Royal BAM N : 2022 Tax Report

2022 Tax Report

"	Royal BAM Group nv

Introduction

Business and

Financial year

Tax policy

Risk management

Relationships

Tax features

Effective tax

Deferred taxes

Total tax

Tax losses available

Business

organisation

2022

and governance

with tax

and incentives

rate

contributions

for carry-forward

structure

authorities

Contents

1.	Introduction	5
2.	Business and organisation	6
3.	Financial year 2022	7
4.	Tax policy	8
5.	Risk management and governance	9
6.	Relationships with tax authorities	10
7.	Tax features and incentives	11
8.	Effective tax rate	13
9.	Deferred taxes	15
10.	Total tax contributions	16
11.	Tax losses avaible for carry-forward	17
12.	Business structure	18

Royal BAM Group nv

Tax department Runnenburg 9 3981 AZ Bunnik The Netherlands

PO Box 20

3980 CA Bunnik

The Netherlands

1. www.bam.com

1. [e-mail]

Tax report 2022

3

Royal BAM Group nv

Introduction

Business and

Financial year

Tax policy

Risk management

Relationships

Tax features

Effective tax

Deferred taxes

Total tax

Tax losses available

Business

organisation

2022

and governance

with tax

and incentives

rate

contributions

for carry-forward

structure

authorities

Introduction

We are pleased to introduce the first BAM Tax report. This report demonstrates our commitment to be transparent about our approach to tax.

Royal BAM Group ('BAM') aims to provide clients with best-in-industry capabilities, contribute to the global movement towards sustainability, provide employees with a safe and rewarding work environment, and generate attractive returns for shareholders.

In 2022, we further developed the sustainability component of our strategy, which forms an integral part of our corporate strategy to de-risk BAM's portfolio and move further towards product leadership and life-cycle solutions. This will enable us to reduce our carbon, resource and waste footprints, while offering our clients scalable, sustainable solutions.

We believe that tax forms an integral part of such sustainability development since our taxes that are paid and collected make a valuable contribution, both economically and socially, to the communities in which we operate. Besides our monetary contribution, we also believe that being open and transparent about BAM's approach to tax and our actual tax contribution forms an integral part of our social responsibility. To turn our words into action, we are one of the companies that have endorsed the Tax Governance Code developed by VNO-NCW (a Dutch employers' organisation), which aims for greater transparency on the tax position of Dutch listed companies. Subsequently, we have decided to publish an annual Tax Report, starting with this 2022 edition.

In this 2022 Tax Report, we intend to give insights into the tax principles which are applied, and outline how these are embedded and safeguarded within the organisation. Furthermore, we provide insights into the taxes paid and collected, the tax numbers reported in the annual report, and the tax incentives used.

We trust this new report is an important step towards more transparency as will continue to improve the reporting to our stakeholders.

Frans den Houter,

CFO

Walter Zuidgeest,

Head of Tax

Bunnik, the Netherlands

October 2023

Tax report 2022

5

Royal BAM Group nv

Introduction

Business and

Financial year

Tax policy

Risk management

Relationships

Tax features

Effective tax

Deferred taxes

Total tax

Tax losses available

Business

organisation

2022

and governance

with tax

and incentives

rate

contributions

for carry-forward

structure

authorities

2. Business and organisation

Royal BAM Group nv designs, builds and maintains high-quality, sustainable buildings, homes and infrastructure for public- and private-sector clients. BAM is one of a few large companies to have set science-based targets to reduce the CO2 intensity of its operations by 50 per cent in 2030 compared to 2015, and is committed to maintaining its place on the Climate Change 'A' List, published by CDP each year. This commitment is set out in BAM's strategy for 2021-2023, called 'Building a sustainable tomorrow', which also aims to provide employees with safe and rewarding work, while generating attractive returns for shareholders.

Royal BAM Group nv is listed on the Amsterdam Euronext exchange.

With annual revenues of approximately €6.5 billion, the Group supports clients through two main divisions: one dedicated to the Netherlands, and the other to the United Kingdom and Ireland. This structure has been put in place to enhance operational excellence, knowledge-sharing and the development of sustainable and life-cycle solutions. The two divisions are supported by a focused and streamlined corporate centre.

In division Netherlands and division United Kingdom and Ireland, BAM leverages its scale and strong position to lead with replicable and 'best-in-industry' construction processes, delivered by highly skilled employees, to create valuable, sustainable solutions for its clients.

