XAMS:HAL ESEF Annual Report
HAL Trust (XAMS:HAL)
Colophon
The history of HAL dates back to April 18, 1873, when the Nederlandsch-Amerikaansche Stoomvaart-Maatschappij (N.A.S.M.) was founded in Rotterdam, the Netherlands.
The Company continued its activities under various names and is now operating as HAL Holding N.V., a Curaçao company. All the shares of HAL Holding N.V. are held by HAL Trust and form the Trust’s entire assets. HAL Trust was formed on October 19, 1977, by a Trust Deed, the text whereof has most recently been approved on March 22, 2024. The shares of the Trust are listed and traded on Euronext in Amsterdam.
HAL Holding N.V.
Statutory address:
Willemstad
CuraçaoTelephone: (599) 9 4615 002
Office address as from April 1, 2024:
3012 CN Rotterdam
The NetherlandsTelephone: (31) 10 281 65 00
Branch office until April 1, 2024:
HAL Holding N.V.
5, Avenue des Citronniers
MC 98000
Telephone: (377) 92 16 75 79
www.halholding.com
Corporate Administration
HAL Holding N.V. | Supervisory Board: Executive Board: |
Highlights and Financial Calendar
In euro | 20231 | 20221 |
|---|---|---|
Income (in millions) | ||
Revenues | 9,854.4 | 7,625.9 |
Income from marketable securities and deposits | 138.5 | (119.7) |
Share of results of associates and joint ventures | 339.9 | 657.0 |
Income from other financial assets | 166.7 | (6.0) |
Income from real estate activities | (9.5) | 58.1 |
Net income attributable to owners of parent | 1,001.0 | 647.4 |
Financial position at December 31 | ||
Total assets (in millions) | 20,513.6 | 20,330.9 |
Equity attributable to owners of parent (in millions) | 13,627.9 | 12,961.9 |
Equity attributable to owners of parent | 66.4 | 63.8 |
Number of Shares outstanding at December 31 (in thousands) | 90,3442 | 88,5932 |
Average number of Shares outstanding (in thousands) | 89,5432 | 87,7242 |
Per Share | ||
Net income | 11.18 | 7.23 |
Shareholders’ equity | 150.84 | 146.31 |
Net asset value | 150.123 | 147.723 |
Closing price shares HAL Trust at December 31 | 113.80 | 120.00 |
Volume-weighted average December share price HAL Trust | 113.28 | 124.04 |
Dividend | 2.854 | 5.00 |
Exchange rates - December 31 | ||
U.S. dollar per euro | 1.11 | 1.07 |
- These figures relate, where applicable, to the pro forma financial statements as included in the supplemental information on pages 123 through 152
- Net of treasury shares
- Based on the market value of the quoted companies and the liquid portfolio and on the book value of the unquoted companies
- Proposed cash dividend
Financial calendar | |
Report of the Trust Committee
HAL Trust
HAL Trust was formed in 1977 and holds all outstanding shares of HAL Holding N.V.
For further details of the organization see page 174.
In accordance with the instructions issued on May 17, 2023, the Trust distributed a dividend of € 5.00 per Share on June 16, 2023, of which € 2.50 per Share was payable in shares HAL Trust and € 2.50 per Share in cash.
Accordingly, a cash dividend was paid of € 221.5 million and 1,771,977 HAL Trust shares were issued as stock dividend.
On December 31, 2023, 90,370,864 HAL Trust shares were in issue (2022: 88,598,887).
On December 31, 2023, HAL Holding N.V. owned 27,019 HAL Trust shares (2022: 6,337).
The Trust Committee
HAL Trust Committee Ltd.
March 27, 2024
Report of the Supervisory Board of HAL Holding N.V.
The Supervisory Board (the ‘Board’) supervises the Executive Board and provides advice to the general meeting of shareholders. In performing its task, the Board is guided by the interest of HAL Holding N.V. and its business.
On May 24, 2023, the general meeting of shareholders reappointed Mrs. M.E. Harris as member of the Board. At the end of 2023, the Board consisted of five members. Their names, nationality and other relevant information are mentioned on page 179.
The Board met during eight meetings, five of which were regularly scheduled meetings. The other meetings related to (potential) acquisitions and the organization of the Company. The meetings were attended by all Board members.
The Executive Board provided the Board with both written and verbal information. Based on this information, the state of affairs of the Company was discussed and evaluated.
Among others, the following specific subjects were addressed: the strategy of the Company, the budget, cash-flow forecasts of the Company and its subsidiaries, the development of the results, the investment, liquid and real estate portfolios, the dividend, the quarterly, semi-annual and annual reports, the reports of the financial expert (see below) and the external auditor, the policy on non-assurance services by the external auditor, the functioning, composition and remuneration of the Executive Board, (potential) acquisitions, the governance of the Company and the design and implementation of the systems of internal control for financial reporting purposes including the reporting by the Executive Board on fraud cases and irregularities.
During two meetings the Board discussed the ESG strategy of the Company and its reporting obligations under the Corporate Sustainability Reporting Directive effective January 1, 2024 as well as the group double materiality analysis performed by the Executive Board.
On November 23, 2023, the Board discussed the transfer of the place of effective management of HAL Holding N.V. to the Netherlands as from April 1, 2024.
The Company does not have an internal audit function. The Board requested Deloitte Risk Advisory B.V. to examine the controls over financial reporting risks (covering the processes at HAL Holding N.V., HAL Investments B.V. and HAL Real Estate Inc.) and to report on deficiencies. The findings were set out in a detailed report to the Board, and the Executive Board was requested to appropriately follow up on these matters. For further information relating to the systems of internal control for financial reporting purposes, we refer to the relevant paragraph in the report of the Executive Board on page 10.
As explained in the paragraph Administrative organization, risk management systems and financial reporting in the report of the Executive Board on page 20, the application of IFRS 10 requires the Company to consolidate the financial statements of Koninklijke Vopak N.V. (‘Vopak’) and Safilo Group S.p.A. (‘Safilo’) in its financial statements, although HAL’s ownership in these companies is below 50%. In order to allow the Company to comply with IFRS, it has entered into Memoranda of Understanding with Vopak and Safilo with respect to confidentiality, the process of exchanging financial information and attendance rights to the Audit Committee meetings of Vopak and the Control and Risk Committee meetings of Safilo of an independent financial expert on behalf of the Company. This financial expert (Mr. J.A.M. Stael, former partner of PricewaterhouseCoopers Accountants N.V.) reports to the Executive Board and the Supervisory Board, whether there are any matters relating to Vopak and Safilo that should be brought to the attention of the Company prior to the signing of the financial statements of the Company by the Executive Board and the Supervisory Board. Moreover, the assessment that the Company’s financial statements do not contain material errors attributable to the financial statements of Vopak and/or Safilo is based on the external audit.
In the publicly traded companies Vopak, Safilo and SBM Offshore N.V. (‘SBM’), the Company plays its role as a large minority shareholder. This is complemented by board representation. Mr. M.F. Groot, Chairman of the Executive Board is a member of the Supervisory Board of Vopak and a non-executive member of the Board of Safilo. Mr. J.N. van Wiechen, member of the Executive Board, is a member of the Supervisory Board of SBM. In their respective functions they may, from time to time, be in the possession of confidential information about these publicly traded companies that they do not share with the other members of the Executive Board and the Supervisory Board of the Company. The Executive Board and the Supervisory Board of the Company recognize the importance of confidentiality of the discussions at the level of the boards of the above mentioned quoted companies as this contributes to a frank exchange of ideas and fruitful discussions. This modus operandi is based on sound business principles and allows these investee companies to operate more independently from the Company.
The Board has determined the variable compensation of the Executive Board. Further information with respect to the compensation of the Executive Board is included on page 116. The annual remuneration per Supervisory Board member for 2023, as determined by the General Meeting of Shareholders in 2023, amounted to € 95,000.
The Board had discussions with the external auditor during three meetings. Subjects discussed included the audit plan and audit findings, the financial statements, the report on the first half of 2023, impairment testing and the systems of administrative and internal controls for financial reporting purposes, the reporting requirements under the Corporate Sustainability Reporting Directive ("CSRD") as well as the independence of the auditor. The financial expert was also present during the meetings where the financial statements, the report on the first half of 2023, the audit plan of the external auditor and the third quarter interim audit report from the external auditor were discussed. The Board also met with the external auditor in absence of the Executive Board.
The Board also met in the absence of the Executive Board to discuss, among other matters, the functioning and composition of the Board as well as the functioning of the Executive Board. All Board members were present during the meeting of Trust Shareholders of HAL Trust on May 17, 2023.
The Board did not form any committees. Between Board meetings, the Chairman of the Board maintained more intensive contacts with the Executive Board. In between the meetings of the Board, individual members provided their views on specific matters relevant to the Company.
The financial statements for 2023 were prepared by the Executive Board and discussed by the Board during a meeting on March 27, 2024, in which the external auditor and the financial expert participated. After reviewing the unqualified audit opinions on the financial statements of HAL Trust and HAL Holding N.V., the results of the external audit as summarized in a report to the Board and the Executive Board and the report of the financial expert, all members of the Board agreed to sign the financial statements of the Company.
The Board recommends that the Shareholders of HAL Trust instruct the Trustee to vote at the Annual Meeting of HAL Holding N.V. for the approval of the financial statements for 2023 as per the documents submitted and the proposed distribution of profits.
It should be noted that neither the Dutch Corporate Governance Code is applicable to HAL Holding N.V., because HAL Holding N.V. is not a Dutch company, nor are other corporate governance codes applicable to HAL Holding N.V. Pages 175 through 178 of this report provide a description of HAL Holding N.V.’s corporate governance structure.
In accordance with the rotation schedule, Mr. L.J. Hijmans van den Bergh will resign this year. He is available for re-election. We propose to the Shareholders of HAL Trust to instruct the Trustee to vote at the Annual Meeting of HAL Holding N.V. for the re-election of Mr. L.J. Hijmans van den Bergh.
Mr. M.F. Groot, Chairman of the Executive Board since 2014, will retire from the Executive Board effective March 31, 2024. Mr. Groot, a member of the Executive Board since 2003, has been with the Company for 35 years. The Supervisory Board expresses its gratitude for his dedication and remarkable contributions to the Company during this long period. He will be succeeded as Chairman of the Executive Board by Mr. J.N. van Wiechen, member of the Executive Board since 2014.
On behalf of the Supervisory Board,
M. van der Vorm, Chairman
March 27, 2024
Report of the Executive Board of HAL Holding N.V.
Net income of HAL Holding N.V. for 2023 amounted to € 1,001 million (€ 11.17 per share) compared with € 647 million (€ 7.23 per share) for 2022.
The net asset value based on the market value of the quoted companies and the liquid portfolio and on the book value of the unquoted companies, increased by € 700 million in 2023. The book value of the unquoted companies is detailed on page 131 of the financial statements. After taking into account the cash portion of the 2022 dividend (€ 221 million) and the purchase of treasury shares (€ 3 million), the net asset value amounted to € 13,563 million (€ 150.12 per share) on December 31, 2023, compared to € 13,087 million (€ 147.72 per share) on December 31, 2022.
Corporate reorganization
Mr. M.F. Groot, Chairman of the Executive Board since 2014, will retire from the Executive Board effective March 31, 2024. He will be succeeded as Chairman of the Executive Board by Mr. J.N. van Wiechen, member of the Executive Board since 2014. In connection with this change and in order to better align the organizational structure of HAL, also given the size of the investments of HAL that are located in and/or managed from the Netherlands, the place of effective management of HAL Holding N.V. will be transferred to the Netherlands as from April 1, 2024.
As a consequence, HAL Holding N.V. will become subject to the Dutch corporate income tax regime as from April 1, 2024, and dividends will be subject to the deduction of Dutch dividend withholding tax (currently at the rate of 15%). Depending on their particular circumstances, shareholders may be entitled to a full or partial relief of Dutch dividend withholding tax. The net effect on HAL’s future consolidated income tax charge (2023: € 194 million) will depend on the taxable income of HAL Holding N.V., but also on that of its subsidiaries as well as future changes in tax laws. The taxable income of HAL Holding N.V. will depend on the composition of its assets and liabilities including the size of the corporate liquid portfolio as well as developments in the financial markets relating to interest and currency exchange rates and return on equities.
In view of the transfer of HAL Holding’s place of effective management, an extraordinary general meeting of shareholders of HAL Trust was held on March 22, 2024. This meeting approved an amendment of the trust deed of HAL Trust and the articles of association of HAL Holding N.V. The amendments included provisions for the share capital of HAL Holding N.V. and HAL Trust to be identical in terms of number of outstanding shares and nominal value, conversion of available profit reserves of HAL Holding N.V. into nominal share capital and further clarification that distributions received from HAL Holding N.V. by HAL Trust are to be paid promptly to the respective shareholders of HAL Trust.
On November 23, 2023, an amendment of the dividend policy was announced. The current dividend policy is, barring unforeseen circumstances and provided sufficient liquid assets, to base the dividend (in cash) on 2.5% of the volume-weighted average December share price of HAL Trust in the year prior to the year of the dividend payment. Accordingly, the proposed cash dividend per share over 2023 amounts to € 2.85 (cash dividend 2022: € 2.50 per share).
Due to the fact that a significant part of the Company’s net income is determined by the results of the quoted companies and in view of the broad composition of the investment portfolio as well as potential capital gains and losses, we generally do not express expectations with respect to net income. During the period from December 31, 2023, through March 22, 2024, the market value of the ownership interests in quoted companies and the liquid portfolio was positively impacted by changes in market prices for approximately € 440 million (€ 4.87 per Share).
The Company’s strategy is focused on acquiring and holding significant shareholdings in companies, with the objective of increasing long-term shareholders’ value.
When selecting investment candidates the Company emphasizes, in addition to investment and return criteria, the potential of playing an active role as a shareholder and/or board member. Given the emphasis on the longer term, the Company does not have a pre-determined investment horizon.
HAL's strategy with respect to environmental, social and governance topics (ESG) is that it expects its investments to structurally and continuously improve on all material aspects of ESG topics, in order to create long term value. We refer to the paragraph ESG in this report.
HAL is also active in real estate. The real estate activities are concentrated in the greater Seattle metropolitan area with an emphasis on the development and rental of multi-family properties.
The liquid portfolio is primarily invested in short-duration investment grade bonds, cash deposits and quoted equities. This provides a high degree of flexibility for potential acquisitions.
There are a number of risks associated with the strategy and with its implementation.
Financial risks are further described in the section supplemental information of the financial statements on pages 149 through 152.
Besides risks which are specific to individual companies (these risks are not managed by HAL Holding N.V., see page 20), important risk factors are summarized below. The risks described below also exclude the risks of Koninklijke Vopak N.V. (‘Vopak’, 48.15%) and Safilo Group S.p.A. (‘Safilo’, 49.8%). Although HAL’s ownership in these associates is below 50%, these companies are included in the consolidated financial statements of the Company as, in accordance with the provisions of IFRS 10, the Company is deemed to have control over these entities. Reference is also made to the paragraph Administrative organization, risk management systems and financial reporting on page 20, for the organizational and control aspects of the consolidation of Vopak and Safilo.
Concentration risk
Concentration risk exists with respect to Royal Boskalis B.V. (‘Boskalis’). The book value of Boskalis represents 33% of HAL’s net asset value as of December 31, 2023. The 2023 revenues of Boskalis represents 43% of the 2023 consolidated revenues of the unquoted companies. Accordingly, adverse developments at Boskalis can have a substantial negative effect on the financial position of HAL.
Market value risk
In addition to the interests in the quoted associates Vopak, Safilo and SBM Offshore (aggregate market value of € 2.5 billion at the end of 2023), HAL owned listed equities, including the investment in Technip Energies, which are part of the liquid portfolio and other financial assets, for an amount of € 0.7 billion (2022: € 0.5 billion). The value of these assets can be subject to significant fluctuations as a result of the volatility of the stock markets.
Interest rate risk
Investments in fixed-income instruments are exposed to fluctuations in interest rates. At the end of 2023, HAL had invested in investment-grade bonds for an amount of € 2.0 billion. The average duration of this portfolio at the end of 2023 was 1.1 year. The remainder of the fixed-income portfolio primarily consisted of deposits with banks, which had a duration of less than one month. In view of the short duration of these assets, the interest rate risk is relatively limited. In addition, the risk of an increase in interest rates exists with respect to the Company’s debt position.
Of the € 1,760 million interest-bearing debt outstanding at the end of 2023 (2022: € 2,519 million) 24% (2022: 29%) was borrowed at fixed rates for an average period of 5.2 years (2022: 4.3 years).
Currency risk
The most important currency risk relates to currency translation risk as a result of the translation of (net) balance sheet positions from a foreign currency to the euro. At the end of 2023 the unhedged exposure to currency translation risk was € 2,672 million (2022: € 2,505 million). The largest currency exposure related to the U.S. dollar and amounted to € 1,568 million (2022: € 1,389 million). The potential impact is detailed in the section supplemental information of the financial statements on page 151. Currency risk also exists with respect to the translation of income statements in foreign currency. Changes in exchange rates compared with 2022 had a negative effect on revenues of € 72 million. The negative effect on operating income was € 8 million.
Credit risk
HAL is subject to credit risk with respect to financial instruments and liquid assets. This is the risk that a counterparty is unable to comply with its contractual obligations. The Company generally only enters into transactions with counterparties that have a strong credit rating. At the end of 2023 the liquid assets (excluding equities) amounted to € 4.3 billion (2022: € 4.8 billion) of which € 2.8 billion (2022: € 3.4 billion) was part of the “corporate” liquid portfolio. At the end of 2023, the fixed-income part of the corporate liquid portfolio consisted for 72% of investment-grade bonds with an average long-term S&P credit rating of A. The remainder primarily consisted of short-term deposits held at banks with an average short-term S&P credit rating of A-1 and an average long-term rating of A+.
Liquidity risk
Liquidity risk relates to situations where a company is unable to comply with its financial obligations. The financial liabilities mainly relate to the consolidated subsidiaries. The liquidity risk of the consolidated subsidiaries is detailed in the section supplemental information on pages 150 through 151 of the financial statements. In view of the current size of the corporate liquid portfolio, the liquidity risk is limited.
Acquisition risk
In the process of acquisitions, the Company makes hypotheses, assumptions and judgments about possible future events. Actual developments may turn out to be significantly different. In addition, errors of judgment in due diligence and contract negotiations, as well as non-compliance with laws and regulations in the context of acquisitions, could result in (opportunity) losses and/or reputational damage for the Company.
Reporting risk
Although HAL’s ownership interest in Vopak and Safilo Group is below 50%, IFRS requires (since January 1, 2014) these associates to be consolidated in the consolidated financial statements as HAL, in accordance with the provisions of IFRS 10 (Consolidated Financial Statements), is deemed to have control over these two entities. HAL has agreed with Vopak and Safilo on certain procedures for the exchange of information which allow HAL to comply with its consolidation requirement. If however, for whatever reason, either Vopak or Safilo will not, or is not able to, provide HAL with this information, HAL may not be able to comply with its obligation to prepare consolidated financial statements on a timely basis.
As of its 2024 annual report HAL will prepare annual consolidated sustainability statements under the European Sustainability Reporting Standards (ESRS), which will also include Vopak and Safilo. If, for whatever reason, either Vopak or Safilo will not, or is not able to, provide HAL with the required sustainability information, HAL may not be able to comply with its obligation to prepare consolidated sustainability statements on a timely basis.
Other
In addition to the above-mentioned risk factors, it should be noted that the profitability and the net asset value of the Company are susceptible to economic downturns. Demand for the products and services of the subsidiaries and minority-owned companies and/or their profitability may decline as a direct result of an economic recession, inflation, changes in the prices and availability of raw materials, climate related risks (transitional and physical), the inability to transform business models to a digital environment, consumer confidence, interest rates or governmental (including fiscal) policies, legislation as well as geopolitical developments. In addition, the operations and profitability of certain investee companies may be negatively affected by restrictive measures as a result of a pandemic.
With respect to ESG, there is a risk that the Company's objectives relating to its ESG strategy are not achieved.
On January 18, 2023, GreenV B.V. (‘GreenV’) acquired 80% of Prins USA, a supplier of high-quality, high-tech glass greenhouses in the United States with 2023 sales of € 27 million.
On March 8, 2023, GreenV acquired the activities of Voshol in the Netherlands, active in the engineering and installation of heating and electrical systems for greenhouses with 2023 sales of € 36 million.
On May 24, 2023, GreenV acquired Green Simplicity in the Netherlands. Green Simplicity delivers research systems to help clients determine the ideal growth conditions for crop cultivation in a fully controlled environment and develops systems for large-scale controlled daylight-free cultivation. Sales over 2023 amounted to € 4 million.
In August 2023, GreenV acquired a 25% interest in Apex. This company designs, manufactures and builds greenhouses in Australia and New-Zealand and reported 2023 revenues of AU $ 28 million.
In February 2023, HAL acquired the remaining 1.1% shares in Boskalis it did not yet own. HAL is now 100% shareholder of Boskalis.
In March 2023, MSPS Holding B.V. (previously named Infomedics Holding B.V.) acquired Vertimart. This company provides software for dental practices.
On March 14, 2023, HAL completed the acquisition of IQIP, a supplier of foundation and installation equipment to the offshore wind, coastal & civil and oil & gas markets. The company is active worldwide and both sells and rents out equipment. Revenue over 2023 amounted to € 176 million. On August 11, 2023, HAL announced it had agreed to sell 40% of IQIP to AvH Growth Capital N.V. (‘AvH’) and 20% to MerweOord B.V. (‘MerweOord’). MerweOord has the option to increase its shareholding to 33.33% during 2024, which upon exercise would result in HAL, AvH and MerweOord each owning one-third of IQIP’s shares. The transaction is based on an equity value of IQIP, adjusted for dividend, of € 250 million. The finalization of the transaction is subject to regulatory clearance. The obtaining and timing of this clearance is uncertain.
On April 24, 2023, HAL increased its ownership interest in Prodrive Technologies Group B.V. from 31.45% to 47.03%. The company is active in the research, development and manufacturing of high-tech electronics, software and mechatronic products and systems. Sales for 2023 amounted to € 506 million.
On October 27, 2023, Boskalis has signed a contract with Dutch shipbuilding company Royal IHC to build a large trailing suction hopper dredger. The vessel will have a hopper capacity of 31,000 m3 and will be built at the IHC yard in Krimpen aan den IJssel, the Netherlands, over the next few years. In connection with this contract and the acquisition of IQIP, HAL has provided certain guarantee facilities with an exposure for HAL of an amount of up to € 150 million. This is in addition to a loan of € 30 million provided by HAL to IHC in June, 2023, and a liquidity standby facility of up to € 50 million provided by HAL to IHC in October 2023.
On February 15, 2024, HAL invested € 140 million in preferred share capital in Koppert TopCo B.V. (‘Koppert’). Koppert, based in Berkel en Rodenrijs (the Netherlands) is the global leader in biological solutions for agriculture. The company has approximately 2,700 employees and revenues over 2023 of € 450 million.
On February 29, 2024, Boskalis acquired a 100% interest in ALP Maritime Group B.V. The company is a specialist in marine services and operates a fleet of 8 powerful long-distance towing and anchor-handling vessels.
Koninklijke Boskalis B.V (100%), is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors based in Papendrecht (the Netherlands). The company provides creative and innovative solutions to infrastructural challenges in the maritime, coastal and delta regions of the world. With core activities such as coastal defense, riverbank protection and land reclamation, Boskalis is able to provide adaptive and mitigating solutions to combat the effects of climate change, such as extreme weather conditions and rising sea levels, as well as delivering solutions for the increasing need for space in coastal and delta regions across the world. The company facilitates the development of offshore energy infrastructure, including renewable wind energy. Boskalis is furthermore active in the construction and maintenance of ports, waterways, access channels and civil infrastructure. Boskalis has a versatile fleet of more than 500 vessels and floating equipment and had 11,634 employees at the end of 2023, including associates. Revenues for 2023 amounted to € 4,283 million (2022: € 3,578 million). EBITDA (earnings before interest, taxes, depreciation and amortization excluding exceptional items and purchase price accounting adjustments) of Boskalis amounted to € 920 million (2022: € 556 million). Boskalis reported an EBITDA including exceptional items and excluding the effect of purchase price accounting adjustments of € 1,016 million (2022: € 604 million). Operating income (income before interest, exceptional items, taxes and amortization of intangible assets but including amortization of software) of Boskalis excluding the effect of purchase price accounting adjustments amounted to € 606 million (2022: € 250 million). Cash balances less debt including lease liabilities amounted to € 523 million (December 31, 2022: € 237 million). Net income excluding the effect of purchase price accounting adjustments and including exceptional items for 2023 amounted to € 601 million (2022: € 241 million). At the end of 2023 the order book of the company amounted to € 6.0 billion compared to € 6.1 billion at the end of 2022.
HAL has an ownership interest in Boskalis since 1989.
Broadview Holding B.V. (97.4%) is located in ‘s-Hertogenbosch (the Netherlands) and employed 5,760 FTE’s at the end of 2023 (2022: 6,104). Broadview is an international holding company that is active in two industry clusters: Material Technology and Energy. With sales of circa EUR 1.2 billion the material technology business – Broadview Industries – has a leading position in the global market for surface materials. The companies in this cluster manufacture, fabricate and sell composite panels and related products with superior aesthetic and functional properties, which includes FENIX®, an innovative material for interior design. Arpa Industriale, Homapal and Formica produce composite panels for interior applications such as kitchens and other residential furniture as well as interiors for offices, healthcare, retail and hospitality. Other companies include Trespa that focuses on façade cladding and laboratory furniture and Westag that produces interior doors, kitchen worktops, solid surface material and coated plywood panels. The material technology cluster also comprises Direct Online Services, an e-commerce-led, multichannel retailer of kitchen worktops. Together, the companies in this cluster have a global presence, operate 15 factories across Europe, North America and Asia and are supported by group centers of excellence for technology and marketing/design. The energy cluster of Broadview – Broadview Energy Solutions – focuses on the transition towards cleaner fuels. The companies in this cluster are DMT Environmental Technology (Netherlands) that supplies biogas upgrade facilities and related equipment, Barents NaturGass (Norway) that distributes liquefied natural gas and Aritas Cryogenics (Turkey) that manufactures cryogenic tanks. Furthermore, Cryogenic Container Solutions (Netherlands) operates a leasing portfolio of cryogenic containers and road trailers. Total revenues of Broadview Holding for 2023 decreased by 4.2% to € 1,306 million (2022: € 1,364 million). Excluding the effect of acquisitions and changes in currency exchange rates revenues decreased by 6.0% compared with an increase of 6.6% in 2022. Operating income amounted to € 53 million (2022: € 43 million) and was positively affected by decreasing raw material and energy prices. Lower volumes sold had a negative effect on operating income.
HAL has an ownership interest in Broadview since 1996.
Van Wijnen Holding B.V. (88.0%) is located in Baarn (the Netherlands) and employed 2,282 FTE’s at the end of 2023 (2022: 2,252). The company is active in residential construction, utility construction, project development and renovation activities in the Netherlands. Revenues and operating income for 2023 amounted to € 1,249 million (2022: € 1,275 million) and € 3 million (2022: € 19 million) respectively. Traditional construction performed in line with last year but the ramp-up of the factory for industrial house production experienced delays and resulted in start-up losses.
HAL has an ownership interest in Van Wijnen since 2020.
Timber and Building Supplies Holland N.V. (94.3%), TABS, located in Zaandam (the Netherlands), is one of the country’s leading suppliers of timber products and building materials used for new construction, renovations and maintenance. The company has outlets throughout the Netherlands and employed 1,636 FTE’s at the end of 2023 (2022: 1,708). Following the strong performance over 2021 and 2022, fueled by the Covid period and positive effects from inflation, revenues for 2023 decreased by 10.7% to € 917 million (2022: € 1,027 million) due to both lower timber prices and lower volumes. Operating income amounted to € 48 million (2022: € 89 million).
HAL has an ownership interest in Timber and Building Supplies Holland since 1999.
Pro Gamers Group, (64.3%), located in Berlin (Germany), is globally active in the development, distribution and e-commerce of computer gaming equipment. At the end of 2023 the company had 615 FTE’s (2022: 648). Revenues for 2023 amounted to € 449 million (2022: € 452 million). Operating income was € 28 million (2022: € 12 million). During 2023, results improved versus 2022, however not to the extent expected. Our expectation of the future profitability of the company was also reduced. Accordingly, also in view of the high leverage of the company and the associated interest expense, the book value of the investment in Pro Gamers was fully impaired during 2023 (effect for HAL of € 131 million).
HAL has an ownership interest in Pro Gamers Group since 2021.
Auxilium GmbH (53,1%) is located in Essen (Germany) and is the holding company of fourteen German companies which sell medical aid products. At the end of 2023, Auxilium employed 2,481 FTE’s (2022: 2,389). Revenues for 2023 increased by 8.7% to € 324 million (2022: € 298 million). Operating income amounted to € 22 million (2022: € 22 million).
HAL has an ownership interest in Auxilium since 2010.
Koninklijke Ahrend B.V. (98.0%) is based in St. Oedenrode (the Netherlands) and employed 1,251 FTE’s at the end of 2023 (2022: 1,317). The company delivers furniture and fit-out services for office, education, healthcare and retail environments and has sales channels in Western Europe, Eastern Europe and China. Revenues for 2023 decreased by 8.1% to € 295 million (2022: € 321 million). Despite lower revenues, operating income increased from € 3 million in 2022 to € 12 million in 2023 due to higher gross margins.
HAL has an ownership interest in Ahrend since 2001.
Anthony Veder Group N.V. (62.9%) is a Rotterdam based shipping company. At the end of 2023 the company had 469 FTE’s (2022: 517) and operated 29 gas tankers (2022: 31), of which 28 (2022: 27) were owned. Revenues for 2023 (including recharged bunker and port costs) amounted to $ 254 million (2022: $ 241 million). Operating income amounted to $ 42 million (2022: $ 24 million). This increase is primarily due to higher income from the LNG activities. At the end of 2023 the company operated eleven LNG tankers.
HAL has an ownership interest in Anthony Veder since 1991.
Atlas Professionals B.V. (86.9%), located in Hoofddorp (the Netherlands), is a temporary staffing agency supplying technical personnel to the international oil & gas, marine and offshore wind industries. Atlas also owns NextWave Partners, a recruitment agency mainly focused on the renewable energy sectors. The company employed 387 FTE’s at the end of 2023 (2022: 395). Revenues for 2023 increased by 8.3% to € 195 million (2022: € 180 million). Operating income for 2023 amounted to € 3 million (2022: € 4 million). Excluding the effect of acquisitions in 2022 revenues decreased by 1.1%.
HAL has an ownership interest in Atlas since 2011.
GreenV B.V. (74.6%), based in Waddinxveen (the Netherlands) is the holding company of a group of companies that are active in the greenhouse construction sector: Stolze, Prins Group, H.T. Verboom, Prins USA, Voshol, JV Energy solutions, Green Simplicity, Apex Greenhouses and GreenV Mexico. GreenV employed 337 FTE’s at the end of 2023 (2022: 250). Revenues for 2023 amounted to € 150 million (2022: € 180 million). Acquisitions contributed € 56 million to 2023 revenues. Revenues decreased due to the macro-economic environment as well as a tight financing market that caused many clients to postpone projects. Operating income for 2023 amounted to € 4 million (2022: € 8 million).
During 2023 a goodwill impairment of € 68 million was recorded on GreenV.
HAL has an ownership interest in GreenV since 2021.
FD Mediagroep B.V. (98.3%) is located in Amsterdam. The company employed 438 FTE’s at the end of 2023 (2022: 427). The brands of FD Mediagroep include the Dutch financial newspaper Het Financieele Dagblad, the radio station BNR Nieuwsradio, the information and data services provider Company.info and Investment & Pensions Europe. In 2023 BNR Nieuwsradio renewed its FM frequency license.
Revenues for 2023 amounted to € 118 million (2022: € 109 million). Operating income amounted to € 16 million (2022: € 16 million).
HAL has an ownership interest in FD Mediagroep since 1997.
MSPS Holding B.V. (95.1%), previously named Infomedics Holding B.V., provides processing and software services for the Dutch health care sector and had 342 FTE’s at the end of 2022 (2022: 266). The company is based in Almere (the Netherlands). On an annual basis MSPS handles approximately € 4.3 billion in payment flows. Operating income for 2023 amounted to € 48 million (2022: € 42 million).
HAL has an ownership interest in MSPS Holding since 2012.
RyK Holding (100%) is the holding company of the optical retail chain Rotter y Krauss that is active in the Chilean market since 1914. HAL acquired this company as part of the sale of GrandVision in 2021. Rotter y Krauss currently operates 101 stores in Chile. Revenues for 2023 amounted to CLP 50.1 billion (2022: CLP 49.6 billion), approximately € 55 million, and the company has 785 FTE’s (2022: 753). Operating income was € 4 million (2022: € 9 million). The decrease in operating income is due to lower gross margins and higher operational costs as a result of the high inflation environment in Chile.
HAL has an ownership interest in Rotter y Krauss since 2008.
HR Top Holding B.V. (86.1%) is the holding company of Top Employers Institute based in Amsterdam. Top Employers Institute is globally active in certification and benchmarking of human resource practices. The company has 203 FTE’s (2022:159) and reported 2023 sales of € 40 million (2022: € 34 million) and an operating income of € 8 million (2022: € 7 million).
HAL has an ownership interest in Top Employers Institute since 2021.
AN Direct B.V. (90%) is the holding company of MD Hearing which sells hearing aids via its website and call centers in the United States. The company employed 54 FTE’s at the end of 2023 (2022: 38). Revenues for 2023 amounted to $ 31 million (2022: $ 23 million). The operating income for 2023 was $ 1 million (2022: a loss of $ 3 million).
HAL has an ownership interest in AN Direct since 2017.
Unquoted minority interests
HAL has ownership interests in the following unquoted associates:
Coolblue Holding B.V. (49%), based in Rotterdam, is one of the leading e-commerce companies in the Benelux and had 5,735 employees in 2023 (2022: 6,114). Coolblue also offers energy services under its own energy label “Coolblue Energy”, an integrated offering of gas and energy contracts as well as the installation of solar panels and electrical vehicle charging boxes. The company reported 2023 revenues of € 2,409 million (2022: € 2,349 million). In 2023, Coolblue further expanded its activities in Germany and increased the number of physical stores in the Netherlands and Belgium. The company operated 25 physical stores at the end of 2023. Earnings before interest, taxes, depreciation and amortization and exceptional items (EBITDA) amounted to € 88 million (2022: € 44 million).
HAL has an ownership interest in Coolblue since 2016.
Prodrive Technologies Group B.V. (47%), based in Son (the Netherlands) is active in the research, development and manufacturing of high-tech electronics, software and mechatronic products and systems. Prodrive Technologies provides solutions for, among others, the semiconductor, medical and electric mobility industries. The company employed 2,401 FTE’s at the end of 2023 (2022: 2,528). Revenues for 2023 amounted to € 506 million (2022: € 415 million). EBITDA for 2023 was € 66 million ( 2022: € 54 million).
HAL has an ownership interest in Prodrive Technologies Group since 2022
DMF Holding B.V. (28.5%), based in The Hague, operates under the trade name Dutch Mortgage Funding Company (DMFCO). The company is active in the origination and management of Dutch mortgages under the label Munt Hypotheken. The mortgages are funded by pension funds and international investors. At the end of 2023 DMFCO had assets under management of approximately € 28 billion. The company reported 2023 revenues of € 64 million (2022: € 68 million) and employed 50 FTE’s at the end of 2023 (2022: 53).
HAL has an ownership interest in DMFCO since 2017.
280ppm B.V., (95%), based in Rotterdam, focuses on early stage growth investments in areas related to the reduction of greenhouse gases. The company owns a 10.7% stake in Enough, a producer of a protein rich product called “Abunda” which is used as the protein source and main ingredient in meat replacement products. The construction of the plant with a capacity of 10,000 ton in Sas van Gent (the Netherlands) was completed by the end of December 2022. The plant is in the commissioning phase. The company also owns a 34.8% stake in OTC Flow B.V., a trader and broker in energy certificates and bio fuels.
HAL has an ownership interest in 280ppm since 2021.
HAL has ownership interests in the following quoted associates:
Safilo Group S.p.A. (49.8%) is a Padua (Italy) based manufacturer and distributor of optical frames and sunglasses. The shares of the company are listed on the Milan stock exchange. At the end of 2023 the company had 3,828 employees.
Revenues for 2023 amounted to € 1,025 million (2022: € 1,077 million). The net loss amounted to € 25 million (2022: net profit € 54 million). The 2023 results include exceptional costs of € 39 million which mainly relate to restructuring expenses and impairments.
HAL has an ownership interest in Safilo since 2005.
The value of HAL’s ownership interest as of December 31, 2023, amounted to € 188 million.
For additional information on Safilo, please refer to the company’s annual report and its website www.safilo.com.
Koninklijke Vopak N.V. (48.15%), based in Rotterdam, provides storage and infrastructure solutions for vital products such as liquids and gases that provide energy for homes and businesses, chemicals for manufacturing products and edible oils for cooking. As of December 31, 2023, Vopak operated 76 terminals in 23 countries with a combined storage capacity of 35.2 million cubic meter. At the end of 2023, the company employed 5,505 FTE’s. The shares of the company are listed on Euronext in Amsterdam. Revenues for 2023 amounted to € 1,426 million (2022: € 1,367 million). Net income amounted to € 456 million (2022: loss € 168 million). Net income for 2022 was negatively affected by exceptional items (mainly impairments) of € 463 million.
HAL has an ownership interest in Vopak since 1999.
The value of HAL's ownership interest as of December 31, 2023 amounted to € 1,843 million.
For additional information on Vopak, please refer to the company’s annual report and its website www.vopak.com.
SBM Offshore N.V. (22.88%) The company designs, builds, installs and operates offshore floating facilities for the offshore energy industry and is based at Schiphol. As a leading technology provider, it puts its marine expertise at the service of a responsible energy transition by reducing emissions from fossil fuel production, while developing cleaner solutions for renewable energy sources. At the end of 2023 the company had 5,404 employees. Its shares are listed on Euronext in Amsterdam. Directional revenues for 2023 amounted to $ 4,523 million compared to $ 3,288 million for 2022. Directional underlying EBITDA amounted to $ 1,319 million (2022: $ 1,010 million). The directional underlying net income for 2023 amounted to $ 524 million compared to $ 115 million for 2022. At the end of 2023 the pro forma order backlog of the company amounted to $ 30.3 billion compared to $ 30.5 billion at the end of 2022.
HAL has an ownership interest in SBM Offshore since 2012.
The value of HAL's ownership interest as of December 31, 2023 amounted to € 515 million.
For additional information on SBM Offshore please refer to the company’s annual report and its website www.sbmoffshore.com.
The real estate assets of HAL are located in the Seattle metropolitan area (United States of America) and the Netherlands. HAL has a real estate operation in Seattle (8 employees). The portfolio consisted at the end of 2023 of seventeen joint ventures of which two were invested in office buildings and fifteen in residential real estate with a total (expected) cost of $ 1,234 million (€ 1,115 million). HAL’s total equity commitment for these projects amounts to $ 344 million (€ 311 million) of which $ 51 million (€ 46 million) was not yet spent as of December 31, 2023. At the end of 2023, the book value of the US real estate portfolio amounted to $ 228 million (€ 206 million). The increase in interest rates during 2023 has resulted in an increase of capitalization rates which has a negative effect on real estate values. Although, during 2023, there were very few transactions against which we could measure the value of the real estate portfolio, we have no indications that, in aggregate, the estimated value of the real estate portfolio is below the book value.
Residential real estate U.S.A
HAL has ownership interests in fifteen joint ventures for the development and rental of 2,393 apartments and the development and sale of 98 town-homes in the Seattle metropolitan area. Five projects (1,187 apartments) were (partially) completed at the end of 2023 and are 84% leased. Excluding a partially completed building, occupancy was 92%. The other projects will be completed during the period 2024-2026.
Office buildings U.S.A
This portfolio consists of a 50% ownership in a fully leased, 12,000 net rentable m² office property and an 80% ownership in a two-building, 5,700 m² office project both in Seattle’s Fremont neighborhood. In aggregate the offices are 73% leased.
For additional information on HAL’s real estate portfolio in the United States please refer to www.halrealestate.com.
The Netherlands
In the Netherlands, HAL has a 90% interest in a company that owns the retail centers De Aarhof (12,303 m²) in Alphen aan den Rijn, City Passage (7,405 m²) in Veldhoven and De Prinsenpassage in Rijswijk (19,787 m²). The intention is to redevelop these properties in order to add residential units and upgrade the retail space. The entitlement processes for these redevelopments are taking longer than expected. The book value of these assets at the end of 2023 amounted to € 63 million.
The corporate liquid portfolio, excluding the investment in Technip Energies N.V., amounted to € 2.9 billion as of December 31, 2023 (2022: € 3.0 billion). On December 31, 2023, the liquid portfolio consisted for 95% (2022: 93%) of fixed-income instruments and cash balances amounting to € 2.8 billion (2022: € 2.8 billion), and for 5% (2022: 7%) of equities, for an amount of € 0.2 billion (2022: € 0.2 billion). The fixed-income instruments and cash balances provided a return of 4.3% (2022: negative 3.1%). This portfolio consisted mainly of investment-grade bonds with an average S&P credit rating of A, an average duration of 1.1 years and a yield to maturity of 3.9%. These bonds are managed by external asset managers. Equities provided a return of 17.3% (2022: negative 11.8%).
The 14.9% ownership interest in Technip Energies N.V. of € 574 million (2022: € 345 million, 13.1%) is included in Other financial assets in the balance sheet.
The paragraphs below refer to the segmentation in the pro forma financial statements on page 129 where Vopak and Safilo are accounted for on an unconsolidated basis using the equity method.
Revenues from the unquoted subsidiaries for 2023 amounted to € 9,854 million (2022: € 7,626 million), representing an increase of € 2,228 million (29.2%). This increase is primarily the result of the full year consolidation of Boskalis (consolidated as from July 1, 2022). Excluding the effect of acquisitions, divestitures and currency exchange differences, revenues from the unquoted subsidiaries increased by € 81 million (1.1%).
The operating income of the unquoted companies for 2023 amounted to € 915 million (2022: € 403 million), an increase of € 512 million. Excluding the effect of acquisitions, divestitures and changes in currency exchange rates operating income increased by € 286 million. This increase is primarily due to higher results from Boskalis.
Net income from quoted minority interests increased by € 378 million to € 477 million. This increase is primarily due to higher income from Vopak (effect € 302 million) and the increase in value of the ownership interest in Technip Energies (€ 169 million). In 2022 Vopak reported exceptional losses of € 462.8 million (HAL share € 223 million). These losses were mainly due to impairments on property, plant and equipment.
This segment included HAL's share in the earnings from Boskalis until July 1, 2022. As from that date Boskalis was consolidated and is now reported in the segment unquoted companies.
Real estate
Operating income from real estate decreased by € 66 million to a loss of € 13 million. The 2022 results included realized capital gains of € 64 million on the sale of two apartment buildings in Seattle.
