Introduction Strategy Update FY 2017 Results

Transcription

1 Introduction Strategy Update FY 2017 Results March 2018 Aston Swift Investor Relations

2 Disclaimer This document may contain statements that constitute forward looking statements about Applus Services, SA ( Applus+ or the Company ). These statements are based on financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations, which refer to estimates regarding, among others, future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the Company. Such forward looking statements, by its nature, are not guarantees of future performance and involve risks and uncertainties, and other important factors that could cause actual developments or results to differ from those expressed or implied in these forward looking statements. These risks and uncertainties include those discussed or identified in fuller disclosure documents filed by Applus+ with the relevant Securities Markets Regulators, and in particular, with the Spanish Market Regulator, the Comisión Nacional del Mercado de Valores. Applus+ does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the projected performance, conditions or events expressed or implied therein will not be realized. This document contains summarised information or information that has not been audited. In this sense this information is subject to, and must be read in conjunction with other publicly available information including if necessary any fuller disclosure document published by Applus+. Nothing in this presentation should be construed as a profit forecast. 2

3 Introduction

4 Applus+ is one of the world's leading Testing, Inspection & Certification companies. It provides mission critical solutions for customers to ensure that their assets and products meet quality, health & safety, and environmental standards and regulations. 20,700 employees in ,583 million total revenue in countries across all continents accredited by major international organisations 4

5 Established over 20 years Period Investors 53% 70% 1 5 % 100% Free Float 100% 25% 22% Financial Institutions and other shareholders Financial Institutions and 30% other shareholders 10 % Free Float 7 5 % Milestones Automotive established in 1996 IDIADA contract awarded (est 1971) Labs contract awarded (est 1907) Acquisition of RTD (est 1937) Acquisition of Norcontrol (est 1981) Acquisition of VELOSI (est 1982) 20 more companies acquired The IPO of Energy & Industry division Formed Four more companies acquired Acqn of Inversiones Finisterre Four more companies acquired ABO of 10% at Current equity ownership (>3%) 14,5% Southeastern Threadneedle 8,2% Harris 65% 4,6% 4,5% 3.0% Norges River and Mercantile Remainder Source: CNMV disclosures as of 7 March 2018

6 FY Revenue by Division, End Market and Geography By Division By End Market IDIADA 12% *11% Auto 20% *19% Labs 4% *4% Energy & Industry 64% *66% *13% Others 13% Aerospace 3% *3% Construction 4% *3% Power 9% *9% Automotive OEM 12% *11% Oil & Gas 39% *42% Statutory Vehicle Inspection 20% *19% Opex 68% (*62%) Capex 32% (*38%) By Geography Middle East & Africa 11% *12% LatAm 9% *9% Spain 20% *18% Asia Pacific 11% *13% * FY 2016 North America 21% *20% Rest of Europe 28% *28% 6

7 Divisions ENERGY & INDUSTRY DIVISION LABORATORIES DIVISION AUTOMOTIVE DIVISION IDIADA DIVISION 2017 Revenue and employees 1,010M 13,100 64M M 4, M 2,400 (64%) employees (4%) employees (20%) employees (12%) employees 2017 Adj Operating Profit (% Group) 79m (47%) 7m (4%) 59m (35%) 24m (14%) Margin 7.8% 10.4% 18.9% 12.1% Main Activities Industrial and environmental inspection, technical assistance, non-destructive testing (NDT) and technical staffing. Product testing and system certification services from multidisciplinary laboratories. Statutory vehicle inspection services for safety and emissions. Proving ground, design, engineering, testing and homologation services. 7

8 Strategy Update

9 Our Strategy Inorganic Margin Improvement Growth Trusted Partner Innovation & Technology Leadership 9

10 Leadership A world leader in Testing, Inspection, Certification A global leader in chosen markets Inspection and NDT mission-critical services for Oil & Gas and Power end markets Statutory vehicle inspection in Europe and Americas Independent proving ground and passive safety testing facilities for vehicle manufacturers With leadership in technology based on proprietary applications # 2 in Industrial Inspection (# 1 in Oil & Gas) 1.0bn Revenue # 2 in Statutory Vehicle Inspection # number of inspections 15 million Most advanced independent testing facilities for OEM s Applus+ Other Companies in the chart are: BV, DNV GL, Intertek, Mistras, SGS, Team, TUV Sud Source: Companies annual reports and Applus+ estimates Applus+ Other Companies in the chart are: Dekra, Opus, SGS, TUV Nord, TUV Rheinland, TUV Sud Number of inspections directly performed by the companies 10

11 Innovation & Technology Continued Investment in Proprietary Technology and Know-How New technical solutions across industry sectors to enhance operational efficiency and to reduce risk for our clients and the public Build best practice by working with companies, government legislators and industry associations to help develop better, industry-wide operations and standards R&D Innovation projects 264,241 Hours worked on innovation projects 761 Employees working part-time on innovation 85 Agreement with external bodies 71 Accumulated Patents 13 Granted and 7 New filed Patents in

