Comisión Nacional del Mercado de Valores

Comisión Nacional xxx Xxxxxxx de Valores

División de Mercados Primarios

Edison, 4

28010 Madrid

En Madrid, a 25 xx xxxxx de 2014

Estimados Sres.:

Adjunto les remitimos soporte digital que contiene el Prospectus elaborado por Applus Services, S.A. (en adelante “Applus”) de la oferta de venta y de suscripción de acciones de Applus dirigida exclusivamente a inversores cualificados en España y fuera de España, y posterior admisión a negociación en las Bolsas de Valores de Barcelona, Bilbao, Madrid y Valencia (la “ Oferta”).

El contenido del Prospectus que figura en este soporte digital es idéntico a la última versión en papel del mismo presentado ante la Comisión Nacional xxx Xxxxxxx de Valores.

Asimismo, se autoriza a la Comisión Nacional xxx Xxxxxxx de Valores a difundir el mencionado documento por vía telemática.

Atentamente,

X. Xxxx Xxxx Xxxxxx

IMPORTANT NOTICE

IMPORTANT: You must read the following before continuing. The following applies to the document following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the document. In accessing the document, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from the Company or the Underwriters (both as defined in the document) as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THE FOLLOWING PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED THEREIN.

Confirmation of your Representation: By accepting the e-mail or accessing this document, you shall be deemed to have represented to the Company and the Underwriters that (1) you and any customers you represent are either (a) qualified institutional buyers (as defined in Rule 144A under the Securities Act) or (b) a person outside the United States, (2) if you have received this by e-mail, the electronic mail address that you gave to the Company or the Underwriters and to which this e-mail has been delivered is not located in the United States and

(3) you consent to delivery of such document by electronic transmission.

You are reminded that this document has been delivered to you or accessed by you on the basis that you are a person into whose possession this document may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver or disclose the contents of this document to any other person. The materials relating to the Offering (as defined in the document) do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the Offering be made by a licensed broker or dealer and any of the Underwriters or any affiliate thereof is a licensed broker or dealer in that jurisdiction, the Offering shall be deemed to be made by the Underwriters or such affiliate on behalf of the Company in such jurisdiction.

This document has been sent to you or accessed by you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently, none of the Company nor the Underwriters nor any person who controls any of them nor any director, officer, employee nor agent of any of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the document distributed to you in electronic format and the hard copy version available to you on request from the Underwriters. Please ensure that your copy is complete.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk, and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.

PROSPECTUS

BETWEEN 67,692,308 AND 83,018,868 ORDINARY SHARES OF

APPLUS SERVICES, S.A.

at an Offering Price Range of between €13.25 and €16.25 per Share

The Comisión Nacional xxx Xxxxxxx de Valores (the “CNMV”), which is the Spanish competent authority for the purposes of Directive 2003/71/EC, as amended (the “Prospectus Directive”) and relevant implementing measures in Spain, has approved this document as a prospectus.

This is a global initial public offering (the “Offering”) by Applus Services, S.A. (the “Company”) and Azul Finance S.à r.l. (Lux) (the “Selling Shareholder” and together with Azul Holding S.C.A. (Lux), the “Selling Shareholders”) to qualified investors of between 67,692,308 and 83,018,868 ordinary shares of the Company with a nominal value of €0.10 each (the “Shares”).

This document comprises a prospectus relating to the Company and its subsidiaries (together, the “Group”) prepared in accordance with the prospectus rules set out in Commission Regulation (EC) No 809/2004 (and amendments thereto, including Commission Delegated Regulation (EU) 486/2012 and Commission Delegated Regulation (EU) 862/2012), enacted in the European Union (the “Prospectus Rules”) and Ley 24/1988 of 28 July 1988, xxx Xxxxxxx de Valores (the “Spanish Securities Markets Act”). This document has been prepared in connection with the Offering and application for the admission of the Shares to the Barcelona, Bilbao, Madrid and Valencia stock exchanges (the “Spanish Stock Exchanges”) and on the Automated Quotation System (the “AQS”) or Mercado Continuo of the Spanish Stock Exchanges (“Admission”), which are regulated markets for the purposes of Directive 2004/39/EC (the Markets in Financial Instruments Directive).

The Company is offering between 18,461,538 and 22,641,509 new Shares (the “New Offer Shares”) in the Offering, being such number of Shares as is required, at the offering price range set forth above (the “Offering Price Range”), to provide the Company with gross sale proceeds of

€300 million, and the Selling Shareholder is selling an aggregate of between 49,230,769 and 60,377,358 existing Shares (the “Existing Offer Shares”) in the Offering, being such number of Shares as is required, at the Offering Price Range to provide the Selling Shareholder with aggregate gross sale proceeds of €800 million.

In addition, the Selling Shareholder and Azul Holding S.C.A. (Lux) (together, the “Over-allotment Shareholders”) will grant an option to the Underwriters (the “Over-allotment Option”), exercisable within 30 calendar days from the date on which the Shares commence trading on the Spanish Stock Exchanges, to purchase a number of additional Shares (the “Over-allotment Shares”) representing up to 10 per cent. of the total number of Shares sold by the Company and the Selling Shareholder in the Offering solely to cover over-allotments of Shares in the Offering, if any, and short positions resulting from stabilisation transactions. The Company will not receive any of the proceeds from the sale of the Existing Offer Shares sold by the Selling Shareholder or the sale of Over-allotment Shares sold by the Over-allotment Shareholders. The New Offer Shares, the Existing Offer Shares and the Over-allotment Shares (if any) are referred to herein as the “Offer Shares”.

The indicative Offering Price Range at which Offer Shares are being sold in the Offering will be between €13.25 to €16.25 per Share. This price range has been determined based on negotiations between the Company, the Selling Shareholder and the Underwriters and no independent experts have been consulted in determining this price range. The price of the Shares offered in the Offering (the “Offering Price”) will be determined based on negotiations between the Company, the Selling Shareholder and the Underwriters, upon the finalisation of the book-building period (expected to occur on or about 7 May 2014) and will be announced through the publication of a relevant fact (“hecho relevante”).

Prior to this Offering, there has been no public market for the Shares. The Company will apply to have the Shares listed on the Spanish Stock Exchanges and to have the Shares quoted on the AQS. The Shares are expected to be listed on the Spanish Stock Exchanges and quoted on the AQS on or after 9 May 2014 under the symbol “APPS”. The Offer Shares (other than the Over-Allotment Shares) are expected to be delivered through the book-entry facilities of Iberclear and its participating entities on or about 13 May 2014.

Concurrently with the Offering, pursuant to a binding directed offering by the Selling Shareholders (the “Directed Offering”), the Chief Executive Officer and Chief Financial Officer of the Company will purchase in aggregate between 356,923 and 437,736 Shares at the Offering Price for total consideration of €5.8 million. The total number of Shares to be sold pursuant to the Directed Offering will depend on the Offering Price. Such Shares which are not Offer Shares, will be subject to lock-up restrictions as described in “Plan of Distribution – Lock-Up Agreements”. For further details see, “Management and Board of Directors – Shareholdings of Directors and Senior Management – Agreements to Acquire Shares”.

Investing in the Shares involves certain risks. See “Risk Factors” beginning on page [27] for a discussion of certain matters that investors should consider prior to making an investment in the Shares.

The Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and are being sold within the United States only to qualified institutional buyers (“QIBs”), as defined in and in reliance on Rule 144A under the Securities Act (“Rule 144A”), and outside the United States in compliance with Regulation S under the Securities Act. See “Plan of Distribution – Selling Restrictions”, for a description of certain restrictions on the ability to offer the Offer Shares and to distribute this document, and “Transfer Restrictions” for a description of certain restrictions on transfers of Shares.

Joint Global Coordinators and Joint Bookrunners

Xxxxxx Xxxxxxx UBS Investment Bank

Joint Bookrunners

Citigroup J.P. Xxxxxx

Co-Lead Managers

Berenberg Banco Santander

Financial Adviser to the Company

Xxxxxxxxxx

The date of this document is 25 April 2014

TABLE OF CONTENTS

Page

IMPORTANT INFORMATION ABOUT THIS PROSPECTUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

PRESENTATION OF FINANCIAL INFORMATION v

SUMMARY 1

THE OFFERING 25

RISK FACTORS 28

USE OF PROCEEDS 46

DIVIDENDS 47

CAPITALISATION AND INDEBTEDNESS 48

SELECTED CONSOLIDATED FINANCIAL INFORMATION 50

BUSINESS 55

OPERATING AND FINANCIAL REVIEW 81

MANAGEMENT AND BOARD OF DIRECTORS 148

PRINCIPAL AND SELLING SHAREHOLDERS 171

RELATED PARTY TRANSACTIONS 173

MATERIAL CONTRACTS 177

MARKET INFORMATION 192

DESCRIPTION OF CAPITAL STOCK 197

TAXATION 208

PLAN OF DISTRIBUTION 218

TRANSFER RESTRICTIONS 226

LEGAL MATTERS 229

INDEPENDENT AUDITORS 230

GENERAL INFORMATION 231

CERTAIN TERMS AND CONVENTIONS 233

GLOSSARY 237

SPANISH TRANSLATION OF THE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 EQUIVALENCE CHART . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

IMPORTANT INFORMATION ABOUT THIS PROSPECTUS

This document, including the financial information incorporated by reference herein, is in compliance with the Prospectus Rules, which comply with the provisions of the Prospectus Directive for the purpose of giving information with regard to the Company, the Group, the Selling Shareholders and the Shares. The Company and the undersigned, Mr. Xxxxx Xxxxx Xxxx, in his capacity as director of the Company and acting under a special power of attorney granted by the Board of Director and the general shareholders’ meeting of the Company, accept responsibility for the information contained in this document. Having taken all reasonable care to ensure that such is the case, the information contained in this document is, to the best of their knowledge, in accordance with the facts and contains no omissions likely to affect its import.

Xxxxxx Xxxxxxx & Co. International plc (“Xxxxxx Xxxxxxx”) (duly represented by Ms. Xxxxxxx Xxxxxx Xxxxxxx- Xxxxxxxx) and UBS Limited (“UBS”) (duly represented by Mr. Xxxxx Xxxxxx-Xxxxxxxxx Xxxxxxxxx) as Joint Global Coordinators of the Offering hereby declare that they have carried out the revision which is reasonable in accordance with commonly accepted market criteria to asses that the information contained in the following sections of this document, to the extent it refers to the terms and conditions of the Offering and the rights and obligations attached to the Shares, is not false and does not omit relevant information required by applicable legislation: “Plan of Distribution”, “Dividends” and “Description of Capital Stock”.

None of Xxxxxx Xxxxxxx or UBS (together, the “Joint Global Coordinators”), Citigroup Global Markets Limited or J.P. Xxxxxx Securities plc (together with the Joint Global Coordinators, the “Joint Bookrunners”), and Joh. Xxxxxxxxx, Gossler & Co. KG or Banco Santander S.A. (together, the “Co-Lead Managers” and, together with the Joint Bookrunners, the “Underwriters”), or Xxxxxxxxxx (acting as financial adviser to the Company) or their respective affiliates make any representation or warranty, express or implied, nor accept any responsibility whatsoever (other than, for Xxxxxx Xxxxxxx and UBS Limited, pursuant to the statement made in the preceding paragraph), with respect to the content of this document, including the accuracy or completeness or verification of any of the information in this document. This document is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Company, the Selling Shareholders, the Underwriters or Xxxxxxxxxx that any recipient of this document should subscribe for or purchase the Shares. Each subscriber for or purchaser of Shares should determine for itself the relevance of the information contained in this document, and its subscription for or purchase of Shares should be based upon such investigation, as it deems necessary, including the assessment of risks involved and its own determination of the suitability of any such investment, with particular reference to their own investment objectives and experience and any other factors that may be relevant to such investor in connection with the subscription for or purchase of the Shares.

This document does not constitute an offer to the public generally to subscribe for or purchase or otherwise acquire the Shares. In making an investment decision regarding the Shares, an investor must rely on its own examination of the Company and the Group and the terms of the Offering, including the merits and risks involved. Investors should rely only on the information contained in this document. None of the Company, the Selling Shareholders, the Underwriters or Xxxxxxxxxx has authorised any other person to provide investors with different information. If anyone provides any investor with different or inconsistent information, such investor should not rely on it. Investors should assume that the information appearing in this document is accurate only as of its date. The Group’s business, financial condition, results of operations, prospects and the information set forth in this document may have changed since the date of this document.

Notwithstanding the foregoing, the Company is required to issue a supplementary prospectus in respect of any significant new factor, material mistake or inaccuracy relating to the information included in this document which is capable of affecting the assessment of Shares and which arises or is noted between the date hereof and the Admission, in accordance with Prospectus Directive and Article 22 of Spanish Royal Decree 1310/2005, of 4 November (“Real Decreto 1310/2005, de 4 de noviembre, por el que se desarrolla parcialmente la Ley 24/1988, de 28 de Julio, xxx Xxxxxxx de Valores, en materia de admisión a negociación de valores en mercados secundarios oficiales, de ofertas públicas de venta o suscripción y del folleto exigible a tales efectos”).

The contents of the website of the Company, or the website of any other member of the Group, do not form any part of this document.

Investors should not consider any information in this document to be investment, legal or tax advice. An investor should consult its own legal counsel, financial adviser, accountant and other advisers for legal, tax, business, financial and related advice regarding subscribing for and purchasing the Shares. None of the Company, the Selling Shareholders, the Underwriters or Xxxxxxxxxx or their respective affiliates makes any representation or

warranty to any offeree or purchaser of or subscriber for the Shares regarding the legality of an investment in the Shares by such offeree or purchaser or subscriber under appropriate investment or similar laws.

Each Underwriter that is regulated in the United Kingdom by the Financial Conduct Authority is acting exclusively for the Company and no one else in connection with the Offering and will not be responsible to any other person for providing the protections afforded to their respective clients or for providing advice in relation to the Offering. Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Underwriters under the Spanish Securities Markets Act or the regulatory regime established thereunder, none of the Underwriters accepts any responsibility whatsoever for the contents of this document or for any other statement made or purported to be made by it or any of them or on its or their behalf in connection with the Group or the Shares. Each of the Underwriters accordingly disclaims, to the fullest extent permitted by applicable law, all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this document or any such statement.

In connection with the Offering, the Underwriters and any of their respective affiliates acting as an investor for its or their own account(s) may subscribe for or purchase the Shares and, in that capacity, may retain, subscribe for, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in such securities, any other securities of the Group or other related investments in connection with the Offering or otherwise. Accordingly, references in this document to the Shares being issued, offered, subscribed or otherwise dealt with should be read as including any issue or offer to, or subscription or dealing by, the Underwriters or any of their respective affiliates acting as an investor for its or their own account(s). The Underwriters do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

The Company and the Selling Shareholders may withdraw the Offering at any time prior to Admission, and the Company, the Selling Shareholders and the Underwriters reserve the right to reject any offer to subscribe for or purchase the Shares, in whole or in part, and to sell to any investor less than the full amount of the Shares sought by such investor. For more information on the withdrawal and revocation of the Offering, see “Plan of Distribution-Withdrawal and Revocation of the Offering”.

This document does not constitute or form part of an offer to sell, or a solicitation of an offer to subscribe for or purchase, any security other than the Shares. The distribution of this document and the offer and sale of the Shares may be restricted by law in certain jurisdictions. Any investor must inform themselves about, and observe any such restrictions. See “Plan of Distribution-Selling Restrictions” elsewhere in this document. Any investor must comply with all applicable laws and regulations in force in any jurisdiction in which it subscribes for, purchases, offers or sells the Shares or possesses or distributes this document and must obtain any consent, approval or permission required for its subscription for, purchase, offer or sale of the Shares under the laws and regulations in force in any jurisdiction to which such investor is subject or in which such investor makes such subscriptions, purchases, offers or sales. None of the Company, the Selling Shareholders or the Underwriters is making an offer to sell the Shares or a solicitation of an offer to buy any of the Shares to any person in any jurisdiction except where such an offer or solicitation is permitted or accepts any legal responsibility for any violation by any person, whether or not an investor, or applicable restrictions.

The Offering does not constitute an offer to sell, or solicitation of an offer to buy, securities in any jurisdiction in which such offer or solicitation would be unlawful. The Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be sold within the United States, except to persons reasonably believed to be QIBs or outside the United States in offshore transactions in compliance with Regulation S. Investors are hereby notified that sellers of the Shares may be relying on the exemption from the registration requirements of Section 5 of the Securities Act provided by Rule 144A. For a discussion of certain restrictions on transfers of the Shares in other jurisdictions, see “Transfer Restrictions”.

In connection with the Offering, Xxxxxx Xxxxxxx, or any of its agents, as stabilising manager (the “Stabilising Manager”), acting on behalf of the Underwriters, may (but will be under no obligation to), to the extent permitted by applicable law, engage in transactions that stabilise, support, maintain or otherwise affect the price, as well as over-allot Shares or effect other transactions with a view to supporting the market price of the Shares at a level higher than that which might otherwise prevail in an open market. Any stabilisation transactions shall be undertaken in accordance with applicable laws and regulations, in particular, Commission Regulation (EC) No 2273/2003 of 22 December 2003 as regards exemptions for buy-back programmes and stabilisation of financial instruments.

The stabilisation transactions shall be carried out for a maximum period of 30 calendar days from the date of the commencement of trading of Shares on the Spanish Stock Exchanges, provided that such trading is carried out in compliance with the applicable rules, including any rules concerning public disclosure and trade reporting. The stabilisation period is expected to commence on 9 May 2014 and end on 8 June 2014 (the “Stabilisation Period”).

For this purpose, the Stabilising Manager may carry out an over-allotment of Shares in the Offering, which may be covered by the Underwriters pursuant to one or several securities loans granted by the Selling Shareholders. The Stabilising Manager is not required to enter into such transactions and such transactions may be effected on a regulated market and may be taken at any time during the Stabilisation Period. However, there is no obligation that the Stabilising Manager or any of its agents effect stabilising transactions and there is no assurance that the stabilising transactions will be undertaken. Such stabilisation, if commenced, may be discontinued at any time without prior notice, without prejudice to the duty to give notice to the CNMV of the details of the transactions carried out under Commission Regulation (EC) No 2273/2003 of 22 December 2013. In no event will measures be taken to stabilise the market price of the Shares above the Offering Price. In accordance with Article 9.2 of Commission Regulation (EC) No 2273/2003 of 22 December 2013, the details of all stabilisation transactions will be notified by the Stabilising Manager to the CNMV no later than closing of the seventh daily market session following the date of execution of such stabilisation transactions.

Additionally, in accordance with Article 9.3 of Commission Regulation (EC) No 2273/2003 of 22 December 2013, the following information will be disclosed to the CNMV by the Stabilising Manager within one week of the end of the Stabilisation Period: (i) whether or not stabilisation transactions were undertaken; (ii) the date at which stabilisation transactions started; (iii) the date at which stabilisation transactions last occurred; and (iv) the price range within which the stabilisation transaction was carried out, for each of the dates during which stabilisation transactions were carried out.

For the purposes of this document, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU, to the extent implemented in each relevant member state of the European Economic Area (the “EEA”)), and includes any relevant implementing measure in each relevant member state of the EEA.

NOTICE TO UNITED STATES INVESTORS

THE SHARES HAVE NOT BEEN REGISTERED WITH, OR APPROVED OR DISAPPROVED BY, THE US SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER US REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT PASSED ON OR ENDORSED THE MERITS OF THE OFFERING OR THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.

NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (“RSA 421-B”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY INVESTOR, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO UNITED KINGDOM AND OTHER EUROPEAN ECONOMIC AREA INVESTORS

This document and the Offering are only addressed to and directed at persons in member states of the EEA, who are “qualified investors” (“Qualified Investors”) within the meaning of Article 2(1)(e) of the Prospectus Directive (including any relevant implementing measure in each relevant member state of the EEA). In addition, in the United Kingdom, this document is only being distributed to and is only directed at (1) Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Xxx 0000 (Financial Promotion) Order 2005 (the “Order”) or high net worth entities falling within Article 49(2)(a)-(d) of the Order or (2) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). The Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, (1) in the United Kingdom, relevant persons and (2) in any member state of the EEA other than the United Kingdom, Qualified Investors. This document and its contents should not be acted upon or relied upon (1) in the United Kingdom, by persons who are not relevant persons or (2) in any member state of the EEA other than the United Kingdom, by persons who are not Qualified Investors.

Any person making or intending to make any offer within the EEA of the Shares should only do so in circumstances in which no obligation arises for the Company, the Selling Shareholders, or any of the Underwriters to produce a prospectus for such offer. None of the Company, the Selling Shareholders or the Underwriters has authorised or authorises the making of any offer of the Shares through any financial intermediary, other than offers made by the Underwriters which constitute the final placement of the Shares contemplated in this document.

NOTICE TO INVESTORS IN CERTAIN OTHER COUNTRIES

For information to investors in certain other countries, see “Plan of Distribution — Selling Restrictions”.

PRESENTATION OF FINANCIAL INFORMATION

General

The Company prepares its financial statements in euro. The euro is the currency of the member states of the European Union, including Spain, which participated or participate at the relevant time in the Economic and Monetary Union.

Certain monetary amounts and other figures included in this document have been subject to rounding adjustments. Any discrepancies in any tables between the totals and the sums of the amounts listed are due to rounding.

Audited Consolidated Financial Statements

The Group’s Audited Consolidated Financial Statements as of and for the year ended 31 December 2011, 2012 and 2013 (the “Audited Consolidated Financial Statements”) have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The Audited Consolidated Financial Statements have been audited by Deloitte, S.L., as stated in its unqualified reports, which together with the Audited Consolidated Financial Statements are incorporated by reference herein and are available on the Company’s website (xxx.xxxxxx.xxx) and on the CNMV’s website (xxx.xxxx.xx).

The Group’s audited consolidated financial statements for the year ended 31 December 2013 (the “2013 Audited Consolidated Financial Statements”) were formally prepared by the Directors of the Company at the Board of Directors meeting held on 4 March 2014. On 22 April 2014, the Company’s Directors, taking into account the importance of the events occurring after the reporting date described in Note 32 to the 2013 Audited Consolidated Financial Statements relating to the new management incentive plan for certain Group employees, have reformulated the 2013 Audited Consolidated Financial Statements. Having also considered the proposed Admission, the Company’s Directors considered it appropriate to disclose information additional to that which they previously held in relation to the revaluation of the provision for executive incentives (see Note 29 to the 2013 Audited Consolidated Financial Statements), to the assumptions and sensitivity analyses relating to the impairment tests (see Note 6 to the 2013 Audited Consolidated Financial Statements) and to the contingencies relating to vehicle roadworthiness testing in Catalonia (see Note 27 to the 2013 Audited Consolidated Financial Statements). Also, Note 32 to the 2013 Audited Consolidated Financial Statements describes other significant events occurring after the reporting period. As a result, the 2013 Audited Consolidated Financial Statements were replaced for all purposes by the reformulated audited consolidated financial statements for the year ended 2013 on 22 April 2014.

Combined Financial Statements

In addition to the Audited Consolidated Financial Statements, this document includes references to the Group’s Combined Financial Statements as of and for the years ended 31 December 2011 and 2012 (the “Combined Financial Statements”). The Combined Financial Statements have been prepared from the audited consolidated annual accounts of the Group and the Velosi Group (as defined below), respectively, both of which were prepared in accordance with IFRS. The Combined Financial Statements have not been audited. The Combined Financial Statements are available on the Company’s website (xxx.xxxxxx.xxx).

On 20 December 2012, the entire issued share capital of Velosi S.à r.l., the holding company of the Applus+ Velosi business (Velosi S.à r.l. together with its subsidiaries, the “Velosi Group”), was contributed to Applus+. Prior thereto, and from 24 January 2011, the Velosi Group was owned by Azul Holding 2, S.à r.l. (Lux), a subsidiary of Azul Holding S.C.A. (Lux), one of the Selling Shareholders. Accordingly, from 24 January 2011 until 20 December 2012, the Company and the Velosi Group were under common control. During this period the Velosi Group was managed by the Company.

The Audited Consolidated Financial Statements comprise the consolidated financial statements of the Group as of and for the years ended 31 December 2011, 2012 and 2013. The income statement and cash flow statement for the year ended 31 December 2012 reflects the consolidation of the Velosi Group for only 11 days of operations (from 20 December 2012).

In view of the significant contribution of the Velosi Group to the consolidated Group (23.6 per cent. of revenues and 18.9 per cent. of operating profit before depreciation, amortisation and others for the year ended 2013), and

reflecting the fact that the Company and the Velosi Group were under common control from 24 January 2011 until the Velosi Group was contributed to the Group in December 2012, the Group has chosen to include herein, references to the Combined Financial Statements combining both the Velosi Group and the remainder of the Group in order to present comparable historical financial information for the three years ended 31 December 2013.

Management Financial or Non-IFRS Measures (unaudited)

In addition to the financial information presented herein and prepared under IFRS, the Group has included herein certain financial measures, which have been extracted from the accounting records of the Group, including “adjusted operating profit”, “adjusted operating profit margin” and “adjusted net income”. The Group has presented these non-IFRS financial measures, which are unaudited, because the Group believes they may contribute to x xxxxxx understanding of the Group’s results of operations by providing additional information on what the Group considers to be some of the drivers of the Group’s financial performance.

These measures are not defined under IFRS and may be presented on a different basis than the financial information included in the Audited Consolidated Financial Statements and the Combined Financial Statements. Accordingly, they may differ significantly from similarly titled information reported by other companies, and may not be comparable. Investors are cautioned not to place undue reliance on these non-IFRS financial accounting measures, which should be considered supplemental to, and not a substitute for, the financial information prepared in accordance with IFRS included elsewhere in this document.

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” which are based on estimates and assumptions and subject to risks and uncertainties. Forward-looking statements are all statements other than statements of historical fact or statements in the present tense, and can be identified by words such as “targets”, “aims”, “aspires”, “assumes”, “believes”, “estimates”, “anticipates”, “expects”, “intends”, “hopes”, “may”, “outlook”, “would”, “should”, “could”, “will”, “plans”, “potential”, “predicts” and “projects”, as well as the negatives of these terms and other words of similar meaning. Since these statements speak as to the future, and are based on estimates and assumptions and subject to risks and uncertainties, actual results could differ materially from those expressed or implied by the forward-looking statements.

Forward-looking statements appear in a number of places in this document, including in “Use of Proceeds”, “Dividends”, “Operating and Financial Review” and “Business”. These may include, among other things, statements relating to:

Š acquisition and disposal strategies;

Š capital expenditure priorities;

Š prospects;

Š anticipated uses of cash;

Š regulatory or technological developments in the markets in which the Group operates;

Š the Group’s ability to introduce and expand services;

Š competitive and economic factors;

Š the growth potential of certain markets; and

Š the expected outcome of contingencies, including litigation.

This document does not contain any financial projections regarding future revenue or profit.

The factors listed above and risks specified elsewhere in this document should not be construed as exhaustive. Actual results may differ materially from those described in the forward-looking statements and, therefore, undue reliance should not be placed on any forward-looking statements.

Risks and uncertainties that could cause actual results to vary materially from those anticipated in the forward- looking statements included in this document include those described in “Risk Factors”. The following are certain of the factors described in “Risk Factors” that could cause actual results or events to differ materially from anticipated results or events:

Š the Group has experienced fluctuations in its profitability and incurred significant net consolidated losses;

Š the Group’s goodwill and other intangible assets may be subject to further impairments in the future;

Š payments and awards under the Group’s management incentive plans may impact its financial condition;

Š liberalisation of statutory vehicle inspections markets could result in increased competition;

Š the Group holds significant tax assets which it may not be able to use, and is subject to tax legislation, the substance and interpretation of which may change;

Š the Group’s business is exposed to exchange rate fluctuations. Such fluctuations, to the extent they are unhedged, may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects;

Š the Group’s businesses may be adversely affected by virtue of having major clients in certain markets;

Š a number of the Group’s key agreements are limited in duration and the Group may not be able to renew such agreements;

Š the Group’s leverage and ability to service its debt may adversely affect its business, financial condition, results of operations and prospects;

Š any failure to obtain and maintain certain authorisations could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects;

Š the Group provides services pursuant to contracts entered into with governmental authorities and such authorities may reduce or refuse to increase the price paid for the Group’s services;

Š changes to regulatory regimes could have a material adverse effect on the Group’s business;

Š there are many risks associated with conducting operations in international markets;

Š adverse claims or publicity may adversely affect the Group’s reputation, business, financial condition, results of operations and prospects;

Š the Group seeks to expand its business partly through acquisitions, which, by their nature, involve numerous risks;

Š the loss of any of the Group’s key personnel could have a material adverse effect on the Group’s business;

Š the Group is dependent on its ability to develop new proprietary technology;

Š current, future or pre-litigation proceedings may adversely affect the Group;

Š the possibility that all claims against the Group or all losses suffered may not be effectively covered by insurance;

Š the Group may be unable to secure or protect its right to intellectual property;

Š the fact that certain of the Group’s subsidiaries are held by third parties not controlled by the Group;

Š disruptions to the Group’s IT systems may have a material adverse effect on the Group’s business;

Š the Group’s operations are subject to anti-bribery and anti-corruption laws and regulations;

Š the fact that the Group operates in certain jurisdictions with labour laws that may restrict the Group’s flexibility with respect to its employment policy and ability to respond to market changes;

Š the Group is subject to extensive health, environmental, and safety laws that could both increase the Group’s cost or restrict its operations;

Š the performance of the Group’s business may be affected by global economic conditions;

Š the Group is dependent on levels of capital investment and maintenance expenditures by its clients in the oil and gas industry;

Š the Group operates in competitive markets and its failure to compete effectively could result in reduced profitability and loss of market share; and

Š the Group is dependent on its ability to attract and retain sufficient experienced engineers, scientists and other skilled technical personnel to achieve its strategic objectives.

Readers should not place undue reliance on any forward-looking statements, which speak only as of the date of this document. Except as otherwise required by Spanish, US federal and other applicable securities law and regulations and by any applicable stock exchange regulations, the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in the Company’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.

ENFORCEMENT OF CIVIL LIABILITIES

Applus Services, S.A. is a Spanish company and the majority of the Company’s assets are located outside of the United States. In addition, most of the Company’s directors and executive officers, as well as the Selling Shareholders, reside or are located outside of the United States. As a result, investors may not be able to effect service of process outside these countries upon the Company or these persons or to enforce judgments obtained against the Company or these persons in foreign courts predicated solely upon the civil liability provisions of US securities laws. Furthermore, there is doubt that a lawsuit based upon US federal or state securities laws, or the laws of any non-Spanish jurisdiction, could be brought in an original action in Spain and that a foreign judgment based upon such laws would be enforceable in Spain. There is also doubt as to the enforceability of judgments of this nature in several other jurisdictions in which the Company operates and where the Company’s assets are located.

AVAILABLE INFORMATION

The Company is currently neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act. For as long as this remains the case, the Company will furnish, upon written request, to any shareholder, any owner of any beneficial interest in any of the Shares or any prospective purchaser designated by such a shareholder or such an owner, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, if at the time of such request any of the Shares remain outstanding as “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act.

EXCHANGE RATES

The Group reports its financial results in its functional currency, the euro. However, the Group operates in more than 60 countries worldwide and many of the Group’s subsidiaries transact business in currencies other than the euro. The following table sets forth, for the periods set forth below, the high, low, average and period-end Bloomberg Composite Rate for the euro as expressed in Australian dollars, Canadian dollars, US dollars, British Pounds Sterling and Danish Xxxxxx per €1.00, which, after the euro, are the principal currencies referred to herein. The Bloomberg Composite Rate is a “best market” calculation in which, at any point in time, the bid rate is equal to the highest bid rate of all contributing bank indications and the ask rate is set to the lowest ask rate offered by these xxxxx. The Bloomberg Composite Rate is a mid-value rate between the applied highest bid rate and the lowest ask rate. The rates may differ from the actual rates used in the preparation of the consolidated financial statements and other financial information appearing in this document. No representation is made that the euro could have been, or could be, converted into Australian dollars, Canadian dollars, US dollars, British Pounds Sterling or Danish Xxxxxx at that rate or any other rate.

The average rate for a year means the average of the Bloomberg Composite Rates on the last day of each month during a year. The average rate for a month, or for any shorter period, means the average of the daily Bloomberg Composite Rates during that month, or shorter period, as the case may be.

Exchange Rates	Period End	Average	High	Low
(US dollars per €1.00)
Year:
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.2960	1.3924	1.4874	1.2925
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.3197	1.2859	1.3463	1.2053
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.3789	1.3283	1.3804	1.2772
Month:
January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.3505	1.3620	1.3766	1.3505
February 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.3808	1.3668	1.3808	1.3517
March 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.3772	1.3830	1.3925	1.3733

The US dollar per euro Bloomberg Composite Rates on 31 March 2014 was US$1.3772 per €1.00.

Year: 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.31748	1.37657	1.43010	1.28440
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.31298	1.28502	1.34435	1.21487
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.46550	1.36859	1.47199	1.28647
Month: January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.50050	1.48857	1.52634	1.44336
February 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.52555	1.51033	1.52801	1.49244
March 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.52033	1.53589	1.55318	1.51758

Exchange Rates Period End Average High Low (Canadian dollars per €1.00)

The Canadian dollar per euro Bloomberg Composite Rates on 31 March 2014 was CAD $1.52033 per €1.00.

Year: 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.26364	1.34826	1.42887	1.26364
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.27108	1.24179	1.29532	1.16168
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.54467	1.37754	1.54955	1.22340
Month: January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.54374	1.53785	1.56962	1.50759
February 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.54691	1.52250	1.54691	1.50582
March 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.48548	1.52194	1.54754	1.48519

Exchange Rates Period End Average High Low (AUD dollars per €1.00)

The Australian dollar per euro Bloomberg Composite Rates on 31 March 2014 was AUD $1.48548 per €1.00.

Exchange Rates Period End Average High Low (GBP per €1.00)

Year: 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.83571	0.86798	0.90322	0.83040
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.81255	0.81124	0.84825	0.77745
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.83231	0.84912	0.87480	0.81135
Month: January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.82051	0.82698	0.83417	0.81747
February 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.82545	0.82511	0.83237	0.81844
March 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.82565	0.83194	0.83958	0.82086

The British Pounds Sterling per euro Bloomberg Composite Rates on 31 March 2014 was GBP £0.82565 per

€1.00.

Exchange Rates	Period End	Average	High	Low
(DKK per €1.00)
Year:
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7.4338	7.4506	7.4595	7.4313
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7.4608	7.4438	7.4617	7.4303
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7.4603	7.4580	7.4634	7.4522
Month:
January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7.4626	7.4615	7.4632	7.4586
February 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7.4626	7.4623	7.4626	7.4618
March 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7.4659	7.4640	7.4665	7.4626

The Danish Xxxxxx per euro Bloomberg Composite Rates on 31 March 2014 was DKK 7.4659 per €1.00.

SUMMARY

Summaries are made up of disclosure requirements known as “Elements”. These Elements are numbered in Sections A – E (A.1 – E.7).

This summary contains all the Elements required to be included in a summary for this type of security and company. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of security and company, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of ‘not applicable’.

SECTION A – INTRODUCTION AND WARNINGS

A.1 Warning to investors

This summary should be read as an introduction to the document. Any decision to invest in the shares of Applus Services, S.A. (the “Shares” and the “Company”, respectively) should be based on a consideration of the document as a whole by the investor. Where a claim relating to the information contained in the document is brought before a court, a plaintiff investor might, under the national legislation of the European Economic Area (“EEA”) member states, have to bear the costs of translating the document before the legal proceedings are initiated. Civil liability attaches only to those who have tabled this summary including any translation thereof, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of the document or if it does not provide, when read together with the other parts of the document, key information in order to aid investors when considering whether to invest in the Shares.

A.2 Information on financial intermediaries

Not applicable.

SECTION B – COMPANY

B.1 Legal and commercial name

The legal name of the Company is Applus Services, S.A. and the global brand name of the Company and its subsidiaries (the “Group”) is “Applus+”.

B.2 Domicile/legal form/legislation/country of incorporation

The Company is a public limited liability company (“sociedad anónima”) incorporated in and subject to the laws of the Kingdom of Spain. The Company’s registered address is Campus de la UAB, Xxxxx xx xx Xxxx xxx Xxxxx x/x, Xxxxxxxxxx, Xxxxxxxxxx xxx Xxxxxx (Xxxxxxxxx).

B.3 Current operations/ principal activities and markets

The Group is one of the world’s largest testing, inspection and certification (“TIC”) companies with global market positions in its chosen markets. Applus+ provides technological and regulatory-driven services and solutions for the energy, industrial, infrastructure and automotive sectors that assist its clients to manage risk, enhance the quality and safety of their products, assets and operations, comply with applicable standards and regulations and optimise industrial processes. The Group provides its services and solutions to a highly diverse blue chip client base in established as well as high-growth economies globally.

Headquartered in Barcelona, Spain, the Group operates in more than 60 countries through its network of 324 offices, 157 testing facilities and 322 statutory vehicle inspection stations, and employs more than 19,000 people

(including approximately 3,000 engineers). In the year ended 31 December 2013, the Group recorded revenue of

€1,581 million and an operating loss of approximately €42.8 million. The Group’s revenue increased by 32.5 per cent. and 21.6 per cent. from 31 December 2012 to 31 December 2013, and from 31 December 2011 to 31 December 2012, respectively. For the year ended 31 December 2013, the Group recorded 44.2 per cent. of its revenue in Europe, 22.9 per cent. in the United States and Canada, 15.8 per cent. in the Asia Pacific region,

10.2 per cent. in the Middle East and Africa and 6.9 per cent. in Latin America.

The Group operates through six global divisions, each of which is reported as a segment for financial reporting purposes and which operates under the “Applus+” global brand name. The Group’s Statutory Vehicle Inspections and Automotive Engineering and Testing divisions operate on a standalone global basis and are considered as two independent operating verticals. The four divisions serving clients across the energy and industry markets are also operated globally, but have complementary service offerings and target a similar set of end-markets, and are therefore grouped together in the Energy and Industry Services vertical. The following is a summary of the Group’s services across these three verticals:

Š Energy and Industry Services: The Group provides testing, inspection and certification services, specifically non-destructive testing (“NDT”), asset integrity testing, site inspection, vendor surveillance, certification and other services to a diversified client base across a range of end-markets, including the energy, power generation, infrastructure, industrial, IT and aerospace sectors. The Group’s mission-critical services assist its clients to increase productivity, reduce repair costs, extend the economic life of their assets, comply with applicable national regulations and international quality and safety standards and enhance safety. The Group provides these services to clients in Europe, the United States and Canada, the Asia Pacific region, the Middle East, Africa and Latin America. The Group’s Energy and Industry Services vertical comprises the following four divisions:

Š Applus+ RTD (which represented 35.3 per cent. of the Group’s revenue and 35.9 per cent. of the Group’s operating profit before amortisation, depreciation and others in the year ended 31 December 2013) is a global provider of NDT services to clients in the upstream, midstream and downstream oil and gas industry. Applus+ RTD also provides services to the power utilities, aerospace and civil infrastructure industries. Applus+ RTD’s services provide the Group’s clients with tools and solutions to inspect and test the mechanical, structural and materials integrity of critical assets such as pipelines, pressure vessels and tanks without causing damage to those assets, either at the time of installation or during the assets’ working lives. The Group believes that Applus+ RTD has established a recognised brand and a reputation for technology and quality globally, based on a combination of advanced testing equipment and software, staff expertise and extensive experience with global clients. Applus+ RTD is active in more than 25 countries across five continents;

Š Applus+ Velosi (which represented 23.6 per cent. of the Group’s revenue and 18.9 per cent. of the Group’s operating profit before amortisation, depreciation and others in the year ended 31 December 2013) is a global provider of vendor surveillance (third party inspection and auditing services to monitor compliance with client specifications in procurement transactions), site inspection, certification and asset integrity as well as specialised manpower services primarily to companies in the oil and gas industry. Applus+ Velosi has a long-established presence in the Asia Pacific region, the Middle East, Africa and Europe and has also established significant operations in the Americas. Applus+ Velosi is active in more than 35 countries around the world;

Š Applus+ Norcontrol (which represented 11.8 per cent. of the Group’s revenue and 10.8 per cent. of the Group’s operating profit before amortisation, depreciation and others in the year ended 31 December 2013) focuses primarily on the Spanish, Latin American and Middle Eastern markets. In Spain, Applus+ Norcontrol principally provides supervision, technical assistance and inspection and testing services in respect of electricity and telecommunications networks and industrial facilities. In Latin America, Applus+ Norcontrol primarily provides quality assurance, quality control, testing and inspection and project management services to the utilities, oil and gas and civil infrastructure sectors. Applus+ Norcontrol has a distinguished market position in Spain, a growing presence in a number of its Latin American markets and has recently established a presence in the Middle East and other countries; and

Š Applus+ Laboratories (which represented 3.6 per cent. of the Group’s revenue and 3.8 per cent. of the Group’s operating profit before amortisation, depreciation and others in the year ended 31 December

2013) provides a range of laboratory-based product testing, system certification and product development services to clients in a wide range of industries including the aerospace, oil and gas and payment systems sectors.

