Notes to the Group Account
1. Consolidation and valuation principles
1.1. Consolidated financial statements
The consolidated financial statements of MCH Group are based on the individual financial statements of the group companies as at December 31, 2022, which have been drawn up in accordance with uniform guidelines and are presented in Swiss francs (CHF). They comply with the specialist recommendations on accounting and reporting (Swiss GAAP FER) and the provisions of Swiss law, and thus satisfy the guidelines of the Swiss stock exchange (SIX Swiss Exchange) in the “Swiss Reporting Standard” segment. They give a true and fair view of the financial position and performance of the Group and are prepared on a going concern basis. They are based on the principle of individual valuation for assets and liabilities and on historical cost.
1.2. Consolidation principles
The consolidated financial statements comprise the annual accounts of MCH Group Ltd. and all the group companies in compliance with the following criteria:
- Companies in which MCH Group Ltd. directly or indirectly holds more than half of the voting rights or which are controlled by MCH Group Ltd. in some other ways are fully consolidated. Even if MCH Group Ltd. holds less than half of the voting rights, control may still exist. In this case, 100 % of the assets, liabilities, income, and expenses are included.
- Companies in which MCH Group Ltd. directly or indirectly holds between 20 % and less than 50 % of the voting rights and which are not controlled by MCH Group Ltd. are included using the equity method. In this context, the share of equity is disclosed under the “Financial assets” item in the consolidated financial statements. The pro rata annual result is disclosed in the consolidated income statement under “Result from associated organizations”.
- Companies in which MCH Group Ltd. directly or indirectly holds less than 20 % of the voting rights are recognized in the consolidated balance sheet at acquisition cost less any allowance necessary for business reasons.
Initial consolidation takes place on the date on which MCH Group acquires control. At the time of acquisition, the assets and liabilities of the acquired company are valued at current values. Any difference between the purchase price and the equity of the acquired company remaining after this revaluation is charged or credited directly to retained earnings as goodwill or negative goodwill, respectively. Upon disposal of an investment, goodwill previously offset against equity is included at original cost to determine the gain or loss on disposal of investments recognized in the income statement. In the statement of changes in equity, this transaction is presented in a separate line. Transaction costs are recognized as an expense.
In performing full consolidation, 100 % of the assets, liabilities, income, and expenses are included. Any minority interests in the equity and profit of the consolidated companies are disclosed separately in the consolidated balance sheet and the consolidated income statement. Intercompany assets and liabilities, and income and expenses arising from intercompany transactions and relationships, as well as intercompany profits arising from intercompany transactions, are eliminated. In the case of sales and purchases of shares to and from minority shareholders, the difference between the sales price and the sold pro rata carrying amount of the net assets is recognized through retained earnings.
1.3. Foreign currency conversion
Financial statements of consolidated companies in foreign currencies are translated as follows: Current assets, non-current assets, and liabilities at year-end rates (closing rate); equity at historical rates. The income statement and the cash flow statement are translated at average exchange rates for the year. The resulting currency translation differences are recognized directly in equity.
Items denominated in foreign currencies are translated using the closing rate method. All assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. The effects of foreign currency adjustments are recognized in the income statement. Unrealized exchange rate gains are also recognized in the income statement.
Transactions in foreign currency are translated at the official average exchange rate of the Federal Tax Administration for the corresponding month.
1.4. Recognition and accounting principles
The consolidated financial statements are drawn up on an accrual basis. Accordingly, the effects of transactions and other events are recognized when they occur and not when cash or cash equivalents are received or paid. This means, inter alia, that expenses and income are recognized on an accrual basis.
For all assets, an assessment is made at year-end as to whether there is any indication that the carrying amount of the asset may exceed its recoverable amount (impairment). If an impairment exists, the carrying amount is reduced to the recoverable amount, with the impairment losses being charged to profit or loss for the period.
1.4.1. Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, postal giro and bank accounts, and short-term time deposits (residual term less than 90 days). They are measured at nominal value.
1.4.2. Securities
Securities held for trading purposes are reported under current assets and are valued at current market value. If there is no current value, they are to be valued at no more than acquisition cost less any impairment. The adjustment is made through the income statement.
