06 Compliance

Within our risk profile, we recognise four categories of risk; strategic, operational, reporting and compliance. We weigh these on a scale of 1-5.

Two subcategories are recognised in the strategic risk category; risks that we influence through our strategic activities (internal) and those that come from outside the organisation (external).

The larger internal strategic risks we recognise relate to our variety portfolio and hence the robustness of our earning power, our human capital and our vulnerability to issues in the value chain.

We actively manage the availability of the appropriate varieties in the wide range of markets in which we operate. We do this now and will continue to do so in the future. With our current variety portfolio, we believe we have great varieties available for every market. To ensure the future sustainability of our variety portfolio, we have been investing in innovation and advanced breeding techniques as well as in our staff and organisation for years. We have a group-wide overview of key positions and invest in attracting and retaining the right people. Fit for the future!

To ensure the continuity of our operation, we are investing in Aurora to ensure a robust and future-proof ERP. Under earning capacity, or financial risk, we manage the extent to which we are able to match our production to demand and the development of licence revenues. We never accept any infringements of our intellectual property; we are affiliated to Breeders Trust and, within our means, use active enforcement measures around the world.

We also monitor the development of risk externally. Local market conditions, climatic developments, sustainability and related regulations can have a major impact on the organisation of our business. Some of this risk is managed thanks to our global presence and the corresponding diversification. Through our commitment to the right human capital and strong local management, we ensure that we are not faced with surprises and stay close to developments in each market. We carefully monitor which regulations or developments affect us and make adjustments to ensure we are ready for them in time.

The volatility of global geopolitical relations has led to some concerns locally, however, the risk is seen as limited at group level.

The operational risk category deals with risks that could shut down the group's day-to-day processes. These include risks relating to production, the availability and quality of our seed potatoes for sale, IT and security, treasury, the group's ability to adapt to ad hoc changing conditions and those issues that may affect the health or safety of our employees.

Production risk requires a great deal of attention. We manage according to the availability of the right acreage for our forecasts, mini-tuber capacity and quality. Managing risks relating to IT and security is essential for the continuity of our organisation. Our focus is maintained and we can proactively address any weaknesses with periodic phishing simulations and pen tests.

Reporting risk includes any event that results in desired or required financial or non-financial reports not being delivered. This risk is assessed as low; however, we can realise efficiency gains. The implementation of the new ERP system, which is part of Aurora, is helping to reduce this risk.

Compliance includes the obligation to adhere to laws, regulations and internal policies, such as Code of Conduct, Whistleblower Policy, etc.. As a result of our global presence, we have to cope with different cultural conditions. These circumstances are not always compatible. We are ambitious in our feeding the world mission and will always seek the opportunity to deliver on this within the legal framework. In order to realise this, we follow strict procedures to maintain an overview of who we are doing business with. This is how we prevent unexpected involvement in money laundering, terrorist financing or violation of sanctions laws. Agents acting on behalf of one of our group entities follow this line and subscribe to our code of conduct. We are also keen to ensure that paid commissions are properly substantiated. We refrain from offering excessive commission payments to avoid the risk of corruption and bribery.

HZPC operates in various countries, including some with an increased risk of non-compliance with sanctions laws, anti-fraud and corruption regulations, and anti-money laundering legislation. This brings complexity due to the diverse and constantly changing (inter)national knowledge and regulations. As a result, there is a risk that certain transactions and/or payments may unintentionally conflict with relevant sanctions or anti-money laundering legislation. HZPC has implemented policies and control measures aimed at ensuring compliance with applicable sanctions laws. Compliance is an integral part of our governance and risk management structure and includes, among other things, due diligence processes, internal guidelines, and employee training. However, there is an inherent risk that HZPC does not always have direct control or oversight over all transactions and business relationships, particularly in international contexts. HZPC's internal risk management and control systems are designed to mitigate these risks as much as possible. This is guided by a corporate culture in which integrity and compliance are central. Despite these efforts, a complete elimination of compliance risks cannot be guaranteed. Any violation of relevant laws and regulations could have adverse effects on HZPC's operational performance, financial results, cash flows, and reputation. Therefore, HZPC remains focused on timely risk identification, strengthening internal control measures, and promoting a strong compliance culture.

We invested in our business in 2024/2025, despite the economically uncertain environment, and will continue to do so. With the construction of the enclosed garden, our R&D facility is all set. We are making steady progress with the construction of our mini-tuber facility in France and hope to complete this in 2026. We have also invested in our mini-tuber production facility in the UK and in our distribution centers.

Our invested capital (total fixed assets) at the end of the 2024/2025 financial year is EUR 44.4 million, which is EUR 1.7 million higher than last year. We expect a similar amount of investment next year, a significant component of which is the Aurora project. In Aurora, we are adapting processes and replacing the old ERP system. This investment is in addition to regular replacement investments in operations and R&D.

The cash position remained unchanged compared to last year. The current ratio is unchanged from 1.2 last year. The quick ratio (current ratio excluding inventory) is also unchanged from last year at 1.2. We do not expect any major changes here in the future either.

Net turnover of EUR 525 million was recorded in the past year. Sales were higher as Royal HZPC Group B.V. achieved higher volume at much higher average prices. Licence income increased from EUR 25.4 million in 2023/2024 to EUR 30.5 million.

The gross margin, i.e. the sum of operating income minus the sum of costs of raw and auxiliary materials and third-party services, freight and loading charges and packaging, increased from EUR 67.3 million to EUR 96.4 million. This is due to higher volumes and prices.

