Indra Sistemas, S.a. Class A · BME:IDR
Indra Sistemas, S.a. Class A — Investor Day (November 2017)
107 slides from Indra Sistemas, S.a. Class A's investor day presentation, Nov 30, 2017
Slide 1: Investor Day 30 November 2017
os: indra 2nd | ) INVEST DAY 30 November 2
Slide 2: Agenda
Agenda 10:00-10:40 1. Vision, Strategy and Targets FERNANDO ABRIL-MARTORELL 10:40-11:00 2. T&D Introduction and General Overview JAVIER DE ANDRÉS 11:00-11:20 2.1 Defence & Security MANUEL ESCALANTE T&D 11:20-11:40 2.2 ATM GONZALO GAVÍN 11:40-12:00 2.3 Transport BERTA BARRERO 12:00-12:30 Coffee break
Slide 3: Vision, Strategy and Targets
1 Vision, Strategy and Targets Fernando Abril-Martorell 2
Slide 4: Indra Evolution 2015-2017
Indra Evolution 2015-2017 Since 1st Investor Day 3
Slide 5: When we started our first Strategic Plan in April 2015, Indra was in a very challenging situation
When we started to work on our first Strategic Plan in April 2015, Indra was in a very challenging situation Ongoing deep operational issues Resulting in high financial stress Non reliable analytical accounting and lack of control of onerous projects Cash flow draining • 718€M write-offs in 2015 • D
Slide 6: Increasing market concerns including potential need for a capital increase
Therefore, there were increasing market concerns including a potential need for a capital increase Market concerns of Indra's financial stress… …and of a potential need for a capital increase "The removal of the dividend is a first step here but is "Market concerns could linger over continued weakne
Slide 7: 2015 Strategic Plan
Two main objectives for 2015 Strategic Plan: reversing cash drainage and launching a profound transformation process Reverse cash drainage Launch business transformation 16 30 projects initiatives 1 Balance sheet adjustment to better 1 Portfolio rationalisation and offering development reflect busin
Slide 8: Significant structural improvements in Indra's financials
By implementing our 2015 Strategic Plan, we have achieved significant structural improvements in Indra's financials… Healthy P&L and balance Sustainable cash generation Net debt on the lowest point sheet since 2015 peak Much more reliable balance sheet after FCF accumulated LTM (€M) Net Debt / EBITD
Slide 9: We have also improved our competitive positioning for the future
… and we have also improved our competitive positioning for the future • T&D solutions remained predominantly high value More relevant weight of high value solutions • TI high value solutions increased their relative weight Minsait, our new transformational vehicle, • Launched in January 2016 and al
Slide 10: Unexpected issues in our transformation process
But we found some unexpected issues in our transformation process We had • Unexpected large restructuring needs in Brazil and Transport (~300€M and ~90€M impact on EBIT internal respectively in 2015-2017) issues… • Slower than planned portfolio rotation – Exit from onerous projects took longer than
Slide 11: Increased cash flow and improved EBIT margins, but short of forecasted sales
As a result, YTD, we increased cash flow generation and improved EBIT margins, but came short of forecasted sales Increased cash flow Improved EBIT margin Lagging sales generation FCF accumulated LTM (€M) Indra Excluding Tecnocom Recurring Sales LTM (€M) EBIT LTM (€M) 222 184 184 6.5% 2,850 2,709 2,
Slide 12: Shortfall in sales prevented capitalising operating leverage
Shortfall in sales prevented us from capitalising our operating leverage, consequently falling short of our margin expectations 1ID guidance simulation Sales LTM (€M) Between LTM Dec 14 and Sep 17, Brazil sales fell ~70M, and Transport sales fell ~100M 4,000 3,317 Sales LTM (€M) 173 436 173 4,000 3,
Slide 13: Indra has accomplished a significant part of the turnaround
In conclusion: Indra has already accomplished a significant part of the turnaround, but we still need to capture its full potential We already accomplished significant changes... Improved operations, processes and culture Solid financial footing after having deep operational issues and having been o
Slide 14: Market Outlook and Strategic Guidelines 2018-2020
Market Outlook and Strategic Guidelines 2018-2020 13
Slide 15: Positive market environment: digitalisation disrupting every business
