Formulafirst : Monats-News Februar 2021 Englisch

Monthly Report February 2021

Stock market Better Performance Underperformance Investments Invested

Outlook Higher

Markets

In order to save the eurozone from disintegration, a joint bond of EUR 750 billion was issued. In the process, a thick red line was crossed. Until now, the German government has been strictly opposed to a construction in which some are liable and the others spend the money. Macron and Merkel are the initiators of this project. It is justified by the urgency of providing rapid assistance to member states in need due to the consequences of the pandemic. Moreover, it is a one-off. But it will not be possible to refuse help in the event of later emergencies. A transfer union, however, will stifle Europe's creativity. Since additional funds will flow at any semblance of eurozone disintegration, no member country will be able to go bankrupt. It will not have to abide by conditions attached to lending. The sanctioning mechanism, i.e. leaving the eurozone, no longer exists. No member state can be forced to repay the loans. They are simply extended. There is no longer a difference between loans and subsidies. The question is how long the people in the creditor states will put up with this. At the moment, Chancellor Merkel can keep people in Germany quiet by saying that a failure of the euro would be far more disastrous for the earning power of the economy and job security than further payments.

Performance

In a better market environment, the Net Asset Value of Formulafirst Ltd. slid by 2.44% in February. The MSCI Europe increased by 2.40%. The resulting underperformance of Formulafirst Ltd. compared to the MSCI Europe is 4.84 percentage points for the month of February 2021. Since the beginning of 2021, an underperformance of 4.17 percentage points has resulted.

Investments

SGS SA reported an organic decline in sales of only 6.5% for 2020. The best performing divisions were Agriculture and Food as well as Consumer and Retail. China, Korea, Taiwan, Vietnam even developed positively. In China, it paid off that SGS is also well positioned in the domestic business. The Group's operating margin was maintained at the previous year's level of 16.1%. As cash flow was higher than in 2019, an unchanged dividend of CHF 80 can be paid. For the current year, the dividend is expected to be at least the same. For 2021, an increase in margins is expected. The solid balance sheet leaves room for further acquisitions in the current year. Swatch Group sales fell organically by 29% last year. Thanks to the good development in China, where double-digit sales increases were realized, the decline in H1 was largely made up in H2. The company used the crisis to cut costs. Nearly 400 boutiques were closed and more advantageous rental conditions were negotiated at many locations. For 2021, the CEO expects a significant acceleration in business. He anticipates a large pent-up demand. Sales at constant exchange rates should almost reach the 2019 level again by the end of this year. In terms of operating profit, Hayek expects a result above the billion mark.

Outlook

The rate at which vaccination is taking place in the US is impressive. It has accelerated to 1.5 million doses per day. At this rate, over 80% of the US population is expected to be vaccinated this summer. This could bring the US back to normal much sooner than expected and trigger a spending boom. This will help the global economy to recover strongly. Moreover, central banks around the world have no intention of tightening policy. The combination of very low interest rates and the recovery in global economic growth will lead to a strong rebound in corporate profits. This should further boost share prices.

Performance as of February 28, 2021

Net Asset	February	Since
Value	2021	2021	3 years	inception
CHF 31.17	-2.44%	-2.59%	-4.30%	4.85% p.a.

Share price development as of February 28, 2021 (indexed)

180

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

Healthcare29.2%

Materials26.8%

Industrials17.0%

Consumer discretionaries10.1%

IT7.5%

Consumer staples4.8%

FX -1.2%

Cash5.8%

Country Breakdown

Germany56.4%

Switzerland43.6%

The largest positions

Swatch Group AG10.1%

Wacker Chemie AG9.9%

Fuchs Petrolub SE9.2%

Dürr AG8.7%

SGS SA8.3%

Forbo Holding AG7.7%

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 restric-tion 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 conceptInvestment 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-ori-ented 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.

Smart Owners consistently outperform the market (indexed)

700

600

100

500

400 300

200

80

70

60

50

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

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

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 invest-ments 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 31.95), at the previous year end (CHF 32.00) respectively 3 years ago (CHF 32.57). The perfor-mance since inception (18 December 2002) reflects the annualized yield since 18 December 2002 till today, using a start NAV of CHF 13.-.

Company detailsCompany:

Board of Directors:Investment manager:

Management team:Auditors: Corporate structure: Inception:

Type of stock: Shares outstanding: Market capitalization: Listing:

Fees:

Security number: Reuters: Bloomberg: Net asset value:Address:Investor relations:

28.2.2021

Formulafirst Ltd., British Virgin Islands

Derek P. Baudains, Paul Broxup, Markus Gresch

2trade group ltd., Zug

Sammy Matter, Martin Treffer, Daniel Biedermann

PricewaterhouseCoopers, Zürich Public limited company 18.12.02 bearer shares 395,503 CHF 13 mn

Swiss Exchange SIX Management fee of 1.5% p.a., Performance fee 20% current hurdle at CHF 33.19 146 29 83

FFI.S

FFI SW Equity, FFI SW Equity NAV

Website daily, Wednesday/Saturday in FuW (Finanz und Wirtschaft)

2trade group ltd. Baarerstrasse 2, CH-6300 Zug

Dynamics Group Ltd. Alexandre Müller

Internet: E-mail:

Tel.: [phone]www.formulafirst.vginfo@formulafirst.vg