Formulafirst : Monats-News Februar 2022 Englisch

Monthly Report February 2022

Stock market Weaker

Performance Underperformance

Investments Slightly increased cash position

Outlook Higher

Markets

One of the most important goals of EU climate policy is to increase energy efficiency, which costs the Union several billion euros. Now, an investigation by the European Court of Auditors shows that the EU money, which was supposed to give entrepreneurs an incentive to invest in reducing energy demand, is wasting away ineffectively. It criticizes bureaucrats for failing to analyze the needs of businesses. More than half of the investments would have been made even without EU funding! The EU is not drawing any consequences from the billion-euro flop. Its goal remains to use subsidies to improve the energy efficiency of companies. The goal of "improving the energy efficiency of buildings" cost the Union EUR 14 billion from 2014 to 2020, plus another EUR 5 billion from the member states. The auditors found fault with the fact that EU-funded projects were still not geared toward achieving the greatest potential energy savings per euro invested. Bureaucrats were distributing funds on a first-come,first-served basis. They did not bother to weigh the relative costs and benefits. What is true of subsidies for greater energy efficiency is equally true of transportation projects, agricultural policy, the health sector, or education. There is sloppiness in the allocation process, and money is spent improperly.

Performance

In a weaker market environment, the Net Asset Value of Formulafirst Ltd. decreased by 3.43% in February 2022. The MSCI Europe lost 3.15%. The resulting light underperformance of Formulafirst Ltd. compared to the MSCI Europe is 0.28 percentage points for the month of February 2022. Since the beginning of 2022, an underperformance of 1.23 percentage points has resulted.

Investments

The very strong order intake at Dürr AG's Woodworking Machinery and Systems division comes from all over the world in geographical terms. Europe is ordering very strongly, but China is also ordering heavily, especially in the systems business, which has increased significantly in H2 2021. Large furniture plants are being built in China. Orders in 2021 will be extremely good for Homag. Orders in the range of EUR 1.7-1.8 billion are expected. At Solid Wood for house construction, incoming orders should exceed EUR 200 million in 2021. In 2020, it amounted to only EUR 80 million! Until now, timber house construction in Germany has been carried out by small and medium-sized companies. Now, large investors are penetrating this segment, who want to populate entire neighborhoods with wooden houses in cities, among other things. Fielmann AG will massively expand the acoustic sector, especially in store renovations. Double-digit growth was also achieved in this segment during the pandemic. In acoustics, Fielmann is booked up for months. This margin is no worse than for vision aids. In the Czech Republic, order values are higher than in Germany. In addition, there are no chains there. In Italy, the number of branches was doubled from 20 to 40 in 2021. Further stores are also being opened in Poland. In total, 46 new Fielmann stores will be opened in 2021. In the next 2-3 years, the company wants to enter another 2 countries. Eastern and southern Europe are the obvious candidates.

Outlook

With regard to inflation, we expect it to fall fairly quickly. Clear signals of an easing of supply disruptions are evident. The ISM Delivery Time, Order Backlog and Prices Paid indices fell significantly. The increased oil price acts like a tax increase and depresses costs in other sectors, keeping the general price level stable. The US Employment Cost Index is up 4%, but when you factor in the 2% increase in labor productivity, it translates into 2% inflation! The bar for further acceleration of inflation is high, as price levels would have to continue to rise at an increasing pace. As we consider this highly unlikely, we remain constructive on the equity market.

Performance as of February 28, 2022

Net Asset	February			Since
Value	2022	2022	3 years	inception
CHF 31.28	-3.43%	-7.51%	10.57%	4.61% p.a.

Share price development as of February 28, 2022 (indexed)

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Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20 Jan 21 Jan 22

Formulafirst (CHF) MSCI Europe Index (EUR) SO Index (EUR)

Breakdown by sectors

Materials		29.4%
Healthcare								17.9%
Industrials					12.8%
Consumer discretionaries					10.9%
IT				7.1%
Consumer staples			4.0%
FX		3.5%
Cash							14.4%

Country Breakdown

Germany 46.4%

Switzerland 53.6%

The largest positions

Swatch Group AG 10.9%

Holcim Ltd. 9.7%

SGS SA 8.7%

Forbo Hold. 8.0%

SAP SE 7.1%

Wacker AG 6.7%

This information is not an offer to purchase or subscribe to shares in Formulafirst and may not be circulated in any jurisdictions where it violates any applicable laws or regulations, including and without restriction in the United States of America. While the information given is considered reliable, Formulafirst, respectively 2trade group ltd. don't guarantee that it is complete or accurate. Opinions and estimates may be amended without notice. Past performance is not an indication of future performance.

