Annual report 2022

Clean watercourses for future generations and a living environment in harmony with water

Annual Report 2022 BE-GAAP

With our activities, we have a clear corporate objective in sight: clean watercourses for future generations and a living environment in harmony with water.

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Annual Report BE GAAP 2022

Foreword

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About Aquafin

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• Doing business sustainably • 2022 in figures

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Challenges and opportunities

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• Achieving the maximum return on investments • Growing with a profitable and impactful offering for our customers • Strong partnership in the water and utility sector • Research for sustainable development • Innovation for impactful services and products • People make success possible

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Financial report

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Corporate governance statement

• • • • • • • • • •

28 32 39 39 40 40 40 41 52 57

• Corporate Governance at Aquafin 64 • Notes on deviations from the Code 65 • Key features of the company’s internal controls and risk management systems in relation to financial reporting 66 • Composition and functioning of the management bodies and committees 66 • Key elements of the evaluation process of the Board of Directors, the committees and the individual directors 70 • Diversity policy 70 • Remuneration Report 71

General information Report of the Board of Directors Main risks and uncertainties Main events during the financial year Auditing of the company Shareholder structure and cross-shareholdings Branch offices Notes to the balance sheet Notes to the income statement Proposal to the General Meeting

Extra information

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• • • •

59 60 60 62

Hedge accounting Pension liabilities Cash flows Green Finance Framework report

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Foreword Dear reader

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In 2023, Aquafin started a new cooperation agreement with the Flemish Region. And this agreement reflects strong confidence in the company as a partner for deploying resources efficiently and effectively in the water sector. A result-oriented follow-up gives us the autonomy to do so. At the same time, the new agreement gives us the opportunity to take on additional tasks related to our key mission due to new European legislation, for example.

The freedom we are given for this allows us to work towards optimal water quality.

Like the previous one, the new agreement has also been entered into on a rolling basis for 20 years. Such a long-term perspective is necessary given the repayment terms of the financing that Aquafin has entered into for the supra-municipal investment projects. That financing is crucial for the implementation of the projects. Confirmation of our investors’ confidence in the new cooperation agreement was therefore an absolute must.

With more autonomy comes more responsibilities. Whereas our results mainly used to be monitored on an operational basis, we are now responsible ourselves for the control mechanisms for ensuring that objectives are achieved in the best manner financially. In 2022, together with the Flemish Environment Agency, we prepared for a new method of supervision based on critical performance indicators that will provide transparency on the course that we take.

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Annual Report BE GAAP 2022

CONNECTOR IN THE WATER SECTOR Meanwhile, Aquafin looked for ways to bring the actors in the water sector even closer together in order to further improve efficiency gains for Flanders. That is because we believe that more integrated management of the waste water and stormwater infrastructure will greatly benefit connectivity and consequently water quality. Initial experiences in our role as matchmaker where we match supra-municipal investments with those of the municipalities are already pointing in that direction.

In 2022, Aquafin also excelled in terms of digitalisation.

Thanks to the additional funding from Europe and Flanders released for this purpose, we can widen the deployment of our infrastructure to address social challenges such as climate change. That also applies to the end product of the water treatment process: treated waste water. The increasingly frequent periods of drought that Flanders has to cope with have put the reuse of this alternative water source on the radar.

The Blue Deal also gave an extra boost to a number of major projects which we are keen to support.

NOT ONLY A WATER TREATMENT COMPANY BUT ALSO AN ENERGY PRODUCER Water treatment remains our main activity but we also create extra sustainable value for society through new services, by supplying green energy in the form of heat (sewer thermal energy) and natural gas (biomethane production), for example.

Or by advising municipalities to provide space specifically for water and greenery.

Because we want to respond to current and future needs within our environment as much as possible, we held a consultation round with our stakeholders on corporate social responsibility last year. We will use their valuable input to work with them to make even more of a difference in the future.

Alain Bernard Chairman

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About Aquafin

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or over 30 years Aquafin has been a reliable partner of the Flemish Region for the financing, construction, optimisation and management of the supra-municipal infrastructure for waste water treatment. At our 325 waste water treatment plants, we treat the waste water of 86% of Flemish households.

Since 2022, we have been working according to the spirit of a new cooperation agreement for which full-scale preparations were carried out last year and which came into effect from January 2023. That agreement stipulates that Aquafin is responsible for the supra-municipal investment programme and aligns it with the planned investments of the towns, cities and municipalities. Projects must contribute towards the achievement of the objectives set by the Flemish Environment Agency. We do that by investing the available resources effectively, aiming for a maximum ecological result in the process.

In our collection sewers, we collect the waste water from the municipal sewers of more than 86% of the Flemish population. From there, we transport it to one of our 325 waste water treatment plants spanning the whole of Flanders. After a mechanical and biological treatment process, it meets the applicable Flemish and European standards and we discharge it into the surface water.

ADDED VALUE FOR SOCIETY AND THE ENVIRONMENT With our activities, we are contributing towards an important corporate objective: clean watercourses for future generations and a living environment in harmony with water. Our expertise in all aspects of the water cycle means that we are well placed to design solutions to tackle the consequences of climate change at local level.

Dealing with rainwater smartly is crucial for coping with periods of drought and reducing the risk of flooding. That is why in our projects, we try to contain stormwater as far as possible. Where it is possible, we let it soak into the ground to combat the consequences of drought or we store the water in order to make it available for reuse.

In the process, we take every opportunity to create added value for the neighbourhood through natural elements that promote biodiversity and by integrating functions such as recreation, cohesion and mobility in the design.

We can also increasingly extract value from the water treatment process itself.

Thanks to research and innovation, the recovery of energy and raw materials is becoming increasingly feasible and cost-effective, as a result of which waste water has become an important link in the circular economy.

EXPERTISE FOR TOWNS, CITIES AND MUNICIPALITIES Towns, cities and municipalities can also ask Aquafin to manage the municipal sewer infrastructure and for advice on the climate-robust planning of public areas.

In accordance with the agreement with the Flemish Region, the charges and revenues for activities regarding the Flemish Region and those for the municipalities are separated. More than 100 Flemish towns, cities and municipalities are customers of Aquafin, mostly via a partnership with a water company.

INDUSTRIAL WATER TREATMENT Our subsidiary Aquaplus offers the knowledge and expertise of Aquafin within the industry and to companies with a water-related issue. From renovation to process optimisation, asset management, operation, recycling of water or the whole process from design to implementation: all projects require an in-depth knowledge of water treatment. Aquaplus takes care of all this for its clients so they can concentrate on their core business. Our subsidiary has clients in various sectors, including food and beverage, chemicals and the pharmaceutical industry.  Discover our expertises

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Annual Report BE GAAP 2022

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Doing business sustainably The ultimate aim of our core business is to create a positive impact on the environment and society. But the way in which we achieve this goal also has to be as sustainable as possible, not only on an ecological level but also on a social and organisational one.

“In dialogue with our stakeholders we refined our sustainability policy.”

Determining a course with our stakeholders A quality dialogue with internal and external stakeholders adds value to the development of the organisation. In 2022, Aquafin organised a stakeholder consultation to further strengthen its sustainability policy. This consisted of a quantitative survey and qualitative round-table discussions during which the topics put forward via the survey as important for Aquafin to focus on were looked at in more depth. The stakeholder consultation produced a materiality matrix that will serve as a basis for updating and refining our approach to doing business sustainably. All topics in the matrix are important for Aquafin to focus on. The topics shown top right are the ones where we can make the most difference for our stakeholders. In 2023, we will carry out a follow-up during which we will set concrete Environment, Social and Governance (ESG) ambitions and objectives.

HIGH

Materiality matrix

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IMPORTANCE FOR STAKEHOLDERS

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1. Water quality 2. Water availability 3. Water life 4. Climate adaptation 5. Energy efficiency 6. Energie transition 7. Sustainable procurement 8. Health and wellbeing 9. Safety 10. Biodiversity 11. Social commitment 12. Innovation & digitization 13. Less nuisance 14. Sharing knowledge 15. Talent management 16. Air emissions 17. Diversity and equality 18. Ethical conduct 19. Sustainable and healthy food

5 10 6 11

LOW

14 13

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LOW

16 17 18

7 12

8 9

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IMPACT ON AQUAFIN

HIGH

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Based on the input from our stakeholders and our own insights, we will be focusing on the following topics in three pillars:

Environmental impact Water quality Climate mitigation Climate adaptation

Modern & inclusive employer Talent development Zero bias hiring & equal career experience Positive wellbeing & safety culture

At one with our environment Synergies with stakeholders Sustainable procurement Less nuisance Ethical conduct

In a follow-up process that Aquafin will go through in 2023, we will define our ambitions and concrete objectives. The objectives and subsequent reporting will naturally be in line with the European Corporate Sustainability Reporting Directive and Taxonomy which will apply to Aquafin from 2025.

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Annual Report BE GAAP 2022

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2022 in figures Finance

631

5.1

MILLION EUROS OF TURNOVER

MILLION EUROS OF PROFIT TO BE APPROPRIATED

Infrastructure

2,025

325

PUMPING STATIONS AND STORAGE SETTLEMENT TANKS

WWTPs

99 %

7,085

OF WWTPs MET ALL STANDARDS

KM OF PIPES

3,677

PROJECTS DELIVERED TO FLEMISH REGION AT 31/12/2022 WORTH 4.5 BILLION EUROS

SUPRA-MUNICIPAL PROJECTS WORTH 186 MILLION EUROS CONTRACTED OUT

SUPRA-MUNICIPAL PROJECTS WORTH 178 MILLION EUROS DELIVERED

Employees

1,173

EMPLOYEES (860 MEN AND 313 WOMEN) + 40 VMM EMPLOYEES

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Challenges and opportunities

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n a rapidly changing world, social and ecological challenges are evolving at a fast pace. Climate change, increasing micropollution, rising population density, energy crises,… These are just a few of the factors that also have an impact on the water sector. We are continually searching for appropriate answers, while keeping an open mind. In doing so, we strive to achieve the maximum return on shared resources, provide a profitable offering for our customers with a positive impact on society and the environment and create strong partnerships with all actors in the water and utility sector.

ACHIEVING THE MAXIMUM RETURN ON INVESTMENTS Development and optimisation of the waste water treatment infrastructure With the new cooperation agreement, we were assigned a coordinating role by the Flemish Government which would involve matching supra-municipal investments to those of towns, cities and municipalities. Until now, the Region would assign us a programme of projects for the development and optimisation of the supra-municipal treatment infrastructure every year. Now we are guided by the investment plans of the municipalities and link supra-municipal projects to them seamlessly. The actual design phase only starts after all the parties involved have expressed their commitment. By taking possible risks into account early on, we expect to reduce the lead time of a project. The design of the projects carried out will thus better reflect the latest vision and insights too.

Aquafin is one of the largest clients for infrastructure works in Flanders. Hence we provide a considerable volume of work for the consultancy firms and contractors we work with. In terms of deliveries, we were able to allocate the planned delivery budgets for investment projects, asset management projects and energy projects in 2022, thanks to the joint efforts of Aquafin and its partners. In total, we delivered 178 million euros in projects to the Region. We also brought a record 372 million euros’ worth of new projects to market, with municipal projects accounting for 112 million euros.

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Annual Report BE GAAP 2022

Reliable infrastructure Over the past few decades, the Flemish Region has invested heavily – via Aquafin – in the expansion of the domestic waste water treatment infrastructure. Through intelligent asset management, Aquafin does everything possible to keep the ageing infrastructure in good condition. The Flemish Region recognises the need to increase investments in asset management and will increase the budget for projects of this type by 5 million euros a year until it reaches 55 million euros in 2026.

The sewer infrastructure of towns, cities and municipalities is also ageing and failure could cause significant social and ecological damage.

In view of this, the Flemish Government wants to have a clear picture of the condition of Flemish sewers by the end of 2027. In 2021, Aquafin worked with the Association of Flemish Cities and Municipalities (VVSG), AquaFlanders, the Flemish Environment Agency, Vlario and the towns, cities and municipalities and their sewer operators to devise standards and minimum requirements for sewer inspections. By the end of 2022, all municipalities had to have a complete sewer inventory and have prepared a first version of their inspection plan. Aquafin managed to complete this task successfully for its municipality customers as well as identify the action that needed to be taken in respect of the other sewer operators. Rightly so as the total value of the sewerage assets in Flanders is estimated at 70 billion euros. With a total cost of 60 million euros to implement the inspection plan in all municipalities, this still means that only 0.09% of the reinvestment value is being spent on inspection. We apply higher standards for the supra-municipal system because the consequential damage is usually considerably higher. We also extend this method to municipalities that call on us for asset management.

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ECONOMIC COMPENSATION FOR TECHNICAL PARTNERS Due to Covid-19, contractors had to take special measures to protect their employees. That resulted in significant additional costs that could not have been foreseen at the time of bidding for the project in question. Aquafin took the lead in determining fair compensation for the unforeseeable costs and loss of return in the form of a lump sum based on a percentage of the contract price. An arrangement that was later adopted by other clients.

“We reached a bilateral agreement with Aquafin extremely quickly regarding a simple arrangement for the loss incurred,” says Eli Desmedt of VlaWeBo, the Flemish federation of building contractors for road works. “A good example of partnership and open communication, with the deliberate choice of a win-win for all parties, which was very much appreciated by VlaWeBo, Bouwunie and their member contractors.

The pragmatic arrangement has undoubtedly meant that long legal disputes and the associated costs of proceedings have been avoided but above all, our people have been spared negative energy.”

The high level of inflation was a considerable challenge for the consultancy firms we work with. By staggering the payment of fees, aligned with the underlying costs, Aquafin was able to help them absorb the high wage increases at the beginning of 2023 and thus reduce cash flow problems.

DIGITAL PLATFORM At the request of the Region, Aquafin has since developed a digital platform that enables all towns, cities and municipalities to monitor the status of their inspection programme and also lets the Flemish Government get a clear view of that status at any time. Rosi, the platform that we developed for our municipality customers, goes one step further and gives municipalities transparency as far as the inspection planning and results level.

They can also find recommended actions along with a clear estimate here.

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OVERFLOW MONITORING NETWORK

Digitalisation of the infrastructure

The sewers in Flanders are predominantly of the combined type which means that they transport both waste water and rainwater. Emergency outlets or overflows into a watercourse are provided at certain locations in order to prevent sewers overflowing in the event of heavy rainfall.