1.4.3. Trade accounts receivable and allowance for doubtful accounts
Trade receivables are measured at nominal value less any impairment losses (=allowance for doubtful accounts). Individual valuation allowances are first recognized for significant items. The remaining receivables are subject to a lump-sum allowance as follows, based on empirical values, without consideration of the country of origin:
1.4.4. Inventories
Inventories are measured at the lower of acquisition cost and net realizable value. Cost includes all directly attributable material and production costs as well as overheads incurred in bringing the inventories to their present location and condition. If the costs exceed the net fair value, an impairment loss (expense) is recognized in the amount of this difference. This value is determined by means of the current market price on the sales market. Discounts granted are deducted from the cost of goods as purchase price reductions. Subsequent measurement is based on the average cost method.
1.4.5. Work in progress
Work in progress is long-term and/or multi-period construction or stand construction contracts that are identified and measured using the “Completed Contract” method because the requirements for the “Percentage of Completion” method are not cumulatively met. Contract costs incurred are capitalized as work in progress during the construction period. Construction projects are recognized in profit or loss at the time of project acceptance or, in the absence thereof, at the time of delivery to the event or destination. The date of acceptance or the date of delivery is the date on which the risks and rewards pass to the customer. Stand construction projects are recognized in profit or loss at the time the event is held or, in the case of events lasting several days, on the last day of the event. Losses are recognized immediately in profit or loss. Advance payments received are recognized directly in the balance sheet. They are offset against the corresponding long-term contracts for which the advance payment was made, provided there is no right of recovery. Otherwise, they are recognized as a liability.
1.4.6. Other current receivables
Other receivables (including time deposits with a remaining term of more than 90 days) and loans receivable are measured at nominal value less any impairment losses.
1.4.7. Prepayments, accrued income, accrued expense and deferred income
Prepayments, accruals, and deferrals are measured in accordance with the principles applicable to receivables and payables, respectively.
Prepayments and accrued income include both third-party and internal services for trade fairs and events recognized in the reporting year (except for work in progress for both construction and stand construction) for the following year and sales not yet invoiced for the reporting year.
Accrued expense and deferred income include accruals and deferrals relating to income already invoiced for trade fairs and events in the following year, as well as outstanding supplier invoices for goods or services already received. In addition, the accruals for current income taxes are recognized under accrued expense and deferred income.
1.4.8. Tangible fixed assets
Tangible fixed assets are capitalized at acquisition or production cost and valued taking into account scheduled straight-line depreciation and any impairment in value. If the factors that led to an earlier impairment improve significantly, the impairment is reversed in part or in full by means of a reversal of an impairment loss.
Depreciation of tangible fixed assets begins from the first day of use. Assets under construction are accordingly not depreciated. The depreciation period corresponds to the useful economic life and is as follows for:
If it is determined that the useful life of the asset will change, in particular due to technical progress, the condition of the asset or the market, the residual carrying amount of the asset is depreciated over the newly envisaged remaining useful life.
Accompanying own work on investments in property, plant and equipment is generally not capitalized. Exceptions may arise due to major development projects.
Interest expense is capitalized as cost during the construction phase of a tangible fixed asset.
1.4.9. Intangible assets
Intangible assets are non-monetary and have no physical existence. Acquired intangible assets are accounted for using the following categories (incl. useful economic life):
Internally generated intangible assets (trade fairs, events, software, or other intangible assets) are generally not capitalized. Exceptions may arise due to major development projects.
1.4.10. Liabilities and loans payable
Liabilities and loans payable are recognized at their respective nominal values. A liability or a loan payable is current if it:
- is to be settled within 12 months after the balance sheet date, or
- is likely to result in a cash outflow from operating activities, or
- is held for trading purposes
All other liabilities are non-current.
1.4.11. Provisions
Provisions are recognized to cover all risks and obligations identifiable at the balance sheet date. Provisions are recognized when there is a probable obligation to a third party because of a past event (prior to the balance sheet date) and the amount of the obligation can be estimated. The amount of the provision is based on the expected outflow of funds to settle the obligation. This corresponding provision amount is reassessed each year.