Liquid portfolio
Income from the liquid portfolio increased by € 258 million to € 139 million. This is primarily due to an increase in value of the fixed-income portfolio whereas in 2022 this portfolio provided a loss.
Exceptional gains and losses
The 2023 results include a net exceptional gain of € 28 million, mainly relating to capital gains and reversal of impairments at Boskalis. The 2022 results included a net exceptional gain of € 655 million. This net gain primarily consisted of a € 656 million revaluation of the previously held minority stake in Boskalis prior to obtaining control, capital gains on the sale of Livit, Floramedia and MYLAPS (in total € 85 million), partly offset by a € 111 million impairment on the minority interest in Prodrive Technologies (net of a € 19 million release of an earn-out liability).
In addition, impairments on goodwill were recorded in 2023 for an amount of € 233 million (2022: € 312 million) and other intangibles of € 54 million. These impairments relate to Pro Gamers Group and GreenV.
The administrative procedures, the risk management and internal control systems associated with the Company’s strategy and its implementation, the financial reporting and compliance are all designed to provide a reasonable degree of assurance that significant risk factors are identified, their development is monitored and, where appropriate, action is taken on a timely basis. (Refer to the paragraph Risks on page 11) The Supervisory Board is regularly informed about these matters.
The companies in which HAL has interests differ in industry, size, culture, geographical diversity and stage of development. Each company is subject to specific risks relating to strategy, operations, finance and (fiscal) legislation. HAL has therefore chosen not to institute a centralized management approach and not to develop a central risk management system. Each investee company has its own financial structure and is responsible for evaluating and managing its own risks as well as formulating and executing its own strategy with respect to issues such as sustainable development, compliance with law and regulations, safety, health and environment as well as cyber security (including regulations with respect to data protection). The companies generally have a supervisory board of which certain members are affiliated with HAL. However, the majority of the members of these supervisory boards is not affiliated with HAL. This corporate governance structure allows the investee companies to fully concentrate on developments that are relevant to them and to assess which risks to accept and which risks to avoid. Accordingly, in addition to risks associated with HAL’s strategy and its implementation as described above, there are specific risk factors associated with each individual investee company. It is the responsibility of each investee company to evaluate and manage these risks. These risks are therefore not managed by HAL.
HAL has a management reporting system to monitor its performance, as well as that of the companies where its ownership exceeds 50%, on a monthly basis. This system comprises a set of tools including portfolio analysis, budgeting and the reporting of actual as well as projected results, balance sheet and cash flow information and operational performance indicators. In addition, management of the majority-owned companies provide internal letters of representation with respect to the half-year and year-end financial statements. They also report on fraud and irregularities on a semi-annual basis. Each investee company is responsible for its own fraud risk assessment as well as the implementation of policies and procedures to prevent fraud.
HAL’s objective is, in the context of the inherent limitations of the decentralized management approach described above, that its internal and external financial reporting is complete, accurate, valid and timely. Financial reporting risk can be defined as any event that impedes HAL to achieve its financial reporting objectives. Although HAL is aware that no risk management and internal control system can provide absolute assurance that its objectives will be achieved or that errors, losses, fraud or the violation of laws and regulations, human errors and mistakes will be prevented, the Company aims to constantly improve its risk management and internal control systems. In this context the risk management and internal control systems with respect to financial reporting were again examined by Deloitte Risk Advisory B.V. during 2023. For the most important financial processes (financial reporting and consolidation, information technology, treasury, taxation and entity level controls), risks were identified as well as the control measures designed to mitigate these risks. These controls were also tested in order to conclude on their operating effectiveness during the year. The risk management review did not cover the key financial processes of HAL’s investee companies for the reasons described above. The Company's risk management and internal control systems were discussed with the Supervisory Board.
From 2024 onward, the Company's risk management and internal control systems will be expanded to also cover sustainability reporting.
ESG
On November 28, 2022, the European Council adopted the Corporate Sustainability Reporting Directive (CSRD), which entered into force on January 5, 2023. HAL is in scope of the CSRD and needs to apply the European Sustainability Reporting Standards (ESRS) as of its 2024 annual report. This directive amends current European Union regulations on disclosure of sustainability information in annual reports and introduces extensive disclosure requirements on environmental, social and governance (ESG) topics. It significantly expands the scope of companies that need to report ESG information. In addition, assurance requirements are brought into place with regards to sustainability disclosures. HAL is in the process of preparing to comply with the directive. This preparation includes performance of a double materiality analysis (see below), training on CSRD and ESRS subjects as well as the development of reporting and consolidation templates and systems. HAL will also need to comply with the EU taxonomy in 2024 and will report on eligible and aligned activities in its 2024 annual report.
HAL considers responsible behavior with respect to ESG topics part of good business practice. HAL’s vision with respect to its investment strategy has been further refined to reflect this: As an active long-term investor, HAL expects its investments to structurally and continuously improve on all material aspects of ESG, in order to create long term-value. This ESG vision statement is in accordance with HAL's overall strategy and decentralized management approach, whereby the boards of the individual investee companies are responsible for their strategy and its execution and at the same time addresses the fact that HAL considers ESG an important element of long-term value creation and therefore expects investee companies to also improve their performance on these aspects.
The strategic ESG framework of HAL consists of focus areas with respect to (i) HAL itself and (ii) the approach of HAL towards its investee companies.
For HAL itself, we realize that the key impact of HAL with respect to sustainability matters is through the allocation of its human and financial resources throughout the investment life cycle. Therefore, ESG considerations will be further embedded in the investment (management) process. For HAL itself the following focus areas are defined:
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ESG in the investment life cycle (at due diligence and during ownership). HAL views ESG holistically and therefore as an integral part of its operations and the (future) success thereof. HAL will structurally and explicitly take ESG considerations into account when assessing, selecting and managing its investments;
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Employee engagement and diversity. HAL strives to be a diverse organization with equal opportunities for its employees (see below);
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ESG training. HAL developed an ESG training program for its investment team members;
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Information security. HAL expects and demands high standards of information security from its employees, IT suppliers and external advisors;
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Greenhouse gas emissions. HAL is reviewing how to reduce its emissions and how to compensate the remaining emissions; and
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Business ethics. HAL expects and demands the highest standards of integrity and ethical behavior of all HAL employees. It is HAL’s policy to comply with all applicable laws, including but not limited to those with respect to employment, human rights, privacy, anti-discrimination, health, anti-trust, securities fraud, corruption and bribery (see below).
With respect to its investment portfolio, HAL continues to have a decentralized management approach (see above). Therefore, it is the management of each investee company that addresses and reports on ESG topics and includes these in their business strategies, in order to allow integration of key ESG value drivers into a sustainable business model and strategy. It is the responsibility of the supervisory boards of the investee companies to monitor this strategic process and its subsequent outcomes. Through its representation on the supervisory boards of the investee companies, HAL aims to positively influence their ESG ambitions and strategy and monitor progress made. To safeguard a structural approach to ESG, HAL expects investee companies to include the following focus areas in their approach to ESG:
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Governance. Investee companies should integrate monitoring, managing and overseeing sustainability matters in roles, responsibilities and performance evaluations;
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Materiality assessment. Investees should be aware of the context they operate in and identify the most material themes related to ESG;
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Strategy and business model. Investee companies should have an ESG strategy aligned with or integrated in the corporate strategy in order to grasp ESG opportunities and mitigate ESG risks; and
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Performance and risk management. Investee companies should have meaningful and ambitious targets for their material themes and corresponding policies, procedures and action plans. Investees should be aware of ESG-related risks and identify and capture those in their risk management framework and have mitigating controls in place.
ESRS requires each company to design a materiality assessment to identify material impacts, risks and opportunities (IRO’s) in relation to environmental, social and governance sustainability matters. A sustainability matter meets the criterion of double materiality if it is material from either an impact perspective or a financial perspective, or both:
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A sustainability matter is material from an impact perspective when it pertains to the company’s material actual or potential, positive or negative impacts on people or the environment over the short, medium and long term. A material sustainability matter from an impact perspective includes impacts connected with the company’s own operations and upstream and downstream value chain, including through its products and services, as well as through its business relationships.
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A sustainability matter is material from a financial perspective if it generates risks or opportunities that materially affect (or could reasonably be expected to affect) the company’s financial position, financial performance, cash flows, access to finance or cost of capital over the short, medium or long term.
To establish the ESG topics that are material to HAL on a consolidated basis, a bottom-up double materiality assessment (DMA) has been applied. This means that HAL itself and all of its investee companies performed their own (preliminary) DMA. This process included stakeholder engagement at the level of HAL and at the investee level. The outcome of these assessments (i.e. local material topics) subsequently formed the input for the consolidated DMA. Through a mapping to ESRS (sub)topics, the local material topics were clustered into consolidated topics and weightings were applied based on qualitative and quantitative thresholds to define the material topics at consolidated level. This approach is based on the draft guidance from the European Financial Reporting Advisory Group (EFRAG) as a valid approach to materiality assessments for groups that are active in different sectors and/or that operate various business models. For the consolidated DMA, the material topics will be reassessed from time to time based on the DMA of HAL itself and the (updated/confirmed) investee company DMA’s.
For the preliminary double materiality assessment , a quantitative analysis was performed, reviewing the significance of a potentially material topic based on:
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aggregate 2022 revenues of the investee companies that reported the topic;
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aggregate assets at the end of 2022 of the investee companies that reported the topic;
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aggregate FTE at the end of 2022 of the investee companies that reported the topic.
A topic was deemed likely material if, in aggregate, it was a material topic for investee companies that represented at least 60% of the consolidated revenues, assets or number of FTE's. The qualitative assessment will be updated in 2024. In addition, a qualitative assessment was performed to consider the impact a certain topic may have on the environment, people and (as a result) the reputation of HAL that is not necessarily financially quantifiable. Structural inappropriate management of such topics by HAL or its investee companies could lead to negative public perception and loss of trust and credibility, which could negatively affect business (opportunities), funding options and staff retention.
Based on the qualitative assessment and the aforementioned 60% threshold in the quantitative assessment, the following topics were considered material for HAL on a consolidated basis and are the preliminary topics that will form the basis for the 2024 sustainability statement in accordance with ESRS:
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Reduction of greenhouse gases emissions
Climate change mitigation by measuring and reducing greenhouse gases emissions. Further review and analysis is required to determine the relevant emission scopes and/or categories. This review comprises, among others, the significance and the availability of reliable data with respect to greenhouse gases emissions. -
Occupational health and safety
Health and safety of own employees and non-employees that work on-site. This includes well-being and protection by preventing accidents, injuries, and illnesses related to work activities and to promote a safe and healthy working environment. -
Business ethics
Managing risks surrounding ethical conduct of business, including fraud, corruption, bribery and facilitation payments, human rights violations, fiduciary responsibilities and other behavior that may have an ethical component. This includes sensitivity to business norms and standards as they shift over time, jurisdiction and culture.
We recognize that certain of our investee companies have made significant progress with respect to the development of their ESG strategy and reporting, while others are at the beginning of this process. We do expect, however, that all of our investee companies will structurally and continuously improve on all material aspects of ESG, in order to create long-term value. New investee companies are expected to include a structural approach to ESG in their strategy and include the focus areas mentioned above within three years after acquisition.
HAL Corporate
The Executive Board has adopted, with the approval of the Supervisory Board, a code of conduct and whistle-blower rules for the employees of HAL Holding N.V., HAL Investments B.V. and HAL Real Estate Inc. The purpose of this code of conduct is to state HAL’s policies on ethics, integrity, compliance with laws, employment and business conduct. With respect to compliance with laws, it is HAL’s policy to comply with all applicable laws, including, but not limited to, those with respect to employment, anti-discrimination, health, antitrust, securities, fraud, corruption and bribery. No employee, including members of the Executive Board of HAL Holding N.V., may violate any law or direct another employee or any other person to violate any law on behalf of HAL. HAL has also implemented rules of conduct relating to (suspected) fraud. These rules outline HAL’s approach with respect to the risks and threats of fraud and underline the commitment of HAL to maintain and adhere to the highest ethical standards in all of its affairs. With respect to employment it is HAL’s policy to maintain a working environment in which each individual is treated with respect and to ensure equal employment opportunity without discrimination or harassment on the basis of race, color, national origin, religion, sex, age or disability. In this context it should be noted that HAL holds personal information with respect to employment. This information is kept for employment-related purposes only. Personal information may only be released outside HAL with the permission of the employee. Employees may access and review their own personal information. The code of conduct also covers subjects such as conflicts of interest, use of e-mail, internet and social media, bribes, gifts, business courtesy, confidential information and securities transactions. The employees, including the members of the Executive Board, confirm on an annual basis that they have complied with the code of conduct. In addition, the understanding by the employees of the code of conduct is tested on an annual basis. The whistle-blower rules offer the opportunity for employees to report suspected irregularities. During 2023 no such irregularities were reported.
Taxation
With respect to taxation, HAL is committed to comply with all tax laws and regulations, including compliance with country by country tax reporting, in all jurisdictions where it is active. A tax strategy was adopted which provides a framework of how to operate the tax function and how risks related to taxation are managed. It also describes the various roles, responsibilities and procedures, including a quarterly reporting of the majority owned investee companies of their tax position and (potential) tax risks. These tax risks are managed by the respective investee companies and not by HAL. Previously, HAL Investments B.V. concluded a compliance agreement with the Dutch tax authorities in the context of the “Horizontal Supervision” model. This model was based on trust, mutual understanding and transparency. The tax authorities gradually implemented a number of changes in horizontal monitoring which means that the compliance agreements evolved into individual supervision plans for the hundred largest and/or most complex organizations in the Netherlands. The supervision by the Dutch tax authorities on this group of organizations is now based on the following elements:
- cooperation based on the principles of “horizontal supervision”;
- working real time;
- where possible relying on the internal control environment of the organization involved;
- pursue a professional working relation on the basis of transparency, mutual understanding and trust;
- stimulate a proactive approach; and
- communication on executive level with periodical review of the working relation.
HAL Investments B.V. forms part of the group to which this applies. The Dutch tax authorities renew the individual supervision plan for HAL Investments B.V. annually. The plan is based on HAL’s main risk areas and sets out the responsibilities of both HAL and the tax authorities.
HAL has taken note of the global minimum tax rules set by Pillar II legislation that was formally adopted on December 15, 2022, by the Council of the European Union, which are effective as from January 1, 2024, and which will be applicable to HAL. This legislation introduces an additional tax in situations where the effective tax rate in a certain jurisdiction is below 15%. Although the consolidated effective tax rate of HAL is above 15%, detailed calculations per legal entity and/or jurisdiction are required to demonstrate that the effective tax rate is above 15% on a per-jurisdiction basis. We are currently preparing to determine the impact of the Pillar II legislation.
Consolidation Vopak and Safilo
Although HAL’s ownership interest in Vopak and Safilo is below 50%, IFRS requires since January 1, 2014 that these associates are consolidated in the consolidated financial statements as HAL is deemed to have control, as defined in IFRS 10, over these two entities. Vopak and Safilo are both publicly traded companies. Whereas HAL has board representation and, accordingly, may be considered to have significant influence over these associates, neither operational nor strategic control was exercised. Moreover, Vopak and Safilo are, for example, not part of the above mentioned management reporting system which monitors the performance of the consolidated companies on a monthly basis. In addition, in view of its minority interest, the Company has no instruction rights with respect to Vopak and Safilo. HAL therefore continues to include the results of Vopak and Safilo in the segment Quoted minority interests. The Company has entered into Memoranda of Understanding with Vopak and Safilo with respect to confidentiality, the process of exchanging information and attendance rights to the audit committee meetings of Vopak and the Control and Risk Committee meetings of Safilo for an independent financial expert on behalf of HAL. This allows HAL to comply with IFRS and prepare consolidated financial statements which include the (audited) financial statements of Vopak and Safilo. However, HAL does not have access to the financial books and records, contracts and related information of Vopak and Safilo in order to independently verify that these financial statements are complete, valid and accurate.
Mr. M.F. Groot, chairman of the Executive Board of the Company, is a member of the Supervisory Board of Vopak and non-executive member of the Board of Safilo. Mr. J.N. van Wiechen, member of the Executive Board of the Company, is a member of the Supervisory Board of SBM Offshore. The information obtained in these capacities cannot be used for the preparation of the consolidated financial statements of the Company in order to preserve confidentiality and to allow these quoted associates to operate independently from the Company. Accordingly, the risk management and internal control systems of HAL with respect to financial reporting risks are not designed and are not able to provide assurance that the information relating to quoted associates in the Company’s consolidated financial statements does not contain material errors due to the inherent limitations described above. The assessment that the Company’s consolidated financial statements do not contain material errors attributable to the financial statements of Vopak and/or Safilo, is based on the external audit of these companies and the involvement of the independent financial expert referred to above. Vopak and Safilo both have included a description of their risks and risk management system in their respective annual reports. These risks are neither monitored nor managed by HAL.
In view of the fact that consolidating Vopak and Safilo significantly affects the financial statements of the Company, supplemental financial information is provided where, consistent with the period before the effective date of IFRS 10, Vopak and Safilo are accounted for on an unconsolidated basis using the equity method.
Accordingly, based on the above and taking into account the inherent limitations referred to above, we are of the opinion that the risk management and internal control systems with respect to financial reporting of HAL Holding N.V. provide reasonable assurance that the financial reporting does not contain material inaccuracies and that these systems operated properly during 2023 and we declare that, to the best of our knowledge:
1º. the financial statements give a true and fair view of the assets, liabilities, financial position and profit for the year of the consolidated entities taken as a whole;
2º. the report of the Executive Board gives a true and fair view of the situation as of the statement of financial position date and the developments during the year of the entities included in the financial statements taken as a whole, and
3º. this report includes a description of the principal risks HAL Holding N.V. is facing.
Executive Board HAL Holding N.V.
M.F. Groot (Chairman)
A.A. van ’t Hof
J.N. van Wiechen
March 27, 2024
Mr. M.F. Groot, Chairman of the Executive Board since 2014, will retire from the Executive Board effective March 31, 2024. Throughout his 35 years of service with HAL, he has not only been a valuable team member but also a friend and mentor to many. His dedication, expertise, and camaraderie have left an indelible mark on all of us at HAL. His willingness to share knowledge and lead with integrity has made a lasting impact on our professional lives and the success of our teams. Mel has played a pivotal role in the achievements of the Company and under his leadership HAL developed the optical retail activities which were sold in 2021, one of the largest successes to date. As he embarks on this new chapter of his life, we want to express our sincere gratitude for his countless contributions to HAL. We will miss him.
Arie van 't Hof
Jaap van Wiechen
Financial Statements HAL Trust
Consolidated Statement of Financial Position
In millions of euro | Notes | 2023 | 2022 |
|---|---|---|---|
Non-current assets | |||
Property, plant and equipment | |||
Right-of-use assets | |||
Investment properties | |||
Intangible assets | |||
Investments in associates and joint arrangements | |||
Other financial assets | |||
Derivatives | |||
Pension benefits | |||
Deferred tax assets | |||
Total non-current assets | |||
Current assets | |||
Inventories | |||
Receivables | |||
Marketable securities | |||
Other financial assets | |||
Derivatives | |||
Unbilled revenue | |||
Other current assets | |||
Cash and cash equivalents | |||
Assets held for sale | |||
Total current assets | |||
Total assets | |||
Equity | |||
Equity attributable to owners of parent | |||
Non-controlling interest | |||
Total equity | |||
Non-current liabilities | |||
Deferred tax liabilities | |||
Pension benefits | |||
Derivatives | |||
Provisions | |||
Contract liabilities | |||
Lease liabilities | |||
Debt and other financial liabilities | |||
Total non-current liabilities | |||
Current liabilities | |||
Provisions | |||
Contract liabilities | |||
Accrued expenses | |||
Income tax payable | |||
Accounts payable | |||
Derivatives | |||
Lease liabilities | |||
Debt and other financial liabilities | |||
Liabilities related to assets held for sale | |||
Total current liabilities | |||
Total equity and liabilities |
Consolidated Statement of Income
In millions of euro | Notes | 2023 | 2022 |
|---|---|---|---|
Revenues | |||
Income from marketable securities and deposits | ( | ||
Share of results from associates and joint ventures | |||
Income from other financial assets | ( | ||
Income from real estate activities | ( | ||
Other income (net) | |||
Total income | |||
Usage of raw materials, consumables and other inventory | |||
Employee expenses | |||
Depreciation and impairment of property, plant, equipment and investment properties | |||
Depreciation and impairment of right-of-use assets | |||
Amortization and impairment of intangible assets | |||
Other operating expenses | |||
Total expenses | |||
Operating profit | |||
Financial expense | ( | ( | |
Other financial income | |||
Profit before income tax | |||
Income tax expense | ( | ( | |
Net profit | |||
Attributable to: | |||
Owners of parent | |||
Non-controlling interest | ( | ||
Average number of Shares outstanding (in thousands) | |||
Earnings per Share for profit / (loss) attributable to owners of parent during the period (in euro) | |||
- basic and diluted | |||
Dividend per Share (in euro) |
- Proposed
The notes on pages 39 to 152 form an integral part of the consolidated financial statements.
Consolidated Statement of Comprehensive Income
In millions of euro | Notes | 2023 | 2022 |
|---|---|---|---|
Net profit / (loss) | |||
Other comprehensive income (OCI) | |||
Items that will not be reclassified to statement of income in subsequent periods | |||
Change in fair value of financial assets through OCI | |||
Actuarial results on pension benefits obligations | |||
Income tax on actuarial results | ( | ( | |
Associates and joint ventures - share of OCI, net of tax | ( | ||
Items that may be reclassified to statement of income in subsequent periods | |||
Change in fair value of financial assets through OCI | ( | ||
Income tax on change in fair value | |||
Effective portion of hedging instruments | ( | ||
Income tax related to hedging instruments | ( | ||
Translation of foreign subsidiaries, net of hedges | ( | ||
Associates and joint ventures - share of OCI, net of tax | ( | ||
( | |||
Other comprehensive income for the year, net of tax1 | ( | ||
Total comprehensive income for the year, net of tax | |||
Total comprehensive income for the year, attributable to: | |||
- Owners of parent | |||
- Non-controlling interest | ( | ||
- Of which € (
The notes on pages 39 to 152 form an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Equity
Attributable to owners of parent | ||||||
|---|---|---|---|---|---|---|
In millions of euro | Share capital | Retained earnings | Other reserves | Total | Non-controlling interest | Total equity |
Balance on December 31, 2021 | ||||||
Net profit for the year | ( | |||||
Other comprehensive income for the year | ||||||
Total comprehensive income for the year | ( | |||||
Capital increase/(decrease) | ||||||
Effect of acquisitions and disposals | ||||||
Effect purchase of non-controlling interest1 | ( | ( | ( | ( | ||
Dividend paid to minority shareholders and share buyback plans | ( | ( | ( | ( | ||
Share-based compensation | ||||||
Treasury shares | ||||||
Dividend paid | ( | ( | ( | |||
Reclassification | ( | |||||
Other movements | ( | ( | ||||
Transactions with the owners of parent recognized directly in equity | ( | ( | ( | ( | ||
Balance on December 31, 2022 | ||||||
Net profit for the year | ||||||
Other comprehensive income for the year | ( | ( | ( | ( | ||
Total comprehensive income for the year | ( | |||||
Effect transactions on non-controlling interest | ( | ( | ||||
Dividend paid to minority shareholders and share buyback plans | ( | ( | ||||
Share-based compensation | ||||||
Treasury shares | ( | ( | ( | |||
Dividend paid | ( | ( | ( | |||
Reclassification | ( | |||||
Other movements | ||||||
Transactions with the owners of parent recognized directly in equity | ( | ( | ( | ( | ||
Balance on December 31, 2023 | ||||||
- Mainly related to the purchase of Boskalis shares after obtaining (de facto) control over the company
The notes on pages 39 to 152 form an integral part of the consolidated financial statements.
Consolidated Statement of Cash Flows
In millions of euro | Notes | 2023 | 2022 |
|---|---|---|---|
Cash flows from operating activities | |||
Profit / (loss) before taxes | |||
Dividend from associates and joint ventures | |||
Changes in working capital | ( | ||
Adjustments for other (non-cash) items | |||
Cash generated from operating activities | |||
Other financial income received | |||
Finance costs paid, including effect of hedging | ( | ( | |
Income taxes paid | ( | ( | |
Net cash from operating activities | |||
Cash flows from investing activities | |||
Acquisition of associates, joint arrangements and subsidiaries, net of cash acquired | ( | ( | |
Proceeds from divestiture of associates, joint arrangements and subsidiaries | |||
Proceeds from sale of/(investments in) other intangibles | ( | ( | |
Purchase of property, plant, equipment and investment properties | ( | ( | |
Proceeds from sale of property, plant, equipment and investment properties | |||
Proceeds from/(investments in) other financial assets | |||
Acquisition of marketable securities and deposits | ( | ( | |
Proceeds from marketable securities and deposits | |||
Settlement of derivatives (net investments hedges) | ( | ||
Net cash from/(used in) investing activities | ( | ||
Cash flows from financing activities | |||
Proceeds from non-current debt and other financial liabilities | |||
Repayment of non-current debt and other financial liabilities | ( | ( | |
Payments on lease liabilities | ( | ( | |
Net proceeds from/(repayments of) short-term financing | ( | ||
Capital increase non-controlling interests | |||
Other non-controlling interest transactions (including dividend paid) | ( | ( | |
Movement in treasury shares | ( | ||
Dividend paid | ( | ( | |
Net cash from/(used in) financing activities | ( | ||
Increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at beginning of year | |||
Cash and cash equivalents included in assets held for sale at beginning of year | ( | ||
Effect of exchange rate changes and reclassifications | ( | ||
Cash and cash equivalents retranslated at beginning of year | |||
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at end of period | |||
Cash and cash equivalents included in assets held for sale | ( | ||
Cash as included on the consolidated statement of financial position |
The notes on pages 39 to 152 form an integral part of the consolidated financial statements.
Basis of preparation
Basis of preparation
The consolidated financial statements presented are those of HAL Trust (the ‘Trust’), a Bermuda trust formed in 1977, and its subsidiaries (the ‘Group’) as well as the interests in associates and joint ventures and were prepared in accordance with sections 13.2 and 13.3 of the Trust deed. HAL Trust shares are listed and traded on Euronext in Amsterdam. For the years presented, the Trust’s only asset was all outstanding shares of HAL Holding N.V. (the ‘Company’), a Curaçao corporation. Accordingly, the consolidated financial statements of the Trust are identical to those of HAL Holding N.V.
The consolidated financial statements of the Company were authorized for issue by the Supervisory Board of HAL Holding N.V. on March 27, 2024, and have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The consolidated financial statements have been prepared under the historical cost convention unless otherwise stated in the accounting policies. There were no changes in the accounting policies compared to previous year except as described below. Certain amounts in prior periods have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders’ equity or earnings per Share, except as described in the recent accounting developments section below.
Use of estimates and judgments
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported assets and liabilities and the disclosure on contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results ultimately may differ from those estimates. Estimates and judgments are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future period affected. Accordingly, it is reasonably possible that outcomes within the next financial year that are different from the assumptions could have an impact on the carrying amount of the asset or liability affected. Accounting policies that are critical to the financial statements presentation and that require complex estimates or significant judgment are described in the following notes:
-
Deemed control over quoted minority interests – consolidation section;
-
Useful life and residual value of property, plant and equipment – note 4;
-
Determination of lease terms and discount rates applied to lease contracts – note 6;
-
Valuation of intangible assets in acquisitions – note 3;
-
Progress and forecasted outcomes of construction and offshore contracting activities and related provisions for onerous contracts – notes 12 and 21;
-
Allowance for inventory obsolescence – note 13;
-
Recognition of carry-forward losses and tax provisions – notes 19 and 32;
-
Assumptions pension benefits – note 20;
-
Estimated impairment of non-financial, non-current assets – note 36.
Recent accounting developments
The material accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements as of and for the year ended December 31, 2022.
New and amended standards, interpretations and clarifications adopted by the Company
On May 23, 2023, the International Accounting Standards Board published the “International Tax Reform - Pillar Two Model Rules” amendment to IAS 12 Income Taxes which was adopted by the Group. The amendment provides a temporary mandatory exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, which is effective immediately. In addition, it requires disclosures to help users of the consolidated financial statements better understand the Group’s exposure to Pillar Two. The mandatory exception applies retrospectively. However, because no new legislation to implement the top-up tax was enacted or substantively enacted at December 31, 2022, in any jurisdiction in which the Group operates and no related deferred taxes were recognized in previous periods. Hence, the retrospective application has no impact on the Company’s consolidated financial statements. The amendments have no impact on the Group’s equity and results.
Apart from the application of the above amendment, no new or amended standards and interpretations had significant impact on the Company’s consolidated financial statements.
New standards, amendments and interpretations issued but not yet effective
There are no new standards, amendments to existing standards or new IFRIC interpretations that are not yet effective that are expected to have a significant impact on the Company.
Supplemental information
As a result of the 2014 implementation of IFRS 10, Consolidated Financial Statements, HAL Trust consolidates the financial information of Koninklijke Vopak N.V. (‘Vopak’) and Safilo Group S.p.A. (‘Safilo’). Supplemental information has been included on pages 123 through 152 whereby Vopak and Safilo are accounted for on an unconsolidated basis using the equity method as applied in the years until 2014. The inclusion of this information is considered appropriate and useful as the control model of the Company with respect to Vopak and Safilo is materially different than the model with respect to the other consolidated entities, where the Company’s ownership interest exceeds 50%, and the effect of the inclusion of Vopak and Safilo in the consolidation has a significant effect on the financial statements.
Consolidation
Subsidiaries, which are those entities over which the Company is deemed to have control, are consolidated. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In certain circumstances, significant judgment is required to assess if the Company is deemed to have (de facto) control over entities where the Company’s ownership interest does not exceed 50%. Subsidiaries are consolidated from the date on which effective control is obtained and are no longer consolidated as from the date the effective control ceases.
The amounts reported by the subsidiaries are based on the Company’s accounting policies. Intercompany transactions, balances and unrealized results on transactions between group companies are eliminated on consolidation. Unrealized results arising from transactions with joint arrangements and associates are eliminated to the extent of the interest of the Company in the equity.
Non-controlling interests are disclosed separately. Transactions with holders of non-controlling interests that do not result in a loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid or received and the relevant share acquired or disposed of the carrying value of net assets of the subsidiary is recorded in equity.
When the Company ceases to have control, any retained interest in the entity is re-measured at its fair value at the date when control is lost, with the change in the carrying amount recognized in the consolidated statement of income. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint arrangement or other financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified (“recycled”) to the consolidated statement of income.
Critical accounting estimates and judgments
In the preparation of these financial statements, management has applied significant judgment to assess if the Company is deemed to have (de facto) control over entities where the Company’s ownership interest does not exceed 50%.
Although the Company’s ownership interest in Vopak and Safilo is below 50%, IFRS requires these entities to be consolidated in these financial statements as the company is deemed to have control, as defined in IFRS 10 and more specifically in example 4 of the application guidance in appendix B of this standard, over these two entities. Vopak and Safilo are both publicly traded companies. Whereas HAL has board representation and, accordingly, may be considered to have significant influence over these entities, in the past neither operational nor strategic control was exercised. Moreover, Vopak and Safilo are, for example, not part of the Company’s management reporting system which monitors the performance of the consolidated companies on a monthly basis. In addition, in view of its minority interest, the Company has no formal instruction rights with respect to Vopak and Safilo. The Company has a process in place to obtain information from Vopak and Safilo in order to prepare consolidated financial statements in accordance with IFRS. The Company does not, however, have access to the financial books and records, contracts and related information of Vopak and Safilo in order to independently verify that these are complete, valid and accurate.
Management performed an assessment with respect to the other minority-owned entities and asserted that (de facto) control was not deemed present for these entities. A list of the Company’s principal subsidiaries and minority-owned entities is set out on page 122.
Foreign currencies
Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in euro, which is the Company’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognized in the consolidated statement of income, except when deferred in equity as qualifying hedges. Any hedge ineffectiveness is recognized in the consolidated statement of income as it arises.
Company’s subsidiaries
The results and financial position of all the Company’s subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position;
-
the income statement, the cash flow statement and all other movements in assets and liabilities are translated at average rates of exchange as a proxy for the transaction rate, or at the transaction rate itself if more appropriate;
-
all resulting exchange differences are recognized as a separate component of other comprehensive income.
On consolidation, exchange differences arising from the translation of net investments in foreign entities and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. Exchange differences on intra-group monetary assets or liabilities that are not part of a net investment in foreign entities are recognized in the consolidated statement of income. When a foreign operation is sold, exchange differences previously recognized through other comprehensive income are reclassified from equity (as a reclassification adjustment) to the consolidated statement of income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Cash flow statement
The consolidated statement of cash flows has been prepared using the indirect method. Cash flows denominated in foreign currencies are translated at average exchange rates, or at the transaction rate if more appropriate. The effect of exchange rates on cash and cash equivalents is presented separately.
Interest paid and interest and dividends received are classified as operating cash flows. Dividends paid are classified as financing cash flows. Cash flows arising from income taxes are classified as operating cash flows.
Notes to the Consolidated Financial Statements
1 Segmentation
The Company’s reportable segments are defined as follows:
-
Unquoted
-
Quoted minority interests
-
Real estate
-
Liquid portfolio
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources between segments and assessing the performance of the operating segments, is identified as the Executive Board. The reportable segments are defined based on differences in products and services as well as differences in the nature of the respective assets and the management thereof.
Unquoted relates to majority-owned companies as well as non-controlling minority interests in companies that derive their revenues from various products and activities such as dredging, (maritime) construction and maintenance, building materials, computer gaming equipment, orthopedic devices, office furniture, greenhouse projects, staffing, shipping and other products and activities. In July 2022, HAL obtained (de facto) control over Boskalis and, in accordance with earlier communicated intentions, the company was delisted as per November 9, 2022. Therefore, Boskalis has been included in the Unquoted segment in these financial statements as of the date of first consolidation.
The Quoted minority interests segment comprises both the Company’s consolidated and unconsolidated minority interests in publicly traded entities. Boskalis was included in this segment until the date of first consolidation.
The Real estate segment relates to the development and rental of retail centers, multi-family properties and office buildings. This segment does not include the activities of the Company’s construction companies.
The segment Liquid portfolio consists of financial assets, included in marketable securities, and cash-equivalent instruments generating interest, dividend and trading results.
Operating income (for the purpose of this report defined as earnings before interest, exceptional items of the unquoted segment, taxes and amortization of intangible assets but including amortization of software) is set out below.
2023 | 2022 | |
|---|---|---|
Unquoted | 914.6 | 402.8 |
Quoted minority interests | 1,017.4 | 325.1 |
Real estate | (12.7) | 53.6 |
Liquid portfolio | 138.5 | (119.7) |
Total operating income | 2,057.8 | 661.8 |
Reconciling items: | ||
- Amortization and impairment of intangibles | (460.7) | (459.8) |
- Other | 5.9 | 604.9 |
Operating result as per the consolidated statement of income | 1,603.0 | 806.9 |
Financial expense, net | (241.2) | (125.7) |
Profit before tax as per the consolidated statement of income | 1,361.8 | 681.2 |
The “other” reconciling items represent mostly corporate overhead and exceptional items (excluding those of the Quoted minority interests segment). The segment Quoted minority interests includes the operating income (including exceptional items) of Vopak and Safilo and the Company’s share in the net income of SBM Offshore and, for the first half of 2022, Boskalis. As from 2023, this segments also includes the change in fair value of the ownership interest in Technip Energies N.V. (based on stock exchange prices). From the second half of 2022 onwards, Boskalis was included in the Unquoted segment.
The composition of depreciation and impairment expense on property, plant and equipment, right-of-use assets and investment properties by segment is as follows:
2023 | 2022 | |
|---|---|---|
Unquoted | 557.6 | 378.1 |
Quoted minority interests | 308.9 | 797.6 |
Real estate | 2.3 | 2.3 |
Reconciling items | 2.0 | 1.7 |
870.8 | 1,179.7 |
The reconciling items represent the corporate depreciation expense.
The composition of revenues by segment is as follows:
2023 | 2022 | |
|---|---|---|
Unquoted | 9,854.4 | 7,625.9 |
Quoted minority interests | 2,489.4 | 2,478.4 |
12,343.8 | 10,104.3 |
The composition of assets by segment is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 13,968.2 | 13,307.9 |
Quoted minority interests | 9,013.8 | 8,858.8 |
Real estate | 300.5 | 270.7 |
Liquid portfolio | 2,919.3 | 3,892.1 |
Reconciling items | 140.8 | 385.0 |
26,342.6 | 26,714.5 |
The reconciling items represent corporate assets, including deferred tax, loans and pension benefit assets. The reconciling items in 2022 also included an amount of € 250 million representing the part of the proceeds from the sale of the Company’s 76.72% shareholding in GrandVision N.V., which was held in escrow for potential liabilities of HAL under the sale and purchase agreement. The full escrow amount was released to the Company in 2023.
The composition of investments in associates and joint arrangements by segment is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 825.0 | 501.0 |
Quoted minority interests | 2,614.5 | 2,682.7 |
Real estate | 206.0 | 175.1 |
3,645.5 | 3,358.8 |
The composition of capital expenditures by segment is as follows:
2023 | 2022 | |
|---|---|---|
Unquoted | 770.1 | 521.0 |
Quoted minority interests | 413.2 | 404.0 |
Real estate | 10.8 | 10.9 |
1,194.1 | 935.9 |
Capital expenditures consist of additions to property, plant and equipment, investment properties and other intangible assets that are not related to acquisitions.
The composition of liabilities by segment is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 6,663.5 | 6,442.9 |
Quoted minority interests | 3,744.8 | 4,385.3 |
Real estate | 3.1 | 3.1 |
Liquid portfolio | 0.1 | 0.3 |
Reconciling items | 59.1 | 645.1 |
10,470.6 | 11,476.7 |
The reconciling items represent corporate liabilities, including liabilities related to obligations to acquire equity instruments in certain subsidiaries from the management of these subsidiaries and deferred tax. At the end of 2022, the reconciling items also included corporate debt of € 576 million, which was fully repaid in 2023.
The composition of revenues by geographical area is as follows:
2023 | 2022 | |
|---|---|---|
Europe | 7,245.9 | 6,671.3 |
USA & Canada | 1,642.4 | 1,270.4 |
Asia | 2,461.6 | 1,452.4 |
Other | 993.9 | 710.2 |
12,343.8 | 10,104.3 |
The composition of property, plant and equipment, investment properties, right-of-use assets, intangible assets and investments in associates and joint ventures by geographical area is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Europe | 9,282.4 | 9,667.1 |
USA & Canada | 1,390.5 | 1,421.7 |
Asia | 4,116.8 | 4,004.4 |
Other | 1,196.2 | 1,197.3 |
15,985.9 | 16,290.5 |
2 Exceptional items
To increase transparency, exceptional items are disclosed separately when relevant. These items are exceptional, by nature, from a management perspective. Exceptional items may include impairments, reversals of impairments, additions to and releases from provisions for restructuring, gains and losses on the sale of subsidiaries, joint arrangements and associates, any other significant provisions being formed or released and any significant changes in estimates.
Summary of exceptional items is as follows:
Notes | 2023 | 2022 | |
|---|---|---|---|
Impairment of goodwill and other intangibles | (296.1) | (312.4) | |
Restructuring | (47.1) | (7.4) | |
Net capital gains on sale of subsidiaries | 44.6 | 104.8 | |
Net capital gains on sale of tangible assets | 25.6 | 16.5 | |
Other impairments, net of reversal | (24.8) | (4.0) | |
Impairments at Koninklijke Vopak N.V., net of reversals | 23.2 | (448.6) | |
Reclassification of Smit Lamnalco by Koninklijke Boskalis B.V. | 16.3 | - | |
Badwill on increase in shareholding Prodrive Technologies Group B.V. | 8.0 | - | |
Revaluation of the previously held equity interest in Koninklijke Boskalis B.V. | - | 656.2 | |
Impairment of joint ventures and associates, net of reversals | - | (162.0) | |
Exceptional gain at Koninklijke Boskalis B.V.1 | - | 27.0 | |
Acquisition-related expenses | - | (10.2) | |
Impairments at Koninklijke Boskalis B.V.1 | - | (7.1) | |
Revaluation of repurchase obligations | - | (1.3) | |
Other | (22.2) | 24.4 | |
Effect on operating profit / (loss) | (272.5) | (124.1) | |
Revaluation of earn-out liabilities | (7.9) | 50.1 | |
Effect on profit / (loss) before income tax | (280.4) | (74.0) | |
Income tax | (9.4) | (0.2) | |
Effect on net profit / (loss) | (289.8) | (74.2) |
- Related to the period that equity accounting was applied, up to July 1, 2022, when HAL obtained control over the company
The exceptional items are disclosed separately in the notes, when relevant, in order to increase transparency.
3 Acquisition and divestment of subsidiaries
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of the business combination and the fair value of any contingent consideration to be transferred. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree is measured, on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
If the business combination is achieved in stages, the Company’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and the difference with the book value of the previously held equity interest is recognized in the consolidated statement of income. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired, is recorded as goodwill. If the total of the consideration transferred, the non-controlling interest recognized and the fair value of the previously held interest is less than the fair value of the net assets of the subsidiary acquired (‘badwill’), the difference is directly recognized in the consolidated statement of income. Acquisition-related costs are expensed as incurred. Subsequent changes to the fair value of the contingent consideration classified as an asset or liability are recognized in the consolidated statement of income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Critical accounting estimates and judgments
When a company is acquired, a value is assigned to intangible assets such as trademarks and the customer relationships. The determination of the value of such intangible assets at the time of acquisition and their estimated useful life are subject to judgment. Assumptions by management underlying the estimation of fair value include the future cash flows expected from the asset and discount rates. Useful life is estimated using past experience and relevant industry practices.
Acquisitions
IQIP
On March 14, 2023, HAL completed the acquisition of 100% of the shares in IQIP Holding B.V. (‘IQIP’), in the Netherlands. IQIP is a supplier of foundation and installation equipment to the offshore wind, coastal & civil and oil & gas markets. The company is active worldwide and both sells and rents out equipment. Revenue over the financial year 2023 amounted to € 176 million (2022: € 102 million). IQIP is headquartered in Sliedrecht and has approximately 300 employees. The primary intangible assets recognized in the purchase price allocation include proprietary technology, customer relationships and the IQIP trademark. In addition, the company’s rental equipment, work in progress and (options to acquire) real estate were revalued at fair value.
On August 11, 2023, HAL announced it had agreed to sell 40% of IQIP to AvH Growth Capital NV (‘AvH’) and 20% to MerweOord B.V. (‘MerweOord’). As a consequence, the assets and liabilities of IQIP were classified as held for sale as of August 2023. MerweOord has the option to increase its shareholding to 33.33% during 2024, which upon exercise would result in HAL, AvH and MerweOord each owning one-third of IQIP’s shares. The transaction is based on an equity value of IQIP, adjusted for dividend, of € 250 million. The finalization of the transaction is subject to customary regulatory clearance.