The Energy and Industry Services vertical employs approximately 12,600 full time equivalents (“FTEs”).

Š Statutory Vehicle Inspections: Applus+ Automotive (which represented 17.3 per cent. of the Group’s revenue and 37.6 per cent. of the Group’s operating profit before amortisation, depreciation and others in the year ended 31 December 2013) provides vehicle inspection and certification services across a number of jurisdictions in which periodic vehicle inspections for compliance with technical safety and environmental specifications are mandatory. Eighty per cent. of these services (by revenue) are provided pursuant to concession agreements or authorisations which regulate and restrict the number of competing operators with an average weighted remaining term of approximately nine years, as at the date of this document. The Group carried out more than 10 million vehicle inspections in 2013 across Spain, Andorra, Ireland, Denmark, Finland, the United States, Argentina and Chile and this vertical employs approximately 3,000 FTEs.

Š Automotive Engineering and Testing: Applus+ IDIADA (which represented 8.4 per cent. of the Group’s revenue and 11.6 per cent. of the Group’s operating profit before amortisation, depreciation and others in the year ended 31 December 2013) provides engineering, safety testing and technical testing services as well as proving ground and homologation (testing and certification of new and prototype vehicle models for compliance with mandatory safety and technical standards) services globally to many of the world’s leading vehicle manufacturers. The Group operates one of the world’s few independent proving ground near Barcelona and has a broad client presence across Europe, China, India and Brazil. Applus+ IDIADA employs approximately 1,700 FTEs.

B.4 Significant recent trends affecting the Group and the industries in which it operates

The Group is not aware of any exceptional trend influencing the industries in which the Group operates, without prejudice to the risk factors described elsewhere in this Summary.

Save as described in the paragraphs below, there has been no significant change in the financial or trading position of the Group since 31 December 2013, the date at which the last audited consolidated financial information of the Group contained herein was prepared.

Debt Refinancing

The Company has entered into a €850 million multicurrency facilities agreement (the “New Facilities Agreement”) dated 7 April 2014 between, amongst others, Caixabank S.A., Société Générale, Sucursal en España, BNP Paribas Fortis S.A. N.V., Banco Santander, S.A., Credit Agricole Corporate and Investment Bank, Sucursal en España , RBC Capital Markets, Sumitomo Mitsui Finance Dublin Limited, Mizuho Bank Ltd., The Bank of Tokyo-Mitsubishi UFJ Ltd., UBS Limited, J.P. Xxxxxx Limited and Citigroup Global Markets Limited as mandated lead arrangers, and Société Générale, Sucursal en España as agent and security agent. The New Facilities (as defined below) are conditional on the admission of the Shares to listing on the Barcelona, Bilbao, Madrid and Valencia stock exchanges (the “Spanish Stock Exchanges”) and to trading on the Automated Quotation System (the “AQS”) or Mercado Continuo of the Spanish Stock Exchanges. The New Facilities Agreement will provide to certain members of the Group (i) a €700 million multicurrency term loan facility (the “New Term Loan Facility”); and (ii) a €150 million multicurrency revolving credit facility (the “New Revolving Facility” and, together with the New Term Loan Facility, the “New Facilities”).

The funds available under the New Term Loan Facility, and €35 million under the New Revolving Facility, will be used, together with the net proceeds of the Offering and the Group’s existing cash (i) to repay the current Syndicated Loan Facilities (as defined below) in full in the amount of €1,047 million; and (ii) to make an aggregate cash payment of approximately €20 million to certain key employees of the Group under a management incentive plan. The rest of the Group’s existing cash and the funds available under the New Revolving Facility will be used for general corporate purposes, which may include, among other things, capital expenditures and acquisitions. The “Syndicated Loan Facilities” means the senior facilities agreement for a total amount of €790,160 thousand and $215,000 thousand and a mezzanine facility agreement for a total amount of €150,000 thousand.

In 2013, the Group had a cost of debt of 5.1 per cent., and 6.4 per cent. excluding and including, respectively, any interest on the participating loan between the Company and Azul Finance S.à r.l. (Lux) for an initial amount of

€369,375 thousand (“the Participating Loan”). As a result of the Group’s New Facilities, with effect from Admission, the Group expects to pay an initial interest margin of 2.25 per cent. above LIBOR, or in relation to any loans drawn in Euro, EURIBOR, and for other local facilities that will not be refinanced as part of the Offering, a similar rate of interest to those paid in the past. By way of illustration, the cost of debt in respect of the New Facilities would be 2.56 and 2.48 per cent. based on the 3 month EURIBOR of 0.31 per cent. and 3 month USD LIBOR of 0.23 per cent., respectively, as of 31 March 2014. The Group’s net financial debt as at 28 February 2014 would have been €695,066 thousand (as compared to €938,866 thousand in connection with the current Syndicated Loan Facility and other local debt facilities currently in place), as adjusted to give effect to (i) the receipt of the gross proceeds of the Offering, (ii) the drawdown of amounts under the New Facilities,

(iii) repayment in full of the Group’s current Syndicated Loan Facility and (iv) the costs of the Offering. The New Facilities represent 95.11 per cent. of such post-offering net financial debt (as adjusted). Accordingly, the changes to the Group’s debt financing arrangements post-Admission are expected to have positive effect on the Group’s financial performance.

Litigation regarding statutory vehicle inspection regimes

The Group is currently involved in litigation in Catalonia in respect of the existing vehicle inspection regime that is in place in this region (which represented 3.2 per cent. of the Group’s revenue, and 18.5 per cent. of Applus+ Automotive’s revenue, in the year ended 31 December 2013). In rulings dated 25 April 2012, 13 July 2012, 13 September 2012 and 21 March 2013, the Catalan High Court of Justice (“Tribunal Superior de Justicia de Calaluña”) (“CHCJ”) ruled at first instance that the authorisation regime operated in Catalonia and, therefore, the authorisations granted thereunder, were contrary to the EU Services Directive. These rulings are currently subject to appeal to the Spanish Supreme Court. On 20 March 2014, the Spanish Supreme Court formally requested a preliminary ruling (“cuestión prejudicial”) from the European Court of Justice on the application of the EU Services Directive to vehicle inspections services under European Union law. The Group anticipates that the final ruling from the Spanish Supreme Court in relation to this matter will therefore be delayed further. In any event, until a final ruling from the Spanish Supreme Court is handed down, given that the ruling of the CHCJ is not final, no changes to the current Catalan vehicle inspection regime will be implemented as a result. If, pursuant to the European Court of Justice preliminary ruling, the Spanish Supreme Court declares the regime operated in Catalonia unlawful on the basis of the applicable EU regulation, the considerations made under the CHCJ ruling would be sustained. In such event, the Group believes that it would still be entitled to continue operating its statutory vehicle inspection business in Catalonia but under a different administrative authorisation regime (“título habilitante”) and, as a result of any such ruling, it is likely that number of operators authorised to provide vehicle inspection services in Catalonia would increase. The Group had taken into account the Catalan litigation when considering the cashflow projections used in the impairment tests performed for the year ended 31 December 2013 and no impairment related to this issue had been recorded, taking into account, among other things, the anticipated legislative developments in connection with the New Roadworthiness Directive and favourable statements made by the European Commission’s Directorate for Internal Markets and Services. These statements are, however, not binding on the Directorate.

The Group’s vehicle inspection operations in the Canary Islands represented 0.9 per cent. of the Group’s revenue, and 5.0 per cent. of Applus+ Automotive’s revenue in the year ended 31 December 2013. Historically, the regional government of the Canary Islands had limited the number of operators authorised to operate a vehicle testing network. However, in May 2007 (prior to the end of the Group’s current concession), the regional government of the Canary Islands passed a liberalisation decree pursuant to which several new operators were authorised to conduct vehicle inspections in the Canary Islands from year 2010 onwards. This liberalisation decree has had an impact on the Group’s market share in that territory. The Group, along with other operators and certain industry associations, challenged the decision of the regional government of the Canary Islands to award additional contracts before the Spanish Supreme Court. As of the date of this document, the Group’s claim is still under consideration by the Spanish Supreme Court. The decision of the regional government of the Canary Islands to award additional vehicle inspection contracts was also challenged by the industry association Asociación Española de Entidades Colaboradoras de la Administración en la Inspección Técnica de Vehículos (AECA-ITV) and General de Servicios ITV, S.A, another provider of vehicle inspection services in Spain. On 11 February 2014, the Spanish Supreme Court rejected the challenge of both of these entities and upheld the action of the Canary Islands government.

Sale of the Group’s agrofood business

In March 2014, the Group entered into an agreement to sell its agrofood business, including two laboratories, to Eurofins Scientific. The agreement is effective as of 1 January 2014. The Group’s agrofood business was part of the Applus+ Laboratories segment and focused primarily on the Spanish market. For the year ended 31 December 2013, its agrofood business represented 19 per cent. of Applus+ Laboratories’ revenues (0.7 per cent. of the Group’s revenue) and 7.5 per cent. of Applus+ Laboratories’ operating profit before depreciation, amortisation and others (0.3 per cent. of the Group’s operating profit before depreciation, amortisation and others). The total proceeds received from the sale will amount to €10,394 thousand.

B.5 Group structure

The Company is the parent company of the Group formed by 30 principal directly and indirectly controlled subsidiaries, whose operations and activities have been described in item B.3. above. The Company will not upon Admission belong to any wider corporate group.

The following table shows the Company and its material subsidiaries together with the relevant ownership interests.

Applus Services, S.A.

100% 100%

Xxxxxx, S.à r.l.

Applus Servicios Tecnológicos, S.L.U.

80%

95%

100%

100%

Idiada Automotive Technology, S.A.

Lgai Technological Center, S.A.

RTD

Holding B.V.

Applus Iteuve Technology, S.L.U.

100%

Applus Norcontrol, S.L.U.

B.6 Selling Shareholders

As at the date of this summary Azul Finance, S.à r.l. (Lux) (the “Selling Shareholder”) and Azul Holding,

S.C.A. (Lux) (together with the Selling Shareholder, the “Selling Shareholders”) own the entire issued ordinary share capital of the Company. Azul Finance, S.à r.l. (Lux) (which holds 61.72 per cent. of the Company’s issued share capital) is owned by Azul Holding, S.C.A. (Lux) (which holds 38.28 per cent. of the Company’s issued share capital). CEP II Participations, S.à r.l. SICAR (“CEP II”) and CEP III Participations, S.à r.l. SICAR (“CEP III”), investment companies in risk capital owned by Xxxxxxx Europe Partners II L.P., a partnership organised under the laws of England, and Xxxxxxx Europe Partners III, L.P., a partnership organised under the laws of England, respectively (and, together with their affiliates, doing business as The Xxxxxxx Group (“Carlyle”)), hold a combined total of 71.2 per cent of the issued share capital of Azul Holding, S.C.A. (Lux). There are no controlling shareholders of Carlyle (as such term is defined under Article 42 of the Spanish Commercial Code (“Real Decreto de 22 xx xxxxxx de 1885, Código de Comercio”).

CEP II and CEP III are investment companies in risk capital constituted as limited liability companies organised under the laws of the Grand Duchy of Luxembourg (“société d’investissement à capital risqué constituée sous la forme d’une société à responsibilité limitée”). CEP II and CEP III are affiliates of the Xxxxxxx Group L.P., a Delaware limited publicly traded partnership listed in the United States on the NASDAQ Global Select Market under the symbol “CG”.

Carlyle is a full service asset manager engaged in various activities, which may include securities trading, financial advisory, investment management, principal investment, hedging, financing and brokerage activities.

The following table sets out the direct and indirect percentage ownership interests in Azul Holding, S.C.A. (Lux), which will not be modified as a result of the Offering.

Ownership interest

	Corporate purpose		%
CEP III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Investment company in risk capital		54.46%
CEP II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Investment company in risk capital		16.74%
Catalunya Bank . . . . . . . . . . . . . . . . . . . . . . . . . .	Financial entity		7.98%
ICG(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Private equity fund		6.34%
GTD Invest S.á r.l.(2) . . . . . . . . . . . . . . . . . . . . . .	Private equity fund		4.65%
Banco Bilbao Vizcaya Argentaria, S.A. . . . . . . .	Financial entity		2.62%
Xxxxxx, S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Financial entity		1.72%
Company’s management . . . . . . . . . . . . . . . . . .	N/A		1.61%
Infisol 3000 S.L. . . . . . . . . . . . . . . . . . . . . . . . . .	Private equity fund		1.32%
Xxxxxxxxxx family . . . . . . . . . . . . . . . . . . . . . . . .	N/A		1.31%
ASF X Xxxxx LP . . . . . . . . . . . . . . . . . . . . . . . .	Private equity fund		1.24%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			100.00%

(1) ICG’s interest in Azul Holding, S.C.A. (Lux) is held by Intermediate Investment Jersey Limited and ICG European Fund 2006, No2

S.A. ICG is an affiliate of Intermediate Capital Group PLC, a public limited company listed on the London Stock Exchange under the symbol “ICP”.

(2) The Company is not aware as to whether or not GTD Invest S.à r.l. is controlled by a particular person or entity.

Save as described above in respect of CEP II and CEP III, the Company is not aware of any of the indirect minority shareholders listed above being under common control with each other or with the Selling Shareholders, or otherwise acting in concert in connection with their indirect stake in the Company.

On the date hereof, the Selling Shareholders hold 100 per cent. of the Company’s share capital and voting rights and, therefore, control the Company.

Pursuant to the global initial public offering (the “Offering”), the Selling Shareholders are currently expected to sell, in aggregate, between 49,230,769 and 60,377,358 Shares (the “Existing Offer Shares”), being such number of Shares as is required, at the Offering Price Range, to provide the Selling Shareholder with aggregate gross sale proceeds of €800 million and representing between 38.5 and 45.8 per cent. of the total issued ordinary share capital of the Company on Admission. In addition, up to a further 8,301,887 Shares (representing up to 6.29 per cent. of the issued ordinary share capital of the Company on Admission and up to 7.59 per cent. of the ordinary share capital pre-Offering) may be sold by the Over-allotment Shareholders to the Underwriters pursuant to an over-allotment option (the “Over-allotment Option”). The number of Shares offered pursuant to the Over- allotment Option shall not exceed 10 per cent. of the total number of Shares offered by the Company and the Selling Shareholder in the Offering.

In addition the Chief Executive Officer and the Chief Financial Officer of the Company will purchase from the Selling Shareholders in aggregate between 356,923 and 437,736 Shares at the Offering Price (the “Directed Offering”).

Upon Admission and for such period as CEP II and CEP III continue to own and control, directly or indirectly, a material portion of the Shares, even if such portion represents less than half of the issued Shares, they will continue to be able to exert significant influence over decisions adopted both by the general shareholders’ meetings and the board of directors of the Company. Upon Admission, and assuming the Over-allotment Option is exercised in full, CEP II and CEP III will hold, in aggregate, not less than 30.80 per cent. of the voting rights attaching to the Shares (excluding the Directed Offering). If the Over-allotment Option is not exercised at all, CEP II and CEP III will hold, in aggregate, up to 47.03 per cent. of the voting rights attaching to the Shares (excluding the Directed Offering).

Upon Admission, CEP II and CEP III will hold, in aggregate, an indirect interest in the share capital of the Company that will exceed the 30 per cent. control threshold set forth in Article 4.1 a) of the Spanish Royal Decree 1066/2007, of 27 July 2007, on tender offers. Thereafter, the exact level of influence that CEP II and CEP III will be able to exercise will be dependent on the number of Shares which are retained indirectly by CEP II and

CEP III. Nevertheless, no special voting majority is included in the by-laws of the Company and indirectly CEP II and CEP III will not have any power to appoint a majority of directors to the Company’s board post-Offering.

B.7 Summary historical audited key financial information Summary audited consolidated income statement data

The following table sets out the Group’s summary audited consolidated income statement for the years ended 31 December 2011, 2012 and 2013.

Year Ended 31 December

2011 2012 2013

€ thousands (except percentages)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	980,919	1,192,647	1,580,501
Procurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(71,911)	(101,083)	(244,420)
Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(529,219)	(640,077)	(784,361)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(255,890)	(305,952)	(362,268)
Operating profit before depreciation, amortisation and others . . . . .	123,899	145,535	189,452
Operating profit before depreciation, amortisation and others
margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12.6%	12.2%	12.0%
Depreciation and amortisation charge(1) . . . . . . . . . . . . . . . . . . . . . . . . . .	(70,117)	(79,173)	(97,623)
Impairment and gains or losses on disposal of non-current assets(2) . . . .	(22,744)(3)	(19,932)(4)	(117,571)(5)
Other losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(17,602)	(15,502)	(17,024)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13,436	30,928	(42,766)
Operating profit margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.4%	2.6%	(2.7)%
Net financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(112,413)	(114,683)	(86,407)
Net financial expense/revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(11.5%)	(9.6%)	(5.5%)
Share of profit of companies accounted for using the equity method . . .	-	-	2,493
Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(98,977)	(83,755)	(126,680)
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11,268	17,512	(38,832)
Net loss from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . .	(87,709)	(66,243)	(165,512)
Loss from discontinued operations net of tax . . . . . . . . . . . . . . . . . . . .	(1,682)	-	-
Net consolidated loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(89,391)	(66,243)	(165,512)
Profit attributable to non-controlling interests . . . . . . . . . . . . . . . . . . . . .	1,611	2,914	4,567
Net loss attributable to the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(91,002)	(69,157)	(170,079)

(1) Depreciation and amortisation reflect the yearly loss in economic value of the tangible and intangible assets of the Group due to their ordinary utilisation or as a result of the ageing process, taking into account any residual value.

(2) Impairments reflect the positive or negative change in the value of each asset as a consequence of the performance of such assets or as a result of other market considerations.

(3) This item comprises of impairment (€18,000 thousand loss), asset sales results (€608 thousand loss) and others (€4,136 thousand loss).

(4) This item comprises of impairment (€18,101 thousand loss), asset sales results (€915 thousand loss) and others (€916 thousand loss).

(5) This item comprises of impairment of goodwill (€81,285 thousand loss), impairment of intangible assets (€37,882 thousand loss), asset sales results (€18 thousand loss) and others (€1,614 thousand profit).

The following significant changes to the Group’s financial condition and operating results have occurred during the period covered by the historical key financial information above:

Š On 20 December 2012, the entire issued share capital of Velosi S.à r.l., the holding company of the Applus+ Velosi business (Velosi S.à r.l., together with its subsidiaries, the “Velosi Group”) was contributed to the Group. The Applus+ Velosi business contributed to the Group revenue of

€66,352 thousand and €372,576 thousand and operating profit before depreciation, amortisation and others of €3,371 thousand and €35,774 thousand for the years ended 31 December 2012 and 2013, respectively.

Š Revenue for the Group increased by 32.5 per cent. to €1,580,501 thousand for the year ended 31 December 2013, from €1,192,647 thousand for the year ended 31 December 2012, reflecting Organic Growth of 9.0 per cent., Growth from Acquisitions of 26.0 per cent. and a decrease in revenue due to

unfavourable fluctuations in exchange rates of 2.4 per cent. Revenue growth in 2013 was driven principally by the contribution of the Applus+ Velosi business to the Group which was consolidated with the Group for the entirety of 2013, compared with 2012 for which it was consolidated for the last 11 calendar days of that year. This increase was also driven by a strong performance across all segments and in particular by a significant increase in the revenue of the Applus+ RTD, Applus+ Velosi and Applus+ IDIADA segments.

Š The Group’s operating profit before depreciation, amortisation and others (which represented

12.0 per cent. of the Group’s revenue in 2013) increased by 30.2 per cent. to €189,452 thousand for the year ended 31 December 2013, from €145,535 thousand for the year ended 31 December 2012, primarily as a result of an increase in the operating profit before depreciation, amortisation and others of the Energy and Industry Services vertical of 65.9 per cent., to €131,557 thousand for the year ended 31 December 2013, from €79,291 thousand for the year ended 31 December 2012. This increase was principally as a result of increased focus across the Group on margin enhancement as well as revenue growth, the integration and standardisation of services across the Group and the improved management of each division’s cost base.

Š For the year ended 31 December 2013, the Group reported an operating loss of €42,766 thousand (which represented (2.7) per cent. of the Group’s revenue in 2013) from an operating profit of €30,928 thousand for the year ended 31 December 2012, a decrease of 238.3 per cent. The decrease was driven principally by impairment losses, mainly comprised of write-xxxxx of the goodwill associated with Applus+ Automotive (Finland and US) and Applus+ Norcontrol, and write-xxxxx of the intangible assets associated with Applus+ RTD Europe and Applus+ Automotive (Finland, US and Spain).

Š For the year ended 31 December 2013, net financial expense constituted (5.5) per cent. of the Group’s revenue as compared to (9.6) per cent. for the year ended 31 December 2012.

Š Revenue for the Group increased by 21.6 per cent. to €1,192,647 thousand for the year ended 31 December 2012, from €980,919 thousand for the year ended 31 December 2011, reflecting Organic Growth of 13.5 per cent., Growth from Acquisitions of 6.5 per cent. and an increase in revenue due to favourable fluctuations in exchange rates of 1.6 per cent. Revenue growth in 2012 was driven principally by a strong performance across all segments and in particular by a significant increase in the revenue of the Applus+ RTD and Applus+ IDIADA divisions.

Š The Group’s operating profit before depreciation, amortisation and others (which represented 12.2 per cent. of the Group’s revenue in 2012) increased by 17.5 per cent. to €145,535 thousand for the year ended 31 December 2012, from €123,899 thousand for the year ended 31 December 2011, primarily as a result of an increase in the operating profit before depreciation, amortisation and others of the Energy and Industry Services vertical of 30.4 per cent., to €79,291 thousand for the year ended 31 December 2012, from €60,805 thousand for the year ended 31 December 2011. This was driven primarily by the increased profitability of Applus+ RTD.

Š The Group’s operating profit (which represented 2.6 per cent. of the Group’s revenue in 2012) increased by 130.2 per cent. to €30,928 thousand for the year ended 31 December 2012, from €13,436 thousand for the year ended 31 December 2011, primarily as a result of increases in the profitability of Applus+ RTD, and to a lesser extent Applus+ IDIADA and Applus+ Norcontrol, despite the increase in depreciation and amortisation resulting from the re-estimate of the initial useful life of the administrative authorisation for vehicle inspections in Finland.

Š For the year ended 31 December 2012, net financial expense constituted (9.6) per cent. of the Group’s revenue as compared to (11.5) per cent. for the year ended 31 December 2011.

Š From 24 January 2011 until 20 December 2012, the Velosi Group was owned by Azul Holding 2, S.à r.l. (Lux), a subsidiary of Azul Holding S.C.A. (Lux), one of the Selling Shareholders. During the period from January 2011 until 20 December 2012, the Company and the Velosi Group were under common control. The Combined Financial Statements combine both the Velosi Group and the remainder of the Group, reflecting Applus+ Velosi’s operations from January 2011. The revenue of the Group, as recorded in the Combined Financial Statements increased by 7.3 per cent. from 31 December 2012 to 31 December 2013 (as recorded in the case of 2013, in the Audited Consolidated Financial Statements).

Summary audited consolidated balance sheet data

The following table sets out the Company’s summary audited consolidated balance sheet for the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December

2011 2012 2013

€ thousands, except percentages and ratios

Total non-current assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,558,830	1,634,832	1,425,585
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	394,180	535,023	598,295
Total equity(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,529	390,399	323,249
Total participating loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	391,715	92,448	-
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,308,410	1,372,726	1,342,740
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	250,356	314,282	357,891
Net financial debt(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,010,134	990,895	943,599
Net financial debt/Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52%	46%	47%
Net financial debt/operating profit before depreciation,
amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8.15	6.81	4.98
Net total debt(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,401,849	1,083,343	943,599
Net total debt/total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	72%	50%	47%
Net total debt/operating profit before depreciation, amortisation and
others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11.31	7.44	4.98

(1) Total non-current assets, include, among other items, deferred tax assets amounting to €113,130 thousand, €137,547 thousand and

€101,727 thousand as at the years ended 31 December 2011, 2012 and 2013, respectively.

(2) Total equity includes share capital (amounting to €31,058 thousand, €600,825 thousand and €654,731 thousand as at the years ended

31 December 2011, 2012 and 2013, respectively) and reserves (amounting to €(28,556) thousand, €(219,926) thousand and

€(331,482) thousand as at the years ended 31 December 2011, 2012 and 2013, respectively.

(3) Net financial debt is defined as the Group’s financial indebtedness to xxxxx and other financial institutions (including, without limitation, local debt facilities, the Syndicated Loan Facilities and derivatives) less cash and cash equivalents. Local debt facilities comprise a number of borrowings with different institutions in different countries. Net total debt does not include potential earn-out payments arising from acquisitions. Recognised provisions related to these potential payments amounted to €14,551 thousand in the year ended 31 December 2013.

(4) Net total debt is defined as net financial debt plus the amount of the Participating Loan, but excludes potential earn-out payments from acquisitions. Recognised provisions related to these potential payments amounted to €14,551 thousand in the year ended 31 December 2013.

As of 31 December 2013, total non-current assets comprised goodwill (24.1 per cent. of total assets); other intangible assets (31.3 per cent. of total assets); property, plant and equipment (9.4 per cent. of total assets); non- current financial assets (0.7 per cent. of total assets) and deferred tax assets (5.0 per cent. of total assets).

Post-Offering Capitalisation and indebtedness

The following table sets out the Group’s cash and cash equivalents, current borrowings and capitalisation as at 28 February 2014, as adjusted to give effect to: (i) the receipt of the gross proceeds of the Offering, (ii) the drawdown of amounts under the New Facilities, (iii) the repayment of the Group’s current Syndicated Loan Facilities, and (iv) the costs of the Offering:

Gross

As of 28 February 2014 Adjustments

Existing Debt

Offering

and Management Incentive Plan As

Actual

Proceeds New Debt

Refinanced

€ thousands

Costs

Adjusted

Gross financial debt . . . . . . . . . . . . . . . . .	1,084,345		-		735,000		(1,046,537)		-		772,808
Cash(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(145,479)		(300,000)		(735,000)		1,046,537		56,200		(77,742)
Net financial debt(2) . . . . . . . . . . . . . . . . .	938,866		(300,000)		-		-		56,200		695,066
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .	318,581		300,000		-		-		(56,200)		562,381
Total capitalisation . . . . . . . . . . . . . . . . .	1,257,447		-		-		-		-		1,257,447

(1) The Group has no restricted cash.

(2) Net financial debt is defined as the Group’s financial indebtedness to xxxxx and other financial institutions (including, without limitation, local debt facilities, the Syndicated Loan Facilities and derivatives) less cash and cash equivalents. Local debt facilities

comprise a number of borrowings with different institutions in different countries. Net total debt does not include potential earn-out payments arising from acquisitions. Recognised provisions related to these potential payments amounted to €14,551 thousand in the year ended 31 December 2013.

As of 31 December 2013, the Company’s share capital amounted to €654,731 thousand, and reserves and other equity items amounted to €(331,482) thousand. On 4 April 2014, the Company’s general shareholders’ meeting resolved to decrease the Company’s capital stock to €10,932,710 (relocating the reduced amount to non- distributable reserves). In the Offering, the Company is expected to receive additional equity amounting to

€300,000 thousand, which will be distributed between share capital and issue premium (“prima de emisión”). However, the exact number of shares to be issued (and, consequently, the exact figures of share capital and reserves post-Offering) will depend on the Offering Price. Assuming the Offering is made at the mid-point of the Offering Price Range, the resulting share capital would amount to €12,966,608 and the resulting reserves and other equity items would amount to €549,414,392.

Summary audited consolidated statement of cash flow data

The following table sets out the Group’s summary audited consolidated cash flows for the years ended 31 December 2011, 2012 and 2013.

	Year	ended 31 December
	2011	2012	2013
Net cash from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	108,775	€ thousands 132,767	154,798
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(66,258)	(40,173)	(69,999)
Net cash (used in)/from financing activities . . . . . . . . . . . . . . . . . . . . . .	4,004	(52,415)	(45,348)
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .	46,521	40,179	39,451

B.8 Selected key pro forma financial information

Not applicable.

B.9 Profit forecast or estimate

The Company has chosen not to include profit forecasts or estimates in this document.

B.10 Qualifications in the audit report on historical information

The audit reports corresponding to the Group’s audited consolidated financial statements for the years ended 31 December 2011, 2012 and 2013 prepared by Deloitte, S.L. are unqualified.

B.11 If the issuer’s working capital is not sufficient for the issuer’s present requirements an explanation should be included

Not applicable.

SECTION C – SECURITIES

C.1 Description of class of the securities

The Shares have the ISIN code ES0105022000, allocated by the Spanish National Agency for the Codification of Securities (“Agencia Nacional de Codificación de Valores Mobiliarios”), an entity dependent upon the Spanish Comisión Nacional xxx Xxxxxxx de Valores (the “CNMV”). It is expected that the Shares will be traded on the

Spanish Stock Exchanges and quoted on the AQS under the ticker symbol “APPS” (“Admission”). The Shares will, on Admission, comprise the entire issued ordinary share capital of the Company.

C.2 Currency of the securities issue

The Shares are denominated in euro.

C.3 Number of issued and fully paid Shares

There is only one class of shares in the Company and each Share entitles the holder to one vote.

On Admission, there will be between 127,788,638 and 131,968,609 Shares of €0.10 nominal value each in issue. All Shares will be fully paid. The new Shares (the “New Offer Shares”) will represent between 16.89 and 20.71 per cent. of the pre-Offering share capital of the Company and between 14.45 and 17.16 per cent. of the post- Offering share capital of the Company.

C.4 Rights attaching to the Shares

The Shares rank pari passu in all respects with each other, including for voting purposes and in full for all dividends and distributions on Shares declared, made or paid after their issue and for any distributions made on a winding-up of the Company.

The Shares grant their owners the rights set forth in the Company’s by-laws and in the Real Decreto Legislativo 1/2010, de 2 de julio, que aprueba el Texto Refundido de la Ley de Sociedades de Capital (as amended, the “Spanish Companies Act”), such as, among others: (i) the right to attend general shareholders’ meetings of the Company with the right to speak and vote; (ii) the right to dividends proportional to their paid-up shareholding in the Company; (iii) the pre-emptive right to subscribe for newly issued Shares in capital increases with cash contributions; and (iv) the right to any remaining assets in proportion to their respective shareholdings upon liquidation of the Company.

C.5 Description of restrictions on free transferability of the Shares

There are no restrictions on the free transferability of the Shares in the Company’s by-laws (“estatutos sociales”).

C.6 Applications for admission to trading on regulated markets

Application will be made for the entire issued and to be issued ordinary share capital of the Company to be admitted to trading on the Spanish Stock Exchanges and quoted on the AQS. No application has been made or is currently intended to be made for the Shares to be admitted to listing or trading on any other exchange.

C.7 Dividend policy

Assuming that there are sufficient distributable reserves available at the time, the Company intends to target a dividend of approximately 20 per cent. of the Group’s adjusted net income. Following Admission, the Company currently intends to pay its first dividend in 2015 after the publication of its financial results for the year ended 31 December 2014. The Company will disclose its adjusted net income through a relevant fact announcement (“hecho relevante”) which will be available on its corporate website (xxx.xxxxxx.xxx) and on the CNMV’s website (xxx.xxxx.xx) simultaneously with the publication of its annual financial results.

No dividends have been declared or paid by the Company in the three years ended 31 December 2011, 2012 and 2013.

Upon Admission, and due to measures taken in 2013 and 2014 (including a capital reduction) and the capital increase for issuance of the New Offer Shares in the Offering, the Company’s equity structure will be sufficient to comply with the minimum thresholds set out in the Spanish Companies Act to permit dividend distribution.

There are no contractual restrictions on the distribution of the dividends by the Company under the New Facilities Agreement or any other financing arrangement in place upon Admission.

SECTION D – RISKS

D.1 Key information on the key risks that are specific to the Group or its industry IMPORTANT NOTICE

The Company wishes to highlight to the investors of the Shares in the Offering and to any future shareholders of the Company the following matters:

 the Group has incurred consolidated net losses attributable to the parent amounting to €(91,002) thousand, €(69,157) thousand and €(170,079) thousand for the years ended 31 December 2011, 2012 and 2013, respectively. These losses were partly driven by the non-cash borrowings costs relating to the capitalisation of interests under the Participating Loan and, in addition in 2013, by certain extraordinary impairments of goodwill and other intangible assets. As a result of a failure to achieve sufficient operating profits to offset the referred borrowing costs and impairments of goodwill and other intangible assets, the Group may continue incurring losses in the future;

 the audited consolidated balance sheet of the Group for the year ended 31 December 2013 includes goodwill amounting to €487,882 thousand and other intangible assets, principally associated with administrative concessions and authorisations related to its statutory vehicle inspection business, amounting to €632,695 thousand (including an associated deferred tax liability of €166,465 thousand), that jointly amount to €1,120,577 thousand, representing 55.4 per cent. of the Group’s total assets. Future impairment losses arising from the valuation of such intangible asset accounts could impact the Group’s audited consolidated income statement; and

 the Company estimates that the current value of the undertakings of the Group in relation to the incentive plans of senior management (including the Chief Executive Officer of the Group) and other employees of the Group (calculated, with respect to those management incentive plans dependent on the Offering Price, on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range) would amount to €74,924 thousand, of which €33,195 thousand are payable in cash (including €24,746 thousand payable in year 2014) and the remaining €41,729 thousand are payable in Shares from 2015 through 2017. See “Risks Factors – Risks Specific to the Group - Payments and awards under the Group’s management incentive plans may impact its financial condition” for further information.

Risks Specific to the Group

The Group has experienced fluctuations in its profitability and incurred significant net consolidated losses.

Historically the Group has experienced fluctuations in its profitability and has incurred consolidated net losses. The Group has incurred consolidated net losses attributable to the parent amounting to €(91,002) thousand,

€(69,157) thousand and €(170,079) thousand for the years ended 31 December 2011, 2012 and 2013, respectively. There can be no assurance that the Group will not experience fluctuations in its profitability and incur significant operating losses in future.

The Group’s goodwill and other intangible assets may be subject to further impairments in the future.

The Group has recognised significant goodwill and other intangible assets arising principally from the acquisition of the Group by funds advised by Xxxxxxx and other investors in 2007, in addition to subsequent acquisitions undertaken by the Group. As at 31 December 2013, the Group carried goodwill of €487,882 thousand and other

intangible assets of €632,695 thousand (including an associated deferred tax liability of €166,465 thousand), of which €444,210 thousand and €550,245 thousand (including an associated deferred tax liability of €153,709 thousand), respectively, was recognised upon the acquisition of the Group by funds advised by Xxxxxxx and other investors in 2007.

Impairments reflect changes in the value of each asset as a consequence of changes in the expected performance of such asset, which can be driven by a number of factors affecting the operations, as well as other market considerations. The Group performs impairment tests, and therefore, records impairments on an annual basis at the end of the financial year, or if there is an event or change that suggests that the carrying amount may not be recorded. In the years ended 31 December 2011, 2012 and 2013, the Group recognised impairment losses and losses on disposals of €22,744 thousand, €19,932 thousand and €117,571 thousand, respectively. Of the impairment recognised in the year ended 31 December 2013, €16,744 thousand was attributable to Applus+ RTD’s operations in Europe, €60,897 thousand to Applus+ Automotive’s operations in Finland, €23,105 thousand to Applus+ Automotive’s operations in the United States, €11,370 thousand to Applus+ Norcontrol’s operations in Spain and €7,051 thousand to Applus+ Automotive’s operations in Spain. In the years ended 31 December 2011 and 2012 impairments were attributable to Applus+ RTD’s operations in Europe of €18,000 thousand and €18,101 thousand, respectively.

Payments and awards under the Group’s management incentive plans may impact its financial condition.

The Group has established a number of management incentive plans, including two cash incentive agreements, a cash and share based management incentive plan, a multi-annual bonus agreement and a new long-term incentive plan. Certain of these management incentive plans were entered into prior to the date of this document and the remainder will be implemented upon or after Admission. Certain of the awards under the management incentives plans or agreements are dependent on the Offering Price or on the financial results of the Group or one of its divisions.

The aggregate equivalent value in cash of the referred management incentive plans from Admission through to 31 December 2017 amounts to €74,924,130 (calculated, with respect to those management incentive plans dependent on the Offering Price, on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range). It should be noted that this aggregate equivalent value in cash is a mere estimate and that these management incentive plans do not contemplate a minimum guaranteed value for the Shares which may be exchanged thereunder at vesting of the RSUs. The Group has recognised and will, in the future, recognise the impact of such management incentive plans in its consolidated financial statements and as a result they may have a material effect on the Group’s financial condition.

Liberalisation of statutory vehicle inspections markets could result in increased competition.

The Group’s Statutory Vehicle Inspections division accounted for 17.3 per cent. of the Group’s consolidated revenue for the year ended 31 December 2013. As at the date of this document, approximately 80 per cent. (by revenue) of the Group’s statutory vehicle inspections services operate as concessions or authorisations under which a limited number of operators are authorised by the relevant local government agency to provide vehicle inspection services within a particular region or jurisdiction. The average weighted remaining term of these concessions or authorisations is approximately nine years, as at the date of this document. Spain is a principally important market for the Group in respect of this sector as it has a number of concessions for vehicle inspections and there are relatively few other authorised operators in the market (accounting for 33.9 per cent. of the Statutory Vehicle Inspection division’s revenue for the year ended 31 December 2013). In particular, in certain Spanish regions in which the Group operates, such as Catalonia and the Canary Islands, which represented

18.5 per cent. (3.2 per cent. of the Group’s revenue) and 5.0 per cent. (0.9 per cent. of the Group’s revenue) of Applus+ Automotive’s revenue for the year ended 31 December 2013, respectively, current, proposed or future reforms of the statutory vehicle inspections regimes may remove or limit the restrictions on the number of operators that are authorised to conduct vehicle inspections, which may thereby increase the number of operators that are authorised to provide vehicle inspection services.

Furthermore, the Group is currently involved in litigation both in Catalonia and in the Canary Islands in respect of the applicable vehicle inspection regimes and the authorisations thereunder (for further information on the status and potential outcome of such proceedings, see the section “Litigation regarding statutory vehicle inspection regimes” in Element B.4 above). The Group had taken into account the Catalan litigation when considering the cashflow projections used in the impairment tests performed for the year ended 31 December

2013 and no impairment related to this issue had been recorded, taking into account, among other things, the anticipated legislative developments in connection with the New Roadworthiness Directive and favourable statements made by the European Commission’s Directorate for Internal Markets and Services. These statements are, however, not binding on the Directorate.

The Group holds significant tax assets which it may not be able to use, and is subject to tax legislation, the substance and interpretation of which may change.

