Report of the Supervisory Board
The process of improvement, innovation, and preparation for the future at Jaarbeurs continued in 2019, with more content and a new look. The Supervisory Board is positive about the progress and the results.
At the various Supervisory Board meetings and in contacts with the Executive Board, the Works Council, and other stakeholders, the primary focus was on three things:
redefinition and implementation of the strategy in the Netherlands;
development of the new event/trade show centre, i.e. new Jaarbeurs;
developments at the trade show organisation outside the Netherlands (especially in Asia).
Jaarbeurs in the Netherlands
After returning to profit in 2018 after several years, our Dutch operations continued to show strong performance in 2019. Even after having made such significant improvements, there is still an interesting upside to be attained in the long run, as we concluded from our discussions with the Executive Board on the strategy for the coming years. In operational terms, the primary focus can now be shifted somewhat from costs to growth.
The basis of this renewed confidence going forward is the fact that Jaarbeurs’ ‘double role’ in the Netherlands as an event and trade show organiser and owner/operator of several buildings in the centre of Utrecht where trade shows can be held, which dates back over 100 years, has now been reconfirmed. Knowing this, the main aim of the new strategy does not come as a surprise: to deliver the kind of service to customers that merits a 9+ out of 10, attract new customers, come up with new trade show/event concepts and implement innovations in how we organise and host events and trade shows.
It is therefore primarily about the execution. The organisation has shown over the past few years that it can handle that challenge and the Supervisory Board has confidence in the next steps, inspired partly by a number of key hires and appointments that are aligned with the strategy adopted earlier in the year. To illustrate this point:
In September 2019, Peter van der Veer returned to Jaarbeurs, after 14 years at Rotterdam Ahoy, where he was on the board until late 2018. He is now the CCO running Jaarbeurs’ entire commercial organisation in the Netherlands;
On 1 September 2019, Alex van de Bersselaar, previously Managing Director at PinkRoccade Healthcare, joined Jaarbeurs as IT Project Director;
On 1 October 2019, Pim Venema, who while working for the city of Utrecht was closely involved in the development of the inner-city area that includes the area around the central railway station, became the project director in charge of the major complex redevelopment at Jaarbeurs;
On 1 December 2019, Aletta Kok, formerly marketing, communications and digital innovation manager at Ahold, Telfort and KPN, became Jaarbeurs’ new Marketing Director;
In late 2019, Marloes van der Berg, who was in charge of the Brands & Content business unit up to that point, was appointed to primarily focus on the professionalisation and realisation of our sustainability ambitions;
In early 2020, Ruud Koolen, previously an initiator, editor and moderator of publications and seminars in the healthcare industry - most recently at Springer Media - was hired to generate business for Jaarbeurs from and for that industry.
It should be noted, however, that the Supervisory Board had no say in these appointments, as they are the sole preserve of the Executive Board under the articles of association. In consultation with the Executive Board under the articles of association, people appointed to such crucial positions are, however, invited to talks with (members of) the Supervisory Board, both at Supervisory Board meetings and on other occasions.
Delivery of the new IT infrastructure in the autumn of 2019, with the inevitable points for improvement but without any significant setbacks in terms of the schedule, performance and/or budget, is also a factor in the Supervisory Board’s confidence.
In September 2019, the Supervisory Board signed off on the partnership with Samsung Global, which already materialised in large screens with digital signage and digital marketing at the Vakantiebeurs travel industry trade show in January 2020. The objective is to experiment and work together with Samsung in such a way over the coming years that the new Jaarbeurs will hit the ground running in terms of the use of modern technology to serve and surprise our customers and visitors.
In early December 2019, the masterplan for the new Jaarbeurs was unveiled. In a nutshell, we are going to build a new complex on the existing site, so as to create an attractive and sustainable trade show, event and conference centre that opens itself towards the city and is incorporated into the new urban Beurskwartier district that offers excellent quality of life. The plan was preceded by a meticulous design and planning process involving primarily the MVRDV/Winy Maas architectural firm and the city of Utrecht. In 2017, the Supervisory Board appointed a (Building) Committee to closely monitor the process and be a sounding board throughout. Responses to the publication of the masterplan have shown that there is widespread enthusiasm for the project, both among stakeholders and in society. The Executive Board shares their enthusiasm, while also being fully aware of its responsibility as a critical supervisor during such a transformation phase. Needless to say, this will be on the agenda for both regular Supervisory Board meetings and the meetings of the Audit and Building Committee in 2020.