That admittedly diluted waste water can affect the water quality in brooks and streams. At the request of the Flemish Region, Aquafin started work on the further development of an overflow monitoring network in 2022. By 2025, we will be carrying out permanent monitoring activities at a total of 1,600 overflow locations. Priority will be given to overflows which have the most impact on the watercourse, overflows at critical locations in the system and the replacement of measurement devices at locations that up to 2021, were monitored by the Flemish Environment Agency.

The results from the monitoring network can be used to plan targeted investments in order to address the negative impact that overflows have on water quality.

In 2022, with financial support from Europe and the Flemish Recovery Plan, we started transforming the waste water and stormwater infrastructure into a ‘smart network’. This means making the control of our infrastructure even more efficient by means of algorithms in the cloud which combine classic field data with data such as precipitation forecasts, energy prices, etc. This will enable us to deploy our plants even more effectively in order to respond to current and future challenges.

Controls developed in 2022: • Digital twin for Beveren WWTP: this plant is controlled based on an intelligent model (digital twin) in the cloud whereby field data and modelling are combined with artificial intelligence in order to improve performances.

• Smart control of a storm pump: by integrating precipitation forecasts in the algorithm that controls the stop level of the pump, it is possible to operate the pump solely to effectively prevent flooding. As a result, more waste water is subsequently pumped to the water treatment plant and no less than 60% of the overflow operation is now avoided at that site.

• Energy production based on supply and demand: the gas engine that turns the biogas we produce into green energy is started by an intelligent control when we most need power at the WWTP and energy prices are high. That way, we save on purchased energy and smooth out our peak production and offtake from the grid.

Through the intelligent control of a storm pump in Hondelee (Zwijnaarde), no less than 60% less waste water overflows into the watercourse.

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Annual Report BE GAAP 2022

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In 2022, 99.38% of our WWTPs complied with all the applicable standards.

5 parameters for clean water > BOD: biological oxygen demand

– the amount of oxygen required to break down the pollution biologically. > COD: chemical oxygen demand

– the amount of oxygen required to break down the pollution via a chemical process. > Suspended solids: all undissolved

substances in a volume of waste water. > Nitrogen & phosphorus: nutrients

present in domestic waste water.

Excessive quantities of these in the watercourse lead to too strong algae growth, which reduces the oxygen content.

An excellent treatment year The treated waste water from our waste water treatment plants has to comply with European and Flemish quality standards. 3 to 5 parameters are checked in the waste water before and after the treatment process depending on the capacity of the WWTP (see box).

For most parameters, there are concentration limits as well as removal percentages to be attained. Concentration limits indicate how many milligrams per litre of a substance can be present in the treated waste water. Removal percentages specify how many percent of the substance we have to remove in the treatment process annually.

Dilution of the sewage water with rainwater affects the removal percentages.

In that respect, we benefited from 2022 being a dry year but we could not have achieved such good results without the close monitoring of the treatment process by our employees who were on stand-by day and night. Supply problems and consequently high increases in the prices for the chemicals required for the removal of nitrogen, phosphorus and suspended solids from the waste water also presented a particular challenge last year.

In 2022, 99.38% of our WWTPs complied with all the applicable standards. Only 2 of the 324 plants assessed failed to get to the finishing line, both due to a single instance of exceeding a single standard. That is the third best result in Aquafin’s history.

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EXTRA EFFORTS FOR LESS PHOSPHORUS Although Aquafin removes 85% of the phosphorus present in the waste water on average every year, the level of phosphorus in Flemish watercourses is still constantly too high. In freshwater ecosystems, phosphorus stimulates the growth of algae as a result of which the oxygen level drops and light incidence is reduced. Both effects have a negative impact on certain species of aquatic organisms. A social debate within the Coordination Committee on Integrated Water Policy (CIW) during which various measures were compared showed that the targeted dosing of iron and aluminium salts in the water treatment process is by far the most cost-effective measure for reducing the phosphorus burden on watercourses. These are vulnerable streams and brooks that are close to the target water quality from the Water Framework Directive.

Aquafin is currently rolling out the installation of phosphate analysers at 50 WWTPs. Based on continuous measurement, the right amount of chemicals is then added automatically in order to achieve the target value of 0.3 mg/l on an annual basis while the standard for most WWTPs is 2 mg/l. The new European Urban Waste Water Directive is expected to bring the standard to 0.5 mg/l for all WWTPs from a population equivalent of 10,000. Phosphorus that is removed during the treatment process accumulates in the sludge produced. The more phosphorus that is removed, the more will also be recoverable via sludge processing in the future.

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Annual Report BE GAAP 2022

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Sludge as an energy provider The residual sludge produced during the biological treatment process is a form of biomass consisting of 99% water and 1% dry matter. It is thickened and dewatered as much as possible at the WWTP itself, before being carried away for processing.

Half of the biomass is digested at one of our 13 digestion plants spread throughout Flanders.

We convert the biogas produced in this way into electricity and heat and at one WWTP, it is now converted into biomethane. Over the next few years, we will be adding another 4 biomethane units.

We dry out one third of the total (digested and undigested) biomass in our three sludge dryers to make pellets as a renewable energy source. The remaining two thirds of the sludge is incinerated as dewatered sludge and therefore not dried.

One sludge dryer runs mainly on self-produced biogas and two run on natural gas.

Due to the impending shortage of gas following the war between Russia and Ukraine, we looked for a temporary different solution for the two gas-fired dryers in 2022 to help ensure security of supply. The dryer in Leuven ran at half-capacity for just over three months while the dryer in Houthalen was powered by fuel oil instead of gas for four months.

Over the next few years, we will continue to rely on the old sludge dryers but by 2026, they will be replaced by two new sludge dryers, one in the east and one in the west of Flanders. The new dryers will run on residual heat from industry, at a lower temperature, without using fossil fuels. Until that time, the current dryers will be properly maintained to enable them to continue fulfilling their task. To that end, the dryer from Deurne was shut down for two months in 2022 so that a number of major maintenance tasks could be carried out.

In addition, by 2026 our brand new sludge treatment plant at the Arcelor Mittal site in Ghent will be operational. In the beginning, this sludge mono-processor will process two thirds of the sludge from our plants without the addition of other waste streams.

This will enable maximum recovery of energy and raw materials. The steel producer will use all the steam produced at the plant in its processes which will enable Arcelor to reduce its CO2 emissions by 65,000 tonnes a year. At a later stage, we also want to recover phosphorus from the sludge incinerator ash on a large scale here. That will make this plant unique in Europe.

Phosphorus is becoming a scarce resource.

In the medium term, we can recover up to 20% of the total demand for this substance in Flanders from sludge.

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Striving for climate neutrality Last year, Aquafin presented its Energy and Climate Plan for aligning ourselves with Flemish energy and climate targets – and even going one step further. The plan contains a number of concrete targets and sets a course for evolving towards climate neutrality. The basis for this is the inventarisation of the total greenhouse gas emissions throughout our value chain which was started in 2022 but will be further refined.

GREEN GAS FOR 1,600 FAMILIES You can use a gas engine to convert biogas into green energy, which is what we are currently doing at 12 of the 13 WWTPs with a sludge digester. In 2021, we commissioned our first biomethane installation at the Antwerpen-Zuid WWTP, which upgrades biogas to high-quality green gas that is then injected into the grid. By doing this, we make even better use of the energy released from sludge digestion. The green gas that we produce in AntwerpenZuid is equivalent to the consumption of 300 families.

In 2024, we are planning to commission 4 additional biomethane installations, in Ghent, Harelbeke, Genk and Dendermonde. Together, these will enable us to provide 1,600 families with renewable green gas.

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Annual Report BE GAAP 2022

The most tangible and concrete aspects we have been working on for many years are our own energy targets. The transport and treatment of domestic waste water is a highly energy-intensive process, making Aquafin one of the largest energy consumers in Flanders. In order to keep control of our energy bills, since 2010 we have set ourselves the goal of becoming 1% more energy-efficient every year compared to model consumption and therefore in relation to the expansion of our assets. Year after year, we have achieved that goal which means that by the end of 2022, we had recorded efficiency gains of approximately 13.5% compared with 2010. We realised these gains mainly by replacing outdated, energy-guzzling equipment with new energy-friendly variants and by optimising automatic controls in the treatment process.

In 2022, Aquafin delivered 3.1 million euros in energy projects.

The expansion of solar arrays at our WWTPs accounted for a significant share of this. These investments are financed with resources from the Energy Fund which is managed by the Flemish Region. The savings on energy bills that they generate are reinvested in the fund for new investments.

Besides improving the energy efficiency of our infrastructure, we are working on phasing out the use of fossil fuels by 2030.

In that context, a programme for electrifying the heating of our service buildings is currently being carried out and we are still working to make our vehicle fleet greener too. From 2024, only BEV (fully electric) service vehicles and company cars will be ordered and we are also looking at replacing 4 trucks with electric variants.

But the biggest step will be taken in 2026 when two new sludge dryers will be commissioned. These will only use industrial residual heat while we will still partly be using natural gas in our dryers until then.

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As well as a water treatment company, Aquafin is becoming more of an energy producer.

PRODUCTION OF RENEWABLE ENERGY ON AN UPWARD TREND DUAL-PURPOSE CONTROL OF ENERGY PRODUCTION To keep the energy transition affordable in the future, it will be important to maintain a balance between supply and demand on the electricity grid throughout the day. The increasing number of ways to produce renewable energy and greater peaks in current consumption due to increased electrification have upset the balance of the grid. In 2022, Aquafin developed an innovative control algorithm that only allows the gas engine for producing green energy from biogas to start up at the time when our own electricity consumption on site peaks and the market price for electricity is high.

That way, we avoid having to purchase expensive electricity and at the same time avoid the extra load on the grid by not supplying power to it that we will need ourselves a few hours later.

Meanwhile, we are in the process of expanding the production of renewable energy. At the end of 2022, we had 23 solar panel farms in operation at our sites. This number should have increased by at least 7 by the end of 2023. The current installed capacity of 10.6 MWp should by then have reached 13 MWp, which is equivalent to the production of 3,250 domestic solar panel installations. This year, we are also going to carry out a market consultation regarding 4 sites for the development of large-scale wind turbines.

In addition to our energy objectives, the energy and climate plan also states our ambition to seize opportunities to help build a sustainable energy transition, by aligning our electricity demand with the needs of the grid via smart controls, for example.

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GROWING WITH A PROFITABLE AND IMPACTFUL OFFERING FOR OUR CUSTOMERS Sewer thermal energy

Under the title ‘renewable energy from waste water’, Aquafin with its projects connected with sewer thermal energy and biomethane was nominated for the first Trends Impact Awards in the circular economy category.

The jury considered the projects modern and innovative and appropriate in view of the major challenge presented by the energy transition. They also praised the scalability of the projects in Flanders which give waste water added value too. A wonderful compliment!

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Annual Report BE GAAP 2022

The search for new sustainable energy sources has never been greater than it has been in the past year. After an innovation process and an initial application at its own Campus, Aquafin has been offering sewer thermal energy – or heat recovery from waste water – since 2022. There are two possible forms of sewer thermal energy: one based on the sewer water in the collector and the other based on the treated waste water after water treatment and before it is discharged into surface water. Sewer thermal energy is an excellent energy source if there is a waste water pipeline with a sufficient flow rate in the immediate vicinity. This then makes the technology a good alternative for heating and cooling office buildings, public buildings, sports complexes and clusters of at least 15 dwellings, for example.

There has been a lot of interest from towns, cities and municipalities but also from project developers and construction companies who are constantly looking for renewable energy alternatives. We are expecting to carry out the effective rollout of 15 projects over the next few years.

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Transparent sewer management More than 1 out of 3 Flemish cities, towns and municipalities collaborate with Aquafin for sewer management, either directly or via our partnerships with water companies water-link, De Watergroep (Riopact), Pidpa and Farys.

Rosi is a user-friendly digital platform that can give you a transparent insight into the state of the sewers, the planning and results of inspections, the estimation of risks and advice on measures at any time. Rosi responds to Flemish objectives to map the state of the sewers by 2027 but goes one step further by also linking interpretations and possible actions to this. Within a period of eighteen months, the number of municipalities using Rosi tripled from 35 to 110.

Smart controls for municipal infrastructure The algorithm for the intelligent control of waste water and stormwater management infrastructure combines real-time measurements with precipitation forecasts. This makes it possible to add an extra useful function to the basic function of the infrastructure. With smart control, a basin that was originally built to slow the draining of stormwater can be used to store rainwater in times of drought. The water can then be made available to nearby agricultural and horticultural businesses, for example.

Another example are collective rainwater reservoirs that are partially emptied by means of a smart control system before a major storm occurs, thus guaranteeing extra storage. There are also other controls set up to avoid overflow operation as much as possible.

Blue/green advice By the end of 2024, Flemish municipalities, towns and cities must have a stormwater and drought plan if they still want to rely on water-related subsidies. This is a longterm vision of the best way to deal with stormwater in their area in future projects.

In 2022, Aquafin formulated 8 stormwater and drought plans, bringing the total to 39 to date. However, we have noticed that the water between theory and practice is often still very deep. In addition, municipalities sometimes struggle with the water balance when rebuilding a street or district or want to focus on climate robustness.

That is the reason why last year, Aquafin developed the ‘blue/green advice’ service for municipalities. By taking an integrated approach, we ensure that various infrastructure elements strengthen each other, with optimum effect for biodiversity and the neighbourhood.

RENOVATED CAMPUS AS A DEMO AREA After 18 months of major renovations, the head office of Aquafin was able to return to its familiar address in September 2022. The building was transformed into a sustainable hub that meets the expectations of modern partnerships.

At the same time, it is the first location where we have applied sewer thermal energy and employees and visitors are able to experience how blue/green measures improve the quality of the environment.  Read more (in Dutch)

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STRONG PARTNERSHIP IN THE WATER AND UTILITY SECTOR Close link with the Blue Deal The Flemish Government launched the Blue Deal in 2020 as an action plan for tackling water scarcity and drought in Flanders. Aquafin is closely involved in the Blue Deal, both at policy level and via projects. For example, we successfully drew up dossiers for 6 towns, cities and municipalities for subsidies from the Blue Deal within the category of ‘collective rainwater projects’. All these projects save on drinking and groundwater by collecting rainwater via the municipal infrastructure and using it for low-quality applications.  Read more (in Dutch) The Blue Deal also subsidises 5 initiatives for the reuse of treated waste water from our WWTPs. In the future, they will use a combined total of 33.3 billion litres of effluent every year as a water source for process or drinking water. The biggest project is Waterkracht, which will upgrade no less than 20 billion litres of treated waste water from 600,000 Antwerp residents to cooling water for companies at the Port of Antwerp.  Read more (in Dutch) Aquafin is also closely involved with 2 of the 3 demo areas that are being implemented

by VITO – the Flemish Institution for Technological Research – on behalf of the Flemish Government as part of WaterProof, one of the major projects within the Blue Deal.

