Indra Sistemas, S.a. Class A · BME:IDR
Indra Sistemas, S.a. Class A — Investor Day (July 2015)
116 slides from Indra Sistemas, S.a. Class A's investor day presentation, Jul 8, 2015
Slide 1: Our Vision
01 OUR VISION Fernando Abril-Martorell
Slide 2: 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 3: Indra: we are a global technology company
Indra: we are a global technology company €2.9Bn 39,000 employees Projects in +140 countries Sales 2014 R&D 6-8% of sales Balanced portfolio Leading clients +200 deals with between businesses, in key geographies and research centres and products and projects industries universities Strategic guideli
Slide 4: We deliver core business operations technology in various industries
We deliver core business operations technology in various industries Transport & Traffic Defence & Security • Air Traffic Management systems and • Air surveillance Communications, Navigation and • Military simulation Surveillance systems • Maritime surveillance • Railway & airport management systems
Slide 5: We have grown over the last years despite the crisis in Spain
We have grown over the last years despite the crisis in Spain Sales evolution by geography, 2007 – 2014 (€M) 3,000 2,938 +36% 2,168 2,000 1,791 International 698 +157% 606 1,000 +13% 685 Spain - corporations 864 -47% 461 Spain - public sector 0 2007 2014 We overcame the Spanish crisis by internation
Slide 6: However, our profitability performance worsened
However, our profitability performance worsened Profitability decreased... ...and cash flow eroded Recurrent EBIT margin (%) Free cash flow margin (%) 16 5 -4.2 pps 12 11.1 4 -1.7pps 3.3 6.9 8 3 4 2 1.6 0 1 -1.4 When including non-recurrent -4 items 0 2007 2014 2007 2014 Recurrent Free cash EBIT (€M
Slide 7: We understand the main causes that impacted our profitability
We have a deep understanding of the main causes that impacted our profitability performance Complex macro macro Complex Issues Issues derived derived economic economic fromfrom our our strong environment environment & & focusfocus strong on new industry new industry on growing growing dynamics dynam
Slide 8: In a context of aggressive growth and sales replacement...
In a context of aggressive growth and sales replacement... 02 ...we widened 03 ... we didn't 04 ...we ended up our portfolio and react quickly to in an expensive focused less on our adjust our go-to- delivery model value-added market strategy segments Insufficient productivity Wide footprint in many
Slide 9: We have defined a set of strategic guidelines
We have defined a set of strategic guidelines to achieve our growth and profitability ambition Enabler for strategy implementation 06 Cultural change to be more focused on profitability Growth accelerators 05 Growth in new businesses Base for sustainable and profitable growth 02 Products and project
Slide 10: Indra's uniqueness is a combination of four differential elements
Indra's uniqueness is a combination of four differential elements • In-depth know-how on key • Different industries with business processes, different key drivers and cycles especially linked to real-time Leading – Defence, Security, Transport, operational systems Balanced and Traffic technology for
Slide 11: Our vision: advanced technology partner for core business operations everywhere
Our vision: advanced technology partner for core business operations everywhere Continue building a high value-added product portfolio focused on technology for core business operations Focus our go-to-market strategy as partners to our clients leveraging our vertical businesses know-how Continuousl
Slide 12: We expect to grow at 2.5%-4.5% to generate ~€200M of FCF in 2018
We expect to grow at 2.5%-4.5% to generate ~€200M of FCF in 2018 2014 2018 CAGR1 Revenues (€M) 2,938 2.5%-4.5% Recurrent EBIT 204 10%- margin (€M) (6.9%) 11% (% of revenues) FCF (€M) 47 ~200 (% of revenues) (1.6%) (~6%) Net Debt / EBITDA 2.5x ~1.0x 1. Organic growth. Constant exchange rates as of 20
Slide 13: TaN "
TaN " 15 6 aa . FIRST INVESTOR
Slide 14: Diagnostic and Operating Plans
02 DIAGNOSTIC AND OPERATING PLANS Javier de Andrés
Slide 15: 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 16: Strong sales growth historically with a decrease in profitability
