6.16 Inventories

x € 1,000

Strategic land holdings

The strategic land holdings are measured at cost or net realisable value if lower. The net realisable value of these holdings may be either the direct realisable value or the indirect realisable value. The net realisable value depends on the expected manner and time horizon of realisation and in most cases, therefore, is measured using an indirect realisable value method. The indirect realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale, the expected cash flows usually being discounted to net present value using a discount rate of 5% unless a different rate has been agreed, for example on the basis of favourable financing arrangements available within a joint undertaking. In fixing the discount rate, account is taken of the expected capital structure, operational risks and specific circumstances affecting Heijmans or the project concerned.

Determining the indirect realisable value involves the use of judgements and estimates. The strategic land holdings are affected by several elements of uncertainty, such as demographic changes, location and details and implementation of development plans and administrative decisions, with as local a focus as possible. This provides a location-specific forecast of developments in land and house prices and other variables, which ultimately determine the indirect revenue value of the land holdings. The Group makes a comprehensive internal assessment of the value of its land holdings twice a year.

In general, the risk of deviations from the judgements and estimates is greater for strategic land holdings without planning permission than for those with. Moreover, this risk keeps increasing the longer the expected delay is before the start of development.

In 2023, the net realisable value of the strategic land holdings was calculated and compared with the carrying amount. This did not result in a write-down (2022: zero). Nor was there a write-down in a joint venture (2022: € 4.1 million).

For more information on the pledging of land holdings in connection with the financing agreements, see note 6.22.

In 2023, the inventory included € 9.7 million (2022: nil) for a number of homes that have been completed/delivered but had not yet been sold.

Term

In principle, the strategic land holdings and the residential property in preparation and under construction have terms of more than 12 months after the reporting date (mostly two to 10 years). In principle, the other items have a term of less than 12 months.

Impact Van Wanrooij acquisition

With the acquisition of Van Wanrooij, Heijmans expanded its inventory of development positions by approximately 14,000 homes divided between strategic land positions and homes in preparation and under construction. In the context of the purchase price allocation, the development positions have been valued at market value. The total inventory of development positions was assigned a market value as at 5 September of € 259 million, which represented a fair value step-up of €142 million as at that date. This € 259 million was recognised partly on balance sheet (in consolidation) and partly off balance sheet (in joint ventures). In addition, part of the inventory of development positions also consists of work in progress and is partly classified under guarantee deposits. For a breakdown of these items, please see the table in section 6.2.

Between 5 September and 31 December, the strategic land holdings were increased by € 9 million to € 68 million. The Van Wanrooij acquisition therefore explains most of the € 80 million increase in strategic land holdings. Homes in preparation and under construction fell by € 18 million to € 139 million in the same period. This decrease was partly (€ 8.7 million) due to the high number of home transfers in this period and partly (€ 9.7 million) due to the partial release of the fair value step-up. Total homes in preparation and under construction increased by € 128 million in 2023 and this amount was therefore more than fully explained by the acquisition of Van Wanrooij.