In the year ended 31 December 2013, the Group had substantial tax assets of €101,727 thousand. Such assets may, in future, reduce the Group’s corporate income tax burden, and comprised €60,478 thousand of tax loss carryforwards, deferred tax assets of €30,478 thousand and tax credits of €10,771 thousand. Furthermore, the Group has €65,315 thousand potential tax assets which have not been recognised on the Group’s balance sheet. In accordance with Spanish tax regulations, any net operating losses, deferred tax assets and tax credits will expire after a specific period of time after the year incurred. If the Group is unable to use these losses in the future, whether as a result of changes to legislation in relation to carrying losses forward, or as a result of a failure to achieve sufficient profits which could be offset by such losses, or otherwise, the Group may be forced to write down its deferred tax assets and may be subject to higher taxation charges, which may have an adverse effect on the Group’s future cash flows.

In 2013, certain tax assets recognised in previous year amounting to €54,791 thousand were written-off.

The Group’s business is exposed to exchange rate fluctuations.

The Group generates a significant proportion of its revenue in currencies other than its reporting currency, the euro. As a result, the Group faces exchange rate risks due to exchange rate translation losses. A significant negative change in exchange rates could result in a significant translation impact, which could have a material adverse effect on its results of operations. For example, as a result of the favourable fluctuations in exchange rates, the revenue of the Group increased by 1.6 per cent. for the year ended 31 December 2012 compared to the year ended 31 December 2011. However, in the year ended 31 December 2013, revenue was reduced by unfavourable fluctuations in exchange rates by 2.4 per cent. compared to the revenue in the previous year. In addition, economic or fiscal crises in emerging economies may result in the depreciation of the local currency in relation to the euro and/or to restrictions such as exchange controls. In the year ended 31 December 2013, Group revenue split by currency was: 38.8 per cent. of the Group’s revenue was generated in euros; 27.0 per cent. in US Dollars, or currencies pegged to the US Dollar; 5.0 per cent. in Canadian Dollars; 5.4 per cent. in Australian Dollars; 4.9 per cent. in Pound Sterling; and 18.9 per cent. in other currencies. In the same period, 75.0 per cent. of the Group’s liabilities were denominated in euro, 18.9 per cent. in US Dollars, 2.0 per cent. in Pound Sterling and 3.0 per cent. in other currencies. The Group does not enter into, and has not in the current financial year or the three years ended 31 December 2013, entered into foreign currency hedging arrangements.

The Group’s businesses may be adversely affected by virtue of having major clients in certain markets.

The Group has a highly diversified client base of over 48,000 active clients with the Group’s top 20 clients by revenue in 2013 accounting for only 25.0 per cent. of revenue, while the top 3 clients by revenue in 2013 accounted for only 10.6 per cent. of the Group’s revenue. However, within certain of the Group’s divisions a significant portion of the revenue generated by that division is attributable to a limited number of major clients. For example, in 2013, largest client of Applus+ Xxxxxx represented 21.0 per cent. of this division’s revenue (5.8 per cent. of the Group’s revenue). The loss of one or more of these major clients could have a significant adverse effect on the division’s business and therefore the Group’s business, financial condition, results of operations and prospects.

The Group’s leverage and ability to service its debt may adversely affect its business, financial condition, results of operation and prospects.

In the context of the Offering, the Group will repay its existing Syndicated Loan Facilities, which will be replaced with the New Facility, comprised of the New Term Loan Facility and the New Revolving Facility which will both to be applied (in the case of the New Revolving Facility, in part) to repay the existing Syndicated Loan Facilities. The New Facilities are conditional on Admission and will be partially used, along with Offering proceeds and existing cash, to fully repay the existing syndicated facilities. Although it is expected that, as a result of the offering and the refinancing, the Group’s net financial debt and weighted interest rate will be lower, the New Facilities

Agreement imposes certain restrictions and covenants on the Group, including a negative pledge, a restriction on the ability of the Company and other Group members to make acquisitions of companies, shares or securities, or any businesses or undertakings, a financial covenant to maintain the ratio of consolidated total net debt to consolidated earnings before interest, depreciation and amortisation at or below a specified level of 4.50:1 from the date of the first test of 31 December 2014 until 31 December 2015 (4.00:1 thereafter), and a cross default provision applying to other indebtedness of the Group above €50 million. The New Facilities Agreement also contains a change of control provision, which would require the repayment in full or part of the New Facilities, if triggered, among other things, by any group or persons acting in concert gaining control of the Company.

The New Facilities Agreement contains certain covenants customary for a listed entity (including a negative pledge (which prohibits any guarantor or borrower under the agreement from granting or permitting to exist security over its assets or entering into a financial arrangements similar to security primarily to raise additional funds) and a restriction on any guarantors under the agreement merging unless permitted under the agreement but without any specific restrictions on dividends or debt incurrence).

The New Facilities Agreement is to be initially secured by share pledges over the shares in 22 subsidiaries of the Company, which include of certain holding companies and material subsidiaries, which each represent more than

5.0 per cent. of the earnings before interest, tax, depreciation and amortisation (“EBITDA”), or net assets of the Group, including: Applus Servicios Tecnológicos, S.L.U.; IDIADA Automotive Technology, S.A. (the subholding of Applus+ IDIADA); Arctosa Holding B.V. (the subholding of Applus+ RTD); Applus Norcontrol,

S.L.U. (the subholding of Applus+ Norcontrol); LGAI Technological Center, S.A. (the subholding of Applus+ Laboratories); Applus Iteuve Technology, S.L.U. (the subholding of Applus+ Automotive); and Azul Holding 2, S.à r.l. (Lux) (the subholding of Applus+ Velosi). These 22 subsidiaries represent approximately, in aggregate,

60.7 per cent. of the EBITDA and 60.3 per cent. of net assets of the Group as of the date of this document.

32,798,130 shares of the Company owned by Azul Holding, S.C.A. (Lux), representing thirty per cent of the Company’s share capital, are currently pledged in favour of the lenders under the existing Syndicated Loan Facilities (the “Share Pledge”). The remaining shares of the Company (including all Shares owned by Azul Finance, S.à r.l. (Lux) and 9,052,284 Shares owned by Azul Holding, S.C.A. (Lux)) are free from liens or encumbrances. The lenders under the existing Syndicated Loan Facilities do not have any voting or economic rights over the Shares by virtue of the Share Pledge. On the settlement date of the Offering, and upon repayment in full of the Syndicated Loan Facilities, the Share Pledge will be cancelled and released.

The failure of the Group to comply with the restrictions or covenants described above would result in an event of default which, if not resolved or waived, may result in, amongst other things, the acceleration of all or part of the outstanding loans and/or the termination of the commitments and/or the declaration of all or part of the loans payable on demand and/or the enforcement of the aforementioned pledges, which would have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

A number of the Group’s key agreements are limited in duration and the Group may not be able to renew such agreements.

A number of the Group’s key agreements are limited in duration and the Group may not be able to renew such agreements. For example, in the year ended 31 December 2013, Applus+ IDIADA generated 19 per cent. of its revenue (1.6 per cent. of the Group’s revenue) from the proving ground that it has leased from the Catalan government. Under the terms of the relevant agreement, the Group has the exclusive right to operate the proving ground until 2019. In 2010, the Catalan government expressly committed to take the necessary regulatory measures to extend the relevant agreement for an additional five year period (until 2024). The Group also operates statutory vehicle inspection concessions in a number of jurisdictions that have scheduled expiry dates, with such agreements accounting for 80 per cent. of the revenue generated by the Group’s Statutory Vehicle Inspections division. The average weighted remaining years of these concessions is approximately nine years, as at the date of this document. However, eight concession agreements (two of which are currently subject to ongoing tenders for new concessions) which represented 8 per cent. of Applus+ Automotive’s revenue (1.4 per cent. of the Group’s revenue) in the year ended 31 December 2013 are due to expire in the three years ended 31 December 2016. Although many of these concession agreements provide an option to renew the agreement (subject to agreement by that relevant agency), there can be no guarantee that the renewal can be achieved on commercially acceptable terms or at all. In addition, Applus+ Laboratories operates seven of its twelve laboratories under a contractual agreement with the government of Catalonia. The Group will, upon expiry of the contract in 2033, be required to apply to the relevant agency to renew or extend the term of this contract.

Any failure to obtain and maintain certain authorisations could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

A significant part of the Group’s business requires the Group to obtain and maintain industry accreditations, approvals, permits, official recognition and authorisations, which enable it to provide many of its services to its clients on a local, regional and global level. Certain authorisations are granted for limited periods of time only and are subject to periodic renewal by the authority concerned. Any failure to retain such authorisations, through the non-renewal, suspension or loss of certain of these authorisations, may affect the ability of the Group to meet its contractual expectations with clients and the reputation of the Group.

The Group provides services pursuant to contracts entered into with governmental authorities and such authorities may reduce or refuse to increase the price paid for the Group’s services.

The Group provides TIC services under concession or other agreements entered into with national, regional and local governmental authorities in a number of countries. Eighty per cent. of the revenue recorded by Applus+ Automotive in 2013 was attributable to vehicle inspection services provided pursuant to government concessions or authorisations in regulated markets. Applus+ Norcontrol also has a number of clients that are public institutions and which in aggregate accounted for 7.5 per cent. of its revenue (representing less than one per cent. of the Group’s revenue), in the year ended 31 December 2013. Governmental counterparties may reduce or refuse to increase the price they are willing to pay or the prices they set for other customers or clients for the Group’s services, where prices are fixed by the competent authorities. For example, on 28 March 2014 the regional government of Valencia passed a resolution, effective as of 1 April 2014, decreasing the tariffs payable by customers or clients for vehicle inspection services in the region. The Group currently estimates that this decrease in tariffs will reduce the Group’s operating profit before depreciation, amortisation and others by approximately €2,000 thousand per annum.

Changes to regulatory regimes could have a material adverse effect on the Group’s business.

The Group conducts its business in sectors which are subject to significant regulation, which may differ from one jurisdiction to another. Since a significant proportion of the Group’s revenue is generated from the testing of its clients’ assets, products and systems to determine compliance with the relevant applicable legislation, rules or standards, any changes to such regulatory regimes could affect the level of demand for TIC services, which could have a material adverse effect on the Group’s business. For example, the demand for TIC services may be reduced if regulatory regimes are liberalised or if different standards are harmonised across a number of jurisdictions, thus reducing the need for specific testing in accordance with the particular standards of each such jurisdiction. In addition, any changes in the law or regulatory environment may create onerous requirements on the Group and may materially increase the Group’s costs if subsequent changes are required for it to be compliant with the changes in regulations.

There are many risks associated with conducting operations in international markets.

The Group operates in more than 60 countries throughout the world. As a result, it faces a number of difficulties, including, staffing of technical employees on geographically remote projects, managing international operations, trade barriers, currency, economic or fiscal crises, the threat of terrorism and war, and social instability in the regions in which it operates.

Adverse claims or publicity may adversely affect the Group’s reputation, business, financial condition, results of operations and prospects.

The Group is exposed to liabilities arising out of the services that it provides. A significant proportion of the Group’s clients operate in the industrial, energy and construction sectors, which can give rise to serious and potentially catastrophic environmental or technology incidents. Such clients may have used the Group’s testing and inspections results to assess their own assets, facilities and plants. Consequently, there could be adverse effects for the Group’s reputation and financial results in the event that a client is involved in such an accident or incident, including costs arising from any investigations that it would need to undertake if such events occur.

The Group seeks to expand its business partly through acquisitions, which, by their nature, involve numerous risks.

Since part of the Group’s growth strategy is based on the acquisition of small and medium sized businesses to provide access to new end-markets and/or services to create synergies, there is a risk that the Group may not

identify appropriate targets, or acquire companies on commercially satisfactory terms, or be able to obtain financing for the acquisitions on favourable terms. There may be particular contingencies or subsequent difficulties arising from certain acquisitions that were not foreseen by the Group at the time. The Group could also experience competition for acquisition targets that could render such acquisitions more expensive or difficult to complete. In addition, the Group cannot be certain that benefits that were expected from certain acquisitions will materialise and additional financing costs arising from these transactions could offset additional revenues.

The loss of any of the Group’s key personnel could have a material adverse effect on the Group’s business.

The success of the Group relies heavily on the contribution of key personnel who possess industry-specific skills and knowledge of the Group’s business, as well as, industry contacts that are critical to the operation and performance of the Group. The Group may find it difficult to replace key personnel, which would also lead to a loss of key know-how that is important to the Group, which could also have a disruptive effect on the Group’s operations, for example, by negatively affecting the Group’s relationships with key clients, as well as its ability to execute its growth strategy. The Group could also incur additional costs in seeking a replacement for key personnel, as well as diverting management attention from ordinary course business.

The Group is dependent on its ability to develop new proprietary technical solutions.

The Group believes that it has an outstanding position in terms of technology, in particular in the provision of NDT and vendor surveillance services and automotive original equipment manufacturers (“OEM”) engineering, and makes significant capital investments with the intention of maintaining this advantage. The Group’s success depends on its ability to continue to innovate, develop and introduce new hardware, software and techniques to continue to meet the requirements of its clients better than its competitors. If the Group fails to do so and/or a competitor is able to develop equivalent or superior technology, then, among other things, the demand for the Group’s existing services could decline, and the Group may be required to make significant unplanned occasional expenditures to compete more effectively.

The Group may be subject to costs and liabilities in connection with current or future litigation or pre- litigation procedures relating to services it has performed.

In the ordinary course of the Group’s business it is, from time to time, involved in claims and proceedings relating to services it has performed. In certain situations, a claim may only be notified to the Group after resolution of the underlying commercial dispute and, in such cases, a considerable period of time may elapse between the performance of services by the Group and the assertion of a claim in respect of such services. In either case, because the underlying commercial transaction can be of significant value, the claims notified to the Group can allege damages in significant amounts. Such litigation may lead to the Group incurring significant financial costs, including legal expenses and other costs involved with investigating or defending such claims, in addition to the risk that is required to pay damages in respect of a claim.

There can be no assurance that all claims made against the Group or all losses suffered may be effectively covered by its insurance.

The Group seeks to insure itself against all financial consequences of claims asserting professional liability. However, there can be no assurance that all claims made against the Group or all losses suffered are or will be effectively covered by insurance, nor that the policies in place will always be sufficient to cover all costs and financial awards it may be required to pay as a result. It is possible that there may be claims in the future that may not be covered in full by the Group’s insurance, and that insurance premiums may increase over time, which could prevent the Group from obtaining adequate insurance, potentially resulting in the Group withdrawing from certain markets in which it currently operates.

The Group may be unable to secure or protect its rights to intellectual property.

The Group’s ability to compete effectively depends in part upon the maintenance and protection of the intellectual property, including any know-how required for its day-to-day operations, related to its services. Whilst the Group makes significant effort to protect its technological and operational process, where possible, through patent protection and other contractual arrangements, there can be no assurance that such patents will not be challenged, invalidated or circumvented, or that these efforts are sufficient in preventing misappropriation of the intellectual property on which the Group relies.

Certain of the Group’s subsidiaries are held by third parties not controlled by the Group.

The Group has operations in a number of jurisdictions, including Angola, Malaysia, and United Arab Emirates, where local law restricts or may restrict (i) foreign shareholders from holding a majority of the shares in either any locally registered companies or those companies which operate in certain sectors such as oil and gas or

(ii) the ability of foreign-owned companies from participating in certain public tenders. Consistent with the approach taken by many other foreign-owned companies operating in these jurisdictions, the Group has addressed this foreign ownership restriction by using commonly used structures, whereby the majority of the shares in its local business is held by a locally registered company or national in that country (depending on the requirements of local law) on trust or pursuant to a management agreement or similar arrangement, for and on behalf of the Group. The remaining minority share capital is usually held by the Group through one of its locally incorporated subsidiaries. However, these arrangements may not be as effective in providing control over these entities as a direct majority ownership. There is also a risk that these ownership structures may be challenged under local law in one or more of these jurisdictions, which in turn poses a risk that the structure could be declared void or unenforceable, or that the Group will be required to change the corporate structure and/or face potential legal penalties in connection with its use of such structures.

Disruptions to the Group’s IT systems may have a material adverse effect on the Group’s business.

Certain of the Group’s businesses, such as the testing, inspection and vendor surveillance services, are heavily dependent on its IT systems. The Group’s IT systems, related infrastructure and business processes may be vulnerable to a variety of sources of interruption, some of which may be due to events beyond the Group’s control, including telecommunications and other technological failures, human errors, computer viruses, hackers and security issues, and natural disasters and terrorist attacks. Any disruptions to the Group’s IT system could have significant negative effect on the business as it is likely to hamper the ability of the Group to operate its business effectively, which itself may lead to negative publicity, in addition to exposing the Group to potential litigation and liability.

The Group’s operations are subject to anti-bribery and anti-corruption laws and regulations.

The Group’s activities are subject to a number of international and extra-territorial laws and regulations including the US Foreign Corrupt Practices Xxx 0000, the UK Bribery Act 2010, and regulations promulgated by the US Department of the Treasury Office of Foreign Assets Control among others. Whilst the Group has established policies and procedures to facilitate compliance with such laws, there can be no assurance that the Group’s policies and procedures can effectively detect and prevent all violations of applicable law and regulations in every instance of fraud or bribery, including by the Group’s own employees or other commercial partners. Consequently, there can be no assurance that the group can avoid financial penalties or reputational damage should any such violation occur.

Labour laws in certain jurisdictions in which the Group conducts its operations could limit the Group’s flexibility with respect to employment policy and its ability to respond to market changes.

Labour laws applicable to the Group’s business in certain jurisdictions are onerous, and can be highly restrictive. In certain jurisdictions, such as Spain, the Group’s employees are partially or fully unionised, and in others, the Group may be subject to mandatory consultation processes with its employees in managing its business. These labour laws and formal consultative procedures could, among other things, limit the Group’s flexibility to rationalise its workforce in response to poor market conditions, or require the Group to change working condition procedures.

Compliance with extensive health, environmental and safety laws and regulations could increase the Group’s costs or restrict its operations.

The Group’s operations are subject to extensive health, environmental and safety laws and regulations by various governmental entities and agencies in the jurisdictions in which it operates. In many of these jurisdictions, these laws are complex, subject to frequent change and are increasingly becoming more stringent. There can be no assurance that breaches of these laws have not occurred or will not occur or be identified or that these laws will not change in the future in a manner that could have a material adverse effect on the Group, particularly if the Group is required to cease certain of its business activities and/or remedy past infringements.

Risks specific to the Group’s industry

The performance of the Group’s business may be affected by global economic conditions.

The Group could be affected by developments and trends in the macro-economic environment, such as changes to world trade, energy prices and levels of investment and consumption, but also by any economic policies affecting its clients as this may affect the demand for the Group’s services and the price and margins that the Group may achieve.

The Group is dependent on levels of capital investment and maintenance expenditures by its clients in the oil and gas industry.

The Group’s clients in the oil and gas industry have accounted for a substantial proportion of the Group’s historical revenue, for example, revenue from clients operating in this sector accounted for 53 per cent. of the Group’s consolidated revenue in the year ended 31 December 2013. Demand for TIC services provided to the oil and gas industry is driven by levels of capital investment and maintenance expenditure by oil and gas companies.

The Group operates in competitive markets and its failure to compete effectively could result in reduced profitability and loss of market share.

The markets in which the Group operates are competitive and could become more competitive in the future. For example, the Group frequently competes for service contracts within the Energy and Industry Services vertical against a number of global competitors, as well as smaller operators with specialised service offerings. The Statutory Vehicle Inspections vertical also faces much competition, where the Group competes for new vehicle inspection programs on the basis of price, technological excellence and track record. In regulated markets, in which 80 per cent. of Applus+ Automotive’s revenue was generated in the year ended 31 December 2013, as prices are largely fixed, the Group competes for customers with other operators mostly on the basis of location and customer service. In liberalised markets, in which 20 per cent. of Applus+ Automotive’s revenue was generated in the year ended 31 December 2013, the Group also competes on the basis of price. As a result of increased competition in the statutory vehicle market in Finland, Applus+ Automotive recorded impairments of

€60,897 thousand and the United States recorded impairments of €23,105 thousand due to uncertainty in respect of the Group’s ability to renew existing concession agreements. In the event of increased competition, there can be no assurance that the Group may experience reduced profitability and loss of market share.

The Group is dependent on its ability to attract and retain sufficient experienced engineers, scientists and other skilled technical personnel to achieve its strategic objectives.

The success of the Group’s growth partly depends on its ability to attract and retain qualified personnel to carry out its services, particularly to meet the demand of NDT services in certain regions. Nevertheless, there is a current shortage, amongst other things, of qualified NDT technicians in certain geographies, and other qualified individuals to work in remote areas that the business operates in, such as certain parts of Australia. This means that there is pressure on the ability of the Group to effectively staff projects, and it increases the Group’s costs as, on certain occasions, it may need to offer generous compensation packages to attract and maintain sufficiently skilled personnel.

D.2 Key information on the key risks that are specific to the Shares

After the Offering, CEP II and CEP III will continue to be able to exercise significant influence over the Group, its management and its operations.

After the Offering, CEP II and CEP III will continue to be able to exercise significant influence over the Group, its management and its operations. Upon Admission, and assuming the Over-allotment Option is exercised in full, CEP II and CEP III will hold, in aggregate, not less than 30.80 per cent. of the voting rights attaching to the Shares (excluding the Directed Offering). If the Over-allotment Option is not exercised at all, CEP II and CEP III will hold, in aggregate, up to 47.03 per cent. of the voting rights attaching to the Shares (excluding the Directed Offering). Upon Admission, CEP II and CEP III will hold, in aggregate, an indirect interest in the share capital of the Company that will exceed the 30 per cent. control threshold set forth in Article 4.1 a) of the Spanish Royal

Decree 1066/2007, of 27 July 2007, on tender offers. Thereafter, the exact level of influence that CEP II and CEP III will be able to exercise will be dependent on the number of Shares which are retained indirectly by CEP II and CEP III. Nevertheless, no special voting majority are included in the by-laws of the Company and indirectly CEP II and CEP III will not have power to appoint a majority of directors to the Company’s board post-Offering.

Substantial subsequent sales of Shares by significant shareholders could depress the price of the Shares.

Substantial subsequent sales of Shares by significant shareholders in the public market, or the perception that such sales might occur, could depress the price of the Shares. Pursuant to the Underwriting Agreement to be entered into between the Company, the Selling Shareholders and the Underwriters, the Selling Shareholders will be subject to a lock-up period of 180 days and the Chief Executive Officer and Chief Finance Officer of the Company, who will acquire Shares in connection with the Directed Offering, representing approximately

0.3 per cent. of the Company’s share capital post-Admission assuming the Offering Price is set at the mid point of the Offering Price Range, and will be subject to a lock-up period of 360 days.

There is no established trading market for the Shares, and there can be no assurance that any active trading market will develop.

There is no established trading market for the Shares, and there can be no assurance that any active trading market will develop. There can be no assurance that an active trading market will be sustained following the completion of the Offering, or that the market price of the Shares will not decline thereafter below the Offering Price.

Shareholders in certain jurisdictions other than Spain may not be able to exercise their pre-emptive rights to acquire further shares.

The Spanish Companies Act prescribes that all the shareholders have pre-emptive subscription rights in the event of a capital increases with cash consideration (unless it has been excluded in exceptional circumstances by a general shareholders’ meeting or by the resolution of the board of director of a company). Nevertheless, the holders of the Shares in certain jurisdictions other than Spain may be unable to exercise pre-emptive rights unless applicable securities law requirements are complied with or exemptions are available, although the option provided under the EU Prospectus Rules to passport a prospectus into other member states of the EEA may facilitate the exercise of such rights for residents in the EEA. The Company may determine it is not in its best interests to comply with such formalities, and there can be no assurance that such exemptions will be available.

The market price of the Shares may be highly volatile.

The liquidity of any market for the Shares depends on the number of holders of the Shares, the market for similar securities and other factors, including general economic conditions and the Group’s financial condition, performance and prospects, as well as the recommendations of securities analysts.

Dividend payments are not guaranteed.

Following Admission, the Company intends to target a dividend of approximately 20 per cent. of the Group’s adjusted net income, however, dividends may only be paid if certain requirements under the Spanish Companies Act are met. Following Admission, the Company currently intends to pay its first dividend in 2015 after the publication of its financial results for the year ended 31 December 2014. In addition, the amount of dividends that the Company decides to pay in the future, if any, will depend upon a number of factors, including, but not limited to, the Company’s earnings, financial condition, debt service obligations, cash requirements (including capital expenditure and investment plans), prospects, market conditions and such other factors as may be deemed relevant at the time, therefore dividends payments are not guaranteed. The Company will disclose its adjusted net income through a relevant fact announcement (“hecho relevante”) which will be available on its corporate website (xxx.xxxxxx.xxx) and on the CNMV’s website (xxx.xxxx.xx) simultaneously with the publication of its annual financial results.

The Company may be classified as a passive foreign investment company (“PFIC”).

If the Company is a PFIC for any taxable year during which a US Holder (within the meaning of the Internal Revenue Code of 1986) holds Shares, certain adverse US federal income tax consequences could apply to such

US Holder. Whilst the Company does not expect that it will be classed as a PFIC for the current taxable year or for the foreseeable, based on its historic and expected operations, composition of assets and market capitalisation, it is possible that the Company could be classified as a PFIC for the current and future taxable years due to changes to the aforementioned factors.

If the Company is treated as a financial institution under the US Foreign Account Tax Compliance Act (“FATCA”), withholding tax may be imposed on payments on the Shares.

The provisions of FATCA may impose 30 per cent. withholding tax on certain “withholdable payments” and “foreign passthru payments” (each as defined in the US Internal Revenue Code) made by a “foreign financial institution” (as defined in the US Internal Revenue Code) that has entered into an agreement with the US Internal Revenue Service (“IRS”) to perform certain diligence and reporting obligations with respect to the foreign financial institution’s US-owned accounts. Whilst the United States has entered into an intergovernmental agreement (an “IGA”) with Spain, which modifies the FATCA withholding regime described above, the IRS and Spanish tax authorities have not yet provided final guidance regarding compliance with the Spanish IGA. It is not clear whether the Company would be treated as a financial institution subject to the diligence, reporting and withholding obligations under FATCA, and nor how foreign passthru payments will be addressed.

SECTION E – ADMISSION AND THE OFFER

E.1 Total net proceeds of the Offering and estimated expenses

The Company is offering New Offer Shares and the Selling Shareholder is offering Existing Offer Shares in the Offering.

The Company expects to raise gross proceeds of €300 million from the Offering. The underwriting commissions, fees and expenses which will be payable by the Company in connection with the Offering are expected to be approximately €36.2 million. The Company intends to pay this out of the gross proceeds of the Offering. Accordingly, the Company expects to raise net proceeds of €263.8 million from the Offering.

Pursuant to the Offering, the Selling Shareholder expects to raise gross proceeds of €800 million (assuming no exercise of the Over-allotment Option). The Company will not receive any proceeds from the sale of the Existing Offer Shares by the Selling Shareholder.

In addition, the Selling Shareholders expect to raise gross proceeds of €5.8 million in the Directed Offering. The Selling Shareholder will bear any commissions payable in respect of the sale of Existing Offer Shares.

E.2 Reasons for the Offering and use of proceeds

The Company intends to use the net proceeds of the Offering, together with €700 million under the New Term Loan Facility, €35 million under the New Revolving Facility and the Group’s existing cash:

Š to repay the existing Syndicated Loan Facilities in full in the amount of €1,047 million; and

Š to make an aggregate cash payment of €20 million to certain key employees of the Group under a management incentive plan.

The Company believes that the Offering will enable the Group to expand the number of shareholders of the Company so as to reach a free float of 57.51 per cent. of the total issued share capital of the Company upon Admission (assuming the Offering Price (as defined below) is set at the mid-point of the Offering Price Range and that the Over-allotment Option is not exercised), above the minimum threshold of distribution of the Company’s Shares required for their admission to trading on the Spanish Stock Exchanges and on the AQS (which, in accordance with Spanish Royal Decree 1310/2005, of 4 November, and subject to certain exceptions, involves reaching a free float of at least 25 per cent. of the shares admitted to trading), and access the equity capital markets, which could allow the Company to improve its financing arrangements for the future development of the Group’s business. In addition, it is expected that the Offering will enhance the Group’s brand name as a result of being a listed company and provide liquidity on the Spanish Stock Exchanges for the Shares

held by its shareholders. The Offering (together with the Over-allotment Option, if exercised) will also provide an opportunity for the Selling Shareholders to transfer part of their investment in the Company.

E.3 Terms and Conditions of the Offering

As part of the Offering:

(i) the Company is offering for subscription between 18,461,538 and 22,641,509 New Offer Shares (representing between 14.45 per cent. and 17.16 per cent. of its share capital post-Offering) to provide the Company with gross sale proceeds of €300 million; and

(ii) the Selling Shareholder is offering to sell an aggregate of between 49,230,769 and 60,377,358 Existing Offer Shares to provide the Selling Shareholder with aggregate gross sale proceeds of €800 million.

In addition, the Selling Shareholder and Azul Holding S.C.A. (Lux) (the “Over-allotment Shareholders”) will xxxxx Xxxxxx Xxxxxxx & Co. International plc (“Xxxxxx Xxxxxxx”), UBS Limited (“UBS”), Citigroup Global Markets Limited, J.P. Xxxxxx Securities plc, Joh. Xxxxxxxxx, Gossler & Co. KG and Banco Santander S.A. (the “Underwriters”) an option to purchase additional Shares representing up to 10 per cent. of the total number of Shares offered by the Company and the Selling Shareholder to cover over-allotments, if any, and short positions resulting from stabilisation transactions.

The Offering is only addressed to and directed at persons in member states of the EEA who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (including any relevant implementing measure in each relevant member state of the EEA). The Offer Shares will be (i) sold in the United States only to qualified institutional buyers (“QIBs”) as defined in and in reliance on Rule 144A under the US Securities Xxx 0000 (“Securities Act”), and (ii) offered and sold outside the United States in compliance with Regulation S of the Securities Act.

The indicative Offering price range at which the Offer Shares are being sold in the Offering will be between

€13.25 to €16.25 per Share (“the “Offering Price Range”) offered in the Offering. Such range has been determined by negotiations among the Company, the Selling Shareholders and the Underwriters, and no independent experts were consulted in determining it. The price of the Offering (the “Offering Price”) will be determined by negotiations among the Company, the Selling Shareholders and the Underwriters, upon the finalisation of the book-building period (expected to be on or about 7 May 2014) and it will be announced through the publication of a relevant fact (“hecho relevante”).

The Company, the Selling Shareholders and the Underwriters will enter into an underwriting agreement (the “Underwriting Agreement”) with respect to the New Offer Shares to be issued by the Company, the Offer Shares being sold by the Selling Shareholder in the Offering and the Over-allotment Shares being sold by the Over-allotment Shareholders under the Over-allotment Option, pursuant to which, subject to the satisfaction of certain conditions set out in the Underwriting Agreement, each Underwriter shall agree, severally but not jointly, to purchase such percentage of the total number of Offer Shares as is set forth opposite its name in the following table:

Underwriters		% Offer Shares
Xxxxxx Xxxxxxx & Co. International plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		31.00
UBS Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		31.00
Citigroup Global Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		13.50
J.P. Xxxxxx Securities plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		13.50
Joh. Xxxxxxxxx, Gossler & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5.50
Banco Santander, S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5.50

The closing date of the Offering or “fecha de operación bursátil” (the “Closing Date”) is expected to be on or about 8 May 2014. On the Closing Date, investors become unconditionally bound to pay for, and entitled to receive, the relevant Shares subscribed or purchased in the Offering. In order to expedite the listing of the Offer Shares, it is expected that one or both of Xxxxxx Xxxxxxx or UBS (the “Joint Global Coordinators”), in their capacity as prefunding xxxxx, will subscribe and pay for the New Offer Shares on the Closing Date of the Offering, each acting in the name and on behalf of the Underwriters, and each Underwriter acting on behalf of the final investors. Payment for the New Offer Shares by the prefunding xxxxx is expected to be made to the

Company by 9:00 a.m. CET on the Closing Date in its account maintained with Santander Investment, S.A., as the Agent Bank, and the New Offer Shares will come into existence once registered with the Commercial Registry of Barcelona and recorded in book-entry form with Iberclear. Payment by the final investors for the Offer Shares, including for the New Offer Shares subscribed and paid for on the Closing Date by the one or both of Joint Global Coordinators as prefunding xxxxx, will be made no later than the third business day after the Closing Date by the disbursement of the corresponding Offering Price against delivery through the facilities of Iberclear of the Offer Shares (other than the Over-Allotment Shares) to final investors, which is expected to take place on or about 13 May 2014 (the “Settlement Date”).

The Shares will be listed on the Spanish Stock Exchanges and quoted on the AQS on or about 9 May 2014, under the symbol “APPS”.

The Offering may be:

(i) withdrawn, postponed, deferred or suspended temporarily or indefinitely by the Company or the Selling Shareholders at any time before the setting of the Offering Price; or

(ii) revoked (i) if the Underwriting Agreement is not executed on or before 11:59 p.m. Madrid time on the date the Offering Price is set (expected to be on 7 May 2014) or any postponement thereof duly notified to the CNMV; (ii) if the Underwriting Agreement is terminated prior to the time of registration of the notarial deed of the capital increase relating to the issue of the New Offer Shares with the relevant Commercial Registry upon the occurrence of certain events set forth in the Underwriting Agreement; (iii) in case the Offering is suspended or withdrawn by any judicial or administrative authority; (iv) if the Shares are not admitted to listing on the Spanish Stock Exchanges before 11.59 pm Madrid time of 23 May 2014.

If the Offering is revoked, the Shares will be returned to the Company and the Selling Shareholders and the purchase price will be returned to the investors, together with interest calculated at the statutory rate (interés legal, currently set at 4 per cent.).

Concurrently with the Offering, pursuant to the Directed Offering, the Chief Executive Officer and Chief Financial Officer of the Company will purchase in aggregate between 356,923 and 437,736 Shares at the Offering Price for total consideration of €5.8 million. The total number of Shares sold in the Directed Offering will depend on the Offering Price.

In connection with the Offering, Xxxxxx Xxxxxxx, the stabilising manager, acting on behalf of the Underwriters, may (but will be under no obligation to), to the extent permitted by applicable law and regulations, engage in transactions that stabilise, support, maintain or otherwise affect the price, as well as over-allot Shares or effect other transactions with a view to supporting the market price of the Shares at a level higher than that which might otherwise prevail in an open market for a period starting on the date of commencement of trading of the Shares on the Spanish Stock Exchange and ending 30 calendar days from such date. The stabilisation period is expected to commence on 9 May 2014 and end on 8 June 2014. Any stabilisation transaction shall be undertaken in accordance with applicable laws and regulations, in particular, Commission Regulation (EC) No 2273/2003 of 22 December 2003.

The Shares have not been and will not be registered under the Securities Act, and are being sold within the United States only to QIBs, as defined in and in reliance on Rule 144A under the Securities Act (“Rule 144A”) and outside the United States in compliance with Regulation S under the Securities Act.

E.4 Material interests in the Offering

Not applicable.

E.5 Entities offering the Shares and lock-up arrangements

(A) Entities offering the Shares

The Company and the Selling Shareholder are the entities offering the Shares.

(B) Lock-up arrangements

Pursuant to the terms of the Underwriting Agreement to be entered into between the Company, the Selling Shareholders and the Underwriters, the following parties will be subject to a lock-up for the periods from the Settlement Date of the Offering set out below:

Lock-up agreements:

Company lock-up 180 days.

Selling Shareholders lock-up 180 days.

In addition, the Chief Executive Officer and Chief Finance Officer of the Company, will be subject to a lock-up period of 360 days. The Shares that such officers will acquire in the Directed Offering will represent approximately 0.3 per cent. of the Company’s share capital post-Admission assuming the Offering Price is set at the mid-point of the Offering Price Range.

The lock-up agreements are subject to customary exceptions including the issuance and sale of Shares pursuant to the Offering or, in the case of the Company, transfers of Shares in the context of the implementation by the Company of incentive plans.

E.6 Dilution

Between 18,461,538 and 22,641,509 New Offer Shares will be issued pursuant to the Offering and the existing Shares will represent between 14.45 and 17.16 per cent. of the total issued Shares depending on the Offering Price.

If the Over-allotment Option is exercised in full, following the Offering (and excluding the Directed Offering), the Selling Shareholders will hold between 30.80 and 41.73 per cent. of the Company’s share capital and voting rights.

If the Over-allotment Option is not exercised, following the Offering (and excluding the Directed Offering), the Selling Shareholders will hold between 37.09 and 47.03 per cent. of the Company’s share capital and voting rights.

E.7 Expenses charged to Investors

Notwithstanding any expenses, broker fees or commissions that might be charged by the participating entities in Iberclear in accordance with their respective fees (and which are external to the Company), for the purposes of the transfer of the Shares, the Company will not charge final investors any expense in addition to the Offering Price.

THE OFFERING

The Company Applus Services, S.A.

The Selling Shareholder Azul Finance, S.à r.l. (Lux)

See “Principal and Selling Shareholders”.

The Global Offering The Offer Shares will be (i) sold in the United States only to QIBs (as

defined in Rule 144A under the Securities Act) in reliance on Rule 144A under the Securities Act and (ii) offered and sold outside the United States in compliance with Regulation S under the Securities Act.

Offering Price Range The indicative Offering Price Range at which Offer Shares are being

sold in the Offering will be between €13.25 and €16.25 per Share. This price range has been determined based on negotiations between the Company, the Selling Shareholder and the Underwriters, and no independent experts have been consulted in determining this price range. The Offering Price of the Shares offered in the Offering will be determined based on negotiations between the Company, the Selling Shareholder and the Underwriters, upon the finalisation of the book- building period (expected to occur on or about 7 May 2014) and will be announced through the publication of a relevant fact (“hecho relevante”).

Total number of Shares offered in the

Offering . . . . . . . . . . . . . . . . . . . . . . . . Between 67,692,308 and 83,018,868 Offer Shares (excluding the

Over-allotment Shares).

Share capital Immediately after the issue of the New Offer Shares, the Company’s

issued share capital will consist of 129,666,083 Shares, if the Offering Price is €14.75, being the mid-point of the Offering Price Range. If the Offering Price is at the high point of the Offering Price Range, the Company’s issued share capital will consist of 127,788,638 Shares and if the Offering Price is at the low point of the Offering Price Range, the Company’s issued share capital will consist of 131,968,609 Shares.

Over-allotment Option . . . . . . . . . . . . . . The Over-allotment Shareholders will grant an option to the

Underwriters, exercisable within 30 calendar days from the date on which the Shares commence trading on the Spanish Stock Exchanges, to purchase additional Over-allotment Shares representing up to 10 per cent. of the total number of Shares offered by the Company and the Selling Shareholder in the Offering to cover over-allotments, if any, and short positions resulting from stabilisation transactions. The Company will not receive any of the proceeds from the sale of the Existing Offer Shares in the Offering or the Over-allotment Shares by the Over-allotment Shareholders in the Offering.

Listings and quotation . . . . . . . . . . . . . . . Application will be made to list the Shares on the Spanish Stock

Exchanges and to have them quoted on the AQS. It is expected that the Shares will be admitted to listing on the Spanish Stock Exchanges on or about 9 May 2014 under the symbol “APPS”. If the Shares are not listed on the Spanish Stock Exchanges and quoted on the AQS before 23 May 2014, the Offering will terminate, the Shares will be returned to the Company and the Selling Shareholders and the purchase price will be returned to the purchasers, together with accrued interest. See “Plan of Distribution”.

Directed Offering Concurrently with the Offering, pursuant to the Directed Offering, the

Chief Executive Officer and Chief Financial Officer of the Company will purchase in aggregate between 356,923 and 437,736 Shares at the Offering Price for total consideration of €5.8 million. The total number of Shares sold in the Directed Offering will depend on the Offering Price.

