Applus+ Group H1 2018 Results Presentation 24 July 2018
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
Results Presentation H1 2018 HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK Fernando Basabe Chief Executive Officer
Highlights � Accelerating growth and margin improvement despite FX headwinds � Energy & Industry back to growth at constant rates � Excellent performance in IDIADA, Auto and Labs � Three acquisitions with annual revenue of €13 million � Senior debt refinanced to extend maturities and diversify sources of financing � H1 Results: Revenue of €812.8 million up 3.0% (organic 1 +3.5%) � Operating profit 2 of €82.3 million up 15.9% (organic 1 +5.1%) � Operating profit 2 margin of 10.1%, up 113 bps � � Operating cash flow of €47.3 million up 10% Net Profit up 36.2% (Adjusted 2 +14.2%). Earnings per Share 2 of €0.32, up � 3.8% � Net debt/EBITDA ratio stable at 2.4x (1) Organic is at constant exchange rates (2) All adjusted for other results and amortisation of acquisition intangibles 4
Results Presentation H1 2018 HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK Joan Amigó Chief Financial Officer
H1 2018. Revenue Bridge EUR Million +3.0% Accelerating revenue growth 6
H1 2018. Adjusted Operating Profit Bridge EUR Million 15.9% Significant margin improvement 7
H1 2018. Summary Income Statement EUR Million H1 2018 2017 Change Revenue 812.8 789.3 3.0% (1) Adj. Operating Profit 82.3 71.0 15.9% Adj.Op.Profit margin 10.1% 9.0% + 113 bps PPA Amortisation (29.6) (23.8) Other results (1.1) (5.6) Operating profit 51.6 41.6 24.1% Finance result (9.3) (12.3) Associates 0.0 0.5 Profit before tax 42.3 29.8 42.0% (11.5) (8.7) Income taxes Net Profit 30.8 21.1 46.2% Minorities (8.6) (4.8) Net Profit Group 22.2 16.3 36.2% Adjusted Net Profit Group 45.9 40.2 14.2% EPS in € 0.155 0.125 23.8% (2) Adjusted EPS in € 0.321 0.309 3.8% (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 8
H1 2018. Cash Flow EUR Million H1 2018 2017 Change (1) Adjusted EBITDA 106.9 93.9 13.9% (Increase) / decrease in working capital (41.1) (38.1) � Adjusted free cash flow increase Capex - operational (16.9) (18.9) of 8.8M€ Capex - Net new vehicle stations (1.6) 6.1 Adjusted Operating Cash Flow 47.3 43.0 10.0% � Significant reduction of cash out Cash Conversion rate 44.3% 45.8% below free cash flow Taxes Paid (8.8) (11.1) Interest Paid (5.5) (7.7) � Acquisitions corresponds to 3C, Adjusted Free Cash Flow 33.0 24.2 36.1% Karco, DatapointLabs and final Extraordinaries & Others 1.6 (0.3) payment on Inversiones Finisterre Tax litigations 0.0 (2.0) Historical Management Incentive Plan 0.0 (8.5) Minorities (4.0) (3.3) Operating Cash Generated 30.6 10.2 Acquisitions (31.0) (4.6) Cash b/Changes in Financing & FX (0.4) 5.5 (1) Adjusted EBITDA is stated as Operating Profit before depreciation, amortisation and Other results 9
H1 2018. Net Debt – as defined by bank covenant 1 EUR Million H1 2017 DEC 2017 H1 2018 Stable leverage (*) LTM EBITDA includes proforma annual results from acquisitions (1) Stated at annual average rates (2) Others includes return of short term investments partially offset by dividends to minorities and purchase of Restricted Stock Units 10
H1 2018. Currency Exposure % Revenue by Actual Currency � Euro is stronger against most currencies � Slightly less impact in Q2 than Q1 16% 16% 4% 4% Average FX Exchange rates vs Euro 4% 4% 4% 4% (2) JAN - JUN JAN - JUN OTHER Change FY 2017 2018 2017 24% CAD 26% USD 1.212 1.081 (10.8)% 1.128 AUD GBP 0.879 0.859 (2.3)% 0.876 AUD 1.569 1.434 (8.6)% 1.471 GBP CAD 1.546 1.444 (6.6)% 1.464 (1) USD 48% ARS 25.832 16.934 (34.4)% 18.640 46% EUR H1 2018 H1 2017 (1) Includes currencies pegged to USD (2) None above 4% 11
Refinancing New Financing Facilities Bank Facility - €600 million Private Placement - €230 million Term Loan €200m / RCF €400m 7 years €150m � � � Maturity 2023 extendable to 2025 � 10 years €80m � Margin at current leverage of 1.1% � Fixed rate (blended) of 2.0% Leverage covenant of 4x (Net Leverage covenant of 4x (Net � � debt/EBITDA) debt/EBITDA) � Subscribed by major US institutional investors Benefits � Diversifies the sources of financing � Extended the maturity dates � Unsecured facilities giving flexibility for future financing � Long term facility at fixed rates � Higher RCF amount providing flexibility and cost optimization 12
Results Presentation H1 2018 HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK Joan Amigó Chief Financial Officer
H1 2018. Revenue by Division, End Market and Geography By Division By End Market Others 14% Oil & Gas 35% Energy & IDIADA 13% *14% Aerospace 2% Industry 59% *38% *12% *3% *65% Construction 3% *4% Power 9% Auto 24% *10% *19% Automotive Laboratories 4% OEM 13% Statutory Vehicle *4% *12% Inspection 24% *19% By Geography Middle East & Africa 10% Spain 22% *12% *20% Asia Pacific 12% *11% LatAm 10% *9% North Rest of America Europe 18% 28% * H1 2017 *20% *28% 14
Energy & Industry Division (I) 34% Adj.Op. Revenue Profit 59% EUR Million Revenue Adj. Op. profit (5.5)% (5.9)% � Q2 (*) Revenue growth 2.1% at constant FX after 14 quarters of decline � Oil & Gas end market overall flat � Other end markets including Power, Construction, Telecom, Aerospace continued to grow well, benefiting from regional cross-selling � Negative FX impact mainly due to US, Canadian and Australian dollar � Flat margin reflecting tough pricing environment * See in Back-up pages 15
Energy & Industry Division (II) � North America (25% of division revenue), strong recovery in Oil & Gas continues especially for small new construction pipelines in shale regions, pipeline integrity services and facility turnarounds � LatAm (10%), good growth with a significant performance improvement in countries such as Colombia, Mexico, Brazil and Panama � Northern Europe (19%), down mid single digit due to fewer large international projects managed out of the region and a competitive opex market in Europe. North Sea capex market returned to growth � Spain, Middle East and Oceania growing well in all end markets and continued decline in Africa and South East Asia from lower investment in existing and new projects in the Oil & Gas sector 16
Laboratories Division Adj.Op. Revenue Profit 4% 4% Revenue Adj. Op. profit +11.6% +17.2% Good growth and margin improvement � All business units (Industry, Construction, IT, Metrology) performing well � Acquisition of DatapointLabs in Q2 with annual revenue of US$4 million � Five small acquisitions made in 2017 and 2018 at good multiples with high � growth and margins with total annual revenue of €12 million Strong pipeline of further acquisition opportunities � 17
Automotive Division (I) Adj.Op. 24% Revenue Profit 48% Revenue Adj. Op. profit +25.0% +37.5% � Strong revenue and profit growth organic and reported despite negative FX impact mainly from Argentinian currency � Excellent performance from Inversiones Finisterre with high organic revenue and profit growth � Margin increase mainly due to Inversiones Finisterre but also organic margin improvement 18
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