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 178 international and national trade fairs in Germany rose +1.5 percent in 2018 compared to the respective previous events. Rented stand space increased +1.0 percent, whereas visitor numbers declined again slightly by -0.5 percent compared with the respective previous events. For the year 2019, AUMA expects the 174 planned international and national trade fairs to see a further slight increase in exhibitor numbers and stable visitor numbers. This assessment is supported by a survey of exhibitors who exhibit primarily at B2B trade fairs. The study was carried out by the market research institute TNS Emnid on behalf of AUMA. It also found that German companies wanted to increase their exhibition budgets for the next two years by an average of 3 percent compared to 2017/2018.

2. Foreign business

The Foreign Ministry of Economics and Energy (BMWi) and the Federal Ministry of Food and Agriculture (BMEL) support German exhibitors at foreign trade fairs with their foreign trade fair program. The number of participations in foreign trade fairs amounted to 249 in 2018. For the year 2019 the BMWi is currently planning 270 participations, of which 111 are in Asia – of which 51 in China, including Hong Kong – and 44 in European countries outside the EU. 37 of the total are in Russia. It is followed by Middle East with 40, North Africa with 26, Latin America with 22 and Africa with 21 events. The BMEL is planning 38 participations in 2019. The main regions are Asia with 16 participations and the European countries outside the EU with seven participations.

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 2018. In 2017 Germany was a growth market, however, according to the Meeting & Event Barometer. The number of participants rose year on year by +2.8 percent to 405 million. This put Germany in first place among European conference and congress destinations for the 14th consecutive year, according to the annual ranking by the International Congress and Convention Association (ICCA). In the global ranking, Germany remains in second place after the USA. Particularly striking is the share of international participants, which was up year on year +10.9 percent to 36.5 million.

B. Business development of HMC

Hamburg Messe und Congress GmbH (HMC) generated revenues of 104.3 million euros in 2018. This was 6.6 million euros down on the reference year 2016, which is due to the closure of the CCH – Congress Center Hamburg for revitalization purposes. The largest share of revenue (89 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. The outperformance was particularly due to the exhibitions WINDENERGY HAMBURG and OOHH!

NORTEC celebrated its 30th jubilee in 2018 and set a new exhibitor record with growth of +4 per cent compared with the previous event. Plant and components from the production technology sector were in greater demand at the fair, thanks to the strong performance of the industry. The exhibition focused on 3D printing, electronics manufacturing, packaging and logistics and special activities for start-ups.

HOME², the exhibition for real estate, building and refurbishment, took place for the second time in 2018. The number of exhibitors and the rented space were up compared with the first event, whereas visitor numbers were slightly down.

OOHH! was held for the first time, combining the individual brands TRAVEL HAMBURG, CRUISE WORLD HAMBURG, CARAVANING HAMBURG AND BIKE HAMBURG. The exhibition profited from the upturn in the caravan industry, which drove the rented space up by +18 percent compared with the predecessor event TRAVEL. At the same time the number of exhibitors and visitors increased.

In 2018, INTERNORGA once again demonstrated its position as the leading trade fair in the German gastronomy industry. In its 92nd edition, 1,278 exhibitors occupied the exhibition grounds including a lightweight construction hall. The Association of the German Trade Fair Industry (AUMA) classifies the INTERNORGA as the only international trade fair for gastronomy in Germany, thanks to its share of professional visitors from abroad.

HANSEPFERD Hamburg reported an increase in exhibitors and the net exhibition space. Visitor numbers went up significantly in 2016, but fell in 2018.

For the eighth year in a row, the HANSEBOOT ANCORA BOAT SHOW took place at ancora Marina in Neustadt/Holstein in 2018. This event grew significantly to 169 exhibitors and 18,000 visitors.

SMM 2018 took place on the entire exhibition grounds, including two lightweight construction halls, and hosted 2,249 exhibitors from 67 countries with trade visitors from 125 nations. Digitalization in the maritime industry and more ecological shipping were the overarching themes of the exhibition and its accompanying conferences. The SMM was also the first maritime trade fair to highlight “maritime 3D printing” in a special show with live printing.