By paying close attention to costs, a net profit before deduction of costs of the Connecting Growers programme of EUR 17.1 million was achieved.

As yet, there are no expectations of the result for the coming season due to uncertainties. These are caused by uncertain yield expectations and the corresponding availability for different markets. In addition, uncertainty remains due to the geopolitical situation.

We do not expect any major changes for our workforce.

The financing structure has not been affected by any major changes this year. We concluded an increase and extension of our financing agreement as of March 2024. In the process, the consortium expanded from two banks to three banks. The banking consortium now consists of ING Bank N.V., Commerzbank Aktiengesellschaft and Crédit Industriel et Commercial, Succursale de Bruxelles. Funding is now guaranteed for a minimum of two years plus an option to extend it twice for a year. 

Solvency fell from 44.7% in 2023/2024 to 41.6% in 2024/2025. The decline is partly caused by increases in working capital with the increase in sales tax 9% to 21% having a significant impact.

Costs were up due to higher volumes and cost increases due to inflation. As for the debtor position, we have seen an increase compared to last year and this is reflected in the balance sheet. However, we have recognised a higher provision for a debtor from Cuba. This is mainly due to the poor economic situation in this country.

The management team is constantly assessing the relevant information and risks in order to take the appropriate measures. The financing facility we now have is sufficient to continue paying out advances to growers and finance further growth. The current facility is also sufficient to absorb future regular fluctuations and disruptions in customer receipts. The management team constantly monitors developments in turnover and costs in order to maintain an overview of liquidity developments. Analyses are also carried out on a regular basis so that additional measures can be taken in good time. On the basis of the management analyses, the current results and the company’s financing position, the financial statement has been drafted on the basis of an assumption of continuity. Based on an updated forecast in September 2025, we expect to have sufficient funding until at least March 2028 and to be in compliance with the bank's covenants.

Potato breeder and seed potato trading company Royal HZPC announced on October 2, 2025, its proposed acquisition of IPM Potato Group, a leading seed potato breeder and exporter based in Ireland. Financing for this acquisition was expanded in October 2025. The proposed acquisition is expected to make a positive contribution in the coming years.

Royal HZPC Group B.V. stands for Diversity, Equity and Inclusion (DEI).

We are committed to a diverse workforce and an inclusive environment where everyone feels valued and respected. In addition, we support a corporate culture where everyone feels encouraged to (continue to) develop and grow. Or, in other words: Guiding continuous growth.

We actively seek to attract, employ and retain people from diverse backgrounds. As a result, our workforce is increasingly reflecting the rich diversity of the societies in which we operate. Our commitment to diversity extends to all levels of the organisation, from entry-level positions to management positions. The diversity dimensions on which Royal HZPC Group B.V. intends to report are:

• Gender diversity (female/male representation)
• Age diversity (representation of different age groups) 
• International diversity (number of nationalities of our colleagues)
• Knowledge diversity (distribution of our workforce by clustered subject areas) 
• Equal pay for men/women

We are accountable to the principles of fairness, impartiality and justice. Our aim is to provide a working environment where everyone has equal access to professional and personal growth. To the extent that there are barriers to these principles, we want to remove them.

Our Code of Conduct describes how to deal with (perceived) unequal treatment.

For us, inclusion means promoting a sense of ‘belonging’ and creating a culture where everyone feels properly rewarded, respected and valued. Our mission, vision, corporate values and goals should be unifying. Within this context, we encourage open dialogue, active listening and mutual respect for everyone's unique contribution to the whole. We recognise that inclusive teams are more innovative, productive and better able to achieve our shared goals.

Our commitment to Diversity, Equality and Inclusion (DEI) is in line with international (including European) laws and regulations promoting equality and non-discrimination in the workplace. We focus on adhering to the principles set out in the various international guidelines within the countries where we are based. We understand that building a diverse, equitable and inclusive organisation is a journey that requires continuous effort and improvement. We will discuss the objectives internally so that they are known to everyone. Based on insights gained, we will make arrangements with Staff Representatives to refine our practices and policies.

Twenty years ago, almost all certificates were in the hands of active growers. This has now fallen to around half. This is because many growers, who are no longer actively involved in growing, hold on to their certificates and in the past have rarely offered them for sale. At the same time, active growers purchased few certificates. Thanks to the Connecting Growers programme, share certificates are increasingly coming into the hands of active growers. For this purpose, Royal HZPC Group B.V. bought EUR 1.5 million worth of certificates in 2024-2025. These were donated free of charge to growers with a seed potato contract with Royal HZPC Group B.V. in the EU. The majority of our active European growers now hold certificates. Read more at: https://www.hzpc.com/en/about-us/association-hzpc/connecting-growers.

Share certificates used to be traded on an internal market. Since the trading period in May 2022, Royal HZPC Group B.V. has operated a new trading system for trading in certificates. Twice a year, in May and November, certificate holders can trade HZPC certificates for 10 working days on the Captin trading platform; Captin is an AFM-regulated brokerage firm. Royal HZPC Group B.V. has thus become a semi-listed company that is obliged to abide by the Dutch Financial Market Authority (AFM) rules. The market has also become more transparent and the rights of the certificate holders align with the regulations that govern the regular market. The range within which trading takes place is twenty percent (rather than ten percent), so the market balances faster. During these trading periods, Royal HZPC Group B.V. purchases certificates for the Connecting Growers program in addition to the certificate scheme for staff.

The certificate holders receive information about Royal HZPC Group B.V via press releases, the Annual Report and the HZPC website. In addition, Dutch certificate holders receive the company’s client magazine ‘Ruggespraak’.