The amount of the provision is determined on the basis of an analysis of the relevant event in the past and on the basis of events occurring after the balance sheet date, insofar as this helps to clarify the facts.
Impending losses from trade fairs and events are recognized immediately in profit or loss and the portion exceeding the allowance for capitalized costs is included in provisions.
An event that becomes obligatory after the balance sheet date has an impact on provisions if it becomes clear that the origin of the event occurred prior to the balance sheet date.
1.4.12. Goodwill
In the case of an acquisition, the net assets acquired are valued at current values. The excess of the cost of acquisition over the fair value of the net assets acquired represents goodwill. This is offset directly against equity at the time of acquisition. According to Swiss GAAP FER, this is permitted provided that the effects of theoretical capitalization and theoretical amortization on equity and goodwill are presented separately in the statement of changes in equity and in the notes. Goodwill is theoretically amortized over 5 years. If there is an impairment of goodwill, this is presented in the notes. On disposal of an investment, goodwill previously offset against equity is included at original cost to determine the gain or loss recognized in profit or loss.
1.4.13. Treasury shares
Treasury shares are recognized at cost at the time of acquisition and disclosed as a separate deduction in equity. There is no subsequent valuation. If treasury shares are sold, this is done at the moving average price. Any realized increase or decrease in value is credited or charged to capital reserves without affecting income.
1.4.14. Derivative financial instruments
Derivative financial instruments are recognised in the balance sheet as soon as they are cash flow hedges or fair value hedges and fulfil the definition of an asset or liability.
Derivative financial instruments with no direct link to a cash flow are not recognised in the balance sheet. They are disclosed in the notes with the purpose “without hedging”.
A derivative is recognized in the balance sheet when it meets the definition of an asset or liability. The Group uses currency futures and swaps to hedge currency risks. In particular, cash flow hedges are used to reduce the currency risk of highly probable future cash flows from sales in foreign currencies. All open positions from cash flow hedges at the balance sheet date are disclosed in the notes and are recognized in equity through the hedging reserve.
1.4.15. Pension benefit obligations
The pension obligations of the Group companies for retirement, death or disability are based on the local regulations and practices applicable in the respective countries. Except for MC2, the most important companies are in Switzerland, where the pension plans are administered by a legally independent foundation. Only a few pension plans are operated abroad. The actual economic impact of all pension plans for the Group is calculated as of the balance sheet date.
Any benefit arising from employer contribution reserves (pension asset) is recognized as an asset. The capitalization of a further economic benefit (from an overfunding in the pension plan) is neither intended, nor are the prerequisites for this given. An economic obligation is recognized as a liability if the conditions for the formation of a provision are met.
1.4.16. Share-based payments
A long-term incentive plan (LTIP) exists for members of the group management team, as well as individual authorized persons defined by the Board of Directors. At the beginning of the three-year plan period, the plan participants receive a defined number of performance share units (PSUs), which are distributed over the vesting periods. The expense is recognized as personnel expense in proportion to the duration of the vesting periods. At the end of the respective vesting period, a certain number of shares are transferred to the plan participants for each PSU granted, depending on target achievement. Between zero and 1.5 shares can be allocated per PSU.
The PSUs are valued at the beginning of the respective plan period at the closing share price of the MCH share on the allocation date. The recording of personnel expenses for the current plan periods is based in each case on the degree of target achievement, which is calculated on the basis of the current actual, budget, forecast and medium-term plan figures.
The shares are freely available to the plan participants after the transfer and are not subject to any further vesting period.
1.4.17. Operating income
MCH Group generates its sales from exhibitions, events, construction projects and stand construction projects.
Sales and the associated expenses for exhibitions and events are recognized in the income statement on the date on which the event is held. The decisive date for recognition in profit or loss is the last day of the exhibition or event.
Construction projects are recognized in profit or loss at the time of project acceptance or, in the absence thereof, at the time of delivery to the event or destination. The date of acceptance or the date of delivery is the point in time at which benefit and risk pass to the customer. Stand construction projects are recognized in profit or loss at the time the event is held.
