Annual Financial Statements

A. Business and economic environment

1. The German trade fair and exhibition market

According to preliminary calculations by the Association of the German Trade Fair Industry (AUMA), the number of exhibitors at the 163 international and national trade fairs in Germany rose by 1 percent compared to the respective previous events. The number of visitors decreased by 2 percent com-pared to the respective previous events, primarily due to developments in the automotive industry.

2. International business

The Federal Ministry of Economics and Energy (BMWi) and the Federal Ministry of Food and Agricul-ture (BMEL) support German exhibitors at overseas trade fairs with their international trade fair pro-gram. The number of participations in international trade fairs amounted to 288 in 2019.

3. The national and international congress and conference business

Figures for the performance of the domestic and international congress market are not yet available for 2019. According to the Meeting & EventBarometer 2018/2019 study, Germany, with growth of 1.6 percent in the number of participants in 2018, was once again a growth market. Compared to the pre-vious year, these visitors were distributed across fewer but larger events.
In the annual ranking of the International Congress and Convention Association (ICCA), Germany once again took the second spot – behind only the United States – in a worldwide comparison of interna-tional events.

B. Business development of HMC

In 2019, HMC generated revenue of 67.9 million euros. This was 4.9 million euros down on the refer-ence year 2017, which is above all due to changes in the structuring of realization agreements with the Federal Republic of Germany. At EXPO 2019 in Beijing, China – unlike for EXPO 2017 in Astana, Ka-zakhstan – HMC commissioned the services on behalf of and on the account of the Federal Republic of Germany. The largest share of revenue (69 percent) was generated by the Own Events and Guest Events Trade Fair and Services divisions.

1. Hamburg Messe division

In terms of realized revenues, the Hamburg Messe division developed slightly better than planned. This positive deviation is primarily due to INTERNORGA and the MARINE INTERIORS event, which was realized for the first time in 2019.

HOME², an exhibition for real estate, construction, and refurbishment, took place for the third time in 2019. In terms of content, HOME² is subdivided into three themed areas: “Real Estate, Financing, Consulting,” “New Build, Modernization, and Renovation,” and “Gardening and Landscaping.” The exhibition thus brings together qualified support and current trends on a wide range of phases and questions regarding real estate acquisition and construction under one roof. The rented space once again increased while the number of visitors decreased.

OOHH! took place for the second time with its individual brands REISEN HAMBURG, KREUZFAHRTWELT HAMBURG, CARAVANING HAMBURG, RAD HAMBURG, and FOTOHAVEN HAMBURG. OOHH! continued to benefit from the upturn in the caravan industry, which drove the rent-ed space up by 1.7 percent compared with the predecessor event. In contrast, the number of exhibi-tors fell by 8 percent, which was primarily due to the decrease in the number of coexhibitors of the individual REISEN HAMBURG brand. The number of visitors increased by 10.4 percent.

In 2019, INTERNORGA once again demonstrated its position as the leading trade fair in the German gastronomy industry. In its 93rd edition, 1,311 exhibitors occupied the fully booked exhibition grounds including the lightweight construction hall B6.1. The number of visitors increased by 5.3 per-cent compared to the previous year.

The In-Water Boat Show, which was renamed HAMBURG ANCORA YACHTFESTIVAL for its tenth anniversary, took place at the ancora Marina (Neustadt, Holstein) in 2019. The event recorded growth of 4.7 percent with regard to the number of exhibitors, with the number of visitors coming slightly below the previous event at around 17,000 due to one day of rain.

SEATRADE EUROPE, the conference trade fair for cruises and river cruises, took place for the sec-ond time in cooperation with UBM (UK) Ltd. In spite of the decrease in number of exhibitors, the rent-ed exhibition space increased by 1.4 percent. Among visitors, a significant increase was achieved primarily with regard to representatives from shipping companies, who are the main target group of the exhibitors. The MARINE INTERIORS event, which was realized for the first time in parallel, was an additional attractive draw for visitors, especially shipping company representatives.

The MARINE INTERIORS event (Cruise & Ferry Global Expo powered by SMM) made its debut from September 11 to 13, 2019, with a focus on interior design for passenger ships. More than 100 exhibi-tors from 20 markets met up with architects, designers, technicians, and purchasers from renowned design firms, shipping companies, and shipyards. Altogether, some 2,700 experts from over 50 coun-tries visited the exhibition, which featured a high-caliber conference program on current topics related to ship design and the potential of the Chinese market for the cruise sector of the shipbuilding indus-try. MARINE INTERIORS was intentionally scheduled to run parallel to SEATRADE EUROPE in order to create synergy benefits for both visitors and exhibitors. The exhibition was a success, although it had to make a name for itself in a hard-fought market environment with three other premieres in the same sector in Miami, Barcelona, and Shanghai.

