Formulafirst : Monats-News Juli 2022 Englisch

Monthly Report July 2022

Stock markets Upward

Performance Outperformance

Investments Slightly increased cash position

Outlook Higher

Markets

The great financial crisis of 2008 brought to light the differing financial soundness of the various euro states. Since autumn 2009, this has manifested itself in widely differing interest rates on the bonds of these countries. As this did not please countries such as France, Italy, etc., the ECB changed course in May 2010. Contrary to the Maastricht Treaty, the central bank gradually embarked on a policy of buying up government bonds en masse. The aim was to ensure that all euro states remained liquid and to prevent bond yields from drifting too far apart. Under Christine Lagarde, the ECB interprets its mandate to protect the euro in such a way that, if possible, there should be no significant interest rate differences between German and Greek government bonds. Regardless of the state of their public finances, all countries in the euro zone should be equally protected from the risk of insolvency, and the ECB's policy is, according to its own will, the guarantor of this. This works if the ECB continues to buy up government bonds with a special focus on euro countries with high debt. Thus, the asset side of the ECB is increasingly becoming a dumping ground for bonds that are shunned on the capital markets because of their poor credit ratings. If interest rates of 8% and more are temporarily required to fight inflation, there can no longer be any special protection for weak debtors. This is why the pressure on Germany to communitize even more debt will increase massively.

Performance

In a good market environment, Formulafirst Ltd.'s July 2022 Net Asset Value gained 8.05% compared to the previous month. The MSCI Europe increased by 7.52%. The resulting outperformance of Formulafirst Ltd. compared to the MSCI Europe is 0.53 percentage points for the month of July 2022. Since the beginning of 2022, an underperformance of 3.20 percentage points has resulted.

Investments

Chocolate and cocoa products manufacturer Barry Callebaut AG reported above-average growth from December 2021 and February 2022 and consequently increased its market share. Its high-margin business with food service and confectionery customers (Gourmet & Specialties) deserves special mention, having reported first-half revenue growth of 30%! Momentum remains strong. Thanks to its cost-plus model, fluctuations in commodity prices (70% of total operating expenses) are passed through without delay. Its mid-term targets (incl. 5% to 7% volume growth) appear realistic. The CEO sees a further recovery of the market. Sonova Holding AG will continue to pursue its growth strategy through innovation and smooth execution. Solid growth in its hearing aid business is targeted through the expansion of its audio care network via acquisitions and greenfield projects and through the successful extension of its Phonak Paradise product cycle. Sales growth of 17% to 21% is forecast for fiscal year 2022/23 with an adjusted EBITA increase of 12% to 18%. New products will be launched in August 2022. Cost savings of CHF 15-20 million are anticipated as of the current fiscal year.

Outlook

It is important to see that although the U.S. core PCE is high and well above the Fed's target, it has already turned down. The recent fall in prices of oil, industrial commodities and food could also moderate headline inflation. On balance, these are positive developments that increase the chances of a soft landing for the U.S. economy. In the coming months, more signs of a weakening economy will become apparent in the wake of higher borrowing costs and tighter financial markets. This is likely to lead to a more pronounced downward trend in inflation. In this environment, the Fed could make a subtle shift to the looser side with a positive effect on the stock markets.

Performance as of July 31, 2022

Net Asset	July			Since
Value	2022	2022	3 years	inception
CHF 29.65	8.05%	-12.33%	1.93%	4.23% p.a.

Share price development as of July 31, 2022 (indexed)

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35

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 27.1%

Consumer discretionaries 20.9%

Healthcare 17.5%

Industrials 8.3%

IT 6.6%

Consumer staples 5.2%

FX 2.5%

Cash 11.9%

Country Breakdown

Germany		34.9%
Switzerland		65.1%

The largest positions

Swatch Group AG							10.5%
Holcim Ltd.							10.1%
SGS SA						8.3%
Wacker Chemie AG					7.4%
Forbo Holding AG				7.2%
Sonova Holding AG		7.0%

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 27.44), at the previous year end (CHF 33.82) respectively 3 years ago (CHF 29.09). 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)

31.7.2022

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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:	274,410
Market capitalization:	CHF 8.1 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]