Spark New Zealand FY18 Results Announcement

Spark New Zealand Limited ARBN 050 611 277
Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand

JUSTINE GUNN
Acting Company Secretary

Client Market Services
NZX Limited
Level 1, NZX Centre
11 Cable Street
Wellington 6011

ASX Market Announcements
Australian Securities Exchange
4th Floor, 20 Bridge Street
Sydney NSW 2000
Australia

22 August 2018

SPARK NEW ZEALAND LIMITED FY18 RESULTS AND ANNUAL REPORT

Dear Sir/Madam

In accordance with the NZSX Listing Rules, I enclose the following for release to the
market in relation to Spark New Zealand Limited’s FY18 results:

1. Appendix 1
2. Annual Report
3. Appendix 7 (x2)
4. ESG Report
5. Media Release
6. FY18 Results Summary (containing FY19 earnings and dividend guidance)
7. Detailed financial information

Spark New Zealand’s Managing Director, Simon Moutter, and Chief Financial Officer,
David Chalmers, will discuss the FY18 Results at 10:00am New Zealand time today.

Spark New Zealand’s 2018 Annual Report is now available at: investors.sparknz.co.nz.

ASX Appendix 3A.1 will follow this release.


Yours sincerely



Justine Gunn
Acting Company Secretary

1
Spark New Zealand Limited
Results for announcement to the market

Basis of Report: Audited financial statements
Reporting Period: 12 months to 30 June 2018
Previous Reporting Period: 12 months to 30 June 2017

12 months
ended
30 June 2018
(NZ$ million)
Percentage
change
Operating revenues and other gains

3,649 Up 1.0%
Reported earnings before interest, income tax,
depreciation and amortisation

989 Down 2.7%
Adjusted earnings before interest, income tax,
depreciation and amortisation
1


1,038 Up 2.2%
Reported net earnings for the period attributable to
security holders

385 Down 7.9%
Adjusted net earnings for the period attributable to
security holders
1


420 Up 0.5%

1
Adjusted for the impact of $49 million (and $35 million net of tax) costs of change associated with the
Quantum programme (Spark’s shift to being the industry’s lowest cost operator through radically simplified and
digitised processes, products and services).

Dividends
Amount per security
(NZ$)
Imputed amount per
security
Interim dividend
Interim first half-year ordinary dividend 11.0cps 3.2083cps
1

Interim first half-year special dividend 1.5cps 0.4375cps
2

Final dividend
Final second half-year ordinary dividend 11.0cps 3.2083cps
1

Final second half-year special dividend 1.5cps 0.4375cps
2

Total dividend 25.0cps 7.2916cps

Record date 21 September 2018
Payment date 5 October 2018
1
A supplementary dividend of 1.4559 cents per security will be payable to shareholders who are not resident
in New Zealand.
2
A supplementary dividend of 0.1985 cents per security will be payable to shareholders who are not resident
in New Zealand.

ANNUAL REPORT 2018
Helping
New Zealand
win big.

HELPING NEW ZEALAND WIN BIG
What does Agile mean for Spark?8
Performance snapshot 201810
Chair and Managing Director report12
Board of Directors16
Leadership Squad18
ENVIRONMENT, SOCIAL &
GOVERNANCE REPORTING
20
Long-term growth22
People and remuneration24
Community26
Environment28
Governance30
Risk32
PERFORMANCE
34
Spark results overview34
Spark Home, Mobile & Business42
Spark Digital 43
Spark Connect & Platforms44
Spark Ventures & Wholesale45
FINANCIAL STATEMENTS 46
Financial statements47
Notes to the financial statements51
Independent auditor’s report84
OTHER INFORMATION
89
Corporate governance and disclosures89
Glossary98
Contact details99
This report is dated 22 August 2018 and
is signed on behalf of the Board of Spark
New Zealand Limited by Justine Smyth, Chair
and Simon Moutter, Managing Director.
Justine Smyth
Chair
Simon Moutter
Managing Director
Annual Meeting
2 November 2018
FY19 half-year results announcement
20 February 2019
FY19 financial year-end
30 June 2019
FY19 year-end results announcement
21 August 2019
Contents
Key Dates

Page 1
The pace of digital change is unrelenting.
New Zealanders expect more every day. More
coverage. The latest products. Greater speed.
Better bargains. The latest content. New ways of
doing business. We’re with you. We want to help all
of New Zealand win big in a digital world. Is that
ambitious? Absolutely. Too ambitious? Never. It’s
bold and strong and requires commitment and
purpose. And to deliver on it, at Spark we know we
need to keep changing. We’re good with that.
We're
with you.

Page 2Spark New Zealand Annual Report 2018Helping New Zealand win big
Customer experience is the new source of competitive
advantage. To succeed, we are concentrating our time
and energy on the things that matter for customers.
That means the experience you have when you join
Spark, when you use our products, when you want to
change your plan or need help. We are making sure
when we get feedback from customers, we use this
to help shape the products of the future.
We understand customer journeys deeply and are
working out where there are sources of frustration
so we can make the experience truly market-leading.
This means being nimble enough to improve things
iteratively or change tack quickly and seamlessly.
Customers
leading
the way.

Page 3

Page 4Spark New Zealand Annual Report 2018Helping New Zealand win big
A different
pace.
We talk a lot about the new pace of normal
– by which we mean Spark changing faster on
the inside than the world is changing around us.
We are looking for ways to keep up with new
products and services, because our customers
rightly don’t want to wait.
We’re in an environment where people expect
stuff to happen immediately – or as close to it as
possible. Introducing new products and improving
existing ones has to be done in much shorter time
frames. Spark is now doing in days what used to
happen in weeks or months.

Page 5

Page 6Spark New Zealand Annual Report 2018
In today’s workforce, people don’t just want a job.
They want to be part of an organisation with a clear
purpose and to know the contribution they can make.
They don’t want to just do what they’re told.
Instead success will depend on our people being
truly, deeply engaged with our purpose and having
a clear sense of how the work they do is making
a difference for customers.
A shared
sense of
purpose.
Helping New Zealand win big

Page 7

Page 8Spark New Zealand Annual Report 2018What does Agile mean for Spark?
Spark is the first large company in
New Zealand to go all in with Agile.
Agile is a business organisational model that has
been used for a number of years by some of the
world’s largest digital services businesses.
It replaces traditional hierarchical control with
small, cross-functional and self-managing teams
– all working to a central organisational purpose.
It also involves working on smaller, faster,
incremental improvements to products and
services, and looking at a customer’s journey
with our business from beginning to end.
Agile is putting Spark’s focus squarely on our
customers, providing feedback loops and
disciplined frameworks to give deep and clear
insights on what customers need and expect.
Multifunctional teams and flat structure mean
no need to ‘hand over’ work to another part
of the business or seek approvals from above.
Teams can simply deliver for customers, fast.
By focusing our work on Spark’s overall purpose
and our contribution to customers, Agile
ensures all of our people are engaged and feel
empowered to make a difference.
FromTo
What does Agile
mean for Spark?
Top-down
hierarchy
Work to
instruction
Silos
Bureaucracy
Quick changes,
flexible resources
Leadership shows direction
and enables action
‘Boxes and lines’
less important,
focus on action
Multiskilled teams accountable
for customer experience of
product/service from beginning
to end of their journey