Dividends Assuming that there are sufficient distributable reserves available at

the time, the Company intends to target a dividend of approximately

20 per cent. of the Group’s adjusted net income. Following Admission, the Company currently intends to pay its first dividend in 2015 after the publication of its financial results for the year ended 31 December 2014. The Company will disclose its adjusted net income through a relevant fact announcement (“hecho relevante”) which will be available on its corporate website (xxx.xxxxxx.xxx) and on the CNMV’s website (xxx.xxxx.xx) simultaneously with the publication of its annual financial results.

The amount of future dividends that the Company decides to pay, if any, will depend upon a number of factors, including, but not limited to, the Group’s earnings, financial condition, debt service obligations, cash requirements (including capital expenditure and investment plans), prospects, market conditions and such other factors as may be deemed relevant at the time. The amount of dividends will be proposed by the Company’s Board of Directors and determined by its shareholders at general shareholders’ meetings.

The Offer Shares offered hereby will be eligible for any dividends paid or declared after the Offering.

Upon Admission, and due to measures taken in 2013 and 2014 (including a capital reduction) and the capital increase for issuance of the new Shares in the Offering, the Company’s equity structure will be sufficient to comply with the minimum thresholds set out in the Spanish Companies Act to permit dividend distribution.

No dividends have been declared or paid by the Company in the three years ended 31 December 2011, 2012 and 2013.

Any dividends paid in the future will be subject to tax under Spanish law. See “Taxation – Spanish Tax Considerations”.

There are no contractual restrictions on the distribution of the dividends by the Company under the New Facilities Agreement or any other financing arrangement in place upon Admission.

Voting rights . . . . . . . . . . . . . . . . . . . . . . Each Share entitles the holder to one vote. See “Description of

Capital Stock — Shareholders’ Meetings and Voting Rights”.

Total net proceeds of the Offering and

use of proceeds . . . . . . . . . . . . . . . . . . The Company is offering New Offer Shares and the Selling

Shareholder is offering Existing Offer Shares in the Offering.

The Company expects to raise gross proceeds of €300 million from the Offering. The underwriting commissions, fees and expenses which will be payable by the Company in connection with the Offering are expected to be approximately €36.2 million. The Company intends to pay this out of the gross proceeds of the Offering. Accordingly, the Company expects to raise net proceeds of

€263.8 million from the Offering.

The Company intends to use the net proceeds of the Offering, together with €700 million under the New Term Loan Facility,

€35 million under the New Revolving Facility and the Group’s existing cash:

Š to repay the existing Syndicated Loan Facilities in full in the amount of €1,047 million; and

Š to make an aggregate cash payment of approximately

€20 million to certain key employees of the Group under a management incentive plan.

Pursuant to the Offering, the Selling Shareholder expects to raise gross proceeds of €800 million (assuming no exercise of Over- allotment Option). The Selling Shareholder will bear any commissions payable in respect of the Existing Offer Shares.

In addition, the Selling Shareholders expect to raise gross proceeds of

€5.8 million in the Directed Offering. For further details see, “Management and Board of Directors – Shareholdings of Directors and Senior Management – Agreements to Acquire Shares”.

RISK FACTORS

You should carefully consider the following risk factors and the other information contained in this document before making an investment decision. The risks described below are not the only ones that the Group faces. Additional risks not presently known to the Group or that the Group currently believes to be immaterial may also materially adversely affect the Group’s business, financial condition, results of operations and prospects. The trading price of the Shares could decline due to any of these risks and, as a result, you may lose part or all of your investment. This document also contains forward-looking statements that are based on estimates and assumptions about future events and, as such, are subject to risks and uncertainties. Actual results could differ materially from those anticipated in such forward-looking statements, whether as a result of the risks described below and elsewhere in this document or otherwise.

IMPORTANT NOTICE

The Company wishes to highlight to the investors of the Shares in the Offering and to any future shareholders of the Company the following matters:

 the Group has incurred consolidated net losses attributable to the parent amounting to €(91,002) thousand, €(69,157) thousand and €(170,079) thousand for the years ended 31 December 2011, 2012 and 2013, respectively. These losses were partly driven by the non-cash borrowings costs relating to the capitalisation of interests under the Participating Loan and, in addition in 2013, by certain extraordinary impairments of goodwill and other intangible assets. As a result of a failure to achieve sufficient operating profits to offset the referred borrowing costs and impairments of goodwill and other intangible assets, the Group may continue incurring losses in the future;

 the audited consolidated balance sheet of the Group for the year ended 31 December 2013 includes goodwill amounting to €487,882 thousand and other intangible assets, principally associated with administrative concessions and authorisations related to its statutory vehicle inspection business, amounting to €632,695 thousand (including an associated deferred tax liability of €166,465 thousand), that jointly amount to €1,120,577 thousand, representing 55.4 per cent. of the Group’s total assets. Future impairment losses arising from the valuation of such intangible asset accounts could impact the Group’s audited consolidated income statement; and

 the Company estimates that the current value of the undertakings of the Group in relation to the incentive plans of senior management (including the Chief Executive Officer of the Group) and other employees of the Group (calculated, with respect to those management incentive plans dependent on the Offering Price, on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range) would amount to €74,924 thousand, of which €33,195 thousand are payable in cash (including €24,746 thousand payable in year 2014) and the remaining €41,729 thousand are payable in Shares from 2015 through 2017. See “Risks Factors – Risks Specific to the Group - Payments and awards under the Group’s management incentive plans may impact its financial condition” for further information.

Risks Related to the Group’s Business

The Group has experienced fluctuations in its profitability and incurred significant net consolidated losses.

Historically the Group has experienced fluctuations in its profitability and has incurred consolidated net losses. The Group has incurred consolidated net losses attributable to the parent amounting to €(91,002) thousand,

€(69,157) thousand and €(170,079) thousand for the years ended 31 December 2011, 2012 and 2013, respectively. There can be no assurance that the Group will not experience fluctuations in its profitability and incur significant operating losses in future.

The Group’s goodwill and other intangible assets may be subject to further impairments in the future.

The Group recognises significant goodwill and other intangible assets arising principally from the acquisition of the Group by funds advised by Xxxxxxx and other investors in 2007, in addition to subsequent acquisitions undertaken by the Group. See “Operating and Financial Review — Impact of Acquisitions”. As at 31 December 2013, the Group carried goodwill of €487,882 thousand and other intangible assets of €632,695 thousand

(including an associated deferred tax liability of €166,465 thousand), of which €444,210 thousand and

€550,245 thousand (including an associated deferred tax liability of €153,709 thousand), respectively, was recognised upon the acquisition of the Group by funds advised by Xxxxxxx and other investors in 2007.

Impairments reflect changes in the value of each asset as a consequence of changes in the expected performance of such asset, which can be driven by a number of factors affecting the operations, as well as other market considerations. The Group performs impairment tests, and therefore, records impairments on an annual basis at the end of the financial year, or if there is an event or change that suggests that the carrying amount may not be recorded. In the years ended 31 December 2011, 2012 and 2013, the Group recognised impairment losses and losses on disposals of €22,744 thousand, €19,932 thousand and €117,571 thousand, respectively. Of the impairment recognised in the year ended 31 December 2013, €16,744 thousand was attributable to Applus+ RTD’s operations in Europe, €60,897 thousand to Applus+ Automotive’s operations in Finland,

€23,105 thousand to Applus+ Automotive’s operations in the United States, €11,370 thousand to Applus+ Norcontrol’s operations in Spain and €7,051 thousand to Applus+ Automotive’s operations in Spain. In the years ended 31 December 2011 and 2012 impairments of €18,000 thousand and €18,101 thousand, respectively were attributable to Applus+ RTD’s operations in Europe. For a further discussion, see “Operating and Financial Review — Results of Operations for the year ended 31 December 2012 compared to the year ended 31 December 2013 ended — Consolidated balance sheet — Goodwill.”

Payments and awards under the Group’s management incentive plans may impact its financial condition

The Group has established a number of management incentive plans, including two cash incentive agreements, a cash and share based management incentive plan, a multi-annual bonus agreement and a new long-term incentive plan. Certain of these management incentive plans were entered into prior to the date of this document and the remainder will be implemented upon or after Admission. Certain of the awards under the management incentives plans or agreements are dependent on the Offering Price or on the financial results of the Group or one of its divisions. All of the senior managers of the Group will participate in, at least, one of these incentive plans and agreements.

In particular, pursuant to a cash and share based management incentive plan to be implemented upon Admission, ten senior managers of the Group will receive: (i) an aggregate gross cash payment before tax on or about the date of Admission of approximately €20,000 thousand (in particular, Mr. Xxxxxxxx Xxxxxx Xxxxxx is expected to receive an aggregate gross cash payment before withholding taxes of approximately €9,950 thousand); and (ii) an aggregate estimated number of non-transferrable restricted stock units of the Company (“RSUs”) of between 2,192,649 and 3,168,454 (which will be exchangeable upon vesting into an equal number of Shares). Although the exchange for Shares of the RSUs awarded under this management incentive plan will not occur on Admission, the aggregate estimated number of RSUs awarded thereunder would have an aggregate equivalent value in cash on Admission of approximately €39,137,457 (calculated on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range). In particular, the aggregate estimated number of RSUs awarded to Mr. Xxxxxxxx Xxxxxx Xxxxxx under this management incentive plan would have an aggregate equivalent value in cash on Admission of approximately €17,924,396 (calculated on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range). It should be noted that these aggregate equivalent values in cash are a mere estimate and that this management incentive plan does not contemplate a minimum guaranteed value for the Shares which may be exchanged thereunder at vesting of the RSUs. RSUs will vest over a three-year period from Admission in three equal annual instalments subject to customary vesting conditions being met. RSUs will be exchangeable for Shares upon vesting at market value, with no minimum guaranteed rate of exchange. The value of this share based management incentive plan is dependent on the final Offering Price and the number of RSUs is estimated on the assumption that the Offering Price will be within the Offering Price Range. On that assumption, the aggregate number of RSUs awarded under this incentive plan would represent, if exchanged for Shares on Admission, between 1.66 per cent. and 2.48 per cent. of the capital stock of the Company on such date (in particular, the aggregate RSUs awarded to Mr. Xxxxxxxx Xxxxxx Xxxxxx under this incentive plan would represent, if exchanged for Shares on Admission, between 0.77 per cent. and

1.18 per cent. of the capital stock of the Company).

The aggregate equivalent value in cash of all the referred management incentive plans from Admission through to 31 December 2017 amounts to €74,924,130 (calculated, with respect to those management incentive plans dependent on the Offering Price, on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range). It should be noted that this aggregate equivalent value in cash is a mere estimate and that these management incentive plans do not contemplate a minimum guaranteed value for the Shares which may be exchanged thereunder at vesting of the RSUs.

The table below sets out the details of (i) the total estimated maximum aggregate gross amounts to be paid in cash by the Group; and (ii) the total estimated aggregate equivalent value in cash of the RSUs which may be awarded during 2014, 2015, 2016 and 2017 in connection with the Group’s management incentive plans (assuming the Offering Price is at the mid-point of the Offering Price Range). RSU awards after 2017 will continue subject to the terms and conditions of the Group’s long-term incentive plan to be implemented after Admission.

2014	2015		2016		2017		TOTAL
Aggregate incentives payable to senior management in cash €20,367,953		€3,132,267		-		€2,107,000		€25,607,220
Aggregate incentives payable to other employees in
cash €4,377,686		€2,536,337		€283,430		€390,000		€7,587,453
SUBTOTAL €24,745,639		€5,668,604		€283,430		€2,497,000		€33,194,673
Aggregate value of RSUs issued to senior management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -		€13,045,819		€13,459,819		€13,873,819		€40,379,457
Aggregate value of RSUs issued to other
employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -				€450,000		€900,000		€1,350,000
SUBTOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - €13,045,819				€13,909,819		€14,773,819		€41,729,457
TOTAL cash payments and RSU awards . . . . . . . . €24,745,639 €18,714,423				€14,193,249		€17,270,819		€74,924,130

The Group has recognised and will, in the future, recognise the impact of such management incentive plans in its consolidated financial statements and as a result they may have a material effect on the Group’s financial condition.

See “Management and Board of Directors – Management incentive plans” for further information on the Group’s management incentive plans.

Liberalisation of statutory vehicle inspections markets could result in increased competition.

The Group’s Statutory Vehicle Inspections division accounted for 17.3 per cent. of the Group’s consolidated revenue and 37.6 per cent. of the Group’s operating profit before depreciation, amortisation and others for the year ended 31 December 2013. As at the date of this document, approximately 80 per cent. (by revenue) of the Group’s statutory vehicle inspections services operate as concessions or authorisations under which a limited number of operators are authorised by the relevant local government agency to provide vehicle inspection services within a particular region or jurisdiction. The average weighted remaining term of these concessions or authorisations is approximately nine years, as at the date of this document. Markets in which the Group operates under a concession or authorisation typically have lower levels of competition as compared to liberalised markets. The financial performance of Applus+ Automotive is also driven by other factors, in addition to competition, such as the efficiency of the division’s operations, legislative changes, which impact the level and frequency of testing and certification required, and the age of vehicle fleets in the relevant regions as older cars require more frequent testing.

Spain is one of the Group’s most important statutory vehicle inspections markets, accounting for 33.9 per cent. of the Applus+ Automotive division’s revenue in the year ended 31 December 2013. In certain Spanish regions in which the Group operates, current, proposed or future reforms of the statutory vehicle inspections regimes may remove or limit restrictions on the number of operators that are authorised to conduct vehicle inspections, which may increase the number of operators that are authorised to provide vehicle inspection services.

In Catalonia, which represented 18.5 per cent. of Applus+ Automotive’s revenue (3.2 per cent. of the Group’s revenue) in the year ended 31 December 2013, the existing vehicle inspections regime limits the provision of vehicle inspections to a defined number of operators. This regime (which includes certain provisions of Catalan Decrees 30/2010, of 2 March and 45/2010, of 30 March), as well as certain administrative resolutions granting vehicle inspection authorisations to members of the Group, among other service providers, have been challenged through of several appeals before the Catalan High Court of Justice (“Tribunal Superior de Justicia de Cataluña”), (“CHCJ”) on the basis that the regime is contrary to the EU Services Directive. In rulings dated 25 April 2012, 13 July 2012, 13 September 2012 and 21 March 2013, respectively, the CHCJ ruled at first instance that the authorisation regime operated in Catalonia and, therefore, the authorisations granted thereunder,

were contrary to the EU Services Directive. These rulings are currently subject to appeal to the Spanish Supreme Court. On 20 March 2014, the Spanish Supreme Court formally requested a preliminary ruling (“cuestión prejudicial”) from the European Court of Justice on the application of the EU Services Directive to vehicle inspections services under European Union law. The Group anticipates that a final ruling from the Spanish Supreme Court in relation to this matter will therefore be delayed further. In any event, until a final ruling from the Spanish Supreme Court is handed down, given that the ruling of the CHCJ is not final, no changes to the current Catalan vehicle inspection regime will be implemented as a result. If, pursuant to the European Court of Justice preliminary ruling, the Spanish Supreme Court declares the regime operated in Catalonia unlawful on the basis of the applicable EU regulation, the considerations made under the CHCJ ruling would be sustained. In such event, the Group believes that it would still be entitled to continue operating its statutory vehicle inspection business in Catalonia but under a different administrative authorisation regime (“título habilitante”) and, as a result of any such ruling, it is likely that number of operators authorised to provide vehicle inspection services in Catalonia would increase. The Group had taken into account the Catalan litigation when considering the cashflow projections used in the impairment tests performed for the year ended 31 December 2013 and no impairment related to this issue had been recorded, taking into account, among other things, the anticipated legislative developments in connection with the New Roadworthiness Directive and favourable statements made by the European Commission’s Directorate for Internal Markets and Services. These statements are, however, not binding on the Directorate.

The Group’s vehicle inspection operations in the Canary Islands represented 5.0 per cent. of Applus+ Automotive’s revenue (0.9 per cent. of the Group’s revenue) in the year ended 31 December 2013. Historically, the regional government of the Canary Islands had limited the number of operators authorised to operate a vehicle testing network. However, in May 2007 (prior to the end of the Group’s current concession), the regional government of the Canary Islands passed a liberalisation decree pursuant to which several new operators were authorised to conduct vehicle inspections in the Canary Islands from year 2010 onwards. This liberalisation decree has had a negative impact on the Group’s market share in that territory. The Group, along with other operators and certain industry associations, challenged the decision of the regional government of the Canary Islands to award additional contracts before the Spanish Supreme Court. As of the date of this document, the Group’s claim is still under consideration by the Spanish Supreme Court. The decision of the regional government of the Canary Islands to award additional vehicle inspection contracts was also challenged by the industry association Asociación Española de Entidades Colaboradoras de la Administración en la Inspección Técnica de Vehículos (AECA-ITV) and General de Servicios ITV, S.A, another provider of vehicle inspection services in Spain. On 11 February 2014, the Spanish Supreme Court rejected the challenges brought by both of these entities and upheld the actions taken by the Canary Islands government.

Any adverse decision in any of the proceedings above or further liberalisation of the vehicle inspections markets in Spain or in any other jurisdiction which is currently regulated and in which the Group operates could increase competition within the relevant vehicle inspection markets which may have a negative impact on sales volumes or the price of vehicle inspections or other services provided by the Group. For example, in Denmark and Finland, two liberalised markets in which the Group operates, the Group has experienced higher levels of competition and, as a consequence, a decrease in market share and in sales, which have affected the margin of the Group. The Group recognised an impairment of the goodwill and other intangible assets of its vehicle inspection business in Finland in 2013 as a result. An increase in the liberalisation of vehicle inspection regimes may render the extension of existing concessions or the entry into new arrangements less commercially attractive, which may have a negative impact on the growth of the Applus+ Automotive division and have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Furthermore, under Spanish law, providers of public services, such as statutory vehicle inspections, are restricted from carrying on a broad range of other commercial activities (which include, among others, being engaged in land transportation activities, in the sale of motor vehicles or in the provision of vehicle insurance services). As such the number of entities willing or able to provide such public services is limited. A current draft royal decree on statutory vehicle inspections stations issued by the Spanish central government proposes to remove such restrictions with respect to entities conducting statutory vehicle inspections, which would, were it to come into force, allow a broader range of operators to conduct statutory vehicle inspections in liberalised regions or allow them to participate in future tenders, thus potentially increasing the competition faced by the Group. There is currently no certainty as to when this royal decree will be passed, if at all, or, if enacted, as to its final terms and conditions.

The Group holds significant tax assets which it may not be able to use, and is subject to tax legislation, the substance and interpretation of which may change.

In the year ended 31 December 2013, the Group had substantial tax assets and other fiscal assets not recognised on its balance sheet amounting to €101,727 thousand. Such assets may, in future, reduce the Group’s corporate income tax burden, and comprised €60,478 thousand of tax loss carryforwards, deferred tax assets of

€30,478 thousand and tax credits of €10,771 thousand. Furthermore, the Group has €65,315 thousand potential tax assets which have not been recognised on the Group’s balance sheet. Such items were largely generated, in or are deductible in, Spain. These tax assets were generated principally during the years 2009 to 2013.

Pursuant to Spanish tax regulations, net operating losses, and deferred tax assets expire 18 years after the year in which the relevant loss or asset is incurred and tax credits expire, ten years after the year in which the relevant credit is incurred. If the Group is unable to use these losses in the future, whether as a result of changes to legislation in relation to carrying losses forward, or as a result of a failure to achieve sufficient profits which could be offset by such losses, or otherwise, the Group may be forced to write down its deferred tax assets and may be subject to higher taxation charges, which may have an adverse effect on the Group’s future cash flows.

In 2013, certain tax assets recognised in previous years amounting to €54,791 thousand were written-off.

The Group has operations in various countries that have differing tax laws and rates. The Group relies upon generally accepted interpretations of tax laws and regulations in the countries in which it operates. The Group cannot be certain that these interpretations are accurate or that the responsible taxing authority is in agreement with its views. Where a responsible taxing authority interprets tax laws and regulations differently from the Group, or disagrees with the views taken by it, the ultimate tax outcome may differ significantly from the amounts recorded in the Group’s consolidated financial statements and adversely affect the results of operations in the period(s) for which such determination is made. Moreover, any change in the tax status of any member of the Group or in taxation legislation or its interpretation could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group’s business is exposed to exchange rate fluctuations. Such fluctuations, to the extent they are unhedged, may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group generates a significant proportion of its revenue in currencies other than its reporting currency, the euro. As a result, the Group faces exchange rate risks due to exchange rate translation losses. A significant negative change in exchange rates could result in a significant translation impact, which could have a material adverse effect on its results of operations. For example, as a result of the favourable fluctuations in exchange rates, the revenue of the Group increased by 1.6 per cent. for the year ended 31 December 2012 compared to the year ended 31 December 2011. However, in the year ended 31 December 2013, revenue was reduced by unfavourable fluctuations in exchange rates by 2.4 per cent. compared to the revenue in the previous year. In addition, economic or fiscal crises in emerging economies may result in the depreciation of the local currency in relation to the euro and/or to restrictions such as exchange controls. In the year ended 31 December 2013, Group revenue split by currency was: 38.8 per cent. in euros; 27 per cent. in US Dollars, or currencies pegged to the US Dollar; 5 per cent. in Canadian Dollars; 5.4 per cent. in Australian Dollars; 4.9 per cent. in Pound Sterling; and 18.9 per cent. in other currencies. In the same period, 75 per cent. of the Group’s liabilities were denominated in euro, 18.9 per cent. in US Dollars, 2 per cent. in Pound Sterling and 3 per cent. in other currencies. The Group does not enter into, and has not in the current financial year or the three years ended 31 December 2013 entered into, foreign currency hedging arrangements. Both the revenue and costs of the Group’s subsidiaries are largely incurred in their respective operating currencies and as a result the transaction- related exchange exposure of the Group is mitigated to a certain extent.

The Group’s businesses may be adversely affected by virtue of having major clients in certain markets.

The Group has a highly diversified client base of over 48,000 active clients with the Group’s top 20 clients by revenue in 2013 accounting for only 25 per cent. of revenue, while the top 3 clients by revenue in 2013 accounted for only 10.6 per cent. of the Group’s revenue. However, within certain of the Group’s divisions a significant portion of the revenue generated by that division is attributable to a limited number of major clients. For example, in 2013, the largest client of Applus+ Xxxxxx represented 21.0 per cent. of this division’s revenue (5.8 per cent. of the Group’s revenue). The loss of one or more of these major clients could have a significant adverse effect on the division’s business and therefore the Group’s business, financial condition, results of operations and prospects.

The Group’s leverage and ability to service its debt may adversely affect its business, financial condition, results of operation and prospects.

The Group’s indebtedness as at 28 February 2014 was €1,084,345 thousand. On 7 April 2014, the Company entered into a €850 million multicurrency facilities agreement (the “New Facilities Agreement”), comprised of a

€700 million multicurrency term loan facility (the “New Term Loan Facility”), which shall be applied to repay the existing Syndicated Loan Facilities and the €150 million multicurrency revolving facility agreement (the “New Revolving Facility” and, together with the New Term Loan Facility, the “New Facilities”). The New Facilities are conditional on Admission. Therefore, upon Admission, the Group’s total indebtedness and the average cost of its debts will be reduced as a result of the repayment of the Syndicated Loan Facilities, the drawdown on the New Facilities and the receipt of proceeds from capital increase undertaken in connection with the Offering (see “Capitalisation and Indebtedness”).

The New Facilities Agreement imposes certain restrictions and covenants on the Group, and sets out specific events of default which could lead to early termination, including the following:

Š A negative pledge, which prohibits any guarantor or borrower under the agreement from granting or entering into a financial arrangement primarily to raise additional finance.

Š Restriction of the ability of the Company and certain other members of the Group to make acquisitions of companies, any shares or securities, or any businesses or undertakings (or, in each case, any interest in any businesses or undertakings) which would constitute a class 1 transaction (as defined in The Listing Rules published by the UK Listing Authority), unless a waiver from the majority lenders is obtained.

Š A financial covenant to maintain the ratio of consolidated total net debt to consolidated earnings before interest, depreciation and amortisation at or below a specified level of 4.50:1 from the first test date of 31 December 2014 until 31 December 2015 (when the specified maximum level for the ratio will be reduced to 4.00:1). Such financial covenant is to be first tested on 31 December 2014 and semi-annually thereafter on a rolling 12 month basis. For illustrative purposes only, as at 28 February 2014, the ratio of the Group’s consolidated total net debt to consolidated earnings before interest, depreciation and amortisation was 3.33 per cent.

The New Facilities Agreement also contains a change of control provision, which would require the repayment in full or part of the New Facilities, if triggered, among other things, by any group or persons acting in concert gaining control of the Company.

The New Facilities Agreement is to be initially secured by share pledges over the shares in 22 subsidiaries of the Company, which include of certain holding companies and material subsidiaries, which each represent more than

5.0 per cent. of the EBITDA, or net assets of the Group, including: Applus Servicios Tecnológicos, S.L.U.; IDIADA Automotive Technology, S.A. (the subholding of Applus+ IDIADA); Arctosa Holding B.V. (the subholding of Applus+ RTD); Applus Norcontrol, S.L.U. (the subholding of Applus+ Norcontrol); LGAI Technological Center, S.A. (the subholding of Applus+ Laboratories); Applus Iteuve Technology, S.L.U. (the subholding of Applus+ Automotive); and Azul Holding 2, S.à r.l. (Lux) (the subholding of Applus+ Velosi). These 22 subsidiaries represent approximately, in aggregate, 60.7 per cent. of the EBITDA and 60.3 per cent. of net assets of the Group as of the date of this document.

The New Facilities Agreement contains certain covenants customary for a listed entity (including a negative pledge (which prohibits any guarantor or borrower under the agreement from granting or permitting to exist security over its assets or entering into a financial arrangements similar to security primarily to raise additional funds) and a restriction on any guarantors under the agreement merging unless permitted under the agreement but without any specific restrictions on dividends or debt incurrence). The New Facilities Agreement does not restrict the ability of the Company and other members of the Group to make acquisitions of companies, any shares or securities, or any businesses or undertakings (or, in each case, any interest in any businesses or undertakings) unless, in respect of the Company and certain other members of the Group the acquisition would constitute a class 1 transaction (as defined in The Listing Rules published by the UK Listing Authority). A ‘class 1’ transaction under the Listing Rules published by the UK Listing Authority is, in summary, (subject to certain specific situations) a major transaction outside the ordinary course of business the size of which results in a 25 per cent. threshold being reached under any one of the class tests. The class tests comprise an assets test (gross assets the subject of the transaction divided by the gross assets of the company), a profits test (profits attributable

to the assets the subject of the transaction divided by the profits of the company), a consideration test (the consideration divided by the aggregate market value of all the ordinary shares of the company) and x xxxxx capital test (gross capital of the company or business being acquired divided by the gross capital of the company). The Company may seek a waiver of this restriction providing it has the consent of the majority of lenders under the New Facilities.

The failure of the Group to comply with such restrictions or covenants would result in an event of default which, if not resolved or waived, may result in, amongst other things, the acceleration of all or part of the outstanding loans and/or the termination of the commitments and/or the declaration of all or part of the loans payable on demand and/or the instruction or direction of the security agent to exercise its rights under the New Facilities Agreement which would have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

32,798,130 shares of the Company owned by Azul Holding, S.C.A. (Lux), representing thirty per cent of the Company’s share capital, are currently pledged in favour of the lenders under the existing Syndicated Loan Facilities (the “Share Pledge”). The remaining shares of the Company (including all Shares owned by Azul Finance, S.à r.l. (Lux) and 9,052,284 Shares owned by Azul Holding, S.C.A. (Lux)) are free from liens or encumbrances. The lenders under the existing Syndicated Loan Facilities do not have any voting or economic rights over the Shares by virtue of the Share Pledge. On Settlement Date, and upon repayment in full of the Syndicated Loan Facilities, the Share Pledge will be cancelled and released.

A number of the Group’s key agreements are limited in duration and the Group may not be able to renew such agreements.

The Group entered into a services and lease agreement with the Catalan government in 1999 in respect of the proving ground near Barcelona operated by its Automotive Engineering and Testing division (Applus+ IDIADA). In the year ended 31 December 2013, 19 per cent. of Applus+ IDIADA’s revenue (1.6 per cent. of the Group’s revenue) was generated from the proving ground. If the Group were to lose the right to operate the proving ground, it is unlikely that it would be able to find a suitable replacement. Under the terms of the services and use assignment agreement, the Group has the exclusive right to operate the proving ground until 2019. In 2010, the Catalan government expressly committed to take the necessary regulatory measures to extend the services and use assignment agreement for an additional five year period (until 2024). Although in 2010, the Catalan government expressly committed to take the necessary measures to extend the agreement for an additional five year period from 2019 upon completion of the initial term, there can be no assurance that the term of the agreement will be extended to 2024 or beyond. Were this agreement not to be extended, the Group would lose the investments that it has made in the proving ground and its ancillary facilities on the site, including adjacent laboratories. In addition, the Group would lose the revenue generated from the proving ground, and the facilities located there, and could also lose the laboratories located adjacent to the proving ground since these facilities also belong to the government of Catalonia. In addition, the Group would lose the revenue generated by Applus+ IDIADA, since it is unlikely that the Group would be able to find a suitable replacement. This would materially and adversely affect the Automotive Engineering and Testing division.

In addition, 80 per cent. (by revenue in the year ended 31 December 2013) of the Group’s statutory vehicle inspections services operate pursuant to concessions or authorisations which regulate and restrict the number of competing operators with an average weighted remaining term of approximately nine years. Eight concession agreements (two of which are currently subject to ongoing tenders for new concessions), which represented

8 per cent. of Applus+ Automotive’s revenue (1.4 per cent. of the Group’s revenue) in the year ended 31 December 2013 are due to expire in the three years ended 31 December 2016. In the year ended 31 December 2013, Applus+ Automotive recorded an impairment of €23,105 thousand due to the uncertainty as to the Group’s ability to renew existing concession agreements in the United States.

Applus+ Laboratories operates seven of its twelve laboratories under a contractual agreement with the government of Catalonia. The Group will, upon expiry of the contract in 2033, be required to apply to the relevant agency to renew or extend the term of this contract. Although the contract currently provides the possibility to extend it up to 2053, there can be no assurance that the Group will be able to achieve a renewal or extension on commercially acceptable terms or at all. See “ — The Group operates in competitive markets and its failure to compete effectively could result in reduced profitability and loss of market share”.

If the Group is unable to renew or extend the terms of its agreements and/or concessions or purchase the assets in order to continue operating the business, this could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Any failure to obtain and maintain certain authorisations could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

A significant part of the Group’s business requires obtaining and maintaining industry accreditations, approvals, permits, delegated authority, official recognition and authorisations (together, “Authorisations”) at local, regional or global levels, which are issued by public authorities or professional organisations following processes which are often complex and time consuming. Certain Authorisations are granted for limited periods of time and are subject to periodic renewal by the authority concerned.

Although the Group monitors closely the quality of services performed under applicable Authorisations, as well as their renewal and the maintenance of its Authorisations, any failure to meet its professional responsibilities, or real or perceived conflicts of interest, could lead the Group losing, either temporarily or on a permanent basis, one or more of its Authorisations. In addition, a public authority or professional organisation which has granted one or more Authorisations to the Group could decide unilaterally to withdraw such Authorisations.

The non-renewal, suspension or loss of certain of these Authorisations, or of membership of certain professional organisations, could result in the Group being unable to meet its contractual obligations and/or disqualify it working on existing contracts. This could materially harm the Group’s reputation among clients, which may make it significantly more difficult for the Group to retain existing or win new clients in the future, which, in turn, could have a significant adverse effect on the Group’s business, financial condition, results of operations and prospects.

Aside from the concession to operate statutory roadworthiness inspection services for the so-called Batch III in the Basque Country, which represented less than 0.5 per cent. of the Group’s revenue in the year ended 31 December 2013, during the period covered by the historical financial information, no material Authorisation has been lost, withdrawn or suspended.

The Group provides services pursuant to contracts entered into with governmental authorities and such authorities may reduce or refuse to increase the price paid for the Group’s services.

The Group provides TIC services under concession or other agreements entered into with national, regional and local governmental authorities in a number of countries. Government authorities may, under the terms of a concession agreement or relevant legislation, prescribe the maximum prices payable by customers and clients in respect of certain services such as statutory vehicle inspection and infrastructure inspection services, which may particularly affect certain segments of the Group. For example, 80 per cent. of the revenue recorded by Applus+ Automotive in 2013 was attributable to vehicle inspection services provided pursuant to government concessions or authorisations in regulated markets. Applus+ Norcontrol also has a number of clients that are public institutions, and which accounted, in aggregate, for 7.5 per cent. of its revenue (representing less than one per cent. of the Group’s revenue) in the year ended 31 December 2013. Government authorities may also seek to reduce or may fail to increase the price payable by customers or clients for such services as a result of popular political pressure or otherwise. For example, on 28 March 2014 the regional government of Valencia passed a resolution, effective as of 1 April 2014, decreasing the tariffs payable by customers or clients for vehicle inspection services in the region. The Group currently estimates that this decrease in tariffs will reduce the Group’s operating profit before depreciation, amortisation and others by approximately €2,000 thousand per annum. In addition, as a result of the recent economic crisis, governmental authorities in a number of countries have reduced their expenditure or budgets. As a result of this, among other reasons, governmental counterparties may reduce or refuse to increase the price they are willing to pay for the Group’s services, regardless of whether or not this is prohibited under the relevant agreements. Such governmental authorities may also delay payment for the services provided. If the terms upon which the Group provides services to governmental authorities were to deteriorate or fail to improve over time this may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Changes to regulatory regimes could have a material adverse effect on the Group’s business.

A significant portion of the Group’s revenue is derived from the testing of assets, products and systems to determine if they comply with the requirements under applicable legislation, rules or standards. As such the Group’s business is impacted by extensive regulation, health, safety and environmental law in each of the countries and industries in which it operates. Changes in regulation, such as the regulations affecting the oil and gas and power sectors or other sectors in which the Group operates, may impact demand for mandatory TIC services or require the Group to undertake more costly and/or less profitable testing, inspection or

certification services. Any liberalisation of regulatory regimes could reduce the requirement for independent testing, inspection or certification. Similarly, an increase in self-certification by the Group’s customers would lead to a reduction in demand for the Group’s services. The Group also benefits from the broad range of differing standards that apply to testing, inspection and certification across different countries, regions or states as its customers are frequently required to comply with multiple applicable standards across jurisdictions, thereby increasing their regulatory compliance burden. If government or other authorities adopt uniform standards or agree to mutually recognise each other’s standards this may lead to a decline in demand for TIC services. In the statutory vehicle inspections market, material changes to regulatory regimes would likely have significant impacts. Such changes may include both the implementation of new or the modification of existing regulations and changes to the scope or frequency of inspections. Any such development or any modified or new government regulation applicable to the Group’s current or future services which materially increases the Group’s costs or reduces demand for the Group’s services, could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

There are many risks associated with conducting operations in international markets.

The Group has operations in more than 60 countries throughout the world. The Group generates a material proportion of its revenue from clients in emerging economies in Africa, Asia, Latin America and the Middle East and the Group’s growth strategy to a significant extent focuses on increasing its revenue in emerging economies. Changes in local economic or political conditions in foreign countries (for example, Argentina, a country which has in the past been affected by hyper-inflation and currency devaluations) could negatively impact the Group’s ability to conduct business.

There are risks inherent in the Group’s international business activities including difficulties in staffing and managing international operations, which may impact the Group’s ability to execute projects in a timely and/or cost-effective manner. See also “ — The Group is dependent on its ability to attract and retain sufficient experienced engineers, scientists and other skilled technical personnel to achieve its strategic objectives”. The Group may experience difficulties associated with conducting business in certain countries including the imposition by governments of trade barriers (such as tariffs, quotas, preferential bidding and import restrictions), acts of war, terrorism, theft or other xxxxxxx conduct from economic, social or political instability, international sanctions regimes, longer accounts receivable collection cycles, difficulties associated with enforcing agreements through foreign legal systems, arbitrary or inconsistent regulatory decisions, difficulties in protecting and enforcing intellectual property rights, transportation difficulties and delays resulting from inadequate local infrastructure. A number of countries in which the Group currently operates, for example Iraq and Nigeria, present security problems to which the Group’s operations are exposed. For instance, the Group’s operations in Iraq cannot be carried out without the provision of private security details due to the threat of violence. In some countries, the Group is required under applicable laws to conduct its activities in association with local partners. Although the Group conducts due diligence in selecting its local partners, the business and reputation of the Group may be adversely affected by the activities that such local partners may carry out separately. In addition, economic or fiscal crises in emerging economies may result in the depreciation of the local currency in relation to the euro and/or to restrictions such as foreign exchange controls. The Group’s business and growth prospects are vulnerable to economic and political developments in these regions and the occurrence of any of the aforementioned events could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Adverse claims or publicity may adversely affect the Group’s reputation, business, financial condition, results of operations and prospects.

The Group is exposed to liabilities arising out of the services that it provides. A significant proportion of the Group’s clients operate in the industrial, energy, construction, and aerospace sectors, which can give rise to serious and potentially catastrophic environmental or technological incidents. The Group’s clients use the results of the Group’s testing and inspections in their assessment of their assets, facilities, plants and other structures. Such results may be incorrect or incomplete, whether as a result of poorly designed inspections, malfunctioning testing equipment or the failure of the Group’s employees to adequately test or properly record data. Further, if an accident or incident involving an asset or structure that the Group is testing or has tested occurs and causes personal injuries to the Group’s personnel or third parties or property damage, and particularly if these injuries or damage could have been prevented by the Group’s clients had the Group provided them with correct or complete results, the Group may suffer damage to its reputation and as a result lose existing or future contracts with clients. In addition, any investigation into or claim related to such an incident could take a significant period of time to conclude. Even if the Group’s services are carried out competently, the Group may face claims simply because the Group tested the structure or facility in question.

There have been no material claims against the Group in relation to any accidents, disasters or litigation giving rise to substantial media coverage in the three years ended 31 December 2013. However, although the Group closely monitors the quality of its services, there can be no assurance that it will be able to protect itself against claims or damage to its reputation resulting from an accident, disaster or litigation giving rise to substantial media coverage, particularly if such publicity suggests substantial failures, real or alleged, by the Group in discharging its responsibilities. Serious damage to the Group’s reputation could result in the Group losing existing and future contracts or make it more difficult for the Group to compete effectively, which would have a negative impact on the Group’s financial performance.

Any of the events above could significantly damage the Group’s reputation or otherwise have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group seeks to expand its business partly through acquisitions, which, by their nature, involve numerous risks.

The Group’s growth strategy is based partly on the acquisition of small-and medium-sized businesses to provide access to new end-markets and/or services or to create synergies with the Group’s existing businesses. The Group may not be able to identify appropriate targets, acquire companies on commercially satisfactory terms or achieve the anticipated benefits in terms of revenue growth and synergies. In addition, although the Group’s current strategy is to finance acquisitions through cash, it may also seek to fund acquisitions through debt finance. The Group may not be able to obtain such debt financing on favourable terms which may increase financing costs. Furthermore, the New Facilities Agreement contains a covenant that restricts the Company and certain other members of the Group from making acquisitions (see “Operating and Financial Review – Liquidity and Capital Resources – Indebtedness – Certain Indebtedness at Admission – The New Facilities”). The Group may also encounter competition for acquisition targets from its competitors or financial investors, which could make acquisitions more expensive or difficult to complete. In addition, the Group may acquire businesses on the basis of limited financial and other information, or may not otherwise identify potential liabilities during pre- acquisition due diligence, which may result in the Group assuming unexpected, unforeseen or unidentified liabilities and obligations. The Group may not be able to recover in full losses arising from such liabilities from the relevant seller. Moreover, the Group may acquire businesses in new sectors in which it lacks experience, which could make the integration process more difficult and/or result in the acquisition bringing fewer benefits than the Group than anticipated.