Strong sales growth historically with a decrease in profitability Sales grew... ...but profitability decreased... ...and cash flow eroded Sales (€M) Recurrent EBIT margin (%) Free cash flow margin (%) 4,000 15 6 +4%/year -4.2 pps 2,938 11.1 3,000 -1.7 pps 10 4 2,168 6.9 3.3 2,000 5 2 1.6 1,000 0 0 0
Slide 17: We have an in-depth understanding of the main causes
We have an in-depth understanding of the main causes that impacted our profitability performance Complex macro Issues derived economic environment from our strong & new industry focus on growing dynamics outside of Spain Strategic guidelines 2015 – 2018 3
Slide 18: Worst crisis in decades in Spain, our home market
Worst crisis in decades in Spain, our home market GDP growth negative or Public investment Public IT spending1 flat since the crisis began falling significantly also dropping GDP growth rate in Spain (%) Public investment in Spain (€Bn) Public IT spending in Spain (€Bn) 10 15 1.5 1.3 Average growth
Slide 19: New industry dynamics worsened pricing and margins
At the same time, new industry dynamics worsened pricing and margins • Internationalized competition of European Global players and American companies competing • Increasing end-to-end offer by competitors everywhere MARGIN • Strong decrease in public PRESSURE and private sector budgets – Particular
Slide 20: We focused on internationalization
We focused on internationalization Despite the crisis Indra has been able to ...by internationalizing its increase sales... business and focusing on LatAm Sales (€M) +36% 2,938 New affiliates in Asia, by leveraging new organic growth opportunities 375 AMEA +331% Focusing growth on LatAm due to exist
Slide 21: In a context of aggressive growth and sales replacement...
In a context of aggressive growth and sales replacement... 02 ...we widened 03 ... we didn't 04 ...we ended up our portfolio and react quickly to in an expensive focused less on our adjust our go-to- delivery model value-added market strategy segments Insufficient productivity Wide footprint in many
Slide 22: We lost our focus on cost efficiency
While targeting sales replacement and growth, we lost our focus on cost efficiency Lack of adjustment of resources due Heavy corporate structure to a low attrition rate Corporate structure highly focused on developing and While increasing our geographical footprint and serving new projects in new ge
Slide 23: Cost overruns and excessive working capital requirements
A combination of factors led us to cost overruns and excessive working capital requirements Products launched at an early development stage Cost overruns Net working capital (in EBIT pps) (days) Go-to-market pressure to acquire new clients and enter new geographies, thus increasing +1.5 pps +10% fra
Slide 24: We didn't optimally readjust our go-to-market strategy and portfolio
We didn't optimally readjust our go-to-market strategy and portfolio Wide footprint in many Low value-added projects countries Client fragmentation with lower margins As a consequence of the global Due to our commercial We pushed lower value-added growth phase, to replace sales objectives, our clien
Slide 25: We ended up in an expensive delivery model
We ended up in an expensive delivery model Room for improvement in our delivery Off-shoring ratios model in terms of near and off- shoring % off-shoring ratio 70 Given the higher reticence to accept 60 Off-shoring global off-shoring of our Spanish clients, we up to competitors 40 57pps did not foste
Slide 26: We are well positioned to achieve our ambition of higher profitability
However, we are well positioned to achieve our ambition of higher profitability Diagnostic completed and new strategic Better macro economic perspectives guidelines defined expected in the short and medium-term We have completed a diagnostic of the factors Spain, still our largest market, heading to
Slide 27: Cost reduction to capture savings and increase competitiveness
Cost reduction to capture savings and increase 01 Indra's competitiveness Enabler for strategy implementation 06 Cultural change to be more focused on profitability Growth accelerators 05 Growth in new businesses Base for sustainable and profitable growth 02 Products and projects 03 Go-to-market str
Slide 28: €180-200M cost reduction plan based on four levers