WINDENERGY HAMBURG took place for the third time in 2018. The number of visitors increased around +4 percent. The leading industry congress, the WindEurope Conference, was held concurrently with the WINDENERGY HAMBURG in the exhibition halls. Together, the two events – the leading global fair and the conference – form the Global Wind Summit.

COTECA took place for the fifth time, with a larger number of exhibitors, from 28 nations. The net exhibition area remained roughly stable compared with the previous event. Around 31 percent of visitors came from abroad.

HAMBURG MOTOR CLASSICS was held for the second time, occupying three halls on the A grounds. As with the launch event, both exhibitor and visitor numbers were below expectations. Reasons included flat demand for classic cars and a high density of classic car events.

GET NORD, a trade fair for electrics, plumbing, heating and air conditioning in northern Germany, saw increases of +13 percent for exhibitors and +12 percent for the net rental area in 2018. Only the number of visitors was down.

MINERALIEN HAMBURG, Northern Europe’s largest trade fair for minerals and jewelry, recorded a year-on-year increase in rented exhibition space, with the number of exhibitors almost stable.

The Guest Events division developed better than planned in the year under review. Revenue was +24 percent higher than the original budget. The largest of the 31 guest events were the AIRCRAFT INTERIORS EXPO along with NORDSTIL Summer and NORDSTIL Winter.

A total of 43 trade fairs and exhibitions were held in 2018 (2016: 45), including 12 own events (eleven on the exhibition grounds, one in Neustadt/Holstein). 722,649 visitors attended the events held in Germany – 40,916 fewer than in the reference year 2016. This decline is primarily due to the absence of the HANSEBOOT, which last took place in 2017. The gross rented space rose slightly compared to the reference year 2016 (+5 percent) and amounted to 1,089,982 square meters. Additional gross hall space of 131,906 square meters was let for CCH events held on the exhibition grounds in 2018.

2. Foreign Business division

Every year Hamburg Messe und Congress GmbH (HMC) organizes many joint participations in trade fairs, mainly on behalf of the Federal Ministry of Economics 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, gastronomy and airport construction and technology industries. In the reporting period HMC organized 13 joint participations on behalf of the BMWi. Highlights of the international activities were the successful organization and implementation of the Seatrade Cruise Global, with 44 exhibitors, and the Offshore Technology Conference (OTC) in Houston, with 67 exhibitors, along with the first organization of a German joint participation at a trade fair in Chile – the FIDAE in Santiago de Chile. The year 2018 was also marked by preparations for organizing the German contribution to the EXPO 2019 in Beijing on behalf of the BMEL. The EXPO is taking place from April 29 to October 7, 2019.

3. CCH division

Since January 1, 2017, the CCH – Congress Center Hamburg – has been closed for the revitalization decided by the Free and Hanseatic City of Hamburg in 2014. During the renovation period, CCH customers will be offered an interim solution on the exhibition grounds. In 2018 the events included ENDOCLUBNORD with 2,100 participants, a works meeting of the Elbkinder association of Hamburg kindergardens, with 2,150 participants, and the annual general meetings of Beiersdorf AG and Hamburg Hafen und Logistik AG (HHLA) with 1,500 and 1,000 participants respectively.

C. Economic situation

1. Development of revenue

Hamburg Messe und Congress GmbH (HMC) reported revenues of 104.3 million euros in 2018 (2016: 110.9 million euros). The total revenue of 2018 breaks down to the individual divisions as follows: Trade Fair: 56.9 million euros, CCH: 0.8 million euros, Guest Events: 13.4 million euros, Foreign Business: 7.0 million euros, Services: 22.9 million euros. Revenue from the Property division totaled 3.1 million euros.

2. Profit/loss for the year

The 2018 fiscal year ended with a loss for the year of -1.6 million euros before loss absorption by HGV (2016: -1.9 million euros). Lower maintenance expenses and lower depreciation and amortization meant earnings were better than in the reference year 2016. However, these improvements were offset by lower revenues due to the closure and revitalization of the CCH. Lower depreciation and amortization resulted from transferring non-current assets in the CCH extension from 2007 to CCH Immobilien GmbH & Co. KG. The result for the year 2018 was 2.3 million euros higher than forecast. This positive difference is largely due to better business performance, particularly in the Trade Fair and Guest Events divisions.