12 Split of Group Revenue from Top 100 clients % of Top 25 Clients with MSA (2017) Trusted Partner Long Term Relationships with Blue Chip Clients Provider of Essential and Regulatory-Driven Mission Critical Services Long Term relationship (*) Long Term Master Services Agreements with Key Clients Long Term and Stable Statutory Vehicle Inspection contracts 71% 73% Portfolio of 30 contracts: 15 new contracts won (1) 10 renewed/extended (1) One contract lost (1) 15% 14% Less than 5 years From 5 to 10 years Over 10 years Energy & Industry (*) Auto división not included (1) From 2008 to

13 Historical Financials Historical Financials CAGR Total Revenue ( Million) 1,619 1, % Oil & Gas (*) % Rest of the Group % Adjusted Operating Profit Margin 9.8% 9.0% Cash Conversion 77% 73% Leverage 3.1x 2.4x ROCE (**) 21% 20% Period significantly impacted by the tough Oil & Gas end market environment (51% of the Group Revenue in 2014 to 39% in 2017) Rest of the Group performing well, growing at mid single digit organic Leverage reduced due to to the equity raise and cash generation A return on capital around 20% maintained Strong financial position ready to support the next 3 year growth plan (*) excluding non material oil & gas Labs business (**) Return on Capital Employed excludes the goodwill and intangible assets and the associated amortisation related to the purchase price allocation from the leverage buy out in

14 Energy & Industry Division Key figures 13,100 people 60 countries 64% Revenue 47% Adj. Op. Profit

15 Energy & Industry Division: Introduction Overview Energy & Industry was formed at the end of 2015 as a result of the integration of 3 previously separate divisions The new division realised material cost savings and optimised growth opportunities through complementary geographic footprint and cross selling Division Joined A+ Expertise Norcontrol RTD Velosi TIC Services for Power and Construction markets Non Destructive Testing for the Oil & Gas Market Vendor Surveillance, Site Inspection and Technical Staffing for the Oil & Gas industry Revenue by End Market Revenue by Geography Revenue by Service Telecom 2% Aerospace 3% Mining 4% Construction 6% Power 14% Others 11% Oil & Gas 60% Asia Pacific 13% Middle East & Africa 17% LatAm 9% Rest of Europe 18% Spain 15% North America 28% Environmental and Health & Safety 5% Vendor Surveillance 5% Inspection 13% Technical Staffing 17% Others 12% NDT Services 48% 15

16 Energy & Industry Division: Historical Financials Historical Financials EUR Million CAGR Revenue Oil & Gas Other End Markets Oil & Gas Peak to trough Down 216m (26%) Other end markets Up 79m (24%) Adj. Op. FY 2014 FY 2015 FY 2016 FY 2017 Profit Margin 8.7% 8.7% 7.6% 7.8% Capex is 2.4% of revenue Last 3 years significantly impacted by Oil & Gas market environment Other end markets performing well, growing annually at mid single digit organic Continued investment in proprietary technology and know-how Opening new growth opportunities Focus on defending market share and margin: Integration of Norcontrol, RTD and Velosi Significant restructuring plan developed Rightsizing resources with workload Excellence in delivery Adapting to serve changing customer needs 16

17 Oil & Gas (60%) Energy & Industry Division: Strategic plan End Markets Position and Market Growth Drivers Global leader Strong position in key geographies Technological leadership in Non Destructive Testing Strong long term relationships with oil majors and pipeline contractors. Cyclical upturn in O&G capex Complete offering of services delivered globally Market recognition Applus+ Revenue 610m Middle East 10% Others 9% North America 36% Global footprint Asia Pacific 16% Europe 29% Global Market 18 Bn 17

18 Other Infrastructure & Construction (6%) Power (14%) Energy & Industry Division: Strategic plan End Markets Position and Market Growth Opportunity Leadership position in Spain and LatAm. Strong in Northern Europe Unique knowhow in Electrical Power generation and distribution Applus+ Revenue 141m Latam 22% Others 5% Europe 27% Spain 46% Global Market 12 Bn Sell expertise into new geographies where we have good E&I presence Renewable energy expansion Nuclear power new investments, refurbishment and decommissioning Leading position in Spain, LatAm and developing in the Middle East Expertise for: Instrumentation and monitoring of large capex projects Road management maintenance services. Applus+ Revenue 61m Others 1% Europe 3% Middle East 23% Spain 27% Latam 46% Global Market 14 Bn Extend into all Middle East and LatAm countries. Sell expertise into new geographies where we have good E&I presence. Aerospace (3%): Leading NDT position in the US and UK Telecom (2%): strong position and client relationships in Spain and Latam Aerospace: Services expansion through our global network. Telecom: Follow our clients into new geographies as they invest for 4G, 5G and fibre optics. 18