Page 9
Spark’s Agile building blocks
Channel and delivery units
Our customer service and sales teams. These parts of the
business are already operating as autonomous teams, so
their structure remains largely the same – with an
increased focus on self-management and empowerment.
Tribes
Our network teams, IT platforms teams, marketing teams
and product development teams are now reorganised into
Tribes, Squads and Chapters (see definitions on right). All
people in these areas work in multifunctional teams, which
manage new products or services – or improvements to
products or services – from beginning to end, and are fully
accountable for delivering them (previously these sorts of
projects were handed from team to team as they
progressed).
Centres of Excellence
Parts of our business with specialist skills, such as finance,
human resources, procurement, communications, brand
marketing and legal. Individuals in these teams will be
deployed to support tribes and squads as they are
needed.
Subsidiaries
Our subsidiaries solve market or capability gaps – where
there are benefits from retaining a level of independence.
They will remain separate to the main Spark business.
Tribes
A group of several squads that are all working in the
same business area, focused on either a product (e.g.
broadband), a customer segment (e.g. consumer), or
an area of technical expertise where it’s not practical
to embed that expertise in other tribes (e.g. billing).
Squad
An autonomous, multidisciplinary team (up to nine
people) able to define work and make business
decisions. Has ‘end to end’ responsibility for a certain
purpose related to the product.
Chapter
A group of people from different squads who perform
similar roles and regularly meet to share expertise and
solve problems (e.g. consumer marketing).
Agile terms defined...

Operating revenues and other gains $
3,649M
▲
1.0%
Net earnings $
385M
▼
7.9%
Adjusted net earnings
1,2
$
420M
▲
0.5%
Dividends per share
25 cents No change
Cloud, security and service
management revenue $
373M
▲
15.1%
Mobile connections
2.458M
▲
2.8 %
Mobile revenue $
1,280M
▲
6.9 %
Broadband revenue $
685M
▼
0.6%
Capital expenditure
1
$
413M
▼
0.5%
EBITDA
1
$
989M
▼
2.7%
Adjusted EBITDA
1,2
$
1,038M
▲
2.2%
Spark financial performance 2018
* All changes are comparative to FY17 or 30 June 2017.
1
Earnings before interest, income tax, depreciation and amortisation (EBITDA), adjusted EBITDA, adjusted net earnings and capital expenditure are all
non-Generally Accepted Accounting Practice (GAAP) measures and are not comparable to the New Zealand Equivalents to International Financial
Reporting Standards (NZ IFRS) measures. These measures are defined and reconciled on page 40.
2
Adjusted for the impact of $49 million (and $35 million net of tax) costs of change associated with the Quantum programme (Spark’s shift to being the
industry’s lowest cost operator through radically simplified and digitised processes, products and services).
Performance snapshot 2018Page 10Spark New Zealand Annual Report 2018

Operational highlights
Continued growth in mobile
connections, revenues and margins
Continued growth in cloud, security
and service management revenues
Transitioned to Agile operating model
at scale
Successful results from New Zealand’s
first live 5G mobile test site and 5G
indoor trial
More than half of Spark home
broadband customers moved on to
new technologies (fibre or wireless
broadband)
Ramped up decommissioning of public
switched telephone network (PSTN);
equipment now removed from 70
exchanges
Launched nationwide low-power
Internet of Things (IoT) network; trials
on mobile-network based IoT network
under way
Launched new Lightbox platform with
movies and a separate kids section
Entered into sports content market,
securing rights to Rugby World Cup
2019, Premier League football and
other premium content.
Customer experience highlights
Cutting edge data and automation
deployments, and improvements to
customer websites and apps, reduced
customer service calls by 24%
Improved customer satisfaction with
increase in net promoter score (NPS)
across both Spark and Skinny brands
Improved Spark App now has 840,000
unique users, a 15% increase on FY17
Automated varied and sometimes
complex business tasks by deploying
more than 40 ‘bots’
Launched four customer-facing virtual
assistants or ‘chatbots’, which are
resolving simple customer questions
Halved the average time to process
customised deals for large business
customers
Completed migration of 178,000
consumer and small business
customers to new, simplified plans
with self-service functionality.
Page 11

Page 12Spark New Zealand Annual Report 2018Chair and Managing Director report
Tēnā koutou,
We’ve talked a lot over the past few
years about transformation. Spark is
already a very different company from
five years ago. We know our future will
be profoundly different to our past –
and it's coming at us fast.
We know that our future customers who
will shape our business in the years ahead
have grown up in a world where the
internet is ubiquitous: where they can
instantly play any song they like; download
any book or video; play online games with
people spread all over the planet. They
don’t see why they should wait for the stuff
that’s coming out overseas and they
expect companies to have the best digital
tools and channels and be easy to deal
with. These customers demand more and
more of us – and we need to deliver,
because if we don’t, we can be certain a
competitor will.
In the volatile, uncertain, complex and
ambiguous world we now operate in, we
have been focused on leveraging Spark’s
competitive advantage – the thing that
gives us confidence we can live up to our
purpose: to help all of New Zealand win
big in a digital world.
When it comes down to it, our competitive
advantage revolves around our
relationship with around three million
New Zealanders who engage with Spark’s
products and services up to hundreds of
times every day. This gives us the scale
required to build the best digital services
and technology platforms. It gives us the
rich data to develop a deeper
understanding of New Zealanders and
their needs. And as a result, it gives us a
powerful opportunity to provide the best
customer experience in market and carve
out a locally-relevant position that none
of our competitors – local or global – can
match.
We’ve already come a long way, with
better and more competitive products in
market; vibrant new brands and a far
better customer experience through our
digital channels. But we never rest on our
laurels. To truly become leaders in
customer experience Spark needs to
continue to reinvent how we do things.
And that’s why we announced during the
financial year that we are undertaking a
company-wide transition to an Agile way
of working.
Agile focuses our business – everything we
do and produce – around the customer.
It paves the way for their needs,
perceptions and feedback to have greater
influence on the way we conceive
customer journeys, products and services
than ever before. It allows us to respond to
market opportunities more quickly as we
Justine Smyth Chair
Simon Moutter
Managing Director
Helping all of
New Zealand
win big in a
digital world.

