6.22 Interest-bearing loans and other financing liabilities

The breakdown of interest-bearing loans and other financing liabilities is shown below:

x € 1,000

x € 1,000

6.22a Cumulative financing preference shares B

In 2022, Heijmans redeemed the class B cumulative financing preference shares, with an outstanding amount of €31 million as at 31 December 2021, in phases. On 14 April, Heijmans redeemed €15 million based on the redemption agreements linked to the appropriation of profit in the previous financial year. Based on Heijmans' strong balance sheet ratios and for the purposes of a more efficient allocation of capital, Heijmans then proceeded on 28 April (with the announcement of the first quarter figures) with the voluntary, penalty-free redemption of the remaining share premium reserve amounting to €16 million. The buy-back and cancellation of the class B financing cumulative preference shares required the approval of the General Meeting of Shareholders, which was granted on 12 July 2022. On 13 July 2022, the class B cumulative financing preference shares were fully redeemed via the payment of the nominal value and all remaining interest obligations were settled. The shares concerned were subsequently cancelled, terminating the financing structure.

6.22b Syndicated bank financing

The syndicated bank facility amounted to €117.5 million as at year-end 2022. This amount is fully committed up to and including 31 December 2025 and is made up of an overdraft facility of €20 million with ING and a revolving credit facility of €97.5 million granted equally by ABN AMRO, ING and Rabobank. The facility was renewed early in April 2021 and the following terms and conditions were changed:

• The total commitments have been lowered slightly from €121.4 million to €117.5 million, with €20 million of this in the form of an overdraft facility;

• The term has been extended to 31 December 2025, subject to an extension option to the end of 2026;

• The interest rate margin has been lowered and from now on will be linked to the outcome of the leverage ratio. This was previously linked to the outcome of the average leverage ratio, which is no longer applicable. The facility is subject to a margin grid of 170 – 270 basis points. If the leverage ratio is less than 0.5 (as was the case throughout 2022), the lowest step in the grid will apply. Consequently, a reduction in margin of 225 basis points to 170 basis points has been created. It should be noted that as long as Heijmans does not draw on the facility, it will only pay a commitment fee;

• The margin grid is linked to a bonus/malus system of plus or minus five basis points on the basis of four sustainability criteria. In effect, Heijmans is raising its sustainability ambitions by committing to improvements in terms of reducing (CO2) emissions, the number of accidents (drop in IF rate), the average CO2 emissions of the homes it delivers, and increasing the share of electric cars in its total fleet; Three of the four criteria had been achieved by the end of 2022, meaning that the maximum malus of five basis points was obtained and the applicable margin was set at 165 basis points at the start of 2023. The target that was not achieved in 2022 was the CO2 reduction of Heijmans as a whole;

• With respect to machinery/equipment, intellectual property rights and brand names, the established security will be released, which will improve Heijmans’ operational flexibility. The other security, including the pledge of receivables, the 100%-owned bank accounts and several existing mortgages on land holdings will remain in place in favour of the financiers.

Established securities on land holdings

For several existing land holdings with a carrying amount of €23.9 million at year-end 2022 these securities also remain in place in favour of the financiers.

6.22c Bank covenants related to the syndicated facility

The syndicated facility is subject to financial covenants which have been amended as shown in the table below. If these financial covenants are not met, the facility is in default. The financial covenants will from now on be measured on the basis of the reported figures, taking into account IFRS 15 and IFRS 16, to improve the alignment of the covenants with the reported figures. The covenants will still be adjusted for IFRS 11, which means that Heijmans will not use the equity method for joint ventures but will instead apply proportionate recognition.

The solvency ratio is measured at the end of each year and 21% is required. This is the solvency ratio reported in the financial statements using capital base, which comprises equity plus the cumulative financing preference shares B. An interest cover ratio also applies, calculated at the end of each quarter and a minimum value of 5 applies. In addition, a leverage ratio is also calculated each quarter and it must not exceed 3. The interest cover ratio is calculated as EBITDA divided by net interest expense. The leverage ratio is obtained by dividing net debt by EBITDA (earnings before interest, tax, depreciation and amortisation). The definitions of these items include several adjustments to the reported figures, as agreed with the bank consortium in the credit agreement. The main adjustments compared with the net debt for accounting purposes are an increase in respect of the net debt from joint ventures and a decrease in respect of the outstanding amount of the cumulative financing preference shares B and certain specific project financing arrangements where there is no recourse against Heijmans. The main adjustments compared with the accounting EBITDA concern the capitalised interest, results relating to business units that have been sold off, fair value adjustments, restructuring costs and EBITDA results from joint ventures. The main adjustments to the reported net interest expense concern the exclusion of interest expense on non-recourse project financing and the coupon on cumulative financing preference shares B. Heijmans operated within the agreed covenants throughout the year.

Satisfying the covenants is actively monitored within Heijmans. Based on the 2023 business plan and its solid financial starting position at year-end 2022, the Group expects to be able to continue operating comfortably within the covenants in the year ahead, the key parameters here being the development in EBITDA and net debt. Changes in the net debt position are a function of fluctuations in working capital, behind which lie seasonal effects and fluctuations due to specific projects. The working capital requirement is generally higher during the course of the year than at year-end, and this can lead to an increase in net debt by as much as €25-75 million. The cash position and, if necessary, the syndicated loan, which was not drawn on at all in 2022, are available to fund fluctuations in working capital.

6.22d Project financing

Project financing arrangements have been entered into in connection with specific real estate and other projects. This item also includes a liability to a joint venture producing asphalt. The project financing repayment schedules are usually related to the progress on projects. Project financing generally expires no later than the date of completion and/or sale of the projects. Recourse is limited to project assets only, including future positive cash flows from these projects, as well as the contracts and mortgage collateral related to the project / project company in most cases. Heijmans N.V. has not guaranteed repayment of principal and/or payment of interest for this project financing in 2022 or 2021.

6.22e Other liabilities

The other liabilities concern financing arrangements provided by related parties in a number of specific land holdings. As security for these financing arrangements, amounting to €2.2 million (2021: €2,9 million), Heijmans has provided guarantees in respect of repayments/payment of interest.

6.22f Average interest rate

• ** The disclosed percentage is exclusive of amortised refinancing costs and fees.

6.22g Movements in interest-bearing liabilities

The movements in the interest-bearing liabilities were as follows:

x € 1,000

x € 1,000