Kenya Airways PLC · NSEKE:KQ
Kenya Airways — FY2015 Earnings Presentation
41 slides from Kenya Airways's earnings presentation, Jul 30, 2015
Slide 1: Kenya Airways Investor Briefing
Kenya Airways Investor Briefing 30th July 2015
Slide 2: Agenda
Agenda Global Economy Airline Industry Overview KQ Business Review Financial Results Chairman's Remarks Q&A ® Kenya Airways F) Pride of A\frion
Slide 3: Our Purpose
Our Purpose ‘Contributing to the sustainable’ Gavelopment of Africa. me (KQ Kenya Airways
Slide 4: Connecting Africa to the world and the world to Africa
Connecting Africa to the world and the world to Africa. DESBAL FucHT KO777 OME O7NOV ‘we YOUR NAME HERE LAGOS FucHT KO777 DATE O7NOV ancous w: STA ZONEA gg grep roe oe teh = —_ = — a = — = = = — kenya Airways <3
Slide 5: GDP Growth Comparison
GDP Growth Comparison World & Sub-Sahara Africa GDP Growth Forecast 8% 4 7% > — SSA = —— ——- ae World —— 6% - —= 5% + 4% 3% - 2% + 1% - 0% T T r T T T T T 7 2009 2010 2011 2012 2013 2014 (2015 2016 2017 GDP for Sub Sahara Africa still above World average Source: IMF (® Kenya Airways :
Slide 6: Global Economy
Global Economy Marginal trade growth in 2014 for airlines ¢ Growth was uneven across regions ¢ Emerging market-positive yet weak growth. ¢ Consumers benefit from lower oil prices in the second half and more routes ¢ Economies spend 1% of world GDP on air transport. ¢ Source: IATA website ® Kenya Air
Slide 7: Global Airline Industry
Global Airline Industry § Profits increased in 2014 but at slim margins § Rebounding passenger travel with accelerated growth in cargo business § Load factors set to slip as capacity accelerates Source: IATA website
Slide 8: Improving Net Profits and EBIT Margins
Improving Net Profits and EBIT Margins 2014/15
Slide 9: Global Commercial Airlines Profits
Global Commercial Airlines Profits Net Profit,$ billion | 2012: 2013: 2014: 2015F Global 6.1: i 19.9} 25.0) Regions H H North America 2.3 } 72 11.9 } 13.2 Europe 0.4 } 0.5 27° 4.0 Asia-Pacific 27: 2.3 3.5 } 5.0 Middle East 1.0} 0.5 1.1} 1.6 Latin America (0.2); 0.2 0.7 ; 1.0 Africa (0.1): (0.1): 0.0
Slide 10: Economic Cycle is positive but weak
Economic Cycle is positive but weak World industrial production, trade and business confidence 8 8 Net balance of respondants index, S0=no change Industrial production % change over year Business confidence > w 8 w wu -20% 30 2008 2009 2010 2011 2012 2013 2014 ® Kenya Airways Source: Datastream, Net
Slide 11: Business confidence
Business confidence Worldwide growth in air travel and business confidence % change over year Index of business confidence (50 = no change) 1>Y% ss 10% 55 5° sO as o% 35 -59 30 -10% 25 O7 os os 10 11 12 13 14 15 —_ Growth in RPKs (YoY) —_— Business confidence index Senn IATA Makita &® Kenya Airways
Slide 12: Close to Home
Close to Home Closer to home § Factors impacting 2014-15 include: Growth in Kenya tourist arrivals* versus NBO international seat capacity** Year-over-year change by quarter § Volatility of Exchange Rate Capacity and tourist arrivals 20% 22% significantly out of sync from 2014+ § Intense competition
Slide 13: Our Advantage
( Cy Our Advantage ~
Slide 14: f \\ jf Wy oy |
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Slide 15: KQ fleet
KQ fleet. &® Kenya Airways
Slide 16: Lounges
(®ounges. Relax, stay connected and be - es informed. Our new Terminal 1A lounges can accommodate over 350 people. Our Skyteam partners also have access to the lounges. 64) Kenya Airways
Slide 17: Holidays
Holidays PACKAGING aay. <i FIFA WORLD CUP Brasil Special packages. Occasionally, we develop seasonal or special packages for particular seasons, functions or periods. These are: * Special season/festive packages - Christmas, Valentines, low season, school holidays etc * Event targeting packages - sp
Slide 18: Slide 18
Slide 19: The Pride Centre
eg KH x THE PRIDE CENTRE Where stars become leaders.
Slide 20: Loyalty programme
Bm FLYINGSLUC Loyalty programme. The world’s largest Frequent Flyer programme.