Through its joint venture Invesis, BAM is also committed to public- private civil and social infrastructure projects. BAM International previously delivered construction and civil engineering projects outside Western Europe. Following its wind-down, all these projects have now been completed.

BAM employs approximately 13,500 people. Division Netherlands employs approximately 6,700 people; division United Kingdom and Ireland 6,700 people; and Belgium 100 people.

BAM carries out non-residential construction activities in the Netherlands, the United Kingdom and Ireland. On a modest scale, BAM is also active in non-residential construction in Denmark and Belgium. These activities are managed from the Netherlands. In addition, BAM delivers residential construction projects primarily in the Netherlands, Ireland and Belgium. Housing for families, students and the elderly is developed and built mainly in the Netherlands, where development and construction are provided as a fully integrated solution to clients. Non-residential property development activities are carried out in the Netherlands, the United Kingdom and Ireland, and on a limited scale in Belgium. BAM is also active in facilities management. BAM's civil engineering activities cover the markets in the Netherlands, the United Kingdom and Ireland, and Denmark (the Fehmarnbelt Tunnel).

Tax report 2022

6

Royal BAM Group nv

Introduction

Business and

Financial year

Tax policy

Risk management

Relationships

Tax features

Effective tax

Deferred taxes

Total tax

Tax losses available

Business

organisation

2022

and governance

with tax

and incentives

rate

contributions

for carry-forward

structure

authorities

3. Financial year 2022

3.1 Significant events update

During 2022, the following significant events took place:

• On 3 February 2022, BAM sold BAM Galère (including its subsidiary BAM Lux and BAM Galère's plant and equipment, managed by BAM Mat) to the Belgian construction company Thomas & Piron Group. The company was active in Wallonia, Brussels and - via its subsidiary BAM Lux - in the Grand Duchy of Luxembourg, had annual revenues of approximately
  €200 million, and has 650 employees delivering construction and civil engineering projects.
• On 5 May 2022, BAM sold its Belgian business BAM Contractors nv to the Belgian construction company Stadsbader Group. BAM Contractors employed approximately 400 people and had annual revenues of approximately €190 million.
• On 18 May 2022, BAM was one of more than 40 major Dutch multinationals to embrace the new Tax Governance Code, which was developed by the VNO-NCW employers' organisation. The code sets out a clear and transparent system that guarantees supervision of tax policies and accountability.
• On 16 September 2022, BAM sold its German business Wayss & Freytag Ingenieurbau to Zech Building SE. The transaction was first announced on 21 June 2022. Wayss & Freytag Ingenieurbau employed over 1,000 employees, and had annual revenues of over €500 million. The divestment resulted in a book profit of approximately €52 million.
• On 1 December 2022, BAM renewed its committed revolving credit facility (RCF) with a tenor until November 2026, linked to its sustainability targets. The new facility of €330 million has a tenor of four years with two one-year extension options, and will be used for general corporate purposes.
  The facility is a refinancing of the existing and currently undrawn committed revolving credit facility, which was due to expire in March 2024.

• On 14 December 2022, BAM paid the remaining VAT and salary tax, which had been deferred using arrangements granted by the Dutch tax authorities in response to Covid-19 in 2020. The amount of €115 million, which had been due for payment in monthly instalments until 2027, has been paid in full.

3.2 Financial performance update

BAM met its financial outlook for 2022, delivering adjusted EBITDA margin of 4.5 per cent excluding the positive result on the Wayss & Freytag Ingenieurbau transaction. The capital ratio further improved to 21.2 per cent. BAM confirmed its earlier announced expectation to pay a dividend over the year 2022 and proposed €0.15 per share. BAM is in good shape to benefit from its strong market positions and structural growth opportunities. Despite the headwinds created by the uncertain macro-economic and geopolitical situation, the Group remains on track with the execution of its strategy and is aiming to deliver a performance towards the 2023 strategic targets.

• Revenue in Netherlands, United Kingdom and Ireland increased by 2 per cent; total revenue declined by 10 per cent to €6.6 billion due to divestments in Belgium and Germany;
• Adjusted EBITDA of €350 million (adjusted EBITDA margin of 5.3 per cent); adjusted EBITDA margin excluding €52 million book profit on Wayss & Freytag was 4.5 per cent;
• Good contribution Dutch residential and further recovery in Dutch civil engineering; in second half-year increased impact of inflation, supply chain issues and project delays on Group result;
• Net result of €180 million (2021: €18 million), reflecting earnings
  per share of €0.66 (2021: €0.07);
• Liquidity position strong at €0.8 billion, after full repayment of Covid-19 deferred VAT and salary tax payments and effect of divestments; revolving credit facility extended to 2026, now also linked to sustainability targets;

• Capital ratio further improved to 21.2 per cent (year-end 2021: 14.5 per cent);
• Solid order book of €10.0 billion (2021: €13.2 billion), reduced mainly due to divestments (€2.1 billion), UK government review of regional roads development programme (€0.6 billion) and negative impact of exchange rate (€0.3 billion).