We developed a €180-200M cost reduction plan based on four levers to be implemented by the end of 2016 1 Personnel costs optimization Delivery Production and model €180-200M1 other costs optimization optimization 4 2 Overruns and project delays reduction 3 1. Impact subject to the result of negotiat
Slide 29: Organizational restructuring program
The current situation has forced us to launch an organizational 1 restructuring program Personnel cost We are launching an organizational optimization is needed restructuring program Worldwide organizational • Restructuring opportunities in our restructuring plan to be implemented corporate areas be
Slide 30: Optimizing production and other related costs
We are also optimizing our cost base: production 2 and other related costs Reduction and improved control of costs Production Improved production processes processes From purchases to operations Leverage product standardization and modularization Standardized to avoid excessive tailor made produ
Slide 31: Improving project management to minimize overruns and delays
We are improving our project management processes & tools to 3 minimize overruns and delays • Stricter demand of project minimum requirements More selective • Higher restriction in commercial scoring offering • Assessment of risk and price accordingly • Contract manager role to be incorporated at th
Slide 32: Room for improvement in our global delivery model
4 We have room for improvement in our global delivery model Indra has ~9,500 FTEs in our production Opportunity to further factories based in Spain increase near/off-shoring ~7,000 FTE in on-shore with the highest cost Further increase near/off-shoring ratios to reduce the gap with our competitors ~
Slide 33: Intensify near/off-shoring to capture cost efficiencies
We will intensify our strategy of near/off-shoring to capture 4 cost efficiencies whilst growing We will accelerate the deployment Opportunities to reduce of competitive production centers, costs by near/off-shoring especially for new contracts Employee cost relative to on-shore cost in Spain (%) %
Slide 34: €180-200M cost reduction plan with levers quantified
We developed a €180-200M cost reduction plan based on four levers to be implemented by the end of 2016 €120M Personnel costs optimization Delivery Production and model optimization €180-200M1 other costs optimization €10M €30M Overruns and project delays reduction €20-40M 1. Impact subject to the re
Slide 35: TaN "
TaN " 15 6 aa . FIRST INVESTOR
Slide 36: Strategic Guidelines 2015-2018
03 STRATEGIC GUIDELINES 2015-2018 Fernando Abril-Martorell
Slide 37: 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 38: Our strategic guidelines
Our strategic guidelines Enabler for strategy implementation 06 Cultural change to be more focused on profitability Growth accelerators 05 Growth in new businesses Base for sustainable and profitable growth 02 Products and projects 03 Go-to-market strategy 04 Delivery model portfolio Short term must
Slide 39: Refocusing our product and project portfolio on four levers
We are refocusing our product and project portfolio 02 based on four levers Prioritize existing Increase standardization Prioritize existing portfolio by Increase Industrialize and standardize our products portfolio focusing on core business operation standardization offer to capture economies of sc
Slide 40: Prioritizing successful proprietary products
We are prioritizing successful proprietary products 02 to keep investing in them We continued investing ...and, as a result, we have obtained products that support during the economic crisis... core business operations across the whole value chain (€M) 540 Example of Energy Products Transmission & G
Slide 41: Reviewed go-to-market strategy
We have reviewed our go-to-market strategy to achieve our 03 target projects and products portfolio Train and reinforce sales teams on new Reinforce skills of vertical offerings, with specialized teams Reinforce commercial teams to deliver the best approach for the client commercial push for value-a
Slide 42: Leveraging improved delivery model for profitability and references
By leveraging the improved delivery model we will increase 04 both profitability and customer references Standardized products that Industrialized Rigorous New high-end tools and will be produced efficiently Industrialized processes for project production project • In terms of costs, timings product
