VT5 Acquisition Company AG

Investor Presentation • Aug 20, 2024

Expanding Footprint & Capacity through Strategic Acquisition of Kyte Powertech We guarantee energy

20 August 2024

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 hosts ³

Heinz Kundert Chairman R&S Group

Beatrix Natter Board Member R&S Group

Andreas Leutenegger Board Member R&S Group

Gregor Greber Board Member R&S Group

Doris Rudischhauser Head of IR R&S Group

Rolf Lanz Vice Chairman R&S Group

Markus Laesser CEO R&S Group

Matthias Weibel CFO R&S Group

Stephanie Leonard CEO Kyte Powertech

Noel Culbert CFO Kyte Powertech

Agenda for today

Transaction overview and strategic rationale

Kyte Powertech: Leading manufacturer of distribution transformer solutions

Key financials, financing and guidance

Concluding remarks

Q&A

Transaction overview 1

Overview	• R&S Group ("R&S") agrees to acquire 100% of Kyte Powertech ("Kyte") from MML Capital Partners Ireland and the Kyte management team • Kyte is a leading manufacturer of distribution transformer solutions with LTM Jun-24 net sales of €174m and EBITDA of €34.5m (20% margin), headquartered in Ireland with ~490 employees • Complementary acquisition that will enhance product portfolio and give access to new markets and customers, with synergies from cross-selling opportunities and operating efficiencies
Consideration	• Enterprise value of €250m; equity value of €264m, funded through €24m in R&S Group Holding AG shares issued to the Kyte management team1 , and €240m cash; in addition, a CHF 2.5m employee benefit trust will be created for the purpose of incentivising Kyte management and employees • Acquisition reflects 7.3x EV / LTM EBITDA (per Jun-24)
Financing	• Bridge financing facility to be taken-out by a combination of bank debt, excess cash and equity issuance of ~CHF 23m2 ; R&S has secured commitments for the equity issuance to be executed in a timely manner • Acquisition results in a PF leverage3 of around 2.25x with the aim of reducing it to ~2x by year-end 2024
Financial effects	• Confirmed net sales growth and EBIT margin guidance, review of FCF margin guidance and updated dividend outlook; mid-term target leverage of around 1.5x Net Debt4 / LTM EBITDA based on expected high warrant conversion • The transaction is expected to be highly EPS accretive5
Governance	• Kyte management team will have a ~5% shareholding in R&S Group Holding AG on a diluted basis, showcasing their long-term commitment • To ensure business continuity, Kyte management team and employees will stay on board
Lock-up Notes:	• Kyte's management is subject to a 1-year lock-up period for 25% of their shares and a 2-year lock-up period for 75% of shares • Additional 6 months extension of existing CGS lock-up

• 1 Corresponding to 1.7m shares

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 CHF ~CHF 10m secured by a commitment of Zürcher Kantonalbank

4 Including lease liabilities and PF for equity issuance 5 Based on existing accounting principles in place for both companies

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

Strong 2024 momentum, with financial guidance raised for the year to net sales growth >12%, EBIT margin ~20% and FCF margin of mid-teens

Strong order backlog of CHF218m & book-to-bill of 1.3x as of end of June 2024

IPO guidance FY2023 result FY2024 outlook

Net sales growth >CHF200m CHF202m >12% growth EBIT margin c.18% 18.6% c.20% FCF margin MSD to HSD 15.3% Mid-teens Dividend policy CHF7m CHF7m CHF0.50 per share

✓ ✓ ✓ ✓ Secular tailwinds for the electricity distribution sector driving multidimensional future growth

15% H1 2024 y/y adj. net sales growth

6

Expanded production capacity in Poland in

Goals delivered as promised in FY2023 guidance

Successful listing on SIX Swiss Exchange Share price performance of 39.5% from initial listing price¹ mid-2024 23.2%

H1 2024 adj. EBIT margin²

Notes: 1 Performance as of market close on 19 August 2024, based on initial offer price of CHF10

2 Without figures of plant in Czech Republic (SERW), which was divested on 5 December 2023

Strategic pillars – M&A has always been an instrumental part 1

Strong rationale for the combination of R&S Group and Kyte 1

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 top-line and cost synergies

Notes:

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

Kyte will bolster R&S Group's position as a European leader for distribution and medium voltage transformers

Source: R&S Group market data and Management estimates, Market information Notes:

1 As disclosed in the listing prospectus

1

2 Percentages indicate utility market share for annual demand of distribution transformers

R&S Group and Kyte share a strategic positioning as local niche players, with highly recognisable brands in their respective markets… 1

R&S and Kyte share some structural advantages vs. global players…

Global players focused on high voltage

1

R&S & Kyte	vs.
------------	-----

• Production lines geared towards small batches and customizations
• Low overhead costs
• Premium personalized and local service
• Dedication to small customers
• Fast response time
• Global players
  • focused on high voltage
  • Production lines geared towards scale and standardization
  • High overhead costs
  • KAM and high-volume sales
  • Limited interest in small customers
  • Long lead times

…with highly recognisable quality brands in the low to midvoltage segment that have "the right to win"

10

Source: Company information, Market information

Note:

…and a combined pan-European footprint that will open up further market opportunities with new and existing customers 1

