6.16 Inventories

Strategic land holdings

The strategic land holdings are measured at the lower of cost or net realisable value, with the net realisable value of these holdings being the higher of 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% (2023: 5%) unless a different rate has been agreed, for example on the basis of favourable financing arrangements available within a joint arrangement. In fixing the discount rate, account is taken of the expected capital structure, operational risks and circumstances specific to either Heijmans or the project in question.

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 an internal integral 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 further increases the longer it takes before development is started.

In 2024, the net realisable value of the strategic land holdings was calculated and compared with the carrying amount. This did not result in an impairment  (2023: nil). In addition, the Group recognised an impairment of € 4.4 million in a joint venture (2023: nil).

For more information on the pledging of land holdings in connection with the financing agreements, see note ‘6.22 Interest-bearing loans and other financing liabilities’.

In 2024, the item other inventories included € 6.2 million (2023: € 9.7 million) for a number of homes that have been completed but had not yet been sold.

Term

In principle, the ‘strategic land holdings’ and the ‘Unsold residential property and land holdings in preparation and under construction (including development and construction rights)’ 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 Gisbergen acquisition

With the acquisition of Van Gisbergen, the Group expanded its portfolio by approximately 2,200 land holdings, consisting of both strategic land holdings and unsold residential property and land holdings in preparation and under construction (including development and construction rights. In the context of the allocation of the purchase price to the identifiable assets and liabilities, the development positions have been valued at fair value. On the acquisition date, the total inventory at Van Gisbergen represented a fair value of € 12 million. For a breakdown of these items, see also note ‘6.2 Business combinations’.