07 Report of the Supervisory Board

For the third year in a row, we speak to Michael Kester, Chair of the Supervisory Board (SB), about the main themes of this financial year.

2023-2024 was a difficult year for the entire potato sector. The harvest was disappointing in north-western Europe with high disease pressure, lower yields and remarkably high levels of oversized seed. It did come with a high payout price for Dutch growers, however.

Although European yields were lower, we were still able to pay a good price to our growers. We saw growth in licencing in the Americas, improved results in India and sales prices rose sharply in export markets. In an challenging year like 2023-2024, this is a result we can be really proud of.

In 2023-2024, compliance was our main theme. Together with the executives, we asked Partners in Compliance to systematically address compliance issues. Substantial strides have been made on all fronts as a result.

A key question was whether it is still permissible to supply countries where banking systems are failing. Both the SB and the management felt that the organisation’s risk profile was too high and the policy for international payments was further tightened in 2023-2024. A number of countries are no longer supplied.

On 14 September 2023, Royal HZPC Group B.V. was hit hard by a cyber attack. As the SB, we cannot help but conclude that the security of the systems was in good order but, despite this, cybercriminals still managed to gain access to the systems via a phishing email.

We were impressed by the speed of response to the cyber attack and the siphoned-off money was frozen and has since been returned. Hats off to the Executive Board and the organisation. The Executive Board has also taken measures to minimise the chances of a recurrence, such as the continuous training of staff.

Aurora, the business transformation programme, continues to demand our attention. The start was difficult, but Royal HZPC Group B.V. has now made significant progress and changes have been made to the structure of the project management. The Executive Board is also more closely involved in decisions. The SB continues to monitor the situation closely. The first milestone was reached on 1 July 2024, when HZPC Germany and Poland started using the new ERP programme.

After 23 years as CEO of Royal HZPC Group B.V., Gerard Backx is standing down. The SB is responsible for finding his successor and we have handled the process carefully. The full SB met no fewer than 15 potential candidates in person and ultimately selected Hans Huistra. We are delighted with our choice. Hans started as CEO on 1 September and will help shape the new strategy. We are also pleased that Gerard will stay on for the time being to oversee a number of projects.

Other issues on the agenda in 2023-2024:

•  A new consortium of banks offering Royal HZPC Group B.V. broader resources for the future with good terms and conditions.
•   Crowning anniversary year 2023: Royal HZPC Group B.V. received the Royal designation.
•  Strategy development for the next 15 years: the architecture is now in place and the task is to flesh out this new strategy.
•  The acquisition of mini-tuber producer T.L.C. Potatoes Ltd in Scotland, through which HZPC UK secures production in the United Kingdom.
•  Preparations for the new Corporate Sustainable Reporting Directive (CSRD).

This year confirms that the complexity of seed potato cultivation and the market is increasing. This requires a critical eye and resilience on the part of the SB and management. Royal HZPC Group B.V. has a solid foundation. Firstly, because the demand for good, healthy food is increasing. The decision to spread our wings globally and invest in licensed cultivation is paying off. This year, for instance, will see a positive result from the joint venture in India for the first time. Thanks to our robust research machine, we have amazing varieties that are ready to conquer the world. Developments in the hybrid programme reinforce classic breeding techniques and, in the coming years, Royal HZPC Group B.V. will be one of the frontrunners in bringing the first potato varieties from seed to the market. We would like to thank the employees and Executive Board of Royal HZCP Group B.V. for their commitment and resilience. It gives us great confidence in the future of Royal HZCP Group B.V..

In 2023-2024, the composition of the SB remained unchanged. Martine Hommes-Gesink and Michael Kester were re-elected for a four-year term at the shareholders' meeting on 7 May 2024.

The Supervisory Board of Royal HZPC Group B.V. supervises the policy of the Executive Board and the company strategy and operates completely independently of this board. The Executive Board submits plans to the SB in terms of strategy, budgets, investments and commercial policy. The SB serves to provide approval of the plans after review. The survival of the company and the interests of all stakeholders are paramount. As an employer, the SB also sets the remuneration for the Executive Board. As a shareholder, the HZPC Association (re)appoints the members of the SB.

In 2023-2024, spread across the year, six meetings took place between the SB and the Executive Board of Royal HZPC Group B.V. The Chair of the SB worked with CEO Gerard Backx to prepare for the meetings. The audit committee met five times, always prior to meetings between the SB and the Executive Board. This financial year, the SB has also held two meetings of shareholders with the Board of HZPC Association.