Advance payments made by customers or to suppliers for projects in future financial years are accrued for exhibitions and events and are reported as work in progress and payables for construction and stand construction projects.
In the case of cancelled projects (construction and stand construction), as a rule, the cancellation date of the project is considered the realization date and the related contractual modalities must be considered. If, in exceptional cases, special repayment and cancellation modalities are negotiated, the date of agreement/signing of the repayment and cancellation modalities shall be considered the realization date.
In the case of cancelled exhibitions and events, profit is recognized as follows:
- Canceled exhibitions and events without event cancellation insurance:
Recognition in profit or loss takes place after agreement has been reached with the customers on the repayment and cancellation modalities unless the regulation according to the contract is applied. - Canceled exhibitions and events with event cancellation insurance:
The costs incurred are recognized in the income statement under operating expenses at the time the exhibition or event is cancelled. The insurance benefits are recognized in the income statement either after the insurance company's definitive commitment to pay or when it can be assumed with virtual certainty that the insurance benefits will be paid.
1.4.18. Current and deferred income tax
In accounting for current and future income tax effects, a distinction is made between the determination of current and deferred income tax.
Current income tax is calculated and expensed in accordance with local income tax regulations. The accrual of current income tax is made under deferred income.
Deferred tax arises from valuation differences between the Group's values and the values used for tax purposes and is accrued accordingly. The accrual of deferred income taxes is based on a balance sheet-oriented view and generally considers all future income tax effects. The calculation of deferred income taxes to be accrued is based on the actual expected tax rates. Deferred tax assets on temporary differences are only capitalized if it is probable that they can be offset against future taxable profits. Deferred tax assets based on tax loss carry forwards are not capitalized. Deferred tax assets are recognized in financial assets, deferred tax liabilities in non-current provisions.
1.4.19. Government grants (Subsidies)
In the context of the “Neubau Messe Basel” project, various subsidies (including investment contributions à-fonds-perdu) were granted by the public authorities (Cantons of Basel-Stadt, Basel-Landschaft and Zurich, as well as the City of Zurich). In the 2012 financial year, MCH Messe Schweiz (Basel) AG received a non-repayable mortgage loan of CHF 50.0 million from the Canton of Basel-Stadt, as a financing contribution à-fonds-perdu, which was structured with a term of 20 years and the obligation to continue operation of the Congress Center Basel (CCB) for 20 years. Under buildings, an acquisition value in the same amount as the non-repayable mortgage loan was excluded. The corresponding part of the building is depreciated annually by CHF 2.5 million and at the same time the non-repayable mortgage loan is reduced by CHF 2.5 million and recognized as other operating income.
1.4.20. Transaction with related parties
Individuals or legal entities are deemed to be related parties if they have the ability, either directly or indirectly, to exert significant influence over an entity in making financial or operational decisions. Entities that are either directly or indirectly controlled by the same related parties are also deemed to be related.
MCH Group regards the following persons or organization as related parties:
- Members of the Board of Directors, members of the Executive Board or members of the Management Board.
- Organizations in which MCH Group has a significant holding.
- Shareholders of the reporting organization who directly or indirectly, alone, or together with others, exercise a share of voting rights exceeding 20 %.
- Organizations that are controlled by related parties.
- Pension plans.
The following persons or organizations are not considered to be related parties, unless further reasons indicate a significant influence:
- Two organizations, only because they have members of the board of directors or management in common
- Public authorities.
- Trade unions, public authorities, and public monopolies.
- Individual customers or suppliers with a close or dominant relationship.
- Insurance companies and banks in the normal course of business with customers.
Transactions with related parties considering the materiality principle are to be disclosed separately.
1.4.21. Contingent liabilities and receivables
The probability and amount of contingent liabilities and contingent assets are assessed at the balance sheet date, measured accordingly, and disclosed in the notes.
1.5 Other
Due to rounding, there may be differences in the totals and percentages in this report.
2. Cash and cash equivalents
3. Accounts receivable
3.1. Trade account receivables
3.2 Other account receivables
As at the reporting date, CHF 1.0 million were subject to an ownership restriction (previous year: none).