The objective of WaterProof is to formulate a system-based approach for the whole of Flanders via the demo areas. For instance, a business park in Tielt will become the ‘business park of the future’ with all kinds of applications for maximising the infiltration, storage and reuse of stormwater. The second demo which Aquafin is involved with is situated in the fruit-growing region of Haspengouw. One of the reasons for carrying out tests here is to show how treated waste water can be treated and then reused as water for irrigation in fruit cultivation.  Read more (in Dutch) In December 2022, the Flemish Government granted Aquafin an additional 5 million euros to make residual water available for use in agriculture and horticulture.

We will use this where it is expedient to do so in ongoing and new supra-municipal investment projects to equip buffer volumes with level sensors, controllable valves, a distribution system and smart control. This will enable the buffered water to be used for irrigation while creating sufficient buffer capacity to absorb the next heavy downpour.

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Partnerships with water companies Aquafin believes strongly in cohesion between municipal and supra-municipal infrastructure for waste water and stormwater management.

For municipal sewer management, we have been working with water companies water-link and De Watergroep (Riopact) for many years.

In 2022, in preparation for a structural partnership from 2023, we entered into an agreement with Pidpa for sewer management in a third town/city/municipality within their water supply area. And we are also working with Farys for the first time in connection with municipal sewer management.

In addition, we have formed partnerships with various water companies with the purpose of upgrading and reusing treated waste water, within the framework of the Blue Deal (see above) and systematically for a lot longer with Aquaduin which turns the treated waste water from our Wulpen and Adinkerke WWTPs back into drinking water, for example.

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RESEARCH FOR SUSTAINABLE DEVELOPMENT Aquafin is a valued research partner in both the Flemish and international water sectors. Our fundamental research focuses on building up knowledge on four major themes that have a significant impact on society:

Zero-waste water cycle What we mean by ‘zero-waste’ is the maximised use of residual flows, by recovering raw materials like phosphorus and nitrogen in the water treatment process so that they can be reintroduced into the production chain, for example. For instance, as part of the European WalNUT project, we will be testing as of 2023 how we can recover nitrogen via adsorption from household waste water at our Aartselaar WWTP, so that it can be reused in fertilisers.

At our Antwerpen-Zuid WWTP, we are testing a second technique based on air stripping.

Robust and healthy water systems Water quality and quantity are the barometers for robust and healthy water systems. Where quality is concerned, we look at both the treated waste water that we discharge into the surface water and also run-off rainwater that infiltrates, is reused or goes into a watercourse. On a European level, work is being carried out on a new directive for urban waste water which will set stricter requirements for both treated waste water and rainwater compared with the current ones. Aquafin is already preparing for this via various research projects. For instance, the construction of a full-scale post-treatment installation for the removal of micropollutants started at our Aartselaar WWTP in 2022.

The Flemish Environment Agency has already carried out a zero measurement on the receiving watercourse which will serve as a calibration point for the results later on. We are also a partner in the EU project StopUP in which research is being carried out into how we can protect our watercourses and the fauna and flora around them against polluted rainwater run-off. We are also carrying out research into the presence and possible removal of PFAS in the waste water and testing rainwater treatment systems.

POST-TREATMENT OF MICROPOLLUTANTS STARTS IN SUMMER 2023 Aquafin wants to be prepared for any future obligation relating to the removal of micropollutants. These are small particles of chemical substances which can be difficult to break down or even be toxic. They are found, for example, in non-stick coatings, medicines, etc. That is why we started to construct a waste water post-treatment installation at our Aartselaar WWTP in 2022, aimed at the removal of micropollutants. From summer 2023, we will combine two already tried and tested techniques here: ozone treatment and treatment using activated carbon. The combination of the two techniques will reduce the ecological footprint of both because less energy is required for lower ozone dosing on the one hand and the activated carbon will last longer on account of the preceding ozone treatment on the other hand.

The research project is a collaboration with the Flemish Environment Agency which already carried out a zero measurement on the quality of the receiving watercourse last year. On an annual basis, the micropollutants will be removed from 75% of the waste water that enters the WWTP.

In connection with water quantity, we are involved in European research into the smart control of rainwater storage basins to enable rainwater to be used for irrigation in agriculture.  B-Watersmart

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Digital Water Value Chain

Eco-efficient business models

The digitalisation of the water chain is an indispensable lever for maximising smart controls and reuse of waste flows. But it is also indispensable for prioritising measures for improving water quality. One example of this is the Internet of Water Flanders which Aquafin participates in together with imec, the Flemish Institute for Technological Research (VITO), Vlakwa, the Flemish Environment Agency and De Watergroep. Within this project, a network of sensors is being rolled out that will measure quality parameters for various types of water – including overflow waste water – at specific locations in real time. Carefully chosen locations are being equipped with an innovative sensor that stores information on the quality of the overflow water in the cloud. Combined with specific measurement campaigns and models such as Aquafin’s Cockle software which calculates the waste load emitted and surface water measurements, this information will allow the actual impact of an overflow to be estimated, thus allowing targeted intervention.

By treating domestic waste water before it is discharged into the surface water, Aquafin makes a substantial contribution to clean and healthy watercourses. At the same time, we reduce our ecological footprint. The infrastructure needed to transport and treat sewage is directly or indirectly responsible for various greenhouse gas emissions. We investigate where the environmental impact is greatest and what we can do to reduce this.

 Read more

In addition, when quantifying the emissions from a sewerage system, it also became clear that methane emissions from sewers and even from private septic tanks account for a significant share. In 2023, additional measurements will follow for this.

Annual Report BE GAAP 2022

In 2022, Aquafin worked on estimating its greenhouse gas emissions in accordance with the Greenhouse Gas Protocol. We developed our own model based on real measurements on our infrastructure for the direct emissions from the treatment process. The reason for doing that was because we found that the theoretical models from literature did not correspond to the results from our measurement campaigns.

The information for calculating indirect emissions in the value chain is still far from available. However, we did draw up an inventory of our purchases of materials and raw materials. In 2023, we will continue to calculate the main emission factors based on the information available. Together with Vlario, knowledge centre for the sewerage sector, Aquafin also quantifies the emissions due to the construction of new sewers.

That is because the life cycle analysis of a treatment area made it clear that the production of classic sewage pipes and materials for road construction is particularly energy-intensive. Products that have a lower CO2 footprint such as sulphur concrete, for example, are gradually coming onto the market. Aquafin supports such disruptive innovations and has already used them in projects.

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INNOVATION FOR IMPACTFUL SERVICES AND PRODUCTS Through fundamental research within R&D, Aquafin not only broadens its knowledge of all aspects of the water cycle, we also prepare Flanders for rapidly changing ecosystems and legislative changes. We also do that via innovation with new or adapted products and services. Just like applied research, innovation is crucial in order to respond to social challenges and create added value.

In 2022, Aquafin invested just under 800,000 euros in innovation, in the form of development costs and all external costs for guidance and collaboration, proof-of-concept, etc.

Previous innovations such as sewer thermal energy and biomethane are gradually being incorporated in operating processes and Rosi, the digital platform where municipalities can find full details of the state of their sewer system, has also been widely rolled out to more than 100 municipalities in the meantime.

Also last year, ‘blue/green advice’ was developed as a new service for municipalities. Even at an early stage in the project, we look for possible opportunities to combine functions in the area concerned and create as much added value as possible. Consequently, we deliver a future-oriented design that not only focuses on stormwater management but also covers spatial planning, biodiversity and even recreation.

In 2022, we achieved a breakthrough in terms of the development of various smart controls to avoid overflow operation or reuse rainwater. There are 10 concrete projects in progress for intelligent control of rainwater buffers, for both our own infrastructure and municipal infrastructure. At the same time, Aquafin is participating in a pilot project with the Royal Meteorological Institute of Belgium (RMI) in order to use more refined precipitation forecasts in these controls and enable the infrastructure to be controlled with even greater precision.

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3.70 AVERAGE TRAINING DAYS PER FTE (FULL TIME EQUIVALENT)

PEOPLE MAKE SUCCESS POSSIBLE Attracting the right talent There are a lot of job opportunities for the taking at Aquafin, both for new employees and for those who have been with us for a long time. The expansion and deepening of our activities, digitalisation and new forms of collaboration are just a few of the developments that present challenges in many areas. We want to develop the maximum potential available to us by focusing on strong leadership combined with smart teamwork. But we are also constantly looking for new talent to strengthen our teams.

In 2022, we formulated an employer branding strategy which highlights Aquafin’s uniqueness as its trump card. Unique in our mission and impact but also unique in opportunities and freedom to choose your own path.

In 2022, we filled no less than 150 vacancies, 99 of which were filled by appointing new colleagues. 51 colleagues changed jobs within Aquafin, which is in line with previous years but shows that job mobility initiatives are working.

Continuing focus on safety There can be no debate about safety targets: zero accidents must always be the aim.

At Aquafin, we actively work towards a corporate culture in which thinking and acting safely are central. We want a safe (working) environment – not just for our own employees, but also for people who work on our behalf and for local residents in areas where we carry out works.

Because no less than four serious accidents occurred on our sites within the space of a few months, one of which was actually fatal, a letter went out in March from our general manager to all our technical partners. It reiterated the collective responsibility of all parties involved in the execution of works. It also directly triggered the launch of a new safety campaign, this time focusing specifically on everyone’s personal responsibility in the context of ‘working together differently and better’. In addition, work is still being carried out in order to ensure that everyone working at our sites is aware of the potential risks. To this end, besides the existing instruction cards containing the main risks, a safety introduction film will be made in several languages.

Among our own employees, the number of occupational accidents remained in line with previous years.

Filled vacancies

Occupational accidents involving our own employees

51

20 15 10 5

99

n INTERNAL MOVEMENT n NEW HIRES

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Annual Report BE GAAP 2022

0 2018

2019

2020

2021

2022

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Building well-being and resilience A safe and healthy work environment is not the only prerequisite for job satisfaction.

That is why at Aquafin, we strive to create a positive culture of well-being in which all employees feel good mentally and build up resilience. Connecting with colleagues and with the organisation is crucial in that respect. But so is the extent to which your job suits you, the extent to which you can develop yourself and experience flexibility in achieving a good work-life balance are important factors. A change process was initiated in order to enable such a positive culture of well-being to take root within the organisation.

The new well-being policy was launched in 2022, with periodic questionnaires that would partly probe the same aspects each time and partly focus on a specific aspect such as being able to switch off outside work hours, for example. In addition, a toolbox was developed based on the topic of well-being, with exercises and work methods for working as a team in a simple and practical manner. Colleagues were also trained to become a kind of ‘well-being detector’ by keeping their finger on the pulse in their work environment and responding quickly to signals indicating high stress levels.

AWARD FOR OUR HR APPROACH For HR Gala, the way Aquafin treats its employees, stimulates them to take control of their job, develop themselves, work better together as a team and also provides tools for all these things, was a good reason to make the company an HR ambassador for a year.

Later on in the year, we were also awarded a pioneering employer certificate for focusing on people-oriented hybrid working.

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General information

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HISTORY

A

quafin was established by the Flemish Region in 1990 in order to implement the EU Urban Waste Water Directive. Since the treatment of waste water in Belgium is a regional matter, Aquafin is responsible for the development, management and funding of the regional sewage treatment infrastructure. The company was established under the Law of 26 March 1971 on the protection of surface waters against pollution (Wet op de bescherming van de oppervlaktewateren tegen verontreiniging), which was converted into the Decree on Integrated Water Policy of 18 July 2003, coordinated on 15 June 2018.

Besides the contract for Flanders, Aquafin also operates as sewer manager for municipalities and the company is working on various methods for valorising residual products from waste water and is always looking for innovative applications to offer both within and outside the company. Aquafin applies the principles of separate accounting in order to separate commercial activities from activities commissioned within the regional (supra-municipal) remit.

SUPERVISION As the regulator, the Flemish Environment Agency (VMM) supervises the activities that Aquafin carries out for the Flemish Region. In addition, Aquafin is a private joint stock company with an autonomous Board of Directors, audit committee, auditor, etc.

FINANCE AND INVOICING Since 1 January 2023, Aquafin itself has been responsible for selecting supra-municipal investment projects which it puts on the agenda in order to achieve the objectives set.

Before projects on supra-municipal budgets are carried out, the Flemish Environment Agency assesses the supra-municipal character of the project. After delivery by the contractor, the Flemish Environment Agency can carry out random checks on projects for up to two quarters thereafter. After that, the costs incurred are finally approved and Aquafin has a contractual right to their repayment, spread over a maximum period of 30 years. On the other hand, Aquafin also draws up an asset management programme for the existing plants, based on LCP analyses (lifecycle plans). In the coming years, the proportion of replacement investments (asset management) will rise, so that the proportion repaid over 15 years will gradually increase.

The water companies are obliged by decree to treat the water they supply. They enter into an agreement for this with Aquafin, which assumes the task of treatment for them.

Aquafin invoices the water companies for the investment costs over the specified term, along with the company’s operating costs. The water companies pay part of Aquafin’s invoices via a grant from the MINA fund, funded by general tax revenue. They pass on the remainder, currently around 70% of the total bill, to drinking water consumers according to the principle of “the polluter pays”.

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In this formula, the budget for operating costs, excluding financing costs, under the Management Agreement is related to factors including the pollution load treated, the assets managed, the flows handled and the investment budgets. A series of fixed packages are added to this. The budget calculated is a total operating budget for Aquafin, based on what is known as the performance budget formula. This gives Aquafin the freedom to focus on the areas it considers important and to allocate the performance budget internally according to these areas. A cumulative annual efficiency gain is assigned to several packages from the performance budget each year.

The Flemish Region is a co-debtor in the invoice flow between Aquafin and the water companies. The turnover invoiced is spread between the various Flemish water companies, based on an allocation formula annually updated by Aquaflanders and approved by the Flemish Environment Agency. As Aquafin’s investment expenditure is repaid spread over a period of time, the company has to raise financing for this. Long-term financing for a project is not possible until it has been delivered internally and is in the invoice stream to the water companies. These long-term investments therefore involve no construction risk for the financiers. Aquafin covers short-term funding during the projects’ construction phase with equity capital, commercial paper, lines of credit and general corporate purpose financing.

MANAGEMENT AGREEMENT AND ALLOCATION AGREEMENT Aquafin’s tasks are set out in a Management Agreement entered into between the company and the Flemish Region. This is a 20-year rolling agreement which specifies that, besides developing, managing and operating the treatment infrastructure, Aquafin is also responsible for financing this. The latest update to the agreement was made on 1 January 2023.