Internationally, our (70%) joint venture in China, VNU Exhibitions (VNU-EA) headed up by joint venture CEO David Zhong, continued to grow both their revenue and profit in 2019. David Zhong reports to Jaarbeurs CEO Albert Arp. The Executive Board is made up of Jaarbeurs CEO Albert Arp (Chairman), Jaarbeurs CFO Franka Morssink and David Zhong.
In mid-2019, a mutually beneficial and important strategic partnership deal was sealed with trade show organiser Victam International, strengthening both their and our position as an international trade show organiser for the agriculture and food sector.
The members of the Supervisory Board are regularly treated to tours at trade shows in Utrecht by the employees involved - to get a taste of the atmosphere at these events, get feedback from customers and increase their understanding of the company's operations. The Supervisory Board is also invited to employee meetings and sends members to attend such meetings. Supervisory Board members only occasionally visit trade shows abroad, and any such visits are of a more formal nature. In March 2019, the chair of the Supervisory Board joined the CEO on a visit to the international VIV Asia agriculture and food trade show in Bangkok, which is a highly important event for Jaarbeurs, as well as for over one hundred participating companies from across the Netherlands. This trip also provided an occasion for a very pleasant meeting with the joint venture partner in Thailand, TCC Group, and to meet with Heiko Stutzinger, who will be heading up our global VIV trade shows as of 1 February and has also been appointed managing director of the VNU Asia Pacific organisation.
Vulnerabilities and points for improvement
Naturally, neither the Executive Board nor the Supervisory Board look back on 2019 as a year of only highlights. Terrorist and other attacks, including one very close to home in Utrecht in 2019, as well as the coronavirus (COVID-19) outbreak from December 2019, lay bare the vulnerability of our society and in particular the vulnerability of places where large numbers of people gather - which is the core of our day-to-day services. These kinds of incidents and developments really put our resilience to the test. The Executive Board made and continues to make an extra effort to ensure fast, open and direct communication with the members of the Supervisory Board, which is greatly appreciated.
In 2019, a fault in an app led to a privacy issue. Although no laws were breached and the fault did therefore not have to be reported to any persons affected, it did have to be reported to the Dutch Data Protection Authority. That said, the Executive Board, following consultation with the Supervisory Board, chose to report the incident to any persons affected and the outside world nonetheless. After all, this will benefit the learning ability and alertness of everyone at Jaarbeurs.
When it comes to structural and close monitoring of customer satisfaction, including following up on points for improvement, we can and must do better. Although targeted actions in the area of innovation, marketing, digitalisation and sustainability are still in the early stages, the Supervisory Board feels these could be stepped up considerably.
Also in financial terms, 2019 was a year of positive developments. Revenue was up 13% to €141 million, costs including tax grew by 7% to €126 million and net profit rose 62% to €12 million on balance. Both the Executive Board and the Supervisory Board still see room for improvement in the net margin, the bar for the long term has been set higher, at least. Healthy profitable operations are important to be able to pursue a steady long-term course, so that we can keep innovating, better incorporate the required sustainability into our operations and, perhaps most importantly, finance the new Jaarbeurs. In the 2018 report, we already mentioned that this latter point is the one that the Supervisory Board considers a real tour de force, making it an essential topic in our discussions with the Executive Board. Furthermore, the Supervisory Board intends to engage with the Executive Board on innovation, sustainability, digitalisation and marketing in particular in 2020.
Setting the above focus areas as the main points on the agenda for 2020 was one of the results of the internal evaluation that the Supervisory Board conducted in the fourth quarter of 2019. The Supervisory Board first met in its current line-up in the summer of 2018 and so it seemed appropriate to evaluate after five quarters how the members are experiencing the board’s performance. The chair spoke to all members individually, shared the main points raised with all members in writing, and the Supervisory Board subsequently met to discuss the experiences.
All the members are positive about the principle of ‘a brief look back and a long look ahead’ during meetings. This requires great care in putting together meeting agendas, both for full Supervisory Board meetings and for meetings of the various committees, as well as detailed preparation by all participants. Such improved focus in the agenda will create sufficient time to discuss the right (future-oriented) subjects and allow each participant to contribute their expertise.