Positive market environment for Indra: digitalisation is disrupting every business and generating high value creation opportunities New technological trends are Digital spending is booming Tech companies are disrupting every business outperforming Non-exhaustive list of digital sectors growth (2016-
Slide 16: Every market where Indra has presence is expected to grow sustainably
Every market where Indra has presence is expected to grow sustainably with strong fundamentals CAGR (2016-20) Analytics and Big Data increasing demand >10% Accelerated transition into Cloud environments Digital IT New standards and business models (e.g. Co-leading digital initiatives with clie
Slide 17: 2018-2020 Strategic Plan
In order to ensure Indra's profitable growth under this positive environment we have defined our 2018-2020 Strategic Plan Greater focus, 01 New Specialised Operating Model accountability, agility and flexibility 02 Product 03 Segmented Healthy Portfolio Commercial sales growth Evolution Processes Ma
Slide 18: Grouping IT business under a new corporate entity
We will group all of our IT business under a NEW SPECIALISED new corporate entity within Indra OPERATING MODEL Indra Corporate functions + shared services T&D IT Target date: June 2018 Shareholders' Meeting 17
Slide 19: IT and T&D have different competitive dynamics
Within our portfolio, IT and T&D businesses have NEW SPECIALISED different competitive dynamics OPERATING MODEL IT T&D Client profile Public clients are critical IT and T&D High relevance of private clients markets have Core competition Consulting firms and IT specialists Equipment manufacturers dif
Slide 20: IT subsidiary to gain focus, accountability, agility and flexibility
By incorporating our IT business into a fully-owned subsidiary NEW SPECIALISED we intend to gain focus, accountability, agility and flexibility OPERATING MODEL Indra Increased management focus and accountability Businesses split facilitates specialisation (e.g. more focused Corporate functions + i
Slide 21: Other areas to support business growth
As well as our clients transform themselves, there are other NEW SPECIALISED areas we will work on to better support our businesses growth OPERATING MODEL New compensation models, development plans and career paths Reduced rotation Talent and Culture Intensified screening and recruiting efforts
Slide 22: Product Portfolio Evolution, Segmented Commercial Processes and Productivity Upgrades
Product Portfolio Evolution, Segmented Commercial Processes and Ongoing Productivity Upgrades will produce profitable growth Product Segmented Commercial Ongoing Productivity Upgrades Portfolio Evolution Processes • Invest to reinforce those products • Increase commercial intensity with • Deploy Lea
Slide 23: Guidance
Guidance 2016 (1) CAGR 2016-2020 (2) Revenues (€M) 3,121 Low single digit EBIT (€M) 180 >10% (p.a. growth) 2015-2017E 2018-2020E Total Cash Flow (€M) ~610 (3) [~€775m since First Investors Day] 550-650 (6) CAPEX (€M) (4) 100-110 150-200 Other uses (€M) (5) Restructuring Plan 129 Continue deleveragin
Slide 24: T&D: Introduction and General Overview
2 T&D: Introduction and General Overview Javier de Andrés 23
Slide 25: Portfolio of leading proprietary solutions in T&D
Indra has a portfolio of leading proprietary solutions in T&D 1,188 Transport Transport 302 (25%) Revenue Collection Control & Enforcement Operational systems Safety & Signalling ATM 281 (24%) ATM ATM systems Communications Navigation Surveillance Defence & 606 Security (51%) Defence & Security Air
Slide 26: Defence & Security and ATM outperformed while Transport underperformed
Since 2014 Defence & Security and ATM outperformed while Transport underperformed Sales, €M Defence & Security • Grew above expectations with healthy margins throughout the period 1,196 1,188 • Solid pipeline identified (quality pipeline 3Q2017 +20% vs 2015) with ~2.3€Bn opportunities -10% CAGR 302
Slide 27: What went wrong in Transport
What went wrong in Transport Externally, drop of the national market in Spain linked to public Internally, management issues identified investment… Lack of focus and high risk assumed Infrastructure investment in Spain (US$ Bn) implementing excessively tailor- 30 CAGR '10-'14 CAGR '14-'17 CAGR '17-'
Slide 28: A clear plan to execute Transport turnaround
We have started a clear plan to execute Transport turnaround New organisation New structure and external talent recruited for top management positions and team • Reinforced clients and competitors view Portfolio rationalisation and development of more standardised and packaged solutions Product Port
