4. Financial risk management

4.1 Capital management

The Group’s aim is for a financing structure that ensures continuing operations and minimises cost of equity. For this, flexibility and access to the financial markets are important conditions. As usual within the industry, the Group monitors its financing structure through its liquidity (see note 4.2.3) and capital ratio. Capital ratio is calculated as the capital base divided by total assets. The Group’s capital base consists of equity attributable to shareholders of the company. The Group’s target capital ratio is above 20%. On 31 December 2025, the capital ratio was 23.4% (2024: 23.0%).

4.2 Financial risk factors

4.2.1 Market risk

(a) Foreign exchange risk

A substantial part of the Group’s activities takes place in the United Kingdom (in pound sterling) and, to a limited extent, in other non-euro countries. The Group’s results and equity are therefore affected by fluctuations in foreign exchange rates. Generally, the Group is active in these non-euro countries through local subsidiaries, limiting the exchange risk as both income and expense are denominated largely in the same currency. The associated translation risk to the Group (arising from the translation of the local currency into euro) is not hedged. Due to changes in the exchange rate of the euro to pound sterling, revenue, results, equity and order book from the United Kingdom slightly decreased in 2025. At year end 2025, a 10% change in the exchange rate will impact the Group’s equity by approximately €46 million (2024: circa €45 million).

A limited part of the group’s activities involves projects in a different currency than the functional currency of the respective entity. Group policy is that costs and revenue for these projects are in the same currency, thus limiting foreign exchange risks. The Group may hedge the residual exchange risk using forward exchange contracts. This involves the hedging, using cash flow hedge accounting, of unconditional project-related exchange risks in excess of €1 million as soon as these occur. Any exchange risks in the tender stage and arising from contractual amendments are assessed on a case by case basis. Procedures have been established for the proper recording of hedge transactions. Systems are in place to ensure regular assessments of the hedge effectiveness measurements.

(b) Interest rate risk

The Group is exposed to interest rate risk on interest-bearing receivables and cash and cash equivalents, on the one hand, and to interest-bearing borrowings, on the other. If the interest rate is variable, the Group is exposed to a cash flow risk, i.e. future interest payments vary with (changes in) the interest rate. If the interest rate is fixed, the group is exposed to a fair value risk. For interest-bearing borrowings, the Group may manage cash flow risks. Interest rates on borrowings are generally variable and are hedged to fixed rates on a case-by-case basis with reference to the asset or operation that is funded.

Interest rates on cash and cash equivalents is variable. The overall analysis of the interest rate risk profile takes into account cash and cash equivalents, the debt position and the usual fluctuations in the Group’s working capital requirements.

The composition of borrowings by interest rate is as follows:

If variable interest rates had been 100 basis points higher, the Group’s result before tax would have been €3.4 million higher (2024: €3.3 million higher). If the variable interest rates had been 100 basis points lower, the Group’s result before tax would have been €3.4 million lower (2024: €3.3 million lower).

(c) Geopolitical and Macroeconomic Risk

The Group is indirectly exposed to geopolitical risks, including the conflicts in the Middle East and Ukraine as well as broader global tensions such as intensifying US-China competition and the impact of trade tariffs. These risks primarily affect the Group through potential changes in energy prices and supply chain dynamics that influence energy-intensive construction activities and input costs. Based on current information and management’s assessment, these geopolitical risks did not have a material impact on the financial statements. This is supported by the Group’s strong order book, the presence of indexation clauses within construction contracts, its diversified project portfolio, and the continuous monitoring of market developments.

4.2.2 Credit risk

The Group’s exposure to credit risks on financial assets is as follows:

A substantial part of trade receivables and contract assets are due from governments or government bodies in the Netherlands, the United Kingdom and Ireland. Considering these countries have a strong credit rating, the credit risk related to these assets is therefore inherently assessed as very low. Furthermore, a significant part of trade receivables is based on contracts involving advance payments or payments proportionate to progress of the work, which limits the credit risks, in principle, to the overall balances outstanding. Credit risk on trade and other receivables and contract assets is monitored continuously. Clients’ creditworthiness is analysed before entering into a contract and then monitored during performance of the project. This involves taking account the client’s financial position, previous collaborations and other factors. Group policy is designed to mitigate credit risks. This can, for example, be achieved by retaining ownership of assets until payment has been received, by obtaining prepayments and through the use of bank guarantees.

Non-current receivables predominantly concern loans granted to property joint ventures. Credit losses are identified based on the financial position and forecasts of these joint ventures, which also include the value of the underlying property development positions. For a part of these loans, the underlying property developments are held as security, but generally subordinated to the providers of the external financing.

Cash and cash equivalents are held in various banks. The Group limits the credit risk by working with respectable banks and financial institutions. This involves holding cash and cash equivalents in excess of €10 million at banks and financial institutions with a minimum credit rating of ‘A’.

The Group assessed the credit risk for these assets and concluded that no significant expected credit loss provisions are required. In addition, the Group is also exposed to credit risk on parental guarantees (note 32) and financial guarantees. A provision for financial guarantees of €3.0 million has been recognised (2024: €3.0 million), see note 26.

4.2.3 Liquidity risk

Liquidity risk is the risk that the Group will not be able to satisfy its financial liabilities. It is the Group’s policy to ensure that, at all times, sufficient liquidity is available to satisfy its liabilities when due. To monitor liquidity requirements, the group maintains a rolling cash-flow forecast for the next 12 months. The forecast takes into account the amount of cash and cash equivalents, available credit facilities and expected working capital requirements which, given the large size of individual transactions, is subject to relatively large fluctuations.

The main instruments to ensure that sufficient liquidity is available are the Group’s cash pools and its credit facilities. The cash pools provide the flexibility to optimise the use of cash that is available in the group, while the Group’s committed syndicated credit facility of €330 million and other credit facilities (see note 24), allow it to draw loans when required. As of 31 December 2025 and 2024, no loans were drawn from these facilities. The expected contractual cash flows as of 31 December 2025 and 2024 are as follows:

4.3 Financial instruments and their fair values

The following overview indicates the carrying amounts of each category of financial instrument per balance sheet account, their level in the fair value hierarchy and/or their estimated fair value.

Level 3 fair value measurements are generally based on a discounted cash-flow model. The Group discounts expected future contractual cash flows of the respective financial instrument at an appropriate discount rate. As at 31 December 2025, the Group applies a discount rate in the range of 4.0% to 7.1% for financial assets and 4.0% to 5.0% for financial liabilities. The wider range for financial assets primarily reflects rates of 4-5% for the majority of projects, with the higher end of 7.1% only applied to a limited number of commercial property joint venture exposures.

The estimated fair values of financial instruments accounted at amortised costs has been determined by discounting expected future cash flows (level 3) as described above. The estimated fair values are not necessarily indicative of the amounts that will be realised upon maturity or disposal. Changes in assumptions and/or estimation methods may have a material effect on the estimated fair values.