Rai Way

Investor Presentation • Jul 27, 2023

1H2023 Results Presentation

27 July 2023

Disclaimer

FORWARD LOOKING STATEMENTS

This presentation contains forward-looking statements regarding future events and the future results of Rai Way that are based on current expectations, estimates, forecasts, and projections about the industries in which Rai Way operates, as well as the beliefs and assumptions of Rai Way's management. In particular, certain statements with regard to management objectives, trends in results, margins, costs, rate of return and competition tend to be forward-looking in nature. Words such as "expects", "anticipates", "targets", "goals", "projects", "intends", "plans", "believes", "seeks" and "estimates", variations of such words and similar expressions, are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Therefore, Rai Way's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. They are neither statements of historical fact nor guarantees of future performance. Rai Way therefore cautions against relying on any of these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, the impact of competition, political, economic and regulatory developments in Italy. Any forward-looking statements made by or on behalf of Rai Way speak only as of the date they are made. Rai Way undertakes no obligation to update any forward-looking statements to reflect any changes in Rai Way's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Rai Way participants

• Roberto Cecatto, Chief Executive Officer
• Adalberto Pellegrino, Chief Financial Officer
• Giancarlo Benucci, Chief Corporate Development Officer

Key messages

● Strong 1H23 performance:

• o Revenues up 12,2%, benefitting from CPI-link and rising contribution of regional refarming;
• o Adjusted EBITDA up 16.1%, with underlying opex trend under control supported by lower energy consumption (effect of declining electricity tariffs limited to 2Q only)
• o Development capex at € 14,3m, with lower component related to completion of refarming (€ 5,5m vs 19,1m in 1H22, for both RAI and regional networks) and new infrastructure projects starting to enter investment phase
• Board review of infrastructure expansion initiatives underway
• Guidance for the full year confirmed, with increased comfort on achieving targets

Main drivers of the growth path

5G/FWAP hosting

DAB

Content IP distribution

Efficiencies

1H2023 Financial highlights

Mln Eur; % % YoY growth

1) Maintenance capex excluding component related to IFRS-16 leasing. Development capex include € 2,7 million related to fiber IRU, reported under IFRS-16 financial liabilities in the financial statements

2) Cash conversion = (Adj. EBITDA - Leases – Maintenance Capex) / (Adj. EBITDA – Leases). Leases estimated as sum of leasing right of use depreciation (excl. dismantling) + financial charges on leasing contracts

● New regional MUXes business pushed Third-party revenues up 26,8%

o As for other customers, YoY growth at around 9% supported by inflation link and rising activity with FWAPs and radio broadcasters

+12,2%

Core Revenues

Mln Eur; % % YoY growth

Opex (excluding non-recurring)

Mln Eur; % % YoY growth

• Excluding non-core items and lower capitalization compared to 2022, Personnel cost up 3,9%
• Underlying trend of Other Operating costs broadly stable, benefitting from lower utilities
• o Energy bill reduction in the 1H still driven mostly by volumes rather than price paid (contributing only from 2Q(2))

	1H2022	1H2023	Δ
Raw energy(1) price (€/MWh)	153(2)	142
Tax credit impact (€/MWh)	-	-37
Other tariff components (equivalent per MWh)	43	83
Total price (equivalent per MWh)	196	188	-4%
Consumption (GWh)	38,6	33,4	-14%
Energy bill (€ mln)	7,6	6,3	-17%

Eur Mln, %	2Q2022	2Q2023	% YoY	1H2022	1H2023	% YoY
Core Revenues	61,1	68,1	11,5%	121,2	136,0	12,2%
1) Other Revenues & income	0,3	0,0		0,3	0,3
Adj. EBITDA % margin	38,6 63,2%	46,3 68,0%	19,9%	78,2 64,5%	90,8 66,8%	16,1%
Non recurring costs	0,0	-3,6		0,0	-3,6
EBITDA % margin	38,6 63,2%	42,7 62,7%	10,5%	78,2 64,5%	87,2 64,1%	11,5%
2) D&A	-12,9	-11,6	-9,8%	-25,7	-22,7	-11,8%
Operating Profit (EBIT)	25,8	31,1	20,7%	52,5	64,5	22,9%
Net financial income (expenses)	-0,4	-1,0	140,2%	-0,9	-1,8	103,5%
Profit before Income taxes	25,4	30,1	18,7%	51,6	62,7	21,5%
Income Taxes % tax rate	-7,2 28,2%	-8,7 29,0%	21,7%	-14,6 28,4%	-17,9 28,5%	22,1%
Net Income	18,2	21,4	17,5%	37,0	44,9	21,3%

1H2023 Net Income up by 21,3% at € 44,9m despite €3,6m non-recurring costs:

• o Significantly higher EBITDA
• o Lower D&A following the termination of the useful life of DVB-T equipment
• o Financial charges up reflecting higher net debt and rising interest rates
• o Stable tax rate

1H2023 recurring FCFE(6) at ca. € 62m

1) Excluding component related to IFRS-16 leasing; development capex include € 2,7 million related to fiber IRU, reported under IFRS-16 financial liabilities in the financial statements

2) P&L taxes;

3) P&L financial charges excluding interests on employee benefit liability and interests on leasing contracts;

4) including renewal of leasing contracts and interests on leasing contracts;

5) Including current financial assets

6) Recurring FCFE = Adj. EBITDA – Leases – Net Financial Charges – P&L Taxes – Recurring Maintenance Capex. Leases estimated as sum of leasing right of use depreciation (excl. dismantling) + financial charges on leasing contracts