Page 13
look to adopt a minimum viable product
(MVP) approach – that is, launching
products and services quickly and early
and then iterating and improving them
as we go.
Agile allows us to deliver the purpose-
centred workplace that we know talented
people – both young and more mature
– are increasingly demanding. Because
under Agile our people work in small,
multifunctional squads focused on
delivering a specific customer outcome,
they can clearly see their contribution to
the customer experience and the business
strategy. By bringing different disciplines
together in one team and focusing on the
end outcome for customers, Agile also
encourages deep engagement, better
productivity and collaborative, positive
behaviours – because the model simply
doesn’t work any other way.
To bring our people on the journey, over
the past ten months we have rolled out an
intense programme of communication
about the transition to Agile and what it
means for them. The response we’ve had
is hugely positive and there is a palpable
sense of optimism and energy in the
business.
We’ve also worked hard to address the
things that might detract from this sense
of engagement. In September 2017 we
publicly admitted that – despite an
enormous amount of work putting in
place systems, processes and initiatives –
we had fallen short of creating the truly
diverse and inclusive workplace we aspire
to at Spark. Independent reviewers
identified that many of our people,
particularly women, felt our approach had
been too clinical and focused on ‘ticking
boxes’. It reminded us that diversity and
inclusion is not just about systems or
processes. It is also about how people feel
– and requires us to lead with our ‘hearts’
as well as our ‘heads’.
Over the past few months we’ve enabled
our people to bring forward fresh thinking
and initiatives that underpin our renewed
commitment to diversity and inclusion.
These include practical steps, like our new
Flexible Working and improved Paid
Parental Leave policies. But we’ve also
looked deeply at how we can address the
‘heart’ of our organisation and change
culture and behaviours. Starting in April
we invited all staff to sign our Blue Heart
Pledge – a personal commitment to
diversity and inclusion – and a
commitment to constructively call out
behaviour that doesn’t live up to our
standards. So far more than 2,700 of our
people have signed the pledge, including
our Board and the Spark Leadership
Squad, and we expect that number to
grow in the coming months.
By creating a collaborative and respectful
environment, a diverse workplace where
all voices are heard, we are far more likely
to solve the complex and difficult
problems the future will inevitably bring.
Financial performance on plan
When we made the call to transform
our company to an Agile way of working,
we could see that as well as setting our
people up to deliver a better experience
for our customers, the Agile approach
would also allow us to operate more
efficiently.
Since the latter stages of FY17, we’ve
undertaken a programme of business
improvement and cost reduction through
simplification, digitisation and automation,
which we’ve called ‘Quantum’. In the lead
up to our Agile transformation, we decided
to accelerate this programme – incurring
costs and realising benefits earlier.
This decision was based on our increasing
confidence that we could improve
customer experience and operate under a
lower cost structure in an Agile model.
The acceleration meant additional
implementation costs of $24 million were
brought forward into FY18 earnings which,
added to the $25 million costs of change
we had already planned for, brought total
costs of change for FY18 to $49 million.
As a result of this, overall, reported EBITDA
for FY18 of $989 million declined by
$27 million, or 2.7%, compared with FY17.
Excluding change costs, adjusted EBITDA
for FY18 was $1,038 million, an increase
of $22 million or 2.2%.
We continue to achieve modest growth
in operating revenues and other gains
up $35 million, or 1.0%, to $3,649 million.
This is on the back of continued strong
performance in mobile, up 6.9%; cloud,
security and service management, up
15.1%; and growth associated with the
acquisitions of Ubiquity and Digital Island.
As in prior years, these strong growth lines
were offset by the decline in traditional
voice and data revenues, which this year
were down another 11.6%.
Spark also saw Southern Cross dividends
decline by $11 million to $50 million
during FY18. We expect dividends
received from Southern Cross to decline
significantly during FY19 to between
$10 million and $20 million, as the level
of pre-purchased capacity from large
customers decreases.
Depreciation and amortisation costs were
relatively stable, with an increase of
$4 million, or 0.9%, and net interest
expenses increased by $4 million, or
15.4%, associated with higher net debt
levels. Tax expenses were relatively flat
year on year and capital expenditure of
$413 million was in line with expectation.
Overall, reported net earnings declined
$33 million, or 7.9%, to $385 million, due
to the Quantum programme change costs.
On an adjusted basis, net earnings were
$420 million – relatively flat year on year.
Agile focuses our business
– everything we do and
produce – around the
customer. It paves the way
for their needs, perceptions
and feedback to have
greater influence on the
way we conceive customer
journeys, products and
services than ever before.

Page 14Spark New Zealand Annual Report 2018
Strategic focus drives
continued growth
In June last year we set out a three-year
vision of where the market was going and
how Spark would succeed in this operating
environment. This included setting out
three specific focus areas: an increased
emphasis on wireless; leveraging
multibrands; and being the lowest cost
operator through simplification,
digitisation and automation.
Amid the change programme of the past
12 months, Spark has remained focused
on delivering against these focus areas
and we have seen very good progress over
the year.
EMPHASIS ON WIRELESS
We have once again seen growth in our
mobile connections, revenues and margins
across the business. Our unlimited mobile
plan, launched in September 2017, has
been very successful – showing customers
value the comfort of price certainty on
their mobile usage as much, if not more,
than the actual ability to consume
unlimited mobile data. Success with this
new plan has driven improved mobile
margins by increasing the proportion of
Spark mobile customers on plans costing
$79 and above.
We continued to grow our wireless
broadband product, albeit a little behind
the targets we set and we’re now seeing
the full-year benefits of wireless
broadband adoption in our customer
base, which has driven a 6.7% increase in
broadband gross margin over the year.
Our focus is now shifting to the retention
of existing wireless broadband
connections and migration of copper voice
connections to wireless voice alternatives.
We are also continuing to enhance the
offer by launching a 240GB plan in
selected areas.
Success in wireless-based products and
services is underpinned by our investment
in the mobile network. We have now rolled
out 4.5G to 31 locations across the country,
bringing customers faster speeds and
giving the network more capacity. Our
planning is well advanced for 5G, which
we expect to implement across our
network from the early 2020s – depending
on factors like spectrum availability. We
conducted New Zealand’s first live 5G
outdoor mobile test in Wellington in
March, achieving speeds of up to 9
Gigabits per second (Gpbs). An indoor trial
in Auckland the following month achieved
speeds of 18 Gbps – one of the fastest
speeds achieved anywhere in the world to
date and close to the theoretical maximum
of 20 Gbps. The trial allows us to test, in a
real-world environment, the speeds,
coverage and parameters of the spectrum
we’ll be using for 5G.
In behind the wireless access network is
the new Converged Communications
Network (CCN), which will replace the
ageing Public Switched Telephone
Network (PSTN). This massive, once-in-a-
generation technology upgrade will
provide the foundation for Spark’s voice
services into the future and will bring
together all voice communications – be
it landline, mobile, video or data-based.
It will enable richer, better customer
experiences with voice, video, and
collaboration features over whatever Spark
service is available at the moment
customers want to use it. The upgrade is
being progressively phased in over five
years (from April 2017) and we are now
10% of the way through shutting down the
old PSTN.
Spark’s investment in the Internet of Things
(IoT) has significantly progressed. We have
advanced the roll out of two low-power
networks. The first of these now covers
more than 65% of the population and a
second cellular IoT network has launched
in one region – with a nationwide roll out
under way and a number of customer
contracts signed. Our IoT capability is
already enabling a range of use cases,
such as metering, smart lighting and
environmental monitoring, connected
vehicles and trackers on industrial vehicles
to monitor location of packages and
condition of vehicles. We are also seeing
a number of interesting use cases for IoT
sensors in agribusiness to better manage
farms, orchards and other agricultural use
cases such as beehives.
Chair and Managing Director report
MULTIBRAND
Over the year we saw solid improvements
in customer experience and brand
reputation rankings. This included
improvements in Net Promoter Score (NPS)
for both the Skinny and the Spark brands,
and Spark was the only telecommunications
brand to make it into the top 20 in two
independent annual corporate reputation
surveys (Reptrak and RepZ).
Our multibrand strategy continues to help
us win customers across different market
segments. We further differentiated the
premium Spark brand as a mass market
digital services provider, leveraging our
partnerships strategy to offer attractively-
priced Sky Fanpass subscriptions to Spark
unlimited home broadband customers.
Fanpass now sits alongside our existing
Netflix, Spotify and Lightbox offers for
Spark customers.
Our no frills, low-cost Skinny brand
repositioned itself in the market with a
new, more mature but still light-hearted
brand campaign, reflecting Skinny’s dual
commitment to low prices and customer
satisfaction. It also launched a rewards
programme for customers, rolled out plan
updates to become more competitive and
saw good growth from its data binge
product.
We saw great progress across our suite of
specialty brands: Revera and CCL in the
cloud services space; Lightbox in home
entertainment; specialist business telco
provider Digital Island; supply chain
solution company Telegistics; and
data-analytics and marketing business
Qrious. Over the year Qrious saw revenue
growth through its work on data-driven
customer intelligence and engagement –
where we see the biggest market
opportunities. Our Wholesale business
also won a big new business partner
during the year, with Dimension Data
shifting its business to the Spark network.
DIGITISATION AND AUTOMATION
Our programme of simplification,
automation and digitisation continues to
deliver results as we automate high-
volume processes and design customer
journeys as ‘digital first’. By expanding and
improving the digital and self-service
options available we have reduced calls to
our customer contact centres by almost a
quarter year on year.
Some notable improvements include the
online “fix my broadband” diagnosis tool,
which allows customers to diagnose
broadband connection issues, often helping
them resolve issues for themselves or
We continued to see
competitive challenges
over the year, particularly
in the hyper-competitive
fixed broadband market,
where margins remain
under heavy pressure.
This is a key driver for our
emphasis on wireless
investment.

