Indra Sistemas S.A.

Investor Presentation • Jul 29, 2020

1H20 Results

July 29th, 2020

CONFERENCE CALL DETAILS

LIVE EVENT:

The Company will host a conference call for investors and analysts today at 18:30 (Spanish time). Please find below conference call telephone numbers: Spain: +34 911140101 France: +33 170710159 UK: +44 2071943759 US: +1 6467224916 Access Code: 73683614# Access to the live event: https://onlinexperiences.com/Launch/QReg/ShowUUID=4631EA4D-D4C9-40C4-AB5B-4EF44EB71B60

WEBCAST REPLAY: A recording of the conference call will be available for 30 days on the following telephone numbers:

Replay dial number: Spain: +34 910387491 France: +33 (0)172727402 UK: +44 2033645147 US: +1 (646) 722-4969 Access code: 418945071# Access to the Webcast Replay: https://onlinexperiences.com/Launch/QReg/ShowUUID=4631EA4D-D4C9-40C4-AB5B-4EF44EB71B60

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 recommendation with respect to such securities.

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 of the mentioned estimations and is not obliged to update or revise them.

This document contains information that has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information.

This disclaimer should be taken into consideration by all the individuals or entities to whom this document is targeted and by those who consider that they have to make decisions or issue opinions related to securities issued by Indra.

Impact by sector

Expected GDP evolution by geography

Structural changes in customers

• Massive implementation of working from home
• Stronger demand for digital channels, ecommerce and contact-less solutions
• Acceleration of AI technologies, Unmanned vehicles, etc.
• Increased digitization and robotization opportunities
• Redefinition of Public Administration´s spending priorities to relaunch economies
• Deglobalization of supply chains

Order Intake

Revenues and margins

• Moderate declines, impacted by lower commercial activity in the first stages of the outbreak, as customers reassessed their priorities.
  • Some stabilization in recent weeks.
  • 2Q20 Revenues reflect full impact of covid.
• Margins affected by loss of operational leverage, which is amplified by higher personnel expenses (+10% versus 1H19), as well as price pressure from some clients
• Price pressure from clients leading to consolidation of suppliers, which in turn should help IDR maintain revenues and margins

Minsait Transport & Defence

• Very strong dynamics, beating our own internal expectations pre Covid-19, mainly boosted by Defence & Security, although will not translate into sales before 2021.
• Revenues and margins significantly affected by lockdowns and travelling restrictions in many countries and postponement of decisions of our customers (macro deterioration and oil price declines)
• Accounting by milestone recognition method (IFRS-15) amplifies short term revenue and EBIT impact, but will also lead to faster recovery once lockdowns are lifted.

	Actions	Estimated EBIT impact M€		Estimated Cash savings M€
		One-off costs 2020	Ongoing savings 2021	One-off costs 2020	Ongoing savings 2021
1	Reduction of non-personnel expenses	0	20	0	20
2	Internal processes improvement and new workplace model	-1.4	25	0	25
3	Capex investment reorientation and Balance Sheet adjustments	-100	25	6.3	0
4	Workforce transformation plan	-65	30	-45	30
	Total	-166.4	100	-38.7	75

Short Term (2020) Medium Term

• Commercial activity improving.
• In T&D, deferred revenues and margins should reverse if lockdowns ease, plus expected normalization of Eurofighter in Q4.
• In Minsait, expected revenue recovery and better expenses comparison should improve margins in 2H20.
• Positive Free Cash Flow dynamics continue despite Covid, supported by strong cash collections and more T&D prepayments

Guidance 2020:

• 2020 Revenues: [3.150 3.200 M€] in constant currency

• EBIT 2020: [120-135M€] before estimated one-off costs of the action plan of 165 M€

• Order Intake growing above our own internal expectations pre Covid-19 in Transport & Defence, with total backlog reaching new historic highs (> 5bn€) and a new leg up expected for 2H20.

• New environment will bring new opportunities in some of our core competencies (digitalization, cyber security, AI, etc.).
• Supplier consolidation should benefit stronger, local players like Indra.
• Covid action plan improves our financial profile from 2021 onwards.

