01 Report of the board

Our resilience and agility were put to the test once again this year. Licensed crops in Asia and America took off, while harvests in north-western Europe were disappointing for several reasons. It was a year of peaks and troughs. Our percentage sold as seed potatoes this year was much higher than in previous years and that translated into a good payout price for our growers.

Across the board, we see a new balance emerging. Our strategy of focusing on different segments and regions works to our advantage. Where we lose out in yield and acreage in Europe, we can make huge strides in other parts of the world. Indeed, there is still a world to be won, considering that we now cover only 4% of the world's potato acreage with our varieties.

In 2023-2024, we did not manage to grow. We had not anticipated this. No one had predicted such a challenging growing season and it reminded us, once again, just how unruly and unpredictable seed potato growing can be. It also underscored the importance of resilience and agility. For us, but also for our employees, growers, customers and partners. We have demonstrated that again this year.

We want to stress that global growth does not come at the expense of north-western Europe in general and the Netherlands in particular. Nothing could be further from the truth. Thanks to growth elsewhere in the world, we can invest in research and accelerate the development of new varieties. Over the next 10 years, the market will see the emergence of varieties from HZPC and STET whose impact on our growers, customers and the environment will be unprecedented. And then there’s our contribution towards worldwide food security. This may require a little patience, but will be well worth the wait

We are on the eve of a transformation within the seed potato sector. This stems partly from the need to become more sustainable, but is mainly driven by our own conviction that things can and should be done differently. That is why we are working with Aurora (our business transformation programme) to strengthen and improve our own internal organisation. We are focussing on acceleration within our breeding programme; making the case for new technologies. Paving the way for others and asking growers, customers, partners and employees to join in. Together, we have a exceptionally bright future ahead of us.

With this annual report, the CEO of Royal HZPC Group B.V., Gerard Backx is not only concluding the 2023-2024 financial year, but also his career at Royal HZPC Group B.V. On 1 September 2024, he stepped down as CEO and Hans Huistra succeeded him. A well-considered choice on his part, but after 23 years, it signifies considerable change. Gerard has seen Royal HZPC Group B.V. grow from a Dutch seed potato company to a global market leader. He found it fantastic to witness that. He is proud of how we realized that development with our employees, growers, partners and customers. He wishes Hans much success, but above all a lot of fun in leading this wonderful company. Gerard looks back on the past 23 years with satisfaction. He thanks everyone who has been part of that. We are grateful for the great contribution Gerard has made to the development of HZPC with a lot of passion, effort, knowledge and commitment to growers, breeders and colleagues.

The Association HZPC owns 100% of the shares in the company, making it the sole shareholder of Royal HZPC Group. The Association HZPC has issued all the shares in the form of certificates to natural persons and legal entities that comply with specific requirements. On behalf of its members, the Board of Association HZPC carries out the duties of shareholder at the General Meeting of Shareholders of Royal HZPC Group. All of the activities of Royal HZPC Group focus on the potato product. HZPC carries out research, breeds varieties and grows seed potatoes, ware potatoes and mini-tubers. In addition, Royal HZPC Group is working on other business models such as Woksi, which could offer support to the sales of HZPC’s seed potatoes internationally.

As a result of the international growth of Royal HZPC Group, the issues are no longer focused entirely on the interests of Dutch growers. The Board of Association HZPC aims to represent the interests of all members both nationally and internationally. Members here include (former) growers, (former) breeders and (former) staff members. The autonomy and continuation of the HZPC organisation are therefore a guiding principle for the Board.

This report deals specifically with the activities of Association HZPC. November 2023 and May 2024 were the periods when ongoing trading could take place in HZPC certificates for two weeks, on the Captin trading platform. As a result, the price was set on a daily basis. It was also possible for all certificate holders to see what was being traded and the various price movements.

On the HZPC certificate exchange, liquidity is often relatively limited. This year, however, a total of more than 25,000 certificates were traded in November 2023 and May 2024. This is more than 3% of the total number of outstanding certificates. In November 2023, the new weighted average share price was set at EUR 88.95 and by May 2024, it had further increased to EUR 102.46. We can once again look back on well-run trading periods.

The Board of the Association HZPC closely monitors the HZPC certificate trade to ensure that trading runs properly. However, the price is set entirely on the basis of supply and demand and in the maximum bandwidth within which the share certificates can move. Orders and trades are processed and taken care of by Captin.

The board of Association HZPC has been able to fully implement the Connecting Growers Programme again this year. At the request of the Association HZPC, the Connecting Growers (CG) HZPC Foundation purchased certificates for EUR 1.5 million in November 2023 and May 2024. In recent years, the CG HZPC Foundation managed to buy certificates for EUR 1.5 million relatively easily in the trading period, except in 2022/2023 when the value was EUR 1.1 million. The inability to buy the required certificates at that time was down to insufficient supply. This was not the case in 2023/2024. HZPC has bought a total of 15,000 certificates for the Connecting Growers programme for EUR 1.5 million over the past two trading periods.

