MCH Group: Transformation in full swing

The MCH Group presents consolidated half-year financial statements for the reporting period from January 1 to June 30, 2018, which are in line with expectations. Operating income increased significantly compared with the first half of the previous year despite a substantial drop in income from the Baselworld watch and jewelry show, mainly due to the strong trade fair cycle (Swissbau) and the MC2 effect, which took effect for the first time over the entire reporting period.

Income statement and balance sheet In the reporting period from January 1 to June 30, 2018, consolidated operating income amounts to CHF 356.6 million and is 16.7 % higher than the first half of the previous year (CHF 305.6 million) Operating expenses of CHF 330.9 million increased by 20.1 % compared to the previous year (CHF 275.5 million). Accordingly, there is a decrease in profitability compared to the same period of the previous year: EBITDA amounts to CHF 53.4 million (previous year CHF 63.7 million), EBIT is CHF 25.7 million (previous year CHF 30.1 million) Net profit is CHF 21.9 million (previous year CHF 26.5 million), which corresponds to a net profit margin of 6.1 % (previous year 8.7 %).

Total assets amounted to CHF 733.9 million as of June 30, 2018 (CHF 688.2 million as of December 31, 2017), which on the assets side are divided into current assets of CHF 327.6 million and non-current assets of CHF 406.3 million. On the liabilities side, liabilities of CHF 477.8 million are offset by equity of CHF 256.1 million. The equity ratio amounts to 34.9 % (as of December 31, 2017 34.0 %). Cash and cash equivalents increased from CHF 115.9 million to CHF 212.8 million in the reporting period due to the successful placement of the debut bond in the amount of CHF 100 million in April 2018.

Transformation process

The MCH Group is undergoing a transformation process in which it must align itself to the major changes in the classic trade show and event business. In the past few weeks, the management has been intensively dealing with this process and has drawn up a corresponding plan of measures. The corporate strategy of expanding the range of services, strengthening the international presence and increasing digitization is being adhered to in principle, although the various initiatives are being reviewed again on the basis of the insights already gained. In addition to a clear focus on those strategic projects with the greatest and most sustainable potential, the organization is also to be streamlined and synergies between the business units better exploited. This transformation process will take a longer time. In addition, the future utilization of the infrastructure in Basel will be reviewed, taking into account possible development scenarios for the exhibition and event business.

Outlook for the 2018 annual result

Since the strongest events always take place in the first half of the year and the summer months without events fall in the second half, business is always weaker in the second half of the year than in the first and is loss-making. The first half of 2018 was cyclically strong due to Swissbau, although this cycle effect has been reduced by the losses at Baselworld compared to previous years. The second half of 2018 eliminates Prodex and Swisstech, which had to be moved from fall 2018 to spring 2019. In addition, the development costs for the first staging of Grand Basel are higher than originally planned.

As a result of these factors, the MCH Group has to adjust its expectation for the 2018 annual result. It is expecting a negative annual result for 2018 before special write-downs in the single-digit million range. It can be assumed that, on the basis of the review to be carried out, a further value adjustment will have to be made for the exhibition halls in Basel, which could lead to an annual loss in the hundreds of millions.

Hans-Kristian Hoejsgaard new CEO ad interim

The Board of Directors has elected Hans-Kristian Hoejsgaard as interim CEO of the MCH Group with effect from 4 September 2018. He will perform this function until the definitive replacement of the operational management. The 60-year-old Hans- Kristian Hoejsgaard is a Danish citizen and has more than 30 years of experience in executive positions in the luxury and consumer goods industry as well as in the specialist retail sector. He has worked for various companies - among them the LVMH- Group - in Asia, Georg Jensen Ltd. in Copenhagen and Timex Group in Connecticut in the USA. From 2011 to 2017, he was CEO of Oettinger Davidoff AG in Basel. Since 2018, he has been running his own consulting company.

"I am delighted to be able to support the MCH Group and lead it on an interim basis until a permanent CEO is found ", says Hans-Kristian Hoejsgaard of his new role. "MCH Group is another international Basel company that I admire and know both as an exhibitor and as a sponsor. I look forward to working with the MCH Group's Board of Directors, management and staff to prepare the company for the future in these strategically challenging times."

Ulrich Vischer, Chairman of the Board of Directors of the MCH Group: "We are pleased that we were able to gain such an experienced manager in Hans-Kristian Hoejsgaard in such a short time. He will be a valuable reinforcement for our company in these challenging times."