Report of the Supervisory Board

The Supervisory Board has taken note of the report of the Executive Board for the 2024 financial year and has discussed the report in conjunction with the results of the audit by KPMG Accountants N.V. The financial statements and the sustainability report were audited and assessed by KPMG Accountants N.V. and were provided with an unqualified audit opinion and an assurance report respectively on 28 February 2025.

Both statements have been added to the financial statements as an appendix to the Heijmans 2024 annual report. We recommend that the General Meeting of Shareholders adopt the 2024 financial statements and discharge the members of the Executive Board. We agree with the Executive Board's proposal to distribute a dividend of € 1.64 per (depositary receipt for an) ordinary share.

Position and tasks of the Supervisory Board

Role and powers of the Supervisory Board

The Supervisory Board supervises the strategy of the Executive Board and the general course of business at the Company and its affiliated enterprise and provides the Executive Board with advice. The Supervisory Board not only focuses on the effectiveness of the Company’s internal risk management and control systems and the integrity and quality of its financial reporting, but also on its policies regarding sustainability, including CSRD-related topics, and safety. In the performance of its duties, the Supervisory Board acts in the interests of the Company and its affiliated businesses and in doing so takes into account the legitimate interests of the Company’s stakeholders. The Supervisory Board also takes into account the social aspects of doing business that are relevant to the Company. The Articles of Association of Royal Heijmans N.V. and the Regulations for the Supervisory Board of Royal Heijmans N.V. include rules with respect to board meetings and decision making. Both of these documents are available on the Royal Heijmans N.V. website in the section ‘Corporate Governance: Codes, articles of association and regulations’.

Specific areas of supervision

The Supervisory Board’s supervision of the Executive Board includes:

  • how the board implements the strategy aimed at sustainable long-term value creation;

  • the achievement of both financial and sustainability targets;

  • the risks associated with the Company’s business operations;

  • the design and operation of internal risk management and control systems;

  • the financial and sustainability-related reporting process;

  • compliance with legal and regulatory requirements;

  • the relationship with shareholders - see the Gorporate Governance section of the Management Report and other sections;

  • the activities of the Executive Board related to the culture within the company;

  • the operation of the reporting procedure with regard to abuses and irregularities; and

  • the social aspects of doing business relevant to the Company.

Accents and activities in 2024

(Macro-)economic and social context

In 2024, the world was once again confronted with war and political tensions. Ukraine and Russia are still at war and tensions in the Middle East have escalated. The world is also waiting to see what impact the policies of the new president of the United States will have. In addition to geopolitical tensions, there are also underlying tensions in Dutch society. These circumstances are having repercussions on the global economy and are having an impact on the availability and prices of materials and energy costs, for example. Although inflation in the Netherlands and Europe has fallen, it is still higher than the targeted rate. On the other hand, the spending power and thus the borrowing capacity for home purchases increased due to significant wage increases in collective labour agreements. Following the Dutch House of Representatives elections in November 2023, the Netherlands installed a new government in early July 2024. Heijmans is encouraged by the new cabinet’s stated intent to continue the housing policy that had already been initiated by the previous government. Nevertheless, Heijmans continues to call for attention to be paid to the addition of planning capacity (both in and outside urban areas) and the shortening and acceleration of spatial planning procedures and permit granting processes. The shortages on the housing market demands concrete action.

‘Together towards 2030’ strategy

After the Executive Board had already provided a qualitative explanation of the recalibrated strategy in 2023, Heijmans announced the financial parameters of the recalibrated strategy ‘Together towards 2030’ at the Capital Markets Day on 22 May 2024. In line with the ‘Together towards 2030’ strategy, Heijmans launched its new promise ‘Together, it’s possible’ in early October. In doing so, Heijmans is responding to the major social challenges faced by the built environment in the Netherlands. With the ‘Together towards 2030’ business strategy and the ‘Together, it’s possible’ promise, combined with the financial targets for 2027, Heijmans is setting a clear course for the future. A course in which social responsibility, collaboration and financial targets go hand in hand.

Issues related to the strategy and sustainable long-term value creation are discussed at almost every meeting of the Supervisory Board, which leads to constructive dialogue. The Supervisory Board oversees the implementation of the strategy. Furthermore, the Supervisory Board has taken note of the progress made in a number of areas, including safety, compliance and risk, innovation, product development and innovation, through presentations by knowledge carriers at Supervisory Board meetings.