For the third time, HMC organized INMEX SMM INDIA in collaboration with Informa Markets. A total of 250 exhibitors from 22 countries and around 6,800 visitors took part in the largest and most important maritime trade fair in South Asia, which was realized in the Bombay Exhibition Centre in Mumbai. The exhibition was accompanied by a conference, the second CIMAC Circle, as well as various expert workshops.

THERAPIE HAMBURG was held on October 25 and 26, 2019, for the first time in partnership with Leipziger Messe. With its 100 exhibitors and some 2,400 professional visitors, the trade fair with a congress for physiotherapists, ergotherapists, and sport therapists made a successful start. Together with Leipziger Messe, the intention is to establish THERAPIE HAMBURG as an important meeting place for the industry in northern Germany and to develop it further.

MINERALIEN HAMBURG, an international exhibition for minerals, fossils, jewels, and jewelry, was held for the 42nd time in 2019 and, compared to the previous year, was characterized by lower partic-ipation rates among exhibitors, the associated exhibition space, and visitors. Due to the lack of a positive outlook – falling membership numbers in the collectors’ associations, a lack of successor businesses among the exhibitors, and a decrease in the number of interested collectors as visitors – the MINERALIEN HAMBURG event will no longer be held as an own event.

The Guest Events division developed better than planned in the year under review. Revenue was 6.6 percent higher than the original budget. A total of 36 guest events were realized at the HMC exhibition grounds. In addition to the continued realization of NORDSTIL, the AIRCRAFT INTERIORS EXPO, and the OMR FESTIVAL, the outstanding events of 2019 included BIO-EUROPE and ARCHI-TECT@WORK.

A total of 44 trade fairs and exhibitions were held in 2019 (reference year 2017: 39), including eight own events (seven on the exhibition grounds, one in Neustadt, Holstein). Around 621,000 visitors attended the events realized in Germany – nearly as many as in the reference year 2017. While the HANSEBOOT and HAMBURG MOTOR CLASSICS events were held for the last time in 2017, our own events MARINE INTERIORS and THERAPIE HAMBURG made their debuts in 2019. The gross rented space rose compared to the reference year 2017 by 5 percent and amounted to 854,268 square me-ters. Additional gross hall space of 409,768 square meters was rented for the 30 CCH events realized on the exhibition grounds in 2019.

2. International Events division

Every year, HMC organizes many joint participations in trade fairs, mainly on behalf of the Federal Ministry for Economic Affairs and Energy (BMWi) and the Federal Ministry of Food and Agriculture (BMEL). This year, the focus of the participations was on the maritime, oil and gas, hotel, gastrono-my, and medical technology industries. In the reporting period, HMC organized 12 joint participations on behalf of the BMWi. Some highlights of activities abroad were the successful organization and realization of the MARINTEC CHINA event in Shanghai with more than 90 exhibitors and the OFF-SHORE TECHNOLOGY CONFERENCE (OTC) in Houston with more than 60 exhibitors, as well as the organization of an international private-sector joint participation in the INTERNATIONAL COUNCIL ON COMBUSTION ENGINES (CIMAC) in Vancouver. The realization of the German contribution to the International Horticultural Exhibition 2019 in Beijing on behalf of the BMEL is also worth mentioning. The expo took place from April 29 to October 7, 2019.

3. CCH division

Since January 1, 2017, the CCH has been closed for the revitalization prescribed by the Free and Hanseatic City of Hamburg in 2014. During the scheduled renovation period, CCH customers were offered an interim solution on the exhibition grounds, the so-called A Solution. Due to a delay in con-struction, the new CCH was not able to open as planned on September 1, 2019, with the new opening date slated for August 2020. Congresses and events already booked for the second half of 2019 were still able to be realized on the exhibition grounds with an alternative solution. Included among these events were the Congress of the German Urologists’ Society (DGU) with 6,800 participants, an event of the European Society for Vascular Surgery (ESVS) with 1,765 participants, the ENDOCLUB-NORD event with 2,100 participants, and an event of the German Interdisciplinary Association for Intensive and Emergency Medicine (DIVI) with 5,600 participants.