4. Inventories and work in progress
5. Prepayments, accruals and deferrals
The amount of prepaid expenses and deferred income is primarily influenced by the trade fair cycle.
Costs of CHF 9.4 million (previous year: CHF 9.5 million) were capitalised under “Exhibition and events” in prepaid expenses. Of this amount, CHF 5.1 million were internal services (previous year CHF 3.8 million).
The item “Services invoiced in advance for exhibitions and events” includes in advance invoiced services for exhibitions and events in Switzerland 2024, as well as the Art Basel fairs 2024.
6. Tangible fixed assets
In accordance with the decision of the Cantonal Parliament of 12.03.2008 relating to the financing concept for the new Messe Basel complex (formerly Exhibition Center Basel 2012), security was provided for the non-repayable loan of CHF 50.0 million, secured by a mortgage, that MCH Swiss Exhibition (Basel) Ltd. received as a financing contribution (à fonds perdu) through the issue of a mortgage note for this same amount, charged to the two buildings of the Congress Center Basel.
MCH Group does not own any undeveloped plots of land. The “Developed land” asset category comprises exclusively developed land. The “Buildings” asset category includes all buildings and installations permanently attached to the buildings.
In the reporting year, the City of Zurich exercised its right of first refusal for the Theatre 11 in Zurich. The sale price totalled CHF 2.6 million. The sale price was offset against the existing loans to the Canton of Zurich and the City of Zurich totalling CHF 2.1 million. As part of this transaction, the renovation fund for Theatre 11 was transferred to the new owners with the paid-in amounts of CHF 2.3 million.
The MCH Group carries out an annual review of the value of its exhibition halls. This involves comparing the current book value of the exhibition halls with the realisable value (value in use). The value in use is calculated on the basis of the estimated future cash flows. The future cash flows are in turn based on the estimated future discounted sales and expenses. The value in use of the exhibition halls in Basel and Zurich is calculated on the basis of the achievable hall rental income.
In 2017 and 2018, impairment losses were recognised on the exhibition halls in Basel and Zurich due to the lower estimated future earnings expectations in the national exhibition business at the time. In the years 2019 to 2022, the estimates in this regard had not changed.
Due to the higher future income expectations for the exhibition halls in Zurich in the reporting year, the value in use of the exhibition halls in Zurich will be higher as at 31 December 2023. This results in a reversal of impairment losses of CHF 4.5 million (previous year: none). No reversal of impairment losses was recognized in the financial statements prepared in accordance with stautory law, resulting in deferred tax expenses of CHF 0.8 million on group level in the reporting year (previous year: none).
There was no reversal of impairment or impairment loss for the exhibition halls in Basel in the reporting year (previous year: none)
7. Financial assets
In the United States, deferred tax assets on temporary differences amounting to CHF 8.1 million were capitalised in prior year due to the positive outlook for the future. Due to the positive business performance in the United States, CHF 2.3 million in deferred tax assets were released in the reporting year, resulting in a corresponding deferred tax expense (previous year: deferred tax income).
8. Intangible fixed assets
Additions in the reporting year relate to investments in digitalisation projects of CHF 3.2 million (previous year: CHF 16.6 million) and general modernisations and expansions of CHF 2.5 million (previous year: CHF 1.4 million).
In the previous year, discontinued digitalisation projects in the amount of CHF 9.3 million were written off.
9. Financial liabilities
Net debt (current and non-current financial liabilities less cash and cash equivalents) fell to CHF 66.0 million (previous year: CHF 84.6 million).
As part of the financing of MCH Group, a CHF bond of CHF 100 million was issued in 2018 with a term from 16 May, 2018 to 16 May, 2023 (5 years) and a coupon of 1.875 %. In the current year, shares totalling CHF 3.1 million were repurchased early (previous year: CHF 0.4 million). The bond was repaid in full on 16 May 2023.
10. Provisions
Due to the termination of a tenancy, contractually owed dismantling measures are due, including the disposal of materials brought in. The amount of the provision was increased to CHF 5.0 million in the reporting year (previous year: CHF 0.8 million) and is now recognised as current.