The New Facilities Agreement does not restrict the ability of the Company and other members of the Group to make acquisitions of companies, any shares or securities, or any businesses or undertakings (or, in each case, any interest in any businesses or undertakings), unless, in respect of the Company and certain other members of the Group, the acquisition would constitute a class 1 transaction (as defined in The Listing Rules published by the UK Listing Authority). A ‘class 1’ transaction under the Listing Rules published by the UK Listing Authority is, in summary, (subject to certain specific situations) a major transaction outside the ordinary course of business the size of which results in a 25 per cent. threshold being reached under any one of the class tests. The class tests comprise an assets test (gross assets the subject of the transaction divided by the gross assets of the company), a profits test (profits attributable to the assets the subject of the transaction divided by the profits of the company), a consideration test (the consideration divided by the aggregate market value of all the ordinary shares of the company) and x xxxxx capital test (gross capital of the company or business being acquired divided by the gross capital of the company). The Company may seek a waiver of this restriction providing it has the consent of the majority lenders under the New Facilities.

The Group cannot be certain that the anticipated cash flows, synergies and cost savings from these transactions will materialise or reach expected levels. Further, additional financing costs arising from these transactions could reduce the profitability of the Group. Inefficient integration of the newly acquired businesses poses a risk to the Group’s operations. Any failure to integrate the operations of the newly acquired companies could have a material adverse effect on its business, financial condition and results of operations and prospects.

If the Group is not successful in executing its acquisition strategy, it may not be able to meet its growth targets or maintain its market positions, which could have a material adverse effect on its business, financial condition, results of operations and prospects.

The loss of any of the Group’s key personnel could have a material adverse effect on the Group’s business.

The success of the Group’s businesses depends heavily on the contribution of its key personnel who possess industry-specific skills and knowledge of the Group’s businesses, as well as industry contacts, that are critical to the operation and performance of the Group. The Group may not be able to replace key personnel adequately or

at all and the departure of any key personnel could lead to a significant loss of know-how and knowledge of the Group and its businesses and may, in certain cases, enable the Group’s competitors and clients to obtain sensitive information about the Group’s services or strategy. For example, the loss, resignation or retirement of any of, among other senior managers, the CEO, CFO, vice-president or division heads could, despite the Group’s succession plans, have a potentially disruptive effect on the Group’s business and management. In particular, Dr. Xxxxx Abd Xxxxx, the founder and CEO of Applus+ Xxxxxx is expected to retire from a full time management role during 2014. Xx. Xxxxx is expected to continue to manage Applus+ Velosi until a successor has been appointed, and is currently expected to provide consultancy services to the division thereafter. The loss of key personnel could also have a negative impact on the Group’s relationships with key clients or on its ability to execute its growth strategy and result in the diversion of management attention and the incurrence of substantial costs. If the Group does not succeed in retaining key personnel, its business, financial condition, results of operations and prospects could be materially adversely affected.

The success of the Group’s business depends, in part, on its ability to develop new proprietary technical solutions, increase the functionality of its current offerings and maintain its reputation in the field of technology.

The Group believes that it has an outstanding position in terms of technology, in particular in the provision of NDT and vendor surveillance services and automotive OEM engineering, and makes significant capital investments with the intention of maintaining this advantage. The Group’s research and development expenditure for the three years ended 31 December 2013 were €13,518 thousand, €11,980 thousand and €7,707 thousand, respectively. Part of these expenses were subsidised by third parties, primarily public institutions, clients of other financial institutions. Subsidies for research and development amounted to €6,529 thousand,

€4,452 thousand and €2,841 thousand in 2011, 2012 and 2013, respectively. Additionally, the Company capitalised certain research and development expenses amounting to €3,673 thousand, €3,521 thousand and

€4,061 thousand in 2011, 2012 and 2013, respectively. The Group’s success depends on its ability to continue to innovate, develop and introduce new hardware, software and techniques to support these and other services in order to continue to meet the requirements of its clients better than its competitors. If the Group fails to do so and/or a competitor develops equivalent or superior technology, demand for certain of the Group’s existing services could decline, the Group may not be able to take advantage of new market opportunities that may arise and/or the Group may be required to make significant unplanned occasional expenditures to develop technological solutions that will allow the Group to compete more effectively. Other than the three patents noted in “Business – Intellectual Property”, the expiration of which the Company considers will not have a negative impact on the financial results of the Group, no material patents are due to expire. Furthermore, if the Group’s competitors have greater resources and access to funding, they may be able to finance the development of new technologies before the Group is able to do so, which may allow them to enter new markets before the Group and/or provide lower-priced or better-quality services. The occurrence of any of the foregoing events could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group may be subject to costs and liabilities in connection with current or future litigation or pre- litigation procedures relating to services it has performed.

In the ordinary course of the Group’s business it from time to time is involved in claims and proceedings relating to services it has performed. In certain situations, a claim may only be notified to the Group after resolution of the underlying commercial dispute and, in such cases, a considerable period of time may elapse between the performance of services by the Group and the assertion of a claim in respect of such services. In either case, because the underlying commercial transaction can be of significant value, the claims notified to the Group can allege damages in significant amounts. In addition to the potential to pay damages, claims brought against the Group may require it to incur significant legal and other expenses in investigating and defending such claims. Costs associated with these claims may fluctuate significantly between accounting periods depending on activity levels with respect to claims in any particular accounting period. In addition, the payment of damages and incurrence of legal and other costs arising from such claims and proceedings could make it more expensive or impossible for the Group to obtain insurance coverage in respect of such incidents in the future. Actual or claimed defects in the Group’s services may give rise to claims against it for losses and expose it to claims for damages. Claims can also divert the attention of management from other aspects of the Group’s business. Accordingly, there can be no assurance that claims asserted against the Group, individually or in the aggregate, will not have a material adverse effect on the Group. Except as referred to in “Business – Legal Proceedings”, the Group has not been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Group is aware) since 1 January 2011 which may have, or have had in the recent past, significant effects on the Group’s financial position or profitability.

Although the Group seeks to adequately insure itself, there can be no assurance that all claims made against the Group or all losses suffered may be effectively covered by its insurance.

The Group seeks to insure itself against all financial consequences of claims asserting professional liability. However, there can be no assurance that all claims made against the Group or all losses suffered are or will be effectively covered by insurance, nor that the policies in place will always be sufficient to cover all costs and financial awards it may be required to pay as a result. As a result, there may in the future be claims which are not covered in full or which significantly exceed the limit of the relevant insurance policy. In addition, insurance coverage for certain of the Group’s activities may become unavailable on commercially acceptable terms or at all or more costly in the future, which would either result in an increase in insurance premiums or prevent the Group from obtaining adequate insurance coverage, which may cause the Group to withdraw from certain markets. Any of these factors could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group may be unable to secure or protect its rights to intellectual property.

The Group’s ability to compete effectively depends in part upon the maintenance and protection of the intellectual property, including any know-how required for its day-to-day operations, related to its services. See “ — The Group is dependent on its ability to attract and retain sufficient experienced engineers, scientists and other skilled technical personnel to achieve its strategic objectives”. Patent protection is unavailable for certain aspects of the technology and operational processes important to the Group’s business. Any patent held by the Group or to be issued to the Group, or any of the Group’s pending patent applications, could be unenforceable, challenged, invalidated or circumvented. To date, the Group, and in particular Applus+ RTD, has relied principally on patent protection, as well as confidentiality agreements and licensing arrangements, to establish and protect rights to intellectual property. The Group is not dependent to any material extent on any relevant third party intellectual property rights. While there have been no material violations of any of the Group’s patents in the three years ended 31 December 2013, there can be no assurance that patent protection, as well as confidentiality agreements and licensing arrangements will be honoured or enforceable. Policing unauthorised use of intellectual property is difficult and expensive. The steps that the Group has taken or may take might not prevent misappropriation of the intellectual property on which it relies. In addition, effective protection may be unavailable or limited in jurisdictions outside the United States or the European Union, as the intellectual property laws of foreign countries sometimes offer less protection or have onerous filing requirements. From time to time, third parties may infringe the Group’s intellectual property rights. Litigation may be necessary to enforce or protect the Group’s rights or to determine the validity and scope of the rights of others. Any litigation could be unsuccessful, cause the Group to incur substantial costs, divert resources away from its daily operations and result in the impairment of the Group’s intellectual property. Failure to adequately enforce the Group’s rights could cause the Group to lose valuable rights in its intellectual property and may negatively affect its business.

Disruptions to the Group’s IT systems may have a material adverse effect on its business, financial condition, results of operations and prospects.

Certain of the Group’s businesses are heavily dependent on its IT systems. The Group’s testing, inspection, vendor surveillance, statutory vehicle inspection and automotive testing and engineering services all rely on the continuous functioning of the Group’s IT systems, and the Group stores key information relating to the assets or operations of its clients on its IT systems.

The Group’s IT systems, related infrastructure and business processes may be vulnerable to a variety of sources of interruption, some of which may be due to events beyond the Group’s control, including telecommunications and other technological failures, human errors, computer viruses, hackers and security issues, and natural disasters and terrorist attacks. The Group could be affected by any number of disruptions, including to the Group’s IT systems or those of its third party suppliers or any other external interruption in the technology infrastructure on which the Group depends, or any failure of the general operations of the internet. Were this to occur, it could significantly hamper or prevent the continued operation of the Group’s businesses, result in negative publicity, damage the Group’s reputation or brand, expose the Group to risk of loss or litigation and possible liability, subject the Group to regulatory penalties and sanctions, reduce its revenue, increase its compliance, insurance and other costs or otherwise have a material adverse effect on the its business, financial condition, results of operations and prospects. There can be no assurance that the Group’s recovery and contingency plans, including its secondary data centre in Barcelona, in respect of such interruptions or failures will be effective or sufficient if they need to be activated. Furthermore, the Group’s technology business continuity management and disaster recovery plans may not be adequate to prevent a business disruption which could have a material adverse effect on the Group’s business and operations. If there are technological

impediments to introducing or maintaining the Group’s services, or if its products and services do not meet the requirements of the Group’s clients and third party suppliers, the Group’s business, financial condition, results of operations and prospects may be adversely affected.

The Group’s operations are subject to anti-bribery and anti-corruption laws and regulations that govern and affect where and how the Group’s business may be conducted.

The Group’s activities are subject to a number of laws and regulations including the US Foreign Corrupt Practices Xxx 0000 (the “FCPA”), the UK Bribery Act 2010 (the “Bribery Act”), the Organisation for Economic Co-operation and Development Convention (the “OECD Convention”), regulations promulgated by the US Department of the Treasury Office of Foreign Assets Control (the “OFAC”) and the Spanish Criminal Code, which was modified in 2010 and sets out the criminal liability of legal persons, and are subject to additional anti- corruption laws in other jurisdictions.

The Group has established policies and procedures to facilitate compliance with applicable laws and regulations and has provided training to its employees to facilitate compliance with such laws and regulations. As at the date of this document, the Group is not subject to any anti-corruption or anti-bribery sanctions. However, there can be no assurance that the Group’s policies and procedures will be followed at all times or effectively detect and prevent all violations of the applicable laws and regulations and every instance of fraud, bribery and corruption in every jurisdiction in which one or more of the Group’s employees, consultants, agents, commercial partners, contractors, sub-contractors or joint venture partners is located. As a result, the Group could be subject to penalties and reputational damage, which could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects, if its employees, agents, suppliers or business partners violate any anti-corruption or anti-bribery laws.

Labour laws in certain jurisdictions in which the Group conducts its operations could limit the Group’s flexibility with respect to employment policy and its ability to respond to market changes.

Labour laws applicable to the Group’s business in certain jurisdictions are onerous. In certain jurisdictions, such as Spain, the Group’s employees are partially or fully unionised or, based on applicable regulations, represented within the company by an employee committee. In some cases, the Group must inform or consult with and, in certain jurisdictions, request the consent or opinion of union representatives or employee committees in managing its business. In addition, labour regulations in many European countries are highly restrictive. For instance, in certain European countries, labour laws require consultation periods or other similar procedures with union representatives or employee committees in case of collective redundancies or change of working conditions procedures. These labour laws and consultative procedures with unions or employee committees could limit the Group’s flexibility to rationalise its workforce in the event of poor market conditions or require the Group to change working condition procedures. In addition, any strike or other work stoppage involving any of the Group’s businesses, it could have a material adverse effect on its business, financial condition and results of operations and prospects.

Compliance with extensive health, environmental and safety laws and regulations could increase the Group’s costs or restrict its operations.

The Group’s operations are subject to extensive health, environmental and safety laws and regulations by various governmental entities and agencies in the jurisdictions in which it operates. Certain of the Group’s activities potentially have adverse environmental effects, such as discharges into air and water and the handling, storage and disposal of hazardous wastes and chemicals. The Group believes that it materially complies with all health, environmental and safety laws and regulations, nevertheless, in many jurisdictions these laws are complex, subject to frequent change and are increasingly becoming more stringent. Although the Group is currently not subject, and has not within the three years ended 31 December 2013, been subject, to any material litigation in respect of health, environmental or safety matters, there can be no assurance that breaches of these laws have not occurred or will not occur or be identified or that these laws will not change in the future in a manner that could have a material adverse effect on the Group. There can also be no assurance that the Group will be able to comply with existing or new requirements and, as a result, the Group may be required to cease certain of its business activities and/or to remedy past infringements. In addition, many of the Group’s clients insist, as a matter of policy, that service providers such as the Group demonstrate unequivocally that they have established effective health and safety systems and that failure to do so will exclude a service provider from tendering for business.

Environmental laws and regulations may also impose obligations to investigate and remediate or pay for the investigation and remediation of environmental contamination, and compensate public and private parties for related damages. If an environmental issue arises in relation to a property and it is not remedied, or not capable of being remedied, this may result in such property either being sold at a reduced sale price or becoming unsaleable. There can be no assurance that future remediation will not be required or that any such work will not have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. In some jurisdictions, notably the United States, these obligations (including, but not limited to those under the US Comprehensive Environmental Response, Compensation and Liability Act) may impose joint and several liabilities and may apply to properties presently or formerly owned or operated by the Group, as well as to properties at which wastes or other contamination attributable to the Group have been sent or otherwise come to be located.

Although the Group did not incur any material expenses related to environmental matters in 2013 or 2012, if, in the future, the Group is required to incur material expenditures to comply with new and/or existing health, safety and environmental laws, this could restrict its ability to execute its growth plan and have a material adverse effect on its business, financial condition and results of operations and prospects.

Certain of the Group’s subsidiaries are held by third parties not controlled by the Group.

The Group has operations in Xxxxxx, Xxxxxx, Xxxxx, Xxxxxxxxx, Xxxxxx, Xxxxxxxx, Xxxxxxx, Xxxxx, Xxxxxxxx and the United Arab Emirates, where local law restricts or may restrict: (i) foreign shareholders from holding a majority of the shares in either any locally registered companies or those companies which operate in certain sectors such as oil and gas; or (ii) the ability of foreign-owned companies from participating in certain public tenders. Consistent with the approach taken by many other foreign-owned companies operating in these jurisdictions, the Group has addressed this foreign ownership restriction by using commonly used structures, whereby the majority of the shares in its local business is held by a locally registered company or national in that country (depending on the requirements of local law) on trust or pursuant to a management agreement or similar arrangement, for and on behalf of the Group. The remaining minority share capital is usually held by the Group through one of its locally incorporated subsidiaries. However, these arrangements may not be as effective in providing control over these entities as a direct majority ownership.

Moreover, a particular ownership structure could be unilaterally challenged before a court in one or more of these jurisdictions. In the event a challenge is made as to the ownership structure of any of the Group’s subsidiaries based in any jurisdiction where this foreign ownership restriction applies, there is no certainty as to the approach these courts would take in applying the relevant local laws or policies to the corporate structure in question. Whilst the Group considers the possibility of a successful legal challenge to its ownership structure in these jurisdictions to be unlikely, the potential consequences of a negative judgment in relation to the corporate structure could lead to the Group’s legal arrangements and agreements being declared void or unenforceable, or the Group having to change the corporate ownership structure of its businesses in these jurisdictions and may lead to the imposition of legal penalties, which could all have a material adverse effect on the Group’s business, financial condition, result of operations and prospects.

Risks Related to the Group’s Industry

The performance of the Group’s business may be affected by global economic conditions.

The Group operates a global business, with a presence in more than 60 countries throughout the world, providing services to clients in a number of different industries. The Group’s business could be affected by developments and trends in the global macro-economic environment, such as changes to world trade, levels of global and regional economic growth, energy prices, and the level of investment and consumption. The Group’s business could also be affected by changes in economic conditions affecting its clients. The demand for the Group’s services, and the revenue, prices and margins which the Group is able to achieve are directly related to the level of its clients’ business activities, including levels of investment and capital and operating expenditure, which can be affected by developments in the macro-economic environment, both globally and in the specific geographic areas in which its businesses are based. In the year ended 31 December 2013, Applus+ RTD recorded an impairment of €16,744 thousand as a result of macro-economic conditions affecting its operations in Europe. For a further discussion on growth expectations for the TIC industry, see “Business — Industry Overview”.

Certain developments in the macro-economic environment, and in particular, any deterioration of the global economy could reduce demand for the Group’s services, which could have a material adverse effect on its business, financial condition, results of operations and prospects.

The Group is dependent on levels of capital investment and maintenance expenditures by its clients in the oil and gas industry.

The Group’s clients in the oil and gas industry have accounted for a substantial proportion of the Group’s historical revenue. Revenue from clients operating in the oil and gas sector accounted for 53 per cent. of the Group’s consolidated revenue in the year ended 31 December 2013, respectively. Demand for TIC services provided to the oil and gas industry is driven by levels of capital investment and maintenance expenditure by oil and gas companies. If clients in the oil and gas industry were to delay or cancel new projects as a result of a downturn in the industry or for any other reason, the Group’s revenue could be materially adversely affected. Moreover, from time to time the Group undertakes or provides TIC services in respect of large projects in certain regions. Such projects may generate material revenue or profit for the Group. There can be no assurance that the Group will be able to replace the revenue from these projects with new projects when they are completed. If any of the risks described above were to materialise, they could have a material adverse effect on its business, financial condition, results of operations and prospects.

The Group operates in competitive markets and its failure to compete effectively could result in reduced profitability and loss of market share.

The markets in which the Group operates are competitive and could become more competitive in the future. For example:

Š Within the Energy and Industry Services vertical the Group competes with a number of global competitors and smaller operators with specialised service offerings on the basis of location, coverage, quality of service, technological expertise and price. Frequently, the Group must compete for service contracts through tender processes against such competitors and operators.

Š Applus+ Automotive competes with a limited number of global and regional competitors and numerous local operators. The Group competes for new vehicle inspection programs on the basis of price, technological excellence and track record. In regulated markets, in which 80 per cent. of Applus+ Automotive’s revenue was generated in the year ended 31 December 2013, as prices are largely fixed, the Group competes for customers with other operators mostly on the basis of location and customer service. In liberalised markets, in which 20 per cent. of Applus+ Automotive’s revenue was generated in the year ended 31 December 2013, the Group also competes on the basis of price. As a result of increased competition in the statutory vehicle market in Finland, Applus+ Automotive recorded impairments of €60,897 thousand and of €23,105 thousand due to uncertainty as to the Group’s ability to renew existing concession agreements in the United States.

Š Applus+ IDIADA competes with a large number of regional and specialised operators principally on the basis of technical expertise, price and the quality of testing facilities.

The Group has a number of competitors that operate at the local, regional and global level in one or more of the Group’s markets, and it is possible that, given their size, these competitors may possess financial, commercial, technical or human resources greater than those possessed by the Group. Competitors may adopt a number of strategies, such as, among other things, aggressive pricing policies, diversification of their services offerings, the development of long-term or contractual relationships with potential clients in the markets where the Group is currently present or seeking to develop their businesses, and expansion of their operations into the Group’s core end-markets or into new geographies where the Group has significant operations, any of which could lead to the Group experiencing competitive pressure. As the Group provides outsourced services it also faces competition from its own clients who may decide to perform certain services in-house rather than out-source them to the Group.

In the event of such competition there can be no assurance that the Group will be able to retain its current market positions. Even if the Group is successful in retaining market share, additional competition may reduce the prices which the Group is able to achieve for its services in certain markets, thereby adversely affecting the Group’s ability to offer process, services or a quality of service that is comparable to those offered by its competitors. Existing competition or any increased intensity in competition could, therefore, have significant adverse effects on the Group’s business, financial condition, results of operations and prospects.

The Group is dependent on its ability to attract and retain sufficient experienced engineers, scientists and other skilled technical personnel to achieve its strategic objectives.

The successful implementation of the Group’s growth strategy is heavily dependent on its ability to attract and retain qualified personnel to carry out its services. Favourable industry dynamics have resulted in an increase in

demand for NDT services in certain regions. However, the number of people qualified as NDT technicians in certain geographies is not and has not been sufficient to meet this increased demand, resulting in a shortage of qualified personnel and an increase in average salaries. More generally, a number of the locations in which there is significant demand for qualified technical personnel are very remote, such as the Canadian oil xxxxx regions and certain parts of Australia, which makes recruitment efforts considerably more difficult and has driven significant increases in salaries and costs as compared to other regions in which the Group operates. There is also a lack of qualified personnel and know-how in certain countries in Latin America, such as Brazil and Peru, which could make it more difficult for the Group to take advantage of anticipated growth in demand for testing and inspection services in those markets. In addition, short lead times on projects may create additional pressure on the ability of the Group to staff projects effectively or at all.

If the Group’s compensation and other costs increase significantly as a result of such shortages and it is not able to pass these additional costs to its clients, or if the Group cannot attract and retain sufficient skilled personnel, its profitability could be negatively impacted and its growth potential would be impaired, which could have a material adverse effect on its business, financial condition, results of operations and prospects.

Risks Related to the Offering and to the Shares

After the Offering, CEP II and CEP III will continue to be able to exercise significant influence over the Group, its management and its operations.

As at the date of this document, CEP II and CEP III indirectly hold, in aggregate, 71.2 per cent. of the Company’s issued share capital. CEP II and CEP III are investment companies in risk capital. CEP II and CEP III will together be able to exercise significant influence over the Group’s management and operations and over the Company’s shareholders’ meetings, such as in relation to the payment of dividends and the appointment of Directors to the Company’s Board of Directors. There can be no assurance that the interests of CEP II and CEP III will coincide with the interests of purchasers of the Offer Shares or that CEP II and CEP III will act in a manner that is in the best interests of the Company.

Upon Admission and for such period as CEP II and CEP III will continue to own and control, directly or indirectly, a material portion of the Shares, even if such portion represents less than half of the issued Shares, they will continue to be able to exert significant influence over decisions adopted both by the general shareholders’ meetings and the Board of Directors. Upon Admission, and assuming the Over-allotment Option is exercised in full, CEP II and CEP III will hold indirectly, in aggregate, not less than 30.80 per cent. of the voting rights attaching to the Shares (excluding the Directed Offering). If the Over-allotment Option is not exercised at all, CEP II and CEP III will hold, in aggregate, up to 47.03 per cent. of the voting rights attaching to the Shares (excluding the Directed Offering). Upon Admission, CEP II and CEP III will hold, in aggregate, an indirect interest in the share capital of the Company that will exceed the 30 per cent. control threshold set forth in Article 4.1.a) of the Spanish Royal Decree 1066/2007 of 27 July 2007, on tender offers.

On the date of Admission of the Shares, there are no shareholders’ agreements in force between CEP II and CEP III or their affiliates and other indirect shareholders of the Company which may regulate the exercise of voting rights at the general shareholders meetings or restrict or condition the free transfer of Shares, in the terms described in Article 530 of the Spanish Companies Act.

Substantial subsequent sales of Shares by significant shareholders could depress the price of the Shares.

Each of the Selling Shareholders and the Company has agreed in the underwriting agreement to certain restrictions on the ability to sell, transfer and otherwise deal in Shares for a period of 180 days from the date of the listing of the Shares on the Spanish Stock Exchanges, unless otherwise consented to by the Joint Global Coordinators. In addition, the Shares purchased by the Chief Executive Officer and Chief Finance Officer of the Company, who will acquire Shares in connection with the Directed Offering, representing approximately

0.3 per cent. of the Company share capital post-Admission assuming the Offering Price is set at the mid point of the Offering Price Range, and will be subject to lock-up restrictions for a period of 360 days from the date of the listing of the Shares on the Spanish Stock Exchanges.

There is no established trading market for the Shares.

There is no established trading market for the Shares, and there can be no assurance that any active trading market will develop. The Offering Price has been agreed between the Selling Shareholders, the Company, and

the Underwriters, and may not be indicative of the market price for the Shares following Admission. There can be no assurance that an active trading market will develop or be sustained following the completion of the Offering, or that the market price of the Shares will not decline thereafter below the Offering Price. The Company will apply to list the Shares on the Spanish Stock Exchanges, and the Company expects the Shares to be quoted on the AQS on or about 9 May 2014, subject to completion of customary procedures in Spain. Any delay in the commencement of trading of the Shares would impair the liquidity of the market for the Shares and make it more difficult for holders to sell Shares.

Moreover, the Shares to be sold in the United States have not been listed on a US exchange or registered under the Securities Act. Accordingly, although the Shares will be listed and tradeable on the Spanish Stock Exchanges, there will not be a trading market for the Shares in the United States and resale of such Shares in the United States will be restricted.

Shareholders in certain jurisdictions other than Spain may not be able to exercise their pre-emptive rights to acquire further shares.

Under Spanish corporate law, holders of the Shares generally have the right to subscribe and pay for a sufficient number of Shares to maintain their relative ownership percentages prior to the issuance of any new Shares against monetary contributions, unless such right is excluded under special circumstances by a resolution passed by the general shareholders’ meeting or Board of Directors, in accordance with the Spanish Companies Act. Even if the right is not excluded and therefore is exercisable, holders of the Shares in certain jurisdictions other than Spain may not be able to exercise pre-emptive rights unless applicable securities law requirements are complied with or exemptions are available, although the option provided under the Prospectus Rules to passport a prospectus into other member states of the EEA may facilitate the exercise of such rights for residents in the EEA. The Company may determine it is not in its best interest to comply with such formalities, and there can be no assurance that such exemptions will be available. Accordingly, the pre-emptive rights of any such affected shareholders may lapse and their proportionate interests may be reduced. In particular, holders of Shares resident in the United States may not be able to exercise any future preferential subscription rights in respect of the Shares they hold unless a registration statement under the Securities Act is effective or an exemption from the registration requirements is under the Securities Act available. No assurance can be given that the Company would file or have declared effective any such registration statement or that any exemption from such registration requirements would be available to allow for the exercise of the preferential rights of US holders, or that the Company would utilise an exemption if one were available.

The market price of the Shares may be highly volatile.

The liquidity of any market for the Shares depends on the number of holders of the Shares, the market for similar securities and other factors, including general economic conditions and the Group’s financial condition, performance and prospects, as well as the recommendations of securities analysts. As a result, the Group cannot be certain that an active trading market for the Shares will develop or that it will be maintained. If an active trading market for the Shares does not develop, investors may not be able to sell the Shares they purchased at or above the price at which they acquired them or at all. As a result, investors could lose all or part of their investment in the Shares.

Dividend payments are not guaranteed.

Upon Admission, the Company intends to target a dividend of approximately 20 per cent. of the Group’s adjusted net income. Upon Admission, the Company intends to pay its first dividend in 2015 following the publication of its financing results for the year ended 31 December 2014. Dividends may only be paid by the Company if certain requirements under the Spanish Companies Act are met. For example, dividends may only be paid to shareholders if the value of the Company’s net equity (“patrimonio neto”) does not, and as a result of the payment of dividends would not, amount to less than the capital stock. The amount of dividends that the Company decides to pay in the future, if any, will depend upon a number of factors, including, but not limited to, the Company’s earnings, financial condition, debt service obligations, cash requirements (including capital expenditure and investment plans), prospects, market conditions and such other factors as may be deemed relevant at the time. The Company will disclose its adjusted net income through a relevant fact announcement (“hecho relevante”) which will be available on its corporate website (xxx.xxxxxx.xxx) and on the CNMV’s website (xxx.xxxx.xx) simultaneously with the publication of its annual financial results.

Upon Admission, and due to measures taken in 2013 and 2014 (including a capital reduction) and the capital increase for issuance of the new Shares in the Offering, the Company’s equity structure will be sufficient to comply with the minimum thresholds set out in the Spanish Companies Act to permit dividend distribution.

There are no contractual restrictions on the distribution of dividends under the New Facilities Agreement or any other financing arrangement in place upon Admission.

The Company may be classified as a passive foreign investment company (“PFIC”), which could result in adverse US federal income tax consequences to US Holders of the Shares.

If the Company is a PFIC for any taxable year during which a US Holder (see “Taxation — United States Federal Income Tax Considerations” for a definition) holds Shares, certain adverse US federal income tax consequences could apply to such US Holder. See “Taxation — United States Federal Income Tax Considerations — Passive Foreign Investment Company.”

Based on the Company’s historic and expected operations, composition of assets and market capitalisation (which will fluctuate from time to time), the Company does not expect that it will be classified as a PFIC for the current taxable year or for the foreseeable future. However, the determination of whether the Company is a PFIC is made annually, after the close of the relevant taxable year. Therefore, it is possible that the Company could be classified as a PFIC for the current taxable year or in future years due to changes in the composition of the Company’s assets or income, as well as changes in the Company’s market capitalisation.

If the Company is treated as a financial institution under the US Foreign Account Tax Compliance Act (“FATCA”), withholding tax may be imposed on payments on the Shares.

The provisions of FATCA under the US Internal Revenue Code of 1986 (the “Internal Revenue Code”) and US Treasury Regulations may impose 30 per cent. withholding on certain “withholdable payments” and “foreign passthru payments” (each as defined in the Internal Revenue Code) made by a “foreign financial institution” (as defined in the Internal Revenue Code) that has entered into an agreement with the Internal Revenue Service of the US Government (the “IRS”) to perform certain diligence and reporting obligations with respect to the foreign financial institution’s US-owned accounts. FATCA Treasury Regulations treat an entity as a “financial institution” if it is a holding company formed in connection with or availed of by a private equity fund or other similar investment vehicle established with an investment strategy of investing, reinvesting, or trading in financial assets. The United States has entered into an intergovernmental agreement (an “IGA”) with Spain, which modifies the FATCA withholding regime described above, although the IRS and Spanish tax authorities have not yet provided final guidance regarding compliance with the Spanish IGA. It is not clear whether the Company would be treated as a financial institution subject to the diligence, reporting and withholding obligations under FATCA. Furthermore, it is not yet clear how the IGA between the United States and Spain will address foreign passthru payments, and whether such IGA may relieve Spanish financial institutions of any obligation to withhold on foreign passthru payments. Prospective investors should consult their tax advisors regarding the potential impact of FATCA, the Spanish IGA and any non-US legislation implementing FATCA, on their investment in the Shares.

USE OF PROCEEDS

The Company is offering New Offer Shares and the Selling Shareholder is offering Existing Offer Shares in the Offering.

The Company expects to raise gross proceeds of €300 million from the Offering. The underwriting commissions, fees and expenses which will be payable by the Company in connection with the Offering are expected to be approximately €36.2 million. The Company intends to pay this out of the gross proceeds of the Offering. Accordingly, the Company expects to raise net proceeds of €263.8 million from the Offering.

The Company intends to use the net proceeds of the Offering, together with €700 million under the New Term Loan Facility, €35 million under the New Revolving Facility, and the Group’s existing cash:

Š to repay the existing Syndicated Loan Facilities in full in the amount of €1,047 million; and

Š to make an aggregate cash payment of approximately €20 million to certain key employees of the Group under a management incentive plan.

Pursuant to the Offering, the Selling Shareholder expects to raise gross proceeds of €800 million (assuming no exercise of Over-allotment Option). The Selling Shareholder will bear any commissions payable in respect of the Existing Offer Shares.

In addition, the Selling Shareholders expect to raise gross proceeds of €5.8 million in the Directed Offering. For further details see, “Management and Board of Directors – Shareholdings of Directors and Senior Management

– Agreements to Acquire Shares”.

The Company believes that the Offering will enable the Group to expand the number of shareholders of the Company so as to reach a free float 57.51 per cent. of the total issued share capital of the Company upon Admission (assuming the Offering Price is set at the mid-point of the Offering Price Range and that the Over- allotment Option is not exercised), above the minimum threshold of distribution of the Company’s Shares required for their admission to trading on the Spanish Stock Exchanges and on the AQS (which, in accordance with Spanish Royal Decree 1310/2005, of 4 November, and subject to certain exceptions, involves reaching a free float of at least 25 per cent. of the shares admitted to trading), and access the equity capital markets, which could allow the Company to improve its financing arrangements for the future development of the Group’s business. In addition, it is expected that the Offering will enhance the Group’s brand name as a result of being a listed company and provide liquidity on the Spanish Stock Exchanges for the Shares held by its shareholders. The Offering (together with the Over-allotment Option, if exercised) will also provide an opportunity for the Selling Shareholders to transfer part of their investment in the Company.

DIVIDENDS

Dividends

Assuming that there are sufficient distributable reserves available at the time, the Company intends to target a dividend of approximately 20 per cent. of the Group’s adjusted net income (as described below). Following Admission, the Company currently intends to pay its first dividend in 2015 after the publication of its financial results for the year ended 31 December 2014.

The amount of future dividends that the Company decides to pay, if any, will depend upon a number of factors, including, but not limited to, the Company’s earnings, financial condition, debt service obligations, cash requirements (including capital expenditure and investment plans), prospects, market conditions and such other factors as may be deemed relevant at the time. The amount of dividends will be proposed by the Company’s Board of Directors and determined by its shareholders at general shareholders’ meetings.

The Offer Shares offered hereby will be eligible for any dividends paid or declared after the Offering.

No dividends have been declared or paid by the Company in the three years ended 31 December 2011, 2012 and 2013.

Any dividends paid in the future will be subject to tax under Spanish law. See “Taxation — Spanish Tax Considerations” below.

For the purposes of the Company’s dividend payments, “adjusted net income” means net income, plus PPA Amortisation, plus impairment and gains or losses on disposal of non-current assets, non-recurrent items within depreciation and amortisation and certain items within other losses (severances related to restructuring processes, inorganic growth costs and other non-recurrent costs), plus the tax impact of these adjustments. By way of example, the items considered as “certain items within other losses” for the purposes of calculating the “adjusted net income” corresponding to the year ended 31 December 2013 were: (i) severance costs in connection with the redundancies carried out by the Group as a result of various restructuring processes undertaken by its segments, in particular Applus+ Norcontrol; (ii) inorganic growth costs related to acquisition processes, one-off consultancy services and a bonus retention plan that included costs for key Velosi managers following the contribution of the Velosi Group to the Company (all provisions relating to this retention plan were recognised in the Audited Consolidated Financial Statements on or before 31 December 2013, although the relevant cash payments will be completed in 2014); (iii) refinancing costs relating to fees for advisory contracts in respect of the Group’s Syndicated Facilities amendment in 2012; and (iv) costs incurred in connection with the Offering (provisions relating to these costs were recognised in the Audited Consolidated Financial Statements on or before 31 December 2013, although the relevant cash payments will be completed in 2014). The Company will disclose its adjusted net income through a relevant fact announcement (“hecho relevante”) which will be available on its corporate website (xxx.xxxxxx.xxx) and on the CNMV’s website (xxx.xxxx.xx) simultaneously with the publication of its annual financial results.

Limitations on Dividends and other Distributions

The Company’s capacity to distribute dividends may be restricted under general Spanish corporate law rules.

The conditions under which the Company may declare dividends based on Spanish law and the Company’s by- laws are described under “Description of Capital Stock — Dividend and Liquidation Rights”.

Upon Admission, and due to measures taken in 2013 and 2014 (including a capital reduction) and the capital increase for issuance of the New Offer Shares in the Offering, the Company’s equity structure will be sufficient to comply with the minimum thresholds set out in the Spanish Companies Act to permit dividend distribution. See “Capitalisation and Indebtedness” below.

There are no contractual restrictions on the distribution of the dividends by the Company under the New Facilities Agreement or any other financing arrangement in place upon Admission.

CAPITALISATION AND INDEBTEDNESS

The following tables set out the Group’s cash and cash equivalents, current borrowings and capitalisation as at 31 December 2011, 2012 and 2013 and 28 February 2014, on a historical basis and as adjusted to give effect to

(i) the receipt of the gross proceeds of the Offering, (ii) the drawdown of amounts under the New Facilities,

(iii) the repayment of certain of the Group’s current Syndicated Loan Facilities and (iv) the costs of the Offering.

The financial information as at 31 December 2011, 2012 and 2013 set out below was extracted from the Audited Consolidated Financial Statements for the year ended 31 December 2013. The capitalisation information presented as adjusted has been prepared for illustrative purposes only. By its nature, such information addresses a hypothetical situation and, therefore, does not reflect the Group’s actual financial position.

Prospective investors should read this table in conjunction with “Selected Consolidated Financial Information and Other Data”, “Operating and Financial Review” and the Audited Consolidated Financial Statements. In particular, for a description of the main terms of the New Facilities, see “Operating and Financial Review — Liquidity and Capital Resources — Indebtedness.”

As of 31 December
2011		2012		2013
€ thousands except for percentages and ratios
Local debt facilities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19,788		38,835		43,900
RCF drawn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	-		37,195		36,536
Term Loan B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	629,949		628,509		621,410
Second lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	100,000		100,000		100,000
Mezzanine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	184,157		193,599		203,538
Capex line drawn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	151,563		125,166		199,092
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25,924		9,017		-
Gross financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,111,381		1,132,321		1,124,476
Cash(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(101,247)		(141,426)		(180,877)
Net financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,010,134		990,895		943,599
Participating Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	391,715		92,448		-
Net total debt(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,401,849		1,083,343		943,599
Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31,058		600,825		654,731
Total reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(28,556)		(210,426)		(331,482)
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,529		390,399		323,249
Total Capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,404,378		1,473,742		1,266,848
Net financial debt(4)/total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net financial debt(4)/operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52% 8.15		46% 6.81		47% 4.98
Net total debt(5)/total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net total debt(5)/operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	72% 11.31		50% 7.44		47% 4.98

(1) Includes financial leases and bank borrowings contracted by Group subsidiaries.

(2) The Group has no restricted cash.

(3) Net total debt is defined as net financial debt plus the amount of the Participating Loan.

(4) Net financial debt is defined as the Group’s financial indebtedness to xxxxx and other financial institutions (including, without limitation, local debt facilities, the Syndicated Loan Facilities and derivatives) less cash and cash equivalents. Local debt facilities comprise a number of borrowings with different institutions in different countries.

(5) Net total debt is defined as net financial debt plus the amount of the Participating Loan, but excludes potential earn-out payments from acquisitions. Recognised provisions related to these potential payments amounted to €14,551 thousand in the year ended 31 December 2013.

On 4 April 2014, the general shareholders’ meeting resolved: (i) to decrease the Company’s capital stock by

€645,029,932 (to 10,932,710 Shares with a nominal value of €1.00 each), allocating this amount to the Company’s voluntary non-distributable reserves (“reserva voluntaria de carácter indisponible”); (ii) to decrease the unitary nominal value of the Company’s shares to €0.10, without amending the capital stock of the Company; and (iii) to reduce the non-distributable mandatory reserve (“reserva legal”) to an amount equal to 20 per cent. of the total capital stock of the Company by reallocating the excess to voluntary freely distributable reserves (“reserva voluntaria de libre disposición”).

On 22 April 2014, the general shareholders’ meeting resolved: (i) to allocate profits for the year ended 31 December 2013 to partially set-off losses of prior years (“resultados negativos de ejercicios anteriores”) for an aggregate amount of €101,983,499.94; and (ii) to reclassify the existing share premium (“prima xx xxxxxxxx”) for an aggregate amount of €31,650,796.03 to set-off in full the losses of prior years at that time outstanding.