Safety

The topic of safety is and will remain a fixed agenda item at meetings of the Supervisory Board. All aspects of safety are discussed at Supervisory Board meetings. These include the number and type of accidents, the IF figure and the measurement methodology, but also, for example, environmental safety in projects and constructional safety. In the meeting of the Supervisory Board in June 2024, the board had an intensive thematic discussion with the Executive Board, the chairmen of the business area boards and the Safety director, with specific attention paid to the perception and culture of safety in the company, because these are decisive factors in any improvement of safety performance. The board also discussed the potential of AI in terms of improving safety performance. The actions discussed in June will be evaluated with the Supervisory Board in early 2025. Both the Supervisory Board and the Executive Board are intrinsically motivated to raise safety to an even higher level, for the safety of their own and contracted colleagues and for the environment in the construction chain in which Heijmans operates. Despite all efforts, the safety figures are not yet at the desired level. We will therefore continue the intensive discussions on other approaches and measures to make additional improvements to the safety programme.

M&A and the integration of the acquired companies

In July 2024, Heijmans announced the acquisition of all development and construction activities of Van Gisbergen, based in Hooge Mierde. Heijmans completed the acquisition on 13 September 2024, after obtaining approval from the Dutch Consumers and Markets Authority (ACM). This acquisition, which is in line with Heijmans' strategy, has further strengthened its position in construction and property development. The Executive Board involved the Supervisory Board in the acquisition process. The Supervisory Board endorses the strategic value of this acquisition. Like the acquisition of Van Wanrooij in 2023, this acquisition is in line with one of the Company’s strategic objectives, namely to further strengthen Heijmans' position in property development and residential building.

When Heijmans took over Van Wanrooij Bouw & Ontwikkeling in 2023, the company stated that Van Wanrooij would continue to operate independently in the market for the time being and that, parallel to this, the focus would be on gaining insight into and learning from each other's business models and success factors. After this phase, the Executive Board will decide on the next steps in the integration process and the nature of the collaboration. The Executive Board has given the Supervisory Board frequent updates on its findings.

Financing

In 2023, Heijmans and its banks agreed to adjust the financing arrangement with the ABN AMRO, Rabobank and ING Bank consortium in connection with the acquisition of Van Wanrooij. The adjustment included increasing the bank financing by € 140 million. The expansion consisted of € 60 million in the form of an expansion of the existing revolving credit facility to € 177.5 million, which was also extended to five years starting from 5 September 2023, and a linear loan of € 80 million that was to be repaid over four years. The Supervisory Board is pleased that Heijmans was able to repay the entire linear loan earlier than planned in 2024.

Result development

In 2024, the Executive Board continued to improve working capital and capital ratios and to robustly expand the risk management system. The Company completed the acquisition of Van Wanrooij in 2024. The Supervisory Board monitored the Executive Board's efforts and supported the Executive Board in its work. The ‘margin over volume policy’ and the continued professionalisation of the organisation and improvement of internal processes were discussed extensively in the meetings. The Executive Board frequently discussed the safeguarding of a healthy risk/return ratio while maintaining healthy entrepreneurship in the management of (new) projects with the Supervisory Board. Both boards are satisfied with the balance and composition of the portfolio. Heijmans is in a good position; it is performing robustly and is a highly predictable company. Thanks in part to the unwavering commitment of its employees, the company completed a successful year in 2024.

Dividend

In early 2024, the Executive Board and Supervisory Board discussed the dividend policy in light of Heijmans' results and objectives. The current dividend policy provides for a payout of 40%, with an optional dividend having been offered in recent years. After intensive consultation between the Executive Board and the Supervisory Board, in which external advice was also sought, a decision was made to change the dividend policy to bring it more in line with the company's financial position and market practice. The Executive Board announced the change in dividend policy at the Capital Markets Day on 22 May 2024. In concrete terms, the change will mean an increase in the pay-out to 50% from the current 40%, as well as a distribution entirely in cash. In recent years, Heijmans has offered an optional dividend (cash or shares). This proposal will be explained to the General Meeting of Shareholders on 16 April 2025, after which the dividend proposal for the 2025 financial year will be based on the amended policy. Both the Executive Board and the Supervisory Board believe that the proposed dividend policy is well suited to Heijmans' robust current position.

In view of the financial results for 2024 and based on the announced change to the dividend policy, the Executive Board has proposed a dividend on ordinary shares of € 1.64 per (depositary receipt for a) share. The Supervisory Board has approved this proposal.

Lifelong learning

The Supervisory Board maintains its knowledge of relevant subjects in various ways. For example, it had a separate meeting with an external party about developments in the field of AI and its possibilities within Heijmans. Time is also regularly set aside in Supervisory Board meetings for those directly involved to explain Heijmans innovations. In addition, the Supervisory Board is kept informed of relevant new and upcoming legal and regulatory developments. Examples include CSRD, CSDDD and the Risk Management Statement (Dutch: VOR).