Slide 29: Positive market outlook in every business in T&D
Positive market outlook in every business in T&D Defence & Security Air Traffic Management Transport The smart Expected CAGR (%) Expected CAGR (%) Expected CAGR (%) segment of all Air Defence 3% Revenue Collection 8% these Air Traffic solutions 3% is growing Border Surveillance 6% Management Control
Slide 30: New operating model positive for T&D businesses
Our new operating model will also be positive for our T&D NEW SPECIALISED businesses OPERATING MODEL Clear focus • Facilitates specialisation and accountability • Decision-making and execution processes will be better Increased agility suited to each single business needs Improved flexibility • Easi
Slide 31: Synergies and economies of scale within T&D
We will continue taking advantage of synergies and economies of scale within T&D ONGOING PRODUCTIVITY UPGRADES Clear offering development and operational We will continue improving our operations as synergies within T&D part of our strategic guidelines Shared technologies End-to-end process review N
Slide 32: Defence & Security
2.1 Defence & Security Manuel Escalante 31
Slide 33: Defence & Security is an attractive market with a clear growth trend
Defence & Security is an attractive market with a clear growth trend Geopolitical uncertainty is increasing amidst Indra's home market in Spain is launching a new growing security threats investment cycle • Strong R&D programs launched by 2015 will be "The events that shaped 2016 added a new sense o
Slide 34: Long maturity market with ongoing high volume programs
Defence & Security is a long maturity market, with still ongoing high volume programs and local programs entering into production Existing long-term high volume programs are still in progress + There have been significant developments linked with the new Spanish investment cycle Eurofighter A400M NH
Slide 35: Significant European player with proven track record
Indra is a significant European player with a proven track record, and with an already relevant international business Air Defence Electronic Air Defense Electronic Warfare Warfare Airborne • Eurofighter • Chinook • F1 Platforms • A400M • CH53 • NH90 • C-295 • Tigre • P3 • F/A-18 • Cougar • B707 Nav
Slide 36: Strategic priorities to keep growing profitably
Strategic priorities to keep growing profitably 01 New Specialised Operating Model 02 Product 03 Segmented Focus of this presentation Portfolio Commercial Evolution Processes 04 Ongoing Productivity Upgrades 35
Slide 37: Evolving our offering and applying disruptive digital technology
We are evolving our offering and applying PRODUCT PORTFOLIO disruptive digital technology EVOLUTION Stronger Further standardise our solutions applying a product-based approach, instead of a tailor-made approach Solutions… Enhance existing offering applying disruptive digital technologies, with anal
Slide 38: We will grow our international sales selectively
SEGMENTED COMMERCIAL We will grow our international sales selectively PROCESSES Specific commercial action plans per solution and Strengthened commercial action in target strengthened alliances with platform integrators geographies Specific action plans Special focus on markets with high potential (
Slide 39: Guidance: strategic guidelines support profitable growth
Guidance: our strategic guidelines will support our profitable growth 01 New Specialised Operating Model Revenues 2016 599€M 02 Product 03 Segmented Portfolio Commercial Mid to Excluding Evolution Processes high single 2018 CAGR1 (16-20) Eurofighter digit revenues fall 04 Ongoing Productivity Upgrad
Slide 40: Potential upsides not included in Guidance
Additionally, Indra is very well positioned to capture other potential relevant upsides which are not included in our Guidance New Eurofighter modernisations and sales New European fighter (FCAS) (e.g. Spain, Germany, Belgium) Exports related to F110 technology Euro MALE UAV F110 8x8 future exports
Slide 41: ATM
AIM 2 Gonzalo Gavin : 2nd INVESTOR DAY Indra
Slide 42: ATM is a growing market with very strong fundamentals
ATM is a growing market with very strong fundamentals Increase of air passenger Increase of flying 3 drivers of sustained traffic worldwide aircrafts worldwide demand for ATM systems Passenger traffic (RPKs Bn) Aircrafts in service worldwide (k) Maintenance and replacement 30 80 of legacy systems 4.