C. Economic situation

1. Development of revenue

In 2019, HMC recorded revenue of 67.9 million euros (2017: 72.8 million euros). The total revenue of 2019 breaks down to the individual divisions as follows: Exhibition: 21.4 million euros; CCH: 8.1 mil-lion euros; Guest Events: 13.8 million euros; International Business: 8.9 million euros; Services: 11.4 million euros. Revenue from the Property division totaled 4.4 million euros.

2. Profit/loss for the year

The 2019 fiscal year ended with a loss for the year of 31.3 million euros before loss absorption by HGV. Compared to the reference year 2017, higher expenses in particular for the temporary solution for CCH events on the exhibition grounds, higher maintenance costs, and higher interest expenses for the allocation to pension provisions led to this change in earnings. In addition, the transfer of assets and loans for the expansion of the CCH from 2007 with disposal profits contributed to improved earnings for the year.

3. Employees

At the end of 2019, not including student interns, HMC had 319 (2018: 310) employees, of which 298 had permanent and 21 temporary contracts (2018: 287 permanent and 23 temporary contracts). Ex-pressed in FTEs, HMC had around 268 as of year-end (2018: 255). In addition, HMC provided 21 ap-prenticeships for prospective event, office, and IT administrators, event technology specialists, and Bachelor of Arts (BA) students participating in dual-study programs.

HMC would like to keep expanding the share of women in management positions. The goal of in-creasing the share to at least 40 percent by 2017 was already achieved in 2016. As of year-end 2019, women accounted for 44 percent of management positions.

4. Net assets

Total assets increased by 6.6 million euros to 89.7 million euros in the year under review, resulting in a fall in the equity ratio from 14.0 percent to 13.0 percent.

5. Financial position

A control-and-profit-transfer agreement and a group clearing agreement exist with the parent company HGV. The liquidity of the company is thereby guaranteed at all times.

D. Outlook, risks, and opportunities of future development

1. Outlook

HMC is planning to continue its profitable growth and break even over a two-year period by 2025. Hence, a strategy entitled “ROAD TO 2025” was developed, which describes the challenges, goals, and fields of action to reach this goal. Growth will be primarily achieved through the expansion of HMC’s own trade fairs, the acquisition of profitable guest events, and the realization of additional events in the CCH once it has reopened. Collaborations with other domestic and international trade fair organizers will also be considered and larger numbers of events acquired for the uneven years wherever possible. HMC is currently carrying out a strategy review, which takes current trends and developments into account. The topics of growth, digitization, and increasing maintenance expenses for exhibition halls represent particular challenges in this regard.

2. Earnings

For the 2020 fiscal year, HMC budgeted for revenue of 111.2 million euros, which represents growth of 6.6 percent compared to the reference year. The budget accounts for a net loss before loss ab-sorption in the amount of approximately 8.9 million euros, in particular due to the significant financing costs for leasing the Neue Messe as well as the costs related to temporary solutions for CCH events on the exhibition grounds in the first half of 2020. The current strategy calls for HMC to break even over a two-year period by 2024/25. Property costs will continue to have a negative impact on earnings in the coming years.

Due to the prevalence of the coronavirus pandemic, events have already been cancelled and/or post-poned for 2020, which will have a negative impact on both the revenue and earnings for the 2020 fis-cal year. At the present time, the full extent of the negative effects cannot yet be estimated.

HGV will absorb the losses that are expected in 2020 and the odd-numbered years within the scope of the existing profit-and-loss-transfer agreement.

3. Risk report

Risk management

HMC maintains a risk management system that enables a timely and systematic analysis and evalua-tion of the company’s exposure to risk as well as the development of pertinent countermeasures. The analyses and assessments relate to both strategic and operational risks.

At present, HMC is unaware of any risks that could jeopardize its future development. Due to the prevalence of the coronavirus pandemic, fewer events will be taking place or more will be postponed in the 2020 fiscal year, which will have a negative impact on revenue and earnings for the 2020 fiscal year.
No financial risks are apparent.

Hamburg, March 6, 2020

The Supervisory Board regularly reviewed the situation and development of Hamburg Messe und Congress GmbH in the past fiscal year. In the year under review, it performed the duties incumbent upon it by law and the Articles of Association. The Supervisory Board continuously advised and monitored the Management Board of Hamburg Messe und Congress GmbH in its management of the company.