19 Energy & Industry Division: Strategic plan Using Applus+ designed and produced Technology to preserve leadership position and generate revenue opportunities Oil & Gas Experience Innovation Bespoke Product Validation 80 years developing specialised equipment and technology for NDT and inspection of critical assets More than 60 patents and 30 proprietary solutions Ability to create client specific solutions throughout our global network of Technology Centres Full range of proprietary solutions to address client requirements Recognised by the most prestigious certification bodies, major O&G companies and offshore pipeline contractors Power Specialised Technology 25 years developing specialised technology (e.g. Buho System, Traza+) to provide ad hoc solutions and optimise their infrastructure Track Record Inspected more than 200,000km of lines in 2017 with our own proprietary technology Infrastructure/ Construction Specialised Solutions Developed specialised solutions for assuring the structural integrity and quality of civil infrastructure Track Record 30 projects completed in 2017 with our own solutions 19 19

20 Energy & Industry Division: Strategic plan Growth Opportunities: Case Studies I Technology Breakthrough Corrosion Resistant Alloy Partial Inspection New inspection process developed by Applus+ IWEX 3D Discriminates between benign and serious abnormalities and enhanced data capture creates an immediate 3D image for easier visualisation and interpretation of results 20

21 Energy & Industry Division: Strategic plan Growth Opportunities: Case Studies II Cross Selling Spain to Middle East Kingdom of Saudi Arabia. Metro project. Contract value over 4m over 3 years Spain to Asia Mongolia. Wind Farms. Project value 3m over 2 years USA to Latin America Mexico. Gas Pipeline. Project value 2.3 million over 12 months 21

22 Energy & Industry Division: Strategic plan Growth Opportunities: Case Studies III Track Record, Brand & Reputation Refineries and Chemical Plants West Europe. Contract value over 30 million over 3.5 years Low and medium voltage grids Panama. Asset inventory and control. Project value over 10 million over 14 months 22

23 Energy & Industry Division: Strategic Targets Key Initiatives Target Organic Revenue Focused Growth Plan for each country Increase market share in key markets Expansion of service offering into all geographies Average Annual Mid Single Digit growth Operational Excellence Best practice implementation across division Operational efficiency driving economies of scale Digitally focused on efficiency and new operating models Back office optimisation (SAP roll out in 2019 and Expanding Financial Shared Services) Recover 100 bps in the period Inorganic Expand presence in Non Oil & Gas End Markets (Power, Construction, Aerospace) Enhance our position in all end markets for Key Geographies (South America, Asia Pacific, USA) Focus on Technologically advanced companies 23 23

24 IDIADA Division Key figures 2,400 people 23 countries 12% Revenue 14% Adj. Op. Profit

25 IDIADA Division: Introduction Overview Testing, engineering, homologation and R&D services provider to the leading vehicle manufacturers (OEMs) Specialised facilities, people and proving ground with knowledge of global technical requirements Owned 80% by Applus+ and 20% local government. Since 1999 operates the assets owned by the local government under a long term contract with current renewal/expiry of 2024 Revenue by Customer Base Revenue by Business Line Historical Financials Korea 4% Belgium 5% Italy 6% Others Germany Homologation 18% 22% 16% Passive Safety 34% Spain 18% Proving Ground 18% (*) 2017 CAGR (*) Revenue % Ad. Op. Profit % Margin 13.1% 13.1% 12.1% France 6% Czech Republic 6% China 7% UK 8% Chassis & Power Train 32% Capex is 6% of revenue (*) Restated 2017 rates 25 25

26 IDIADA Division: Strategic Targets Drivers Quality and Safety Regulations Increasing car models Technology Electric and Autonomous vehicles Emerging markets Changing supply chains Outsourcing Strategy Maintain world class testing facilities Retain and attract specialist knowledge Continue to invest in R&D and participate in EU innovation projects Maintain and expand geographic network to serve clients globally Targets Annual organic revenue growth of high single digits Margin to remain in 12% range 26

27 Laboratories Division Key figures 800 people 12 countries 4% Revenue 4% Adj. Op. Profit

28 Laboratories Division: Introduction Overview Product testing and certification services Multi-technology state-of-the-art laboratories serving the Aerospace, Auto, Construction, Energy, IT industries Main facilities in Spain Revenue by Geography Revenue by Business Line Historical Financials Asia Pacific 5% LatAm 6% North America 8% Middle East & Africa 4% Spain 53% Metrology 9% IT 11% System Certification 11% Others 3% Industry 52% (*) 2017 CAGR (*) Revenue % Ad. Op. Profit % Margin 4.2% 3.8% 10.4% Capex is 7% of revenue Rest of Europe 24% Construction 14% (*) Restated 2017 rates 28 28

