Kenya Airways PLC · NSEKE:KQ
Kenya Airways — Investor Presentation (July 2016)
30 slides from Kenya Airways's investor presentation, Jul 21, 2016
Slide 1: KQ Investors Briefing
KQ INVESTORS BRIEFING
Slide 2: Agenda
2015/16 Global Highlights Economy Outlook } Airline Industry Overview * Global + Africa Chairman’s | Remarks y
Slide 3: Significant operating improvements
Significant operating improvements — Passenger numbers increased to 4.2M — Cabin factor up by 5% — Turnover growth by 5% — Operating costs reduced by 5% — Excluding one off impacts, we broke even at operating level. Gross Profit significantly improved, while reducing overall losses — Gross Profit up
Slide 4: Aviation: An Economic Catalyst
Aviation: An $2.4 Trillion — 3.4% LE 58.1 million ono Orid O —t - 0 - — Fs Se
Slide 5: Global Economy
Global Economy In 2015, global economic activity remained subdued. Growth in emerging market and developing economies—while still accounting for over 70 percent of global growth—declined for the fifth consecutive year Three key transitions continue to influence the global outlook: — the gradual slow
Slide 6: Economic Cycle is positive but weak
Economic Cycle is positive but weak Now both developed and emerging economies weaker Business confidence Developed economies no change yw Oo Emerging economies PMI, 50 pb uw S ° 35 T T T 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: IATA Economics using Markit data www.iata.org/econ
Slide 7: Global Aviation
Global Aviation In 2015 airlines generated a global aggregate profit of $35.3 billion (re- stated from $33.0 billion estimated in December 2015). All regions are making a contribution to the $4.1 billion boost over 2015 profits with improved results; but there are stark regional differences in perfo
Slide 8: Global commercial airline profitability
Global commercial airline profitability EBIT margin Net post-tax Source: ICAO, IATA 2016 Net post-tax profits of $39.4 billion forecast this year 40 30 USS billion
Slide 9: Driven largely by N America, but also Europe & Asia
Driven largely by N America, but also Europe & Asia Net post-tax profit by region 50 4 40 Africa 30 - mL America 20 - @ Middle East f 10 = i @ Asia Pacific |(~ @ Europe ; —- a P @ N America USS billion 2010 2011 2012 2013 2014 2015 2016 Source: ICAO, IATA www.iata.org/economics 23
Slide 10: Regional profitability — Africa
Regional profitability — Africa US$bn 0.50 0.25 -0.50 -0.75 Source: IATA mmm Net profit (LHS) =—EBIT margin (RHS) 2% 1% 0% -1% -2% -3%
Slide 11: Africa Aviation in 2015
Africa Aviation in 2015 @ Currency Depreciation @ Interest expenses ' Security impact on commodity arrival numbers prices
Slide 12: Slide 12
Slide 13: Leading Airline in Africa
eading Airline in Africa ~160— LANDINGS & TAKEOFFS DAILY Leading Airline in Business in Africa 4yrs in a row
Slide 14: Income statement 2016 vs 2015
KShs Mil. 2016 2015 Var Var % Turnover 116,158 110,161 5,997 5.4 Direct Operating Costs (67,861) (76,059) 8,198 10.8 Gross Profit 48,297 34,102 14,195 41.6 Fleet Ownership Costs (29,578) (25,932) (3,646) (14.1) Overheads (22,812) (24,503) 1,691 6.9 Operating Profit / (Loss) (4,093) (16,333) 12,240 7
Slide 15: Statement of Financial Position
Statement of Financial Position KShs Mil ASSETS 2016 2015 Var Var % Non Current Assets Property, plant and equipment 120,871 125,422 (4,551) (3.6%) Intangible assets 802 1,163 (361) (31.0%) Leasehold land 2,015 1,237 778 62.9% Aircraft deposits 2,177 10,391 = (8,214) (79.0%) Other 2,840 2,798 42 1.5
Slide 16: Statement of Financial Position
Statement of Financial Position KShs Mil EQUITY AND LIABILITIES 2016 2015 Var Var % Equity attributable to owners Share capital & share premium 16,152 16,152 oO 0.0% Reserves (51,870) (22,161) (29,709) (134.1%) Non controlling interests 51 46 5 10.9% Total equity (35,667) (5,963) (29,704) (498.1%) N
Slide 17: Statement of Cash Flows
Statement of Cash Flows KShs Mil 2016 2015 Var Var % Loss before tax (26,099) (29,712) 3,613 12.2% Non operational items 30,381 28,817 1,564 5.4% Depreciation & Amortisation 7,988 12,081 (4,093) (33.9%) Impairment of assets 5,375 5.583 (208) (3.7%) Interest expense 7,039 4,581 2,458 53.7% Others 9,9
Slide 18: Operation Pride and Capital Structure Optimisation
Operation Pride apital Structure Optimisatio
Slide 19: Operation Pride
ies Operation Pride 5 re Tk T ~ | = y p>” ~~ £4
Slide 20: Revisiting business model
Revisiting business model Competitors have structural advantages Re-focusing on Africa. Developing partnerships Short term financing to meet current business needs Capital structure optimisation to ensure long term sustainability.
Slide 21: How does it work?
How does it work? ‘Paap Operation Pride is committed to be 100% sustainable - so it & is run by KQ employees 8 Workstreams = >250 initiative owners, driving initiatives 460 initiatives: driving savings and generating revenue Pride performance managed through Weekly progress updates governed by a cen
Slide 22: Having an investor mindset is crucial to achieving our targets
Having an investor mindset is crucial to achieving our targets Investor mindset - looking at your business through a proven lens “Cash is king” Focus on how to maximize real cash flow. Treat the business as you would your own money. Do not believe future promises without proof. Protect the downside
Slide 23: We are in the implementation phase of Operation Pride
We are in the implementation phase of Operation Pride 1 2
Slide 24: What have we achieved so far
What have we achieved so far Sustainability Impact Ahn Financial Impact We have introduced several suStainability initiatives to help improve our business, e.g. Operation Pride is on track and in the first 4 months has: " Booked 32% of annualized recurring = “Change management” work stream value to
Slide 25: Capital Structure Optimisation
® Capital Structure Optimisation ‘4 om as oo a Sand Manin HEL Ceili ‘ 7) Ee " me ' 's SS Tl el aaa i eo RN i ee %
Slide 26: KQ has reviewed the options in relation to its capital structure
• KQ has reviewed the options in relation to its capital structure • Ensuring financial flexibility, stability, and sustainability • The turnaround strategy will place Kenya Airways on a stronger footing and provide a stable base for long-term growth • The capital structure optimisation processes wi
Slide 27: Slide 27
Slide 28: Challenges Opportunities
Challenges Opportunities
Slide 29: Questions and Answers
Slide 30: Asante
Asante