Page 15
Spark’s diversity and inclusion programmes
and on a range of strategic initiatives.
We’ve announced Matt Bain as Marketing
Director, a new role within the Leadership
Squad – commencing towards the end of
the 2018 calendar year. Matt is currently
European Managing Director for AKQA,
one of world’s leading innovation and
brand experience agencies, with
responsibility for 500+employees across
five countries. He will bring his outstanding
digital marketing and customer experience
skills right into the centre of our thinking
and actions.
Looking to the future
Significant change has been a consistent
fact of life at Spark in recent years but
during the past financial year we took this
to a new level as we radically embraced an
Agile operating methodology. We’re
proud of what we’ve achieved, firmly
positioning ourselves for future success in
an uncertain and fast-changing industry
and world. Furthermore, we have delivered
this change while maintaining financial and
operational momentum and ensuring our
business performance is to plan.
In the coming year we will be focused on
capturing the advantages the Agile way of
working will deliver for us: highly engaged
and productive people; a total focus on
what matters for customers; and the ability
to deliver new products and services – and
improve existing ones – faster than ever
before.
We believe our strategy sets us up for a
strong FY19. As we look ahead we are
confident we can continue to deliver for
you as shareholders, while making a wider
contribution as we help all of New Zealand
win big in a digital world.
Ngā mihi,
Justine Smyth
Chair
Simon Moutter
Managing Director
22 August 2018
significantly decrease the time required for
Spark to put resolution measures in place.
We have also deployed four customer-
facing virtual assistants – serving customers
across the Spark, Lightbox, Bigpipe and
Morepork brands. These ‘chatbots’ help to
answer simple questions, freeing up our
customer service agents for more complex
queries. They are in addition to more than
40 bots deployed throughout the business
to automate a range of business tasks.
This programme of digitisation and
automation is underpinned by our drive
for simplification across the business.
We have now completed the migration
of 178,000 consumer and small business
customers on to newer, simplified plans
with self-service functionality – offering a
better customer experience and reducing
our customer care costs. In March we shut
down the legacy dial-up service, which has
allowed us to reduce our overhead costs
by simplifying our offer to customers.
Giving New Zealand businesses
the edge
The transitioning of our business
customers to digital services products
gained real momentum over the year.
We saw further growth in cloud services,
driven by the continued uptake of ‘as a
Service’ products and the extension of
our security offer to enterprise customers.
Our new focus on service delivery
continues to improve the profitability of
our top IT services clients and we had
some major new client wins over the year.
Evolving media landscape
Spark is committed to being a key player in
a rapidly evolving media environment.
During the financial year we relaunched
Lightbox on a new platform with several
new features and services – including a
pay-as-you-go movie service, password-
protected kids area and a premium
subscription option. This helped Lightbox
surpass 350,000 users.
We also announced Spark had secured the
rights to Rugby World Cup 2019, English
Premier League football (from the 2019
season) and other high-quality content –
with more announcements to come.
New Zealanders will be able to stream
Rugby World Cup 2019 matches and
related content live or on-demand over
their home broadband or mobile
connections, with TVNZ also screening
seven live matches free-to-air. Other sports
content will be available on a subscription
basis on Spark’s sports platform, which will
launch in early 2019. The service will be
available to all New Zealanders – not just
Spark customers. While we have not yet
announced our platform provider, we are
negotiating with world-class sports
streaming specialists to deliver this
element of our sports offer. We see an
opportunity for standalone financial
returns in the sports media market but we
are also disciplined when it comes to our
investments in this area. We are looking to
secure content that can give us a
commercial return and believe we’ve
achieved that with the high-quality content
we’ve secured to date.
Highly competitive market
We continued to see competitive
challenges over the year, particularly in the
hyper-competitive fixed broadband
market, where margins remain under
heavy pressure. This is a key driver for our
emphasis on wireless investment.
While we continue to see growth in
mobile, this market also remains very price
competitive.
The Commerce Commission has informed
us it will publish the Issues Paper for its
Mobile Market Study by the end of August.
We continue to engage with the
Commission on the study, but as we have
emphasised in the past, with three
world-class networks delivering prices that
are below Organisation for Economic
Co-operation (OECD) averages and three
mobile network operators that are
ploughing significant investment into an
intensely competitive market, we don’t
envisage there will be a case for any new
mobile market regulation.
Senior leadership changes
During the year we announced some
changes to Spark’s leadership line up as we
move to an Agile way of working and away
from a traditional hierarchical organisational
structure based around large business units.
In the new Spark Leadership Squad, we
have assembled the right mix of skills, talent
and experience to collectively make the big
calls that will underpin our ongoing success
across the company. In this new model,
Leadership Squad members are no longer
responsible for individual business units,
instead providing support and guidance as
sponsors of relevant Agile units.
The change saw Jolie Hodson take on the
role of Customer Director, Mark Beder
become Technology Director and Claire
Barber become Product Director.
Melissa Anastasiou has also joined the
Leadership Squad. Melissa has been Spark’s
General Counsel since 2009 and more
recently took on a broader role working on