An allocation agreement exists between the Flemish Region, Aquafin, the European Investment Bank and Belfius Bank, with Belfius Bank acting as agent. The agreement stipulates that, should Aquafin find itself in financial difficulties, the water companies will no longer have to pay Aquafin for the treatment of the drinking water supplied by them, but Belfius Bank. As the agent for the allocation agreement, Belfius Bank will then pass on the sums to the financiers on the (interim) maturity dates of the financing agreements.

According to the allocation agreement, the outstanding credit balance Aquafin has with the water companies must always be greater than the debt under the allocation agreement (the allocation ratio). The statutory auditor checks this ratio after each disbursement of financing under the agreement and confirms this to Belfius Bank. In turn, this bank communicates this allocation ratio to the financiers. It is also important for them to know that, according to the allocation agreement, any changes to the Management Agreement with a financial impact must first be submitted to them for approval.

In order to participate in the allocation agreement, the financier first signs an agency agreement with Aquafin and Belfius Bank.

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Report of the Board of Directors BALANCE SHEET AND INCOME STATEMENT BALANCE SHEET (IN THOUSANDS OF EUROS)

ASSETS

Codes

31-12-2022

31-12-2021

FIXED ASSETS

20/28

3,515,038

3,434,319

Tangible assets

3,430,752

22/27

3,511,496

Land and buildings

22

257,680

237,645

Plant, machinery and equipment

23

2,879,657

2,860,090

Furniture and vehicles

24

1,947

859

Other tangible assets

26

0

22

Assets under construction and advance payments

27

372,212

332,135

Financial fixed assets Affiliated enterprises Participating interests Other financial fixed assets Shares Amounts receivable and cash guarantees CURRENT ASSETS Stocks and contracts in progress Contracts in progress

3,542

3,567

3,443

3,482

280

3,443

3,482

284/8

99

85

284

81

81

285/8

17

3

29/58

348,379

281,764

3

195,644

167,356

37

195,644

167,356

40/41

97,945

50,656

Trade debtors

40

94,208

42,093

Other amounts receivable

41

3,737

8,563

50/53

1

1

51/53

1

1

Cash

54/58

9,553

14,514

Accrued charges and deferred income

490/1

45,236

49,237

TOTAL ASSETS

20/58

3,863,417

3,716,083

Amounts receivable within one year

Short-term investments Other investments

32

28 280/1

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BALANCE SHEET (IN THOUSANDS OF EUROS)

LIABILITIES

Codes

31-12-2022

31-12-2021

EQUITY

10/15

1,125,166

1,137,553

Capital

10

298,400

298,400

Issued capital

100

298,400

298,400

Revaluation surplus

12

1,780

1,780

Reserves

13

29,599

29,347

Legal reserve

130

16,100

15,847

Available reserve

133

13,500

13,500

Profit carried forward

14

4,674

4,079

Investment grants

15

790,714

803,948

PROVISIONS AND DEFERRED TAXES

16

7,196

5,906

Provisions for liabilities and charges

160/5

7,196

5,906

Pensions and similar obligations

160

126

272

163/5

7,070

5,635

17/49

2,731,055

2,572,623

17

2,092,431

2,047,997

Financial debts

170/4

2,092,167

2,047,736

Credit institutions

173

2,092,167

2,047,736

Other liabilities and charges AMOUNTS PAYABLE Amounts payable after more than one year

Other amounts payable

178/9

263

261

42/48

599,645

502,908

Current portion of amounts payable after more than one year

42

143,828

159,968

Financial debts

43

118,568

85,815

Credit institutions

430/8

118,568

85,815

Trade debts

44

119,838

73,866

Suppliers

440/4

119,838

73,866

Advances received on contracts in progress

46

188,562

162,608

Taxes, remuneration and social security

45

24,642

16,144

Taxes

450/3

11,066

5,112

Remuneration and social security

454/9

13,576

11,032

Amounts payable within one year

Other amounts payable

47/48

4,207

4,507

Accrued charges and deferred income

492/3

38,979

21,718

TOTAL LIABILITIES

10/49

3,863,417

3,716,083

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INCOME STATEMENT (IN THOUSANDS OF EUROS)

Operating income Turnover

Codes

31-12-2022

31-12-2021

70/74

666,585

583,273

70

630,918

594,814

71

28,287

-17,955

Increase or decrease in stocks of finished goods, work and contracts in progress Other operating income Operating charges Raw materials, consumables and goods for resale

74

7,379

6,414

60/64

597,338

512,764

60

161,579

115,727

600/8

161,579

115,727

Services and other goods

61

133,000

104,331

Remuneration, social security costs and pensions

62

97,810

89,963

630

197,385

193,708 107

Purchases

Depreciation and other amounts written off formation expenses, intangible and tangible fixed assets Amounts written down stocks, contracts in progress and trade debtors appropriations (write-backs)

631/4

-380

Provisions for risks and charges - appropriations (uses and write-backs)

635/7

1,290

233

Other operating charges

640/8

6,654

8,695

Operating profit

9901

69,247

70,509

Financial income

75

17,036

36,638

Income from financial fixed assets

750

0

33

Income from current assets

751

17,021

36,602

Other financial income Financial charges Debt charges Other financial charges Profit on ordinary activities before taxes Extraordinary income Non-recurring financial income Extraordinary charges

34

752/9

14

3

65

78,192

96,987

650

59,126

58,891

652/9

19,065

38,095

9902

8,091

10,160

76

0

112

76

0

112

66

39

0

Non-recurring financial charges

66

39

0

Profit for the financial year before tax

9903

8,052

10,272

Income taxes

67/77

2,998

3,617

Taxes

670/3

2,998

3,617

Profit for the financial year

9904

5,054

6,655

PROFIT FOR THE FINANCIAL YEAR AVAILABLE FOR APPROPRIATION

9905

5,054

6,655

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STATUTORY AUDITOR’S REPORT Statutory auditor’s report to the general meeting of Aquafin NV for the year ended 31 December 2022.

The Financial Statements can be found via the Central Balance Sheet Office of the National Bank of Belgium.

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Main risks and uncertainties There are no substantial risks and uncertainties with regard to the financial year.

Main events during the financial year MOODY’S CONFIRMS CREDIT RATING Following its annual screening in October 2022, rating agency Moody’s confirmed the long-term rating of Aquafin as Aa3 – stable outlook. The short-term rating remains at P-1. Aquafin’s credit rating tracks the maximum rating of the Flemish Region in view of the strong connections.

REVOLVING CREDIT FACILITY RENEWED In November 2022, Aquafin renewed its revolving credit facility with a consortium of banks. Aquafin succeeded in both reducing the commitment fee and increasing the amount of credit available.

Aquafin now has a syndicated line of credit worth 235 million euros instead of the previous 100 million euros. This transaction is part of a general review of the credit lines that will continue to be rolled out in 2023.

INVESTORS APPROVE ADAPTED ALLOCATION AGREEMENT Parallel with the new cooperation agreement between the Flemish Region and Aquafin, the allocation agreement was also changed. This involved relaxing the approval mechanism for validating a change to the cooperation agreement from total unanimity for all provisions to a majority principle for most provisions and total unanimity only for a limited number of provisions that are crucial for the financiers. Thanks to good preparations and extensive dialogue, Aquafin retained the confidence of its financiers and they approved this change unanimously.

DBFMO CONTRACT FOR SLUDGE MONO-PROCESSOR ASSIGNED Aquafin is planning to build a sludge mono-processor at the Arcelor Mittal site in Ghent that will enable maximum recovery of energy and raw materials from the biomass. In 2022, Aquafin awarded the contract for the design, construction, financing and maintenance of the plant until 2046 to the BESIX/Indaver consortium. The mono-processor should be operational by 2026 and from then on, it will carry out the final processing of two thirds of the sludge from the treatment of domestic waste water in Flanders while Arcelor Mittal will use all the steam produced in its production process. The project fits in with Aquafin’s ambition to cease using fossil fuels by 2030 and evolve into a climate-neutral operation.

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Auditing of the company

Branch offices

In 2020, EY was appointed as statutory auditor by the General Meeting – based on nomination by the Board of Directors – for a period of three years, specifically for the 2020, 2021 and 2022 financial years.

There are no branch offices.

The fees paid to the statutory auditor for the statutory audit of the financial statements of the company amount to 47,000 euros (excluding VAT, excluding the usual charges) and are index-linked annually.

In 2022, the services of the statutory auditor were requested in connection with the audit of EMIR reporting – required by the FSMA. A fee of 5,000 euros (excluding VAT) was paid for these services.

The task of attesting the financial covenants in the credit documentation was also entrusted to EY, for a fee of 1,000 euros (excluding VAT).

A number of special tasks were also assigned to the statutory auditor or persons with whom he collaborates. The total fees for this amounted to 102,500 euros (excluding VAT).

Shareholder structure and cross-shareholdings Participatiemaatschappij Vlaanderen (PMV) holds all the Aquafin shares. There are no cross-shareholdings.

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Notes to the balance sheet TANGIBLE ASSETS The cumulative investment per category is shown below at book value:

IN THOUSANDS OF EUROS

TANGIBLE ASSETS

Supra-municipal infrastructure Water treatment infrastructure Projects not yet delivered, including land Flemish Environment Agency assets purchased Investments in head office and operations Hydronaut studies Asset Management Flanders Municipal infrastructure

As stipulated in the Management Agreement, Aquafin collects domestic waste water in Flanders in collectors and transports it to treatment plants where it is treated. Firstly, Aquafin develops the necessary supra-municipal infrastructure: collector sewers for waste water, pumping stations and waste water treatment plants.

Secondly, Aquafin carries out the projects assigned by the Flemish Region under the Local Pact with the municipalities. These local pact projects follow the same procedures as the supra-municipal projects.

The increase in tangible assets is due to a net growth of investments in the water treatment infrastructure, carried out on the instructions of the Flemish Region. Water treatment infrastructure includes the aforementioned collector sewers for waste water, pumping stations and waste water treatment plants. This relates to all investment projects already delivered from the first delivery in 1992 to the end of the last financial year. Aquafin delivered 208.2 million euros’ worth of new projects in 2022. This year, 171.6 million euros’ worth of depreciation was also recorded and 2 million euros were invested in land.

2022

2021

3,495,332 2,809,272 388,081 240,530 30,647 26,397 405 16,164 3,511,496

3,412,131 2,770,721 340,965 255,705 18,392 26,348 0 18,621 3,430,752

In 1994, under the Management Agreement, Aquafin acquired the right to use plants built in the period preceding Aquafin’s establishment and owned by the Flemish Environment Agency. In subsequent years, these plants were not only operated by Aquafin, but also extended and renovated. Since the management of the same assets by both Aquafin and the Flemish Environment Agency is inefficient, the Flemish Government decided to allow Aquafin to buy out the plants and associated land. These purchases took place from 2010 onwards and are recognised under tangible assets as Flemish Environment Agency assets purchased. In 2022, €15 million in depreciation was recorded on these assets. In addition, part of the sites of Sint-Niklaas and Antwerpen-Zuid WWTPs was sold, further reducing the fixed assets by €0.2 million.

Hydronaut studies are studies that are carried out in order to ensure the correct design of the related supra-municipal investment project and are consequently capitalised. These studies are also carried out in relation to the management of existing infrastructure. In 2022, €3.4 million were invested on the one hand and €3.3 million depreciated, on the other.

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Investments in head office and operations relate to investments in hardware, software, lab equipment, furniture, materials and equipment required for the operation of the main office and/or overarching operational activities, not intended for one specific plant. In September 2022, the new Campus was commissioned.

15.8 million euros were capitalised and 0.3 million euros depreciated in relation to buildings and equipment, bicycle parking and solar panels. The 15.8 million euros also includes a carryforward of 4.3 million euros which was recorded under assets under construction with regard to the Campus at the end of 2021.

In 2022, a further 2.4 million euros were invested in hardware and software, 1.9 million euros in materials and equipment, 0.4 million euros in furniture and 0.2 million euros in a new CNG truck. 1.3 million euros’ worth of furniture from the old head office which had already been fully written off was decommissioned and removed from fixed assets. The installation costs for leased buildings and historic renovation works at the old head office were also deactivated (1.9 million euros). Both the decommissioning and the deactivation have no financial impact since they have been fully written off. A further 0.7 million in depreciation was recorded.

In the context of the role of Asset Manager of Flanders, Aquafin’s task package was expanded with the takeover of the overflow measurement matrix from VMM among other things. To this end, a number of overflow measurement devices were purchased in 2022 worth 0.4 million euros, of which 16,000 euros were depreciated.

Projects not yet delivered, including land comprises all costs incurred for supra-municipal projects in progress. It covers projects in the design phase, contracted projects or projects already awarded where the costs incurred mostly relate to accounting category 27 – assets under construction and advance payments – but also partly under accounting category 22 – land and buildings – for the land element. Assets under construction are not depreciated.

Projects not yet delivered in category 27 increased by 14% in 2022 to 372 million euros. There was an increase of 10% in calls for tenders for development projects. There was a structural increase of 39% in the asset management budget. These increases are partly in line with the obsolescence of assets and partly due to price increases. In 2022, 4 million worth of energy fund projects were delivered and 3.3 million euros’ worth were added to assets under construction.

As well as supra-municipal infrastructure, a small part of Aquafin’s assets is made up of municipal infrastructure. Under the contracts with the municipalities, Aquafin may assume responsibility for socalled transport services. Under these contracts, Aquafin provides the necessary investment and the company offers the municipality or intermunicipal cooperative society the opportunity to transport waste water via these sewers for the duration of the contract (15 years), after which the assets will be transferred to the municipality or intermunicipal cooperative society. The decrease in 2022 is due to 2.5 million euros of depreciation recorded on municipal infrastructure. No new contracts were started in 2022.

IN THOUSANDS OF EUROS

PROJECTS NOT YET DELIVERED

Projects not yet delivered in category 27 Development and other projects Asset Management Energy fund Projects not yet delivered in category 22

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Annual Report BE GAAP 2022

2022

2021

372,169 311,686 56,557 3,926 15,912 388,081

327,822 282,677 40,558 4,587 13,143 340,965

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FINANCIAL FIXED ASSETS

STOCKS AND CONTRACTS IN PROGRESS

The financial fixed assets mainly consist of Aquafin’s majority stake in Aquaplus. The valuation in Aquafin’s books is adjusted annually based on Aquaplus’ equity. In 2022, the method of recognising profits or losses on projects changed from percentage of completion to completed contract. According to the old valuation method, Aquaplus had closed with a positive result of 122,000 euros but according to the new valuation method, Aquaplus finished with a negative result of 39 thousand euros. The reason for this is that the historical margin of the projects not yet delivered was reversed and will only be recognised as a profit or loss at the time of delivery. As a result, an additional loss of 39 thousand euros on the participating interest was recognised in Aquafin.