Slide 43: Complete technological roadmap of critical ATM systems
Indra provides its clients with a complete technological roadmap of critical ATM systems Indra has a leading position globally in Control Indra provides reliable end-to-end solutions Centres, Navigation and Surveillance to operators in the ATM market Providing reliable technology for the key Control
Slide 44: Leading player in the Single European Sky with iTEC
Indra is the leading player in the Single European Sky with the iTEC system... Europe has a challenge in air traffic management due to air traffic congestion and the fragmentation of aerospace iTEC by Indra Coflight Coopans In 2004 Eurocontrol, the European Commission and a selection of industrial p
Slide 45: Large footprint of references globally
… and one of the leading ATM systems providers in the world, having a large footprint of references globally Indra ATM business ~200 Control Centres is present in 176 countries ~1,700 Instrument Landing Systems (ILS) ~400 Secondary Radars (MSSR) Note: Most significant countries with Indra's presence
Slide 46: Strategic priorities to keep growing profitably
Strategic priorities to keep growing profitably 01 New Specialised Operating Model 02 Product 03 Segmented Focus of this presentation Portfolio Commercial Evolution Processes 04 Ongoing Productivity Upgrades 45
Slide 47: Evolving and expanding our offering into new segments
We are evolving and expanding our offering PRODUCT PORTFOLIO into new segments EVOLUTION Keep evolving leading products in current Expanding into new segments to segments with technological updates complement Indra's offering Develop leading Successfully evolve iTEC Evolve CNS products Grow on after
Slide 48: Continue internationalising our business
We will continue internationalising our SEGMENTED COMMERCIAL business by leveraging our strong offering PROCESSES Leader in LatAm and Europe Strong positioning America Europe Africa Middle East Asia Pacific LatAm is a very strong Further expand iTEC Potential upside to Indra's recent Continue captur
Slide 49: Guidance: strategic guidelines support profitable growth
Guidance: our strategic guidelines will support our profitable growth 01 New Specialised Operating Model Revenues 2016 270€M 02 Product 03 Segmented Portfolio Commercial Evolution Processes Mid single CAGR1 (16-20) digit 04 Ongoing Productivity Upgrades 1. Organic growth. Constant exchange rates as
Slide 50: Potential upsides on accelerated UTM demand
Potential upsides on accelerated ATM for UAVs (UTM) demand, where we are already positioned through SESAR Opportunity to frame long term growth of Indra already has a good starting point UAVs within the ATM systems through its positioning in SESAR Annual Flight Hours in Europe in 2050 (Millions) Dev
Slide 51: Transport
2.3 Transport Berta Barrero 50
Slide 52: Attractive Transport technology market entering a phase of expansion
Very attractive technology Transport market, entering into a phase of expansion Change of cycle in infrastructure investment and therefore increased technology demand Changed trend in + Change in infrastructure operating models are generating additional opportunities Increased demand for intelligent
Slide 53: Complete portfolio of 4 key solutions with relevant positioning
Indra has a complete portfolio consisting on 4 key solutions with relevant positioning... Transport segments Indra's solutions Indra's positioning for Indra's solutions Revenue Collection Leading position Rail Control & Inter-urban Enforcement Leading position Urban Operational Systems Leading posit
Slide 54: Strong references in the most innovative projects globally
... with strong references in the most innovative projects globally Riyadh Ticketing Ticketing, The T-Mobilitat, Spain Revenue • Biggest greenfield Netherlands • Biggest integration Collection contactless ticketing • Innovative AFC fare & contactless worldwide machines project Urban Tunnels Control
Slide 55: Strategic priorities to keep growing profitably
Strategic priorities to keep growing profitably 01 New Specialised Operating Model 02 Product 03 Segmented Focus of this presentation Portfolio Commercial Evolution Processes 04 Ongoing Productivity Upgrades 54
Slide 56: 3 key priorities in our offering enhancement