(x €1,000)
	2022		2021
			Adj.				Adj.
	Revenue	EBITDA	Revenue	EBITDA
Division NL	2,917		172.5		2,932			139.8
Division UK&I	3,134		81.6		2,993			89.2
Germany, Belgium
and International	569		77.8		1,394			33.1
Invesis	-		23.5					13.7
Other including
eliminations	(2)	(5.2)	(4)		2.6
	6,618		350.2		7,315			278.4
Adjusted items			(5.2)				(6.5)
Depreciation and
amortisation			(116.6)				(145.4)
Impairments			(15.0)				(48.5)
Finance result			2.3					(12.2)
Result before tax			215.7					65.8
Income tax expense			(37.9)				(48.8)
Non-controlling
interest			1.9					1.1
Net result
attributable to
shareholders			179.6					18.1

Tax report 2022

7

Royal BAM Group nv

Introduction

Business and

Financial year

Tax policy

Risk management

Relationships

Tax features

Effective tax

Deferred taxes

Total tax

Tax losses available

Business

organisation

2022

and governance

with tax

and incentives

rate

contributions

for carry-forward

structure

authorities

4. Tax policy

At BAM our corporate purpose is to provide clients with best-in- industry capabilities, contribute to the global movement toward

Approach to tax

Tax transparency and reporting

sustainability, provide employees a safe and rewarding work environment and generate attractive returns for shareholders. Recognising the role tax plays in this regard, BAM has adopted tax principles that balance the interest of the various stakeholders.

The BAM Code of Conduct and BAM Values (collaborative, inclusive, ownership, reliable and sustainable) are a common foundation for how we work, set the standard for our behavior and provide a compass for decision making. Derived from and in line with these values and code of conduct, BAM has adopted a Tax Policy. This tax policy is intended to set forth BAM's tax strategy, a commitment to the application of good tax practices and the underlying tax principles.

The BAM tax policy has been approved by the Executive Committee and the Audit Committee and is published on our website.

Scope

The tax policy applies to all companies of the group, as well as to all investees over which BAM has effective control. When BAM has no effective control, BAM will promote the alignment of their own tax policy with that of BAM. The tax policy applies to all taxes that BAM encounters in the course of its business. BAM's tax department supports awareness for and compliance with the tax policy.

Tax is an important subject for BAM and its stakeholders. Tax payments are not just a cost factor only, but also a contribution to society and seen as a means for social economic cohesion, sustainable growth and long-term prosperity. Therefore, BAM strives to come to a responsible approach to tax as an integral part of its corporate social responsibility agenda. BAM will seek to align the long-term interests of all our stakeholders, including customers, employees, business partners, investors, and wider society.

BAM has adopted the VNO NCW Tax Governance Code. The following BAM tax principles guide our decisions on tax matters:

Accountability and governance

Tax is a core part of corporate social responsibility and governance and is overseen by the Board. We have a tax control framework that enables us to identify and assess tax risks, define our tax risk appetite and monitor and report tax controls.

Tax compliance

We are committed to comply with the letter, the intent and the spirit of the tax legislation and transfer pricing rules of the countries in which we operate and to pay the right amount of tax at the right time.

We regularly provide information to our stakeholders, including investors, policy makers, employees and the general public, about our approach to tax and taxes paid.

Relationships with tax authorities

We seek, wherever possible, to develop cooperative relationships with tax authorities based on mutual respect, transparency and trust.

Business structure

We will only use business structures that are driven by commercial considerations, are aligned with business activity and have genuine substance.

Tax report 2022

8

Royal BAM Group nv

Introduction

Business and

Financial year

Tax policy

Risk management

Relationships

Tax features

Effective tax

Deferred taxes

Total tax

Tax losses available

Business

organisation

2022

and governance

with tax

and incentives

rate

contributions

for carry-forward

structure

authorities

5. Risk management and governance

5.1 Risk management

Exposure to risk is inevitable in pursuing our strategy. Controlled risks can lead to new opportunities, resulting in value creation. Our strategy has a clear focus on continued de-risking and accelerating opportunities for future growth. This strategy has been translated into BAM's risk management framework, and enables management to identify, evaluate and address risks.