Post-Offering Capitalisation and indebtedness

As of 28 February 2014 Adjustments

Offering

Actual

Gross

Proceeds(3) New Debt(4)

Existing Debt Refinanced(5)

€ thousands

and Management Incentive Plan

Costs(6) As Adjusted

Local debt facilities(1) . . . . . .	37,808	-	-		-	-	37,808
Term Loan B . . . . . . . . . . . . .	621,650	-	-		(621,650)	-	-
Second Lien . . . . . . . . . . . . . .	100,000	-	-		(100,000)	-	-
Mezzanine . . . . . . . . . . . . . . .	205,199	-	-		(205,199)	-	-
Capex line drawn . . . . . . . . . .	119,688	-	-		(119,688)	-	-
New Term Loan Facility . . . .	-	-	700,000		-	-	700,000
New Revolving Facility . . . . .	-	-	35,000		-	-	35,000
Gross financial debt . . . . . . .	1,084,345	-	735,000		(1,046,537)	-	772,808
Cash(2) . . . . . . . . . . . . . . . . . .	(145,479)	(300,000)	(735,000)		1,046,537	56,200	(77,742)
Net financial debt . . . . . . . . .	938,866	(300,000)	-		-	56,200	695,066
Equity	318,581	300,000	-		-	(56,200)	562,381
Total capitalisation . . . . . . .	1,257,447	-	-		-	-	1,257,447

(1) Includes financial leases and bank borrowings contracted by Group subsidiaries.

(2) The Group has no restricted cash.

(3) The increase in cash and cash equivalents is the result of a capital increase in the gross amount of €300 million and is presented prior to the deduction of underwriting commissions, which are included within “Offering and Management Incentive Plan Costs”.

(4) New Debt reflects the draw down of €700,000 thousand under the New Term Loan Facility and €35,000 thousand under the New Revolving Facility out of a total of €150,000 thousand available under the New Revolving Facility, expected to occur upon Admission. There would be an increase in cash for the same aggregate amount.

(5) The decrease of €1,046,537 thousand represents debt that is being repaid and cancelled.

(6) Offering and Management Incentive Plan Costs comprise underwriting commissions, other fees and expenses in connection with the Offering assumed by the Company and an aggregate payment of approximately €20 million to certain senior managers of the Group under a management incentive plan. The decrease of €56,200 thousand in equity represents the pre-tax impact of the costs related to the Offering.

As a result of the drawdown of the New Facilities, the receipt of proceeds of the capital increase, and the repayment of existing debt, the Company’s net financial debt as adjusted and reflected in the table above, based on pro forma calculations as of 28 February 2014, is expected to decrease from €1,084,345 thousand to €772,808 thousand.

In 2013, the Group had a cost of debt of 5.1 per cent., and 6.4 per cent. excluding and including, respectively, any interest on the Participating Loan. The cost of debt for the Group in 2013 amounted to €72,036 thousand, which represented 4.5 per cent. of the Group’s revenue. As a result of the Group’s New Facilities, with effect from Admission, the Group expects to pay an initial interest margin of 2.25 per cent. above LIBOR, or in relation to any loans drawn in euro, EURIBOR, and for other local facilities that will not be refinanced as part of the Offering, a similar rate of interest to those paid in the past. By way of illustration, the cost of debt in respect of the New Facilities would be 2.56 and 2.48 per cent. based on the 3 month EURIBOR of 0.31 per cent. and 3 month USD LIBOR of 0.23 per cent., respectively as of 31 March 2014. The New Facilities represent 95.11 per cent. of the post-Offering net financial debt of the Group. Accordingly, the changes to the Group’s debt financing arrangements post-Admission will have a positive effect on the Group’s financial results. The Group’s debt financing arrangement post-Admission are described in detail in “Operating and Financial Review — Liquidity and Capital Resources”. The Group’s net financial debt as at 28 February 2014 would have been €695,066 thousand (as compared to €938,866 thousand in connection with the current Syndicated Loan Facility and other local debt facilities currently in place), as adjusted to give effect to (i) the receipt of the gross proceeds of the Offering, (ii) the drawdown of amounts under the New Facilities, (iii) repayment in full of the Group’s current Syndicated Loan Facility and (iv) the costs of the Offering.

Working Capital

The Company is of the opinion that, taking into account the bank facilities available and its existing cash resources, the Group has sufficient working capital for its present requirements, that is, for at least twelve months from the date of this document. For a discussion of movements in working capital see “Operating and Financial Review — Liquidity and Capital Resources — Cash Flows”.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The selected consolidated financial information set out below shows certain of the Group’s consolidated financial information as at and for the years ended 31 December 2011, 2012 and 2013. Such selected consolidated financial information has been extracted from the Audited Consolidated Financial Statements.

The selected consolidated financial information should be read in conjunction with “Operating and Financial Review”, and the Audited Consolidated Financial Statements. For a description of the Audited Consolidated Financial Statements, see “Presentation of Financial Information”.

Selected audited consolidated income statement data

The following table sets out the Group’s selected audited consolidated income statement for the years ended 31 December 2011, 2012 and 2013.

Year Ended 31 December 2011 2012 2013

€ thousands except for percentages

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	980,919	1,192,647	1,580,501
Procurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(71,911)	(101,083)	(244,420)
Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(529,219)	(640,077)	(784,361)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(255,890)	(305,952)	(362,268)
Operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . .	123,899	145,535	189,452
Operating profit before depreciation, amortisation and others margin . . . . . . . . . . . .	12.6%	12.2%	12.0%
Depreciation and amortisation charge(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(70,117)	(79,173)	(97,623)
Impairment and gains or losses on disposal of non-current assets(2) . . . . . . . . . . . . . . .	(22,744)(3)	(19,932)(4)	(117,571)(5)
Other losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(17,602)	(15,502)	(17,024)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13,436	30,928	(42,766)
Operating profit margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1.4%	2.6%	(2.7)%
Net financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(112,413)	(114,683)	(86,407)
Net financial expense/revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(11.5%)	(9.6%)	(5.5%)
Share of profit of companies accounted for using the equity method . . . . . . . . . . . . . .	-	-	2,493
Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(98,977)	(83,755)	(126,680)
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11,268	17,512	(38,832)
Net loss from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(87,709)	(66,243)	(165,512)
Loss from discontinued operations net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(1,682)	-	-
Net consolidated loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(89,391)	(66,243)	(165,512)
Profit attributable to non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,611	2,914	4,567
Net loss attributable to the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(91,002)	(69,157)	(170,079)

(1) Depreciation and amortisation reflect the yearly loss in economic value of the tangible and intangible assets of the Group due to their ordinary utilisation or as a result of the ageing process, taking into account any residual value.

(2) Impairments reflect the positive or negative change in the value of each asset as a consequence of the performance of such assets or as a result of other market considerations. Therefore, the management of the Group test the value of each asset for the period and register a loss should the value of such asset have decreased, or a gain if the value of such asset has increased.

(3) This item comprises of impairment (€18,000 thousand loss), asset sales results (€608 thousand loss) and others (€4,136 thousand loss).

(4) This item comprises of impairment (€18,101 thousand loss), asset sales results (€915 thousand loss) and others (€916 thousand loss).

(5) This item comprises of impairment of goodwill (€81,285 thousand loss), impairment of intangible assets (€37,882 thousand loss), asset sales results (€18 thousand loss) and others (€1,614 thousand profit).

The following table sets out the percentage of the Group’s revenue by division and industry in the years ended 31 December 2011, 2012 and 2013:

Year Ended 31 December

2011 2012 2013

€		% of total			€	% of total			€	% of total
	thousands		revenue		thousands		revenue		thousands		revenue
Energy and Industry Services
Applus+ RTD . . . . . . . . . . . . . . . . . . . . . . . .	401,578		41.0%		495,251		41.5%		558,574		35.3%
Applus+ Velosi . . . . . . . . . . . . . . . . . . . . . . .	-		-		66,352		5.6%		372,576		23.6%
Applus+ Norcontrol . . . . . . . . . . . . . . . . . . .	187,686		19.1%		190,695		16.0%		186,158		11.8%
Applus+ Laboratories . . . . . . . . . . . . . . . . . .	52,090		5.3%		55,852		4.7%		56,637		3.6%
Sub-total Energy and Industry
Services . . . . . . . . . . . . . . . . . . . . . . . . . .	641,354		65.4%		808,150		67.8%		1,173,945		74.3%
Statutory Vehicle Inspection
Applus+ Automotive . . . . . . . . . . . . . . . . . .	245,025		25.0%		266,391		22.3%		273,599		17.3%
Automotive Engineering and Testing
Applus+ IDIADA . . . . . . . . . . . . . . . . . . . . .	94,211		9.6%		116,505		9.8%		132,513		8.4%
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	329.0		0.0%		1,601		0.1%		444		0.0%
Total (all segments) . . . . . . . . . . . . . . . . . . .	980,919		100%		1,192,647		100%		1,580,501		100%

(1) “Other” comprises certain central and divisional activities, including in respect of finance, legal, IT, human resources and corporate development recognised within the two holding companies of the Group, Applus Services, S.A. and Applus Servicios Tecnológicos, S.L.U.

The following table sets out the percentage of the Group’s operating profit before depreciation, amortisation and others by division and vertical in the years ended 31 December 2011, 2012 and 2013:

Year Ended 31 December

2011 2012 2013

% of total operating profit before depreciation,

€ amortisation €

% of total operating profit before depreciation,

amortisation €

% of total operating profit before depreciation, amortisation

	thousands		& others		thousands		& others		thousands		& others
Energy and Industry Services
Applus+ RTD . . . . . . . . . . . . . . .	38,019		30.7%		51,052		35.1%		68,035		35.9%
Applus+ Xxxxxx . . . . . . . . . . . . . .	-		-		3,371		2.3%		35,774		18.9%
Applus+ Norcontrol . . . . . . . . . .	17,056		13.8%		17,867		12.3%		20,507		10.8%
Applus+ Laboratories . . . . . . . . .	5,730		4.6%		7,001		4.8%		7,241		3.8%
Sub-total Energy and Industry
Services . . . . . . . . . . . . . . . . . .	60,805		49.1%		79,291		54.5%		131,557		69.4%
Statutory Vehicle Inspection
Applus+ Automotive . . . . . . . . . .	67,054		54.1%		68,968		47.4%		71,247		37.6%
Automotive Engineering and
Testing
Applus+ IDIADA . . . . . . . . . . . .	15,147		12.2%		18,834		12.9%		21,992		11.6%
Other(1) . . . . . . . . . . . . . . . . . . . .	(19,107)		(15.4)%		(21,558)		(14.8)%		(35,344)		(18.6)%
Total (all segments) . . . . . . . . . .	123,899		100%		145,535		100%		189,452		100%

(1) “Other” comprises certain central and divisional activities, including in respect of finance, legal, IT, human resources and corporate development recognised within the two holding companies of the Group, Applus Services, S.A. and Applus Servicios Tecnológicos, S.L.U.

The following table sets out the percentage of the Group’s operating profit by division and vertical in the years ended 31 December 2011, 2012 and 2013:

Year Ended 31 December

2011 2012 2013

% of total

€ operating €

% of total

operating €

% of total operating

	thousands		profit		thousands		profit		thousands		profit
Energy and Industry Services
Applus+ RTD . . . . . . . . . . . . . . . . . . . . . . . .	(8,655)		(64.4)%		5,199		16.8%		21,982		(51.4)%
Applus+ Velosi . . . . . . . . . . . . . . . . . . . . . . .	-		-		2,893		9.4%		22,067		(51.6)%
Applus+ Norcontrol . . . . . . . . . . . . . . . . . . .	2,383		17.7%		4,371		14.1%		(201)		0.4%
Applus+ Laboratories . . . . . . . . . . . . . . . . . .	(1,252)		(9.3)%		701		2.3%		(451)		1.1%
Sub-total Energy and Industry Services . . . . . . . . . . . . . . . . . . . . . . . . . .	(7,524)		(56.0)%		13,164		42.6%		43,397		(101.5)%
Statutory Vehicle Inspection
Applus+ Automotive . . . . . . . . . . . . . . . . . . Automotive Engineering and Testing	34,884		259.6%		34,613		111.9%		(56,840)		132.9%
Applus+ IDIADA . . . . . . . . . . . . . . . . . . . . .	9,168		68.3%		13,119		42.4%		14,893		(34.8)%
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(23,092)		(171.9)%		(29,968)		(96.9)%		(44,216)		103.4%
Total (all segments) . . . . . . . . . . . . . . . . . . .	13,436		100%		30,928		100%		(42,766)		100%

(1) “Other” comprises certain central and divisional activities, including in respect of finance, legal, IT, human resources and corporate development recognised within the two holding companies of the Group, Applus Services, S.A. and Applus Servicios Tecnológicos, S.L.U.

Selected audited consolidated balance sheet data

The following table sets out the Group’s selected audited consolidated balance sheet for the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December

2011 2012 2013

€ thousands, except percentages and ratios

ASSETS Non-current assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		573,210		571,168		487,882
Other intangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		689,770		716,388		632,695
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		170,390		196,566		189,450
Non-current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12,330		13,163		13,831
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		113,130		137,547		101,727
Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,558,830		1,634,832		1,425,585
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		101,247		141,426		180,877
Additional current assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		292,933		393,597		417,418
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		394,180		535,023		598,295
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,953,010		2,169,855		2,023,880
EQUITY AND LIABILITIES EQUITY
Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		31,058		600,825		654,731
Total reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(28,556)		(219,926)		(331,482)
TOTAL EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2,529		390,399		323,249
PARTICIPATING LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		391,715		92,448		-
NON-CURRENT LIABILITIES
Financial liabilities(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,048,456		1,108,610		1,100,076
Non-current liabilities(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		259,954		264,116		242,664
TOTAL NON-CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . .		1,308,410		1,372,726		1,342,740
CURRENT LIABILITIES
Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		67,585		33,929		37,671
Additional current liabilities(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		182,771		280,353		320,220
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		250,356		314,282		357,891
TOTAL EQUITY AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,953,010		2,169,855		2,023,880
Net financial debt(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,010,134		990,895		943,599
Net financial debt/Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		52%		46%		47%
Net financial debt/operating profit before depreciation, amortisation and
others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8.15		6.81		4.98
Net total debt(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1,401,849		1,083,343		943,599
Net total debt/total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		72%		50%		47%
Net total debt/operating profit before depreciation, amortisation and
others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		11.31		7.44		4.98

(1) Other intangible assets include administrative authorisations and concessions (related to the statutory vehicle inspection activity), patents, licences and trademarks, the value of various customer portfolios contracts and asset usage rights.

(2) Additional current assets comprises inventories, trade receivables for sales and services, trade receivables from related companies, other receivables, income tax assets, other current assets and current non-current financial assets.

(3) Financial liabilities comprises non-current bank borrowings and other financial liabilities.

(4) Non-current liabilities comprise mainly deferred tax liabilities and other non-current liabilities and long-term provisions.

(5) Additional current liabilities comprises short-term provisions, trade and other payables, income tax liabilities and other current liabilities and long-term provisions.

(6) Net financial debt is defined as the Group’s financial indebtedness to xxxxx and other financial institutions (including, without limitation, local debt facilities, the Syndicated Loan Facilities and derivatives) less cash and cash equivalents. Local debt facilities comprise a number of borrowings with different institutions in different countries.

(7) Net total debt is defined as net financial debt plus the amount of the Participating Loan, but excludes potential earn-out payments from acquisitions. Recognised provisions related to these potential payments amounted to €14,551 thousand in the year ended 31 December 2013.

As set out in the table above, as at 31 December 2013, the Group carried goodwill of €487,882 thousand and other intangible assets of €632,695 thousand, of which €444,210 thousand and €550,245 thousand respectively were generated from the acquisition of the Group by funds advised by Carlyle and other investors in 2007.

As of 31 December 2013, total non-current assets comprised goodwill (24.1 per cent. of total assets); other intangible assets (31.3 per cent. of total assets); property, plant and equipment (9.4 per cent. of total assets); non- current financial assets (0.7 per cent. of total assets) and deferred tax assets (5.0 per cent. of total assets).

Selected audited consolidated statement of cash flow data

The following table sets out the Group’s selected audited consolidated statements of cash flows for the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December 2011 2012 2013

		€ thousands
Net cash from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	108,775	132,767	154,798
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(66,258) (40,173)		(69,999)
Net cash (used in)/from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4,004	(52,415)	(45,348)
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46,521	40,179	39,451

In the three years ended 31 December 2011, 2012 and 2013, net cash from operating activities represented

11.1 per cent., 11.1 per cent., and 9.8 per cent. of revenue, respectively.

BUSINESS

Overview

The Group is one of the world’s largest TIC companies with global market positions in its chosen markets. Applus+ provides technological and regulatory-driven services and solutions for the energy, industrial, infrastructure and automotive sectors that assist its clients to manage risk, enhance the quality and safety of their products, assets and operations, comply with applicable standards and regulations and optimise industrial processes. The Group provides its services and solutions to a highly diverse blue-chip client base in established, as well as high-growth economies globally.

Headquartered in Barcelona, Spain, the Group operates in more than 60 countries through its network of

324 offices, 157 testing facilities and 322 statutory vehicle inspection stations, and employs more than 19,000 people (including approximately 3,000 engineers). In the year ended 31 December 2013, the Group recorded revenue of €1,581 million and an operating loss of approximately €42.8 million. The Group’s revenue increased by 32.5 per cent. for the year ended 31 December 2013 compared to the year ended 31 December 2012, and by 21.6 per cent. for the year ended 31 December 2012 compared to the year ended 31 December 2011. For the year ended 31 December 2013, the Group recorded 44.2 per cent. of its revenue in Europe, 22.9 per cent. in the United States and Canada, 15.8 per cent. in the Asia Pacific region, 10.2 per cent. in the Middle East and Africa and 6.9 per cent. in Latin America. The Group’s Organic Growth, excluding the impact of the contribution of the Velosi Group in 2012 and other acquisitions in the relevant periods was 9 per cent. for the year ended 31 December 2013 compared to the year ended 31 December 2012 and 14.5 per cent. for the year ended 31 December 2012 compared to the year ended 31 December 2011.

The Group operates through six global divisions, each of which is reported as a segment for financial reporting purposes and, which operates under the “Applus+” global brand name. The Group’s Statutory Vehicle Inspections and Automotive Engineering and Testing divisions operate on a standalone global basis and are considered as two independent operating verticals. The four divisions serving clients across the energy and industry markets are also operated globally, but have complementary service offerings and target a similar set of end-markets, and are therefore grouped together in the Energy and Industry Services vertical. The following is a summary of the Group’s services across these three verticals:

Š Energy and Industry Services: The Group provides testing, inspection and certification services, including NDT, asset integrity testing, site inspection, vendor surveillance, certification and other services to a diversified client base across a range of end-markets, including the energy, power generation, infrastructure, industrial, IT and aerospace sectors. The Group’s mission-critical services assist its clients to increase productivity, reduce repair costs, extend the economic life of their assets, comply with applicable national regulations and international quality and safety standards, and enhance safety. The Group provides these services to clients in Europe, the United States and Canada, the Asia Pacific region, the Middle East, Africa and Latin America. The Group’s Energy and Industry Services vertical comprises the following four divisions:

• Applus+ RTD is a global provider of NDT services to clients in the upstream, midstream and downstream oil and gas industry. Applus+ RTD also provides services to the power utilities, aerospace and civil infrastructure industries. Applus+ RTD’s services provide the Group’s clients with tools and solutions to inspect and test the mechanical, structural and material integrity of critical assets without causing damage to those assets, either at the time of installation or during the assets’ working lives. Applus+ RTD provides NDT services, which test materials and assets without affecting their functionality; asset integrity testing, which helps prolong the life of heavy industrial assets; and site inspection services for its clients. The Group believes that Applus+ RTD has established a recognised brand and a reputation for technology leadership and quality globally, based on a combination of industry-leading testing equipment and software, staff expertise and extensive experience with leading global clients. Applus+ RTD is active in more than 25 countries across five continents;

• Applus+ Velosi is a global provider of vendor surveillance (third party inspection and auditing services to monitor compliance with client specifications in procurement transactions), site inspection, specialised engineering support and certification services, as well as specialised manpower services primarily to companies in the oil and gas industry. Applus+ Velosi has a

long-established presence in the Asia Pacific region, the Middle East, Africa and Europe and has also established significant operations in the Americas. Applus+ Velosi is active in more than 35 countries around the world;

• Applus+ Norcontrol focuses primarily on the Spanish, Latin American and Middle Eastern markets. In Spain, Applus+ Norcontrol principally provides supervision, technical assistance and inspection and testing services in respect of electricity and telecommunications networks and industrial facilities. In Latin America, Applus+ Norcontrol primarily provides quality assurance, quality control, testing and inspection and project management services primarily to the utilities, oil and gas and civil infrastructure sectors. Applus+ Norcontrol has a leading market position in Spain, a strong presence in a number of its Latin American markets and has recently established a presence in the Middle East; and

• Applus+ Laboratories provides a range of laboratory-based product testing, system certification and product development services to clients in a wide range of industries including the aerospace, oil and gas and payment systems sectors.

The Energy and Industry Services vertical employs approximately 12,600 full time equivalents (“FTEs”).

Š Statutory Vehicle Inspections: Applus+ Automotive provides vehicle inspection and certification services across a number of jurisdictions in which periodic vehicle inspections for compliance with technical safety and environmental specifications are mandatory. Eighty per cent. of these services (by revenue) are provided pursuant to concession agreements or authorisations which regulate and restrict the number of competing operators with an average weighted remaining term of approximately nine years, as at the date of this document. The Group carried out more than 10 million vehicle inspections in 2013 across Spain, Andorra, Ireland, Denmark, Finland, the United States, Argentina and Chile and employs approximately 3,000 FTEs.

Š Automotive Engineering and Testing: Applus+ IDIADA provides engineering, safety testing and technical testing services as well as proving ground and homologation (testing and certification of new and prototype vehicle models for compliance with mandatory safety and technical standards) services globally to many of the world’s leading vehicle manufacturers. The Group operates one of world’s leading independent proving ground near Barcelona and has a broad client presence across Europe, China, India and Brazil. Applus+ IDIADA employs approximately 1,700 FTEs.

Revenue breakdown

The following charts set out the percentage of the Group’s consolidated revenue and consolidated operating profit before depreciation, amortisation and others by division in the year ended 31 December 2013.

Consolidated revenue Consolidated operating profit before

depreciation, amortisation and others

8.4%

Applus+ IDIADA

.4%

Applus+ IDIADA 9.8%

Applus+ R

pplus+

tomo

t

i

A plus+

Applus+ TD 5.3%

7

3%

Au m ve

17. %

35.3

Ap

A plus+ RTD 30.3%

es

Applus+ Laboratori

3.6%

Applus+ Automoti

ve

31.7%

pplus+

orcontrol

1.8%

Applus+ N contro 11.8%

Total: €1,581 million

Applus+

15.

Applus+ Velos 23.6%

Applus+

Laboratories

Applus+ Laboratorie 3.2%

Total: €189 million

Applus+

Applus+ Norcontrol 9.1%

Velosi

Applus+

Applus+ Velosi 15.9%

Note: the percentages in the chart above are calculated excluding the impact of the operating loss before depreciation, amortisation and others of €35,344 thousand attributable to “Other”. “Other” is comprised of overhead costs as the Group’s central and divisional levels, including, top management, IT, back-office, finance / human resources and corporate development.

Revenue by end-markets and geography

The following charts set out the percentage of the Group’s consolidated revenue in the year ended 31 December 2013 by (i) the Group’s end-markets and (ii) geographical regions.

7

%

End-markets Geographic regions

10%

structure 2%

i

d

d

le

East

n

d

A

f

ca

Other 0%

nfra ructure 2%

M ning 4%

ndu rial Gen ral

2

tilit 7%

Oil & Gas 53%

EMs 9%

Statu ry hicle

i on

7%

I M dd e East

ining 4%

1

0%

a d A ri

Oil &

53

strial

eral

%

I 0%

ies

U

Latin America

Europe

(excludin

Spain)

27%

Europe (excludi g Spain) 27%

ic

Asia Pacif

O 16%

tatu

t

o

v

eh

icle

n

s

p

ec

t

ion

s

1

7%

Spain

17%

United

States and

Canada

United tates and Canada 23%

Total: €1,581 million Total: €1,581 million

Spai 17%

History

The Group traces the formation of the Applus+ Group to the establishment of the Agbar Automotive business (as owned by Aguas de Barcelona) in 1996. Since then, the Group has grown its network and operations from a Spanish company with revenue of €669 million for the year ended 31 December 2007 into a global company with a presence in more than 60 countries and revenue of €1,581 million for the year ended 31 December 2013.

The Company was incorporated in 2007 as an acquisition vehicle as the means by which Carlyle, an investment company, through certain risk capital funds and other investors would acquire the Group. The Company acquired the then holding company of the Group which had acquired a number of established companies prior to 2007 (including Röntgen Technische Dienst (“RTD”)). Since the acquisition of the Group in 2007, the Group has focused on building a global presence in each of the divisions in which it operates.

Key highlights of the Group’s recent evolution include:

Š 1996: The Agbar Group commenced statutory vehicle inspecting through the establishment of the Spanish vehicle inspection division of the Agbar Group.

Š 1999: The Agbar Group entered into the automotive testing and engineering services market following the privatisation of IDIADA. IDIADA won a public tender to provide automotive testing and engineering services.

Š 2002: Launch of the Applus+ brand worldwide.

Š 2003: Formation of the Applus+ Laboratories division through entry into a long-term contract with the regional government of Catalonia, by which Applus+ Laboratories obtained the rights to operate seven laboratories in Bellaterra (Barcelona). As at the date of this document, the Group operates 12 laboratories including the seven above following the divestment of two laboratories as part of its sale of the agrofood business to Eurofins Scientific in March 2014.

Š 2004: The Agbar Group and Union Fenosa reached an agreement to contribute “Soluziona Calidad y Medio Ambiente” (predecessor of Applus+ Norcontrol) in exchange for a 25 per cent. stake in Applus Servicios Tecnológicos, S.L.U.

Š 2006: Acquisition of RTD in order to increase the Group’s presence in the market for inspection and testing services to the European oil and gas industry.

Š 2007: Funds advised by Carlyle and other investors acquired a majority stake in the Group.

Š 2008-2013: Over the period since 1 January 2011, the Group made 9 material acquisitions to strengthen its market positions and to expand into new geographic regions, such as the United States and Canada, the Asia Pacific region and other emerging markets (see “Operating Financial Information – Impact of Acquisitions”). The most relevant of these acquisitions was the contribution of Velosi (known today as Applus+ Velosi), a global provider of vendor surveillance, site inspection, certification and asset integrity, as well as specialised manpower services primarily to companies in the oil and gas sector, which was acquired by a related party of the Company in 2011 and thereafter contributed to the Group in 2012. Applus+ Velosi was consolidated into the Group for accounting purposes on 20 December 2012. In the year ended 31 December 2013, Applus+ Velosi accounted for 23.6 per cent. of the Group’s revenue and 18.9 per cent. of the Group’s operating profit before depreciation, amortisation and others.

Industry Overview

To the Group’s knowledge, there is no comprehensive report covering or dealing with the market for testing, inspection and certification. As a result, and unless otherwise stated, the information presented in this section regarding market and segment size and share reflects the Group’s estimates and is provided on an indicative basis only. The Group gives no assurance that a third party using other methods for collecting, analysing or compiling market data would arrive at the same result. In addition, the Group’s competitors may define these markets differently. The data regarding market share and size presented in this section are only Group estimates and accordingly they do not constitute official data. The Company is not aware of any exceptional factor

influencing information given in this section made on its markets and activities. In any event, the “Risk Factors” section of this document includes a detailed description of the risks and uncertainties that affect or could affect the Company’s activities in the main markets in which it operates.

The global TIC market comprises services addressing the safety, performance and conformity of products, industrial assets or systems. These services are frequently designed to ensure that clients’ products, assets or systems comply with applicable quality, health, safety and environmental (“QHSE”) standards as established by regulators, industry bodies or internal corporate standards. Given the critical importance clients place on QHSE performance, including the desire to reduce the risk of industrial accidents, asset failures and product recalls, such TIC services are typically mission critical for clients, who require the services on an ongoing basis across the full industrial lifecycle from design, manufacture / installation and operation through to end-of-service compliance.

Given the increasingly requirements for QHSE compliance, the market for TIC services continues to expand. Additionally, given the increasingly complex and global supply chain, such services are increasingly outsourced to third party providers with the global footprint, scale, reputation and technical expertise to carry out these services on behalf of a diverse variety of end-users and industries. Additionally, outsourcing QHSE-related TIC services to independent third parties is typically more cost-effective because of their operating leverage and high utilisation rates. As a result, the TIC industry continues to benefit from structural drivers which present ongoing opportunities for TIC providers. TIC services are performed on behalf of clients across a broad range of industries, geographies and corporate sizes.

An Industry with Structural Growth Trends

Many of the largest TIC service providers in the industry have continued to expand the breadth of their services, reporting consistently favourable organic growth, and outperforming growth in global GDP in recent years. The increased complexity of supply chains requires independent verification and inspection.

Globalisation has changed the nature of manufacturing, procurement and trade, and has led to increasingly complex supply chains with increased cross border sourcing. Clients require independent certification of vendors’ capabilities and systems to establish conformity with relevant standards and client requirements.

An increase in the complexity and variety of products and assets

Products and assets are continuing to increase in the complexity of features and capabilities, increasing the need for inspection, testing and verification at the point of production as well as for their ongoing operation. Additionally, an increase in the variety of products to meet increasingly customised end user requirements drives an increased need for inspection and verification of each product model or variant.

Increased outsourcing of services to independent service providers

The Group believes that, relative to the estimated total size of the TIC market, the proportion of services performed by external third parties has continued to increase historically based on several structural drivers, including, credibility and consistency of third party accreditation, clients moving away from non-core activities, improved quality of service, better use of technical capabilities by industry experts, reduced time-to-market, which is especially important for markets with shorter product cycles, lower cost driven by higher efficiency and better utilisation offered by third party providers.

Strengthening of regulations and sustainability concerns resulting in increasing scope of mandatory and quasi mandatory services

Increasingly wide ranging and stringent QHSE regulations worldwide, especially in developing markets, have led to the extension of the scope of TIC services in both the regulated and non-regulated segments of the TIC market, resulting in increased convergence of verification requirements to best-in-class global standards.

Increased public safety concerns and improved living standards driving higher demand of quality and safety standards

The public’s growing awareness of QHSE related risks, partly driven by improved living standards, generates demand for products that meet strict quality and safety standards, thereby increasing demand for TIC services.

Specific segment growth drivers

In addition to the general market drivers outlined above, each of the Group’s verticals benefits from specific drivers of growth, as set out below.

Vertical Key Trends

Energy and Industry Services

Ongoing investments in new oil and gas infrastructure continue to drive forecast market growth on a global scale. Currently, there is a strong focus on new construction, with key opportunities arising from large new construction pipeline projects across North America, particularly Alaska (mainly driven by the US energy independence programme), and Mexico. However, ageing infrastructure over time, most notably in developed markets, will result in increased maintenance and testing to ensure safety and prolong asset life.

In addition to this, there is a growing trend towards investments in new energy sources. Recently, attractive opportunities lie in the exploration and production of shale gas and oil xxxxx, particularly in key areas across the USA (Xxxxxx, Eagle Xxxx, Xxxxxxxxx, Utica, Monterey and Permian Basin) and Canada (Ft. McMurray).

Large-scale oil and gas incidents have driven both the high economic and reputational cost of safety related incidents, as well as increasing QHSE standards, with oil majors progressively applying best-in-class standards worldwide. Furthermore, environmental concerns (for example, hazardous chemicals, wastewater and small seismic activity) fuel tougher regulation, consequently driving demand for TIC services. As such, oil majors are increasingly engaging a limited number of suppliers with strong reputation and global coverage.

A growing asset base in emerging markets, especially in infrastructure, has resulted in increased demand for TIC services. Positive investment trends in Latin America in the utilities (energy generation projects announced by the Colombian government), energy (Mexico’s energy liberalisation reform) and infrastructure (large investments including Lima subway, Panama canal upgrade and the Brazil 2016 Olympics) sectors continue to illustrate that a significant opportunity for growth exists. Further substantial investment is also being made in civil, power and transport infrastructures in the Middle East, a comparatively smaller but high growth region.

There is strong growth in niche markets with high technical and security requirements, such as the smartcard and cashless payment solutions industry. New materials testing in aerospace (addressed through BKW and Illescas laboratories) and automotive sectors highlight additional key opportunities that may fuel forecast growth.

Statutory Vehicle Inspections

There is a trend towards increased inspection frequency and scope of such inspections. For example, the new European Union legislation expanding testing regime to motorcycles and trailers is planned to be phased in from 2016 and fully implemented in 2018.

Recent reviews of national vehicle inspection regimes in certain countries have considered and rejected the establishment of fully liberalised statutory vehicle inspection models (for example, in Ireland). In addition, the European Parliament and the Council have recently adopted a Directive on periodic roadworthiness tests for motor vehicles and their trailers and repealing Directive 2009/40/EC, which will potentially reduce the ability of the Group’s competitors or others to challenge any vehicle inspection concessions on the grounds of incompatibility with the EU Service Directive (as defined below). See, “ – Other regulatory matters”.

Worldwide, a large number of developed markets have implemented existing statutory vehicle inspection programmes. However, the continuous need to upgrade these programmes, as additional requirements become apparent, has presented a key opportunity. For example, several countries have been extending existing inspection programmes to incorporate emissions testing as well. More broadly, this trend has been witnessed across the majority of the emerging markets, who have seen an increase in both the establishing and extending of statutory vehicle inspection programmes, for example, in countries such as Vietnam, Ecuador, Argentina and Chile.

An additional and broader driver is the fact that across most geographies, there is an increasing number of vehicles on the roads, thus increasing the demand for inspection services.

Automotive Engineering and Testing

The increasingly shorter product lifecycle of automotive products is resulting in an increasing number of new models and products which are being introduced by automotive OEMs. The increased number of models and products result in an increase in the number of engineering and testing services which will be required for them.

Vertical Key Trends

The growing focus of the automotive OEMs on new export markets such as Asia and the Middle East has resulted in greater demand for homologation services.

The tendency of the OEMs to outsource the services such as automotive engineering and testing is increasing, particularly in Europe (level of outsourcing at c.15 per cent.). This is driven by a need of improving OEMs’ flexibility and also the result of tightening regulations, for example on carbon dioxide emissions, which are forcing OEMs to increase outsourcing (including in respect of research and development) in order to develop new equipment that complies with regulatory requirements, such as lighter body or fuel efficiency.

A further trend is the growing technological complexity of vehicles, for example alternative fuel systems, such as diesel, gas and hybrid driving engine specifications as well as regulations, including Euro 5 emissions and EURO NCAP testing.

Fragmented Competitive Landscape

The TIC market is characterised by a very high level of fragmentation, with hundreds of players offering a narrow range of services on a local or regional basis. There are few international players with truly global TIC capabilities, which among them make up a relatively small proportion of the overall TIC market. This supports high barriers to entry for global players while offering continued scope for consolidation given the large number of small, local operators. The table below sets out the nature of competition and key market participants.

Vertical Nature of competition Key market participants

Energy and Industry Services

Statutory Vehicle Inspections

Automotive Engineering and Testing

• Few global players with leading positions

• A few smaller regional niche players with specialised offering

• Numerous small local players

• Depends on nature of operational market (i.e. concession, authorised or liberalised market)

• In general very few global players, a few regional and numerous local players

• Several large engineering services players

• Large number of regional/specialised players

• Limited number of independent proving grounds

• Applus+, Acuren, ALS, Bureau Veritas, DNV GL, Intertek, Mistras, SGS, Xxxxx Technical Services, Team, TÜV Nord, TÜV Rheinland, TÜV Süd

• Applus+, XXXXX, Xxxx, XXX, XXX Xxxx, XXX Xxxxxxxxx, TÜV Süd

• Applus+, AVL, Xxxxxxxxx, XXXX, Nardó Technical Centre, Xxxxx, TRC, Xxxxx

High Barriers to Entry for Global Competitors

Requirement for portfolio of accreditations and authorisations

An extensive portfolio of accreditations and authorisations is necessary to operate in the variety of markets and industry segments within the sector. Building up such an extensive portfolio requires global expertise, presence, experience and a long timeframe.

Focus on brand and reputation

Mission critical nature of services where quality is key, favour established players.

Global capabilities with local presence

International presence and scale and the capacity to provide a spectrum of services at all client locations is an important benefit in servicing local operations of multinational clients as well as addressing global client contracts. Larger global players with larger operational scale across their geographic footprint benefit from efficiencies of scale in the utilisation of assets and technical staff.

Importance of technical know-how and expertise

Technical expertise, proprietary technology and highly skilled staff provide a strong competitive advantage in the TIC sector. For example, Applus+ RTD has developed a number of proprietary technologies that it uses to

perform its testing services, such as Rotoscan, which uses ultrasonic testing for automated girth weld inspections. A new entrant to the TIC sector would need to invest significant financial resources and time in order to recruit highly skilled staff and develop the requisite technical expertise and proprietary technology and equipment.

Mission critical nature of services increases customer inertia

Customers have a preference for continuity in their relationships with TIC providers, creating a competitive advantage for established players over new entrants.

Expansion of scope of services, end-markets and geographies through selective acquisitions

The large number of smaller, niche regional or local service providers offers meaningful continued scope for a global player such as Applus+ to identify and acquire such smaller players to selectively strengthen its market positions, enter new end-markets or enhance its service offering.

Organisational Structure

The Company is the parent company of the Group, which comprises 30 principal directly and indirectly controlled subsidiaries. The table below sets out an organisational structure of the Group’s verticals and divisions as at the date of this document.

Applus+ Services

Energy & Industry

Statutory Vehicle Inspections

Automotive Engineering & Testing

c.3,770 FTEs

2013:

Revenue:

€558,574

% of Group Revenue: 35.3%

c.4,500 FTEs

2013:

Revenue:

€372,576

% of Group Revenue: 23.6%

c.3,700 FTEs

2013:

Revenue:

€186,158

% of Group Revenue: 11.8%

c.600 FTEs

2013:

Revenue:

€56,637

% of Group Revenue: 3.6%

c.3,000 FTEs

2013:

Revenue:

€273,599

% of Group Revenue: 17.3%

c.1,700 FTEs

2013:

Revenue:

€132,513

% of Group Revenue: 8.4%

Note: This table does not reflect the ownership structure of the Group.

Amounts in thousands, other than percentages.

Description of Divisions

Energy and Industry Services

The Group’s Energy and Industry Services vertical provides inspection, testing and certification services to clients through its four divisions: Applus+ RTD, Applus+ Velosi, Applus+ Norcontrol and Applus+ Laboratories. The Group assesses clients’ facilities for compliance with national regulations and international quality and safety standards and enables clients to optimise their processes using a broad range of different equipment, inspection and data interpretation techniques to inspect and test assets, materials, processes, products and management systems.

Applus+ RTD

Applus+ RTD was founded in 1937 and was acquired by the Group in 2006. It was founded as an NDT specialist company and evolved into a service provider for the energy and oil and gas end-markets upon the discovery of gas resources in the Netherlands in 1960. It was able to use its extensive knowledge of NDT to contribute to the development of the national gas network, as it performed detailed inspection of welds and other parts of the new infrastructure, which provided it with the foundations to operate in the global pipeline sector. Applus+ RTD is headquartered in Rotterdam, the Netherlands and employs approximately 3,770 FTEs in more than 25 countries across five continents. Applus+ RTD is a global provider of NDT (both conventional NDT which includes ultrasonic and radiographic testing of piping, pressure values and storage tanks and advanced NDT which includes the use of technologies such as Mapscan (a method used for semi-automatic corrosion mapping around difficult geometry)), inspection and certification services mainly to the oil and gas industry.