Apart from the tasks on behalf of the Flemish Region (which make up 85% of our activities) assigned via the Management Agreement, towns, cities and municipalities can outsource sewerage tasks to Aquafin, which has developed a specific offer for this purpose.

They can either enter into a concession arrangement directly with Aquafin or use Aquafin’s services indirectly via one of the partnerships which Aquafin has formed with water-link or De Watergroep.

On 1 October 2022, Aquafin purchased 4 shares from Luc Bossyns at a value of 26 euros per share. With the purchase of these 4 shares, Aquafin now holds all the shares in Aquaplus.

The increase in contracts in progress is due to the relatively constant refilling of the order book and the sharp increase in contracting costs due to the war in Ukraine among other things.

Works in this context which have been started but not yet completed are included under contracts in progress. In 2022, 115 projects were delivered worth 73.8 million euros.

The shares held by Aquafin in Synductis and Riopact are included in Other participating interests.

In 2022, a guarantee of 14 thousand euros was deposited with the deposit and consignment office in connection with Call Groene Stroom. Aquafin receives a subsidy for the support of medium-sized installations based on solar energy and small and medium-sized wind turbines. In return, Aquafin must deposit a guarantee in the amount of 7.5% of the support granted and at least 2,000 euros.

IN THOUSANDS OF EUROS

FINANCIAL FIXED ASSETS

2022

2021

Participating interest in Aquaplus Other participating interests Guarantees

3,443 82 17 3,542

3,482 82 3 3,567

STOCKS AND CONTRACTS IN PROGRESS

2022

2021

Rio-link (partnership with water-link) Riopact (partnership with De Watergroep) Direct contracts with municipalities

70,445 69,902 55,297 195,644

69,157 53,720 44,479 167,356

IN THOUSANDS OF EUROS

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AMOUNTS RECEIVABLE WITHIN ONE YEAR Amounts receivable within one year comprise trade debtors and other receivables. The balance for Trade debtors is determined by the timing of invoicing of our customers and the time of payment by our customers. As at the end of 2022, trade receivables increased from 42.1 million euros to 94.2 million euros, a combination of an increase of 62.1 million euros in outstanding receivables and a decrease of 10.8 million for invoices to be issued. These 11 million euros related to the final settlement from 2021 which was estimated at the time and were primarily due to the high energy costs that will be settled at actual cost. For 2022, Aquafin will create a credit note for the water companies.

The increase of 62.1 million euros (including VAT) for customers is mainly due to the extra rebilling of operating costs relating to 2022 for 54.7 million euros and the invoicing of the settlement of operating expenses relating to 2021 for 12.6 million euros. Both rebilling items were invoiced to the water companies in December and consequently not yet settled as at 31 December 2022.

In 2022, the provision for Possibly rejected operating costs was reclassified from Amounts receivable within 1 year to Provisions for liabilities and charges (363 thousand euros). This relates to the limited share of costs where there is a possibility of them not being eligible for reimbursement according to the principles of the management agreement.

The main reason for this is recoverable VAT of 4.2 million euros in 2021, where the VAT payable in 2022 is 5 million euros, due to the extra sales invoicing in December of operating costs and investment expenditure to water companies to the value of 67.3 million euros including VAT.

SHORT-TERM INVESTMENTS AND CASH In view of the low interest rates during 2022, cash was mainly kept in the savings account. The amount of cash was kept as low as possible to avoid incurring negative interest.

DEFERRED CHARGES AND ACCRUED INCOME The item purchases of Flemish Environment Agency assets with equity covers the component of the receivable arising from assets acquired by Aquafin from the Flemish Environment Agency since 2010 (for more information on this, see under Tangible assets – purchases of Flemish Environment Agency assets). Aquafin finances these purchases partially with external funds and partially with equity. Purchases using equity are not invoiced to the water companies, but will be invoiced all at once should the Management Agreement –- entered into on a rolling basis for 20 years – come to an end. The resulting receivable is increased annually by 1/20th of the acquisition price of the assets and recorded under accrued income.

Other amounts receivable comprises recoverable VAT, recoverable taxes and reclassification of social debt. These decreased from 8.5 million euros to 3.7 million euros.

IN THOUSANDS OF EUROS

DEFERRED CHARGES AND ACCRUED INCOME

Purchases of Flemish Environment Agency assets with equity Accrued interest - management of interest rate risk Other costs to be transferred Municipal projects Negative interest charges to be transferred Accrued revenue

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Annual Report BE GAAP 2022

2022

2021

36,794 3,586 1,917 1,493 770 676 45,236

33,677 10,758 2,250 1,643 101 808 49,237

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Aquafin uses interest rate hedging instruments to hedge the interest rate risk on certain loans, in line with the policy approved by the Board of Directors. In order to enable the results of the hedging to be measured, a benchmark is set for each hedging strategy. Where the interest charges for the benchmark are lower than the total of the interest charges for the underlying loan and the fixing of the associated hedging instruments, this difference is recorded as a financial charge. Since the interest rate is fixed six months before the payment date, so that the deviation from the benchmark is also known and recorded, pro-rata entry takes place at the time of arrangement under accrued interest - management of interest rate risk. The financial charges, which represent the difference between the interest charges for the loan and the benchmark and are recorded in the result as an interest correction for the management of the interest rate risk, are also recorded on a pro rata basis under deferred charges and accrued income.

Other costs to be transferred are costs incurred by Aquafin in 2022 but relating fully or partially to 2023. These mainly relate to maintenance contracts, licence fees or prepaid rent or interest.

Under the contracts with the municipalities, Aquafin assumes responsibility for transport services (cf. Tangible assets – municipal activities) for which a payment system can be designed at the request of the municipalities. The municipal projects item reflects the positive difference between depreciation on municipal projects and the repayment part of the underlying loans invoiced to the municipalities. This balances out charges and income in the interim.

Accrued revenue includes the 2022 profit under a partnership for municipal sewerage activities between Aquafin and De Watergroep called Riopact. In this, both parties cede 50% of their result to each other. Aquafin ended the financial year with a profit of 1.3 million euros and De Watergroep achieved a result of 52 thousand euros.

Profit distribution is processed as a credit note for 1.3 million euros to be prepared and payment of 676 thousand euros to be received.

EQUITY Aquafin’s capital currently stands at 298 million euros. The capital consists of 1,001,613 shares, which are unlisted, and is fully paid-up.

Following the revaluation of Dijkstraat and Ingberthoeveweg, a revaluation surplus of 1.8 million euros was recorded in 2021.

The reserves consist of the legal reserve and the available reserves.

The legal reserve is topped-up annually until it reaches a level equal to 10% of the capital. In accordance with Article 7:211 of the Companies Code, 5% of the after-tax profit is added to the reserve annually.

If the General Meeting accepts the proposed appropriation of profits for the 2022 financial year, the legal reserve will be increased by 253 thousand euros to 16,100 thousand euros and the remaining profit of 595 thousand euros added to profit carried forward.

Negative interest charges to be transferred relate to the interest applying to issues of commercial paper. Due to Aquafin’s good rating and the negative short-term interest rates, these issues are placed at negative interest rates. As this is still debt with associated financing costs rather than an investment with associated financing revenues, these interest charges are deducted from the financing costs.

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INVESTMENT GRANTS In 1992, Aquafin received a notice from the Belgian Accounting Standards Board granting permission to interpret the investment grants item differently from the usual interpretation. This item reflects the difference between the repayment and depreciation periods for delivered supra-municipal projects. Since the rate of repayment for these projects does not always correspond exactly to the rate of depreciation, a mismatch arises between charges and related income.

The land acquired by Aquafin is not depreciated and is repaid immediately.

We note that all items have increased apart from construction engineering. Up to 2008, construction engineering was invoiced over 15 years and depreciated at 33 years. As of 2009, the construction engineering category is invoiced over 30 years and the repayment term for the outstanding amounts adjusted, halving the annual invoice amount. This means that in time more and more projects will be invoiced in full and only depreciated so that the amount reduces.

The difference between the repayment and depreciation periods is broken down as follows:

PROVISIONS FOR LIABILITIES AND CHARGES The main changes in the provisions for liabilities and charges can be broken down into those for personnel-related costs, sludge buffers and possibly rejected operating costs.

In 2022, rejected operating costs were reclassified from Amounts receivable within 1 year to Provisions for liabilities and charges.

The provision for supra-municipal project costs (4,725 thousand euros) relates firstly to risks for works in progress and projects that cannot be delivered due to delayed/postponed execution of municipal projects because they would generate an insufficient return as yet (4,082 thousand euros). Secondly, provisions are made in relation to the deduction of project costs recorded after delivery, known as subsequent costs (643 thousand euros).

Possibly rejected operating costs are operating costs where there is a possibility of them not being reimbursed according to the management agreement. In 2022, an existing provision of 363 thousand euros relating to the financial years 2017 to 2019 was reclassified from Amounts receivable within 1 year to Provisions for liabilities and charges and an additional provision of 632 thousand euros was made.

IN THOUSANDS OF EUROS

DIFFERENCE BETWEEN THE REPAYMENT AND DEPRECIATION PERIODS

Construction engineering Land Flemish Environment Agency assets Electromechanics Other Easements

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Annual Report BE GAAP 2022

2022

2021

576,133 101,083 53,532 33,178 15,922 10,866 790,714

599,723 99,337 48,571 32,739 12,948 10,630 803,948

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IN THOUSANDS OF EUROS

PROVISIONS FOR LIABILITIES AND CHARGES

2022

2021

Supra-municipal project costs Possibly rejected operating costs 2017-2022 Other Legal disputes Sludge buffers Bridging pensions Insurance claims

4,725 995 831 286 233 126 0 7,196

4,725 0 567 232 110 272 0 5,906

Specifically 532 thousand euros relates to the payment for transport and processing costs due to the shutting down of the dryer from Leuven and the switching from gas to fuel oil in Houthalen within the gas shutdown plan initiated by Flanders.

Provision is made for legal disputes based on a reasonable estimate of the claim where it is probable that Aquafin may lose the case.

As at 31 December 2022, the provision for legal disputes amounted to 286 thousand euros for 66 disputes. In 2022, we recorded 15 new cases and 30 files could be closed.

As advised by the accounting standards, every year, provision is made for the processing costs of the sludge in the buffers. These are the provisions for sludge buffers.

Provision for bridging pensions has decreased by 146 thousand euros. This is partly because fewer employees qualify for this scheme due to stricter government regulations, and partly because the gap between SWT (bridging pension) and actual pension narrows each year for those who remain eligible for this.

AMOUNTS PAYABLE AFTER MORE THAN ONE YEAR, INCLUDING THE CURRENT PORTION An additional sum of 190 million euros was allocated in 2022 to finance our supra-municipal investment expenditure, whose repayment by the water companies is spread. The resulting allocation ratio, in which the remaining claims against the water companies are set against financial debt under the allocation agreement, stands at 1.19 (this must always be greater than one) at the end of the current financial year.

For our day-to-day business operations, Aquafin relies firstly on medium-term finance so as to limit interest rate movements, and secondly on short-term loans and commercial paper so as to be able to respond to fluctuations in work in progress for investment projects. The amount of these general-purpose bank borrowings decreased due to the repayment of 3 bullet loans totalling 45 million euros and a smaller repayment of 487 thousand euros as provided for in the repayment schedule.

At the request of the municipalities, a payment system can be designed with regard to our municipal activities. No new longterm finance was taken up in this respect in 2022. The reduction is due to repayments.

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IN THOUSANDS OF EUROS

AMOUNTS PAYABLE AFTER MORE THAN ONE YEAR

Bank borrowings – under allocation Bank borrowings - general purpose Long-term commercial paper Other loans Bank borrowings - municipal activities

2021

new loans

repayments

2022

1,787,423 399,967 70,000 329,967 20,314 2,207,704

190,000 0 0 0 0 190,000

-113,583 -45,487 -10,000 -35,487 -2,638 -161,708

1,863,840 354,480 60,000 294,480 17,676 2,235,996

2022

2021

IN THOUSANDS OF EUROS

FINANCIAL DEBTS PAYABLE WITHIN ONE YEAR

Commercial paper

110,000

69,000

Fixings - management of interest rate risk

4,863

14,810

Credit lines

3,705

2,005

118,568

85,815

FINANCIAL DEBTS PAYABLE WITHIN ONE YEAR The short-term financing was used primarily to fund work in progress before delivery. Within the commercial paper programme worth 500 million euros, of which 440 million euros are available for short-term finance, 110 million euros of this debt security were outstanding as at 31 December 2022. The outstanding balance depends on various factors and is only a snapshot. However, the increase can largely be attributed to the repayment of a tranche of 25 million euros of a bilateral loan of 100 million euros taken out at the end of 2021.

For the purpose of the management of the interest rate risk, fixing always takes place six months before the payment date.

During this period, the balance of debts and receivables resulting from these fixings is recorded as a short-term financial debt.

The decrease is due to the short-term interest rate that became positive again during the course of 2022. In swap contracts, Aquafin is the receiving party of this floating rate and the payer of the long-term interest rate. In a period of negative interest rates, Aquafin has to pay the negative floating leg too on account of certain modalities.

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Annual Report BE GAAP 2022

As at 31 December 2022, under the existing credit lines worth 485 million euros – including the syndicated loan – as at 31 December 2021, a straight loan for 3.7 million euros was in place to finance municipal work in progress.

TRADE DEBTS Invoices to be received includes estimates for goods and services already provided, the invoice for which has not been received or processed yet. The difference of 9.7 million euros between the two financial years is mainly due to the fact that the provision for certificates of practical completion received – for which no invoice was available yet – increased by 3.7 million and the provisions for electricity and gas and insurance increased by 1.5 million and 1 million euros, respectively due to increased energy prices.

There are also a number of other provisions for IT, telecoms, communication, security materials and HR. There is no significant change in supplier debts year on year.

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IN THOUSANDS OF EUROS

TRADE DEBTS

2022

2021

39,799 39,342 37,771 2,926 119,838

30,068 38,700 2,692 2,406 73,866

TAXES, REMUNERATION AND SOCIAL SECURITY

2022

2021

Regional, provincial and municipal taxes and levies.

