’s functional currency is the euro. Unless otherwise stated, all amounts are presented in<br />
thousands of euros. DELTA N.V. used the option available under Part 9, Book 2, of the Dutch Civil<br />
Code to prepare the company financial statements in accordance with the International Financial<br />
<strong>Report</strong>ing Standards used in the consolidated financial statements, with the exception of equityaccounted<br />
group companies and investments. The company income statement is presented in abridged<br />
form in accordance with Section 402, Part 9, Book 2, of the Dutch Civil Code.<br />
Accounting policies<br />
Associates and joint ventures are measured according to the equity method and stated at net asset<br />
value (in accordance with IFRSs applied to the consolidated financial statements), adjusted for goodwill<br />
paid on acquisition and less any impairment losses on goodwill. No account is taken of non-controlling<br />
interests and the Indaver put option, which is shown within other current liabilities in the consolidated<br />
financial statements. Relevant adjustments are made to the value of the group company concerned. For<br />
the other accounting policies, please refer to the notes to the consolidated financial statements.<br />
129
Notes to the company balance sheet<br />
1. Intangible assets<br />
(EUR 1,000) Total Software<br />
2013<br />
Carrying amount as at 1 January 2,397 2,397<br />
Amortisation (464) (464)<br />
Other movements (418) (418)<br />
Carrying amount as at 31 December 1,515 1,515<br />
2014<br />
Carrying amount as at 1 January 1,515 1,515<br />
Amortisation (21) (21)<br />
Other movements (630) (630)<br />
Carrying amount as at 31 December 864 864<br />
Amortisation period in years 5<br />
130
2. Property, plant and equipment<br />
(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 />
2013<br />
Carrying amount as at 1 January 26,681 19,108 6,245 1,290 756 (718)<br />
Investments 28 6 - 22 - -<br />
Depreciation (789) (658) - (131) - -<br />
Disposals (12) - - (12) - -<br />
Other movements (1,324) (455) (661) (99) (159) 50<br />
Carrying amount as at 31 December 24,584 18,001 5,584 1,070 597 (668)<br />
Carrying amount before deduction of contributions third-party contributions<br />
25,252 18,001 5,584 1,070 597<br />
Accumulated depreciation and impairment 97,809 26,126 51,815 19,868<br />
Acquisition cost as at 31 December 123,061 44,127 57,399 20,938 597<br />
2014<br />
Carrying amount as at 1 January 24,584 18,001 5,584 1,070 597 (668)<br />
Investments 91 - - - 91 -<br />
Depreciation (693) (637) - (56) - -<br />
Disposals - - - - - -<br />
Other movements (1,695) (450) (644) (52) (597) 48<br />
Carrying amount as at 31 December 22,287 16,914 4,940 962 91 (620)<br />
Carrying amount before deduction of contributions third-party contributions<br />
22,907 16,914 4,940 962 91<br />
Accumulated depreciation and impairment 98,502 26,763 51,815 19,924<br />
Acquisition cost as at 31 December 121,409 43,677 56,755 20,886 91<br />
Depreciation periods in years 0 - 40 7 - 40 5 - 15 n/a<br />
Property, plant and equipment mainly comprises investments in premises. The sale of buildings to<br />
DELTA Infra B.V. is shown within disposals.<br />
Cleaning out fixed assets records<br />
During the year, fixed assets records were cleaned out, with assets that had already been written down<br />
and were no longer serving the production process being deleted from the accounts and records.<br />
131
3. Financial assets (excluding tax assets)<br />
(EUR 1,000)<br />
Total<br />
Investments in<br />
subsidiaries<br />
Other<br />
investments<br />
Receivables<br />
from<br />
subsidiaries<br />
Receivables<br />
from other<br />
investment<br />
Other<br />
receivables<br />
Carrying amount as at 31 December 2012 1,347,659 1,028,770 318,001 - 600 288<br />