Formulafirst - investing in "smart owners"

Formulafirst: the concept

Investment idea

Experience shows that owners generally invest more successfully than em- ployees. The Investment company Formulafirst focuses on Smart Owners as they are known. The investment universe consists of owner-managed companies in Central Europe (D-A-CH).

Owner-managed companies and those that are controlled by owner-oriented groups of investors are generally distinguished by their consistent strategy of long-term and sustainable growth. Since owner-managers have a substantial share of their wealth and, in most cases, of their working time invested in the company, their strategic business orientation includes goals such as maintaining the company's independence, a smooth transfer to the next generation as well as safeguarding and growing the company's assets. The long-term perspective, in some cases spanning several generations, is a major reason why these companies are more focused on their long-term strategic positioning rather than on the short-term maximization of returns.

Investment criteria

For owner-managed companies to be included in the investment universe of Formulafirst, the following conditions must be met: a) headquarters in Central Europe (Switzerland, Austria and Germany), b) listed on an regular stock exchange, c) minimum market capitalization of EUR 100 million, d) managed by owner-managers holding at least 15% but no more than 75% of voting rights. The universe of owner-managed companies from which the best stocks are picked by Formulafirst for investment includes the 50 such companies with the highest market capitalization.

The companies selected form the basis for Formulafirst's investments.

Investment strategy

Made up of the 50 owner-managed companies the investment universe is screened by a thorough fundamental analysis in a primarily "bottom-up" approach and the most promising stocks are identified.

Formulafirst invests in equities convertible instruments, options (manag- ing existing positions), futures (to hedge currency and market risks) and shares of holding companies and funds. Investment exposure is 100% of company assets. The investment horizon is long-term and the selection of portfolio positions is limited to a reasonable number. The size of individual investments may not ­exceed 10% of the portfolio when purchased (cost). The investment style is primarily based on the "value" approach and investments are made in an anti-cyclical manner. The maximum sector weighting in the portfolio should not exceed 30%.

NAV and performance calculation

The Net Asset Value (NAV) of the Company is equal to the total assets less total liabilities of the Company (determined on the basis of International Financial Reporting Standards, consistently applied). The NAV per share is calculated by dividing the NAV by the amount of outstanding shares of the Company on the calculation day of the NAV. The monthly, year-to-date as well as the 3 year performance are calculated by dividing the actual NAV per share by the NAV per share a month ago (CHF 32.39), at the previous year end (CHF 33.82) respectively 3 years ago (CHF 28.29). The performance since inception (18 December 2002) reflects the annualized yield since 18 December 2002 till today, using a start NAV of CHF 13.-.

Smart Owners consistently outperform the market (indexed)

28.2.2022

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50 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2017 2018 2019 2020 2021 2022

Smart Owners Index (EUR) MSCI Europe Index (EUR)

Company details
Company:	Formulafirst Ltd., British Virgin Islands
Board of Directors:	Derek P. Baudains, Paul Broxup,
	Markus Gresch
Investment manager:	2trade group ltd., Zug
Management team:	Sammy Matter, Martin Treffer,
	Daniel Biedermann
Auditors:	PricewaterhouseCoopers, Zürich
Corporate structure:	Public limited company
Inception:	18.12.02
Type of stock:	bearer shares
Shares outstanding:	368,787
Market capitalization:	CHF 12 mn
Listing:	Swiss Exchange SIX
Fees:	Management fee of 1.5% p.a.,
	Performance fee 20%
	current hurdle at CHF 34.24
Security number:	146 29 83
Reuters:	FFI.S
Bloomberg:	FFI SW Equity, FFI SW Equity NAV
Net asset value:	Website daily, Wednesday/Saturday in FuW
	(Finanz und Wirtschaft)
Address:	2trade group ltd.
	Baarerstrasse 2, CH-6300 Zug
Investor relations:	Dynamics Group Ltd.
	Alexandre Müller
	Tel.: [phone]
Internet:	www.formulafirst.vg
E-mail:	[e-mail]