The value of water, now and in the future. 2015 Annual Report Disclaimer
The English version of this annual report is a translation of the original Dutch version; in the event of conflicts between the English translation and the Dutch original, the Dutch original shall take precedence.
Contents
1 General 3 2 The value of water, now and in 51 4 Financial results 91 4.11 Explanatory notes to the 124 1.1 Foreword 4 the future 4.1 Key Indicators 92 consolidated cash flow statement 1.2 Vitens’ Profile 7 Report on the activities and results during 2015 4.2 Explanatory notes to the results 93 4.12 Other explanatory notes to the 125 1.3 Statement of the Executive Board 8 2.1 Our drivers 52 4.3 Consolidated results 96 Consolidated annual accounts 1.4 Dialogue with our stakeholders 9 2.2 Reliable supply of safe water at 55 4.4 Consolidated annual accounts 97 4.13 Non-consolidated annual 131 1.5 Central to society: 12 the lowest costs 4.5 Consolidated profit and 99 accounts 131 trends and developments 2.3 Our people 63 loss account and other 4.14 Explanatory notes to the 133 1.6 2015 – 2017 Strategy 14 2.4 Our customers 70 comprehensive income non-consolidated annual 1.7 Looking ahead to 2016 16 2.5 The water company of the future 73 4.6 Consolidated cash flow statement 100 accounts 1.8 Corporate governance 18 2.6 Sustainable and circular 74 4.7 Consolidated statement of 101 4.15 Other information 138 1.9 Risk management and 21 business practices changes in equity capital 4.16 Independent auditor’s report 139 control systems 2.7 Spotlight on water 81 4.8 Explanatory notes to the 102 4.17 Summary of outstanding shares 145 1.10 Report of the Supervisory Board 26 2.8 Political environment 84 consolidated annual accounts 1.11 Report of the Works Council 31 4.9 Explanatory notes to the 111 1.12 Integrated Annual Report 33 3 Impact analysis 86 consolidated balance sheet 1.13 Terms and reporting definitions 35 3.1 Why impact is all-important 87 4.10 Explanatory notes to the 121 1.14 GRI index 36 3.2 Environmental impact 88 consolidated profit and loss 1.15 Assurance report 48 3.3 Economic impact 89 account 3.4 Social impact 90
General
Vitens, with a workforce of nearly 1400 employees, supplies high-quality drinking water at a modest price to 5.6 million customers 24 hours a day and 7 days a week. And we want to be able to do so in 100 years’ time as well. So we actively work to protect our water resources and deliver personalised service to our customers.
During our business activities, we interface with a broad group of stakeholders ranging from industry associations and lobby organisations to business customers, private customers and suppliers. We frequently initiate contacts with them in order to discuss and prioritise common themes. Our materiality matrix helps us to distinguish between, and assess the importance of, these themes.
This chapter presents Vitens as a committed organisation which again tenaciously continued to work on improving three core values during 2015: up-to-date craftsmanship and expertise, moving boundaries and putting customers first.
Chapter 1: General
1.1 Foreword 4 1.2 Vitens’ profile 7 1.3 Statement of the Executive Board 8 1.4 Dialogue with our stakeholders 9 1.5 Central to society: trends and developments 12 1.6 2015 - 2017 Strategy 14 1.7 Looking ahead to 2016 16 1.8 Corporate governance 18 1.9 Risk management and control systems 21 1.10 Report of the Supervisory Board 26 1.11 Report of the Works Council 31 1.12 Integrated annual report 33 1.13 Terms and reporting definitions 35 1.14 GRI index 36 1.15 Assurance report 48 1.1 Foreword
The value of water, now and in the future in which our employees learn to reflect the core qualities of Vitens in relation to their In 2015, we continued in our role as a reliable drinking water supplier. In addition, own activities. We clearly see that this customer focus is paying off and that innovation we took action to make our role as a social organisation more prominently visible. For continues apace in this area. For example, we have used a real-time dashboard for example, 2015 was a year in which we emphasised the value of water, both now and in signalling faults since 2015 and have made excellent progress in informing customers the future, via investments, publicity campaigns and political debate. of faults and supply interruptions in good time via text messages and email. A new method for measuring customer satisfaction gives us immediate feedback about our When we look back on 2015, we can confidently say that most areas of our business service provision. operations are well-organised. We find the organisation’s performance in the area of customer satisfaction, delivery dependability and continuity to be extremely We are steadily shifting our customer satisfactory. Furthermore, we also see that the strategy which we initiated in 2014 is communication activities to the web starting to bear fruit. That is clearly illustrated by the structure of this report, which and mobile telephony. And we also “When it comes to the drinking
links our social activities to our strategic goals in accordance with the latest Global created the basis for an intelligent water supply, we advocate an Reporting Initiative (GRI) guidelines. water distribution network in Friesland. uncompromising approach. Only then Several different living lab projects will we give water the respect it deserves, Rather than managing based on abstract statistics which indicate our performance in that take Vitens’ organisation culture both now and in the future.” Lieve Declerq, relation to the average customer, we now focus on the individual customer and his or into account have been set up for Chair of the Executive Board her specific needs. The fact that ‘each year, only 0.4% of Vitens’ customers submits a experiments. These experiments allow complaint’, has a totally different ring to it than stating that a couple of hundred people us to learn from our mistakes and call us with a complaint each week. Our organisation is tailored to resolve complaints highlight things that go well. We are giving our teams greater freedom in structuring of this nature quickly and effectively. But why do these customers call us? And how their own work and looking for smarter working methods. That generates enthusiasm, can we prevent them from having to call us? These are typical of the questions that we creates greater involvement and encourages thinking outside the box. Furthermore, started asking ourselves very explicitly for the first time last year. Rather than dreaming although we have allowed a generous amount of time, all changes are binding. of a future as the ideal water company, we are actively innovating and taking concrete Last year, the course we wish to pursue in the future was set out within our entire action to make improvements in areas where we already perform well, and to start organisation. doing things which are not yet part of our activities but which should be. In 2015 we experienced a number of acute faults and supply interruptions which were “We are giving our teams greater instructive in that respect. In Zaltbommel, we skipped a number of essential steps in Our own people are our most important freedom in structuring their own work and the communication procedure following a pipe rupture. When the same emergency asset. They are the heart and soul of our looking for smarter working methods. That occurred in Bunschoten-Spakenburg, we did succeed in alerting the neighbourhood, company. We are investing generates enthusiasm, creates greater the municipality and the media effectively and in good time by using the social media substantially in their relationship with our involvement and encourages thinking and other instruments. Whereas we previously focused primarily on implementing the customers and in their technical know- outside the box.” technical solution, we now work according to the motto of ‘communicate first and then how. For example, in 2015, we started a Wolter Odding, fix’. That is more appropriate in a world where customers are becoming increasingly programme called ‘Working on our DNA’, Member of the Executive Board critical.
4 GENERAL - 1.1 Foreword | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.1 Foreword
We take our duty to do business sustainably very seriously. Concrete developments during 2015 included reducing our carbon footprint further and the purchase of land in Groenekan where we intend to create a bog where nitrate is filtered out of groundwater. We applied various innovative techniques for using our waste flows sustainably and in a way that exploits their residual value in the agricultural sector. This allows us to contribute to creating a ‘circular economy’ and promote local biodiversity in our water extraction areas.
We have also expressed our concerns about the quality of our water resources in the future more explicitly than ever before during the past few years. Our call for action has been heard in The Hague. Water was legally recognised as an asset of ‘national strategic importance’ in 2014. That has helped us to protect our water resources against the effects of pollution in the period since. Sources of clean water are indispensable for us as a water supplier, both now and in 50 years’ time. Guarantees relating to the final product are fully dependent on guarantees relating to the source.
We also focused attention on the value of water in other ways during 2015. Together with fellow water companies and other partners, we started an initiative for making tap water available everywhere. We focused on the use and availability of tap water via the ‘Kraanwater Graag’ (Tap water please) campaign. More than 100,000 people signed a petition for making tap water available at festivals, events and in hotels, bars and restaurants. And we introduced a weekly tap water day at more than 500 elementary schools.
Pure tap water is the finest product that exists: the source of all life. However, making tap water available at any time of day and anywhere in the country is far from self-evident. And we want to share this realisation with a wide audience. Within our organisation, with our 5.6 million customers and with the rest of the world.
Our fundamental mission is to achieve optimum delivery dependability at the lowest possible cost. In addition, through continued efforts to increase effectiveness and efficiency, we succeeded in achieving a further reduction in drinking water rates for 2016. While we are proud of this achievement, we cannot afford to sit back complacently. During the past year, we presented ourselves more strongly than ever as a company that is visibly reinventing itself.
In conclusion: the Netherlands is a country of compromises and that is generally a good thing. But not in relation to water. When it comes to the drinking water supply, we advocate an uncompromising approach. Only then will we give water the respect it deserves, both now and in the future.
Lieve Declercq and Wolter Odding
5 GENERAL - 1.1 Foreword | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS Projects in 2015
We are satisfied with our performance during the past year. But we also believe within our national borders. Dutch water is of excellent quality. It could be an export that more is always possible. We started the projects listed below in 2015 and will product. That quality must also be guaranteed in the future. We conducted this continue working on them during the coming years. We are becoming more active, debate in the media and even in the Dutch Lower House. Among other achievements, more innovative and more transparent about our activities and the associated costs this resulted in water being awarded the status of a product of national strategic and results. Furthermore, the customer is central to everything we do. Regardless of importance. whether that customer is a private individual living on the third floor in a high-rise flat or a major corporation producing baby food. We want to optimally serve our customers 5. Campaigns for tap water through our products, expertise and capacity to listen. Our campaign presenting tap water as a healthy, sustainable and cheap alternative for bottled water and sweet beverages achieved good results. More than 100,000 people 1. All data displayed in real time on the ‘heat map’ signed the petition on overalkraanwatergraag.nl, which we started on Liberation Day In 2015, we created a central water distribution dashboard at the heart of our (5 May 2015), and a weekly tap water day has now been introduced at more than organisation. This facility combines and displays all our data. That heat map charts the 500 elementary schools. Surveys indicate that the percentage of Dutch residents vital processes: the water pressure in all parts of the country, faults/supply interruptions who prefer drinking tap water, whether consciously inspired by the campaign or not, and the number and type of customer reactions. That permanent overview allows us to increased from 21% to 36%. react faster to acute problems and questions. Not only resulting in faster action when supply interruptions occur, but also in a better understanding of the consequences that 6. Work order management problems have for customers. After careful preparation, we started implementing the Work Order Management project within Network Management & Delivery in 2015. The goal of the project is to 2. Satisfaction as the principle behind the 8+ programme reduce the administrative load on our technicians when resolving faults and carrying Groups of employees who have intensive contact with customers are increasingly more out maintenance. The project also ensures consistent registration of fault and damage self-managing. That results in higher productivity, faster communication and less ‘noise reports and gives technicians access to new ICT tools that operate more stably, faster and interference’. We measure success based on two criteria: at least a score of eight and in a more user-friendly manner than the outdated laptops and computer programs for the customer review and least a score of eight for staff satisfaction. Which explains which they used to process their work orders previously The project also more the name for this organisational improvement: the 8+ programme. clearly defines the roles, responsibilities and working agreements within the Network Management & Delivery department. These measures are expected to contribute to 3. Cost-awareness when working on projects achieving faster and more efficient handling of faults and maintenance, with reduced The Piket programme, which started in 2015, gives our people a better view of, and nuisance to our customers and more effective asset management as a result. creates a feeling of greater involvement in, the process of constructing and updating the technical infrastructure: our pipe network and the production facilities. While we 7. Friesland Live! complete construction projects to high quality standards, there is a need for a keener Friesland Live! is one of our most important innovation projects. This project involves awareness of time, money and risks. We are encouraging employees to think more the creation of a large-scale, intelligent, drinking water distribution network throughout consciously about whether or not everything can be achieved within budget. We are the province of Friesland. We will equip the more than 8000-kilometre long pipe also recruiting a new breed of professional: the type of project manager who focuses network in the province with 200 sensors that measure drinking water pressure and strongly on cost awareness, getting results, collaboration and communication. This will quality continuously and in real time. Upon completion, the sensors - like ‘eyes and result in greater control of projects and greater predictability. ears’ in the pipe network - will provide data that allows us to resolve potential problems before customers are affected. Furthermore, customers will be informed of problems 4. Debate on protecting water resources personally and in advance. Last year, we initiated a nationwide debate on protecting the water resources
6 GENERAL - Projects in 2015 | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.2 Vitens’ profile
Vitens is the largest drinking water company in the Netherlands. We continuously supply tap water that satisfies the highest quality requirements to 5.6 million business and private customers, day in day out. Groundwater is used to produce all that drinking water. With nearly 1400 employees, 96 production facilities and a distribution network measuring approximately 49,000 kilometres in length, Vitens is responsible for guaranteeing the supply of 330 million cubic metres of drinking water each year. Our supply area encompasses the Dutch provinces of Flevoland, Friesland, Gelderland, Utrecht and Overijssel and a number of municipalities in the provinces of Drenthe and Noord-Holland.
In addition to high-quality drinking water and optimum safety when producing and delivering water, low costs are essential for us. Vitens wants to keep the costs of drinking water extraction, filtration and delivery as low as possible. We do so because we see water as a basic necessity of life. To achieve this, we invest continuously in further optimisation of our water extraction and distribution operations. We also work hard to make our operations more sustainable.
Shareholders The provincial government and nearly three quarters of the municipalities in our supply area are shareholders. They do not play a direct role in the company’s day-to-day business. Vitens has 110 shareholders, which jointly own 5,777,247 shares.
History Vitens has risen to the challenges of supplying water for more than one hundred years. At the time of our incorporation in the late 19th century, that challenge lay mainly in fighting cholera and other infectious diseases. Clean drinking water was and still is of vital importance. During the decades that followed, our focus shifted more and more to improving the methods used to extract, purify and distribute water at the lowest possible cost to society. Providing customer-centric services and adopting an active role in protecting our water resources are also considerations that continue to increase in importance. In addition, our ambition is to contribute to raising the awareness of the importance of water among our customers and throughout society in general. Vitens’ broad- based directive is and remains reliable delivery of drinking water to everybody in our area of supply, 24 hours a day and 7 days a week, both now and in the future. That is our primary mission.
7 GENERAL - 1.2 Vitens’ profile | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.3 Statement of the Executive Board
The Executive Board of Vitens declares to the best of its knowledge and belief: 1. That the 2015 annual accounts provide an accurate picture of the assets, capital and liabilities, the financial position as at 31 December 2015 and the 2015 result of Vitens and the businesses included jointly in the consolidated accounts; 2. That the annual report provides an accurate picture of the situation at the balance sheet date of 31 December 2015 and the course of affairs at Vitens during the financial year; 3. That the materially important risks to which Vitens is exposed have been identified in the annual report.
Zwolle, 22 March 2016
Lieve Declercq, Chairperson Wolter Odding, Member of the Executive Board
8 GENERAL - 1.3 Statement of the Executive Board | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.4 Dialogue with our stakeholders
Materiality matrix and explanatory notes 2. Prioritising themes Next, we prioritised the relevant themes. In doing so, we distinguished between the Vitens performed a materiality analysis to identify what we find truly important within priority for Vitens and the priority for our stakeholders. Management and Executive our strategic framework and to ensure that the content of our reporting more effectively Board determined the internal prioritisation based on our strategic agenda, which was satisfies the needs of our stakeholders. The analysis indicates that our current strategic agreed in 2014 as a result of broad internal and external consultation. These priorities agenda is considered to be highly relevant by both internal and external stakeholders. have not changed in 2015. This confirmation strengthens our resolve to continue down the path we have already chosen. External prioritisation was carried out this year by presenting the themes The section below explains the three phases in our process for determining materiality: identified as relevant to a broader group “Vitens can increase the of external stakeholders in the form of a support for its activities by making 1. Identification of relevant themes questionnaire. For example, supervisory citizens aware of the actions taken to Firstly, a broad cross-section of the staff within Vitens determined which themes are bodies, shareholders, suppliers, provide an excellent water supply and the most relevant for our environment and our company. Themes are relevant if Vitens customers and social organisations. We ensure sustainable management within has or can have an impact on them (both within the organisation and in the value asked them to rank the relevant themes the water value chain.” chain). This is determined based on our own experience and the results of analyses in the order of importance from their Lobby group representative and internal advice. For example, we considered our value creation process and perspective. We use the outcome of this business model in this phase. We also looked at risks, trends and developments which exercise to update the priorities of the various themes. The results are shown in the may affect our operations. For example, we see more extreme weather conditions materiality matrix below. due to climate change, which may result in an increase/decrease in the 3. Impact on policy and reporting groundwater level. We also see that our “The expertise of Vitens’ In the final step, we correlated the outcome of the internal and external reviews to our customers expect us to do business in employees is extremely valuable and reporting. We use the materiality matrix to identify three categories: a sustainable and socially responsible the quid pro quo is that we, as a water • most materially important aspects: these aspects play a leading role and shape manner. Based on these analyses, we board, are in a position to contribute to our strategic framework. We manage activities and formulate objectives based on identified the themes that are relevant protecting groundwater as a source of these aspects, and use them as a guideline and focus for our annual report. to our activities. These also play a role drinking water.” • less materially important aspects: these are aspects which do not directly influence in our strategic agenda. Representative of the water board how we manage, but which do shape and colour our activities. • least materially important aspects: we monitor these aspects, but do not necessarily report on them annually.
9 GENERAL - 1.4 Dialogue with our stakeholders | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.4 Dialogue with our stakeholders
Materiality matrix Explanatory notes relating to the materiality matrix Identified as a materially Threats and opportunities Explanation in this report Department responsible Continuity of the important aspect for the objective and organisation/assets management 1 Continuity of the Delivery dependability and • Risk management: • Asset Management Delivery dependability Water quality organisation/assets preventing emergencies 1.9.2, 1.9.4 and 1.9.6 • Human Resources Closed-loop process for • Explanation: 2.2.3 Important Collaboration between by-product and waste partners in the water flows Compliance with 2 Water quality Securing clean sources and • Risk management: 1.9.3 • Extraction & Purification value chain legislation and guaranteeing drinking water • Explanation: 2.2.1 • Asset Management Local roots and social regulations quality • Laboratory contribution 3 Delivery dependability Infrastructure • Risk management: 1.9.2 • Asset Management Commitment and knowl- and 1.9.3 • Network Management & edge as an authority on • Explanation: 2.2.4 Delivery water • Design & Construction Area development Awareness of tap water 4 Closed-loop process for Cost control and sustainable • Risk management: 1.9 • Asset Management Role in the social debate by-product and waste flows innovation • Explanation: 2.6 • Extraction & Purification 5 Compliance with legislation Fines and sanctions • Risk management: 1.9.1 • Administrative & Legal and regulations • Explanation: 2.1 Support Sustainable business Customer satisfaction operations and customer-centric 6 Local roots/social Quality of drinking water • Risk management: 1.9 • Asset Management processes contribution sources • Explanation: 2.7 • Communication Sustainable procurement Frequency and duration • Business Development of supply interruptions Employee safety 7 Commitment and Influence on political and • Risk management: 1.9 • Communication or emergencies knowledge as an authority administrative decision- • Explanation: 2.8 Sustainable management on water making of resources and protection of the 8 Area development Quality of drinking water • Risk management: 1.9 • Asset Management IMPORTANT FOR OUR STAKEHOLDERS subsurface domain sources • Explanation: 2.2.5 and (Environment Development of staff and 2.2.7 management) the organisation Financial solvency 9 Awareness of tap water Quality of drinking water • Risk management: 1.9.7 • Communication sources • Explanation: 2.1 and Sustainable innovations 2.7.3 Information and asset 10 Role in the social debate Take on a prominent role in • Risk management: 1.9.3 • Communication security the social debate • Explanation: 1.4.1 Availability of data and ICT systems 11 Customer satisfaction and Customer focus • Risk management: 1.9.7 • Customer & Invoicing customer-centric processes • Explanation: 2.3 • Network Management & International activities Delivery Less important Less 12 Employee safety Workplace safety • Risk management: 1.9.5 • Human Resources (occupational accidents) • Explanation: 2.2.5 Less important IMPORTANT FOR VITENS Important 13 Sustainable management of Quality of drinking water • Risk management: 1.9 • Asset Management Least materially important aspects Less materially important aspects Most materially important aspects resources and protection of sources • Explanation: 2.6 • Extraction & Purification the subsurface domain
10 GENERAL - 1.4 Dialogue with our stakeholders | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 2015 stakeholder dialogue Stakeholder Expectations 2015 Dialogue Plans for the 2016 Dialogue and Stakeholder Expectations 2015 Dialogue Plans for the 2016 Dialogue and future years future years Employees • Safe working environment • Continuous consultation • Continuation of the current Suppliers • Collaboration opportunities • Open and continuous • Continuation of the current • Attractive terms and between management and dialogue • Business and product consultation between buyers dialogue conditions of employment employees and annual • Increased focus on safety and development and suppliers • Open communication performance and appraisal the organisation’s capacity • Application of Netherlands • Development opportunities reviews to learn Enterprise Agency criteria • Pleasant working atmosphere • Communication on revised • Continuation of the revised • Application of CO2 strategy strategy dialogue performance ladder • Meetings and internal • Internal consultation on communication (Intranet, sustainability strategy, Lobby groups • Compliance with legislation • Regular consultation and • Continuation of the current staff magazine BRON) materiality and objectives and environmental exchange of ideas for our dialogue • Training courses and • Action to reduce absenteeism regulations projects and service provision • Contribute positively to schooling • Sustainable employability • Conservation of nature areas, • Cooperation in the area of biodiversity • Safety and personal flora and fauna education on water and development • Innovation nature • Co-determination and Central • Communication regarding Works Council maintenance to infrastructure • Informal coffee mornings with • Exchanging knowledge the Executive Board • Collaboration Customers • Low social cost (rates) • Drinking water rates have • Continuation of the current Schools and • Collaboration • Work experience and • Continuation of the current • Households • Delivery dependability remained the same dialogue knowledge institutes • Knowledge transfer graduation projects dialogue • Corporate • High-quality drinking water • Digital invoicing • Maintain low drinking water • Secondary schools, • Research within the water • Trainee programme • Thematic structure Sector customers • Services and knowledge- • Communication via Facebook rates colleges and sector • Collaboration and research research (KWR) • Laboratory sharing and Twitter • Improved service provision universities • Work experience traineeships with other water companies • Extension of the Tap water customers • Communication regarding • Improved communication via new website • Pupils in primary and research opportunities and KWR schools programme to • Vulnerable maintenance and faults about supply interruptions via • Whatsapp pilot project for and secondary • Training courses and • Participation in seminars include primary schools customers such as • Customer- friendly and waterstoring.nl communicating supply education schooling • Guided tours • Set up a programme for hospitals service-focused support • Introduction of a digital interruptions • KWR Water • Research and development • Sustainability Challenge (for higher education • Fast and adequate complaint newsletter • Consultation regarding Research Institute • Awakening pupils' interest the more highly educated) • Support for WaterSpaarders handling • Customer panel – customer possible products and • Wetsus • Educative programmes via Vewin satisfaction services via Waterkennis.nl and the • Relationship meetings with • Live chat facility for introduction of ‘Tap water corporate customers communication between schools’ • Communication about the customers and customer Water for Life Foundation service Broader community • Knowledge transfer • Dialogue with various • Continuation of the current • Early identification of and • Conservation of/public access parties and/or partners for dialogue assistance for customers to nature areas ‘Kraanwater Graag’ experiencing payment • Collaboration • Collaboration with Join the difficulties • Involvement in activities Pipe to make tap water that contribute to business available in public areas Central and local • Continuity and delivery • Meetings with shareholders • Continuation of the current objectives • Collaboration with organisers government dependability and the Supervisory Board dialogue of festivals such as the • Shareholders • Solvency • Annual reporting • Activities relating to Vitens’ Liberation Day festivals, (provincial • Long-term and short-term • Dividend payment 10th anniversary Nijmeegse Vierdaagsefeesten authorities and return on investment (ROI) • Low costs for society and Welcome to the Village municipalities) • Sustainability • Legislation and regulations • Participation in activities and • Transparent reporting (sufferance tax) presentations organised by municipalities Central and local • Continuity and delivery • Regular contact with civil • Continuation of the current Media • Up-to-date information on the • National, regional and local • Continuation of the current government dependability servants and elected officials dialogue company's activities, views media dialogue • Regulatory • Spatial planning at European, national, • Activities relating to Vitens’ and ambitions • Articles in trade magazines • Stronger position in the authorities • Compliance with legislation provincial and local level 10th anniversary • Giving interviews and • Meetings and guided tours at debate on the subsurface (Ministries) and regulations • Company visits, providing reports company sites domain • Other authorities • Soil protection presentations, local and safety regions • Safety (Fire Service) communication • Supervisory • Collaboration in constructing • Contact via sector authorities infrastructure organisations such as Vewin • Partners in the • Knowledge exchange • Topics for debate include water value chain and active shaping groundwater depletion, (utility companies, and implementation of biodiversity, sustainable area water boards, sustainability initiatives development, water quality, infrastructure protection of water resources partners) and legislation
11 GENERAL - 1.4 Dialogue with our stakeholders | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.5 Central to society: trends and developments
Vitens finds it important to react to environmental factors that influence our customers and business operations. Our area of activity is affected by a number of developments and trends that challenge Vitens as an organisation. In the future, we see both opportunities and threats. The revised strategy creates a platform for facing these challenges by focusing on our customers and protecting our resources.
1.5.1 What trends and developments affect our performance and view of the future?
• Both citizens and government authorities increasingly require transparency and accountability. • The level of confidence in drinking water remains as high as ever. That is justified, but not self-evident. So we must increasingly communicate how we keep drinking water quality at a high level. • Increasing overcrowding in the subsurface domain has an adverse effect on the quality of our drinking water reserves. So we feel obliged to voice this issue in the debate on protecting our water resources. • Customers have unrestricted access to information and live in a 24/7 on-demand world. Customers will increasingly require public companies to provide the same high level of flexibility and service as that offered by other organisations. • Due to increasing digitisation, our service provision will progressively take place online and the use of traditional channels such as mail and telephone will decline accordingly. • The employee of the future attaches importance to sharing, meaningfulness, autonomy, flexibility, good stewardship and mobility. • Developments in the field of data processing and the Internet offer us opportunities for creating the drinking water company of the future, in terms of both customer contact and our asset management. • Developments in sensor technology and 3D printing provide new ways of tackling existing problems in the area of making repairs to and constructing our infrastructure.
If Vitens is successful and effective in anticipating all these developments, we are firmly convinced of our ability to guarantee the continuity of our business operations.
12 GENERAL - 1.5 Central to society: trends and developments | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.5 Central to society: trends and developments
1.5.2 Social dilemmas extraction area, due for example to the dozens of diesel-powered generators which generate power for the occupants. Necessity knows no law so Vitens has no choice Vitens actively contributes to making society more sustainable and ensuring the other than to cooperate with this use of the land. However, we have taken action to availability of clean drinking water in the short and long term. In doing so, we interface ensure minimum contamination of the groundwater. This takes place in constructive with a wide range of stakeholders. Making choices and weighing up the different collaboration with the provincial authority. courses of action as a company and social partner sometimes leads to dilemmas. We favour open discussion of these dilemmas. Which dilemmas demand our attention and Water quality: protect or purify resources? what approaches have we adopted? Protecting our vulnerable drinking water resources is one of our main priorities. We are regularly asked why we place such a strong emphasis on protection. After all, Renewable energy and protecting drinking water resources innovative techniques such as membrane technology and nano filtration can be used Vitens invests continuously in innovation and making processes more sustainable. to simply filter any undesirable contaminants out of the water. This is true, however The use of renewable energy is one of the key factors here. For example, in 2014, we Vitens does not advocate this approach. Allowing our sources of drinking water to built a system in Friesland which removes harmful methane from the drinking water become contaminated and subsequently purifying them is an example of the tail and uses it as an energy source at the same production facility. However, we also see wagging the dog in our view. Not only because of the high level of expense, which will initiatives, such as the use of geothermal energy, where the risks for our drinking water increase drinking water bills significantly, but also because we feel that our customers resources have not yet been adequately quantified. So we continually have to weigh are entitled to pure water of the highest possible quality, both now and in future years. up how we can help accelerate developments in the area of renewable energy without potentially endangering our strategic drinking water resources. Collaboration with partners Vitens wants to be seen as an ‘authority on water’. We are working hard to attain this The social function of water extraction areas position by publicly voicing our concerns about issues that have an impact on our Vitens manages approximately 3,300 hectares of land used for water extraction, product. We want everybody to think of Vitens as soon as drinking water is mentioned. making us one of the largest land managers in the country. Where possible, we open As a result, social partners now come to us for advice first and we are asked to these areas up to the public so that everybody can use them. However, the social participate in all kinds of initiatives and alliances, both within and outside the water function of an area is sometimes directly at odds with effective and safe drinking water supply chain, on a daily basis. While we find this gratifying, we are obviously limited extraction. Our water extraction area in Heumensoord close to Nijmegen is a good in what we can do. We have to make choices and continuously keep stakeholders example. The largest reception centre for asylum seekers in the Netherlands was set informed of what we are doing and why, and what we have chosen not to do. up here in 2015. The arrival of 3000 people has had a severe impact on the water
13 GENERAL - 1.5 Central to society: trends and developments | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.6 2015-2017 Strategy
We are resolutely committed to achieving the continuity objective associated with In the area of sustainable use of our resources and assets: our primary task: producing, distributing and delivering drinking water of the highest 7. effective asset management; quality. Vitens has formulated two strategic goals in order to guarantee this and achieve 8. work on the infrastructure of the future; our mission. 9. increase our visibility as an authority on water; 10. keep control of our natural resources. The first strategic goal relates to Customer Excellence: we want to provide excellent service to our customers. The second strategic goal is to ensure sustainable use of our These programmes are linked to materially important themes and key performance resources and assets so that we can supply reliable and good drinking water in the indicators (KPIs) in the connectivity matrix. long term as well. In addition, developing key qualities in our employees is essential to achieving our goals. Our activities relating to sustainability and corporate social responsibility are not described in separate strategic programmes: they are an essential element of Vitens has set up 10 strategic programmes for achieving these goals. These our business operations. The strategic programmes related to our goal of making programmes focus on the development of key qualities, the two strategic roles ‘Sustainable use of resources and assets’ provide further support for our activities and themselves and our continuity objective. results. In order to manage based on the defined sustainability objectives, we reported the progress made against sustainability objectives to the 'Sustainability Steering Group' In the area of the key qualities: on a quarterly basis during 2015. The complete Executive Board and representatives 1. work on our DNA: deliver up-to-date craftsmanship and expertise, move of the Asset Management, Extraction & Purification, Communication and Business boundaries and offer high relevancy for customers. Development departments are members of this steering group. The Sustainability Manager coordinates the associated strategy and reporting in collaboration with the Continuity objective: colleagues who are responsible for research, implementation, internal communication 2. Pallas (the process automation programme); and periodical reporting within each department and for each working area or aspect. 3. ICT3 (data governance, data management, etc.).
In the area of Customer Excellence: 4. proactive customer communication; 5. work on true customer centricity; 6. increase Vitens' appeal.
14 GENERAL - 1.6 2015-2017 Strategy | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.6.1 Link between materially important aspects and the strategy Materially important aspects Threats or opportunities Strategic programme Value driver KPIs 2015 Target Impact Stakeholder groups Result
1 Continuity of the Delivery dependability Effective asset management, Investment in distribution Surface and subsurface Gross investment of nearly Our distribution network and Shareholders, customers organisation/ Preventing emergencies Pallas, ICT3 network maintenance and investments 112 million euros production facilities are in a assets production facilities good state of repair 2 Water quality Securing clean sources and Control over our natural Implementation of sensor Water quality index Water quality index < 0.02 Customers can rely on tap Customers, shareholders, guaranteeing drinking water resources technology water of impeccable quality regulator quality 3 Delivery dependability Infrastructure Effective asset management, Investment in a reliable Under-target delivery Under-target delivery Customers can depend Customers, shareholders infrastructure of the future distribution network and minutes minutes on a continuous supply of production facilities < 12 minutes drinking water 4 Closed-loop process for by- Cost control and sustainable Effective asset management Vitens minimises the Percentage of waste flows 100% put to good use Vitens contributes Collaborative partners product and waste flows innovation negative impact of drinking put to good use significantly to creating a water extraction via its circular economy closed-loop process for by-product and waste flows 5 Compliance with legislation Fines and sanctions Continuity objective Compliance with legislation Number of reports of Number of reports Stakeholders are aware that Public authorities (local, and regulations and regulations potentially avoidable submitted to the Vitens resolves problems regional and national), incidents submitted to the Inspectorate for Habitat proactively and takes action regulator Inspectorate for Habitat and Transport (Inspectie to minimise reports and Transport (Inspectie Leefomgeving en Transport/ Leefomgeving en Transport/ ILT) < 30 ILT) 6 Local roots/ Quality of drinking water Control over our natural Vitens strives to maintain a Contact with local and Continuous dialogue with Properly managed water Local and regional social contribution sources resources good relationship with the regional stakeholders stakeholders extraction that is endorsed authorities, agencies and parties involved in drinking at local authority level and lobby groups water extraction enjoys broad public support (license to operate) 7 Commitment and knowledge Influence on political and Strengthen position as an Vitens speaks out clearly Place issues on the agenda: Media investment of 3 The Dutch population is Public authorities (local, as an authority on water administrative decision- authority on water on issues that may affect e.g. shale gas, waste water million euros aware that Vitens actively regional and national)
making strategic drinking water injection, STRONG defends the country's resources strategic drinking water assets 8 Regional development Quality of drinking water Control over our natural Properly managed water Sustainable land 100% certification at ‘gold’ The 3,300 hectare Local and regional sources resources extraction that is endorsed management level extraction area managed by authorities, agencies and at local authority level and Vitens is optimally protected lobby groups enjoys broad public support (license to operate) 9 Awareness of tap water Quality of drinking water Increase attraction Enhance the value of tap Influence knowledge of/ 8% the Dutch population The Dutch population finds Customers sources water attitude towards/behaviour now appreciates tap water tap water to be important relating to tap water through more due to the ‘Kraanwater and supports Vitens' policy awareness campaigns Graag’ campaign of protecting water resources 10 Role in the social debate Take on a prominent role in Strengthen position as an Vitens conducts a Ongoing dialogue with Results of the stakeholder Vitens is seen as an authority Social partners the social debate authority on water continuous dialogue with stakeholders dialogue in the Netherlands in the stakeholders in order to area of strategic drinking protect strategic drinking water resources water resources 11 Customer satisfaction and Customer focus Proactive customer Cross-linking customer General customer General customer Customers see Vitens Customers customer-centric processes communication, work on information, improving satisfaction satisfaction greater than or as a customer-friendly, true customer centricity accessibility and service equal to 8 enthusiastic and professional focus, customisation organisation 12 Employee safety Workplace safety Work on our DNA DNA programme for each Lost Time Injury Frequency Lost Time Injury Frequency Employees are allowed to Employees, suppliers, (occupational accidents) department, !k werk veilig (I (LTIF) (LTIF) = 0 carry out their work safely subcontractors work safely) 13 Sustainable management of Quality of drinking water Control over our natural Vitens accepts responsibility 100% sustainable 'Gold' level (= Milieukeur Vitens ensures the Public authorities (local, resources and protection of sources resources for the quality of drinking management of all water eco-label) on the sustainable availability of adequate and regional and national), the subsurface domain water resources by extraction areas land management barometer high-quality sources of environmental organisations managing them in a (Barometer Duurzaam groundwater sustainable manner Terreinbeheer) for 100% of our water extraction areas
15 GENERAL - 1.6 2015-2017 Strategy | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.7 Looking ahead to 2016
Vitens managed based on impact in 2015. We listened more attentively to our customers, set up and implemented various innovative projects and adopted a clear position in the social debate on the value of water. From 2016 on, greater emphasis will be given to the following question: What is the social, economic and ecological impact of our activities? Vitens took positive action to make its role as a social organisation more visible during 2015. We actively participated in social debates on protecting raw materials and on the municipal surcharges that are applied additionally to the price of drinking water. Our ambition is to act professionally, enthusiastically and in a customer-friendly manner. Our customers and other stakeholders will increasingly see us act in this way.
Tap water at a low price, everywhere and at any time Vitens is expert in water. We employ nearly 1,400 professionals who produce and deliver tap water of the highest quality at a very modest price. We continue to invest in their professional skills. We do so initially by offering technical (refresher) training courses and investing in our employees' competencies. Secondly, we actively optimise the use of talented people within our organisation. Does everybody still hold a position where he or she can make a difference? Thirdly, we invest in new technology to improve our infrastructure and our knowledge of customers. The intelligent water distribution system in Friesland is a good example of a project funded by investments of this type. This project explicitly creates a link between technical innovation and customer awareness. We will continue to roll out this system in the Netherlands and even intend to export it abroad in collaboration with other water suppliers and other social partners.
Guaranteed availability of tap water in the future The climate conference in Paris was held late in 2015. Never before have so many government leaders called for united action to tackle climate change. Most people associate the term climate change with carbon emissions. However, climate change also affects the quality and quantity of our drinking water resources. According to the WRI (World Resources Institute), the Netherlands is ranked 66th on the list of the 167 countries that will be confronted by water scarcity in 2040. Furthermore, in 2014, the RIVM (National Institute for Public Health and the Environment) found that half of the Dutch groundwater extraction sources do not comply with the valid quality requirements. Vitens is determined to do everything in its power to contribute to protecting natural (drinking) water resources. We have extensive technical expertise in-house, which we will deploy increasingly to ensure the long-term availability of clean drinking water. We do so, for example, by analysing the quality of the water sources and setting up action programmes to improve that quality. We increasingly have access to accurate information on the state of repair of our infrastructure, which is an important precondition for effective asset management. And we continue to deploy this expertise in foreign countries where clean drinking water is not as self-evident as it is in the Netherlands.
16 GENERAL - 1.7 Looking ahead to 2016 | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.7 Looking ahead to 2016
Customised service 'Customer-centric’, what does that mean for customers? Since 2015, digital data on customer behaviour has been of greater assistance than What do terms like ‘customer excellence’ and ‘customer-centric’ actually mean ever before in developing policy and responding adequately to emergencies. We if you are a customer of Vitens? The answer is very simple. If our efforts are continue to invest in faster and more efficient handling of questions and complaints via successful, you will soon notice that Vitens is working day and night and harder our customer service department. In addition, we actively engage in a dialogue with than ever on your behalf. That Vitens is a company that knows who you are, our increasingly critical customers. Every individual customer counts. Our customers what your personal water situation is and what your water requirements are. are in no position to choose where they source their drinking water, so treating them seriously and showing appreciation is all the more important. Good use of all the data As a customer of a company like this, you will find it easier than ever to share generated by these activities tells us what we do well and highlights areas where we your comments, complaints and tips with our employees. Via a broad range of can improve. We are working to robustly link information on customers and assets to social media, email and telephone. And the people at Vitens who take your call the implementation of new communication channels such as our new website, apps or read your messages will relay your information to professionals elsewhere in and live chat. We will share the results of listening to, and communicating with, our the company without delay. They are specifically trained to resolve problems customers more actively within the organisation in 2016. This will result in further quickly and expertly, clearly explain the cause of the problem and tell you improvements to our service provision and a closer match between our investments exactly what they have done about it. You will receive a personal message via and our customers' requirements and behaviour. your choice of medium: a telephone call, email or text message. Because we are investing in intelligent data, Vitens is sometimes aware of water-related problems in your neighbourhood or in your house before you notice anything yourself. In that case, we obviously inform you immediately and explain the solution we have found for the identified problem.
You not only receive a report on your water consumption and personal tips from your drinking water supplier, but also information about current and future issues and developments relating to water extraction. As a result, you have an accurate picture of Vitens' activities; including the challenges which the company and society in general faces in respect of clean drinking water. The company is socially involved and likes to keep you fully informed. Furthermore, as a customer, you can be certain of one thing: you can access tap water of the highest quality, every day, at the lowest possible price, both now and in the future.
