Moving into a positive future

Ladies and Gentlemen,

A significantly better result can be presented compared to the previous year, despite the fact that the pandemic also had a big impact on the course of business in 2021. Thanks to the partial lifting of restrictions on major events as of September 2021, we achieved a positive result in the second half of the past year. In the last four months of 2021, we held seven of the planned eight own exhibitions, including Art Basel in Basel that had been postponed to September and Art Basel in Miami Beach. All seven exhibitions proved to be highly successful.

In parallel to the pandemic, the reporting year 2021 was characterized by the intensive driving forward of the transformation. We used the first half of the year, which was weak due to the pandemic, to further develop and prepare the company for the post-pandemic period. We developed numerous initiatives to anticipate the major changes in our markets and embrace the trends towards a more differentiated marketing mix with new experience formats and the integration of digital technologies. By implementing these initiatives, we will put our company back on track for growth. Following the reverberating constraints in the first quarter of 2022, the outlook for the current year is very positive.

While operating income in the 2021 financial year was increased by about 30 % compared to the previous year, operating expenditure remained at the previous year’s level, demonstrating efficient cost management. The positive EBITDA and clearly lower loss for the year compared with the previous year were also achieved through special effects such as government support (short time working, compensation for hardship cases, loan forgiveness), benefits from event cancellation insurance and the sale of a property in Basel.

Key consolidated figures at a glance (2020 in parentheses):

After a loss for the half-year of CHF -29.4 million was posted in the first-half 2021, a profit for half-year of CHF 12.1 million resulted for the second six months of 2021.

After the capital structure and the shareholder base had been strengthened at the end of 2020 through the capital increases and the entry of the new anchor shareholder Lupa, the partial renewal of the Board of Directors was finalized when the Annual General Meeting gave its approval on 28.04.2021. The stakes of approximately one third each held by the two anchor shareholders Canton of Basel-Stadt and Lupa and by further shareholders, with commensurate representation on the Board of Directors, ensures that the public-sector and private-sector interests will continue to be met in equal measure.

The Canton of Basel-Stadt and the Canton and City of Zurich have always supported the necessary diversification and internationalization of MCH Group in the past and, in return, the group has assured them that it will not neglect the interests of their two locations. With Lupa, it proved possible, at an extremely difficult point in time, to find a private investor who was prepared to back this public-private partnership. Lupa has agreed to a long-term involvement and fully supports the corporate strategy, including the commitment to the Basel and Zurich locations.

In spring 2021, the management and Board of Directors reviewed and further developed the business model and the strategy. The business model with its three business units – Community Platforms (physical and digital formats), Experience Marketing (strategy, creation and implementation of marketing solutions) and Venues (own infrastructure in Basel and Zurich) – and the strategic alignment were both confirmed. The corporate strategy is based on the following pillars:

Prioritized strategic initiatives have been defined for all business segments, with the focus on geographical expansion, digital transformation, innovative offerings and the cross-utilization of competences and services throughout the group.

A number of strategic initiatives were implemented in the financial year already. Work on others is in progress to be realized in the 2022 financial year. The three Art Basel shows that were staged were thus supplemented with the extended “Art Basel Live” digital program. Commitments in Tokyo and Singapore are strengthening the presence of Art Basel in Asia. And, at the start of the current financial year, MCH Group and Art Basel were awarded the contract to organize a new art show in Paris, which is to be staged for the first time in October 2022 already. The Swissbau Innovation Lab, the digital ILMAC Community Platform and the first hybrid HackZurich are further examples of successfully implemented initiatives.

The medium-term planning has been aligned to the reviewed and extended strategy. We have set ourselves ambitious growth and profitability targets in the process. We are convinced that the strategic plan that has been drawn up will enable us to achieve these targets both at group level and in all the individual business segments.

After the past two years, our customers are eager to return to physical events again and, at the same time, are showing a readiness to increasingly exploit the potential of complementary digital formats. The expected upturn in the wake of the pandemic will be marked by a high level of pent-up demand, which is already emerging in different geographical areas and economic sectors. This will open major potential for us, which we are well equipped to exploit. Our three business segments give us a strong network capable of offering our customers services over the full length of the experience marketing value chain – not only physically and digitally but also regionally and globally. We have a convincing strategic framework in place with numerous innovative initiatives. And we have a market-oriented organizational structure that is at the same time focused on the interdisciplinary use of our internal synergy potential.

The pandemic will continue to have a strong negative impact in the first half of 2022 before the situation can be expected to return to normal, allowing business activity to pick up again. Giardina has had to be cancelled once more due to the pandemic and Swissbau has been postponed until May – a time of year when it can only be staged as a downsized version. Art Basel in Hong Kong is also being held on a smaller scale again. The cancellation of Baselworld 2022 had to be announced in autumn 2021 already, since developing the new concept is taking longer than initially planned under current conditions. Gratifyingly, the Live Marketing Solutions division is experiencing far fewer “afterpains” of the pandemic and has well-filled order books.

Digital alternatives and the positive development of the Live Marketing Solutions division will not suffice to fully offset the negative impact of the pandemic on our exhibition business in the first half of 2022. And investments must also be made in future-oriented strategic initiatives. At the moment, it can be assumed that, while the 2022 financial year will once again be better than the previous year, it will still close with a negative result.

Despite the strong negative impact of the pandemic, MCH Group has a cash position at the end of 2021 which, together with the normalization of business activities, is the basis for the group's successful further development.

In May 2023, the refinancing of the outstanding CHF 100 million bond is due. The Board of Directors is currently examining all possible options for refinancing this bond. The two anchor shareholders of Canton Basel-Stadt and Lupa have an obligation to provide a backstop for the refinancing. The focus is on strengthening the capital base with the downstream renewal of debt financing. The Board of Directors will be taking these decisions in the first few months of 2022.

We extend our thanks to everyone who contributed to mastering the major challenges that faced us last year and who will be continuing to support us as we move into the future – our employees and shareholders and, most especially, all our customers and partners.