Reversal of current portion (110) - - - - (110)<br />
Acquisition/grant of loans 50,205 - - 50,200 - 5<br />
Share in profits 75,425 40,341 35,084 - - -<br />
Disposals / repayments / dividends (124,841) (110,808) (23,610) 10,419 (143) (699)<br />
Movements in hedge reserve (5,305) (5,305) - - - -<br />
Other movements 3,091 (12) 2,578 - - 525<br />
Carrying amount as at 31 December 2013 1,346,124 952,987 332,052 60,619 457 9<br />
Reversal of current portion 425 - - - 285 140<br />
Acquisition/grant of loans 18,131 - - 17,981 150 -<br />
Share in profits 4,319 (32,937) 37,256 - - -<br />
Disposals / repayments / dividends (76,879) (37,902) (27,743) (10,110) (434) (690)<br />
Movements in hedge reserve (45,320) (45,320) - - - -<br />
Other movements 1,944 940 404 - (1) 601<br />
Carrying amount as at 31 December 2014 1,248,744 837,768 341,969 68,490 457 60<br />
The hedge reserve declined during 2014. Movements in the hedge reserve do not comprise<br />
corresponding deferred taxes.<br />
132
4. Deferred tax assets<br />
Deferred tax assets arise from differences between the carrying amount in the financial statements and<br />
the corresponding tax base. Deferred tax assets also comprise unused tax losses.<br />
5. Other receivables<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Trade receivables 395 631<br />
Total current taxes 2,079 2,348<br />
Other receivables, prepayments and accrued income 286 727<br />
Current portion of long-term loans granted 10 435<br />
Other receivables 296 1,162<br />
Total 2,770 4,141<br />
133
6. Statement of changes in equity<br />
(EUR 1,000) Total Paid-up capital<br />
Statutory<br />
reserve<br />
Hedge<br />
reserve<br />
Revaluation<br />
Unappropriated<br />
reserve Other reserves<br />
profit<br />
Carrying amount as at 31 december 2012 1,132,619 6,937 225,828 (34,317) (3,132) 863,466 73,837<br />
Profit appropriation for 2012 - - - - - 33,837 (33,837)<br />
Payment of dividend (40,000) - - - - - (40,000)<br />
Other changes 1,011 - (10,962) - (1,592) 13,565 -<br />
Movement in hedge reserve (3,321) - - (3,321) - - -<br />
Corporate income tax effect 2,980 - - 2,980 - - -<br />
Net profit for 2013 74,788 - - - - - 74,788<br />
Carrying amount as at 31 december 2013 1,168,077 6,937 214,866 (34,658) (4,724) 910,868 74,788<br />
Resultaatverdeling 2013 - - - - - 54,788 (54,788)<br />
Dividendbetaling (20,000) - - - - - (20,000)<br />
Overige mutaties (2,148) - (5,052) 1 (2,587) 5,490 -<br />
Mutaties in hedgereserve energiederivaten (33,692) - - (33,692) - - -<br />
Vpb-effect (11,629) - - (11,629) - - -<br />
Netto Resultaat 2014 3,760 - - - - - 3,760<br />
Carrying amount as at 31 december 2014 1,168,077 6,937 209,814 (79,978) (7,311) 971,146 3,760<br />
The statutory reserve comprises undistributed profits of associates and is therefore not freely<br />
distributable. This also applies to the hedge reserve, which should be seen in relation to unrealised<br />
income from fair value changes in derivatives used for hedging purposes.<br />
Other non-distributable reserves comprise the foreign currency translation reserve (in connection with<br />
translation differences) and remeasurements of defined benefit liabilities under IAS 19 Employee<br />
Benefits.<br />
For an explanation of changes in equity, please refer to the consolidated financial statements. In<br />
contrast to the consolidated financial statements, non-controlling interests in group companies are<br />
deducted directly from the carrying amount of the individual group company in accordance with the<br />
equity method.<br />
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7. Provisions<br />
(EUR 1,000)<br />
Total<br />
Employee<br />
benefits<br />
Other provisions<br />
Carrying amount as at 31 December 2012 2,920 2,920 -<br />