17 GENERAL - 1.7 Looking ahead to 2016 | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.8 Corporate governance
As a public company, Vitens has the task of producing clean and safe drinking water Supervisory Board from naturally occurring water and we have an obligation of full disclosure in relation to The Supervisory Board is responsible for supervision of the Executive Board and the how we fulfil that task. general course of affairs at Vitens. The members are appointed by the General Meeting of Shareholders. The regulation relating to the Supervisory Board includes a provision Code governing the maximum period of office of Supervisory Board directors in accordance Transparency is one of Vitens' guiding principles, so we apply the Dutch Corporate with best practice III.3.5 of the Code. Details of the members of the Supervisory Board Governance Code (the Code), which sets out guidelines for good and properly can be found in paragraph 1.10.1. accountable management and administration. In addition, the Code provides a framework for the relationship with a company's stakeholders, such as the Supervisory Board Committees shareholders, employees, customers and society as a whole. Vitens has implemented The Supervisory Board has formed two permanent committees. The Audit Committee best practices recommended in the Code in its operational management procedures, focuses on the financial affairs of Vitens and accountability in this respect. The insofar as they are applicable to a drinking water company with public shareholders. Remuneration and Appointments Committee focuses, among other things, on the remuneration policy for executive directors and the appointment of executive directors. Two best practices have not been adopted. One is the best practice determining that a director is appointed for a maximum period of four years and that reappointment The General Meeting of Shareholders on future occasions again relates to a period of no more than four years (II.1.1 of the The authorised capital of the company amounts to 18 million shares, each of which Code). The current contracts of employment with the directors of Vitens are for an has a nominal value of €1. Holders of shares are exclusively public legal persons which ‘indeterminate period’ and will be upheld. The discussion on this matter will not be re- act on their own account and at their own risk. A list of the shareholders has been initiated until the time of recruitment of a new director. The second best practice that included in this annual report and can also be referenced via the website: vitens.nl. has not been adopted relates to the ‘in control statement’ (II.1.5 of the Code). Vitens has stated its intention of including an 'in control statement' in the annual report. The Committee of Shareholders first steps towards achieving this were taken in 2015, however the underlying system A Committee of Shareholders has been appointed by the General Meeting of has not yet reached the level of maturity required for producing a statement of this Shareholders. This committee convenes at least twice a year and has an advisory nature in relation to 2015. Our website, vitens.nl, presents the various regulations and function for the General Meeting of Shareholders, the Executive Board and the other documentation relating to Corporate Governance at Vitens. Supervisory Board. It considers topics such as the appointment and dismissal of executive directors and supervisory directors of Vitens, the remuneration policy for the Executive Board Executive Board and policy-related topics such as pricing and dividend policy. Vitens N.V. (referred to in this report as Vitens) is a public limited company that is managed on a daily basis by the Executive Board. In 2015, the Executive Board consisted of two directors. Details of the members of the Executive Board can be found in paragraph 1.10.3.
18 GENERAL - 1.8 Corporate governance | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.8 Corporate governance
1.8.1 Legislation and regulations As a drinking water company, Vitens has an obligation to report any violations of the A number of omissions and incidents in 2015 made it clear to us that an overall standards applying to drinking water quality. In 2015, we had to report a potentially summary of legislation and regulations in Vitens' compliance environment is crucial to avoidable incident to ILT on 40 occasions (Vitens' objective: less than 30).* assessing our degree of compliance. ‘Potentially avoidable’ means that Vitens bears responsibility for the incident. The scope of that responsibility includes the production facilities and the water distribution Compliance officer network up to the water meter. We have taken action where necessary and informed Our country is governed by approximately 1,200 laws and thousands of underlying customers and other stakeholders accordingly. In 2016, we will more explicitly provisions. In order to comply optimally with this legal framework, Vitens appointed a focus management activities on working hygienically in order to reduce the reported compliance officer in mid-2015. Compliance focuses on two issues in our particular number of potentially avoidable incidents. case: Does Vitens comply with legislation and regulations? And to what extent are we and can we remain ‘in control’? *In 2014, both potentially avoidable and unavoidable incident reports submitted to ILT were included in the annual report. In 2015, we have only included the reports of potentially avoidable incidents. The duties of the compliance officer position were assigned to the manager of the Administrative and Legal Support Department. As of 2015, the compliance officer is In 2015, Vitens reported an environmental incident on 22 occasions. Of these, 10 were the point of contact and liaises with the organisation, external parties, the Executive caused by faults involving unintended discharges, oil leaks and a leak in a sodium Board and the Supervisory Board in relation to applying legislation and regulations. hydroxide tank. Contractors performing work for Vitens caused half of the incidents. In 2015, the compliance officer identified 180, partially overlapping, legal areas that Most of the incidents involved oil leakages. In addition, one incident involved dumping are relevant for Vitens. These are primarily associated with the Drinking Water Act hazardous substances in a water extraction area. These incidents have been analysed (Drinkwaterwet). In addition, the Working Conditions Act (Arbowet) is relevant as and handled. In 2015, Vitens applied adequate environmental system management is the Environment Management Act (Wet milieubeheer), which directly affects the and committed no serious violations. A highly effective online application (Vitens-loket) approximately 100 production facilities operated by Vitens. for environmental and system monitoring, which was introduced in 2012, allows gov- ernment bodies to view information easily. In 2015, 33 inspections were performed by Inspectorate for Habitat and Transport the government to ensure compliance with licensing regulations. The Inspectorate for Habitat and Transport (Inspectie Leefomgeving en Transport/ ILT), acting on the authority of the Minister of Infrastructure & Environment, monitors Normally, Vitens does not report incidents in groundwater protection areas as this falls whether Vitens complies with the Drinking Water Act . This Inspectorate increasingly under the responsibility of the provincial authority. However, that does not mean that assesses the process itself, as well as the outcome of the compliance investigation. such incidents do not have an impact on a material aspect of our operations. For ex- For example, in June 2015, the Inspectorate discovered that the emergency stock ample, a conspicuously large number of incidents occurred in the groundwater protec- of diesel held by some of the production facilities was only adequate for maintaining tion area around Heumensoord. A large-scale temporary reception centre for refugees operations for a period of up to three days in the event of a prolonged main power was constructed in that area during 2015. There were 47 incidents at Heumensoord. grid failure, rather than the period of 10 days specified in the Drinking Water Act. These mainly involved leakages. All incidents were handled by the provincial authority During 2016, we will review the situation together with ILT and identify the associated in close collaboration with Vitens. consequences.
19 GENERAL - 1.8 Corporate governance | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.8 Corporate governance
Responsibilities In 2015, the compliance officer was assigned the task of reviewing and clarifying the compliance environment within which Vitens operates. There is an operational responsibility - assigned to first-line management - and a responsibility for relating all legislation and regulations to the organisation, which lies in the hands of intermediaries. Intermediaries such as environmental specialists, or the Safety & Health team manager. The review identifies approximately twenty Vitens employees as key actors in the task of fulfilling these responsibilities. In addition, descriptions of the compliance responsibilities of the managers of all thirteen departments at Vitens, the Executive Board, the Supervisory Board and the shareholders have now been drawn up.
The focus for 2016 relates to the following question: Are we ‘in control’ of our operations in respect of the 180 legal areas that have been identified? The initial analyses indicate that we are, however permanent investigation by the departments concerned and the internal audit department remains necessary.
Personal data The Personal Data Protection Act (Wet bescherming persoonsgegevens) is becoming more relevant for Vitens. After all, Vitens manages a database containing the personal data for 2.5 million households. As part of the preparation for new and stricter legislation that comes into force as at 1 January 2016, we have appointed an intermediary whose task it is to prepare procedures and instructions that reflect this legislation for the operational departments.
Code of conduct In 2015, we drew up and introduced a code of conduct called ‘Zó doen we dat bij Vitens!’ (This is how we do things at Vitens!). This code of conduct lays down the basic principles for deciding how to act in relation to important issues such as integrity, safety, interacting with customers, with each other and with our environment.
We want all Vitens employees to be familiar with the code of conduct and comply with it. To achieve this, we have mailed the ‘Zó doen we dat bij Vitens!’ booklet to the home address of all our employees. Managers and supervisors have also discussed the code of conduct in team and departmental meetings. The new code of conduct is part of the introduction programme for new employees.
20 GENERAL - 1.8 Corporate governance | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.9 Risk management and control systems
As a drinking water company, Vitens plays a significant social role. So we see reducing association with the strategic objectives formulated by Vitens. This takes place during and managing risks as a self-evident duty. In 2015, we made significant progress in workshops. The business risks identified in this way are prioritised during a meeting documenting what we already do in practice: integral risk management. The findings between first-line management and the Executive Board. This results in integral will be presented at the beginning of 2016. assessment and broad management involvement. We subsequently used the seven main business risks identified in this process as a framework for the medium-term Taking risks is inherent to managing an organisation. We consciously weigh up our planning process. The measures required to control these risks were formulated and strategic objectives against the risks we are prepared to take in order to manage our included in the annual departmental A3 plans. Progress is documented periodically operations in a socially responsible manner. Vitens is exposed to strategic, operational, in the quarterly report and discussed during the quarterly meeting between the first- financial and compliance risks when conducting its operations. The following basic line manager and the Executive Board. In addition, the Audit & Advice Department principles underpin the integral risk management approach at Vitens: uses Risk Based Auditing to assess the effectiveness of the control measures. The annual audit report provides information on this topic to the Audit Committee and 1. The Executive Board and management are responsible for setting up and the Supervisory Board. The paragraphs below explain the main risks that have been effectively operating the internal risk management and control system; identified, including the control measures that were implemented in 2015. 2. Risk management and internal control systems of this type reduce the likelihood of faults, minimise incorrect decision-making and anticipate unforeseen circumstances; 1.9.1 Risk: data reliability 3. Risk management is integrated in the planning and control cycle; Impact on the results and/or financial position: slight 4. Taking risks is inherent to our business operations and the Executive Board determines the degree of acceptability (‘risk appetite’). Reliable data is of crucial importance. Items of data are directly related to (financial) information and the systems where that information is stored. Vitens must be able The degree of acceptability for strategic, operational and financial risks has been set to assume that (management) information originating from these systems is reliable: at a low level within Vitens. This reflects our social role - assuring a permanent supply in other words accurate, timely and complete. Both formal and informal controls are of drinking water of high quality to our customers - and the high standards relating to required to guarantee this. The formal controls are integrated in the authorisation delivery dependability and safety in relation to drinking water supply. We maintain a policy. In 2015, we focused our attention on setting up consistent logical controls solid financial position in order to ensure permanent access to the financial markets. for accessing ICT systems and correctly allocating access rights to users. The The explanatory notes to the consolidated balance sheet provide details of the financial chosen approach minimises the risk of unauthorised access to and use of ICT risks. systems, transactions and/or data. The authorisation management procedures have been updated to reflect this. In addition, we have created new roles for use in role Vitens performs a risk management review every two years in order to identify management and user management. Financially critical systems are associated risks which may potentially prevent achievement of our business objectives. This with a system owner. And, additionally, we have appointed coordinators at both review, which was last performed for the strategic reassessment in 2014, weighs up departmental and process level who act as the first point of contact for authorisation and prioritises the identified risks. The objective is to determine adequate management issues. Moreover, the main potential conflicts relating to segregation of duties and measures and embed them in the organisation in order to mitigate the risks. The critical activities have been identified. Preventive action was taken at the end of 2015 process is structured around a review of the strategic risks that have been identified in to eliminate ‘very high risk’ conflicts. Further measures in this area will be implemented
21 GENERAL - 1.9 Risk management and control systems | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.9 Risk management and control systems
in 2016. Any unauthorised access to and use of ICT systems, transactions and/or data need to be replaced first. In order to manage this risk even more effectively, a number is detected and corrected by ICT tools. In addition, a strategic vision and policy have of actions will continue on into 2016. These include improvements to the data asset been drawn up for introducing data governance and data management within Vitens. register and pilot projects involving pipe inspection tools. With the aid of IPO and other Finally, we have prepared an implementation plan, which will be progressed further in tools, we are becoming increasingly proficient in deploying our financial assets as 2016. effectively as possible to ensure a robust subsurface infrastructure.
The informal controls are anchored in the convictions and personality of our staff In 2015, we also investigated areas where water pipes run in close proximity to gas and company culture. This is important because people interact with processes and pipes, partly in response to the problems experienced in Apeldoorn. This investigation, systems. Data is often entered into a system by human hand. Vitens acknowledges the which was carried out in collaboration with Enexis, Stedin and Liander, focuses on importance of this form of control by taking steps to positively influence employees. the soil composition, the network load, the condition of the pipes and any breakdown This leads to improved reliability of data and the resulting (management) information. data that is available. Based on the initial results, we replaced 46 kilometres of pipe in For example, control measures that affect motivation, accuracy, ethical standards and Apeldoorn. values. The Vitens DNA programme also contributes in this area. The challenge for the future remains the same: finding a good balance between formal and informal controls. With regard to the surface infrastructure, we set up a similar investment forecasting system (Investeringsprognose Bovengrondse Infrastructuur/IBI) in 2014. This involves assessing the technical condition of all our production facilities. At the end of 2015, 60 1.9.2 Risk: infrastructure sites had already been assessed and the remaining sites will be assessed during 2016. Impact on the results and/or financial position: low This technical assessment determines the status of the surface infrastructure and we use that information to determine when refurbishment or replacement investments are Vitens has 96 production facilities, 110 extraction areas and a distribution network required. This allows us to reliably forecast our long-term investment needs. extending across approximately 49,000 kilometres. These are crucial for fulfilling our primary task: delivering perfect drinking water, 24 hours a day and 7 days a week. The IPO and IBI are the cornerstones of the Effective Asset Management (EAM8) programme, which started in 2015 and will continue until the end of 2018. The Vitens requires more and more accurate information about the state of repair of its objective is to develop a continuous and permanently anchored process in which infrastructure. This will allow us to refurbish and repair effectively, and minimise peaks decisions can be made transparently based on performance and costs. This is only in investment to the greatest possible extent. To achieve this, we have set up an possible if we have reliable information about our infrastructure. investment forecasting system for our subsurface infrastructure (Investeringsprognose Ondergrondse Infrastructuur/IPO). We will use this system to forecast the probability and effect of distribution pipe failures in the long term. This information allows us to estimate the associated investment amounts and decide which distribution pipes
22 GENERAL - 1.9 Risk management and control systems | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.9 Risk management and control systems
1.9.3 Risk: emergencies We reassessed our information security policy in 2015. The revised policy sets out Impact on the results and/or financial position: slight a strategy and identifies concrete actions for implementing our information security based on assessment of the relevant risks. We have amended the policy at both This relates to the risk of an (acute) emergency leading to situations where: strategic and tactical level. The policy applies to both office and process automation. • the quality and/or quantity of the drinking water supply no longer satisfies the In 2015, we set up the ‘Disaster/Recovery’ group for the purpose of describing and statutory requirements; introducing the policy, procedures and work instructions relating to the Disaster • a hazard or threat arises which may have an adverse effect on the quality and/or Recovery (DR) process at strategic and operational level. The objective is to have quantity; drawn up an organisation-wide disaster/recovery plan by mid-2016. This plan will • Vitens is required to assist in responding to other emergencies; describe the underlying procedures at system and application level. A ‘priority 1’ failure • public confidence in Vitens may be undermined. occurred in the primary data centre on 23 June 2015. The disaster/recovery procedure was effective in coping with this situation, which involved a failover to a second data Vitens strives to achieve a high degree of reliability and continuity in its service centre. The systems were available again within three hours. After the event, thorough provision to customers. The standards for this are established in legislation and analysis of the failure led to proposals for concrete improvements, which were internal limits and target values. Possible emergencies include: a breakdown in subsequently implemented. We made a number of changes to our ICT infrastructure the infrastructure or distribution system, or contamination of the drinking water. in 2015 in order to reduce the level of risk exposure. These changes include A timely and adequate response to emergencies is of great importance to Vitens more modern firewalls, extra equipment (servers) and better data communication and its customers. Vitens has prepared an emergency plan and put an emergency connections. organisation in place for this. Periodic drills are an important element within this approach. These are organised both internally and in cooperation with municipal and At the beginning of 2015, we started a programme called ‘Pallas’ which continues regional policy teams within the safety regions. Other elements include media training, on from where the ‘PA Implementation policy’ programme left off when it was put on updating the emergency instructions booklet and an evaluation of ‘phase 3 situations’ hold at the end of 2014. The goal of this programme is to safeguard the continuity of as a result of which possible improvements are implemented. ‘Phase 3 situations’ are automated processes (availability and recovery time) through extensive standardisation. mainly situations where the quality and/or the quantity of the drinking water supply no Three ambition levels have been identified within the programme: longer satisfies the statutory requirements and/or more than 2,000 connections are 1. security; this relates to updating the security level and replacing various systems starved of drinking water. Further professionalization in this area will be implemented in within the basic ICT infrastructure; collaboration with the Institute for Safety and Crisis Management during 2016. 2. end-of-life (EOL); this involves replacing obsolete process automation; 3. standardisation; this relates to safeguarding knowledge, standardising the replacement process and continuity. 1.9.4 Risk: ICT system availability Impact on the results and/or financial position: low A security upgrade of the basic ICT infrastructure associated with process automation was implemented at approximately 170 sites in 2015. The project organisation has Ensuring that primary ICT systems remain available is increasingly important to formally handed over these sites to the ICT department. The remaining sites will be guaranteeing Vitens' operational continuity. Our dependency on ICT systems continues upgraded during the first half of 2016. The first EOL sites for process automation have to increase, both in the production facilities and in our office environment. also been re-equipped and handed over. This process will continue on into 2017.
23 GENERAL - 1.9 Risk management and control systems | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.9 Risk management and control systems
Standardisation mainly relates to prescribing uniform working methods and execution. 1.9.6 Risk: capacity to learn Further work will take place on implementing the desired change, finalising the Impact on the results and/or financial position: slight standardisation approach and coordination at the beginning of 2016. All of this will be firmed up when the programme definition is revised during the first quarter of 2016. The organisation has an inadequate self-learning capacity, due in part to an insufficient willingness to learn from our mistakes, too little corrective discussion at a peer-to- peer level and the fact that we do not reflect and evaluate adequately. Our people do 1.9.5 Risk: safety in the workplace not accept and embrace their personal responsibilities to an adequate extent in this Impact on the results and/or financial position: slight respect. In other cases, they overstep the mark: e.g. when employees fail to perform the agreed tasks, or go beyond the agreed responsibilities or authorities. Processes are An excessively low level of safety awareness or insufficient knowledge of safety not always adhered to, often due to a desire to help customers quickly and effectively. measures may give rise to potentially unsafe situations in the workplace. A monthly As a result, mistakes are easily made and work efficiency sometimes suffers. report, which lists the reported incidents and associated improvement measures, has been implemented in order to provide clear and transparent information on this risk. Tasks, responsibilities and authorities are laid down in job profiles and processes. This report also includes the ‘Lost Time Injury Frequency’ (LTIF), which concretely Compliance in this area is part of the RW&O cycle (RW&O stands for Resultaatgericht indicates the level of safety. The number and type of accidents that occur are a Werken, Ontwikkelen en Beoordelen: a result-focused working and growing cycle), measure of the degree of safety. Safety in the workplace was an area of acute focus in consisting of planning, progress and assessment interviews. Attention was also given 2015. This relates to issues such as: to coaching managers during the team manager days. 2015 is the first year in which • ensuring that management makes safety rounds; function-related competencies have been included in the RW&O cycle. • discussing safety topics during team and departmental meetings; • issuing a ‘safety newsflash’ in relation to accidents that have occurred, thereby ‘Working on Vitens' DNA’ was a further focal programme in 2015. Our key qualities helping to raise safety awareness; (our DNA) are essential to achieving our vision. The term 'up-to-date craftsmanship • organising a Safety Day for office staff; and expertise' relates to a commitment to excel at your profession in a learning • improving escape route signage at production facilities; environment, in which a basic engineering activity is evolving in the direction of a • arranging training courses on handling chemicals, aggression, working in areas data-controlled business. 'Moving boundaries' means that we are always looking for where the soil is contaminated and other topics. new and better ways of improving our effectiveness. And we make water relevant in our customers' daily lives. We offer them convenience, but at the same time make them The continuous level of attention given to safety in 2015 resulted in a significant aware of the value of water. At the end of 2015, the results of a DNA Survey showed increase in the registered number of near accidents and dangerous situations involving that 85% of Vitens' employees can name these key qualities. They also indicated Vitens employees (from 38 in 2014 to 61 in 2015) and a reduction (by 1.64) in the that they find it important to use them in their daily work. The results of the survey LTIF to 3.75 (2014: 5.39). These are positive developments, however safety will remain are a good starting point for further discussion and questions. For example, what do high on the agenda for 2016. employees find most striking about the results of the DNA Survey and what action do they want to take in 2016? This equates to concretely applying the programme at departmental level first, and then at the level of individual employees.
24 GENERAL - 1.9 Risk management and control systems | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.9 Risk management and control systems
We have created a development platform that is intended to motivate employees and At the beginning of 2015, Vitens organised a number of customer sessions in which encourage them to develop further in a learning environment. This is an e-learning customers were invited to share their experiences with Vitens. Critical areas requiring tool, which offers more than 85 online training courses. All Vitens employees have a improvement were given immediate attention, leading to the following improvements in personal login code. They can enrol in these training courses whenever they want and 2015: do not require their manager or supervisor's approval. • a pilot project for invoicing immediately after meter reading; • communicating proactively with customers when breakdowns occur by informing them via email, text messages and a website (waterstoring.nl). In 2016, further 1.9.7 Risk: customer-centricity improvements will be made to waterstoring.nl and a restyled vitens.nl website will Impact on the results and/or financial position: slight go online. The new website will feature significant improvements to accessibility and Internet Self Service (ISS); The degree of customer-centricity plays a crucial role in Vitens' ability to achieve • creating teams in which employees have more extensive personal responsibility. its ambitions. Customer-centricity was also a primary theme in the strategic This results in higher employee satisfaction, which in turn leads to an increase in reassessment exercise of 2014. At Vitens, everything revolves around optimally customer satisfaction. Vitens' target for satisfaction is a score of 8+. satisfied customers who can rely on a 24/7 supply of high-quality drinking water and excellent service provision at the lowest possible price. This means that Vitens strives In addition, the Customer Contact Monitor (Klanten Contact Monitor/KCM) was to achieve perfection in its processes (right first time and on-time delivery) with the introduced within Vitens in 2015. Customers are asked to give immediate feedback primary objective of optimally servicing its customer base, and does so without losing after having contact with Vitens. This not only involves quantitative monitoring but also sight of the individual customer's needs and best interests. We call this Customer a qualitative interpretation, including conclusions about and guidelines on the way in Excellence, i.e. Operational Excellence with a strong focus on the individual customer. which we need to communicate and interact with our customers. This will result in further improvement of our processes.
25 GENERAL - 1.9 Risk management and control systems | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.10 Report of the Supervisory Board
Introduction distribution to the shareholders is €22.1 million. We suggest paying out this amount as For Vitens, 2015 was a year of enthusiastic and effective activity that focused on dividend over 2015, resulting in a dividend per share of €3.83. fulfilling the primary task and achieving the organisation's ambition of ‘giving meaning to water, together’. The Supervisory Board feels that drinking water quality, delivery Composition of the Executive Board and Supervisory Board dependability and provision of service were maintained at a high level. An excellent During the Meeting of Shareholders of 26 November 2015, the Supervisory Board performance of which we can all feel justifiably proud. The Supervisory Board was also honoured Thessa Menssen's request to step down from her position after a period of gratified to see that Vitens charges one of the lowest consumer rates for drinking water five years in office. She has served and supported the company with great dedication in the Netherlands. This is one of the spin-offs of our strong focus on efficiency which, and effectiveness in her role of Supervisory Board Member and Chairperson of the in spite of inflation, has meant that the rates charged by Vitens have remained the Audit Committee. During the same meeting, Els de Groot was appointed to the position same for several years, or even reduced. This favourable trend is likely to be broken by of Supervisory Board Member for the period from November 2015 to the Meeting of the worrying fact that more and more municipalities want to levy sufferance tax, which Shareholders of November 2019. The composition of the Executive Board remained will ultimately increase the drinking unchanged during the reporting year. The composition of the Executive Board and water bill for Vitens' customers. During Supervisory Board and personal details of all members can be found in paragraphs the year, the Executive Board involved “Water is a necessity of life for 1.10.1 and 1.10.3. us directly in the development of the all people. In fact, without water there two strategic goals for the coming would be no life. Obviously, such a vitally Meetings in 2015 years: ‘Customer Excellence’ and important raw material deserves the In addition to bilateral meetings and the committee meetings, the Supervisory Board ‘Sustainable use of our resources and greatest care and our highest attention at came together for plenary meetings on five occasions during the reporting period. infrastructure’. We can conclude from all times.” Apart from the odd exception, all the Supervisory Board Members attended all the our involvement that initial revenues Boele Staal, meetings. The Executive Board was also present at all the meetings. The quarterly look to be extremely promising. Chairperson of the Supervisory Board meetings focused on the developments within Vitens. Among other topics, these meetings were used to review the year-to-date and quarterly figures, the investment Annual accounts and dividend proposal plan, the budget and the drinking water rates for 2016. The external auditor also In addition to the Executive Board's report, this annual report also includes the attended the meeting in which the consolidated annual accounts were reviewed. annual accounts of Vitens, which have been approved by the Supervisory Board Outside these meetings, the Supervisory Board also visited the following production following PwC's unqualified audit report. The Supervisory Board proposes that the facilities: Het Engelse Werk, Havelterberg, Oldeholtpade, Laren and Spannenburg. General Meeting of Shareholders adopt the 2015 annual accounts as presented and grant discharge to the members of the Executive Board for their implementation of Once again, a number of dossiers, such as the Pallas Programme, required our management policy and to the members of the Supervisory Board for their supervisory particular attention in 2015. This programme is intended to ensure continuity of the activities, as evidenced by the annual accounts and the annual report. The profit automated processes (availability and recovery time) at our 252 plants. This is after generated in financial year 2015 amounted to €55.4 million. The Supervisory Board all a factor that guarantees continuity of the production and delivery of drinking water. and Executive Board suggest adding an amount of €33.3 million to the reserves for the This complex programme was put on hold in 2014. The revisions to the structure of purpose of achieving our solvency objective. Consequently, the amount available for the programme (which has been remodelled around three ambition levels) and the
26 GENERAL - 1.10 Report of the Supervisory Board | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.10 Report of the Supervisory Board
appointment of a new programme management team have persuaded the Supervisory In 2015, the Audit Committee consisted of Thessa Menssen (Chairperson), Kees Jan Board in favour of continuing the programme. A further dossier that required the Rameau and Tom de Man. The committee convened on three occasions in 2015 and Supervisory Board's close attention related to safety on the work floor. While it is clear two of those meetings were attended by the auditor. In preparation for the meeting of that the Executive Board and management have devoted a great deal of energy to the plenary Supervisory Board, the Audit Committee studied the annual accounts and reversing the negative trend, and with some success, the Supervisory Board is of the discussed the auditor's report and management letter. In addition, the Audit Committee opinion that this topic requires continuous attention in order to achieve a permanent discussed the integral 2016 - 2018 business plan, the 2016 - 2020 investment plan, change in behaviour. As a result, extensive discussion has taken place with the the audit plan, the financial policy, the main business risks and the 2015 drinking water Executive Board in relation to the DNA change programme. rates. Attention was also given to the investment projects exceeding €1 million. The third meeting of the Audit Committee focused on the annual Treasury report, loan and During the October meeting, the Executive Board presented the integral 2016 - 2018 refinancing requirements, and the strategic business risks. business plan and requested the Supervisory Board's approval. The Supervisory Board approved this business plan and wishes the Executive Board and the organisation Shareholders and General Meeting of Shareholders every success with its implementation. In addition to the General Meeting of Shareholders as a decision-making body, a Committee of Shareholders was appointed by and at the instigation of the Meeting of Committees in 2015 Shareholders in 2008. The Supervisory Board has two permanent committees: the Remuneration and Appointments Committee and the Audit Committee. Committee of Shareholders The Committee of Shareholders has an advisory function in respect of the General The Remuneration and Appointments Committee, which consists of Maaike Meeting of Shareholders, the Executive Board and the Supervisory Board. The Poulussen (chairperson) and Boele Staal, convened on two occasions in 2015. Committee of Shareholders convened twice in the reporting year. Immediately Clearly, recruitment of a new Supervisory Board member was an important task. The following on from these meetings, discussion took place between the Committee Committee co-ordinated the recruitment process in consultation with the shareholders. of Shareholders, the chairperson of the Supervisory Board and all members of the In 2015, the Committee also gathered information about the method used and results Executive Board. The meetings were devoted to discussing the 2014 annual report of the staff review and the appraisal and interview cycle (RW&O) at Vitens. and annual accounts, the changes to remuneration policy for the Executive Board and The committee has evaluated the performance of the Executive Board in relation Supervisory board as a result of the introduction of WNT2, and the recruitment process to the previous year (2014) and discussed the matter with the individual Executive for a new Supervisory Board member. The Committee of Shareholders reported on Board members. A 360 degree feedback instrument was used for this evaluation. The its activities during the meetings of the shareholders of April and November 2015. committee amended the Supervisory Board remuneration policy and the remuneration A complete list of the members of the Committee of Shareholders can be found in policy for the Executive Board in order to bring those policies in line with the Act for paragraph 1.10.2. reducing the maximum remuneration of top managers in the publicly and semi publicly financed sector (Wet verlaging bezoldigingsmaximum WNT/WNT2), which came into effect on 1 January 2015. Finally, the committee considered the matter of capping the pension contribution for the Executive Board.
27 GENERAL - 1.10 Report of the Supervisory Board | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.10 Report of the Supervisory Board
General Meeting of Shareholders In the General Meeting of Shareholders of 30 April, the discussions focused on the 2014 annual report and annual accounts and the 2014 annual accounts were adopted. During this meeting, the shareholders approved and adopted the revised remuneration policies for the Supervisory Board and for the Executive Board. A working visit to a production facility, Het Engelse Werk, took place prior to the meeting of shareholders of November. During the meeting of November, the General Meeting of Shareholders discussed the budget for 2016 and approved and adopted the proposed drinking water rates for 2016. During this meeting, the shareholders voted in favour of appointing Els de Groot to the position of Supervisory Board member of Vitens for a period of four years, expiring in November 2019.
Conflicting interests Pursuant to the Corporate Governance Code, a Supervisory Board member or an Executive Director must immediately report a conflicting interest, which is of material importance relative to the company and/or the Supervisory Board member or Executive Director in question, to the chairperson of the Supervisory Board and provide all relevant information in this respect. No reports of this nature were received during this reporting year.
In conclusion The Supervisory Board wishes to state its appreciation for the effort and dedication of the company's management and all employees in respect of the business operations and the results achieved during 2015. We look forward to the 2016 results with great interest and with every confidence. We also wish to thank the Works Council, with which we, as the plenary Supervisory Board, spent an afternoon this year discussing the Vitens employee of the future.
Zwolle, 22 March 2016 The Supervisory Board
28 GENERAL - 1.10 Report of the Supervisory Board | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.10 Report of the Supervisory Board
1.10.1 Composition of the Supervisory Board
Mr B. (Boele) Staal (mr.), Chairperson (1947) Mr Th.A. (Tom) de Man (ir.) (1948) • Appointed as per 16/05/2013, effective to 2017 • Appointed as per 17/06/2010, effective to 2014, reappointed to 2018 • Former Queen's Commissioner in the province of Utrecht, Member of the Dutch • Member of the Supervisory Board of Nigerian Breweries Plc Heineken (to end Upper House, Chairperson of the Nederlandse Verenging van Banken, Member of September 2015) the Executive Board of the Confederation of Netherlands Industry and Employers • Other positions: (VNO), member of the Social and Economic Council (SER) and the Bankraad Member of the Supervisory Board of Rutgers WPF stichting • No primary position occupied at present Member of the Supervisory Board of NABC (Netherlands Africa Business Council) • Other positions: Ambassador of Wageningen University Member of the Supervisory Board of ONVZ Zorgverzekeraar (to 2016) Member of the Supervisory Board of Eucord (an NGO involved in agriculture Chairperson of the Supervisory Board of St. Antonius Ziekenhuis Nieuwegein projects in Africa) Member of the Supervisory Board of AVRO-TROS Chairperson of the Nationaal Comité Nederlandse Veteranendag Ms T. (Thessa) Menssen MBA (1967) – up to the General Meeting of Shareholders of Chairperson of the Supervisory Board of Revalidatie Centrum Rijndam November 2015 Chairperson of industry association Vebon • Appointed as per 17/06/2010, effective to 2014 Member of the Executive Board of Liszt Concours • Member of the Executive Board of Koninklijke BAM Groep NV Adviser to the Helen Dowling Instituut • Other positions: Member of the Supervisory Board of Stichting Rotterdams Philharmonisch Orkest Mr C.J. (Kees Jan) Rameau MBA (1962) - Vice Chairperson Member of the Supervisory Board of PostNL • Appointed as per 24/04/2014, effective to 2018 • Member (COO) of the Executive Board of Eneco Holding N.V. Ms E.A. (Els) de Groot (1965) from November 2015 • Other positions: • Appointed as per 26/11/2015, effective to 2019 Member of the Executive Board of De Groene Zaak • Member of the Supervisory Board & CFO of Schiphol Group Member of the Executive Board of KVGN (Koninklijke Vereniging van • Other positions: Gasfabrikanten in Nederland) Non-executive Member of the Board of Directors, Aeroports de Paris Member of the Supervisory Board of Stedin Netbeheer B.V. Member of the Supervisory Board and Chairman of the Audit Committee, Beter Bed Holding NV Ms M.C.J. (Maaike) Poulussen (drs.) MSM (1962) • Appointed as per 17/06/2010, effective to 2014, reappointed to 2018 • Affiliate at Aberkyn (co-founded by McKinsey & Company) • Executive Coach & Consultant for MaaikePoulussen.com • No other positions
29 GENERAL - 1.10 Report of the Supervisory Board | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.10 Report of the Supervisory Board
1.10.2 Composition of the Committee of Shareholders 1.10.3 Composition of the Executive Board
Mr S. (Sander) de Rouwe - Chairperson (representing the Provincial Authority of Ms L.C.A. (Lieve) Declercq MSc (1966) – Chairperson Friesland) • Appointed as per 1 September 2012 for an indefinite period Mr E. (Bert) Boerman - Vice Chairperson (representing the Provincial Authority of • Other positions: Overijssel) Member of the Supervisory Board of Catharina Ziekenhuis Eindhoven Mr J. (Jan) Brink (representing other shareholders of the Province of Overijssel) Advisor in the Economic Diplomacy of Belgium Mr J. (Jan) Markink (representing the Provincial Authority of Gelderland) Member of the General Executive Board of VNO-NCW Mr A. (André) Baars (representing the shareholders of the Province of Gelderland) Member of the Audit Committee and member of the Supervisory Board of Wetsus Ms J. (Jacqueline) Verbeek-Nijhof (representing the Provincial Authority of Utrecht) Chairperson of Werkgeversvereniging Waterbedrijven Mr J. (Jeroen) Kreijkamp (representing the Municipality of Utrecht) Member of the Green Deal Board Mr P. (Pieter) de Groene (representing other shareholders of the Province of Utrecht) Member of the Supervisory Board of CED Holding B.V. Mr M. (Mark) Pol (representing the Municipality of Almere) Member of the Adviescommissie Water (as per 1 April 2015)
Mr W.H.J. (Wolter) Odding (1963) - Board Member • Appointed as per 1 June 2009 for an indefinite period • Other positions: Member of the Supervisory Board and also Chairperson of the Audit Committee, Ziekenhuis St. Jansdal Harderwijk Member of the Members Council of Vereniging Achmea
The Executive Board is supported by:
Mr G. (Gert) van Beek (ing.) MBA (1971) - Company Secretary • Appointed as per 1 July 2010 for an indefinite period • Other positions: Chairperson of Stichting Sociaal Fonds Vitens Chairperson of Kennisnetwerk NIVE for Company Secretaries in semi-public organisations
30 GENERAL - 1.10 Report of the Supervisory Board | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.11 Report of the Works Council
A new Works Council with a unique vision Listening to each other also applies to the relationship between the Executive Board A new Works Council was elected in March. Those who voted were spoiled for choice, and the Works Council. Listening, an open discussion and mutual respect are as there were 21 candidates for the 15 seats. The level of interest was high; 877 of the descriptions that typify this dialogue. In 2015, the Works Council regularly advised the 1,447 employees holding voting rights (57%) did in fact cast a vote. Five new members Executive Board on organisational changes, also in instances not included in the scope were appointed and ten existing members were re-elected. of the Works Councils Act. In many cases, the Executive Board adopted this device. In addition, the Works Council made recommendations to the Executive Board in relation Ensuring a seamless transfer of knowledge and dossiers is one of the most important to the Pallas Programme, which is designed to safeguard process automation. activities during the first year in office. However, developing a unique vision and determining priorities are also key activities. As is striking a healthy balance between During 2015, discussions focused on a number of topics that required the Works critical assessment and actively contributing ideas. More details are available in the Council's consent. For example, consent was granted for the procurement of services PanORama 2016 - 2018 manifesto. related to health and sustainable employability, the new procedure for reporting and recording incidents, the procedure for personal protective equipment (PPE) and Even more than in previous years, the designated Works Council contacts (two per various Risk Inventory and Evaluation (RI&E) procedures. department) will liaise intensively with co-workers and the management team. The composition of the Works Council is highly representative of the total workforce. As a The Works Council organises a governance conference every year, during which the result, the Works Council is capable of acting effectively to resolve possible conflicts Works Council, Supervisory Board and Executive Board discuss current issues. The between company interests and employee interests. The important thing here is to conference of 3 September 2015 focused on ‘the employee of the future’ and the way listen to the views of as many colleagues as possible. in which each employee contributes to achieving Vitens' objectives. Obviously, there was also regular consultation between the Works Council's day-to-day executive team and Ms M. Poulussen, the employee representative appointed to the Supervisory “Water is of vital importance. Thousands of professionals in the water industry Board. We expect this excellent cooperation to continue in 2016. work hard every day to produce an adequate supply of clean and safe water. They are all trained professionals who enjoy their work. Safe working conditions and innovative terms and conditions of employment are essential to maintaining that situation. This guarantees Vitens' ability to deliver dependable drinking water, both today and the future. The Works Council attaches great importance to sustainable employability. Our challenge is to ensure continuous investment in the people behind our product.” Hans Teunisse, Works Council Chairperson
31 GENERAL - 1.11 Report of the Works Council | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.11 Report of the Works Council
1.11.1 Composition of the Works Council of Vitens
Mr J.M. (Hans) Teunisse - Chairperson Ms S.M. (Marije) Meerdink - Vice Chairperson Ms C.T.M. (Carolien) Koopman MA - member of the executive team Mr S. (Stef) van Beusekom Ms A. (Astrid) Bolder (to 25 August 2015) Mr W. (Willem) van den Born (from 25 August 2015) Ms M. (Monique) van Dellen Mr B.R. (Bendert) de Graaf (ing.) Mr R.M. (Ronald) Haverkamp (ing.) Ms R. (Ryan) Hoekman Ms I. (Ilona) Jansen Mr H.J. (Henk-Jan) Lammers BSc Mr R. (Reinier) Nogarede Mr R. (Reijer) Roelofsen Mr E. (Eelko) Stelling (ing.) Mr A. (Tonny) van den Toren Secretary: Ms J. (Jenny) Schreuder
To 24 March 2015: Mr A. (Arnold) Hendrikse Mr J.P. (Peter) Smiesing Mr G. (Bert) van Stavel
32 GENERAL - 1.11 Report of the Works Council | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.12 Integrated Annual Report
This integrated annual report analyses our vision, strategy and policy in relation to our involved and subsequently reported to the Executive Board. The data relates to Vitens' performance as a company and development in terms of sustainability. It reports on own performance and not that of our customers and partners in the value chain. our activities in these areas in 2015 (01/01/2015 – 31/12/2015). This annual report has Wherever possible, we have expressed information in terms of financial and been approved and adopted by the Executive Board and the Supervisory Board. non-financial data in this integrated report.