Slide 43: Accelerating delivery model on/near/off-shore balance
We will accelerate the deployment of our delivery model based 04 on a right balance among on/near/off-shore La Coruna Asturias Increase near-shoring within Spain from Madrid and Barcelona to other regional factories Lleida Salamanca Barcelona Madrid Badajoz Ciudad Real Foster off-shoring for Valenci
Slide 44: Indra Digital complements our vertical offer
Through Indra Digital we complement our vertical offer 05 with high value-added solutions and catalyze its evolution Go-to- market Defence & Transport & Energy & Financial Public Admin TMT Security Traffic Industry Services & Healthcare Digital solutions ... Digital Omnichannel Smart assets Risk for
Slide 45: Cultural change focused on profitability and cash
We are driving cultural change to be more focused on 06 profitability and cash Cultural change to be more focused on profitability and cash Individuals Reinforce rigorous and teams are People project management engaged for results Result-oriented behaviors Processes and tools People skilled and read
Slide 46: Cost reduction and strategy will increase sales and profitability
By implementing the cost reduction initiatives and the medium-term strategic guidelines, we will increase sales and profitability Expected CAGR1 Rationale Sales 2014 (€M) 2014 – 2018 (%) • Global and local investment recovery • Proprietary product portfolio and proven track-record to Defence & Secur
Slide 47: Growth of 2.5% to 4.5% in sales and EBIT margin of ~10%-11% in 2018
By implementing our strategic guidelines, we expect to grow at 2.5% to 4.5% in sales and an EBIT margin of ~10%-11% in 2018 Expected CAGR1 2014 – 2018 (%) 2.5%-4.5% / year1 +4% / year1 2,938 3%-5% 2,168 3%-5% Defence & Security Transport & Traffic 2%-4% IT 2007 2014 Objective 2018 EBIT margin (%) 11
Slide 48: TaN "
TaN " 15 6 aa . FIRST INVESTOR
Slide 49: Defence and Security
04 DEFENCE AND SECURITY Carlos Suárez
Slide 50: 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 51: Defence and Security: recovered sales by internationalizing
Defence and Security: we recovered our sales by strongly internationalizing our offering Sales (€M) 800 633 5%/year 600 495 509 298 463 400 311 382 402 International 200 335 152 113 107 Spain 0 2007 2012 2013 2014 % International sales ~50% ~70% Strategic guidelines 2015 – 2018 2
Slide 52: Long maturity-cycle market based on proven capabilities
Defence and Security is a long maturity-cycle market based on proven capabilities and strong commitments "Long development and delivery cycles" Stable market with long investment and product development cycles while Eurofighter NH90 other technological cycles are shorter 1986-2022 1992-2024 Global c
Slide 53: Market gaining momentum, opportunities aligned with Indra's strengths
Defence and Security market gaining momentum, significant opportunities well-aligned with Indra’s strengths Indra is a specialist provider in selected market segments Expected market growth Indra's accessible market size (2015 €Bn) (% CAGR 2015-18) Air Military Maritime Cyber Air Surveillance 5 3 Su
Slide 54: A significant European player in market segments
We are a significant European player in the market segments of activity... Air Military Maritime Electronic Satellite European competitor Surveillance Simulation Surveillance Defence Communication Indra A B C D E Indra’s position in #2 #2 #2 #4 #4 Europe Sou
Slide 55: Worldwide references providing a proven track-record
...and have worldwide references that provide a proven track-record Air Surveillance Maritime Surveillance Electronic Defence Air platforms • Eurofighter • Tigre • Chinook Satellite Communication • A400M • Cougar • CH53 • C-295 • P3 • F1 Naval SATCOM • F/A -18 • B707 • NH90 Simulation Naval platform
Slide 56: 3 drivers to boost our growth
3 drivers to boost our growth going forward Global and local investment recovery Margin pressure Proprietary product portfolio Commercial to boost partnerships international sales Strategic guidelines 2015 – 2018 7
Slide 57: Global and local investment recovery
Global and local investment recovery: changing economic cycle will strengthen Indra's business Global investment cycle recovery Spanish investment cycle recovery Increased uncertainty and local conflicts foster investments Better Spanish perspectives implying increased in Defence and Security invest
