Letter to shareholders
Our financial results are significantly up on the previous year. We were able to increase both sales and EBITDA substantially; however, the Covid–19 pandemic still weighed heavily on the first few months of the year, resulting in another net loss in the single-digit millions for the year.
MCH Group can look back on what were probably the most challenging and turbulent years in its history. On the one hand, the business results for 2022 still reflect the recent past with all its difficulties, and on the other hand, they signal a successful future. We are confident that MCH Group has weathered the storm and that the strategy of growth and expansion we have adopted will bear fruit in the coming years.
Covid effect (January – April 2022)
In the spring of 2023, at the time of publication of this annual report, the global pandemic seems almost forgotten, and we were pleased to note the lifting of the last restrictions in Hong Kong. Amid this pleasing news we must not forget that the first trimester of 2022 was still strongly marked by the ongoing effects of the Covid 19 pandemic, which presented us with major challenges: the regular Swissbau in January was disallowed by the Basel health authorities, which also affected Expomobilia sales; Giardina in Zurich had to be cancelled for the third year in a row; Art Basel Hong Kong had to be postponed and held on a reduced scale; in the area of experiential marketing, a number of orders were cancelled. We estimate that we generated around CHF 45 million less in sales due to these effects. It was not until May that we were finally able to resume all activities with virtually no restrictions, and the unbroken demand for live events and live experiences among exhibitors and visitors alike could be met without any restraints – with the exception of Asia.
Changes in the management team
The year 2022 was also marked by changes to our management team. As of July 1, 2022, Florian Faber took over as Group CEO and Chairman of the Executive Board from Beat Zwahlen. The Executive Board now consists of the Group CEO and the Group CFO. In November, we were able to announce the return of Noah Horowitz as CEO Art Basel, following Marc Spieglerʼs decision to leave the company after a long and successful period at the helm of Art Basel. Richard McAdam, who had led MC2 during a long and successful career, retired and was replaced by Don Lee, who joined MCH Group from Publicis Group as CEO of MC2. We also created a new “Corporate Strategy and Sustainability” position to anchor these important topics in the Executive Board. And finally, in our Swiss business, we merged the “Venues” (guest events) and “Swiss Events” (own exhibitions) units into the new “Exhibitions & Events” unit.
The Group Management Team is now fully staffed and consists of 11 members. It represents all business units and services and will act as a globally networked team with a focus on our customers and their needs.
The members of the Group Management Team:
You can find more information about the members of the management team in the section "Management and Culture".
Success in our core business
Despite the challenges posed by the pandemic, we recorded numerous successes in 2022. Of particular note were our Art Basel events, including the first edition of Paris+ par Art Basel in the French capital and our 20th anniversary edition in Miami Beach. Art Basel Hong Kong was still constrained by local measures but may be considered a success under the circumstances. Art Basel in Basel was held in June for the first time since the beginning of the pandemic in early 2020. The pent-up demand and the excellent quality of the offer led to lively sales in all segments of the market and throughout the duration of the fair.
In autumn, we also launched our start-up Arcual, the first blockchain ecosystem developed by the art community for the art community – a platform specially developed together with the Luma Foundation and Boston Consulting Group Digital Ventures to support royalty exchanges, efficient payments, and digital proofs of authenticity across the art ecosystem.
Swissbau, our trade fair for the construction industry, was not allowed to take place in January as usual due to a decision by the Department of Public Health and was held in May under the adapted concept “Swissbau Compact”. It will be held again in full in January 2024. The traditionally busy autumn in the Swiss home market was extremely successful, led by the Wood trade fair, which only takes place every three years and this time was also able to host the “World Skills” competition in three disciplines.
The experience marketing business with the Live Marketing Solutions division also developed excellently and is now responsible for over two-thirds of our total sales. MC2 in the USA and MCH Global in particular have further consolidated their leading positions in their respective markets.
Further information on our business units and the wide range of activities and successes they have achieved can be found in the relevant sections of the Annual Report.
Capital increase to secure the future
In order to secure growth and to refinance the CHF 100 million bond maturing in spring 2023, we decided to increase our capital. As part of the rights offering, a total of 16,183,796 new registered shares were placed, corresponding to around 87 % of the registered shares offered. By issuing the new registered shares at the offer price of CHF 4.75, MCH Group has generated gross proceeds totaling CHF 76.9 million. It is encouraging that, with the Canton of Basel-Stadt and Lupa Systems, we have two anchor shareholders pursuing a long-term and sustainable strategy and thus ensuring the continued thriving of the MCH Group. We are particularly pleased that the Parliament of the Canton of Basel-Stadt, following an intensive and differentiated political process, has ratified the investment decision of the Government Council in a landmark vote. Lupa Systems supports the “Public Private Partnership” and fully endorses the corporate strategy including the commitment to the locations Basel and Zurich.
Financial impact of the “tidying efforts”
Like any company, we have to constantly balance investments in competitiveness and innovative strength on the one hand, and commercial viability on the other. In the second half of the year in particular, we subjected our portfolio of activities and projects to an in-depth analysis and subsequently divested ourselves of certain projects whose economic viability was not or no longer assured, even in the longer term. Due to the write-downs, these decisions resulted in one-time financial effects which, in addition to the Covid effect, also impacted our earnings for 2022.
Outlook for 2023 and beyond
We are optimistic for the coming year: provided the tense geopolitical situation does not deteriorate drastically, we expect further improved EBIT. Net income in 2023 is still expected to be slightly negative. From 2024, we expect positive net earnings again. We are confident that with our focus on growth, expansion, and customer satisfaction, we will master all the challenges ahead.
Finally, we would like to thank our employees for their continued support and commitment, our shareholders for their trust, and our customers and partners for their cooperation.
Chairman of the Board of Directors