Aside from that, the Supervisory Board believes unanimously that the great diversity in terms of experience, networks, training and background among/of its members creates a good blend of expertise and experience for the phase in which Jaarbeurs currently finds itself.
In the transition from the ‘house in order’ strategy launched in 2016 to a bolder strategy for the period leading up to the opening of the new Jaarbeurs, and in anticipation of the publication of the masterplan for the new Jaarbeurs, the Execution Board chose to revamp Jaarbeurs’ brand identity, which saw the logo, colour, tagline and all advertising get an overhaul. The Supervisory Board was pleased to take part in discussions with the Executive Board on the intended change:
The new and up-to-date tagline of 'Attract - Engage - Accelerate' captures what Jaarbeurs has been doing for over 100 years: attract visitors to come to trade shows, engage them with whatever is on display there and thus help exhibitors accelerate their revenue growth.
The new bright red colour deliberately echoes that of the city of Utrecht, reflecting Jaarbeurs' close ties with the city.
The Supervisory Board met five times in 2019. On each of these occasions, a closed Supervisory Board meeting was followed by a joint meeting with the Executive Board. The main topics discussed at these meeting are the ones outlined above. One of these meetings focused specifically on the new strategy.
The Audit & Risk Committee (ARC) met four times, with each of these meetings being held one or two weeks ahead of the regular Supervisory Board meetings. Besides (preliminary) discussions on the figures, ARC meetings also focused on the usual topics, such as investments (budget & proposals), risk management, the audit plan, the current status of the implementation of the new IT infrastructure, non-financial KPIs, company schemes (business code, whistleblower scheme) and of course the financial impact of the building of the new Jaarbeurs. Information provision continued to improve in 2019 under the responsibility of our CFO, Franka Morssink. The Supervisory Board would like to see the intention to also report more on and account for non-financial KPIs materialise further in the year 2020.
The Building Committee met with the Executive Board and representatives from the various advisers on two occasions in 2019 to discuss work on the new Jaarbeurs.
Given that there were no changes to the composition of the Supervisory Board or the Executive Board under the articles of association, the Selection & Remuneration Committee’s activities did not extend beyond their regular activities. Like in previous years, it has expressed its appreciation to CEO Albert Arp of the way in which he is running Jaarbeurs and the progress that has been made by the employees and the management/Executive Board.
The Executive Board prepared the annual report, including the 2019 financial statements, on which Deloitte issued an unqualified audit opinion.
The Supervisory Board:
discussed the 2019 annual report with the Executive Board and external auditor Deloitte;
accepts the Executive Board’s proposal to add the profit to the shareholders’ equity;
approved the adopted 2019 annual report in its role as board of Stichting Koninklijke Nederlandse Jaarbeurs.
At the time of writing of this report, all trade shows in China from early February onwards had already been cancelled and rescheduled to later dates in 2020 due to the COVID-19 outbreak. As a result, our employees and management in China have been under great strain for several months now. Since mid-March 2020, all trade shows and events in Europe have also been cancelled. How long this closure will last is impossible to say. Needless to say, this is leading to great uncertainty among our employees and management in the Netherlands.
The Executive Board is doing an excellent job in keeping the Supervisory Board informed of developments, both in the Netherlands and internationally. The Supervisory Board observes with great respect the resourcefulness, flexibility and resilience shown by all. Where possible, trade shows or events are postponed in consultation with the customer. This is, however, not always feasible. The impact of the coronavirus crisis on Jaarbeurs is, therefore, fairly straightforward: an unknown period of zero revenue with ongoing costs. Jaarbeurs will get relief from, and is very grateful for, the measures announced by the Dutch government to help companies affected. The Supervisory Board is aware of the fact that Jaarbeurs will have to rely on its favourable solvency ratio and liquidity this year. After all, the financial result for 2020 might turn out to be low or negative. However, the Supervisory Board still has full confidence that the positive intrinsic development will continue in 2020.
The Supervisory Board would like to thank all customers, the city of Utrecht, collaboration partners, employees and the Executive Board for their efforts and support in transforming Jaarbeurs into a new, more sustainable and successful Jaarbeurs, and wishes everyone a healthy future.
The Supervisory Board, Jaarbeurs
21 April 2020