Applus Services S.A. — Investor Presentation 2021

Jul 27, 2021

27 July 2021 Applus+ Group H1 2021 Results Presentation

Fernando Basabe Chief Executive Officer Joan Amigó Chief Financial Officer

Disclaimer

This document has been prepared by APPLUS SERVICES, S.A. ("Applus" or the "Company") exclusively for its use during a presentation of financial results; therefore it cannot be disclosed or made public by any person or entity with an aim other than the one expressed above, without the prior written consent of the Company. The information and any opinions or statements made in this document have not been verified by independent third parties, nor audited and no express or implied warranty is made as to the impartiality, accuracy, completeness or correctness of the information or the opinions or statements expressed herein. The information contained in this document on the price at which securities issued by Applus have been bought or sold, or on the performance of those securities, cannot be used to predict the future performance of securities issued by Applus.

This document may contain statements that constitute forward looking statements about Applus. These statements are based on financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations, which refer to estimates on, 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. Although Applus believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Applus shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Applus, that could cause actual results and developments to differ materially from those expressed in or implied or projected by the forward-looking information and statements. 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 Spanish Market Regulator, the Comisión Nacional del Mercado de Valores. Except as required under applicable law, 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 summarized 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. Results Report includes the list and definition of the Alternative Performance Measures (APMs) used both in this presentation and the Results Report, according to the guidelines published by the European Securities and Markets Authority (ESMA).

Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement. This document does not constitute an offer or invitation to purchase or subscribe shares, in accordance with applicable laws and regulations, nor a request for any vote or approval in any other jurisdiction, nor an invitation or inducement to engage in investment activity. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000.

H1 2021: Highlights

Strong revenue and margin increase over 2020 and on track for full recovery next year

4

5

6

Strategic repositioning: Sustainable and continued diversification towards higher growth and margin end markets

3

Auto and Labs in line with pre COVID levels whilst E&I and IDIADA making good progress

Leverage and liquidity are comfortably supporting the investment and growth strategy

Inorganic growth strategy: Four acquisitions closed year to date and good pipeline

Outlook revised up

H1 2021: Highlights

Revenue	2 Operating profit	2 Operating profit margin
€843.0 million	€80.3 million	9.5%
up +13.7% (+8.5% organic1)	up 132.6% (+119.1% organic1)	(4.7% in H1 2020)

Free cash flow 2	Net debt/EBITDA ratio 3
€41.7 million down 52.0%	2.7x and liquidity of €585 million

1 Organic is at constant exchange rates 2 Adjusted for Other Results, amortisation of acquisition intangibles and impairment 3 Excluding IFRS 16

Strong revenue and margin increase 6

HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK

H1 2021: Revenue Bridge EUR Million

• Organic revenue recovering well and on track to be in line with pre-covid levels by next year
• Strong contribution from acquisitions

Year on Year Organic Revenue change at constant rates

H1 2021: Adjusted Operating Profit Bridge

EUR Million

• Strong Q2 margin at 10.3% driven by improvements from volume, cost control and portfolio mix
• Acquisitions strongly margin accretive
• Fx impact is expected to lessen in the rest of

AOP Margin Evolution

H1 2021: Income Statement EUR Million

		H1
	2021	2020	Change
Revenue	843.0	741.2	13.7%
Adj. Operating Profit	80.3	34.5	132.6%
Adj Op Profit margin	9 5%	7% 4
PPA Amortisation	(31.1)	(29.2)
Impairment	0.0	(165.0)
Other results	(3.4)	(2.2)
Operating profit	45.8	(161.9)
Finance result	(11.4)	(11.6)
Profit before tax	34.3	(173.6)
Income taxes	(11.3)	10.7
Net Profit	23.0	(162.9)
Minorities	(8.3)	(7.0)
Net Profit Group	14.7	(169.9)
Adjusted Net Profit Group	43.3	2.1
EPS in €	0.10	(1.19)