GreenV
During the first half year of 2023, GreenV (74.6% HAL) expanded its service offering and geographical footprint by completing three acquisitions in the greenhouse construction and installation industry. The company acquired majority interests in Prins USA, a significant local player in the U.S. greenhouse construction market, Voshol, a Dutch-Canadian supplier of advanced climate control systems for the greenhouse industry, and Green Simplicity, a knowledge and technology company for crop cultivation based in the Netherlands. Intangible assets recognized in the acquisitions relate mainly to customer relationships and brand names.
There were no other individually significant acquisitions during 2023. Details on the acquisitions in this period are as follows:
IQIP | GreenV | Other | Total | |
|---|---|---|---|---|
Cash paid | 267.8 | 80.6 | 26.3 | 374.7 |
Future consideration | - | 8.2 | - | 8.2 |
Equity instruments issued | - | 18.6 | - | 18.6 |
Fair value of net assets acquired | (196.3) | (63.5) | (15.9) | (275.7) |
Goodwill | 71.5 | 43.9 | 10.4 | 125.8 |
The goodwill on the acquisitions is not deductible for tax purposes.
Details of the net assets acquired are set out below:
IQIP | GreenV | Other | Total | |
|---|---|---|---|---|
Property, plant and equipment and investment properties | 120.9 | 4.0 | 2.8 | 127.7 |
Right-of-use assets | 5.2 | 6.0 | 1.6 | 12.8 |
Intangible assets | 96.4 | 45.3 | 14.0 | 155.7 |
Other financial assets | 6.6 | - | - | 6.6 |
Deferred tax assets | 10.7 | - | - | 10.7 |
Other non-current assets | - | - | 0.5 | 0.5 |
Cash | 59.6 | 11.2 | 8.0 | 78.8 |
Non-current debt | (31.0) | - | (0.2) | (31.2) |
Lease liabilities | (5.2) | (6.0) | (1.7) | (12.9) |
Deferred tax liabilities | (38.3) | (2.7) | (3.7) | (44.7) |
Other non-current liabilities | - | - | (4.0) | (4.0) |
Current debt | (3.6) | 0.1 | (0.3) | (3.8) |
Accounts receivable | 31.6 | 21.8 | 2.5 | 55.9 |
Inventories | 24.8 | 3.8 | 3.0 | 31.6 |
Other current assets | 21.9 | 7.8 | 0.7 | 30.4 |
Contract assets | - | (1.3) | - | (1.3) |
Income tax payable | (2.4) | (0.1) | 0.1 | (2.4) |
Accounts payable | (26.1) | (6.8) | (1.2) | (34.1) |
Accrued expenses | (12.7) | (5.2) | (0.6) | (18.5) |
Contract liabilities | (61.9) | - | (5.8) | (67.7) |
Other current liabilities | - | (0.1) | (0.1) | (0.2) |
Current provisions | (0.2) | - | 0.3 | 0.1 |
Net working capital | (25.0) | 19.9 | (1.1) | (6.2) |
Non-controlling interest | - | (14.3) | - | (14.3) |
Fair value of net assets acquired | 196.3 | 63.5 | 15.9 | 275.7 |
The afore-mentioned acquisitions generated the following results in 2023, respectively would have generated the following results, should they have been consolidated for the full year:
IQIP | GreenV | Other | Total | |
|---|---|---|---|---|
Contribution to 2023 revenues | 143.6 | 57.7 | 20.3 | 221.6 |
Contribution to 2023 operating income | 27.4 | 5.7 | 2.7 | 35.8 |
Contribution to 2023 net income | 13.9 | 4.9 | 1.4 | 20.2 |
2023 full-year revenues | 175.7 | 67.4 | 23.1 | 266.2 |
2023 full-year operating income | 45.5 | 5.4 | 3.0 | 53.9 |
2023 full-year net income | 32.7 | 4.7 | 2.4 | 39.8 |
Acquisition costs charged to the other operating expenses, related to continuing operations, in the consolidated statement of income amounted to € 3.6 million.
Reconciliation to the consolidated statement of cash flows:
Total | |
|---|---|
Cash paid for the above acquisitions | 374.7 |
Cash acquired in the above acquisitions | (78.8) |
Cash outflow due to acquisition of subsidiaries, net of cash acquired | 295.9 |
Acquisitions of and investments in associates and joint arrangements | 190.1 |
Cash outflow due to acquisition of subsidiaries, joint arrangements and associates, net of cash acquired | 486.0 |
Refer to note 8 for details on acquisition of associates and joint ventures.
Acquisition of a group of assets
Vopak Energy Park Antwerp
On May 10, 2023, Vopak acquired 100% of the shares of Gunvor Petroleum Antwerp N.V., subsequently renamed to Vopak Energy Park Antwerp N.V. (‘VEPA’), from commodity trader Gunvor Group Ltd (‘Gunvor’), giving Vopak access to the Gunvor concession in the Antwerp port area. Vopak is committed to sustainably redeveloping the site. VEPA does not constitute a business but a group of assets and therefore does not give rise to goodwill. The total consideration transferred amounted to € 1,-. Recognized amounts of identifiable assets acquired and liabilities assumed are disclosed on the next page.
VEPA | |
|---|---|
Intangible assets | 0.5 |
Property, plant and equipment | 6.8 |
Right-of-use assets | 12.2 |
Other non-current assets | 4.7 |
Total non-current assets | 24.2 |
Cash | 39.5 |
Other current assets | 11.1 |
Total current assets | 50.6 |
Total assets | 74.8 |
Equity attributable to owners of parent | - |
Total equity | - |
Lease liabilities | 9.4 |
Pensions and other employee benefits | 1.1 |
Provisions | 60.5 |
Other payables | 3.8 |
Total liabilities | 74.8 |
Total equity and liabilities | 74.8 |
Divestments
Vopak - Netherlands Botlek terminals
On November 30, 2023, Vopak completed the divestment of its 100% shareholdings in Vopak Chemicals Logistics Netherlands B.V., Vopak Terminal Botlek B.V., Vopak Terminal Chemiehaven B.V. and Vopak Terminal TTR. B.V. In the third quarter of 2023, upon classification as held for sale of these terminals, an impairment reversal of € 54.2 million was recorded. The total agreed transaction price, including fair value of the deferred consideration, amounted to € 381.0 million. The fair value of the conditional deferred payment of € 19.5 million was measured at nil. The sale generated net cash proceeds of € 376.6 million. As a result, an exceptional loss of € 4.9 million was recognized.
Vopak - Canadian terminals
In May 2023, Vopak received the deferred part of the payment of the 2022 divestment of Vopak Terminals of Canada Inc. and Vopak Terminals of Eastern Canada, of € 57.8 million.
Vopak - U.S. Savannah terminal
On May 31, 2023, Vopak completed the earlier announced divestment of its 100% shareholding in Vopak Terminals Savannah Inc. The total agreed transaction price including deferred consideration amounted to € 101.0 million. Proceeds net of transaction costs were € 95.8 million. As a result, an exceptional gain of € 36.4 million, net of an exceptional tax charge of € 13.3 million, was recognized.
The 2023 divestments of subsidiaries, associates and joint ventures resulted in the following cash flows:
Vopak | Other | Total | |
|---|---|---|---|
Cash received from divestment of subsidiaries | 472.4 | - | 472.4 |
Cash received from divestment of subsidiaries in prior years | 57.8 | - | 57.8 |
Cash sold in divestments of subsidiaries | (7.0) | - | (7.0) |
Net cash inflow resulting from divestment of subsidiaries | 523.2 | - | 523.2 |
Disposal of associates and joint arrangements | - | 1.9 | 1.9 |
Cash inflow due to divestment of associates, joint arrangements and subsidiaries, net of cash sold | 523.2 | 1.9 | 525.1 |
Refer to note 8 for details on disposals of associates and joint ventures.
4 Property, plant and equipment
Property, plant and equipment are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items (such as unrecoverable taxes and transport) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced parts is derecognized. All other repair and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life as follows: buildings 10-50 years, vessels and floating equipment 5-30 years, tank storage terminals 10-40 years and equipment and other 3-15 years. Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Critical accounting estimates and judgments
Property, plant and equipment of represent a substantial part of the total assets of the Company and the related depreciation forms a substantial part of the annual operating expenses. The useful life and residual value of these assets have a major impact on the measurement of property, plant and equipment. These estimates and assumptions are partly based on the expected useful productive lives, experiences related to similar assets, the maintenance history and the period during which the company has the economic benefits from the utilization of the assets
Movements for 2023 and 2022 are as follows:
Land and buildings | Vessels and floating equipment | Tank storage terminals | Equipment | Total | |
|---|---|---|---|---|---|
Cost value | 1,093.1 | 664.1 | 6,312.5 | 1,963.8 | 10,033.5 |
Cost value - under construction | 72.2 | 31.3 | 322.1 | 96.6 | 522.2 |
Accumulated depreciation and impairments | (492.9) | (238.0) | (3,090.4) | (1,517.9) | (5,339.2) |
Balance on January 1, 2022 | 672.4 | 457.4 | 3,544.2 | 542.5 | 5,216.5 |
Investments | 63.7 | 343.4 | 340.8 | 126.9 | 874.8 |
Consolidation | 150.0 | 2,836.1 | - | 20.1 | 3,006.2 |
Disposals | (7.4) | (23.2) | (2.1) | (4.5) | (37.2) |
Depreciation and impairments, net of reversals | (58.2) | (174.9) | (677.1) | (110.3) | (1,020.5) |
Reclassification | 3.1 | (1.8) | 0.3 | (1.1) | 0.5 |
Reclassification to held for sale | (4.1) | - | (26.5) | (5.2) | (35.8) |
Exchange differences | 4.2 | (6.0) | 87.9 | 4.9 | 91.0 |
Balance on December 31, 2022 | 823.7 | 3,431.0 | 3,267.5 | 573.3 | 8,095.5 |
Cost value | 1,255.9 | 3,570.6 | 6,771.1 | 1,993.3 | 13,590.9 |
Cost value - under construction | 94.9 | 270.0 | 318.6 | 149.4 | 832.9 |
Accumulated depreciation and impairments | (527.1) | (409.6) | (3,822.2) | (1,569.4) | (6,328.3) |
Balance on December 31, 2022 | 823.7 | 3,431.0 | 3,267.5 | 573.3 | 8,095.5 |
Investments | 71.4 | 540.1 | 340.6 | 174.7 | 1,126.8 |
Consolidation | 5.8 | - | - | 128.1 | 133.9 |
Disposals | (1.4) | (30.4) | (1.2) | (5.7) | (38.7) |
Depreciation and impairments, net of reversals | (38.7) | (318.8) | (214.4) | (122.7) | (694.6) |
Reclassification | 5.7 | - | 0.7 | (11.0) | (4.6) |
Reclassification from/(to) held for sale | (42.9) | (6.0) | (426.0) | (165.6) | (640.5) |
Exchange differences | (9.3) | (25.1) | (67.7) | (4.9) | (107.0) |
Balance on December 31, 2023 | 814.3 | 3,590.8 | 2,899.5 | 566.2 | 7,870.8 |
Cost value | 1,273.4 | 4,075.1 | 5,849.5 | 2,050.6 | 13,248.6 |
Cost value - under construction | 40.0 | 203.9 | 264.9 | 107.0 | 615.8 |
Accumulated depreciation and impairments | (499.1) | (688.2) | (3,214.9) | (1,591.4) | (5,993.6) |
Balance on December 31, 2023 | 814.3 | 3,590.8 | 2,899.5 | 566.2 | 7,870.8 |
Note 22 details information on pledges.
5 Investments properties
Investment properties are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the properties (such as unrecoverable taxes) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life (25-50 years). Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Movements for 2023 and 2022 are as follows:
2023 | 2022 | |
|---|---|---|
Cost value | 79.7 | 72.1 |
Cost value - under construction | 3.3 | - |
Accumulated depreciation and impairments | (6.5) | (4.1) |
Balance on January 1 | 76.5 | 68.0 |
Investments | 10.8 | 10.9 |
Consolidation | 0.5 | - |
Depreciation and impairments | (2.5) | (2.4) |
Balance on December 31 | 85.3 | 76.5 |
Cost value | 90.7 | 79.7 |
Cost value - under construction | 3.8 | 3.3 |
Accumulated depreciation and impairments | (9.2) | (6.5) |
Balance on December 31 | 85.3 | 76.5 |
At year-end 2023 and 2022, the carrying value of the investment properties was a reasonable approximation of their fair value.
6 Right-of-use assets and lease liabilities
A right-of-use asset and a related lease liability are recognized for lease contracts that exceed a duration of twelve months, except when a contract relates to leases of low-value assets, payments are primarily based on variables such as revenue or when a lessor has a substantive substitution right. The latter contracts are expensed on a straight-line basis over the contract term.
The Company leases real estate properties (land and buildings) to house its retail stores, offices, logistical activities and storage terminal operations. Lease contracts are negotiated on an individual basis and, due to the geographical spread and the various business models of operating companies, contain a wide range of different terms and conditions.
The Company leases vessels and floating equipment in respect of its businesses of transporting liquefied gases and petrochemical products, dredging and offshore energy. These lease contracts are negotiated on an individual basis and may contain a wide range of different terms and conditions due to the international lessor base and the complex and varying nature of individual vessels.
The Company leases terminal-related assets, including storage assets, jetties and loading facilities. These lease contracts are also negotiated on an individual basis and contain a wide range of different terms and conditions due to geographical spread and specific nature of the assets.
The Company also leases trucks, passenger cars and machinery and equipment, including information and communication technology equipment. These contracts are insignificant compared to the total leased asset portfolio.
Right-of-use assets
At the commencement date of the lease contract, the right-of-use asset is measured at cost. This comprises the initial amount of the lease liability, adjusted for prepayments and lease incentives received, initial direct cost, estimated restoration and dismantling costs, where applicable. Depreciation is calculated using the straight-line method to write off the cost of each right-of-use asset from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The right-of-use assets are subject to impairment and adjusted for remeasurement of lease liabilities.
Lease liabilities
At the commencement date of the lease contract, the lease liability is measured at the present value of the lease payments over the lease term, discounted using the incremental borrowing rate. Payments include (in-substance) fixed payments, variable lease payments that depend on an index or rate, amounts expected to be payable under residual value guarantees, expected (early termination) penalties and amounts expected to be payable for the exercise of purchase options, when the Company is reasonably certain to exercise these. Contractual payments related to service costs are excluded from the measurement of lease liabilities in respect of terminal-related assets. Lease liabilities are subsequently measured at amortized cost using the effective interest method. A lease liability is remeasured when there is an adjustment to future lease payments arising from, for example, renegotiation of the lease contract, a change in index or rate, or in case of reassessment of the Company’s expected exercise of options. A remeasurement of the lease liability is reflected as a corresponding adjustment to the right-of-use asset, with any excess over the carrying amount of the asset being recognized in the consolidated statement of income.
Lessor accounting
The Company subleases some of its right-of-use assets to third parties. When substantially all the risks and rewards are transferred to the lessee, the sublease is classified as a finance lease, otherwise the sublease is an operating lease. When the sublease is classified as a finance lease, the right-of-use asset in the head lease is de-recognized and a lease receivable is recognized, with any difference being recorded in the consolidated statement of income. Subsequently, the interest income and interest expense are accrued on the lease receivable and lease liability respectively applying the effective interest method. Rental income from operating subleases is recognized in the consolidated statement of income, within revenue from other sources.
Critical accounting estimates and judgments - lease terms
The lease term comprises of the non-cancellable period agreed in the lease contract and the periods covered by renewal or termination options that are reasonably certain to be exercised. Significant renewal and termination options primarily relate to the lease of real estate. Renewal and termination options are assessed at the lease commencement date and subsequently, if there is a change in circumstances within the control of the Company. When assessing renewal and termination options, considerations include the quality and performance of the leased asset and the extent of leasehold improvements undertaken, potential relocation and termination expense including penalties and potentially favorable extension terms and long-term customer contracts related to the leased asset.
Critical accounting estimates and judgments - discount rates
In absence of interest rates implicit in the lease contracts, the Company applies the incremental borrowing rate (IBR) as the discount rate to determine the lease liabilities. The IBR is an approximation of the rate that a lessee would pay to attract the required funding to purchase the asset over a similar term, with similar security and in a similar economic environment. The IBR is determined as the sum of a reference rate, a credit risk premium and a country risk premium. The calculation of the IBR takes into account the currency of the lease contract, the lease term, the type of leased asset, the country and the credit quality of the lessee. A single IBR may be applied to a portfolio of leases within a country, which are similar in nature and lease term.
Movements in the right-of-use assets are as follows:
Land and buildings | Vessels and floating equipment | Equipment and other | Total | |
|---|---|---|---|---|
Cost value | 1,084.7 | 67.4 | 146.7 | 1,298.8 |
Accumulated depreciation and impairments | (199.5) | (34.1) | (63.0) | (296.6) |
Balance on January 1, 2022 | 885.2 | 33.3 | 83.7 | 1,002.2 |
New lease contracts | 75.7 | 21.2 | 38.5 | 135.4 |
Consolidation | 76.0 | 39.1 | 17.5 | 132.6 |
Depreciation and impairments | (95.7) | (22.7) | (38.4) | (156.8) |
Reclassification from/(to) held for sale | (57.2) | - | (3.3) | (60.5) |
Reassessment and remeasurement | 43.6 | (0.6) | 0.5 | 43.5 |
Exchange differences | 14.4 | 2.1 | 0.4 | 16.9 |
Balance on December 31, 2022 | 942.0 | 72.4 | 98.9 | 1,113.3 |
Cost value | 1,221.2 | 91.3 | 181.9 | 1,494.4 |
Accumulated depreciation and impairments | (279.2) | (18.9) | (83.0) | (381.1) |
Balance on December 31, 2022 | 942.0 | 72.4 | 98.9 | 1,113.3 |
New lease contracts | 60.2 | 1.5 | 49.5 | 111.2 |
Consolidation | 26.4 | - | 0.2 | 26.6 |
Depreciation and impairments | (110.8) | (19.3) | (43.6) | (173.7) |
Reclassification | 5.7 | (7.4) | 2.6 | 0.9 |
Reclassification from/(to) held for sale | (97.6) | - | (4.6) | (102.2) |
Reassessment and remeasurement | 81.6 | 0.1 | 0.1 | 81.8 |
Exchange differences | (11.1) | 0.1 | (0.5) | (11.5) |
Balance on December 31, 2023 | 896.4 | 47.4 | 102.6 | 1,046.4 |
Cost value | 1,247.0 | 85.1 | 200.8 | 1,532.9 |
Accumulated depreciation and impairments | (350.6) | (37.7) | (98.2) | (486.5) |
Balance on December 31, 2023 | 896.4 | 47.4 | 102.6 | 1,046.4 |
In 2023, variable payments of € 5.7 million (2022: € 7.4 million) related to on-balance lease contracts were included in operating expenses. Leases with an original duration of less than 12 months and leases for which the leased asset was of low value were included in the 2023 other operating expenses for € 16.1 million, respectively € 5.5 million (2022: € 26.6 million, respectively € 5.6 million). The total cash outflow for leases in 2023 amounted to € 232.7 million (2022: € 222.3 million).
Movements in the lease liabilities for 2023 and 2022 are as follows:
2023 | 2022 | |
|---|---|---|
Balance on January 1 | 1,195.3 | 1,072.5 |
New lease contracts | 111.2 | 135.4 |
Consolidation | 23.7 | 137.2 |
Accrued interest | 34.9 | 31.2 |
Payments | (205.4) | (182.7) |
Reclassification from/(to) held for sale | (112.8) | (60.7) |
Reassessment and remeasurement | 81.0 | 41.9 |
Exchange differences and other | (10.6) | 20.5 |
Balance on December 31 | 1,117.3 | 1,195.3 |
Current lease liabilities | 156.6 | 150.6 |
Non-current lease liabilities | 960.7 | 1,044.7 |
Balance on December 31 | 1,117.3 | 1,195.3 |
The consolidated lease liability as at December 31, 2023, relates mainly to Vopak (€ 639.7 million, 2022: € 725.0 million). The weighted-average incremental borrowing rate applied to this portfolio was 3.3% (2022: 3.2%).
7 Intangible assets
Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets. Intangible assets are carried at cost less accumulated impairments
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 36. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Movements for goodwill and other intangibles are as follows:
Goodwill | Software | Trade- | Customer relationships | Other | Total | |
|---|---|---|---|---|---|---|
Cost value | 1,282.4 | 452.9 | 646.8 | 664.2 | 188.1 | 3,234.4 |
Accumulated amortization and impairments | (148.9) | (294.9) | (180.2) | (202.8) | (94.4) | (921.2) |
Balance on January 1, 2022 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
Investments | 1,301.7 | 32.5 | 0.3 | - | 17.4 | 1,351.9 |
Consolidation | - | 0.7 | 369.4 | 7.2 | 60.0 | 437.3 |
Disposals | - | (0.2) | (0.1) | - | - | (0.3) |
Amortization and impairments | (312.1) | (39.9) | (46.5) | (32.5) | (28.8) | (459.8) |
Reclassification | - | (0.9) | - | - | - | (0.9) |
Reclassification from/(to) held for sale | (18.0) | (2.8) | - | - | (1.5) | (22.3) |
Exchange differences and other | 11.7 | 1.8 | 10.3 | 1.8 | 1.7 | 27.3 |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
Cost value | 2,533.2 | 487.6 | 1,028.2 | 673.1 | 245.8 | 4,967.9 |
Accumulated amortization and impairments | (416.4) | (338.4) | (228.2) | (235.2) | (103.3) | (1,321.5) |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
Investments | 125.8 | 33.8 | 1.1 | - | 21.6 | 182.3 |
Consolidation | - | 9.6 | 9.0 | 69.9 | 67.7 | 156.2 |
Purchase price accounting adjustments | 1.6 | - | - | (0.2) | - | 1.4 |
Disposals | - | (3.0) | - | - | - | (3.0) |
Amortization and impairments | (233.0) | (42.9) | (56.5) | (85.5) | (42.8) | (460.7) |
Reclassification | - | 2.2 | (5.7) | - | 5.6 | 2.1 |
Reclassification from/(to) held for sale | (71.5) | (0.8) | (2.8) | (26.9) | (64.7) | (166.7) |
Exchange differences and other | (8.5) | (0.9) | (5.0) | (4.6) | (1.1) | (20.1) |
Balance on December 31, 2023 | 1,931.2 | 147.2 | 740.1 | 390.6 | 128.8 | 3,337.9 |
Cost value | 2,580.4 | 500.6 | 1,020.0 | 709.1 | 270.6 | 5,080.7 |
Accumulated amortization and impairments | (649.2) | (353.4) | (279.9) | (318.5) | (141.8) | (1,742.8) |
Balance on December 31, 2023 | 1,931.2 | 147.2 | 740.1 | 390.6 | 128.8 | 3,337.9 |
Information on impairment testing and impairments is included in note 36.
8 Investments in associates and joint arrangements
Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company’s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company’s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company’s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations’ individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company’s financial statements.
The movements of investments accounted for using the equity method are set out below.
Associates | Joint ventures | Total | |
|---|---|---|---|
Share of net assets | 2,209.6 | 1,252.7 | 3,462.3 |
Goodwill | 320.1 | 66.7 | 386.8 |
Balance on January 1, 2022 | 2,529.7 | 1,319.4 | 3,849.1 |
Investments | 644.2 | 319.7 | 963.9 |
Consolidation | 10.8 | 59.3 | 70.1 |
Disposals | (47.4) | (2.5) | (49.9) |
Share of results - real estate | - | 50.0 | 50.0 |
Share of results - other | 893.4 | 143.9 | 1,037.3 |
Share of other comprehensive income | 191.6 | 46.7 | 238.3 |
Dividends | (141.2) | (188.1) | (329.3) |
Impairments | (165.8) | - | (165.8) |
Impairment reversal | - | 3.8 | 3.8 |
Reclassification | (2,262.5) | - | (2,262.5) |
Reclassification from/(to) held for sale | (1.5) | (77.8) | (79.3) |
Exchange differences | 8.4 | 29.3 | 37.7 |
Other | (4.6) | - | (4.6) |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
Share of net assets | 1,418.3 | 1,540.3 | 2,958.6 |
Goodwill | 236.8 | 163.4 | 400.2 |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
Investments | 98.0 | 122.7 | 220.7 |
Disposals | (1.3) | (0.6) | (1.9) |
Share of results - real estate | - | (17.6) | (17.6) |
Share of results - other | 181.8 | 164.3 | 346.1 |
Share of other comprehensive income | (25.7) | (17.1) | (42.8) |
Dividends | (149.5) | (213.7) | (363.2) |
Reclassification | (0.3) | 0.4 | 0.1 |
Reclassification from/(to) held for sale1 | - | 221.9 | 221.9 |
Exchange differences | (22.8) | (56.7) | (79.5) |
Other | 3.0 | (0.1) | 2.9 |
Balance on December 31, 2023 | 1,738.3 | 1,907.2 | 3,645.5 |
Share of net assets | 1,496.6 | 1,739.5 | 3,236.1 |
Goodwill | 241.7 | 167.7 | 409.4 |
Balance on December 31, 2023 | 1,738.3 | 1,907.2 | 3,645.5 |
- Related to Boskalis’ joint venture Smit Lamnalco (refer to note 16)
The amounts recognized in the statement of financial position comprise:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Publicly traded | 842.6 | 804.9 |
Other | 2,802.9 | 2,553.9 |
3,645.5 | 3,358.8 |
Vopak - PITSB
In June 2023, Vopak’s joint venture PITSB repaid € 46.7 million of share capital. In the consolidated cash flow statement this cash inflow is reported as cash flows from investing activities. For the purpose of Vopak’s debt covenants this redemption is considered as a dividend.
Vopak - PT2SB
In March 2020, a fire took place at an anchor client of PT2SB (25% Vopak) in Malaysia, leading to a subsequent closure of the facility. At December 31, 2023, PT2SB has reported € 270 million in net accounts receivable from this client (December 31, 2022: € 173 million). In January 2024, € 217 million was received in respect of these net accounts receivable balances. The settlement of the remaining outstanding balance is expected in the first quarter of 2024.
Investments
Vopak - Netherlands
On November 15, 2023, Vopak acquired a 50% shareholding in EemsEnergy Terminal B.V. (‘EET’) from Gasunie. EET is a new, floating LNG terminal in the Eemshaven in the Netherlands, developed to enhance gas supply security in Europe. The fair value of the consideration transferred amounted to € 28.2 million and consists of amounts payable of € 41.7 million, partially offset by a receivable from Gasunie of € 13.5 million. This receivable reflects the discounted, expected receipts under a tax-compensation mechanism agreed between Vopak and Gasunie, whereby certain taxable results of EET economically remain with Gasunie and are compensated to Vopak during the period 2024-2027. The purchase price allocation for this transaction is expected to be finalized within twelve months after the acquisitions date.
Vopak - Canada
On April 4, 2023, Vopak and AltaGas formed a limited partnership (Ridley Island Energy Export Facility LP Inc.) to evaluate a large-scale liquefied petroleum gas (LPG) and bulk liquids export facility in Prince Rupert, Canada. On the completion date of the partnership all assets and liabilities that were previously classified as held for sale were transferred to the newly incorporated legal entity, 50% carrying value of which was reimbursed to Vopak. Vopak’s contribution in kind amounted to € 15.5 million. After April 4, 2023, non-cash contributions of € 1.6 million were made by Vopak. AltaGas has executed a long-term commercial agreement with the joint venture for 100% of the capacity for the first phase of LPG volumes, subject to a positive final investment decision. As such, AltaGas is exposed to, and has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Vopak classified the arrangement as an associate in which it has significant influence.
Real estate joint ventures
The investments in joint ventures belonging to the real estate segment increased by € 71.7 million during 2023.
Real estate joint ventures
The financial position of the U.S. real estate joint ventures included in the real estate segment can be summarized as follows:
2023 | 2022 | |
|---|---|---|
Properties in operation and under construction | 715.1 | 554.5 |
Project debt | (459.1) | (339.6) |
Non-controlling interest | (50.0) | (39.8) |
HAL equity share | 206.0 | 175.1 |
The real estate portfolio consisted at the end of 2023 of 17 joint ventures of which 2 were invested in office buildings and 15 in residential real estate. The total (expected) cost of the real estate portfolio amounted to $ 1,233.6 million (€ 1,115.0 million) as of December 31, 2023 (2022: $ 1,138.1 million, € 1,062.5 million). HAL’s total equity commitment for these projects amounts to $ 344.4 million (€ 311.3 million, 2022: $ 306.2 million, € 285.9 million) of which $ 51.5 million (€ 46.6 million) was not yet spent as of December 31, 2023 (2022: $ 80.0 million, € 74.7 million). As certain properties are under construction, the income statements of these joint ventures on a 100% basis are not significant in relation to the financial statements of the Company. Revenues for 2023 amounted to € 36.6 million (2022: € 30.0 million).
Quoted associate
The difference between the market value of the Company’s share in its publicly traded associate SBM Offshore N.V. (‘SBM Offshore’) and the book value is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Market value | 514.6 | 606.0 |
Book value | 842.6 | 804.9 |
(328.0) | (198.9) |
Significant associate
SBM Offshore is a significant (non-consolidated) associate of the Company, in which the Company has a 22.88% ownership interest. SBM Offshore is incorporated in the Netherlands and is listed on Euronext Amsterdam. The company designs, builds, installs and operates offshore floating facilities for the offshore energy industry.
Set out on the next page is the summarized financial information for SBM Offshore. This summary is based on publicly available information.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
USD ’m | USD ’m | |
Current | ||
Cash and cash equivalents | 543.0 | 683.0 |
Other current assets | 8,876.0 | 8,388.0 |
Total current assets | 9,419.0 | 9,071.0 |
Financial liabilities (excluding trade payables) | 1,194.0 | 1,883.0 |
Other current liabilities (including trade payables) | 1,606.0 | 1,720.0 |
Total current liabilities | 2,800.0 | 3,603.0 |
Non-current | ||
Assets | 7,757.0 | 6,818.0 |
Financial liabilities | 8,194.0 | 6,898.0 |
Other liabilities | 652.0 | 474.0 |
Total non-current liabilities | 8,846.0 | 7,372.0 |
Non-controlling interest | 1,797.0 | 1,517.0 |
Net assets | 3,733.0 | 3,397.0 |
2023 | 2022 | |
|---|---|---|
USD ’m | USD ’m | |
Revenue | 4,963.0 | 4,913.0 |
Depreciation, amortization and impairment | (94.0) | (189.0) |
Financial income | 25.0 | 12.0 |
Financial expense | (601.0) | (385.0) |
Profit / (loss) before tax | 589.0 | 660.0 |
Profit / (loss) after tax for owners of parent | 491.0 | 450.0 |
Other comprehensive income for owners of parent | 18.0 | 526.0 |
Total comprehensive income for owners of parent | 509.0 | 976.0 |
Reconciliation of the summarized financial information for SBM Offshore:
2023 | 2022 | |
|---|---|---|
USD ’m | USD ’m | |
Net assets January 1 | 3,397.0 | 2,579.0 |
Profit / (loss) for the period | 491.0 | 450.0 |
Other comprehensive income | 18.0 | 526.0 |
Transactions with owners | (173.0) | (158.0) |
Net assets December 31 | 3,733.0 | 3,397.0 |
€ 'm | € 'm | |
Interest in SBM Offshore (22.88%, 2022: 22.88%) | 779.0 | 736.0 |
Intangible assets recognized in purchase price allocation | 22.0 | 25.9 |
Goodwill | 41.6 | 43.0 |
Book value | 842.6 | 804.9 |
We refer to note 44 with respect to summarized financial information on associates and joint ventures of Vopak.
9 Other financial assets
For the accounting policies for derivative financial instruments, reference is made to note 38. At initial recognition, the Company classifies its non-derivative financial assets as “measured at amortized cost” or as “measured at fair value” (either through profit or loss or through other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 37). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 37.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 37), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
The specification is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Investments in quoted equity securities | 573.8 | - |
Investments in unquoted equity securities | 133.7 | 94.0 |
Loans to associates and joint ventures | 56.9 | 5.2 |
Other loans | 145.2 | 95.6 |
Finance lease receivable | 121.7 | 131.9 |
Escrow | - | 250.0 |
Other | 59.3 | 68.8 |
1,090.6 | 645.5 |
The investments in quoted equity securities includes the Company’s 14.9% investment in Technip Energies N.V., included under the marketable securities in prior year. The escrow in 2022 represented part of the proceeds from the sale of the Company’s 76.72% shareholding in GrandVision N.V. that was held in escrow for potential liabilities of HAL under the sale and purchase agreement. The full escrow amount was released to the Company in 2023. The category “other” includes long-term deposits and receivables. The classification of financial instruments is disclosed in note 37. For information on derivative financial instruments reference is made to note 38.
The other financial assets can be further specified as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Non-current | 1,037.1 | 360.0 |
Current | 53.5 | 285.5 |
1,090.6 | 645.5 |
Amounts included in the cash flow statement comprise:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Purchase of shares in Technip Energies N.V. | (70.0) | - |
Other | 158.5 | 239.2 |
Proceeds from/(investments in) other financial assets in the statement of cash flows | 88.5 | 239.2 |
The category “Other” includes the receipt of € 250 million from the afore-mentioned escrow in both 2023 and 2022.
10 Marketable securities
The accounting policies applied to marketable securities are the same as those applied to other financial assets (note 9). Marketable securities are measured at fair value through profit or loss except for certain fixed-income securities that are measured at fair value through other comprehensive income.
Marketable securities consist of equity securities amounting to € 158.2 million (2022: € 521.2 million) and fixed-income securities amounting to € 1,967.2 million (2022: € 2,839.7 million). The investment in Technip Energies N.V. (2022: € 345.4 million) was reclassified to other financial assets (refer to note 9). The fixed-income securities mainly include corporate investment-grade bonds, with an average S&P credit rating of A, an average duration of 1.1 year and an average yield to maturity of 3.86%. The portfolios were on average 44% invested in BBB-rated bonds, 39% in A-rated bonds, 9% in AA-rated bonds and 8% in AAA-rated bonds. On average, the portfolio matures for 54% within 1 year, 42% within 1-3 years and 4% within 3-5 years. The emerging market exposure of the portfolios was 4% of the total value. The average amount invested per security was € 3 million.
11 Receivables
Trade receivables are initially recognized at the transaction price and subsequently measured at amortized cost using the effective interest method, less a provision for impairment. Trade receivables that include a significant financing component are initially recognized at fair value plus any directly related transaction costs. A provision for impairment is established based on the expected loss model (refer to note 37) with application of the simplified approach. The amount of the provision is the difference between the assets’ carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Additions to and releases from the provision are recognized in the consolidated statement of income.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Trade receivables | 1,534.7 | 1,502.3 |
Allowance for doubtful accounts | (86.5) | (78.5) |
1,448.2 | 1,423.8 |
The ageing analysis of the trade receivables that are past due, net of provision for impairment, is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Up to 3 months | 292.5 | 249.0 |
Between 3 and 6 months | 60.0 | 27.3 |
Between 6 and 9 months | 22.1 | 13.5 |
Over 9 months | 73.9 | 32.9 |
448.5 | 322.7 |
Movements on the provision for impairment of trade receivables are as follows:
2023 | 2022 | |
|---|---|---|
Balance on January 1 | (78.5) | (64.6) |
Consolidation | (13.4) | (39.2) |
Addition to allowance | (50.3) | (31.2) |
Utilized during the year | 19.1 | 37.9 |
Released | 12.7 | 20.0 |
Reclassification to held for sale | 10.1 | 0.3 |
Other movements | 13.8 | (1.7) |
Balance on December 31 | (86.5) | (78.5) |
There was no indication at the reporting date that these receivables will not be recovered, other than as already provided for. The fair value of the receivables approximates their carrying value.
Information on pledges is included in note 22.
12 Construction and offshore contracting activities
A construction contract is a contract specifically negotiated for the construction of an asset, including (residential) real estate, greenhouse projects, technical facilities, civil and maritime infrastructure and development projects for which a contract with a customer is present. Development projects for which there is not yet a contract with a customer are included within inventories (refer to note 13). Offshore service contracts are specifically negotiated contracts for (sub-sea) marine services, including heavy transport, inspections and surveys. The timing of invoicing and cash collection may result in unbilled revenue, accounts receivable and deferred revenue with respect to these contracts. Amounts are generally invoiced based on contractual terms, either at periodic intervals or upon achievement of contractual milestones, and for each contract a net position is included in the statement of financial position. In the event that billing occurs subsequent to revenue recognition, unbilled revenue is recognized (as an asset). In the event that payments are received from customers in advance of revenue recognition, deferred revenue is recognized (as a liability).
A provision for onerous contracts is recognized when the remaining unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The provisions taken for onerous contracts related to construction and offshore service contracts are included in note 21. The provision is measured based on the expected incremental and directly related costs of fulfilling the contract.
The order book includes future revenues from projects that have been signed and, for framework contracts, for which work packages have been agreed with clients. This includes mainly projects that are in progress but not yet completed and to a lesser extent projects acquired but not yet in progress at the reporting date.
For information on revenue recognition for construction and offshore service contracts reference is made to note 23.
Critical accounting estimates and judgments
The expected outcome of a construction or offshore service contract is periodically estimated. If the contract is expected to be profitable and the contract revenue highly probable, contract revenue and costs are recognized based on the progress of the project over time, generally by reference to the percentage-of-completion method. When a contract is not estimated to be profitable, the realized loss, determined based on the progress of the project, is recognized in the consolidated statement of income immediately. The expected future losses are included in a provision for onerous contracts (refer to note 21) that is charged against the consolidated statement of income.
There is a robust process in place to determine both progress and forecasted outcomes of construction and offshore service contracts. This process builds on decentralized estimates by project managers that are thoroughly discussed with and reviewed by experienced staff and management at various levels of the organization, including comparative analyses with earlier projections and project budgets. There is inherent estimation uncertainty in this process and actual outcomes of projects may deviate from the forecasted outcomes, affecting revenue and results.
Unbilled revenue and deferred revenue related to construction and offshore contracting activities for which there is a contract with a customer are as follows.
Dec. 31, 2023 | Dec. 31, 20221 | |
|---|---|---|
Unbilled revenue | 307.9 | 372.4 |
Deferred revenue | (795.6) | (584.5) |
(487.7) | (212.1) |
- Unbilled revenue and deferred revenue may also relate to periods before acquisition and subsequent consolidation of Boskalis in these financial statements
The unbilled revenue and deferred revenue balances are expected to be mainly recognized in 2024 as the Company does not pre-finance projects longer than one year and regular invoicing of installments applies.
The order book with regards to construction and offshore service projects for which a signed contract is in place amounts to € 8.5 billion (2022: € 7.9 billion). These revenues are expected to be realized mainly over the next three years. The Company does not use the practical expedient to exclude performance obligations in contracts with an original expected duration of one year or less.
13 Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is generally determined using the weighted-average cost method. Cost comprises direct costs and a proportion of attributable production overheads, but excludes interest expense. Net realizable value is the estimated selling price less the estimated costs necessary to make the sale.
Project development includes land positions, related building rights and capitalized property development costs related to projects for which a signed customer contract is not yet in place.
Critical accounting estimates and judgments
Finished goods are regularly subjected to specific assessment tests to identify damaged, slow moving or obsolete inventory, taking into consideration past experience, historic results and the probability of sale under normal market conditions. Based on these analyses, management asserts judgment to determine the write-downs required to reduce the value of the inventory to its net realizable value.
The composition of the inventories is set out below.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Raw materials | 208.3 | 261.5 |
Work in progress | 55.7 | 60.0 |
Spare parts | 106.2 | 93.9 |
Finished goods | 676.6 | 725.0 |
Project development (including land and building rights) | 152.8 | 120.8 |
Stock in transit | 12.2 | 12.9 |
Provision on inventory | (118.6) | (140.4) |
1,093.2 | 1,133.7 |
The cost of inventory, services and subcontracted work recognized as an expense amounts to € 5,761.5 million (2022: € 4,792.6 million). The total (reversal of) write-down of inventories recognized as within expenses amounts to € (7.1) million (2022: € 14.3 million).
Information on pledges is included in note 22.
14 Other current assets
Other current assets generally include prepayments relating to the following year and other receivables to be received within 12 months.
The composition of the other current assets is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Prepaid vendors | 505.6 | 418.0 |
VAT receivable | 35.8 | 82.3 |
Supplier bonus receivable | 47.7 | 46.5 |
Income tax receivable | 85.8 | 116.9 |
Other receivables | 278.9 | 234.6 |
953.8 | 898.3 |
15 Cash and cash equivalents
Cash and cash equivalents comprise unrestricted bank balances and liquid investments with a maturity of three months or less.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Cash | 1,299.6 | 1,707.3 |
Cash equivalents | 1,288.8 | 336.6 |
Cash and cash equivalents as presented in the consolidated statement of financial position | 2,588.4 | 2,043.9 |
Cash and cash equivalents classified as held for sale | 52.8 | - |
Cash and cash equivalents as presented in the consolidated statement of cash flows | 2,641.2 | 2,043.9 |
Cash equivalents include time deposits with a maturity of less than three months. Cash and cash equivalents in amount of € 121.9 million (2022: € 103.0 million) was held by project-driven construction consortia (joint operations).
16 Assets and liabilities held for sale
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is updated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
In the event the criteria for classification as held for sale are no longer met, the entity shall measure a non-current asset (or disposal group) that ceases to be classified as held for sale at the lower of its carrying amount before the asset was classified as held for sale, adjusted for any depreciation, amortization or revaluations (including those arriving from equity accounting) that would have been recognized had the asset (or disposal group) not been classified as held for sale, and its recoverable amount at the date of the subsequent decision not to sell.
A discontinued operation is a component of the Company’s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
At the reporting date the composition of total assets held for sale and related liabilities was as follows.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Property, plant and equipment | 193.0 | 71.4 |
Right-of-use assets | 3.8 | 4.0 |
Intangible assets | 165.9 | - |
Investments in associates and joint arrangements | - | 228.3 |
Other non-current assets | 12.9 | - |
Current assets | 117.8 | - |
Total assets held for sale | 493.4 | 303.7 |
Non-current liabilities | 93.3 | 42.3 |
Current liabilities | 118.6 | - |
Total liabilities related to assets held for sale | 211.9 | 42.3 |
Total net assets held for sale | 281.5 | 261.4 |
The assets and liabilities held for sale mainly relate to the 100% subsidiary IQIP Holding B.V. (IQIP). The other assets held for sale relate to Vopak.
IQIP
On August 11, 2023, HAL announced it had agreed to sell 40% of IQIP to AvH Growth Capital NV (‘AvH’) and 20% to MerweOord B.V. (‘MerweOord’). As a consequence, the assets and liabilities of IQIP were classified as held for sale as of August 2023. MerweOord has the option to increase its shareholding to 33.33% during 2024, which upon exercise would result in HAL, AvH and MerweOord each owning one-third of IQIP’s shares. The transaction is based on an equity value of IQIP, adjusted for dividend, of € 250 million. The finalization of the transaction is subject to customary regulatory clearance.