Slide 58: Balanced portfolio between mature products and new offerings
We have a balanced portfolio between mature products and new offerings to take advantage of the new growth perspectives Air Military Maritime Cyber Surveillance Simulation Surveillance Defence • 3D radars • Helicopters • Maritime and border • Analysis, detection and • Command and control • Military
Slide 59: Lanza 3D Mobile Deployable Radar system example
Our complete product portfolio allows us to have an international presence: Lanza 3D Mobile Deployable Radar system example We developed our offering nationally... ...and were able to export it Export to new countries Innovative public procurement to add new references initiative in Spain + Our expe
Slide 60: Strengthening our network of commercial partners
We will keep strengthening our network of commercial partners Air platforms Naval platforms Terrestrial platforms Strategic guidelines 2015 – 2018 11
Slide 61: Synergies among our vertical businesses give a competitive advantage
Our technological, manufacturing and commercial synergies among our vertical businesses give us a competitive advantage Defence & Air traffic and Security Transport IT Shared engineering and manufacturing capabilities Radars Life cycle Pre-sales Delivery management Command & Control systems
Slide 62: Wrapping up: strategic guidelines aligned with overall strategy
Wrapping up: strategic guidelines aligned with overall strategy 06 Cultural change to be more focused on profitability 02 Products and projects portfolio • Leverage existing track-record and international footprint • Focus investment on developing new offer in selected segments 05 Growth in new busi
Slide 63: TaN "
TaN " 15 6 aa . FIRST INVESTOR
Slide 64: Air Traffic Business
05 AIR TRAFFIC BUSINESS Rafael Gallego
Slide 65: 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 66: Introduction to Indra's Traffic & Transport business
Introduction to Indra's Traffic & Transport business We have grown by ~7%/year since 2007 We have a highly balanced but decelerated in recent years portfolio across geographies Sales (€M) +7%/year 2014 Geographic Sales 800 667 597 611 620 555 AMEA Spain 600 498 22% 434 24% 394 400 International 200
Slide 67: ATM is an attractive market due to sustained growth and stability
ATM is an attractive market due to its sustained growth and stability Market dynamics Global market size Sustained growth €3Bn 4% High entry Expected growth rate Global 2015 – 2018 (%/year) barriers 2% Large Technolo- projects & gical lead equipment (Europe) ATM CNS Systems Equipment Note: ATM: Air
Slide 68: A complete product portfolio covering all segments
We have a complete product portfolio covering all segments... A-SMGCS ATC ATC Control Centers Towers Airports ATM Systems Air Traffic Management ATM Network ATM Communication, Navigation & Surveillance Equipment – CNS Communications Navigation Surveillance Note: ATC: Air Traffic Control A-SMGCS: Adv
Slide 69: Leading products for all phases of the flight
...which means we have leading products for all phases of the flight Illustrative example of Indra's products supporting a flight Secondary Radar A-SMGCS ILS A-SMGCS Primary Radar ATC Navigation Aids GBAS ATC Note: ATC: Air Traffic Control. A-SMGCS: Advanced Surface Movement Guidance & Control Syste
Slide 70: One of the top-5 players in the market
We are one of the top-5 players in the market Systems Competitor Integrator Control Centers Towers Communications Navigation Surveillance Indra ✓ ✓ ✓ ✓ ✓ ✓ A ✓ ✓ ✓ ✓ ✓ ✓ Large Scale B ✓ ✓ ✓ ✓ ✓ ✓ Integrators C ✓ ✓ ✓ ✓ D ✓ ✓ E ✓ ✓ ✓ Specialists F ✓ ✓ ✓ Source: Indra. Strategic guidelines 2015 – 2018
Slide 71: 3 main drivers to grow in Air Traffic Management
3 main drivers to grow in the Air Traffic Management market Take advantage of Single European Sky through SESAR & iTEC Push for Maintain growth nationwide and leadership in projects CNS equipment Strategic guidelines 2015 – 2018 7
Slide 72: Relevant partner at SESAR and iTEC deployment
We are one of the most relevant partners at SESAR... ...and will materialize this through iTEC deployment Indra as one of the founding members The iTEC Alliance aiming to cover an of the Single European Sky R&D Joint important portion of the Single European Space Undertaking Phase II Phase I SESAR 2
