Notes to the Annual Accounts

The present annual accounts of MCH Group Ltd. with head office in Basel have been drawn up in accordance with the Swiss commercial accounting and financial reporting legislation (Title 32 of the Swiss Code of Obligations). The main accounting and valuation principles applied that are not prescribed by law are described below.

Assets are valued at no more than acquisition cost. All assets and liabilities denoted in foreign currencies are translated at the exchange rates applicable on the balance sheet date. The resulting exchange rate differences are included on the income statement. Unrealized exchange gains are deferred and reported under the item “Accrued expenses and deferred income”. Income and expenses denominated in foreign currencies and all transactions in foreign currencies are translated at the exchange rates applicable on the individual transaction dates.

MCH Group Ltd. draws up group accounts in accordance with a recognized accounting standard (Swiss GAAP FER). In accordance with the statutory provisions, it has thus dispensed with the provision of details of interest-bearing liabilities and auditing fees and also with the presentation of a cash flow statement in the notes to the present annual accounts.

The indirect holdings are listed in the “Group Account” section of the Financial Report under “21. Investments in subsidiaries”
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The capital share corresponds to the voting share.

In the previous year, the other payables to third parties included the issue taxes owed for the two capital increases for an amount of CHF 1.0 million.

Other payables towards holdings include already received insurance compensation for the cancelation of shows which has not yet been transferred to the holdings in the amount of CHF 20.6 million (previous year CHF 12.4 million) The event cancelation insurance was taken out by MCH Group Ltd. The insurance compensation is therefore collected in advance by MCH Group Ltd. which then transfers it to the holdings that bear the damage due to the exhibition cancelations. The transfer of the indemnities is made in the amount of the claims for the participations. The retained portion of CHF 3.8 million is included in other operating income.

The long-term, non-interest-bearing liabilities to stakeholders are the non-interest-bearing loan of the Canton of Basel-Stadt to MCH Messe Basel which was transferred to MCH Group as part of the first capital increase in 2020. This loan was converted into share capital on the basis of the non-exercised subscription rights of third-party shareholders. The remaining amount that could not be converted into share capital will continue as a loan.

As at 31.12.2021, the share capital is divided into 14,869,351 registered shares (unchanged compared with the previous year) with a nominal value of CHF 10.00 per share. Two capital increases took place in the 2020 financial year. In the first, the capital was increased by CHF 20,000,000 from CHF 60,065,750 to CHF 80,065,750 (subscription ratio 1 to 3). In the second, the capital was increased by CHF 68,627,760 from CHF 80,065,750 to CHF 148,693,510 (subscription ratio 7 to 6).

Of the reported reserves from capital contributions in the amount of CHF 32.6 million, an amount of CHF 32.2 million was confirmed by the tax authorities, The amount of CHF 0.4 million that has not been confirmed since 2013 relates to issuing costs for the capital increase in 2011. A reclassification within equity has not yet been made.

In the reporting year, 100,000 own shares were purchased for purposes of future compensation of the management. The own shares were purchased in the period from 09.07.2021 to 21.07.2021 at an average market price of CHF 14.71. No shares had been awarded by the balance sheet date of 31.12.2021.

In conjunction with the restructuring of MCH Swiss Exhibition (Basel) Ltd. that was required as a result of Covid-19, a repayment waiver became necessary in the 2020 financial year on the loan granted for CHF 45.0 million.

In the framework of financing MCH Group Ltd., a CHF 100 million bond was raised in 2018, with a term running from 16.05.2018 to 16.05.2023 (5 years) and a coupon of 1.875%. The fees incurred for the issue of the bond are charged to the income statement on an accrual basis over the five-year term.

Due to Covid-19, the company applied for and was granted short-time working by the state during the previous year. No application for compensation was submitted for the 2021 financial year (previous year, CHF 0.2 million, CHF 0.2 million of which was received).

Other operating income includes income from event cancelation insurance of CHF 3.8 million.

The number of full-time employees averaged over the year was between 10 and 50 in both the reporting year and the previous year.

By way of security for obligations taken on by MCH Live Marketing Solutions AG in the context of a work contract, MCH Group Ltd. provided guarantees amounting to CHF 0.9 million (previous year CHF 5.1 million) on 31.12.2021. To secure a rent guarantee for MC2, a guarantee of CHF 2.3 million (USD 2.5 million) was issued (previous year CHF 2.2 million, USD 2.5 million).

As the parent company, MCH Group Ltd. guarantees the fulfilment of the contracts (investment contributions and loans earmarked for a specific purpose) with the public-sector entities (the Cantons of Basel-Stadt, Basel-Landschaft and Zurich and also the City of Zurich) by means of an abstract payment guarantee.