Vopak - Terminal Shandong Lanshan
On February 2, 2024, Vopak signed a sale-and-purchase agreement to sell its 60% share in Vopak Terminal Shandong Lanshan Limited. Upon classification as held for sale as per December 31, 2023, an impairment of € 8.9 million was recorded (allocated to property, plant and equipment) to align the carrying amount of the Lanshan terminal with its expected fair value less cost of disposal.
Vopak - Colombia
As of June 30, 2023, Vopak Colombia S.A. was classified as held for sale. In December 2023, Vopak discontinued the sales process. As at December 31, 2023, the assets and liabilities classified as held for sale have been reclassified to those arising from continuing business, whilst resuming depreciation since the asset held for sale date.
Boskalis - Smit Lamnalco
Upon gaining control over Boskalis on June 30, 2022, the Company classified the joint venture Smit Lamnalco as an asset held for sale (December 31, 2022: € 228.3 million). Late 2023, it became evident that the conditions pertaining to the divestment of Smit Lamnalco could not be met. As a result, the shareholding in Smit Lamnalco has been reclassified to investments in joint ventures and associates with simultaneous recognition of results since the held for sale date of € 17.5 million, including € 9.8 million related to the second half year of 2022. In addition, a positive result of € 6.5 million was recognized from the release of a cash flow hedge reserve that became ineffective when it became clear that the divestment of Smit Lamnalco would not crystallize.
17 Share capital
When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.
The issued and fully paid up share capital at December 31, 2023, consists of 90,370,864 shares of which 27,019 are held as treasury stock by the Company.
Movements in the number of shares were as follows:
x 1,000 | Issued shares | Treasury shares |
|---|---|---|
Balance on January 1, 2022 | 86,729.7 | 26.0 |
Sale and transfer of treasury shares | - | (20.2) |
Stock dividend and purchase of treasury shares | 1,869.2 | 0.5 |
Balance on December 31, 2022 | 88,598.9 | 6.3 |
Sale and transfer of treasury shares | - | (22.2) |
Purchase of treasury shares, including stock dividend | - | 43.0 |
Stock dividend | 1,772.0 | |
Balance on December 31, 2023 | 90,370.9 | 27.1 |
x 1,000 | Dec. 31, 2023 |
|---|---|
Authorized shares | 100,000.0 |
Outstanding shares | 90,343.8 |
Par value (HAL Holding N.V.) (in euro) | 0.02 |
Share capital (in millions of euro) | 1.8 |
The treasury shares referred to are HAL Trust Shares held by HAL Holding N.V. and are not expected to be cancelled. Each share has one voting right.
A 2022-related dividend of € 443.0 million (excluding dividend on treasury shares) or € 5.00 per Share was distributed on June 17, 2023 (2022: € 494.2 million or € 5.70 per Share), of which € 221.5 million in cash and € 221.5 million in Shares. Shareholders received one new Share for 50.0 existing Shares held. The calculation of the 2022 earnings per Share has been adjusted to take account of this stock dividend (in accordance with IAS 33.64).
The conversion ratio was determined based on the volume-weighted average share price of HAL Trust Shares traded on Euronext in Amsterdam during the period May 22, 2023, through June 9, 2023. Accordingly, 1,771,977 Shares were issued on June 16, 2023.
18 Other reserves
Other reserves include the cumulative valuation reserve, the cash flow hedge reserve and the cumulative currency translation reserve.
The cumulative valuation reserve includes the unrealized results, net of tax, on financial assets classified as fair value through other comprehensive income.
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place.
The cumulative currency translation reserve includes all exchange differences resulting from the translation of the financial statements of foreign entities. It also includes the exchange differences on liabilities and the effective currency component of fair value changes of derivative financial instruments, net of tax, to the extent that they are part of an effective net investment hedge relationship.
In millions of euro | Cumulative valuation reserve | Cash flow hedge reserve | Cumulative currency translation reserve | Total other reserves |
|---|---|---|---|---|
Balance on January 1, 2022 | 37.5 | (104.6) | 160.8 | 93.7 |
Change in fair value of financial assets at fair value through other comprehensive income | (13.5) | - | - | (13.5) |
Translation of foreign subsidiaries, including share of associates and joint arrangements | - | - | 63.4 | 63.4 |
Effective portion of hedging instruments, including share of associates and joint arrangements | - | 159.1 | - | 159.1 |
Reclassification | - | 30.1 | - | 30.1 |
Other | - | 0.7 | - | 0.7 |
Balance on December 31, 2022 | 24.0 | 85.3 | 224.2 | 333.5 |
Change in fair value of financial assets at fair value through other comprehensive income | 5.1 | - | - | 5.1 |
Translation of foreign subsidiaries, including share of associates and joint arrangements | - | - | (124.7) | (124.7) |
Effective portion of hedging instruments, including share of associates and joint arrangements | - | (8.5) | - | (8.5) |
Reclassification | - | 23.2 | - | 23.2 |
Balance on December 31, 2023 | 29.1 | 100.0 | 99.5 | 228.6 |
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of the cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place. The table below provides an overview of the estimated maturity profile of the cash flow hedge reserve.
Use of cash flow hedge reserve | |
|---|---|
< 1 year | 71.8 |
1-5 years | (7.8) |
> 5 years | 36.0 |
100.0 |
19 Deferred taxes
Deferred tax is recognized using the liability method on taxable temporary differences between the tax base and the accounting base of items included in the consolidated financial statements. Temporary differences are not provided if they relate to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit or differences relating to investments in subsidiaries, associates and joint ventures to the extent that the reversal of the temporary differences are controlled by the Company and it is probable that they will not reverse in the foreseeable future. Withholding tax and any other tax due for unremitted earnings of subsidiaries are not recognized as deferred tax liability unless there is an intention to distribute these earnings in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, at the year end. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax is recognized in the consolidated statement of income unless it relates to items recognized through other comprehensive income.
Tax assets and liabilities are offset when there is a legally enforceable right to set off the recognized amounts and that there is an intent to either settle on a net basis, or to realize the asset and settle the liability simultaneously.
Critical accounting estimates and judgments
Deferred tax assets, including those arising from carry-forward losses, are recognized if it is likely that taxable profits will be available against which losses can be set off. Management exercises judgment to establish the extent to which expected future profits substantiate the recognition of a deferred tax asset.
The movement in deferred tax assets and liabilities during the period is set out on the next page.
Carry-forward losses | PP&E | Leases | Intangibles | Inventories | Other | Offset | Total | |
|---|---|---|---|---|---|---|---|---|
Assets | 86.9 | 23.9 | 218.4 | 10.9 | 22.9 | 61.7 | (295.9) | 128.8 |
Liabilities | - | (226.1) | (203.7) | (218.0) | (23.1) | (155.6) | 295.9 | (530.6) |
Balance on January 1, 2022 | 86.9 | (202.2) | 14.7 | (207.1) | (0.2) | (93.9) | - | (401.8) |
Credited/(charged) to net income - continued operations (restated) | (12.8) | 49.8 | (79.3) | 21.6 | 5.9 | (6.9) | - | (21.7) |
Credited/(charged) to OCI | - | - | - | - | - | (26.3) | - | (26.3) |
Acquisitions and purchase price accounting adjustments | 2.8 | (61.3) | (0.3) | (90.6) | 1.5 | 10.9 | - | (137.0) |
Divestitures | (6.5) | (1.8) | (0.1) | 0.4 | - | 0.1 | - | (7.9) |
Other | - | - | - | - | - | 2.7 | - | 2.7 |
Reclassifications | - | (0.2) | 0.5 | (5.4) | 2.1 | 3.0 | - | - |
Exchange differences | 4.4 | (10.4) | 0.6 | (4.9) | 1.0 | (4.7) | - | (14.0) |
Balance on December 31, 2022 | 74.8 | (226.1) | (63.9) | (286.0) | 10.3 | (115.1) | - | (606.0) |
Assets | 74.8 | 19.0 | 140.5 | 7.5 | 33.5 | 43.5 | (231.1) | 87.7 |
Liabilities | - | (245.1) | (204.4) | (293.5) | (23.2) | (158.6) | 231.1 | (693.7) |
Balance on January 1, 2023 | 74.8 | (226.1) | (63.9) | (286.0) | 10.3 | (115.1) | - | (606.0) |
Credited/(charged) to net income - continued operations | 0.5 | 16.9 | 0.2 | 41.4 | 8.1 | 23.5 | - | 90.6 |
Credited/(charged) to OCI | - | - | - | - | - | 9.5 | - | 9.5 |
Acquisitions and purchase price accounting adjustments | 1.4 | (1.9) | - | (30.8) | (0.9) | (1.8) | - | (34.0) |
Other | 3.4 | - | - | - | - | 1.1 | - | 4.5 |
Reclassifications to held for sale | (1.5) | 4.0 | 0.4 | 24.0 | 0.2 | 1.7 | - | 28.8 |
Reclassifications | - | (4.4) | 1.9 | 2.2 | - | 0.3 | - | - |
Exchange differences | (4.5) | 5.6 | (0.3) | 1.6 | (0.5) | 4.1 | - | 6.0 |
Balance on December 31, 2023 | 74.1 | (205.9) | (61.7) | (247.6) | 17.2 | (76.7) | - | (500.6) |
Assets | 74.1 | 27.3 | 176.2 | 12.1 | 35.6 | 61.8 | (242.0) | 145.1 |
Liabilities | - | (233.2) | (237.9) | (259.7) | (18.4) | (138.5) | 242.0 | (645.7) |
Balance on December 31, 2023 | 74.1 | (205.9) | (61.7) | (247.6) | 17.2 | (76.7) | - | (500.6) |
The portion of the deferred tax liabilities that is expected to be settled within 12 months amounts to € 13.1 million (2022: € 30.3 million). The portion of the deferred tax assets that is expected to be recovered within 12 months amounts to € 37.2 million (2022: € 34.8 million).
Unused tax losses for which deferred tax assets have not fully been recognized are as follows:
Expiration | 2023 | 2022 |
|---|---|---|
2023 | - | 4.2 |
2024 | 5.4 | 5.7 |
2025 | 15.7 | 10.9 |
2026 | 23.2 | 12.7 |
2027 | 20.5 | 14.0 |
2028 and further years | 132.4 | 91.7 |
No expiration date | 1,843.3 | 1,794.1 |
2,040.5 | 1,933.3 |
Deferred tax assets for which the utilization is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences amount to € 142.2 million (2022: € 87.7 million).
Deferred tax assets of € 70.0 million (2022: € 42.9 million) relate to entities that suffered a loss in either the current or the preceding period. Their recognition is supported by projections of future taxable income and deferred tax liabilities against which they can be offset. Unused tax losses with no expiration date include tax losses relating to acquired entities. These tax losses relate to business models that were different than the activities of the entity at the moment of acquisition. This is an important reason for the fact that these losses have not (fully) been valued.
Unused tax credits for which deferred tax assets have not been fully recognized are not significant.
20 Pension benefits
The Company has both defined benefit and defined contribution plans.
Defined benefit plans
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension charges for defined benefit plans are based on actuarial calculations and calculated in accordance with the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated statement of income so as to spread the regular costs over the service lives of employees in accordance with the advice of independent qualified actuaries who carry out a full valuation of the plans every year. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related liability. The plan assets are measured at fair value. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Current and past service costs, interest components and administrative costs are recognized immediately in the consolidated statement of income. A net defined benefit asset is only recognized to the extent the surplus in the pension plan can be realized during the life of the plan, through refund or reduced future contributions, or at the settlement of the plan.
Defined contribution plans
A defined contribution plan is a pension plan under which the Company pays contributions to a publicly or privately administered pension insurance plan on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Critical accounting estimates and judgments
The defined benefit obligation is determined on the basis of assumptions for future developments in variables such as salary increase, price index increase, life expectancy and discount rate. All assumptions are assessed at the reporting date. Changes in the assumptions may significantly affect the liabilities and pension costs under the defined benefit plans. The weighted average of these assumptions as well as sensitivities of key assumptions are disclosed in this note.
The net amounts recognized in the statement of financial position for pension benefits are as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Pension benefit assets | 74.5 | 55.3 |
Pension benefit liabilities | (99.3) | (109.7) |
(24.8) | (54.4) |
The net pension benefit liability consists of:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Present value of funded obligations | (447.7) | (404.6) |
Fair value of plan assets | 486.4 | 422.4 |
Impact from asset ceiling | (15.9) | (19.4) |
Surplus/(deficit) of funded obligations | 22.8 | (1.6) |
Present value of unfunded obligations | (47.6) | (52.8) |
Total defined benefit plans | (24.8) | (54.4) |
Net asset/(liability) in the statement of financial position | (24.8) | (54.4) |
Pension benefit liabilities
The pension liabilities of € 99.3 million mainly relate to pension plans at Boskalis (€ 42.2 million), primarily a closed insured pension plan in the Netherlands, and a pension plan of Westag (€ 22.3 million), a subsidiary of Broadview Holding B.V., in Germany. Also included are two Formica pension plans in the United Kingdom with a net liability of nil.
Westag plan
The pension plan of Westag is unfunded and payments are made from Westag’s operating cash flow. Participants are insured against the consequences of old age, disability and death. The pension plan is closed to new participants. The defined benefit liability is calculated based on expected, salary-independent, old-age and disability pension payments per full year of staff membership in the company.
Pension supervision in Germany
The Westag pension plan operates under the German Pension Reform Act and is overseen by the Federal Financial Supervisory Authority BaFin.
Boskalis plans
This primarily relates to a closed insured pension plan in the Netherlands, for which future cash inflows consist of the company’s entitlement to excess returns achieved by the insurance company and future cash outflows for premiums for price indexation of insured pensions. The net defined benefit obligation for this pension plan is based on an estimate of this future cash outflow for premiums. The company’s entitlement to excess returns is not accounted for as an asset. Both the annual income from excess returns and expense for premiums for price indexation continue to be recognized through the statement of other comprehensive income. Therefore the expected impact of the defined benefit pension plans on future statements of profit or loss is not significant.
Formica plans United Kingdom
At December 31, 2023, the assets of certain plans at Formica (€ 108.6 million) exceeded the obligations of the plans (€ 96.2 million) by € 12.4 million. The surplus in these pension plans has not been recognized since it is not possible to recognize any economic benefit from refunds or reductions in future contributions. Both plans are closed for new entrants and the future benefit accrual has been frozen with effect of August 31, 2018, when a defined contribution plan was introduced. The benefits of the existing members were not affected by the closure of the scheme. The pension plans provide benefits upon retirement (based on final pay), death, disability and termination. Both plans are operated by separate pension trustees.
Pension supervision in the United Kingdom
The Formica plans operate under the regulatory framework of the Pensions Act 2004, as overseen by The Pensions Regulator. According to a 2018 UK High Court ruling, most UK defined benefit plans are expected to be required to provide additional benefits to their participants regarding guaranteed minimum pensions. This is expected to affect one of the plans and an estimated 1.5% allowance was applied in calculating the defined benefit obligation.
Pension benefit assets
The pension benefit assets of € 74.5 million mainly relate to a surplus of a pension fund in the Netherlands (the ‘pension fund’) that insures its participants against the consequences of old age, death and disability. The Company and its employees currently do not pay contributions to these pension plans. The pension fund has the legal structure of a foundation. The (actuarial) risks related to the pension plan consist of demographic risks (primarily life expectancy) and financial risks (primarily discount rate, future increases in salaries, and return on plan assets) and are regularly reviewed by the board of the pension fund. The board of the pension fund is the most senior governing body of the pension fund and is composed of equal numbers of employer and employee representatives (including pensioners). Modification of the pension plan requires the approval of the Company. The minimum required funding level for the pension fund is 104%. The pension fund had a funded level of 194% at year-end 2022. The funding level at December 31, 2023, was preliminary calculated at 209%. The pension asset is calculated, in accordance with IFRIC 14, as the lower of the surplus and the present value of the future service cost using assumptions (including the discount rate) consistent with those used to determine the defined benefit obligation, taking into account minimum funding requirements.
Pension supervision in the Netherlands
Pension funds in the Netherlands are overseen by the Authority for the Financial Markets (AFM) and the Dutch Central Bank (DNB). An annual report including an actuarial review on the plan is prepared in accordance with legal requirements. Additional reports are prepared periodically in accordance with IFRS requirements.
Multi-employer plans
Multi-employer pension plans are defined benefit plans classified as defined contribution, as the information received from these plans is not detailed per employee and per company. In case of a deficit in the multi-employer plans, future pension premiums may increase. There are no multi-employer plans for which the Group is significant in respect to the total plan. Certain multi-employer plans have indicated they have no reliable and consistent basis on which to attribute the pension obligations, plan assets and the absolute and relative share of the Group in the fund and on which to allocate income and expenses to the individual member companies of these pension funds. As a result, appropriate calculations for these defined benefit plans cannot be performed and they are recognized in these financial statements as a defined contribution plan.
The movement in the net provision for defined benefit plans is as follows:
2023 | 2022 | |
|---|---|---|
Balance on January 1 | (54.4) | (46.5) |
Pension charge defined benefit plans | (9.3) | (12.7) |
Consolidation | 0.1 | (39.9) |
Contributions | 19.1 | 8.3 |
Remeasurement effects | 13.2 | 32.7 |
Benefits paid for unfunded plans | 1.6 | - |
Plan amendments, settlements and curtailments | - | 0.9 |
Exchange differences and other | 4.9 | 2.8 |
Balance on December 31 | (24.8) | (54.4) |
In 2023, the remeasurement effects of € 13.2 million are primarily the result of lower discount rates and higher returns on plan assets. In 2022, the remeasurement effects of € 32.7 million were primarily the result of higher discount rates and lower returns on plan assets.
The amounts recognized in the consolidated statement of income are as follows:
2023 | 2022 | |
|---|---|---|
Current service costs | 7.3 | 11.2 |
Interest expense/(income) | 0.7 | 0.1 |
Administrative costs | 1.3 | 0.9 |
Total defined benefit costs | 9.3 | 12.2 |
Other costs | 138.0 | 112.2 |
147.3 | 124.4 |
Other costs mainly include costs related to defined contribution plans and multi-employer plans classified as defined contribution plans, as referred to above.
Movements in the defined benefit obligation, for both funded and unfunded plans, and plan assets and related asset ceilings, are as follows:
Plan assets | Obligation | Asset ceiling | ||||||
|---|---|---|---|---|---|---|---|---|
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||
Balance on January 1 | 422.4 | 496.0 | 457.4 | 516.1 | 19.4 | 26.4 | ||
Consolidation | 11.0 | 72.7 | 10.9 | 112.6 | - | - | ||
Service cost | - | - | 7.3 | 11.2 | - | - | ||
Interest income | 19.5 | 10.2 | - | - | 1.0 | 0.5 | ||
Interest expense | - | - | 19.2 | 10.3 | - | - | ||
Employer contributions | 19.1 | 8.3 | - | - | - | - | ||
Return on plan assets (excluding amounts included in interest income) | 38.0 | (142.6) | - | - | - | - | ||
Experience adjustments | - | - | 17.1 | 25.5 | - | - | ||
Change in financial assumptions | - | - | 13.0 | (199.5) | (5.0) | (6.2) | ||
Change in demographic assumptions | - | - | (0.3) | 4.9 | - | - | ||
Benefits paid | (20.8) | (21.6) | (23.3) | (25.6) | - | - | ||
Reclassification | (0.1) | - | (4.6) | 0.1 | - | - | ||
Exchange differences and other | (2.8) | (0.6) | (1.4) | 1.8 | 0.4 | (1.3) | ||
Balance on December 31 | 486.3 | 422.4 | 495.3 | 457.4 | 15.8 | 19.4 | ||
The Company expects to contribute € 7.1 million to defined benefit plans in 2024. The decrease mainly relates to contributions in 2023 to fund indexation of certain pension benefits.
The expected maturity analysis of undiscounted pension benefits is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Less than 1 year | 21.5 | 21.7 |
1-2 years | 24.4 | 23.7 |
2-5 years | 69.3 | 64.8 |
> 5 years | 993.1 | 970.8 |
1,108.3 | 1,081.0 |
The principal weighted-average assumptions used were:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Discount rate/return on assets | 3.99% | 4.16% |
Future inflation rate | 2.38% | 2.49% |
Future salary increases | 2.59% | 2.72% |
Life expectancy in years: | ||
Age 65 for men | 16.0 | 16.4 |
Age 65 for women | 17.9 | 18.3 |
Age 65 in 20 years for men | 17.2 | 17.6 |
Age 65 in 20 years for women | 19.1 | 19.5 |
The latest available mortality tables were used. The discount rates used in the determination of defined benefit obligations and pension charges are based on high-quality corporate bonds (AA- rated) with a duration matching the duration of the pension benefit liabilities.
Plan assets include as of December 31, 2023:
Level 1 | Level 2 | Level 3 | Total | Total (%) | |
|---|---|---|---|---|---|
Equity instruments | 163.4 | 3.7 | - | 167.1 | 34.3% |
Debt instruments | 61.7 | 68.9 | 0.1 | 130.7 | 26.9% |
Cash and cash equivalents | 18.6 | - | - | 18.6 | 3.8% |
Other | - | 18.4 | 151.6 | 170.0 | 35.0% |
243.7 | 91.0 | 151.7 | 486.4 | 100.0% |
The amounts in level 3 mainly relate to insurance policies that provide coverage for the related pension obligations.
Plan assets included as of December 31, 2022:
Level 1 | Level 2 | Level 3 | Total | Total (%) | |
|---|---|---|---|---|---|
Equity instruments | 141.9 | 14.0 | - | 155.9 | 36.9% |
Debt instruments | 54.0 | 78.4 | 0.1 | 132.5 | 31.4% |
Cash and cash equivalents | 15.0 | - | - | 15.0 | 3.6% |
Other | 1.2 | 1.7 | 116.1 | 119.0 | 28.1% |
212.1 | 94.1 | 116.2 | 422.4 | 100.0% |
The sensitivity of the defined benefit obligation to changes in the weighted-average principal assumptions is as follows:
Impact on obligation | |||
|---|---|---|---|
Change | Increase | Decrease | |
Discount rate/return on assets | 1.00% | (66.7) | 75.7 |
Future inflation rate | 1.00% | 29.1 | (31.7) |
Future salary increases | 0.25% | 1.8 | (1.8) |
Life expectancy | 1 year | 15.4 | N/A |
The plan liabilities are calculated using a discount rate set with reference to high-quality corporate bond yields. If plan assets underperform this yield, this will create a deficit. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings. The majority of the plans’ obligations are to provide benefits for the lifetime of the members, therefore increases in life expectancy will result in an increase in the plans’ liabilities.
21 Provisions
A provision is recognized for a present legal or constructive obligation as a result of past events, when it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made (for onerous contracts refer to note 12). Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
The composition and movements in provisions is as follows:
Environmental | Employee related | Claims & regulatory | Onerous contracts | Warranty | Other | Total | |
|---|---|---|---|---|---|---|---|
Balance on January 1, 2022 | 21.6 | 26.0 | 13.8 | 7.4 | 19.8 | 33.5 | 122.1 |
Addition to provision | 14.3 | 9.7 | 4.9 | 39.2 | 64.6 | 5.3 | 138.0 |
Consolidation | 1.4 | 8.3 | 1.6 | 69.2 | 56.5 | 4.4 | 141.4 |
Utilized during the year | (4.9) | (15.3) | (8.1) | (33.2) | (20.7) | (8.0) | (90.2) |
Released | (0.3) | (5.4) | - | (0.2) | (0.9) | (0.9) | (7.7) |
Reclassification from/(to) held for sale | - | (0.7) | - | - | (0.2) | - | (0.9) |
Exchange differences | 0.1 | 0.1 | - | 0.5 | 0.3 | 0.2 | 1.2 |
Reclassifications and other movements | - | (0.1) | 14.3 | 35.7 | 5.3 | (13.7) | 41.5 |
Balance on December 31, 2022 | 32.2 | 22.6 | 26.5 | 118.6 | 124.7 | 20.8 | 345.4 |
Current | 5.7 | 7.7 | 7.9 | 66.7 | 80.2 | 15.1 | 183.3 |
Non-current | 26.5 | 14.9 | 18.6 | 51.9 | 44.5 | 5.7 | 162.1 |
Balance on December 31, 2022 | 32.2 | 22.6 | 26.5 | 118.6 | 124.7 | 20.8 | 345.4 |
Addition to provision | 43.7 | 40.1 | 21.5 | 72.8 | 30.2 | 30.4 | 238.7 |
Utilized during the year | (2.2) | (32.6) | (2.7) | (87.9) | (17.3) | (12.9) | (155.6) |
Released | - | (0.4) | - | (28.3) | (9.5) | (2.1) | (40.3) |
Reclassification from/(to) held for sale | (11.2) | (0.1) | - | - | (1.5) | - | (12.8) |
Exchange differences | (0.1) | - | 0.3 | (1.0) | (0.1) | (0.1) | (1.0) |
Reclassifications and other movements | 2.0 | (0.4) | 21.0 | - | (1.5) | 1.8 | 22.9 |
Balance on December 31, 2023 | 64.4 | 29.2 | 66.6 | 74.2 | 125.0 | 37.9 | 397.3 |
Current | 11.6 | 14.8 | 31.1 | 38.3 | 86.1 | 26.6 | 208.5 |
Non-current | 52.8 | 14.4 | 35.5 | 35.9 | 38.9 | 11.3 | 188.8 |
Balance on December 31, 2023 | 64.4 | 29.2 | 66.6 | 74.2 | 125.0 | 37.9 | 397.3 |
Environmental
The environmental provisions primarily relate to historical contaminations of locations where Vopak terminals are located. The increase in 2023 is primarily related to the acquisition of Vopak Energy Park Antwerp (€ 42.2 million), partially offset by the divestment of Vopak Botlek (€ 11.2 million), refer to note 3 for details on both transactions.
Onerous contracts
The provision relates primarily to construction and offshore services contracts (refer to note 12).
Warranty
Warranty provisions relate to multiple projects, mainly at Boskalis.
22 Debt and other financial liabilities
Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 37 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Debt and other financial liabilities is comprised of:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Debt | 3,721.8 | 5,025.7 |
Other financial liabilities | 179.4 | 177.3 |
3,901.2 | 5,203.0 |
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Non-current debt and other financial liabilities | ||
Mortgage loans | 409.6 | 464.3 |
Private placements | 1,548.3 | 1,899.5 |
Other loans | 259.6 | 592.7 |
Total non-current debt | 2,217.5 | 2,956.5 |
Non-current other financial liabilities | 152.7 | 150.2 |
Total non-current debt and other financial liabilities | 2,370.2 | 3,106.7 |
Current debt and other financial liabilities | ||
Bank overdrafts | 471.5 | 1,193.4 |
Current portion of long-term debt | 1,031.9 | 874.9 |
Other loans | 0.9 | 0.9 |
Total current debt | 1,504.3 | 2,069.2 |
Current other financial liabilities | 26.7 | 27.1 |
Total current debt and other financial liabilities | 1,531.0 | 2,096.3 |
Total debt and other financial liabilities | 3,901.2 | 5,203.0 |
Mortgage loans are secured by mortgages and pledges on vessels, real estate, inventory and receivables with a corresponding carrying value of € 626.5 million (2022: € 632.1 million). These are non-possessory pledges, which means that only in case of default under the mortgage loan agreements, the lender will have the right to sell the vessels, real estate or inventory and receive the cash flows from the receivables. The other loans are secured to an amount of € 927.0 million (2022: € 847.7 million) by non-possessory pledges on machinery and equipment, receivables, inventories and other current assets.
The debt position relates for € 1,843.7 million (49.5%) to Vopak (2022: € 2,359.7 million, 47.0%). This debt mainly consists of unsecured private placements in the U.S. and Asian markets. The average remaining maturity at the end of 2023 was 5.5 years (2022: 4.3 years).
The summary of debt per currency is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Euro | 1,891.0 | 3,132.3 |
U.S. dollar | 1,526.6 | 1,533.0 |
Singapore dollar | 136.9 | 139.6 |
Other currencies | 167.3 | 220.8 |
3,721.8 | 5,025.7 |
For € 427.1 million (11.4%) of the bank debt, the applicable covenants were breached at the end of 2023, practically all related to Pro Gamers Group (refer also to note 36). In 2022 100% of covenants were complied with or waived. The table below provides details on certain company-specific covenants that applied in 2023.
Debt | Required | Actual | |
|---|---|---|---|
Boskalis | 115.6 | ||
Maximum net debt:EBITDA ratio | 3.00 | (0.70) | |
Minimum net interest cover ratio | 4.00 | 1 | |
Vopak | 1,843.7 | ||
Maximum senior net debt:EBITDA ratio | 4.00 | 1.80 | |
Minimum interest cover ratio | 3.50-4.00 | 8.40 | |
Other | 1,762.5 | ||
Total debt | 3,721.8 |
- Boskalis has a net interest income over 2023 and therefore has met the conditions of the covenant.
Included in other financial liabilities is the obligation to acquire equity instruments in certain subsidiaries from the management of these subsidiaries and liabilities related to share-based payment plans for an aggregate amount of € 59.7 million (2022: € 83.3 million), of which € 55.3 million (2022: € 67.6 million) is included as non-current liabilities. Reference is made to note 35 on share-based compensation.
Also included are obligations related to options on non-controlling interest and deferred/contingent payments with respect to acquisitions for € 59.7 million (2022: € 79.1 million) and other liabilities of € 60.0 million (2022: € 15.0 million). These liabilities expire during 2024 through 2028. During the first half of 2023, Safilo agreed an extension of the second and third tranche of the put and call options on the non-controlling interest in Blenders, included in other financial liabilities, from 2024 and 2025 to 2026 and 2027 respectively.
The fair value of debt and other financial liabilities is disclosed in note 37.
23 Revenues
Revenue is recognized in the period in which the performance obligation from the underlying contract has been satisfied. In most sales transactions this is at the point in time when control over a product or service has been transferred to the customer. Revenue is shown net of sales tax, value-added tax, discounts, rebates, expected returns and amounts collected on behalf of third parties. A contract with a customer may comprise of multiple distinct performance obligations that require separation. In general, the total consideration under the contract is allocated to performance obligations based on stand-alone selling prices. The timing of revenue recognition depends on the type of performance obligation, as described below.
Sale of goods
The group operates physical retail stores and webstores in the Quoted minority interests and Unquoted segments. Sales on a wholesale basis are present in the Quoted minority interest and Unquoted segments. Revenue is recognized when the product is sold to the customer and control over the product has been transferred to the customer in return for (a right to) payment.
For retail sales, revenue recognition generally coincides with the physical transfer of the product to the customer. Revenue is then recognized at the transaction price, gross of (credit card) fees payable for the transaction which are recorded in selling cost. For rights issued under a customer loyalty program, through vouchers and by way of other future discounts or awards, a contract liability is incurred as a reduction to revenue. Revenue is further reduced and a refund liability is recognized for applicable rights of return. An asset reflecting the right to returned goods is recognized, reducing the cost of sales, at the carrying amount of those goods, net of expected refurbishment cost for returns that are not scrapped. In general, when a replacement product is not an acceptable alternative, the transaction price is refunded. An expected-value calculation based on accumulated experience is used to determine the amounts recognized as a refund liability. Where loyalty programs are in place, revenue allocated to the awards is recognized based on (anticipated) expiration and when the awards are redeemed.
For wholesale and franchise sales the timing of revenue recognition depends on when the products are delivered, with full discretion by the customer or franchisee over the sales channel and price to re-sell the products. Revenue recognition depends on individual customer terms and may occur when the products have been shipped or delivered to a specific location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or objective evidence has been obtained that all criteria for acceptance have been satisfied. Volume incentives apply to various wholesale contracts and reduce related revenues. Depending on the contract, these incentives are either paid at the end of the contract period as a rebate, or provide a right to a discount in the next contractual period. In case of rebates, a refund liability is recorded at the time of the transaction, as a reduction to revenue. The group periodically reviews the expected transaction price for the goods and services provided under the contract and adjusts the revenues from the contract and the refund liability accordingly. Discounts to be provided in future periods based on current year sales are considered a separate performance obligation, reducing current year revenue, and are recognized as a contract liability. The contract liability is recognized as revenue in the consolidated statement of income based on (anticipated) expiration and when the discounts are redeemed. A receivable is recognized for wholesale deliveries when payment has become unconditional. No element of financing is deemed present as payment terms are consistent with market practice. Any prepayments by customers are not considered revenue but are accounted for as contract liabilities.
Obligations to provide a refund under the standard warranty terms are recognized as a provision. Where warranties exceed these standard terms either in time, extent or through the inclusion of (additional) services it is recognized as distinct performance obligation and part of revenues is allocated and recognized over the period covered by the extended warranties. Extended warranties are considered services to be rendered and included under contract liabilities until revenue is recognized.
Provision of services
The group provides storage services in its Quoted minority interest segment and a range of other services, including shipping, staffing and financial services, in its Unquoted segment. Revenue from providing services is recognized in the period in which the services are rendered. Tank storage rentals, including minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period when these services are rendered, as clients simultaneously consume and benefit from the services at the moment that these are rendered. Revenues from excess throughputs and other services are recognized in the period in which they are provided.
For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, based on costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in the consolidated statement of income in the period in which the circumstances that give rise to the revision become known by management. Contracts for the rendering of services typically do not exceed a duration of twelve months, except for framework agreements for which prices are variable or periodically renegotiated.
Modifications of property, plant and equipment paid upfront by customers are accounted for as a contract liability and recognized in the consolidated statement of income over the contractual period on a straight-line basis.
In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered exceed the payment, depending on the specific terms of the contract, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized. If the contract includes an hourly fee, revenue is recognized in the amount to which there is a right to invoice. No element of financing is deemed present as payment terms are consistent with market practice.
License revenues
Franchise rights are accounted for as rights to access the franchisor’s intellectual property. Any fixed fee allocated to those rights is generally recognized over the term of the franchise agreement. Franchise fees that are based on a percentage of sales are recognized at the time of the sale. Access to (digital) content is recognized over time for subscription contracts and at a point in time for usage-based contracts. License revenues are presented within rendering of services.
Construction and offshore contracting activities
The group provides (integration of) goods and services through its construction and offshore contracting businesses in the Unquoted segment, including housing, greenhouse, civil infrastructure and maritime construction. Revenue and results from the these businesses are determined by reference to the latest estimate of the total selling price of the contract, after taking into account claims that have been accepted by the client or that derive from enforceable rights, are highly probable to lead to revenue and can be reliably measured. Such revenue is recognized over time, using the percentage-of-completion method, using a completion rate determined by reference to estimated cost of completed works (input method) and reviewed against progress of the works.
Recognition of revenues and results for property development activities commences only when a contract with a customer for the (further) development and sale of such property has been signed. These contracts generally involve the delivery of both land and buildings. Revenues related to (further) development of the land and the construction of buildings are recognized as set out above. Revenues and results from sale of the land positions are realized at the signing date if the land is transferred to the buyer directly, or through inclusion of land and land-related expenses in the cost basis for determination of project completion, if it remains an integral part of the project under development.
Construction, development and offshore services contracts of the group are frequently subject to variation orders that affect the scope and/or price of the contract and that amend existing performance obligations. Variation orders that are highly probable, cannot be reversed and for which payment is legally enforceable constitute contract modifications. These modifications are accounted for through a cumulative catch-up adjustment.
A provision for onerous contracts is formed against operating expenses when future contract losses are known and can be reliably measured. Additional information on judgment and estimates in relation to construction, development and offshore services contracts are included in note 12.
The Company’s 2023 revenue can be disaggregated as follows:
2023 | Europe | USA & Canada | Asia | Other | Total | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | |||||||
Sale of goods | 2,995.5 | 896.7 | 308.7 | 239.5 | 4,440.4 | 1,021.3 | 3,419.1 |
Construction and offshore contracting activities | 2,340.6 | 284.9 | 1,348.4 | 250.7 | 4,224.6 | - | 4,224.6 |
Provision of services | 1,844.8 | 440.5 | 776.9 | 494.0 | 3,556.2 | 1,425.5 | 2,130.7 |
7,180.9 | 1,622.1 | 2,434.0 | 984.2 | 12,221.2 | 2,446.8 | 9,774.4 | |
Revenue from other sources | 65.2 | 20.2 | 27.6 | 9.6 | 122.6 | 42.5 | 80.0 |
Total revenue | 7,246.1 | 1,642.3 | 2,461.6 | 993.8 | 12,343.8 | 2,489.3 | 9,854.4 |
The Company’s 2022 revenue can be disaggregated as follows:
2022 | Europe | USA & Canada | Asia | Other | Total | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | |||||||
Sale of goods | 3,179.3 | 878.5 | 302.5 | 254.5 | 4,614.8 | 1,072.4 | 3,542.4 |
Construction and offshore contracting activities | 1,977.1 | 91.5 | 630.3 | 60.4 | 2,759.3 | - | 2,759.3 |
Provision of services | 1,466.0 | 286.3 | 507.8 | 387.1 | 2,647.2 | 1,341.6 | 1,305.6 |
6,622.4 | 1,256.3 | 1,440.6 | 702.0 | 10,021.3 | 2,414.0 | 7,607.3 | |
Revenue from other sources | 48.9 | 14.1 | 11.8 | 8.2 | 83.0 | 64.4 | 18.6 |
Total revenue | 6,671.3 | 1,270.4 | 1,452.4 | 710.2 | 10,104.3 | 2,478.4 | 7,625.9 |
Expected future revenues can be specified as follows:
2023 | 2022 | |
|---|---|---|
Future revenues expected to be realized in one year | 4,664.6 | 3,898.6 |
Future revenues expected to be realized between one and two years | 2,050.0 | 2,242.9 |
Future revenues expected to be realized between two and five years | 1,522.0 | 1,453.3 |
Future revenues expected to be realized beyond five years | 236.8 | 274.1 |
Future revenues in order book | 8,473.4 | 7,868.9 |
Future revenues in order book primarily relates to housing, greenhouse, civil infrastructure and maritime construction, office furniture and industrial businesses.
The table below provides a reconciliation of the contract liabilities for the periods presented.
Deferred revenue construction and offshore service contracts | Other deferred revenues | Customer prepayments | Total | |
|---|---|---|---|---|
Balance on January 1, 2022 | 160.3 | 65.9 | 66.3 | 292.5 |
Payments received | 730.1 | 104.3 | 51.5 | 885.9 |
Consolidation | 430.3 | 0.5 | - | 430.8 |
Increase from new contracts with customers | - | - | 0.2 | 0.2 |
Recognized as revenue in current period | (781.1) | (90.9) | (87.7) | (959.7) |
Reclassification | 42.9 | 4.3 | (2.6) | 44.6 |
Exchange differences and other | 2.1 | 3.1 | 1.9 | 7.1 |
Balance on December 31, 2022 | 584.6 | 87.2 | 29.6 | 701.4 |
Balance on January 1, 2023 | 584.6 | 87.2 | 29.6 | 701.4 |
Payments received | 338.3 | 106.7 | 90.0 | 535.0 |
Consolidation | - | 5.4 | 62.3 | 67.7 |
Increase from new contracts with customers | - | 1.3 | - | 1.3 |
Recognized as revenue in current period | (304.2) | (103.4) | (79.9) | (487.5) |
Reclassification | 25.1 | (3.3) | (67.3) | (45.5) |
Exchange differences and other | 151.8 | 0.6 | 2.6 | 155.0 |
Balance on December 31, 2023 | 795.6 | 94.5 | 37.3 | 927.4 |
For more information on (deferred revenue in relation to) construction and offshore service contracts refer to note 12.
24 Income from marketable securities
Income from marketable securities includes realized and unrealized capital gains and losses, impairment losses, interest, dividends and management fees.
Capital gains and losses represent the change in market value of the marketable securities. Interest income on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest rate method. Dividends are recognized when the right to receive payment is established.
2023 | 2022 | |
|---|---|---|
Net capital gains / (losses) | 93.2 | (179.0) |
Interest income / (expense) | 38.6 | 40.8 |
Dividend income | 8.6 | 21.2 |
Management fees | (1.9) | (2.7) |
138.5 | (119.7) |
25 Share of results from associates and joint ventures
Associates and joint ventures are accounted for using the equity method, which involves recognition in the consolidated statement of income the Company’s share of the net result of the associate or joint venture. When the Company’s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company’s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
2023 | 2022 | |
|---|---|---|
Share of results1 | 346.1 | 381.2 |
Revaluation upon gaining control | - | 656.2 |
Impairments | - | (165.8) |
Reversal of impairments | - | 3.8 |
346.1 | 875.4 |
- Capital gains and share of results from real estate joint ventures of € (17.7) million (2022: € 50.0 million) is presented under income from real estate activities in the consolidated statement of income.
The revaluation gain in 2022 related to the revaluation of the previously held equity interest of the Company in Boskalis upon gaining de facto control over the company.
For details on impairments, reference is made to note 36.
26 Income from other financial assets
Interest income on loans granted is recognized on an accrual basis, using the effective interest method. Interest and dividend income on available-for-sale instruments is recognized when the right to receive payment is established.
2023 | 2022 | |
|---|---|---|
Dividend income | 12.2 | - |
Net capital gains / (losses) | 156.9 | - |
Interest income | 2.5 | 6.0 |
Other | (2.8) | (9.0) |
168.8 | (3.0) |
Dividend income and capital gains in 2023 related to the Company’s investment in Technip Energies N.V.
27 Income from real estate activities
The Company develops, leases and sells residential, retail and office properties in its Real estate segment. Revenue from (operating) lease activities is recognized on a straight-line basis over the lease term. Capital gains from property sales are recognized at the transaction price agreed in the contract when control over the property has been transferred to the buyer. Revenue is recognized at the point in time when the legal title has passed to the buyer and the consideration becomes due.
2023 | 2022 | |
|---|---|---|
Capital gains | - | 63.7 |
Rental and residential income | 8.2 | 8.1 |
Share of results from real estate joint ventures | (17.7) | (13.7) |
(9.5) | 58.1 |
28 Other income
The 2023 net other income of € 70.5 million relates mainly to a € 49.7 million pre-tax capital gain on the divestment of a U.S. terminal by Vopak (refer to note 3). The 2022 net other income of € 127.8 million related mainly to the capital gains realized on the sale of the Company’s interests in MYLAPS, Livit and Floramedia, capital gains and losses on sale of subsidiaries by Vopak, capital gains realized on the disposal of property, plant and equipment, negative goodwill realized in acquisitions and a capital gains on the dilution of an associate by Vopak.
29 Employee expenses
Short-term employee benefits
Wages, salaries, social security contributions, annual leave, sickness absenteeism, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognized as an expense as the related service is provided by the employee of the Company. A liability is recognized for the amount expected to be paid under short-term cash bonus plans if there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Termination benefits
Termination benefits are recognized as an expense when the Company and its subsidiaries are committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognized as an expense if an offer has been made of voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period they are discounted to their present value.
Share-based compensation
The compensation cost for share-based payment plans is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period). Refer to note 35 for more details on share-based payment plans.
Participation by management of unquoted subsidiaries
Management of certain subsidiaries own non-controlling interests in the capital of these subsidiaries. With respect to certain subsidiaries, the Company has the conditional obligation to acquire these equity instruments for cash. Obligations to acquire non-controlling interest are fair valued, generally, based on a multiple of EBITA less net debt, with measurement differences recorded as employee expense in the consolidated statement of income in accordance with IAS19. Multiples applied are either contractually determined or, generally, in accordance with those applied in the section on estimated value of the subsidiaries and associates.