	(1.19)
0.30 0.01 Adjusted EPS in €

H1 2021: Cash Flow EUR Million

	2021	2020	Change
Adjusted Ebitda	134.3	85.4	48.9	57.3%
Change in Working Capital	(52.3)	19.6
Capex	(18.0)	(12.6)
Adjusted Operating Cash Flow	64.0	92.4	(28.4)	(30.8)%
Taxes paid	(16.4)	(0.3)
Interest paid	(5.8)	(5.2)
Adjusted Free Cash Flow	41.7	86.9	(45.2)	(52.0)%
Extraordinaries & Others	(1.1)	(2.6)
Dividends to Minorities	(8.1)	(3.4)
Operating Cash Generated	32.6	80.9	(48.3)	(59.7)%
Acquisitions	(60.5)	(4.5)
Cash b/Changes in Financing & FX	(27.9)	76.4
Payments of lease liabilities (IFRS 16)	(29.6)	(26.9)
Other changes in financing	15.2	137.5
Currency translations	1.9	(3.8)
Cash Increase	(40.4)	183.1

• H1 Strong increase in EBITDA at a 15.9% margin
  • Working capital outflow as expected reflects reversal of strong inflow last year due to change in revenue trend
  • Working capital to sales 3%
  • Acquisitions relates to payments for SAFCO, IMA Dresden and Inecosa-Adicora

Leverage and Liquidity at 30 June

EUR Million

Liquidity
Cash at 30 June 2021	148.6
Undrawn facilities	436.4
Available liquidity	585.1

(1) Stated at annual average rates and excluding IFRS 16 as defined by bank covenant

• Leverage reduced to 2.7x despite acquisition spending
• Strong liquidity
• Additional €100 million USPP funded in June (10/15 years maturity at low fixed rates)

HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK

Further progress on portfolio evolution

Acquisition 2020 – July 2021 (I)

Acquisition 2020 – July 2021 (II)

Companies acquired 	9	Revenue (€ Million)
 Total up front investment	€ 305 million	contribution by Division (1) 11%
 Annual Revenue	€ 190 million	190
 Adj. Op. Profit Margin	14%
ROCE (First year) 	8.7%
Increase in Revenue  (1)	+ 11%	18% 75% 5% 70 70
Increase in Margin  (1)	+ 30 bps	50
Increase in EPS  (1)	+ 13%	E&I Auto Labs Group

• Portfolio mix rebalancing enhancing the Group's growth and margin profile
• Statutory Vehicle Inspection is now the largest end market

Energy & Industry Division

The Energy & Industry Division is a leading global provider of non-destructive testing, industrial and environmental inspection, quality assurance and quality control, engineering and consultancy, vendor surveillance, certification and asset-integrity services.

The Division designs and deploys proprietary technology and industry knowhow across diverse sectors, helping our clients to develop and control industry processes, protect assets and increase operational and environmental safety. The services are provided for a wide range of industries including power, construction, aerospace, telecommunications and oil and gas.

Energy & Industry Division

EUR Million

Financial Highlights

		H1
	2021	2020 (1) CCY	Change		Organic	Inorganic
Revenue	434.9	439.0	(0.9)%		(2 0)%	1 1%
Adj. Op. Profit	28.4	12.2	131.9%		126 0%	5 9%
% AOP Margin	6 .5%	2 8%

• Q2 organic revenue growth of 13%
• Power (18% of division revenue) growing strongly and above 2019 levels. Renewables now make up more than one third of Power revenues on pro-forma basis and growing double digits
• O&G Opex (40%) down 4% with good growth in Q2. O&G Capex (10%) continue to decrease
• Mediterranean and LatAm regions (30% of the division revenue) already growing above 2019 levels due to higher exposure to Power
• Significant margin improvement to continue, narrowing the gap vs Pre-Covid levels
• Completed three accretive margin acquisitions with annual revenue of €55 million and strong growth: SAFCO (construction), Inecosa-Adícora (power) and Enertis after the period end (renewables)
• Priority is to accelerate portfolio evolution
• (1) Constant Currency (CCY). Figures stated at actual H1 2021 FX rates. (FX Impact: Revenue: (3.8)% Adj. Op. Profit: (13.5)%)

Year on Year Organic Revenue change at constant rates

Automotive Division

The Automotive Division delivers statutory-vehicle-inspection services globally. The Division's programmes inspect vehicles in jurisdictions where transport and systems must comply with statutory technical-safety and environmental regulations.