Capital Markets Day

On 22 May 2024 at its Capital Markets Day event, Heijmans shared an update with the market on its ‘Together towards 2030’ strategy, which the company recalibrated in 2023. The company also announced its financial targets for 2027, these being revenue of € 3 billion, an underlying EBITDA margin of 7-9% and the above-mentioned plan to adjust the dividend policy to aim for a pay-out ratio of 50% with payment entirely in cash.

The Executive Board kept the Supervisory Board closely involved in the preparations for Capital Markets Day, particularly in the formulation of the aforementioned financial targets. The two boards held intensive discussions on this in a positive atmosphere, which led to a consensus. The Supervisory Board was pleased to note that the Capital Markets Day was very well received by the market and that Heijmans is clearly on track to meet its targets.

Corporate governance

The Supervisory Board is up to date on developments in the field of corporate governance. These include the updated Dutch Corporate Governance Code, which came into effect in 2023, the imminent introduction of the Risk Management Statement (VOR) and relevant new and upcoming (European) regulations in the field of ESG. The board endorses the importance of transparency promoted by CSRD. However, the concerns previously expressed by both the Supervisory Board and the Executive Board regarding the capacity pressures that reporting obligations place on the company and the associated costs were unfortunately not unjustified: the company has had to make a tremendous effort to be able to report in accordance with CSRD for the 2024 financial year. Heijmans' basic principle remains that it aims to achieve ESG compliance in a controlled manner, taking into account the interests of all stakeholders. For more information on governance, please see the ‘Corporate Governance’ section of the management report.

Meeting frequency and attendance

In 2024, the Supervisory Board held seven regular meetings and four interim meeting to discuss specific topics with the Executive Board. The regular meetings were preceded by internal deliberations of the Supervisory Board and were physical meetings. The other meetings were held entirely digitally. Ms Knape-Vosmer, Ms Jonk and Mr Castelein were all unable to attend one meeting. They had spoken to the chairperson beforehand about the items on the agenda and their views on them. All members were present at the meetings of the Remuneration, Selection and Appointments Committee and the Audit and Risk Committee.

The meeting in June was combined with a working visit to the large-scale Noorderhaven area development in Zutphen.

The company's external auditor was present at the meeting arranged to discuss the 2023 financial statements (audited by EY). The Supervisory Board also consulted with the external auditor without the Executive Board present. The Supervisory Board usually attends the Works Council consultation meeting twice a year. Depending on the specific tasks of the supervisory directors, regular consultations take place with members of the Executive Board. This applies in particular to the chairman of the Supervisory Board and the chairmen of the committees, namely the Remuneration, Selection and Appointments Committee and the Audit and Risk Committee.

Decision-making

The important decisions of the Supervisory Board in 2024 included the following:

  • Approval of decisions of the Executive Board to determine and change the operational and financial objectives of the Company;

  • approval of the business plan and budget for 2024, which included the formulation of the parameters of the strategic principles of the policy;

  • adoption of the details of the criteria for the short- and long-term variable remuneration of the Executive Board;

  • nomination for reappointment of Ms J.W.M. Knape-Vosmer as a member of the Supervisory Board at the Annual General Meeting of Shareholders on 30 April 2024;

  • nomination for appointment of Mr M.C. van Gelder as a member of the Supervisory Board at the Extraordinary General Meeting of Shareholders on 4 November 2024;

  • approval of the proposal of the Executive Board regarding the appropriation of the result for the 2023 financial year, including a dividend payment on ordinary shares;

  • approval of the decision of the Executive Board to acquire Van Gisbergen and the associated investment;

  • approval of the proposal of the Executive Board to submit an amendment to the articles of association to an Extraordinary General Meeting of Shareholders.

  • decision to award the contract for the assurance audit of the sustainability report to KPMG Accountants N.V. for the 2024 financial year.

Executive Board

The Executive Board consists of two members. Their areas of responsibility are as follows:

  • Mr. A.G.J. (Ton) Hillen, Chairman of Executive Board / CEO: General affairs, Safety, Strategy, the Living, Working and Connecting segments, HR & Management Development and Innovation;

  • Mr. G.M.P.A. (Gavin) van Boekel, member of Executive Board / CFO: Finance & Tax, Risk office, Investor relations, IT, Heijmans Energy, Legal Affairs, PR & Communications, Procurement, Sustainability, Pensions and Facilities.