1.12.1 Reporting principles and scope 1.12.2 Global Reporting Initiative G4
Since 2008, the annual report has included a section on our financial and strategic Vitens models its reporting on the G4 guidelines of the Global Reporting Initiative performance. This is an area of significant development. Each year, we attempt (GRI). The GRI guidelines are the most widely accepted guidelines worldwide for to improve on the previous year's performance and further optimise our data and preparing non-financial annual reports. The sustainability information in the 2015 systems. Vitens has exclusively published the annual report online since 2012. That annual report has been presented based on the Core option of the G4 GRI guidelines edition and all later editions of the annual report are available for download in PDF and internal reporting criteria. format, both as a complete version and as an eco-friendly version for printing; the latter version contains no photographs. In accordance with the requirements of the GRI guidelines, a materiality analysis has been used to determine the content of the report. In 2014, the topics that are Please refer to the explanatory notes to the consolidated annual accounts for details materially important for Vitens were identified based on the outcomes of a stakeholder of the nature of our financial performance. Vitens' performance in the area of meeting and internal consultation. sustainability is an integral part of our strategy and described in global terms in this In 2015, we reassessed this prioritisation based on input from our stakeholders, which report. In respect of our non-financial performance, Vitens reports on the entities was provided via an online survey. The results of this analysis are presented in a over which it has decision-making control. The report also touches on a number materiality matrix. of initiatives that are related to Vitens' involvement and additional explanations are provided as required. Vitens Evides International produces its own annual report, which This annual report contains both qualitative and quantitative information. Where is therefore not consolidated in these annual accounts. possible, the quantitative information has been taken from systems operated by Vitens to which all internal control measures apply. The Finance & Control department is The definitions and reporting principles remain unchanged relative to the previous responsible for gathering and substantiating this non-financial data. The qualitative year, unless stated otherwise in the explanatory notes. Wherever possible, we compare information is gathered selectively based on the main themes identified in Vitens' quantitative information with comparative figures from previous years. The trend for strategy. The information on these subjects is provided and substantiated by the each KPI (key performance indicator) is discussed every quarter with the departments responsible managers within the organisation.
33 GENERAL - 1.12 Integrated Annual Report | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.12 Integrated Annual Report
1.12.3 Control and assurance
The responsible departments, regions and staff teams were requested to provide the data for indicators (quantitative) and initiatives (qualitative). After an initial assessment, these were internally checked and validated for the entire company. Basic data was taken as far as possible from the regular periodical reports. Any exceptions to this principle are stated in the accompanying note.
Our auditor, PwC, has verified the data and information in this annual report. PwC's audit of the 2015 annual accounts resulted in an independent auditor's report, which has been included in the annual accounts. The assurance engagement - providing limited assurance regarding sustainability performance for 2015 - resulted in an assurance report.
We also had our annual report and operational management assessed externally. For example, our 2014 annual report was ranked 20th on the Transparency Benchmark list produced by the Ministry of Economic Affairs. Our ambition in terms of reporting is to maintain our position among the leaders on the Transparency Benchmark list and consistently report at GRI G4 level during the coming years.
We welcome reactions to this report. If you wish to react, please send an email to [email protected]. In addition, you can register for Vitens' newsletter via vitens.nl.
34 GENERAL - 1.12 Integrated Annual Report | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.13 Terms and report definitions
This overview provides a simplified explanation of GRI (Global Reporting Initiative): global organisation Economic leakage losses/NI (Not invoiced): water that (industry-specific) terms that are used in this annual that produces guidelines for sustainability reporting. has been delivered but not invoiced to an end-user, report. due to a fault for example. Intelligent water supply system: equipping a water BREEAM: Building Research Establishment distribution network with sensors to allow online OLM (under-target delivery minutes): the number of Environmental Assessment Method. An assessment gathering of qualitative and quantitative data. minutes on average during which a resident in our method for determining the sustainability performance supply area has been cut off from the water supply of buildings. LTIF (Lost Time Injury Frequency): the number during the past year. of accidents resulting in more than one day of
CO2: Carbon dioxide. This gas is largely generated absenteeism from work multiplied by 1 million and Softening: removal of the lime naturally present in water by the combustion of fossil fuels such as natural gas divided by the number of working hours. during the purification process. and coal and is one of the factors that magnify the greenhouse effect. We report in accordance with M³: one cubic metre (1000 litres) of water. The average Solvency: the equity capital including the result and the GHG protocol for emissions reporting. Scope 2 water consumption per household is approximately dividend paid during the financial year divided by total emissions (for the energy we purchase) are completely 110 m3 per year. capital. green and covered by renewable energy certificates. Energy consumption (specific): the amount of energy Stakeholders: individuals and groups that have a
CO2 equivalent: calculation indicating the effect of required to supply 1 m3 of drinking water (extraction stake in Vitens in one way or another. For example,
greenhouse gases other than CO2 on CO2 values. source to tap). employees, shareholders, customers, providers of finance, suppliers and local government authorities. Committee of Shareholders: the Committee of Net debt: the sum of the long-term and current interest- Shareholders has an advisory function in respect of the bearing liabilities minus liquid assets and investments. Working capital: trade debtors and other receivables General Meeting of Shareholders, the Executive Board minus non interest-bearing current liabilities and and the Supervisory Board. Net investment: gross investments minus the accrued expenses and deferred income. contributions to these investments that have been Corporate Governance: the relationship between the received from third parties. WQI: the WQI water quality index, which shows the Executive Board, the Supervisory Board and the extent to which water complies with statutory standards General Meeting of Shareholders. The principles of Leakage losses: consist of two components: technical as determined in the Drinking Water Act. Corporate Governance are good entrepreneurship leakage loss and administrative leakage loss. Technical (ethical and transparent conduct on the part of the leakage loss arises through inoperability of distribution Executive Board) and proper monitoring of that conduct pipes and production facilities. Administrative leakage (including accountability). losses are caused by errors in the registration of water consumption. Fte (full time equivalent): equivalent of a full-time employment contract.
35 GENERAL - 1.13 Terms and report definitions | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.14 GRI index
GRI Code Indicator Explanation Section in the report Strategy and analysis G4-1 Statement by the highest person/body in the Foreword 1.1 organisation with decision-making authority Organisation profile G4-3 Name of the organisation Vitens' Profile 1.2 G4-4 Main brands, products and/or services Vitens' Profile 1.2 G4-5 Location of the organisation's headquarters Vitens' Profile 1.2 G4-6 Number of countries where the organisation is Vitens' Profile 1.2 active G4-7 Ownership structure and legal status Vitens' Profile 1.2 G4-8 Markets Vitens' Profile 1.2 G4-9 Size of the reporting organisation Vitens' Profile 1.2 G4-10 Workforce composition The number of employees by type of contract and type of appointment is as follows: 1,006 men and 318 women (95.7%) have 2.3 an employment contract for an indefinite period; 40 men and 19 women (4.3%) have a temporary employment contract. In 2014, 1,025 men and 317 women (95.6%) had an employment contract for an indefinite period; 47 men and 14 women (4.4%) had a temporary employment contract. G4-11 Employees subject to a collective labour The number of employees subject to a collective labour agreement is 1381. This relates to all employees with the exception of 2.3
agreement the Executive Board members. G4-12 Description of the organisation's supply chain Value chain model 2.1.1 G4-13 Significant changes during the reporting period No changes during the reporting period G4-14 Explanation of the application of the Chapter on top 7 business risks 1.9 precautionary principle by the reporting organisation G4-15 Externally developed economic, environment- Global Reporting Initiative; ISO standards for safety, quality, environment, risk management; Talent to the Top (women in senior 1.12, 2.3 and 2.6.6 related and social charters, principles that are management positions); Duurzaam Terreinbeheer environmental quality label endorsed by the organisation G4-16 Membership of associations (such as industry Industry association VEWIN, WWb Websites of the associations) and national and international Knowledge institutes/associations: KWR, MVO Nederland, Nudge relevant associations lobby groups and vitens.nl
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GRI Code Indicator Explanation Section in the report Materially important aspects and their boundaries G4-17 Overview of all companies included in the Recording and scope 1.12 consolidated financial statements and which do not fall within the scope of this report G4-18 Process for determining the content and the Chapter on materiality 1.4 specific boundaries of the report and the principles that apply in this area G4-19 Materially important aspects identified during Chapter on materiality. In the case of materially important aspects for which the available GRI KPIs are considered insufficient, 1.4 the process for determining the content of the we have referred to our own KPI. These KPIs are generally reported each quarter and used for management purposes. report G4-20 Boundary relating to each materially important Vitens and its activities are part of the natural environment and human society. The boundary definition and scope are 1.4 aspect within the organisation determined based on the materiality analysis, which we prepare based on input from our stakeholders. Further explanations relating to the boundary for each aspect are included below: • The materially important aspects relating to compliance with legislation and regulations and continuity of the organisation/ assets are internal to the organisation. The impact of these aspects primarily affects our ability to deliver safe, reliable and affordable drinking water within the statutory frameworks, both now and in the future. • The materially important aspect of closing the recycling loop for by-products and waste flows is partly internal and partly external to the organisation. For example, we focus on minimising the by-products that are generated during the water extraction process and, wherever possible, make them available for re-use. • The materially important aspects of local roots and social contribution, using our expertise as an authority on water, area
development, our role in the social debate and awareness of tap water are largely external to the organisation. As the largest supplier of drinking water in the Netherlands, our activities are at the heart of society. Our aim is to bring about a positive impact on our (natural and social) environment via these aspects. • The impact of the materially important aspects of water quality and delivery dependability is mainly external to our organisation. Delivering high-quality water and guaranteeing the availability of water from the tap is primarily important to our customers.
G4-21 Boundaries relating to the materially important See G4-20 1.4 aspects outside the organisation G4-22 The consequences of possibly reformulating Basic calculation method explained in the footnote to WQI and LTIF 2.2 and 2.3 information that has been provided in an earlier report and the reasons for reformulating that information G4-23 Significant changes in scope and boundaries We now comply with G4 1.12 compared to previous reporting periods
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GRI Code Indicator Explanation Section in the report Consultation with stakeholders G4-24 List of groups of stakeholders whose Chapter on materiality 1.4 engagement has been assured by the organisation G4-25 Basic principles for identifying and selecting The stakeholders are selected based on an assessment of mutual interest between the stakeholders and Vitens. 1.4 stakeholders G4-26 The way in which stakeholder engagement is Chapter on materiality: Stakeholder dialogue overview 1.4 obtained G4-27 The main aspects and issues that have emerged Chapter on materiality: aspects and issues identified in the stakeholder dialogue, materiality matrix and stakeholder overview 1.4 from the consultation with stakeholders Report profile G4-28 Reporting period to which the published Recording and scope. This report relates to the period from 1 January 2015 to 31 December 2015. 1.12 information relates G4-29 Date of the most recent previous report 2014 Annual Report. This report relates to the period from 1 January 2014 to 31 December 2014. 1.12 G4-30 Reporting cycle Recording and scope 1.12 G4-31 Contact information for questions about the [email protected] 1.12 report or its contents G4-32 GRI application level and GRI table Chapter on GRI 1.12, 1.14 and 1.15
G4-33 Policy relating to assurance Chapter on Assurance 1.15 Governance structure G4-34 The organisation's governance structure Chapter on Corporate Governance 1.8 Ethics and integrity G4-56 Description of the organisation's values, Chapter on Corporate Governance, campaign to re-focus attention on Vitens' Code of Conduct during 2015 1.8 and 1.9 principles, standards and behavioural norms, such as a code of conduct
38 GENERAL - 1.14 GRI index | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.14 GRI index
GRI Code Indicator Explanation Section in the report Material indicators reported by Vitens in accordance with GRI Continuity of the organisation/assets (G4 aspect: economic performance) DMA a. State why the aspect is materially important Continuity is a primary strategic goal and also the cornerstone of the organisation. By striving to ensure continuity of our assets and indicate its impact. and organisation, we work to fulfil our promise and primary task of safeguarding our ability to deliver clean and affordable b. State how the organisation handles the drinking water, both now and in the future. We see several developments in the world around us which have an impact on our materially important aspect and its impact. business. c. Evaluation of the management approach. For example, developments in the area of data processing and Internet offer us the opportunity of creating the drinking water company of the future. Furthermore, customers have unlimited access to information and we deliver on demand, 24 hours a day and 7 days a week. Customers will increasingly require public companies to provide the same high level of flexibility and service as that offered elsewhere.
Vitens strives to achieve a trading result that is adequate for paying interest and dividend to its providers of capital. In addition, Vitens wants to maintain a (solvency) ‘buffer’ as a contingency for unforeseen circumstances. The size of this buffer is defined as: ‘an equity capital at least equal to 25% of the balance sheet total and a capital base (equity capital + subordinated loans) equivalent to at least 30% of the balance sheet total’.
Consistent adjustments and appropriate reactions to all kinds of developments are essential if we are to safeguard our survival as a business. Vitens performs an integral risk management audit every two years which identifies risks that may adversely affect achievement of our continuity objectives. To improve internal measurability, the Asset Management department committed to a performance contract with the Executive Board in 2015. This contract sets out the main indicators for effective asset management, with a strong focus on continuity. Effective asset management is a separate monitoring and management
programme. The Executive Board has final responsibility for managing based on the organisation's continuity. Continuity is dependent on our investments in surface and subsurface infrastructure, innovations and other investments in our assets. G4-EC1 Direct economic values are generated and Key indicators in the annual accounts and consolidated annual accounts 4.1 and 4.4 distributed In-house KPI Investments in surface and subsurface 2.2.3 and 4.2 infrastructure and other investment Compliance with legislation and regulations (G4 aspects: compliance and complaints) DMA a. State why the aspect is materially important From the point of view of public health, Vitens attaches importance to ensuring that customers drink water of good and indicate its impact. quality. The Drinking Water Act has been drawn up to guarantee drinking water quality. According to the Drinking Water Act, all b. State how the organisation handles the drinking water companies must report to the Inspectorate for Habitat and Transport (Inspectie Leefomgeving en Transport/ILT) materially important aspect and its impact. if they fail to comply with the quality standards set out in the Drinking Water Decree. The number of reports to ILT is monitored c. Evaluation of the management approach. on a monthly basis and reported to the Executive Board. In-house KPI Number of reports of potentially avoidable 1.8.1 incidents to ILT
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GRI Code Indicator Explanation Section in the report Closed-loop process for by-product and waste flows (G4 aspect: waste) DMA a. State why the aspect is materially important In essence, water is a fully circular, i.e. renewable, raw material. We also want to apply this principle to all other substances or and indicate its impact. flows that we require in order to deliver drinking water to our customers. We want to either recycle or re-use 100% of the natural b. State how the organisation handles the resources we extract (water, humic acids, lime, iron), or return them to nature fully intact. We also actively explore the market for materially important aspect and its impact. high-value opportunities associated with our by-product and waste flows. We want to close the raw materials recycling loop in c. Evaluation of the management approach. our process. This fits in with our policy of contributing to creating a circular economy.
To allow effective management based on the objectives that have been set in the area of closed-loop recycling of by-products and waste flows, reports on the progress made relative to by-product and waste flow objectives are generated each month and sent to the ‘Sustainability Steering Group’. The complete Executive Board and representatives of the Asset Management, Extraction & Purification, Communication and Business Development departments are members of this steering group. Due to the volumes and different operational sites, the by-products and waste flows are monitored separately within the organisation.
Waste flows: the Asset Management department is responsible for the management activities associated with the KPI for waste materials such as residual waste for incineration (including office waste), construction and demolition waste, biomass and hazardous chemicals. Any discussions with the waste collection specialist are also attended by the Purchase department (Facility Management). The account consultation meetings relating to waste also look at what improvements are possible. If, for example, residual waste is discovered in the recycling containers, the environmental policy adviser receives a photograph of the incident so that he can alert the process operator at the site and implement improvements. The approach is evaluated each year in accordance with the ISO guidelines and audits.
Waste flows: progress in the area of waste flows from the water purification process is separately managed by the 'Valorisatie
reststromen' (waste flow value maximisation) consultative body. The Extraction & Purification department has operational responsibility for progress relating to waste flows. The Business Development department is responsible for innovation in this area and research that focuses on waste flows. As a shareholder, we are represented in the ReststoffenUnie and regularly initiate discussions regarding the use to which our lime and liquid ferric oxide/hydroxide waste flows are put. The contracts with additional partners such as Agrifirm and Triferto are managed by the Business Development department. The approach is assessed separately each year within the context of the waste flow value maximisation consultation. Value maximisation is also considered in the quarterly reports which the Business Development department supplies to the Executive Board. Increasingly demanding objectives are set each year in the annual plans. G4-EN23 Total weight of waste by type and disposal 2.6.1 method In-house KPI Percentage of waste flows put to good use 2.6.1
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GRI Code Indicator Explanation Section in the report Area development (G4 aspects: biodiversity) DMA a. State why the aspect is materially important With regard to the material aspect of 'Area development', we mainly look at surface aspects of biodiversity: developing the and indicate its impact. natural habitat in water extraction zones and groundwater protection zones. We see our natural habitat as the most ideal b. State how the organisation handles the environment for water extraction. After all, there is less risk of future contamination in a nature reserve than in an urban materially important aspect and its impact. environment. Agriculture and industrial activities, mobility and urban construction have a significant effect on the biodiversity of c. Evaluation of the management approach. our areas and therefore also affect the groundwater quality. In order to guarantee our continuity, we must imperatively maintain the biodiversity in our areas and improve it where necessary. Vitens extracts drinking water in 110 water extraction areas, which together amount to a surface area of 3,300 hectares. Vitens manages all these areas in a sustainable manner and has consistently achieved Gold level certification according to the Barometer Duurzaam Terreinbeheer (Barometer for Sustainable Land Management) since 2011. The land managers are directly responsible for daily management of the areas. This is also partially set out in legislation and partially in our own objective to achieve 100% sustainable land management and apply the sustainable land management barometer (Barometer Duurzaam Terreinbeheer) at 'Gold' level.
To allow effective management based on the objectives that have been set in the area of sustainability, reports on the progress made relative to environmental incidents and land management are generated each month and sent to the ‘Sustainability Steering Group’. The complete Executive Board and representatives of the Asset Management (AM), Extraction & Purification, Communication and Business Development departments are members of this steering group. The Environment Management department, which is part of the AM department, is responsible for daily management and consultation in relation to spatial planning and discussions with land-related partners such as those in the InterProvinciaal Overleg consultation forum. This department submits monthly reports on progress and the challenges it faces to the AM manager. Progress is measured based on the specific area dossiers which we manage within AM. For example, the provincial Sustainable Drinking Water Supply Agreement Gelderland (Overeenkomst Duurzame Drinkwatervoorziening Gelderland/ODDG) which entered a new phase called
Robust Drinking Water Supply Gelderland (Robuuste Drinkwatervoorziening Gelderland/RDG) in 2015. A further development programme, which we have named 'natuurlijk ondernemen' (doing business in the natural way), involves collaboration with various parties to guarantee resilient and broadly supported water extraction. The Environment Management department works together with nature conservation and agricultural organisations in this area. Each location is associated with an area dossier, which is managed by the Environment Management department (within AM). The process operators and land managers (Extraction & Purification) make agreements under the supervision of the Environment Management department in order to ensure proper coordination of nature and environment management. Depending on the area, the land managers assess biomass, the number of animals (birds, bees and wildlife) and other biodiversity indicators. They work in close collaboration with the Real Estate department (Facility Affairs), which manages leases and hunting licenses. If damage occurs due to groundwater depletion, compensation is paid to the injured party based on a documented system. If necessary, Vitens may decide to purchase the area if this protects the water source. Such cases are financial transactions for which the Real Estate department draws up a business case in cooperation with the Environment Management department. In specific cases, we re- landscape the nature area. This always takes place subject to consultation with Municipalities and Provincial Authorities.
This management approach is monitored on a quarterly basis in the above-mentioned reporting structures and, when necessary, stricter guidelines are applied in consultation with the stakeholders. In-house KPI % relating to sustainable land management 2.6.6
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GRI Code Indicator Explanation Section in the report Sustainable resources (G4 aspect: biodiversity) DMA a. State why the aspect is materially important With regard to the material aspect of 'Sustainable resources', we mainly look at subsurface aspects of biodiversity: the soil and indicate its impact. and geohydrological factors in water extraction areas and groundwater protection areas. Agricultural and industrial activities, b. State how the organisation handles the mobility and urban construction have a significant influence on biodiversity and soil condition, and therefore also affect materially important aspect and its impact. groundwater quality. The subsurface domain is increasingly crowded and this may have an adverse effect on our water c. Evaluation of the management approach. reserves. The following are significant developments: shale gas extraction, nitrate leaching as a result of spreading manure on the land and the risks of contaminated surface water. In order to guarantee our continuity, we must imperatively maintain the soil and groundwater quality and improve it where necessary.
The recent strategic reassessment revealed that we must improve our knowledge and strengthen our activities in the area of resource protection if we want to achieve our goals. We want our water sources to satisfy the requirements of the Water Framework Directive (Kaderrichtlijn Water/KRW). Recent research performed by the National Institute for Public Health and the Environment (RIVM) indicates that 50% of the water extraction sources in the Netherlands do not comply with those requirements. Consequently, we will have to focus more strongly on protecting our resources in the coming years by performing regular analyses and introducing additional activities. A number of strategic programmes have been developed for this. Responsibility for this aspect lies with the Asset Management department where the associated policy, analysis and required adjustments are initiated and managed. We continuously monitor the quality of our resources through analyses of our water quality and the activities of our land managers and environment managers. We also participate actively in debate at regional and national level, for example in relation to shale gas, in order to protect our water sources. Progress in relation to these programmes is regularly evaluated during management team meetings as part of the strategic programme assessment. In-house KPI % of water sources which comply with KRW This is not a result which Vitens can autonomously influence, however all our efforts are focused on raising this percentage to 2.8
guidelines 100%. In 2016, we will formulate KPIs that are specific to Vitens for this aspect. Customer satisfaction and customer-centric processes (G4 aspect: product & service labelling) DMA a. State why the aspect is materially important As the largest drinking water company in the Netherlands, our activities are at the heart of society. Furthermore, customers are and indicate its impact. not at liberty to choose a different drinking water company. With this position in mind, our ambition is to offer our customers b. State how the organisation handles the good service and ensure that our processes are truly customer-centric. Our objectives relating to customer satisfaction and materially important aspect and its impact. the associated KPIs reflect this ambition. In our strategy, we explicitly state our intention of differentiating ourselves by setting c. Evaluation of the management approach. up excellent processes for our customers. The four strategic programmes which we have created in this area all have direct reporting lines to the Executive Board.
As part of the activities for the Long Term Vision programme, which comes to an end in 2016, various surveys relating to both households and businesses were conducted during 2015 in order to gather information about how customers experience dealing with Vitens and customer profiles, and identify the associated scenarios for Vitens. The results of these surveys provide pointers for decision-making on future infrastructure and setting up customer-oriented processes. PR5 Results and conclusions of the customer 2.4.1 satisfaction survey
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GRI Code Indicator Explanation Section in the report Materiality indicators which Vitens reports and which partially overlap GRI aspects Employee safety (G4 aspect: health and safety of employees) DMA a. State why the aspect is materially important Our employees are our primary asset and the main actors in achieving organisational continuity and excellent performance. Not and indicate its impact. only are we morally obliged to protect their health and ensure their safety, failing to do so would have a disastrous effect on our b. State how the organisation handles the operational performance. Safety is a direct concern of the Executive Board and explicitly brought to our employees' attention materially important aspect and its impact. wherever possible - for example, by signs in all our offices and locations that indicate the number of days during which we have c. Evaluation of the management approach. worked without sickness resulting from accident.
Safety is measured based on LTIF (Lost Time Injury Frequency). Not only are our own employees monitored in this respect. We also look at the safety reports (number, type, policy and awareness) submitted by the subcontractors that work for us. Every month, the first-line managers and the Executive Board receive an accident report indicating the number of accidents and the LTIF. Consequently, our management approach in this area is evaluated continuously during the year. LA6 LTIF, type and number of accidents involving Reporting by region or gender in relation to this aspect is not relevant to how we manage. We report the number of accidents 2.3.4 employees and subcontractors and LTIF in relation to employees. In relation to subcontractors, we report the total number of accidents (17 in 2015). Water quality (G4 aspect: Customer health and safety) DMA a. State why the aspect is materially important We assign the highest priority to excellent water quality in connection with the health, perception and satisfaction of our and indicate its impact. customers. b. State how the organisation handles the materially important aspect and its impact. Water quality is measured based on the WQI index. The Technology Centre in the Asset Management department monitors the c. Evaluation of the management approach. WQI on a monthly basis. In accordance with guidelines issued by ILT, the WQI has been expressed in four parameter groups since 2013. These groups are health parameters (acute), health parameters (not acute), operational parameters and customer- related parameters. Our objective is to achieve a WQI of 0.02. A score of '0' indicates the highest possible quality and we try to approach this value as closely as possible. We are constantly looking for improvement and accordingly initiated a ‘Drinking water and customer satisfaction’ survey in 2013. The survey looked at issues such as colour, odour, taste and the amount of limescale. The results indicated that water hardness (one of the factors that determine the WQI index) is of less influence on the value perceived by customers than the degree to which limescale accumulates on sanitary equipment, kettles and hot water equipment. This latter phenomenon is not included in the WQI water quality index. However, we at Vitens find this very important. In response to this outcome, we are going to change the way in which we purify our water to ensure that customers are less affected by limescale deposits. That will result in substantial costs for Vitens, but the social costs of water purification will reduce; because equipment remains in service for longer, for example, or because people will no longer need to purchase water softeners.
The WQI and the results of customer surveys are included in the quarterly reports and regularly evaluated during the management team meetings. In-house KPI WQI - Water Quality Index 2.2.1
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GRI Code Indicator Explanation Section in the report Local roots and social contribution (G4 aspect: local communities) DMA a. State why the aspect is materially important Because Vitens operates at the heart of society with its 96 production facilities, water extraction areas and other activities, we and indicate its impact. participate in various projects in order to confirm and demonstrate our social involvement. We want to contribute to making b. State how the organisation handles the society sustainable and act to ensure that our water sources are resilient and broadly supported. The way in which we assume a materially important aspect and its impact. social role is important to achieving this goal. c. Evaluation of the management approach. Our relationships with local, municipal and provincial stakeholders are managed by the Environment Management department, which operates within the Asset Management department. This department employs three strategic environment managers who base their activities on inter-provincial dossiers or cross-area issues. Sixteen environment managers act as the daily point of contact for our stakeholders, partners and other local or social organisations. We use a system called Sugar CRM for daily management of the contacts with our stakeholders.
In view of the diverse aspects, this department has several different objectives and programmes. For example, we support local initiatives such as 'Vruchtbare Kringloop' in the Achterhoek area, 'Boeren voor drinkwater' in Overijssel and 'Circulair Fryslân' in Friesland. Progress is measured based on the specific area dossiers which we manage within AM. For example, the provincial Sustainable Drinking Water Supply Agreement Gelderland (Overeenkomst Duurzame Drinkwatervoorziening Gelderland/ODDG) which entered a new phase called Robust Drinking Water Supply Gelderland (Robuuste Drinkwatervoorziening Gelderland) in 2015. A further development programme focuses on encouraging 'natural entrepreneurship' in our areas in order to guarantee resilient and broadly supported water extraction. The Environment Management department works together with nature conservation and agricultural organisations in relation to this aspect. In-house KPI Approach relating to managing contacts 1.4.1
between local and regional stakeholders (Sugar CRM) and the Environment Management department
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GRI Code Indicator Explanation Section in the report Other materiality indicators which Vitens reports, but which are not included in GRI as an aspect Delivery dependability DMA a. State why the aspect is materially important With 96 production companies and approximately 49,000 kilometres of distribution pipes in the ground, occasional faults are and indicate its impact. inevitable. This causes inconvenience to our customers. In view of the fact that drinking water is an asset of national strategic b. State how the organisation handles the importance and a necessity of life, we try to avoid this at all times. materially important aspect and its impact. c. Evaluation of the management approach. Our responsibility for delivery dependability is closely related to Continuity, one of our materially important aspects. Obviously, we primarily look at delivery dependability from our customers' perspective and our emergency response process has been set up to ensure maximum dependability. We have also created strategic programmes in this area to ensure that all disciplines focus adequate attention on monitoring and improvement. We calculate 'under-target delivery minutes' (OLM) as the key indicator for this objective. Three departments (Extraction & Purification, Network Management & Delivery and Analysis) submit a daily update for this indicator to Asset Management, which evaluates the process and reports to the Executive Board and the management team. We have also set up a process which helps us detect faults based on customer reactions received via waterstoring.nl or via Twitter. In addition, we are experimenting with the use of sensors in our Friesland Live! network to give advance warning of emergency situations before they actually arise.
The progress made with programmes related to process automation and the infrastructure of the future are regularly evaluated during management team meetings. We also regularly organise drills together with our emergency service partners in order to perfect the response to prolonged or widespread non-availability of drinking water. Under the dictates of the Drinking Water Act, Vitens must submit a supply plan to the Ministry of Infrastructure and Environment (Inspectorate for Habitat and Transport) once every four years. The supply plan requires us to report on delivery dependability, functions, threats and emergency response
organisation. The next report is due to be submitted in June 2016. In-house KPI The number of under-target delivery minutes 2.2.4
45 GENERAL - 1.14 GRI index | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.14 GRI index
GRI Code Indicator Explanation Section in the report Use of expertise as an authority on water DMA a. State why the aspect is materially important As the largest drinking water company in the Netherlands, we invest significant amounts of time and money in our expertise and indicate its impact. related to water, groundwater sources and a future-proof infrastructure. We feel that we have a duty to contribute to innovation b. State how the organisation handles the projects and social debates. To inform customers of water consumption or water quality on the one hand. And on the other materially important aspect and its impact. hand to protect our water sources by contributing our expertise when developing areas and participating in social partnerships. c. Evaluation of the management approach. Primary school children can learn all about water via our free online teaching programme. For example, we feel that we have a social duty to explicitly encourage consumers to use hot water sparingly. We do so in a number of ways, such as the WarmWaterWijzer test and via our role within the Waterspaarders initiative. Another example: Kraanwaterkennis.nl offers different lessons on all aspects of (tap) water, both in the Netherlands and abroad.
Within the scope of our strategy and the associated strategic programmes, we have created a separate programme for achieving this particular ambition. To allow effective management based on the objectives that have been set in relation to using our expertise as an authority on water, reports on the progress made relative to the strategic ‘Vitens as an authority on water’ programme are generated each month. The programme is owned and implemented by the Communication department under the watchful eye of a steering group in which Asset Management and Business Development are represented. This programme is regularly evaluated during management team meetings as part of the strategic programme assessment procedure. In-house KPI Placing issues on the political agenda 2.8 Role in the social debate DMA a. State why the aspect is materially important Water is a basic necessity of life and a meaningfully sustainable product. Even so, the drinking water companies have often and indicate its impact. been too reticent about their activities in the past. Vitens wants to change this. As the largest drinking water company, we are
b. State how the organisation handles the an authority in the water sector and have a duty to promote the importance of water and water extraction. In our view, this topic materially important aspect and its impact. requires a higher profile in the political arena and should be focused on more strongly in debates about shale gas extraction, or c. Evaluation of the management approach. discussions relating to the National Policy Strategy for Subsurface Spatial Planning (Structuurvisie Ondergrond/STRONG). We are increasingly successful in our efforts to put drinking water on the political agenda. It is our duty to ensure that our precious resources are still capable of producing the best tap water in the world in fifty years’ time.
In order to manage our role in the social debate, the Communications and Environment Management departments produce quarterly reports on the progress we make in this area. We also organise various debates on social issues with groups of stakeholders at different times in order to maintain our participation in the social debate. Furthermore, we keep track of relevant legislation and record which interviews take place on the issues that we have identified as being important for our organisation. We have set up monitoring teams comprising representatives from various departments in order to monitor the issues of Agriculture, Soil, Deep Subsurface and Medicine Residues. The KPIs vary from media attention to specific interviews with municipal aldermen or politicians. In-house KPI Results of the stakeholder dialogue, focusing 1.4 and 2.8 customers' attention on water and placing issues on the political agenda
46 GENERAL - 1.14 GRI index | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.14 GRI index
GRI Code Indicator Explanation Section in the report Awareness of tap water DMA a. State why the aspect is materially important Not enough people are aware that water of impeccable quality flows out of the tap 24 hours a day in the Netherlands. We also and indicate its impact. note that bottled water is served in hotels, bars and restaurants even though this form of water pollutes the environment more b. State how the organisation handles the and is more expensive than tap water due to the impact of transportation and packaging. In an effort to change this situation, materially important aspect and its impact. Vitens has operated an active campaign for putting Dutch tap water more firmly on the map since 2013. Not because we want c. Evaluation of the management approach. to sell more, but because we see it as our social duty.
We measure the effects of our efforts. For example, we conduct surveys to identify our customers’ perception of tap water and establish whether they understand more of the advantages of tap water in the wake of the ‘Kraanwater Graag’ campaign. This is the KPI which we used to monitor this aspect. To allow effective management based on the objectives that have been set in the area of awareness of tap water, the progress made relative to this awareness campaign is reported within the reports package which the Communication department submits to the Executive Board each quarter. In-house KPI % of customers who have a better 2.7 understanding of the advantages of tap water and have started to request tap water more regularly
47 GENERAL - 1.14 GRI index | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.15 Assurance report
Independent auditor's assurance report in relation to Vitens' report on sustainability This assessment focuses on obtaining a limited degree of assurance. The activities performed to obtain a limited level of assurance focus on establishing information To: the Executive Board of Vitens N.V. plausibility and are less in-depth than those carried out for an assurance engagement aimed at obtaining a reasonable level of assurance. The activities performed in this The Executive Board of Vitens N.V. has asked us to provide a limited degree of context consisted mainly of requesting information from company officers of Vitens assurance regarding the 2015 sustainability report included in the annual accounts. In N.V. and performing analytical reviews in relation to the information presented in the our opinion, this engagement fulfils a rational purpose as explained by Vitens N.V. in sustainability report. The level of assurance obtained through assessment activities is paragraph 1.12 ‘Integrated annual report’. therefore lower than the assurance obtained through audit activities.
Our conclusion The basis for our conclusion
Based on our audit activities and the information provided to us, we conclude in Professional and ethical standards relation to the sustainability information in the 2015 sustainability report, as presented We have performed our assessment of the sustainability report in accordance with in paragraphs 1.4 to 1.6, 1.12 to 1.14 and chapters 2 and 3, that we have made no Dutch law, including Standard 3810N ‘Assurance engagements relating to social discoveries based on which we would have to conclude that the sustainability report reports’ (hereinafter referred to as 'Standard 3810N'). Our responsibilities under this does not, in all materially important aspects, provide a reliable and adequate picture standard are explained in more detail in the paragraph in this report entitled 'Our of the policy of Vitens N.V. in respect of corporate social responsibility and operational responsibilities'. management, and the events and the performance in that area during the reporting year, in accordance with Vitens N.V.'s reporting criteria. We are impartial and not dependent on Vitens N.V., in accordance with the 'Regulation on the independence of auditors in respect of assurance engagements’ (Verordening Our conclusion should be read in the context of the rest of this report. inzake de onafhankelijkheid van accountants bij assurance-opdrachten/ViO) and other relevant requirements regarding independence in the Netherlands. In addition, we have The aspects on which we provide assurance satisfied the ‘Regulation on conduct and professional rules for auditors’ (Verordening We have assessed the 2015 sustainability report (hereinafter: ‘the sustainability report’) gedrags- en beroepsregels accountants/VGBA) and other relevant requirements. of Vitens N.V. in Zwolle, as included in these annual accounts in paragraphs 1.4 to 1.6, 1.12 to 1.14 and chapters 2 and 3. In the sustainability report, Vitens N.V. accounts for Limitations affecting the investigation the organisation's social performance in 2015. The sustainability report includes forward-looking information in the form of ambitions, strategy, plans, expectations and estimates. The fact that the actual outcomes in the The sustainability report reflects Vitens N.V.'s policy in respect of corporate social future may differ, and are therefore uncertain, is inherent to this information. We do responsibility and operational management, and the events and the company's not provide any assurance relative to the suppositions and feasibility of forward-looking performance in these areas during 2015. The scope of the sustainability report is information in the sustainability report. explained by the Executive Board in paragraph 1.12, ‘Integrated annual report’.
48 GENERAL - 1.15 Assurance report | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.15 Assurance report
Reporting criteria Vitens N.V. has determined its reporting criteria based on the G4 Guidelines issued Our main activities consisted of: by the Global Reporting Initiative (GRI). These guidelines, together with detailed • performing an environmental analysis and gaining an understanding of the information about the reporting scope, processes and methods, are explained in sector, relevant social themes and issues, relevant laws and regulations and the paragraph 1.12, ‘Integrated annual report’ in the annual report. We feel that the characteristics of Vitens N.V.; assurance engagement information we have gathered is sufficient and suitable for • evaluating the acceptability of the reporting policy and the consistent application substantiating our conclusion. thereof, including the evaluation of the outcome of the dialogue with stakeholders and the reasonableness of estimates made by management, and also an Definition of reporting and measurement methods evaluation of the total picture presented in the Annual Report; The information to which this assurance engagement relates must be read in the • assessing whether the sustainability information has been drawn up ‘in accordance context of the reporting criteria. Vitens N.V. is responsible for selecting and applying with’ the G4 Guidelines issued by GRI; these criteria. The lack of established practices for assessing and measuring non- • conducting interviews with relevant employees responsible for the delivery of financial information allows the use of various, acceptable measurement techniques. information for CSR reporting and performing internal controls on the data in the This may have an effect on comparability between entities and over time. sustainability report; • assessing the internal and external documentation, in addition to information gained through interviews, to determine whether the information in the Our assurance approach sustainability report has been sufficiently substantiated; • analytically evaluating data and trends. Materiality We apply materiality levels during the planning phase and have reassessed these levels We feel that the assurance engagement information we have gathered is sufficient and during fulfilment of our assurance engagement assignment. These help us to establish suitable as the basis for our conclusion. the nature, timeliness and scope of our work and assess the effect of identified misrepresentations in the information presented in the report, both in individual and aggregated form. Based on our professional judgement, we have determined specific Responsibilities materiality levels for each element of the sustainability information. When assessing our materiality levels, we have taken the relevance of the information for both stakeholders Responsibilities of the Executive Board and the organisation into account, based on the materiality analysis carried out by The Executive Board of Vitens N.V. is responsible for the preparation of the Vitens N.V. sustainability report in accordance with Vitens N.V.'s reporting criteria, including identifying stakeholders and determining materially important topics. The choices Our activities made by the Executive Board in relation to the scope of the sustainability report and We are required to plan and implement our assessment in a way that provides a limited the reporting policy are set out in paragraph 1.12 ‘Integrated annual report’ in the degree of assurance that the sustainability report is free of misrepresentations of annual report. material importance.
49 GENERAL - 1.15 Assurance report | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS 1.15 Assurance report
The Executive Board is also responsible for exercising internal controls to the extent it considers necessary in order to draw up the sustainability report in a form free of misrepresentations of material importance resulting from fraud or errors.
Our responsibility Based on our work in line with Standard 3810N, we are responsible for providing a conclusion regarding the 2015 sustainability report. This requires compliance with the ethical standards that apply to our activities and that we plan and perform our assessment in a way that provides limited assurance that the sustainability report does not contain misrepresentations of material importance.
The selected procedures depend on the auditor's judgement, including the analysis of risks of material misrepresentations in the sustainability report due to fraud or error. During these risk assessments, the auditor takes the relevant internal controls required for preparation of the sustainability report into consideration, in order to develop appropriate procedures. These are not intended to express an opinion on the effectiveness of the internal controls of Vitens NV. An assurance engagement aimed at providing limited assurance focuses on evaluating the appropriateness of the reporting framework used and the reasonableness of estimates made by management, as well as the evaluation of the entire presentation of the sustainability report.