The Division operates 30-plus programmes, expected to carry out over 16 million vehicle inspections across Spain, Ireland, Denmark, Finland, Sweden, Andorra, the United States, Argentina, Georgia, Chile, Costa Rica, Ecuador and Uruguay in 2021. In the programme-managed services, a further 10 million inspections are delivered annually by third parties.

Automotive Division

EUR Million

Financial Highlights

		H1
	2021	2020 (1) CCY	Change	Organic	Inorganic
Revenue	234.8	137.9	70.2%	41 8%	28 4%
Adj. Op. Profit	48.5	24.3	99.1%	61 1%	38 0%
Margin % AOP	20 6%	17.6%

• Q2 organic revenue growth of 80%
• Expect approximately €440 million revenue for the year at a similar margin to H1 due to seasonality change
• Covid-19 has accelerated digitalisation process especially with online booking and advance payments
• Strong contribution from Besikta acquisition with the expected synergies coming through
• Negative FX impact expected to reduce by the end of the year
• Connecticut contract for €6 million annual revenue was not renewed, but won a fourth new contract in Mexico

(1) Constant Currency (CCY). Figures stated at actual H1 2021 FX rates. (FX Impact: Revenue: (4.2)% Adj. Op. Profit: (5.7)%)

Year on Year Organic Revenue change at constant rates

IDIADA Division

IDIADA A.T. (80% owned by Applus+ and 20% by the Government of Catalonia) has been operating under an exclusive contract from the 351 hectare technology centre near Barcelona (owned by the Government of Catalonia) since 1999. The contract to operate the business and use the assets runs until September 2024 and although it is renewable in five-year periods until 2049, it has been decided that there will be no further extensions but a tender for a new 20 or 25 year concession.

IDIADA A.T. provides design, testing, engineering and homologation services to the world's leading vehicle manufacturers.

20

IDIADA Division

EUR Million

Financial Highlights

		H1
	2021	2020 (1) CCY	Change	Organic	Inorganic
Revenue	107.3	99.7	7.7%	7 7%	0 0%
Adj. Op. Profit	8.5	3.9	115.9%	115 9%	0 0%
Margin % AOP	7.9%	4.0%

• Q2 organic revenue growth of 34%
• Solid recovery, on track to exceed 2019 levels by next year
• High margin Proving Ground in Catalonia (19% of Division revenue in 2019) operating at c. 65% capacity with customers gradually returning due to first class facilities
• Services for Electric/Hybrid and ADAS continue gaining share
• Continued focus on innovation such as the 5G proprietary network presented at the Mobile World Congress in Barcelona
• Expect continued margin improvement in H2
• Tender for the concession delayed and now expected to be launched next year
• (1) Constant Currency (CCY). Figures stated at actual H1 2021 FX rates. (FX Impact: Revenue: (0.7)% Adj. Op. Profit: (0.9)%)

Year on Year Organic Revenue change at constant rates

Laboratories Division

The Laboratories Division provides testing, certification and development engineering services to improve the competitiveness of its clients' products and encourage innovation. The Division has a network of multidisciplinary laboratories in Europe, Asia and North America.

Our state-of-the-art facilities and the technical knowledge of our experts allow us to offer high added-value services to a wide range of industries such as aerospace, automotive, electronics, IT and construction.

Laboratories Division

EUR Million

Financial Highlights

		H1
	2021	2020 (1) CCY	Change	Organic	Inorganic
Revenue	65.6	40.2	63.1%	9 7%	53 4%
Adj. Op. Profit	9.7	3.7	163.1%	63 6%	99 5%
Margin % AOP	14.9%	9 2%

• Q2 organic revenue growth of 21%
• Strong growth and in line with pre-COVID levels
• Electrical & Electronic (39% of the revenue), strong Asian performance offset slow down in Europe due to chip shortage
• Mechanical Labs (24%), temporarily suffering due to challenging aerospace market. Expect to recover next year
• Other segments including Construction and Metrology and calibration are performing strongly
• Recent acquisitions contributing >50% revenue growth while recently closed IMA Dresden (materials testing) add an incremental €25 million of annual revenue
• Highest margin ever at 14.9% with continued improvement expected
• (1) Constant Currency (CCY). Figures stated at actual H1 2021 FX rates. (FX Impact: Revenue: (1.2)% Adj. Op. Profit: (2.8)%)

HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK

Strong performance reinforces positive outlook

HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK

Summary of H1 2021

• Strong performance in the half year and on track for full recovery next year
• Auto and Labs in line with pre COVID levels. E&I and IDIADA making good progress
• Strong margin performance through revenue recovery and focus on margin levers
• Successful acquisition performance adding higher growth and margin businesses in line with strategic portfolio repositioning

Outlook for 2021

• Outlook revised up
• Mid teens revenue growth at constant fx rates from both organic and acquisitions made to date and margin improving to close to 10%
• Continued focus on inorganic growth strategy

HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW SUMMARY & OUTLOOK APPENDIX

www.applus.com

26

Adjustments to Statutory results

		H1 2021			H1 2020
EUR Million	Adj. Results	Other results	Statutory results	Adj. Results	Other results	Statutory results	+/- % Adj. Results
Revenue	843.0	0.0	843.0	741.2	0.0	741.2	13.7%
Ebitda	134.3	0.0	134.3	85.4	0.0	85.4	57.3%
Operating Profit	80.3	(34.5)	45.8	34.5	(196.4)	(161.9)	132.6%
Net financial expenses	(11.4)	0.0	(11.4)	(11.6)	0.0	(11.6)
Profit Before Taxes	68.8	(34.5)	34.3	22.9	(196.4)	(173.6)	200.9%
Current Income tax	(17.2)	5.9	(11.3)	(13.8)	7.5	(6.3)
Extraordinary Income tax	0.0		0.0	0.0	17.0	17.0
Non controlling interests	(8.3)	0.0	(8.3)	(7.0)	0.0	(7.0)
Net Profit	43.3	(28.6)	14.7	2.1	(171.9)	(169.9)	1,971.5%
Number of Shares	143,018,430		143,018,430	143,018,430		143,018,430
EPS, in Euros	0.30		0.10	0.01		(1.19)	1,971.5%
Income Tax/PBT	(25.0)%		(32.9)%	(60.3)%		3.6%

(2)

Currency Exposure

% Revenue by Actual Currency

	Average FX Exchange rates vs Euro
	JAN - JUN 2021	JAN - JUN 2020	Change	JAN - DEC 2020
USD	1.205	1.101	(8.6)%	1.140
CAD	1.503	1.503	(0.0)%	1.529
SEK	10.125	10.664	5.3%	10.495
AUD	1.562	1.679	7.5%	1.656

Progress on ESG

• Environmental – reduced energy and emissions intensity, water use and increased renewable power sources. Bank loan linked to reductions in emissions. Targets for further reductions in 2021
• Social – improvements on key parameters including global satisfaction survey results implementation, training, promotion, voluntary turnover rate, local community, diversity & equality, accident rate, innovation. Targets set for 2021
• Governance – Strong and diverse Board of Directors with high adherence to Good Governance Code for listed companies, high AGM participation of Corporate Governance road shows. Targets set for 2021

ESG Ratings

• MSCI ESG Rating (AA) – Top Quintile of peers
• CDP (B) – Above average and in the "Management" category
• Gaïa (72/100) – Above average and increase of 10 from previous
• FTSE4Good IBEX – Included

External Green Services

• Circa €200 million revenue with a substantial sustainability contribution directly related to protecting / reducing environmental impact, from a range of services:
  • Renewables, Automotive Emissions, Environmental Surveys, Energy Audits, Waste Management Surveys, Innovation projects for Automotive eco-engines and lightweight Aerospace materials
  • These are services which help customers reduce their environmental impact, and have a significant positive effect

H1 2021. Revenue and Adj. Op. Profit by Division

	(1)	Growths			Actual 2020	FX	Actual
Revenue	Actual 2021	Organic	Inorganic	Total	CCY (2)	Impact	2020
Energy & Industry	434.9	(2.0)%	1.1%	(0.9)%	439.0	(3.8)%	456.2
Laboratories	65.6	9.7%	53.4%	63.1%	40.2	(1.2)%	40.7
Auto	234.8	41.8%	28.4%	70.2%	137.9	(4.2)%	144.0
Idiada	107.3	7.7%	0.0%	7.7%	99.7	(0.7)%	100.3
Total Revenue	842.6	8.5%	9.1%	17.6%	716.8	(3.3)%	741.2