2023 | 2022 | |
|---|---|---|
Wages and salaries | 1,948.0 | 1,586.6 |
Social security costs | 264.1 | 217.8 |
Pension costs | 147.3 | 124.4 |
Other | 252.8 | 162.0 |
Total | 2,612.2 | 2,090.8 |
The number of persons employed by the Company and its subsidiaries at the end of 2023 was 35,661 (2022: 35,805), on a full-time equivalent basis 31,846 (2022: 31,144) .
30 Other operating expenses
Operating expenses, including marketing and information and communication technology, are recognized in the consolidated statement of income when incurred.
Other operating expenses include the following:
2023 | 2022 | |
|---|---|---|
Marketing and publicity | 214.9 | 215.4 |
Staffing expenses Atlas Professionals | 139.3 | 145.4 |
Information and communication technology | 165.2 | 137.8 |
Royalty expenses | 62.0 | 59.4 |
Housing | 63.5 | 44.3 |
Other | 963.0 | 937.0 |
Total | 1,607.9 | 1,539.3 |
Research and development costs expensed, included in “Other”, amounted to € 18.8 million (2022: € 29.3 million). Expenses recognized in the consolidated statement of income in respect of low-value asset leases and short-term leases amounted to € 21.6 million and in respect of variable lease payments € 5.7 million was expensed (2022: € 32.2 million, respectively € 7.4 million).
Remuneration PricewaterhouseCoopers
Audit fees for the year ended December 31, 2023, totaled € 11.0 million (€ 2022: 8.1 million). Fees for non-assurance services provided by PricewaterhouseCoopers network firms totaled € 4.8 million (2022: € 3.7 million).
31 Financial income and expense
Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (‘earn-out’ liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
Interest income and expense on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest method.
Financial income and expense include:
2023 | 2022 | |
|---|---|---|
Financial expense | 324.4 | 272.2 |
Other financial income | (83.2) | (146.5) |
241.2 | 125.7 |
Financial expense includes:
2023 | 2022 | |
|---|---|---|
Interest expense on lease liabilities | 36.3 | 31.9 |
Other interest expense | 214.3 | 167.2 |
Exchange differences, net of hedges1 | 47.7 | 42.0 |
Derivatives, not included in hedge accounting | - | 14.7 |
Revaluation of options on non-controlling interests | 7.9 | - |
Revaluation of earn-out liabilities | 6.2 | - |
Other | 12.0 | 16.4 |
324.4 | 272.2 |
- Exchange differences on underlying items includes the impact of foreign currency derivatives that are part of a fair value hedge accounting relationship and/or the recycling of results from the cash flow hedge reserve.
The revaluation of options on non-controlling interests relates to the revaluation of reciprocal put and call options concluded by Safilo with respect to the non-controlling interest in Blenders and Privé Revaux.
Other financial income includes:
2023 | 2022 | |
|---|---|---|
Interest income | 34.7 | 5.5 |
Exchange differences | 32.7 | 77.9 |
Derivatives, not included in hedge accounting | 0.1 | 2.8 |
Revaluation of options on non-controlling interests | - | 31.2 |
Revaluation of earn-out liabilities | - | 18.9 |
Other | 15.7 | 10.2 |
83.2 | 146.5 |
32 Income tax expense
The current income tax charge is calculated on the basis of the tax law enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries have operations, taking into account tax-exempt income and tax losses carried forward. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretations. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Income tax is recognized in the consolidated statement of income unless it relates to items recognized in the consolidated statement of comprehensive income or in the consolidated statement of changes in equity. Where the final outcome of tax-related provisions is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Critical accounting estimates and judgments
Significant judgment is required in determining the worldwide provision for income tax, as subsidiaries are subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain. Provisions for anticipated tax audit issues are recognized based on management’s estimates of whether additional taxes will be due.
2023 | 2022 | |
|---|---|---|
Current income taxes | 284.8 | 163.6 |
Deferred income taxes | (90.6) | 21.7 |
194.2 | 185.3 |
Income taxes differ from the theoretical amount that would arise using the domestic tax rates applicable to profits of taxable entities in the countries concerned, as follows:
2023 | 2022 | |
|---|---|---|
Profit before income tax | 1,361.8 | 681.2 |
Less: after-tax share of results from associates, joint ventures and other financial assets | (515.2) | (875.4) |
Less: non-taxable other income (sale of subsidiaries and associates) | (70.5) | (127.8) |
Adjusted profit before income tax | 776.1 | (322.0) |
Income tax expense | 194.2 | 185.3 |
Effective tax rate (%) | 25.0 | (57.5) |
2023 | 2022 | |||
|---|---|---|---|---|
Composition | Amount | % | Amount | % |
Weighted-average statutory tax rate | 218.9 | 28.2 | (93.9) | 29.2 |
Goodwill impairment | 66.3 | 8.5 | 76.1 | (23.6) |
Recognition of tax losses1 | 43.0 | 5.5 | 176.0 | (54.7) |
Non-taxable income | (100.0) | (12.9) | (37.8) | 11.7 |
Non-deductible expenses | 25.2 | 3.2 | 69.7 | (21.6) |
Rate differences | (62.3) | (8.0) | 0.1 | - |
Adjustment tax provisions and PY adjustments | 3.1 | 0.5 | (4.9) | 1.5 |
Effective tax (rate) | 194.2 | 25.0 | 185.3 | (57.5) |
- Current period losses that are not recognized increase the effective tax rate. When previously unrecognized tax losses are recognized, this reduces the effective tax rate.
In 2023, the line recognition of tax losses primarily relates to current period losses at Boskalis, Broadview, Safilo and Pro Gamers Group for which no deferred tax assets were recognized. During 2022, the impairments in Botlek and Europoort at Vopak did not lead to recognition of deferred tax assets as insufficient taxable profits were expected to be available. This, together with a derecognition of deferred tax assets in the Dutch fiscal unity of Vopak, explained to a large extent the effect of recognition of tax losses in the above table for the year 2022.
The line non-taxable income in 2023 mainly relates to the application of a tonnage tax regime in certain jurisdictions to the operations and projects of Boskalis and Anthony Veder, as well as to non-taxable income from the liquid portfolio. In 2022 and 2023 this line also included the effect of non-taxable income with respect to the revaluation of earn-out liabilities and options on non-controlling interests.
In 2023 the line rate differences mainly includes the effect of earnings of Boskalis realized in jurisdictions with a lower statutory tax rate than in the Netherlands.
The effect of non-deductible expenses in 2022 primarily related to a decrease of the value of the fixed-income portfolio (included in marketable securities) of € 147 million, which was non-tax deductible.
Pillar Two minimum taxation
The Group is within the scope of the Pillar Two model rules, issued by the Organisation for Economic Cooperation and Development, which entered into effect on January 1, 2024. These rules mandate a minimum corporate income tax framework, stipulating a baseline effective tax rate of 15% at the jurisdictional level. Under these rules the Group may incur supplementary taxes, which represent the difference between its jurisdiction-specific effective tax rates and the aforementioned minimum threshold. Since the Pillar Two legislation was not effective at the reporting date, the group has no related current tax exposure. The group applies the mandatory exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023 (refer to the basis of preparation).
The Pillar Two model rules incorporate transitional safe harbour rules, relevant for financial years 2024 through 2026, offering three distinct exemptions for preparing the detailed calculations. This reduces the administrative workload during the initial three years following the implementation of Pillar Two. Jurisdictions qualifying for any of these exemptions will not be subject to supplementary taxation. For those jurisdictions that do not qualify under the exemptions, comprehensive calculations are required, potentially leading to additional tax obligations for the Group in the respective periods.
The Group is undertaking an evaluation of its potential liabilities under the Pillar Two legislation. Preliminary assessments indicate that the Group’s exposure is significantly influenced by the impact of vessel-related (tonnage) tax regulations, which diverge from the international shipping exemptions outlined in the Pillar Two model rules. Additionally, the project related activities of Boskalis, which from time to time are executed in jurisdictions with lower tax rates, are an important factor in this assessment. It is expected that the Pillar Two model rules will increase the effective tax rate of the Group although the exact amount is, at this moment, difficult to assess, primarily in view of the project nature of the activities of Boskalis.
Taxes recognized in other comprehensive income:
2023 | 2022 | |
|---|---|---|
On changes in the fair value of cash flow hedges | 12.9 | (19.2) |
On changes in defined benefit obligations | (3.4) | (7.1) |
9.5 | (26.3) |
33 Earnings per Share
Earnings per Share for profit attributable to the owners of parent are calculated by dividing the profit attributable to the owners of parent by the time-weighted average number of outstanding Shares. The calculation of the previous year earnings per Share is adjusted to take into account the stock dividend paid in the current year, in respect of the previous year, in accordance with IAS 33.64.
The calculation of the time-weighted average number of outstanding shares is as follows:
x 1,000 | 2023 | 2022 |
|---|---|---|
Issued and outstanding Shares at January 1 | 88,593 | 86,704 |
Sale and transfer of treasury shares | 13 | 11 |
Purchase of treasury shares | (24) | - |
Dividend paid in stock | 961 | 1,009 |
Average number of outstanding Shares at December 31 | 89,543 | 87,724 |
There was no dilutive effect on earnings per Share in the years presented.
34 Cash flows from operating activities
Notes | 2023 | 2022 | |
|---|---|---|---|
Profit before taxes | 1,361.8 | 681.2 | |
Depreciation and impairments | 697.1 | 1,022.9 | |
Depreciation and impairments right-of-use assets | 173.7 | 156.8 | |
Amortization and impairments | 460.7 | 459.8 | |
Badwill recognized on acquisitions | - | (6.6) | |
(Profit)/loss on sale of other financial assets and marketable securities | 24, 26 | (250.1) | 179.0 |
Fair value gain on remeasurement of previously held equity interest | 25 | - | (656.2) |
Results from associates and joint ventures, net of impairments | 8, 25 | (328.4) | (269.2) |
(Profit)/loss on sale of property, plant, equipment and investment properties | 28 | (25.6) | - |
Profit on assets and liabilities held for sale | 28 | (44.6) | (121.3) |
Net financial expense | 31 | 241.2 | 125.7 |
Other movements in provisions and pension benefits | 56.0 | 16.8 | |
Dividend from associates and joint ventures | 288.6 | 313.2 | |
Changes in working capital | 236.7 | (114.2) | |
Cash generated from operating activities | 2,867.1 | 1,787.9 |
Changes in working capital, excluding exchange differences and the effect of acquisitions:
2023 | 2022 | |
|---|---|---|
Accounts receivable | 2.1 | 4.2 |
Inventories | 28.0 | (2.2) |
Other current assets | 53.2 | (55.3) |
Contract liabilities | 218.3 | 3.8 |
Accounts payable / accrued expenses | (64.9) | (64.7) |
236.7 | (114.2) |
35 Share-based compensation
The Company and its subsidiaries operate a number of equity-settled and cash-settled share- based compensation plans. Under the plans these entities receive services from employees as consideration for respectively ordinary shares of the respective entity or for the cash equivalent to the value of the underlying ordinary shares of the respective entity.
For equity-settled share-based compensation plans, the fair value is determined at the date of grant and expensed in the consolidated statement of income with a corresponding adjustment directly in equity. For cash-settled share-based compensation plans, the fair value is determined at the date of the grant and is re-measured at each reporting date until the liability is settled.
The compensation is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period).
Expenses related to share-based compensation consist of:
2023 | 2022 | |
|---|---|---|
HAL Holding N.V. | ||
Share Plan1 | 3.3 | 3.3 |
Vopak | ||
Long-Term Share Plans1 | 8.9 | 3.3 |
Long-Term Cash Plans2 | 0.6 | 0.7 |
Safilo | ||
Stock Option Plans1 | - | 0.7 |
Unquoted subsidiaries | ||
Cash Plans2 | 13.2 | 24.6 |
26.0 | 32.6 |
- Equity-settled
- Cash-settled
Liabilities recognized in relation to cash-settled share-based compensation are comprised of:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Vopak | ||
Long-Term Cash Plans | 0.9 | 0.7 |
Unquoted subsidiaries | ||
Cash Plans | 58.8 | 82.6 |
59.7 | 83.3 |
The current part of this liability of € 4.4 million (2022: € 15.7 million) is included under current other financial liabilities and the non-current part of € 55.3 million (2022: € 67.6 million) under non-current other financial liabilities.
The HAL Supervisory Board has the power to grant Executive Board members shares HAL Trust.
The granted, unvested shares can be summarized as follows:
x 1,000 | 2023 | 2022 |
|---|---|---|
Outstanding shares on January 1 | 65 | 65 |
Outstanding shares on December 31 | 65 | 65 |
The Supervisory Board resolved, on November 19, 2014, to grant each of Messrs. A.A. van ‘t Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of 19,500 shares HAL Trust. These shares vested in 2019 and are restricted until November 19, 2024.
On May 18, 2016, the Supervisory Board resolved to grant Mr. M.F. Groot, chairman of the Executive Board, 20,000 shares HAL Trust, under the condition precedent that he was still employed with the Company on June 1, 2021. These shares vested on June 1, 2021, and are restricted until June 1, 2026.
The Supervisory Board granted on September 5, 2021, to Messrs. M.F. Groot, A.A. van ‘t Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of respectively 25,000, 20,000 and 20,000 shares HAL Trust. These shares will vest on September 5, 2024 and are restricted until September 5, 2031.
Long-Term Share Plans (LTSP)
The LTSPs reward participants for considerable and ambitious improvements in Vopak’s earnings per share (Vopak’s EPS), excluding exceptional items, performance and strategy- and sustainability execution achievements during a three-year performance period, from their respective start dates in 2021, 2022 and 2023 at a pre-set Vopak EPS target and strategy- and sustainability execution targets. If the achievement of these targets during the three-year performance period falls within or exceeds the target range, a long-term remuneration will be awarded based on a percentage of their target grants (i.e. number of shares) made at date of grant, and this for all plans that are active.
The conditional awards granted under the LTSPs 2021-2023 can be summarized as follows:
x 1,000 | 2023 | 2022 |
|---|---|---|
Outstanding conditional awards on January 1 | 401 | 344 |
Granted | 243 | 177 |
Forfeited | (72) | (27) |
Vested and settled | (115) | (93) |
Outstanding conditional awards on December 31 | 457 | 401 |
The weighted-average fair value of the equity-settled LTSP awards granted in 2023 of € 31.34 (2022: € 25.14) has been determined based on Vopak’s share price at the grant date.
Cash plans
The cash plans provide eligible participants with a right to participate in unlisted subsidiaries’ growth in EBITA, subject to meeting the applicable vesting conditions. Obligations with respect to these plans are fair valued, generally, based on a multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates.
36 Impairment of non-financial, non-current assets
Assets that have an indefinite useful life are tested for impairment annually, while all non-current assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss on non-financial assets is recognized in the consolidated statement of income for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and an asset’s value in use. Goodwill is allocated to groups of cash-generating units (CGU’s) for the purpose of impairment testing. A CGU is in no event larger than the operating segment it belongs to.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
For discontinued operations, impairment testing requires management to determine whether the carrying value of the discontinued operation does not exceed the fair value less cost of disposal.
The recoverable amounts in impairment testing are determined based on the value in use and fair value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The primary impairment test for the Company relates to annual goodwill impairment testing. Property, plant and equipment as well as joint ventures and associates are reviewed and, when required, tested.
Critical accounting estimates and judgments
The recoverable amounts in impairment testing are determined based on the value in use and fair
value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and (terminal) growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The following impairment losses, net of reversals, are recognized:
2023 | 2022 | |
|---|---|---|
Property, plant and equipment | (29.1) | 451.5 |
Goodwill | 233.0 | 312.1 |
Other intangibles | 63.2 | 0.3 |
Right of use assets | 0.6 | 1.1 |
Investments in associates and joint arrangements | 7.1 | 162.0 |
Other financial assets | 7.7 | - |
Assets held for sale | 15.3 | - |
297.8 | 927.0 |
Impairment losses by segment are as follows:
2023 | 2022 | |
|---|---|---|
Unquoted | 301.0 | 445.5 |
Quoted minority interests | (10.3) | 481.5 |
Real estate | 7.1 | - |
297.8 | 927.0 |
Impairment losses, net of reversals, are included as follows in the consolidated statement of income:
2023 | 2022 | |
|---|---|---|
Amortization and impairment of intangible assets | 296.1 | 312.3 |
Depreciation and impairment of property, plant, equipment, right-of-use assets and investment properties | (28.4) | 452.7 |
Income from other financial assets | 7.7 | - |
Share of results of associates and joint arrangements | - | 162.0 |
Income from real estate activities | 7.1 | - |
Other operating expenses | 15.3 | - |
297.8 | 927.0 |
All impairments are included in the exceptional items (note 2), with the exception of the impairment of assets held for sale, referred to below.
Property, plant and equipment
With respect to Vopak, in performing the impairment test, Vopak management made an assessment of whether cash-generating units (CGU) will be able to generate positive net cash flows that are sufficient to support the value of the intangible assets, property, plant and equipment and financial assets included in the cash-generating unit. For value-in-use calculations, the assessment is based on estimates of future expected cash flows on the basis of the budget for the coming year and two subsequent plan years, which form the basis for a 15-year discounted cash flow model. For oil-related assets, the assessment is impacted by the energy transition and the forecast period is extended from a 15-year period to include the period in which the energy transition is expected to take place. Key assumptions applied are the expected occupancy, the estimated storage rate per cubic meter (for revenues not covered by long-term contracts), sustaining capital expenditures, expected (decreasing) growth rates based on most recent IEA energy transition scenarios (in a range of -3% and -4%) and the estimated terminal value, together with the applied discount rates. The discount rates are based on long-term government bonds, adjusted for a risk premium and specific country risks. The equity market risk premium was assumed 6.5% by Vopak management (2022: 6.5%). There is significant uncertainty towards the impact of the energy transition on the projected cash flows and these remain subject to continuous review and monitoring by Vopak management.
Vopak management has assessed that the value in use for a very limited number of terminals is lower than the carrying amount. For these individual terminals, the fair value less cost of disposal was calculated. Fair value less cost of disposal calculations are primarily based either on comparable market multiples and/or (indicative non-) binding bids or discounted cash flow models from the perspective of a willing buyer in an orderly transaction. When the fair value less cost of disposal of a terminal is based on (preliminary) offers received from interested parties (level 2 fair value), Vopak management has assessed that these offers are a good reflection of the fair value of the terminals concerned and assessed whether it is probable that these terminals will be sold in the near future resulting in a situation where the carrying amount will be recovered principally through a sale instead of through continued use. The value in use and fair value less cost of disposal assessments may change over time, amongst others due to changes in the business environment and/or outcomes of decisions taken by management, and when applicable could result in (reversal of) impairment. The discount rates used in calculating assets’ value in use are reassessed annually. In 2023, none of the tests on cash-generating units that were impaired in 2022 resulted in impairment, based on the value-in-use assessment.
2023
Vopak - Botlek terminal (reversal)
Upon classification as held for sale of the Botlek chemical terminals, an impairment reversal of € 54.2 million was recorded (€ 40.2 million net of tax). The chemical terminals divested represent the entire (unchanged) Botlek CGU that was impaired in 2022. The reversal mainly relates to the property, plant and equipment of the terminals. The recoverable amount of the Botlek CGU is based on its fair value less cost of disposal.
Vopak - Terminal Shandong Lanshan
On February 2, 2024, Vopak signed a sale and purchase agreement to sell its 60% share in Vopak Terminal Shandong Lanshan Limited. Upon classification as held for sale as per December 31, 2023, an impairment of € 8.9 million (€ 6.7 million net of tax) was recorded (allocated to property, plant and equipment) to align the carrying amount of the Lanshan terminal with its expected fair value less cost of disposal.
Vopak - cancelled projects
Vopak recorded an impairment of € 22.2 million (€ 16.5 million net of tax) in as it decided not to pursue the completion of a jetty in China, construction of which was started in 2018, due to lack of feasibility of the related LNG project.
2022
Vopak - Europoort terminal
For the cash-generating unit Europoort an impairment of € 240.0 million was recognized in the first half of 2022. By accelerating into new energies and repurposing some of its assets, the terminal will reduce its capacity by 2030 and will use the available land for new energy investments. Over time, this will reduce Vopak’s exposure to oil assets in line with its ambition to increase the relative exposure of industrials, gas and new energies. Transition in the energy markets is expected to impact the long-term revenue prospects of Europoort, in addition to current dynamics related to inflation pressure, utility prices, labor and material costs. The combined impact of these items caused the CGU’s carrying amount to exceed its recoverable amount, leading to an impairment.
Vopak - Botlek terminals
In the first half of 2022, an impairment of € 190.0 million was recorded for the cash-generating unit Botlek. The Botlek CGU is performing below Vopak’s minimum return levels, which is driven by lower revenue projections in addition to challenging conditions related to, among others, inflation pressure, utility prices and labor costs.
Vopak - Colombia terminals
In the fourth quarter of 2022, an impairment of € 17.1 million was recorded for the cash-generating unit. The decrease in recoverable value is primarily related to the business environment in which the terminals currently operate and forecasted competition.
Vopak - cancelled projects
Vopak recorded an impairment of € 1.7 million on a business development project for the Belgium terminal Eurotank due to Vopak’s decision to discontinue the project.
Goodwill
Unquoted
Goodwill for the unquoted segment has been tested for impairment losses at a level that reflects the way the operations are managed and with which the goodwill would naturally be associated. Management reviews the unquoted business performance on an entity level. Goodwill is also monitored on this level.
The recoverable amount of cash-generating units is generally determined based on the calculation of their value in use. These calculations use cash flow projections covering a five-year period. Cash flows beyond this five-year period are extrapolated using an estimated growth rate of nil. In 2023 the value-in-use method was applied to 89.9% of the goodwill tested (2022: 51.7%). For 10.1% (2022: 48.3%) of the goodwill tested, the fair value less cost of disposal was used, this related to Pro Gamers Group.
Impairment testing during the year resulted in impairment charges on the goodwill of Pro Gamers Group of € 164.9 million, of which € 106.0 million represents the share of HAL, taking into account the non-controlling interest (2022: € 312.1 million, HAL share € 200.0 million), and on the goodwill of GreenV of € 68.1 million (HAL share € 51 million), both in the Unquoted segment.
The impairment of the goodwill related to Pro Gamers Group was primarily the result of a lower than expected recovery in revenue and results during the reporting year, as well as uncertainties regarding the achievement of long-term financial objectives, partly due to increasing interest expenses on the company’s significant debt position. The impairment test is based on a five-year discounted cash flow model using a pre-tax WACC of 16.11% and a terminal growth rate of 2.0%, applying the fair value less cost of disposal method. As a result of the impairment the book value of the company in the books of HAL is approximately nil. In addition to the goodwill impairment, a pre-tax impairment of € 51.6 million of customer relationships was recorded (HAL share € 33.2 million, before tax).
Key assumptions used for value-in-use calculations are included as follows:
2023 | 2022 | |
|---|---|---|
Unquoted investments | ||
Weighted-average increase in revenues | 3.7% | 6.6% |
Weighted-average gross margin | 32.8% | 54.5% |
Weighted-average pre-tax discount rate | 13.5% | 15.6% |
Growth rate beyond year five | 0.0% | 0.0% |
The impairment of the goodwill related to GreenV resulted primarily from delays in the realization of the business plan due to the macro-economic and geopolitical situation as well as a tight financing market that cause many projects to be postponed. The recoverable amount of € 174 million was determined by the value-in-use method, using a pre-tax WACC of 15.59% and a terminal growth rate of 2.0%.
The valuation models include certain assumptions with respect to revenue growth, margin development, discount rates and terminal growth rates. A negative development of 2% in these assumptions would result in a potential (further) impairment charge on goodwill for the Unquoted segment as follows:
2023 | 2022 | |
|---|---|---|
2% lower increase in revenues | 380.0 | 97.8 |
2% increase in the discount rate | 629.1 | 88.4 |
2% lower gross margin | 509.2 | 241.0 |
If the cash flows beyond the five-year period were extrapolated using an estimated growth rate of 2%, the value in use of the cash-generating units within the Unquoted segment that indicated a potential impairment in the above sensitivity analyses would increase by € 697.0 million (2022: € 352.7 million).
Quoted
Vopak and Safilo are both listed entities. At the year-end 2023 the stock market value of the ownership interest in Safilo was below the carrying value by € 2.2 million. At the end of 2023, the stock market value of the ownership interest in Vopak exceeded its carrying value by € 217.4 million. These stock market values qualify as level 1 in the fair value hierarchy.
The goodwill at the level of Safilo (€ 33.7 million) has been tested on a single cash-generating unit basis using a five-year projection based on the Safilo group business plan for the period 2024 through 2028. This value-in-use model includes a post-tax WACC of 8.55% and a 2.13% terminal growth rate beyond the explicit forecast period (2022: 10.12%, respectively 2.07%). Applying alternative scenarios with a 55% decrease of EBITDA or with an increase of the WACC by 6.5% also does not lead to impairment.
Other intangibles
The total amount of impairments recognized on other intangibles was € 63.2 million (2022: € 0.3 million), mainly related to the customer relationships of Pro Gamers Group, as referred to above. There were no reversals of impairment (2022: nil).
Associates and joint arrangements
2023
In 2023 an impairment of € 7.1 million was recognized in the income from real estate activities. This related to a joint venture of the Company in the United States and is associated with a prolonged low occupancy of an office building.
The value of the joint venture in the financial statements after this impairment is zero.
2022
Prodrive Technologies
At year-end 2022, an impairment of € 129.6 million was recognized on the associate Prodrive Technologies. An impairment trigger was recognized due to a combination of supply chain challenges, cost inflation and personnel shortages, which caused the company to fall behind on its expected revenues and results. In addition, discount rates increased significantly as a result of macro-economic factors, further deteriorating the net present value of the company’s future cash flows. The key assumptions applied in the impairment test included a weighted-average cost of capital of 12.2% and a terminal-growth rate after the 10-year forecast period of 1.9%. The fair value less cost of disposal was calculated at € 81.0 million. An earn-out liability of € 18.9 million related to the investment in Prodrive was reduced to nil, which led to the recognition of a gain within other financial income.
Vopak - Colombia LNG terminal
In the second quarter an impairment was recognized for Vopak’s SPEC LNG terminal in Colombia for an amount of € 36.2 million. Mainly due to unusual weather conditions in recent years, which had brought a significant amount of rain in Colombia, hydropower had been available as the main source of power, which resulted in a reduced utilization of Vopak’s Floating Storage and Regasification Unit (FSRU). In addition, the tight FSRU market associated with the war in Ukraine was leading to the opportunity to reduce FSRU costs becoming remote. As a result of the above there was a decrease in dividend expectations, leading to impairment.
Vopak - German LNG terminal
As a result of Vopak’s divestment of its 33.3% shareholding in the German LNG Terminal GmbH, in the first half of 2022 an impairment reversal of € 3.8 million was recorded. This reversal partially offset a 2021 impairment.
Assets held for sale
The € 15.3 million impairment on assets held for sale related primarily to the discontinuance of depreciation and amortization of the non-current assets of IQIP B.V. as a result of its classification as held for sale (refer to note 16). This adjustment caused the book value of the company, in the books of HAL, to exceed its anticipated sales value on a 100% basis.
37 Financial instruments
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or 3).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
The following tables provide an analysis of the Company’s financial instruments per line item, stating the classification of the instruments, their fair value and their level within the fair value hierarchy:
December 31, 2023 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | ||||||
Other financial assets | ||||||
- Quoted equity securities | 1 | - | - | 573.8 | 573.8 | 573.8 |
- Unquoted debt securities | 2 | - | 383.1 | - | 383.1 | 383.1 |
- Unquoted equity securities | 3 | 108.2 | - | 25.5 | 133.7 | 133.7 |
Marketable securities | ||||||
- Quoted equity securities | 1 | - | - | 154.7 | 154.7 | 154.7 |
- Quoted debt securities | 1 | 34.3 | - | 1,932.9 | 1,967.2 | 1,967.2 |
- Unquoted equity securities | 2 | - | - | 3.5 | 3.5 | 3.5 |
Derivatives | 2 | - | - | 36.2 | 36.2 | 36.2 |
Other current assets | - | 326.6 | - | 326.6 | 326.6 | |
Receivables | - | 1,448.2 | - | 1,448.2 | 1,448.2 | |
Cash | - | 2,588.4 | - | 2,588.4 | 2,588.4 | |
Total financial assets | 142.5 | 4,746.3 | 2,726.6 | 7,615.4 | 7,615.4 |
December 31, 2022 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | ||||||
Other financial assets | ||||||
- Unquoted debt securities | 2 | - | 551.5 | - | 551.5 | 551.5 |
- Unquoted equity securities | 3 | 94.0 | - | - | 94.0 | 94.0 |
Marketable securities | ||||||
- Quoted equity securities | 1 | - | - | 518.4 | 518.4 | 518.4 |
- Quoted debt securities | 1 | 33.5 | - | 2,806.2 | 2,839.7 | 2,839.7 |
- Unquoted equity securities | 2 | - | - | 2.8 | 2.8 | 2.8 |
Derivatives | 2 | - | - | 98.8 | 98.8 | 98.8 |
Other current assets | - | 281.1 | - | 281.1 | 281.1 | |
Receivables | - | 1,423.8 | - | 1,423.8 | 1,423.8 | |
Cash | - | 2,043.9 | - | 2,043.9 | 2,043.9 | |
Total financial assets | 127.5 | 4,300.3 | 3,426.2 | 7,854.0 | 7,854.0 |
December 31, 2023 | Fair value level | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value | |
|---|---|---|---|---|---|---|
Liabilities | ||||||
Debt and other financial liabilities | ||||||
- Non-current debt | 2 | 2,217.5 | - | 2,217.5 | 2,200.9 | |
- Current debt | 2 | 1,504.3 | - | 1,504.3 | 1,504.3 | |
- Other financial liabilities | 2 | 8.2 | - | 8.2 | 8.2 | |
- Other financial liabilities | 3 | - | 171.2 | 171.2 | 171.2 | |
Lease liabilities | 2 | 1,117.3 | - | 1,117.3 | 1,117.3 | |
Derivatives | 2 | - | 36.9 | 36.9 | 36.9 | |
Accounts payable | 1,245.9 | - | 1,245.9 | 1,245.9 | ||
Total financial liabilities | 6,093.2 | 208.1 | 6,301.3 | 6,284.7 |
December 31, 2022 | Fair value level | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value | |
|---|---|---|---|---|---|---|
Liabilities | ||||||
Debt and other financial liabilities | ||||||
- Non-current debt | 2 | 2,956.5 | - | 2,956.5 | 3,215.0 | |
- Current debt | 2 | 2,069.2 | - | 2,069.2 | 2,069.2 | |
- Other financial liabilities | 2 | 15.0 | - | 15.0 | 15.0 | |
- Other financial liabilities | 3 | - | 162.4 | 162.4 | 162.4 | |
Lease liabilities | 2 | 1,195.3 | - | 1,195.3 | 1,195.3 | |
Derivatives | 2 | - | 20.5 | 20.5 | 20.5 | |
Accounts payable | 1,317.0 | - | 1,317.0 | 1,317.0 | ||
Total financial liabilities | 7,553.0 | 182.9 | 7,735.9 | 7,994.4 |
Valuation techniques used to value level 2 financial instruments include, for unquoted securities, quoted market prices or dealer quotes for similar instruments. Derivatives and debt instruments are valued using present value calculations of estimated future cash flows, based on observable yield curves and forward exchange rates. These calculations include credit spreads based on recent borrowing contracts and observable credit information on counterparties.
Level 3 financial instruments include contingent considerations that are remeasured based on the achievement of agreed business targets, taking into account the effect of discounting.
There were no transfers between levels 1, 2 and 3 during the period.
A reconciliation of level 3 financial liabilities for the period is given below:
2023 | 2022 | |
|---|---|---|
Balance on January 1 | 162.4 | 118.5 |
Additions | 9.2 | 69.5 |
Consolidation | - | 19.7 |
Settlements | (56.1) | (26.1) |
(Gains)/losses through income | 58.9 | (25.9) |
Exchange differences | (3.2) | 6.7 |
Balance on December 31 | 171.2 | 162.4 |
38 Derivatives and hedge accounting
Derivatives are measured at fair value with any related transaction costs expensed as incurred. Reference is made to the accounting policies in note 37 on fair value measurement. The treatment
of changes in the fair value of derivatives depends on their use, as explained below.
Cash flow hedge
Derivatives held to hedge the uncertainty in timing or amount of future forecasted cash flows are
classified as being part of cash flow hedge relationships. For effective hedges, gains and losses
from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are recycled in the consolidated statement of income at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, or if the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of income immediately.
Net investment hedge
The Company applies hedge accounting to certain investments in foreign operations. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. In the event of disposal or partial disposal of an interest in a foreign operation either through sale or as a result of a repayment of capital, the cumulative exchange difference is recognized in the consolidated statement of income.
Fair value hedge
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Company designates the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk being hedged, with changes going to the consolidated statement of income. Gains and losses on the corresponding derivative are also recognized in the consolidated statement of income. The amounts recognized are offset in income to the extent that the hedge is effective. When the relationship no longer meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortized using the effective interest method.
Derivatives for which hedge accounting is not applied
Derivatives not classified as hedges are carried at fair value with changes being recognized in the consolidated statement of income.
Derivatives are classified as follows in the statement of financial position:
Assets | Liabilities | ||||
|---|---|---|---|---|---|
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | ||
Equity derivatives | - | - | - | (0.2) | |
Fuel derivatives | 0.2 | 2.3 | (0.8) | (0.4) | |
Interest rate derivatives | 6.0 | 9.9 | (3.5) | (1.0) | |
Currency derivatives | 30.0 | 86.6 | (32.6) | (18.9) | |
36.2 | 98.8 | (36.9) | (20.5) | ||
Current | 20.2 | 75.6 | (29.2) | (18.0) | |
Non-current | 16.0 | 23.2 | (7.7) | (2.5) | |
36.2 | 98.8 | (36.9) | (20.5) | ||
For an overview of the movements in the cash flow hedge reserve in equity, reference is made
to note 18. Information on fair value measurement of derivatives is included in note 37, disclosure on financial risk management, including hedging, is provided in note 39.
39 Financial risk management
The Company is exposed to credit risk, liquidity risk and market risk. Market risk primarily relates to movements in exchange rates, interest rates and the market value of investments in equity securities.
Financial risk management activities are carried out both on a central level and on the level of individual subsidiaries and controlled minority interests (Vopak and Safilo). For managing these risks, both derivative and non-derivative financial instruments are used.
Risks related to discontinued operations are not included in this paragraph as these assets are held for sale and there is a high probability that the assets will be recovered through a sale rather than through continuing use.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations, including committed credit facilities extended to the Company. Credit risk on trade receivables, finance lease receivables and contract assets is generally monitored and managed on the level of each subsidiary and on the level of the controlled minority interests. These receivables generally have short payment periods, reference is made to note 11 for more information on trade receivables and note 12 for more information on contract assets.
Credit risk with respect to bonds, loans, derivatives, other financial instruments, cash and cash equivalents and credit facilities is managed by the Company for the Real estate and Liquid portfolio segments. Debt securities are mainly managed by external asset managers. The mandate to these managers stipulate that only investments in highly liquid, investment-grade bonds with an average S&P credit rating of A is allowed. These portfolios have a maximum average duration of two years. The Company mitigates its credit risk on cash and cash equivalents by spreading these assets over highly rated counterparties, applying regularly reviewed counterparty exposure limits that take into account their credit rating. A similar approach applies to credit facilities. The credit risk on the aforementioned financial instruments with respect to the other segments is managed by the respective subsidiary or controlled minority interest. The expected credit losses recognized in the consolidated statement of income for these financial instruments is insignificant for both years presented. There was no indication as at the statement of financial position date that these financial instruments will not be recovered, other than as already provided for.
The maximum exposure to credit risk is the carrying value of the consolidated financial assets, excluding equity securities, which can be specified by segment as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 3,177.5 | 3,076.6 |
Quoted minority interests | 1,088.7 | 885.2 |
Real estate | 30.4 | 28.7 |
Liquid portfolio | 2,761.0 | 3,370.9 |
Other | - | 250.0 |
7,057.6 | 7,611.4 |
The other items in 2022 represented the part of the proceeds from the sale of the Company’s 76.72% shareholding in GrandVision N.V. That was held in escrow for potential liabilities of HAL under the sale and purchase agreement. The full escrow amount was released to the Company in 2023.
These financial assets can be further specified as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Loans | 202.1 | 100.8 |
Trade receivables | 1,448.2 | 1,423.8 |
Contract assets | 307.9 | 372.4 |
Marketable securities | 1,967.2 | 2,839.7 |
Derivative financial instruments | 36.2 | 98.8 |
Other financial assets | 181.0 | 450.7 |
Other current assets | 326.6 | 281.1 |
Cash and cash equivalents | 2,588.4 | 2,043.9 |
7,057.6 | 7,611.2 |
Cash and cash equivalents can be specified by segment as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 1,520.2 | 1,396.1 |
Quoted minority interests | 271.9 | 111.5 |
Real estate | 2.5 | 5.1 |
Liquid portfolio | 793.8 | 531.2 |
2,588.4 | 2,043.9 |
For the Liquid portfolio and Real estate segments, cash and cash equivalents were held by counterparties with the following short-term Standard & Poor’s credit ratings:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
A-1+ | - | 75.7 |
A-1 | 725.1 | 362.7 |
A-2 | 62.1 | 86.0 |
Not rated | 9.1 | 11.9 |
796.3 | 536.3 |
The bonds held in the Liquid portfolio can be disaggregated based on their Standard & Poor’s (equivalent) credit ratings as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
AAA | 166.3 | 255.5 |
AA+, AA, AA- | 222.6 | 295.2 |
A+, A, A- | 718.7 | 1,113.3 |
BBB+, BBB, BBB- | 859.6 | 1,175.3 |
CCC | - | 0.4 |
1,967.2 | 2,839.7 |
The Company is not exposed to any significant concentration of credit risk.
Liquidity risk
Liquidity risk is the risk that the financial obligations associated with financial instruments and off-balance sheet commitments cannot be met.
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. The Company has no ability to transfer cash (or other assets) from the entities belonging to the segment Quoted minority interests that may be consolidated in these financial statements (i.e. Vopak and Safilo).
The approach to managing liquidity at the level of the Company is to ensure, as far as possible, that there will be sufficient liquidity to meet liabilities when due, both under normal and stressed conditions, without incurring unacceptable losses or risk damaging the Company’s reputation. The Company seeks to mitigate liquidity risk through its cash reserves held in the Liquid portfolio segment and committed credit facilities entered into at corporate level. Reference is made to the table on cash and cash equivalents per segment above. At the end of 2023, unused committed credit facilities were available to an amount of € 1,925.3 million (2022: € 2,161.8 million).
The following tables categorize the consolidated, undiscounted cash flows of non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining lifetime of the contract at the end of the reporting periods. The financial guarantee contracts are contingent liabilities.
December 31, 2023 | ||||
|---|---|---|---|---|
< 1 year | 1-2 years | 3-5 years | > 5 years | |
Non-derivative liabilities | ||||
Redemption of debt | 1,504.3 | 342.5 | 972.8 | 914.2 |
Redemption of other financial liabilities | 26.7 | 38.5 | 114.2 | - |
Interest payments | 193.0 | 92.1 | 194.9 | 138.5 |
Payments on lease liabilities | 177.9 | 249.4 | 185.2 | 881.9 |
Accounts payable | 1,245.8 | - | - | - |
Commitments and guarantees provided | 1,805.4 | 280.2 | 174.0 | 249.7 |
Total undiscounted non-derivative financial liabilities | 4,953.1 | 1,002.7 | 1,641.1 | 2,184.3 |
Derivative liabilities | ||||
Gross-settled derivative liabilities outflow | (183.9) | 61.2 | 112.1 | 45.4 |
Gross-settled derivative liabilities inflow | 208.6 | (67.8) | (115.7) | (45.2) |
Total gross-settled derivative liabilities | 24.7 | (6.6) | (3.6) | 0.2 |
Net-settled derivative liabilities | 1.9 | 1.9 | 2.6 | 0.3 |
Total undiscounted derivative liabilities | 26.6 | (4.7) | (1.0) | 0.5 |
Total undiscounted financial liabilities | 4,979.7 | 998.0 | 1,640.1 | 2,184.8 |
December 31, 2022 | ||||
|---|---|---|---|---|
< 1 year | 1-2 years | 3-5 years | > 5 years | |
Non-derivative liabilities | ||||
Redemption of debt | 2,069.2 | 499.6 | 1,316.7 | 1,157.3 |
Redemption of other financial liabilities | 27.1 | 83.2 | 67.0 | - |
Interest payments | 168.0 | 120.0 | 235.9 | 197.0 |
Payments on lease liabilities | 175.2 | 268.7 | 180.7 | 964.3 |
Accounts payable | 1,317.0 | - | - | - |
Commitments and guarantees provided | 1,362.2 | 156.6 | 148.6 | 250.5 |
Total undiscounted non-derivative financial liabilities | 5,118.7 | 1,128.1 | 1,948.9 | 2,569.1 |
Derivative liabilities | ||||
Gross-settled derivative liabilities outflow | 597.2 | 141.0 | 70.3 | 73.2 |
Gross-settled derivative liabilities inflow | (535.2) | (151.3) | (61.2) | (66.6) |
Total gross-settled derivative liabilities | 62.0 | (10.3) | 9.1 | 6.6 |
Net-settled derivative liabilities | 1.5 | 1.2 | 1.5 | 1.0 |
Total undiscounted derivative liabilities | 63.5 | (9.1) | 10.6 | 7.6 |
Total undiscounted financial liabilities | 5,182.2 | 1,119.0 | 1,959.5 | 2,576.7 |
The total debt as of December 31, 2023, amounted to € 3,721.8 million (2022: € 5,025.6 million). For 89% of the bank debt, the applicable covenants were complied with or waived during 2022 and 2023. Refer to note 22 for details on applicable covenants.
The movements during 2023 and 2022 in the net cash position were as follows:
Cash and cash equivalents | Marketable securities and deposits | Total debt | Net (debt) / cash | |
|---|---|---|---|---|
Balance on January 1, 2022 | 2,256.4 | 4,160.0 | (3,731.4) | 2,685.0 |
Cash flows | (200.1) | (605.8) | (846.9) | (1,652.8) |
Foreign exchange adjustments | 9.4 | (14.3) | (59.2) | (64.1) |
Fair value movements | - | (179.0) | - | (179.0) |
Other non-cash movements | (21.8) | - | (388.1) | (409.9) |
Balance on December 31, 2022 | 2,043.9 | 3,360.9 | (5,025.6) | 379.2 |
Cash flows | 601.1 | (984.7) | 1,268.0 | 884.4 |
Foreign exchange adjustments | (3.8) | 1.4 | 87.2 | 84.8 |
Fair value movements | - | 93.2 | - | 93.2 |
Reclassification to held for sale | (52.8) | - | - | (52.8) |
Other non-cash movements | - | (345.4) | (51.4) | (396.8) |
Balance on December 31, 2023 | 2,588.4 | 2,125.4 | (3,721.8) | 992.0 |
This net cash position represents a ratio of 0.4 (2022: net cash ratio of 0.2) when compared to the operating result before depreciation, amortization and impairments, less income from marketable securities and share of profit of associates and joint ventures. The differences between the debt cash flows in the table above and those in the cash flow statement relate to cash flows on other financial liabilities, which are not part of the net cash definition.