Supervisory Board self-evaluation

One of the principles of the Dutch Corporate Governance Code is that the Supervisory Board is collectively responsible for its own performance and lists the self-evaluation as a ‘best practice’. It is good practice to periodically conduct the self-evaluation with the help of an external party. That was the case in 2023. In late 2024, the board performed a self-evaluation by means of a written internal survey. All the members of the Supervisory Board took part, with the exception of the supervisory director appointed on 4 November 2024. The members of the Executive Board completed the part of the survey that focused on the cooperation between the Supervisory Board and the Executive Board. The resulting findings were discussed extensively by the members of the Supervisory Board among themselves and between the Supervisory Board and the Executive Board. The evaluation for 2024 showed that the Supervisory Board is functioning properly. Nevertheless, the increasing size and complexity of the company and the internal and external dynamics require alertness from the Supervisory Board. The board must evolve with all the above-mentioned developments if it is to be able to deal with them. This topic will remain on the agenda in 2025.

Diversity

The composition of Heijmans’ Supervisory Board is diverse in terms of gender, background and experience. The Diversity at the Top Act came into force on 1 January 2022. Among other things, this envisages a gradual entry quota for supervisory boards. This means that for a balanced composition, the supervisory board of a listed public limited company must consist of at least one-third women, and at least one-third men.

When appointing a new supervisory director, the balance of the m/f ratio on the board must be taken into account. If the board is not balanced, a new appointment will have to contribute to that balance. The General Meeting, the Works Council and the Supervisory Board are then obliged to take into account the diversity quota when making recommendations and nominations.

The Supervisory Board consists of five members: two women and four men. Based on this current composition, the Supervisory Board complies with the new statutory regulation. The diversity policy and plan of action based on the Diversity at the Top Act that applies to the Executive Board and Supervisory Board is included in the management report. For further background information on all members of the Supervisory Board, please see the Management and Supervision section of the Management Report.

Committees

The Supervisory Board has appointed two committees: the Audit and Risk Committee and the Remuneration, Selection and Appointments Committee. Rules have been drawn up for each committee that define the role of the committee in question, its composition and how it carries out its duties. These rules can be found on the Heijmans website in the 'Corporate Governance: codes, articles of association, regulations' section.

Audit and Risk Committee

The Audit and Risk committee comprises three members of the Supervisory Board and its tasks cover a number of financial areas and risk management. The discussions of subjects in the Audit and Risk committee serve as preparation for the discussion of these subjects by the full Supervisory Board. These subjects include the annual report, the financial statements, the external auditor's reports, the internal risk and audit reports, the audit plan of both the external auditor and internal audit, other financial reports, the functioning of internal risk and control systems, the relationship with and evaluation of the external auditor, the pension schemes, the development of the Company's financing requirements and the debt position, as well as the relationship with the Company's financiers.

In addition, the Audit and Risk Committee discussed the Double Materiality Analysis (DMA) in the context of CSRD, the IT landscape, M&A and purchase price allocation (PPA), evaluations of acquisitions, change programmes, the company's fiscal position, the issue list and the replacement of the ERP system. Other topics of discussion included integrity and compliance, risk & audit management, the reports of the risk & audit manager, cybersecurity and privacy. A regular item on the agenda in the context of lifelong learning is the discussion of developments in the field of ESG regulations and how Heijmans can proactively implement them. Concerns were also expressed about the heavy reporting burden and the capacity required in that regard.

At the AGM of 3 April 2023, KPMG was appointed as the external auditor for the 2024 and 2025 financial years. Based on the intended Article 2:393a of the Dutch Civil Code (included in the bill for the Sustainability Reporting (Implementation) Act), the General Meeting of Shareholders must also appoint the external auditor for the assurance audit of the sustainability reporting. In anticipation of the transitional legislation, the Supervisory Board commissioned KPMG to conduct the aforementioned assurance audit for the 2024 financial year. The committee advised the Supervisory Board to nominate KPMG as the external auditor for the sustainability reporting for the financial years 2025 and 2026 at the Annual General Meeting of Shareholders on 16 April 2025. Furthermore, on the advice of the committee, KPMG will be nominated during that meeting as the external auditor for the financial audit for the 2026 financial year.

The Audit and Risk Committee consists of Mr A.E. Traas (chairman), Ms M.M. Jonk and Mr A.S. Castelein. Expertise in the field of financial reporting and auditing of the annual accounts in the committee is guaranteed because Mr Traas is a chartered accountant. In 2024, the committee met with the Executive Board four times. The external auditor also attended a number of meetings. In addition, the committee consulted with the auditor in the absence of the Executive Board.