	(1)	Growths			Actual 2020	FX	Actual
Adj. Op. Profit	Actual 2021	Organic	Inorganic	Total	CCY (2)	Impact	2020
Energy & Industry	28.4	126.0%	5.9%	131.9%	12.2	(13.5)%	14.2
Laboratories	9.7	63.6%	99.5%	163.1%	3.7	(2.8)%	3.8
Auto	48.5	61.1%	38.0%	99.1%	24.3	(5.7)%	25.8
Idiada	8.5	115.9%	0.0%	115.9%	3.9	(0.9)%	4.0
Holding	(14.7)				(13.2)	(0.0)%	(13.2)
Total Adj. Op. Profit	80.4	119.1%	40.4%	159.5%	31.0	(10.2)%	34.5

(1) Argentina hyperinflation impacts not included Impacts: Revenue +0.4M EUR; Adj. Op. Profit: (0.1)M EUR

(2) Constant Currency (CCY)

Q2

Q1

Q1 & Q2 2021. Revenue and Adj. Op. Profit by Division

	(1) Actual 2021		Growths		Actual 2020	FX	Actual
Revenue		Organic	Inorganic	Total	CCY (2)	Impact	2020
Energy & Industry	202.4	(14.8)%	0.2%	(14.6)%	236.9	(4.6)%	248.3
Laboratories	31.4	0.1%	43.0%	43.1%	21.9	(1.5)%	22.3
Auto	117.5	17.3%	22.2%	39.5%	84.2	(4.5)%	88.1
Idiada	50.8	(11.6)%	0.0%	(11.6)%	57.5	(1.3)%	58.2
Total Revenue	402.1	(6.8)%	7.2%	0.4%	400.5	(3.9)%	416.9
Adj. Op. Profit	35.1	20.4%	16.6%	37.0%	25.6	(7.4)%	27.7

	(1)	Growths			Actual 2020	FX	Actual
Revenue	Actual 2021	Organic	Inorganic	Total	CCY (2)	Impact	2020
Energy & Industry	232.6	13.1%	2.0%	15.1%	202.1	(2.8)%	207.9
Laboratories	34.2	21.3%	65.9%	87.2%	18.3	(0.8)%	18.4
Auto	117.3	80.2%	38.1%	118.3%	53.8	(3.8)%	55.9
Idiada	56.5	33.9%	0.0%	33.9%	42.2	0.2%	42.1
Total Revenue	440.6	27.7%	11.6%	39.3%	316.4	(2.5)%	324.3
Adj. Op. Profit	45.2	590.7%	154.1%	744.8%	5.4	(21.6)%	6.8

(1) Argentina hyperinflation impacts not included

Q1 Impacts: Revenue +0.1M EUR; Adj. Op. Profit: (0.0)M EUR Q2 Impacts: Revenue + 0.3M EUR: Adj. Op. Profit: (0.1)M EUR

(2) Constant Currency (CCY)

32

Q1 & Q2 & H1 2021. Summary Income Statement

	Q1				Q2		H1
	2021	2020	Change	2021	2020	Change	2021	2020	Change
Revenue	402.1	416.9	(3.5)%	440.9	324.3	35.9%	843.0	741.2	13.7%
Adj. Operating Profit	35.1	27.7	26.7%	45.2	6.8	561.0%	80.3	34.5	132.6%
Adj .Op.Profit margin	8.7%	6.6%		10.3%	2.1%		9.5%	4.7%
PPA Amortisation	(15.6)	(14.6)		(15.6)	(14.5)		(31.1)	(29.2)
Impairment	0.0	0.0		0.0	(165.0)		0.0	(165.0)
Other results	(0.1)	(0.4)		(3.3)	(1.9)		(3.4)	(2.2)
Operating profit	19.4	12.6		26.3	(174.6)		45.8	(161.9)
Finance result	(6.1)	(6.2)		(5.3)	(5.4)		(11.4)	(11.6)
Profit before tax	13.3	6.5		21.0	(180.0)		34.3	(173.6)
Income taxes							(11.3)	10.7
Net Profit							23.0	(162.9)
Minorities							(8.3)	(7.0)
Net Profit Group							14.7	(169.9)
Adjusted Net Profit Group							43.3	2.1
EPS in €							0.10	(1.19)
Adjusted EPS in €							0.30	0.01