Reversal of current portion of provisions 1,819 449 1,370<br />
Added 1,336 1,336 -<br />
Interest added 150 150 -<br />
Released (4) - (4)<br />
Utilised (621) (621) -<br />
Carrying amount as at 31 December 2013 5,600 4,234 1,366<br />
Current portion of provisions (2,107) (741) (1,366)<br />
Carrying amount as at 31 December 2013 3,493 3,493 -<br />
Reversal of current portion of provisions 2,107 741 1,366<br />
Added 112 112 -<br />
Interest added 154 154 -<br />
Released (139) (139) -<br />
Utilised (509) (509) -<br />
Other movements (1,811) (1,811) -<br />
Carrying amount as at 31 December 2014 3,407 2,041 1,366<br />
Current portion of provisions (2,011) (645) (1,366)<br />
Carrying amount as at 31 December 2014 1,396 1,396 -<br />
At 31 December 2014, long-term provisions only comprised employee benefits.<br />
With the introduction of a new health insurance system in the Netherlands on 1 January 2006, the<br />
obligations underlying the provision for health care changed substantially. Of the provision formed in the<br />
past, an amount of EUR 0.2 million continues to be recognised.<br />
Under the terms of the collective agreement, employees are paid long-service benefits. From the start<br />
date of employment, a provision is recognised for these benefits, based on past years of service,<br />
expected price and pay rises (at an average rate of 2%) and probability of dismissals, invalidity and<br />
mortality rates. The discount rate is 4.5% (2013: 4.5%).<br />
135
8. Non-current liabilities<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Carrying amount as at 1 January 240,624 216,885<br />
Reversal of current portion 41,818 1,818<br />
Loans drawn down 20,000 75,000<br />
Repayments (91,818) (1,818)<br />
Other movements 691 (9,443)<br />
211,315 282,442<br />
Repayments due in the current year (36,818) (41,818)<br />
Long-term debt 174,497 240,624<br />
136
9. Other payables<br />
(EUR 1,000) 31-12-2014 31-12-2013<br />
Trade payables 4,787 9,461<br />
Current tax liabilities 2,680 4,700<br />
Current portion of non-current liabilities 36,818 41,818<br />
Current portion of provisions 2,012 2,107<br />
Other 7,010 6,035<br />
Total other payables 45,840 49,960<br />
Bank borrowings 35,823 4,000<br />
Carrying amount as at 31 December 89,130 68,121<br />
Other payables comprise, inter alia, the current portion of the provisions, the current portion of<br />
borrowings, and outstanding supplier accounts. Current tax liabilities comprise VAT and energy tax<br />
payable.<br />
137
Off-balance sheet assets and liabilities<br />
A summary of off-balance sheet assets and liabilities is given below, to the extent that they have an<br />
estimated (potential) impact on the profit or loss in excess of EUR 5 million.<br />
Independent Grid Management Act (Wet Onafhankelijk Netbeheer; WON)<br />
The Dutch Minister of Transport approved the plans to split up energy companies on 2 December 2009.<br />
However, on 22 June 2010, the Hague Court of Appeal declared several sections of the Independent<br />
Grid Management Act to be non-binding. In the light of this judgment, the grid and supply operations<br />
were not split off, although the conditions stipulated by the Minister were complied with, where possible<br />
and necessary. The Dutch government took the case to the Supreme Court in an attempt to get the<br />
decision overturned. On 24 February 2012, the Supreme Court referred the case to the European Court<br />
of Justice in Luxembourg. On 14 January 2013, the parties presented their cases at a hearing before<br />
the ECJ. The ECJ issued its ruling on the questions presented in late 2013, after which the case was<br />
referred back to the Supreme Court. The Supreme Court has since adjourned its decision twice. It is<br />
now expected to hand down its decision on 26 June 2015.<br />
Other pending cases<br />