Market risk
Market risk - currency risk
Foreign currency exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. From time to time the Company hedges foreign currency exchange risk arising from significant, highly probable forecast transactions, including acquisitions of subsidiaries. The Company primarily uses foreign currency derivative financial instruments to hedge this risk, matching the critical terms of the hedged item, and in principle applies a hedge ratio of one.
The table below shows the net assets per currency, taking into account debt instruments denominated in foreign currency and related hedging instruments.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
U.S. dollar | 2,050.1 | 2,077.5 |
U.K. pound sterling | 552.6 | 536.3 |
Chinese yuan renminbi | 442.8 | 496.4 |
Singapore dollar | 428.2 | 447.2 |
Indian rupee | 235.6 | 214.0 |
Canadian dollar | 204.8 | 185.3 |
Hong-Kong dollar | 157.3 | 161.6 |
Brazilian real | 140.7 | 117.0 |
Australian dollar | 84.4 | 108.9 |
Saudi riyal | 59.2 | 62.4 |
Taiwan dollar | 54.4 | 71.3 |
South African rand | 43.9 | 50.6 |
Thai baht | 43.5 | 91.9 |
Other | 179.3 | 176.1 |
Total | 4,676.8 | 4,796.5 |
An average change in value of these currencies by 10% would have a pre-tax effect on equity of € 467.7 million. Vopak applies hedge accounting to net investments in foreign operations (hedged item) for a nominal amount of € 880.7 million (2022: € 792.9 million), of which € 752.6 million (2022: € 663.6 million) was hedged via foreign currency interest bearing debt and € 128.1 million (2022: € 129.3 million) via derivative financial instruments. The remaining currency exposures relate mainly to investments in foreign operations that the Company does not hedge.
The market value of the currency derivative financial instruments per the consolidated financial statements were as follows.
December 31, 2023 | December 31, 2022 | ||||||
|---|---|---|---|---|---|---|---|
Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount | |
Fair value hedge | < 1 year | 0.6 | - | 53.1 | 0.7 | (7.7) | 198.9 |
0.6 | - | 53.1 | 0.7 | (7.7) | 198.9 | ||
Cash flow hedge | < 1 year | 6.2 | (22.3) | (277.8) | 53.9 | (4.6) | 458.4 |
Cash flow hedge | 1-5 years | 10.3 | (2.0) | 193.8 | 10.2 | (2.2) | 212.5 |
Cash flow hedge | > 5 years | - | (2.3) | 45.4 | 6.6 | - | 66.6 |
16.5 | (26.6) | (38.6) | 70.7 | (6.8) | 737.5 | ||
Net investment hedge | < 1 year | 8.4 | - | 136.8 | 1.0 | - | 130.3 |
8.4 | - | 136.8 | 1.0 | - | 130.3 | ||
No hedge accounting | < 1 year | 4.5 | (6.0) | 721.8 | 14.2 | (4.4) | 839.3 |
4.5 | (6.0) | 721.8 | 14.2 | (4.4) | 839.3 | ||
Total currency derivative financial instruments | 30.0 | (32.6) | 873.1 | 86.6 | (18.9) | 1,906.0 | |
In addition, one of the Company’s consolidated minority interests holds cross-currency interest rate swaps to hedge foreign currency risk on fixed rate debt denominated in U.S. dollar. These interest rate swaps, with a notional amount of € 370.0 million (2022: € 525.2 million), are included under foreign currency derivatives.
Sensitivity of profit and equity to financial instruments, with respect to exchange rate changes
The value of financial instruments denominated in currencies other than the functional currency of the entities holding them are subject to exchange rate movements. This primarily relates to instruments denominated in Chinese yuan renminbi, U.S. dollar and Singapore dollar. The aggregate effect on net profit of a 10% depreciation in exchange rates is € 5.6 million (2022: € 0.1 million), with an equal but opposite effect of a 10% appreciation in exchange rates. The aggregate effect on equity of a 10% appreciation of the foreign currencies against the euro is € 143.6 million (2022: € 92.4 million). The aggregate effect on equity of a 10% depreciation of the foreign currencies against the euro is € (124.0) million (2022: € (66.7) million).
Sensitivity of revenues and profit to the translation of the revenues and results of foreign operations, with respect to exchange rate changes
The result is impacted by translating the result of foreign currency operations. The translation risk of converting the net result of foreign entities into euro mainly concerns the British pound, the Singapore dollar and the U.S. dollar. The sensitivity to these currencies is as follows.
EUR/USD ∆ $10ct | EUR/GBP ∆ £10ct | EUR/SGD ∆ $10ct | ||||
|---|---|---|---|---|---|---|
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
Impact on revenues | 162.3 | 131.1 | 72.2 | 49.4 | 122.6 | 129.2 |
Impact on net profit | 20.3 | 15.9 | 6.1 | 1.6 | 7.7 | 5.5 |
Market risk - interest rate risk
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. There is no debt at other segments.
Fixed income investments that are part of the Liquid portfolio are subject to fair value interest rate risk. In view of the short average duration of this portfolio, this risk is limited.
As of December 31, 2023, taking into account interest rate swaps, 59% (2022: 55%) of the total debt of € 3,721.8 million (2022: € 5,025.6 million) was at fixed rates for an average period of 5.4 years (2022: 4.2 years).
The market value of the interest rate derivative financial instruments per the consolidated financial statements is shown on the next page.
December 31, 2023 | December 31, 2022 | ||||||
|---|---|---|---|---|---|---|---|
Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount | |
Fair value hedge | 1-5 years | 1.3 | - | 39.7 | - | - | - |
1.3 | - | 39.7 | - | - | - | ||
Cash flow hedge | < 1 year | 0.3 | - | 18.1 | 1.7 | (0.2) | 37.3 |
Cash flow hedge | 1-5 years | 1.3 | (3.1) | 144.8 | 5.4 | (0.8) | 160.5 |
Cash flow hedge | > 5 years | 3.1 | (0.4) | 49.7 | - | - | - |
4.7 | (3.5) | 212.6 | 7.1 | (1.0) | 197.8 | ||
No hedge accounting | 1-5 years | - | - | - | 2.8 | - | 60.0 |
- | - | - | 2.8 | - | 60.0 | ||
Total interest rate derivative financial instruments | 6.0 | (3.5) | 252.3 | 9.9 | (1.0) | 257.8 | |
The weighted-average interest rate on total debt was 4.9% (2022: 3.6%).
If variable interest rates in 2023 or 2022 had decreased/increased by 25%, the impact on the consolidated statement of income for the year would have been insignificant.
An increase of 25% in interest rates underlying the calculation of the valuation of interest rate swaps would have had a pre-tax positive impact on equity of € 10.2 million (2022: € 13.3 million). An equal but opposite change would have had a pre-tax negative impact on equity of € 10.7 million (2022: € 14.0 million negative).
Market risk - price risk
At the end of 2023, the Company had investments in equity securities (included in marketable securities and other financial assets) amounting to € 865.6 million (2022: € 615.1 million), based on quoted market prices at the statement of financial position date. If at December 31, 2023, equity markets had fallen 10% overall, the portfolio value could have decreased by 10%, which would have resulted in a negative impact on other reserves of € 10.8 million (2022: € 9.4 million) and a negative impact on income of € 75.7 million (2022: € 52.1 million). A 10% increase would have had the equal but opposite effect.
The Company has not identified additional financial risk exposures in 2023 compared to the previous year, and its approach to financial risk management remained unchanged.
40 Capital risk management
The Company manages its capital to safeguard its ability to continue as a going concern and to provide an adequate return on its invested capital.
The capital structure at the end of the reporting periods is summarized in the table below:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Equity | 13,675.6 | 13,010.1 |
Non-current debt | 2,217.5 | 2,956.5 |
Current debt | 1,504.3 | 2,069.2 |
Cash and cash equivalents | (2,588.4) | (2,043.9) |
Total capital employed | 14,809.0 | 15,991.9 |
41 Related-party transactions
A related party is a person or entity that is related to the Company. These include both people and entities that have, or are subject to, the influence or control of the Company.
Employment benefits for the Executive Board, charged to the income statement, are as follows:
2023 | 2022 | |
|---|---|---|
Members of the Executive Board | ||
Short-term employee benefits | 4.1 | 3.9 |
Post-employment benefits | 1.3 | 1.7 |
Share-based compensation | 3.3 | 3.3 |
8.7 | 8.9 |
For details on share-based compensation plans refer to note 35.
The fixed 2023 remuneration for the Supervisory Directors of HAL Holding N.V. was € 0.5 million (2022: € 0.4 million) in total.
42 Capital and financial commitments, contingent liabilities
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
Capital commitments
On December 31, 2023, capital commitments in respect of property, plant and equipment amounted to € 408.2 million (2022: € 265.8 million) and mainly relate to terminal construction activities at Vopak, vessel-related construction activities at Boskalis and a new build vessel ordered at Anthony Veder.
Financial commitments
At year end, Safilo had contracts with licensors for the production and sale of branded sunglasses and frames. These contracts include guarantees for a minimum amount of production as well as commitments for advertising. These licensing commitments can be summarized as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
No later than 1 year | 75.7 | 89.0 |
Later than 1 year and no later than 5 years | 275.9 | 204.2 |
Later than 5 years | 156.1 | 12.9 |
507.7 | 306.1 |
Commitments and guarantees
The Company and its subsidiaries and controlled minority interests entered into various commitments to provide debt and equity financing. These commitments mainly relate to Boskalis, Vopak, the Real estate segment and acquisitions of HAL. In addition, certain subsidiaries, mainly Boskalis and Van Wijnen, have provided (counter) guarantees to financial institutions in respect of contracts, partnerships, joint arrangements and associates. The total estimated amount of these commitments and guarantees not recognized in the statement of financial position is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Commitments to provide debt or equity funding | 775.1 | 598.8 |
Guarantees and securities provided | 1,734.2 | 1,319.2 |
2,509.3 | 1,918.0 |
The above commitments and guarantees relate for € 1,319 million (2022: € 1,086 million) to commitments and guarantees provided by Boskalis.
On October 27, 2023, Boskalis signed a contract with Dutch shipbuilding company Royal IHC to build a large trailing suction hopper dredger. The vessel will have a hopper capacity of 31,000 m3 and will be built at the IHC yard in Krimpen aan den IJssel, the Netherlands, over the next few years. In connection with this contract and the acquisition of IQIP, HAL has provided certain guarantee facilities with an exposure for HAL of an amount of up to € 150 million. This is in addition to a loan of € 30 million provided by HAL to IHC in June, 2023, and a liquidity standby facility of up to € 50 million provided by HAL to IHC in October 2023.
The commitments and guarantees are included in the liquidity risk paragraph in note 39.
Other contingencies
Associates and joint ventures Vopak
The joint ventures and associates of Vopak are currently, and may from time to time become, involved in a number of legal proceedings, including inquiries from, or discussions with, governmental authorities (including tax authorities) that are incidental to their operations. For the contingent liabilities of the joint ventures and associates as at year-end related to legal cases, it is based on the current facts and circumstances not believed that they may have a material adverse effect on the financial position or profitability of Vopak. Due to inherent uncertainties, Vopak cannot make any accurate quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings referred to in this report, however costs in complex litigation may be substantial.
Environmental obligations Vopak
Vopak is exposed to risks regarding environmental obligations arising from past activities. For example, a number of sites has to be decontaminated before being handed back at the end of the contractual period. Under current legislation, environmental plans and any other measures to be adopted have to be agreed with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations arise, a provision is formed based on the most reliable estimate possible of future expenses. Vopak management is of the opinion that the provisions are adequate, based on information currently available. However, given the degree of difficulty in making estimates, this does not guarantee that no additional costs will arise going forward.
Legal proceedings and other contingent liabilities
As a result of its day-to-day activities, the Company is involved in a number of legal proceedings. Management is of the opinion that for the legal cases and risks for which no provision has been recognized, it is not probable that the final outcome will result in a cash outflow, therefore no provisions have been recognized.
As part of divestments of terminals and assets, Vopak has provided certain customary representations and warranties in the relevant sales purchase agreements. These representations and warranties will generally terminate, depending on their specific features, a number of years after the date of the relevant transaction completion date. Based on the current facts and circumstances, Vopak management has determined that for the items for which no provision is currently recognized, the likelihood of a cash outflow relating to these items is considered to be remote.
43 Non-controlling interests
Non-controlling interests with respect to Vopak and Safilo are significant to the Company. The non-controlling interests in Vopak and Safilo can be detailed as follows:
Vopak | Vopak | Safilo | Safilo | Total | Total | |
|---|---|---|---|---|---|---|
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
Profit / (loss) allocated to the non-controlling interest during the year | 270.0 | (57.3) | (15.8) | 23.3 | 254.2 | (34.0) |
Accumulated non-controlling interest at December 31 | 1,820.1 | 1,703.3 | 216.4 | 247.0 | 2,036.5 | 1,950.3 |
Set out on the following page is the summarized financial information for Vopak and Safilo. This is the financial information as reported by these companies, including purchase price accounting adjustments made by the Company.
Vopak | Safilo | |||
|---|---|---|---|---|
2023 | 2022 | 2023 | 2022 | |
Summarized balance sheet | ||||
As of December 31 | ||||
Current | ||||
Assets | 644.9 | 520.6 | 546.8 | 598.0 |
Liabilities | (668.6) | (1,162.2) | (288.7) | (312.2) |
(23.7) | (641.6) | 258.1 | 285.8 | |
Non-current | ||||
Assets | 6,077.5 | 6,546.7 | 328.2 | 388.4 |
Liabilities | (2,609.3) | (2,691.9) | (178.3) | (219.0) |
3,468.2 | 3,854.8 | 149.9 | 169.4 | |
Net assets | 3,444.5 | 3,213.2 | 408.0 | 455.2 |
Summarized income statement | ||||
For the year | ||||
Revenue | 1,517.9 | 1,430.9 | 1,023.4 | 1,075.5 |
Profit / (loss) before tax | 562.6 | (36.6) | (25.9) | 57.5 |
Income tax expense | (73.8) | (101.2) | (4.2) | (9.3) |
Profit / (loss) after income tax | 488.8 | (137.8) | (30.1) | 48.2 |
Other comprehensive income | (59.1) | 132.6 | - | - |
Total comprehensive income (CI) | 429.7 | (5.2) | (30.1) | 48.2 |
CI allocated to non-controlling interest | 26.2 | 37.8 | 2.1 | 1.9 |
Dividend paid to non-controlling interest | 34.6 | 33.1 | 0.6 | 0.9 |
Summarized cash flow statement | ||||
For the year | ||||
Cash from operating activities | 990.8 | 872.1 | 66.1 | 17.8 |
Interest paid net | (114.9) | (96.9) | (9.8) | (6.2) |
Income tax (paid) / received | (85.3) | (55.9) | (8.7) | (2.4) |
Net cash from operating activities | 790.6 | 719.3 | 47.6 | 9.2 |
Net cash from investing activities | 116.2 | (489.4) | (2.7) | (15.6) |
Net cash from financing activities | (734.0) | (249.1) | (46.4) | (16.8) |
Increase/(decrease) in cash and cash equivalents | 172.8 | (19.2) | (1.5) | (23.2) |
Cash and cash equivalents at beginning of year | 33.8 | 73.4 | 77.7 | 99.0 |
Cash included in assets held for sale beginning of year | - | (21.8) | - | - |
Effect of exchange rate changes and reclassifications | (1.2) | 1.4 | (1.4) | 1.9 |
Increase/(decrease) in cash and cash equivalents | 172.8 | (19.2) | (1.4) | (23.2) |
Cash and cash equivalents at end of year | 205.4 | 33.8 | 74.9 | 77.7 |
44 Summarized financial information on associates and joint ventures
The summarized financial information of the associates and joint ventures of Vopak is as follows. In 2023, Vopak changed its reporting segments to align with its amended organizational structure. Comparative information has been restated accordingly.
Summarized statements of financial position on a 100% basis:
Asia & Middle East | Netherlands | USA & Canada | Other | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Non-current assets | 4,680.0 | 4,943.5 | 1,407.5 | 918.3 | 1,207.6 | 1,203.7 | 763.9 | 861.3 | 8,059.0 | 7,926.8 |
Cash and cash equivalents | 440.2 | 629.7 | 112.9 | 81.0 | 11.3 | 16.9 | 62.0 | 44.1 | 626.4 | 771.7 |
Other current assets | 415.3 | 259.8 | 152.6 | 26.2 | 60.1 | 57.2 | 80.1 | 54.3 | 708.1 | 397.5 |
Total assets | 5,535.5 | 5,833.0 | 1,673.0 | 1,025.5 | 1,279.0 | 1,277.8 | 906.0 | 959.7 | 9,393.5 | 9,096.0 |
Financial non-current liabilities | 2,339.5 | 2,049.0 | 724.9 | 551.9 | 382.4 | 386.7 | 283.0 | 319.0 | 3,729.8 | 3,306.6 |
Other non-current liabilities | 175.8 | 156.3 | 131.7 | 25.7 | 1.4 | 2.3 | 118.9 | 150.8 | 427.8 | 335.1 |
Financial current liabilities | 223.2 | 545.1 | 158.8 | 58.9 | 32.6 | 14.3 | 68.1 | 66.3 | 482.7 | 684.6 |
Other current liabilities | 537.8 | 379.8 | 190.9 | 31.2 | 46.9 | 46.0 | 62.2 | 39.2 | 837.8 | 496.2 |
Total liabilities | 3,276.3 | 3,130.2 | 1,206.3 | 667.7 | 463.3 | 449.3 | 532.2 | 575.3 | 5,478.1 | 4,822.5 |
Net assets | 2,259.2 | 2,702.8 | 466.7 | 357.8 | 815.7 | 828.5 | 373.8 | 384.4 | 3,915.4 | 4,273.5 |
Vopak’s share of net assets | 865.9 | 1,018.8 | 231.1 | 177.2 | 286.2 | 288.1 | 205.4 | 213.3 | 1,588.6 | 1,697.4 |
Goodwill on acquisition | 121.1 | 116.9 | 27.0 | 27.0 | 35.2 | 36.5 | - | - | 183.3 | 180.4 |
Vopak’s carrying amount of net assets | 987.0 | 1,135.7 | 258.1 | 204.2 | 321.4 | 324.6 | 205.4 | 213.3 | 1,771.9 | 1,877.8 |
Summarized statements of total comprehensive income on a 100% basis:
Asia & Middle East | Netherlands | USA & Canada | Other | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
Revenues | 1,131.0 | 1,083.3 | 254.1 | 213.7 | 230.6 | 233.0 | 194.5 | 173.7 | 1,810.2 | 1,703.7 |
Operating expenses | (295.1) | (326.4) | (51.7) | (26.6) | (139.7) | (142.1) | (83.6) | (75.8) | (570.1) | (570.9) |
Depreciation, amortization and impairment | (261.0) | (264.7) | (58.3) | (46.2) | (31.5) | (28.8) | (16.1) | (100.2) | (366.9) | (439.9) |
Operating profit (EBIT) | 574.9 | 492.2 | 144.1 | 140.9 | 59.4 | 62.1 | 94.8 | (2.3) | 873.2 | 692.9 |
Net finance income / (expense) | (116.8) | (104.3) | (25.2) | (28.8) | (17.8) | (17.1) | (33.9) | (30.9) | (193.7) | (181.1) |
Income tax | (87.2) | (50.1) | (27.3) | (28.2) | (0.3) | (0.4) | (11.4) | 5.9 | (126.2) | (72.8) |
Net profit | 370.9 | 337.8 | 91.6 | 83.9 | 41.3 | 44.6 | 49.5 | (27.3) | 553.3 | 439.0 |
Other comprehensive income | (10.4) | 87.1 | (1.2) | 46.5 | 25.9 | 42.8 | - | - | 14.3 | 176.4 |
Total comprehensive income | 360.5 | 424.9 | 90.4 | 130.4 | 67.2 | 87.4 | 49.5 | (27.3) | 567.6 | 615.4 |
Vopak’s share of net profit | 129.3 | 120.2 | 42.8 | 39.5 | 13.9 | 15.2 | 26.5 | (12.6) | 212.5 | 162.3 |
Vopak’s share of OCI | (3.7) | 23.9 | (0.6) | 23.3 | (4.1) | 21.4 | (0.1) | - | (8.5) | 68.6 |
Vopak’s share of total comprehensive income | 125.6 | 144.1 | 42.2 | 62.8 | 9.8 | 36.6 | 26.4 | (12.6) | 204.0 | 230.9 |
45 Events after the reporting period
On February 13, 2024, Vopak (48.15% owned by HAL) authorized a share buyback program to purchase ordinary shares of Koninklijke Vopak N.V. up to € 300 million. This share buyback program commenced on February 15, 2024, and will run until the end of 2024, barring unforeseen circumstances.
On February 15, 2024, HAL invested € 140 million in preferred share capital in Koppert TopCo B.V. (‘Koppert’). Koppert is the global leader in biological solutions for agriculture. The company has approximately 2,700 employees and revenues over 2023 of € 450 million.
On February 29, 2024, Boskalis acquired a 100% interest in ALP Maritime Group B.V. (‘ALP’) for € 168 million. ALP operates a fleet of eight powerful long-distance towing and anchor-handling vessels. Due to the short time lag between acquisition date and reporting date the fair value of identifiable assets acquired and liabilities assumed has not yet been determined. This, together with the determination of goodwill, will take place before the next reporting date.
In view of the transfer of HAL Holding’s place of effective management to the Netherlands effective April 1, 2024, an extraordinary general meeting of shareholders of HAL Trust was held on March 22, 2024. This transfer was announced on November 23, 2023. The extraordinary general meeting of shareholders of HAL Trust approved an amendment of the trust deed of HAL Trust and the articles of association of HAL Holding N.V. The amendments included provisions for the share capital of HAL Holding N.V. and HAL Trust to be identical in terms of number of outstanding shares and nominal value, conversion of available profit reserves of HAL Holding N.V. for an amount of € 12.2 billion into nominal share capital and further clarification that distributions received from HAL Holding N.V. are to be paid promptly to the respective shareholders of HAL Trust.
List of Principal subsidiaries and minority interests
Name | Country of incorporation | Nature of business | Interest in common shares | Interest in preferred shares | Non-controlling interest |
|---|---|---|---|---|---|
Subsidiaries | |||||
HAL Holding N.V. | Curaçao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Investments B.V. | The Netherlands | Holding company | 100.0% | 0.0% | 0.0% |
HAL Real Estate Inc. | U.S.A. | Real estate | 100.0% | 0.0% | 0.0% |
IQIP Holding B.V. | The Netherlands | Hydro hammers | 100.0% | 0.0% | 0.0% |
Koninklijke Boskalis B.V. | The Netherlands | Dredging and offshore | 100.0% | 0.0% | 0.0% |
Rotter y Krauss | Chile | Optical retail | 100.0% | 0.0% | 0.0% |
FD Mediagroep B.V. | The Netherlands | Media | 98.3% | 100.0% | 1.7% |
Koninklijke Ahrend B.V. | The Netherlands | Office furniture | 98.0% | 100.0% | 2.0% |
Broadview Holding B.V. | The Netherlands | Industrial | 97.4% | 0.0% | 2.6% |
MSPS Holding B.V. | The Netherlands | Financial services | 95.1% | 0.0% | 4.9% |
280ppm B.V. | The Netherlands | GHG reduction investments | 95.0% | 100.0% | 5.0% |
Timber and Building Supplies Holland N.V. | The Netherlands | Building materials | 94.3% | 0.0% | 5.7% |
AN Direct B.V. | The Netherlands | Hearing aids | 90.0% | 0.0% | 10.0% |
SB Real Estate | The Netherlands | Real estate | 90.0% | 0.0% | 10.0% |
Van Wijnen Holding B.V. | The Netherlands | Construction | 88.0% | 100.0% | 12.0% |
Atlas Professionals B.V. | The Netherlands | Staffing | 86.9% | 0.0% | 13.1% |
HR Top Holding B.V. | The Netherlands | HR services | 86.1% | 100.0% | 13.9% |
GreenV B.V. | The Netherlands | Greenhouse projects | 74.6% | 0.0% | 25.4% |
Pro Gamers Group | Germany | Computer gaming equipment | 64.3% | 81.2% | 35.7% |
Anthony Veder Group N.V. | Curaçao | Shipping | 62.9% | 0.0% | 37.1% |
Auxilium GmbH | Germany | Orthopedic devices | 53.1% | 0.0% | 46.9% |
Controlled minority interests | |||||
Safilo Group S.p.A. | Italy | Optical products | 49.84% | 0.00% | 50.16% |
Koninklijke Vopak N.V. | The Netherlands | Tank terminals | 48.15% | 0.00% | 51.85% |
All the above entities are included in the consolidation. The proportion of the effective voting rights in the respective entity are virtually equal to the proportion of the ordinary shares held.
Non-controlled interests | |
|---|---|
Publicly traded | |
SBM Offshore N.V. | 22.88% |
Other | |
Coolblue Holding B.V. | 49.00% |
Prodrive Technologies Group B.V. | 47.03% |
DMF Holding B.V. | 28.50% |
Supplemental information
General
The consolidated financial statements of HAL Trust include the financial statements of Koninklijke Vopak N.V. (‘Vopak’) and Safilo Group S.p.A. (‘Safilo’). This section provides supplemental information where Vopak and Safilo are accounted for on an unconsolidated basis using the equity method. This was the accounting treatment until the application of IFRS 10, effective January 1, 2014, which requires consolidation of these entities. In all other respects, the accounting policies applied are consistent with those applied to the consolidated financial statements. The inclusion of this supplemental information is considered appropriate and useful as the control model of the Company with respect to the entities where its ownership interest exceeds 50% is materially different from the model with respect to Vopak and Safilo. Moreover, the inclusion of Vopak and Safilo in the consolidation has a significant effect on the financial statements.
The following pro forma consolidated statements are included as supplemental information:
-
Statement of Financial Position
-
Statement of Income
-
Statement of Comprehensive Income
-
Statement of Changes in Equity
-
Statement of Cash Flows
The pro forma consolidated statements of financial position and income as well as the statement of changes in equity, include a bridge from the consolidated financial statements (including consolidation of Vopak and Safilo) to these pro forma statements.
A number of notes has been added to the above statements in order to provide additional information on the effect of the inclusion of Vopak and Safilo in the consolidated financial statements. These notes are based on the notes to the consolidated financial statements on pages 39 through 121. Certain notes are summarized for practical purposes.
Pro forma Consolidated Statement of Financial Position
Information
In millions of euro | Notes | Consolidated 2023 | Effect exclusion Vopak/Safilo | Pro forma 2023 | Pro forma 2022 |
|---|---|---|---|---|---|
Non-current assets | |||||
Property, plant and equipment | 7,870.8 | (3,258.2) | 4,612.6 | 4,439.8 | |
Right-of-use assets | 1,046.4 | (608.4) | 438.0 | 425.7 | |
Investment properties | 85.3 | - | 85.3 | 76.5 | |
Intangible assets | 3,337.9 | (332.6) | 3,005.3 | 3,273.9 | |
Investments in associates and joint arrangements | 3,645.5 | (3.5) | 3,642.0 | 3,150.8 | |
Other financial assets | 1,037.1 | (340.2) | 696.9 | 79.4 | |
Derivatives | 16.0 | (9.2) | 6.8 | 7.4 | |
Pension benefits | 74.5 | (11.1) | 63.4 | 55.3 | |
Deferred tax assets | 145.1 | (74.1) | 71.0 | 42.7 | |
Total non-current assets | 17,258.6 | (4,637.3) | 12,621.3 | 11,551.5 | |
Current assets | |||||
Inventories | 1,093.2 | (228.5) | 864.7 | 875.1 | |
Receivables | 1,448.2 | (325.5) | 1,122.7 | 1,081.9 | |
Marketable securities | 2,125.4 | - | 2,125.4 | 3,360.9 | |
Other financial assets | 53.5 | (27.4) | 26.1 | 277.9 | |
Derivatives | 20.2 | (13.4) | 6.8 | 16.6 | |
Unbilled revenue | 307.9 | - | 307.9 | 372.4 | |
Other current assets | 953.8 | (299.0) | 654.8 | 626.1 | |
Cash and cash equivalents | 2,588.4 | (271.9) | 2,316.5 | 1,932.4 | |
Assets held for sale | 493.4 | (26.0) | 467.4 | 236.1 | |
Total current assets | 9,084.0 | (1,191.7) | 7,892.3 | 8,779.4 | |
Total assets | 26,342.6 | (5,829.0) | 20,513.6 | 20,330.9 | |
Equity | |||||
Equity attributable to owners of parent | 13,675.6 | (47.7) | 13,627.9 | 12,961.9 | |
Non-controlling interest | 2,196.4 | (2,036.5) | 159.9 | 277.4 | |
Total equity | 15,872.0 | (2,084.2) | 13,787.8 | 13,239.3 | |
Non-current liabilities | |||||
Deferred tax liabilities | 645.7 | (270.7) | 375.0 | 419.1 | |
Pension benefits | 99.3 | (19.1) | 80.2 | 87.7 | |
Derivatives | 7.7 | (6.3) | 1.4 | 0.8 | |
Provisions | 188.8 | (67.8) | 121.0 | 119.4 | |
Contract liabilities | 19.5 | (2.6) | 16.9 | 16.0 | |
Lease liabilities | 960.7 | (637.7) | 323.0 | 321.2 | |
Debt and other financial liabilities | 2,370.2 | (1,783.4) | 586.8 | 1,262.5 | |
Total non-current liabilities | 4,291.9 | (2,787.6) | 1,504.3 | 2,226.7 | |
Current liabilities | |||||
Provisions | 208.5 | (57.4) | 151.1 | 156.0 | |
Contract liabilities | 907.9 | (30.6) | 877.3 | 659.4 | |
Accrued expenses | 1,602.9 | (205.6) | 1,397.3 | 1,390.6 | |
Income tax payable | 284.8 | (46.0) | 238.8 | 208.1 | |
Accounts payable | 1,245.9 | (313.1) | 932.8 | 972.1 | |
Derivatives | 29.2 | (26.1) | 3.1 | 6.0 | |
Lease liabilities | 156.6 | (41.0) | 115.6 | 105.4 | |
Debt and other financial liabilities | 1,531.0 | (236.2) | 1,294.8 | 1,363.1 | |
Liabilities related to assets held for sale | 211.9 | (1.2) | 210.7 | 4.2 | |
Total current liabilities | 6,178.7 | (957.2) | 5,221.5 | 4,864.9 | |
Total equity and liabilities | 26,342.6 | (5,829.0) | 20,513.6 | 20,330.9 |
Pro forma Consolidated Statement of Income
Information
In millions of euro | Consolidated 2023 | Effect exclusion Vopak/Safilo | Pro forma 2023 | Pro forma 2022 |
|---|---|---|---|---|
Revenues | 12,343.8 | (2,489.4) | 9,854.4 | 7,625.9 |
Income from marketable securities and deposits | 138.5 | - | 138.5 | (119.7) |
Share of results from associates and joint ventures | 346.1 | (6.2) | 339.9 | 657.0 |
Income from other financial assets | 168.8 | (2.1) | 166.7 | (6.0) |
Income from real estate activities | (9.5) | - | (9.5) | 58.1 |
Other income (net) | 70.5 | (44.9) | 25.6 | 108.8 |
Total income | 13,058.2 | (2,542.6) | 10,515.6 | 8,324.1 |
Usage of raw materials, consumables and other inventory | 5,903.6 | (347.7) | 5,555.9 | 4,588.9 |
Employee expenses | 2,612.2 | (618.8) | 1,993.4 | 1,487.9 |
Depreciation and impairment of property, plant, equipment and investment properties | 697.1 | (255.9) | 441.2 | 277.5 |
Depreciation and impairment of right-of-use assets | 173.7 | (53.0) | 120.7 | 104.6 |
Amortization and impairment of intangible assets | 460.7 | (52.4) | 408.3 | 414.0 |
Other operating expenses | 1,607.9 | (726.8) | 881.1 | 824.7 |
Total expenses | 11,455.2 | (2,054.6) | 9,400.6 | 7,697.6 |
Operating profit | 1,603.0 | (488.0) | 1,115.0 | 626.5 |
Financial expense | (324.4) | 190.4 | (134.0) | (79.0) |
Other financial income | 83.2 | (34.5) | 48.7 | 58.3 |
Profit before income tax | 1,361.8 | (332.1) | 1,029.7 | 605.8 |
Income tax expense | (194.2) | 78.4 | (115.8) | (75.3) |
Net profit | 1,167.6 | (253.7) | 913.9 | 530.5 |
Attributable to: | ||||
Owners of parent | 1,000.5 | 0.5 | 1,001.0 | 647.4 |
Non-controlling interest | 167.1 | (254.2) | (87.1) | (116.9) |
1,167.6 | (253.7) | 913.9 | 530.5 | |
Average number of Shares outstanding (in thousands) | 89,543 | - | 89,543 | 87,724 |
Earnings per Share for profit / (loss) attributable to owners of parent during the period (in euro) | ||||
- basic and diluted | 11.17 | 0.01 | 11.18 | 7.23 |
Pro forma Consolidated Statement of Comprehensive Income
Information
In millions of euro | Pro forma 2023 | Pro forma 2022 |
|---|---|---|
Net profit / (loss) | 913.9 | 530.5 |
Other comprehensive income (OCI) | ||
Items that will not be reclassified to statement of income in subsequent periods | ||
Actuarial results on post-employment benefit obligations | 4.8 | 1.8 |
Income tax on actuarial results | (1.3) | (0.4) |
Associates and joint ventures - share of OCI, net of tax | 6.1 | 14.1 |
9.6 | 15.5 | |
Items that may be reclassified to statement of income in subsequent periods | ||
Change in fair value of financial assets through OCI | 1.4 | (14.3) |
Effective portion of hedging instruments | (14.3) | 14.0 |
Income tax related to hedging instruments | 0.7 | (1.0) |
Translation of foreign subsidiaries, net of hedges | (51.2) | (6.3) |
Associates and joint ventures - share of OCI, net of tax | (72.4) | 225.2 |
(135.8) | 217.6 | |
Other comprehensive income for the year, net of tax | (126.2) | 233.1 |
Total comprehensive income for the year, net of tax | 787.7 | 763.6 |
Total comprehensive income for the year, attributable to: | ||
- Owners of parent1 | 878.7 | 869.3 |
- Non-controlling interest | (91.0) | (105.7) |
787.7 | 763.6 |
- For both reporting periods there are no differences in other comprehensive income attributable to the owners of parent between the consolidated and the pro forma consolidated statements of comprehensive income.
Pro forma Consolidated Statement of Changes in Equity
Information
Attributable to owners of parent | ||||||
|---|---|---|---|---|---|---|
In millions of euro | Share capital | Retained earnings | Other reserves | Total | Non-controlling interest | Total equity |
Balance on December 31, 2021 | 1.7 | 12,267.1 | 118.4 | 12,387.2 | 348.8 | 12,736.0 |
Net profit for the year | - | 647.4 | - | 647.4 | (116.9) | 530.5 |
Other comprehensive income for the year | - | 12.9 | 209.0 | 221.9 | 11.2 | 233.1 |
Total comprehensive income for the year | - | 660.3 | 209.0 | 869.3 | (105.7) | 763.6 |
Effect of acquisitions and disposals | - | - | - | - | 45.8 | 45.8 |
Capital increase/(decrease) | - | 2.9 | - | 2.9 | 6.3 | 9.2 |
Effect purchase of non-controlling interest1 | - | (55.3) | - | (55.3) | (13.6) | (68.9) |
Dividend paid to minority shareholders and share buyback plans | - | (5.1) | - | (5.1) | (3.4) | (8.5) |
Share-based compensation | - | 6.9 | - | 6.9 | - | 6.9 |
Treasury shares | - | 2.8 | - | 2.8 | - | 2.8 |
Dividend paid | 0.1 | (247.2) | - | (247.1) | - | (247.1) |
Reclassification | - | 35.2 | (35.2) | - | - | - |
Other | - | 0.3 | - | 0.3 | (0.8) | (0.5) |
Transactions with the owners of parent recognized directly in equity | 0.1 | (259.5) | (35.2) | (294.6) | 34.3 | (260.3) |
Balance on December 31, 2022 | 1.8 | 12,667.9 | 292.2 | 12,961.9 | 277.4 | 13,239.3 |
Net profit for the year | - | 1,001.0 | - | 1,001.0 | (87.1) | 913.9 |
Other comprehensive income for the year | - | 5.8 | (128.1) | (122.3) | (3.9) | (126.2) |
Total comprehensive income for the year | - | 1,006.8 | (128.1) | 878.7 | (91.0) | 787.7 |
Effect transactions on non-controlling interest | - | 3.8 | - | 3.8 | (21.3) | (17.5) |
Dividend paid to minority shareholders and share buyback plans | - | - | - | - | (5.1) | (5.1) |
Share-based compensation | - | 5.2 | - | 5.2 | - | 5.2 |
Treasury shares | - | (2.6) | - | (2.6) | - | (2.6) |
Dividend paid | - | (221.5) | - | (221.5) | - | (221.5) |
Reclassification | - | (22.3) | 22.3 | - | - | - |
Other | - | 2.4 | - | 2.4 | (0.1) | 2.3 |
Transactions with the owners of parent recognized directly in equity | - | (235.0) | 22.3 | (212.7) | (26.5) | (239.2) |
Balance on December 31, 2023 | 1.8 | 13,439.7 | 186.4 | 13,627.9 | 159.9 | 13,787.8 |
- Mainly related to the purchase of Boskalis shares after obtaining (de facto) control over the company
The difference in equity attributable to owners of parent (€ 47.7 million) between the pro forma consolidated statement of financial position and the consolidated statement of financial position is due to the retrospective application of IFRS 10 to Vopak and Safilo.
Pro forma Consolidated Statement of Cash Flows
Information
In millions of euro | Notes | Pro forma 2023 | Pro forma 2022 |
|---|---|---|---|
Cash flows from operating activities | |||
Profit / (loss) before taxes | 1,029.7 | 605.8 | |
Dividend from associates and joint ventures | 145.7 | 181.2 | |
Changes in working capital | 204.9 | (51.1) | |
Adjustments for other (non-cash) items | 442.6 | 261.9 | |
Cash generated from operating activities | 1,822.9 | 997.8 | |
Other financial income received | 20.1 | 1.9 | |
Finance costs paid, including effect of hedging | (120.4) | (78.9) | |
Income taxes paid | (117.9) | (95.9) | |
Net cash from operating activities | 1,604.7 | 824.9 | |
Cash flows from investing activities | |||
Acquisition of associates and subsidiaries, net of cash acquired | (457.6) | (2,149.0) | |
Net proceeds from divestiture of associates, joint arrangements and subsidiaries | 1.9 | 274.4 | |
Proceeds from sale of/(investment in) other intangibles | (34.9) | (28.8) | |
Investment in property, plant, equipment and investment properties | (744.8) | (503.0) | |
Proceeds from sale of property, plant, equipment | 65.4 | 36.6 | |
Proceeds from/(acquisition of) other financial assets | 149.6 | 235.0 | |
Acquisition of marketable securities and deposits | (59.2) | (102.3) | |
Proceeds from marketable securities and deposits | 1,043.9 | 708.1 | |
Net cash from/(used in) investing activities | (35.7) | (1,529.0) | |
Cash flows from financing activities | |||
Proceeds from non-current debt and other financial liabilities | 93.2 | 297.0 | |
Repayment of non-current debt and other financial liabilities | (339.5) | (125.6) | |
Payments on lease liabilities | (130.2) | (107.2) | |
Net proceeds from/(repayments of) short-term financing | (482.0) | 729.5 | |
Capital increase non-controlling interests | - | 9.2 | |
Other non-controlling interest transactions (including dividend paid) | (56.7) | (12.2) | |
Movement in treasury shares | (2.6) | 2.8 | |
Dividend paid | (221.5) | (247.1) | |
Net cash from/(used in) financing activities | (1,139.3) | 546.4 | |
Increase/(decrease) in cash and cash equivalents | 429.7 | (157.7) | |
Cash and cash equivalents at beginning of year | 1,932.4 | 2,084.0 | |
Effect of exchange rate changes and reclassifications | (1.2) | 6.1 | |
Cash and cash equivalents retranslated at beginning of year | 1,931.2 | 2,090.1 | |
Net increase/(decrease) in cash and cash equivalents | 429.7 | (157.7) | |
Cash and cash equivalents at end of period | 2,360.9 | 1,932.4 | |
Cash and cash equivalents included in assets held for sale | (44.4) | - | |
Cash as included on the consolidated statement of financial position | 2,316.5 | 1,932.4 |
Notes to the pro forma Consolidated Financial Statements
Information
1 Segmentation
The consolidated financial statements are significantly affected by the consolidation of Vopak and Safilo. Accordingly, the segmented information on a basis whereby Vopak and Safilo are not consolidated is materially different. This section provides segmented information excluding the effect of the consolidation of Vopak and Safilo.
2023 | 2022 | |
|---|---|---|
Unquoted | 914.6 | 402.8 |
Quoted minority interests | 476.9 | 98.9 |
Real estate | (12.7) | 53.6 |
Liquid portfolio | 138.5 | (119.7) |
Total operating income | 1,517.3 | 435.6 |
Reconciling items: | ||
- Amortization and impairment of intangibles | (408.3) | (414.0) |
- Other | 6.0 | 604.9 |
Operating result as per the pro forma consolidated statement of income | 1,115.0 | 626.5 |
Financial expense, net | (85.3) | (20.7) |
Profit before tax as per the pro forma consolidated statement of income | 1,029.7 | 605.8 |
The “other” reconciling items represent mostly corporate overhead and exceptional items (excluding those of Vopak, Safilo, SBM Offshore, Technip and, for the first half of 2022, Boskalis). The segment Quoted minority interests includes the Company’s share in the net income (including exceptional items) of Vopak and Safilo and the Company’s share in the net income of SBM Offshore and, for the first half of 2022, Boskalis. As from 2023, this segments also includes the change in fair value of the ownership interest in Technip Energies N.V. (based on stock exchange prices). From the second half of 2022 onwards, Boskalis was included in the Unquoted segment.
The composition of revenues by segment is as follows:
2023 | 2022 | |
|---|---|---|
Unquoted | 9,854.4 | 7,625.9 |
9,854.4 | 7,625.9 |
The composition of assets by segment is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 13,968.2 | 13,307.9 |
Quoted minority interests | 3,184.8 | 2,474.6 |
Real estate | 300.5 | 270.7 |
Liquid portfolio | 2,919.3 | 3,892.1 |
Reconciling items | 140.8 | 385.6 |
20,513.6 | 20,330.9 |
The reconciling items represent corporate assets, including deferred tax, loans and pension benefit assets. The reconciling items in 2022 also included an amount of € 250 million representing the part of the proceeds from the sale of the Company’s 76.72% shareholding in GrandVision N.V. That was held in escrow for potential liabilities of HAL under the sale and purchase agreement. The full escrow amount was released to the Company in 2023.