PRODUCT PORTFOLIO 3 key priorities in our offering enhancement EVOLUTION Consolidate Indra's positioning in the traditional segment Increase recurrence and profitability Evolve existing product portfolio to capture opportunities in the Smart Transport ecosystem Position in the rapidly growing and fr
Slide 57: 8 big projects identified to evolve our offering
PRODUCT PORTFOLIO 8 big projects identified to evolve our offering EVOLUTION New revenue collecting Enhancement of the rail ecosystem operational systems Technological enrichment of Evolution of the Safety & interurban platform Signalling products Multimodal Back Office Free flow tolling evolution T
Slide 58: Reinforce commercial activity to generate quality pipeline and higher win-rate
For this new stage we will strongly reinforce our commercial SEGMENTED COMMERCIAL activity to generate quality pipeline and higher win-rate PROCESSES New governance model New selective Commercial Plans • Product managers focused on • Focused commercial efforts geographically pre-sales activities New
Slide 59: Restructured business unit and redefining operational processes
We have restructured the business unit and are currently redefining our operational processes ONGOING PRODUCTIVITY UPGRADES New organisation New team in place New Operations Plan implemented defined • New structure defined • New external talent • Risk management, taking into (solution-client matrix)
Slide 60: We aim to be a main player globally in Transport
We aim to be a main player globally in the Transport business Leveraging the following positive factors: Strong international references and innovative projects Indra's strong brand for T&D globally Spanish brand internationally recognised in the infrastructure sector A renewed business vision, with
Slide 61: Guidance: growth without additional drawbacks
Guidance: our strategic guidelines will support our growth without additional drawbacks 01 New Specialised Operating Model Revenues 2016 355€M 02 Product 03 Segmented Portfolio Commercial Evolution Processes Mid to high CAGR1 (16-20) single digit Potential upside of becoming 04 Ongoing Productivity
Slide 62: IT
IT QO Cristina Ruiz s 2nd INVESTOR DAY
Slide 63: Successful turnaround of our IT business
In the last three years, we have performed a successful turnaround of our IT business 2015 LTM Sep 2017 -67€M +17€M EBIT EBIT* Pending write-offs No additional significant write-offs Brazil´s losses Brazil´s business under control with expected positive EBIT at the end of 2017 Heavy cost structure L
Slide 64: Strengthened fundamentals, solid starting point for next growth cycle
We have strengthened the fundamentals of our business, setting up a solid starting point for the next growth cycle High value brand, focused on digital transformation Minsait launch Transformation trigger of our move to high value Source of margin, growth and talent attraction Rationalisatio
Slide 65: Focus on healthy business impacted overall sales volume
However, our focus on building a healthy business had an impact on the overall sales volume Despite of our progress, ... in a difficult macro context... ... resulting in lower sales we faced challenges... than expected Harder restructuring, needing greater Lower growth in Latin IT revenues (€M) focu
Slide 66: Technology increasingly relevant on CEO agenda
Technology is becoming increasingly relevant on CEO agenda and market expectations are favourable for growth… In 2015 digital was an emerging Digitalisation is a direct driver Market conditions are business, today it is on the CEO for value expected to be favourable main agenda Top 5 most valued com
Slide 67: Digital transformation changing market rules in all verticals
…while digital transformation is changing market rules in all verticals where Indra has a strong business presence Impact of digital TMT Customer experience, new digital services, data monetisation and analytics Retail G Online channel, customer experience on & offline Banking and Insurance Customer
Slide 68: Need to rapidly adapt offering and operating model
Although we need to rapidly adapt our offering and operating model to changing market demands... New technology New contracting New types of New digital buyers models competitors capabilities Digital transformation as Cloud/As-A-Service Strategic consulting Increasing demand of top topic on the CEO
Slide 69: Strong segmentation of the market
