Asmallworld : 2023 Annual Report

ANNUAL REPORT 2023

OVERVIEW

ASMALLWORLD at a glance	3
Highlights 2023	5
Letter to Shareholders	6
Business Report 2023	8
Corporate Governance	11
Remuneration Report	26
Financial Report	36
Contacts and Agenda	79

ASMALLWORLD AT A GLANCE

ASMALLWORLD is the world's leading travel & lifestyle community, focusing on experiences: the modern- day definition of luxury.

Centred around the ASMALLWORLD social network, the company operates a digital travel & lifestyle ecosystem that enables and inspires members to travel better, experience more and make new connections. Members of the ASMALLWORLD social network connect through its app and website, where they can meet other members, engage in online discussions, receive travel and lifestyle inspiration, and enjoy a wealth of travel privileges. They also meet at over 800 global ASMALLWORLD events every year, ranging from casual get-togethers in major cities around the world, access to exclusive launches, shows, galas, soirées, exhibitions, major global sporting events, and larger flagship weekend experiences hosted in iconic destinations such as Saint-Tropez.

Other businesses in the ASMALLWORLD travel & lifestyle ecosystem include:

• ASMALLWORLD Collection, a high-end online hotel booking engine focused on the world's most admired hotels, offering the unique "ASMALLWORLD VIP Rate," which allows customers to enjoy exclusive travel benefits at no extra cost
• ASMALLWORLD Private, a high-end travel agency offering personalised travel curation services
• ASW Hospitality, a hotel management and consulting company that operates and manages the iconic North Island resort in the Seychelles
• First Class & More, a subscription-based smart luxury travel service that allows members to enjoy luxury travel at insider prices
• The World's Finest Clubs, the world's leading nightlife concierge, offers its members VIP access to the most exclusive nightlife venues around the world
• ASMALLWORLD DISCOVERY, provides independent hotels with the opportunity to join the GHA DISCOVERY loyalty platform
• Jetbeds, a booking tool for First- and Business-Class flights from the world's leading airlines

THE ASMALLWORLD TRAVEL & LIFESTYLE ECOSYSTEM

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ASMALLWORLD AT A GLANCE

BUSINESS MODEL

ASMALLWORLD reports on two business units: Subscriptions and Services. These segments serve their own strategic purposes and offer different business economics.

The Subscription businesses allow members to use one of our services for a predefined period of time (usually a year), for which members will pay a membership fee. Subscription businesses are characterised by high fixed and low variable costs and offer attractive economies of scale with membership growth. ASMALLWORLD's subscription businesses are the ASMALLWORLD social network, First Class & More and The World's Finest Clubs.

The Service segment is characterised by traditional cost-plus economics, where margins related to scale are more stable. For ASMALLWORLD, the most important service businesses are ASMALLWORLD Events, the ASMALLWORLD Collection, ASMALLWORLD Private travel businesses, and the hotel management and consulting business ASMALLWORLD Hospitality, which includes North Island. In 2023, we have also added ASMALLWORLD DISCOVERY and Jetbeds.

OUR BUSINESS SEGMENTS

SUBSCRIPTIONS

2023 revenue contribution: 70%

Upselling

Membership fees

Mutually

reinforcing

effect

Subscription fees

Value-add for the

customers

Membership fees

Membership offerings are monetised

through annual mebership fees

SERVICES

2023 revenue contribution: 30%

Event tickets

Online hotel bookings

Travel arrangements

Hospitality consulting &

hotel management

Hotel loyalty platform

Flight booking portal

Services are monetised through fees we charge for individual transactions

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HIGHLIGHTS 2023

HIGHLIGHTS 2023

• Net Sales increased by 15%, driven primarily by strong ASMALLWORLD Prestige and Signature membership sales
• Net profit increased by 5.5%
• Debt reduced from 9.1M to 4.2M
• Cash position of CHF 3.0M by the end of 2023
• Increased share capital from 11.7M to 14.5M shares
• Launched ASMALLWORLD DISCOVERY
• Acquired Jetbeds.com, online flight booking portal

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LETTER TO SHAREHOLDERS

DEAR ESTEEMED SHAREHOLDERS,

As we reflect on ASMALLWORLD's 2023 results, it is my pleasure to share with you the factors that contributed to our continued success and growth in this post-pandemic era.

The world of travel has transitioned to a new normal, with travel now surpassing pre-pandemic levels and contributing to our robust growth on the back of ASMALLWORLD's diverse product offering. We managed to keep the momentum that we built in 2022 and carried it over into 2023.

One of the key events of 2022 was to become fully self- funding, a milestone in our company's history. In 2023, we further improved our financial standing by strengthening our balance sheet. We did so through a capital increase and debt repayments, which led to a reduction of more than CHF 5 million or 54% of our debt. Our balance sheet now has only CHF 4.2 million of debt left, which is less than our combined cash and investments, essentially giving us the option to make the company debt-free whenever we choose to do so. To summarise, the financial health of the business has never been better than today.