1H2023 Results Presentation 10

Guidance 2023 confirmed

●	Outlook based on recent levels of power futures for 2023(1)	Increased comfort supported by 1H operating
Adjusted EBITDA	Growth rate in the mid-teens area	performance and energy price expectations for 2H - CPI-link - Rising contribution from regional refarming prices(1) - Lower energy and lower consumption - Start-up costs related to new infrastructure/services
Capex	• Maintenance capex broadly stable vs 2022 • Development capex broadly stable vs 2022, but with different RAI-3 rd Parties mix	- New infra roll-out (mainly edge & CDN) - Backbone upgrade completion - Residual refarming investments (both RAI & regional)

Q&A session

Contacts

Appendix

Balance sheet

Mln Eur

2) Net funds include employee termination indemnities, provision for risks and deferred taxes

Detailed summary of Income Statement

(€m; %)	2Q22	2Q23	1H22	1H23
Core revenues	61,1	68,1	121,2	136,0
1 Other revenues and income	0,3	0,6	0,3	1,5
Purchase of consumables	(0,2)	(0,3)	(0,6)	(0,6)
Cost of services	(10,8)	(9,9)	(19,2)	(20,8)
Personnel costs	(11,1)	(15,0)	(22,3)	(27,5)
Other costs	(0,7)	(0,8)	(1,3)	(1,4)
Opex	(22,8)	(26,0)	(43,4)	(50,4)
Depreciation, amortization and write-downs	(12,9)	(11,6)	(25,7)	(22,7)
Provisions	0,0	-	0,0	-
Operating profit (EBIT)	25,8	31,1	52,5	64,5
Net financial income (expenses)	(0,4)	(1,0)	(0,9)	(1,8)
Profit before income taxes	25,4	30,1	51,6	62,7
Income taxes	(7,2)	(8,7)	(14,6)	(17,9)
Net Income	18,2	21,4	37,0	44,9
EBITDA	38,6	42,7	78,2	87,2
EBITDA margin	63,2%	62,7%	64,5%	64,1%
Non recurring costs	-	(3,6)	-	(3,6)
Adjusted EBITDA	38,6	46,3	78,2	90,8
Adjusted EBITDA margin	63,2%	68,0%	64,5%	66,8%

Summary of Balance Sheet

(€m)	2022FY	1H2023
Non current assets
Tangible assets	280,8	278,2
Rights of use for leasing	33,4	33,8
Intangible assets	19,5	20,1
Financial assets, holdings and other non-current assets	0,9	0,9
Deferred tax assets	1,8	3,0
Total non-current assets	336,4	336,1
Current assets
Inventories	0,8	0,8
Trade receivables	66,2	75,2
Other current receivables and assets	2,5	3,7
Current financial assets	1,5	0,8
Cash and cash equivalents	35,2	5,4
Current tax receivables	0,1	0,1
Total current assets	106,2	85,9
TOTAL ASSETS	442,6	422,0

Current liabilities
Trade payables	60,5	44,8
Other debt and current liabilities	38,5	58,2
Current financial liabilities	101,5	106,8
Current leasing liabilities	17,6	15,5
Current tax payables	0,4	1,3
Total current liabilities	218,4	226,6
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	442,6	422,0

Shareholders' Equity

Non-current liabilities

Summary of Cash Flow Statement

(€m)	2Q2022	2Q2023	1H2022	1H2023
Profit before income taxes	25,4	30,1	51,6	62,7
Depreciation, amortization and write-downs	12,9	11,6	25,7	22,7
Provisions and (releases of) personnel and other funds	(1,0)	0,9	(0,6)	1,8
Net financial (income)/expenses	0,4	1,0	0,8	1,7
Other non-cash items	0,1	0,2	0,2	0,2
Net operating CF before change in WC	37,7	43,7	77,7	89,1
Change in inventories	0,0	-	0,0	0,0
Change in trade receivables	7,6	9,4	(0,5)	(9,3)
Change in trade payables	(5,1)	(5,7)	(12,3)	(15,7)
Change in other assets	0,7	1,0	1,8	(1,2)
Change in other liabilities	(3,4)	(3,9)	3,4	3,9
Use of funds	(0,8)	(0,2)	(0,9)	(0,4)
Payment of employee benefits	(0,7)	(0,8)	(1,7)	(1,3)
Change in tax receivables and payables	(0,0)	(2,2)	(0,1)	(2,2)
Taxes paid	(1,7)	-	(1,7)	-
Net cash flow generated by operating activities	34,3	41,3	65,9	63,0
Investment in tangible assets	(16,4)	(7,6)	(25,5)	(12,4)
Disposals of tangible assets	0,0	-	0,0	-
Investment in intangible assets	(0,6)	(1,5)	(0,7)	(2,8)
Change in other non-current assets	0,0	0,0	0,0	0,0
Change in non-current financial assets	0,0	-	0,1	-
Net cash flow generated by investment activities	(16,9)	(9,1)	(26,1)	(15,2)
(Decrease)/increase in medium/long-term loans	32,0	-	32,0	-
(Decrease)/increase in current financial liabilities	0,2	4,7	0,2	4,7
(Decrease)/increase in IFRS 16 financial liabilities	(2,3)	(5,3)	(5,7)	(7,8)
Change in current financial assets	(0,1)	(0,2)	(0,2)	0,0
Net Interest paid	(0,3)	(0,8)	(0,5)	(0,9)
Dividends paid	(65,1)	(73,5)	(65,1)	(73,7)
Net cash flow generated by financing activities	(35,7)	(75,1)	(39,3)	(77,7)
Change in cash and cash equivalent	(18,3)	(43,0)	0,5	(29,8)
Cash and cash equivalent (beginning of period)	36,0	48,3	17,2	35,2
Cash and cash equivalent (end of period)	17,7	5,4	17,7	5,4