VAT payable Remuneration and social security

6,005 5,061 13,576 24,642

5,112 0 11,032 16,144

Invoices to be received Supplier debts Credit notes to be prepared - water companies current financial year Other

IN THOUSANDS OF EUROS

The item credit notes to be prepared - water companies reflects the difference between the budget estimates for operating costs – estimates on which the advance invoices to the water companies are based – and Aquafin’s final invoice, based on services actually performed and settlement of the remuneration model for operating costs. In 2022, the final settlement of accounts for the 2021 remuneration model resulted in a further invoice for 11 million euros (see Trade debtors). The balance comprised a maximum permissible reserve set up by Aquafin to carry out the restructurings in the interest rate management programme.

The other item includes firstly a reclassification between assets and liabilities of customers with a credit balance and suppliers with a balance owing to Aquafin (1.5 million euros). Secondly, this includes a provision for credit notes to be prepared for the Flemish Region and De Watergroep among others regarding the settlement of profits within Riopact (1.4 million euros combined).

In this, both parties cede 50% of their result to each other. Aquafin ended the financial year with a profit of 1.3 million euros and De Watergroep achieved a result of 52 thousand euros. Profit distribution is processed as a credit note for 1.3 million euros to be prepared and payment of 676 thousand euros to be received (see also Accrued revenue).

ADVANCES RECEIVED ON CONTRACTS IN PROGRESS The services provided and invoiced by Aquafin for municipal customers which are not yet completed are included under the heading of advances received on contracts in progress and evolve along the same lines as contracts in progress.

TAXES, REMUNERATION AND SOCIAL SECURITY Outstanding liabilities with respect to taxes relate to payable corporate tax, VAT payable, regional, provincial and municipal taxes and levies.

The item Taxes, remuneration and social security increased by 16.1 million euros to 24.6 million euros. The main reason for this is the VAT payable: in 2022, the balance of the VAT payable was 5.1 million euros due to the extra invoicing, in December, of operating costs and investment expenditure to water companies to the value of 67.3 million euros including VAT. In 2021, there was still recoverable VAT of 4.2 million euros:

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In the context of the payment of holiday pay in 2023, acquired based on performances from 2022, an additional provision was made as a result of the high wage index and growth in 2023. That is because holiday pay was accrued in 2022 and will be paid in 2023.

As a result, the provision for holiday pay increased by 2.2 million euros compared to 2021.

The increase in the provision for group insurance is in line with the growth of the workforce.

OTHER AMOUNTS PAYABLE The dividends payable are recognised here. If the General Meeting approves the proposed appropriation of profits, a gross dividend of 4,207 thousand euros will be paid to PMV on 18 April 2023.

ACCRUED CHARGES AND DEFERRED INCOME Other accrued charges include 26.9 million euros of revenue to be carried forward. Since 2021, this item also includes budgets for Flanders already received but not yet allocated for the roll-out of the digitalisation programme Digital 4Us and for performing the role of Asset Manager for Flanders.

In 2022, these were cumulated to give 23.2 million euros and 2.8 million euros respectively. This income will be recorded as turnover in proportion to the related costs. The other elements are shown in the table below.

In addition, the other accrued charges item includes several bank charges such as the commitment fee payable and negative interest CP receivable which together amount to 28 thousand euros.

Accrued interest on loans includes interest on both short and longterm finance which is allocated to the relevant financial year on a pro rata basis at the time of arrangement. These increased significantly due to a rise in interest rates.

Transactions relating to the hedging of interest rate risks for the future period are also recorded under accrued charges and deferred income. Aquafin uses hedging instruments in particular to hedge the interest rate risk on certain loans. In order to enable the results of the hedging to be measured, a benchmark is set for each hedging strategy. If the interest charges for the benchmark are higher than the total of the interest charges for the underlying loan and the fixing of the associated hedging instruments, this difference is recorded in a revenue account.

IN THOUSANDS OF EUROS

ACCRUED CHARGES AND DEFERRED INCOME

Other accrued charges Accrued interest on loans Accrued interest - management of interest rate risk

2022

2021

26,942 11,261 776 38,979

13,976 6,663 1,079 21,718

2022

2021

23,155 2,770 909 75 28 5 26,942

11,949 1,523 323 53 69 59 13,976

IN THOUSANDS OF EUROS

Revenue to be carried forward Digital4Us Asset Management Vlaanderen Gesubsidieerde Onderzoeksprojecten IWTPs Bank charges Other

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Annual Report BE GAAP 2022

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Since the interest rate is fixed six months before the payment date, so that the deviation from the benchmark is known and recorded, pro-rata entry takes place at the time of arrangement via accrued interest - management of interest rate risk. Because the short-term interest rate is no longer negative, Aquafin is again the receiving party of the floating legs of the swaps, benefiting performances compared with the benchmark.

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Notes to the income statement The Management Agreement with the Flemish Region which contains provisions regarding Aquafin’s supra-municipal activities stipulates that Aquafin’s remuneration for supra-municipal activities is based on the rebilling of all reasonable costs, plus remuneration for the shareholder(s) based on the contribution to the company’s equity. This means that charges and income for these activities broadly mirror one another.

Payments for operating costs concern invoicing for the budget set by the performance budget formula. The change in operating costs is due to the rise in the output parameters and indices for the remuneration model. This budget has increased due to an increase in activities: including the future delivery volume, the increase in assets and the pollution load treated. Rising energy prices are another important factor here.

The reasonableness of the operating costs – excluding financing costs and excluding fluctuations in energy prices – is determined based on the so-called performance budget formula where Aquafin’s budget for operating costs is dependent on a number of parameters including assets and the pollution load treated and specific indices.

The staggered invoicing of investment costs concern repayment for the sewage treatment infrastructure delivered. The repayment terms for this infrastructure take the expected life of the underlying assets into account.

The settlement of interest charges relates to the rebilling of the interest charges which are due to Aquafin’s prefinancing role.

The difference between the result according to the performance budget formula on the one hand and the actual charges recorded for this financial year on the other has a positive impact of 1.1 million euros on the accounting result as at 31 December 2022.

Turnover also includes the rebilling of charges made for the clean-up of cross-regional waste water by the Brussels Region, via Hydria.

TURNOVER

The remuneration for equity – the equity remuneration – is designed, with due regard for the risks taken, to ensure a minimum acceptable return for the shareholder(s). In 2022, the Flemish Region reduced the rate of return expected on equity capital from 3.5% to 1.95%.

Aquafin realises the majority of its turnover from supra-municipal activities under the Management Agreement with the Flemish Region. Within this remuneration, a distinction can be made between payments relating to construction activities (investment costs) and payments relating to services (operating costs), which, in view of the constantly growing activities, evolve along the same lines.

Services rendered by Aquafin to the towns, cities and municipalities not covered by the Management Agreement resulted in a turnover of almost 95,8 million euros for 2022. In 2021, turnover was higher due to the optimisation of the delivery process.

IN THOUSANDS OF EUROS

TURNOVER

Supra-municipal activities Remuneration of operating costs Staggered invoicing of investment costs Settlement of interest charges Settlement of Hydria contract Remuneration - equity Municipal activities Netting of invoicing of investment costs after depreciation Other

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Annual Report BE GAAP 2022

2022

2021

520,613 266,986 173,732 61,156 9,444 9,295 95,762 13,476 1,067 630,918

468,588 211,720 171,936 60,349 9,670 14,913 114,247 10,986 993 594,814

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Due to a timing difference between the depreciation and rebilling of supra-municipal investments – as explained under the investment grants item – a correction is made to the result in order to bring the depreciation into line with the related turnover.

CHANGES IN CONTRACTS IN PROGRESS This item reflects the change in the item stocks and contracts in progress on the asset side of the balance sheet, current period versus previous period.

Under the completed contract valuation method, a project is not recognised on the income statement until the project is fully completed. This heading reflects the growth of purchases linked to commercial projects not yet delivered. The increase is due to the relatively constant refilling of the order book and the sharp increase in contracting costs due to the war in Ukraine among other things.

OTHER OPERATING INCOME

In 2022, similarly to previous years, an exemption was obtained from income tax deducted at source concerning research and development activities for the 2021 financial year. 2.3 million euros were recovered which is in line with the amount recovered in the 2021 financial year.

Other operating income also includes primarily recovery of costs that cannot be treated as part of normal sales. The main increases relate to activities within structural maintenance (392 thousand euros), subsidies for solar panels (101 thousand euros), dewatering (148 thousand euros) and green energy certificates (130 thousand euros).

RAW MATERIALS, CONSUMABLES AND GOODS FOR RESALE The main items under this heading are shown below.

The increase of almost 40% compared with 2021 is mainly the result of high electricity and gas prices in 2022.

Other operating income rose by 965 thousand euros year on year.

IN THOUSANDS OF EUROS

STOCKS AND CONTRACTS IN PROGRESS

Capitalised other costs Capitalised personnel costs

Balance Sheet

Impact on result

2022

2021

change

167,005 28,639 195,644

144,103 23,253 167,356

22,902 5,386 28,287

2022

2021

85,030 27,909 14,016 12,703 12,477 9,444 161,579

42,249 27,693 10,963 12,378 12,774 9,670 115,727

IN THOUSANDS OF EUROS

RAW MATERIALS, CONSUMABLES AND GOODS FOR RESALE

Energy costs for operating activities Costs of removal of sludge, sand and screenings Chemicals for water and sludge treatment Mechanical, electrical and architectural maintenance Other Operation by the Brussels Region (Hydria)

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Compared with 2021, energy costs increased by 42.8 million euros – which means that they almost doubled – in spite of the 6% reduction in electricity consumption at high-voltage WWTPs (75% of the total consumption) compared with 2021.

Although this increase is very high, it has a limited impact on the result. This is because these costs are neutralised via contracts in progress on the balance sheet and are not recognised on the income statement until the project or service is fully completed.

After an exceptional year with heavy rainfall in 2021, the amount of sludge production returned to normal again and dropped slightly from 101,000 tonnes of dry matter in 2021 to 94,300 tonnes of dry matter in 2022. The relative increase in the cost per tonne of dry matter is mainly due to the high price increases and shortage of raw materials, and the shutdown of the dryers in the fourth quarter in order to reduce gas consumption and thus contribute to the minimum availability of gas for households in Flanders.

In addition, there was then another downturn in sludge production in the summer period so extreme that we had to shut down 2 dryers.

The remaining increase (+3.6 million euros or an increase of 6%) has been recorded within the supra-municipal activities and relates, among other things, to fees for legal support provided during the process towards a new cooperation agreement with Flanders and laboratory and research costs because the contract for sampling and analyses has been carried out by Aquafin instead of VMM since 2022. In addition, there were increases within vehicle leasing costs and IT support.

We also see a strong increase in the case of Chemicals due to the extreme price increases on the market.

SERVICES AND OTHER GOODS 87% of the increase under this heading is due to the increase in costs relating to municipal activities such as consultancy and contracting costs which saw an increase compared with 2021 of 25 million euros or 40%. This increase is due to the expansion of the portfolio in conjunction with price increases on the market.

REMUNERATION, SOCIAL SECURITY COSTS AND PENSIONS The increase in personnel costs follows the increase in the workforce from 1,094 FTEs to 1,110 FTEs. This increase is in line with the growth of the infrastructure operated and developed by Aquafin, at both municipal and supra-municipal level.

Holiday pay was accrued in 2022 and will be paid in 2023. In view of the high wage index, an additional provision for holiday pay of 1.6 million euros was made in 2023. This was included under Salaries and direct social benefits.

IN THOUSANDS OF EUROS

REMUNERATION, SOCIAL SECURITY COSTS AND PENSIONS

Salaries and direct social benefits Employer’s social insurance contributions Employer's premiums for non-statutory insurance Other personnel costs

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Annual Report BE GAAP 2022

2022

2021

70,786 18,662 6,303 2,059 97,810

64,919 17,468 5,612 1,964 89,963

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IN THOUSANDS OF EUROS

DEPRECIATION AND OTHER AMOUNTS WRITTEN OFF ON FORMATION EXPENSES, INTANGIBLE AND TANGIBLE FIXED ASSETS

Plant, machinery & equipment Buildings Furniture and vehicles Other

DEPRECIATION AND OTHER AMOUNTS WRITTEN OFF ON FORMATION EXPENSES, INTANGIBLE AND TANGIBLE FIXED ASSETS

2022

2021

195,787 1,025 550 23 197,385

191,248 1,808 585 67 193,708

AMOUNTS WRITTEN DOWN ON STOCKS, CONTRACTS IN PROGRESS AND TRADE DEBTORS – PROVISIONS FOR LIABILITIES AND CHARGES

Depreciation can be subdivided into the four headings above.

Given the steady expansion of Aquafin’s assets – the value of Aquafin’s assets continues to increase year on year – the depreciation on Plant, machinery & equipment also increased.

By contrast, the depreciation on buildings decreased in 2022, mainly due to an exceptional depreciation in 2021 of the head office in the context of its renovation, to the value of 0.7 million euros.

The table below shows the connection with changes to the related balance sheet accounts. The main changes are explained above in the notes to the balance sheet items.

In 2022, the provision for Receivables Management Agreement was transferred to Provisions for liabilities and charges (363 thousand euros). In addition, a number of balance sheet positions were reversed without any impact on the result since full provision had already been made for the outstanding receivables in the past.

Provisions for liabilities and charges have already been discussed in relation to the balance sheet positions concerned.

IN THOUSANDS OF EUROS

AMOUNTS WRITTEN DOWN ON STOCKS, CONTRACTS IN PROGRESS AND TRADE DEBTORS

Receivables - Management Agreement Receivables - municipal activities Receivables - industry

Balance Sheet 2022 2021

Impact on result change

0 2 37 39

374 8 37 418

-374 -6 0 -380

PROVISIONS FOR LIABILITIES AND CHARGES

2022

2021

change

Supra-municipal project costs Possibly rejected operating costs Severance payments Sludge buffers Legal disputes Bridging pensions Insurance claims

4,725 995 831 233 286 126 0 7,196

4,725 0 567 110 232 272 0 5,906

0 995 264 123 53 -146 0 1,290

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OTHER OPERATING CHARGES

FINANCIAL CHARGES AND INCOME

This heading mainly covers direct taxation and taxes levied on Aquafin’s installations. This mainly comprises property tax and regional, provincial, municipal and environmental taxes which together amount to 5.0 million euros.

This heading covers interest charges on short- and long-term financing, charges and income relating to active interest rate management and the commitment fee for Aquafin’s credit lines.

In addition, this item contains the cover for the residual balances relating to invoices to be prepared for operating costs for the financial years 2018-2021 (0.8 million euros) and energy fund costs not accepted for 2021 and 2022 (0.3 million euros).

