VT5 Acquisition Company AG

Investor Presentation • Sep 11, 2024

R&S Group Semi-annual Report 2024

Presentation for investors, analysts and financial media

11 September 2024

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This presentation contains certain forward-looking statements. Such forward-looking statements reflect the current views of management and are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance or achievements of the Group to differ materially from those expressed or implied herein. Although R&S Group is convinced that the forward-looking statements are based on reasonable assumptions, R&S Group cannot guarantee that these expectations will be realized.

Should such risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation.

R&S Group is providing the information in this presentation as of this date and does not undertake any obligation to update any forward-looking statements contained in it as a result of new information, future events or otherwise.

Today's speakers ³

Markus Laesser Group CEO

Matthias P. Weibel Group CFO

Table of contents ⁴

Highlights – Markus Laesser, Group CEO 1

Half year 2024 financial results – Matthias P. Weibel, Group CFO 2

Sustainability – Matthias P. Weibel, Group CFO 3

• Outlook & take-aways Markus Laesser, Group CEO 4
• 5 Q&A Markus Laesser, Matthias P. Weibel

Highlights

Markus Laesser | Group CEO

❝ Developments in line with our strategy to deliver profitable growth on a sustainable basis.❞

• Profitable performance underpinned by market demand
• Acquisition of Kyte Powertech Ltd. for an enterprise value of EUR 250 million (7.3x EV/LTM EBITDA) announced 20 August 2024, in line with anorganic growth strategy
• Confirmed sales growth and EBIT margin guidance of 12% and 20%, respectively, also for combined group, updated dividend guidance for CHF 0.50 per share mid-term
• Capacity expansion with imminent plant opening in Bochnia/PL. FAT¹ scheduled for 23 September 2024 and ramp-up in Q4 with first deliveries to launching customers in Q1 2025. Target output of 1,300 units in first build-up phase.

¹ FAT: Factory Acceptance Test

Highlights 7 Strategic pillars – M&A has always been an instrumental part

Kyte highlights

Source: Company information, Market information Notes:

• 1 Distributed Network Operator
• 2 Refers to 7 out of top 10 clients
• 3 Mega Volt Amp

Kyte product portfolio

Highlights Combined pan-European footprint adding market opportunities

Complementary footprint covering key countries in Western / Central Europe…

…to be leveraged with a combined product portfolio

Source: Company information, Market information

Half year 2024 financial results

Matthias P. Weibel | Group CFO

HY 2024 financial results Key messages (adjusted) as per 30 June 2024

HY 2024 financial results Key financial figures as per 30 June 2024

	HY2023 reported	HY 2023 adjusted1	HY 2024 reported	HY 2024 adjusted	Change in adjusted figures
	MCHF	MCHF	MCHF	MCHF	in%
Order intake	133.3	119.3	141.0	141.0	18%
Order backlog	188.1	174.6	218.2	218.2	25%
Net sales	103.0	95.4	109.9	109.9	15%
Operating result (EBIT)	18.6	18.1	24.0	25.53	41%
as % of net sales	18.1%	19.0%	21.8%	23.2%
Profit	14.5	14.2	12.1	17.32.3	22%
Free cash flow	-2.4	-1.9	રેં રે	7.52	n/a
Net financial position	2.5	2.5	5.1	5.1	104%

Three adjustments

The adjustments help to improve comparability with the previous year because at that time the Czech company SERW was still included in the consolidated figures

We consider the additional tax payment in Italy to be a one-off (impact of 3.7 MCHF on net profit and 2.0 MCHF on free cash flow).

Higher consulting costs were incurred in connection with M&A activities in the first half of the year 2024, which led to higher other operating expenses of 1.5 MCHF

Higher net sales

+63% higher PoC-related sales compared to prior year (22% of total sales at the end of June)

Positive sales mix (see pie chart on the right side) with 64% net sales in Western Europe (vs. 54% throughout 2023)

5.5% of total net sales generated in the German markets

HY 2024 financial results Consolidated profit & loss statement as per 30 June 2024

A
B
C
D
E
F
G

adjusted EPS at 0.6 CHF

previous HY 2023: «old» R&S group without acquired VT5 and Czech plant SERW included (sold in Dec. 2023)

A Net sales

• all product groups with higher sales compared to previous year
• neglectable impact of FX as stronger PLN was offsetting negative impact of weaker EUR

B Material costs

stable material prices with good availability of key materials; materials ratio at 56% compared to 57% at the end of the year 2023.