The provision for the Theatre 11 renovation fund was supplemented annually by CHF 0.2 million plus indexed inflation. This fund is used to finance renovation work on Theatre 11. With the sale of Theatre 11 in the reporting year, funds from the renewal fund were transferred to the new owner. Further details on the transaction can be found in the notes under 6.
Deferred taxes totalling CHF 0.8 million (previous year: none) were recognised for temporary differences between the tax accounts of the individual company and the accounts in accordance with Swiss GAAP FER from the reversal of impairment losses on the exhibition hall in Zurich.
The reclaims relate to provisions for tax risks totalling CHF 1.5 million (previous year: CHF 1.5 million) and warranty guarantees from the Experience Marketing division's project business amounting to CHF 0.4 million (previous year: CHF 0.6 million). In the reporting year, warranty guarantees amounting to CHF 0.2 million were released (previous year: CHF 0.9 million).
In the reporting period, provisions totalling CHF 0.3 million were used for pending legal proceedings in Switzerland and Germany that were recognised in the previous year.
11. Treasury shares
In the previous year, MCH Group Ltd. subscribed to 125,000 treasury shares at an issue price of CHF 4.75 per share as part of the capital increase for the purpose of future remuneration of the Executive Board. The subscription rights to which MCH Group Ltd. was entitled were exercised in full.
12. Other operating income
In the United States, the “Paycheck Protection Program (PPP)" loans received, which were directly related to covering the operating costs incurred as a result of the Covid–19 pandemic, were unconditionally waived in the amount of USD 2.2 million (CHF 1.9 million) (previous year: USD 0.3 million, CHF 0.3 million) due to local regulations.
In prior year insurance compensation of CHF 10.8 million, as well as CHF 5.8 million from a debt waiver of the Canton Basel-Stadt were collected in the previous year.
The items “Loan waiver” (reporting year: none, previous year: CHF 5.8 million) and “State Covid–19 indemnities USA” (reporting year: CHF 2.0 million, previous year: CHF 0.3 million) are non-cash items. They are recognised in the consolidated cash flow statement under “Other non-cash transactions” in net cash flow from operating activities.
13. Segment reporting
The segment revenues and results of the business areas are stated prior to consolidation. The division “Community Platforms” comprises the revenues and results of the various physical, hybrid and digital platforms and the associated services of the units “Art & Art Related Industries” and “Exhibition & Events”. “Experience Marketing” includes strategy, creation and implementation of experience marketing services of the “Live Marketing Solutions” division with the brands MCH Global, Expomobilia and MC2. The division “Venues” business comprises the rental business (guest events, rental to own exhibitions) and general services (e.g. parking lot revenue) of the Basel and Zurich exhibition venues. “Corporate Functions & Consolidation” takes in Corporate IT, Corporate Finance, Corporate Procurement, Legal Department, Risk Management & Compliance, Corporate HR, Corporate Communications, Group Strategy & Sustainability and the consolidation effects.
Operating income by geographical market is presented subsequent to consolidation and thus relates purely to third-party sales.
14. Staff and staff expenditure
Personnel expenses include short-time working compensation of CHF 1.1 million (previous year: CHF 0.3 million), all of which was received. The short-time working compensation in the reporting year are back payments for claims from previous years, which are attributable to a federal court ruling in Switzerland. Personnel expenses before short-time working compensation totalled CHF 124.6 million (previous year CHF 115.5 million).
For various services, additional temporary staff are employed as cashiers, cloakroom attendants, guards and office assistants, etc.
15. Share-based payments
Three vesting periods were defined for PSUs from the LTIP 2022–2024. They end as follows:
- On the 1st anniversary of the grant date for one third of the PSUs granted.
- On the 2nd anniversary of the grant date for a further third of the PSUs granted.
- On the 3rd anniversary of the grant date for the final third of the PSUs granted.
Two vesting periods were defined for PSUs from the LTIP 2023–2025. They end as follows:
- On the 2nd anniversary of the grant date for one third of the PSUs granted.
- On the 3rd anniversary of the grant date for two third of the PSUs granted.