In 2021, the deficit on the performance budget was also included under Other operating charges which was no longer applicable in 2022.

Both the short- and the long-term interest rates have risen since the beginning of 2022 but through active management of the interest rate risk, Aquafin is able to keep its financing costs well under control.

The decrease in both income and costs is due to the lower amount of restructurings of hedges required which also had a lower market value than in 2021.

IN THOUSANDS OF EUROS

OTHER OPERATING CHARGES

2022

2021

Direct taxation and taxes Residual balances for invoices to be prepared for operating costs 2018-2021 Other Energy fund costs not accepted Deficit on the performance budget

5,034 800 551 269 0 6,654

5,122 0 431 286 2,856 8,695

2022

2021

16,966 56 14

36,601 1 36

-59,127 -16,867 -2,198 -61,156

-58,891 -36,364 -1,732 -60,349

IN THOUSANDS OF EUROS

FINANCIAL CHARGES AND INCOME

Financial income Positive interest rate management Commitment fee Other Financial charges Interest costs Negative interest rate management Other

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IN THOUSANDS OF EUROS

NON-RECURRING FINANCIAL INCOME AND CHARGES

2022

2021

Non-recurring financial income Non-recurring financial charges

0 -39 -39

112 0 112

NON-RECURRING FINANCIAL INCOME AND CHARGES This comprises the adjustment of the loss recorded for the participating interest in Aquaplus. The valuation in Aquafin’s books is adjusted annually based on Aquaplus’ equity. In 2022, the method of recognising profits or losses on projects changed from percentage or completion to completed contract. According to the old valuation method, Aquaplus had closed with a positive result of 122,000 euros which reflects the healthy financial position of this subsidiary but according to the new valuation method, Aquaplus finished with a negative result of 39 thousand euros.

The reason for this is that the historical margin of the projects not yet delivered was reversed and will only be recognised as a profit or loss at the time of delivery. As a result, an additional loss of 39 thousand euros on the participating interest was recognised in Aquafin.

INCOME TAXES Corporation tax on the result amounts to 3.0 million euros.

Specifically 4.1 million tax owed for the 2022 financial year and an adjustment of 1.1 million euros for the 2021 financial year.

Proposal to the General Meeting Taking into account the profit after taxes, the profit available for appropriation amounts to 5,054,305.39 euros: • • • •

transfer to the legal reserve: transfer to the other reserve: dividends: profit carried forward:

252,715.27 euros 0 euros 4,206,774.60 euros 594,815.52 euros

If the General Meeting approves the proposed appropriation of profits, a gross dividend of 4.2 euros per share will be paid to PMV on 18 April 2023.

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Extra information

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Annual Report BE GAAP 2022

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Hedge accounting In view of the level and the term of Aquafin’s long-term debt, in 2006, the Board of Directors agreed to manage the interest rate risk actively. The framework stipulates that the interest rate risk associated with borrowings may be hedged as follows: a) Long-term debt (initial maturity of more than 10 years) • a maximum of 10% of the long-term debt may have an unlimited floating rate; • a maximum of 35% of the long-term debt may be floating, but with interest costs being limited (via caps).

• a minimum of 65% of the long-term debt must have a fixed rate. b) Medium-term debt (initial maturity of 1-10 years) • a maximum of 50% may be hedged c) Short-term debt • not hedged d) Budgeted long-term debt • 50% may be hedged (maximum 5 years forward) Each hedging transaction is fully documented on arrangement and linked to a (budgeted) underlying loan.

The table below shows the distribution of the outstanding debt for long and medium-term loans based on the type of rate, hedged or otherwise.

IN THOUSANDS OF EUROS

DISTRIBUTION OF THE OUTSTANDING DEBT

2022

2021

Fixed rate Floating rate (hedged with caps and floors) Floating rate

2,075,579 69,167 91,250 2,235,996

1,918,121 108,750 180,833 2,207,704

The figures confirm the trend that had emerged which was not to leave interest floating for the long term in times of (extremely) low interest rates but rather to lock it in via a fixed-rate loan or a swap. The market conditions were not opportune for setting up collars without additional cap funding as a result of which more and more swaps or fixed-rate loans were taken out. The share in financing hedged with collars (caps and floors) also decreased further due to the redeeming character of the underlying loans on the one hand and the exercising of optional break clauses which were subsequently hedged again with a swap on the other hand.

The market value of the instruments used to hedge the interest rate risk amounted to +43 million euros at 31 December 2022, an increase of no less than 338 million euros compared with a year ago. This is mainly due to a rise in short- and long-term rates.

Cash flows relating to interest rate hedging instruments form part of the interest cost in accordance with the provisions of the Management Agreement.

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Pension liabilities

Cash flows

There are two types of pension plans within the company.

The cash flow table shows the cash flows for 2022 compared with 2021.

Employees joining before 1 January 2007 have a defined benefit plan. Employees joining after 1 January 2007 have a defined contribution plan.

These ‘life and death in service plans’ are managed by AG Insurance NV. They are underwritten in the form of a group insurance scheme managed for each individual member.

Every employee with a temporary or permanent contract is signed up for the ‘survival’ and ‘death’ cover immediately upon joining the company.

For the current population of employees, the upper age limit of the plan is 65 years (the first day of the month following the 65th birthday). If a member remains in the employer’s service after the specified end date, this is postponed for successive periods of one year.

All of the contributions are at the expense of the employer.

No problem of underfunding arises for the group insurance.

For both plans, the balance of the financing fund is considerably larger than the shortfall on the contract for active members and ‘sleepers’ (former employees who have left the amount of their supplementary pension in the plan).

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Annual Report BE GAAP 2022

The cash flow table shows significant changes in operating activities.

There is an increase in net outgoing operating and investment cash flow of 37.4 million euros. Payments to suppliers and Investments increased due to the acceleration initiated in order to enable the delivery of investment projects to be maximised in the next few years.

In 2022, long-term finance totalling 190.0 million euros was taken up (including refinancing). This is set against repayments amounting to 161.7 million euros. On balance this gives an increase in long-term finance of 28.3 million euros. Short-term debt increased by 32.8 million euros. This amount can be divided into 41.0 million euros more outstanding commercial paper, a higher volume of straight loans amounting to 1.7 million euros and 9.9 million euros less debt due to fixings of interest rate hedging contracts.

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IN THOUSANDS OF EUROS

CASH FLOW TABLE

31-12-2022

31-12-2021

-255,262 -278,128 -95,266 604,107 2,956 -21,593

-234,837 -206,905 -88,957 549,635 -3,135 15,801

-78,192 17,036 61,045 0 -4,507 21,250 16,632 -4,961 14,515 9,554

-96,954 36,605 45,169 0 -9,234 9,754 -14,660 1,141 13,374 14,515

OPERATING & INVESTING ACTIVITIES

Payments to suppliers Investments Payments to employees Revenue from customers Corporate tax paid Net operating & investment cash flow FINANCING ACTIVITIES

Interest paid Interest revenue New disbursements & repayment of debt Revenue from capital increase Dividends paid Other investment transactions (net) Net financing cash flow Net total cash flow Short-term investments and cash at the start of the period Short-term investments and cash at the end of the period

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Green Finance Framework report on 31/12/2022 In April 2020, Aquafin published a new Green Finance Framework. In this way, we offer investors structured information about the ecological impact of our projects. The Green Finance Framework is available to view at www.aquafin.be. The annual reporting can also be found on the website, but is also contained in this section of the annual report.

IN THOUSANDS OF EUROS

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ASSETS

31-12-2022

31-12-2021

21/28 Fixed assets 22/27 Property, Plant and Equipment 22 Land and buildings 23 Plant, machinery and equipment 23 VMM assets 23 Hydronaut 23 Invest. in HQ & Operations 23 WWTI - delivered 23 Municipal 23 Overflow monitoring network 24 Furniture and rolling stock 25 Leasing and other similar rights 26 Other tangible assets 27 Assets under construction and advance payments 28 Financial fixed assets 280/1 Affiliated enterprises 284/8 Other financial fixed assets 29/58 Current assets 3 Stocks and contracts in progress 37 Contracts in progress 40/41 Amounts receivable within one year 40 Trade debtors 41 Other amounts receivable 50/53 Short-term investments 50 Other investments 54/58 Cash 55 Cash 490/1 Accruals and deferrals 490/1 Accrued charges and deferred income Total green assets Total non-green assets Total assets

3,515,038 3,511,496 257,680 2,879,657 130,215 26,397 9,196 2,697,322 16,121 405 1,947 0 0

3,434,319 3,430,752 237,645 2,860,090 145,219 26,348 9,161 2,660,756 18,606 0 859 0 22

372,212 3,542 3,443 99 348,379 195,644 195,644 97,945 94,208 3,737 1 1 9,553 9,553 45,236 45,236 3,473,956 389,462 3,863,417

332,135 3,567 3,482 85 281,764 167,356 167,356 50,656 42,093 8,563 1 1 14,514 14,514 49,237 49,237 3,394,362 321,721 3,716,083

Annual Report BE GAAP 2022

Green Green Non-Green Non-Green Green Green Green Non-Green Non-Green Non-Green Green Niet-Groen Non-Green Non-Green Non-Green Non-Green Non-Green Non-Green Non-Green Non-Green Non-Green

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IN THOUSANDS OF EUROS

GREEN BUFFER 31/12/2022 389,462 776,250

3,863,417

3,473,956 2,697,706

Total assets

Excluded assets

Green assets

Existing green liabilities

Green buffer

IMPACT Metric

Explanation

Metric 1 Metric 2

Annual amount of waste water treated to appropriate standards (m³/year) Annual volume of sludge treated (dewatered, digested without biogas extraction) Annual amount of digested sludge with biogas recovery

Metric 3 Metric 4 Metric 5

Metric 6

31-12-2022

31-12-2021

693.3 million m³ 106,228 tonnes of dry matter 57, 603 tonnes of dry matter Percentage of Flemish households connected to a waste water treatment plant1 86.04% Energy: 5.1. Total yearly energy consumption - In MWh 204,701 MWh - In kWh / m³ of treated waste water 0.29 kWh/m³ 5.2. Total yearly production of renewable energy - Biogas used in sludge dryers 1,950,000 Nm³ - Production of green electricity from biogas 11,745 MWh - Production of green electricity from solar panels and wind turbines 8,394 MWh - Production of biomethane from biogas 3,547 MWh - Production of sludge pellets as a renewable energy source 30,851 tonnes Technical performance of the WWTPs 6.1 Effluent: removal of nitrogen (min. 75%) 84.83% 6.2 Effluent: removal of phosphorus (min. 75%) 85.86% 6.3 Percentage of WWTPs compliant with Flemish and European norms 99.38%

868.2 million m³ 114,046 tonnes of dry matter 55,023 tonnes of dry matter 86.04%

217,427 MWh 0.25 kWh/m³ 2,829,588 Nm³ 10,272 MWh 5,915 MWh 756 MWh 33,820 tonnes 81.22% 84.24% 96.28%

1 Source: VMM, figure from April 2022, no update available when the annual report was published.

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Corporate governance statement CORPORATE GOVERNANCE AT AQUAFIN

A

quafin’s Corporate Governance Charter defines the rules and principles based on which corporate governance is organised within the company. In line with the Belgian Corporate Governance Code originally published in 2004, the Board of Directors approved the first charter on 26 January 2006. Following the publication of the Belgian Corporate Governance Code in 2009 and general developments in the area of corporate governance, the charter has since been reviewed several times and adapted in line with the changes occurring, where necessary.

By resolution of the Extraordinary General Meeting of 8 December 2020, the company’s articles of association were brought into line with the requirements of the new Companies and Associations Code. The new Belgian Corporate Governance Code also came into force in 2020. The Board of Directors has revised the charter to bring it into line with the Belgian Corporate Governance Code 2020 and the new Companies and Associations Code. The Board of Directors approved this new charter on 22 January 2021.

The latest version of the charter is available at Corporate Governance Statement | Aquafin.

The latest composition of the Board of Directors can also be found on the website, as well as in the Belgian Official Journal.

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NOTES ON DEVIATIONS FROM THE CODE Aquafin applies the provisions of the Belgian Corporate Governance Code. The provisions of the code are deviated from in certain cases, according to the specific requirements and characteristics of the company. Further details of the provisions of the Code with which the company does not comply are given below.

• 5.6 The term of the mandate should not exceed four years Aquafin complies with the provisions of the articles of association, which stipulate that a mandate may be for a maximum of six years and is renewable.

• 7.6 Non-executive board members should receive part of their remuneration in the form of shares.

In view of Aquafin’s special situation in which all shares are held via Participatiemaatschappij Vlaanderen by the Flemish Region, this rule is not followed.

• 7.9 The Board of Directors should set a minimum threshold of shares to be held by members of the executive management.

In view of the exception in point 7.6, this rule does not apply.

• 8.7 The Board of Directors should debate whether it would be appropriate for the company to enter into a relationship agreement with the significant or controlling shareholders.

In view of the exception in point 7.6, this rule does not apply.

• 8.8 and 8.9 Institutional investors.

In view of the exception in point 7.6, this rule does not apply.

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KEY FEATURES OF THE COMPANY’S INTERNAL CONTROLS AND RISK MANAGEMENT SYSTEMS IN RELATION TO FINANCIAL REPORTING The Board of Directors is responsible for approving and evaluating the existing systems of internal control and risk management.

Internal control environment The Audit Committee plays a key role in the operation of the internal control system and in particular the financial reporting process. The tasks of the Audit Committee include: • overseeing the integrity of the financial information; • evaluating the systems for internal control and risk management set up to ensure that the main risks (including the risks relating to conformity with existing legislation and regulations) are suitably identified, managed, and reported; • monitoring the activities of internal audit and the effectiveness and performance of the audit function; • monitoring the statutory audit of the annual accounts, including follow-up of recommendations made by the statutory auditor.

• monitoring the accounting team responsible for recording income and expenses in the accounts and preparing the reports • monitoring the controlling team responsible for reviewing and declaring fluctuations (both timewise and with respect to the budget) • monitoring the Finance management team, together with the accounting team, responsible for the final review of the financial information and the preparation and presentation of the financial statements.

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Annual Report BE GAAP 2022

Risk management The management team is also aware of the importance of the good operation of the internal control system and risk management. Risk-related matters are a permanent item on the agenda and discussed at the weekly meetings.

A range of control measures are implemented in all departments as part of risk management. These control measures comprise policies, procedures, specified signing authorities, segregation of duties, built-in early warning indicators, management reporting, actual/budget comparison and so on.

New or amended legislation is noted and communicated. At the same time, the necessary steps are taken to comply with it.