Page 16Spark New Zealand Annual Report 2018
1. Justine Smyth
Chair
Justine joined the Board of Spark
New Zealand in December 2011.
Her background is in finance and
business management (with Deloitte and
Lion Nathan). She is currently a director
of Auckland International Airport Limited
and Chair of The Breast Cancer Foundation
New Zealand. Former governance roles
include being a board member of the
Financial Markets Authority and Deputy
Chair of New Zealand Post Limited.
Justine’s experience in governance,
mergers and acquisitions, taxation and
financial performance of large corporate
enterprises, as well as actively investing
in small and medium enterprises (SMEs)
underpins her contribution as a director.
Justine has a Bachelor of Commerce from
the University of Auckland and is a Fellow
of the New Zealand Institute of Chartered
Accountants and a Chartered Fellow of
the Institute of Directors.
2. Alison Barrass
Non-executive Director
Alison joined the Board in September
2016. She brings a broad range of skills,
including knowledge and expertise in the
fast-moving consumer goods (FMCG)
sector and in governance, leadership and
marketing-led innovation. Her background
includes 30 years’ experience at major
international FMCG companies, including
PepsiCo, Kimberley-Clark, Goodman
Fielder and Griffins Foods. She currently
Chairs the Board of Methven and is a
director with Gough Group, Heilala Vanilla,
Lewis Road Creamery and Rockit Global.
Alison was previously Chair of the Breast
Cancer Research Trust and a director of
The Parenting Place and Callaghan
Innovation. Alison has a Bachelor of
Science from the University of
Southampton and a Business Diploma in
Marketing from the University of Auckland.
Board of Directors
Our
Board.
1
3
5
7
2
4
6
8

Page 17
3. Paul Berriman
Non-executive Director
Paul joined the Board in December 2011,
bringing over 25 years of international
experience in telecommunications, media
and convergence. Since 2002 he has been
Group Chief Technology Officer of the HKT
Trust, where he’s responsible for leading
the group’s product and technology
roadmap and strategic development.
Prior to this he was Managing Director of
management consultancy Arthur D. Little
in Hong Kong and he has held roles in
Reuters and several major Hong Kong
service providers. In 2009 Paul was
recognised by the IPTV World Forum with
its Special Merit Award for Outstanding
Industry Contribution and in 2008 he was
listed as one of the Global Telecoms
Business Magazine’s top 100 “most
influential persons in telecoms”. He is a
Chartered Engineer who holds a Bachelor
of Science in electro-acoustics from the
University of Salford (UK) and an MBA from
the University of Hong Kong. Paul is a
Director of Rain Networks in South Africa
and the Next Generation Mobile Networks
Alliance in the UK.
4. Alison Gerry
Non-executive Director
Alison joined the Board in July 2016.
She has more than 20 years of experience
working in trading, finance and risk roles
for corporates and financial institutions,
including Macquarie Bank, HSBC and Lion
Nathan. Alison spent 17 years working
overseas, mainly in Australia and Asia, and
was also a Visiting Fellow at Macquarie
University for 12 years. From 2007 Alison
has been a professional company director
and is currently also a director of Infratil
and Vero and on the Board of Wellington
Airport. She is former Deputy Chair of
Kiwibank and a former director of TVNZ
and NZX. Alison has a Bachelor of
Management Studies 1st class Hons from
Waikato University and a Master of Applied
Finance from Macquarie University.
5. Pip Greenwood
Non-executive Director
Pip joined the Board in April 2018,
bringing significant experience in capital
markets, mergers and acquisitions,
telecommunications and governance.
She was recently appointed as interim
CEO of Russell McVeagh, having been
a senior partner at the firm, with over ten
years’ experience on the firm’s Board
including time as its Chair. Over the years
Pip has advised on many high-profile
New Zealand corporate transactions that
have changed the face of industries.
She was a member of the New Zealand
Takeovers Panel from 2007 to 2011
and is a current director of Fisher & Paykel
Healthcare and a trustee of the Auckland
Writers Festival. Pip has an LLB from the
University of Canterbury.
6. Ido Leffler
Non-executive Director
Ido joined the Board in June 2014.
He brings experience in developing
digital brands and extensive networks in
the start-up communities of Silicon Valley
and Australasia. Ido is the co-founder and
Chief Executive Officer at Yoobi, a school
supplies company that engages kids
through bright colours, cool designs
and, most importantly, cause. He is also
Co-founder of Yes To Inc. – a leading
global natural beauty brand; Co-founder
and Chairman of Brandless – a disruptive
consumer packaged goods company;
and the Chairman of Beach House Group
– a global consumer products solutions
house. Ido sits on numerous corporate
and advisory boards, including
The United Nations Foundation Global
Entrepreneur Council.
7. Simon Moutter
Managing Director
As Managing Director Simon works to
ensure the company has a sound strategy
in place and applies his leadership and
management capability to deliver on that
strategy and run an efficient business.
He has led the reinvention of Telecom
to Spark, to better reflect the fast-changing
new world of digital services. Simon
returned to Spark in mid-2012, having
managed most parts of Telecom as Chief
Operating Officer during the years
2003-2008. In the intervening years he led
Auckland International Airport for a period
of four years, in which he transformed the
customer experience and delivered a
significant uplift in its growth trajectory.
Simon also spent 13 years in the electricity
and gas industry, including as Chief
Executive of Powerco (1992 to 1999).
Simon has a Master’s degree in
Engineering from the University of
Canterbury and a Bachelor's degree
in Science from Massey University.
8. Charles Sitch
Non-executive Director
Charles joined the Board in December
2011. He has more than 20 years’
experience in driving business strategy,
having worked for McKinsey & Company
from 1987, where he became senior
director in 2010, primarily working with
CEOs and boards on strategy and
operations turnarounds, before retiring
in 2010. Since 2006 he has been involved
in various new business ventures.
Charles is Chairman of the Board of Trinity
College at the University of Melbourne
and a committee member of the
Melbourne Cricket Club. He holds an
MBA from Columbia Business School
and an LLB and BCom from Melbourne
University. He is also a Graduate of the
Australian Institute of Company Directors.

Page 18Spark New Zealand Annual Report 2018
1. Claire Barber
Product Director
As Product Director Claire is responsible
for designing and delivering products and
service experiences that customers value.
Claire is also responsible for shaping
Spark’s investments and maturing
capability in digital, IT, data and
experience design to deliver on future
business needs. She joined Spark in July
2011 as General Manager Change and
Technology and was appointed Chief
Digital Officer in July 2016. She has led
strategic projects, including IT in-sourcing,
developing new operating models and
simplifying products and processes.
Claire brings to the role more than
20 years of experience in international
technology and telecommunications,
having held a variety of roles in IBM
working with clients in India, China and
the Asia Pacific region. She has a PhD from
the University of Northumbria in the UK
and has previously held positions in
academia locally and internationally.
Leadership Squad
Leadership
Squad.
1
3
5
2
4
6