Value added (Gross Margin) B

significant increase due to higher output (esp. Italy and Switzerland) and expiry of some low-margin contracts

• C Personnel costs only higher in absolute terms due to higher number of employees to address business growth and strategic expansion of capacities (new plant in Poland), but very stable in relation to sales (18.2%)
• D Operating expenses higher maintenance costs and operational costs as a result of increased output. In addition higher administrative expenses for «being public».
• E Other operating expenses include additional consultancy costs related to ongoing strategic projects (1.5 MCHF)

Depreciation, amortisation

F

slightly higher due to continued increase in investments

G Tax expenses increased due to higher profit, continued consumption of tax loss carryforwards (most of the available losses were consumed in 2023), expired tax exemptions for Tesar PL and a subsequent tax payment in Italy (3.7 MCHF)

HY 2024 financial results Continuing strong Order Intake provides stable Backlog

MCHF

• Continuously high monthly order intake from key markets (CH, GER, IT) and stable order backlog for 2024 and beyond.
• Build-up of new capacities will gradually put more pressure on prices. However, no price erosion is expected and margins will remain very attractive due to stable material prices.
• Since months avg. book-to-bill flat > 1.2 (see graph above)
• High backlog for Oil-Distribution and Power Transformers until Q4/2025, normal backlog for Cast Resin Transformers until end of 2024

HY 2024 financial results Consolidated Balance Sheet as per 30 June 2024

A B C

B Increase is reflecting higher business volumes as it is including higher work-in-progress (PoC-WIP) stock amount compared to the end of 2023 Decrease of cash due to reductio of financial liabilities and payout of dividend out of the capital contribution reserve in the first half of the year. C Including interest-bearing cash deposit for bank guarantee limit in Poland A D Increase in short-term provisions is attributable to an increase in tax provisions (CHF 4.2 million) associated with growing profitability and the result of a subsequent tax audit in Italy.

B
D
A
A

HY 2024 financial results Consolidated Cash Flow Statement as per 30 June 2024

A
B
C
D
E
E

• ^A Mainly attributable to higher tax provisions as a result of the overall increase of the business volume and operational profit, higher accruals for customer claims (risk provisioning for penalties and onerous contracts), as well as tax provisions
• B Includes a pledge for bank guarantees in Poland
• C Increase in PoC-WIP balances due to higher business volumes
• D Positive impact of increase in advance payments from customers in other current liabilities and CHF 8 million in net inventories (total 18.5 MCHF)
• E High financing cash outflows due to dividend payout out of the capital contribution reserve and partial repayment of bank loan at holding level RSG, which was raised in connection with the initial business combination (IBC) and going public end of 2023

previous HY 2023: «old» R&S group without acquired VT5 and Czech plant SERW included (sold in Dec. 2023)

Sustainability

Matthias P. Weibel | Group CFO

Sustainability Update on activities

• Goal set to achieve ISO 50001 certification for energy management in all plants by 2025 by improving energy efficiency, reducing environmental footprint and supporting sustainable operations.
• Multi-site assessment at Group level is being analyzed with the aim of identifying best practices, opitimizing allocation of plant resources and ensuring compliance with regulations and industry standards.
• Installations of solar panels on building roof in Italy and Poland (Bochnia – see picture) and are being evaluated for other plants in Poland. The Sissach (Switzerland) plant is already utilizing energy from solar panels.
• R&S Group set the target to reduce GHG emissions by 33% by 2033 versus 2023 levels and to be climate neutral by 2050, in accordance with the Swiss Climate and Innovation Act.
• Group policy on zero-tolerance with regard to child labour no imports or process of conflict minerals.
• New compliance officer responsible for all ESG matters is being hired.

Outlook & take-aways

Markus Laesser | Group CEO Matthias P. Weibel | Group CFO

Outlook & take-aways Update on 2024 and mid-term guidance

	2024 outlook1	Mid-term outlook2	Commentary
	Confirmed	Confirmed
Net sales growth	Above 12%	Around 12%	• Mid-term outlook organic growth over the cycle • Strong tailwind from global electrification demand, decarbonization, decentralization and aged grids
	Confirmed	Confirmed
EBIT margin	Around 20% of net sales	Around 20% of net sales	• Resilient gross profit margin profile • Economies of scale from continued net sales growth • Operational excellence supporting margin expansion
	Under review	Under review	• FCF equals cash flow from operating activities minus cash
Free cash flow margin	Mid-teens double-digit as % of net sales*	Mid-teens double-digit as % of net sales**	flow from investing activities • 2024 under review due to M&A transaction costs and subsequent tax payments in Italy • * mid-term being reviewed due to combined Capex plans
	Changed	Changed	• Stable dividend for FY2024 to FY20263 , thereafter
Dividend policy and leverage	CHF 0.50 per share	CHF 0.50 per share	accelerated • Mid-term target leverage of around 1.5x Net Debt4 / LTM EBITDA based on expected high warrant conversion; excess cash to be returned to shareholders