Processes and procedures are updated if necessary.

Since 2015 the company has held ISO 55001 certification. Inherent in this standard is management based on risks and opportunities.

In this context, the risk matrix is an objective tool.

Critical performance indicators are defined, which are used as a measurement tool but also as a reporting system.

COMPOSITION AND FUNCTIONING OF THE MANAGEMENT BODIES AND COMMITTEES Board of Directors The company has adopted a single-tier structure, in which the company is governed by the Board of Directors. The Board of Directors is the company’s highest decision-making body and is authorised to perform all actions required or necessary to achieve the company’s objects, with the exception of those actions that are reserved for the General Meeting, by law or by the articles of association.

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Naam

Type of directorship/Independent/(Non-)executive

End of term of office

Alain Bernard Marleen Evenepoel Koen Helsen Renaat De Sutter Jozef Wittouck Dirk Lybaert Jochen Bultinck Katrien Desomer Katrijn Faket Nathalie Heremans Caroline Craenhals

Non-independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive Independent, non-executive

2024 2024 2024 2024 2024 2024 2024 2024 September 2022 2024 April 2023

• Composition The composition of the Board of Directors was changed in 2022. Katrijn Faket resigned as a director in the 3rd quarter.

The Board of Directors co-opted Caroline Craenhals as a director. Her directorship started on 25 November 2022.

Aquafin’s Board of Directors comprises ten members appointed by the General Meeting. All members are non-executive directors. Nine directors are independent based on the criteria of Article 7:87(1) of the new Companies and Associations Code and provision 3.5 of the Belgian Corporate Governance Code 2020. Consequently, the Board of Directors complies with provision 3.4 of the Corporate Governance Code 2020 which states that at least three members of the Board of Directors should be independent (please note that this does not refer to independence in the definition from the Administrative Decree but only in application of the Companies Code).

Until the end of June 2022, the Board of Directors was assisted by the corporate projects director, as a temporary replacement for the head of legal affairs, in the capacity of secretary of the company. During the second half of the year, this position was occupied by the new head of legal affairs.

• Functioning During 2022, the Board of Directors met six times. There were two meetings at which one director was absent and two meetings at which two directors were absent. This represents average attendance of 91%.

BOARD OF DIRECTORS - ATTENDANCE Number of Meetings

Jochen Bultinck Katrien Desomer Renaat De Sutter Katrijn Faket Koen Helsen Alain Bernard Dirk Lybaert Jozef Wittouck Marleen Evenepoel Nathalie Heremans

5 6 6 1 6 6 6 6 5 6

Percentage

84% 100% 100% 17% 100% 100% 100% 100% 84% 100%

As well as exercising the powers defined in the charter, the Board of Directors once again paid close attention to the subjects of safety and well-being during the last financial year.

During each meeting, the directors were informed of occupational accidents which had occurred in the period under review. Work continued towards setting up a long-term safety programme with the ultimate goal of zero occupational accidents.

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The various long-term, annual and permanent objectives were also reviewed in order to realise Aquafin’s vision within the context of the corporate values and the policy around corporate social responsibility.

The impact of the Flemish Coalition Agreement with the new coordinating role for Aquafin with respect to the sewer operators and municipalities was discussed further. It emerged from the negotiations around the new cooperation with the Flemish Environment Agency that the decree (the Water Code) needed to be amended. This took place in 2022. The text of the new cooperation agreement was finalised, approved and came into effect in January 2023.

The implementation of Aquafin’s long-term strategy for sludge treatment was also covered with plans for a full review of sales by 2026.

Some time ago, the Board of Directors approved a strategy focussing on recovery of raw materials and energy, which is also in keeping with the company’s energy policy: reducing the CO2 footprint through annual energy saving, phasing out and eventually ceasing the use of fossil fuels and producing (more) green energy. As part of the broader energy policy, the adaptation of the click strategy with regard to purchasing energy in a market under pressure was also followed by the Board of Directors.

Due to the prolonged drought of the previous years, the use of effluent was also focused on more. A number of parties showed that they were interested in using and upgrading effluent.

This would provide an alternative to the use of drinking water in each case.

The Board of Directors was also closely involved in the major strategic commercial projects relating to the reuse of effluent in industrial applications and the development of sewer thermal energy. In doing this, the Board of Directors set the course for further elaboration and realisation of these projects.

The Board of Directors was also kept up-to-date regarding investments for maintaining existing infrastructure. The growth, but above all the obsolescence of our assets, leads to an increasing budgetary requirement for repairs and replacements year by year. By 2030, we expect to need around double the current budget to keep the infrastructure working efficiently.

This evolution will be followed closely.

• Conflicts of interest 1 conflict of interest was reported in 2022.

Proximus, of which Mr Dirk Lybaert is a director, is one of the potential stakeholders in the dossier relating to the possibilities for the realisation of monitoring and data communications in sewers. Strictly speaking, since there is no question of a direct or indirect conflict of interest under property law (art. 7.96 of the Companies Code) at this stage, the rules on conflicts of interest do not apply. Nevertheless, Mr Dirk Lybaert considered it opportune to voluntarily abstain from taking part in the deliberations and/or voting and therefore left the meeting relating to this dossier.

Audit Committee • Composition The composition of the Audit Committee was changed in 2022.

Katrijn Faket resigned as a director in the 3rd quarter. The Board of Directors co-opted Caroline Craenhals as a director and member of the Audit Committee. Her directorship started on 25 November 2022. The committee has a balanced composition as a whole and possesses the necessary independence, competencies, knowledge and experience to perform its tasks effectively.

Chairman Jochen Bultinck Katrien Desomer Katrijn Faket (directorship until 16/09/2022) Koen Helsen Nathalie Heremans Caroline Craenhals (directorship until 18/04/2023)

• Functioning The main function of the Audit Committee is to assist the Board of Directors in the exercise of its mission of control, in the broadest sense. The tasks relate in particular to supervision of financial reporting, internal controls and risk management, the internal audit process and the external audit process.

The Audit Committee is the main link between the Board of Directors, the internal auditor and the statutory auditor.

The Chairman of the Audit Committee reports systematically on the activities of the Audit Committee at the next meeting of the Board of Directors. The annual report on the activities of the Audit Committee was presented to the Board of Directors.

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During the 2022 financial year, the Audit Committee also focused on the following matters in particular: • the financial reporting was discussed in depth at all meetings.

At the March and September meetings respectively, the 2021 financial statements and the 2022 interim results were discussed, in the presence of the independent auditor.

• preparation of the 2023 budget for presentation to the Board of Directors • evolution and results of management of interest rate risk, in particular the credit risk for Aquafin with regard to counterparties • the approval of the internal audit plan and monitoring of the KPIs relating to the functioning of internal audit and follow-up by the management of the recommendations made by internal audit • discussion of the management letter from the independent auditor and supervision of the policy for non-audit services • internal audit reports • the appointment of the auditor • the security of the ICT systems with regard to cybersecurity.

It also contributes to the objective and professional functioning of the process for appointing and re-appointing directors and the annual evaluation of the performance of the management team.

• Composition

Chairman

Marleen Evenepoel Renaat De Sutter Dirk Lybaert Jozef Wittouck

• Functioning The Appointments and Remuneration Committee met three times during the past financial year. These meetings were attended by all directors. This represents average attendance of 100%.

AUDIT COMMITTEE - ATTENDANCE

• Number of meetings and attendance record

Number of Meetings

The Audit Committee met four times in 2022. All directors took part in all meetings. This represents average attendance of 100%.

AUDIT COMMITTEE - ATTENDANCE Number of Meetings

Jochen Bultinck Katrien Desomer Katrijn Faket (directorship until 16/09/2022) Koen Helsen Nathalie Heremans

Renaat De Sutter Alain Bernard Dirk Lybaert Jozef Wittouck Marleen Evenepoel

3 3 3 3 3

Percentage

100% 100% 100% 100% 100%

Percentage

4 4 3

100% 100% 100%

4 4

100% 100%

The independent auditor, the CEO, the Finance & Procurement director and the internal audit manager attended all or part of the meetings.

Appointments and Remuneration Committee The main task of the Appointments and Remuneration Committee (ARC) is to assist the Board of Directors to define the outline of the Company’s remuneration policy.

During the meetings in the past financial year, the objectives of the Management Committee for 2021 were reviewed.

The committee then decided on the objectives for 2022. Besides the overall remuneration for 2022, the remuneration of the Management Committee was also discussed.

At the request of the ARC, the HR vision and strategy was explained. It is important for an organisation going through change (social, sector, corporate) to have a modern and supportive HR policy.

In response to the vacancy created on the Board of Directors, a procedure was started for the purpose of selecting a new director. This was completed during the ARC meeting on 25 November where advice was formulated for the Board of Directors.

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About Aquafin I Challenges and opportunities I Financial report I Extra information I Corporate Governance

KEY ELEMENTS OF THE EVALUATION PROCESS OF THE BOARD OF DIRECTORS, THE COMMITTEES AND THE INDIVIDUAL DIRECTORS The members of the Board of Directors evaluate the size, composition and functioning of this body on a regular basis, at least every three years. The current composition is evaluated in terms of the desired composition. The relationship and interaction with the management team are also reviewed.

The following elements are discussed during the evaluation process for the Audit Committee: internal regulations, composition and appointments, meetings, training of members and resources available for this, the integrity reporting procedure and relations with the Board of Directors. The Audit Committee evaluates its effectiveness and efficiency at least once every three years. As part of this evaluation, an individual questionnaire shall be issued to the members of the Audit Committee. The results of these questionnaires shall be discussed during a meeting of the Audit Committee and submitted to the Board of Directors.

The Appointments and Remuneration Committee evaluates its own effectiveness and efficiency at least once every three years.

For the purpose of this self-evaluation, an individual questionnaire is sent to each member of the committee. The results are discussed at a meeting of the committee and submitted to the Board of Directors.

The Appointments and Remuneration Committee also contributes to the objective and professional functioning of the process for appointing and re-appointing directors and the annual evaluation of the performance of the management team.

Managementteam • Composition Following the adaptation of the articles of association to bring them into line with the new Companies and Associations Code, the Board of Directors has established an executive body, the management team. The management team consists of the General Manager, who leads the management team, and all other directors of the Company at a given time.

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Annual Report BE GAAP 2022

The composition of the management team on 31/12/2022:

CEO Asset Management Finance & Procurement Project Management Business Development & Innovation Operations HR & Organisational Development Corporate projects

Jan Goossens Bart Van Eygen Glenn Van Olmen Danny Baeten Marjolein Weemaes Hans Bruynooghe Sabine Schellens Johan Maes (temporary position on an interim basis)

• Functioning The management team exercises the powers relating to day-to-day management, and all transferable powers except for those powers reserved for the Board of Directors according to the statutory provisions, the company’s articles of association and the internal regulations of the Board of Directors. The management team meets on a weekly basis.

DIVERSITY POLICY Aquafin aims for diversity in the Board of Directors and the management team. We interpret this more broadly than age, gender and cultural background, and also view diversity in terms of education, insights, experience and professional competencies.

Aquafin believes that diversity of perspectives within the management bodies contributes to the constructive puttingforward of views for discussion. It provides a broad range of perspectives, new ideas and critical considerations which are necessary to support the decision-making process effectively.

Aquafin also enters into dialogue with the outside world and external expert groups regarding a wide range of topics in order to gather broad insights.

The Board of Directors ensures that each appointment or reappointment enables a suitable balance of competencies, knowledge, experience and diversity to be maintained in the board and the committees. As far as gender diversity is concerned, the Board of Directors aims to ensure balanced participation in the Board of Directors. The Board of Directors currently consists of ten members, four of them women.

About Aquafin I Challenges and opportunities I Financial report I Extra information I Corporate Governance

REMUNERATION REPORT

• General

• Non-executive directors Aquafin applies the following remuneration model for directors: On the one hand, there is an annual flat fee for attending meetings of the Board of Directors. This flat fee stands at 6,500 euros for directors and 13,000 euros for the chairman.

Payment of the fee is conditional on attending at least two thirds of the total number of meetings, barring force majeure.

In addition, a fee is paid per meeting of the Audit Committee and the Appointments and Remuneration Committee amounting to 380 euros for the chairmen and 320 euros for the members of these committees.

Total remuneration 2022

Jochen Bultinck (C) Katrien Desomer Renaat De Sutter Katrijn Faket Koen Helsen Alain Bernard (C) Dirk Lybaert Jef Wittouck Marleen Evenepoel (C) Nathalie Heremans Geert Diericx TOTAL

8,020 7,780 7,460 4,524 7,780 13,960 7,460 7,460 7,640 7,780 0 79,864

Based on the advice of the Appointments and Remuneration Committee, the Board of Directors determines the remuneration policy for the executive management team. The aim of this policy is to attract, retain and motivate knowledgeable people.

The amount of the remuneration shall take into account the individual tasks and responsibilities of the members of the management team.

The performance of the management team is evaluated once a year in the presence of the General Manager. The appraisal of the General Manager takes place in his absence.

The Appointments and Remuneration Committee closely monitors the entire procedure, which is also approved by the Board of Directors. Individual and collective objectives are set each year, based on the regulations. A certain weighting is assigned to each objective within the evaluation in advance.

For 2022, the elements of the evaluation related to organisational, budgetary, economic and environmental aspects and/or results, among other factors. The overall performance of each member of the Managing Committee is also evaluated, in addition to the evaluation based on the objectives set.

The period during which this performance is evaluated extends from 1 January 2022 to 31 December 2022 inclusive.

In addition, a broad assessment was organised for each director by means of collaboration with Accord Group. This consisted of a 360° survey (digital questionnaire) and an interview with each director conducted by Accord. The results of these are discussed with the ARC and form the basis for a development plan for each director.

((C) = Chairman) • Management team The total gross remuneration paid for 2022 to the members of the management team amounts to: • basic salary: 1,439,710.84 euros • variable part: 272,249 euros • pension entitlements: 228,996.16 euros • other remuneration components: 171,011.75 euros The variable remuneration for the 2022 financial year will be added to the group insurance in 2023.

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AQUAFIN NV Colophon Publisher: Jan Goossens, Dijkstraat 8 - 2630 Aartselaar Graphic design: altera Photography: Silke Van Rooy, Nicolas Herbots, Frederik Beyens, Shutterstock and Aquafin NV The 2022 annual report is also available in Dutch.

Aquafin NV, Dijkstraat 8, B-2630 Aartselaar tel. 03 450 45 11 l e-mail: info@aquafin.be www.aquafin.be

To develop reliable waste water and stormwater management, tailored to our customers’ requirements, with respect for those around us and the environment.