Page 19
2. Mark Beder
Technology Director
As Technology Director Mark steers the big
technology choices and deployment that
ensures Spark offers customers
New Zealand’s best data connectivity
experience. This means optimising the
huge investments in data networks,
mobile, and IT infrastructure to set Spark
up for success and growth and enable
New Zealand’s digital future. Mark became
Chief Operating Officer in 2016, after
joining the business in 2003. Since 2003
he has held several senior roles, including
General Manager Value Management with
responsibility for Group Procurement, IT
and network investment, management of
the Chorus relationship and mobile
capacity. He has successfully driven major
initiatives and innovation, including Spark’s
Mobile network evolution and the ongoing
replacements of the PSTN with a new
Converged Communications Network
(CCN). Before joining Spark Mark worked
as a Senior Manager for Ernst and Young
Consulting in Auckland. He has a
Bachelor’s degree in Commerce from
the University of Auckland.
3. David Chalmers
Finance Director
As Finance Director David draws on his
extensive experience in finance, media and
digital business to drive clear insights
around what customers value, what makes
the business more competitive and what
delivers value for Spark in competitive and
rapidly changing digital markets. His role
includes accountability for framing the key
strategic choices for Spark. He joined the
Spark Leadership Team as Chief Financial
Officer (CFO) in October 2016. Prior to
Spark David was Chief Financial Officer
for Mediaworks, including a period of time
as interim Chief Executive Officer. He has
held a number of senior financial and
general management roles with iSelect
Limited, Dulux Group Limited and
Macquarie Capital. David has an MBA
from INSEAD Business School and a
Bachelor of Commerce (Hons) from the
University of Melbourne.
4. Jolie Hodson
Customer Director
As Customer Director Jolie understands
dynamic, competitive markets and focuses
on developing clear insight into what
customers value, what makes the business
more competitive and what delivers value
for Spark New Zealand. Jolie joined Spark
in 2013 as CFO before becoming CEO
Spark Digital in October 2016. Prior to
joining Spark she worked for 12 years with
the Lion Group and Deloitte in a range of
senior finance roles. She has a Bachelor of
Commerce from the University of Auckland
and has attended the Strategic
Management Program at Sydney's
Macquarie Graduate School of
Management.
5. Joe McCollum
Human Resources (HR) Director
As HR Director Joe understands the critical
importance of an organisational culture
of success and has been very involved in
the cultural shift at Spark. He joined Spark
in November 2012, bringing over 30 years’
global experience in leading
transformational HR initiatives at
companies undergoing significant change
and operating in rapidly changing markets.
He has a diverse background that includes
executive leadership positions in the
hospitality, music, software and media
industries in New Zealand, the UK and
elsewhere. This includes as HR Director
for Lion Nathan and senior roles at EMI
and news media group DMGT, global
chemical company ICI and global software
provider Misys. Joe also worked in Saudi
Arabia for five years in the 1970s as the
HR Director for a 4,500-staff hospital
company before joining Pepsi initially
in Cyprus and then in the headquarters
in New York. He has an MSc in Business
Studies from Columbia University.
6. Melissa Anastasiou
General Counsel
Melissa was appointed to the Spark
Leadership Squad on 1 July 2018.
As General Counsel, Melissa leads Spark’s
legal and compliance functions, providing
Spark with strategic legal and commercial
guidance, ensuring the business acts
lawfully and with the utmost integrity.
She has also played a pivotal role in
leading out Spark’s diversity and inclusion
programme. Melissa joined Spark in 2009
and undertook a range of legal roles
across the organisation before being
appointed as Group General Counsel in
2012. Prior to joining Spark Melissa spent
a number of years as a Senior Legal
Counsel for UK mobile provider Telefonica
O2. She also has extensive experience
working for leading corporate law firms
in Auckland and the UK. Melissa has a
Bachelor of Laws from Victoria University
of Wellington.
Matt Bain
Marketing Director – joins November 2018
Matt will join Spark as Marketing Director
in November 2018, bringing his
outstanding digital marketing and
customer experience skills to place the
customer right at the centre of Spark’s
thinking and actions. Matt is a New
Zealander, currently based in Amsterdam
as European Managing Director for agency
AKQA – one of the world’s leading
innovation and brand experience
agencies, with responsibility for 500+
employees across five countries.
Over an 18-year career Matt has built an
impeccable international reputation with
some of the world’s greatest brands –
Nike, Heineken, Mini, Rolls Royce, Siemens,
EASports, Audi, Phillips, Tommy Hilfiger
and KLM amongst others. He holds a
Bachelor of Commerce from the University
of Auckland.

Page 20Spark New Zealand Annual Report 2018Environmental, social & governance reporting
Our environmental,
social & governance
commitments

Page 21
We will do this by:
>>
Focusing on long-term growth and
business sustainability;
>>
Cultivating an inclusive workplace
of diverse and engaged people;
>>
Supporting Spark Foundation to
encourage generosity and build
a better future for New Zealanders;
>>
Using technological innovation to
reduce our own environmental impact
and that of our customers;
>>
Embedding our Supplier Code of
Conduct into supply chain management;
and
>>
Applying best practice governance
and risk management procedures.
Spark prepares a separate Environment,
Social and Governance Report (ESG
Report), which provides more detail on
our commitments in each of these areas.
The following sections provide a summary
of our ESG Report, which is available
from our website at
www.sparknz.co.nz/what-matters and
www.sparknz.co.nz/about/governance
Spark’s purpose is to help
all of New Zealand win
big in a digital world.
To truly live this purpose,
we must do the right
thing by our shareholders,
our people, our customers
and ultimately, by all
New Zealanders.
Long-term
Growth
People &
remuneration
CommunityEnvironment
GovernanceRisk

Page 22Spark New Zealand Annual Report 2018Environmental, social & governance reporting
This strategy is reinforced by three, more
recent, key areas of focus:
>>
An increased emphasis on wireless
services and investment;
>>
Better serving price-sensitive customers;
and
>>
The company with the lowest operating
costs in our industry in New Zealand.
Our commitment to being an
environmentally aware, low-carbon
business; a strong culture of diverse and
engaged talent; and maintaining a strong
governance framework helps strengthen
Spark’s market position and aims to
enhance investor confidence in the
long-term sustainability of our business
strategy.
We have already made significant progress
against our three focus areas – giving us
the confidence to transition to an Agile
operating model that will:
>>
Deeply embed customer centricity;
>>
Dramatically increase speed to market;
and
>>
Foster highly empowered, more
productive and engaged people.
Spark is committed to delivering
consistent earnings growth,
sustainable business performance
and dividends that in the long term
are fully funded through earnings.
We operate in a tough and competitive
industry and we know our aspirations are
bold. Nonetheless, we believe we have the
capability and expertise needed for
success, with a number of assets:
>>
Spark’s people and Leadership Squad
are energised and highly capable;
>>
A solid track record of execution;
>>
A clear view of market dynamics,
opportunities and the risks ahead;
>>
A solid technology foundation that is
adaptable and future ready; and
>>
A strong suite of assets, including
market scale, strong balance sheet and
cash flow, portfolio of brands, strong
channels and partnerships, digital
service capabilities and a powerful
organisational culture.
As a result we remain on track to deliver
on our aspiration to, over time, increase
EBITDA margin into the low 30% range
(from high 20% range currently). This will
be underpinned by sustained revenue
growth and cost reductions in Spark’s core
business areas; complemented by
selectively entering new high-growth
markets to unlock additional revenue
streams and business models.
We also retain our ambition to pay a
sustainable dividend per share, that in the
long term is fully funded through earnings,
of 25 cents per share. This is reflective of
sustainable growth in Free Cash Flow (FCF)
and a prudently managed capital structure,
which in turn allows for consistent
distributions to shareholders. This focus
on long-term growth and business
sustainability will deliver the Spark of the
future, as we continue on our path to help
New Zealanders win big in a digital world.
FY18 adjusted EBITDA up
2.2%
FY18 adjusted earnings
per share up
0.4%
Compound average total
shareholder return:
17. 0 % p.a.
over the past three years
Long-term
growth