The Supervisory Board complied with the requirements of the Hamburg Corporate Governance Code and issued a statement of compliance together with the company’s Management Board.

The Management Board informed the Supervisory Board regularly, timely, and comprehensively in written and verbal form about the relevant issues of corporate planning, strategic development, and the results achieved in the company, including the risk situation.

The Supervisory Board held four ordinary meetings in the reporting year. Three Supervisory Board resolutions were also passed by circulation of documents. The Finance Committee met twice and the Construction Committee three times. The Human Resources Committee held two ordinary meetings in the reporting year.

On June 20, 2019, the Annual General Meeting of Hamburg Messe und Congress GmbH appointed FIDES Treuhand GmbH & Co. KG (FIDES) to audit the company’s annual financial statements and to ensure the company’s due and proper conduct of business for the fiscal year from January 1 to December 31, 2019.

FIDES audited the annual financial statements – consisting of balance sheet, income statement, and notes – together with the bookkeeping system and the management report for the fiscal year from January 1 to December 31, 2019.

The audit has not led to any reservations. In the opinion of FIDES and based on the findings of its audit, the annual financial statements comply with the legal requirements and give a true and fair view of the company’s net assets, financial position, and results of operations in accordance with the German principles of proper accounting. The management report is consistent with the annual financial statements, provides a suitable overview of the company’s situation, and suitably presents the opportunities and risks of future development.

The Finance Committee at its meeting on May 18, 2020, and the Supervisory Board at its meeting on June 16, 2020 – both of which took place as web conferences due to the coronavirus pandemic – examined the annual financial statements, the management report, and the report from FIDES in detail. The Supervisory Board has no objections to these documents and agrees with the results of the auditor’s report. The Supervisory Board approves both the management report and the annual financial statements as of December 31, 2019.

The Supervisory Board thanks the Management Board and the employees for the successful 2019 fiscal year.

Hamburg, June 2020

State Secretary Dr. Torsten Sevecke
Supervisory Board Chairman

Johann C. Lindenberg
Former National Chairman of Unilever Deutschland, Chairman of the Supervisory Board (until June 19, 2019)

Dr. Torsten Sevecke
Hamburg Ministry for Economics, Transport, and Innovation, Chairman of the Supervisory Board (since September 10, 2019)

Christi Degen
Hamburg Chamber of Commerce (until June 19, 2019)

Jeanette Gonnermann
Hamburg Chamber of Commerce (since September 10, 2019)

Brigitte Engler
City Management Hamburg

Jutta Hartung
Hamburg Financial Authority

Kai Hollmann
Gastwerk Hotel Hamburg Verwaltungsgesellschaft mbH

Oliver Jensen
Gastwerk Hotel Hamburg Verwaltungsgesellschaft mbH

Julia Wöhlke
Iwan Budnikowsky GmbH & Co. KG (since September 10, 2019)

Martin Köppen
Hamburg Ministry for Economics, Transport, and Innovation

Dr. Renate Krümmer
KRÜMMER fine art e. K. (until June 19, 2019)

Hartmut Hofmann
Hamburg Messe und Congress GmbH

Claudia Jeske
Hamburg Messe und Congress GmbH (until June 19, 2019)

Matthias Balz
Hamburg Messe und Congress GmbH (since September 10, 2019)

Loretta Marsh
Hamburg Messe und Congress GmbH

Frank Minak
Hamburg Messe und Congress GmbH

The Management Board and the Supervisory Board of Hamburg Messe und Congress (HMC) hereby declare:

“With two exceptions, Hamburg Messe und Congress GmbH complied with all the regulations of the Hamburg Corporate Governance Code, for which the Management Board and Supervisory Board were responsible during the 2019 fiscal year.
The following items were not observed:

• Section 5.1.5: The six-week period for distributing the minutes regarding resolutions made by the Supervisory Board could not be adhered to at all times, as the draft minutes had to be approved prior to their publication and the approval processes were not completed in time.
• Section 5.4.8: One member of the Supervisory Board was present in person for fewer than half of the Supervisory Board meetings during the 2019 fiscal year.

In the 2019 fiscal year, Mr. Aufderheide received total gross compensation of 308,990.82 euros, and Mr. Fischer received total gross compensation of 248,372.30 euros. The breakdown of the total compensation can be viewed online at hamburg-messe.de.“

Hamburg, June 2020