Report of the Supervisory Board
In the first quarter of 2020, we were suddenly deprived of the lifeblood of our business – that is, meetings and events that would draw many people, sometimes in their tens of thousands. One year later, at the time of writing, we can fully expect to be able to start work again some time during, or soon after, the summer of 2021. Our customers, employees, business and other partners, management, and the Supervisory Board are eagerly awaiting that moment, which at this point is why, for us, looking forwards is infinitely preferable to looking back.
All of that being said, though: here is the report of the Supervisory Board for 2020.
Experiences in 2020
Anyone who is a member of a supervisory board at a company where sales in the first quarter of 2020 begin dropping to virtually zero could easily have gone through a business 'intensive care' experience a year later. That was not the case for the Jaarbeurs Supervisory Board. There are five main reasons for this:
Jaarbeurs entered this difficult period after a number of years in which the organisation had made meaningful progress and built up cash reserves that could serve as a buffer.
The government made significant financial support available to companies such as Jaarbeurs whose turnover fell markedly.
Because of these first two favourable factors, management and the Supervisory Board were also able to keep their focus on building a healthy future for the company over the medium and longer term: manoeuvring as well as possible in the short term was a significant and ongoing priority, but it not consume a disproportionate amount of attention.
Employees continued their efforts, with full commitment and a positive attitude, to plan events together with clients and to reschedule these (often several times), even in the face of the inevitable staff cuts.
The operations of Jaarbeurs in China were the first to close, but economic activity in the country recovered quickly, and our local team, led by Managing Director David Zhong, responded extremely effectively, and that resulted in a positive contribution to profits and the payout of a cash dividend from China to the holding company in the Netherlands in 2020.
In absolute numbers, financial developments at Jaarbeurs were unfavourable in 2020: there was a net loss of 12 million euros. Considering the aforementioned set of circumstances, the Supervisory Board considers this to be a relatively favourable outcome.
The Executive Board informed the Supervisory Board each month on the current cash flow and on the projections, which they elaborated in various scenarios, regarding cash flow for the upcoming quarters. As the months went by, it became increasingly clear that any significant use of our halls in the Netherlands could no longer be expected either in 2020 or in early 2021. A reduction in the number of jobs in the Netherlands became inevitable, though there was an explicit effort to mitigate the effects of the cuts through retraining and redeployment, all within a social plan that was seen as acceptable by those who were affected.
"We will continue to focus on building a healthy future for the company in the medium and long term"
Major issued focused on the medium and long term were discussed extensively during the four regular meetings the Supervisory Board held, these being innovations in marketing (in April), the sustainability of business operations (in June), the new innovation process (in September), and the development of the Dutch Health Hub at the Jaarbeurs venue (in December).
Developments concerning the New Jaarbeurs were discussed at every meeting of the Supervisory Board. Given that part of the cash reserves that had been built up as a buffer had to be used to get through this difficult period, that part is no longer available to finance the new building plans. The Executive Board and the Supervisory Board thus discussed the extent to which the plans could and should be adjusted in order to be able to press on and keep the momentum going. We will have to wait and see when Jaarbeurs can resume operations in the Netherlands (and beyond, with the exception of China), but at the moment we are convinced that, with limited adjustments, the focus can and should remain on starting construction in 2024.
In addition to the four regular Supervisory Board meetings, several short online sessions were held with the Executive Board on the trend with regard to finances, and cash in particular, based on various scenarios around full or partial reopening. After a few sessions it became clear that the financial situation was robust, so that it would be enough to share information on relevant developments with the Supervisory Board without having to hold additional plenary meetings.
Audit & Risk Committee
The Audit & Risk Committee (ARC) met four times, and each of these meetings was held between one and two weeks ahead of the regular Supervisory Board meetings. In addition to the preliminary discussion of the figures, at these meetings the ARC also addressed such topics as the new Treasury Charter, cybersecurity, progress in implementing the new IT infrastructure, investments (results, budget, and potential savings), risk management, and of course the financial consequences of both the closure caused by COVID-19 and the financing of the investments for the New Jaarbeurs.
The Building Committee met with the Executive Board and representatives of various advisers to discuss the New Jaarbeurs. It was also decided that this information should be discussed by the full Supervisory Board.
Selection and Remuneration Committee
Given that there were no changes in the composition of the Supervisory Board or the Executive Board, the Selection & Remuneration Committee had little reason to engage in any special activities. Under harsh conditions one gets a better sense of the qualities an organisation’s staff possesses. Equipped with this better understanding, at the end of the reporting year the Supervisory Board expressed its appreciation, with extra satisfaction and conviction, to CEO Albert Arp for the way in which he has been leading Jaarbeurs. And it also admires the ways in which staff and management alike have been holding their own during this period and continuing to dedicate themselves with verve to Jaarbeurs.
The Executive Board prepared the annual report, including the 2020 financial statements, on which Deloitte issued an unqualified audit opinion. The Supervisory Board:
discussed the 2020 Annual Report with the Executive Board and with Deloitte as external auditor;
agrees with the Executive Board’s proposal to charge the loss to shareholders’ equity; and
approved and adopted, in its capacity as the Board of Stichting Koninklijke Nederlandse Jaarbeurs (Royal Dutch Jaarbeurs Foundation), the 2020 Annual Report.
The road ahead
It seems clear that international operations in China can be carried out without hindrances again this year. In the other countries where we operate, the possibilities appear to be non-existent or extremely limited, at least for the first half of 2021. Thus, in all likelihood, and despite the extraordinary efforts on the part of our Managing Director of the VIV trade shows for innovative livestock farming, Heiko Stutzinger, and of his team, we will have to cancel the major VIV trade show it was planning to hold in Thailand in 2021. We anticipate that Jaarbeurs in Utrecht will reopen at some point in the second half of the year. Even if this turned out not to be the case, the future of Jaarbeurs is fully assured.
In the meantime, we are making the exhibition halls in Utrecht available for a test location, for a vaccination site, and for education, and we are continuing with our initiatives in digitalisation, sustainability, marketing, and innovation. Work on the plans for the New Jaarbeurs is proceeding apace.
The COVID-19 crisis will no doubt accelerate structural changes in society, and perhaps even beget new ones. The desire to meet in person seems to have increased rather than decreased, at least for events in the Netherlands.
The Supervisory Board therefore continues to look to the future of Jaarbeurs with optimism and confidence, and thanks all of its customers, its collaborative partners, its staff, the Executive Board, and the City of Utrecht for their efforts and their support for Jaarbeurs.
The Jaarbeurs Supervisory Board
7 April 2021