...and we need to realise the strong segmentation of the market Core Digital Internal transactional processes Connectivity, Open ecosystems, intelligence Mature, consolidated software Atomized software market, start-ups Two types of market vs New digital entrants in an innovation and technolog
Slide 70: 4 waves from core businesses to digital business platforms
We have identified 4 waves to evolve from "core businesses" to "digital business platforms" Digital Transformation roadmap 2 Actively pursue 4 4 Build digital products and transformational projects capabilities to operate in leveraging our vertical New Digital an Open ecosystem product portfolio a
Slide 71: Two main business opportunities: E2E value propositions and proprietary products
Leveraging the digitalisation waves there are 2 main business opportunities: (1) E2E value propositions and (2) proprietary products Transformation roadmap Proactively seek opportunities to deliver E2E value 4 propositions, with transformation projects from Digital Pursue E2E value consulting to Out
Slide 72: Strategic priorities to foster profitable growth in IT
Strategic priorities to foster profitable growth in IT 01 New Specialised Operating Model 02 Product 03 Segmented Portfolio Commercial Evolution Processes 04 Ongoing Productivity Upgrades Talent management will be a critical success factor for digital transformation 71
Slide 73: IT: Product Portfolio Evolution
3.1 IT: Product Portfolio Evolution Sergio Martín 72
Slide 74: Digital transformation journey with successful references
We have already started our digital transformation PRODUCT PORTFOLIO journey with successful references EVOLUTION Productivity Core legacy Digital New digital 1 2 3 4 Outsourcing & BPO transformation initiatives businesses Multi-client Tecnocom's Payment Leading Leading recycling ITO Processing Solu
Slide 75: E2E value propositions and evolving proprietary products
We will offer E2E value propositions and evolve our PRODUCT PORTFOLIO proprietary products to the next digital wave EVOLUTION E2E value propositions Proprietary products Polarise our service capabilities along Consolidate our proprietary products "Value Propositions" as an independent business Orien
Slide 76: Change to Value Propositions to compete on value
The change to "Value Propositions" is a structural effort to PRODUCT PORTFOLIO increasingly compete on "value" EVOLUTION From… …To • Selling capabilities / services • Selling "impact" enabled by a combination of capabilities Structural • High % of RFP answers • Increasing % of proactive idea generat
Slide 77: Intensify investments to evolve digital products
We will intensify investments to evolve our digital products PRODUCT PORTFOLIO to capture the next digital wave EVOLUTION In the last 2 years we have established …and now we will intensify our investments solid basis for our SW business… and efforts along a clear vision Improved governance and sta
Slide 78: OPEN will be the strategic mantra for SW-based business
"OPEN" will be the strategic mantra for our PRODUCT PORTFOLIO SW-based business EVOLUTION OPEN strategy Clear business Examples objectives • Leverage the start-up • Smart Suite community – Smart Cities OPEN • Accelerate innovation – Smart Home Disruptors (IoT, AI...) – Smart Industry – Smart Store •
Slide 79: IT: Segmented Commercial Processes
3.2 IT: Segmented Commercial Processes Borja Ochoa 78
Slide 80: Segmented commercial approach based on client needs
We have segmented our commercial approach based SEGMENTED COMMERCIAL on client needs, opportunities and offering PROCESSES E2E value propositions Proprietary products Focus on E2E transformational projects Prioritise product specialisation to accompanied by an innovative pricing scheme international
Slide 81: Fostering end-to-end value propositions for sustainable growth
We are fostering end-to-end value propositions SEGMENTED COMMERCIAL as a key driver for sustainable growth PROCESSES Actively focus on big deals • Leveraging strong position and deep knowledge of core, vertical systems • Pushing end-to-end transformation offering to maximise delivered value • Launch
Slide 82: Boosting commercial reach of proprietary products
We are reinforcing specific initiatives to boost the commercial SEGMENTED COMMERCIAL reach and penetration of our proprietary products PROCESSES Vertical specialised commercial forces • Creating specialised teams for vertical products with a global reach with regional deployment ("product gurus")...