The composition of investments in associates and joint ventures by segment is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 825.0 | 501.0 |
Quoted minority interests | 2,611.0 | 2,474.7 |
Real estate | 206.0 | 175.1 |
3,642.0 | 3,150.8 |
The composition of capital expenditures by segment is as follows:
2023 | 2022 | |
|---|---|---|
Unquoted | 770.1 | 521.0 |
Real estate | 10.8 | 10.9 |
780.9 | 531.9 |
Capital expenditure consists of additions of property, plant and equipment, investment properties and other intangible assets that are not related to acquisitions.
The composition of liabilities by segment is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 6,663.5 | 6,442.9 |
Real estate | 3.1 | 3.1 |
Liquid portfolio | 0.1 | 0.3 |
Reconciling items | 59.1 | 645.3 |
6,725.8 | 7,091.6 |
The 2022 reconciling items included € 576 million in corporate debt, which was fully repaid in 2023.
The composition of revenues by geographical area is as follows:
2023 | 2022 | |
|---|---|---|
Europe | 6,298.7 | 5,712.2 |
USA & Canada | 905.1 | 515.7 |
Asia | 2,033.8 | 1,048.2 |
Other | 616.8 | 349.8 |
9,854.4 | 7,625.9 |
The composition of property, plant and equipment, investment properties, right-of-use assets, intangible assets and investment in associates and joint ventures by geographical area is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Europe | 9,178.8 | 9,237.5 |
USA & Canada | 372.8 | 349.5 |
Asia | 2,159.1 | 1,764.1 |
Other | 72.5 | 15.6 |
11,783.2 | 11,366.7 |
The composition of the book value of the company’s investments in the Unquoted segment is as follows:
2023 | 2022 | |
|---|---|---|
Koninklijke Boskalis B.V. | 4,441.7 | 4,160.7 |
Broadview Holding B.V. | 758.7 | 798.2 |
Timber and Building Supplies Holland N.V. | 332.9 | 325.7 |
Coolblue Holding B.V. | 253.5 | 251.6 |
IQIP Holding B.V. | 250.8 | - |
Prodrive Technologies Group B.V. | 159.2 | 81.0 |
MSPS Holding B.V. (formerly Infomedics Holding B.V.) | 144.9 | 131.7 |
Van Wijnen Holding B.V. | 142.6 | 148.1 |
Anthony Veder Group N.V. | 138.9 | 133.5 |
GreenV B.V. | 128.1 | 96.2 |
Other | 393.8 | 461.2 |
7,145.1 | 6,587.9 |
2 Property, plant and equipment
The amount of property, plant and equipment as per the consolidated financial statements (€ 7,870.8 million) is significantly affected by the consolidation of Vopak and Safilo and in particular the tank storage terminals of Vopak (€ 2,899.5 million at the end of 2023).
The table on the next page provides information on property, plant and equipment excluding the assets of Vopak and Safilo.
Land and buildings | Vessels and floating equipment | Equipment | Total | |
|---|---|---|---|---|
Cost value | 564.7 | 664.1 | 1,178.4 | 2,407.2 |
Cost value - under construction | 52.9 | 31.3 | 80.5 | 164.7 |
Accumulated depreciation and impairments | (221.5) | (238.0) | (846.3) | (1,305.8) |
Balance on January 1, 2022 | 396.1 | 457.4 | 412.6 | 1,266.1 |
Investments | 51.4 | 343.4 | 97.3 | 492.1 |
Consolidation | 150.0 | 2,836.1 | 20.1 | 3,006.2 |
Disposals | (7.7) | (23.2) | (4.0) | (34.9) |
Depreciation and impairments, net of reversals | (18.0) | (174.9) | (82.2) | (275.1) |
Reclassification | 1.5 | (1.8) | 0.1 | (0.2) |
Reclassification to held for sale | (4.0) | - | (4.7) | (8.7) |
Exchange differences | (1.4) | (6.0) | 1.7 | (5.7) |
Balance on December 31, 2022 | 567.9 | 3,431.0 | 440.9 | 4,439.8 |
Cost value | 706.6 | 3,570.6 | 1,206.6 | 5,483.8 |
Cost value - under construction | 74.3 | 270.0 | 129.4 | 473.7 |
Accumulated depreciation and impairments | (213.0) | (409.6) | (895.1) | (1,517.7) |
Balance on December 31, 2022 | 567.9 | 3,431.0 | 440.9 | 4,439.8 |
Investments | 51.8 | 540.1 | 142.1 | 734.0 |
Consolidation | 4.8 | - | 122.2 | 127.0 |
Disposals | (1.4) | (30.4) | (4.3) | (36.1) |
Depreciation and impairments, net of reversals | (24.3) | (318.8) | (95.6) | (438.7) |
Reclassification | 3.9 | - | (8.5) | (4.6) |
Reclassification from/(to) held for sale | (18.9) | (6.0) | (153.9) | (178.8) |
Exchange differences | (3.0) | (25.1) | (1.9) | (30.0) |
Balance on December 31, 2023 | 580.8 | 3,590.8 | 441.0 | 4,612.6 |
Cost value | 805.7 | 4,075.1 | 1,333.6 | 6,214.4 |
Cost value - under construction | 11.9 | 203.9 | 74.4 | 290.2 |
Accumulated depreciation and impairments | (236.8) | (688.2) | (967.0) | (1,892.0) |
Balance on December 31, 2023 | 580.8 | 3,590.8 | 441.0 | 4,612.6 |
3 Intangible assets
The intangible assets are significantly affected by the consolidation of Vopak and Safilo. This section provides information on the intangible assets excluding those of Vopak and Safilo.
Movements for goodwill and other intangibles are as follows:
Goodwill | Software | Trade- | Customer relationships | Other | Total | |
|---|---|---|---|---|---|---|
Cost value | 1,175.1 | 163.2 | 383.1 | 565.4 | 109.7 | 2,396.5 |
Accumulated amortization and impairments | (148.9) | (111.0) | (54.9) | (103.9) | (51.4) | (470.1) |
Balance on January 1, 2022 | 1,026.2 | 52.2 | 328.2 | 461.5 | 58.3 | 1,926.4 |
Investments | 1,301.7 | 11.8 | 0.1 | - | 17.0 | 1,330.6 |
Consolidation | - | 0.7 | 369.4 | 7.2 | 60.0 | 437.3 |
Disposals | - | - | (0.1) | - | - | (0.1) |
Amortization and impairments | (312.1) | (13.3) | (33.0) | (32.6) | (23.0) | (414.0) |
Reclassification from/(to) held for sale | (18.0) | (2.5) | - | - | (1.5) | (22.0) |
Exchange differences and other | 9.5 | - | 5.0 | 1.8 | (0.6) | 15.7 |
Balance on December 31, 2022 | 2,007.3 | 48.9 | 669.6 | 437.9 | 110.2 | 3,273.9 |
Cost value | 2,423.7 | 166.1 | 758.4 | 574.1 | 162.8 | 4,085.1 |
Accumulated amortization and impairments | (416.4) | (117.2) | (88.8) | (136.2) | (52.6) | (811.2) |
Balance on December 31, 2022 | 2,007.3 | 48.9 | 669.6 | 437.9 | 110.2 | 3,273.9 |
Investments | 125.8 | 14.5 | 0.3 | - | 21.3 | 161.9 |
Consolidation | - | 9.6 | 9.0 | 69.9 | 67.2 | 155.7 |
Purchase price accounting adjustments | 1.6 | - | - | (0.2) | - | 1.4 |
Disposals | - | (1.2) | - | - | - | (1.2) |
Amortization and impairments | (233.0) | (16.2) | (42.2) | (85.5) | (31.4) | (408.3) |
Reclassification | - | 2.2 | (5.7) | - | 5.6 | 2.1 |
Reclassification from/(to) held for sale | (71.5) | - | (2.8) | (26.9) | (64.5) | (165.7) |
Exchange differences and other | (7.2) | (0.6) | (2.1) | (4.5) | (0.1) | (14.5) |
Balance on December 31, 2023 | 1,823.0 | 57.2 | 626.1 | 390.7 | 108.3 | 3,005.3 |
Cost value | 2,472.2 | 188.5 | 752.9 | 610.2 | 190.7 | 4,214.5 |
Accumulated amortization and impairments | (649.2) | (131.3) | (126.8) | (219.5) | (82.4) | (1,209.2) |
Balance on December 31, 2023 | 1,823.0 | 57.2 | 626.1 | 390.7 | 108.3 | 3,005.3 |
4 Acquisition and divestment of subsidiaries
Below a summary is included of the acquisitions during 2023, excluding the acquisitions made by Vopak and Safilo. There were no divestments during the year.
IQIP | GreenV | Other | Total | |
|---|---|---|---|---|
Cash paid | 267.8 | 80.6 | 26.3 | 374.7 |
Future consideration | - | 8.2 | - | 8.2 |
Equity instruments issued | - | 18.6 | - | 18.6 |
Fair value of net assets acquired | (196.3) | (63.5) | (15.9) | (275.7) |
Goodwill | 71.5 | 43.9 | 10.4 | 125.8 |
The reconciliation to the cash flow statement is as follows:
Total | |
|---|---|
Cash paid for the above acquisitions | 374.7 |
Cash acquired in the above acquisitions | (78.8) |
Cash outflow due to acquisition of subsidiaries, net of cash acquired | 295.9 |
Acquisitions of associates and joint arrangements | 161.7 |
Cash outflow due to acquisition of subsidiaries, joint arrangements and associates, net of cash acquired | 457.6 |
The acquisitions of associates and joint arrangements are further detailed in note 5.
5 Investments in associates and joint arrangements
The amount of investments in associates and joint arrangements in the consolidated financial statements is significantly affected by the consolidation of Vopak. Vopak has a significant amount of associates and joint arrangements on its balance sheet (€ 1,771.9 million at the end of 2023). This section provides information about the investments in associates and joint arrangements excluding the investments in associates and joint arrangements of Vopak and Safilo.
The movement of investments accounted for using the equity method is as follows:
Associates | Joint ventures | Total | |
|---|---|---|---|
Share of net assets | 3,513.3 | 153.9 | 3,667.2 |
Goodwill | 328.4 | - | 328.4 |
Balance on January 1, 2022 | 3,841.7 | 153.9 | 3,995.6 |
Investments | 604.0 | 99.0 | 703.0 |
Consolidation | 10.8 | 59.3 | 70.1 |
Disposals | (43.6) | (2.5) | (46.1) |
Share of results - real estate | - | 50.0 | 50.0 |
Share of results - other | 782.1 | 4.8 | 786.9 |
Share of other comprehensive income | 239.3 | - | 239.3 |
Dividends | (155.5) | (25.7) | (181.2) |
Impairments | (129.9) | - | (129.9) |
Reclassification1 | (2,262.5) | - | (2,262.5) |
Reclassification from/(to) held for sale | (1.6) | (79.1) | (80.7) |
Exchange differences and other | (1.2) | 7.5 | 6.3 |
Balance on December 31, 2022 | 2,883.6 | 267.2 | 3,150.8 |
Share of net assets | 2,645.2 | 267.2 | 2,912.4 |
Goodwill | 238.4 | - | 238.4 |
Balance on December 31, 2022 | 2,883.6 | 267.2 | 3,150.8 |
Investments | 80.9 | 80.8 | 161.7 |
Disposals | (1.3) | (0.6) | (1.9) |
Share of results - real estate | - | (17.6) | (17.6) |
Share of results - other | 322.3 | 17.6 | 339.9 |
Share of other comprehensive income | (56.9) | (9.4) | (66.3) |
Dividends | (128.0) | (17.7) | (145.7) |
Reclassification from/(to) held for sale2 | - | 222.0 | 222.0 |
Exchange differences and other | 6.2 | (7.1) | (0.9) |
Balance on December 31, 2023 | 3,106.8 | 535.2 | 3,642.0 |
Share of net assets | 2,862.1 | 535.2 | 3,397.3 |
Goodwill | 244.7 | - | 244.7 |
Balance on December 31, 2023 | 3,106.8 | 535.2 | 3,642.0 |
- Mainly related to the acquisition of Boskalis
- Related to Boskalis' joint venture Smit Lamnalco
The 2023 additions in joint ventures primarily relate to the real estate joint ventures in Seattle, United States of America. The amount invested in real estate joint ventures in the United States as of December 31, 2023, amounted to € 206.0 million (2022: € 175.1 million). The 2023 addition to associates mainly relates to the increase in ownership interest in Prodrive Technologies from 31.45% to 47.18%.
The amounts recognized in the consolidated statement of financial position consist of:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Publicly traded | 2,611.0 | 2,474.7 |
Other | 1,031.0 | 676.1 |
3,642.0 | 3,150.8 |
The difference between the market value of the Company’s share in its publicly traded associates and the book value is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Market value | 2,545.8 | 2,599.7 |
Book value | (2,611.0) | (2,474.7) |
(65.2) | 125.0 |
6 Other financial assets
The table below provides information on other financial assets, excluding the assets of Vopak and Safilo.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Other financial assets | ||
Investments in quoted equity securities | 573.8 | - |
Investments in unquoted securities | 25.5 | - |
Loans to associates and joint ventures | 5.3 | 5.2 |
Other loans | 76.2 | 50.0 |
Escrow | - | 250.0 |
Other | 42.2 | 52.1 |
723.0 | 357.3 |
The investments in quoted equity securities comprises of the Company’s 14.9% investment in Technip Energies N.V. The escrow in 2022 represented part of the proceeds from the sale of the Company’s 76.72% shareholding in GrandVision N.V. that was held in escrow for potential liabilities of HAL under the sale and purchase agreement. The full escrow amount was released to the Company in 2023.
The maturity of other financial assets can be split as shown below.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Non-current | 696.9 | 79.4 |
Current | 26.1 | 277.9 |
723.0 | 357.3 |
Amounts included in the cash flow statement comprise:
2023 | 2022 | |
|---|---|---|
Purchase of shares in Technip Energies N,V, | (70.0) | - |
Loans provided to associates | (0.9) | (6.3) |
Repayment of loans to associates | - | - |
Other | 220.5 | 241.3 |
Changes in other financial assets in cash flow statement | 149.6 | 235.0 |
The category “other” mainly relates to the receipt of € 250 million from the afore-mentioned escrow.
7 Receivables
The amount of receivables in the consolidated financial statements (€ 1,448.2 million at the end of 2023) is significantly affected by the consolidation of Vopak and Safilo.
This section provides information on the receivables, excluding those of Vopak and Safilo.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Trade receivables | 1,198.0 | 1,147.8 |
Allowance for doubtful accounts | (75.3) | (65.9) |
1,122.7 | 1,081.9 |
The ageing analysis of the trade receivables that are past due but not impaired is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Up to 3 months | 244.8 | 195.3 |
Between 3 and 6 months | 50.0 | 21.4 |
Between 6 and 9 months | 16.0 | 9.3 |
Over 9 months | 72.7 | 30.0 |
383.5 | 256.0 |
8 Inventories
The amount of inventories in the consolidated financial statements (€ 1,093.2 million at the end of 2023) is significantly affected by the consolidation of Safilo. This section provides information on the inventories, excluding those of Vopak and Safilo.
The composition of the inventories is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Raw materials | 156.7 | 187.2 |
Work in progress | 52.4 | 54.8 |
Spare parts | 106.2 | 93.9 |
Finished goods | 448.9 | 486.6 |
Project development (including land and building rights) | 152.8 | 120.8 |
Stock in transit | 12.2 | 12.9 |
Provision on inventory | (64.5) | (81.1) |
864.7 | 875.1 |
9 Deferred taxes
The movement in deferred tax assets and liabilities during the period are set out on the following page.
Carry-forward losses | PP&E | Leases | Intangibles | Inventories | Other | Offset | Total | |
|---|---|---|---|---|---|---|---|---|
Assets | 23.9 | 13.1 | 49.5 | 1.3 | 7.3 | 26.9 | (81.2) | 40.8 |
Liabilities | - | (57.5) | (50.2) | (202.5) | (22.9) | (35.6) | 81.2 | (287.5) |
Balance on January 1, 2022 | 23.9 | (44.4) | (0.7) | (201.2) | (15.6) | (8.7) | - | (246.7) |
Credited/(charged) to net income - continued operations (restated) | (2.4) | 0.3 | (0.2) | 22.3 | 2.2 | (8.4) | - | 13.8 |
Credited/(charged) to OCI | - | - | - | - | - | (1.4) | - | (1.4) |
Acquisitions and purchase price accounting adjustments | 2.8 | (61.3) | (0.3) | (90.6) | 1.5 | 10.9 | - | (137.0) |
Divestitures | (6.5) | - | (0.1) | 0.4 | - | 0.1 | - | (6.1) |
Other movements | - | - | - | - | - | 2.7 | - | 2.7 |
Reclassifications to held for sale | - | (0.1) | 0.5 | (5.4) | 2.1 | 2.9 | - | - |
Exchange differences | 0.2 | (0.6) | - | (1.6) | - | 0.3 | - | (1.7) |
Balance on December 31, 2022 | 18.0 | (106.1) | (0.8) | (276.1) | (9.8) | (1.6) | - | (376.4) |
Assets | 18.0 | 12.9 | 48.7 | 4.1 | 13.3 | 37.3 | (91.6) | 42.7 |
Liabilities | - | (119.0) | (49.5) | (280.2) | (23.1) | (38.9) | 91.6 | (419.1) |
Balance on January 1, 2023 | 18.0 | (106.1) | (0.8) | (276.1) | (9.8) | (1.6) | - | (376.4) |
Credited/(charged) to net income | 11.0 | 8.3 | (0.3) | 38.3 | 7.2 | 8.0 | - | 72.5 |
Credited/(charged) to OCI | - | - | - | - | - | (0.6) | - | (0.6) |
Acquisitions and purchase price accounting adjustments | 1.4 | (1.9) | - | (30.8) | (0.9) | (1.8) | - | (34.0) |
Other movements | 3.4 | - | - | - | - | 1.1 | - | 4.5 |
Reclassifications | - | 0.4 | 0.1 | 2.3 | - | (2.8) | - | - |
Reclassification to held for sale | (1.5) | 4.0 | 0.4 | 24.0 | 0.2 | 1.7 | 28.8 | |
Exchange differences | (0.3) | 0.4 | - | 1.5 | (0.2) | (0.2) | - | 1.2 |
Balance on December 31, 2023 | 32.0 | (94.9) | (0.6) | (240.8) | (3.5) | 3.8 | - | (304.0) |
Assets | 32.0 | 17.2 | 53.5 | 7.3 | 14.9 | 44.5 | (98.4) | 71.0 |
Liabilities | - | (112.1) | (54.1) | (248.1) | (18.4) | (40.7) | 98.4 | (375.0) |
Balance on December 31, 2023 | 32.0 | (94.9) | (0.6) | (240.8) | (3.5) | 3.8 | - | (304.0) |
Unused tax losses, excluding those of Vopak and Safilo, for which deferred tax assets have not been recognized are as follows:
Expiration | 2023 | 2022 |
|---|---|---|
2023 | - | 4.2 |
2024 | 3.4 | 5.7 |
2025 | 14.1 | 10.8 |
2026 | 19.5 | 11.0 |
2027 | 17.3 | 14.0 |
2028 and further years | 127.4 | 88.0 |
No expiration date | 844.2 | 861.9 |
1,025.9 | 995.6 |
10 Pension benefits
The pension obligations are significantly affected by the consolidation of Vopak. The present value of the funded obligations and the fair value of the plan assets as per the consolidated financial statements are € 447.7 million, respectively € 486.4 million, whereas excluding Vopak these amounts are significantly lower. This section therefore provides additional information on the pension obligations, excluding those of Vopak and Safilo.
The amounts recognized on the pro forma statement of financial position comprise:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Pension benefit assets | 63.4 | 55.3 |
Pension benefit liabilities | (80.2) | (87.7) |
(16.8) | (32.4) |
The net pension benefits consist of:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Present value of funded obligations | (305.6) | (275.5) |
Fair value of plan assets | 341.4 | 300.1 |
Impact from asset ceiling | (15.9) | (19.4) |
Surplus/(deficit) of funded obligations | 19.9 | 5.2 |
Present value of unfunded obligations | (36.7) | (37.6) |
Net asset/(liability) in the statement of financial position | (16.8) | (32.4) |
The movement in the net liability is as follows:
2023 | 2022 | |
|---|---|---|
Balance on January 1 | (32.4) | 7.3 |
Pension charge defined benefit plans | (4.0) | (4.5) |
Consolidation | 0.1 | (40.3) |
Contributions | 12.3 | 1.2 |
Remeasurement effects | 4.9 | 1.7 |
Benefits paid for unfunded plans | 0.5 | - |
Plan amendments, settlements and curtailments | - | 0.9 |
Exchange differences and other | 1.8 | 1.3 |
Balance on December 31 | (16.8) | (32.4) |
The amounts recognized in the pro forma consolidated statement of income are as follows:
2023 | 2022 | |
|---|---|---|
Current service costs | 3.0 | 4.3 |
Interest expense/(income) | 0.2 | (0.7) |
Administrative costs | 0.8 | 0.4 |
Total defined benefit costs | 4.0 | 4.0 |
Other costs | 101.1 | 69.3 |
105.1 | 73.3 |
Other costs mainly relate to defined contribution plans and multi-employer pension plans classified as defined contribution plans. The 2023 increase in expenses primarily relates to the full-year inclusion of Boskalis.
The principal, weighted-average assumptions used were:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Discount rate/return on assets | 3.73% | 3.92% |
Future inflation rate | 2.18% | 2.36% |
Future salary increases | 1.62% | 1.50% |
The latest available mortality tables were used. The discount rates used in the determination of defined benefit obligations and pension charges are based on AA-rated corporate bonds with a duration matching the duration of the pension liabilities.
As of December 31, 2023, the plan assets consist of:
Level 1 | Level 2 | Level 3 | Total | Total (%) | |
|---|---|---|---|---|---|
Equity instruments | 101.0 | 3.7 | - | 104.7 | 30.7% |
Debt instruments | 41.1 | 20.5 | 0.1 | 61.7 | 18.1% |
Cash and cash equivalents | 18.6 | - | - | 18.6 | 5.4% |
Other | - | 4.9 | 151.5 | 156.4 | 45.8% |
160.7 | 29.1 | 151.6 | 341.4 | 100.0% |
The amounts in level 3 mainly relate to insurance policies that provide coverage for the related pension obligations.
As of December 31, 2022, the plan assets consisted of:
Level 1 | Level 2 | Level 3 | Total | Total (%) | |
|---|---|---|---|---|---|
Equity instruments | 85.2 | 14.0 | - | 99.2 | 33.1% |
Debt instruments | 33.5 | 34.1 | 0.1 | 67.7 | 22.6% |
Cash and cash equivalents | 15.0 | - | - | 15.0 | 5.0% |
Other | 0.5 | 1.7 | 116.0 | 118.2 | 39.3% |
134.2 | 49.8 | 116.1 | 300.1 | 100.0% |
The sensitivity of the defined benefit obligation to changes in the principal, weighted-average assumptions is as follows:
Impact on obligation | |||
|---|---|---|---|
Change | Increase | Decrease | |
Discount rate/return on assets | 1.00% | (53.1) | 58.7 |
Future inflation rate | 1.00% | 25.5 | (28.4) |
Future salary increases | 0.25% | 0.9 | (0.9) |
Life expectancy | 1 year | 12.3 | N/A |
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If plan assets underperform this yield, this will create a deficit. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings. The majority of the plans’ obligations are to provide benefits for the lifetime of the members, so increases in life expectancy will result in an increase in the plans’ liabilities.
11 Provisions
The provisions (current and non-current) as per the consolidated financial statements amount to € 397.3 million. This amount is significantly affected by the consolidation of Vopak and Safilo.
This section provides information on provisions excluding the amounts relating to Vopak and Safilo.
The composition and movement of the provisions is as follows:
Environmental | Employee related | Onerous contracts | Warranty | Other | Total | |
|---|---|---|---|---|---|---|
Balance on January 1, 2022 | 4.5 | 14.8 | 7.5 | 12.3 | 10.9 | 50.0 |
Addition | 1.2 | 6.7 | 39.2 | 63.9 | 1.8 | 112.8 |
Consolidation | 1.4 | 8.3 | 68.8 | 56.5 | 6.0 | 141.0 |
Utilization | (1.6) | (7.6) | (33.2) | (20.0) | (3.6) | (66.0) |
Released | (0.3) | (1.8) | (0.2) | (0.9) | (1.0) | (4.2) |
Reclassification from/(to) held for sale | - | (0.7) | - | (0.2) | - | (0.9) |
Exchange differences | - | 0.1 | 0.5 | 0.2 | - | 0.8 |
Reclassifications and other movements | - | (0.1) | 36.1 | 5.3 | 0.6 | 41.9 |
Balance on December 31, 2022 | 5.2 | 19.7 | 118.7 | 117.1 | 14.7 | 275.4 |
Current | 1.4 | 4.9 | 66.7 | 78.0 | 5.0 | 156.0 |
Non-current | 3.8 | 14.8 | 52.0 | 39.1 | 9.7 | 119.4 |
Balance on December 31, 2022 | 5.2 | 19.7 | 118.7 | 117.1 | 14.7 | 275.4 |
Addition | 0.3 | 9.6 | 72.8 | 29.8 | 20.5 | 133.0 |
Utilization | (0.6) | (6.4) | (87.9) | (14.5) | (6.4) | (115.8) |
Released | - | (0.2) | (28.3) | (9.5) | (0.7) | (38.7) |
Reclassification from/(to) held for sale | - | (0.1) | - | (1.5) | - | (1.6) |
Exchange differences | - | - | (1.0) | - | 0.2 | (0.8) |
Reclassifications and other movements | (0.1) | (0.7) | 0.2 | (1.5) | 22.7 | 20.6 |
Balance on December 31, 2023 | 4.8 | 21.9 | 74.5 | 119.9 | 51.0 | 272.1 |
Current | 1.1 | 8.1 | 38.3 | 83.9 | 19.7 | 151.1 |
Non-current | 3.7 | 13.8 | 36.2 | 36.0 | 31.3 | 121.0 |
Balance on December 31, 2023 | 4.8 | 21.9 | 74.5 | 119.9 | 51.0 | 272.1 |
12 Debt and other financial liabilities
The amount of debt and other financial liabilities in the consolidated financial statements (€ 3,901.2 million) is significantly affected by the consolidation of Vopak and Safilo. The amount excluding Vopak and Safilo is significantly lower as set out below.
Debt and other financial liabilities excluding Vopak and Safilo consists of:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Debt | 1,759.5 | 2,518.6 |
Other financial liabilities | 122.1 | 107.0 |
1,881.6 | 2,625.6 |
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Non-current debt and other financial liabilities | ||
Mortgage loans | 409.6 | 464.3 |
Private placements | 42.7 | 236.7 |
Other loans | 39.1 | 475.4 |
Total non-current debt | 491.4 | 1,176.4 |
Non-current other financial liabilities | 95.4 | 86.1 |
Total non-current debt and other financial liabilities | 586.8 | 1,262.5 |
Current debt and other financial liabilities | ||
Bank overdrafts | 471.5 | 915.4 |
Current portion of long-term debt | 795.7 | 425.9 |
Other loans | 0.9 | 0.9 |
Total current debt | 1,268.1 | 1,342.2 |
Current other financial liabilities | 26.7 | 20.9 |
Total current debt and other financial liabilities | 1,294.8 | 1,363.1 |
Total debt and other financial liabilities | 1,881.6 | 2,625.6 |
The summary of debt per currency is as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Euro | 1,435.2 | 2,257.1 |
U.S. dollar | 313.7 | 233.6 |
Other currencies | 10.6 | 27.9 |
1,759.5 | 2,518.6 |
13 Revenues
Revenues included in the consolidated financial statements amount to € 12.3 billion of which € 2.4 billion is related to Vopak and Safilo.
The 2023 revenues excluding those of Vopak and Safilo can be disaggregated as follows:
2023 | Europe | USA & Canada | Asia | Other | Total |
|---|---|---|---|---|---|
Revenue from contracts with customers | |||||
Sale of goods | 2,635.1 | 394.0 | 230.9 | 159.1 | 3,419.1 |
Construction and offshore contracting activities | 2,340.6 | 284.9 | 1,348.4 | 250.7 | 4,224.6 |
Provision of services | 1,277.5 | 211.4 | 436.6 | 205.2 | 2,130.7 |
6,253.2 | 890.3 | 2,015.9 | 615.0 | 9,774.4 | |
Revenue from other sources | 45.5 | 14.8 | 17.9 | 1.8 | 80.0 |
Total revenue | 6,298.7 | 905.1 | 2,033.8 | 616.8 | 9,854.4 |
The 2022 revenues excluding those of Vopak and Safilo can be disaggregated as follows:
2022 | Europe | USA & Canada | Asia | Other | Total |
|---|---|---|---|---|---|
Revenue from contracts with customers | |||||
Sale of goods | 2,764.8 | 374.2 | 226.8 | 176.6 | 3,542.4 |
Construction and offshore contracting activities | 1,977.1 | 91.5 | 630.3 | 60.4 | 2,759.3 |
Provision of services | 951.8 | 50.0 | 191.1 | 112.7 | 1,305.6 |
5,693.7 | 515.7 | 1,048.2 | 349.7 | 7,607.3 | |
Revenue from other sources | 18.5 | - | - | 0.1 | 18.6 |
Total revenue | 5,712.2 | 515.7 | 1,048.2 | 349.8 | 7,625.9 |
14 Share of results from associates and joint ventures
Results from associates and joint ventures as per the consolidated financial statements is affected by the inclusion of the results of the joint ventures of Vopak.
The table below provides information on the share of results from associates and joint ventures excluding those of Vopak.
2023 | 2022 | |
|---|---|---|
Share of results1 | 339.9 | 130.7 |
Revaluation upon gaining control | - | 656.2 |
Impairments | - | (129.9) |
339.9 | 657.0 |
- Capital gains and share of results, including impairments, from real estate joint ventures of € (17.7) million (2022: € 50.0 million) are presented under income from real estate activities in the consolidated statement of income.
15 Employee expenses
The table below provides information on the employee expenses excluding the employee expenses of Vopak and Safilo.
2023 | 2022 | |
|---|---|---|
Wages and salaries | 1,468.5 | 1,103.5 |
Social security costs | 185.9 | 140.5 |
Pension costs | 105.1 | 73.3 |
Other | 233.9 | 170.6 |
Total | 1,993.4 | 1,487.9 |
The number of persons employed by the Company and its subsidiaries, excluding Vopak and Safilo, at the end of 2023 was 24,253 (2022: 22,961) on a full-time equivalent basis.
Reference is made to note 10 for details of the pension costs.
16 Other operating expenses
The table below provides information on the other operating expenses excluding the other operating expenses of Vopak and Safilo.
2023 | 2022 | |
|---|---|---|
Marketing and publicity | 80.3 | 79.3 |
Staffing expenses Atlas Professionals | 139.3 | 145.4 |
Information and communication technology | 103.9 | 81.5 |
Housing | 62.2 | 42.6 |
Other | 495.4 | 475.9 |
Total | 881.1 | 824.7 |
Research and development costs expensed, excluding Vopak and Safilo, during 2023 amounted to € 16.8 million (2022: € 14.9 million).
17 Income tax expense
Income taxes in the consolidated financial statements, and in particular the analysis of the effective tax rate, are significantly affected by the consolidation of Vopak and Safilo.
The tax charge excluding the consolidation of Vopak and Safilo can be detailed as follows:
2023 | 2022 | |
|---|---|---|
Current income taxes | 188.3 | 89.1 |
Deferred income taxes | (72.5) | (13.8) |
115.8 | 75.3 |
The table below provides an analysis of the effective tax rate excluding the consolidation of Vopak and Safilo.
2023 | 2022 | |
|---|---|---|
Profit before income tax | 1,029.7 | 605.8 |
Less: after-tax share of results from associates, joint ventures and other financial assets | (509.0) | (657.0) |
Less: non-taxable other income (sale of subsidiaries and associates) | (25.6) | (108.8) |
Adjusted profit before income tax | 495.1 | (160.0) |
Income tax expense | 115.8 | 75.3 |
Effective tax rate (%) | 23.4 | (47.1) |
18 Cash flows from operating activities
The cash flows from operating activities can be detailed as follows:
2023 | 2022 | ||
|---|---|---|---|
Profit before taxes from continuing operations | 1,029.7 | 605.8 | |
Depreciation and impairments | 441.2 | 277.5 | |
Depreciation and impairments right-of-use assets | 120.7 | 104.6 | |
Amortization and impairments | 3 | 408.3 | 414.0 |
Badwill recognized on acquisitions | - | (6.6) | |
(Profit)/loss on sale of property, plant, equipment and investment properties | (25.6) | - | |
(Profit)/loss on sale of other financial assets and marketable securities | (250.1) | 179.0 | |
Fair value gain on remeasurement of previously held equity interest | 14 | - | (656.2) |
Results from associates and joint ventures, net of impairments | 14 | (322.3) | (50.8) |
(Profit)/loss on assets and liabilities held for sale | - | (102.3) | |
Net financial expense | 85.3 | 20.7 | |
Other movements in provisions and pension benefits | (14.9) | 82.0 | |
Dividend from associates and joint ventures | 5 | 145.7 | 181.2 |
Changes in working capital | 204.9 | (51.1) | |
Cash generated from operating activities | 1,822.9 | 997.8 |
19 Share-based compensation
The amount of expenses and liabilities related to share-based compensation in the consolidated financial statements (€ 26.0 million and € 59.7 million, respectively) is also affected by the consolidation of Vopak and Safilo. The amounts excluding Vopak and Safilo are set out below.
Expenses related to share-based compensation consist of:
2023 | 2022 | |
|---|---|---|
HAL Holding N.V. | ||
Share Plan1 | 3.3 | 3.3 |
Unquoted subsidiaries | ||
Cash Plans2 | 13.2 | 24.6 |
16.5 | 27.9 |
- Equity-settled
- Cash-settled
Liabilities recognized in relation to cash-settled share-based compensation are disclosed in the table on the following page.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted subsidiaries | ||
Cash Plans | 58.8 | 82.6 |
58.8 | 82.6 |
The current part of this liability of € 4.0 million (2022: € 15.7) is included under current debt and other financial liabilities and the non-current part of € 54.8 million (2022: € 66.9 million) is included under non-current debt and other financial liabilities.
20 Financial risk management
The financial risk management of the Company is set out in note 39 to the consolidated financial statements. In this note it is set out that the financial risks of Vopak, Safilo and the companies belonging to the Unquoted segment are not managed by the Company but by these entities.
As the aggregated financial risks of Vopak and Safilo are substantial, the tables below provide quantitative information with respect to the financial risks of the Company excluding the amounts relating to Vopak and Safilo.
Credit risk
The maximum exposure to credit risk can be specified by segment as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 3,177.5 | 3,076.7 |
Real estate | 30.4 | 28.7 |
Liquid portfolio | 2,761.0 | 3,370.9 |
Other | - | 250.0 |
5,968.9 | 6,726.3 |
The other items in 2022 represented the part of the proceeds from the sale of the Company’s 76.72% shareholding in GrandVision N.V. that was held in escrow for potential liabilities of HAL under the sale and purchase agreement. The full escrow amount was released to the Company in 2023.
These financial assets can be further specified as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Loans | 81.5 | 55.1 |
Trade receivables | 1,122.7 | 1,081.8 |
Contract assets | 307.9 | 372.4 |
Marketable securities | 1,967.1 | 2,839.7 |
Derivative financial instruments | 13.6 | 24.0 |
Other financial assets | 42.2 | 302.2 |
Other current assets | 117.4 | 118.6 |
Cash and cash equivalents | 2,316.5 | 1,932.4 |
5,968.9 | 6,726.2 |
At the end the period, cash and cash equivalents can be specified by segment as follows:
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Unquoted | 1,520.2 | 1,396.1 |
Real estate | 2.5 | 5.1 |
Liquid portfolio | 793.8 | 531.2 |
2,316.5 | 1,932.4 |
Liquidity risk
The following tables categorize the undiscounted cash flows of non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting periods to the contractual maturity date, excluding the amounts relating to Vopak and Safilo. The financial guarantee contracts are contingent liabilities.
December 31, 2023 | ||||
|---|---|---|---|---|
< 1 year | 1-2 years | 3-5 years | > 5 years | |
Non-derivative liabilities | ||||
Redemption of debt | 1,268.1 | 48.8 | 274.2 | 172.1 |
Redemption of other financial liabilities | 26.7 | 2.0 | 93.4 | - |
Interest payments | 108.6 | 26.1 | 52.1 | 25.6 |
Payments on lease liabilities | 119.2 | 151.4 | 82.8 | 134.9 |
Accounts payable | 932.8 | - | - | - |
Commitments and guarantees provided | 1,326.8 | 280.2 | 174.0 | 249.7 |
Total undiscounted non-derivative financial liabilities | 3,782.2 | 508.5 | 676.5 | 582.3 |
Derivative liabilities | ||||
Gross-settled derivative liabilities outflow | (524.7) | - | - | - |
Gross-settled derivative liabilities inflow | 522.1 | - | - | - |
Total gross-settled derivative liabilities | (2.6) | - | - | - |
Net-settled derivative liabilities | 0.3 | 0.3 | 0.6 | 0.2 |
Total undiscounted derivative liabilities | (2.3) | 0.3 | 0.6 | 0.2 |
Total undiscounted financial liabilities | 3,779.9 | 508.8 | 677.1 | 582.5 |
December 31, 2022 | ||||
|---|---|---|---|---|
< 1 year | 1-2 years | 3-5 years | > 5 years | |
Non-derivative liabilities | ||||
Redemption of debt | 1,342.2 | 256.5 | 322.9 | 605.6 |
Redemption of other financial liabilities | 20.9 | 26.2 | 59.9 | - |
Interest payments | 93.6 | 59.0 | 132.1 | 51.7 |
Payments on lease liabilities | 109.3 | 152.4 | 74.2 | 123.0 |
Accounts payable | 972.1 | - | - | - |
Commitments and guarantees provided | 1,229.3 | 156.6 | 148.6 | 250.5 |
Total undiscounted non-derivative financial liabilities | 3,767.4 | 650.7 | 737.7 | 1,030.8 |
Derivative liabilities | ||||
Gross-settled derivative liabilities outflow | 102.9 | - | - | - |
Gross-settled derivative liabilities inflow | (97.8) | - | - | - |
Total gross-settled derivative liabilities | 5.1 | - | - | - |
Net-settled derivative liabilities | 1.5 | 1.2 | 1.5 | 1.0 |
Total undiscounted derivative liabilities | 6.6 | 1.2 | 1.5 | 1.0 |
Total undiscounted financial liabilities | 3,774.0 | 651.9 | 739.2 | 1,031.8 |
The total debt, excluding the debt of Vopak, Safilo, as of December 31, 2023, amounted to € 1,759.5 million (2022: € 2,518.6 million). For 76% of the bank debt, the applicable covenants were complied with during 2022 and 2023. At the end of 2023, unused committed credit facilities were available to an amount of € 742.6 million (2022: € 1,226.4 million). These exclude the facilities of Vopak and Safilo.
Market risk - currency risk
The table below shows the net assets per currency (taking into account debt and hedging instruments denominated in foreign currency), excluding the exposures of Vopak and Safilo.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
U.S. dollar | 1,568.0 | 1,388.5 |
U.K. pound sterling | 551.3 | 531.1 |
Canadian dollar | 119.2 | 105.6 |
Chinese yuan renminbi | 105.4 | 109.0 |
Hong-Kong dollar | 81.0 | 84.0 |
Taiwan dollar | 54.4 | 71.3 |
Chilean peso | 49.1 | 41.0 |
Thai baht | 31.6 | 35.5 |
Australian dollar | 26.0 | 42.8 |
Norwegian krone | 16.0 | 23.9 |
Other | 69.7 | 72.7 |
Total | 2,671.7 | 2,505.4 |
An average change in value of these currencies by 10% would have a pre-tax effect on the pro forma consolidated equity of € 267.2 million.
The market value of the currency derivative financial instruments at December 31, 2023, per the consolidated financial statements is a net liability of € 2.6 million on a notional amount of € 873.1 million (2022: net asset € 67.7 million, notional amount € 1,906.0 million). These amounts are primarily comprised of derivatives of Vopak. The amount excluding Vopak and Safilo is a net asset of € 5.3 million on a notional amount of € (404.1) million (2022: net asset € 7.4 million, notional amount € 343.5 million).
Market risk - interest rate risk
As of December 31, 2023, taking into account interest rate swaps, 24% of the total debt, excluding the bank debt of Vopak, and Safilo, of € 1,759.5 million (2022: 29% of € 2,518.6 million) was at fixed rates for an average period of 5.2 years (2022: 4.3 years). The weighted-average interest rate was 5.7% (2022: 3.6%).
21 Capital risk management
The table below summarizes the capital structure excluding the impact from the consolidation of Vopak and Safilo.
Dec. 31, 2023 | Dec. 31, 2022 | |
|---|---|---|
Equity | 13,627.9 | 12,961.9 |
Non-current debt | 491.4 | 1,176.5 |
Current debt | 1,268.1 | 1,342.2 |
Cash and cash equivalents | (2,316.5) | (1,932.4) |
Total capital employed | 13,070.9 | 13,548.2 |
The net asset value based on the market value of the ownership interests in quoted companies and the liquid portfolio and on the book value of the unquoted companies amounted to € 13,563 million on December 31, 2023 (2022: € 13,087 million). The net asset value consists of the sum of the shareholders’ equity attributable to the owners of the parent (€ 13,628 million) and the difference between the market value of the ownership interests in quoted companies and their book value, calculated based on equity accounting and excluding the difference due to purchase price accounting adjustments (€ 65.0 million).
22 Capital and financial commitments
Capital commitments
The capital commitments in respect of property, plant and equipment under construction, excluding those of Vopak and Safilo, amounted to € 332.1 million (2022: € 152.1 million). The other commitments amounted to € 27.2 million (2022: € 6.3 million).