NDT consists of the analysis and testing of industrial parts and material without causing any damage or affecting its functionality. Since NDT allows the evaluation of the properties or materials or components of materials and assets without affecting its functionality and use, it offers a cost-effective solution for clients in terms of the quality control assessment of its assets. Applus+ RTD uses a range of methods of NDT testing including, among others, radiography testing, ultrasonic testing, which involve the use of digital radiographic inspection, and ultrasonic technology, respectively, to test the materials and, as well as the use of xxxx current, which uses electromagnetic induction to detect flaws in conductive materials. Applus+ RTD also uses laser profilometry technology to detect corrosion in materials, as well as positive material identification (“PMI”) technology to determine the alloy composition of a material. Applus+ RTD also offers advanced NDT testing, which is a higher-value service, which enables testing of complex assets and materials.

Services

Š Applus+ RTD provides regulatory-driven and mission-critical services to upstream, midstream and downstream oil and gas exploration, transportation and production facilities, as well as to clients in the power, aviation and civil infrastructure sectors. These services primarily comprise NDT, asset integrity (including pipeline integrity management to ensure that the pipelines that are used to deliver oil are safe and secure, such as non-piggable pipeline inspection, whereby Applus+ RTD uses technology to inspect particular pipelines that are difficult to inspect because of access or valve restrictions, plant life management, where Applus+ RTD advises clients on how to optimise the service and operational life of nuclear power plants, as well as other types of industrial risk-based inspections) in-service inspection and certification, new construction inspection and consultancy and radiation protection services for high-risk capital intensive assets, such as oil pipelines.

Technology know-how and authorisations

Š The Group believes that Applus+ RTD uses a wide range of technology and know-how, and has qualified employees and technicians in order to deliver its services globally. Applus+ RTD has developed specific technology and know-how to deliver testing and inspection services, including products such as Rotoscan, which is used in ultrasonic testing, and Rayscan, which is used in connection with radiography. Applus+ RTD also designs and manufactures sophisticated inspection equipment, which is used by its technicians to perform inspections at clients’ sites. Applus+ RTD is working on new, innovative techniques, such as non-piggable pipeline inspection equipment, which Applus+ RTD plans to launch later in 2014, to create opportunities to sell new and improved inspection services to clients. Applus+ RTD’s research and development team, which employs more than 50 specialists, has developed inspection equipment and advanced inspection techniques in respect of which it has been granted 35 patents. Applus+ RTD also holds more than 100 authorisations issued by different national and international organisations. The process for obtaining such authorisations can typically be a lengthy process, which requires the applicant to demonstrate the strength of its expertise and internal systems. The process of acquiring a broad portfolio of authorisations and accreditations, together with the associated expertise and experiences, is therefore a long-term process that is not easy to replicate.

End-Markets

Š Applus+ RTD tests both newly constructed assets and assets that are already in-service. The Group believes that industrial assets are subject to increasingly stringent regulation, partly as a result of major recent safety and environmental incidents and partly due to an increasing adoption of western safety

standards in emerging markets. In the year ended 31 December 2013, 64 per cent. of Applus+ RTD’s revenue was generated from clients in the upstream and midstream oil and gas industry, compared to 22 per cent. from the downstream oil and gas industry, 7 per cent. from the power generation industry and 7 per cent. from other end-markets. Within the upstream and midstream oil and gas industry, services in respect of onshore facilities represented 19 per cent. of Applus+ RTD’s revenue in 2013, onshore pipelines represented 37 percent, storage represented 3 per cent. and offshore fixed units 5 per cent. The Group expects that capital and operating expenditures in the oil and gas sector will increase globally as a result of a number of factors, including investments into new production assets, ageing oil and gas production assets and transportation infrastructure, which requires more frequent inspection and testing to ensure safety and to prolong the useful lives of assets. In the year ended 31 December 2013, 73 per cent. of revenue generated by Applus+ RTD was attributable to conventional NDT services, 17 per cent. to advanced NDT services and 10 per cent. to other services such as asset integrity inspection and management, new construction and in-service inspection, radiation protection services and the use of ropes and associated equipment when working at height to gain access to and from the work place (“Rope Access”).

Clients

Š Applus+ RTD has a diversified blue chip customer base, with the largest client accounting for 7 per cent. and no other client accounting for more than 5 per cent. of its recorded revenue in the year ended 31 December 2013. Applus+ RTD’s top 20 clients represented 36 per cent. of its recorded revenue in 2013, while its top 3 clients accounted for 15 per cent. of Applus+ RTD’s revenue (and 5 per cent. of the Group’s revenue) in 2013. Applus+ RTD has established long-term relationships with its key clients and has entered into global master service agreements and global supply contracts with a number of them. A large number of clients have had teams of Applus+ RTD employees embedded within their facilities for significant periods of time. Illustrative clients include oil and gas majors such as BP, Chevron, Exxon Mobil, Shell and Total, and other oil and gas operators, and downstream energy companies such as EDF, Enbridge, Oxy, and Technip and TransCanada. Applus+ RTD also has long-term relationships with major engineering, procurement and construction (“EPC”) contractors, such as Xxxxxx, and pipeline construction companies such as Saipem and Serimax.

Geographical presence

Š Applus+ RTD has a geographical presence across the United States and Canada, Latin America, Europe, the Middle East, South East Asia and Australia. In the year ended 31 December 2013, services provided to clients in the United States and Canada accounted for 52 per cent. of Applus+ RTD’s revenue, as compared to 32 per cent. in Europe, 11 per cent. in the Asia Pacific region and 6 per cent. in Latin America, the Middle East and Africa. North America is a key market for Applus+ RTD, where it is currently providing services for clients constructing and operating large-scale energy transportation infrastructure in two of the largest shale regions in the United States. The Group believes that its operations in the United States and Canada are well-positioned to take advantage of any opportunities that may result from further significant investments into upstream and midstream assets in these regions, if and when this occurs.

The table below sets out Applus+ RTD’s revenue and operating profit for each of the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December 2011 2012 2013

		€ thousands
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	401,578	495,251	558,574
Operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . .	38,019	51,052	68,035
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Applus+ Velosi	(8,655)	5,199	21,982

Applus+ Velosi was founded in 1982 in Kuala Lumpur, Malaysia and was acquired by Azul Holding S.C.A. (Lux) on 24 January 2011, before being contributed to the Group in December 2012. Applus+ Velosi operates globally from five regional headquarters based in the United States, the United Kingdom, South Africa, the UAE and Malaysia and employs approximately 4,500 FTEs in more than 35 countries across five continents. Global provider of vendor surveillance, site inspection and specialized manpower services for the oil and gas industry.

Services

Š Applus+ Velosi is a global provider of a wide range of activities, including primarily specialised manpower services, which consist of the recruitment of inspectors, construction supervisors, engineers and other specialised labour required by clients for the inspection, testing and construction of assets and vendor surveillance (which is the provision of third-party inspection, auditing and expediting services), site inspection services (whereby it provides “third party” inspection of clients’ projects and sites to ensure that they comply with the high standards of quality expected from majors in the oil and gas industry).

Š Applus+ Velosi also provides safety and quality certification services and specialised engineering support to clients, such as assisting with the repair and maintenance of the floating production storage and offloading (“FPSO”) vessel units used by offshore oil and gas providers. In the year ended 31 December 2013, 47 per cent. of Applus+ Velosi’s revenue was generated from such technical staffing services, 19 per cent. from vendor inspection services, 13 per cent. from site inspections, 9 per cent. from engineering support and 12 per cent. from other services provided by the division.

Š Applus+ Velosi’s services also comprise training in first aid, rope access, NDT and work safety to its clients’ personnel. Applus+ Velosi has developed proprietary software for use in its vendor surveillance and asset integrity services. Its software development team can adapt and develop this software to provide additional functionalities if required.

End-markets

Š Applus+ Velosi generates the significant majority of its revenue from services to clients in the oil and gas industry. Applus+ Velosi carries out vendor surveillance services at manufacturing plants globally for a broad range of structural, mechanical, electrical and instrumentation equipment to ensure compliance with client specifications. Applus+ Velosi conducts site inspections for clients, which involve the inspection of welding, painting, coating, electrical instrumentation, structural and dimensional control on offshore platforms, floating production, storage offloading vessels, drilling operations, on/offshore pipelines, sub-sea and petrochemical facilities.

Clients

Š Applus+ Velosi is one of a few operators with global coverage, enabling it to provide services to key clients wherever their assets are located. Applus+ Velosi has entered into medium-term global master service agreements with 17 of its 25 major clients in the Energy and Industry Services vertical. Applus+ Velosi has a high share of repeat business, for example, in 2013, 81 per cent. of its revenue was attributable to existing clients. These global master services agreements establishes a framework for Applus+ Velosi to provide new and ongoing services to its major clients, which the Group believes can lead to higher revenue visibility and order backlogs. Applus+ Velosi has developed long-term relationships with key clients in the oil and gas industry such as BP, Chevron, Conoco Xxxxxxxx, Eni, Exxon Mobil, Shell and Transocean, pipeline construction companies, such as TransCanada, infrastructure companies such as Alstom and construction and mining equipment manufacturers such as Komatsu. Applus+ Xxxxxx’x top 20 clients represented 54 per cent. of its recorded revenue in 2013, while its top 3 clients accounted for 28 per cent. of Applus+ Xxxxxx’x, and 7 per cent. of the Group’s, revenue in 2013.

Geographical presence

Š Applus+ Velosi is a provider of vendor surveillance, site inspection and specialised manpower services in the Middle East, Africa and the Asia Pacific region with a growing presence in the United States and Canada, as well as an established presence in Europe. In the year ended 31 December 2013, services provided to clients in Asia Pacific accounted for 42 per cent. of Applus+ Velosi’s revenue, as compared to 35 per cent. in the Middle East and Africa, 13 per cent. in Europe, and 9 per cent. in the United States and Canada.

The table below sets out Applus+ Velosi’s revenue and operating profit for each of the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December 2011 2012(1) 2013

€ thousands

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	-	66,352	327,576
Operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . . .	-	3,371	35,774
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	-	2,893	22,067

(1) Applus+ Velosi comprised a part of the Group for 11 calendar days in 2012 from 20 December 2012 to 31 December 2012.

Applus+ Norcontrol

Applus+ Norcontrol was founded in 1981 and was acquired by the Group in 2004. Applus+ Norcontrol is headquartered in Madrid. It operates primarily in Spain, Latin America and the Middle East and employs approximately 3,700 FTEs. Applus+ Norcontrol is primarily engaged in the assessment of the quality, safety and efficiency of the design, construction and operation of utilities infrastructure, oil and gas facilities, other industrial facilities and large-scale civil engineering projects for a diversified client base that includes, among others, clients in the construction, utilities and telecommunications sectors.

Services and end-markets

Š Applus+ Norcontrol provides a broad range of services to across a number of end-markets, which can be summarised as follows:

• Industrial, utilities and telecommunications sectors – Applus+ Norcontrol assists its clients by providing TIC services, which include statutory inspection, particularly of power grids, telecommunication networks, civil infrastructure, quality control, project management and other technical assistance, such as advising on energy efficiency (which refers to the services provided to any client in respect of energy optimisation in industrial production processes, energy saving consultation and energy efficiency implementation and certification in all types of buildings);

• Public Sector and other companies – Applus+ Norcontrol provides health, safety and environmental (“HSE”) consultancy, which includes quality and management consulting, environmental testing, inspection and environmental control, health and safety coordination, occupational health consultancy and external accident prevention services; and

• Construction – Applus+ Norcontrol provides inspection, quality control testing for building materials, technical assistance, project design, consulting, project management and testing services for a broad range of civil construction projects, including transport infrastructure, industrial facilities and residential construction projects.

• In the year ended 31 December 2013, 55 per cent. of Applus+ Norcontrol’s revenue was generated from clients in the industrial, utilities and telecommunications sector, compared to 31 per cent. from the public sector and other companies and 13 per cent. from construction clients.

Clients

Š Applus+ Norcontrol has established many long-term relationships with clients in the Spanish utilities sector and has leveraged the Group’s global relationships to penetrate Latin American markets. Additionally, the Group has established a presence in the Middle East and other countries to diversify revenue further. In the year ended 31 December 2013, Spain and Latin America accounted for 62 per cent. and 35 per cent. of Applus+ Norcontrol’s revenue, respectively. The Group believes that Applus+ Norcontrol’s operations in Latin America are well-established and will provide a platform for further growth in the region. Applus+ Norcontrol provides services to utilities companies such as Codelco, Gas Natural and Iberdrola, telecommunications companies such as Huawei, Telefonica and Vodafone, oil and gas companies such as Petrobras and Repsol, and infrastructure companies such as Aena Aeropuertos and Ferrovial. Applus+ Norcontrol’s top 20 clients in Spain and Latin America represented

approximately 60 per cent. and 66 per cent., respectively, of its recorded revenue in the relevant region in 2013, while its top 3 clients accounted for 30 per cent. of Applus+ Norcontrol’s revenue and 4 per cent. of the Group’s revenue in 2013. 40 per cent. of Applus+ Norcontrol’s revenues in Spain, and 71 per cent. of its revenues in Latin America, derive from contracts with customers with terms lasting more than one year.

The table below sets out Applus+ Norcontrol’s revenue and operating profit for each of the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December 2011 2012 2013

		€ thousands
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	187,686	190,695	186,158
Operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . .	17,056	17,867	20,507
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Applus+ Laboratories	2,383	4,371	(201)

Applus+ Laboratories, which is headquartered in Barcelona, traces its history back to 1907. It was acquired by the Group in 2003. It has a presence in Europe, Latin America, China and Saudi Arabia and employs approximately 600 FTEs.

Services

Š Applus+ Laboratories provides a wide range of product testing, system certification and product development services, such as: IT security and functionality testing; testing of smart cards, chips and systems security; mechanical, structural and materials testing; electromagnetic compatibility; electrical and environmental testing and certification; construction material testing (including fire testing) and certification; legal metrology; and industrial calibration. Applus+ Laboratories has clients in a wide range of industries including the aerospace, oil and gas and payment systems sectors, through a network of 12 laboratories (seven of which are operated under contractual agreements with the regional government of Catalonia, following the divestment of two laboratories as part of the sale of the agrofoods business to Eurofins Scientific in March 2014). These technologically advanced facilities underpin the Group’s ability to deliver the technology, expertise and services that is expected and required by its clients, and also provide a differentiated platform that would require much financial investment and technical effort and know-how for a new entrant to the market to replicate.

Š Applus+ Laboratories’ operations focus primarily on Spain, where it is a distinguished provider of product testing and system certification services, and other European markets.

Š Product testing and certification: Laboratory services for technical products are focused on the industrial, aerospace, oil and gas, metrology and IT sectors. Applus+ Laboratories provides IT consultancy to payments systems providers, IT systems companies, and chip manufacturers globally, including smart card and chip testing. It has significant experience in the testing, evaluation and accreditation of chip payment security and payment devices, including mobile payment systems. In the aerospace and automotive testing sectors, Applus+ Laboratories focuses on safety and reliability testing, and provides structural and materials testing and quality control for new products. In 2012, Applus+ Laboratories established new laboratories in Saudi Arabia and Norway focused on destructive testing, which the Group believes is a significant market for upstream oil and gas equipment. Laboratories for technological products accounted for the majority of the services provided by Applus+ Laboratories.

Š Applus+ Laboratories has established capability in fire testing, materials testing, electromagnetic compatibility (which studies and tests the unwanted effects of electromagnetic interference in electrical devices and circuitry) and quality control in the aerospace, automotive and oil and gas sectors.

Š Management systems certification: Applus+ Laboratories provides management systems certification services, quality, environmental, occupational health and safety and IT security services, primarily to small and medium sized businesses in Spain, where it is a relevant provider, and in Latin America. It also provides services to large companies in the financial, food, telecommunications and retail sectors. Applus+ Laboratories has a presence in China, where it provides certification services to the construction industry.

In the year ended 31 December 2013, product testing and certification accounted for 63 per cent. of Applus+ Laboratories’ revenue, compared to 18 per cent. from management systems certification and 19 per cent. from consumer goods.

Laboratories network

Š Following the divestment of two laboratories as part of the sale of the agrofoods business to Eurofins Scientific in March 2014, Applus+ Laboratories has twelve laboratories, which have a number of approvals and accreditations to work with the Group’s principal clients. In 2003, Applus+ Laboratories entered into a programme with the regional government of Catalonia to manage its laboratories based in Balleterra, Barcelona, until 2033, upon which it will have the option, subject to the agreement of both parties, to extend the programme for a further two ten year periods. In March 2014, the Group entered into an agreement to sell its agrofood business, including two laboratories, to Eurofins Scientific. In the year ended 31 December 2013, its agrofood business represented 19 per cent. of Applus+ Laboratories’ revenues (0.7 per cent. of the Group’s revenue) and 7.5 per cent. of Applus+ Laboratories operating profit before depreciation, amortisation and others (0.3 per cent. of the Group’s operating profit before depreciation, amortisation and others). The total proceeds received from the sale will amount to €10,394 thousand. For a further discussion, see “Operating Review – Current Trading and Recent Developments

– Recent Developments”. Applus+ Laboratories has more than 70 accreditations from European regulatory bodies. See “ — Accreditations”.

Clients

Š Applus+ Laboratories has established long-term relationships with a number of key clients and provides services to a diverse range of clients in a number of industries. In the aerospace industry, Applus+ Laboratories’ key clients include Airbus, EADS, Rolls Xxxxx and Safran. Applus+ Laboratories also provides services to technology companies such as HP and Indra.

Geographical presence

Š Applus+ Laboratories has a presence in Europe, Latin America, China and Saudi Arabia. In the year ended 31 December 2013, Applus+ Laboratories generated 81 per cent. of its revenue from clients in Spain, 9 per cent. from the rest of Europe, 6 per cent. from China and 4 per cent. from Latin America.

The table below sets out Applus+ Laboratories’ revenue and operating profit for each of the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December

	2011	2012	2013
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52,090	€ thousands 55,852	56,637
Operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5,730	7,001	7,241
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(1,252)	701	(451)
Statutory Vehicle Inspections (Applus+ Automotive)

Applus+ Automotive was established in Spain in 1994 and was acquired by the Group in 1996. Applus+ Automotive is a global provider in the statutory vehicle inspection and emissions testing market. The Group believes that it is one of only a few global operators that have the technological and operational capabilities to deliver statutory vehicle inspections and emissions testing services efficiently on behalf of national, regional and state authorities, which enhances the Group’s ability to win further contracts, and to renew or retain existing ones. The management of the Group believes that the Group’s ability to provide a high level of service, enable it to renew existing contracts successfully while winning new business globally. It has expanded its operations to include a number of Spanish regions, several European Union and Latin American countries, and several states in the United States. Applus+ Automotive currently employs approximately 3,000 FTEs.

Services

Š Applus+ Automotive is a full service provider, which includes the design and development of vehicle inspections programmes for national, state and local authorities, software design and development and

the use of inspection technology. In Europe and Latin America, Applus+ Automotive conducts a multi- stage and comprehensive vehicle testing process, which involves exhaust emissions testing, under-the- xxxxxx inspection, a review of indicators and headlamps, assessing shock absorbers and brakes and under-the car body checks of the tyres and transmission, among other things. Vehicles that pass the testing process are issued with a roadworthiness certificate confirming compliance with legislative requirements.

Š In the United States, the Group’s vehicle inspection services relate to compliance with environmental emissions legislation. Applus+ Automotive offers on-board diagnostic (“OBD”) tests, which uses a device to download engine and emissions control data from computerised emission control system that are installed on newer cars produced in the United States. It also offers specific testing vehicles that are not equipped with OBD systems, such as opacity tests for diesel vehicles, and tailpipe tests for older, gasoline powered vehicles.

Š Applus+ Automotive provides a number of ancillary services, including the sale of testing equipment such as smoke meters and portable gas analysers (in the United States and Canada) and training and educational services. Applus+ Automotive has 322 vehicle inspection stations and provided more than 10 million statutory vehicle inspections in 2013 to certify that vehicles comply with minimum safety, emissions and technical standards.

Regulatory models

Š Applus+ Automotive provides its services to individual vehicle users and fleet operators in the regions in which it operates. In each region which operates a regulated or exclusive model, Applus+ Automotive contracts with the relevant government agency responsible for implementing the statutory vehicle inspection regime.

Š Applus+ Automotive operates in both liberalised and regulated vehicle inspections markets and provides services under the following types of operational model, depending on the regulatory framework in a particular jurisdiction.

Š Exclusive model: the service is provided by one operator, which manages all aspects of the service and controls all systems within a particular jurisdiction. Competition with other providers occurs only when the mandate is being tendered for renewal. In the United States Applus+ Automotive operates under this model in the states of Xxxxxxxxxxx, Xxxxxxx, Illinois, Utah and Washington, and as well as the countries of Andorra and Ireland. In Ireland, Applus+ Automotive has a ten-year mandate expiring in 2020, with exclusivity for the entire national territory. In the United States, operators provide services either under a centralised model, under which the contractor operates the testing stations and conducts the vehicle tests itself or under a decentralised model, under which independent operators operate testing stations and conduct vehicle testing under the supervision of the contractor. Under the decentralised model, the contractor is responsible for training and certification of individual operators and data collection.

Š Regulated model: a limited number of operators are authorised by the relevant regulator to operate a vehicle testing network within a particular jurisdiction (pursuant to concessions or authorisations and, in some cases, with certain degrees of territorial exclusivity). The main differences between a concession regime and an authorisation regime typically are that concessions are awarded to one company, or a limited number of operators, after winning a tender process against competitors, whereas an authorisation will be granted to, in principle, any company that complies with certain regulatory requirements, although restrictions may be imposed on the number of operators that may be authorized to operate vehicle testing inspections. Typically, concessions are granted for a longer period of time than authorisations, and they grant exclusivity to operate vehicle testing inspections over a specified territory or a number of testing stations, whereas authorisations usually do not grant such exclusivity. If additional capacity is required, the regulator may tender for a limited number of additional testing stations. Applus+ Automotive operates vehicle inspection programmes under this model in Argentina, Chile and some Spanish regions.

Š Liberalised model: under this model, any operator fulfilling the technical and administrative requirements specified by the relevant regulator can provide vehicle testing services. Requirements typically include independent facilities, certified equipment, IT infrastructure and trained personnel.

Jurisdictions in which the Group’s Statutory Vehicles Inspection vertical operates and which have adopted this system include Denmark, Finland, and Madrid and Castile-La Mancha regions in Spain.

Š The mandatory nature of statutory vehicles inspections provides the Group with a clear and resilient revenue stream. Through its experience in the sector and across a number of markets that it operates in, such as Spain, the Group has observed that the volume of inspections has grown over the years and is remaining resilient during periods of economic downturns as lower new vehicle sales frequently lead to ageing vehicle fleets which require more frequent inspections.

Š Proposed amendments to vehicle inspection legislation in the European Union, if enacted, could increase the frequency and the range of vehicles (to include trailers and motorcycles) that are subject to testing, giving rise to the potential for further growth in the statutory vehicle inspections market. The Group expects that the legislation is likely to result in an increase in the number of inspections that its operations within the European Union could assist with carrying out.

Business opportunities

Š The Group also expects that it is possible that further emissions testing programmes may be introduced in the United States, which would also provide a growth opportunity for the Group’s operations in the United States and Canada. Similarly, the Group expects that several countries in Africa, Asia, the Middle East and Latin America may adopt statutory vehicle inspection regimes in the coming years as more stringent QHSE standards are adopted across different jurisdictions, which may also provide the Group with additional opportunities in these markets. The Group has identified a number of opportunities for international tenders which it is currently pursuing.

Applus+ Automotive has identified more than ten concessions globally, including in Latin America and Asia, in respect of which it has or expects to bid and tender for over the next 24 months. See “Risk Factors — The Group operates in competitive markets and its failure to compete effective could result in reduced profitability and loss of market share”.

Š In certain Spanish regions in which the Group operates, current, proposed or future reforms of the statutory vehicle inspections regimes may remove or limit restrictions on the number of operators that are authorised to conduct vehicle inspections, which may increase the number of operators that are authorised to provide vehicle inspection services. In this respect, a current draft royal decree on statutory vehicle inspections stations issued by the Spanish central government proposes to remove certain restrictions under Spanish law with respect to entities conducting statutory vehicle inspections, which would, were it to come into force, allow a broader range of operators (including, for example, entities engaged in the sale or repair of motor vehicles or in land transportation activities) to conduct statutory vehicle inspections in liberalised regions or allow them to participate in future tenders, thus potentially increasing the competition faced by the Group. There is currently no certainty as to when this royal decree will be passed, if at all, or, if enacted, as to its final terms and conditions. See “Risk Factors — Liberalisation of statutory vehicle inspections markets could result in increased competition”.

Š In the year ended 31 December 2013, 80 per cent. of Applus+ Automotive’s revenue was generated in regulated or exclusive markets, with the remaining 20 per cent. coming from liberalised markets. Any adverse decision in any judicial proceedings or government decisions that result in the further liberalisation of the vehicle inspections in any jurisdiction which is currently regulated, and in which the Group operates, could increase competition within the relevant vehicle inspection markets, which could have a negative impact on sales volumes or the price of vehicle inspections or other services provided by the Group. For example, in certain Spanish regions, including Catalonia, which represented 18 per cent., and the Canary Islands, which represented 5 per cent., of Applus+ Automotive’s revenues in the year ended 31 December 2013, respectively, there is the possibility of current proposed or future reforms to the statutory vehicle inspections regimes, which may increase the number of operators that are authorised to provide vehicle inspection services. See “Risk Factors — Liberalisation of statutory vehicle inspections markets could result in increased competition” and “ — Legal proceedings”.

Geographical presence

% of revenue in

Regulatory

Minimum contract

Possible maximum(2)

Price

Geographic region(1)		2013			model		duration	extensions	scheme
Spain
Catalonia . . . . . . . . . . . . . . . . . . . . . . . . . . .		18%			Regulated		2035	-	Maximum
Canary Islands . . . . . . . . . . . . . . . . . . . . . .		5%			Regulated		2018	99 years	Price limit
Alicante . . . . . . . . . . . . . . . . . . . . . . . . . . .		4%			Regulated		2023	75 years	Fixed price
Basque Country . . . . . . . . . . . . . . . . . . . . .		3%			Regulated		2024	99 years	Fixed price
Aragon . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1%			Regulated		2020	50 years	Fixed price
Castile-La Mancha . . . . . . . . . . . . . . . . . . .		<1%			Liberalised		2015	5 years	Price limit
Menorca . . . . . . . . . . . . . . . . . . . . . . . . . . .		<1%			Regulated		2017	99 years	Fixed price
Madrid . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Spain . . . . . . . . . . . . . . . . . . . . . . . .		<1% 34%			Liberalised		N/A	-	Free pricing
Rest of Europe
Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		24%			Exclusive		2020	-	Fixed price
Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . .		10%			Liberalised		N/A	-	Free pricing
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . .		9%			Liberalised		N/A	-	Free pricing
Andorra . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Spain and Rest of Europe . . . . . . .		<1% 77%			Exclusive		2016	25 years	Fixed price
United States/Canada(3)
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4%			Exclusive		2015	-	Fixed price
Washington . . . . . . . . . . . . . . . . . . . . . . . . .		4%			Exclusive		2017	5 years x 232	Fixed price
Connecticut . . . . . . . . . . . . . . . . . . . . . . . . .		2%			Exclusive		2017	2 years x 2	Fixed price
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . .		<1%			Exclusive		2018	1 year x 2	Fixed price
Utah-Xxxxx . . . . . . . . . . . . . . . . . . . . . . . .		<1%			Exclusive		2015	3 years	Fixed price
Salt Lake City . . . . . . . . . . . . . . . . . . . . . . . Total United States . . . . . . . . . . . . . . . . . .		<1% 13%			Exclusive		2014	3 years	Fixed price
Latin America
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . .		7%			Regulated		2018	-	Fixed price
Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3%			Regulated		2014/2022	-	Fixed price
Total Latin America . . . . . . . . . . . . . . . . .		10%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		100%

(1) In relation to the Spanish regions: the Canary Islands, Alicante, the Basque Country, and Aragon, programmes may be renewed for successive periods of 10 years, and in Menorca, Castile-La Mancha and Andorra for successive periods of 5 years. The table sets out the maximum possible extension period.

(2) The table sets out the maximum extension period included in the contract. Although for those contracts with no possible extension, the Group will be able to win the future new programmes.

(3) In addition, the Group has entered into an equipment supply contract in Canada – Ontario which expires in 2018 and for which extensions are limited to 3 years. Canada accounted for 2 per cent. of Applus+ Automotive’s revenue in the year ended 31 December 2013.

Š Long-term agreements

As of the date of this document, the weighted average remaining life of Applus+ Automotive’s inspection service contracts is more than nine years (excluding potential contract extensions). The Group believes that on expiry of contracts, existing operators have a clear advantage over competitors if service expectations have been met during the life of the contract. The Group has an established track record of renewing, extending and winning contracts. Over the last ten years, Applus+ Automotive has only lost two tendering processes, where it was unable to renew its contracts in Massachusetts and Rhode Island, on the basis of pricing. However, since 2005 the Group has successfully renewed nine programmes (Castile-La Mancha, Catalonia, Canary Islands, Aragon, and Menorca in Spain, and Georgia, Connecticut and Washington in the United States, and Chile). The Group also won nine additional programmes (which excluding those won between 2011 and 2013 listed below), include two programmes in Chile, Andorra, Illinois and Salt Lake (Utah) in the United States and Ireland. In the three years ended 31 December 2013, the Group has won concessions in Xxxxx (Utah), Ontario, Ireland, Chile and Georgia and has successfully renewed its concessions in Connecticut, Menorca, Washington and Chile. As is indicated in the table above, eight concession agreements (two of which are currently

subject to ongoing tenders for new concessions), which represented 8 per cent. of Applus+ Automotive’s revenue, which was 1.4 per cent. of the Group’s revenue, in the year ended 31 December 2013 are due to expire in the three years ended 31 December 2016.

Š Applus+ Automotive operates in, among other locations, a number of Spanish regions, Ireland (where it is the sole provider of vehicle inspection services, and enjoys 100 per cent. of the market share), and in Denmark, Finland, the United States and Canada, Argentina and Chile. Applus+ Automotive has over time, developed market share in these jurisdictions, where, as at the date of this date, it currently enjoys a 12 per cent. market share (by name in 2013) in the United States, 31 per cent. in Denmark and 17 per cent. in Finland. In the year ended 31 December 2013, Spain accounted for 33.9 per cent. of Applus+ Automotive’s revenue, as compared to 23.5 per cent. in Ireland, 13.5 per cent. in the United States and Canada, 10 per cent. in Finland, 8.8 per cent. in Denmark and 10.1 per cent. in Latin America.

Technology

Š Applus+ Automotive has developed proprietary software and management systems to increase efficiency and share know-how across the regions in which it operates. Applus+ Automotive has developed the use of modern inspection technology, such as on-board diagnostics and dashboards incorporated into clients’ vehicles, to provide clients with technically advanced services. This technological and data gathering expertise also enables Applus+ Automotive to provide regulators with key market information.

The table below sets out Applus+ Automotive’s revenue and operating profit for each of the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December 2011 2012 2013

		€ thousands
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	245,025	266,391	273,599
Operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . .	67,054	68,968	71,247
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Automotive Engineering and Testing (Applus+ IDIADA)	34,884	34,614	(56,840)

Applus+ IDIADA was established in 1971 as an institute at the Polytechnic University of Catalonia specialising in applied automotive research. In 1990, the institute was spun-off from the university and in 1999 it was privatised and the Group acquired 80 per cent. of its issued share capital. The Group is a provider of testing, engineering and homologation services to global automotive original equipment manufacturers (“OEMs”) and operates an independent vehicle engineering and testing facilities at its proving ground, near Barcelona. The Group has developed engineering expertise across the automotive value chain which has enabled it to become a renowned provider of design and engineering services to global automotive OEMs, many of whom have co- located design and engineering operations at the Group’s proving ground. In addition to its long-established European operations, the Group’s global network spans key growth markets, including China, India and Brazil. The Group believes that its international presence, technologically advanced testing facilities and engineering expertise will enable it to sustain continued growth with existing customers and win business from prospective clients. Applus+ IDIADA has approximately 1,700 FTEs of which approximately 950 employees are skilled and experienced engineers.

Š Demand for the Group’s automotive engineering and testing services is principally driven by a continued increase in the outsourcing of specific functions by resource-constrained automotive OEMs together with the increase in vehicle models launched, all of which require independent testing and certification against safety and performance standards.

Š Applus+ IDIADA provides solutions to automotive OEMs at each stage of the development of a vehicle.

Its principal services are:

• Engineering services: Applus+ IDIADA collaborates with OEMs on vehicle development projects. Services include the development of passive and active safety systems, such as passenger and pedestrian protection, as well as braking systems, in addition to focussing on the comfort of the interior and exterior of the vehicle, including noise levels, physical comfort, reliability, electronics, power testing and chassis development.

• Proving ground services: Applus+ IDIADA operates a comprehensive range of testing facilities, including a high speed circuit, external noise test tracks, dry and wet handling tracks, test hills and off-road tracks.

• Homologation services: European legislation requires OEMs to ensure that vehicles comply with strict requirements. Applus+ IDIADA provides homologation services to OEMs to ensure that vehicles and vehicle components meet these requirements. In addition, Applus+ IDIADA also assists certain western OEMs, which are expanding their operations into emerging markets, to meet local requirements.

• Other services: Applus+ IDIADA provide other services to OEMs, including testing services for OEM facilities, designing proving grounds, events organisation and vehicle exhibitions.

In the year ended 31 December 2013, 61 per cent. of Applus+ IDIADA’s revenue was generated through its engineering and testing services, 19 per cent. by proving ground services, 13 per cent. by homologation services, and 7 per cent. by other services.

Facilities operating through a concession agreement

Š Applus+ IDIADA operates one of the world’s few independent testing facilities for automotive OEMs at its proving ground close to Barcelona. The proving ground enables automotive OEMs to test new models confidentially and includes a high speed circuit, external noise test tracks, dry and wet handling tracks, test hills and off-road tracks.

The Company indirectly holds an 80 per cent. stake in Applus+ IDIADA with the Catalan government holding the remaining 20 per cent. The Catalan government also owns Applus+ IDIADA’s vehicle proving ground near Barcelona and in 1999 Applus+ IDIADA entered into a 20-year services and use assignment agreement to operate it. This services and use assignment agreement can, with the agreement of both Applus+ IDIADA and the Catalan government, be extended after 2019 by successive five-year periods up to 2049. In 2010, the Catalan government expressly committed to take the necessary regulatory measures to extend the services and use assignment agreement for an additional five year period (until 2024) upon completion of the initial term. Under the terms of the services and use assignment agreement, the Catalan government is required to incur certain capital expenditure in order to maintain the condition of the proving ground provided that such amounts have been approved in Catalonia’s budget. Many automotive OEMs have located operations at the Group’s proving ground so that they can work closely with Applus+ IDIADA’s engineering teams and for ease of access to the testing facilities.

Know-how, Innovation and brand reputation

Š The Group believes that it has developed know-how and technical expertise, particularly around the delivery of passive safety, homologation and electrical vehicle engineering services, which allows it to deliver services to its clients effectively. Applus+ IDIADA has a strong focus on research and development to underpin its new services.

Š Applus+ IDIADA believes that it has established a distinct brand identity in the global automotive testing and, engineering services market and is considered a major provider of testing services in passive safety systems, homologation and electric vehicles. Through its teams of engineers specialising in vehicle development, Applus+ IDIADA has acquired in depth knowledge of technical requirements to enable vehicle manufacturers to fulfil standards and regulations worldwide. Applus+ IDIADA also has extensive research and development capabilities in active safety systems, chassis and powertrain design and electronics and reliability.

Geographical footprint

Š Applus+ IDIADA provides engineering, testing and homologation services to the world’s leading automotive OEMs and has a presence in 22 countries worldwide, with presence mainly in Europe, China, Mexico, the United States, India and Brazil. In the year ended 31 December 2013, 22 per cent. of Applus+ IDIADA’s revenue was generated in Spain, 50 per cent. in the rest of Europe, 23 per cent. in in the Asia Pacific region and 5 per cent. in Latin America and the Middle East.

Š In addition, the expansion of European automotive OEMs into emerging markets, such as Brazil, is expected to create more opportunities for the Group to expand its homologation services into such markets. Automotive OEMs in emerging economies, such as China, typically need to import technical know-how from established automotive markets, which is further driving demand for the Group’s testing and engineering services. Increasingly stringent emissions standards in Europe, Asia and the United States will also drive demand for specialist engineering know-how. The Group believes that these market trends on quality and geography are likely to lead to further demand for its automotive and testing services.

Clients

Applus+ IDIADA provides services to major global vehicle manufacturers such as Audi, BMW, Ferrari, Hyundai, KIA, Mercedes, McLaren, Nissan, Seat and TATA and to vehicle equipment manufacturers such as Continental. Applus+ IDIADA’s top 20 clients represented 64 per cent. of its recorded revenue in 2013, while its top 3 clients account for 23 per cent. of IDIADA’s revenue (2 per cent. of the Group’s revenue) in 2013. The table below sets out Applus+ IDIADA’s revenue and operating profit for each of the years ended 31 December 2011, 2012 and 2013.

Year ended 31 December 2011 2012 2013

€ thousands

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	94,211	116,505	132,513
Operating profit before depreciation, amortisation and others . . . . . . . . . . . . . . . . . . . . . . . . . . .	15,147	18,834	21,992
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intellectual property	9,168	13,119	14,893

The Group’s intellectual property consists of inventions, trademarks, industrial designs and copyright (for example, in the case of technical drawings). The Group continually generates new procedural and technological innovations and analyses newly created intellectual property to decide strategically if and how the knowledge created should be protected. The Group seeks to ensure long-term value-added and distinguishable technological and procedural solutions that it offers to its clients. By conducting periodic audits of its intellectual property, the Group seeks to ensure that all created intellectual property is adequately protected to preserve the Group’s revenue and growth potential resulting from the intellectual property. Audits are designed to identify areas in which the Group could improve its intellectual property protection or if the Group is potentially infringing any third party’s intellectual property rights.

The Group also uses professional agents specialising in intellectual property protection to monitor the market for new innovations and to protect the Group’s intellectual property rights in case of infringement by third parties.

The Group relies on intellectual property rights across each of its divisions. In particular, Applus+ RTD relies on the technology and equipment it develops to provide inspection and testing services, for example, oil and gas NDT, which provide a significant competitive advantage. In addition, Applus+ Laboratories relies on patents related to the aeronautical sector which are valuable for the Group’s revenue attributable to this sector. Both Applus+ Automotive (which relies on certain software in its operations in the United States) and Applus+ Velosi (which relies on the proprietary software it has developed as an important component of its asset integrity, site inspection and vendor surveillance services) rely on intellectual property rights in their operations which differentiate the Group from its competitors.

As of the date of this document, the Group holds approximately 38 patents, of which 35 are held by Applus+ RTD, two are held by Applus Norcontrol+ and one is held by Applus Technologies, Inc. The Group has 18 outstanding patent applications, including with respect to Applus+ Laboratories. The Group periodically assesses appropriate circumstances for seeking patent protection for those aspects of its technologies, designs, methodologies and processes that it believes provide significant financial, operational or competitive advantages. See “Risk Factors — Risks Related to the Group’s Business — The Group may be unable to secure or protect its rights to intellectual property”.

Certain intellectual property held by Applus+ RTD is licenced to a number of the Group’s clients.

