A LEADING TECH COMPANY September 2014
A LEADING TECH COMPANY | 2
This presentation has been produced by Indra for the sole purpose expressed therein. It should not in any event be constructed as an offer or invitation to purchase shares of the Company.
Its content is purely for information purposes and the statement it contains may reflect certain forward-looking statements, expectations and forecasts about the Company at the time of its elaboration. These expectations and forecasts are not in themselves guarantees of future performance as they are subject to risks, uncertainties and other important factors beyond the control of the Company that could result in final results materially differing from those contained in these statements. The Company does not assume any obligation or liability in connection with the accuracy if the mentioned estimations and is not obliged to update or revise them.
This disclaimer should be taken into consideration by all the individuals or entities to whom this documents is targeted and by those who consider that they have to make decisions or issue opinions related to securities issued by Indra.
A LEADING TECH COMPANY | 3
INDEX
Who we are
2013 Performance
Outlook 2014
Brief look at 1H14
A LEADING TECH COMPANY | 4
INDRA: GLOBAL FOOTPRINT
WHO WE ARE
A technology company providing real time, smart, efficient solutions and services to clients all around the world
38,000 employees
€2.9bn revenues in 2013
Local presence in
45
countries
78 Excellence Centers &
Software Labs
Projects in
138 countries
Services 35%
Solutions 65%
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IN A BROAD RANGE OF VERTICALS
WHO WE ARE
as % of Sales
as % of Solutions
Transport & Traffic
Intelligent Traffic Systems &
Smart Mobility
Railways, Mass Rapid Transit &
Buses
21%
Energy & Industry
Network Management (Smart Grid)
17%
Public Administrations & Healthcare
Voting
Healthcare
17%
Financial Services
Core insurance
16%
ePayments
Telecom & Media
12%
Social Media
Digital Platforms Plant Management & Energy Markets
Security & Defense
Simulation
Border Control
17%
BPO Application Management
IT Outsourcing
Key Solutions
Services
Air Traffic Air Defense Customer Management
Taxes & Justice Core Banking Networks & Communications
A LEADING TECH COMPANY | 6
AN INTERNATIONAL DIVERSIFIED COMPANY
WHO WE ARE
Asia, Middle East & Africa
Spain
Latam
>45% of workforce in 45 international subsidiaries
>40% of total revenues in
emerging markets
Figures as of 2013
Europe & USA
28%
13%
20%
39%
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68% 66%
64% 61%
57%
43%
39%
32% 34%
36% 39%
43%
57%
61%
CONSOLIDATING GLOBAL PRESENCE
WHO WE ARE
Spanish revenues as % of total Indra
Revenues outside of Spain as % of total Indra
Revenues outside of Spain
17% CAGR since
beginning of the
crisis
2008 2009 2010 2011 2012 2013 2007
A LEADING TECH COMPANY | 8
197
831
2007 2013
4.2x
Mexico
19%
Colombia
10%
Chile
6%
Peru
6%
Argentina
5%
Others
19%
Brazil
35%
WITH STRONG GROWTH IN LATAM
WHO WE ARE
39% of total employees (~15,000) located in Latam
Figures in €M
Latam revenues growth since 2007 % of total Latam
+22% growth in Latam (local currency) in 2013
A LEADING TECH COMPANY | 9
WITH STRONG GROWTH IN AMEA AS WELL
WHO WE ARE
3% of total employees (~1,300) located in AMEA
Figures in €M
AMEA revenues growth since 2007 % of total AMEA
Revenue growth of 28% CAGR since 2007
86
381
2007 2013
4.4x
Africa
28%
Middle East
26%
Asia
46%
A LEADING TECH COMPANY | 10
SPANISH REVENUES SUPPORTED BY THE CORPORATES THROUGH THE CRISIS
WHO WE ARE
7% 3%
-3% -3%
-18%
-11%
7%
-9% -1%
-10%
-26%
Corporate clients