Financial Statements (unconsolidated) HAL Trust
Unconsolidated Statement of Financial Position HAL Trust (in millions of euro)
As of December 31 | 2023 | 2022 |
|---|---|---|
Assets | ||
Shareholding in HAL Holding N.V. | 69.3 | 69.3 |
Trust Property | 69.3 | 69.3 |
Unconsolidated Statement of Comprehensive Income HAL Trust (in millions of euro)
For the year ended December 31 | 2023 | 2022 |
|---|---|---|
Dividend received from HAL Holding N.V. | 443.0 | 494.4 |
Net Income | 443.0 | 494.4 |
Unconsolidated Statement of Changes in Trust Property (in millions of euro)
Balance on January 1, 2023 | 69.3 |
Dividend received from HAL Holding N.V. (in cash and in shares) | 443.0 |
Distributed to Unit Holders HAL Trust (in cash and in shares) | (443.0) |
Balance on December 31, 2023 | 69.3 |
Unconsolidated Statement of Cash Flows HAL Trust (in millions of euro)
For the year ended December 31 | 2023 | 2022 |
|---|---|---|
Dividend received from HAL Holding N.V. | (221.5) | (247.2) |
Distributed to Unit Holders HAL Trust | 221.5 | 247.2 |
Net change | - | - |
Notes to the unconsolidated financial statements (in millions of euro)
The shares in HAL Holding N.V. are accounted for at historical cost. As of December 31, 2023, HAL Trust owned 90,370,864 shares of HAL Holding N.V. (2022: 88,598,887)
Distribution of Dividends
It is proposed to the Shareholders’ Meeting of HAL Trust to instruct the Trustee to vote, at the General Meeting of Shareholders of HAL Holding N.V., in favor of the proposals to approve the Financial Statements for 2023 and to pay a dividend of € 2.85 per Share outstanding, which shall be payable in cash.
It is proposed to direct the Trustee to pay a cash dividend of € 2.85 per HAL Trust Share.
Shareholders holding their shares through Euroclear Nederland will be paid via affiliated banks and security brokers. To the other Shareholders payment of the dividend due is made directly, in accordance with the conditions agreed upon with these Shareholders.
The text of Article VII, Section 7.1 of the Trust Deed reads:
Cash dividends and other proceeds. Upon the Trustee receiving a dividend payment or other payment from the Company on or in respect of any of the Company Shares, it shall immediately make an equivalent payment on the corresponding Trust Shares. Distributions on Trust Shares will be made payable without charging costs or commission.
Independent Auditor’s Report
To the Trustee and Shareholders of HAL Trust
Report on the audit of the financial statements
In our opinion:
-
the consolidated financial statements of HAL Trust (the ‘Trust’) together with its subsidiaries (the ‘Group’) give a true and fair view of the financial position of the Group as at December 31, 2023, and of its financial performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted in the European Union (‘EU-IFRS’).
-
the unconsolidated financial statements of HAL Trust give a true and fair view of the financial position of the Trust as at December 31, 2023, and of its financial performance and cash flows for the year then ended in accordance with EU-IFRS.
What we have audited
We have audited the accompanying consolidated and unconsolidated financial statements of HAL Trust (collectively referred to as the ‘financial statements’).
The financial statements comprise:
-
the consolidated and unconsolidated statements of financial position as at December 31, 2023;
-
the consolidated statement of income for the year ended December 31, 2023;
-
the consolidated and unconsolidated statements of comprehensive income for the year ended December 31, 2023;
-
the consolidated statement of changes in equity and the unconsolidated statement of changes in trust property for the year ended December 31, 2023;
-
the consolidated and unconsolidated statements of cash flows for the year ended December 31, 2023; and
-
the notes to the financial statements, including material accounting policy information and other explanatory information.
We conducted our audit in accordance with International Standards on Auditing (‘ISAs’). We have further described our responsibilities under those standards in the section “Auditor’s responsibilities for the audit of the financial statements”.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of HAL Trust in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Chartered Professional Accountants of Bermuda Rules of Professional Conduct (CPA Bermuda Rules) that are relevant to our audit of the financial statements. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the ethical requirements of the CPA Bermuda Rules.
We designed our audit procedures with respect to the key audit matters, in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The information in support of our opinion, such as our findings and observations related to individual key audit matters, was addressed in this context, and we do not provide separate opinions or conclusions on these matters.
Overview and context
The Group is comprised of several components and therefore we considered our group audit scope and approach as set out in the section “How we tailored our group audit scope”. We paid specific attention to the areas of focus driven by the operations of the Group, as set out below.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the Executive Board of HAL Holding N.V. (hereinafter the Executive Board) made subjective judgments, for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain..
In the “Basis of preparation” section of the financial statements, the Executive Board describes the areas of judgment in applying accounting policies and the key sources of estimation uncertainty. Given the higher inherent risks of material misstatement in: Valuation of assets and liabilities in acquisitions of subsidiaries; Impairment testing of tank terminal assets and joint ventures and associates of Koninklijke Vopak N.V. (‘Vopak’); Assessment of valuation of goodwill (including goodwill related to associates); and Recognition of contract revenue and valuation of unbilled revenue and deferred revenue of Koninklijke Boskalis B.V. (‘Boskalis’), we continued to consider these to be key audit matters in 2023. Each of these key audit matters have been set out in the section “Key audit matters” of this report.
As in all of our audits, we addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Executive Board that may represent a risk of material misstatement due to fraud. This was not considered to be a key audit matter.
We ensured that the audit teams at both group and component levels included the appropriate skills and competences which are needed for the audit. We therefore included experts and specialists in the areas of IT, taxes, valuation, forensics, pensions and share-based compensation in our team.
The outline of our audit approach was as follows:
Materiality |
|
Audit scope |
|
| |
Key audit matters |
|
The scope of our audit was influenced by the application of materiality, which is further explained in the section “Auditor’s responsibilities for the audit of the financial statements”.
Based on our professional judgment we determined certain quantitative thresholds for materiality, including the overall group materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of identified misstatements, both individually and in aggregate, on the financial statements as a whole.
Overall group materiality | € 40.0 million (2022: € 28.7 million). |
How we determined it | We used our professional judgment to determine overall materiality. As a basis for our judgment, we used 5% of adjusted profit before tax. At the request of the Executive Board, materiality was capped at € 40.0 million. |
Rationale for the materiality benchmark applied | We used profit before tax as the primary benchmark, a generally accepted auditing practice, based on our analysis of the common information needs of the users of the financial statements. On this basis, we believe that profit before tax is an important metric for the financial performance of the Group. We adjusted the profit before tax for the effect of exceptional items and non-controlling interests and capped the calculated materiality at the request of the Executive Board. |
Component materiality | Based on our judgment, we allocated materiality to each component in our audit scope that is less than our overall group materiality. The range of materiality allocated across components was between € 0.7 million and € 30.0 million. |
We also take misstatements and/or possible misstatements into account that, in our judgment, are material for qualitative reasons.
We agreed with the Executive Board and the Supervisory Board of HAL Holding N.V. (hereinafter the Supervisory Board) that we would report to them any misstatements identified during our audit impacting profit before tax above € 500,000 for components with revenues above € 100 million and € 250,000 for components with revenues below € 100 million. Where misstatements have no impact on profit before tax, we agreed that we would report those above € 4,000,000 for components with revenues above € 100 million, and for components with revenues below € 100 million we would report those above €2,000,000. We agreed with the Executive Board and Supervisory Board that for Boskalis we would report misstatements above € 1,200,000 for the income statement and € 4,000,000 for reclassifications. For Vopak and Safilo Group S.p.A (‘Safilo’) we would report misstatements (including for reclassifications) above € 1,250,000 and € 500,000 respectively. We also agreed that we would report misstatements below the above amounts that, in our view, warranted reporting for qualitative reasons.
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements of the current period. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters that were identified by our audit and that we discussed. In this section, we described the key audit matters and included a summary of the audit procedures we performed on those matters.
The key audit matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We do not provide a separate opinion on these matters or on specific elements of the financial statements. Any comments we make on the results of our procedures should be read in this context.
Key audit matter | Our audit work and observations |
|---|---|
Valuation of assets and liabilities in acquisitions of subsidiaries | Our audit procedures on acquisitions included an assessment of the purchase agreements, the process that management has undertaken to determine the allocation of the respective purchase considerations, including contingent adjustments, including but not limited to, understanding the scope of work, assessing the qualifications, competence and objectivity of the valuation experts engaged by the Group and evaluating the process and oversight performed by the Group’s finance team on harmonizing the accounting policies. |
See notes 3 and 7 of the consolidated financial statements for the disclosures of related accounting policies, judgments and estimates. | |
During 2023 the Group entered into various acquisition agreements. The net valuation of assets and liabilities acquired in these acquisitions amounted to € 275.7 million in 2023. |
Key audit matter | Our audit work and observations |
|---|---|
Impairment testing of tank terminal assets and joint ventures and associates of Vopak | The audit of the impairment testing included, among others, evaluating Vopak’s policies and procedures, including internal controls to identify triggering events for potential impairment of terminal assets, joint ventures and associates. This included assessing the completeness of the impairment triggers identified by reviewing the actual and forecasted financial performance of the cash-generating units. |
See notes 4, 8 and 36 of the consolidated financial statements for the disclosures of related accounting policies, judgments and estimates. | |
Through its de facto controlling interest in Vopak, the Group controls a number of tank storage terminals with a total carrying value of owned property, plant and equipment of € 2,899.5 million as of December 31, 2023. Furthermore, Vopak has an interest in a number of joint ventures and associates, with a total carrying value of € 1,771.9 million as of December 31, 2023. The valuation of these assets is significant to our audit as the determination of whether these assets are not carried at more or less (the latter only in the case of any such assets that were impaired in previous periods) than their recoverable amounts is subject to significant management judgment. |
Key audit matter | Our audit work and observations |
|---|---|
Assessment of valuation of goodwill (including goodwill related to associates) | Our audit procedures included, among others, an evaluation of the Group’s policies and procedures applied in the triggering-event-based and the annual impairment test of goodwill performed to identify potential impairments of goodwill, as well as management’s assessment with respect to triggering events for their associates. |
See notes 7, 8 and 36 of the consolidated financial statements for the disclosures of related accounting policies, judgments and estimates. | |
The goodwill on the consolidated statement of financial position of the Group totals to € 1,931.2 million. In assessing whether these amounts are recoverable, management generally applied the value-in-use method. The Group also holds interests in associates other than those held by Vopak. Management performs a triggering-event analysis annually for its associates. If a trigger is identified, an impairment test is performed. |
Key audit matter | Our audit work and observations |
|---|---|
Recognition of contract revenue and valuation of unbilled revenue and deferred revenue of Boskalis | The audit procedures on contract revenue and valuation of unbilled revenue and deferred revenue included an assessment of the Group’s policies and procedures for Boskalis’ projects, substantive audit procedures and testing of Boskalis’ management’s positions against underlying documentation. |
See notes 12 and 23 of the consolidated financial statements for the disclosures of related accounting policies, judgments and estimates. | |
The Group’s controlling interest Boskalis operates a business on a project basis. The projects are characterized by contract risk with significant judgments involved in the assessment of contract financial performance. |
How we tailored our group audit scope
HAL Trust holds 100% of the shares of HAL Holding N.V., a Curaçao based limited liability company, that manages the group of entities included in the financial statements. The financial information of HAL Holding N.V. and this group of entities are included in the financial statements of HAL Trust. The Executive Board and the Supervisory Board reside at the level of HAL Holding N.V.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to provide an opinion on the financial statements as a whole, taking into account the management structure of the Group, the nature of operations of its components, the accounting processes and controls, and the markets in which the components of the Group operate.
We conducted audit work at HAL Trust, HAL Holding N.V.’s corporate entities and twenty of its components. A full scope audit was performed at two components that we determined to be individually financially significant to the Group. These two components are: Boskalis and Vopak. Additionally, three components were selected for full scope audit procedures based on our scoping determinations. At the request of the Executive Board and the Supervisory Board, we further undertook full scope audits at fifteen additional components. For HAL Trust, HAL Holding N.V. and HAL Holding N.V.’s corporate entities, the group engagement team performed the audit work. For all other components that are in scope of the Group audit, the group audit team used component auditors, who are familiar with the local laws and regulations, to perform this audit work.
In establishing the overall group audit strategy and plan, we determined the type of work required to be performed at the component level by the group engagement team and by each component auditor. Where the work was performed by component auditors, the group audit team determined the level of involvement it needed to have in the audit work at those components to be able to conclude whether sufficient appropriate audit evidence had been obtained to support our opinion on the financial statements as a whole.
We issued instructions to the component audit teams in our audit scope. These instructions included amongst others our risk analysis, materiality and the scope of the work to be performed. We explained to the component audit teams the structure of the Group, the main developments in the current year that were relevant for the component auditors, the risks identified relevant to the group audit, the materiality levels to be applied and our global audit approach.
We had individual calls with each of the in-scope component audit teams, both during the year and upon conclusion of their work. During these calls, we discussed the significant accounting and audit issues identified by the component auditors, their reports, the findings of their procedures and other matters that could be of relevance for the consolidated financial statements.
The group engagement team visited local management and the component auditors of Boskalis and Vopak, given the significance of these components. Visits were carried out in a hybrid way, being a combination of virtual meetings and meeting physically at the components. For each of these components, the group audit team reviewed all reports regarding the audit approach and audit findings of the component auditors, held several meetings with and reviewed the selected working papers of the component auditors and assessed the sufficiency and appropriateness of the work performed by the component auditors.
The group audit team also attended (virtual) meetings with local management for Boskalis (The Netherlands), Vopak (The Netherlands), Atlas Professionals B.V. (The Netherlands), Broadview Holding B.V. (The Netherlands), De Drie Eiken B.V. (‘Van Wijnen’, The Netherlands), FD Mediagroep B.V. (The Netherlands), HR Top Holding B.V. (‘Top Employers Institute’, The Netherlands), Hero Senior Holdco GmbH (‘Pro Gamers Group’, Germany), GreenV B.V. (The Netherlands), and Safilo (Italy). The group audit team reviewed and discussed the reports regarding the audit approach and audit findings of all component auditors.
In total, in performing these procedures, we achieved the following coverage on the financial line items:
Audit coverage per financial statements line item1 | |
|---|---|
Revenue | 100% |
Total assets | 95% |
Profit before tax | 94% |
- The in scope percentages are the percentages of revenue, total assets and profit before tax covered by the component auditor’s reports on the investments of HAL Holding N.V., notwithstanding that the audits of the financial statements of those investments do not necessarily have all their subsidiaries in scope to support their full scope audit opinion to us.
None of the remaining components represented more than 4% of total group assets. For those remaining components, the group audit team performed, among other things, analytical procedures to corroborate the assessment that there were no significant risks of material misstatements within those components. In instances where the remaining component was a quoted entity, the group audit team also performed reconciliations to the audited financial statements.
By performing the procedures outlined above at the components, we have been able to obtain sufficient and appropriate audit evidence on the Group’s financial information, as a whole, to provide a basis for our opinion on the financial statements.
The Executive Board is responsible for the other information. The other information comprises all information in the Annual Report 2023 (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Report on other legal and regulatory requirements
European Single Electronic Format (ESEF)
HAL Trust has prepared the annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the annual report prepared in XHTML format, including the marked-up consolidated financial statements, as included in the reporting package by HAL Trust, complies in all material respects with the RTS on ESEF.
The Executive Board is responsible for preparing the annual report, including the financial statements in accordance with the RTS on ESEF, whereby the Executive Board combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF.
Our examination included amongst others:
-
Obtaining an understanding of the Trust’s financial reporting process, including the preparation of the reporting package.
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Identifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion, including:
-
obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in accordance with the technical specifications as included in the RTS on ESEF;
-
examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF.
-
The Executive Board is responsible for:
• the preparation and fair presentation of the financial statements in accordance with EU-IFRS; and for
• such internal control as the Executive Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Executive Board is responsible for assessing the Trust’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the Executive Board either intends to liquidate the Trust or to cease operations, or has no realistic alternative but to do so.
The Supervisory Board is responsible for supervising the procedures followed by the Executive Board in the preparation of the Trust’s financial statements.
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA’s will always detect a material misstatement when it exists. Misstatements may arise due to fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on the financial statements.
As part of an audit in accordance with ISA’s, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the intentional override of internal control.
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Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
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Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures of the Group and the Trust made by the Executive Board.
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Conclude on the appropriateness of the Executive Board’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Trust to cease to continue as a going concern.
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Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Considering our ultimate responsibility for the opinion on the consolidated financial statements, we are responsible for the direction, supervision and performance of the group audit. In this context, we have determined the nature and extent of the audit procedures for components of the Group to ensure that we performed enough work to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to be able to express an opinion on the consolidated financial statements as a whole. Determining factors are the geographic structure of the Group, the significance and/or risk profile of group entities or activities, the accounting processes and controls, and the industries in which the Group operates. On this basis, we selected group entities for which an audit or review of financial information or specific balances was considered necessary.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Supervisory Board, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is David Gibbons.
PricewaterhouseCoopers Ltd.
Chartered Professional Accountants
Hamilton, Bermuda, March 27, 2024
Five-Year Summary Consolidated Statement of Financial Position
In millions of euro | 20231 | 20221 | 20211 | 20201 | 20191 |
|---|---|---|---|---|---|
Non-current assets | |||||
Property, plant and equipment | 4,612.6 | 4,439.8 | 1,266.1 | 1,188.8 | 1,217.9 |
Right of use assets | 438.0 | 425.7 | 325.1 | 320.5 | 347.6 |
Investment properties | 85.3 | 76.5 | 68.0 | 42.0 | 34.0 |
Intangible assets | 3,005.3 | 3,273.9 | 1,926.4 | 850.9 | 852.1 |
Investments in associates and joint arrangements | 3,642.0 | 3,150.8 | 3,995.6 | 3,664.7 | 3,279.2 |
Derivatives and other financial assets | 703.7 | 86.8 | 316.6 | 167.6 | 598.8 |
Pension benefits | 63.4 | 55.3 | 58.5 | 41.2 | 40.5 |
Deferred tax assets | 71.0 | 42.7 | 40.8 | 21.0 | 24.0 |
Total non-current assets | 12,621.3 | 11,551.5 | 7,997.1 | 6,296.7 | 6,394.1 |
Current assets | |||||
Inventories | 864.7 | 875.1 | 733.0 | 519.6 | 428.5 |
Receivables | 1,122.7 | 1,081.9 | 698.5 | 566.1 | 560.6 |
Marketable securities and deposits | 2,125.4 | 3,360.9 | 4,160.0 | 175.8 | 222.6 |
Derivatives and other financial assets | 32.9 | 294.5 | 273.2 | 20.8 | 11.7 |
Other current assets | 654.8 | 626.1 | 178.5 | 157.2 | 122.3 |
Contract assets | 307.9 | 372.4 | 70.6 | 79.3 | - |
Cash and cash equivalents | 2,316.5 | 1,932.4 | 2,084.0 | 1,269.7 | 1,399.9 |
Assets held for sale | 467.4 | 236.1 | 32.0 | 5,281.4 | 4,991.1 |
Total current assets | 7,892.3 | 8,779.4 | 8,229.8 | 8,069.9 | 7,736.7 |
Total assets | 20,513.6 | 20,330.9 | 16,226.9 | 14,366.6 | 14,130.8 |
Equity attributable to owners of parent | 13,627.9 | 12,961.9 | 12,387.2 | 7,944.3 | 7,960.3 |
Non-controlling interest | 159.9 | 277.4 | 348.8 | 788.7 | 630.3 |
Non-current liabilities | |||||
Deferred tax liabilities | 375.0 | 419.1 | 287.5 | 161.2 | 181.6 |
Provisions | 201.2 | 207.1 | 89.4 | 109.9 | 67.7 |
Contract liabilities | 16.9 | 16.0 | 14.3 | 13.6 | 13.0 |
Lease liabilities | 323.0 | 321.2 | 240.1 | 238.7 | 277.5 |
Debt and other financial liabilities | 588.2 | 1,263.3 | 1,027.6 | 582.2 | 647.9 |
Total non-current liabilities | 1,504.3 | 2,226.7 | 1,658.9 | 1,105.6 | 1,187.7 |
Current liabilities | |||||
Provisions | 151.1 | 156.0 | 11.8 | 14.4 | 20.2 |
Contract liabilities | 877.3 | 659.4 | 234.9 | 141.2 | 53.5 |
Accrued expenses | 1,397.3 | 1,390.6 | 426.6 | 325.8 | 256.8 |
Income tax payable | 238.8 | 208.1 | 66.3 | 38.1 | 16.2 |
Accounts payable | 932.8 | 972.1 | 666.1 | 529.5 | 419.1 |
Lease liabilities | 115.6 | 105.4 | 79.9 | 72.1 | 66.4 |
Debt and other financial liabilities | 1,297.9 | 1,369.1 | 346.4 | 413.3 | 237.1 |
Liabilities related to assets held for sale | 210.7 | 4.2 | - | 2,993.6 | 3,283.2 |
Total current liabilities | 5,221.5 | 4,864.9 | 1,832.0 | 4,528.0 | 4,352.5 |
Total equity and liabilities | 20,513.6 | 20,330.9 | 16,226.9 | 14,366.6 | 14,130.8 |
Equity per share (in euro) | 150.84 | 146.31 | 142.87 | 93.12 | 95.45 |
Net asset value per share at market value of quoted companies (in euro) | 150.12 | 147.72 | 151.22 | 149.91 | 164.20 |
- Figures used are based on the pro forma consolidated financial statements
Five-Year Summary Consolidated Statement of Income
In millions of euro | 20231 | 20221 | 20211 | 20201 | 20191 |
|---|---|---|---|---|---|
Revenues | 9,854.4 | 7,625.9 | 5,008.4 | 3,387.4 | 2,965.4 |
Earnings from marketable securities and deposits | 138.5 | (119.7) | 80.0 | (28.9) | 5.5 |
Share of results of associates and joint ventures | 339.9 | 657.0 | 286.4 | 108.4 | 235.3 |
Income from other financial assets | 166.7 | (6.0) | 4.2 | 4.4 | 11.5 |
Income from real estate activities | (9.5) | 58.1 | 49.7 | 2.3 | (2.5) |
Other income | 25.6 | 108.8 | 3,511.4 | 86.4 | 39.0 |
Total Income | 10,515.6 | 8,324.1 | 8,940.1 | 3,560.0 | 3,254.2 |
Raw materials, consumables used and changes in inventories | 5,555.9 | 4,588.9 | 2,751.0 | 1,658.8 | 1,352.4 |
Employee expenses | 1,993.4 | 1,487.9 | 1,128.6 | 836.1 | 735.4 |
Depreciation and impairments property, plant and equipment and investment properties | 441.2 | 277.5 | 127.0 | 126.6 | 110.7 |
Depreciation & impairment Right of Use assets | 120.7 | 104.6 | 82.5 | 72.9 | 57.7 |
Amortization and impairments intangible assets | 408.3 | 414.0 | 71.1 | 95.0 | 58.2 |
Other operating expenses | 881.1 | 824.7 | 635.2 | 529.7 | 526.5 |
Total expenses | 9,400.6 | 7,697.6 | 4,795.4 | 3,319.1 | 2,840.9 |
Operating profit | 1,115.0 | 626.5 | 4,144.7 | 240.9 | 413.3 |
Financial income and (expense) | (85.3) | (20.7) | (27.3) | (47.0) | (32.6) |
Profit before income tax | 1,029.7 | 605.8 | 4,117.4 | 193.9 | 380.7 |
Income tax expense | (115.8) | (75.3) | (88.3) | (9.8) | (36.4) |
Net profit from continuing operations | 913.9 | 530.5 | 4,029.1 | 184.1 | 344.3 |
Net profit from discontinued operations | - | - | 399.9 | 642.9 | 460.8 |
Net profit before non-controlling interest | 913.9 | 530.5 | 4,429.0 | 827.0 | 805.1 |
Non-controlling interest | 87.1 | 116.9 | (158.2) | (203.7) | (139.3) |
Net profit attributable to owners of parent | 1,001.0 | 647.4 | 4,270.8 | 623.3 | 665.8 |
Earnings per Share (in euro) | 11.18 | 7.23 | 48.68 | 7.25 | 7.91 |
Dividend per Share (in euro) | 2.852 | 5.00 | 5.70 | 4.70 | 5.80 |
- Figures used are based on the pro forma consolidated financial statements
- Proposed
Company Financial Statements HAL Holding N.V.
Company Statement of Financial Position HAL Holding N.V. (in millions of euro)
As of December 31 | 2023 | 2022 |
|---|---|---|
Non-current assets | ||
Financial assets | 10,997.1 | 10,403.3 |
Property, plant and equipment | 0.6 | - |
Current assets | ||
Other current assets | 0.9 | 0.4 |
Marketable securities and bank deposits | 2,689.5 | 3,194.7 |
Total assets | 13,688.1 | 13,598.4 |
Equity | 13,675.6 | 13,010.1 |
Current liabilities | ||
Current debt | - | 576.0 |
Accrued expenses | 12.5 | 12.3 |
Total equity and liabilities | 13,688.1 | 13,598.4 |
Company Statement of Income HAL Holding N.V. (in millions of euro)
For the year ended December 31 | 2023 | 2022 |
|---|---|---|
Income from financial assets | 904.0 | 772.0 |
General and administrative expenses | (14.8) | (14.5) |
889.2 | 757.5 | |
Financial income/(expense) | 111.3 | (110.7) |
Net income | 1,000.5 | 646.8 |
Notes to the company financial statements HAL Holding N.V. (in millions of euro)
The company financial statements of HAL Holding N.V. have been prepared in accordance with book 2 of the Civil Code applicable for Curaçao, applying accounting principles generally accepted in the Netherlands as allowed by article 2:120 of the Civil Code applicable for Curaçao. For details concerning the accounting principles in respect of the statement of financial position and statement of income, reference is made to the consolidated financial statements of HAL Trust (which are identical to the consolidated financial statements of HAL Holding N.V.) except for investments in subsidiaries which are carried at net asset values.
Financial assets
Balance on January 1, 2023 | 10,403.3 |
Income | 904.0 |
Increase/(decrease) in loans, net | (187.9) |
Exchange differences, valuation differences and equity adjustments | (122.3) |
Balance on December 31, 2023 | 10,997.1 |
Financial assets include receivables on group companies for an amount of € 1,450.4 million (2022: € 1,500.4 million).
Equity
The movement for 2023 of Shareholders’ equity is included on pages 33 and 70.
On December 31, 2023 and 2022, 90,370,864 and 88,598,887 Shares respectively were outstanding, with a nominal value of € 0.02 each, and all were held by HAL Trust.
The Company may purchase HAL Trust Shares, when deemed appropriate, up to a maximum of 10% per year of the number of Shares outstanding at the beginning of the year.
A 2022 dividend of € 443.0 million (excluding dividend on treasury shares) or € 5.00 per Share was distributed on June 17, 2023 (2022: € 494.2 million or € 5.70 per Share), of which € 221.5 million in cash and € 221.5 million in stock. The conversion ratio of 1:50.0 resulted in 1,771,977 new Shares being issued.
The Company owned 27,019 HAL Trust Shares as of December 31, 2023. These shares may be used in the context of a share participation plan for management (not being members of the Executive Board).
Supervisory Directors
The 2023 fixed remuneration for the Supervisory Directors of HAL Holding N.V. was € 0.5 million in total (2022: € 0.4 million).
Distribution of Profits
The profit to be decided upon by the General Meeting of Shareholders of HAL Holding N.V. for 2023 is as follows:
In millions of euro | 2023 |
|---|---|
Net income according to the Statutory Statement of Income | 1,000.5 |
Available for distribution to Shareholders | 1,000.5 |
Proposed distribution | |
Addition to the available reserves in accordance with Article 30 | (742.9) |
Available to the General Meeting of Shareholders in accordance with Article 31 (1) | 257.6 |
After approval of the dividend proposal of € 2.85 per Share by the General Meeting of Shareholders of HAL Holding N.V., the dividend shall be distributed to HAL Trust for 90,370,864 Shares at € 2.85 per Share | 257.6 |
The above references to Articles refer to the Articles of Association of the Company.
The dividend shall be payable for an amount of € 2.85 per Share in cash.
HAL Trust Organization
A Trust, which is quite common in Anglo-American law, is a property managed in accordance with a trust deed by a Trustee on behalf of the beneficial owners.
The Trust has the following three components:
The Meeting of Shareholders of HAL Trust
Except for the powers of the Trust Committee described below, control of the Trust rests with the Meeting of Trust Shareholders.
Execution of the decisions of the Meeting of Trust Shareholders is the task of the Trustee. The Trustee therefore votes at the General Meeting of Shareholders of HAL Holding N.V. in accordance with the outcome of the vote taken at the Meeting of Shareholders of HAL Trust.
The Annual Meeting of Trust Shareholders takes place in Rotterdam. The members of the Board of Supervisory Directors and the Executive Board of HAL Holding N.V. shall be present at the meeting in order to explain policies pursued.
The Trustee
The function of Trustee is exercised by HAL Trustee Limited, Hamilton, Bermuda.
The Board consist of D.C. Meerburg, Chairman, H.E. Cooper, M.P.M. de Raad and H. van Everdingen, members.
The Trustee is the legal owner of the assets of the Trust, which consist of Shares in HAL Holding N.V., Curaçao.
The powers of the Trustee are limited to execution of the decisions of the Meeting of Trust Shareholders of HAL Trust and of the Trust Committee.
The Trustee votes at the General Meeting of Shareholders of HAL Holding N.V. in accordance with the instructions of the Meeting of Shareholders of HAL Trust.
The Trust Committee
The Trust Committee is HAL Trust Committee Limited, Hamilton, Bermuda.
The Board of HAL Trust Committee Limited consists of P.J. Kalff, Chairman, H.E. Cooper, M. van der Vorm and A.A. van 't Hof, members.
This Board is appointed by the Stichting HAL Trust Commissie, shareholder of HAL Trust Committee Limited. The Board of the Stichting is appointed by the shareholders of HAL Trust and consists of P.J. Kalff, M. van der Vorm and A.A. van 't Hof.
The Trust Committee is empowered to regroup the assets of the enterprise if, in special circumstances such as international political complications, it considers it necessary to do so in the interest of the shareholders and/or the enterprise. The objective of such regrouping is to replace HAL Holding N.V. with a company situated in another jurisdiction. To achieve this, HAL Holding N.V. may transfer its assets to that new company in exchange for a repurchase of shares. The Trust Committee also has the power to appoint another Trustee, if necessary. Finally, the Trust Committee has some duties of an administrative nature.
Description Corporate Governance HAL Holding N.V.
A Curaçao public company
HAL Holding N.V. is a
Share capital
HAL Holding N.V. has a share capital that is, as from March 28, 2024, divided in shares with a nominal value of € 135 each. All shares have the same rights. Each share carries the right to exercise one vote in the General Meeting of Shareholders. All shares are in registered form.
HAL Trust
All shares in the capital of HAL Holding N.V. are held by
HAL Trust is a trust under Bermuda law and is subject to a trust deed. The text whereof has most recently been approved for change on March 22, 2024. The function of Trustee is exercised by HAL Trustee Limited. In addition, the trust deed grants certain powers to HAL Trust Committee Limited. For further information on HAL Trustee Ltd. and HAL Trust Committee Limited, see page 174. The Trust Shares are listed and traded on Euronext in Amsterdam.
Meetings of Trust Shareholders
In accordance with the provisions of the trust deed each year a meeting of Trust Shareholders is held prior to the General Meeting of Shareholders of HAL Holding N.V.
The meeting of Trust Shareholders has, inter alia, the power to direct the Trustee as to the exercise by the Trustee of its voting rights in the General Meeting of Shareholders of HAL Holding N.V. This means that the Trust Shareholders have de facto control in the General Meeting of Shareholders of HAL Holding N.V.
Neither the articles of association of HAL Holding N.V. nor the trust deed contain any protective provisions which limit the control of the Trust Shareholders. All resolutions of the General Meeting of Shareholders of HAL Holding N.V. require a simple majority of the votes cast. The same holds for the decision-making process in the meeting of Trust Shareholders.
Rights of Trust Shareholders
Each Trust Shareholder has the right to attend the meetings of Trust Shareholders, either in person or by written proxy, to speak at such meetings and to exercise his voting rights. In addition, Trust Shareholders who together represent at least 10% of all outstanding Trust Shares are entitled to request the Trustee to convene a meeting of Trust Shareholders.
Powers General Meeting of Shareholders
In accordance with the articles of association of HAL Holding N.V. the General Meeting of Shareholders of HAL Holding N.V. and therefore indirectly the meeting of Trust Shareholders, has the following powers:
-
appointment and dismissal of the members of the Executive Board and the Supervisory Board;
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approval of the financial statements;
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granting discharge to the members of the Executive Board and the Supervisory Board;
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amendment of the articles of association, provided such amendment is proposed by the Executive Board and has been approved by the Supervisory Board;
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remuneration of supervisory directors;
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appointment of the external auditor;
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decisions about the distribution of profits after the taking of certain reserves by the Executive Board subject to the approval of the Supervisory Board;
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all other powers which the articles of association do not grant to another corporate body.
Executive Board
The Executive Board of HAL Holding N.V. is responsible for the management of the Company, which means, among other things, that it is responsible for achieving the company’s objectives, strategy and policy. The Executive Board is accountable to the Supervisory Board and to the General Meeting of Shareholders. In discharging its role, the Executive Board is guided by the interests of the Company and its business, taking into consideration the relevant interests of all those involved in the Company.
The Executive Board is responsible for complying with all relevant legislation and regulations, for managing the risks associated with the Company’s activities and for the financing of the Company.
The number of members of the Executive Board is determined by the Supervisory Board. As of April 1, 2024 the Executive Board will consist of two members. All members have been appointed by the General Meeting of Shareholders for an indefinite period of time. They can be dismissed by the General Meeting of Shareholders. In addition they can be suspended by the Supervisory Board.
With the approval of the Supervisory Board the Executive Board has adopted regulations which, inter alia, provide for additional rules in respect of the decision taking process within the Executive Board, the reporting to the Supervisory Board, the treatment of possible conflicts of interest and the fulfilment by members of the Executive Board of additional offices.
The Supervisory Board determines the remuneration of each member of the Executive Board. The remuneration consists of a fixed part and a variable part, the size whereof is determined by the Supervisory Board who also decides on additional benefits. The members of the Executive Board do not participate in any option scheme and do not receive any personal loans or guarantees from the Company.
Supervisory Board
The Supervisory Board is responsible for the supervision of the policies of the Executive Board and the general affairs of the Company and its business. It also assists the Executive Board by providing advice. In discharging its role the Supervisory Board is guided by the interests of the Company and its business and shall take into account the relevant interests of all those involved in the Company. The Supervisory Board is responsible for the quality of its own performance.
The Supervisory Board consists of at least five members. The Supervisory Board can determine that the Board consists of more members. At present the Board has five members which have been appointed by the General Meeting of Shareholders for an indefinite period of time. Each year at least one supervisory director resigns in accordance with a retirement schedule set by the Board. A supervisory director resigning in accordance with the retirement schedule is eligible for re-appointment.
The Supervisory Board has chosen a chairman and a vice chairman from among its members.
All tasks and duties of the Supervisory Board are exercised on a collegiate and full-board basis. The Supervisory Board has adopted regulations which, inter alia, provide for rules in respect of the providing of information by the Executive Board, the matters that in any case must be addressed each year, the manner of meeting and decision taking by the Supervisory Board, the treatment of potential conflicts of interest, the individual investments by supervisory directors and the criteria which may possibly jeopardize the independent exercise of the position of supervisory director.
The Supervisory Board has prepared a profile for its composition. Each member is capable of assessing the broad outline of the overall policy. Together the supervisory directors have sufficient expertise to carry out the tasks of the Supervisory Board taken as a whole.
The General Meeting of Shareholders determines the remuneration of the members of the Supervisory Board.
Supply of information/logistics General Meeting of Shareholders
The Executive Board and the Supervisory Board provide the General Meeting of Shareholders, and the meeting of Trust Shareholders, with all relevant information that they require for the exercise of their powers, unless this would be contrary to an overriding interest of the Company.
The Executive Board and the Supervisory Board will provide all shareholders and other parties in the financial markets who find themselves in an equal position with equal and simultaneous information about matters that may influence the price of the Trust Shares.
Any possible contacts between the Executive Board on the one hand and the press and financial analysts on the other will be carefully handled and structured, and the Company shall not engage in any acts that compromise the independence of analysts in relation to the Company and vice versa.
Financial reporting
The Executive Board is responsible for the quality and completeness of publicly disclosed financial reports. The Supervisory Board sees to it that the Executive Board fulfils this responsibility.
The consolidated financial statements of HAL Holding N.V. are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. In addition HAL Holding N.V. publishes interim reports in accordance with the relevant provisions of the law and the listing requirements of Euronext in Amsterdam. All financial information is also published on the web site www.halholding.com. The financial statements are signed by the members of the Executive Board and the Supervisory Board. The Supervisory Board discusses the financial statements with the external auditor prior to signing of the statements by the supervisory directors.
Reference is made to the Report of the Supervisory Board (page 7) and the report of the Executive Board (page 10). These reports explain the implications and the measures that have been taken as a consequence of the application of IFRS 10 which requires the Company to consolidate the financial statements of Koninklijke Vopak N.V. (‘Vopak’) and Safilo Group S.p.A. (‘Safilo’). As explained in these reports, the Company has entered into Memoranda of Understanding with Vopak and Safilo with respect to confidentiality, the process of exchanging information and attendance rights to the Audit Committee meetings of Vopak and the Control and Risk Committee meetings of Safilo of an independent financial expert appointed by the Company. This independent financial expert reports to the Company if there are any matters which should be brought to the attention of the Company prior to the signing of the financial statements.
The assessment that the Company’s financial statements do not contain material errors attributable to the financial statements of Vopak and/or Safilo is based on the external audit of these companies and the involvement of the independent financial expert referred to above. The Executive Board and the Supervisory Board felt that it was necessary to take the measures outlined above, in order to provide additional comfort to the Executive Board when discharging itself of its responsibility for financial statements of the Company and to the Supervisory Board when discharging itself of its responsibilities to supervise the Executive Board and to review and sign the annual financial statements.
The General Meeting of Shareholders appoints the external auditor. Following receipt by the Board of Supervisory Directors of advice from the Executive Board, the Supervisory Board prepares a nomination for the appointment of the external auditor. HAL Holding N.V. has no internal audit function.
Non-assurance services by the external auditor to HAL and entities (de facto) controlled by HAL are only allowed to a limited extent. These services need to be allowed under the independence rules of the audit profession and require approval of the Executive Board of HAL. Services for which the remuneration is in excess of € 50,000 also require the approval of the Supervisory Board.
The external auditor is represented at the meetings of Trust Shareholders.
Information in respect of members of the Supervisory Board
M. van der Vorm (65) has Dutch nationality. Mr. van der Vorm was appointed member of the Supervisory Board of HAL Holding N.V. in 2014. In 2016 he was appointed Chairman. His current term is from 2020-2025. Mr. van der Vorm was Chairman of the Executive Board of HAL Holding N.V. from 1993-2014.
L.J. Hijmans van den Bergh (60) has Dutch nationality. In 2013 he was appointed member of the Supervisory Board of HAL Holding N.V. In 2016 he was appointed vice-Chairman. His current term is from 2019-2024. Mr. Hijmans van den Bergh is a former partner of De Brauw Blackstone Westbroek N.V. and a former member of the Management Board of Royal Ahold N.V. He is member of the Supervisory Boards of Heineken N.V. and ING Groep N.V. as well as chairman of the boards of the Utrecht University Fund and Vereniging Aegon. It will be proposed to re-elect Mr. Hijmans van den Bergh.
G.J. Wijers (73) has Dutch nationality. In 2014 he was appointed member of the Supervisory Board of HAL Holding N.V. His current term is from 2022-2027. He is a former Minister of Economic Affairs, former Senior Partner at the Boston Consulting Group and former CEO of Akzo Nobel N.V.
C.O. van der Vorm (53) has Dutch nationality. In 2015 he was appointed member of the Supervisory Board of HAL Holding N.V. His current term is from 2021-2026. He is based in the United Kingdom and serves as a managing director of Southberg Holdings UK Ltd., which is active in agricultural operations in South America and Eastern Europe.
M.E. Harris (57) has British and Dutch nationality. In 2020 she was appointed member of the Supervisory Board of HAL Holding N.V. Her current term is from 2023-2028. Mrs. Harris is a former partner of McKinsey & Co. and is currently non-executive director of Reckitt plc. and Coca-Cola Europacific Partners plc.
HAL Trust
Notice to Trust ShareholdersNotice to Trust ShareholdersA general meeting of Trust Shareholders of HAL Trust, will be held on Thursday, May 16, 2024, at 11:00 a.m.in the Rotterdamse Schouwburg, Schouwburgplein 25, Rotterdam, the Netherlands. The agenda of the meeting is as follows:
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Opening
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Instructions for the Trustee to vote at the General Meeting of Shareholders of HAL Holding N.V., to be held in Rotterdam on Thursday, May 23, 2024, with regard to the following items on the agenda:
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Report of the Executive Board of HAL Holding N.V.
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Report of the Supervisory Board of HAL Holding N.V.
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Approval of the 2023 financial statements of HAL Holding N.V.
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Dividend payment against the profits of 2023 in the amount of € 2.85 payable in cash per Share as published in the Annual Report 2023 and to authorize the Executive Board to effectuate the cash payments
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Election Supervisory Director. It is proposed to re-elect Mr. L.J. Hijmans van den Bergh
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Discharge of the members of the Executive Board in respect of their duties of management during the financial year 2023
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Discharge of the members of the Supervisory Board in respect of their duties of supervision during the financial year 2023
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Approval of the 2023 financial statements of HAL Trust
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Proposal to distribute a dividend in cash against the profits of 2023 of € 2.85 per Trust Share. The dividend will be made payable, subject to statutory dividend tax being withheld, on May 24, 2024
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Report of the Trust Committee
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Other business
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Closing
HAL Trust Shareholders who want to exercise their voting rights without attending the meeting must use an e-voting system (www.abnamro.com/shareholder) prior to the meeting (see below). HAL Trust Shareholders whose holding of Trust Shares is registered in the HAL Trust shareholders’ register and who want to exercise their voting rights are required to exercise these by a written proxy and voting instruction (see below).
HAL Trust Shareholders who wish to attend and vote at the meeting or be represented via electronic proxy without attending the meeting must notify this not later than May 8, 2024, via their intermediary where their Trust Shares are administered or directly via www.abnamro.com/shareholder. HAL Trust Shareholders who wish to attend the meeting will receive a written confirmation of their entitlement to HAL Trust Shares, which confirmation will at the same time serve as a permit providing admission to the meeting. If you intend to instruct your intermediaries for any of the above, please be aware that their deadlines could be a number of days before those mentioned above. Please check with the individual intermediaries as to their cut-off dates. Furthermore, please be aware that some intermediaries do not accommodate electronic proxies. In this case you may contact ABN AMRO Bank N.V (+31 20 6286070 or [email protected]). HAL Trust Shareholders whose holding of shares is registered in the shareholders’ register and who wish to be represented at the meeting should contact HAL Holding N.V. at Weena 696, 3012 CN Rotterdam ([email protected]) and provide a written proxy and voting instructions prior to May 8, 2024.
Attention is drawn to the fact that HAL Trust Shareholders who will not be able to attend the meeting but wish to be represented at the meeting must provide a proxy. For the sake of good order it is pointed out that proxyholders will only be admitted to the meeting against surrender of the confirmation of entitlement referred to above together with a duly signed proxy statement.
This notice is enclosed with the 2023 Annual Report which is presented to you in accordance with Section 13.4 of the trust deed of HAL Trust.
HAL Trustee Ltd.
April 2, 2024
The time-table for the dividend is as follows:
2024 | |