2023's robust revenue growth and our improved financial health were the result of all of the hard work of the entire ASMALLWORLD team and our partners. This is why I wish to express my sincere appreciation to our dedicated employees, loyal members, valued customers, supportive partners, and, of course, you, our esteemed shareholders, for your unwavering commitment and invaluable contributions to our continued success.

Delving into the details of our performance, the "Prestige" and "Signature" memberships with air miles from Miles & More, Emirates, and Etihad, along with many other travel benefits, have continued to exhibit strong sales growth and are the clear cornerstones of our product offering and our growth today.

The ASMALLWORLD Collection, our online hotel booking platform, witnessed remarkable growth, boasting a 29% increase in bookings from the previous year, and we are proud to report a 27% increase in customers choosing ASMALLWORLD for their travel needs. We are confident that, given our continual efforts to improve upon and expand the Collection, it will continue to experience significant growth and contribute positively to our bottom line for years to come.

For the ASMALLWORLD community, the number of events has gradually increased this year, growing by 31% year-on-year to a total of 856 events, yet we are still working towards reaching pre- pandemic levels. The pandemic's impact on our ambassador network persists, but we are implementing initiatives to rebuild and strengthen it in the coming years.

One significant achievement was the completion of our acquisition of a 10% stake in Global Hotel Alliance (GHA). The strategic partnership with GHA is going well so far, with ASMALLWORLD DISCOVERY, our GHA soft brand, already signing 14 hotels. GHA DISCOVERY's elite members continue to receive complimentary ASMALLWORLD memberships, further contributing to the growth of the ASMALLWORLD community with interesting frequent travellers. In 2023, we also received our first dividend payment from GHA in the amount of CHF 270'000, demonstrating that the investment is also lucrative from a pure financial point of view.

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LETTER TO SHAREHOLDERS

Looking into the future, our board of directors has decided to focus the company's attention on two goals: growth and diversification. Growth is important in our industry because margins are thin and new market competitors enter the market daily to challenge existing players. Only growth will assure that we can build a sustainable position as the world's leading luxury travel and lifestyle community. Diversification, on the other hand, is also important for two reasons: to manage risks and to increase share of wallet with our existing customers. The implication of this strategy is that we may have to sacrifice short-term profitability in the coming years to set ourselves up for long-term success. This is also why we are forecasting a lower EBITDA for next year. However, we are confident that this strategy will pay off in the long run and will create value for the benefit of all stakeholders.

To summarise, 2023 was another record year in terms of sales and the company's balance sheet has never been healthier. For 2024, we aim to continue on this growth path and will further diversify our product portfolio to create a healthy foundation for ASMALLWORLD's future.

On behalf of the Board of Directors, I extend our heartfelt gratitude for your unwavering dedication, support, and invaluable contributions. Together, we continue to shape a sustainable and profitable future for

ASMALLWORLD.

Sincerely,

Michael Manz,

Chairman of the Board

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BUSINESS REPORT 2023

ANOTHER RECORD YEAR

In 2023, the travel industry saw another year of solid growth. As a result, demand for ASMALLWORLD's products and services increased as well, leading to a record year in terms of sales, crossing the CHF 20M mark for the first time in the company's history.

Net sales increased by 15%, from CHF 18.5M to 21.2M, driven by strong demand for the company's Prestige and Signature memberships with Emirates and Miles & More air miles. Additional revenue drivers were First Class & More's travel services, ASMALLWORLD Collection bookings, and fees from the collaboration with Global Hotel Alliance.

EBITDA decreased by 16%, from CHF 2.5M to 2.1M but the net result was still up by 5%, from CHF 1.45M to 1.53M, due to the dividend contribution from the Global Hotel Alliance investment, favourable FX conditions and lower interest payments. Operating cash flow totalled CHF 1.9M, down by 19%, primarily due to changes in working capital.

After becoming self-funding in 2022, ASMALLWORLD further improved its financial health by reducing its debt by 54% year- on-year. The company now holds only CHF 4.2M in debt, compared to CHF 9.1M at the end of 2022, which is less than the sum of its cash and short-term investment positions, giving the company the option to be debt-free if it chooses to do so.

Much of the funding for the debt repayment came from a capital increase that took place in October. 2.7M new shares were created, bringing the number of outstanding shares to 14.4M.

In terms of business unit performance, most of the growth came from the Subscriptions segment, which grew by 13%, while Services grew faster at 20% but from a smaller base. Subscriptions contributed 70% of the company's total revenues, compared to 71% last year, whereas Services contributed 30%, compared to 29% in the previous year.

The Subscriptions segment grew primarily thanks to increased demand for ASMALLWORLD's Prestige and Signature memberships, especially those with Emirates miles. In terms of profitability, the Subscriptions segment still contributed the majority of the company's earnings with CHF 1.2M, while Services contributed CHF 0.8M of a total of CHF 2.1M in

EBITDA.

