Letter to shareholders

The reporting year 2023 has been marked by notable successes as well as challenges. We're proud of the record numbers posted by our events and congress business, as well as the continued growth of MC² in the USA, and the solid performance of Art Basel.

However, we are aware there's still much work to be done. Art Basel revenue growth and expansion are at an early stage, and our Target Operating Model (TOM) and cost management must improve; we have identified clear plans to achieve these targets. We recognise the sustainable recovery of our Group profitability will only be achieved once the transformation is completed.

We are confident that our strategy of growth and expansion is the right one, and with the underlying impact of our cost review plan, we'll start seeing improvements in 2024 already.

Third party rentals of our infrastructure in Basel and Zurich have delivered very strong figures, achieving a record year of 27 congresses and 23 guest exhibitions with more than 500,000 visitors.

Conversely, our own events have not returned to their pre-pandemic highs. Despite improved, enthusiastically received new formats, the economy behind the Giardina gardening fair, Ilmac life science trade fair, Igeho catering and hotel trade fair, and Swissbau (January 2024, not part of the reporting year) has changed. They've become more complex and demanding, and we must respond to this.

For 2024 and beyond, it's on us to operate trade fairs and year-round digital services that are more economically lucrative. ILMAC 2023 sketched out the blueprint for the future.

Art Basel has had a profitable year, both in Basel and beyond. New management positions are a vital investment to accelerate future success and growth beyond the four exhibitions. Therefore, we now employ four local directors, who will make sure each fair retains its specific local charisma while being a world-class event; we've also hired a Chief Growth Officer and a Chief Digital Officer.

Art Basel Hong Kong celebrated its ten-year anniversary and the city's grand reopening after three years of pandemic-related challenges. The largest edition since 2019, the fair brought together 177 galleries from across the world – a significant increase from 130 galleries in 2022.

The flagship event in Basel was back to full strength last year with 284 of the world's leading galleries. In June, Maike Cruse will be presenting the first Art Basel under her direction, with expanded presence across the city and a novel concept for the Parcours.

Paris+ par Art Basel took place for the second and last time in the temporary Grand Palais Ephémère. This October, it will be held in the newly renovated Grand Palais, where more space will be available for the event to be even more splendid.

Art Basel Miami Beach saw the introduction of a new, more effective floorplan, and again solidified its position as the premier art fair in the Americas,

The Live Marketing Solutions division has been our most important revenue driver for several years now. Notably, our full-service provider for brand experiences, MC² US, has had an outstanding business year, delivering very strong figures.

This impact must be mirrored across the whole division. It's why we'll be reorganising MC², Expomobilia, and MCH Global, simplifying structures, streamlining management, and tightening up the business in the months to come.

In our full-year closing, a negative special effect in the form of a one-off provision placed a significant burden on the financial result. (See our Finance Report for details.) With this excluded, we are within our guidance for both EBITDA (CHF 16.5 million) and the overall result (CHF –9.8 million).

In 2022, we achieved the EBITDA of CHF 14.0 million thanks to a number of positive, one-off special effects. The year-on-year increase from the purely operating business amounts to around CHF 12 million.

Thanks to the commitment of our shareholders and the timely capital increase carried out in autumn 2022, we repaid the bond of CHF 100 million in May 2023 as planned. This increased our equity ratio, which stood at 29.4 % at the end of the year. We were able to further reduce net debt from CHF 84.6 million to CHF 66.0 million.

We remain optimistic for 2024, expecting EBITDA to improve further. Most importantly, we're doing everything in our power to break even and become profitable again. In doing so, we not only focus on growth and expansion, but also on disciplining and cutting costs.

The long-term financial health of our company is ensured as the basis for sustainable growth through the launch of two Group-wide programmes:

The following measures are also planned for 2024:

We're confident that we can master the challenges ahead with the continued support and commitment of our Board of Directors, employees, shareholders, customers, and partners. We thank you all for your co-operation and trust.

With kind regards,