In recent years, DELTA has also been involved in two separate lawsuits filed by its former solar power<br />
business partners. The courts have already found in favour of DELTA several times. However, our<br />
former partners continue pursuing their cases.<br />
403 Declarations<br />
DELTA N.V. has filed a statement with the Chamber of Commerce as required under Section 403, Book<br />
2, of the Dutch Civil Code, assuming joint and several liability for debts arising from legally binding<br />
transactions of the following subsidiaries as at the balance sheet date.<br />
1. DELTA Comfort B.V.<br />
2. DELTA Energy B.V.<br />
3. DELTA Ficus Holding B.V.<br />
4. DELTA Infra B.V.<br />
5. DELTA Kabelcomfort Netten B.V.<br />
6. DELTA Onroerend Goed Ontwikkelingsmaatschappij B.V.<br />
7. DELTA Pipe B.V.<br />
8. DELTA Tolling Sloe B.V.<br />
9. DELTIUS B.V.<br />
10. LIMO Energie Nederland B.V.<br />
11. LITRO Energie Nederland B.V.<br />
12. ZeelandNet B.V.<br />
13. DELTA Com B.V.<br />
On that basis, and on the grounds of annual authorisation statements from the shareholders filed with<br />
the Chamber of Commerce, these companies are exempt from using the prescribed format in preparing<br />
their financial statements.<br />
Put options<br />
DELTA N.V. has granted put options to the non-controlling shareholders in Indaver.<br />
Fiscal unity<br />
In consultation with the Dutch Tax and Customs Administration, the commercial operations in the<br />
energy segment, including multimedia, were transferred to a separate fiscal unity for corporate income<br />
tax purposes. Initially, the separation was to be effective from 31 December 2013 but, in consultation<br />
with the Tax Administration, the start date for both fiscal unities was moved to 1 January 2014.<br />
138
Notes to the company income statement<br />
In 2014, DELTA N.V. employed an average number of 652 FTEs (2013: 683 FTEs). The comparative<br />
for 2013 was adjusted to reflect the relocation of Infra staff to DNWG.<br />
For details of the remuneration of DELTA N.V.’s Executive Board members, please refer to note 18<br />
(Staff costs) to the consolidated financial statements.<br />
For details of the remuneration of DELTA N.V.’s Supervisory Board members, please refer to note 20<br />
(Other operating expenses) to the consolidated financial statements.<br />
Auditors’ fees<br />
In 2014, DELTA N.V. paid the following fees for its consolidated companies:<br />
(EUR 1,000)<br />
DELOITTE ACCOUNTANTS BV<br />
OTHER PARTS OF DELOITTE<br />
NETWORK NLD<br />
TOTAL<br />
2014 2013 2014 2013 2014 2013<br />
Audit of DELTA Group <strong>Annual</strong><br />
<strong>Report</strong>s 511 553 - - 511 553<br />
Other analysis assignments 39 35 - 8 39 43<br />
Tax consultancy - - 12 50 12 50<br />
Other non-analysis services 55 37 43 209 98 246<br />
Total 605 625 55 267 660 892<br />
No performance-related fees were paid<br />
139
Signed:<br />
Executive Board<br />
Supervisory Board<br />
Arnoud Kamerbeek, CEO<br />
C. Maas, Chairman<br />
F. Verhagen, CFO Ms. A.M.H. Schöningh, Vice Chairman<br />
B.P. de Wit, Secretary<br />
J. Bout<br />
140
3. Other Information<br />
Profit appropriation<br />
Profit appropriation according to the Articles of Association<br />
Article 39 of the Articles of Association provides for the appropriation of profits as follows.<br />
1. Any loss reported in the income statement, as included in the adopted financial statements, shall be<br />
taken to the general reserve. If the general reserve holds insufficient funds to cover the said loss,<br />
the remainder of the loss shall be charged to any profits achieved in future years.<br />
2. If the income statement, as included in the adopted financial statements, reports any profit, the<br />