H1 2021. Statutory Cash Flow

	H1
	2021	2020
Profit Before taxes	34.3	(173.6)
Non cash items	97.4	254.6
Change in working capital	(53.6)	19.8
Taxes Paid	(18.1)	(0.3)
Operating Cash Flow	60.0	100.5
Capex	(18.0)	(12.6)
Business combination	4.5	1.5
Acquisitions of subsidiaries	(60.5)	(4.5)
Cash Flow from Investing activities	(74.1)	(15.6)
Dividends to Minorities	(8.1)	(3.4)
Interest paid	(5.8)	(5.2)
Changes in financing	(14.4)	110.5
Cash Flow from Financing activities	(28.2)	102.0
Currency translations	1.9	(3.8)
Cash Increase / (Decrease)	(40.4)	183.1

H1 2021. Balance Sheet

	H1 2021	FY 2020		H1 2021	FY 2020
Goodwill	715.7	665.5	Equity	638.9	633.9
Other intangible assets	399.5	425.8	Long Term Provisions	31.9	25.6
PPA	339.1	362.3	Bank borrowings	695.1	686.6
Other intangible assets	60.4	63.5	Leasing Liabilities	145.7	144.4
Rights of use	184.2	179.2	Other financial liabilities	21.9	22.5
Tangible assets	240.6	232.6	Deferred Tax Liabilities	122.8	128.1
Investments accounted for using the equity method	0.5	0.5	Deferred Tax Liabilities PPA	83.5	68.7
Non current Financial Assets	15.1	15.0	Deferred Tax Liabilities Others	39.3	59.4
Deferred Tax Assets	66.4	64.2	Other non current liabilities	48.0	37.4
Total Non-Current Assets	1,622.0	1,582.8	Total Non-Current Liabilities	1,065.4	1,044.6
			Short term provisions	3.2	4.5
Inventories	10.0	8.9	Bank borrowings	40.0	32.8
Trade & Other receivables	400.8	353.9	Leasing Liabilities	54.5	51.2
Corporate Income Tax assets	15.0	19.4	Trade & Other payables	374.5	365.1
Current financial assets	7.5	2.6	Income Tax Liabilities	16.2	18.7
Cash & Cash equivalents	149.0	189.5	Other current liabilities	11.6	6.3
Total Current Assets	582.3	574.3	Total Current Liabilities	500.0	478.6
Total Assets	2,204.3	2,157.1	Total Equity & Liabilities	2,204.3	2,157.1

Alternative Performance Metrics

Applus' financial disclosures contain magnitudes and metrics drafted in accordance with International Financial Reporting Standards (IFRS) and others based on the Group's disclosure model referred to as Alternative Performance Metrics

• EBITDA, measure of earnings before interest, taxes, depreciation and amortisation
• Operating Profit, measure of earnings before interest and taxes
• Adjusted measures are stated before other results
• Other results are those impacts corrected from the relevant measures to provide a better understanding of the underlying results of the Group, for example: amortisation of acquisition intangibles, restructuring, impairment and transaction & integration costs
• PPA Amortisation corresponds to the amortisation of the Purchase Price Allocation related to acquisitions, allocated to intangible assets and Goodwill reduction for finite life concessions
• Capex, realized investments in property, plant & equipment or intangible assets
• Operating Cash Flow, operating cash generated after capex investment and working capital variation

Alternative Performance Metrics

• Free Cash Flow, operating cash generated after capex investment, working capital variation and tax & interest payments
• Net Debt, current and non current financial debt, other institutional debt less cash. As per bank covenant definition, calculated at annual average exchange rates and pre-IFRS16
• Leverage, calculated as Net Debt/LTM Ebitda as per bank covenant definition
• AOP, Adjusted Operating Profit
• EPS, Earnings per share
• NDT, Non destructive testing
• P.A., per annum
• FX, Foreign exchange
• LTM, Last twelve months
• ROCE, Adjusted Operating Profit / Capital Employed