29 Laboratories Division: Strategic Targets Drivers Quality and Safety Regulations Technology and increasing product variety Outsourcing Strategy Geographic expansion Develop and invest in core growth business lines Retain and attract specialist knowledge Targets Annual organic revenue growth of mid single digits Margin to increase by 20-30bps per annum Acquisitions to expand footprint and service portfolio 29 29

30 Automotive Division Key figures 4,400 people 9 countries 20% Revenue 35% Adj. Op. Profit

31 Automotive Division: Introduction Overview Revenue by Type of Market Vehicle safety and emissions inspection 20 million inspections across 28 programmes in 9 countries Drivers: Regulations (emissions, safety) Increasing car volume Increasing compliance rates Emerging markets implementing legislation Outsourcing Liberalised 17% Regulated 83% Revenue Split of Spain and USA Historical Financials Chile 1% Finland 5% Argentina 7% Other 1% Spain 38% Catalonia Galicia Alicante Canary Islands Madrid Others (*) 2017 CAGR(*) Revenue % Costa Rica 7% Ad. Op. Profit % Denmark 8% USA 12% Ireland 21% Massachusetts Washington Illinois Connecticut Georgia Others Margin 21.5% 21.0% 18.9% Capex is 3% of revenue (*) Restated 2017 rates Chart figures based on annual 2017 pro-forma revenue at average FX rates 31

32 Automotive Division: New & Renewal contracts to 2020 Massachusetts 6m for years Q Menorca 2m Q Ecuador 1m for 10 years Q Province of Buenos Aires 21m Q Uruguay 8m for 8+4 years Q Georgia 4m Q Connecticut 7m Q Washington 9m Q Ireland 78m Q Aragon 5m Q New Revenue for New is average annual expected over term of contract Renewal 2017 Revenue for Renewals Annual Revenue at December 2017 FX rates 32 32

33 Automotive Division: Strong track record in new and renewed programmes Weber County Madrid Ontario Chile-R.IX Salt Lake (Utah) Uruguay Ecuador Massachusetts Buenos Aires Andorra Salt Lake (Utah) Ireland Washington Menorca Chile-R.V Chile-R.VI Idaho New York Salt Lake (Utah) Georgia Weber County Illinois Connecticut Chile-R.XIII-RM Illinois Massachusetts NO PROGRAMMES LOST SINCE 2008 Lost programmes Renewed/Extended programmes New programmes 33 33

34 Automotive Division: The Market Opportunity South America Applus+ 0.4bn North America Europe Mature markets (Europe and US) accountable for 79% of current addressable market Significant potential in Asia, LatAm & Africa as they adopt developed countries legislation LatAm presents an opportunity in the next 2-3 years Asia will be the largest market in the long run Fitness test (safety + emission) natural choice for developing markets Our current pipeline: 23 opportunities in 10 countries mainly in LatAm and Asia Current Adressable Market 7bn (*) Opportunity from new Legislation 23bn (*) Total Potential Market Potential Outsourcing 3bn 33bn Current Adressable Market (*) 7bn Brazil & Mexico India & China Asia South America Africa Europe North America Oceania Opportunity from New Legislation 23bn (*) (*) Excluding countries where inspections performed by independent garages or Government 34

35 Automotive Division: Strategic Targets Strategy Current operations: efficiency, service, continuous innovation Tenders: compete only if meet profit targets Emerging markets: build relations and market intelligence; support authorities in designing and implementing legislation Inorganic: opportunistic Targets Continue strong renewal track record and new programme wins Organic revenue from existing contracts to increase at low single digits Margin to increase > 200bps in 2018, then maintain 35 35

36 Strategy Update Summary

37 Summary Highlights Objective Return to growth Focus on the operational strategy Leadership Innovation & Technology Trusted Partner Financial targets over (*) Annual revenue growth of mid single digits organic Margin improvement of bps in 2018 and bps in 2019 and 2020 Strong cash generation to continue with a cash conversion above 70% Leading to Organic revenue growth Margin improvement Cash generation Capital Allocation Priorities Maintain dividend at 20% of Adjusted Net Profit Leverage below 3x Acquisition capacity in the range of 150 million per annum (*) Financial constant rates and current perimeter 37

38 Calendar and Contact 2018 Q1 9 May H1 24 July Q3 30 October FY 27 February 2019 Ticker: APPS-MC Aston Swift, Vice President Investor Relations Barcelona aston.swift@applus.com investors@applus.com 38

39 Results Presentation Full Year 2017 HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK APPENDICES 39

40 Highlights Flat organic 1 revenue with growth in H2 Solid margin performance Energy & Industry improving trend with higher margin Continued good performance in IDIADA, Auto and Labs Successful acquisition of Inversiones Finisterre in Auto FY Results: Revenue of 1,583.1 million, organic % (reported -0.2%) Operating profit 2 of million up organic 1 0.3% (reported +1.4%) Operating profit 2 margin of 9.0%, up 14 bps Earnings per Share 2 of 0.62, down 3.5% Net debt/ebitda reduced to 2.4x from good cash flow generation and equity raise Board proposes a dividend of 0.13 per share, same as previous year (1) Organic is at constant exchange rates (2) All adjusted for other results and amortisation of acquisition intangibles 40