• Strong Financial position to cope with the current difficult environment and take advantage of potential opportunities.

• 1

• The postcovid action plan will provide estimated annual cost savings of €100m by 2021 onwards, implying one-off costs of €165m in 2020, of which €95m are impairments (mostly intangible assets), already accounted for in June 2020.
• Backlog up +15%, new historic high for Indra (€5.1bn). 2
• 1H20 Order Intake grew +8%, driven by the Transport & Defence division (notably Defence & Security). 3
• 1H20 Revenues down -2% in local currency (-4% in reported terms) and 2Q20 Sales also declined -5% in local currency and -8% in reported terms, both affected by the covid impact. 4
• 1H20 Operating Margin stood at €43m in 1H20 vs €102m in 1H19 (margin of 2.9% vs 6.6% in 1H19), affected by delays and lower activity due to Covid. 5
• 1H20 reported EBIT was €-78m in 1H20 vs €79m in 1H19 (€-97m in 2Q20 vs €40m in 2Q19), impacted by the impairments of Intangible assets (€-95m), and by the delays and lower activity due to the covid crisis, which was more pronounced in the second quarter. 6
• Cash generation was €+149M better than 1H19. Net Debt / EBITDA LTM ratio up to 2.7x (excluding the impairments and IFRS 16 impact) vs 2.4x in 1H19. 7
• Reinforced financial position during the quarter, with more than €1,100m between cash and credit facilities as of June 2020. 8

Order Intake 1H20 (€m)

Local Currency / Reported

+11% +8%

Local Currency / Reported Revenues 1H20 (€m)

-2% -4%

Revenues 2Q20 (€m)

Local Currency / Reported

-5% -8%

1H20 Operating Margin¹ 2Q20 Operating Margin¹

1. EBIT before Other Operating Income & Expenses, including: staff reorganization, impairments, integration and acquisition costs, fines, amortization of intangible assets (PPA from acquisitions) and equity based compensation.

1H20 Order Intake (€m) Local Currency / Reported 340 374 250 460 1H19 1H20 590 834 +84% / +84% +13% / +10% +43% / +41%

1H20 Revenues (€m)

Transport & Traffic

Defence & Security

2Q20 Revenues (€m)

Local Currency / Reported

1

2Q20 Operating Margin 1H20 Operating Margin ¹

1. EBIT before Other Operating Income & Expenses, including: staff reorganization, impairments, integration and acquisition costs, fines, amortization of intangible assets (PPA from acquisitions) and equity based compensation.

T&D

^{16 345 351} 316 310 211 188 122 129 1H19 1H20 994 979 +10% / +6% -9% / -11% +2% / -2% +5% / +2% +2% / -2% 116 64 2Q19 2Q20 523 Financial Services 1H20 Order Intake (€m) Local Currency / Reported Local Currency / Reported 2Q20 Revenues (€m) Local Currency / Reported 1H20 Revenues (€m) 432 404 376 373 345 274 188 203 1H19 1H20 1,341 1,253 +16% / +8% -19% / -21% +4% / -1% -3% / -7% -3% / -7%

Energy & Industry

PPAA & Healthcare

Telecom & Media

182 176 161 151 97 64 489 +6% / +1% -14% / -16% -2% / -6% +2% / -3% -2% / -7%

1

1. EBIT before Other Operating Income & Expenses, including: staff reorganization, impairments, integration and acquisition costs, fines, amortization of intangible assets (PPA from acquisitions) and equity based compensation.

Net Debt Bridge – Cash Flow (€m)

Net Working Capital (DoS)

1. Non-recourse factoring; 2.EBIDA LTM excluding IFRS 16 and Intangible assets and clients impairment in 2Q20

beyond 1. European Investment Bank. 2. Including €246m Convertible Bond with 2023 maturity and €296m Corporate Bond with 2024 maturity. 3. The 2023 convertible bond has a put option in October 2021 which has not been considered as part of 2021 maturities

Investor Relations irindra@indra.es

Avenida de Bruselas, 35 28108 Alcobendas Madrid Spain T +34 91 480 98 00 www.indracompany.com