Where relevant, managers with responsibility for finance, auditing, risk and compliance attended the meetings of the Audit and Risk Committee, together with the CEO and CFO. Relevant topics requiring the approval of the entire Supervisory Board were submitted to the full Supervisory Board together with a recommendation from the Audit and Risk Committee.

Remuneration, Selection and Appointment Committee

The Remuneration, Selection and Appointment committee consists of Ms M.M. Jonk (Chair), and Ms J.W.M. Knape-Vosmer. The committee’s areas of focus include the remuneration of the members of the Executive Board and drawing up the selection criteria and appointment procedure for members of the Supervisory Board and the Executive Board. At least once a year, the committee also assesses the performance of the members of the Executive Board and draws up a succession planning for the Executive Board. In this context, the committee conducts individual performance interviews with the members of the Executive Board at least once a year.

Remuneration

The committee held six meetings in the year under review. The members also consulted with each other regularly in the course of the year.

The remuneration policy for both the Supervisory Board and the Executive Board was adopted by the General Meeting of Shareholders on 30 April 2024 and has been in force since 1 January 2024. In its meetings, the committee paid attention to the implementation of the new remuneration policy. The remuneration for 2024 is in line with the remuneration policy adopted in 2024. Please see the 2024 remuneration report in the Remuneration Report appendix of the Heijmans 2024 annual report.

In addition, the committee discussed and advised the Supervisory Board on a number of topics, including the targets for variable remuneration for 2025, the variable remuneration itself and the adjustment of the fixed remuneration of the members of the Executive Board and of the Supervisory Board itself. In that context, a benchmark study was conducted at the end of 2024 based on the reference group included in the remuneration policies for both boards to test whether the fixed remuneration is still in line with the market.

Finally, the committee drew up the 2024 Remuneration Report and discussed this with both the Executive Board and the Supervisory Board. The result of the advisory vote of the General Meeting of Shareholders regarding the 2023 Remuneration Report was taken into account.

Appointments

After the General Meeting of Shareholders on 30 April 2024, Ms J.W.M. Knape-Vosmer stepped down in accordance with the retirement schedule after a term of more than four years. She was reappointed at the aforementioned meeting and appointed for a term of four years. The nomination was supported by the Works Council.

In accordance with the retirement schedule, Mr Vollebregt will step down from the board after the Annual General Meeting of Shareholders on 16 April 2025; he is not available for a subsequent term. In light of this, the committee, in consultation with the Supervisory Board, started the recruitment procedure for a new supervisory director at the end of 2023. It was a long and careful process, which resulted in the nomination of Mr M.C. van Gelder at the Extraordinary General Meeting of Shareholders on 4 November 2024. Mr Van Gelder was appointed for a period of more than three and a half years, i.e. until after the Annual General Meeting of Shareholders to be held in 2028. Following his appointment, the Supervisory Board temporarily consisted of six members, i.e. until the Annual General Meeting of Shareholders in April 2025. Even after this appointment, the composition of the board complies with the legal quota for a balanced composition (see the Diversity sub-section above).

Composition of the Supervisory Board

The Supervisory Board currently consists of six members. In accordance with the retirement schedule, as described above, one supervisory director will step down in 2025.

The current composition of the Supervisory Board, including personal details and main and other positions, is included in the Management and Supervision chapter of the management report. All members of the Supervisory Board can be considered independent within the meaning of best practice 2.1.8 of the Dutch Corporate Governance Code.

Finally

Last year was a very good year for Heijmans. Heijmans is on track to fulfil its promise of ‘Together, it’s possible’. The realisation of strategic goals has been achieved through, among other things, the acquisition of Van Gisbergen, which has further strengthened Heijmans' position in construction and property development. As in recent years, the focus of both the Supervisory Board and the Executive Board remains on a strict selection policy, an optimal cost structure, physical and social safety and long-term sustainability. The company has worked on improving results in a broad sense. The economic and political circumstances do present challenges. However, Heijmans is resilient and flexible and uses its capacity for innovation to find solutions. The basis for structural success lies in a robust organisational structure, team excellence and the development of human capital, maintaining the right balance between entrepreneurship, return and risk.

The Supervisory Board not only has great respect for the Executive Board and the good financial results for 2024, but above all for all the employees who made this possible. This is the foundation of Heijmans' good results!

The Supervisory Board would like to thank the Works Council, all Heijmans employees and the Executive Board for their significant contributions during the past reporting year.

Rosmalen, 28 February 2025

Sj.S. (Sjoerd) Vollebregt, chair
M.M. (Martika) Jonk, vice-chair
J.W.M. (Ans) Knape-Vosmer
A.E. (Arnout) Traas
A.S. (Allard) Castelein
M.C. (Marc) van Gelder