Notes:

• 1 Latest guidance for 2024 (announced on 20 August 2024)
• 2 Based on current mid-term plan (announced 20 August 2024)
• 3 Actual year financial target to be paid out the following year 4 Including lease liabilities and PF for equity issuance

May 2024

Confirmed

Under review Changed

Outlook & take-aways Key take-aways

R&S Group and Kyte Powertech are excited to join forces looking ahead into a bright future, guaranteeing energy and transforming the world of energy every day

1 2 3 4

R&S Group has delivered a successful financial and operational performance since its listing, creating meaningful value for shareholders

Part of the R&S Group success story can be attributed to the group's robust strategic roadmap and DNA, which M&A is a key part of

Kyte represents an opportunity to expand R&S Group's position as market leader in selected products and markets while maintaining a high standard of quality and technical expertise

The acquisition will further enhance R&S' attractive financial profile through Kyte's attractive growth and margin profile

Outlook & take-aways Stronger together!

The acquisition of Kyte Powertech is a natural next step in the evolution of R&S Group.

Next update on combined group strategy and integration

to follow at Capital Markets Day in Zurich on 31 October

Q&A

Thank you for your attention.

We are now happy to answer your questions.

Financial Calendar 2024/2025

Capital Markets Day 31 October 2024 Trading update full-year 2024 sales 06 March 2025 Release of full-year 2024 results 15 April 2025 Annual General Meeting 14 May 2025

Contact

Investor and Media Relations: Doris Rudischhauser Phone: +41 79 410 81 88 Email: investors@the-rsgroup.com

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Appendix

Kyte: a high-quality asset acquired at an attractive valuation

Acquisition consideration (EURm)

Sources: Company information

Notes: EUR/CHF of 0.9324 as secured via FX forward for the transaction

1 Including adjusted net cash, NWC adjustment, ticking fee and employee benefit trust consideration

2 R&S Group Holding AG will receive equity proceeds from the committed execution of R&S Group warrants, among others, by Artemis Beteiligungen at the amount of CHF 9.6m and from the partial sale of treasury shares held by the company of ~C HF 10m secured by a commitment of Zürcher Kantonalbank

3 Net debt / LTM EBITDA as of Jun-24 including lease liabilities and PF for equity issuance 4 Including lease liabilities and PF for equity issuance

• Bridge financing facility provided by UBS

– Take-out by a combination of bank debt, excess

• Kyte Powertech management rollover is subject to a 1 year lock-up period for 25% of their shares and a 2 year lock-up period for the remaining 75% of shares

– Acquisition results in a PF leverage³ of around 2.25x with the aim of reducing it to ~2x by year-end 2024

– Mid-term target leverage of around 1.5x Net Debt⁴ / LTM EBITDA based on high warrant conversion

• The transaction is expected to be highly EPS accretive⁵

cash and equity issuance of ~CHF 23m²

– R&S has secured commitments for the equity issuance to be executed in a timely manner

5 Based on existing accounting principles in place for both companies

• Leverage

28

Financial profiles over the last 12 months (LTM)

Sources: Company information, R&S Group semi-annual report, Kyte June reporting

Notes: New R&S Group PF numbers represent a simple addition of R&S Group and Kyte figures, without including synergies and accounting standards, PPA and other adjustments 1 FX rate for Kyte at EUR/CHF 0.96

2 Adjusted for CHF9.5m loss from disposal of R&S Group's Czech plant SERW in December 2023 and M&A transaction costs of CHF1.6m

3 R&S Group FCF calculated as cash flow from operating activities minus cash flow from investing activities; Kyte Powertech not reported, figure calculated as the movement in cash balance during 12-month period

Kyte Powertech transaction Strong rationale for the combination of R&S Group and Kyte

The combination of R&S Group and Kyte will increase R&S Group's profile as a public company, strengthen market leading positions, create a deeper management bench, and enhance product offerings and technical expertise for both companies

Combined increase in leading market positions and expansion of European regional footprint

Complementary product portfolio & expertise in distribution transformers

Joint network and service expertise, and potential to increase share of wallet with customers

Shared deep bench of management expertise with respectively high levels of market competence in their core segments

R&S Group can facilitate and support Kyte's growth with historically underserved industrial customers; in turn, Kyte's design capabilities¹ will enhance R&S Group's existing customer relationships

Shared culture, including a focus on product on quality² and sustainability

Similarly attractive financial profiles, with growth and profitability of both companies to be uplifted by topline and cost synergies

• 1 Refers to Kyte's "DesDT" software
• 2 Refers to <0.1% transformer failure rate at Kyte