Slide 73: Maintaining leadership in CNS equipment with flagship products
We will maintain growth and leadership in CNS equipment by boosting our flagship products • Flagship and leader product globally (outside of US) • >175 installations worldwide MSSR • References in China, India, Australia, Indonesia, Turkey, Poland, Spain, Latin America... Surveillance • Competitive
Slide 74: Nationwide projects with strong references
We have the opportunity to pursue nationwide projects where we already have strong and successful references Turkey Australia • We provided Turkey with • We implemented 9 MSSRs on the 18 MSSRs and 5 PSRs East coast of Australia, the heaviest covering the country's traffic area in the country whole a
Slide 75: Wrapping up: strategic guidelines aligned with overall strategy
Wrapping up: strategic guidelines aligned with overall strategy 06 Cultural change to be more focused on profitability 02 Products and projects portfolio • Maintain leadership in primary and secondary radar and ILS • Proven track record in successful projects 05 Growth in new businesses 02 Products
Slide 76: TaN "
TaN " 15 6 aa . FIRST INVESTOR
Slide 77: IT and Digital Solutions
06 IT AND DIGITAL SOLUTIONS Cristina Ruiz
Slide 78: 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 79: Introduction to Indra's core IT businesses
Introduction to Indra's core IT businesses We managed to grow despite Balanced portfolio the complex macro environment across industries & geographies Sales (€M) 1,809 1,809 2,500 1% 7% North 18% TMT America +7%/year 9% 2,000 1,809 Europe Financial 27% 34% AMEA 1,500 Services LatAm 1,140 1,000 Indus
Slide 80: Presence in very attractive market segments
We have a presence in very attractive market segments Proprietary 3rd party Global Market Size (2015 €Bn) Expected Market Growth (% CAGR 2015-18) products software Vertical Vertical Product Solutions ~40 Solutions 6.8% development IT Outsourcing, IT Outsourcing, AM, ITO, & IT AM & ITO ~120 AM & ITO
Slide 81: IT is constantly evolving
IT is constantly evolving Technology to transform core business operations Increased IT & OT acceptance & convergence demand for BPO IT Further Emergence of globalization two speeds IT Cloud as an enabler of growth Strategic guidelines 2015 – 2018 4
Slide 82: Vision on IT value creation: core operations with digital solutions
Our vision on IT value creation: core business operations with value-added digital solutions Core business operations Digital Industry Financial & Retail Energy TMT Services Customer Management Channel Channel Management Management Core Billing business Billing Utilities Telcos ... Core operations N
Slide 83: Unique portfolio of proprietary products for core business operations
We have developed a unique portfolio of proprietary products for core business operations Portfolio of proprietary products... ...balanced across the maturity curve Extended life cycle Cash flow generation Energy & TMT Financial Public Admin Industry Services & Healthcare Elections Product Leading p
Slide 84: Energy: products support core operations across the value chain
Energy: our set of products supports core business operations across the industry's whole value chain Transmission & Generation Commercialization Distribution Plant Basin & Dam Maintenance GIS Operation Management Management Asset Network Construction Network Planning & Maintenance Management SCADA
Slide 85: Energy: products running for many clients, white space for sales
Energy: products already running for many clients... ...and still much white space to trigger new sales +70 companies already with our commercial system... out of +850 potential targets United States Europe Asia-Pacific +250 +150 +140 0 4 24 LatAm Africa +80 +200 11 Commercial system Targeted utilit
Slide 86: Financial services: iONE for the life insurance industry
Financial services: iONE as an emerging solution for the life insurance industry which is operating in Tier-1 companies Business Lines Retail Bank Life Accidents Investment Health Products Channels Claims Underwriting New Business External & Benefits & Servicing Relations Clients Professionals Bank
Slide 87: International recognition of our products