Groningen, 22 March 2016 PricewaterhouseCoopers Belastingadviseurs N.V.
Original signed by: A.L. Koops-Aukes RA
50 GENERAL - 1.15 Assurance report | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS
The value of water, now and in the future
Report on the activities and results in 2015
The past year was devoted to implementation of our revised strategy. We innovated technically in the area of monitoring vital processes, infrastructure and customer contact. We introduced the Piket programme to control costs throughout the organisation and the 8+ programme in which high scores from customers and colleagues are the basis of the KPIs for self-managing teams.
We actively participated in the social debate on protecting water resources. We ran several different campaigns designed to increase the Dutch population’s awareness of water. And we made progress towards creating a circular economy by re-using our by-products and waste flows as sustainably as possible.
All these activities are explained in detail in this chapter. And none of them would have been possible without one of the organisation’s most important ‘assets’: our own employees.
Chapter 2: The value of water, now and in the future Report on the activities and results in 2015
2.1 Our drivers 52 2.2 Reliable water at the lowest cost 55 2.3 Our people 63 2.4 Our customers 70 2.5 The water company of the future 73 2.6 Sustainable entrepreneurship in a circular 74 economy 2.7 Spotlight on water 81 2.8 The political arena 84 2.1 Our drivers
Vitens stands for supplying high-quality drinking water at the lowest possible rate. Now and in the future. That we do in fact achieve this is demonstrated time and again by our excellent scores for water quality and delivery dependability. Our dedicated professionals make a huge contribution to our continued good performance in this area. They work hard to deliver the best water and guarantee delivery dependability.
In addition, we succeed in producing this drinking water in a sustainable manner and at a low cost. In the Netherlands, we have the lowest costs per connection. Which directly benefits our customers. In 2016, they will pay the lowest drinking water rates in the Netherlands.
In order to guarantee our ability to supply good drinking water in the future, we focus strongly on sustainable water extraction, purification and distribution. For example, we have succeeded in making nearly all of the by-products from our water purification process suitable for re-use. Lower costs are an added benefit. We also invest continuously in our surface and subsurface infrastructure, and in new technologies that make our work more efficient and sustainable.
However, the linchpin of our revised strategy is the customer himself. Not an interface. Not a computer file. Not an address where a fault needs to be rectified. Our customer is a person. A person with whom we talk, with whom we empathise when he/she faces problems and whom we want to help. So we not only strive to operate excellent processes, we also pay attention to individual customers. We want to achieve this by working based on three key qualities: up-to-date craftsmanship and expertise, moving boundaries and high relevancy for customers.
Finally, we are committed to protecting our sources of drinking water. We achieve this by convincing policy-makers of the importance of these resources. Our goal is to ensure that policy-makers structurally consider this aspect when issuing licenses for shale gas extraction or other projects which potentially threaten valuable sources of drinking water.
52 GENERAL | THE VALUE OF WATER - 2.1 Our drivers | IMPACT ANALYSIS | FINANCIAL RESULTS 2.1.1 Value creation model
Finance THE VALUE OF WATER Finance The shareholders of Vitens are 105 Our investments and the salaries we pay municipalities and 5 provincial authorities. have a positive economic impact. In The capital position, revenues, NOW AND IN THE FUTURE addition, we have the lowest net operating investments and capital/loan liabilities are costs in the Dutch water sector. Our described in the annual accounts increased solvency strengthens our nancial position. 23% indicate that they will drink more tap water due to the VITENS Kraanwater Graag campaign CUSTOMER 8,271 tonnes of waste Production Production Investment of 102 million euros in of which 57% is re-used subsurface and surface activities In 2015, our 96 production facilities Customers can depend on a continuous produced 356.1 million m3 of drinking Nearly 700 schools make use of supply of top-quality drinking water and water. Energy consumption Kraanwater Graag and Kraanwaterkennis good service provision. We provide of 158 GWh softened water in more and more areas and keep the price as low as possible. 36 tap water supply points
330.8 million m3 of 1,383 employees tap water delivered to customers Expertise Expertise Customer satisfaction: 7.7 In 2015, Vitens invested in innovation, Through innovation projects, we have set entrepreneurship in a circular economy, up new partnerships and created new robustly linking data and digitising service technologies such as the heat map and the provision. human sensor. We succeed in putting our residual by-products to good use.
2.5 million People households
With a workforce of 1,383 employees, we 5.6 million customers People have a diverse organisation in which we prioritise exible and safe working. Safety: 3.75 LTIF Our programmes in the area of safety, Output-based management gives 49,000-kilometre sustainable employability and DNA have a employees greater responsibility. distribution network Water quality: 0.019 WQI positive impact on the organisation's capacity to learn and the development of our employees. Telephone response service level: 77% Social role and 356.1 million m3 27.5% solvency relationships of groundwater Social role and We are involved in the (global) community Net turnover: €356.9 million relationships through our international activities and education programmes. We work together 54,706 tonnes of by-product ows Through our collaborative initiatives, we and seek to initiate a dialogue with our 3,300 hectares of nature reserves INPUT 99.2% put to good use OUTPUT have made good progress in the stakeholders. where we extract water Netherlands in promoting the awareness of tap water and protecting our groundwater resources. Our international activities contribute to the quality of life of people in developing Primary task: countries. Produce, distribute and deliver drinking water Habitat to our customers and provide the associated services.
We require 158 GWh of energy for our Habitat operations. This is generated by Dutch wind turbines. We manage approximately 3,300 hectares of water extraction territory Sustainable use of By re-using 99.2% of our by-product ows in a sustainable manner. Customer and recycling our waste ows to a greater 1 Continuity 2 groundwater sources 3 extent, we make a signi cant contribution Excellence to the circular economy and exercise and assets sustainable land management.
© 2016, Vitens Value Creation Model
53 GENERAL | THE VALUE OF WATER - 2.1 Our drivers | IMPACT ANALYSIS | FINANCIAL RESULTS 2.1 Our drivers
Comparative figures for the value creation model Vitens’ value creation model is closely associated with our company’s ambitions and strategy. Please refer 2015 2014 to paragraph 1.6, which explains our strategy and Number of municipalities and provinces 105 and 5 105 and 5 ambitions in detail. The social developments and trends around us also influence our strategy and the value Production facilities 96 96 chain. More information is provided in paragraph 1.5. Drinking water production in million m3 356.1 350.1 The developments and trends can also be expressed Employees 1,383 1,403 as opportunities and risks, which are explained in Energy consumption in GWh 158 156 more detail in paragraph 1.9 Risk management and Water extraction areas in hectares 3,300 3,300 control systems. Finally, chapter 3 contains a concise Investments below and above the surface 102 107 explanation of the social, economic and environmental Distribution network in kilometres 49,000 49,000 impact of our activities. By-products and waste flows 54,706 54,156 Put to good use 99.2% 99.7% Net turnover (millions) €356.9 €353.8 Solvency 27.5% 24.6% Service level for telephone contacts 77% 68%
Water quality index (WQI) 0.019 0.019 Safety expressed as LTIF (Lost Time Injury Frequency) 3.75 5.39 Customers (millions) 5.6 5.6 Households (millions) 2.5 2.5 Customer satisfaction 7.7 7.9 Delivered tap water in million m3 330.8 325.1 Tap water supply points 36 18 Schools participating in Kraanwater Graag and nearly 700 nearly 600 Kraanwaterkennis Waste in tonnes 8,271 8,421 Re-utilised waste 57% 72% Customers who have started to drink more tap water 23% 12%
54 GENERAL | THE VALUE OF WATER - 2.1 Our drivers | IMPACT ANALYSIS | FINANCIAL RESULTS 2.2 Reliable water at the lowest cost
Water quality index (aggregated KPI) We deliver high quality drinking water at a low rate. Something which our customers appreciate. Furthermore, we achieve a high score in the area of delivery dependability. Behaving conscientiously in terms of 0.020 environmental conservation is a primary concern. So we continuously focus on making our processes more 0.019 0.019 sustainable and using our water resources in a way which guarantees their future availability. 0.015 2.2.1 Water quality “I find it encouraging to see that 0.010 Vitens has a long-standing record of successfully complying Vitens openly refers to the drinking with the statutory standards provided for by the Drinking Water water contamination by medicine residues Act. We achieved a Water Quality Index* (WQI) score of 0.019. on their website and that they also 0.005 Water which exactly complies with the statutory standard is suggest ways of tackling the problem.” given a score of ‘1’. A score of ‘0’ is the highest attainable, and Jeroen Verjaarschot, a customer of Vitens our objective is to approach this value as closely as possible. 0.000 2014 2015 Even though we achieve a low value for the Water Quality Index, the analysts working in Vitens’ laboratory also look for other substances which may be present in the water. They conduct their own research and keep up- to-date by reading relevant studies and publications. For example, in order to detect possible contamination, Vitens keeps a record of the substances which can find their way into the surface water. These can be * The aggregated WQI is reported residues of medicines used for animals, which find their way into ditches close to farms. And medicines used in 2015. This is calculated based on to treat humans also play a role: the body does not absorb the full dose and traces of these medicines end up weighting factors for four parameter in the surface water via the sewage system. This type of contamination can seep down into the groundwater in groups. In 2014, we only reported the long term. So Vitens not only tries to compensate for this in the purification process, but also investigates the WQI related to the customer- whether the problem can be tackled at its source. For example, by making agreements with hospitals about oriented parameter group. In 2014, the medicine residues and using humic acids (instead of manure) to improve the soil structure in the agricultural aggregated WQI amounted to 0.019: sector. the same value as in 2015.
Since 2013, we have conducted surveys into customer satisfaction relating to drinking water formulation. We have asked customers in areas with different drinking water formulations to tell us their opinion about issues such as odour, taste and water hardness. The results indicated that water hardness (one of the factors that determines the WQI index) is of less influence on the value perceived by customers than the degree to which limescale accumulates on sanitary equipment, kettles and hot water equipment. This latter phenomenon is not included in the WQI. Because we wanted to satisfy this customer requirement as well, we have adapted the purification process to ensure that customers experience fewer problems with limescale deposition. The associated additional cost of the purification process is outweighed by the social benefits. Because equipment remains in service for longer and customers do not have to buy water softeners.
55 GENERAL | THE VALUE OF WATER - 2.2 Reliable water at the lowest cost | IMPACT ANALYSIS | FINANCIAL RESULTS 2.2 Reliable water at the lowest cost
Investments in 2015 2.2.2 Benchmark and price surface, subsurface and other (€ millions) The water sector association, Vewin, compares the performance of the Dutch water companies each year. The 2014 benchmark shows that Vitens again achieved the lowest total costs per connection within the sector 6.4 (€144 compared to the sector average of €173). Vitens has already had the lowest net operating costs in the sector for several years: €72 per connection (compared to the sector average of €97). This is mainly the result of economies of scale and streamlining operational processes. 56.5 45.3 Price We strive to sell our drinking water at the lowest possible rate without making any compromises in terms of quality or delivery dependability. The variable drinking water rate (excluding taxes) charged by Vitens in 2015 reduced from €0.73 (2014) to €0.68 per m3. The standing charge increased by €5 relative to 2014 and amounted to €45 in 2015. Based on an average small consumer consumption of 110 m3, the average annual bill exclusive of taxes amounted to €120, which was the same as the previous year. In 2016, Vitens surface subsurface other has succeeded in reducing the variable drinking water rate by 5 cents to €0.63 while maintaining the standing charge at the same level.
2.2.3 Investments in infrastructure
Vitens invests in the continuity and quality of drinking water in order to continue to guarantee a good drinking water supply in the long term, In 2015, we invested €108 million (excluding contributions from third parties), of which €102 million was invested in our distribution network and our production facilities. Of that amount, €56.5 million was spent on subsurface infrastructure improvements, which included replacing existing pipes and laying new pipes. We invested €45.3 million in surface infrastructure: construction and renovation of production facilities.
The level of investment is slightly lower than in 2013 and 2014. This is partly attributable to a number of incidental investment projects, including the construction of our office building in Zwolle in 2014. In addition, a number of projects were deferred during the course of 2015. We expect to continue to invest approximately €120 million a year during the coming years (excluding contributions made by third parties).
56 GENERAL | THE VALUE OF WATER - 2.2 Reliable water at the lowest cost | IMPACT ANALYSIS | FINANCIAL RESULTS 2.2 Reliable water at the lowest cost
2.2.4 Delivery dependability and faults Under-target delivery minutes (minutes) 16 In 2015, we again succeeded in minimising the number of faults. We measure the period during which we are unable to deliver water in ‘under-target delivery minutes’: OLM. The OLM reduced to 13:53 minutes last year. That means that customers were without water for approximately 14 minutes in 2015. That is an improvement 15.33 of more than 1.5 minutes relative to 2014. However, our objective was to reduce the OLM to less than 12 15 minutes. We will again strive to achieve that goal in 2016.
This good score does not change the fact that a loss of water pressure can put our customers in a difficult 14 14.31 position. Consequently we are investing in providing timely and complete information if a fault occurs. 13.53 We have learned a great deal in that respect from a fault that occurred in the Bommelerwaard in July 2015. A 13 ruptured water pipe meant that many customers in Zaltbommel and Gameren temporarily had no water. After the incident, we also had to advise on preventive measures when cooking. This process took too long and not everybody received our advice. That resulted in unnecessary worry for customers in that area. When we were confronted by a similar situation in Bunschoten sometime later, we managed information provision much more 12 effectively by using Facebook, Twitter and email, and by involving emergency service partners in good time. 2013 2014 2015
In order to guarantee delivery dependability at the time of Le Grand Départ, the start of the Tour de France on Saturday 4 July 2015 in Utrecht, we made an unusual appeal to residents and companies in and around the city. Because extreme temperatures were forecast for that day and a record number of people were expected to visit Utrecht, we asked our customers to use water sparingly. We also set up tap water supply points at different locations. On the Saturday in question, an additional 15 million litres of water were used over and above the normal daily consumption volume. During the night prior to the Saturday, we increased the pressure in the water pipes at the production facilities that are located in a ring around the city, for example in Bunnik and the Leidsche Rijn district of Utrecht. All the reservoirs were also filled to their maximum capacity. On the day in question, the main pipes under the city had to handle twice the amount of water they would normally. This ‘practical test’ involving extremely high pressures led to no problems: water delivery was not put at risk at any time.
57 GENERAL | THE VALUE OF WATER - 2.2 Reliable water at the lowest cost | IMPACT ANALYSIS | FINANCIAL RESULTS 2.2 Reliable water at the lowest cost
2.2.5 Vechterweerd Vechterweerd opening ceremony and Watermakers open day The construction work for the Vechterweerd production facility, which started The Vechterweerd drinking water production facility was constructed on the in June 2013, reached completion at the end of the summer of 2015. On 9 Overijsselse Vecht near Dalfsen last year. The facility was constructed to guarantee October 2015, the Chairperson of Bouwend Nederland, Maxime Verhagen, delivery dependability in the northern part of the province of Overijssel. The building officially opened the facility in Dalfsen together with Herman Wijffels, a former was designed in accordance with an ‘integral sustainability assessment’. This is a member of the Social and Economic Council. On the next day, the public was new concept in the water sector, which calls for collaboration between the drinking given the opportunity of visiting the production facility during the ‘WaterMakers’ water company and local parties in order to create a highly sustainable production open day. The new production facility will supply drinking water to the residents facility. After we have resolved some initial teething problems, Vechterweerd will fulfil of Dalfsen and an extensive area around the town in 2016. its intended role as a resilient, high-tech extraction and purification facility for drinking water. The new building emphasises the natural function of the location: it blends in Collaboration seamlessly with the nature area surrounding it. The building aesthetics committee Vitens ensured close involvement of local parties during the design and build of the municipality of Dalfsen described the design as ‘landscape art’. In addition, once process for the new production facility. For example, agreements have been fully commissioned and fully operational, Vechterweerd will be the first production made with the water boards, the provincial authority of Overijssel and the facility to have Breeam certification. Breeam is an objective method for indicating municipality of Dalfsen in order to prevent damage caused by groundwater building sustainability. depletion in the area and to monitor and even improve the water quality in the river Vecht. A water agreement and a water supply plan have been drawn up for this. In addition, the direct neighbours of the new production facility and the municipality of Dalfsen were also closely involved in the design process. The scale of this collaboration is unique in the water sector. Information points have been created outside the building and tours and field trips for schools in the nature reserve are offered in collaboration with the Institute for Nature Education and Sustainability (Instituut voor Natuureducatie en Duurzaamheid/ IVN).
Pride and uncertainty Obviously we are proud of what we have succeeded in creating in Dalfsen. The facility shows that we are capable of significant technical feats. However, there are also uncertainties: we draw in water from the river Vecht via a riverbank filtration system. As a result, the water quality is more complex and the costs of water purification are higher compared to using groundwater. Consequently, whenever possible, we will always opt in favour of using groundwater as the raw material for our drinking water and we remain committed to lobbying for clean water resources.
58 GENERAL | THE VALUE OF WATER - 2.2 Reliable water at the lowest cost | IMPACT ANALYSIS | FINANCIAL RESULTS 2.2 Reliable water at the lowest cost
2.2.6 Softened water
In 2015, Vitens put the new water softening plant at the Bunnik production facility into operation. As a result, approximately 75,000 people in Houten and Bunnik now receive softened tap water. The new plant removes almost all of the lime that is naturally present in the water. As a result, the tap water hardness has reduced from 14 °dH to a value between 6.5 and 7.8 °dH.
Each year, Vitens delivers approximately 3.5 million m3 of water to the residents of Bunnik and Houten via the production facility in Bunnik. The new plant consists of a water softening building which houses several pellet softening reactors. The pellets are small spheres of lime. Calcium and magnesium molecules attach themselves to grains of sand to form pellets in these reactors. These pellets are disposed of for re-use in the glass and concrete industry. A new water reservoir has also been installed in the new building in order to increase storage capacity.
The advantage of softer water is reduced build-up of limescale in sanitary equipment and heating elements. This extends the service life of appliances such as washing machines and electric kettles. In addition, less dishwasher salt and detergent are required. Soap lathers more easily when softer water is used and less shampoo is also required for same reason. So the residents of Bunnik and Houten will definitely notice the difference that softer water makes. It is good for the environment and saves money.
59 GENERAL | THE VALUE OF WATER - 2.2 Reliable water at the lowest cost | IMPACT ANALYSIS | FINANCIAL RESULTS 2.2 Reliable water at the lowest cost
2.2.7 Natural Entrepreneurship What will Vitens do with the land in Groenekan? Purchasing the land is the first step in a protracted process. Firstly, we need We see increasing crowding, both on the surface and under the surface. The risk to answer all kinds of additional questions: what kind of ground stratification of groundwater contamination is accordingly higher. During the past year, Vitens is present, what is the quality of the soil and vegetation, how does water consciously decided to embrace responsibility for protecting the groundwater by buying flow into the purchased land, and what threats exist for groundwater in the targeted areas of land. We do so via our ‘Natural Entrepreneurship’ plan. surrounding area? Secondly, the designated land use must be amended to change it from ‘farmland’ to a ‘nature preserve’. We will coordinate this with In the autumn of 2015, the Netherlands Enterprise Agency (Rijksdienst voor the municipality and provincial authority. Finally, we will develop a plan for Ondernemend Nederland/RVO) sold us an area of land that is ideal for use as a living sustainably exploiting the area based on the adjusted land price. That requires lab in line with this ambition. This tract of rural land measures 20 hectares and is partners who subscribe to our goal of protecting groundwater in the long term. situated in Groenekan to the north of Utrecht. All the main decisions relating to the The Environment Management team at Vitens applies Strategic Environment purchase were taken within just four weeks. This was largely possible due to the Management principles to achieve this: how can we combine individual existence of concrete and detailed plans for this kind of purchase. So Vitens was ready stakeholder interests to achieve a higher social goal? for this opportunity and successfully took this first step towards independent land development in order to create a protected water extraction area. Once these phases have been completed, we can make a start on implementation, which is expected to take place before 2020. The land will be transformed into an attractive nature reserve. It will become a transitional area between the outlying districts of the municipality of Utrecht and a nature area that is part of the National Ecological Network in the Netherlands (‘Natura 2000’). We will develop the soil in collaboration with the Forestry Commission and apply natural methods for filtering out any anthropogenic substances resulting from human activity which have already found their way into the soil. As a result, the area will contribute to cleaner groundwater in our country. That is not only important for Vitens, but also vital for society. This approach allows Vitens to embrace its social responsibility practically and within a commercial envelope.
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2.2.8 Sustainable Drinking Water Supply Agreement same as the production capacity, which indicates how much is in fact extracted). This measure gives the provincial authority more accurate information about the maximum Gelderland amount of water that will be extracted from the soil at each location.
Vitens and the provincial authority of Gelderland have already collaborated successfully The licensed volume in Gelderland reduced from 185 to 160 million m3 in 2015, for some time thanks to the Sustainable Drinking Water Supply Agreement Gelderland in line with the ODDG agreement. To achieve this, we had to discontinue water (Overeenkomst Duurzame Drinkwatervoorziening Gelderland/ODDG). A meaningful extraction at the Nieuwe Marktstraat site in Nijmegen. We have done so to guarantee sequel to this agreement - the Robust Drinking Water Supply Gelderland (Robuuste good groundwater quality at and around that location and achieve a more balanced Drinkwatervoorziening Gelderland/RDG) agreement - was introduced in 2015. extraction pattern across the province. The capacity that has been lost in Nijmegen This agreement ensures that Vitens can continue to extract good drinking water in is currently compensated by the Fikkersdries location in Driel. Closure is planned in the province of Gelderland and that measures are enforced to protect the soil in 2016. Gelderland. The ODDG, which ran from 2008 to 2015 inclusive, successfully achieved a number of objectives. The section below lists some of the results that were achieved Robust Drinking Water Supply Gelderland agreement in 2015. Due to the success of the ODDG, the provincial authority of Gelderland and Vitens decided to draw up a follow-on agreement at the end of 2014. This took place Compensation for extraction in 2015. The new agreement has been baptised Robust Drinking Water Supply Reducing the effects of groundwater depletion (soil desiccation) was one of the main Gelderland (Robuuste Drinkwatervoorziening Gelderland/RDG) and runs from 2016 objectives of the ODDG. To achieve this, we opened a new and extremely extensive to 2021 inclusive. The new agreement focuses primarily on protecting and improving infiltration project in Epe in 2015. Vitens already removes surface water at this location groundwater quality. The European Water Framework Directive has been taken as the and compensates for the resulting effects via ‘infiltration’ - catching surface water and starting point. The Framework Directive’s main goal is to ensure that we can continue rainwater in basins - close to the extraction site. The innovative element here is that to produce drinking water from groundwater with relative ease in the future. Vitens now extracts as much water as it infiltrates, thereby reducing the net effect of its extraction activities in Gelderland to zero. During the last quarter of 2015, we entered into high-level consultation about the agreement with our area partners - water boards, land management organisations, The - modest - water extraction location in Speuld was closed in November as the new LTO as the representative for agriculture and horticulture and the Gelderse Natuur- en centralised production facility in Harderwijk compensates for the lost capacity. The Milieufederatie (GNMF). We initiated this consultation based on the belief that the result is greater efficiency with no capacity loss and a favourable effect on the land main goals of the agreement can only be achieved through cooperation with the area around Speuld. partners. Our approach was much appreciated. The agreement highlights the power of collaboration more than ever before. Licensed capacity A further objective of the agreement was to achieve a balance between the licensed The final decision-making stage for the new agreement - based on the outcome of the quantity of water extracted from the ground in Gelderland and our production capacity. consultation phase - was completed at the end of 2015. The agreement was signed on The licensed capacity is the amount of water that may be extracted (and is not the 12 February 2016.
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2.2.9 Maintenance in Apeldoorn
Vitens and gas mains network operator Liander will replace approximately 46 kilometres of gas and water pipes in Apeldoorn during the coming two years. The project started in the Kerkschoten and Anklaar districts in September 2015. The decision to replace the water and gas pipes was taken as a result of two combined water and gas supply interruptions in 2014. The residents of the two districts had to get by without gas for several days at the time.
A combined break of this type can have major knock-on effects due to a combination of factors. Vitens and Liander consider the risk of recurrence to be unacceptably high and will therefore replace the water and gas pipes in the Zevenhuizen, De Maten and Zuid districts during the coming two years
Vitens and Liander will work simultaneously on their distribution pipes so that the road and pavement only have to be broken open once. In addition, the municipality of Apeldoorn will also participate so that possible work on the sewer system can be performed at the same time.
Walk-in meetings will be organised at the start of the activities and all stakeholders can reference up-to-date information on the onderhoudinapeldoorn.nl website.
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Water extraction and distribution requires human input. So Vitens’ success is largely attributable to the efforts of its workforce of nearly 1400 employees. We have defined three key qualities: ‘up-to-date craftsmanship and expertise’, ‘moving boundaries’ and ‘high relevancy for customers’. These key qualities are expressed in nine types of behaviour, such as wanting and being allowed to excel, for example by taking the initiative, collaborating constructively in the interest of Vitens and permanent learning and development. These qualities are described in our strategy, which was revised and updated in 2014. They make up Vitens’ DNA. In 2015, we started to implement these qualities throughout the organisation.
Head Office The new head office in Zwolle, which was officially opened in 2015, proved itself to be an excellent physical location for achieving our plans last year. Our staff and visitors appreciate the more open layout with many more communal areas and a fresh, bright décor. Interviews with management, a survey held among users of the building and an analysis of capacity usage all confirm this high level of satisfaction.
2.3.1 Employee satisfaction
At the end of 2015, we introduced a new way of working in the departments that have direct contact with customers: the 8+ programme. The programme focuses on output, which results in a daily score for employee satisfaction. Employee satisfaction is not only an important element of company culture, it also generates high customer satisfaction. Furthermore, the new way of working, which allows employees to personally plan, delegate and handle their work, is an expression of the high level of confidence that company management has in Vitens’ employees. The initial results are very promising.
“Our team has also started to apply the new way of working. You can really work together effectively as a team by showing respect, embracing your personal responsibilities and having confidence in your fellow team members. You discuss and agree who will do what with your team members and decide how you can best help your customer. In addition, you are free to plan your own work and choose the way of working you find most pleasant. And when you feel happy at work, you also capable of helping customers more effectively! In a nutshell, the new way of working results in greater satisfaction for both customers and employees!” Sacha Jansen, employee in the Customer & Invoicing department
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2.3.2 DNA programme
Vitens started a programme called ‘Work on our DNA’ in 2015. The essence of the programme is that employees relate the three key qualities to their personal work: how is a quality such as ‘moving boundaries’ reflected in your daily work? And can you successfully take action to implement a quality like this more concretely? Concepts such as wanting to excel and sharing expertise are central elements in implementing the programme. These concepts are embodied in nine concrete forms of behaviour, which are allocated internally. Collaboration levels have increased within and between departments, there is less emphasis on the formal hierarchy and we have succeeded in creating an open dialogue about our work. The Intranet is used for this and employees regularly organise knowledge-sharing sessions on their own initiative. The Executive Board talks to a different group of employees on each occasion during the weekly ‘coffee and chat’ sessions. We also continue to offer personal development opportunities in order to maintain our status as a popular employer.
Vitens’ management team has set out the frameworks for these developments. These frameworks indicate the type of behaviour that matches the key qualities, which results indicate success and the period of time that may pass before the results become apparent. Within these frameworks, each department is at liberty to work at its own pace and determine what actions are required to implement the DNA programme in its activities.
DNA Programme survey An initial DNA Programme survey was performed at the end of November 2015. This survey indicated how employees feel about the debate on our DNA during the past year and what the key qualities mean for individual employees. Particular attention is given to anything that scores negatively as a guideline for corrective action. The DNA Programme survey comprised 14 questions and was answered by 65% of the workforce (928 employees). Of those respondents, 85% were able to state the three key qualities and also indicated that they found it important to apply those key qualities in their daily work. The scores for the other questions also indicated that all the management attention given to this aspect during the previous year has paid off and that the programme objective for 2015 has been achieved. We will use these results in order to discuss the next subsequent actions for 2016 within each of the teams.
The DNA Programme survey is part of a revised approach for investigating how employees perceive their work: the Jij&!K Monitoring menu. This monitoring menu makes it possible to gauge work perception and check progress in relation to our DNA. In 2015 and 2016, the Jij&!K Monitoring menu replaces the annual Employee Survey (MEO), which was performed for the last time in 2014.
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2.3.3 Piket - project management in the value chain
Each year, Vitens implements complex infrastructure projects which involve substantial amounts of money, time and effort. The methods used for planning, reporting, resourcing, escalating, collaborating in and managing projects left something to be desired. As a result, failure to complete projects on time and within budget was an all too frequent occurrence. So, in 2015, we invested significantly in more training for project leaders, a more tightly controlled project approach and an improved system for project planning, reporting, risk management and resourcing. We refer to this entire initiative as Piket. Piket stands for ‘Projectbeheersing In de KETen’, which means project management in the value chain.
A key control element of this approach is that we assign all projects to ‘project cluster boards’. These project cluster boards (which are set up in accordance with Prince2) started in November. The project cluster boards comprise first-line managers from various departments. The role of these managers is described for each project. For example, one manager represents the commissioning authority and a second manager represents the future user. This ensures that the project group maintains contact with other stakeholders in the organisation and that all interests are represented.
In order to anchor this structure in the organisation, the project managers have received additional training and project support has been set up. That takes the form of administrative support and an automated planning system. Furthermore, we can learn from previous projects by documenting the experiences of the project boards.
We ensure good collaboration within the projects by reserving one day (or morning or afternoon) a week for project work. The members of the project group work together at a single site on that day. This results in both better collaboration and coordination between the employees, and faster identification of any bottlenecks within projects.
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2.3.4 Staff safety LTIF (based on the number of accidents and absenteeism of more than 1 day) The ‘!K werk veilig’ (I work safely) programme, which started in 2014, continued in the same form in 2015. 6.0 This programme encourages our staff to report potentially dangerous situations. Employees can communicate improvement points to their team manager via work consultation meetings or based on a last-minute risk 5.5 5.39 analysis (LMRA). The scope of the improvement, large or small, is not important. The manager/supervisor can contact our advisers in the Health and Safety Department (H&S) in order to handle and resolve the reported 5.0 problem. This approach results in a higher awareness of safety. 4.5 4.52 Safety inspection rounds Regular meetings also took place between team managers and advisers this year as part of our effort to 4.0 improve the perception of safety. The number of meetings varied per department - technicians discuss 3.75 physical safety more frequently than employees in the ICT department - however on average these meetings 3.5 take place once a month throughout the company. All managers/supervisors in all departments walk ‘safety inspection rounds’ once a year. This programme was expanded in 2015: managers now walk a safety 3.0 inspection round in other departments as well as their own. This method ensures that we regularly look at 2013 2014 2015 whether improvement actions are possible with relatively fresh eyes. The H&S department organised safety LTIF 2014 relates to the number of accidents resulting in sickness absenteeism of more than 3 days. In 2015, this statistic re ects sickness awareness training courses for the technicians in the Network & Delivery department and other technicians absenteeism starting from the day after the date of the report. during 2015.
These programmes and meetings help to prevent accidents. Nine accidents resulting in sickness absenteeism (of more than one day) were reported in 2015. As a result, the LTIF, Lost Time Injury Frequency, reduced from 5.39* to 3.75.
* The LTIF in 2014 was based on the number of accidents resulting in sickness absenteeism of more than three days. In 2015, the period of sickness absenteeism starts from the day after the date of the report.
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Safety topics were publicised via meetings, on Intranet and on signs in the head office building. The main Last minute risk analysis focus lies on topics related to people travelling on business and those who work in the field: Vitens’ employees work intensively every day to deliver • the use of mobile equipment in traffic; water. This focus can lead to blind spots relating • the danger of UV radiation; to personal safety and the safety of others. Vitens • tick bites; introduced the ‘last-minute risk analysis’ (LMRA) system • LMRA (last-minute risk analysis, performed just before work begins on site). last year. This is a fairly simple procedure which calls for employees to answer a number of questions about The first Safety Day was held on 6 October. This day focused on safety in office environments. A ‘crime scene’ safety just before they start working. This brief check-list was set up for the occasion to allow employees to practice detecting unsafe situations and company safety makes it possible for employees to start work on a task officers provided information on company emergency response (CER). with increased safety awareness. This is particularly beneficial to people who have already worked in An accident clock indicates the number of days that have passed without accident-related sickness accordance with fixed routines for a considerable time. absenteeism since the summer of 2015. The clock is displayed on the screens at the head office in Zwolle and on boards in the offices in Utrecht and Arnhem. The maximum period in 2015 was 77 days.
Security of data and systems We not only consider our employees’ physical safety, we also make sure that our information and systems are secure. We tightened up the authorisation policy in 2014 to achieve this. For example, we now look more critically at who should be allowed to access specific ICT systems and data in order to prevent unauthorised use. We have achieved this by rewriting procedures. However, considering employee conduct when working with these systems is at least as important. The ‘Work on our DNA’ programme covers this aspect as well.
Our authorisation policy sets out guidelines and basic principles for shaping procedures and work instructions associated with managing access to automated information systems. This policy applies to all automated information systems at Vitens and is valid for our own staff, temporary staff and external parties (contract work). In 2015, we resolved all very-high-risk bottlenecks. In 2016, we will take action to resolve the other bottlenecks.
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2.3.5 Sickness absenteeism Sickness absenteeism expressed as a percentage
6.0 Sickness absenteeism at Vitens amounted to 4.6% in 2015. This is higher than in 2014 (4.5%) and also higher than the national average of 3.5% (first three calendar quarters of 2015), but slightly lower than the sector 5.5 average (4.1%). One possible cause is that the average age within Vitens is higher than that of the general working population. In addition, a small number of instances of long term sickness resulted in an increase 5.0 of the sickness absenteeism percentage in 2015 compared to 2014. So health and sustainable employability 4.59 remain key concerns. 4.5 4.52 4.31
Sustainable employability 4.0 In 2015, we focused more acutely on ensuring sustainable employability on the part of our employees.
The results of the Gezondheidscheck health examination have been communicated and discussed, a new 3.5 occupational health and safety service (arbodienst) has been selected, and a more structured approach has been adopted in relation to the agreements made with employees whose work has been adapted because 3.0 they are no longer capable of performing all tasks associated with their position. In addition, we started to link 2013 2014 2015 strategic staff planning to sustainable employability in 2015. This link will be formalised more strongly in 2016.
Age structure
1500 1402 1403 1383
1250
764 1000 783 793
750
500 384 365 329
250 185 186 192
0 69 69 69 2013 2014 2015 Below the age of 30 Aged between 30 and 40 Aged between 40 and 50 Older than 50
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Employees split out by gender and 2.3.6 Diversity percentage of active women 1500 26 1402 1403 1383 In 2015, women accounted for 24% of our workforce. Of the total of 91 management positions within Vitens, 23 (25%) are occupied by women. This compares to 23% last year. This increase is a logical consequence 1250 330 331 337 25 of the efforts made by Vitens in this area following signature of the ‘Talent to the Top’ Charter in 2014. 24.4 Subscribing to this Charter commits us to introducing targeted programmes for increasing the number of 1000 24 women in top positions within the company. 23.5 23.6 750 23 Based on our membership of the water companies employers’ association (Werkgeversvereniging 1072 1072 Waterbedrijven/WWb), we have elected to play a leading role, together with the employers’ associations in the 500 1046 22 energy, waste & environment, cable & telecom sector (WENb), in implementing the Social Covenant in order to employ more people who have difficulty in competing in the labour market. This is our response to Inclusief 250 21 Werkgeverschap (Inclusive Employership): recruiting and providing long-term employment for people in a 0 20 vulnerable position in the labour market, such as people with work disabilities, the long-term unemployed and 2013 2014 2015 people receiving welfare. The efforts we have made fall within the scope of the ‘Samenwerken & Verbinden’ Men Women Percentage of women (Collaboration and Creating Connections) project, which is designed to help organisations achieve the agreed targets for helping people suffering from some form of work disability to find employment. As part of this project, Vitens wants to provide normal jobs for 46 people suffering from some form of work disability during the coming 10 years. We started with three placements in 2015.
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Customer Excellence is one of our strategic goals. This goes beyond working in a customer-centric manner. General customer satisfaction We do see customers as people, not addresses. And we approach them proactively. In other words, we inform 10 customers, via social media and other instruments, before they experience a possible problem themselves. In addition, our employees increasingly use customer reactions and satisfaction scores in their daily work to 9 remodel work processes as and when required.
8 8.0 7.9 2.4.1 Customer contact 7.7 7 Under normal circumstances, customers have little contact with Vitens as an organisation. They are asked to note and submit the meter reading once a year and subsequently receive an annual settlement statement. It 6 is exactly at the time of these occasional contacts that we want to ensure optimum service and convenience when arranging their water-related affairs. 5 We are investing significantly in improving our digital channels. More and more customers want to be able 2013 2014 2015 to arrange their water-related affairs quickly and conveniently on line. In 2015, 70% of home relocations and 69% of the meter readings were communicated online. And 68% of our customers only receive a digital invoice. In response to this trend, we started to build our new website - vitens.nl - last year. The ‘Mijn Vitens’ section, where customers can view and edit their information, is being completely revised.
Our customers have been able to submit the meter reading via an app since September 2015. So customers no longer have to take a piece of paper with them to the water meter to note the meter reading. The next step is to develop the app further so that a photograph suffices. This will make submitting the meter reading even more convenient.
Customer satisfaction The decline in customer satisfaction is attributable to the small number of respondents that assessed a specific area within our service provision. As a result, a low individual score has a disproportionately high effect on the overall score for general customer satisfaction. In order to be able to draw reliable conclusions in the future, we switched to a new method for measuring customer satisfaction at the end of 2015. This method is based on customers giving immediate feedback following a contact they have had with Vitens. In view of the fact that general customer satisfaction was measured using the previous method for most of 2015, the figures reported here relate to the method used up to 9 November 2015.
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Customer satisfaction is leading for the Customer & Invoicing department Since October 2015, customer satisfaction and employee satisfaction have been leading for the activities in our Customer & Invoicing department. These satisfaction indicators are measured continuously. If satisfaction falls, our employees act to increase the level of satisfaction. As part of our objective for Customer Excellence, our employees in the Customer & Invoicing department strive to achieve a score of 8+ for customer satisfaction. We measure customer satisfaction after each contact. For example, the employee receives immediate feedback from the customer after a telephone conversation. The feedback is analysed every day to identify possible areas requiring improvement and immediate action is taken if required.
Significantly fewer disconnections Drinking water is a necessity of life. So Vitens tries to ensure that customers are only disconnected as a last resort. We focus on preventing payment problems and make agreements with municipalities so that everybody has continuous access to water, even when a customer faces financial difficulties. Furthermore, at the beginning of 2015, we amended our debt collection procedure in order to reduce the number of disconnections. Since then, customers who are behind on payments receive more reminders and an additional letter after the final demand. A few days before the scheduled disconnection, they received a text message or an email reminding them that they have one final opportunity to pay. These measures resulted in 30% fewer disconnections in 2015 compared to the previous year.