41 FY Revenue Bridge EUR Million (0.2)% 1, % 0.7% (1.0)% 1,583.1 FY 2016 Revenue Organic Inorganic Fx Impact FY 2017 Revenue Q % 2.7% (3.7)% 0.2% Stable revenue performance 41

42 FY Adjusted Operating Profit Bridge EUR Million 1.4% % 2.3% (1.2)% FY 2016 Adj. Op. Profit Organic Inorganic Fx Impact FY 2017 Adj. Op. Profit Adj.OP.Profit Margin 8.9% + 2 bps + 14 bps -2 bps 9.0% Q % 8.4% (4.4)% 5.1% Solid margin performance 42

43 FY Summary Income Statement EUR Million FY Change Revenue 1, ,586.5 (0.2)% Adj. Operating Profit (1) % Adj.Op.Profit margin 9.0% 8.9% PPA Amortisation (50.1) (47.6) Other results (10.8) (16.2) Operating profit % Finance result (21.5) (18.6) Associates Profit before tax % Income taxes (15.7) (31.9) Net Profit % Minorities (10.0) (9.0) Net Profit Group % Adjusted Net Profit Group (1.0)% EPS in % Adjusted EPS in (2) (3.5)% (1) Adjusted Op. Profit is stated before amortisation of acquisition intangibles, Historical Management Incentive Plan, restructuring, impairment and transaction & integration costs (2) EPS is adjusted for other results and its related tax impact 43

44 FY Cash Flow EUR Million Change Adjusted EBITDA (1) (0.3)% (Increase) / decrease in working capital (4.1) 44.6 Capex - operational (49.9) (44.6) Capex - Net new vehicle stations 2.7 (9.1) Adjusted Operating Cash Flow (23.9)% Cash Conversion rate 72.6% 95.1% Taxes Paid (32.5) (33.8) Interest Paid (15.8) (15.8) Adjusted Free Cash Flow (32.0)% Extraordinaries (6.3) (15.0) Tax litigations (2.0) (10.4) Historical Management Incentive Plan (8.5) (9.5) Applus+ Dividend (16.9) (16.9) Minorities (8.0) (7.2) Others 1.9 (0.8) Operating Cash Generated Acquisitions / Disposals (95.9) (2.1) Cash b/changes in Financing & FX (47.9) 67.2 FY Stable working capital level following flat revenue Capex for vehicle stations is net of disposals of old stations of 11.9M less amount invested for new stations of 9.1M. FY M investment Extraordinaries corresponds to the cash outflow for restructuring and costs related to M&A Acquisitions / Disposals corresponds to the cash cost for Inversiones Finisterre, Emilab, AC6 and TST (1) Adjusted EBITDA is stated as Operating Profit before depreciation, amortisation and Other results 44

45 FY Net Debt as defined by bank covenant 1 EUR Million DEC 2016 DEC (87.8) (6.1) (137.2) Net Financial Debt Free cash Flow Inorganic Applus+ Dividend FX ABO Funds (3) Others (2) Net Financial Debt LTM EBITDA (*) Net Debt/EBITDA 3.2x 2.4x Significant leverage reduction due to cash generation and equity raise (*) LTM EBITDA includes proforma annual results from acquisitions (1) Stated at annual average rates (2) Others includes dividends to minorities, purchase of Restricted Stock Units, restructuring costs and short term investments (3)Accelerated book build offering 10% of equity in September

46 FY Currency Exposure % Revenue by Actual Currency USD and GBP weakened against euro 16% 17% 4% 4% 4% 4% 5% 4% 26% 26% 46% 44% OTHER AUD GBP CAD USD EUR (1) (2) Average FX Exchange rates vs Euro JAN - DEC JAN - DEC Change USD (1.7)% CAD % GBP (6.6)% AUD % FY 2017 FY 2016 (1) Includes currencies pegged to USD (2) None above 4% 46

47 Energy & Industry Division (I) EUR Million Revenue 64% Adj. Op. Profit 47% Revenue Adj. Op. profit (4.1)% (1.2)% 66% 48% 1, , (3.0)% 0.0% (1.1)% (0.2)% 0.0% (1.0)% FY 2016 Revenue Organic Inorganic Fx Impact FY 2017 Revenue AOP margin FY 2016 Adj. Op. Profit Organic Inorganic Fx Impact FY 2017 Adj. Op. Profit 7.6% 7.8% Q4 Revenue decline lowest in over two years (-1.7%) Oil & Gas revenue now 60% of the division decreasing high single digit in Some regions have now returned to growth Other end markets including Construction, Power, Telecom, Aerospace continued to grow at mid single digits Margin improvement of 20bps due to integration synergies and cost control 47