Slide 83: Adapting commercial approach to each geography
Adapting our commercial approach to our client needs SEGMENTED COMMERCIAL in each of our geographies prioritising digital growth PROCESSES Spain LatAm Rest of the world Prioritise portfolio mix shift towards Grow profitably and sustainably while Base growth on our proprietary digital, while maintain
Slide 84: Critical commercial enablers to accelerate growth
We will push forward critical commercial enablers SEGMENTED COMMERCIAL to accelerate growth across our markets PROCESSES 1 Accelerating new internal processes focused on speed and efficiency Change in Redesigning our cultural habits Designing campaigns 4 2 incentive scheme to align for specific prod
Slide 85: IT: Ongoing Productivity Upgrades
3.3 IT: Ongoing Productivity Upgrades Luis Abril 84
Slide 86: Aggressive efficiency plan applying new technologies
We have designed an aggressive efficiency plan by applying new technologies ONGOING PRODUCTIVITY UPGRADES Lean & Apply full end-to-end Lean approach, fostering a culture of continuous 1 Automation improvement and placing automation at the core of our operations Reduce management layers to increase a
Slide 87: Implementing Lean for continuous quality and efficiency improvement
We are implementing Lean to establish a culture of continuous quality and efficiency improvement ONGOING PRODUCTIVITY UPGRADES We plan to keep increasing our We have identified clear initiatives with proven competitiveness with Lean impact • Improve and automate testing for Software development (e.g
Slide 88: Multi-client ITO platform fostering healthy growth
Our continuously improved multi-client ITO platform is fostering healthy growth ONGOING PRODUCTIVITY UPGRADES Multi-client ITO efficient growth strategy based on 3 pillars ITO general services example 01 Lever multi-client concept provided by the multi-client platform • More efficient and flexible p
Slide 89: Lean case study: automation at the heart of operations
Lean case study: we are placing automation at the heart of all operations, building on recent successful experiences ONGOING PRODUCTIVITY UPGRADES Automation is a powerful tool We have already implemented a for quality and efficiency successful pilot Mean processing time of each activity type Low Me
Slide 90: IT closing remarks
IT closing remarks IT Market outlook and Indra's positioning • IT is a highly attractive market, disrupted by digital transformation • Indra is in a privileged position to capture profitable growth opportunities 01 New Specialised Operating Model Product Portfolio Evolution • Push forward end-to-end
Slide 91: Guidance: strategic guidelines help keep growing
Guidance: our strategic guidelines will help us to keep growing 01 New Specialised Operating Model Revenues 20161 1,897€M 02 Product 03 Segmented Portfolio Commercial Evolution Processes CAGR2 (16-20) Low single digit 04 Ongoing Productivity Upgrades 1. Proforma including full 2016 revenues from Tec
Slide 92: Additional potential upsides not considered in the guidance
Additional potential upsides not considered in the guidance LatAm Seasonal Accelerated accelerated Electoral digital growth Processes transformation 91
Slide 93: Financial Overview
4 Financial Overview Javier Lázaro 92
Slide 94: When we started our first Strategic Plan in April 2015, Indra was in a very challenging situation
When we started to work on our first Strategic Plan in April 2015, Indra was in a very challenging situation Ongoing deep operational issues Resulting in high financial stress Non reliable analytical accounting and lack of control of onerous projects Cash flow draining • 718€M write-offs in 2015 • D
Slide 95: Clear management priorities to improve business and financial situation