The total net book value of patents for the year ended 31 December 2013 was €3,285 thousand. There have been no material impairments on patents in the year ended 31 December 2013. Save as for the following

patents: (i) apparatus for determining proprieties of an electrically conductive object. which was granted in Germany, Netherlands, United States, Canada, Norway and filed in 1999; (ii) method and assembly for carrying out irradiation tests on units, which was granted in France, Germany, Switzerland, United Kingdom and filed in 1998; and (iii) a method for non-destructive inspection which was granted in the United States and filed in 1996, held by Applus+ RTD, that will expire in 2016, 2018 and 2019, respectively, no other material patents are due to expire. The Company does not consider that the expiration of these three patents will have a negative impact on the financial results of the Group as these patents relate to historical technologies that were developed approximately 20 years ago.

Except for the description provided in this section, there are no patents, licences or any kind of intellectual property which are deemed material to the Company’s business or profitability.

Accreditations, Approvals and Authorisations

To carry out its business, the Group has numerous licenses to operate (“Authorisations”) which vary depending on the country or business concerned, including accreditations (official voluntary acknowledgments which are granted by official accreditation bodies who assess, among other things, a company’s technical competence and expertise, equipment and HR in accordance with International Organisation Standards and applicable laws), approvals (which must be obtained in order to access and operate in certain regulated business sectors), certifications (which indicate that a company meets system-related standards, for example, management system standards), delegated authority, official recognition, or listings. The Authorisations may be issued by national governments, public or private authorities, and national or international organisations.

Obtaining Authorisations globally can be a lengthy process requiring the applicant to establish the strength of its expertise and internal systems. In addition, costs may be payable in respect of certain Authorisations, for example, periodic fees payable to accreditation bodies and fees for annual audits. See also “Risk factors — Any failure to obtain and maintain certain authorisations could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects”.

Applus+ RTD

Applus+ RTD holds more than 100 authorisations issued by numerous national and international organisations, including the Belgian accreditation bodies DAP and BELAC, the German accreditation bodies DAkkS and KTA 1401, National Association of Testing Authorities in Australia, United Kingdom Accreditation Service, Xxxx voor Accreditatie (RvA) in the Netherlands, NADCAP and ASTM in the United States, SAC in Singapore, CAI in Czech Republic and DANAK in Denmark. In addition, Applus+ RTD holds “SCC” and “VCA” safety certifications and also more than 15 approvals issued worldwide by government authorities.

Applus+ Velosi

Applus+ Velosi holds accreditations and certifications from RvA, Dubai Accreditation Department, Emirates Authority for Standardisation and Metrology, Accredia in Italy, American Petroleum Institute, and approvals by classification societies such as ABS, DNV and Lloyd’s. In addition, Applus+ Velosi holds authorisations from governments worldwide that enable it to operate in more than 35 countries, including authorisations from the Abu Dhabi EHS Centre, the Government of Dubai, the Government of Sharjah, the Department of Occupational Safety in Malaysia, the Central Boilers Board in India and the Ministry of Manpower in Singapore. Applus+ Velosi also holds certification in relation to quality and environmental management, occupational risk prevention and the oil and gas sector.

Applus+ Norcontrol

Applus+ Norcontrol holds more than 30 authorisations. These accreditations have been issued by national accreditation bodies such as Entidad Nacional de Acreditación (“ENAC”), Organismo Nacional de Acreditación de Colombia and MINCOMU in Colombia. In addition, the division is classified as a “notified body” under European Union Directives in respect of pressure equipment, simple pressure vessels and lifting equipment. A “notified body” is an organisation that has been accredited by a member state of the European Union to assess whether a product meets certain prescribed standards. Applus+ Norcontrol holds more than 15 approvals and certifications issued by local authorities to perform official inspections which are mandatory under industrial safety regulations.

Applus+ Laboratories

Applus+ Laboratories has approximately 85 accreditations issued by recognised organisations such as ENAC, Norwegian Accreditation, DAkkS, NADCAP, United Nations Acreditación UNFCCC, EMA in Mexico, ONA in Colombia, INN in Chile, International Automotive Task Force (IATF), the International Maritime Organisation and EMvCO, which cover a broad range of accredited activities. The division is a “notified body” under European Union Directives in respect of construction products, measuring instruments, electromagnetic compatibility, machinery, safety of toys and interoperability of electronic road toll systems. Applus+ Laboratories has several approvals issued by local authorities enabling the division to perform official inspections which are mandatory under regulations relating to legal metrology.

Applus+ Automotive

Applus+ Automotive, as a provider of statutory vehicle inspection services, has been authorised by national organisations to perform vehicle inspections in more than 300 stations in the United States, Latin America and Europe. The division holds approximately 60 accreditations issued by international organisations, including ENAC in Spain and the Irish National Accreditation Board in the Republic of Ireland including in respect of management systems of quality, health and safety and environment.

Applus+ IDIADA

Applus+ IDIADA holds several accreditations for testing activities issued by ENAC, National Institute of Metrology Standardisation and Industrial Quality (INMETRO) and Euro NCAP and is a “notified body” under the European Union Directive relating to personal protective equipment. The division holds European vehicle type approval from Germany (KBA), the Netherlands (RDW), and Spain (MINETUR), and the Japanese and Taiwanese vehicle type approval (NTSEL and VSCC respectively).

Except for the description provided in this section, there are no licences or authorisations which are deemed material to the Company’s business or profitability.

IT and Management Systems

As at 31 December 2013, the net book value of the Group’s IT software and hardware was €5,951 thousand and

€5,595 thousand, respectively.

The Group’s IT initiatives can be broadly categorised into two areas:

Š Development of business applications to support sales and operational processes. The Group uses a number of tailor-made solutions and software packages to manage its operations. Requirements vary from one division to another, and as a result, the Group has developed various applications including key applications that it uses to carry out its site inspection, vendor surveillance, specialised manpower, project management, NDT, statutory vehicle inspection and laboratory information management services. The development and refinement of these business applications are critical to the Group’s ability to carry out its services and establish technology leadership in its chosen markets.

Š Standardisation of technology platforms across the Group. The Group is standardising the way employees use technology to ensure that all employees have access to enterprise information systems and tools with the appropriate level of performance and support.

The Group’s corporate applications are hosted in a modern data centre in Madrid. Critical information is continuously replicated into a secondary data centre in Barcelona to ensure business continuity. The Group has back-up and disaster recovery plans in place which are reviewed on a periodic basis. The IT services are supplied in a cost efficient and flexible way through a combination of internal and external resources from the Group’s IT partners.

Employees

The Group has approximately 19,000 employees as at the date of this document. Of the Group’s employees, approximately 3,000 are qualified engineers.

The Group recorded staff costs of €529,219 thousand, €640,077 thousand and €773,771 thousand in the years ended 31 December 2011, 2012 and 2013 respectively.

There have been no material collective redundancies implemented by the Group in the three years ended 31 December 2013.

To date, the Group has not experienced any material strikes, work stoppages or labour disputes. The Group considers its relations with its employees satisfactory.

The following table sets out the approximate number of the Group’s FTEs as of each of the years ended 31 December 2011, 2012 and 2013 by division.

Number of FTEs as of 31 December

	2011		2012		2013
Applus+ RTD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,952		3,989		3,770
Applus+ Velosi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,878		4,581		4,517
Applus+ Norcontrol(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3,198		3,402		3,683
Applus+ Laboratories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	614		775		612
Applus+ Automotive(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,896		2,887		3,064
Applus+ IDIADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1,287		1,368		1,690
Other(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	103		108		119
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11,049		17,110		17,456(4)

(1) Includes Applus+ Norcontrol units in Latin America.

(2) Includes Applus+ Automotive units in Latin America, Spain and other countries worldwide.

(3) Includes employees in the in-house corporate division within the Group.

(4) As at the date of this document, the Group has approximately 19,000 employees.

Facilities

As of 31 March 2014, the Group operated 324 offices, 157 testing facilities and 322 statutory vehicle inspection stations in 60 countries. The total net book value of land and buildings owned by the Group was

€88,812 thousand as at 31 December 2013. In addition, in the year ended 31 December 2013 the total amount paid under the operating leases of the Group was €28,682 thousand. The following table sets out the facilities that management of the Group considers more relevant from an operating point of view and would require significant time and investment to replicate. The most difficult and expensive asset to replicate due to its size is the Applus+ IDIADA facility in Tarragona (which includes the proving ground, laboratories and offices) which is currently operated under a concession with the regional government of Catalonia.

Division Geographic region Facility(1) Owned/leased

Applus+ RTD Germany Laboratory Leased

Applus+ RTD Germany 10 offices / laboratories Leased

Applus+ RTD Australia 2 offices Leased

Applus+ RTD Australia Laboratory Leased

Applus+ RTD Canada 2 offices / laboratories Leased

Applus+ RTD Netherlands 2 offices /laboratories Owned

Applus+ RTD UK Offices / laboratories Leased

Applus+ RTD UK Laboratory Leased

Applus+ RTD US 2 offices / laboratories Owned

Applus+ RTD US Offices / laboratories Leased

Applus+ RTD US Offices Leased

Applus+ Laboratories China Offices / laboratories Leased

Applus+ Laboratories Germany Offices/ laboratories Leased

Applus+ Laboratories Norway Offices / laboratories Leased

Applus+ Laboratories Saudi Arabia Laboratory Leased

Applus+ Laboratories Spain 2 offices / laboratories Leased

Applus+ Norcontrol Spain 2 laboratories Owned

Applus+ Norcontrol Spain 6 offices / laboratories Owned

Applus+ Norcontrol Spain 5 offices / laboratories Leased

Applus+ Norcontrol Spain 5 laboratories Leased

Applus+ Norcontrol Spain 3 offices Leased

Applus+ IDIADA Spain Proving ground / laboratories / offices

Leased

(1) Office / laboratories denotes a single facility or location that has both office and laboratory facilities.

The land and buildings owned by the Group listed above are not subject to any major encumbrances besides those referred to in the section “Operating and Financial Review – Guarantees and obligations acquired”.

The Group is not aware of any material environmental issues that may affect the Group’s utilisation of its tangible fixed assets.

Health and safety

The Group’s operations (and, in particular, the operations of Applus+ NDT, Applus+ Laboratories and Applus+ Norcontrol) are subject to numerous health and safety laws and regulations. The Group believes that its operations are in compliance with applicable health and safety legislation. Except as described in “Risk Factors

— Compliance with extensive health, environmental and safety laws and regulations could increase the Group’s costs or restrict its operations”, the Group has not experienced any serious accidents that have had a significant impact on employee health and safety.

Environmental matters

The Group is subject to numerous environmental, legal and regulatory requirements related to its operations worldwide. In the European Union, these laws and regulations include, among others, Directives 2008/EC on waste, and 2013/59/EURATOM on safety standards for protection against the risks of exposure to ionising radiation. In the United States, these laws and regulations include, among others: the Comprehensive Environmental Response, Compensation, and Liability Act, the Resources Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Atomic Energy Act, the Energy Reorganization Act of 1974, as amended, and applicable state regulations.

In addition to these laws and regulations, other jurisdictions in which the Group does business often have environmental, legal and regulatory requirements with which the Group is obliged to comply. The Group evaluates and addresses the environmental impact of its operations by assessing properties in order to avoid future liabilities and comply with environmental, legal and regulatory requirements.

The Group did not incur any significant expenses related to environmental matters in 2013, 2012 and 2011.

Insurance

The Group has entered into global insurance policies covering general and professional liability in the countries in which it operates. The Group carries property damage and business interruption in most of the countries where the Group operates. The Group’s main insurance policy also covers the transportation of the Group’s equipment and machinery by sea. The Group carries director and officer liability insurance covering the Company and all of its subsidiaries. The Group also purchases insurance cover locally in certain circumstances, for example for individual projects or for nuclear power related services.

The Group believes that its insurance coverage is generally similar to that of global companies of the same size operating in the same sectors. The Group intends to continue its policy of subscribing global insurance policies where possible and increase coverage locally where necessary.

Other regulatory matters

In July 2012, as part of the “Roadworthiness Package”, the European Commission proposed a new Regulation on periodic roadworthiness tests for motor vehicles and their trailers, which would repeal the current Directive 2009/40/EC. The objective of the proposal was to update the current European rules on the roadworthiness testing of motor vehicles and their trailers and enhance road safety and environmental protection. In March 2014, the European Parliament and the Council approved this proposal and adopted a new Directive on roadworthiness tests for vehicles, which as of the date of this document, is awaiting publication in the Official Journal of the European Union (the “New Roadworthiness Directive”). Once in force, the New Roadworthiness Directive will have to be adopted by member states of the EEA within 36 months.

Directive 2006/123/EC on services of the internal market (the “Service Directive”) seeks to encourage freedom of establishment and freedom to provide services across borders. Although the Service Directive aims to encourage the liberalisation of certain markets it specifically does not apply to “services of general interest in the field of transport”. The New Roadworthiness Directive confirms that when authorising vehicle testing centres in their respective territories, member states of the EEA should take into account the fact that the Service Directive

excludes from its scope services of general interest in the field of transport. As discussed in “Legal Proceedings

– Statutory Vehicle Inspections” below, the Group is involved in litigation affecting the Catalonian and Canary Islands. Statutory vehicle inspection regimes in which certain authorisations held by the Group have been challenged on the basis of this Service Directive.

The ability of the Group’s competitors or others to challenge any vehicle inspection concessions awarded to a sole or a limited number of operators on the grounds of incompatibility with the Service Directive will potentially be significantly reduced pursuant to the New Roadworthiness Directive.

The operations of Applus+ RTD, Applus+ Velosi and Applus+ Norcontrol involve the storage, handling, import, export and transport of radioactive materials and equipment in more than ten countries, including the United States, Canada, Indonesia, Spain and the United Arab Emirates. The right to perform such activities is granted by the relevant federal or national regulator upon issuance of a permit or licence once compliance with the applicable regulatory and technical requirements is verified. Such permits and licences are issued for a specific term and may be renewed periodically. Applus+ RTD, Applus+ Velosi and Applus+ Norcontrol hold approximately 90 permits and licenses to operate radioactive materials and equipment issued by numerous federal and national organisations, including the New York State Department of Health, Scottish Environment Protection Agency and the Canadian Nuclear Safety Commission.

The operations of Applus+ RTD, Applus+ Velosi and Applus+ Norcontrol are also subject to periodic audits by the relevant regulators to verify compliance with the applicable regulatory and technical requirements to operate radioactive materials and equipment. Such audits may result in sanctions, fines and the withdrawal or non- renewal of permits and licenses. Furthermore, these divisions are subject to surveillance obligations by federal and national regulators in connection with the exposure of personnel to radiation (in terms of both accumulated exposures over extended periods of time and isolated incidents of exposures).

As at the date of this document, 80 per cent. (by revenue) of the Applus+ Automotive’s statutory vehicle inspections services operate as concessions or authorisations under which a limited number of operators are authorised by the relevant local government agency to provide vehicle inspection services within a particular jurisdiction. This typically results in lower levels of competition and higher margins for the Group’s services as compared to liberalised markets. Spain is one of the Group’s most important statutory vehicle inspections markets, accounting for 33.9 per cent. of the Applus+ Automotive division’s revenue in the year ended 31 December 2013. However, a draft royal decree on statutory vehicle inspections stations issued by the Spanish Ministry of Industry, Energy and Tourism proposes to remove such restrictions with respect to entities conducting statutory vehicle inspections. In this respect, the Ministry of Industry, Energy and Tourism published in 2013 a draft of the proposed royal decree, which would, were it to come into force, allow a broader range of operators to conduct statutory vehicle inspections in liberalised regions or allow them to participate in future tenders, thus potentially increasing the competition faced by the Group. In order to be enacted, the new royal decree would have to be approved by the Spanish government and there is currently no certainty as to when this royal decree will be passed, if at all, or, if enacted, as to its final terms and conditions. Any adverse decision in any judicial proceedings or government decisions to further liberalise of the vehicle inspections markets in Spain or in any other jurisdiction which is currently regulated, and in which the Group operates could increase competition within the relevant vehicle inspection markets which, may have a negative impact on sales volumes or the price of vehicle inspections or other services provided by the Group. See – “Risk Factors – Liberalisation of statutory vehicle inspections markets could result in increased competition”.

Legal proceedings

From time to time, the Group is involved in legal proceeding arising in the ordinary course of business. Except as referred to below there have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Group is aware) since 1 January 2011 which may have, or have had in the recent past, significant effects on the Group’s financial position or profitability. Furthermore, all such proceedings considered jointly do not have, or have had, in the recent past, significant effects on the Group’s financial position.

Statutory Vehicle Inspections

In certain Spanish regions in which the Group operates, current, proposed or future reforms of the statutory vehicle inspections regimes may remove or limit restrictions on the number of operators that are authorised to conduct vehicle inspections, which may increase the number of operators that are authorised to provide vehicle inspection services.

In Catalonia, which represented 18.5 per cent. of Applus+ Automotive’s revenue (3.2 per cent. of the Group’s revenue) in the year ended 31 December 2013, the existing vehicle inspections regime limits the provision of vehicle inspections to a defined number of operators. This regime (which includes certain provisions of Catalan Decrees 30/2010, of 2 March and 45/2010, of 30 March), as well as certain administrative resolutions granting vehicle inspection authorisations to members of the Group, among others, have been challenged through several appeals before the Catalan High Court of Justice (“Tribunal Superior de Justicia de Cataluña”) (“CHCJ”) on the basis that the regime is contrary to the EU Services Directive. In rulings dated 25 April 2012, 13 July 2012, 13 September 2012 and 21 March 2013, respectively, the CHCJ ruled at first instance that the authorisation regime operated in Catalonia and, therefore, the authorisations granted thereunder, were contrary to the EU Services Directive. These rulings are currently subject to appeal to the Spanish Supreme Court. On 20 March 2014, the Spanish Supreme Court formally requested a preliminary ruling (“cuestión prejudicial”) from the European Court of Justice on the application of the EU Services Directive to vehicle inspections services under European Union law. The Group anticipates that a final ruling from the Spanish Supreme Court in relation to this matter will therefore be delayed further. In any event, until a final ruling from the Spanish Supreme Court is handed down, given that the ruling by the CHCJ is not final, no changes to the current Catalan vehicle inspection regime will be implemented as a result. If, pursuant to the European Court of Justice preliminary ruling, the Spanish Supreme Court declares the regime operated in Catalonia unlawful on the basis of the applicable EU regulation, the considerations made under the CHCJ ruling would be sustained. In such event, the Group believes that it would still be entitled to continue operating its statutory vehicle inspection business in Catalonia but under a different authorisation regime (“título habilitante”) and, as a result of any such ruling, it is likely that number of operators authorised to provide vehicle inspection services in Catalonia would increase. The Group had taken into account the Catalan litigation when considering the cashflow projections used in the impairment tests performed for the year ended 31 December 2013 and no impairment related to this issue had been recorded, principally as a result of the anticipated legislative developments in connection with the New Roadworthiness Directive and favourable statements made by the European Commission’s Directorate for Internal Markets and Services. These statements are, however, not binding on the Directorate.

The Group’s vehicle inspection operations in the Canary Islands represented 5 per cent. of Applus+ Automotive’s revenue (0.9 per cent. of the Group’s revenue) in the year ended 31 December 2013. Historically, the regional government of the Canary Islands had limited the number of operators authorised to operate a vehicle testing network. However, in May 2007 (prior to the end of the Group’s current concession), the regional government of the Canary Islands passed a liberalisation decree pursuant to which several new operators were authorised to conduct vehicle inspections in the Canary Islands from 2010 onwards. This liberalisation decree has had a negative impact on the Group’s market share in that territory. The Group, along with other operators and certain industry associates, challenged the decision of the regional government of the Canary Islands to award additional contracts before the Spanish Supreme Court. As of the date of this document, the Group’s claim is still under consideration by the Spanish Supreme Court. The decision of the regional government of the Canary Islands to award additional vehicle inspection contracts was also challenged by the industry association Asociación Española de Entidades Colaboradoras de la Administración en la Inspeccion Técnica de Vehículos (AECA-ITV) and General de Servicios ITV, S.A. another provider of vehicle inspection services in Spain. On 11 February 2014, the Spanish Supreme Court rejected the challenges brought by both of these entities and upheld the actions taken by the Canary Islands government.

See also, “Risk Factors – Liberalisation of statutory vehicle inspections markets could result in increased competition”.

Employee Matters

On 6 November 2013 and 28 February 2014, two employment claims were filed against Valley Industrial X-Ray and Inspection Services, Inc. and Applus Technologies, Inc., two members of the Group, in connection with, amongst other things, unpaid overtime and a failure to provide appropriate meal breaks. As of the date of this document, both cases are pending in the United States District Court for the Eastern District of California, Fresno Division. The plaintiffs have applied for the matter to be tried as a class action. The court has set 21 May 2015 as the date for hearing when it will determine whether these claims can proceed as a class action. The Group intends to defend the claims and vigorously oppose the commencement of any class action. A €3,600 thousand provision has been made by the Group in the Audited Consolidated Financial Statements for the year ended 31 December 2013 to cover reasonable contingencies in connection with the potential early settlement of these two employment claims and related opposing counsel fees.

OPERATING AND FINANCIAL REVIEW

The following discussion of the Group’s financial condition and results of operations as at and for the three year period ending 31 December 2013 should be read in conjunction with the Audited Consolidated Financial Statements, including the notes thereto and the other information included elsewhere in this document. See also “Presentation of Financial and Other Information”. The Audited Consolidated Financial Statements are prepared in accordance with IFRS. The Combined Financial Statements have been prepared from the audited consolidated annual accounts of the Group and the Velosi Group respectively, both in accordance with IFRS.

This section contains forward-looking statements, which are based on assumptions and estimates, and, as such, is subject to risks and uncertainties. Accordingly, the Group’s actual results may differ materially from those expressed or implied in such forward-looking statements, as a result of various factors, including those described under “Risk Factors” and “Forward-Looking Statements”. In this section, unless otherwise indicated, the financial information discussed is extracted or derived from the Audited Consolidated Financial Statements.

Overview

For an overview of the Group, see “Business – Overview”.

Basis of Presentation of Audited Consolidated Financial Statements

This operating and financial review for the three-year period ended 31 December 2011, 2012 and 2013 is based on the financial information derived from the Audited Consolidated Financial Statements. The Audited Consolidated Financial Statements have been prepared in accordance with IFRS, are incorporated by reference herein and available on the Company’s website (xxx.xxxxxx.xxx).

The Group has six reportable segments: Applus+ RTD, Applus+ Velosi, Applus+ Norcontrol, Applus+ Laboratories, Applus+ Automotive and Applus+ IDIADA, which are the Group’s strategic divisions. To measure performance of these segments, the Group examines certain segment financial information, including revenue; operating profit; and operating profit before amortisation, depreciation and others; as it believes that such information is the most relevant in evaluating the results of its segments relative to other entities that operate within the Group’s industry. See also “Management Financial or Non-IFRS Measures (unaudited)”.

Key Factors Affecting the Comparability of Results of Operations

Contribution of Applus+ Velosi

On 20 December 2012, Azul Holding S.C.A. (Lux), a shareholder of the Company, contributed the entire issued share capital of Velosi S.à r.l., the holding company of the Applus+ Velosi business, to the Group.

The Audited Consolidated Financial Statements comprise the consolidated financial statements of the Group (excluding the Velosi Group) as of and for the year ended 31 December 2011, the consolidated financial statements of the Group as of and for the year ended 31 December 2012, the audited consolidated balance sheet of which reflects the consolidation of the Velosi Group but the income statement and cash flow statement of which reflects the consolidation of the Velosi Group for only 11 days of operations (from 20 December 2012), and the consolidated financial statements of the Group as of and for the year ended 31 December 2013 (including the Velosi Group for all purposes). Accordingly, the Group’s results of operations for the years ended 31 December 2011 and 2012 are not directly comparable with those of subsequent periods. For, example the revenue contributed to the Group by the Applus+ Velosi segment in 2012 from 11 days of operations (from 20 December 2012) was €8,837 thousand whereas in the year ended 31 December 2013 the Applus+ Velosi segment contributed revenue of €372,576 thousand. In the year ended 31 December 2013, Applus+ Velosi accounted for 23.6 per cent. of the Group’s revenue and 18.9 per cent. of the Group’s operating profit before depreciation, amortisation and others.

The Group has prepared financial statements combining both the Velosi Group and the remainder of the Group (the Combined Financial Statements) in order to present comparable historical financial information for the years ended 31 December 2011 and 2012 (available on the Company’s website (xxx.xxxxxx.xxx)). For a discussion of the Combined Financial Statements, see “Presentation of Financial Information – Combined Financial Statements”.

See also “Key Factors Affecting the Group’s Performance and Results of Operations — Impact of acquisitions”.

Financing arrangements

Historically, the Group has incurred significant costs arising from its financing arrangements, which has had a significant impact on the Group’s operating profit. The Company entered into an agreement dated 29 November 2007 with Azul Finance S.à r.l. (Lux), one of the Company’s Selling Shareholders, under which Azul Finance S.à r.l. (Lux) extended a participating loan to the Company for an initial amount of €369,375 thousand with a stated maturity date of 27 November 2019 (the “Participating Loan”). In addition the Company entered into the Syndicated Loan Facilities dated 27 November 2007 (see “Material Contracts”) with a syndicate of lenders in an initial amount of €1.085 million.

These losses before tax were driven, in part, by borrowing costs relating to the Syndicated Loan Facilities of

€43,129 thousand in 2013 and €45,863 thousand in 2012 and the non-cash borrowings costs relating to the capitalisation of interests under the Participating Loan of €14,351 thousand in 2013, €41,740 thousand in 2012 and €36,166 thousand in 2011. The total referred borrowing costs amounted to €72,036 thousand in 2013,

€113,928 thousand in 2012 and €111,814 thousand in 2011 (which represented 4.5 per cent., 7.2 per cent. and

7.4 per cent. respectively, of the Group’s revenue). The Participating Loan was fully capitalised by way of a conversion into share capital and share premium by the end of December 2013 which reduced the Group’s indebtedness and financing costs. In addition, the Group intends to use part of the net proceeds of the Offering and the New Facilities towards the repayment of the Syndicated Loan Facilities upon Admission.

In 2013, the Group had a cost of debt of 5.1 per cent., and 6.4 per cent. excluding and including, respectively, any interest on the Participating Loan. The cost of debt for the Group in 2013 amounted to €72,036 thousand, which represented 4.5 per cent. of the Group’s revenue. As a result of the Group’s New Facilities, with effect from Admission, the Group expects to pay an initial interest margin of 2.25 per cent. above LIBOR, or in relation to any loans drawn in euro, EURIBOR, and for other local facilities that will not be refinanced as part of the Offering, a similar rate of interest to those paid in the past. By way of illustration, the cost of debt in respect of the New Facilities would be 2.56 and 2.48 per cent. based on the 3 month EURIBOR of 0.31 per cent. and 3 month USD LIBOR of 0.23 per cent., respectively as of 31 March 2014. The New Facilities represent 95.11 per cent. of the post-Offering net financial debt of the Group. Accordingly, the changes to the Group’s debt financing arrangements post-Admission will have a positive effect on the Group’s financial results. The Group’s debt financing arrangement post-Admission are described in detail in “Operating and Financial Review — Liquidity and Capital Resources”. The Group’s net financial debt as at 28 February 2014 would have been €695,066 thousand (as compared to €938,866 thousand in connection with the current Syndicated Loan Facility and other local debt facilities currently in place), as adjusted to give effect to (i) the receipt of the gross proceeds of the Offering, (ii) the drawdown of amounts under the New Facilities, (iii) repayment in full of the Group’s current Syndicated Loan Facility and (iv) the costs of the Offering.

As a result of the transactions described above, the Group’s results of operations for the years ended 31 December 2011, 2012 and 2013 are not directly comparable with those of subsequent periods.

Impairment of goodwill and other intangible assets

The Group recognises significant goodwill and other intangible assets arising principally from the acquisition of the Group by funds advised by Xxxxxxx and other investors in 2007, in addition to subsequent acquisitions undertaken by the Group. See “Impact of Acquisitions”. As at 31 December 2013, the Group carried goodwill of

€487,882 thousand and other intangible assets of €632,695 thousand (including an associated deferred tax liability of €166,465 thousand), of which €444,210 thousand and €550,245 thousand (including an associated deferred tax liability of €153,709 thousand), respectively, was recognised upon the acquisition of the Group by funds advised by Xxxxxxx and other investors in 2007.

The changes in the impairment and gains or losses on disposal of non-current assets in 2013 and 2012 are set out in the table below:

Year Ended 31 December 2012 2013

Impairment of Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	€ thou (18,101)	xxxxx (81,285)
Impairment of Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	-		(37,882)
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(18,101)		(119,167)
Asset sales results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(915)		(18)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(916)		1,614
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(19,932)		(117,571)

Save for the acquisition of the Group, the impairments for the three year period ended 31 December 2013 related principally to Applus+ RTD as a result of macro-economic conditions affecting its operations in Europe. In this regard the Group recognised impairments of €16,744 thousand, €18,101 thousand and €18,000 thousand in 2013, 2012 and 2011 respectively. In 2013 the Group also recorded impairments of €60,897 thousand in the Applus+ Automotive division as a result of the liberalisation of the statutory vehicle inspections market in Finland, and of

€23,105 thousand due to uncertainty in respect of the Group’s ability to renew existing concession agreements in the United States. Additionally, during the year 2013 the Group impaired €18,421 thousand related to Applus+ Norcontrol goodwill (€11,370 thousand) and Applus+ Automotive Spain (€7,051 thousand).

As a result of the impairments described above, the Group’s results of operations for the years ended 31 December 2011, 2012 and 2013 are not directly comparable with those of subsequent periods. As part of the Group’s expansion strategy it intends to undertake further acquisitions which may lead to an increase in the Group’s goodwill and other intangible assets. The Group’s goodwill and other intangible assets may be subject to further impairments in the future.

Management incentive plans

The Group has established a number of management incentive plans, including two cash incentive agreements, a cash and share based management incentive plan, a multi-annual bonus agreement and a new long-term incentive plan. Certain of these management incentive plans were entered into prior to the date of this document and the remainder will be implemented upon or after Admission. Certain of the awards under the management incentives plans or agreements are dependent on the Offering Price or on the financial results of the Group or one of its divisions. All of the senior managers of the Group will participate in, at least, one of these incentive plans and agreements.

Starting from October 2008, Azul Holding S.C.A. (Lux) has entered into certain cash incentive agreements granting nine senior managers and 37 other employees of the Group an incentive linked to the return received in the Offering by the Selling Shareholders with respect to their initial investment in the Company. Prior to Admission these economic incentive agreements will have been terminated (with no entitlement to cash payments) other than with respect to one senior manager and 18 other employees of the Group. The Company estimates that the senior manager and the other 18 employees could potentially receive a cash payment upon Admission of an aggregate estimated amount of €1,250 thousand, although the maximum aggregate amount potentially payable under these cash incentive agreements is €10,500 thousand (of which a total aggregate amount of €1,500 thousand would be payable to the senior manager and the remaining €9,000 thousand to 18 other employees of the Group).

Starting from June 2011, Velosi S.à r.l. has entered into a cash incentive agreement with two senior managers of the Group and nine other employees of the Applus+ Velosi division. Under the cash incentive agreement, the relevant individuals are entitled to a cash payment upon the achievement of certain profitability and cash flow targets of the Applus+ Velosi division for the years ended 31 December 2011 through to 31 December 2015. Cash payments under these incentive agreements with respect to two senior managers and eight other employees are due in 2014 and 2015. Cash payments with respect to the remaining employee will be due in 2016. The aggregate estimated cash payment under these cash incentive agreements is approximately €9,448 thousand, of which a total aggregate estimated amount of €3,321 thousand will be payable to senior managers of the Group and the remaining €6,126 thousand to the nine other employees of the Applus+ Velosi division.

Pursuant to a cash and share based management incentive plan to be implemented upon Admission, ten senior managers of the Group will receive: (i) an aggregate gross cash payment before tax on or about the date of Admission of approximately €20,000 thousand (in particular, Mr. Xxxxxxxx Xxxxxx Xxxxxx is expected to receive an aggregate gross cash payment before withholding taxes of approximately €9,950 thousand); and (ii) an aggregate estimated number of non-transferrable restricted stock units of the Company (“RSUs”) of between 2,192,649 and 3,168,454 (which will be exchangeable upon vesting into an equal number of Shares). Although the exchange for Shares of the RSUs awarded under this management incentive plan will not occur on Admission, the aggregate estimated number of RSUs awarded thereunder would have an aggregate equivalent value in cash on Admission of approximately €39,137,457 (calculated on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range). In particular, the aggregate estimated number of RSUs awarded to Mr. Xxxxxxxx Xxxxxx Xxxxxx under this management incentive plan would have an aggregate equivalent value in cash on Admission of approximately €17,924,396 (calculated on the assumption that the Offering Price will equal to the mid-point of the Offering Price Range). It should be noted that these aggregate equivalent values in cash are a mere estimate and that this management incentive plan does not contemplate a minimum guaranteed value for the Shares which may be exchanged thereunder at vesting of the RSUs. RSUs

will vest over a three-year period from Admission in three equal annual instalments subject to customary vesting conditions being met. RSUs will be exchangeable for Shares upon vesting at market value, with no minimum guaranteed rate of exchange. The value of this share based management incentive plan is dependent on the final Offering Price and the number of RSUs is estimated on the assumption that the Offering Price will be within the Offering Price Range. On that assumption, the aggregate number of RSUs awarded under this incentive plan would represent, if exchanged for Shares on Admission, between 1.66 per cent. and 2.48 per cent. of the capital stock of the Company on such date (in particular, the aggregate RSUs awarded to Mr. Xxxxxxxx Xxxxxx Xxxxxx under this incentive plan would represent, if exchanged for Shares on Admission, between 0.77 per cent. and

1.18 per cent. of the capital stock of the Company).

In addition, on or about the date of this document, the Group will enter into a multi-annual bonus agreement with approximately nine senior managers and three other employees of the Group, effective from 1 January 2014 until 31 December 2016, and payable in February 2017, for a total variable amount to be determined upon achievement of the Group of certain profitability and cash flow targets during the financial years from 2014 to 2016. The total aggregate estimated amount payable under the multi-annual bonus incentive for the three year period is €2,497 thousand. The senior managers subject to this multi-annual bonus agreement are expected to receive an aggregate estimated amount thereunder of €2,107 thousand and the three other employees of the Group are expected to receive an aggregate estimated amount of €390 thousand. The terms and conditions of this multi-annual bonus agreement are very similar to other multi-annual bonus agreements implemented by the Group in the past.

The Group also intends to implement a new long-term incentive plan after Admission, whereby approximately 11 senior managers and 50 other employees of the Group who receive an annual bonus under the terms of their respective employment agreements will additionally receive RSUs in an amount equivalent to their respective annual bonus, in case of the senior managers, and, in case of the other employees, dependent on the level of compliance with certain performance targets related to their respective annual bonus. The number of RSUs to be awarded will be determined by reference to the trading price of the Shares on the date in which the annual bonus is accrued. Such RSUs will have a three-year vesting period. 30 per cent. of the RSUs will vest in each of the first and second years after being awarded and the remaining 40 per cent. will vest in the third year after being awarded. The aggregate value of this long-term incentive plan for each three-year period is expected to be €2,880 thousand. The senior managers subject to this long-term incentive plan are expected to receive RSUs thereunder for an aggregate estimated amount of €1,380 thousand and the 50 other employees of the Group are expected to receive RSUs for an aggregate estimated amount of €1,500 thousand.

The table below sets out the details of (i) the total estimated maximum aggregate gross amounts to be paid in cash by the Group; and (ii) the total estimated aggregate equivalent value in cash of the RSUs which may be awarded during 2014, 2015, 2016 and 2017 in connection with the Group’s management incentive plans described above (assuming the Offering Price is at the mid-point of the Offering Price Range). RSU awards after 2017 will continue subject to the terms and conditions of the Group’s long-term incentive plan described above.

2014	2015		2016		2017		TOTAL
Aggregate incentives payable to senior management in cash €20,367,953		€3,132,267		-		€2,107,000		€25,607,220
Aggregate incentives payable to other employees in
cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €4,377,686 €2,536,337				€283,430		€390,000		€7,587,453
SUBTOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €24,745,639 €5,668,604				€283,430		€2,497,000		€33,194,673
Aggregate of RSUs issued to senior management . . . - €13,045,819				€13,459,819		€13,873,819		€40,379,457
Aggregate of RSUs issued to other employees . . . . . . - -				€450,000		€900,000		€1,350,000
SUBTOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - €13,045,819				€13,909,819		€14,773,819		€41,729,457
TOTAL cash payments and RSU awards . . . . . . . . €24,745,639 €18,714,423				€14,193,249		€17,270,819		€74,924,130

Mr. Xxxxxxxx Xxxxxx Xxxxxx is expected to receive (i) an aggregate gross cash payment before withholding taxes of approximately €9,950 thousand; and (ii) an aggregate equivalent value in cash of €18,374,396, under the Group’s management incentive plans he participates in from Admission through to 31 December 2017. It should be noted that this aggregate equivalent value in cash is a mere estimate and that these management incentive plans do not contemplate a minimum guaranteed value for the Shares which may be exchanged thereunder at vesting of the RSUs.

The Group has recognised and will, in the future, recognise the impact of such management incentive plans in its consolidated financial statements and as a result they may have a material effect on the Group’s financial condition.

Impact of acquisitions

Since 2011, the Group has made nine material acquisitions and the Group’s consolidated results of operations in the periods under review reflect the impact of these acquisitions, some of which, such as the acquisition of Applus+ Velosi (by way of contribution in kind) in 2012, have been significant. See, “Key Factors Affecting the Comparability of Results of Operations – Acquisition of Velosi”. The Group focuses mainly on proprietary transactions with attractive valuations and drives further value creation for the Group by extracting revenue and cost synergies from its acquisitions. The Group’s financial results are impacted by such acquisitions. The table below sets out the principal acquisitions completed by the Group in the three years ended 31 December 2013:

Revenue of the

Year

Principal entity or business

acquired / contributed Location Segment Principal activities

Year

€m(1)

2011 BKW

including the following subsidiaries:

- Werkstofftechnik – Prüfstelle für Werkstoffe GmbH; and

- Burek & Partner GbR Qualitec Engenharia de Qualidade, Ltda

Germany Applus

+Laboratories

Brazil Applus

+Norcontrol

Material testing 2.5

NDT 4.4

Xxxxxxx & Associates, Inc. United States Applus + RTD Engineering and failure

analysis services

3.4

Xxxx Xxxxxxxx & Associates Ltd. including the following subsidiaries:

- Xxxx Xxxxxxxx & Associates Pty Ltd, PT JDA Indonesia; and

- JDA Wokman Ltd (PNG)

Australia, Papua New Guinea and Indonesia

Applus + Velosi Specialised recruitment

services

23.2

Total revenue attributable to entities acquired/contributed in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5

2012 Applus + Velosi(2) The Americas, Europe, the Middle East, Africa and Australasia

Applus + Velosi Vendor surveillance, site

inspection, certification, asset integrity and specialised manpower services

159.1

Shanghai EDI Automotive Technology Co Ltd

China Applus + IDIADA Automotive design and

engineering

3.3

Total revenue attributable to entities acquired/contributed in 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.4

2013 TesTex Inspection, LLC United States Applus + Velosi Specialised personnel

services for pipeline, utility, chemical, and oil and gas companies

Applus+ Velosi OMS Co Ltd South Korea Applus +Velosi Offshore safety training to the

oil and gas sector

24.2

1.0

A-Inspektion Denmark Applus + Automotive

Statutory vehicle inspection 3.8

Total revenue attributable to entities acquired/contributed in 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Total revenue attributable to entities acquired/contributed in 2011 – 2013 . . . . . . . . . . . . . . . . . . . . . . 224.9

(1) Revenue attributable to the business acquired in the full financial year of the relevant acquisition or contribution. Accordingly, only part of such revenue was consolidated.

(2) The Velosi Group was acquired by Azul Holding 2, S.à r.l. (Lux), a subsidiary of Azul Holding (S.C.A.) Lux and was under common control with the Group from 24 January 2011. The Applus+ Velosi business was contributed to the Group on 20 December 2012 and consolidated within the Group from that date.