Part of BAM's risk management framework is our effective tax control framework, which sets out the activities tools, techniques and organization arrangements to ensure all tax risks are identified, assessed, understood and that appropriate responses are in place to mitigate the impact of all risks. Tax risks are the risks that the company may be paying or accounting for an incorrect amount of tax (including both income and indirect taxes), or that the tax positions that the company adopts are out of step with the tax risk appetite that the directors have authorised or believe is prudent. Tax risks may lead to a negative impact on the goals of the organisation, or to financial - or reputational - damage.

In organisations as ours, tax is impacting a lot of processes in all parts of the organisation. As part of our tax control framework we have described the dedicated tax processes, such as the preparation of tax returns, step by step. By doing this we gain insight in where material risks are present in our processes. Where required we have implemented additional or tighter controls to manage these risks. Next to dedicated tax processes, tax can be relevant in business processes, such as tendering, HR, contract management, legal processes, etc. The relevant department also has a risk control framework in place, in which we ensure that the relevant tax step is included and controls are in place.

The tax control framework sets out the end-to-end processes for identifying, controlling, monitoring, reporting and escalation of tax risks. On a quarterly basis, tax controls in the scope of our tax control framework are subject to effectiveness testing and evaluation. On a yearly basis, risk and control self-assessments are performed to assess the design and effectiveness of specific tax controls.

The main tax risks identified are registered in our tax risk matrix, where we assess the likelihood and impact of the potential risk. In the Netherlands this risk matrix is shared with the Dutch tax authorities.

5.2 Governance

Despite international developments tax law remains a very country specific topic. Therefor we have tax functions at different levels and locations in the organisation. At the level of the divisions, we have local tax functions providing tax expertise for specific types of taxations. The local tax functions are responsible for the tax matters of local companies and activities. The corporate centre tax function at the level of the head office oversees, aligns and supports these local tax functions. Where specific tax expertise is not available in our own organisation we consult external tax advisors.

The BAM Tax Policy is intended to serve as a guidance to the application of good tax practices and the underlying tax principles. Everyone who is contributing to the tax function adheres to the BAM Tax Policy.

The Executive Committee and the Audit Committee of the Supervisory Board have approved the BAM Tax Policy. Implementation and operation of the BAM Tax Policy, as well as reports on our tax position and tax risks and - developments,

are reviewed by and discussed with the Audit Committee on a regular basis, no less than annually.

The corporate centre tax function regularly reports to the CFO and the Executive Committee on day-to-day operations, the status and effectiveness of the function and on tax developments.

Tax report 2022

9

Royal BAM Group nv

Introduction

Business and

Financial year

Tax policy

Risk management

Relationships

Tax features

Effective tax

Deferred taxes

Total tax

Tax losses available

Business

with tax

organisation

2022

and governance

authorities

and incentives

rate

contributions

for carry-forward

structure

6. Relationships with tax authorities

We seek to develop and maintain open, constructive and mutually respectful relations with tax authorities based on transparency and trust. We only seek rulings from tax authorities to confirm the applicable tax treatment based on the full disclosure of the facts. We support the OECD initiatives to promote tax transparency and the reform of international tax systems in order to arrive at fair tax systems.

In the Netherlands, we have concluded what is referred to as a covenant horizontal monitoring agreement ' with the Dutch tax authorities. During quarterly update meetings, we inform tax inspectors of business developments and potentially relevant tax topics. We also strive to update the tax inspectors on BAM's approach to tax. Finally, we proactively share our tax risk control matrix, which includes identified risks, potential exposure and mitigation measures. Furthermore, every year several risks are subject to a thorough and detailed internal review, whose outcome is shared and discussed with the tax authorities.

In the United Kingdom, we have a dedicated HMRC Customer Compliance Manager. During yearly update meetings, we inform tax inspectors of business developments and potentially relevant tax topics. We also strive to update the tax inspectors on BAM's approach to tax. Finally, we proactively share our tax risk control matrix, which includes identified risks, potential exposure and mitigation measures. Every three years, we are subject to re-assessment of our tax processes and the subsequent risk profile, by HMRC. Currently our risk profile is low, which means that HMRC fully trusts and relies on our tax processes.

We strive to implement similar engagements in other countries, where possible.

Tax report 2022 10 Royal BAM Group nv