The Connecting Growers programme has been rolled out to growers from six EU countries, i.e. the Netherlands, Belgium, France, Poland, Germany and Finland. The aim of the Connecting Growers programme is to ensure that the majority of certificates remain in the hands of growers who grow for entities of Royal HZPC Group B.V. The Association HZPC, the Supervisory Board and the executive team believe it is important that the Association HZPC and the company continues to be ‘for and of’ active growers. The Board of Association HZPC hopes to continue this Connecting Growers Programme in the coming years, but this will partly depend on the growers' appreciation of the CG Programme in relation to the cost of EUR 1.5 million.

As a result of changing laws and regulations, the certificates purchased by CG HZPC Foundation under this programme are only allocated to growers who have a growing contract for 2024 in the EU with Royal HZPC Group and have completed the full identification process via Captin. Participation in Connecting Growers has consequently reduced slightly. The Association HZPC regrets that not all growers in the six countries have completed the identification process with Captin. As a result, more than 400 growers failed to get 1.26 certificates per hectare worth EUR 102.46 per certificate.

Many active growers, mainly in outlying countries, have not completed the identification process. It has become clear that communication still needs to be improved. The Board of Association HZPC is naturally disappointed with participation of almost 50% of growers who have signed a seed potato production contract. During the evaluation of this programme in October 2023, a decision was made to continue with the Connecting Growers programme. Action will have to be taken, however, to ensure that growers complete the identification process on Captin's platform. It is important that all participants in the Connecting Growers programme identify themselves to Captin by logging into their Captin accounts. If this fails, they can contact Captin by phone or e-mail. The HZPC company cannot help with this for privacy reasons. So the growers will have to do it themselves. This year, the Board once again decided that participants in the Connecting Growers’ programme who have not identified themselves to Captin by the start of 2024 will be excluded from the Connecting Growers programme in 2024.

On behalf of the Board
Egbert de Vries

Royal HZPC Group B.V. has a net result of EUR 5.9 million which does not include a charge of EUR 1.5 million for the Connecting Growers programme. The dividend is based on the result before processing the costs of the Connecting Growers programme.

When the costs of Connecting Growers are included, the result comes to EUR 4.657 million. The return on equity of Royal HZPC Group B.V. excluding Connecting Growers is 11.17%. This is in line with the historical average. 

The dividend received from Royal HZPC Group B.V. (after deduction of dividend tax) will be passed on one-to-one to the certificate holders. 

Besides focusing on the market, the Association HZPC's Board has also paid particular attention to the Business Transformation Program Aurora. In July 2023, a decision was made to approve the budget for the second year of Aurora. Subsequent budgets will be assessed on the basis of milestones achieved. Aurora will be on the agenda of every meeting of the Board for the coming years.

Royal HZPC Group invests in Research & Development. This is a fixed item on the agenda in discussions between the SB, the Executive Board and the board of Association HZPC. This concerns questions such as: What should Royal HZPC Group do in this area? How much money are we investing in it? In which areas can we cooperate?

Developments in plant breeding come about quickly. In the past, HZPC has invested a great deal in techniques which accelerate breeding and make the process more effective. These investments are beginning to bear fruit and the varieties that are being introduced now and in the future will represent a significant improvement on past varieties. In the past year, great results have also been achieved in the hybrid potato breeding programme. Hybrid potato varieties allow botanical potato seed to be produced and distributed.

These developments are expected to be a genuine ‘game changer’ in the longer term for potato production across the world. This means that there must be a disciplined, regular review of these developments. Executives lead the way. The Supervisory Board provides advice and takes a critical look at whether we are on the right course. The Board of Association HZPC maintains an appropriate distance.

The risks for Association HZPC are limited. Ensuring that the trade in share certificates for Royal HZPC Group B.V. runs smoothly is an important activity. The responsibility for and execution of this has been in the hands of Captin since May 2022. This is a professional party and means the risks associated with this trade are mitigated. The Board of Association HZPC will continue to closely monitor the process.

The Royal HZPC Group B.V. Articles of Association stipulate which decisions have to be presented to the General Meeting of Shareholders and, therefore, to the Board of Association HZPC for approval. There were 4 General Meetings of Shareholders/Certificate Holders. These encompassed discussions about a joint venture in the Middle East, the future of the Connecting Growers Programme, liquidation DSS and possible acquisitions and divestments. The Association HZPC's Board met six times.

Below are the changes that have taken place.

With regard to roles within the Board of Growers: Mr A. Vael stepped down in July 2023. Mr A. Vael resigned early from the Board of Growers to focus on his political career. Ms Brooijmans took over his role. The board change took place during the HZPC Field Day in Zeeland in July 2023. The chair is Mr D. Gesink and the secretary is Mr J.M. Hendrikse.

In the Youth Board: in October 2023, Mr M. Duisterwinkel stepped down and Mr M. Wierenga was appointed. The chair is Mr H. Plomp and the secretary is Mr E. Goodijk. 

In the Board of Breeders: Since March 2024, Messrs Hiddema, Dopperberg and v/d Werff have resigned.