48 Energy & Industry Division (II) North America (27% of division revenue), H2 high single digit growth following a stable H1 and two years of strong revenue decline. New construction pipeline market and pipeline integrity leading the change in trend LatAm (9%), weak Q4 performance in line with previous quarters due to market conditions mainly in infrastructure and construction Colombia and Chile have been the most negatively impacted countries whereas Brazil and Mexico have performed well Northern Europe (19%), stable opex work and international new construction projects managed out of the region performing well. North Sea Oil & Gas continue to be under the most pressure. Pricing pressure in the region continues Southern Europe, Africa, Middle East, Asia & Pacific (45%): Middle East Oil & Gas opex work and Spain (Power and Construction) continue performing well and partially offset the decline in Africa and Asia Pacific 48

49 Laboratories Division Revenue Adj. Op. Profit Revenue 4% 4% Adj. Op. profit +6.2% +10.7% % 3.3% (0.4)% % 9.3% (0.8)% 6.7 FY 2016 Revenue Organic Inorganic Fx Impact FY 2017 Revenue AOP margin FY 2016 Adj. Op. Profit Organic Inorganic Fx Impact FY 2017 Adj. Op. Profit 10.0% 10.4% Good annual revenue growth although Q4 negatively impacted by a one off Aerospace contract in Q Acquisitions performing well, adding 3.3 p.p. growth Margin continued to increase benefiting from acquisitions and operating leverage Industrial Labs (52% of the division) grew low single digit organic. Electromagnetic compatibility for the Auto industry growing high single digit Rest of the businesses, Construction, IT, Metrology, System Certification continue performing well, growing between mid and high single digit 49

50 Automotive Division (I) 20% Revenue Adj. Op. Profit 35% Revenue Adj. Op. profit +5.9% +2.4% % 3.3% (1.3)% (0.7)% 4.7% (1.6)% 58.7 FY 2016 Revenue Organic Inorganic Fx Impact FY 2017 Revenue AOP margin FY 2016 Adj. Op. Profit Organic Inorganic Fx Impact FY 2017 Adj. Op. Profit 19.6% 18.9% Good organic revenue growth for the year with ramp-up of new contracts coming in H2 Inversiones Finisterre acquisition performing in line with business plan added 3.3 p.p. growth in 2017 Margin improved in H2 but not enough to offset the H1 decrease impacted by the ramp up in the Illinois and Chile renewals and new contract in Buenos Aires city 50

51 Automotive Division (II) Spain, organic revenue growth of mid single digit led by the liberalised contracts in Madrid and Canary Islands Ireland, mid single digit decline impacted by the fleet rejuvenation. A tender for the renewal is expected to commence shortly USA, new programme in Massachusetts offset the lower revenue on the Illinois contract. The other key contracts Washington and Connecticut performing well LatAm, new contract in Buenos Aires continued well and slow ramping up of the Chile renewed programme Good performance in Denmark offset the tough Finnish market Building and preparation for the new programmes in Uruguay and Ecuador estimated to start in H2. New opportunities in the pipeline 51

52 IDIADA Division 12% Revenue 14% Adj. Op. Profit Revenue Adj. Op. profit +10.2% +7.7% 11% 13% % 0.0% (0.1)% % 0.0% (0.1)% 24.0 FY 2016 Revenue Organic Inorganic Fx Impact FY 2017 Revenue AOP margin FY 2016 Adj. Op. Profit Organic Inorganic Fx Impact FY 2017 Adj. Op. Profit 12.4% 12.1% Double digit annual revenue growth continues with all business lines performing well Homologation type approval (16% of the division) strong growth following the introduction of the new EU vehicle fuel consumption and emissions standard plus other increase in regulatory requirements Chassis & Powertrain (32%) and Body & Passive Safety (34%) growing double digit helped by the development of the autonomous and electric vehicle and advance driver assistance systems Proving Ground (18%) grew mid single digit despite capacity constraints on some of the tracks Margin reduction due to product mix and investments required to remain first class 52

53 Summary and Outlook Summary of 2017 Improving revenue trend with organic growth in H2 Margin improvement in Energy & Industry and the Group Successful acquisition of a majority stake of Inversiones Finisterre (Auto) Significant deleverage to 2.4x due to good cash generation and equity raise Outlook for 2018 Oil and gas to continue improving and no change in the positive trend of all other business lines High single digit revenue growth at constant rates from the current perimeter. Mid-single organic Margin to improve bps 53