Page 23
Modest revenue growth
Tight capital expenditure
management driving
FCF growth
Competitive advantage
Margin expansion
Prudent capital structure
Environmental and
social sustainability
Strong governance
•
Grow core mobile and IT services
•
Enter high-growth segments
•
Selective bolt-on mergers and acquisitions
•
Embrace a wireless future
•
Digitise the service experience
to create operational efficiency
•
Amazing customer experiences
•
Differentiate through multi brand
and inclusions
•
Superior IT platforms and networks
•
Environmentally aware
•
Reduce carbon emissions
•
Contributing to New Zealand communities
•
Socially diverse and engaged talent
•
Proactive risk management policies
•
Diverse Board composition and skills
•
Capex maintained at ~11-12% of sales
•
Investment focused on future revenue
streams and transforming customer
experience
•
A- credit rating
•
Ambition to pay a sustainable dividend per
share, that in the long term is fully funded
through earnings, of 25 cents per share or
above; with consideration to topping up
earnings in the short term
Rising
dividend
profile
KEY FOCUS AREAS
Long-term growth
Evidenced by Total Shareholder Returns
SHARE PRICE GROWTH
Sustainable
business
performance
Consistent
earnings
growth
SPARK’S MODEL FOR LONG-TERM GROWTH

Page 24Spark New Zealand Annual Report 2018Environmental, social & governance reporting
Progress on these goals during FY18
included:
>Increased female directors from 38%
to 50% of the total Board as at 30 June
2018;
>Appointed Spark’s first female Board
Chair, Justine Smyth;
>Proportion of females on Spark’s
Leadership Squad increased from 29%
in FY17 to 33% as at 30 June 2018;
>Reviewed and updated our parental
leave policy: effective from FY19 Spark
paid parental leave will increase from
six weeks to up to 22 weeks;
>Launched the Blue Heart Pledge to
demonstrate our commitment to
promoting diversity and inclusion in
the workplace; and
>Developed and applied a set of clear
standards in a clearly defined health and
safety framework.
Diversity and Inclusion
Spark continues to make good progress in
delivering diversity and inclusion initiatives,
with a focus on growing more balanced
gender representation at senior levels and
improving our cultural identity and
awareness. We believe that inclusion should
be hardwired into everything we do and
something that everyone at Spark
understands.
In 2018 we invited all Spark people to make
the ‘Blue Heart Pledge’, to mark their
commitment to supporting diversity and
inclusion. By the end of FY18, 2,704 people
had signed a Blue Heart pledge, including
all members of the Board and the
Leadership Squad and we expect this
number to grow in the coming months.
As part of our transition to Agile, we
established a new contribution model, with
transparent criteria for ensuring like-for-like
pay, for a like-for-like contribution – which is
how we measure pay parity. All our people
Spark seeks to employ the best people
and empower them to do great things
for our customers and for New
Zealand. To achieve this we remunerate
our people with competitive salaries,
provide them with a wide range of
benefits and incorporate customer
satisfaction measures into our
performance incentives. We also invest
in our people – looking to develop their
full potential and bring top talent
through into leadership roles
sooner rather than later.
Our key people goals are to:
>Create a diverse pipeline of leaders and
employees, with a culture of inclusion;
>Ensure Spark people are fairly
remunerated, and incentivised in ways
that lead to better customer outcomes;
>Ensure Spark has the right skills in our
Board and Leadership teams for the
digital future; and
>Provide a safe and healthy work
environment for Spark people and those
who work with us.
Spark has some long-term goals and
aspirations linked to these, including
having more than 50% of our directors,
Leadership Squad and people leaders be
either female or non-NZ European; embed
diversity and inclusion programmes into
our recruitment and progression practices;
ensure our people and people leaders
have the skills they need to succeed in an
Agile environment, achieve 100% gender
pay parity and ensure the high standards
of health and safety we have set flow
through to everything we do.
in the parts of the business that have
become ‘fully Agile’ (reorganised into tribes
and squads) have already been mapped to
this model with any pay parity issues
resolved.
MĀORI CULTURAL AWARENESS
Spark's vision for our Māori business strategy
is kanohi kitea – for our people to be seen,
connected and empowered. Our mission is
to become trusted advisors, enabling
intergenerational digital solutions through
amazing technology. Our purpose is
Āwhinatia ngā tangata katoa o Aotearoa, kia
matomato te tipu i tea o matihiko – To help
all New Zealanders so that they may grow,
stand strong and be successful in the digital
world.
The strategy endeavours to build a
relationship between Spark and the Māori
community and economy to effect change
and become a driver for cultural, economic
and social growth through meaningful
partnerships and digital platforms.
We continue to grow and develop our Māori
talent. A key achievement in FY18 was the
launch of the ‘Tuia Te Ao’ cultural intelligence
app to help all Spark employees to learn
about te reo Māori/Māori language me ōna
tikanga/and culture.
PRIDE
Spark was the first company in
New Zealand’s telecommunications sector to
achieve Rainbow Tick certification. We have
maintained this accreditation throughout
FY18. In 2018 we joined the #thankstoyou
campaign, part of the Auckland Pride
Festival, to further demonstrate our
commitment to being an ally and supporter
of the Rainbow Community. The campaign
included the announcement of a three-year
strategic partnership with OUTLine (a
confidential telephone support and
face-to-face counselling service available to
the LGBTQI+ community and their families
and friends).
People and
remuneration
33%
of Spark
Leadership Squad
was female at
30 June 2018

