Investor Presentation NOVEMBER 2017

Transcription

1 Investor Presentation NOVEMBER 2017 ASTON SWIFT, IR

2 Contents 1 Applus introduction (3-12) 2 Divisions description (13-17) 3 Inversiones Finisterre and Equity Raise (18-26) 4 Equity Analysts (27) 2

3 CALENDAR AND AND CONTACT FURTHER INFORMATION CALENDAR 2017 FY 27 February Q1 10 May H1 24 July Q3 30 October 2018 Ticker: APPS-MC Aston Swift, Vice President Investor Relations Barcelona

4 Applus+ at a Glance Applus+ is one of the world's leading Testing, Inspection & Certification companies. It provides solutions for customers in all types of industries to ensure that their assets and products meet quality, health & safety, and environmental standards and regulations. 19,000 employees in ,587 million total revenue in countries across all continents accredited by major international organisations 4

5 Spain Employees %total revenue in ,000 18% Rest of Europe Employees %total revenue in 2016 Asia Pacífic US & Canada Employees %total revenue in ,100 20% Employees 1,900 %total revenue 13% in 2016 Latin America Middle East & Africa Employees 3,300 %total revenue 9% in 2016 ALGERIA ANDORRA ANGOLA ARGENTINA AUSTRALIA AZERBAIJAN BAHRAIN BELGIUM BOLIVIA BRAZIL BRUNEI CAMEROON CANADA CHILE CHINA COLOMBIA 3,700 28% COSTA RICA CZECH REPUBLIC DEMOCRATIC REPUBLIC OF CONGO DENMARK ECUADOR EGYPT EL SALVADOR Employees %total revenue in 2016 EQUATORIAL GUINEA FINLAND FRANCE GABON GERMANY GHANA GUATEMALA INDIA INDONESIA IRAQ IRELAND ITALY JAPAN KAZAKHSTAN KUWAIT MADAGASCAR MALAYSIA MEXICO MOROCCO MONGOLIA MOZAMBIQUE NETHERLANDS NICARAGUA NIGERIA 2,000 12% NORWAY OMAN PAKISTAN PANAMA PAPUA NEW GUINEA PERU PHILIPPINES POLAND PORTUGAL QATAR RUSSIA SAUDI ARABIA SINGAPORE SLOVAKIA SOUTH AFRICA SOUTH KOREA SPAIN TAIWAN THAILAND TURKEY UKRAINE UNITED ARAB EMIRATES UGANDA UK USA UZBEKISTAN 5

6 Established over 20 years Period % Shareholding 100% 25% Automotive established Acquisition of RTD (est 1937) IDIADA contract awarded (est 1971) Acquisition of Norcontrol 1981) (est 15 % 70% Financial Institutions and other shareholders 30% 22% Milestones Financial Institutions and other shareholders Free Float Acquisition of VELOSI (est 1982) Acquisition of 20 more businesses The IPO of 10 % 75 % Energy & Industry division formed % Free Float Rev 1.6bn AOP 141m FCF 129m Labs contract awarded (est 1907) Current equity ownership (>3%) Source: CNMV disclosures as of 3 November

7 Revenue History % 1-16: 6.1 CAGR 201 1,581 1,619 1,702 1,587 1,460 Revenue ( million) 1,180 Revenue for 2011 and 2012 are proforma for acquisitions within the relevant acquisition year 7

8 Investment Case A TIC company benefiting from Quality, Safety & Environmental structural growth drivers: Regulations, Risk, Outsourcing, Product Variety, Complexity, Ageing Leading market positions in key markets Good balance of developed (2/3) and emerging market (1/3) exposure High entry barriers: accreditations, reputation, relationships, network, innovation Resilient earnings profile due to critical nature of work, differentiated offerings, blue-chip customer relationships, diversified revenue streams and flexible cost base Longer term margin potential Management experience of TIC industry and managing challenging markets Strong cash flow with low capital intensity that can comfortably manage higher gearing levels Fragmented industry With 42% O&G exposed end markets, Applus+ is demonstrating its resilience in the current environment and recover when energy capex spending resumes 8

9 Structural Growth Drivers Energy & Industry Infrastructure investment Maintenance of ageing assets (eg Pipes, Refineries, buildings) Growth in Emerging Market infrastructure Growth Drivers and Key Risks Automotive (Statutory Vehicle Inspections) Resilience to economic downturn Regulations of vehicle safety and emissions Developing countries adopting statutory inspection programmes Increased number of vehicle models / shorter product life cycle Incease in car volume Increased outsourcing in developed markets Increase in regulations Increase in regulations Economic growth in Spain Key risks: contract renewals Key risks: decline in capex and opex spend in Oil & Gas IDIADA (Automotive Engineering & Testing) See Annual Financial Statements for all risks and further detail OEMs in Emerging Markets need to import technical know-how Key risks: reduced R&D spend and model variants in Auto OEM and contract renewal 9