Public clients
2008 2009 2010 2011 2012 2013
604 692
864
433
1,468
1,125
2007 2013
+15%
2013 vs 2007
Public
Corporates
Public Spain as % of Indra’s Total Revenues
40% 15%
-50%
-23%
38%
62%
Spanish market growth rate
-23%
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39%
3%4%
54%
Nearshore
Factories
BUILDING NEARSHORE AND OFFSHORE PRODUCTION AND DELIVERY CAPABILITIES
WHO WE ARE
A significant part dedicated to
export business
Local presence in 14 countries
>38,000 professionals running
the business with overall utilization capacity of 94%
Asia, Middle East & Africa
Europe & North America
+ c.4,000 subcontractors
providing operational flexibility worldwide
Spain
Latam
Personnel breakdown
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SOLUTIONS AND SERVICES CARRY OUT DIFFERENT CONTRIBUTION MARGINS
WHO WE ARE
Contribution Margin
16.6%
11.9%
15.0%
7.2%
7.8%
Solutions Services Total Overheads &
Others
Indra EBIT
Margin 2013
(recurrent)
2013 Figures
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FOCUSED INVESTMENTS TO TAKE ADVANTAGE OF THE DEMAND FOR SOLUTIONS
WHO WE ARE
Main areas of investment
(1) Intangible Capex net of subsidies (€M)
Net Intangible (R&D) CAPEX evolution (1)
Smart Grid & Customer Management Solutions for Utilities
Core Banking & Insurance Systems
Surveillance Healthcare
Railway Solutions Airlines Revenue
Accounting
38
51 53
69
51 47
1.6%
2.0% 2.1% 2.6%
1.7% 1.6%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013
Net Intangible Capex (€M)
Net Intangible Capex / Sales
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0.43 € 0.50 €0.61 € 0.66 € 0.68 € 0.68 €
0.34 € 0.34 €
0.35 €
55% 55% 55% 55%59%
62%
42%48%
0%
10%
20%
30%
40%
50%
60%
0
0,2
0,4
0,6
0,8
1
1,2
2007 2008 2009 2010 2011 2012 2013 2014
Ordinary Dividend Extraordinary Dividend Pay-Out
2.3%2.7%
3.7% 4.0%
5.3%
6.9%
3.4%2.8%
WHO WE ARE
Dividend yield calculated on Dec 31st of previous year; Pay-out calculated on previous FY results
Dividend Yield
Dividends paid on
Dividend accommodated to free cash flow generation, setting a floor in 2013
DIVIDEND TRACK RECORD
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SHAREHOLDERS (July 2014)
WHO WE ARE
(*) Board of Directors representation
CNMV data. Identified shareholders with a position in excess of 3%
% as of
Share Capital Sociedad Estatal de Participaciones Industriales S.E.P.I (*)
Fidelity Group
Invesco
Corporación Financiera Alba (*)
Others 20.1%
11.3%
11.3%
4.0%
53.3%
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INDEX
Who we are
2013 Performance
Outlook 2014
Brief look at 1H14
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2013 PERFORMANCE
Operating margin at 7.8%
Spain: Public clients down by 23%, but bottoming out
Positive revenue growth in local currency (+2% YoY)
2013 targets achieved
Positive FCF evolution
NWC and Capex stable
Strong performance in Latam (+22% in local currency)
2013: MAIN MESSAGES
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MAIN 2013 FIGURES
2013 PERFORMANCE
2013 Variation
vs. 2012
Objectives
2013
Order Intake (€M) 3,029 B-t-B 1.04x Book-to-Bill >1x
Revenues (€M) 2,914 +2% (1) Slightly positive (3)
EBIT margin Recurrent 7.8% (2) -0.7pp Around 8%
Net profit (€M) 116 -9% ---
Net Capex (€M) 64 (3) -14% 65 - 75
NWC (DoS) 109 +5 100 – 110
Free Cash Flow 52 (3) +35% ---
Net Debt (€M) 622 -11 ---
(1) In local currency; -0.9% in reported terms (2) Before extraordinary costs of 28 M€ (3) Adjusted for the impact of the disposal of the business of advanced management of digital documentation in Spain and Mexico. Revenues in 2013 of this activity