The following personnel expenses, including social security benefits, were recognized for the current plan periods
In the reporting year, a total of 46,028 shares were transferred to plan participants (previous year: none).
16. Financial result
Interest expense (interest on capital) relates to the financing costs for operating loans and various other interest expenses.
17. Taxes
Due to the positive business performance in the United States, deferred tax assets on temporary differences in the amount of CHF 5.8 million are capitalized (previous year CHF 8.1 million). The decrease led to a deferred tax expense in the reporting year. Deferred tax assets from losses carried forward are not capitalized.
The calculation was based on the following assumptions:
Impact of the non-capitalization of losses carried forward: Shows how high the impact of tax losses carried forward would have been on income tax expenditure if these had been capitalized. The theoretical capitalization includes the formation and expiry of tax losses carried forward.
Impact from the use of non-capitalized losses carried forward: Shows how much higher income tax expenditure would have been if it had not been possible to claim any tax losses carried forward.
18. Earnings per share
The undiluted earnings per share are calculated by dividing the consolidated result for the year attributable to the shareholders of the parent company, after taxes, by the weighted average number of shares outstanding.
19. Goodwill
In accordance with the consolidation principles, MCH Group offsets the goodwill acquired directly against equity at the time of initial consolidation or the time of acquisition.
The theoretical net carrying amount of goodwill comprises the acquired company Digital Festival AG (merged with MCH Swiss Exhibition (Zurich) Ltd. on Jan 1, 2022).
If the goodwill had been capitalized, assuming an amortization period of five years, the following values would have been obtained:
20. Employee benefits
MCH has various pension schemes and plans, which are based on the local conditions in the countries concerned. The following table provides an overview of the overfunding and underfunding and the economic share attributable to the employer:
The pension fund of MCH Group, Switzerland, is shown under the item “Pension plans with overunderfunding. This is a legally independent foundation on whose Board of Trustees the employer and employees are equally represented. The pension fund manages the occupational benefit scheme for the Swiss companies under its own responsibility on a defined contribution basis. The benefits are determined on the basis of the available retirement assets. They therefore depend on the contributions paid, the vested benefits brought in and the buy-ins, including interest in each case. Financing is provided by employer and employee contributions defined in the regulations. Any overfunding or underfunding is determined on the basis of the pension fund's annual financial statements prepared in accordance with Swiss GAAP FER 26 after deduction of the fluctuation reserves. At the end of the reporting year, there was an overfunding of CHF 47.0 million (previous year CHF 42.0 million). This surplus is fully attributable to the beneficiaries of the pension fund, which is why no economic portion is capitalized.
A defined contribution savings plan in the USA (401k) is stated under “Pension plans without over-/underfunding”. There is no over- or underfunding in these plans. Accordingly, no economic interests are capitalized or recognized as liabilities in the balance sheet.
The employer contribution reserve totaled CHF 0.7 million in the reporting year (previous year CHF 0.7 million).
21. Off-balance-sheet transactions
22. Derivative financial instruments
For commercial reasons, forward transactions without a hedging purpose were concluded in the reporting year (previous year: none)
23. Investments in subsidiaries
23.1 Investments
The reporting date for Art Events Singapore PTE Ltd. is June 30. All other companies in the Group have a reporting date of December 31.
23.2 Change in consolidation scope
MCH Swiss Exhibition (Zurich) Ltd. has absorbed its sister company Digital Festival AG with retroactive effect from January 1, 2022.
MCH Swiss Exhibition (Basel) Ltd. acquired a minority holding of 15 % in Art Events Singapore Pte. Ltd. on 17 January, 2022 for a price of USD 0.3 million.
On March 16, 2022, MCH Group Ltd. founded the company MCH Digital Ventures AG with its registered office in Zurich. The company was renamed Arcual AG on August 30, 2022. On the balance sheet date of December 31, 2023, MCH Group Ltd. held 68.1 % of the participation rights (Prior year: 67.5 %).
MCH Swiss Exhibition (Basel) Ltd. founded the company MCH Group France SAS, based in Paris, France, on March 30, 2022. MCH Swiss Exhibition (Basel) Ltd. holds 100 % of the participation rights.
