Mirabaud - Discovery Europe Ex-UK DH cap. GBP

Performance update

The standout contributor at the holdings level in December was recent addition Swedish schools operator, AcadeMedia. We believe the business is well positioned to address the estimated shortage of 300,000 German preschool places by opening 10-15 new preschools a year from their base of 98 schools and 8000 places in Germany. AcadeMedia's November AGM also delivered the approval a voluntary share redemption programme to return cash to shareholders from the high free cash flow. In our view, the company's objective of educating 200,000 children each year is a great way to make society smarter.

Portfolio activity

Our process continues to discover smarter, safer and circular businesses that we believe are well positioned for the future. We continue to see opportunities in consumer, industrial and technology businesses. In December, we added a holding in the Swedish industrial Bergman & Beving – a business we have known for some time having successfully held one of its spin-offs, Lagercrantz, since 2015. The management of Lagercrantz have since returned to Bergman & Beving to transform that business, with a focus on niche industries, high market shares, margins and free cash flow. We hope management will be successful in building on the business' strengths in workplace safety.

As the many crises that Europe has faced fall into historical perspective, we observe resilience and see opportunity. Inflation is beginning to decelerate and European central banks are easing, but tight monetary conditions continue globally, so we remain vigilant. We see an evergreen opportunity for the discovery of bottom-up fundamental investments that we believe can deliver compounding returns over the long term.