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2.4.2 Dialogue Sonsbeeksingel How does Vitens ensure optimum provision of Vitens attaches great importance to contact with customers. Our customers tell us what we do well and information during major infrastructure work in the what can be done better. So we do not wait for them to contact Vitens, e.g. by telephone, email or post. We centre of Arnhem? How do you make it possible for try to identify their needs and questions via customer panels. We also base our participation in dialogue via local residents to ask questions without unnecessary social media on our customers’ perceptions. We have analysed their concerns relating to water. Based on complication? By engaging in a dialogue with customers that analysis, we create targeted content which provides information and answers via the channels used by on the Sonsbeeksingel Facebook page. This interactive customers. We engage in dialogue with customers online and actively give them relevant information. platform was used to keep the people of Arnhem informed of progress during the project and provide a And this activity is successful: in 2015, we were privileged to welcome our 20,000th follower on Facebook portal for posting reactions and asking questions. and our 5,700th follower on Twitter. As that number is just a statistic, we also measure the level of interaction on our Facebook page. The IPM+ score (Interaction Per Mille) was extremely high at the end of the year: 114.8. This is partly attributable to expertly deployed communication campaigns. Even though there are 9.4 million Facebook users in the Netherlands, not all of our customers use social media. So we also produce a Maintenance work in Apeldoorn newsletter, which had nearly 800,000 subscribers at the end of 2015 (compared to 150,000 at the end of The details of this long-term project can be found on
2014). onderhoudinapeldoorn.nl. The information is provided in an easily accessible form (Who?, What?, When?) to help Open days readers find what information they need in seconds. In 2015, we organised three open days: two small events (in Bunnik on 12 June and Fikkersdries on 7 Local residents can see the status of the work in the November) and a major event in our new Vechterweerd production facility in Dalfsen on 10 October. schedule. During the latter event, which we called the ‘Watermakers’ open days, we exclusively invited our customers to visit a production facility that is normally closed to the public. Visitors had the opportunity of seeing and experiencing everything that extracting, purifying and delivering tap water involves in an interactive and informal manner. Our open days are an enjoyable and educational experience for young and old and include activities such as a tour of the production facility, laboratory tests, water tests and repairing a leak. In 2015, nearly 8,400 people came to these open days.
Online communication of infrastructure work Nothing annoys customers as much as a lack of certainty about the duration of infrastructure work on their doorstep and not knowing where to address their questions. In 2015, we not only used traditional communication tools such as the telephone and mail shots to inform our customers, we also interacted with many of them online. When work started on replacing the drinking water pipe in the inner city area of Arnhem, we created a Facebook page to provide up-to-date information for local residents. We have also created an online platform in order to provide information relating to the joint Vitens and Liander project for replacing the water and gas pipes in Apeldoorn.
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Innovative projects help us to achieve one of our strategic goals: sustainable location from which our customers call us and send us tweets and which vulnerable management of assets and water resources. For example, we have made significant customers, such as kidney dialysis patients and hospitals, are located in a specific progress in our Friesland Live! pilot project. This is the first step towards a situation in area. If a pipe ruptures or other problems occur in the distribution network, Vitens is which we will be able to track the quality of the water and the condition of the pipes currently still dependent on a customer telephoning to report the problem. based on real-time data. The sensors will act as our eyes and ears in the distribution network itself, and make it possible for us to localise leaks much faster. The sensors and data analysis techniques 2.5.1 Heat map and human sensor will soon make it possible for us to see a leakage or water discolouration in an area in real time. Armed with this new information, Vitens will be able to dispatch a technician In 2015, we created a central water distribution dashboard at the heart of our before customers experience any problems with their drinking water supply. organisation. This dashboard combines and displays all our data in real time. The heat map charts the vital processes: the water pressure in all parts of the country, And we see even more possibilities for the sensors in the future. For example, reducing faults/supply interruptions and the number and type of customer reactions. That energy consumption by providing more information about water pressure and live permanent overview allows us to react faster to acute problems and questions. This measurement of the water quality in the network. This will herald in a new form of enhanced level of monitoring not only results in faster action when supply interruptions operational management, which will be increasingly data-driven. We will train our occur, it also gives us a greater understanding of the consequences that problems employees to interpret this data correctly and take proactive action. have for customers. In 2016, Vitens plans to start a Whatsapp pilot project. Vitens will use Whatsapp to contact people during a supply interruption and ask questions in order to resolve the fault as quickly as possible. 2.5.3 Aquatech
We presented our company as ‘Vitens The Water Utility Partner’ at Aquatech 2.5.2 Friesland Live! Amsterdam, the International trade fair for process water, drinking water and waste water. We focused on three areas of activity during the exhibition in the RAI The Friesland Live! project involves construction of a large-scale intelligent drinking Amsterdam complex: Smart Water Technology, Sustainable Water Resources and water distribution network throughout the province of Friesland. We will equip the more Customer Excellence. than 8000-kilometre long pipe network in the province with 200 sensors that measure drinking water pressure and quality continuously and in real time. In the future, the Because innovation is not possible without collaboration with knowledge partners and sensors will deliver the data we need in order to resolve possible problems before they business partners, we use this biannual trade exhibition, which attracts 850 exhibitors, even affect customers and allow us to inform customers personally and in advance to establish contacts with potential collaborative partners. We met a large number when supply interruptions occur. They will also provide more information about what of new contacts this year. During 2016, we will continue talk about opportunities for actually goes on in the distribution network. collaboration in more detail with these contacts. For example, specialised companies may want to market the technologies we have developed both nationally and At present, we can already see how much water enters the distribution network, the internationally.
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We will only be able to continue to supply high-quality drinking water in the distant future if our operating processes are sustainable and our water sources are future proof. We are working hard to achieve this strategic objective. For example, we have succeeded in re-using nearly all the by-products generated by our water purification process.
“As a drinking water company we are acutely aware that our activities have a high social value and entail considerable responsibility. Because water affects us all. It is time for all of us to stand up in defence of this necessity of life and our natural resources. To unite in ensuring that future generations will also be able to count on clean, healthy and sustainable drinking water.” Birgitta Kramer, Sustainability Manager and 2015 CSR Manager of the Year
In addition, we also take stock of our infrastructure from the perspective of this strategic objective. This form of asset management results in more effective decision-making in many areas, such as condition-based maintenance. Our level of investment in infrastructure maintenance will remain at much the same level during the years to come.
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CO emissions and energy consumption 2.6.1 By-products and waste 2 175 50000 44213 We want to either re-cycle or re-use 100% of the natural resources we extract in order to deliver drinking
2 37055 water, or return them to nature fully intact. We have four objectives in this area: 100% re-use of by-products, 170 40000 balancing revenues and costs, introducing innovative and circular solutions, and reducing or re-using our 32344 waste. 165 30000
Objective 1: 100% re-use of by-products 160 20000 159 In 2015, we unfortunately did not succeed in completely re-using all of the by-products from our water 158 millions kWh 156 extraction process (99.2%). We will maintain this objective at 100% in order to contribute to creating a circular 155 10000 economy. The by-products from our water extraction process are lime, iron and humic acid. thousands of kilogrammes CO 150 0 2013 2014 2015 Lime Energy consumption CO emissions Our partner, ReststoffenUnie, uses the lime we produce in pellet form and gives it a second life as a fertiliser. 2 In November, we signed a contract for the delivery of lime pellets to the animal feed division of Agrifirm. These pallets are used as a raw material for chicken feed. By-products put to good use Iron 100 ReststoffenUnie also sells our liquid ferric oxide/hydroxide (iron-rich sludge) in liquid form or as granules. This 100% product is used for bio-fermentation and in filters for gas and air purification. 99.70% 99 99.23% Humic acids
We have extracted humic acids from the groundwater at two locations in Friesland and one in Overijssel since 98 2013. This by-product is used as a bio-stimulant or soil conditioning agent in the agricultural sector. The use of humic acids is explained in more detail in paragraph 2.6.2. 97 Objective 2: Balancing costs and revenues Our second objective is to balance the costs and revenues associated with by-products flows. Through 96 commercial and technological innovation, we have succeeded in reducing our annual costs in this area from
€1.7 million in 2013 to €0.9 million in 2015. 95 2013 2014 2015 In 2015, our by-products and waste flows generated an income of €0.5 million, which is not sufficient to cover the costs. The fact that not all of the humic acid was sold is one of the underlying causes.
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Objective 3: Innovative and circular applications Reduction in industrial waste for incineration The third objective is to innovate in order to develop applications that offer greater added value for our by- 0 products and waste flows. In 2015, we investigated and developed applications for the animal feed sector. Vitens achieved GMP+ certification this year, meaning that our humic acids and lime pellets can be used for -3 -6% animal feed.
Our ambition is to use the raw materials generated by our water purification process for agriculture, which is -6 one of the sectors on which Vitens depends. Agricultural activities ultimately affect groundwater quality. Less -14% (artificial) fertiliser thanks to the use of humic acids and lime pellets reduces the amount of harmful nitrates or -9 phosphates that leach into the groundwater
-12 Objective 4: Reduction or re-use of waste Waste flows are also generated by Vitens’ other activities. Renewing the distribution network for example, which involves digging up and removing old pipes, and maintaining our water extraction areas, which -15 generates large quantities of surplus biomass. These waste flows are also separated as much as possible for 2014 2015 re-use.
Last year, the percentage of re-use fell to 57%. In some cases, cement pipes for example, re-use is not possible. The fact that this waste may not be reused has a negative effect on the percentage.
The remaining residual waste is incinerated in waste processing plants. In 2015, we succeeded in reducing the amount of waste for incineration by 14%. This was largely attributable to an improvement to the collection process, which resulted in greater waste compaction and significantly reduced the volume and weight of our industrial waste.
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2.6.2 Humic acid Filters Flushing water is required to clean the sand filters. Humic acid is found in the water extracted from the peat bogs in the province of Friesland. The water is These filters are used to remove iron and manganese pale yellow in colour due to the presence of the humic acid. Vitens has developed a proven method for from the groundwater. As time passes, the filters extracting this humic acid from the groundwater for use as an organic fertiliser by farmers and horticulturists. become saturated and have to be flushed clean. This Royal HaskoningDHV - with which we signed an agreement early in 2015 - sees opportunities for selling this process requires a relatively large amount of water. This technology under license to foreign water companies. can even amount to 8% of the water pumped up from Vitens’ extraction wells. This iron-rich flushing water is Humic acid used to be a cost item. Each year, Vitens had to spend approximately €0.5 million on removing generally pumped into special storage tanks. The solid humic acid from the groundwater and then disposing of it as waste. particles (or iron) settle to the bottom and the water is dumped back into the surface waters. In Wierden and at The technology which Vitens has now developed for extracting the humic acid from the water and converting four other Vitens’ sites, this water is now re-used rather it into an organic fertiliser means that it no longer has to be disposed of as waste and can even generate than being dumped. Membranes separate the solid profit. The revenue in 2015 was lower than forecast, however we expect the sale of humic acid to generate a particles from the water. contribution in 2016. Ceramic membranes versus polymer membranes Humic acid extracted from groundwater also offers benefits to farmers. As humic acid improves soil quality, Ceramic membranes are more durable than polymer less artificial fertiliser and phosphates are required. Furthermore, humic acid extracted from groundwater is membranes. The risk of cracks developing in the more cost-effective than conventional humic acid produced by the lignite mines in America, Australia and membrane is much smaller, extending the service life by other countries. Shipping costs in particular make this alternative much more expensive. a factor of three. Furthermore, the new system generates a higher economic return as water losses are lower Royal HaskoningDHV expects high interest in our humic acid technology in Europe (Great Britain, Ireland and less energy is consumed in comparison to existing and Scandinavia), South Africa and the United States. Possible proceeds from selling the technology (under systems. In short, the use of ceramic membranes is license) will be partially reinvested in a Vitens fund for research into innovative technologies. a promising innovation which makes re-using flushing water more cost-effective and more sustainable. Although this technology is not completely new, this is 2.6.3 Re-use of flushing water the first time in Europe that these membranes have been employed to allow re-use of flushing water. Together with RWB Almelo, Vitens has built an innovative system with ceramic membranes to sustainably re- use the flushing water that is discharged after cleaning the sand filters. Trials with these ceramic membranes at our production facility in Wierden have demonstrated a substantial increase in the percentage of flushing water that can be converted into drinking water. Thanks to this innovative system, nearly all the flushing water can be re-used after cleaning. That percentage is significantly lower in the case of conventional systems. The use of this technology to clean flushing water is a European first.
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2.6.4 Broad screening On the lookout for unknown substances Not only do we continuously test for known Vitens monitors the quality of the drinking water continuously. Our primary guideline in doing so is the Drinking contaminants, we are also alert to the presence of as Water Act. This legislation includes a list of substances which must be monitored. Analysts in Vitens’ laboratory yet unknown substances in the water. In collaboration investigate whether these substances are present in the water and, if so, to what degree. The majority of these with the water companies, Vitens has developed an substances are not found in the water. assessment method for identifying these substances in good time. Our method analyses a water sample in its Because the list of substances in the Drinking Water Act is not exhaustive, we also check if other substances entirety. We focus on the potentially harmful effects. This are present in the water. In order to detect possible contamination of this nature, Vitens keeps a record of the toxicity test investigates the effect of the water on human substances which can find their way into the surface water. For example, animal medicine residues which find cells. their way into the ditches around farms. This type of contamination can seep down into the groundwater in the long term. As a result of this approach, the list of substances monitored by our analysts grows longer each We combine this test with a broad chemical screening year. Over the past decade, this list has increased in length by a factor of 10. procedure. Rather than looking for specific substances, this procedure traces and identifies as many substances as possible. The combination of the toxicity test and the screening procedure provides information about possibly toxic substances.
We expect this assessment method to be extremely beneficial. We are currently validating this method in collaboration with other laboratories. We hope that this method will eventually replace the list of substances in the Drinking Water Act for which mandatory testing must take place.
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2.6.5 Fertile recycling Fertile soil The key question for farmers is how they can improve Vruchtbare Kringloop Achterhoek en Liemers (VKA) is an initiative of the LTO (Dutch Federation of Agriculture their soil. Vitens’ Environment Manager, Toon van Kessel and Horticulture) in which Vitens participates. This project, which started in 2013, aims to achieve broad points out that fertile soil contains an abundance of sustainability in farm management. roots, worms and organic compounds. ‘The soil retains fertiliser more effectively, meaning that contaminants Approximately 260 farmers from the Achterhoek area are involved in the VKA project. Manure processors, are less likely to leach into the groundwater.’ The contractors offering agricultural services, pig farmers and arable farmers are also involved in this project. Their measures farmers must implement in order to achieve objective is to reduce the amount of harmful minerals such as nitrates and phosphates, crop protection agents this goal differ depending on the situation. According to and pesticides absorbed by the soil. This approach means that the groundwater is cleaner before we extract Van Kessel, this decision depends on the current soil it and convert it into drinking water. So the farmers and Vitens share the same interests: less contamination quality, the type of crop, how the soil is prepared and means less land devaluation for the farmers. And because less nitrogen and phosphate finds its way into the the type of fertiliser used. Van Kessel: ‘If farmers want groundwater, Vitens can purify it more easily. Which leads to lower costs. to grow maize on former grazing land, they sometimes plough the entire area. That is the worst thing they can Improved Soil and Groundwater Quality do. It is better to remove strips of grass and plant the In the sub project for Improved Soil and Groundwater Quality (Verbeteren Bodem- en Grondwaterkwaliteit), the seed in those areas. This approach reduces the loss of participating farmers and Vitens collaborate in looking for the most efficient and effective measures for making organic compounds and prevents leaching.’ agriculture cleaner. The results will be shared with all farmers who work the land in water extraction areas.
Organic compounds In addition to acting to reduce harmful substances, adding organic compounds to the land is a further method for making the soil cleaner and healthier. These organic compounds help to improve the water quality and
increase crop yields. In addition, they make a modest contribution to reducing CO2 emissions. Vitens has developed a method for converting the by-products of drinking water production into these compounds: lime pellets, humid acid and other organic material. The effectiveness of these products has been demonstrated in pilot projects.
National and European impact The Vruchtbare Kringloop project has attracted national attention. A delegation from the Ministry of Economic Affairs visited the project on 7 July 2015, and Vruchtbare Kringloop has also been presented to members of the European Parliament in Brussels. Similar projects are now being implemented in a number of other regions in the Netherlands.
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2.6.6 Water extraction areas
Vitens extracts groundwater in 110 water extraction areas, which together amount to a surface area of 3300 hectares. Vitens manages all these areas in a sustainable manner and has consistently achieved Gold level certification according to the Barometer Duurzaam Terreinbeheer (Barometer for Sustainable Land Management) since 2011. This is the highest performance level according to the assessment system operated by Stichting Milieukeur. This Foundation was set up in 1992 at the initiative of the Ministry of Infrastructure & the Environment and the Ministry of Economic Affairs in order to develop and manage criteria for the Dutch Milieukeur ecolabel. The certificate indicates that we take good care of our drinking water resources and the natural habitat on the surface.
The Natuurlijk Ondernemen project (doing business the natural way, or Natural Entrepreneurship), which we started in 2014, continued at the same pace and level of effort during 2015. Within the scope of this project, we seek collaboration with environmental organisations such as the Institute for Nature Education and Sustainability (Instituut voor Natuureducatie en Duurzaamheid/IVN).
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Vitens has focused attention on water as a product in various ways. The main target WarmWaterWijzer online tool groups are schools, our customers, the media and Dutch and European politicians. Customers who want to save energy can use an online tool developed by Vitens: Our objective is to raise the importance of water in the eyes of society. This will help the WarmWaterWijzer. Heating water for the bathroom and kitchen accounts Vitens accomplish its mission of protecting drinking water sources. for approximately a fifth of total gas consumption in an average household. The WarmWaterWijzer tool shows how customers can use hot water more sparingly. Last 2.7.1 Kraanwaterkennis.nl website year, 37,985 people entered their details in the WarmWaterWijzer tool. WaterSpaarders education programme Kraanwaterkennis.nl, previously called waterkennis.nl, is a website that offers a free online In 2015, Vitens was also active as a partner in WaterSpaarders, an initiative set up by package of lessons about (tap) water for primary schools. Since the introduction in 2013, Unilever, the World Wildlife Fund and the Missing Chapter Foundation. WaterSpaarders almost 700 schools use the program each year. The curriculum targets schoolchildren is a tool offered to schools for teaching children and their parents in a positive way aged between 10 and 11 years old. In January, Vitens employees promoted kraanwater- about how to use hot water consciously. kennis.nl during the biannual NOT exhibition for education professionals in Utrecht. The online platform was given a makeover in the autumn of 2015. 2.7.3 Promoting tap water 2.7.2 Water and energy The Netherlands is known as the country with the best tap water in the world. Vitens has set up various online initiatives to emphasise the relationship between water However, too few people are aware that the water flowing out of the tap is always of excellent quality. So Vitens has actively campaigned to increase awareness of this since consumption and energy bills. The objective is to encourage more conscious use of water. 2013. Not because we want to sell more, but because we see convincing people that Wijkenwaterbattle.nl tap water is delicious, healthy and sustainable as our social responsibility. Most people use water at exactly the same time: in the morning when they get up and in the evening when they come home. So the water pumps have to work harder at National ‘Overal Kraanwater Graag’ petition these times, resulting in power demand peaks. Vitens wants to make people aware of In 2015, we mounted various campaigns and promotions under the umbrella of this and encourage them to use water at different times. Vitens organised the Wijk & Kraanwater Graag (Tap Water Please). We even organised a national petition called Water Battle together with the provincial authority of Friesland as part of this campaign. ’Overal Kraanwater Graag‘. Vitens wants to ensure that people who request tap water In this ‘battle’, local residents and school children join forces in the fight to support in hotels, bars and restaurants, or water. The objective is to use water more consciously, gain an understanding of the at festivals, or in public places do in “Tap water is the tastiest water there relationship between water consumption and energy consumption, share knowledge fact receive their order. And there is is, and even more importantly… no more and ultimately change water usage behaviour. The change in the way water is used is no reason why this should be free plastic bottles!” intended to reduce energy consumption. of charge: tap water is a fantastic Eede Kroon, a customer of Vitens product which can be sold at a
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realistic price. The ´Overal Kraanwater Graag´ petition was publicised at events such as the Nijmegen Four Kraanwaterdag Days Marches and various Liberation Day festivals, and online via Facebook and other media. This resulted We appealed to primary schools to participate in the in 100,000 signatures at the beginning of January 2016, an achievement which generated significant media Kraanwaterdag (tap water day) in an online campaign attention. The signed petition was handed to Martijn Naberman during the Horecava fair. As the Principal of and via a tap water song performed by girl band Tio Hotelhogeschool in Amsterdam, he represents the future of the hospitality industry. Raak!, rapper Yes-R and dancer Juvat Westendorp, the ambassador for ‘Jongeren Op Gezond Gewicht’. The national ‘Overal Kraanwater Graag’ petition is an initiative of Vitens in collaboration with other drinking The hash tag for this activity was #GoedGedaan. The water companies such as PWN, Brabant Water, Oasen, Dunea and partners like ‘Jongeren Op Gezond Kraanwaterdag is an initiative of Vitens and supported Gewicht’ and the Netherlands Nutrition Centre Foundation (Voedingscentrum). by ‘Jongeren op Gezond Gewicht’ and the Netherlands Nutrition Centre Foundation (Voedingscentrum). Brabant Kraanwater schools Water and the Join the Pipe foundation also participated This year, Vitens focused its educational activities and tap water promotion campaign on primary schools, in this initiative. which resulted in the launch of ‘Kraanwaterschool’. This interactive program for primary school children aged between 9 and 11 combines learning and doing, knowledge about tap water and drinking tap water.
The first national Kraanwaterdag was organised on 4 November as part of the launch for the primary school Percentage of customers who request campaign. Kraanwaterdag is a day during which the schoolchildren and teachers drink tap water to the tap water more frequently exclusion of other drinks like lemonade, fruit juice or soft drinks. 514 primary schools participated. This 30 tap water day generated extensive media attention, with in-depth coverage by Jeugdjournaal and other
programmes. 25
23% By participating in the Kraanwaterdag event, primary schools earned the right to call themselves a 20 ‘Kraanwaterschool’. Other elements of the Kraanwater school programme are guest talks given by Vitens employees, a free online interactive lessons package (via kraanwaterkennis.nl) and an optional tap water 15 supply point in the school playground. 10 12% Results of the Kraanwater Graag campaign 5 Vitens organised an extensive survey at the end of 2015 in order to determine the effects of the Kraanwater Graag campaign up to that point in time. The first outcome is that customers know more about the advantages 0 of tap water thanks to the campaign: the percentage of customers that is aware of the advantages increased 2014 2015 from 21% to 36%. In addition, customers indicate that they value tap water more: the level of appreciation increased from 32% to 35%. As a result of the campaign, 23% now requests tap water more often (12% in 2014). The campaign will be continued in 2016.
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2.7.4 International arena
We put our knowledge to good use in order to improve the drinking water supply and sanitation facilities in developing countries. We do so in collaboration with Evides Waterbedrijf, WML, Waterbedrijf Groningen and PWN under the name of Vitens Evides Internationaal (VEI).
Each year, VEI implements several dozen projects in twenty countries. Those projects, largely in Africa and Asia, offer employees of Vitens the opportunity of working abroad for a brief period. VEI and Plan Nederland announced a permanent collaboration for WASH projects (Water, Sanitation and Hygiene) during the Dutch World Water Day event on 22 March. The two organisations had collaborated previously in Malawi. In this project, VEI employees cooperated with the local drinking water company to identify water losses through leakage and areas in the distribution network where the water pipes had been repaired. At the same time, Plan Nederland worked with the local municipalities to inform the population about good hygiene and sanitation. VEI and Plan Nederland have agreed to set up joint WASH projects together during the period up to 2020.
Sustainable Development Goals VEI’s activities contribute to achieving the Sustainable Development Goals, which replace the Millennium Development Goals from 2016. The agreed goals have resulted in worldwide improvements. Poverty has been reduced, more children go to school, more people live in acceptable housing with access to safe water and adequate sanitation facilities. But there is still much to do. Via VEI, we will primarily invest in clean drinking water and sanitation facilities for all during the period up to 2030.
Water for Life Foundation Water for Life is an independent foundation which offers the customers of Vitens and Evides the opportunity of contributing funding to support VEI’s projects. Nearly 27,000 customers of the two water companies have made donations to Water for Life. The work carried out by Water for Life is related to VEI’s activities. In areas where VEI is involved in long-term water projects, Water for Life finances concrete projects of short duration that achieve fast and practical results.
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According to the current principles of national and international policy, such as the The Ministry of Infrastructure and the Environment wants to exploit the land below European Water Framework Directive, the quality of drinking water sources must be the surface ‘in the most efficient, sustainable and future-proof manner possible’ and adequate for producing drinking water using simple techniques. This is currently true intends to abandon the principle of ‘first come, first served’ that has applied until now. of approximately half of the groundwater extraction sites in the Netherlands; the other The vision is expected to be finalised in 2016. half of the groundwater extraction sites do not comply however. Vitens wants to ensure that the quality of all drinking water resources in its supply area satisfies the standards. Until recently the subsurface domain has been primarily used for extracting natural So we have taken a prominent stand in the political and social debate on protecting the gas, drinking water and oil. soil. The emergence of new techniques means that we can now do more with this natural resource. For example, gas can be stored under the surface or we can use the In 2015, we published our opinion on the National Policy Strategy for Subsurface geothermal energy present far below the surface as a source of power. In addition, Spatial Planning (Structuurvisie Ondergrond/STRONG), shale gas extraction and space for a wide variety of activities, such as tunnels, roads and railways, underground disposing of waste water in injection wells. We invited politicians to come and see what car parks and bicycle parking is an increasingly common requirement. Vitens does with their own eyes in order to demonstrate why conscientiously preserving soil quality is so important. Vitens sees the subsurface domain as a valuable public asset that needs protection. The soil and subsurface domain are characterised by the presence of natural resources, ecosystems and biodiversity, on which we depend and which we can 2.8.1 National Policy Strategy for Subsurface Spatial use. Nearly all our drinking water is produced from groundwater. As a result, the subsurface domain is crucially important for our drinking water supply. Due to an Planning (Structuurvisie Ondergrond) increase in activity, the different functions may interfere with each other to a much greater extent and protecting our natural resources is likely to become increasingly The government started to prepare the National Policy Strategy for Subsurface Spatial difficult. Consequently, the Drinking Water Act states that the drinking water supply is Planning (Structuurvisie Ondergrond/STRONG) in 2015. This exercise will chart all ‘of overriding public importance’. subsurface activities on land and under the sea. As this information has been lacking until now, there is insufficient knowledge of responsibilities and possible courses of action in emergencies. So the vision set out by national government will determine organisation in the subsurface domain.
The Dutch Lower House supports Vitens in its plea to recognise water as an asset of national strategic importance. For example, the House approved and adopted the Jacobi/ Hachchi motion in September 2015. In this motion, Lower House members Lutz Jacobi (PvdA) and Wassila Hachchi (D66) call on the Cabinet to, as a follow-up to the motion tabled by Jacobi and associates (2014), develop a Defence Plan for Fresh Water and Water Quality. There is a requirement for a coherent approach to and independent control of water quality and adequate fresh water.
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2.8.2 Shale gas 2.8.3 Waste water injection wells
Even though the Cabinet decided in July 2015 that no drilling would take place during Old oil and gas fields in different areas in the Netherlands are used to dispose of the coming five years, the 2016 Energy Report which Minister Kamp of Economic contaminated waste water produced in the oil and gas extraction process. Injection Affairs submitted to the Dutch Lower House in January 2016 states that shale gas takes place close to water extraction locations in some cases. Like other drinking extraction remains an option in the Netherlands in the longer term. water companies in Vewin, the drinking water industry association, Vitens is extremely concerned about the detrimental effects this activity may have on our groundwater. Vitens is concerned by these plans and advocates prohibiting this kind of risky activity in areas where drinking water is extracted, including the surrounding water feeding Drinking water companies are still not consulted during the licensing procedure for areas. Vitens sees specific risks relating to processing the waste water generated by mining/drilling and related activities such as waste water injection. Consequently, Vitens shale gas extraction, the integrity of the shale gas wells during and after gas extraction, was not consulted on the matter of storing waste water at various sites in Twente, and the transportation to site, removal and storage of chemicals, water and gas. In which lie in its supply area. This has to change in view of the extensive knowledge the our opinion, no shale gas drilling activity may take place before all the risks have been drinking water companies have of the groundwater system and possible vulnerabilities charted and possible disasters ruled out. In this case, we find the economic benefits to in that system. The drinking water sector wants to be explicitly involved. In order to be of secondary importance. In view of the risks for drinking water extraction, but also achieve this, in addition to the provincial authorities, the drinking water companies in view of the knowledge Vitens has of the deep subsurface domain, we will continue to must also be assigned an advisory role in respect of license applications that have to call the risks of shale gas extraction to the attention of our politicians in The Hague. be registered in accordance with the Mining Act (Mijnbouwwet).
Seasonal thermal energy storage (STES) and geothermal energy are further developments which have our full attention. The use of geothermal heat is becoming increasingly popular as a sustainable energy source. This power supply technology also involves drilling to great depths, with no guarantee that pollutants are not released into the ground. We track these activities critically when water extraction areas are involved. Vitens applauds the use of sustainable energy, however protecting our sources of drinking water is our first priority.
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Impact analysis
Vitens has an effect on people, the environment and society through its activities. These effects may be both intentional and unintentional. On balance, we add value and we have a positive impact on the community. We try to increase that positive impact in all our activities.
This chapter briefly summarises the main social, economic and environmental effects of our work.
Chapter 3: Impact analysis
3.1 Why impact is all-important 87 3.2 Environmental impact 88 3.3 Economic impact 89 3.4 Social impact 90
3.1 Why impact is all-important
Like any other company, Vitens has an impact on society. That impact consists of both intentional and unintentional effects at a social, economic and environmental level. We want to create value in everything we do and ensure that our activities have a positive effect on society. The value creation model (paragraph 2.1.1) provides a schematic overview of the practical effects of our activities in these different areas.
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Our main environmental impact lies in the area of energy management, resource management and land management and waste and by-product flows. We try to reduce our impact in these areas as much as possible. For example, we use the by-products generated in the drinking water production process as sustainably as possible. We also
try to re-use our waste. We reduce our energy consumption and CO2 emissions by, for example, setting the pumps used in our production process to operate as efficiently as possible. In 2015, we purchased Dutch wind power, so all the energy we used came from renewable sources. Vitens manages approximately 3,300 hectares of natural land in the form of water extraction areas. All of this land is already managed in a sustainable manner. We have been awarded Gold-level certification according to the Barometer for Sustainable Land Management (Barometer Duurzaam Terreinbeheer) since 2011. If we really want to have a sustainable impact on society - and that is our mission - we must embrace our duty to help customers make sustainable use of our water. As the largest drinking water company in the Netherlands, we feel responsible for raising awareness about tap water among our customers. And our customers expect this of us as well. We want to encourage our customers to choose tap water and inform them of products and technologies which reduce the amount of energy they require to produce hot water. For example, in 2015, we used the WarmWaterWijzer test, WaterSpaarders and ‘Overal Kraanwater Graag’ to encourage our customers to use water in a sustainable manner.
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Water is generally not seen as a product with a major economic impact. Even so, good water quality is required if the Netherlands is to remain an attractive business location for users of groundwater such as the food industry. So we also assume an active role in this area, as a protector of drinking water resources. Our work generates economic activity and therefore jobs for our suppliers and their subcontractors, among others. In addition, the salaries of our employees contribute to consumer spending in the Netherlands. We have controlled our costs effectively for years, without making compromises in the area of legislation and regulations, investment or innovation. As a result, we have succeeded in keeping our rates low and we remain financially stable and solvent. See paragraph 2.1.1 for a schematic overview of Vitens’ value creation model.
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At a primary level, we have an impact on society because we employ nearly 1400 people. This is a positive impact, because we invest in their development and employability in the long-term. But also in a negative way though accidents at work and sickness absenteeism. We invest in our employees’ safety via different programmes that focus on the needs of specific departments. In the Netherlands, everyone has access to affordable high-quality tap water. And rightly so, because tap water is a necessity of life. We keep the price as low as possible to ensure that no one has to go without. Which is why we lobby so strongly against developments that may increase people’s water bills, such as the tax on tap water and sufferance tax charges. We have acted to help customers who are unable to pay their water bill in spite of the low rate by introducing a flexible disconnection policy and making agreements with debt assistance services.
In addition, we are committed to maintaining the long-term availability of good drinking water by actively getting involved in social themes that potentially endanger the water supply, such as test drilling for shale gas or manure policy. This will ensure that we can still count on a supply of good water from the tap 100 years from now. We also follow developments outside our borders and put our expertise to good use in areas where a supply of clean drinking water is less self-evident. So far, we have contributed to improved access to water and sanitation for millions of people in Africa and Asia.
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Financial results
Vitens is a financially sound company. In 2015, our operating result amounted to €93.3 million (2014: €77.6 million). The result has been partially paid out to the shareholders and partially added to equity. Our increased solvency puts us in a favourable financial position. And we now also have the lowest net operating costs in the Dutch drinking water sector and one of the lowest drinking water rates.
This chapter outlines the financial factors underpinning these results.
Chapter 4: Financial results
4.1 Key indicators 92 4.10 Explanatory notes to the consolidated 121 4.2 Explanatory notes to the results 93 profit and loss account 4.3 Consolidated results 96 4.11 Explanatory notes to the consolidated 124 4.4 Consolidated annual accounts 97 cash flow statement 4.5 Consolidated profit and loss account 99 4.12 Other explanatory notes to the 125 and other comprehensive income consolidated annual accounts 4.6 Consolidated cash flow statement 100 4.13 Non-consolidated annual accounts 131 4.7 Consolidated statement of changes 101 4.14 Explanatory notes to the non-consolidated 133 in equity capital annual accounts 4.8 Explanatory notes to the consolidated 102 4.15 Other information 138 annual accounts 4.16 Independent auditor’s report 139 4.9 Explanatory notes to the consolidated 111 4.17 Summary of outstanding shares 145 balance sheet 4.1 Key indicators
2015 2014 2013 2012 2011 2015 2014 2013 2012 2011 Customers Costs per connection 1 Number of connections quantity 2,531 2,497 2,487 2,479 2,460 Operational costs € – 72 72 74 74 as at 31 December (x 1000) Taxes € – 2 3 3 29 Average drinking water rate € 1.09 1.09 1.09 1.08 1.28 Depreciation € – 40 38 39 41 based on average small Borrowing costs € – 15 16 17 18 consumer consumption (110 m3) Result € – 15 15 12 15 Consumption per small m3 110 109 112 112 113 Capital costs € – 30 31 29 33 consumer connection Total costs € – 144 144 145 177 (households) Non-financial Workforce Production and purchase, m3 352.1 346.2 350.0 346.7 3 47.5 Number of people in quantity 1,383 1,403 1,402 1,406 1,431 exclusive of bulk millions permanent employment as at Deliveries to customers m3 330.8 325.1 329.7 329.8 329.2 31 December millions Not invoiced (NI) % 6.1 6.1 6.3 5.9 5.7 Company results Number of active production quantity 96 96 96 96 96 Total revenue € millions 390.7 388.9 385.6 386.0 455.9 facilities Net turnover € millions 356.9 353.8 352.4 351.8 417.0 Trading result before € millions 186.1 180.7 179.2 171.9 182.8 1. Calculated in accordance with Vewin benchmark definitions. The benchmark information for 2015 will be depreciation and amortisation available in September 2016. (Ebitda) Trading result (Ebit) € millions 93.3 77.6 80.4 74.1 83.8 Result to be distributed to € millions 55.4 42.1 39.3 29.6 36.0 shareholders of Vitens N.V. Profit margin % 14.2 10.8 10.2 7.7 7.9 Interest coverage ratio 4.9 5.1 4.4 3.9 3.8
Equity capital € millions 471.7 421.2 438.3 386.1 398.3 Total capital € millions 1,714.4 1,713.7 1,711.0 1,682.6 1,680.4 Total interest-bearing € millions 992.6 1,027.6 1,043.4 1,044.6 1,058.5 liabilities Investments € millions 102.3 106.8 116.1 106.2 103.3 Solvency % 27.5 24.6 25.6 22.9 23.7 Weighted Average Cost of % 5.1-5.5 4.6 4.8 4.5 5.0 Capital (WACC)
Tangible fixed assets per € 661 666 665 661 662 connection
92 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.1 Key indicators 4.2 Explanatory notes to the results
Financial policy The Drinking Water Act lays down extensive financial frameworks for controlling Vitens’ financial policy is based on three elements. rates and solvency, which came into effect in 2011. For example, a maximum limit applies to the costs of capital that can be charged to customers by the drinking water Rates: companies (rate control) and a maximum has been set for the permitted percentage ‘Vitens strives to offer the lowest possible drinking water rates without compromising of equity capital in the total capital (solvency). Every two years, before 1 November, the the business continuity objective. The policy focuses on smooth transition, in order to government sets the levels that will apply for both financial frameworks for the following avoid large fluctuations from year to year.’ two calendar years. For 2014 and 2015, the weighted average cost of capital has been set at 4.8% and the maximum permissible solvency at 70%. In 2015, the actual Continuity: weighted average cost of capital (provisional figure) was 5.1 - 5.5% (2014: 4,6%), The continuity objective is linked to the company’s solvency (percentage of equity which exceeds the statutory standard. As a result, Vitens will reduce the drinking water capital in the total capital). rates from the beginning of 2016 and will additionally repay the ‘surplus profit over 2015’ to customers in 2017. At the end of 2015, solvency was 27.5% (2014: 24.6%). ‘Solvency has been set at an equity capital at least equal to 25% of the balance sheet Based on recommendations issued by the Authority for Consumers and Markets total and a capital base (equity capital + subordinated loans) equivalent to at least 30% (ACM), the weighted average cost of capital has been set at 4.2% for 2016 and 2017. of the balance sheet total’. Rate transparency is a further aspect of rate control. The regulatory authorities, the Dividend: Inspectorate for Habitat and Transport (ILT) and the Authority for Consumers and Vitens wants to pay its shareholders a reasonable return on their invested capital. Markets (ACM), reported in 2014 that the drinking water sector did not adequately comply with this aspect. In 2015, the drinking water companies took action to rectify ‘Dividend Policy: this via Vewin, the water sector association, and jointly drew up a cost price model, • the dividend is related to the net result; which shows how costs and rates are assigned to the underlying products and • the amount of dividend paid out amounts to a minimum of 40% and a maximum services. of 75% of the net result. The relevant factor here is the mandatory addition to the reserves in order to guarantee the company’s continuity (for investments in fixed ILT, in addition to supervising the rates, also performed three reality checks to assets or for strengthening solvency); establish compliance with the Drinking Water Act and regulations during 2015. • each year, a dividend proposal that complies with the above rules is submitted to These reality checks assessed the manner in which Vitens assures compliance with the Supervisory Board for approval and to the General Meeting of Shareholders legal requirements within its organisation. The checks related to scheduling drills for for final adoption. This dividend proposal is structured in line with the company’s resolving supply disruptions, working hygienically and the backup power supply for specific financial situation.’ unexpected events.
Compliance The drinking water companies created a voluntary benchmark in 1997 at the Increasing regulation is being introduced into the drinking water sector in line with instigation of the water sector association, VEWIN. This benchmark compares the social developments relating to transparency. Transparency relates to openness, performance of the drinking water companies in the area of the environment, water accountability and accessibility. quality, service provision and finance.