Arcual AG founded the company Arcual GmbH with registered office in Berlin, Germany, on October 12, 2022. Arcual AG holds 100 % of the participation rights.
Arcual AG founded the company Arcual GmbH with registered office in Berlin, Germany, on October 12, 2022. Arcual AG holds 100 % of the participation rights.
MCH Group AG founded the company MCH Group Japan KK with registered office in Tokyo, Japan, on February 20, 2023. MCH Group AG holds 100 % of the participation rights.
MCH Group AG founded the company MCH Group Netherlands B.V with registered office in Amsterdam, Netherlands, on March 22, 2023. MCH Group AG holds 100 % of the participation rights.
Design Miami Basel AG, in liquidation, which had already been in liquidation in the previous year, was formally deleted from the commercial register in November 2023.
On 23 June, 2022, MCH Swiss Exhibition (Basel) Ltd. acquired a further 31.5 % of the shares in Masterpiece London Ltd. at a price of GBP 59. On 2 February, 2023, MCH Swiss Exhibition (Basel) Ltd. acquired a further 1 % of the shares in Masterpiece London Ltd. at a price of GBP 2. As of this date, MCH Swiss Exhibition (Basel) Ltd. holds 100 % of the participation rights in Masterpiece London Ltd. (previous year: 99 %).
23.3 Further details
By acquiring the shares of Art Events Singapore Pte. Ltd., MCH Swiss Exhibition (Basel) Ltd. also acquired the right to sell back its shareholding in 2024 if the event cannot be staged at all or cannot be staged with economic success.
24. Further details
24.1. Contingent liabilities and receivables
In the previous year, the contingent assets related to prospective payments to MC2 as part of the employment retention credit (ERC) program in the United States. The ERC is a refundable tax credit for companies that continued to pay their employees during the lockdown due to the COVID–19 pandemic. These were collected in the reporting year.
To secure the contractual obligations of Arcual AG, MCH Group Ltd. has issued a guarantee amounting to CHF 2.1 million (USD 2.5 million) as per 31.12.2023 (previous year: CHF 2.3 million, USD 2.5 million). To secure a rent guarantee for MC2, MCH Group Ltd. has issued a guarantee amounting to CHF 0.4 million (USD 0.5 million) as per 31.12.2023 (previous year: CHF 0.7 million, USD 0.8 million). MCH Live Marketing Solutions Ltd. has issued guarantees to secure contractual obligations, which amount to CHF 0.4 million as per 31.12.2023 (previous year: none).
In 2021, a total of CHF 9.8 million as part of the state Covid–19 hardship programs in the canton of Zurich were collected. This amount , which are subject to the Covid–19 Hardship Ordinance of the Swiss Confederation and thus its article on the restriction of use until the end of 2024. The Board of Directors is of the opinion that the restrictions on use have been complied with. As at the date of these financial statements, no other assessment has been made by the authorities that would result in the recognition of a corresponding liability. In the previous year, this matter was explained in Note 12 “Other operating income”.
In the previous year, MCH Swiss Exhibition (Zurich) Ltd. had contingent liabilities of CHF 0.4 million in connection with Theater 11 and the renovation of exhibition restaurants.
24.2. Risk management
MCH Group has implemented a risk management system. On the basis of a risk identification conducted by the Executive Board each year, the key risks for the group are rated according to the probability of their occurrence and their impact and evaluated in depth with the Audit Committee. These risks are avoided, reduced or passed on by means of appropriate measures decided on by the Board of Directors. The risks borne by the group itself are consistently monitored. The last risk assessment conducted by the Board of Directors was adopted on 15.12.2023. To allow the group to respond flexibly to changes in the risk environment, the Executive Board is entitled to commission in-depth risk clarifications on an ad-hoc basis.
24.3. Events subsequent to the balance sheet date
No other significant events occurred after the balance sheet date and up to the approval of the annual financial statements by the Board of Directors that could affect the informative value of the 2023 annual financial statements and would therefore have to be disclosed here.
24.4. Approval of the annual accounts
The Board of Directors of MCH Group Ltd. approved the consolidated annual accounts on March 21, 2024.