MCH Group Ltd. is jointly and severally liable with MCH Swiss Exhibition (Basel) Ltd. for a credit facility of CHF 40.0 million (previous year CHF 40.0 million), which was taken up for a sum of CHF 40.0 million (previous year CHF 40.0 million) by MCH Swiss Exhibition (Basel) Ltd. on the balance sheet date.

The financing concept with the public-sector entities (the Cantons of Basel-Stadt, Basel-Landschaft and Zurich and also the City of Zurich) provides for a maximum dividend payment of 5% over the full financing term.

At the end of 2021, 2,295 registered shareholders were entered in the share register (previous year 2,255).

Shareholding in excess of 1.00% as of 31.12.2021 (31.12.2020)

¹⁾ Without registered voting rights

The members of the Board of Directors and related parties hold shares to the value of TCHF 43,699 (previous year TCHF 57,738). The taxable value per share is CHF 9.00 (previous year CHF 12.00).

The members of the Executive Board and related parties hold shares to the value of TCHF 108 (previous year TCHF 67). The taxable value per share is CHF 9.00 (previous year CHF 12.00).

As in the previous year, 2021 was strongly influenced by the Covid-19 pandemic. The pandemic had a significant negative impact on business activity and the financial results for the 2021 financial year. The period from January to August 2021 was marked by the continuing measures put in place by governments and public authorities, with severe restrictions on the freedom to travel and on the holding of meetings and events, where these were permitted at all.

In the first eight months of 2021, business activity came virtually to a standstill with the exception of a considerably scaled-down Art Basel in Hong Kong and a small number of activities in the Live Marketing Solutions division. Numerous exhibitions scheduled for the first half of the year, such as SWISS-MOTO, Giardina, Baselworld, IFAS and Powertage, had to be postponed or canceled. In summer 2021, restrictions were relaxed in a large number of European countries, including in Switzerland, and MCH Group was able to successfully stage exhibitions in the autumn within the scope of the conditions imposed. Art Basel in Basel in September and Art Basel in Miami Beach in December were both held with a large number of galleries and visitors. A number of Swiss events were staged, such as Ilmac, Smart Swiss, the Digital Festival in Zurich, which had been newly acquired in 2021 with its Hackathon, and the careers fairs in Zurich and Lausanne. These attracted a record number of visitors in some cases. Igeho and the Wine Festival that had been planned for the autumn had to be canceled, however.

The business field Experience Marketing has also experienced a notable upswing in its business activity since the summer, including with the World Expo that opened in Dubai in October, where the division Marketing Solutions division was able to construct a number of country pavilions, and also with the preparations for a number of key exhibitions and events staged in the USA at the end of 2021 and the start of 2022. Positive Covid-19 case numbers unfortunately increased significantly again at the end of 2021, and renewed restrictions were imposed by governments and authorities in many countries. Since this only occurred after all the major events had been held, however, this development had no further negative impact on the 2021 financial year.

The high case numbers are unfortunately continuing at the beginning of 2022. Despite this, in the light of the latest developments MCH Group remains optimistic that the situation will gradually return to normal and that the exhibitions and events planned for 2022 will take place in most cases. A significant rise in the number of inquiries is also being recorded for the Live Marketing Solutions division. MCH Group will thus experience a pronounced increase in its business activity in 2022 and achieve an improvement in its operating results. Despite this, the situation must be continuously assessed for any negative developments and their corresponding impact on MCH Group.

Despite the strong negative impact of the pandemic, MCH Group has cash and cash equivalents of CHF 113 million gross at the end of 2021. Together with a return to normal of business activities, this forms the basis for the successful further development of the group.

On the basis of the strategy, which was revised by the Board of Directors in its new composition in 2021, and the medium-term plan for the group, the management and Board of Directors have concluded that the liquidity and also the equity base of MCH Group have sufficient reserves to ensure the company’s continued existence beyond 2022.

In May 2023, the refinancing of the outstanding CHF 100 million bond is due. The Board of Directors is in the process of examining all possible options for refinancing this bond. For the refinancing, the two anchor shareholders of the Canton of Basel-Stadt and Lupa Investment Holdings LP have an obligation to provide a backstop (refinancing obligation if refinancing of the bond is not or only partially possible). The focus is on strengthening the capital base with downstream renewal of debt financing. The Board of Directors will be taking these decisions in the first few months of 2022.

As a result, the Board of Directors sees no relevant uncertainty for the future of the MCH Group and its group companies.