3. Employees

At the end of 2018, Hamburg Messe und Congress GmbH (HMC) had 310 employees (2017: 300), of which 287 were on permanent and 23 on temporary contracts (2017: 273 permanent and 27 temporary contracts). Expressed in FTEs, HMC had around 255 (2017: 254) as at year-end. In addition, HMC provided 21 apprenticeships for prospective event, office and IT administrators, event technology specialists and Bachelor of Arts (BA) students participating in dual study programs.

HMC would also like to keep expanding the share of women in management positions. The goal of increasing the share to at least 40 percent by 2017 was already achieved in 2016. As at year-end 2018 women accounted for 41 percent of the management positions.

4. Net assets

Total assets increased by 1.5 million euros to 83.2 million euros in the year under review, resulting in a fall in the equity ratio from 14.3 percent to 14 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

Due to the rotation of events, fewer own events will take place in fiscal year 2019 than in even-numbered years. 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 hosting of additional events in the CCH once it has reopened. Collaborations with other domestic and foreign trade fair organizers will also be considered and larger numbers of events acquired for the uneven years wherever possible.

2. Earnings

Hamburg Messe und Congress GmbH (HMC) anticipates revenue of 68.2 million euros for the 2019 fiscal year, which corresponds to a decline in revenue of -6.3 percent compared with the reference year. The contraction is mainly due to an amendment in the contract for organizing the EXPO 2019 in China, but which will have no impact on the result for the year. Owing to the significant financing costs for leasing the “Neue Messe” in particular, the company expects to post a net loss before loss absorption. Property costs will continue to have a negative impact on earnings in the coming years. Higher losses are also expected in the future, especially in uneven years. The current strategy calls for HMC to break even over a two-year period by 2024-25.

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

3. Risk report

Risk management

Hamburg Messe und Congress GmbH (HMC) maintains a risk management system that enables a timely and systematic analysis and evaluation 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.

No financial risks are apparent.

Hamburg, March 7, 2019

The Supervisory Board regularly reviewed the situation and development of Hamburg Messe und Congress GmbH (HMC) 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 HMC 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. One Supervisory Board resolution was also passed by circulation of documents and one by telephone. The Finance Committee met twice and the Construction Committee three times. The Human Resources Committee held four ordinary meetings in the reporting year.

On Monday, June 18, 2018, 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 Monday, December 31, 2018.

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 Monday, December 31, 2018.

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 Monday, May 20, 2019, and the Supervisory Board at its meeting on Wednesday, June 19, 2019, 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 Monday, December 31, 2018.

The Supervisory Board thanks the Management Board and the employees for the particularly successful fiscal year 2018.

Hamburg, June 2019

Johann C. Lindenberg
Chairman of Supervisory Board

Johann C. Lindenberg
Economist, Former National Chairman Unilever Germany (chairman of the supervisory board)

Christi Degen
General Manager, Hamburg Chamber of Commerce (Since March 6, 2018)

Brigitte Engler
Managing Director Hamburg City Management

Jutta Hartung
Employee Department of Finance, Free and Hanseatic City of Hamburg

Hartmut Hofmann
Director Production CCH, Hamburg Messe und Congress GmbH

Kai Hollmann
Managing Director, Gastwerk Hotel Hamburg Verwaltungsgesellschaft mbH

Claudia Jeske
Project Manager, Hamburg Messe und Congress GmbH

Dr. Rainer Klemmt-Nissen
Managing Director, HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH (Until June 18, 2018)

Oliver Jensen
Managing Director, HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH (Since June 19, 2018)

Martin Köppen
Office Manager, Department of Economics, Transport and Innovation, Free and Hanseatic City of Hamburg

Dr. Renate Krümmer
Owner / Managing Director, KRÜMMER fine art e. K.

Loretta Marsh
Chairperson Works Council, Hamburg Messe und Congress GmbH

Frank Minak
Technical Project Manager, 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 fiscal year 2018. The following items was 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 attended less than half of the meetings of the Supervisory Board in person during the fiscal year 2018.“

In the fiscal year 2018, Mr. Aufderheide received total gross compensation in the amount of 307,385.32 euros. Mr. Fischer received total gross compensation in the amount of 249,872.30 euros. The breakdown of the total compensation can be viewed online at www.hamburg-messe.de.

Hamburg, June 2019