93 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.2 Explanatory notes to the results 4.2 Explanatory notes to the results
The new Drinking Water Act legislates for mandatory implementation of this type vennootschap/NV) such as Vitens, are considered to use their entire capital for of performance comparison every three years, effective from 2012. This means business purposes. This means that Vitens will be liable to pay corporation tax. The that the compulsory benchmark comparison in 2016 will relate to 2015. In 2016, provision in the bill relating to general exemption for the performance of government- an improvement plan must be submitted to the ILT based on the outcome of this related public service tasks may offer a solution for Vitens. The drinking water comparison. We have drawn up this performance comparison on a voluntary basis companies are currently attempting to reach an agreement with the tax authorities in relation to 2014. This comparison shows that Vitens, which achieved an amount of regarding the concrete measures and implications for the drinking water sector via €144 per connection (sector average: €173), is the most cost-effective drinking water Vewin, the water sector association. company in the Netherlands. Furthermore, Vitens has led in the area of operating costs for several years, reporting €72 per connection in 2014 (sector average: €97). The above developments, in combination with the fact that we did not quite achieve the continuity objective (solvency), mean that we need to reassess the current Financial In accordance with the legal obligations of the Drinking Water Decree, Vitens’ quality Policy and make changes where necessary. The time horizon for this task is 2020. The management system is certified in accordance with NEN-EN-ISO9001. The quality ‘new’ Financial Policy must comply with legislation and regulations, serve the interests management system assessment and internal audits performed by the Audit & of our customers and shareholders and set challenging but realistic targets for Vitens. Advisory Department show that improvements have been made in various areas of We will look at this in more detail in 2016. the system during the past year. This leads us to conclude that the system is capable of both identifying improvement opportunities and initiating improvement actions. ISO Rates recently decided to develop the standards for its management systems in accordance As a result of a permanent focus on optimising our internal processes and exploiting with a universal management system model. As a result, all ISO standards will follow synergies and economies of scale, Vitens has succeeded in maintaining its drinking the same basic structure (in terms of chapters and paragraphs), comply with the same water rates at the same level during recent years. In line with the 2016 - 2018 key requirements and also use common terms and definitions. This model is based plan, Vitens will reduce its consumer rate in 2016 by adjusting the variable m3 rate around what ISO calls the ‘High Level Structure’ (HLS), which is basically a set of downwards by an amount of €0.05 to €0.63 (2015: €0.68). The capacity charge key requirements which each management system must satisfy as a minimum. Vitens in 2016 will remain at the same level as in 2015 (€45 per household). The rate for will use this universal management system model for its management systems. Work business usage up to 4 m3 per hour will be set at the same level as the consumer will start on this in 2016. rate. The other rates for business usage from a delivery capacity of 6 m3 per hour and upward remain the same as in 2015. The same applies to the capacity charges for At the end of 2014, the bill relating to the corporation tax rate of public companies both the consumer and the business markets. Based on these changes, we expect was adopted by Parliament. Pursuant to this new legislation, publicly owned Dutch Vitens to comply with the maximum weighted average cost of capital (WACC) target for legal persons will in principle become liable to pay corporation tax as of 1 January 2016 (4.2%). 2016. Previously, public companies were only liable to pay corporation tax in exceptional situations. Companies incorporated as a public limited company (naamloze
94 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.2 Explanatory notes to the results 4.2 Explanatory notes to the results
Investments During 2015, investments were realised for an amount of €108.2 million (2014: €119.5 million), excluding third-party contributions. A number of major investment projects reached completion in 2015. These included the Vechterweerd (Dalfsen), Harderwijk, Bunnik and La Cabine (Arnhem) production facilities, the Epe infiltration project, the ‘End of Life’ process automation project, the demand-smoothing Spannenburg service reservoir and the work order management project. The major investment projects which will continue on in 2016 include the new construction work for the Nieuwegein and Heek production facility, the BEEL projects for assessing the impact of external effects on pipes, and water transport pipes for the Ede-Zutphen and Velddriel-Zetten stretches.
Treasury In 2015, Vitens succeeded in attracting new loan capital amounting to €50.0 million: two loans of €25 million each, with a maturity of 22 and 30 years respectively. An amount of €39.7 million was repaid against existing loans. In addition, our current- account credit reduced by €20 million and a cash loan of €25 million was repaid. As a result, the interest-bearing liabilities reduced by €34.7 million in 2015. At the end of 2015, Vitens had a loan portfolio of €815.5 million (excluding subordinated loans). In the past, use was made of interest rate swaps (financial instruments) for normal trading operations in order to avoid interest rate exposure risks resulting from (major) fluctuations in the interest rate on the variable loan portfolio. These instruments are not used for speculative or trading purposes.
95 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.2 Explanatory notes to the results 4.3 Consolidated results
In financial terms, 2015 was an excellent year for Vitens. In spite of the fact that Vitens Depreciation did not increase its rates although operating costs did increase due to inflation, the Depreciation in 2015 reduced to €92.8 million (2014: €103.1 million). In addition to result before and after taxation amounted to €55.4 million. This is €13.3 million higher normal depreciation, Vitens also reported €4.0 million for fair value changes (2013: than in 2014. €6.1 million) and €0.8 million for impairment losses (2014: €11.2 million). The fair value changes relate to devaluation of office buildings (€ 1.9 million) and company- Due to indexation of the taxation levied on tap water and sufferance tax, customers owned housing (€ 2.1 million). The impairment losses primarily relate to carrying values paid slightly more for their drinking water in 2015. A number of municipalities levied for replaced pipes (€0.5 million), higher valuation of land (€0.7 million) and a delay sufferance tax on underground pipes in 2015. Vitens passes this levy on to its penalty relating to ongoing projects (€1.5 million). customers in the municipalities in question. As a publicly owned organisation, Vitens is expected to contribute to reducing social costs. Our unique position as a drinking Trading result water company with a natural monopoly is automatically associated with a moral duty The trading result for 2015 amounts to €93.3 million (2014: €77.6 million). to spend our customers’ money and the money invested by public shareholders in a responsible manner. Financial income and expenses The financial income and expenses balance increased in 2015 to €37.9 million (2014: Turnover €35.5 million). This was caused by the fact that Vitens had to bear an additional The amount of water consumed in 2015 (330.8 million m³) substantially exceeds expense in 2015 for concession pay-outs amounting to €1.7 million (compared to the consumption in 2014 (325.1 million m³). This can be attributed to a hot summer opposite situation in 2014: a release of €3.2 million). In addition, Vitens has benefited and higher business consumption. The average consumption per small-consumer from a low market interest rate for a significant period of time and two new loans were connection remained practically identical: 110 m³ (2014: 109 m³). The net turnover taken out of the beginning of 2015, with a maturity of 22 and 30 years respectively was €3.1 million higher at €356.9 million (2014: €353.8 million). (€50 million). The interest rates for 83% (2014: 78.2%) of the loan capital are fixed for several years. This stabilises the borrowing costs over time and reduces the effect of Delivery to the network during 2015 amounted to 352.1 million m3 (2014: 346.2 fluctuations in the market interest rate. million m³). As a result, the provisional ‘Not Invoiced’ percentage (NI) is 6.1%, which is identical to the final NI percentage for 2014. Result to be distributed to shareholders The net result to be distributed to shareholders of Vitens in 2015 amounted to The turnover for other items in 2015 reduced by €1.3 million to €33.8 million (2014: €55.4 million (2014: €42.1 million). €35.1 million). Equity capital Operating costs The equity capital increased in 2015 by €50.5 million to €471.7 million. The increase The total operating costs reduced by €13.9 million relative to 2014 to €297.4 million. was caused by a drop in the hedging reserve as a result of an increase in the value of This is mainly attributable to a reduction in energy costs (€5.7 million) and lower derivatives (€12.0 million), the addition of the 2015 result (€55.4 million), the dividend depreciation (10.3 million); the latter relates to lower impairment losses of €9.9 million for financial year 2014 paid out in 2015 (-/- €16.8 million) and a reduction in the relative to 2014. revaluation reserve for company-owned housing (-/- €0.1 million).
96 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.3 Consolidated results 4.3 Consolidated results
The hedging reserve for unrealised adjustments to the fair value of financial instruments as a result of applying ‘cash flow hedge accounting’ increased in 2015, due to a slightly higher market interest rate, by €12.0 million to a negative value of €89.3 million in 2015 (2014: €101.3 million).
The solvency ratio (equity capital) as at 31 December 2015 was 27.5% (2014: 24.6%) and the solvency ratio (capital base) as at 31 December 2015 was 31.9% (2014: 29.7%) and therefore comes closer to the target (respectively 25% and 30%) as formulated in the financial policy.
After adoption of the proposal for profit appropriation for financial year 2015, an amount of €33.3 million will be added to the reserves and an ordinary dividend of €22.1 million will be paid out, after discussion and approval of the dividend resolution in the General Meeting of Shareholders
Cash flow/financing The cash flow from operations of €147.3 million (2014: €130.0 million) was more than sufficient for financing the investment activities, amounting to €99.4 million (2014: €104.4 million) and paying dividend. This made it possible to once again make a repayment against interest-bearing liabilities. In 2015, new loan capital was attracted to an amount of €50.0 million (2014: €29.6 million) and an amount of €39.6 million was repaid against existing loans (2014: €59.5 million). In addition, we repaid a cash loan of €25 million in 2015 and reduced the current-account overdraft facility by €20 million. The net investments in 2015 amounted to €102.3 million (2014: €106.8 million). The level of investment is expected to remain at a similar level in 2016.
97 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.3 Consolidated results 4.4 Consolidated Annual Accounts
Consolidated balance sheet as at 31 December
Assets Equity and liabilities In millions of euros 31/12/2015 31/12/2014 In millions of euros 31/12/2015 31/12/2014 Fixed assets [6] Equity capital [1] Tangible fixed assets 1,673.1 1,663.4 Shareholders' capital 5.8 5.8 [2] Associate companies and joint 5.1 5.9 Share premium reserve 147.2 147.2 ventures Revaluation reserve 0.1 [3] Other financial assets 4.9 7.7 Hedging reserve -89.3 -101.3 1,683.1 1,677.0 Other reserves 352.6 327.3 Current assets Result for the financial year 55.4 42.1 [4] Trade debtors and other receivables 31.3 36.0 Total equity capital 471.7 421.2 [5] Fixed assets held for sale – 0.7 31.3 36.7 Liabilities Total assets 1,714.4 1,713.7 Long-term liabilities [7] Equalisation account - contributions 50.6 42.2 received from third parties [8] Subordinated loans 62.9 75.5 [9] Long-term loans 815.5 8 57.9 [10] Derivatives 89.3 101.3 [11] Provisions for employee remuneration 6.5 5.3 [12] Other provisions 1.2 8.8 1,026.0 1,091.0 [13] Current liabilities Trade creditors and other payables 158.3 95.4 Tax liabilities 13.5 14.7
Interest-bearing liabilities 9.5 54.5 Short-term employee remuneration 26.7 26.8 Accrued expenses and deferred 8.7 10.1 income 216.7 201.5 Total equity and liabilities 1,714.4 1,713.7
Notes in the left-hand margin of tables relate to the explanations in paragraph 4.9.
98 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.4 Consolidated Annual Accounts 4.5 Consolidated profit and loss account and other comprehensive income
In millions of euros 2015 2014 Consolidated summary of other comprehensive income [15] Net turnover from 356.9 353.8 In millions of euros 2015 2014 delivery of goods and services Result before and after tax 55.4 42.1 [16] Other turnover 33.8 35.1 Change in interest-rate derivatives offering effective coverage 12.0 -43.4 Total turnover from ongoing 390.7 388.9 Total result 67.4 -1.3 operating activities Of which: Operating costs Result to be distributed to shareholders of Vitens 67.4 -1.3 [17] Work contracted out and 28.7 28.6 temporary staff Groundwater taxes and levies 4.8 4.7 We do not expect future changes in interest-rate derivatives offering effective coverage [18] Other costs 86.6 92.9 to be reclassified and reported in the profit and loss account. [19] Staff costs 84.5 82.0 [20] Depreciation, fair value changes 92.8 103.1 Notes in the left-hand margin of tables relate to the explanations in paragraph 4.10. and impairment of tangible fixed assets Total operating costs 297.4 311.3
Trading result 93.3 77.6
[21] Financial expenses -38.0 -35.2 [22] Share in the result in associate 0.1 -0.3 companies and joint ventures -37.9 -35.5
Result before and after tax 55.4 42.1
Of which: Result to be distributed to 55.4 42.1 shareholders of Vitens
99 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.5 Consolidated profit and loss account and other comprehensive income 4.6 Consolidated cash flow statement
[23] Consolidated cash flow statement In millions of euros 2015 2014 In millions of euros 2015 2014 Result before and after tax 55.4 42.1 [1,21] Investments in tangible fixed -100.0 -106.7 Adjustments for: assets [21] Financial expenses 38.0 35.2 [1,20] Divestiture 0.6 2.3 [20] Depreciation, fair value changes 91.9 102.2 Cash flow from investment -99.4 -104.4 and impairment of tangible fixed activities assets [7] Equalisation account -1.5 -1.2 [9] Long-term loans drawn down 50.0 29.6 amortisation - contributions [9] Repayments against long-term -27.1 -46.9 received from third parties loans [11,12] Addition to/withdrawal from -2.2 -2.7 [8] Repayments against -12.5 -12.6 provisions subordinated loans [3] Other changes in financial fixed 0.1 0.3 [3] Repayments received against 2.8 3.7 assets loans 126.3 133.8 [6] Dividend paid -16.8 -15.7 [3] Received from participating 0.7 2.0 Changes in working capital: interests [4] Trade debtors and other 4.7 -4.6 Cash flow from financing -2.9 -39.9 receivables activities Trade creditors, accrued -1.0 -8.2 expenses and deferred income Net cash flow 45.0 -14.3 [7] Receipts, equalisation account - 9.9 8.6 contributions from third parties Interest-bearing liabilities as at -54.5 -40.2 13.6 -4.2 1 January [11,12] Withdrawals from provisions -7.7 -4.4 Interest-bearing liabilities as at -9.5 -54.5 Cash flow from operational 187.6 167.3 31 December
trading activities Change in interest-bearing 45.0 -14.3 liabilities Interest paid -40.3 -37.3
Cash flow from operating 147.3 130.0 activities
100 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.6 Consolidated cash flow statement 4.7 Consolidated statement of changes in equity capital
In millions of euros Share capital Share pre- Revaluation Hedging Other Result for Equity capital mium reserve, reserve 1 reserve 2 reserves 2 financial attributable to ordinary year shareholders of Vitens capital As at 1 January 2014 5.8 147.2 0.2 -57.9 303.7 39.3 438.3
Result for financial year 2014 – – – – – 42.1 42.1 Other comprehensive income 2014 – – – -43.4 – – -43.4 Total result 2014 – – – -43.4 – 42.1 -1.3
Appropriation of the 2013 result – – – – 39.3 -39.3 – Release from revaluation reserve – – -0.1 – – – -0.1 Dividend payment on ordinary shares – – – – -15.7 – -15.7 As at 31 December 2014 5.8 147.2 0.1 -101.3 327.3 42.1 421.2
Result for financial year 2015 – – – – – 55.4 55.4 Other comprehensive income 2015 – – – 12.0 – – 12.0 Total result 2015 – – – 12.0 – 55.4 67.4
Appropriation of the 2014 result – – – – 42.1 -42.1 – Release from revaluation reserve – – -0.1 – – – -0.1 Dividend payment on ordinary shares – – – – -16.8 – -16.8 As at 31 December 2015 5.8 147.2 – -89.3 352.6 55.4 471.7
1. The revaluation reserve relates to the revaluation of company-owned housing. The reserve was €0 at the end of 2015 (2014: €0.1 million). 2. The balance of the other reserves and the negative hedging reserve is freely distributable.
101 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.7 Consolidated statement of changes in equity capital 4.8 Explanatory notes to the consolidated annual accounts
General A number of new standards and amendments to standards and interpretations are Vitens is a public limited company that is registered in Zwolle, with its office at the effective for financial years starting after 1 January 2015, and have therefore not following address: Oude Veerweg 1, 8019 BE Zwolle. The shares in the company been used when drawing up these consolidated annual accounts. The standards and are owned by municipalities and provincial authorities in its areas of supply. The interpretations listed below may have an impact on the consolidated annual accounts main activities of Vitens are pumping up and purifying ground water and subsequent of Vitens. The exact scope of this possible impact is still under investigation. distribution of purified water. • IFRS 16 Leases, relates to on-balance-sheet recognition of all leases in effect for financial years from 1 January 2019; These 2015 Annual Accounts were signed on 22 March 2016 by the Executive Board • IFRS 9 Financial instruments, is a simplification of valuation models for financial and the Supervisory Board. The Supervisory Board will present the annual accounts for assets and applies to financial years from 1 January 2018; the purpose of adoption to the General Meeting of Shareholders on 22 April 2016. • IFRS 15 Turnover from contracts with customers. This standard determines the principle for recognising turnover from contracts with customers in accordance IFRS with a five-step plan and replaces IAS 18 and IAS 11; the standard is effective Vitens’ annual accounts are drawn up based on the International Financial Reporting from 1 January 2017. Standards (IFRS), as adopted by the European Union (EU). IFRS includes both the IFRS standards and the International Accounting Standards, which are issued by Principles used for consolidation the International Accounting Standards Board (IASB) and the interpretations of IFRS The consolidated annual accounts present the financial information for Vitens and the and IAS standards as issued by the International Financial Reporting Interpretations group companies in which Vitens exercises direct or indirect influence on business Committee (IFRIC), or the Standing Interpretations Committee (SIC). The main and financial policy. The assets, liabilities and results of these group companies are principles for valuation and result determination as used when drawing up the fully accounted for in the consolidated accounts. In cases where the holding in the consolidated annual accounts are described in the following sections. The historical consolidated company amounts to less than 100%, a third-party element is included cost convention applies. In deviation from this, certain assets and liabilities, mainly in the equity capital and in the result. The results of the group companies that were company-owned housing, offices, fixed assets held for sale and derivatives have acquired or sold during the year are included in the consolidated profit and loss been valued at their fair value. Unless stated otherwise, these valuation principles are account from the date of joining the group, respectively to the date of sale. The same applied consistently to all the financial years shown in these annual accounts. The principles as those that apply to Vitens are used to determine the balance sheet and annual accounts are presented in millions of euros (operational currency that is also result of the group companies. The same financial year is also used. Interests in used for reporting purposes) and rounded to the nearest whole number. associate companies and joint ventures are not included in the consolidation.
New and/or amended IFRS standards Intercompany transactions, balance sheet entries and unrealised profits on The International Accounting Standards Board (IASB) and the International Financial transactions between group companies have been eliminated. Reporting Interpretations Committee (IFRIC) issued new and/or amended standards and interpretations in 2015, which apply in the case of Vitens from financial year 2015 onward.
102 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.8 Explanatory notes to the consolidated annual accounts 4.8 Explanatory notes to the consolidated annual accounts
Valuation principles and method for determining the result unrealised changes in value.
Tangible fixed assets Investments made during the financial year are valued at the acquisition price less The tangible fixed assets are categorised as follows: any subsidies and other contributions that have been obtained. The acquisition price • company buildings and grounds; is understood to be the purchase price, which is either the manufacturing price, or • office buildings; valuation at fair value in the case of companies that have been acquired. The cost • company-owned housing; price of assets made by the company consists of the direct costs of manufacture and • plant and machinery; supplements for indirect production costs. • pipes; • other fixtures, fittings, tools and equipment; Tangible fixed assets are depreciated based on the straight-line method, taking into • work in progress; account the expected service life of the different components that make up the asset • raw materials and process additives (stocks). in question. Depreciation starts from the time when the asset in question is put into operation. Company buildings and grounds, plant and machinery, pipes and other fixtures, fittings, tools and equipment are valued at the purchase price or manufacturing price. The useful lives of the items in the different asset categories are as follows: When first-time adoption of IFRS was implemented (2006), the assets were valued • company buildings - 40 years, outbuildings and equipment in the grounds - 15 based on fair value. This fair value was assumed at the ‘deemed cost’, subject to years. The grounds themselves (land) are not depreciated. annual depreciation. • office buildings and company-owned housing - 40 years. • production locations in civil engineering terms - 40 years, in terms of electrical and Office buildings are valued according to the fair value method as specified in IAS mechanical engineering - 15 years; 16.31. Corrections for a lower fair value of the office buildings are initially deducted • other plant and machinery - 15 years. from a positive revaluation reserve and any remaining excess is accounted for as • pipes: main pipes - 50 years and connection pipes - 331/3 years; a direct expense via the profit and loss account. Adjustments resulting in a higher • other fixtures, fittings, tools and equipment - 3 to 5 years; valuation of the office buildings are accounted for as an income item via the profit and • work in progress is not depreciated; loss account insofar as they apply to devaluations that have been applied in previous • raw materials and process additives (stocks) are not depreciated. years; any remaining adjustment to the valuation is accounted for via a revaluation reserve. The office buildings are periodically valued. The expected useful life, residual value and depreciation methods are assessed each year and amended if necessary. Profit or loss at the time of sale is determined based Company-owned housing comprises residential properties situated in the water on the proceeds and the valid carrying amount on that date. extraction areas of Vitens and let at market rental rates to (former) Vitens employees. Vitens handles these properties as tangible fixed assets in accordance with IAS 16, Borrowing costs are allocated in accordance with IAS 23 for projects under values them at their fair value and recognises any changes in equity capital (revaluation construction. Borrowing costs are allocated to projects that started after 1 January 2009 reserve). The fair value is based on the value in accordance with the Valuation of with an expected completion time exceeding 12 months and an expected investment Immovable Property Act (WOZ) and other factors. A revaluation reserve is accrued for amount of more than €1 million. The borrowing costs are allocated based on the
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weighted average interest rate that applies to the interest-bearing loans (2015: 3.75%; which Vitens exercises significant influence, and participating interests in joint ventures, 2014: 3.91%). are valued according to the ‘equity method’. The carrying value of the associate company or of the joint venture includes the goodwill that was paid at the time of acquisition and Impairment of fixed assets the share of Vitens in the changes in the equity capital of the associate company or joint If circumstances require, analysis takes place to determine whether impairment of venture after the date of acquisition. tangible fixed assets is required. If there are indications for this, an estimate is made of the realisable value of these assets. In the case of assets, the realisable value is the Other financial assets higher of two valuations: the fair value minus sales costs, or the going-concern value. The The other financial assets relate to loans that have been issued and receivables that have going-concern value is determined based on the discounted value of the estimated future been valued at the amortised cost price minus any impairment losses. cash flows. Derivatives The impairment loss is accounted for as a cost item in the profit and loss account and Derivatives (financial instruments) are used during normal trading operations to limit specified in note [20], depreciation. After processing an impairment loss, the annual interest rate exposure risks. The objective of this form of control is to limit the effect that amount of depreciation is amended in line with the revised carrying value minus the changes in interest rates have on the results. Interest-rate derivatives are used to manage residual value. the loan portfolio based on the desired risk profile and are not used for speculative or trading purposes. These interest-rate derivatives are valued at fair value from the time If the impairment amount exceeds the carrying value for the asset, consideration must be when the contract is entered into (trade date). The fair value is determined based on given to creating a liabilities-based provision. developments in the market interest rate and the defined interest rate for the underlying derivative. Changes in the fair value of derivatives are recognised in the profit and loss In 2014 and 2015, management identified the need for possible impairment. As a result, account as standard. The interest-rate derivatives that have been contractually agreed impairment was implemented in 2014 and 2015 in respect of a number of plots of land, are referred to as hedge instruments. process automation, plant, pipes and delay penalties relating to ongoing projects. Vitens applies the following valuation hierarchy: Associate companies and joint ventures • level 1: quoted (unadjusted) prices on active markets for identical assets or Associate companies are entities where Vitens, either directly or indirectly, exercises liabilities; influence on the financial and operational policies but does not have a final say when • level 2: other methods where all variables have a significant effect on the fair value taking decisions. In general, this applies in cases where Vitens can exercise voting rights measurement, and are directly or indirectly observable; of between 20% and 50%. Associate companies are valued at cost price at the time of • level 3: methods where variables are used that have a significant effect on the fair acquisition (which is the fair value). And, from that time on, changes in the value of the value measurement, but which are not based on observable market information. associate companies are accounted for directly in the profit and loss account (equity method). The derivatives are valued according to the level 2 method in the valuation hierarchy: i.e. variables that have a significant effect on the fair value measurement are directly or Joint ventures are contracts where Vitens, together with one or more parties, performs indirectly observable. Vitens applies a net discounted value calculation that takes credit activities subject to joint control of all the parties. Investments in associate companies on risk into account. The following are relevant variables that apply to the valuation of
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derivatives: (i) discounted values of interest payments; and (ii) forecast yield curves. Valuations at fair value Vitens applies the following valuation hierarchy for determining the fair value: The use of interest-rate derivatives results in a fixed cash outflow. Vitens pays a fixed • level 1: quoted (unadjusted) prices on active markets for identical assets or interest rate on the derivative, whereas the short term interest on rollover loans is paid liabilities; from the short-term interest receipts on the derivative. • level 2: other methods where all variables have a significant effect on the fair value measurement, and are directly or indirectly observable; A hedge is considered to be effective from the start and during the term of the hedge • level 3: methods where variables are used that have a significant effect on the fair relationship. Changes in the cash flows for the hedged item are expected to be almost value measurement, but which are not based on observable market information. completely covered by changes in the cash flows from the hedge instrument. If this is the case, the fluctuations in the fair value of the derivatives are accounted for as debit/ credit transactions against the hedging reserve (equity capital). This is known as hedge accounting. If the derivative no longer qualifies as a hedge instrument, the fluctuations in the fair value are accounted for as debit/credit transactions against the profit and loss account.
Impairment of financial fixed assets In the case of financial instruments, the company determines whether there are objective indications for impairment of a financial asset or group of financial assets as per the date of each balance sheet. If objective reasons for impairment exist, the company determines the extent of the loss based on the impairment loss and accounts for this directly in the profit and loss account.
In the case of financial assets that are valued at amortised cost price, the degree of impairment is calculated as the difference between the carrying value of the assets and the best possible estimate of the future cash flows, expressed as the discounted value using the effective interest rate for the financial assets as determined when the instrument was first processed. The impairment loss that was recorded for this must be corrected if the reduction in impairment is associated with an objective event after writing-down. The correction is limited to no more than the amount that would be required to value the asset at the amortised cost price at the time of correction if no value impairment had been involved. The correction made to the loss is recognised in the profit and loss account.
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The table below details the financial assets and liabilities that are valued at fair value. Trade debtors and other receivables For an explanation of office buildings and company-owned housing that are valued at Trade debtors and other receivables are valued at amortised cost price subject to fair value, please refer to the explanatory note on the accounting principles for ‘tangible deduction of a value correction for possible bad debts. Netting and presentation of fixed assets’. For an explanation relating to fixed assets held for sale that are valued at trade debtors and other receivables, and advances from water consumers are based fair value, please refer to the explanatory note on the accounting principles for ‘Fixed on billing groups: a customer grouping based on time-staggered submission of meter assets held for sale’. For an explanation relating to derivatives that are valued at fair readings for determining the billable water consumption. Trade debtors and other value, please refer to the explanatory note on the accounting principles for ‘Derivatives’. receivables are no longer included when payment has been received, or bad debt has been established. Valuations at fair value Level 1 Level 2 Level 3 Total as at 31/12/2015 in millions of euros Fixed assets held for sale Assets Fixed assets that are held for sale, and liabilities associated with those assets, are Office buildings – 32.9 – 32.9 shown separately on the balance sheet. Assets are classed as such if Vitens has Company-owned housing – – 4.9 4.9 committed to selling the assets in question, the sales process has been initiated Fixed assets held for sale – – – – and the asset is expected to be sold within one year. These assets are no longer Total assets – 32.9 4.9 37.8 depreciated and they are devalued to their fair value minus the expected sales costs if this value is less than the carrying value. Equity and liabilities Derivatives – 89.3 – 89.3 Liquid assets Total equity and liabilities – 89.3 – 89.3 The liquid assets entry relates to bank credit balances and cash in hand and is valued at fair value, which is equivalent to the nominal value. Debts owed to banks are Valuations at fair value Level 1 Level 2 Level 3 Total accounted for under interest-bearing liabilities. as at 31/12/2014 in millions of euros Assets Equalisation account - contributions received from third parties Office buildings – 35.1 – 35.1 Starting from 2010, the equalisation account for contributions received from third Company-owned housing – – 7.1 7.1 parties is valued in accordance with IFRIC 18 as the amount received from third Fixed assets held for sale – 0.7 – 0.7 parties when laying connection pipes minus amortisation. The equalisation account Total assets – 35.8 7.1 42.9 is amortised over 331/3 years and is seen as equivalent to the depreciation period for investments in connection pipes. The annual amortisation is accounted for under other Equity and liabilities turnover. Derivatives – 101.3 – 101.3 Total equity and liabilities – 101.3 – 101.3 Interest-bearing liabilities The interest-bearing liabilities are valued at fair value after deduction of transaction costs at the time of inclusion. They are valued subsequently at the amortised cost price using the effective interest method. Repayment obligations relating to long-term
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liabilities that fall due within a period of one year are presented under the current Collective schemes liabilities. Vitens operates a Pension and Flexible Early Retirement scheme (Pensioen- en Flexibele Uittredingsregeling) for existing and former employees. The pensions are Provisions for employee remuneration administered by Stichting Pensioenfonds ABP and the Flexible Early Retirement The reorganisation provision was created to cover liabilities resulting from the social scheme by Stichting Flexibel Uittreden Nutsbedrijven, which is consequently indirectly plan. The costs ensuing from the social plan are largely attributable to the expenses administered by Pensioenfonds ABP. These are collective schemes in which multiple associated with finding new positions for employees who are surplus to requirements. employers participate and are essentially defined-benefit pension schemes where the The calculation is based on the number of employees surplus to requirements, the amount of pension is based on the length of service and average salary enjoyed by the total wage costs, a realistic estimate of the (average) age and the expected period employee during the period of employment. required for guidance and coordination. The pension schemes comply with the definition of ‘multi-employer funds’. IAS 19 The anniversary provision has been created for future anniversaries and calculated in requires certain information relating to defined-benefit schemes to be explained in accordance with actuarial principles. The 2012 period life table for men and women, the annual accounts. In particular, the balance of the assets and liabilities associated future staff turnover and salary increases have been taken into account in this respect. with the scheme must be shown in the balance sheet as a receivable or payable. Both The provisions for employee remuneration have been converted to discounted value at pension funds have indicated that they are unable to provide the information that is a nominal interest rate of 3.75% (2014: 3.91%). required in relation to defined-benefit pension schemes to the participating businesses. Therefore, both schemes are handled as defined-contribution schemes and the The short-term component of the employee remuneration provision is accounted for pension premiums owed for the financial year are accounted for as pension expenses under the current liabilities. in the profit and loss account. The expected pension expenses for 2016 amount to €8.9 million (2015: €8.5 million actual). Other provisions The stated provisions are created if: ABP’s 12-month average funding ratio at the end of 2015 was 98.7% (2014: 101.1%). • a legally enforceable and/or actual liability exists as at the balance sheet date, This is insufficient, meaning that the premium will be subject to a supplement of 1% in which ensues from events before the balance sheet date; 2016. The total premium for the retirement and surviving dependents pension via ABP • it is reasonable to expect that settling the obligation will require an outflow of will amount to 18.8% on 1 April 2016. In principle, the premium supplement applies financial resources; for five years. • the size of the liability can be estimated reliably; • the provisions are valued at the nominal value of the projected expenditure that will Current liabilities be required, unless the time value of money has a significant effect. In the latter The current liabilities are valued at amortised cost price. A current liability is included case, the provision is valued at the discounted value; in the balance sheet as soon as Vitens becomes a contract partner and/or a concrete • the short-term component of the other provisions is recognised under the current service has been provided, or goods have been delivered. liabilities.
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Lease contracts • revenues from services provided to Evides N.V., Vitens Evides International B.V. and Vitens has entered into operational lease contracts for a large part of the vehicle Stichting Aansluitingen.nl; fleet. The risks and benefits associated with ownership of the assets in question do • amortisation on contributions from third parties. This relates to contributions for not transfer to the lessee. As a result, payments made for these lease contracts are laying connection pipes. The equalisation account is amortised over 331/3 years; recognised as an expense in the profit and loss account on a straight-line basis. • the activities associated with other revenues are recognised as revenue insofar as delivery of goods and services has taken place and insofar as the contractual Net turnover from delivery of goods and services obligations have been fulfilled. The net turnover consists of the standing charge (fixed fee) and the charge for delivering drinking water. The revenues from drinking water are recognised based on the total Work contracted out and temporary staff amount of water delivered to third parties. The turnover data is obtained via meter These are the costs incurred by Vitens for its operations and relate to work that is readings at customers’ premises and, in respect of the amount that has not yet been contracted out and the costs of hiring temporary staff from third parties. These costs finally invoiced, via estimates based on historical statistics. The turnover tax and levy are allocated to the period to which they relate. on tap water charged based on net turnover are not included in the turnover figure. The net turnover is recognised at the time when the benefits of ownership have transferred Groundwater taxes and levies to the buyer. These are the costs incurred by Vitens for its operations and relate to taxes and levies associated with extracting groundwater. These costs are allocated to the period to which Other turnover they relate. The other turnover section is used to account for revenues that are not directly related to the core activities. The other turnover includes the following items (among others): Other costs • revenues from home relocations/new connections and collection. In the case These are costs incurred by Vitens for its operations and consist (among other things) of of home relocations/new connections, Vitens charges an extra contribution for raw materials and process additives, electricity, vehicle costs, IT costs, facility costs and administrative handling costs; other costs. These costs are allocated to the period to which they relate. • revenues from fire hydrants. This relates to a one-off contribution and an annual payment for maintenance; Capitalised own-account production • revenues from work for third parties. This relates to various activities that Vitens Capitalised own-account production relates to direct salary and wage costs and performs for third parties; indirect other costs incurred for manufacturing tangible fixed assets which relate to • revenues from rental and leasehold contracts. This relates to revenues from letting the infrastructure activities of the business. This capitalised own-account production is company-owned housing built on land where production companies are located or deducted from the salaries and wages and the other costs. where extraction takes place. This item also includes land leasehold revenues; • ‘Hitch-hiking’ payments. This relates to payments made primarily by water boards Financial income and municipalities for ‘hitch-hiking’ in the area of water pollution levies/home The financial income consists of interest income on financial assets, i.e. loans, occupant-based cost allocation and sewerage levies on the invoice sent by Vitens; calculated based on the effective interest method. This income is allocated to the period • revenues from analyses and consultancy. This relates to revenues generated by to which it relates. analyses performed for third parties by Vitens’ laboratory;
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Financial expenses Other provisions The borrowing costs relate to interest-bearing liabilities, calculated based on the The other provisions relate to a number of legal disputes and current rental effective interest method and are allocated to the period to which they relate. The commitments. The provisions have been determined based on management’s best interest-bearing liabilities include fixed interest loans, subordinated loans, rollover estimate of the amounts at which these liabilities can be settled. loans, interest-rate derivatives and current-account overdraft facilities. In addition, they include a release of the difference between the fair value and nominal value of the loan Valuation of tangible fixed assets portfolio of parties that have been acquired, unwinding the discount on provisions and When determining the carrying value for tangible fixed assets, use has been made other financing costs such as commitment fees, guarantees and bank charges. of estimated depreciation periods: these are based on expectations relating to the technical and economical useful life of the underlying assets. The useful life of the Share in the result of associate companies and joint ventures assets may change due to the future changes in the area of technological development, This relates to the result of associate companies and joint ventures. or in the use of the assets, which may then result in impairment losses. An increase/ decrease of 10% relative to the amount of depreciation (depreciation percentages) Taxation results in higher/lower depreciation of approximately €8.7 million. In accordance with article 2, paragraphs 3 and 7 of the Corporation Tax Act (Wet op de Vennootschapsbelasting), the taxation provided for in this Act does not apply to If circumstances require, analysis takes place to determine whether impairment of drinking water. tangible fixed assets is required. If there are indications for this, an estimate is made of the realisable value of these assets. In the case of assets, the realisable value is the Suppositions, estimates and assumptions in the annual accounts higher of two valuations: the fair value minus sales costs, or the going-concern value. When drawing up a set of annual accounts, use is made of assumptions, suppositions The going-concern value is determined based on the discounted value of the estimated and estimates based on historical data and factors that are considered acceptable by future cash flows. An increase/decrease in the tangible fixed assets of 1% results in a management in view of the specific circumstances. These assumptions, suppositions revaluation/devaluation of approximately €16.7 million in relation to the tangible fixed and estimates affect the valuation and presentation of the reported assets and assets. liabilities, and the result achieved during the financial year. The actual figures may differ from the estimates and suppositions that have been used. These items are examined in detail below.
Provisions for employee remuneration The stated provisions have been determined based on suppositions relating to future trends in the area of salaries, social legislation, staff turnover and statistically substantiated assumptions relating to life expectancy. This set of assumptions, together with the discount rates that have been used, has a major effect on the valuation of the provisions and the results.
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Trade debtors 2. The quantities still to be invoiced, expressed as m3/turnover up to and including the Vitens periodically assesses the recoverability of receivables based on historical data end of the calendar year (annual forecast). relating to past payment behaviour. Possible devaluations are deducted from the debtor In relation to the period during the financial year for which customers have not yet balance. Vitens applies the following bad debt provision percentages in relation to received a final account, an estimate is made based on historical meter readings in its internal and external outstanding accounts receivable for water (which have been relation to current drinking water delivery. A higher/lower estimate of the turnover still transferred to a collection agency): to be invoiced of 1% results in a higher/lower net turnover of approximately €2 million. Note [26] includes a detailed explanation with regard to recognition of accrued balance Age category % debtors processed % debtors processed sheet turnover items from previous years and the actual ‘Not Invoiced’ (NI) amount internally by Vitens by collection agency expressed as a percentage. Outstanding trade debtors 0-90 days 0% 0% Outstanding trade debtors 91-180 days 15% 30% 3. Total reconciliation check between customer information in SAP IS-U and drinking Outstanding trade debtors 181-365 days 25% 50% water delivery figures. The customer data is compared to the water balances Outstanding trade debtors > 365 days 60% 90% (production company delivery figures) as a reconciliation check. Movements are analysed, as is the trend in NI. Fair value measurement in relation to financial instruments Derivative financial instruments are recognised at fair value in the balance sheet. In the Accounting policy for the cash flow statement case of other financial instruments, including drawn-down and issued loans, the fair The cash flow statement has been drawn up in accordance with the indirect method value is indicated in the explanatory notes to the annual accounts. where the result after tax according to the profit and loss account is used to infer the movement in cash. When used in the cash flow statement, the term cash refers to the Turnover recognition liquid assets shown on the balance sheet. Recognition of the drinking water revenues is based on the total amount of water delivered to third parties (taxation on tap water is not counted as turnover). Vitens applies a system for determining turnover where the actual recorded consumption is allocated to months/years in the following three-step process:
1. The actual invoiced quantities, expressed as m3/turnover. The actual invoiced m3/turnover is allocated to the calendar years for each customer. In 2015, 41.9% of the deliveries to customers were invoiced in 2015.
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[1] Tangible fixed assets In millions of euros Company Office Company- Plant and Pipes Other Work in Total In millions of euros Company Office Company- Plant and Pipes Other Work in Total build- buildings owned machinery fixtures, progress build- buildings owned machinery fixtures, progress ings and housing fittings, ings and housing fittings, grounds tools and grounds tools and equip- equip- ment ment Position as at 1 January Changes during 2015 2014 Value impairment 0.7 – – – – – -1.5 -0.8 Purchase value 551.0 53.8 7.7 562.4 2,071.0 132.3 65.5 3,443.7 Fair value changes – -1.9 -2.2 – – – – -4.1 Cumulative -244.9 -14.8 – -398.5 -1,011.4 -119.1 – -1,788.7 depreciation, Investments 0.5 – – -0.5 43.0 -0.3 59.0 102.3 impairments and fair Work in progress put 23.1 0.4 – 30.1 11.0 12.1 -76.7 – value changes into service Carrying value 306.1 39.0 7.7 163.9 1,059.6 13.2 65.5 1,655.0 Divestiture – – – – -0.5 – – -0.5 as at 1 January 2014 Depreciation -12.5 -0.7 – -23.3 -44.0 -5.9 – -86.4 Total 11.8 -2.2 -2.2 6.3 9.5 6.5 -19.2 10.5 Changes during 2014 Value impairment -2.2 – – -0.5 -0.1 -0.4 -8.7 -11.9 Balance as at Fair value changes – -5.8 -0.4 – – – – -6.2 31 December 2015 Investments -0.2 – – -0.3 53.2 -0.2 54.3 106.8 Purchase value 587.6 47.7 7.3 611.6 2,180.0 150.6 42.1 3,626.9 Work in progress put 15.5 5.5 – 21.2 1.8 5.8 -49.8 – Cumulative -268.5 -14.8 -2.4 -443.3 -1,099.2 -131.8 – -1,960.0 into service depreciation, Classified as fixed – -0.8 – – – – – -0.8 impairments and assets held for sale fair value changes Impairment correction – – – – – 0.7 – 0.7 Carrying value as at 319.1 32.9 4.9 168.3 1,080.8 18.8 42.1 1,666.9 Divestiture -0.1 -1.8 -0.2 – – – – -2.1 31 December 2015 Depreciation -12.2 -0.7 – -22.2 -43.2 -6.8 – -85.1 Total 0.8 -3.6 -0.6 -1.8 11.7 -0.9 -4.2 1.4 In millions of euros 2015 2014 Company buildings and grounds 319.1 3 07.3 Balance as at Office buildings 32.9 35.1 31 December 2014 Company-owned housing 4.9 7.1 Purchase value 563.7 52.7 7.3 582.0 2,126.0 138.2 61.3 3,531.2 Plant and machinery 168.3 162.0 Cumulative -256.4 -17.6 -0.2 -420.0 -1,054.7 -125.9 – -1,874.8 Pipes 1,080.8 1,071.3 depreciation, Other fixtures, fittings, tools and equipment 18.8 12.3 impairments and Work in progress 42.1 61.3 fair value changes Subtotal tangible fixed assets 1,666.9 1,656.4 Carrying value as at 307.3 35.1 7.1 162.0 1,071.3 12.3 61.3 1,656.4 31 December 2014 Raw materials and process additives (stocks) 6.2 7.0 Total tangible fixed assets 1,673.1 1,663.4
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The borrowing costs (IAS 23) are allocated based on the weighted average interest The fixed assets that were classified as held for sale in 2014 at €0.8 million consist of rate that applies to the interest-bearing loans (2015: 3.75%; 2014: 3.91%) for projects land that will be sold in 2015. These are accounted for under liquid assets (fixed assets which started after 1 January 2009 involving a minimum investment of €1 million and held for sale), see note [5]. a completion time exceeding 12 months. In 2015, an amount of €1.5 million (2014: €1.3 million) was allocated to projects in progress. At the end of 2015 , the capitalised [2] Associate companies and joint ventures interest total amounted to €5.0 million (2014: €3.5 million). The group companies, associate companies and joint ventures are shown below.