54 FY Adjustments to Statutory results EUR Million Adj. Results FY 2017 FY 2016 Other results Statutory results Adj. Results Other results Statutory results +/- % Adj. Results Revenue 1, , , ,586.5 (0.2)% Ebitda (3.7) (11.1) (0.3)% Operating Profit (60.9) (63.8) % Net financial expenses (21.5) 0.0 (21.5) (18.6) 0.0 (18.6) Share of profit of associates Profit Before Taxes (60.9) (63.8) 60.5 (1.7)% Income tax (29.4) 11.7 (17.7) (31.6) 11.1 (20.5) Extraordinary Income tax (11.4) (11.4) Non controlling interests (10.0) 0.0 (10.0) (9.0) 0.0 (9.0) Net Profit 82.8 (47.2) (64.1) 19.5 (1.0)% (*) Number of Shares 133,267, ,267, ,016, ,016,755 EPS, in Euros (3.5)% Income Tax/PBT (24.1)% (28.9)% (25.4)% (34.0)% (*) weighted number of shares considering 3 months post equity raise 54

55 FY Revenue and Adj. Op. Profit by Division EUR Million REVENUE Actual 2017 Growth Organic Inorganic FX Total Actual 2016 Energy & Industry 1,009.8 (3.0)% 0.0% (1.1)% (4.1)% 1,052.6 Laboratories % 3.3% (0.4)% 6.2% 60.7 Auto % 3.3% (1.3)% 5.9% Idiada % 0.0% (0.1)% 10.2% Total Revenue 1, % 0.7% (1.0)% (0.2)% 1,586.5 Adj. Op. Profit Actual 2017 Growth Organic Inorganic FX Total Actual 2016 Energy & Industry 78.8 (0.2)% 0.0% (1.0)% (1.2)% 79.8 Laboratories % 9.3% (0.8)% 10.7% 6.1 Auto 58.7 (0.7)% 4.7% (1.6)% 2.4% 57.4 Idiada % 0.0% (0.1)% 7.7% 22.2 Holding (25.2) 0.0% 0.0% 0.0% 3.7% (24.3) Total Adj. OP. Profit % 2.3% (1.2)% 1.4%

56 FY Organic Revenue Growth by quarter and division Q1 Q2 Q3 Q4 FY REVENUE Vs LY Vs LY Vs LY Vs LY Vs LY Energy & Industry (4.2)% (2.2)% (3.8)% (1.7)% (3.0)% Laboratories 7.8% 6.1% 3.6% (2.7)% 3.3% Auto 1.8% (0.5)% 6.8% 8.2% 3.9% Idiada 5.9% 15.4% 13.2% 7.3% 10.3% Total Applus constant rates (1.4)% 0.2% 0.2% 1.2% 0.1% Acquisitions 0.0% 0.1% 0.1% 2.7% 0.7% Total constant rates (1.4)% 0.3% 0.3% 4.0% 0.8% FX 1.7% 0.7% (2.7)% (3.7)% (1.0)% Total Applus 0.3% 1.0% (2.4)% 0.2% (0.2)% 56

57 Q Revenue by Division and Adj. Op. Profit EUR Million REVENUE Actual 2017 Growth Organic Inorganic FX Total Actual 2016 Energy & Industry (1.7)% 0.0% (4.6)% (6.3)% Laboratories 18.2 (2.7)% 5.8% (1.1)% 2.0% 17.9 Auto % 14.2% (3.4)% 19.0% 68.8 Idiada % (0.3)% 7.0% 51.1 Total Revenue % 2.7% (3.7)% 0.2% Adj. Op. Profit % 8.4% (4.4)% 5.1%

58 H Revenue & Adj. Op. Profit by Division EUR Million Growth Revenue Actual 2017 Organic Inorganic FX Total Actual 2016 Energy & Industry (3.2)% 0.0% 1.8% (1.4)% Laboratories % 1.6% 0.3% 8.8% 28.5 Auto % 0.0% 0.1% 0.8% Idiada % 0.0% 0.2% 10.8% 86.3 Total Revenue (0.6)% 0.1% 1.2% 0.7% Adj. Op. Profit Actual 2017 Growth Organic Inorganic FX Total Actual 2016 Energy & Industry % 0.0% 1.3% 3.0% 33.7 Laboratories % 5.3% (0.4)% 27.7% 2.7 Auto 33.3 (5.3)% (0.3)% (5.6)% 35.3 Idiada % (0.2)% 7.9% 11.5 Holding (12.9) 1.9% 0.0% 1.9% (12.6) Total Adj. OP. Profit % 0.2% 0.4% 0.6%

59 H Revenue & Adj. Op. Profit by Division EUR Million REVENUE Actual 2017 Growth Organic Inorganic FX Total Actual 2016 Energy & Industry (2.8)% 0.0% (3.8)% (6.6)% Laboratories % 4.8% (1.0)% 4.0% 32.2 Auto % 6.9% (3.0)% 11.4% Idiada % 0.0% (0.3)% 9.7% 93.4 Total Revenue % 1.4% (3.2)% (1.1)% Adj. Op. Profit Actual 2017 Growth Organic Inorganic FX Total Actual 2016 Energy & Industry 44.1 (1.7)% 0.0% (2.5)% (4.2)% 46.1 Laboratories 3.3 (14.6)% 12.5% (1.0)% (3.1)% 3.4 Auto % 12.1% (3.9)% 15.0% 22.1 Idiada % 0.0% (0.0)% 7.5% 10.7 Holding (12.3) 0.0% (11.6) Total Adj. OP. Profit % 4.4% (2.9)% 2.0%