International recognition of our products Gartner Magic Quadrant 2015 (representation) Celent ABCD Vendor View (representation) Challengers Leaders SISTRAN SISE SAP InMotion GIT Ability to execute Depth of Service Oracle Utilities Visual Time CSC Integral CONSIS ACSEL-E I4PRO ERP Gruppo Engineering
Slide 88: Elections: balance between traditional and new offerings
Elections: balance between traditional and new offerings to keep leading in the future Election Post- Pre-election election We have accompanied ID Voting Counting +50 public institutions Optical in very different environments Scan Biometric Solutions New Direct Recording Electronic Result Analysis O
Slide 89: Indra Digital complements our vertical offer
Through Indra Digital we complement our vertical offer with high value-added solutions and catalyze its evolution Go-to- Individual go-to-market for each vertical industry market • Leveraging deep know-how of specific client needs and realities Digital Starting from the digital platform, we engineer
Slide 90: Portfolio of digital platforms to engineer digital solutions
Comprehensive portfolio of digital platforms to engineer digital solutions for our vertical clients Go-to- market Defence & Transport & Energy & Financial Public Admin TMT Security Traffic Industry Services & Healthcare Digital solutions Omnichannel Smart Assets Risk Force Cybersecurity ... Digital
Slide 91: International recognition of our digital products
International recognition of our digital products Gartner Magic Quadrant 2015 (representation) Challengers Leaders Salesforce.com Ability to execute Microsoft Google Red Hat Progress OutSystems Mendix IBM Engine Yard Zoho cloudControl SAP Software AG MIOsoft NTT Communications OrangeScape Niche play
Slide 92: Smart cities: solutions to generate tangible impact
Smart cities: solutions to generate a tangible impact on citizens City Manager Tangible impacts • 20% time reduction in displacements Holistic forecasting Mobility • 12% reduction in CO2 emissions models Citizens • 10%-15% savings in consumption cost Lighting Omnichannel Information City Monitoring
Slide 93: Wrapping up: strategic guidelines aligned with overall strategy
Wrapping up: strategic guidelines aligned with overall strategy 06 Cultural change to be more focused on profitability 02 Products and projects portfolio • Continue developing core business solutions, especially in Financial Services and Energy 05 Growth in new businesses • Abandon particular busine
Slide 94: TaN "
TaN " 15 6 aa . FIRST INVESTOR
Slide 95: Financial Overview
07 FINANCIAL OVERVIEW Juan Carlos Baena
Slide 96: 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 97: Agenda
Agenda Evolution of Indra Expected 2007-2014 Performance 2018 Strategic guidelines 2015 – 2018 2
Slide 98: Agenda
Agenda Evolution of Indra Expected 2007-2014 Performance 2018 Strategic guidelines 2015 – 2018 3
Slide 99: Strong sales growth historically with a decrease in profitability
Strong sales growth historically with a decrease in profitability From 2007 to 2014 sales grew... ...but profitability decreased Sales (€M) Recurrent EBIT margin (%) 4,000 15 -4.2 pps +4% / year 2,938 11.1 3,000 10 2,168 6.9 2,000 5 1,000 0 0 -1.4 When including non-recurrent 2007 2014 2007 2014 ite
Slide 100: Low Free Cash Flow generation during the economic crisis
Low Free Cash Flow generation during the economic crisis Accumulated Cash Flow 2008-14 (€M) FCF / Sales (%) (€M) 8 1,500 5.8% 1.9% Before full % Sales impact of 1,109 215 6 5.1% crisis 1,000 540 4 After impact of crisis 500 354 2 1.6% 0 0 Cash Flow Net Working CAPEX Free Cash 2008 2014 Generation Ca
Slide 101: Net Working Capital deterioration
Net Working Capital deterioration Net Working Capital1 Evolution 2007-14 (€M) 61 648 154 433 Increase NWC 2007 Increase NWC due due to Higher 2014 to Sales Growth Days of Sales (+8) Days of Sales 73 81 1. NWC Strategic guidelines 2015 – 2018 6
Slide 102: Net Working Capital days of sales have increased
Net Working Capital days of sales have increased due to inventories and suppliers evolution Net Working Capital Evolution (Days of Sales) 2007-14 Net Working Capital (Days of Sales) 2007 2014 Effect on NWC 100 Client reduction 13 81 Net higher than unbilled 73 -12 136 124 revenues increase 7 Receiva
Slide 103: Accumulated CAPEX of €540M, of which 68% intangible