Vitens had part of the office buildings assessed by an independent party and revalued As at 31 December 2015 Town Participating interest (%) as at 31 December 2015. The valuation is based on the following assumptions: one Group companies (consolidated) office building will continue to be used and one office building will be rented. This Vitens Watermanagement B.V. Zwolle Zwolle 99.9 resulted in 2015 in a fair value change of a total of €1.9 million (2014: €5.8 million) for Vitens Industriewater B.V. Leeuwarden 100 office buildings. Associate companies (not consolidated) The land was devalued in 2015 by €0.7 million (2014: €1.5 million). In 2014, Reststoffenunie Waterleidingbedrijven B.V. Rijswijk 36.9 devaluation related to the land for which Vitens was still incorrectly shown as the owner KWH Water B.V. Nieuwegein 29.1 and where the carrying value had not yet been deducted. In view of the limited impact on equity capital, tangible fixed assets and the result, these items were recognised in Joint ventures (not consolidated) the 2014 accounts. Vitens Evides International B.V. Zwolle 50 Facturatie B.V. Utrecht 50 In 2015, the fair value of the company-owned housing changed by a total of €2.2 million negative (2014: €0.4 million negative) due to less favourable market conditions Associate companies Joint ventures Total and a reassessment of the plans for using the company-owned housing in the future. In millions of euros 2015 2014 2015 2014 2015 2014 The fair value is based on the value in accordance with the Valuation of Immovable Carrying amount as at 1 January 2.6 2.6 3.3 5.6 5.9 8.2 Property Act (WOZ) and other factors. Movements In 2015, Vitens applied a write-down of €1.5 million in the area of work in progress due Share in the result – – -0.1 -0.3 -0.1 -0.3 to delays in the case of two projects. Received from participating – – -0.7 -2.0 -0.7 -2.0 interests In 2014, Vitens applied a write-down of €9.7 million (including €0.7 million for Total movement – – -0.8 -2.3 -0.8 -2.3 impairment corrections) comprising a write-down on process automation of €8 million and €1.7 million as a result of shutting down a production company and taking some Carrying value as at 2.6 2.6 2.5 3.3 5.1 5.9 items of plant and a number of pipes out of service. 31 December
In 2015, Vitens received €0.7 million (2014: €2.0 million) from Facturatie B.V.
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[4] Trade debtors and other receivables Financial information for associate companies and joint ventures In millions of euros 2015 2014 In millions of euros Assets Liabilities Turnover Profit/ % participating Share in Trade debtors 22.3 26.8 Loss interest net assets Impairment loss on debtors -1.3 -1.7 2014 Hitch-hikers 1.2 1.3 Vitens Evides International B.V. 13.7 12.6 16.3 -0.1 50.0% 0.6 Net trade receivables 22.2 26.4 Reststoffenunie 1.5 0.8 4.3 – 36.9% 0.3 Tax and social contributions 1.5 2.0 Waterleidingbedrijven B.V. Amounts invoiced in advance by third parties 0.9 0.9 KWH Water B.V. 31.8 20.1 18.2 -0.2 29.1% 3.4 Accrued income and prepaid expenses 6.7 6.7 Facturatie B.V. (2015) 4.0 0.2 1.7 – 50.0% 1.9 Total 31.3 36.0
The 2015 annual accounts for the associate companies and joint ventures listed above The trade debtors balance relates to water debtors in the business and consumer will not be available before publication of the 2015 Vitens Annual Report. The expected markets at €16.8 million (2014: €19.5 million) and other non-water debtors at €5.5 2015 result for the associate companies and joint ventures has however been included. million (2014: €7.3 million). The fair value for the debtors is identical to the carrying The amounts stated in the table above relate to the entities in their entirety. value. Payments are collected by automatic direct debit after invoicing in the case of approximately 83% of the water debtors. [3] Other financial assets In millions of euros 2015 2014 At the end of the financial year, the bad debt write-down on debtors amounted to Carrying amount as at 1 January 7.7 11.4 €1.8 million (2014: €1.7 million). The expense in the profit and loss account for 2015 amounted to €0.3 million (2014: €1.0 million). Movements Repayments received against loans -2.8 -3.7 The movement in the debtor provisions is shown below. Total movement -2.8 -3.7 In millions of euros 2015 2014 Position as at 1 January 1.7 1.6 Carrying amount as at 31 December 4.9 7.7 Movements At the end of the financial year, the other financial assets amounted to €4.9 million Additions 0.3 1.0 (2014: €7.7 million); these relate to loans that have been issued. Of these loans, an Withdrawals -0.7 -0.9 amount of €4.6 million (2014: €7.3 million) relates to vehicle fleet funding. That amount Total movement -0.4 0.1 includes a loan of €4.4 million (2014: €7.0 million) to the lease company. The term for this loan is a maximum of five years. Position as at 31 December 1.3 1.7
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An aged trade debtor analysis is included below. This includes receipts that have [5] Fixed assets held for sale not yet been allocated amounting to €0 (2014: -/- €0.1 million) and excludes the In millions of euros 2015 2014 receivables due from hitch-hikers at an amount of €1.2 million (2014: €1.3 million), in Carrying amount as at 1 January 0.7 – view of the fact that Vitens has no payment default exposure in this respect. Movements The trade debtors balance as at 31 December 2015 does not include individual Assets classified as held for sale – 0.8 receivables which would have a material impact on the result of Vitens in the event of Expected sales costs – -0.1 non-recovery. Sales -0.7 – Total movement -0.7 0.7 Water debtors In millions of euros 0 - 90 91 - 180 181 - 365 > 365 Total Carrying amount as at 31 December – 0.7 days days days days 2015 14.3 0.9 0.8 0.8 16.8 The fixed assets held for sale relate to land that was sold in 2015. 2015 (including impairment) 14.2 0.7 0.6 0.2 15.7 2014 17.0 1.0 0.6 0.8 19.4 [6] Equity capital 2014 (including impairment) 16.9 0.7 0.2 – 17.8 Authorised capital Ordinary shares Number of shares Shares issued Shares in portfolio with Total Non-water debtors Vitens In millions of euros 0 - 90 91 - 180 181 - 365 > 365 Total Position as at 31 December 5,777,247 – 5,777,247 days days days days 2014 2015 4.9 0.1 0.2 0.3 5.5 Position as at 31 December 5,777,247 – 5,777,247 2015 (including impairment) 4.9 0.1 0.2 0.1 5.3 2015 2014 6.9 0.1 0.2 0.2 7.4 2014 (including impairment) 6.9 0.1 0.2 0.1 7.3 Authorised capital The authorised capital of the company amounts to €18,000,000 divided up into 18,000,000 ordinary shares of a nominal value of €1 per share.
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Consolidated statement of changes in equity capital From 1 January 2010, Vitens has applied IFRIC 18 (Transfers of assets from The authorised capital of the company amounts to €18,000,000 divided up into customers) in respect of the amounts that Vitens receives from third parties for 18,000,000 ordinary shares of a nominal value of €1 per share. At the end of 2013, installing connection pipes. Previously, the amounts received were deducted from the 5,777,247 of these shares were issued and paid up. investments in connection pipes.
The share premium reserve is a reserve resulting from the establishment of Vitens in Amortisation takes place over a period of 331/3 years and is seen as equivalent to the 2001. This amounted to €9 per share for each issued share (4,475,439), equating to a depreciation period for investments in connection pipes. total of €40.3 million. As a result of the merger, 1,887,685 shares were issued in 2006 and an amount of €52.80 per share was added to the share premium reserve (total of [8] Subordinated loans €99.7 million). In 2006 and 2007, the shares in Nuon N.V. were purchased in three In millions of euros 2015 2014 transactions (1,615,655 shares in total). Of these shares, 619,223 were withdrawn Position as at 1 January 75.5 88.0 in 2006 and a further 175,000 in 2007. The share premium reserve was reduced Repayment obligation during the financial year 12.5 12.6 by €9 per share (total of €7.1 million). In 2007, part of the shareholding in Nuon N.V. 88.0 100.6 was sold to municipalities and provincial authorities (274,935 shares in total). In 2011, Movements Vitens issued 208,346 shares and an amount of €69 per share was added to the share Loan repayments -12.5 -12.6 premium reserve (total of €14.4 million). 75.5 88.0 Repayment obligation during next financial year -12.6 -12.5 The revaluation reserve of €0 (2014: €0.1 million) was created as a result of a fair value change in respect of the company-owned housing. Company-owned housing is Position as at 31 December 62.9 75.5 recognised at fair value. Repayment takes place in 15 annual instalments subject to an option to suspend The other reserves relate to a reserve resulting from cumulative retained profit. payment if solvency falls below 25% in the financial year in question. Interest is paid over the part of the principal sum that has not been repaid. The percentage applied is [7] Equalisation account - contributions received from third parties the same as the average interest rate percentage for 10-year Dutch government bonds In millions of euros 2015 2014 during the 5 preceding calendar years, plus 100 basis points (1%). This amounted Position as at 1 January 42.2 34.8 to 2.97% in 2015 (2014: 3.55%). The loans are subordinated relative to other debt Amounts received during installation phase 9.9 8.6 liabilities. The fair values of the subordinated loans are included in note [27]. Amortisation recognised as income in the profit and loss account -1.5 -1.2 Position as at 31 December 50.6 42.2
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[9] Long-term loans Other information relating to long-term and subordinated loans: In millions of euros 2015 2014 In millions of euros 2015 2014 Position as at 1 January 857.9 864.7 Average percentage interest rate 3.75% 3.91% Repayment obligation during the financial year 27.2 37.9 Total as at 31 December 983.1 973.1 885.1 902.6 Repayments < 1 year 104.7 39.7 Movements Repayments > 1 year and < 5 years 234.0 288.0 New loans 50.0 29.6 Repayments > 5 years 644.4 645.4 Repayments -27.1 -46.9 Release resulting from market value versus nominal value -0.4 -0.2 No collateral (pledge, mortgage, ownership of securities, etc.) has been provided in 9 07.6 885.1 respect of the loan portfolio referred to above. Repayment obligation during the next financial year -92.1 -27.2 [10] Derivatives Position as at 31 December 815.5 857.9 As at 31 December 2015, Vitens held the following financial instruments, recognised at fair value. The long-term liabilities relate to private loans and rollover loans. Guarantees amounting to a total of €9.6 million (2014: €10.9 million) have been issued by 46 municipal In millions of euros 2015 2014 shareholders in respect of a number of private loans. The fair values of the long-term Financial instruments as at 1 January 101.3 57.9 liabilities are included in note [27]. Change in value due to realised and unrealised results -12.0 43.4 Financial instruments as at 31 December 89.3 101.3 In 2015, 2 new loans were agreed for an amount of €50.0 million (2013: (2014: € 29.6 million). The market value of the derivatives depends on unrealised changes to the fair value resulting from changes in the yield curves. In concrete terms this means that the Type of long-term loan Long-term component Short-term component payable interest on the derivatives exceeds the current market interest rate, which in millions of euros 2015 2014 2015 2014 results in a negative value. In 2015 this was €89.3 million (2014: €101.3 million). Rollover loans 338.2 423.9 61.3 11.2 These derivatives have been taken out in order to compensate for interest rate risk Private loans 477.3 434.0 30.8 16.0 exposure caused by major fluctuations in the market interest rate. The negative value Total 815.5 857.9 92.1 27.2 in question will not be recognised directly by Vitens in the profit and loss account because the hedge is considered to be effective. The interest on the rollover loans is fixed on each occasion between the 1-month and 12-month Euribor rate and therefore fluctuates depending on trends in the capital market.
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At the end of 2015, Vitens had 9 ongoing interest-rate derivative contracts for a [11] Provisions for employee remuneration principal sum of €299.5 million where the variable interest on the rollover loans is fixed Movement summary for employee remuneration Reorganisation Anniversary Total for between 1 to 30 years. The fair value of these interest-rate derivatives amounted to in millions of euros provision provision a negative amount of €89.3 million at the end of 2015 (2013: €101.3 million negative). Position as at 1 January 2014 7.0 4.0 11.0 Within the derivatives referred to above, Vitens has two interest rate derivatives (2015: €16.7 million; 2014: €17.8 million) with a remaining term of 27 and 28 years (both for Addition 0.6 0.2 0.8 a principal sum of €25 million), with a break clause after 10 years (with both parties). Added interest 0.2 0.2 0.4 In the case of both derivatives, the credit risk (CVA/DVA), which is included in the Amount released -0.6 – -0.6 valuation, is determined up to the break clause and not over the entire term. This has Withdrawals -2.0 -0.7 -2.7 a negative effect on the valuation of the derivatives as at 31 December 2015 to an Position as at 31 December 2014 5.2 3.7 8.9 amount of €2.9 million. Addition 2.7 0.2 2.9 Vitens has agreed a derivative with one party where a deposit can be made above a Added interest 0.2 0.2 0.4 certain negative market value (threshold). Vitens has taken out a single derivative for Amount released -0.1 – -0.1 a principal sum of €25 million subject to this arrangement. The negative market value Withdrawals -2.0 -2.0 -4.0 as at 31 December 2015 amounted to €6.9 million (in 2014, the negative market value Position as at 31 December 2015 6.0 2.1 8.1 was €7.5 million; the ‘threshold’ is €20 million). A possible drop of 100 basis points in the yield curve relative to 31 December 2015 has a negative effect of €7.3 million on Short-term liabilities relating to employee remuneration 1.2 0.4 1.6 the value of the derivative. A possible increase of 100 basis points in the yield curve Long-term liabilities relating to employee remuneration 4.8 1.7 6.5 relative to 31 December 2015 has a positive effect of €5.7 million on the value of the derivative. Long-term component of the employee remuneration provisions 2015 2014 in millions of euros Reorganisation provisions 4.8 3.5 Anniversary provision 1.7 1.8 Total long-term component of the employee remuneration provisions 6.5 5.3
In respect of the long-term component in the employee remuneration provisions, €4.1 million (2014: €3.8 million) relates to expected expenditure during a period of 1 to 5 years and €2.4 million (2014: €1.5 million) relates to expected expenditure after 5 years. The short-term component of the employee remuneration provisions is recognised under current liabilities, see note [13].
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Short-term component relating to employee remuneration 2015 2014 [12] Other provisions in millions of euros In millions of euros 2015 2014 Reorganisation provisions 1.2 1.7 Position as at 1 January 11.1 15.7 Anniversary provision 0.4 1.9 Reservation for holiday pay and outstanding leave 9.1 9.5 Movements Pension premiums to be paid 1.0 1.2 Addition 1.7 2.5 Other short-term employee remuneration 15.0 12.5 Interest added -0.3 – Total short-term component relating to employee remuneration 26.7 26.8 Release -6.7 -5.4 Withdrawals -3.7 -1.7 The employee remunerations and other (deferred) disbursements are recognised in Total movement -9.0 -4.6 accordance with IAS 19. Position as at 31 December 2.1 11.1 Reorganisation provisions The reorganisation provisions have been created to cover commitments resulting Short-term component in other provisions 0.9 2.3 from the social plans that are still in effect. The calculation is based on the number of Long-term component in other provisions 1.2 8.8 redundant employees, the total wage costs per employee, a realistic estimate of the Total 2.1 11.1 number of years in service and the (average) age. The other provisions relate to a number of legal disputes and current rental The outgoing payment flows have been converted to discounted value at a nominal commitments that ensue from company operations. Insofar as considered necessary, interest rate of 3.75% (2014:3.91%). No allowance has been made for mortality. At the provisions have been made as detailed in the above movement summary. end of 2015, the remaining provision was €6.0 million (2014: € 5.2 million).
Anniversary provision The main factors used to determine the anniversary provision are detailed below:
Assumptions 2015 2014 Period life table/mortality table period life table 2012 period life table 2012 Discount rate 3.75% 3.91% Expected salary increases 1.50% 1.50%
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[13] Current liabilities [14] Entitlements and commitments not shown in the balance sheet In millions of euros 2015 2014 Trade creditors and other payables 45.1 47.4 Lease commitments Repayment obligations in relation to long-term liabilities 104.7 39.7 In millions of euros 2015 2014 Tax liabilities 13.5 14.7 Within one year 4.6 4.5 Interest-bearing liabilities (= banks) 9.5 54.5 Between 1 and 5 years 8.5 7.9 Short-term employee remuneration 26.7 26.8 More than 5 years 0.6 0.1 Invoices still to be received 8.5 8.3 Accrued expenses and deferred income 8.7 10.1 These commitments ensue from operational lease contracts for company vehicles. Total 216.7 201.5 Rental commitments Trade creditors and other payables, tax liabilities, employee remuneration payable In millions of euros 2015 2014 in the short term, invoices that are still to be received and accrued expenses and Within one year 2.3 2.3 deferred income are non interest-bearing liabilities. The fair value of these items is Between 1 and 5 years 8.0 8.8 taken as the nominal value in view of the short duration. In principle, trade creditors More than 5 years 0.7 3.7 and tax liabilities are paid within 30 days. The tax liabilities consist of payable groundwater and tap water levies amounting to €8.9 million (2014: €11.4 million) and These commitments ensue from rental contracts for office buildings, parking spaces payable wage tax and social premiums amounting to €4.6 million (2014: €3.3 million). and support facilities.
The current interest-bearing liabilities, with a balance at the end of 2015 of €114.2 Energy supply commitments million (2014: €94.2 million), consist of current-account overdraft facilities with the In millions of euros 2015 2014 banks in addition to the current component of the long-term liabilities. Within one year 7.3 8.9 Between 1 and 5 years 9.7 9.0 The interest-bearing liabilities relate to a current-account overdraft facility (2015: €9.5 More than 5 years – – million; 2014: €29.5 million) and a cash loan (2015: €0; 2014: €25 million). Interest is paid on this amount at a variable rate. This is based on the 1-month Euribor rate These commitments ensue from energy supply contracts for office buildings. including an agreed mark-up percentage. Water purchase commitments The employee remuneration payable in the short term amounted at the end of 2015 to In millions of euros 2015 2014 €26.7 million (2014: €26.8 million) and relates to all commitments to employees such Within one year 3.4 3.3 as the current component of the reorganisation provisions and anniversary provision, Between 1 and 5 years 10.1 12.0 pension premiums that are payable, reserves for outstanding unemployment benefit, More than 5 years 11.9 12.9 reserves for long-term illness, outstanding days of holiday and holiday pay and profit- sharing bonuses. These commitments ensue from water purchases for a period of up to 15 years.
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Conditional commitments Vitens and Vitens Watermanagement B.V. together are classed as a tax group in relation to levying turnover tax; each of the companies is severally liable to pay the tax owed by all of the companies included in the tax group.
Pledged collateral Vitens has issued a bank guarantee for €0.5 million to Vitens Evides International B.V. (2014: €0.5 million).
Deferred tax assets Non-valued deferred tax assets relate to tax-deductible losses and pre-consolidation losses. These amounted to €0 (2014: €0.7 million).
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[15] Net turnover from delivery of goods and services The revenues from rental and leasehold contracts relate to land leases and rent In millions of euros 2015 2014 income from company-owned housing. These are homes in the water extraction areas. Supply of drinking water 216.9 227.0 Standing charge 140.0 126.8 ‘Hitch-hiking’ payments are payments for providing invoicing services for third parties Total 356.9 353.8 such as water boards and municipalities.
Vitens increased the capacity rate (standing charge) in combination with a reduction The revenues from analyses and consultancy relate to analyses performed in the in the variable rate for the supply of drinking water for small consumers. The average laboratory on behalf of third parties. customer’s annual bill (small consumers) remained largely unchanged in 2015 relative to 2014. The revenues from services provided to third parties relate to front-office and back- office work carried out for a different drinking water company. [16] Other turnover In millions of euros 2015 2014 The other revenues include revenues from services provided to Vitens Evides Revenues from home relocations and collections 3.7 4.8 International B.V. and Stichting Aansluitingen.nl and other incidental revenues. Revenues from fire hydrants and sprinklers 7.1 6.4 Revenues from work for third parties 2.1 2.3 Operating costs Revenues from rental and leasehold contracts 1.6 1.5 ‘Hitch-hiking’ payments 0.2 0.2 [17] Work contracted out and temporary staff Revenues from analyses and consultancy 3.4 3.2 In millions of euros 2015 2014 Revenues from services provided to third parties 5.5 5.5 Work contracted out 19.8 20.0 Equalisation account amortisation 1.5 1.2 Temporary staff provided by third parties 8.9 8.6 Revenues from installing building site connections 2.0 1.8 Total 28.7 28.6 Revenues from standpipe rental 0.6 0.6 Revenues from by-products 0.5 0.7 Other revenues 5.6 6.9 Total 33.8 35.1
A fee is charged to customers for home relocations (not via Internet Self Service)/new connections in order to cover the extra administration burden.
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[18] Other costs [19] Staff costs In millions of euros 2015 2014 In millions of euros 2015 2014 Raw materials and process additives 10.9 10.7 Salaries 73.7 72.2 Other staff costs 5.9 5.7 Social charges 8.8 8.4 Water purchases 3.6 3.4 Premiums paid into collective schemes that are handled as a defined- 8.5 9.9 Electricity 7.8 13.5 contribution scheme Vehicle costs 7.2 7.6 Minus: staff costs related to capitalised own-account production -9.3 -8.7 IT costs 16.4 14.7 81.7 81.8 Telecommunications costs 2.7 3.1 Facility costs 19.4 19.8 Reorganisation provisions 2.6 – Taxation, benefits and insurance 6.4 4.9 Anniversary provision 0.2 0.2 Demolition costs 1.8 2.1 Total 84.5 82.0 Other costs 8.1 10.9 Minus: indirect costs related to capitalised own-account production -3.6 -3.5 The costs included under capitalised own-account production are own-account Total 86.6 92.9 costs incurred for manufacturing tangible fixed assets that relate to the company’s infrastructure activities (production facilities and pipes). These consist mainly of direct The other staff costs largely relate to travel and accommodation costs and costs staff costs and in 2015 amounted to €9.3 million (2014: €8.7 million). incurred for training. The staff costs for reorganisations and anniversaries are included here: The vehicle costs relate to lease costs for the vehicle fleet, fuel and other vehicle costs. In millions of euros Reorganisation Anniversary Total 2015 Total 2014 The lease costs in 2015 amounted to €5.6 million (2014: €5.6 million). provision provision Addition to the provisions 2.7 0.2 2.9 0.8 The facility costs largely relate to the rent paid for office buildings and maintenance Release from provisions -0.1 – -0.1 -0.6 costs associated with plant, office buildings and grounds. The rent paid for office Total 2.6 0.2 2.8 0.2 buildings and machines in 2015 amounted to €2.0 million (2014: €2.0 million). At the end of 2015, an amount of €2.7 million (2014: €0.6 million) was added to the The costs included under capitalised own-account production are own-account reorganisation provision to compensate for the increased retirement age for redundant costs incurred for manufacturing tangible fixed assets that relate to the company’s employees. infrastructure activities (production facilities and pipes). In addition to staff costs, these relate to sundry other costs and in 2015 amounted to €3.6 million (2014: €3.5 million). Number of employees 2015 2014 Number of people in permanent employment as at 31 December 1,383 1,403 Number of FTEs in permanent employment as at 31 December 1,299 1,321
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[20] Depreciation, fair value changes and impairment of tangible fixed assets [21] Financial expenses In millions of euros 2015 2014 In millions of euros 2015 2014 Depreciation 86.4 85.1 Interest paid on bullet and linear loans 21.8 21.9 Depreciation costs associated with Facturatie B.V. 0.9 0.9 Interest paid on derivatives 12.3 11.9 Accounting result associated with the sale of assets 0.2 -0.2 Interest paid on rollover loans 0.9 2.0 Divestiture 0.5 – Interest paid on subordinated loans 2.5 3.4 Impairment 0.8 11.2 Interest paid on current-account overdraft – 0.1 Fair value changes 4.0 6.1 Interest addition to provisions 0.1 0.4 Total 92.8 103.1 Other financial expenses 1.9 -3.2 Borrowing costs charged to investment projects (IAS 23) -1.5 -1.3 In 2014, impairment losses were recognised amounting to €9.7 million). These Total 38.0 35.2 resulted from an assessment of the remaining realisable value of the underlying assets (mainly plant and process automation software). For further explanations, please In 2015, Vitens had to bear an additional expense of €1.7 million for concession pay- refer to ‘Valuation principles and method for determining the result’, section entitled outs (compared to a release of €3.2 million in 2014). Impairment of fixed assets. [22] Share in the result of associate companies and joint ventures The land was revalued in 2015, resulting in an increase of €0.7 million (2014: In millions of euros 2015 2014 devalued by €1.5 million). The latter relates to a write-down on land (€1.5 million) Result of associate companies and joint ventures 0.1 -0.3 where Vitens was incorrectly still shown as the owner and where the carrying value had not yet been deducted. In 2015, Vitens applied a write-down of €1.5 million in the Taxation area of work in progress due to delays in the case of two projects and a write-down on Vitens withholds and pays dividend tax over the dividend payment. As the shareholders pipes of €0.5 million. are government bodies and not liable to pay corporation tax, they are entitled to request a refund of the dividend tax that has been paid. So no dividend tax is paid on balance.
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[23] Cash flow from operating activities The cash flow from operations amounted to €147.3 million (2014: €130 million) and, as in 2014, was more than sufficient for financing the investment activities, amounting to €99.4 million (2014: €104.4 million). The cash flow from operating activities is €17.3 million higher than in 2014.
[23] Cash flow from financing activities The surplus cash flow from operating and investment activities (2015: €47.9 million; 2014: € 25.6 million) has been primarily used to pay dividend (€16.8 million) and reduce the extent of the interest-bearing liabilities. Although the long-term loans increased slightly (new loans amounting to €50 million against repayments amounting to €39.6 million), Vitens substantially reduced the short term interest-bearing liabilities (repayment of a cash loan amounting to €25 million, reduction in the current-account overdraft).
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[24] Dividend are Vitens (50%) and Evides N.V. (50%). The depreciation costs for Vitens in 2015 In 2015, the General Meeting of Shareholders adopted the proposed profit amounted to €0.9 million (2014: €0.9 million). At the end of 2015, an amount of appropriation for the 2014 result. As a result, the associated dividend was paid in June €0.2 million (2014: 0.2 million) was still shown on the balance sheet as chargeable 2015 and the remainder added to the other reserves. depreciation costs. In 2014, Facturatie B.V. paid out €1.4 million in dividend to the two shareholders: Vitens (€0.7 million) and Evides N.V. €0.7 million). In millions of euros 2015 2014 Dividend over financial year 2013 – 15.7 The following companies are classed as connected parties: Dividend over financial year 2014 16.8 – Connected party Place of establishment Participating interest (%) Reststoffenunie Waterleidingbedrijven B.V. Rijswijk 36.9 Number of ordinary shares with dividend entitlement 5,777,247 5,777,247 KWH Water B.V. Nieuwegein 29.1
Dividend per share (in euros) 2.91 2.72 At the end of the financial year, the receivables and payables in respect of connected parties amounted to: The Executive Board has submitted a proposal to the shareholders to pay a 2015 In millions of euros 2015 2014 dividend on ordinary shares amounting to €22.1 million in 2016 (approved by the Receivables due from connected parties 0.6 0.4 Supervisory Board on 22 March 2016). On a total of 5,777,247 shares with dividend Payables owed to connected parties 0.3 0.3 entitlement, this equates to a dividend of €3.83 per share. [26] Water account [25] Connected parties In millions of m3 2015 2014 The shares in Vitens are held by 110 shareholders in the public sector (provincial Total water requiring processing 356.1 350.1 authorities and municipalities). Vitens has holdings in associate companies and joint Production losses -9.5 -9.6 ventures, where it either has significant influence but not a majority holding, or has Total service water produced 346.6 340.5 joint control of operations and financial policy. Transactions with these parties are performed on an arm’s-length basis. Purchase of service water 5.5 5.7 Production and purchase 352.1 346.2 Vitens Evides International B.V. In 2015, the two shareholders, i.e. Vitens (50%) and Evides N.V. (50%), jointly paid Sales of service water outside supply area – – in an amount of €4 million (2014: €4 million) as a contribution to Vitens Evides Delivered in supply area 352.1 346.2 International B.V.’s development activities. In addition, Vitens invoiced an amount of €1.2 million in 2015 for hours worked by Vitens employees who participated in Vitens Distribution losses and measurement variances -21.3 -21.1 Evides International B.V.’s projects (2014: €1.2 million). Delivery to customers 330.8 325.1
Facturatie B.V. Not Invoiced (NI) in % 6.1% 6.1% Each year, Facturatie B.V. charges the depreciation costs to the shareholders, which
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The actual NI for 2014 (after invoicing 99.5% of the deliveries to customers) was found The Drinking Water Act (Drinkwaterwet) defines a maximum of 4.8% for the years to be higher than the figure reported in the 2014 annual accounts (6.1% instead of 2014 - 2015 as the fee for the average capital made available (2012 - 2013: 6.0%) and 5.9%). The total estimated water consumption and standing charge at the end of 2014 a maximum admissible solvency of 70% (2012 - 2013: 70%). that would be invoiced in 2015 was 0.6% (€207.1 million on a total of €208.3 million) higher than it should have been relative to actual invoicing. The NI for 2015 (41.9% of In 2015, Vitens satisfied the financial ratios set by its lenders. In 2015, the WACC the deliveries to customers have been invoiced) is calculated at 6.1%. achieved by Vitens has provisionally been assessed at 5.1 - 5.5%. The final WACC will be presented in the Operating Report that will be submitted to the Ministry of Result after processing accrued balance sheet turnover 2015 2014 2013 2012 2011 Infrastructure and the Environment before 1 October 2016. The actual WACC exceeds items and NI effect the set standard of 4.8%. As a result, Vitens will repay the ‘surplus profit over 2015’, Result after processing accrued balance sheet turnover -0.7 -1.0 -2.6 -1.2 0.2 amounting to approximately €5 - 12 million, to its customers by reducing the drinking items in previous years (in millions of euros) water rates in 2017. NI reported in annual accounts 6.1% 5.9% 5.8% 4.9% 5.3% Actual NI 6.1% 6.3% 5.9% 5.7% Financial ratios Targets 1 2015 2014 2013 2012 2011 Solvency (equity capital/total capital) > 20% 27.5 24.6 25.6 22.9 23.7 [27] Financial risk management Solvency (capital base/total capital) > 25% 31.9 29.7 31.5 29.7 31.2 Leverage ratio > 7% 14.8 12.7 13.6 13.0 13.8 Management of capital Interest Coverage ratio > 1.0 1.70 1.52 1.44 1.24 1.35 The financial policy of Vitens, which was revised in 2012, states the following objective (EBIT/(interest expenses and income + with regard to solvency: ‘an equity capital at least equal to 25% of the balance sheet dividend paid out in current financial total and a capital base (equity capital + subordinated loans) equivalent to at least 30% year)) of the balance sheet total’. This primary objective is focal to managing the financial Debt ratio < 7.0 4.9 5.2 5.3 5.4 5.1 risks. At the end of 2015, the solvency was 24.6% (2014: 24.6%) and the capital base (Interest-bearing liabilities 31.9% (2014: 29.7%). (excluding the subordinated loans) /EBITDA) Vitens states in its Treasury Statute that the interest rate exposure risk may not exceed Weighted Average Cost of Capital < 4.8% 5.1-5.5% 4.6% 4.8% 4.5% 5.0% 25% of the total loan capital. The interest rate exposure is the sum of the interest rate (WACC) 2 resets (including interest rate derivatives) and the requirement for new loans (loan 1. The target values are the values defined by the lenders for the various credit arrangements. renewal) in any year. 2. The target value is established once every 2 years and has been set at 4.8% for the years 2014 and 2015 (6.0% for the years 2012 and 2013). Vitens has agreed credit arrangements with various lenders. These credit arrangements describe the conditions (financial ratios) set by the lenders, which Vitens must satisfy.
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Calculation method for financial ratios and explanation of abbreviations Market risk Solvency (equity capital): equity capital x 100% divided by the balance sheet total (i) Price risk Solvency (capital base): (equity capital + subordinated loans) x 100% Price risk is understood to be the risk of changes in value as a result of changes in divided by the balance sheet total market prices.
Leverage: net cash flow from operations divided by interest-bearing debt Fair value of financial assets and liabilities Carrying value Fair value (including the subordinated loans) in millions of euros 2015 2014 2015 2014 Assets EBIT: trading result plus result from joint ventures and associate companies Trade debtors and other receivables 30.4 35.1 30.4 35.1 Long-term financial assets 4.9 7.7 4.4 7.4 EBITDA: EBIT plus depreciation and amortisation Amounts invoiced in advance 0.9 0.9 0.9 0.9
WACC: trading result plus contribution generated by foreign activities designed to Liabilities promote a good drinking water supply divided by the average balance sheet total Subordinated loans 75.5 88.0 77.3 90.4 Long-term loans 9 07.6 885.1 1,033.0 1,027.5 Financial risks are controlled within Vitens by the Treasury Committee, which Trade creditors and other payables 45.1 47.4 45.1 47.4 reports to the Executive Board. The primary objectives of the Treasury policy include Invoices still to be received 8.5 8.3 8.5 8.3 guaranteeing permanent access to the capital market, controlling financial risks, Interest-bearing liabilities 9.5 54.5 9.5 54.5 achieving the lowest possible level of cost and guaranteeing adequate liquidity. Other current financial liabilities 48.9 51.6 48.9 51.6
Vitens is exposed to the following financial risks: market risk (including price risk, The above table shows the fair values of the financial assets and liabilities. The currency risk and interest rate risk), credit risk and liquidity risk. derivatives are not reported here as these are recognised at fair value in the balance sheet. The fair value of the financial assets and liabilities has been determined as follows: • Trade debtors, other receivables and amounts invoiced in advance: in view of the short duration of these receivables, the fair value is the same as the carrying value; • Long-term financial assets: this item relates to a loan issued for the purpose of funding the vehicle fleet and mortgage loans to (former) employees. The fair values have been determined by converting the future cash flows to the discounted value; • Subordinated and long-term loans: the fair values have been determined by converting the future cash flows to the discounted value using the yield curve that applies in the case of Vitens as at 31 December;
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• Trade creditors and other payables, invoices still to be received, interest-bearing (2014: €1.6 million). The increase/decrease relates to the rollover loans, which are not liabilities and other current financial liabilities: the fair value of these items is taken covered by the derivatives, and the current account overdraft balance. as the carrying value in view of the short duration; • Interest-bearing liabilities: the fair value of the interest-bearing liabilities is identical A possible increase of 100 basis points in the yield curve relative to 31 December 2015 to the carrying value. has a negative effect of €39.9 million on the value of the derivatives. A possible increase of 100 basis points in the yield curve relative to 31 December has a positive (ii) Currency risk effect of €34.3 million on the value of the derivatives. A negative or positive effect on This is the risk that the value of a financial instrument will change as a result of the value of derivatives results in changes to the equity capital. exchange rate fluctuations. Vitens Evides International B.V. is a joint venture between Vitens and Evides N.V. and implements projects designed to improve the water supply The interest-rate derivatives relate to rollover loans that expire in the long term. In in developing countries. Both Vitens Evides International B.V. and its subsidiaries/ respect of a principal sum of €249.5 million, the term (to 2027) of the interest-rate associated companies use the euro as their functional currency. Possible exchange derivatives is the same as the duration of the rollover loans. In respect of a principal rate fluctuations are calculated for each transaction and credited/debited to the profit sum of €50 million, the term (€25 million to 2042 and €25 million to 2043) differs and loss account. Vitens itself has no exposure to currency risk in its activities because from the rollover loans. In view of the nature of the trading activities, Vitens considers all trading activities take place in the Netherlands. it probable that, for the period after expiry of the current rollover loans, continued funding that is at least equal to the principal sum and duration of the related interest- rate derivatives will be required and need to be arranged. (iii) Interest-rate risk During the course of its normal trading operations, Vitens uses derivatives (interest rate swaps) to limit interest-rate risk exposure. The objective of this form of control is to limit the effect that changes in interest rates have on the results. Derivatives are used to manage the loan portfolio based on the desired risk profile. These instruments are not used for speculative or trading purposes. Vitens has stated in its Treasury Statute that no more than 25% of the total loan capital (excluding subordinated loans) may be subject to interest-rate risk. At the end of 2015, the interest-rate risk calculated in this manner amounted to 17.0% (2014: 21.8%). These figures comply with the defined standard. This means that only a small part of the loan portfolio is exposed to interest rate fluctuations and that the effect on interest costs is limited.
The approach described above satisfies the desire to match the availability of the drawn-down loans as far as possible to the relatively long service life of the assets.
A possible increase/decrease in the short-term interest rate (3-month Euribor) of 100 basis points means an increase/decrease in borrowing costs of €1.1 million per annum
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The table below shows the expiry date or, if earlier, the contractual review date for Credit risk the loan portfolio as at 31 December 2015. This shows the extent to which Vitens is Vitens is exposed to debtor risk in that customers may be unable to pay their bills. At exposed to changes in the interest rate percentages for financial liabilities. the end of 2015, the debtor balance for which this risk applies amounted to €22.3 million (2014: €26.8 million), see note [4]. Payments are collected by automatic direct Interest-rate risk Effective < 6 > 6 < 12 1 - 5 > 5 Total debit after invoicing in the case of approximately 83% of the water debtors. in millions of euros interest rate months months years years As at 31 December 2014 The remaining current receivables of €10.3 million (2014: €10.9 million) consist of Subordinated loans 3.60% – 12.6 50.2 25.2 88.0 receivables owed by ‘hitch-hikers’ at €1.2 million (2014: €1.3 million), tax and social Bullet and linear loans 4.75% 1.0 14.8 144.7 289.1 449.6 insurance contributions at €1.5 million (2014: €2.0 million), expenses paid in advance Rollover loans (linked to ‘interest 4.16% – 9.0 29.5 270.0 308.5 at €0.9 million (2014: €0.9 million) and revenues still to be received at €6.7 million rate swaps’, resulting in fixed- (2014: €6.7 million). Vitens is not exposed to credit risk in relation to ‘hitch-hikers’ and interest loans) taxation and social premiums. Rollover loans 0.55% – 2.3 63.6 61.3 127.2 Cash loan 0.28% 25.0 – – – 25.0 Vitens has no significant credit risk concentrations. Banks (current account) one-month 29.5 – – – 29.5 EURIBOR Liquidity risk Total financial liabilities 55.5 38.7 288.0 645.6 1,027.8 The liquidity risk consists of the risk that Vitens may (temporarily) not have access to financial resources in order to fulfil its obligations. In order to minimise this risk, Vitens As at 31 December 2015 regularly assesses the expected and potential cash flows over a time horizon of several Subordinated loans 3.01% – 12.6 50.3 12.6 75.5 years. In addition, a detailed liquidity forecast is drawn up every year in order to identify Bullet and linear loans 4.49% 26.0 4.8 149.7 328.2 508.7 possible fluctuations in the need for liquid funds in good time and take appropriate Rollover loans (linked to ‘interest 4.20% 4.5 – 25.0 270.0 299.5 action as necessary. rate swaps’, resulting in fixed- interest loans) As of 31 December 2015, Vitens has at its disposal a current-account overdraft facility Rollover loans 0.34% 4.5 52.3 10.9 32.3 100.0 up to an amount of €65 million, a cash facility up to an amount of €55 million (of which Banks (current account) one-month 9.5 – – – 9.5 €25 million relates to an uncommitted facility), a long-term credit facility of €90 million EURIBOR (facility for €300 million, of which €210 million has been drawn down during the period Total financial liabilities 44.5 69.7 235.9 643.1 993.2 from 2006 to 2014) and a long term credit facility of €150 million.