Slide 21: Members, destinations, countries
Members Destinations Countries Members Destinations Countries Members Destinations Countries Daily departures Fleet Daily departures Fleet Daily departures Fleet
Slide 22: Hong Kong
Hong Kong. The 7s are just the start of it! I. lathes fire at Dr
Slide 23: Corporate Social Responsibility
Slide 24: Community projects
Lingithya School in Kitui County Kenya Renovation of Mazeras School in Kenya Supporting Ebola Action Project for Sierra Leone in Ghana Water Project in Gaborone. MA |: mE SIERRA LEONE GROUP - GHANA a (STUDENTS UNION) Conifeate Y Afpreciation w KENYA AIRWAYS roa Yous surreRt EBOLA ACTION PROJECT Pe ®
Slide 25: Kenya Airways and Born Free working together
Kenya Airways and Born Free working together. It is the responsibility of each one of us to contribute towards fighting poaching and other illegal activities that threaten our wildlife.
Slide 26: Our Awards
\ & Our Awards Best Business Class in Africa - 3yrs in a row Best Cargo airline in Africa - 3 yrs in a row Air Cargo best airline in Africa 2015
Slide 27: Financial Results
(RK) Financial Results " ~ Myo Yar wnys PONT ND =F noneeenenreeerneN x ny ° Dine Min we enn pnt ® Kenya Airways y
Slide 28: Consolidated Income Statement
Consolidated Income Statement KShs Mil. 2015 2014 Var Var % Turnover 110,161 106,009 4,152 4 Direct Operating Costs (76,059) (75,268) (791) (1) Fleet Ownership Costs (25,932) (12,490) (13,442) (108) Gross Profit 8,170 18,251 (10,081) (55) Overheads (24,503) (20,972) (3,531) (17) Operating Profit / (
Slide 29: Statement of Financial Position
Statement of Financial Position KShs Mil ASSETS Mar-15 Mar-14 Var Var % Non Current Assets Property, plant and equipment 125,422 88,389 37,033 41.9% Intangible assets 1,163 1,619 (456) (28.2%) Leasehold land 1,236 1,238 (2) (0.1%) Aircraft deposits 10,391 27,505 (17,114) (62.2%) Other 2,799 270 2,52
Slide 30: Statement of Financial Position
KShs Mil Statement of Financial Position EQUITY AND LIABILITIES Mar-15 Mar-14 Var Var % Equity attributable to owners Share capital & share premium 16,152 16,152 - 0.0% Reserves (22,161) 12,034 (34,195) (284.2%) Non controlling interests 46 43 3 6.9% Total equity (5,963) 28,229 (34,192) (121.1%) Non
Slide 31: Statement of Cash Flows
Statement of Cash Flows KShs Mil Mar-15 Mar-14 Var Var % Loss before tax (29,712) (4,861) (24,851) (511.2%) Non operational items 28,818 8,688 20,130 231.7% Depreciation & Amortisation 12,081 6,887 5,194 75.4% Impairment of assets 5,583 - 5,583 100.0% Interest expense 4,734 2,424 2,310 95.3% Others
Slide 32: Outlook
Cy Outlook N ho . <b opoenneter vWOYS The frie of Abica
Slide 33: Business Challenges and narrative
Slide 34: The positives
The positives Re-entry into West Africa Revision of some travel advisories Kenya and the region in the spotlight attracting FDI Government engagement and aviation workshop Jambojet Potential of direct flights to the US ® Kenya Airways
Slide 35: Focus areas announced in November plus one other
Focus areas announced in November plus one other § Financing Options § Hub re-design § Commercial Focus § Cost Containment PLUS: § Regaining our altitude
Slide 36: Financing Options
Financing Options § Afrexim Bank appointed financial advisor to assist KQ § Raise long term capital to refinance the business § perform a comprehensive review of Kenya Airways debt profile with a view to recommend an optimal liability structure § Shareholder support § Sale of assets § Aircraft § Lan
Slide 37: Hub Design - Making Connections and improving service
Hub Design -— Making Connections and improving service Arrivals Departures . Minimum AAAA connecting 4 time (30’-90") \ SX Nw! er A i i i i Gp aa a aa a a Sa sa - Ws Bank 2 477]\\\° Bank 2 444 Bank3 7741\\\ eS, 7AM 44 Noon ~~~ \\, 5PM \ /, WN / Wa 4/4 ww ; : // —— ® Kenya Airways om
Slide 38: Work Streams on Revenue Management
Work Streams on: Revenue Management Improving sales and distribution Performance monitoring and management While addressing Revenue growth and pricing
Slide 39: Cost Containment
Cost Containment ¢ Re-negotiation of contracts and cheaper sourcing ¢ Saving on fuel as aresult of a much better burn rate due to the new fleet ¢ Focus on productivity
Slide 40: Regaining our altitude
Regaining our altitude Review of strategy Review of network and 5 year plan Full business diagnostic - Revenues, cost, cashflow Balance sheet restructure
Slide 41: Asante