Complementary footprint covering key countries in Western / Central Europe…

…to be leveraged with a combined product portfolio

Region	Opportunity	Timing
	Kyte 4-6MVA distribution transformers to the German market	1-2 years
	R&S 10-40MVA power transformers to UK and Ireland generation market via EPC	2-3 years
	R&S cast resin transformers to the UK and Ireland market for data centres	0.5-2 years
	R&S 20-25MVA power transformers to UK and Ireland utilities	3-5 years
	R&S 400-1,000kVA distribution transformers to the UK	0.5-1 years
	R&S 20-25MVA power transformers to Belgium and Netherlands utilities (already pursued by R&S)	2-3 years

Strong presence in UK, Ireland, Netherlands and Belgium across utility and industrial customers 12 2

Net sales segmentation, LTM Mar-24 (%)

Source: Company information, Market information

Kyte's management team has deep expertise and high market competence 2

Experienced and committed management team reinvesting into the combined group

Stephanie Leonard Chief Executive Officer

Noel Culbert Chief Financial Officer

Martin Reilly Chief Operating Officer

Patrick Healy Head of Commercial

2023 2023

Dr. Gokhan Kalkhan Technical Director

2016 2020

Andrea Flanagan HR, Health & Safety Manager

Stephen McSharry Industrial Engineering Manager

Sarah Connolly Quality assurance, ENV & Testbay Manager

John Flanagan IT Systems Manager

13

Kyte Powertech: Leader in distribution transformers 2

Substantial current output

c.16k

LTM per Mar-24 output (# of units delivered)

Source: Company information, Market information Notes:

• 1 Distributed Network Operator
• 2 Refers to 7 out of top 10 clients

Deeply entrenched blue-chip customer base

Relationship tenure with key DNO¹ clients²

Fully owned integrated production facility

51,600m²

Site area in Cavan, Ireland

Kyte highlights Key competitive advantages

Approved supplier to all UK / Ireland DNOs

Bespoke designs and solutions in-house

Distinctive intellectual property and proprietary design software

Dedicated technical design team

Entrenched blue-chip customer relationships

Strong traditional product portfolio of transformers… 2

Deep product portfolio across the MVA spectrum

Source: Company information, Market information

• Notes:
• 1 Mega Volt Amp 2 Includes net sales contribution from outsourcing
• 3 Includes c.1.2k units from outsourcing

…complemented by digital capabilities 2

"DesDT" proprietary design software

Highly accurate design software leveraging intelligent algorithms for design optimisation

• 45+ years of accumulated data
• Proprietary formulae algorithms
• Extensive library of 5,000+ active designs from prior customer interactions and collaboration partnerships
• Future-proofed by upgrading the software from a legacy language to Python Render from DesDT

Value Stream Mapping

Holistic approach when analysing a specific state of the value stream, improving:

Cycle-times

Layout optimisation

Inventory management

Information / Material flow

Value Stream Mapping visualisation

Kyte's strong customer relationships derive from a business model centred on customer proximity and responsiveness 2

Overview of Kyte's operations and customers (% of LTM Mar-24 net sales)

• ✓ All offices and facilities are strategically positioned, ensuring proximity to key markets for swift lead times and enhanced responsiveness to customer needs
• ✓ Kyte employs a lean manufacturing approach, centralising its manufacturing and operations (e.g. R&D etc.) in Cavan, Ireland
• ✓ To efficiently cater to significant customer bases in key markets, the company deploys its own sales force and both in-house and outsourced service teams
  • The commercial team includes 19 FTEs across the business with 8 dedicated sales team managers
  • This includes dedicated individuals in key European markets and for major UK and Ireland customers

Relationship tenure of 25+ years with the majority of key clients

17

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 ~CHF 10m secured by a commitment of Zürcher Kantonalbank
• Bridge financing facility provided by UBS
  • Take-out by a combination of bank debt, excess cash and equity issuance of ~CHF 23m²
  • R&S has secured commitments for the equity issuance to be executed in a timely manner
• 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

• Leverage

• 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

• 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
• 5 Based on existing accounting principles in place for both companies

R&S and Kyte have highly complementary financial profiles 3

Adj. net sales (June 2024 LTM, CHFm)1,2

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

Update on 2024 and mid-term guidance 3

	2024 outlook1	Mid-term outlook2	Commentary
Net sales growth	Confirmed Above 12%	Confirmed Around 12%	• Mid-term outlook organic growth over the cycle • Strong tailwind from global electrification demand, decarbonization, decentralization and aged grids
EBIT margin	Confirmed Around 20% of net sales	Confirmed Around 20% of net sales	• Resilient gross profit margin profile • Economies of scale from continued net sales growth • Operational excellence supporting margin expansion
Free cash flow margin	Under review Mid-teens double-digit as % of net sales*	Under review Mid-teens double-digit as % of net sales**	• FCF equals cash flow from operating activities minus cash 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
Dividend policy and leverage	Changed CHF 0.50 per share	Changed CHF 0.50 per share	• Stable dividend for FY2024 to FY20263 , thereafter 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 17 May 2024)
• 2 Based on current mid-term plan (announced on 17 May 2024)
• 3 Actual year financial target to be paid out the following year
• 4 Including lease liabilities and PF for equity issuance

Guidance confirmed / updates / under review vs latest guidance announced on 17 May 2024 Confirmed Under review Changed

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

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

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

Next update on combined group strategy and integration to follow at Capital Markets Day in Zurich on 31 October

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