10 Group management Fernando Basabe CEO Joan Amigó CFO Jorge Lluch Corporate Development & Communications José Delfín Pérez Human Resources Eva Argilés Legal M. Teresa Sanfeliu HSQE Anna Díaz Compliance Ramón Fernandez Armas LABORATORIES DIVISION IDIADA DIVISION AUTOMOTIV E DIVISION ENERGY & INDUSTRY DIVISION Jordi Brufau Guillermo Andres Phillip Morrison Pablo San Juan Sytze Voulon Ramón Fernandez Armas Brian Dawes Cameron Waters Derek Burr Africa North America Latin America Nothern Europe Mediterranean Middle East Oceania Southeast Asia Carles Grasas Aitor Retes 10

11 Today: Global Leader in Testing, Inspection and Certification Leadership in chosen markets and technology No. 1 in Non Destructive Testing (NDT) for the Oil & Gas industry No. 2 Operator of Statutory Vehicle Inspections Leading independent Auto Proving Ground End markets (2016) Aero 3% Construction 3% Power 9% c. 19,000 employees > 70 countries Over 48,000 customers Organised through 4 divisions 2016 results Oil & Gas 42% Auto OEM 11% Statutory Vehicle Inspection 19% Global platform with local presence Other 13% Diversified geographic footprint (2016) Middle East, Africa 12% Asia Pacific 13% Latin America 9% Rest of Europe 28% Revenue of 1,587 million, down 6.8% on 2015 Adj. Op. Profit of 141 million, 8.9% margin Adj. Net Profit 83.7 million, down 14.5% Spain 18% North America 20% 11

12 Divisions ENERGY & INDUSTRY DIVISION 2016 Revenue and employees 2016 Adj Operating Profit (% Group) 1,053M (66%) LABORATORIES DIVISION AUTOMOTIVE DIVISION IDIADA DIVISION 12,500 61M M 3, M 2,200 employees (4%) employees (19%) employees (11%) employees 80m (48%) Margin 7.6% Main Activities Industrial and environmental inspection, technical assistance, non-destructive testing (NDT) and technical staffing. 6m (4%) 57m (35%) 22m (13%) 10.0% 19.6% 12.4% 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. 12

13 Energy & Industry Division Overview The former divisions of RTD, Velosi and Norcontrol. Integrated into one in 2017 Assesses the quality, safety, environmental and efficiency of design, construction and operation of industrial and civil infrastructure Non Destructive Testing, Inspection, Certification, Quality Assurance and Control, Site Supervision, Project Management, Vendor Surveillance, Technical Staffing 60 countries with 12,500 employees Top Customer < 6%. Top 10 = 27% Revenue by End Market (2016) Telecom 2% Aerospace 3% Mining 4% Construction 5% Power 14% Other 9% Oil & Gas 63% Revenue by Geography (2016) Latin America 10% Asia Pacific Europe 14% 32% Africa & Middle East 18% North America 26% 13

14 Oil & Gas Exposure Overall Oil & Gas revenue down by 18% in Most of this mainly capex/upstream in Africa, LatAm and North America 14

15 Laboratories Division Overview Product testing and certification services Multi-technology state-of-the-art laboratories serving the Aerospace, Auto, Construction, Energy, IT industries Presence in Europe, Latin America, North America, Asia and Saudi Arabia with 800 employees Revenue by Geography (2016) Asia 10% ROW 2% USA 9% LatAm 3% Spain 50% Rest of Europe 25% 15

16 IDIADA Division Overview Revenue by Geography (2016) Founded in HQ in Tarragona, Spain Rest of World Owned 80% by Applus+ and 20% local government and since 1999 Applus+ operates the assets owned by the local government under a long term contract1 Engineering, testing, homologation and R&D services provider to the leading vehicle manufacturers (OEMs) 3% Spain Asia Pacific 21% 25% Rest of Europe 50% Revenue by Service (2016) Specialised facilities, people and proving ground with knowledge of global technical requirements Global network in 23 countries across Europe, Asia and Latin America with 1,980 employees Homologation 15% Body & Passive Safety 34% Proving Ground 19% Chassis & Powertrain 32% 16