60 Q4 & FY Summary Income Statement EUR Million Q4 FY Change Change Revenue % 1, ,586.5 (0.2)% Adj. Operating Profit % % Adj.Op.Profit margin 9.2% 8.8% 9.0% 8.9% PPA Amortisation (14.4) (11.9) (50.1) (47.6) Other results (3.6) (7.8) (10.8) (16.2) Operating profit % % Finance result (3.6) (2.0) (21.5) (18.6) Associates (0.0) Profit before tax % % Income taxes (2.6) (17.3) (15.7) (31.9) Net Profit 12.6 (3.6) (447.4)% % Minorities (3.5) (2.6) (10.0) (9.0) Net Profit Group 9.1 (6.2) (245.9)% % Adjusted Net Profit Group % (1.0)% EPS in 0.07 (0.05) (242.3)% % Adjusted EPS in % (3.5)% 60

61 FY Other results EUR Million FY Other Results (10.8) (16.2) Severances (5.4) (5.3) Transaction costs (0.9) 0.0 Other gains and losses (0.8) 0.2 Historical Management Incentive Plan (3.7) (11.1) 61

62 FY Net Financial Expenses EUR Million Financial Expenses FY 2017 FY 2016 Interest on Term Loan (14.7) (14.7) Amortisation (2.1) (2.1) Foreign exchange (2.1) 1.0 Other (2.6) (2.8) Total (21.5) (18.6) 62

63 FY Adjustments to Statutory Cash Flow EUR Million CF Statement Restructuring & Extraord. Impacts Historical Mgmnt Incentive Plan Others Add Back capex & interests Non cash items Statutory CF Staturory CF equivalent epigraph Adjusted EBITDA (8.3) (3.7) 0.5 (114.5) 61.3 Profit Before taxes Non cash items Working Capital variation (4.1) - (0.4) - (4.5) (Increase)/Decrease in working ca Capex (47.2) Adjusted Operating Cash Flow (8.3) (4.1) Cash Conversion rate 72.6% Taxes Paid (32.5) (2.0) (34.5) Taxes Paid Interest Paid (15.8) Adjusted Free Cash Flow 87.8 (8.3) (4.1) (1.5) Operating Cash Flow (47.2) (47.2) Capex (15.8) (15.8) Interest paid Extraordinaries (6.3) Tax litigations (2.0) Historical Mgmnt. Incentive Plan (8.5) Applus+ Dividend (16.9) (16.9) Applus+ Dividend Minorities (8.0) (8.0) Minorities Others (3.8) 0.0 Operating Cash Generated (3.3) Business Combination Acquisitions / Disposals (95.9) - (95.9) Acquisitions/Disposals of subsidia Cash b/changes in Financing & FX (47.9) Changes in financing (135.9) (4.4) (140.2) Changes in financing Equity (new shares) (2.2) Capital increase Curency translations (12.4) (12.4) Currency translations Cash increase (decrease) (59.0) (59.0) Cash Increase / (Decrease) 63

64 FY Statutory Cash Flow EUR Million FY 2017 FY 2016 Profit Before taxes Non cash items (Increase)/Decrease in working capital (4.5) 47.3 Taxes Paid (34.5) (44.2) Operating Cash Flow Capex (47.2) (53.7) % of revenue (3.0)% (3.4)% Business combination Acquisitions/Disposals of subsidiaries (95.9) (2.1) Cash Flow from Investing activities (137.5) (55.8) Minorities (8.0) (7.2) Applus+ Dividend (16.9) (16.9) Interest paid (15.8) (15.8) Changes in financing (140.2) (44.2) Capital increase Cash Flow from Financing activities (45.9) (84.0) Currency translations (12.4) (3.8) Cash Increase / (Decrease) (59.0) 25.8 Cash generated w/o changes in Financing Cash Beginning Period Cash End Period

65 FY Balance Sheet EUR Million FY 2017 FY 2016 FY 2017 FY 2016 Equity Goodwill Long Term Provisions Other intangible assets Bank borrowings PPA Other financial liabilities Other intangible assets Deferred Tax Liabilities PPA Tangible assets Deferred Tax Liabilities Others Non current Financial Assets Deferred Tax Liabilities Deferred Tax Assets Other non current liabilities Total Non-Current Assets 1, ,385.9 Total Non-Current Liabilities Non-current assets classified as held for sale Inventories Short term provisions Trade & Other receivables Bank borrowings Corporate Income Tax assets Trade & Other payables Current financial assets Income Tax Liabilities Cash & Cash equivalents Other current liabilities Total Current Assets Total Current Liabilities Total Assets 2, ,996.1 Total Equity & Liabilities 2, ,