Background
COMPLIANCE

Report of the Supervisory Board

The year under review 2016/2017 has been a year in which we have taken a big step forward in the development of HZPC Holding. The season began with a certain level of market insecurity due to a shortage of produced seed potatoes. After the first quarter it did not appear that the volume and turnover could be realised. HZPC Holding has, however, successfully managed these uncertainties well and has sold a record quantity of seed potatoes in various different countries, which resulted in an especially satisfying result being achieved.

Meetings

The Supervisory Board met five times in 2016/2017. It should be noted that a meeting is usually held in early July. In 2016 the meeting was, however, held on June 30, meaning it was formally moved from reporting year 2016/2017 to 2015/2016.

The meetings took place either fully or partially with the Executive Board. The chairman of the Supervisory Board and the CEO prepared the meetings. The agenda items for the various meetings are placed on the agenda on the initiative of the Supervisory Board or on the initiative of the Executive Board. The Supervisory Board is confident that all members made adequate time available to give sufficient attention to HZPC Holding. A member of the Supervisory Board was absent on three occasions due to external circumstances. This did not delay the progress of the discussions and decision making.

Supervisory Board activities

The Supervisory Board is in charge of supervising and advising the Executive Board in determining and achieving the company’s strategy, policies and objectives.

In HZPC Holding, a two-tier corporate structure under Dutch law, the Supervisory Board is a separate body operating fully independently of the Executive Board. Members of the Supervisory Board are appointed and reappointed by the Shareholders; that is, by the ‘Vereniging HZPC’.

In October of the 2016/2017 year, Mr. B. Visser resigned. The Supervisory Board is very grateful to Mr Visser for his great contribution to the board as a member and as chairman. The board proposed a potential successor to the shareholders in 2016: Mr. M. Kester. In May 2017, Mr. A. Oosterhof resigned after the expiration of his regular term.

The board thanked Mr. A. Oosterhof for his many years of constructive contribution. The board proposed Mr. C.J. Biemond as a successor to the shareholder. The shareholder approved this nomination in May 2017.

In the past year, the board, together with the Executive Board, decided to take the development of seed potatoes a different direction. This means that a development direction and an investment programme were discussed, which will be further developed. In addition, the board approved various investments, including the purchase of land around the R&D facility in Metslawier. The board has evaluated the investment in the joint venture MHZPC and approved a recapitalisation of the joint venture at the request of the Executive Board. Following the acquisition of KWP with its foreign activities, the board approved the establishment of Stet Russia LLC and the new governance structure in Russia.

Financial results

Turnover of 318.2 million euros was achieved in 2016/2017, a 9.4% increase on the year before. The volume of sales of seed potatoes and potatoes grown under license has increased by 15%. Exchange rate fluctuations had little impact on the result.

HZPC Holding’s strategy is focused on allowing the gross margin to rise to 50 million euros or more around 2018. The Supervisory Board will see that the strategy is implemented conclusively and the results of the company develop in line with this strategy. The Supervisory Board is fully aware that HZPC works with a natural product and that results are heavily influenced by the demand and availability in that year. Therefore the strategic results must not be judged over one year and the trend over several years must be used. The results of this year under review indicate that the Executive Board has already more than exceeded the goals for 2018.

No major changes have taken place in the balance sheet this year, except for the fact that the acquisition of the cultivation lands around the R&D facility increased the fixed asset by a significant amount. The Supervisory Board proposed paying out a dividend of 5.5 million euros to the shareholders on the recommendation of the Executive Board. This means 7 euros for each share certificate. This is consistent with the company’s aim to provide a stable dividend.

Governance, risk management, audit and internal control systems

During the financial year the Supervisory Board has been adequately informed regarding the company’s governance, risk management, audit and internal control systems. The processes which the Executive Board has initiated to manage risks were discussed with the Supervisory Board. The Supervisory Board established that the risk management and control framework have been strengthened and that reporting has improved.

One of the members of the Supervisory Board had discussions with KPMG, HZPC’s external group auditor. This year, the Supervisory Board concluded a contract for 5 years with KPMG Accountants. KPMG Accountants reported to the Supervisory Board on the agreed scope of the audit and the outcome. HZPC Holding’s financial statements, the report and management letter of the external auditor were discussed with the auditor in the presence of the CEO and CFO. The accountant audited the financial statement for 2016/2017 and issued an approving audit report concerning it.

A word of thanks

The Supervisory Board wishes to express its thanks to all HZPC Holding employees for their commitment during the year 2016/2017 and their contribution to the realised result. The board realises that policy decisions are important but that the results of a company primarily depend on the implementation of these choices by the staff of this company.


On behalf of the Supervisory Board,

 

Meerten Ubbens, Chairman