Supervisory Board may use the profit to allocate funds to the general reserves. Any profit remaining<br />
shall be at the disposal of the General meeting.<br />
3. The General Meeting has the authority to declare one or more interim dividends and/or make other<br />
interim distributions, provided the requirements of Article 105 of Book 2, paragraph 2, of the Dutch<br />
Civil Code are satisfied on the evidence of an interim statement of financial position as referred to in<br />
Article 105 of Book 2, paragraph 4, of the Dutch Civil Code.<br />
Proposed dividend payout to shareholders<br />
(EUR 1,000) 2014 2013<br />
Distributable profit (Art. 39,2 Articles of Association) 3,760 74,788<br />
Interim dividend charged to the other reserves (Art. 39,3<br />
Articles of Association) 11,240 -<br />
Proposed dividend payout to shareholders 15,000 20,000<br />
Added to the general reserve - 54,788<br />
141
Independent auditors’ report<br />
For the independent auditor’s report see the Dutch version of the annual report 2014.<br />
142
4. DELTA in financial figures,<br />
consolidated<br />
(EUR million) 2014 2013<br />
Assets<br />
Intangible assets 367 473<br />
Property, plant and equipment 1,714 1,784<br />
Financial assets 722 696<br />
Current assets 704 690<br />
Cash 158 174<br />
3,665 3,819<br />
Equity and liabilities<br />
Group equity 1,146 1,213<br />
Provisions 504 522<br />
Non-current liabilities 875 1,110<br />
Current liabilities 1,140 973<br />
3,665 3,819<br />
Revenue<br />
Electricity 882 970<br />
Gas 269 344<br />
Electricity and gas transport 106 118<br />
Telecommunications 81 79<br />
Waste management and environmental services 517 514<br />
Miscellaneous 76 78<br />
Total revenue 1,931 2,104<br />
Expenses<br />
Cost of sales 1,141 1,318<br />
Fair value gains and losses on the trading portfolio 1 1<br />
Other operating income (29) (25)<br />
Net operating expenses 826 728<br />
Total operating expenses 1,939 2,023<br />
Earnings from operations (8) 81<br />
Share in results of joint ventures and associates 41 42<br />
Operating result 33 123<br />
Net finance income (expense) (33) (40)<br />
Profit before tax - 83<br />
Corporate income tax (16) (3)<br />
Profit from discontinued operations 1 (1)<br />
Non-controlling interests 19 (5)<br />
Profit after tax 4 75<br />
Proposed dividend 15 20<br />
143
DELTA in key figures<br />
(EUR million) 2014 2013<br />
Revenue 1,931 2,104<br />
of which:<br />
Electricity supply 882 970<br />
Gas supply 269 344<br />
Electricity and gas transport 106 118<br />
Cable, internet and telecommunications 81 79<br />
Waste management and environmental sevices 517 515<br />
Other revenue 76 78<br />
Finances<br />
Gross margin 818 810<br />
Operating result 33 123<br />
Profit before tax - 84<br />
Profit after tax 4 75<br />
EBITDA 312 301<br />
Group equity (excluding dividend) 1,146 1,213<br />
Balance sheet total 3,665 3,819<br />
Ratios<br />
Return on investment 1.5% 4.7%<br />
Return on equity attributable to the shareholders 0.3% 6.4%<br />
Equity ratio 31.3% 31.8%<br />
Interest coverage ratio 15.0 13.2<br />
144
Definitions of financial ratios<br />
RETURN ON INVESTED CAPITAL (ROIC)<br />
Operating profit + interest income from financial fixed assets + share of profits or losses in joint<br />
ventures and associates, divided by capital employed x 100%.<br />
CAPITAL EMPLOYED<br />
Sum total of non-current assets and net working capital as at the balance sheet date.<br />
RETURN ON EQUITY (ROE)<br />
Net profit attributable to DELTA N.V.’s shareholders, divided by shareholders’ equity attributable to<br />
DELTA N.V.’s shareholders.<br />
EQUITY RATIO<br />
Group equity divided by total assets x 100%<br />
INTEREST COVERAGE RATIO<br />
Operating profit + depreciation/amortisation charges + interest income, divided by net external<br />
finance income or expense.<br />
145