We set up clear management priorities to improve our business and its financial situation Implemented Action Lines Improvement of Operations • Resulting in higher operating margins and cash flow generation • Introduce cash collection targets for commercial force Proactive Net Working Capital • Align
Slide 96: Strong Free Cash Flow generation
We delivered strong Free Cash Flow generation… Sharp improvement in …and Net Working Capital reduction… …producing solid cash flow EBIT margin… generation +679€M Working Capital NWC (€M) improvement FCF Accumulated Includes 78€M cash cost Recurring EBIT LTM (€M) from personnel Indra Excluding Tecnoc
Slide 97: Positive impacts on leverage, reduced cost of debt
… having significant positive impacts on leverage, while at the same time cost of debt has been reduced Successful deleveraging efforts Cost of gross debt reduction Cost of Gross Debt (%) Net Debt / EBITDA LTM (Times) Indra Excluding Tecnocom 6.6x -2.0pp Indra Excluding Tecnocom 4.2% Indra + Tecnoco
Slide 98: Diversified, balanced and flexible capital structure
We now have a well diversified, balanced and flexible capital structure Gross and Net Debt Structure Other available credit facilities: 1,318 €M 638 €M Corporate Bonds +250 €M 25 Gross Debt Convertible Maturity Profile Bonds 396 451 R+D Loans 117 (€M) 187 396 680 €M 342 Bank Factoring Loans 239 700
Slide 99: Financial strategy: allocating capital to increase shareholder value
Going forward, our financial strategy will revolve around how to allocate capital to increase shareholder value Supporting growth and Gradually increasing CapEx to strengthen our proprietary products and digital capabilities new business models Financing of capital-intensive business models • i.e. P
Slide 100: Increase CapEx to foster growth in selected areas
We will increase CapEx to foster growth in selected areas Increased level of CapEx …to accelerate growth while in 2018-2020… migrating to high value Total CapEx • Invest to reinforce those products where we already have (€M) a leading position x1.5 – x2 increase • Apply digital technologies to furth
Slide 101: IFRS 15 and IFRS 9 implementation details
IFRS 15 and IFRS 9 implementation details IFRS 15 IFRS 9 The new norm specifies, in a more restrictive way, how and when The new standard includes requirements for recognition and corporates will recognise revenue measurement, impairment, de-recognition and hedge accounting The standard provides a f
Slide 102: Guidance
Guidance 2016 (1) CAGR 2016-2020 (2) Revenues (€M) 3,121 Low single digit EBIT (€M) 180 >10% (p.a. growth) 2015-2017E 2018-2020E Total Cash Flow (€M) ~610 (3) [~€775m since First Investors Day] 550-650 (6) CAPEX (€M) (4) 100-110 150-200 Other uses (€M) (5) Restructuring Plan 129 Continue deleveragin
Slide 103: T&D and IT businesses growth expectations
T&D and TI businesses growth expectations Revenues 2016 CAGR1 (16-20) Excluding Defence & 2018 599€M Mid to high single digit T&D Security Eurofighter revenues fall ATM 270€M Mid single digit Transport 355€M Mid to high single digit IT IT 1,897€M2 Low single digit 1. Organic growth. Constant exchang
Slide 104: 4 key levers to grow our EBIT
4 key levers to grow our EBIT >10% p.a. growth Reduced one-off Operational losses due to Migration to transformation stricter control Growth high value EBIT 2016 EBIT 2020 103
Slide 105: Closing Remarks
5 Closing Remarks Fernando Abril-Martorell 104
Slide 106: Disclaimer
Disclaimer This presentation has been produced by Indra for the sole purpose expressed therein. Therefore, neither this presentation nor any of the information contained herein constitutes an offer sale or exchange of securities, invitation to purchase or sale shares of the Company or any advice or
Slide 107: Thank you
ges indra ank you F |