Accumulated CAPEX of €540 M, of which 68% are intangible CAPEX 2008-2014 (€M) % Total 57 540 CAPEX 65 Tangible CAPEX 74 173 32% Intangible CAPEX 111 89 80 367 68% 65 2008 2009 2010 2011 2012 2013 2014 Total Strategic guidelines 2015 – 2018 8
Slide 104: Tangible and intangible assets evolution
Tangible assets: Depreciation similar to CAPEX Intangible assets: Amortisation will accelerate from now onwards Tangible Assets Evolution 2007-2014 (€M) Intangible Assets Evolution 2007-2014 (€M) % Sales 0.9% 0.9% % Sales 1.9% 0.7% 173 177 367 122 290 131 127 45 Amortisation CAPEX Depreciation Net C
Slide 105: Intangible CAPEX starts to be amortised
Intangible CAPEX has developed the base of future portfolio and starts to be amortised once development phase is finished Intangible Assets Amortisation Public Admin €M Telecom & Healthcare +167% 100 & Media Energy & ~50 Transport 5% Industry 50 7% 20 & Traffic 26% 10% 0 Intangible 2014 Estimated Av
Slide 106: Net Debt increased from 0.5x to 2.5x EBITDA
Net Debt increased from 0.5x to 2.5x EBITDA Net Debt Evolution 2007-2014 (€M) €M 500 122 372 354 0 150 -500 617 663 -1,000 €513M Net Debt 2007 Free Cash Flow Divestments Acquisitions Dividends Net Debt 2014 and Others Net Debt / Recurrent EBITDA 0.5x 2.5x Strategic guidelines 2015 – 2018 11
Slide 107: Acquisitions to increase international presence and expand portfolio
Indra made acquisitions to both increase its international presence and expand its portfolio Main reasons for Indra's historical Acquisitions €195 M €177 M Increase Increase International Portfolio Presence Cryptography Revenue Accounting BPO ATM* Satellite Communications Cloud Brazil Peru Italy Mex
Slide 108: Dividend payment despite the crisis
Dividend payment despite the crisis Dividends 2008-2014 (€M) (%) 200 62 70 59 55 55 55 60 160 48 42 50 120 111 109 99 107 40 €617 M 80 30 of 80 56 56 Dividends 20 during 40 €0.50 €0.61 €0.66 €0.68 €0.68 €0.34 €0.34 10 2008-14 0 0 2008 2009 2010 2011 2012 2013 2014 Dividends paid per year Pay – out (
Slide 109: Net debt manageable in volume and maturity
The resulting net debt is manageable in terms of volume and maturity Net Debt and Total Credit Facilities Net Debt Net Debt 31.12.14 €663 M Dec 2014 Long Term Debt Bank Convertible R+D Loans Bonds Loans €980 M (>1 year) Short Term Available Line Bank Facilities €448 M (<1 year) Maturity of Available
Slide 110: ~€690M of available liquidity
~€690 M of available liquidity despite the increase of net debt during the 1Q 2015 Net Debt and Total Credit Facilities Total Current Available Credit Facilities €1,428 M Net Debt 31.03.2015 €741 M Liquidity Liquidity Available Available €687 M Indra has available credit to finance Operating Plans S
Slide 111: Agenda
Agenda Evolution of Indra Expected 2007-2014 Performance 2018 Strategic guidelines 2015 – 2018 16
Slide 112: Clear plan to increase Free Cash Flow generation
Going forward, we have a clear plan to increase Free Cash Flow generation Drivers of Cash Flow Objective Cash 2014 Main Actions Improvement 2018 Objective Increase of Prioritize existing portfolio CAGR 2,938 (€M) Free Cash Flow (€M) Revenues Growth in new businesses 2.5%-4.5%* 300 6.9% Cost re
Slide 113: Working Capital and CAPEX expected to maintain a stable path
Working Capital and CAPEX expected to maintain a stable path Working Capital will be under a tighter Expected stable CAPEX control thanks to measures taken requirements • Project cash flow profile as Offers KPI for prioritization of commercial biddings Increase due to Reduction Digital as main produ
Slide 114: Net debt expected to be reduced after 2015
Due to higher Cash Flow Generation, net debt expected to be reduced after 2015 Expected Evolution of Net Debt / EBITDA 2014-2018 Net Debt / EBITDA 4 3.2 x 3 2.5 x 2 ~1.0 x 1 0 2014 2015 1Q 2018 Dividend policy will be linked to cash flow generation Strategic guidelines 2015 – 2018 19
Slide 115: Strategic guidelines will improve profitability and cash generation
In summary, the strategic guidelines and current plans will improve profitability and cash generation Objective 2014 2018 Growth of sales supported by clear strategic guidelines and strong product portfolio CAGR Revenues 2,938 (€M) 2.5%-4.5% * Increase of profitability thanks to Operating Plans and
Slide 116: TaN "
TaN " 15 6 aa . FIRST INVESTOR