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The contractually agreed (undiscounted) payments against financial liabilities are Vitens is also exposed to liquidity risk in the form of additional deposit obligations shown in the table below: pursuant to the negative market value of derivatives. As at 31 December 2015, Vitens did not have to make any additional deposits. Liquidity risk in millions of euros < 1 year > 1 < 5 years > 5 years Calculation of long-term financial liabilities including Vitens has agreed a derivative with one party where a deposit can be made above a interest certain negative market value (threshold). Vitens has taken out a single derivative for a Subordinated loans 14.3 54.0 12.8 value of €25 million subject to this arrangement . The negative market value as at 31 Bullet and linear loans 51.4 219.3 432.7 December 2015 amounted to €5.6 million (the threshold is €20 million). A possible Rollover loans 62.9 47.9 319.4 increase of 100 basis points in the yield curve relative to 31 December 2015 has a Derivatives 11.2 36.4 51.1 negative effect of €7.3 million on the value of the derivative. A possible increase of 100 Other long-term financial liabilities 17.6 36.3 13.2 basis points in the yield curve relative to 31 December 2015 has a positive effect of €5.7 Total long-term financial liabilities 157.4 393.9 829.2 million on the value of the derivative.
Current financial liabilities [28] Netting financial assets and financial liabilities Trade creditors and other payables 45.1 – – At the end of 2014 and 2015, Vitens did not include any netted financial assets and Invoices still to be received 8.5 – – financial liabilities on the balance sheet. Furthermore, no conditional set-off rights apply Interest-bearing liabilities 9.5 – – that might lead to recognition of financial assets and financial liabilities in netted form. Other short-term financial liabilities 48.9 – – Total current financial liabilities 112.1 – –
Total long-term and current financial liabilities 269.4 393.9 829.2
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Non-consolidated balance sheet as at 31 December
Assets Equity and liabilities In millions of euros 31/12/2015 31/12/2014 In millions of euros 31/12/2015 31/12/2014 Fixed assets [31] Equity capital Tangible fixed assets 1,673.1 1,663.4 Shareholders’ capital 5.8 5.8 [29] Investments in subsidiaries 1.1 1.1 Share premium reserve 147.2 147.2 [29] Investments in associate 5.3 5.9 Revaluation reserve derivatives -89.3 -101.3 companies and joint ventures Revaluation reserve – 0.1 Other financial fixed assets 4.9 7.7 company-owned housing 1,684.4 1,678.1 Revaluation reserve IFRS 30.6 33.2 Current assets transition [30] Trade debtors and other 31.4 35.7 Other reserves 322.0 294.1 receivables Result for the financial year 55.4 42.1 Fixed assets held for sale – 0.7 471.7 421.2 31.4 36.4 Liabilities
Total assets 1,715.8 1,714.5 Provisions [32] Provisions for employee 6.5 5.3 remuneration Other provisions 1.2 8.8 7.7 14.1 Long-term liabilities Equalisation account - 50.6 42.2 contributions made by third parties Interest-bearing liabilities 878.4 933.4 Derivatives 89.3 101.3 1,018.3 1,076.9
[33] Current liabilities 218.1 202.3
Total equity and liabilities 1,715.8 1,714.5
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Non-consolidated profit and loss account In millions of euros 2015 2014 Own result (excluding associate 55.4 42.1 companies) after tax Result from subsidiaries and associate – – companies after tax Net result 55.4 42.1
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Valuation principles for the non-consolidated annual accounts [29] Investments in subsidiaries and associate companies The non-consolidated annual accounts of Vitens have been drawn up in accordance In millions of euros Investments in Investments in associate Total with the relevant provisions of Title 9, Book 2 of the Dutch Civil Code (Burgerlijk subsidiaries companies and joint Wetboek), with the exception of the principles used for valuation and determining the ventures result as explained below. Carrying amount as at 1 January 2014 1.1 8.2 9.3
The valuation principles that have been applied are largely the same as those used Changes during 2014 for the consolidated annual accounts in accordance with the provisions of article Share in the result - -0.3 -0.3 362, paragraph 8, Title 9, Book 2 of the Dutch Civil Code (Burgerlijk Wetboek), where Dividend received - -2.0 -2.0 investments in subsidiaries are recognised at the net capital value of the assets in Total movement - -2.3 -2.3 accordance with the equity method. The non-consolidated profit and loss account of Vitens has been drawn up in a simplified form pursuant to article 402, Title 9, Book 2 Carrying amount as at 31 December 2014 1.1 5.9 7.0 of the Dutch Civil Code (Burgerlijk Wetboek). Vitens applies the International Financial Reporting Standards (IFRS) as adopted Changes during 2015 within the European Union as the principles for valuation and result determination. Share in the result - 0.1 0.1 For details of these principles, please refer to the ‘Valuation principles and method for Dividend received - -0.7 -0.7 determining the result’ for the consolidated annual accounts. Total movement - -0.6 -0.6
The following balance sheet items are valued at fair value; office buildings, company- Carrying amount as at 31 December 2015 1.1 5.3 6.4 owned housing, fixed assets held for sale and derivatives. Pursuant to application of Title 9, Book 2 of the Dutch Civil Code (Burgerlijk Wetboek), a revaluation reserve has Holdings in subsidiaries are valued at net capital value, which is determined based on been formed to allow for the effect on capital of fair value changes. IFRS principles as used in the consolidated annual accounts.
For other explanatory notes, please refer to the consolidated annual accounts.
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[30] Trade debtors and other receivables In millions of euros 2015 2014 The revaluation reserve for the IFRS transition was created for the value increase in Trade debtors 22.3 26.8 2006 in relation to the transport pipes and main pipes. This is based on a weighted Impairment loss on debtors -1.3 -1.7 average age (or investment year) of 1977, as a result of which the revaluation relating to Hitch-hikers 1.2 1.3 the transport pipes and main pipes will reduce to 0 during the coming 12 years. The Net trade receivables 22.2 26.4 complete revaluation reserve for the IFRS transition will reduce to 0 in 20 years. Taxes and social security contributions 1.5 1.7 Amounts invoiced in advance 0.9 0.9 For further explanatory notes on equity capital, please refer to the consolidated annual Amounts receivable from group 0.1 0.1 accounts. companies Accrued income and prepaid expenses 6.7 6.6 [32] Provisions for employee remuneration Total 31.4 35.7 For a summary of the changes in the employee remuneration provisions, please refer to the consolidated annual accounts. See note [11]. [31] Equity capital In millions of euros 2015 2014 [33] Current liabilities Position as at 1 January 421.2 438.3 In millions of euros 2015 2014 Trade creditors and other payables 45.3 47.1 Movements Repayment obligations in relation to long-term liabilities 104.7 39.7 Result for the financial year 55.4 42.1 Tax liabilities 13.5 14.6 Change in revaluation reserve for derivatives 12.0 -43.4 Interest-bearing liabilities 10.7 55.8 Release from revaluation reserve for company-owned housing -0.1 -0.1 Short-term employee remuneration 26.7 26.7 Change in revaluation reserve for the IFRS transition -2.6 -2.6 Invoices still to be received 8.5 8.3 Change in general reserve 2.6 2.6 Accrued expenses and deferred income 8.7 10.1 Dividend payment on ordinary shares -16.8 -15.7 Total 218.1 202.3 Total movement 50.5 -17.1 [34] Remuneration of the Executive Board and Supervisory Board Position as at 31 December 471.7 421.2 Pursuant to article 1.3, first paragraph, part d of the Act for standardisation of the remuneration of top managers in the publicly and semi publicly financed sector (Wet The revaluation reserve for derivatives relates to the negative derivative market value normering bezoldiging topfunctionarissen publieke en semipublieke sector/WNT of of €89.3 million (2014: €101.3 million), see note [10], and the revaluation of company- 15 November 2012), Vitens has a duty to comply with the provisions of the Act when owned housing of €0 (2014: €0.1 million). drawing up the report included below.
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Remuneration of the Executive Board Executive Board remuneration policy The Executive Board is responsible for all management tasks at Vitens. The The General Meeting of Shareholders adopted the revised ‘Executive Board Supervisory Board is responsible for the Executive Board’s remuneration structure. The remuneration policy’ on 30 April 2015. This remuneration policy reflects the provisions remuneration consists of a basic salary, pension, social charges and other expense of the Act for standardisation of the remuneration of top managers in the publicly allowances and complies with the requirements of the Act for standardisation of the and semi publicly financed sector (Wet normering bezoldiging topfunctionarissen remuneration of top managers in the publicly and semi publicly financed sector (Wet publieke en semipublieke sector/WNT). The WNT has been amended as per 1 Normering Topinkomens/WNT and WNT2). The exact split is reported below: January 2015 to reduce the statutory maximum remuneration from 130% to 100% of a government Minister’s salary (Wet verlaging bezoldigingsmaximum/WNT2). The Remuneration of top managers and former top managers – with a contract of employment (in euros) current remuneration is in line with the transitional arrangements in force in respect Name Remunera- Taxable Provisions Total remu- Other Total remu- Total remu- Total remu- of WNT1. The transitional arrangement is valid up to and including 2016. After 2016, tion (WNT) fixed and for remu- neration remunera- neration neration neration variable neration 2015 WNT tion com- 2015 2014 WNT 2014 the remuneration will be reduced in phases during a period of three years. No loans, expense payable in ponents advances and guarantees were issued to the Executive Board Members. allowances the future (outside (WNT) (WNT) WNT) L.C.A. 205,483 7,9 97 17,5 4 6 231,026 7,130 238,155 228,231 236,266 Remuneration of the Supervisory Board Declercq 1 The remuneration of the Supervisory Board Members consists of attendance fees, (Chairperson) an expense allowance and the contribution to state healthcare insurance. drs. W.H.J. 183,153 9,537 16,638 209,327 6,990 216,318 207,426 214,770 Odding 2 (Member of Remuneration of top managers and former top managers – without a contract of employment (in euros) the Executive Name Attendance Expense Total remu- Healthcare Total remu- Total remu- Time in Board) fee allowance neration insurance neration neration position Total 388,636 17,534 34,184 440,353 14,120 454,473 435,657 451,036 2015 WNT (ZVW) 2015 2014 (in days) 1. WNT remuneration 2015 € 228.231 + undue payment of € 2.795 = € 231.026 contribution mr. B. Staal 1 24,250 1,100 25,350 25,350 16,800 365 2. WNT remuneration 2015 € 207.426 + undue payment of € 1.901 = € 209.327 drs. M.L. van Kleef 2 – – – – – 3,986 – Due to an administrative error in calculating the employer’s pension charges, both ir.T.A. de Man 2 15,800 1,100 16,900 1,098 17,9 98 15,988 365 directors received an undue payment in 2015 amounting to a total of €4,696. A ir. T. Menssen MBA 3 14,483 1,008 15,491 – 15,491 14,951 334 drs. M.C.J. Poulussen 15,800 1,100 16,900 1,098 17,9 98 15,988 365
receivable against both directors for this amount has been included in the annual MSM 2 accounts. This receivable has been set off against the salary payment of February ir. C.J. Rameau 15,800 1,100 16,900 1,098 17,9 98 7,972 365 2016. After correction of the undue payment in 2016, the WNT remuneration for 2015 MBA 2 is identical to that paid in 2014. drs. E.A. de Groot 4 1,317 92 1,409 92 1,501 – 31 Total 87,450 5,500 92,950 3,386 96,336 75,685
The above directors had a full-time contract of employment (365 days) in 2014 and 1. Member of the Supervisory Board, chairperson of the Supervisory Board from 1 January 2014. 2015. The transitional arrangement for WNT2 applies to both directors. 2. Member of the Supervisory Board. 3. Member of the Supervisory Board to 26 November 2015. 4. Member of the Supervisory Board from November 2015.
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Position(s) Remunera- Taxable Provisions Total remu- Other Total remu- Total remu- Total remu- Effective from 1 January 2014, mr. B. Staal succeeded drs. M.L. van Kleef as tion (WNT) fixed and for remu- neration remunera- neration neration neration chairperson. During the Meeting of the Shareholders of 26 November 2015, ir. T. variable neration 2015 WNT tion com- 2015 2014 WNT 2014 Menssen stepped down from her position as a member of the Supervisory Board and expense payable in ponents allowances the future (outside drs. E.A. de Groot was appointed to the Supervisory Board. (WNT) (WNT) WNT) Department 161,717 1,635 15,567 178,919 607 179,526 177,131 177,8 55 The remuneration policy for the Supervisory Board was adapted in line with the Act manager 1 Team 183,580 818 14,815 199,213 380 199,593 140,842 141,179 for standardisation of the remuneration of top managers in the publicly and semi manager 2 publicly financed sector (Wet normering bezoldiging topfunctionarissen publieke HR Service 239,862 – 5,744 245,606 120 245,726 74,193 74,202 en semipublieke sector/WNT) which came into effect on 1 January 2013, and the Centre subsequent related Act (WNT2), which came into effect on 1 January 2015. The employee 3 Total 585,159 2,453 36,126 623,738 1,107 624,845 392,166 393,236 General Meeting of Shareholders adopted the revised Supervisory Board remuneration policy on 30 April 2015. 1. Overrun caused by a working hours bonus. 2. Overrun caused by a severance payment. Remuneration of other company officers - with a contract of employment 3. Relates to an employee with whom a settlement agreement was drawn up in 2013 (severance payment Explanatory note on remuneration exceeding the WNT standards of €190,000).
The following persons/company officers are paid a total remuneration over and above The above top managers 1 and 2 had a full-time contract of employment (365 days) in 2014 and 2015. the applicable WNT amount. Where necessary, the WNT standard has been Top manager 3 had a full-time contract of employment in 2014 (365 days). This top manager left our recalculated on a proportional basis to reflect employment of less than one full year employment in 2015 (273 days). and/or in cases where a part-time contract of employment applies. All top managers held the same positions in 2014 and 2015.
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[35] Accountant’s fees In accordance with article 2:382a of the Dutch Civil Code (Burgerlijk Wetboek), this note explains the accountant’s fees in relation to the services provided by the external accountant in 2015. These comprise audit fees for the annual accounts amounting to €190 thousand (2014: €220 thousand) and for other non- audit related services (consultancy charges) amounting to €13 thousand (2014: €22 thousand).
Zwolle, 22 March 2016
Supervisory Board mr. B. Staal (Chairperson) ir. C.J. Rameau (Vice Chairperson) ir. Th.A. de Man drs. E A. de Groot drs. M.C.J. Poulussen MSM
Executive Board L.C.A. Declercq MSc drs. W.H.J. Odding
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Profit appropriation 34.3 The articles of incorporation state the following with regard to profit appropriation: The General Meeting of Shareholders may, in response to a proposal of the Executive Board that has been approved by the Supervisory Board, decided to pay out interim The valuation principles that have been applied are largely the same as those used dividend and make payments from the company’s reserves. for the consolidated annual accounts in accordance with the provisions of article 362, paragraph 8, Title 9, Book 2 of the Dutch Civil Code (Burgerlijk Wetboek), where 34.4 investments in subsidiaries are recognised at the net capital value of the assets in Payments on shares may only be made up to the amount of distributable equity capital accordance with the equity method. The non-consolidated profit and loss account of as a maximum and, if an interim payment is involved, subject to demonstration that Vitens has been drawn up in a simplified form pursuant to article 402, Title 9, Book 2 this requirement has been satisfied in the form of an interim statement of assets and of the Dutch Civil Code (Burgerlijk Wetboek). liabilities, as referred to in article 2:105, paragraph 4 of the Dutch Civil Code (Burgerlijk Wetboek). The company shall file the statement of assets and liabilities at the office 34.1 of the Commercial Register within a period of eight days from the date on which the The dividend policy is adopted, and may be changed, by a resolution of the Executive decision to make payment is announced. Board that has been approved by the Supervisory Board and adopted by the General Meeting of Shareholders. In compliance with the duly adopted dividend policy, 34.5 the Executive Board determines each year how much profit will be allocated to A shareholder’s entitlement to a payment on shares lapses after a period of five years. reserves and how much profit will be paid out as dividend, subject to approval of the The Executive Board proposes the following appropriation of the result after tax for Supervisory Board. adoption by the shareholders (approved by the Supervisory Board on 22 March 2016): payment of an amount of €22.1 million as dividend on ordinary shares and addition of 34.2 the remaining amount of €33.3 million to the other reserves. This complies with the Payment of distributable profit occurs after the adoption of the annual accounts in dividend policy. which it is determined that this payment is admissible.
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To: the General Meeting of Shareholders and the Supervisory Board of Vitens N.V. The non-consolidated annual accounts consist of the following: • the non-consolidated balance sheet as at 31 December 2015; Statement relating to the 2015 annual accounts • the non-consolidated profit and loss account for 2015; and • the explanatory notes with a summary of the main principles used for financial Our opinion reporting and other explanations. In our opinion: • the consolidated annual accounts in this annual report present a true and accurate The financial reporting system used to draw up the consolidated annual accounts is picture of the size and composition of the assets and liabilities of Vitens N.V. as IFRS as adopted by the EU and the relevant provisions of Title 9, Book 2 of the Dutch at 31 December 2015 and of the 2015 result and the cash flows during 2015, Civil Code (Burgerlijk Wetboek/BW). The non-consolidated annual accounts have in accordance with the International Financial Reporting Standards, as adopted been drawn up in accordance with Title 9, Book 2 of the Dutch Civil Code (Burgerlijk within the European Union and in accordance with Title 9, Book 2 of the Dutch Wetboek/BW), and the provisions of the Act for standardisation of the remuneration Civil Code (Burgerlijk Wetboek/BW) that applies in the Netherlands; of top managers in the publicly and semi publicly financed sector (Wet normering • the non-consolidated annual accounts in this annual report present a true and bezoldiging topfunctionarissen publieke en semipublieke sector/WNT). accurate picture of the assets and liabilities of Vitens N.V. as at 31 December 2015 and of the 2015 result in accordance with Title 9, Book 2 of the Dutch Civil Code The basis for our opinion (Burgerlijk Wetboek/BW), We have performed the audit in accordance with Dutch legislation, including the • and the provisions of the Act for standardisation of the remuneration of top Dutch audit standards and the WNT audit protocol in relation to standardisation of managers in the publicly and semi publicly financed sector (Wet normering the remuneration of top managers in the publicly and semi publicly financed sector. bezoldiging topfunctionarissen publieke en semipublieke sector/WNT). Our responsibilities pursuant to the above are described in the section entitled ‘Our responsibilities in respect of the annual accounts audit’. The scope of our audit We have audited the 2015 annual accounts of Vitens N.V. in Zwolle (‘the company’) as We are impartial and not dependent on Vitens N.V., in accordance with the ‘Regulation presented in this annual report. The annual accounts include the consolidated annual on the independence of auditors in respect of assurance engagements’ (Verordening accounts for Vitens N.V. and its subsidiaries (‘the group’) and the non-consolidated inzake de onafhankelijkheid van accountants bij assurance-opdrachten/ViO) and other annual accounts. relevant requirements regarding independence in the Netherlands. In addition, we have satisfied the ‘Regulation on conduct and professional rules for auditors’ (Verordening The consolidated annual accounts consist of the following: gedrags- en beroepsregels accountants/VGBA). • the consolidated balance sheet as at 31 December 2015; • the following statements relating to 2015: the consolidated profit and loss account, We feel that the assurance engagement information we have gathered is sufficient and the consolidated summary of the total result, the consolidated statement of suitable as the basis for our conclusion. changes to equity capital and the consolidated cash flow statement; plus • the explanatory notes and a summary of the main principles used for financial reporting and other explanations.
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Our audit approach 2017. The final WACC and the future conditional obligation will be determined based on the 2015 Operating Report which will be submitted to the Ministry of Infrastructure Summary and context & the Environment before 1 October 2016. In accordance with IFRS regulations, this We design our audit approach by determining materiality and identifying and assessing future conditional obligation has not been recognised in the 2015 annual accounts. the risk of materially important misrepresentations in the annual accounts. We An explanation relating to exceeding the WACC has been included in note [27] to the pay particular attention to areas where the Executive Board has made subjective annual accounts. assessments, for example significant estimates that are linked to assumptions about future events which are inherently uncertain, such as the estimates relating to the value of the tangible fixed assets, derivatives, debtors, provisions and recognition of the net turnover based on meter readings taken at various times during the year. Materiality Materiality • Materiality: €4.6 million, based on 1.5% of the total costs. The group’s ability to ensure continuity of business activities is largely dependent on Scope of the audit Audit scope the IT infrastructure. We have assessed the reliability and continuity of the automated • We performed all of our audit tasks at the group’s head office data processing procedures insofar as these have an impact on our audit activities in Zwolle, based on a consolidated perspective. for the 2015 annual accounts. We involved internal IT specialists in this task and Focal point Focal points performed data analyses in relation to transactions and/or processes. • Recognition of drinking water revenues. All our audit checks assess the risk of breaching internal control measures on the part of the Executive Board, including an assessment of the risks of material misrepresentations due to fraud based on analysis of the possible interests of the Materiality Executive Board. The scope of our audit is influenced by the application of materiality. The concept of ‘material importance’ is explained in the section entitled ‘Our responsibility in respect We ensured that the audit team possessed adequate specialised knowledge and of the annual accounts audit’. expertise for auditing a drinking water company. We included specialists in valuing real estate, IT specialists and specialists in financial instruments in our team. All the work We determine quantitative limits for materiality. These limits, in combination with the carried out in the group divisions was performed by the same audit team. qualitative considerations, help us to determine the nature, timing and scope of our audit activities for the individual items and explanations in the annual accounts and During our audit, we also looked closely at the overrun relating to the WACC of 4.8% evaluate the effect of any identified misrepresentations on our opinion. (the maximum weighted average cost of capital for drinking water companies) in 2015. Pursuant to the Drinking Water Act, Vitens must ensure that the excess relative to consumers is compensated in the rate set for the following calendar year. Based on the provisionally calculated WACC of 5.1 - 5.5%, Vitens has a future conditional obligation to make compensation for an amount of between €5 to €12 million in the rates set for
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Based on our professional opinion, we have determined the materiality of the annual It is important to note here that the group’s activities take place exclusively in the accounts as a whole to be as follows: Netherlands and that the operating processes and internal controls within the group are set up and applied centrally. Our audit is performed by one central team and is set Materiality for the group €4.6 million up based on a consolidated perspective, meaning that we see the group as a single Materiality determined based on 1.5% of the total costs. entity in administrative terms. This means that we have included all the transaction The considerations relating to We have used this generally accepted benchmark based on our analysis flows and financial positions that are materially important for the consolidated annual the chosen benchmark of the common information needs of users of the annual accounts. On this accounts in the scope of our audit. We have audited the consolidation of the group and basis, we are of the opinion that the total costs are an important indicator the explanatory notes in the annual accounts. of the company’s financial performance. By performing the above-mentioned activities, we have generated enough suitable audit information relating to the financial information for the group in order to express We also take into account misrepresentations and/or possible misrepresentations which an opinion about the consolidated annual accounts. are, in our opinion, materially important based on qualitative reasons. The focal points of our audit In accordance with our agreement with the Supervisory Board, we report In the focal points of our audit, we describe the items which, in our professional misrepresentations amounting to more than €230,000 that are detected during our opinion, were the most important during the audit of the annual accounts. We have audit, and smaller misrepresentations which we feel to be relevant for qualitative informed the Supervisory Board of the focal points, however these do not constitute reasons. a full report of all risks and points which we identified and discussed during our audit. We have described the key points and included a summary of the activities we The scope of our group audit performed in relation to these points. Vitens N.V. stands at the head of a group of entities. The financial information for this group is included in the consolidated annual accounts of Vitens N.V. We determined our audit activities in relation to these key points within the framework of the annual accounts audit as a whole. Our findings relating to the key points must be seen within that framework and not as separate opinions about these key points or about specific elements of the annual accounts.
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Key points Our audit activities in relation to the key points Recognition of drinking water revenues. We have undertaken audit activities in relation to the recognised drinking water revenues, with specific attention for (the process associated with and the relationship between) the total service water delivery, The explanatory notes relating to recognition of drinking water revenues are presented in paragraph 4.8 and the completeness of the active connections and the NI (Not Invoiced expressed as a %), the quality of the notes [15] and [26] in the annual accounts. turnover estimate, and the invoicing process. We have assessed the internal control measures applied by Vitens in relation to the turnover simulation and invoicing processes in terms of their set-up, existence and The net turnover generated by the delivery of drinking water amounted to €357 million as at 31 December effectiveness. We involved ICT specialists in order to validate the automated controls associated with the 2015 and is therefore a significant component in the consolidated profit and loss account (91% of the total system used for turnover simulation and invoicing. operating income). We validated the completeness of the service water delivery (number of m3 of water based on which the The revenues from drinking water are recognised based on the total amount of water delivered to third parties turnover estimate was made) based on primary information logs at Vitens’ pumping stations. (in m3). Due to the large number of customers (5.6 million), the meters are read (particularly in the case of consumers and small business customers) at various times spread throughout the year and (final) settlement We performed audit activities in relation to the customer administration and have determined that all active therefore also takes place at various times spread throughout the year. connections have been included in the turnover simulation via a link between the customer administration and the customer data used in the turnover estimate. The actual invoiced amount of water in m3 for all active connections is allocated to the calendar years. In 2015, 42% of the deliveries to customers were invoiced in 2015 based on a final settlement invoice. In The quality of the turnover simulation, and therefore the estimate of the drinking water revenues as at relation to the period during the financial year for which customers have not yet received a final account, an 31 December 2014, have been validated by means of a check on the data recorded during 2015 and estimate (turnover simulation) is made for the period from the last final account to the date of the balance the estimate as at 31 December 2014. We also evaluated the percentage of connections that have been sheet, based on historical meter readings in relation to current service water delivery. This means that, as estimated for several consecutive years. This shows a downward trend, resulting in an increase in the quality at 31 December 2015, €208 million (58%) of the deliveries to customers in 2015 is based on simulated of the total estimate. turnover. We benchmarked the NI, as specified in note [28], against the NI information for previous years and the NI In view of this estimate and the inherent degree of estimation uncertainty associated with it, combined with information that is available for the entire drinking water sector in the Netherlands. the significance of the amount of the estimated drinking water revenues relative to the total drinking water revenues for 2015, we see this as a key point in our audit. Finally, we assessed the explanatory notes to the annual accounts
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Responsibilities of the Executive Board and the Supervisory Board or collectively, may affect the economic decisions taken by users of these annual The Executive Board is responsible for: accounts. • drawing up the annual accounts in accordance with IFRS as adopted by the EU, and Title 9, Book 2 of the Dutch Civil Code (Burgerlijk Wetboek/BW) and the A more detailed description of our responsibilities is included in the appendix to our provisions of and pursuant to the Act for standardisation of the remuneration of report. top managers in the publicly and semi publicly financed sector (Wet normering bezoldiging topfunctionarissen publieke en semipublieke sector/WNT), and for Statement in relation to other requirements imposed by the law and regulations drawing up the management report in accordance with Title 9, Book 2 of the Dutch Civil Code (Burgerlijk Wetboek/BW); and Statement relating to the management report and the other information • exercising internal controls to the extent considered necessary by the Executive Based on the legal obligations pursuant to Title 9, Book 2 the Dutch Civil Code Board in order to draw up the annual accounts in a form free of misrepresentations (Burgerlijk Wetboek/BW) (relating to our responsibility to report on the management of material importance resulting from fraud or errors. report and the other information), we state: • that, as far as we can ascertain, we have not discovered any misrepresentations When preparing the annual accounts, the Executive Board must consider whether the as a result of our examination of whether the management report (as detailed in company is capable of continuing its activities in the long term. The Executive Board paragraphs 1.1 to 1.9 inclusive, hereinafter referred to as the ‘management report’) must prepare the annual accounts pursuant to the stated reporting systems based has been drawn up in accordance with Title 9, Book 2 of the Dutch Civil Code, on a going-concern assumption, unless the Executive board intends to liquidate the and of whether the other information required subject to the provisions of Title 9, Company or terminate the operating activities, or if termination is the only realistic Book 2 of the Dutch Civil Code has been included. alternative. The Executive Board must include explanatory notes in the annual • that the management report, as far as we can ascertain, is consistent with the accounts relating to events and circumstances that give rise to reasonable doubt about annual accounts. the company’s ability to continue its operating activities in the long term. Our appointment The Supervisory Board is responsible for monitoring the company’s financial reporting We were appointed as the external auditors for Vitens N.V. on 12 December 2012 by process. the Supervisory Board, following a resolution of the General Meeting of Shareholders of 12 December 2012. This appointment has been assessed and reinstated by the Our responsibility in respect of the annual accounts audit shareholders each year since. We have now acted as the external auditors for the Our responsibility is to plan and perform an audit assignment in a way that generates company for a continuous period of 3 years. adequate and suitable audit information for the opinion we have been asked to provide. Our audit opinion aims at providing a reasonable degree of certainty that Groningen, 22 March 2016 the annual accounts do not contain misrepresentations of material importance. A PricewaterhouseCoopers Accountants N.V. reasonable degree of assurance is a high level of certainty, but not an absolute degree of certainty, meaning that we may not discover all misrepresentations during our Original signed by A.L. Koops-Aukes RA audit. Misrepresentations can arise as a result of fraud or errors and are materially important if it is reasonable to expect that these misrepresentations, either individually
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Appendix to the independent auditor’s report relating to the 2015 annual accounts of term. If we conclude that a materially important degree of uncertainty exists, we Vitens N.V. have an obligation to focus on the relevant related explanatory notes in the annual accounts in our audit report. If the explanatory notes are inadequate, we have a This appendix contains complimentary information to our audit report in the form of duty to amend our report. Our conclusions are based on the audit information that more detailed explanation of our responsibilities relating to the annual accounts audit was obtained up to the date of our audit report. Future events or circumstances and the activities comprising an audit of this nature. may however mean that a company can no longer continue to operate; • evaluating the presentation, structure and content of the annual accounts and The responsibilities of the accountant auditing the annual accounts the explanatory notes to the annual accounts and evaluating whether the annual We have performed this audit in a professional and critical manner and, where accounts provide an accurate picture of the underlying transactions and events. relevant, have exercised professional judgement in accordance with the Dutch audit standards, the WNT audit protocol, ethical guidelines and independence requirements. In view of the fact that we have final responsibility for the opinion, we are responsible Our objective is to attain a reasonable degree of assurance that the annual accounts for managing, supervising and performing the group audit. In this respect, we have are free of material misrepresentations resulting from errors or fraud. Our audit determined the nature and scope of the activities that are to be performed for the included the following: group entities in order to guarantee that our audit activities are far-reaching enough for • identifying and assessing the risks of the presence of misrepresentations of coming to an opinion about the annual accounts as a whole. The determining factors material importance in the annual accounts as a result of errors or fraud, here are the geographical structure of the group, the scope and/or risk profile of the determining and performing audit activities based on these risks and obtaining group entities or the activities, the operating processes and internal control measures audit information that is adequate and suitable for forming our opinion. In the and the sector in which the company operates. Based on this, we have selected group case of fraud, there is a greater risk of misrepresentations of material importance entities where there was a need for an audit or assessment of the financial information, going undetected than in the case of errors. Fraud may involve collusion, or of specific accounting entries. falsification of documents, purposely neglecting to record transactions, purposely misrepresenting facts or breaching internal controls; We consult with the Supervisory Board about the planned scope and timing of the • obtaining an understanding of the internal controls that are relevant for the audit in audit and the significant findings revealed by our audit, including possible significant order to select the audit activities that are most suitable under the circumstances. deficiencies in the internal controls. These activities are not intended to reflect an opinion about the effectiveness of the entity’s internal controls. We determine the key points of our audit of the annual accounts based on all issues • evaluating the suitability of the principles that are used for financial reporting that we have discussed with the Supervisory Board. We describe these issues in our and the reasonableness of the estimates made by the Executive Board and the audit report, unless this is prohibited by law or regulations or, in extremely rare cases, if associated explanatory notes in the annual accounts; not disclosing this information is in the best interests of society. • determining that the going-concern assumption applied by the Executive Board is acceptable. In addition, based on the audit information that has been obtained, determining whether events and circumstances exist that give rise to reasonable doubt about the company’s ability to continue its operating activities in the long
144 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.16 Independent auditor’s report 4.17 Summary of outstanding shares
No. Shareholder Ordinary shares Percentage No. Shareholder Ordinary shares Percentage 1 Provincial authority of Friesland 755,043 13.07% 34 Municipality of Wijchen 40,058 0.69% 2 Provincial authority of Gelderland 3 87,231 6.70% 35 Municipality of Oude IJsselstreek 40,057 0.69% 3 Provincial authority of Overijssel 370,632 6.42% 36 Municipality of Twenterand 39,379 0.68% 4 Municipality of Almere 366,175 6.34% 37 Municipality of Houten 38,490 0.67% 5 Provincial authority of Utrecht 285,896 4.95% 38 Municipality of Zwartewaterland 38,453 0.67% 6 Municipality of Utrecht 285,896 4.95% 39 Municipality of Meppel 37,526 0.65% 7 Municipality of Amersfoort 131,691 2.28% 40 Municipality of Lingewaard 37,3 87 0.65% 8 Municipality of Dronten 98,457 1.70% 41 Municipality of Utrechtse Heuvelrug 36,554 0.63% 9 Municipality of Lelystad 98,457 1.70% 42 Municipality of Dalfsen 34,746 0.60% 10 Municipality of Zeewolde 98,457 1.70% 43 Municipality of Epe 34,717 0.60% 11 Municipality of Hilversum 89,569 1.55% 44 Municipality of Nijkerk 34,717 0.60% 12 Municipality of Hof van Twente 66,713 1.16% 45 Municipality of Overbetuwe 34,717 0.60% 13 Municipality of Hardenberg 63,007 1.09% 46 Municipality of Zevenaar 34,717 0.60% 14 Municipality of Nieuwegein 61,246 1.06% 47 Municipality of Montferland 34,716 0.60% 15 Municipality of Steenwijkerland 60,227 1.04% 48 Municipality of Noordoostpolder 32,430 0.56% 16 Municipality of Zeist 60,035 1.04% 49 Municipality of Winterswijk 32,046 0.56% 17 Municipality of Doetinchem 58,752 1.02% 50 Municipality of Lochem 32,045 0.56% 18 Municipality of Stichtse Vecht 58,097 1.01% 51 Municipality of IJsselstein 31,228 0.54% 19 Municipality of Veenendaal 56,404 0.98% 52 Municipality of Hellendoorn 30,113 0.52% 20 Municipality of Kampen 50,961 0.88% 53 Municipality of Oldenzaal 30,113 0.52% 21 Municipality of Zutphen 50,739 0.88% 54 Municipality of Deventer 28,260 0.49% 22 Municipality of Enschede 46,329 0.80% 55 Municipality of Olst-Wijhe 27,797 0.48% 23 Municipality of Hengelo (Overijssel) 46,329 0.80% 56 Municipality of Culemborg 26,705 0.46% 24 Municipality of Zwolle 46,329 0.80% 57 Municipality of Duiven 26,705 0.46% 25 Municipality of Woerden 45,042 0.78% 58 Municipality of Westerveld 25,944 0.45% 26 Municipality of Soest 44,542 0.77% 59 Municipality of Leusden 25,902 0.45% 27 Municipality of Dinkelland 43,085 0.75% 60 Municipality of Borne 25,480 0.44% 28 Municipality of Tiel 42,728 0.74% 61 Municipality of Losser 25,480 0.44% 29 Municipality of De Bilt 41,879 0.73% 62 Municipality of Baarn 24,207 0.42% 30 Municipality of Almelo 41,696 0.72% 63 Municipality of Beuningen 24,035 0.42% 31 Municipality of Raalte 41,696 0.72% 64 Municipality of Buren 24,035 0.42% 32 Municipality of Rijssen-Holten 41,696 0.72% 65 Municipality of Ermelo 24,035 0.42% 33 Municipality of De Ronde Venen 40,426 0.70% 66 Municipality of Geldermalsen 24,035 0.42%
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No. Shareholder Ordinary shares Percentage No. Shareholder Ordinary shares Percentage 67 Municipality of Haaksbergen 24,035 0.42% 90 Municipality of Heerde 16,023 0.28% 68 Municipality of Nunspeet 24,035 0.42% 91 Municipality of Heumen 16,023 0.28% 69 Municipality of Zaltbommel 24,035 0.42% 92 Municipality of Neder-Betuwe 16,023 0.28% 70 Municipality of Berkelland 24,034 0.42% 93 Municipality of Westervoort 16,023 0.28% 71 Municipality of Ommen 23,164 0.40% 94 Municipality of Berg en Dal 13,352 0.23% 72 Municipality of Wierden 23,164 0.40% 95 Municipality of Bunnik 13,314 0.23% 73 Municipality of Brummen 21,364 0.37% 96 Municipality of Montfoort 11,861 0.21% 74 Municipality of Maasdriel 21,364 0.37% 97 Municipality of Lopik 11,619 0.20% 75 Municipality of Voorst 21,364 0.37% 98 Municipality of Doesburg 10,682 0.19% 76 Municipality of Bronckhorst 21,362 0.37% 99 Municipality of Hattem 10,682 0.19% 77 Municipality of Tubbergen 20,848 0.36% 100 Municipality of Lingewaal 10,682 0.19% 78 Municipality of Wijk bij Duurstede 20,818 0.36% 101 Municipality of Woudenberg 9,683 0.17% 79 Municipality of Aalten 18,693 0.32% 102 Municipality of Oudewater 9,199 0.16% 80 Municipality of Elburg 18,693 0.32% 103 Municipality of Wijdemeren 8,956 0.16% 81 Municipality of Oost Gelre 18,693 0.32% 104 Municipality of Eemnes 7,98 8 0.14% 82 Municipality of Oldebroek 18,693 0.32% 105 Municipality of Scherpenzeel 7,74 6 0.13% 83 Municipality of Putten 18,693 0.32% 106 Municipality of Renswoude 4,389 0.08% 84 Municipality of West Maas en Waal 18,693 0.32% 107 Provincial authority of Flevoland 4,316 0.08% 85 Municipality of Staphorst 18,531 0.32% 108 Municipality of Súdwest-Fryslân 1,000 0.02% 86 Municipality of Rhenen 16,461 0.29% 109 Municipality of Tytsjerksteradiel 200 0.00% 87 Municipality of Bunschoten 16,219 0.28% 110 Municipality of Apeldoorn 1 0.00% 88 Municipality of Urk 16,215 0.28% Total 5,777,247 100.00% 89 Municipality of Druten 16,023 0.28%
146 GENERAL | THE VALUE OF WATER | IMPACT ANALYSIS | FINANCIAL RESULTS - 4.17 Summary of outstanding shares