reached 19 M€ and were 49 M€ in 2012. Order Intake totals 19 M€ in 2013 and 28 M€ in 2012. Includes positive impact (25 M€) in FCF from divestment
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INDEX
Who we are
2013 Performance
Outlook 2014
Brief look at 1H14
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GUIDANCE FOR 2014: FREE CASH FLOW
OUTLOOK 2014
Net debt reduction and adequate shareholders’ remuneration
Indra’s 2014 main and
priority target is to generate Free Cash Flow above
100 M€ Recurrent EBIT margin similar to 2013
NWC & Capex below 2013 levels
Main considerations and perspectives:
Positive revenue growth in local currency
• Low/mid single digit decline in Spain
• Double digit growth in local currency in Latam & AMEA
• Flat performance in Europe
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INDEX
Who we are
2013 Performance
Outlook 2014
Brief look at 1H14
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BRIEF LOOK AT 1H14
1H14 MAIN MESSAGES
Recurrent EBIT margin (7.7%) in line Restructuring of 12M€ represents bulk of 2014 plan
FY14 guidance of more than 100M€ reiterated
NWC up, as anticipated, to 112 DoS. Third quarter expected also high, to decrease in fourth quarter
Revenues +5% in local currency; Solutions +9%, Services -2%
Spain improving slightly Further improvement for 2H14 based on macro leading indicators
Latam decelerates but will maintain double digit local currency growth at year end. AMEA to reflect in 2H14 end of non-recurrent projects
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1H14 RESULTS: MAIN HEADLINES
BRIEF LOOK AT 1H14
1H14 Variation
Local currency / reported
1H13
Order Intake (€M) 1,647 +6% / -1% 1,671
Revenues (€M) 1,476 +5% / -1% 1,490
EBIT margin Recurrent (1) 7.7% -0.2 pp 7.9%
Net profit Recurrent (1) (€M) 69 +9% 64
Net Capex (€M) 28 +14% 25
NWC (DoS) 112 +6 106
Free Cash Flow -3 --- 11(2)
Net Debt (€M) 652 +1% 649
(1) Before extraordinary costs of 12 M€
(2) Flat once adjusted for divestment of services business
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Spain Int.
Energy & Industry 229 -3% -9%
Financial Services 255 +6% -1%
Telecom & Media 160 -13% -24%
PPAA & Healthcare 291 +25% +21%
Transport & Traffic 292 +10% +4%
Security & Defence 248 -0% -1%
Total 1,476 +5% -1%
1H14 (€M) Local Currency
35
% Variation
Reported
PPAA & HEALTHCARE AND TRANSPORT & TRAFFIC OUTPERFORM
BRIEF LOOK AT 1H14
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BRIEF LOOK AT 1H14
Spain 575 633 -9% -9%
Latam 384 401 +14% -4%
EU/USA 308 280 +11% +10%
AMEA 209 176 +22% +18%
Total 1,476 1,490 +5% -1%
(€M)
1H14
(€M) Local Currency Reported
1H13 % Variation
SPAIN IMPROVES, LATAM AND AMEA SHOW SOLID PERFORMANCE
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1H14 SOLUTIONS: ACCELERATING GROWTH
1H14
Order Intake (€M) 1,026 +9% / +2% 1,004
Revenues (€M) 953 +9% / +4% 919
Weight
(% total revenues) 65% +3 pp 62%
Book to Bill 1.08x -2% 1.09x
Backlog / LTM
Revenues 1.31x -2% 1.33x
Contribution Margin 16.8% -0.7 pp 17.5%
1H13
33
SOLUTIONS
BRIEF LOOK AT 1H14
Variation Local currency
/ reported
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1H14 SERVICES: WEAK FIRST HALF; TO IMPROVE IN SECOND
Order Intake (€M) 621 +1% / -7% 667
Revenues (€M) 522 -2% / -9% 572
Weight
(% total revenues) 35% -3 pp 38%
Book to Bill 1.19x +2% 1.17x
Backlog / LTM
Revenues 1.06x +5% 1.01x
Contribution Margin 11.6% -0.6 pp 12.2%
1H14 1H13
34
SERVICES
BRIEF LOOK AT 1H14
Variation Local currency
/ reported
Investor Relations [email protected]
Avda. de Bruselas 35
28108 Alcobendas,
Madrid Spain
T +34 91 480 98 00
F +34 91 480 98 47
www.indracompany.com