SUBSCRIPTIONS BUSINESS

The Subscriptions segment increased net sales by 13% to CHF 14.8M, compared to CHF 13.0M in the previous year. The EBITDA margin decreased by 4.6 percentage points, from

13.0% to 8.4%, due to a change in product mix, higher COGS and investments in staff.

ASMALLWORLD's premium memberships, Prestige and Signature, which come with many travel benefits like air miles from Miles & More, Etihad, or Emirates, as well as hotel status levels from Jumeirah and GHA DISCOVERY, continued to experience strong demand in 2023. At the end of 2022, ASMALLWORLD partnered with Emirates to offer Emirates Skywards miles as the third miles option for its memberships. This new customer offering significantly contributed to the strong sales growth in 2023.

The ASMALLWORLD social network and First Class & More continued to add members, and the company's overall member base grew by 6% to 70'200 members. At the same time, renewal rates were comparable to the previous year, not indicating any major shifts in consumer demand.

First Class & More, the group's smart luxury travel business, experienced solid demand for its entry-level Gold and Platinum memberships but struggled to convert members to its top-tier Diamond Membership this year.

The World's Finest Clubs, the world's leading nightlife concierge, is increasing its customer base again after losing nearly all its customers during the pandemic. The website was fully redesigned, and new clubs were added to the network of global nightclubs.

SERVICES BUSINESS

After limited growth in 2022, the Services segment grew by a strong 20% in 2023 to CHF 6.5M. The ASMALLWORLD Collection and ASMALLWORLD Hospitality saw a 29% increase in bookings, while First Class & More's business and first-class flight package sales picked up steam again. The EBITDA margin for the segment decreased slightly, from 14.4% to 13.1%.

ASMALLWORLD continued to improve the functionality and reliability of its online hotel booking platform, the ASMALLWORLD Collection. Customers booking their hotels with the Collection benefit from extraordinary VIP benefits, like room upgrades or USD 100 hotel credit during their stay. Further, they also have the ability to earn loyalty points with five of the world's leading loyalty programmes: World of Hyatt, Marriott Bonvoy, Hilton Honors, IHG and Shangri-La Golden Circle. The Collection saw an increase in bookings of 29% year-on-year, and customer loyalty also proved strong, with 43% of customers booking at least twice during 2023, if not more. ASMALLWORLD is committed to further improving its online hotel booking platform and believes it can significantly contribute to the company's success going forward.

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BUSINESS REPORT 2023

ASMALLWORLD Hospitality managed to score an important win for its client, Murbee Resorts, which has signed a deal with Rosewood Hotels & Resorts® to bring the first Rosewood hotel and residences to the island of Barbuda. ASMALLWORLD has been advising Murbee Resorts on this project for over a year and has played a vital role in brokering this deal with Rosewood Hotels & Resorts. Going forward, ASMALLWORLD will coordinate the development of the resort and oversee the sale of all residential units. A legal dispute with MAG of Life is still ongoing after they unexpectedly terminated the consulting contract for the Ritz-Carlton Residences in Dubai.

Regarding event activity, the number of in-person events for the ASMALLWORLD social network increased by 31%, from

654 events in 2022 to 856 events in 2023. Event attendance increased proportionately. Online events, which were introduced during the pandemic, were purposefully reduced further to allow the team to focus on in-person events again.

GLOBAL HOTEL ALLIANCE COLLABORATION GOING WELL

ASMALLWORLD acquired a 10% stake in Global Hotel Alliance (GHA) in late 2021 and completed this deal in 2022. GHA operates the GHA DISCOVERY hotel loyalty programme and is the world's largest alliance of independent hotel brands with over 800 hotels. GHA offers a source of growth for ASMALLWORLD, as GHA's highest two status levels receive complimentary access to ASMALLWORLD's community.

Further, ASMALLWORLD DISCOVERY went live with its website and first hotels in April last year. ASMALLWORLD's newly created service business allows independent hotels to join the GHA DISCOVERY loyalty platform for the first time. As a service partner to independent hotels, this newly created business added another revenue stream, further diversifying and expanding ASMALLWORLD's long-term earning potential. By the end of 2023, 18 hotels had signed up for the service.

In addition to the operational collaboration with GHA, the financial investment in GHA was also paying off, as GHA was paying out CHF 270'000 in dividends to ASMALLWORLD in 2023.

ACQUISITION OF JETBEDS.COM

In November, ASMALLWORLD acquired the online flight booking site Jetbeds.com, which offers customers a unique tool to find and book First and Business Class flights from the world's leading airlines. This acquisition will further expand ASMALLWORLD's online travel booking capabilities, next to its existing hotel booking platform, ASMALLWORLD Collection. The company plans to continue to operate the standalone website Jetbeds.com but will also leverage the newly acquired booking platform to offer flight bookings from within the ASMALLWORLD and First Class & More apps and websites in the future, further diversifying its revenue streams.

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