Formulafirst : Monats-News Dezember 2021 Englisch

Monthly Report December 2021

Stock market Higher

Performance Outperformance

Investments Increased cash position

Outlook Better

Markets

The energy group Royal Dutch Shell becomes more British. It is moving its headquarters and tax domicile to London. The previous dual presence with two structures and shares is simplified. The group's management expects this to bring greater clarity both internally and externally. The unification of the share should increase the interest of investors, because this should convey a feeling of greater clarity. In addition, in the long run, the British tax authorities should be more friendly to companies than the tax authorities in Holland, which are overlaid by the EU. England also offers a better business climate than Holland, which is locked into EU regulations and courts. Recently, a Dutch court upheld a lawsuit filed by climate activists against Shell in the first instance. A closer look, however, reveals that the location issue is not the most pressing issue when it comes to clarity. An investor demanded that Shell split the group into a fossil energy company with oil and natural gas and a renewable energy company. In the mixed form, there is a danger that the profitable parts of the group will cross-subsidize the less profitable. Climate activists may favor cross-subsidization by fossil fuels to support the buildup of renewables. But the environment isn't helped by dragging green businesses through for a long time only to have them flop. It is better to grow only what can stand on its own.

Performance

In a friendly market trend, the Net Asset Value of Formulafirst Ltd. gained 5.95% in December. The MSCI Europe increased by 5.47%. The resulting outperformance of Formulafirst Ltd. compared to the MSCI Europe is 0.48 percentage points for the month of December 2021. Since the beginning of 2021, an underperformance of 16.69 percentage points has resulted.

Investments

The "Rise with SAP" program is developing very successfully. In the first 9 months of 2021, over 700 customers signed up for it. In Q3 alone, there were over 300, of which 75% were new customers. The share of those customers who signed a contract amount of EUR 5 million or more was 40%. This shows that large customers are also moving to the cloud. By the end of 2021, there should be over 1,000 customers. Through the "Rise with SAP" program, SAP is seeing strong growth for all of its solutions. Current Cloud Backlog growth increased in constant currency from +19% in Q1, to +20% in Q2 and to +22% in Q3! Growth is accelerating across all parameters. Wacker Chemie expects 2021 sales of approx. EUR 6 billion vs. EUR 4.69 in the previous year. EBITDA will be between EUR 1.2 bn and EUR 1.4 bn in 2021 vs. EUR 666 mn last year. The result is expected to be in the upper half of the range. Persistently high polysilicon prices and continued very strong demand in the chemical segments are the reasons for the increased business expectations for the rest of the year. Wacker expects the EBITDA margin to be well above the previous year and ROCE to be well above the cost of capital. Net cash flow is expected to be clearly positive and above the 2020 level. The "Shape the future" program will result in cost reductions of over EUR 100 million in 2021.

Outlook

Positive forces will continue to support share prices. The US economy remains strong, as evidenced by robust labor market numbers and consumer spending. Corporate earnings have been very strong and will continue to grow. The current monetary environment is hyper-stimulative with Fed Fund rates at zero as well as record low long-term interest rates. As a result, the search for yield may continue, driving capital into riskier assets, including equities. Supply chain disruptions are diminishing, so inflation should peak soon. The inflection point should alleviate concerns about the Fed tightening monetary policy too much.

Performance as of December 31, 2021

Net Asset	December			Since
Value	2021	2021	3 years	inception
CHF 33.82	5.95%	5.69%	30.48%	5.07% p.a.

Share price development as of December 31, 2021 (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

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

Breakdown by sectors

Materials 28.7%

Healthcare 17.6%

Industrials 13.9%

Consumer discretionaries 9.8%

IT 8.2%

Consumer staples 3.7%

FX 2.9%

Cash 15.2%

Country Breakdown

Germany 51.9%

Switzerland 48.1%

The largest positions

Swatch Group AG								9.8%
SGS SA							9.2%
Forbo Hold. AG						8.7%
SAP SE					8.2%
Wacker Chemie AG				7.9%
Fuchs Petrolub SE		7.1%

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 31.92), at the previous year end (CHF 32.00) respectively 3 years ago (CHF 25.92). 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)

31.12.2021

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

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:	369,248
Market capitalization:	CHF 12.5 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]