Applus Services S A : 2023 First Half Results Announcement

2023 First Half Results Announcement

25 July 2023

Applus Services, S.A. ("Applus+" or "the Group"), one of the world's leading and most innovative companies in Testing, Inspection and Certification, today announces the results for the first half year ended 30 June 2023 ("the period").

Highlights

• Strong financial performance continues
• Active portfolio strategy drives 90 basis points margin2 improvement
• New statutory vehicle inspection contract awarded in Saudi Arabia
• Progress on ESG including an improved score from Sustainalytics
• Solid cash flow generation supports acquisition strategy
• Second 5% share buyback programme completed
• Outlook raised following strong performance

H1 2023 Results

• Revenue of €1,001 million up 9.0% (organic1 up 8.8%)
• Operating profit2 of €111 million up 10.2% (organic1 up 6.5%)
• Operating profit2 margin of 11.0% (10.1% H1 2022)
• Earnings per share2 of €0.46, up 19%
• Reported net profit €26.4 million (€21.8m H1 2022)
• Free cash flow2 of €70.7 million (€71.5m H1 2022)
• Net debt/EBITDA3 ratio of 2.6x and liquidity of €425 million

Outlook

• High single digit organic revenue growth (raised from mid to high)
• Operating profit margin2 to increase in excess of 60 basis points compared to the reported margin last year (10.1%) as recently upgraded in June

1. Organic is at constant exchange rates
2. Adjusted for Other results, amortisation of acquisition intangibles and IDIADA Accelerated Depreciation (page 23)
3. Excluding IFRS 16

Joan Amigó, Chief Executive Officer of Applus+:

"I am pleased to report today good results for the second quarter and first half of the year with all four divisions performing well. Disciplined execution of our successful portfolio evolution has resulted in a more robust business mix that is closer aligned towards key global megatrends of energy transition, electrification and connectivity supporting demand for our services.

We were recently awarded a prestigious ten-year statutory vehicle inspection contract in Saudi Arabia that is testament to our ability to win international tenders

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and demonstrates the continued drive for sustainability linked services which continue to account for more than half of our revenue.

Our operating profit margin reached 11.0% in the first half, 90 basis points higher than last year. This margin improvement was mainly driven by our portfolio evolution whilst our good underlying margin progression on a proforma basis was partly offset by the ending of the Auto contracts in Costa Rica in July of last year and Alicante in February this year.

Our adjusted net profit increase of nearly 13%, along with the fewer number of shares following the two 5% share buyback programmes that recently completed, has resulted in an adjusted earnings per share increase of over 19%.

The profit increase, coupled with a similar level of working capital outflow as for the comparative period was entirely offset by the increase in the cash interest paid resulting in a free cash flow in-line with last year. Solid cash generation has supported our ability to make investments in acquisitions and the second share buyback whilst financial leverage remained stable.

In the light of this strong performance and our visibility for the rest of the year, we expect to deliver good revenue and profit growth giving us the confidence to raise our guidance to high single digit organic revenue growth from the previous guidance of mid to high. Following the recent margin upgrade we announced in June, we expect the operating profit margin to increase in excess of 60 basis points compared to the reported margin last year.

We remain totally focused on continued strong execution and delivering on the strategic plan."

Presentation and Webcast

There will be a webcast and audio presentation on these results today at 10.00 am Central European Summer Time. To access the webcast, use the link:

https://edge.media-server.com/mmc/p/uuktv4e4

To listen by telephone please first register in advance to receive an email with registration number, passcode and the telephone number to dial:

Conference Registration (vevent.com)

Applus+ Investor Relations:
Aston Swift	[phone]	[e-mail]
Applus+ Media:
Maria de Sancha Rojo	[phone]	[e-mail]

Equity Advisory, Europe - FGS Global, London:

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Justin Shinebourne

[phone]

About Applus+ Group

Applus+ is one of the world's leading and most innovative companies in the Testing, Inspection and Certification (TIC) sector. It has a broad portfolio of services for customers in all types of industries to ensure that their assets and products meet quality, health & safety and environmental standards and regulations.

The company drives increasingly profitable revenue generation through its sustainability services supported by innovation and digitalisation at all levels and invests in the development of proprietary solutions. The Group strategy aligns with the global megatrends of Energy Transition, Electrification and Connectivity.

Headquartered in Spain and listed on the Spanish stock markets, Applus+ operates in more than 70 countries and employs over 26,000 people. For the full year of 2022, Applus+ reported revenue of €2,050 million, and an adjusted operating profit of €202 million. The total number of shares is 129,074,133.

The Group is at the forefront of ESG best practices which is recognised by external ratings agencies.

ISIN: ES0105022000

Symbol: APPS-MC

For more information go tohttps://www.applus.com/global/en/

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Discontinued operations and Proforma numbers

Revenue, adjusted operating profit, margin and other financial indicators, in 2023 are reported as required by the applicable accounting standards on a continuing basis, removing the amounts in the current year and in the comparable year for the three disposals recently made. To allow for a cleaner comparison between the periods and to reflect the business performance on a continuing basis, the comparable financial indicators in 2022 are referred to as "proforma", and where appropriate the actual reported figures in 2022 may also be shown.

Within the Automotive division, the business and operations in Finland were sold in December 2022 which had revenue of €13.0 million in 2022 of which €6.7 million was in the first half.

The sale of the business of the Automotive division in the USA, with revenue in 2022 of €36.6 million of which €16.3 million was in the first half, was announced in December last year and the sale completed in February.

The disposal of the Oil & Gas business in the USA that is held within the Energy & Industry division was announced on the 30th March this year and the completion was in June. The revenue from this business was €101.8 million in 2022 of which €45.3 million was generated in the first half of 2022.

Appendix 2 has a table with the revenue by quarter of these discontinued operations.

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Profit and Loss Overview

The figures shown in the table above are rounded to the nearest €0.1 million

1. AD is IDIADA accelerated depreciation to adapt assets useful life to contract/concession duration
2. EPS calculation based on Net Profit from Continuing Operations

Revenue

Revenue for the six-month period ending 30 June 2023 was €1,000.8 million which was 1.4% higher than the revenue of €986.7 million reported in the first half of last year and 9.0% higher compared to €918.4 million of proforma revenue, in the first half of last year.

The revenue bridge for the first half in € million is shown below.

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