17 Automotive Division Overview Established in Spain in nd largest statutory vehicle inspection operator globally1 with leading market positions in Europe and Americas: 11 million inspections pa and programme manage another 5 million by 3rd parties Vehicle safety and emissions inspection Active in both regulated and deregulated markets Europe and Americas with 3,500 employees Revenue by Geography (2016) Latin America 15% North America 13% Scandinavia 16% Spain 29% Ireland 27% Revenue by Regulatory Regime (2016) Liberalised 20% Concession/ authorisation based (regulated) 80% 1. Based on number of inspections carried out 17

18 1. Acquisition of Inversiones Finisterre Reinforces our global leadership position in Auto Inspection Highly visible and stable cash flows Accretive for margin and earnings per share Funded by an equity accelerated book build Leverage will reduce Well positioned to make further attractive acquisitions 18

19 2. Inversiones Finisterre Private company with 30 years of experience managing vehicle inspection concessions in Spain, Costa Rica and Argentina Argentina will transfer to a third party Well known to Applus+ The current owners will retain 20% Applus+ Minority Partners (Spain) 80% 20% Inversiones Finisterre 100% Minority Partner (Costa Rica) Supervisión y Control (Galicia)* 55% 45% Riteve (Costa Rica)* * Operating Companies 19

20 3. Transaction Highlights Unique opportunity to acquire two highly attractive businesses Vehicle inspection concessions in Galicia (Spain) and Costa Rica Revenue of c. 74 million in FY 2017 Four million annual vehicle inspections growing between low and mid single digits Price agreed of c. 89 million for 80% ownership with an agreement to, subject to certain events, acquire the remaining 20% after July 2022 Expected to close in 2017 Low integration risk 20

21 4. Galicia Supervisión y Control S.A. Established in 1987 Concession currently runs to Dec 2023 and can be extended in four year periods up to 2037 Revenue in 2017 of c. 47 million with a margin above Auto division average Provides services on an exclusive basis in Galicia through 25 stations and 10 mobile inspection centres and over 500 people Gives Applus+ a presence in 9 Autonomous Regions in Spain Benefit from back office efficiencies and increased scale Number of inspections E CAGR at 3.7% 21

22 5. Costa Rica Best in class operation in Central America Contract started in 2002 for ten years, has been extended ten years to 2022 and can be further extended Revenue in 2017 of c. 27 million with a margin above Auto division average Provides services on an exclusive basis in the country through 13 stations and 4 mobile inspection centres and over 400 people With a presence in 5 countries, Applus+ will now be the leader in Latin America and in the best position to win further opportunities in the region Number of inspections E CAGR at 6.1% 22

23 6. Strong Track Record in New and Renewed Programmes In last 10 years: 15 new programmes 10 programmes extended or won re-tender 1 contract lost and re-won in 2016 (Massachusetts) 23

24 7. A Broadly Diversified Auto Division Portfolio of 25 programmes in 2016 becomes 27 with this acquisition and 30 after the new programmes in Massachusetts, Uruguay and Ecuador commence Auto division proforma 2016 revenue is 22% of Group versus 19% previously 24

25 8. Equity Raise Applus+ raised 13 million shares, 10% of current capital at Proceeds to be used to fund the acquisition and reduce debt Leverage will reduce: End 2017 by bps (proforma) End 2018 by further 40 bps Increasing financial flexibility 25

26 9. Summary of Acquisition and Equity Raise Adds 74 million of highly visible, stable revenue and cash flow Strengthens global leadership position in Vehicle Inspection Applus+ becomes the leader in Latin America where there are further opportunities Accretive for Group margin and EPS Combined with the equity raise, reduces leverage and positions Group for further attractive acquisitions 26

27 CALENDAR AND FURTHER INFORMATION EQUITY ANALYSTS London: Madrid, Porto, Paris, Zurich: Barclays, Paul Sullivan Santander, Robert Jackson Morgan Stanley, Toby Reeks Sabadell, Andres Bolumburu UBS, Denis Moreau Fidentiis, Alberto Sanchez Citigroup, Ed Steele Alantra Equities, Alvaro Lenze Berenberg, Josh Puddle Ahorro, Javier Díaz Exane, George Gregory Caixa BPI, Filipe Leite JPMorgan Cazenove, Robert Plant Oddo, Emira Sagaama Credit Suisse, Andy Grobler Mainfirst, Mourad Lahmidi Jefferies, Will Kirkness Kepler Cheuvreux, Aymeric Poulain 27

28 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 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. 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 realised. This document may contain summarized information or information that has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information, including if it is necessary, any fuller disclosure document published by Applus+. Nothing in this presentation should be construed as a profit forecast. 28