Page 25
relativities, performance, qualifications and
experience.
Short-term incentives (STI) – At Spark we
believe it’s about setting two or three
targets that will improve performance of
the business.
Long-term incentives (LTI) – For Spark
executives a key part of their role is to
effectively balance the short-term and
long-term success of Spark for people,
customers and shareholders. LTI is set over
three years, with an absolute Total
Shareholder Return (TSR) target of Spark’s
cost of equity plus 1% compounding
annually.
MANAGING DIRECTOR’S REMUNERATION
The Managing Director’s remuneration is
structured slightly differently to reflect the
long-term performance focus of his role.
Short
Short-Term
Incentive
STI
Long-Term
Incentive
LT I
Salary
Performance
Equity Incentive
PEI
Base
56%
of base
44%
of base
71%
of base
PERFORMANCE EQUITY INCENTIVE (PEI)
In addition to the three factors applied to
the Leadership Squad, the Managing
Director has a further PEI, essentially a
deferred STI, set at 44% of his base. The PEI
has the same performance criteria as the
STI scheme but the award is deferred for
two years and delivered in Spark shares.
HEALTH AND SAFETY (H&S)
The health and safety of our people is of
the utmost importance to Spark. We have
recently developed and committed to a
12-month health and safety roadmap,
which drew partially on recommendations
from external H&S consultancy IMPAC,
which we contracted to do a H&S gap
analysis. Our roadmap established a set of
clearly defined H&S standards that require
us to have a clearly defined H&S
framework, active hazard & risk
management, an employee-driven safety
culture and the right resources and
processes to deliver on our framework.
Integral to this plan is the implementation
of a new H&S information system, which
will shape and monitor key performance
indicators across the business, focusing on
Spark’s strategic objectives, targets and
managing critical hazards and risks.
Remuneration
Spark wants the best possible people doing
great things for our customers and for
New Zealand. To achieve this we remunerate
them with competitive salaries, provide them
with a wide range of benefits and use
performance incentives that include
customer satisfaction as a key measure.
LEADERSHIP SQUAD REMUNERATION
For the majority of the Spark Leadership
Squad remuneration is structured around
three key elements.
Base
50%
of base
40%
of base
Short
Short-Term
Incentive
STI
Long-Term
Incentive
LT I
Salary
Base salary – All Spark employee packages
include a substantial fixed remuneration
component that is set based on market
FY18 SHORT-TERM INCENTIVES
PERFORMANCE OUTCOME
For FY18 substantively all STI participants
shared the same Spark Group targets
comprising EBITDA and market Net
Promoter Score (our measure of customer
satisfaction).
The FY18 Group performance outcome,
as approved by the Board, is summarised
as follows:
Performance metricResult
Group EBITDA50% 57%
Market Net Promoter Score (mNPS)50%42%
Board discretion0%
Total99%
Based on the above result, the total
available funding pool for all eligible STI
participants across Spark for FY18 was
$9.4 million. The pool is allocated based
on individuals’ STI targets and may be
differentiated based on individual
performance. Total payments cannot
exceed $9.4 million.
Additional disclosure in relation to the
Managing Director’s FY18 STI scheme
outcome and FY18 LTI vesting outcomes
is included on pages 90 and 91.
FY19 INCENTIVES
The mechanics of FY19 STI will be similar
to FY18 – Group results will be the main
determinate of the STI pool and individual
target STI values and performance will
determine the allocation of the pool across
STI participants. The FY19 Group measures
will be a combination of EBITDA and
Customer Experience measures as in FY18
and an additional measure – Group gross
labour cost.
No changes are proposed to the LTI
scheme – in September 2018 the company
will offer eligible employees restricted
shares and vesting will be conditional on
service and TSR hurdles.
Weighting %

Page 26Spark New Zealand Annual Report 2018Environmental, social & governance reporting
NEW INVESTMENTS IN DIGITAL
LEARNING
Late in FY18 Spark Foundation trustees
committed to invest in three new social
ventures, totalling $550,000 and focused
on creating step-change in digital skills
and capability amongst kids.
Spark has also supported a range of other
education-focused initiatives by partnering
with national not-for-profit organisations.
These include:
>>
OMG tech!, a not-for-profit education
initiative to open the world of
technology to young students;
>>
First Foundation, with Spark funding the
university education of five talented
students from disadvantaged
backgrounds, along with paid work
experience during holidays and
mentoring;
>>
NZTech, with women at Spark in
Wellington hosting high school students
during a ShadowTech day to encourage
the next generation of women to pursue
careers in technology;
>>
The Lion Foundation Young Enterprise
Scheme, with Spark people being
business mentors to high school
students during the ‘Entrepreneurs in
Action’ business competition weekends;
and
>>
Springboard Trust where Spark people
provide mentoring to school principals.
We have a big part to play in creating
a better New Zealand. Spark’s
community initiatives are targeted
around education, as we seek to
ensure all New Zealanders, especially
the young, have the opportunity to
win big in the digital world. Spark also
uses digital technology to power
a more generous society through
Givealittle, New Zealand’s premier
crowdfunding platform for social
good. Spark's activities combine the
talent and passion of our people,
together with corporate programmes,
and the work of Spark Foundation,
a registered charity funded by Spark
and governed by a board of trustees.
Helping New Zealanders win big
in a digital world through learning
SPARK JUMP
As classroom learning goes digital,
students without broadband at home are
at risk of being left behind. After a
successful pilot in FY16, this year Spark
expanded Spark Jump – which offers
heavily subsidised broadband to families
with school-aged children who cannot
afford commercial broadband.
Administered by the Spark Foundation,
Spark Jump enables more school-aged
children to go online outside of classroom
hours and get on the right side of the
digital divide.
At the end of FY18, Spark Jump had 1,049
families connected and is continuing to
expand the programme around the country
with the support of our 65 community
partners in 82 locations. As these partners
know their respective communities well,
they are well placed to determine which
families have the most need and are
therefore eligible for Spark Jump.
Community
FY18 Performance
1,049
families connected
65
community partners
Spark Jump
82
locations

Page 27
MANAIAKALANI EDUCATION TRUST
Spark Foundation has been a major
funding partner of the Manaiakalani
Education Trust to bring learning to
low-income communities.
After a five-year partnership, Spark
Foundation’s investment in the Manaiakalani
Education Trust has come to a close.
Spark Foundation set out to create the
step-change required to scale up the
education programme, with the help of
Spark’s resources and friendship. Our
involvement started when the Manaiakalani
Trust was operating in a single site in
Tamaki, Auckland and with the help of
Spark's resources it has grown into a
fully-formed methodology available to
more than 50 schools across New Zealand.
Manaiakalani has helped to transform
teaching and learning methods,
significantly improving educational
achievement for the students of
participating schools.
During this time Spark people contributed
strongly to the friendship with the
Manaiakalani schools through activities
such as mentoring teachers, becoming
buddies to students and providing
feedback on their blogs and volunteering
at Manaiakalani schools.
Over the five years Spark Foundation’s
contribution totalled almost $2.8 million.
Spark Foundation remains proud of its
contribution and continues to have a
positive relationship with the Trust.
Unleashing potential
through generosity
GIVEALITTLE
The internet and the ‘power of the crowd’
can be strong enablers of generosity and
Spark Foundation is proud to own and
operate Givealittle, New Zealand's
crowdfunding platform for social good.
Givealittle has grown to become a
$18m
in donations raised by
Givealittle in FY18
1,12 5
volunteer days
donated in FY18
Spark Volunteer
Givealittle
$840,000
donated via
Spark Give in FY18
Spark Give
household name and hundreds of
thousands of New Zealanders use the site to
support the causes they feel passionate
about. In FY18 Givealittle causes raised a
total of $18 million in donations and reached
$88.4 million in donations since the platform
launched in 2008.
SPARK VOLUNTEER AND SPARK GIVE
Spark people have continued to
participate in volunteering and payroll
giving programmes, which allow them to
generously donate time or funds to causes
of their choice. In FY18, 1,125 days of
employee time were gifted. Spark Give, a
payroll giving programme, enables Spark
people to donate to New Zealand schools
and registered charities of their choice
directly from their pay, and Spark
Foundation will match the first $500 of
their giving each year. In FY18 donations
totalling $840,000 were distributed to
590 organisations. Since Spark Give
launched in 2011 almost $5 million in
cumulative donations has been gifted
to 1,010 New Zealand schools and
registered charities.
Unleashing potential through
stronger communities
Spark is committed to making New Zealand
a better place for all of us by supporting a
range of important community projects:
>>
Sponsorship of Lifeline’s new text service
HELP, which provides another channel of
support for New Zealanders going
through times of emotional distress;
>>
Encouraging young women to consider
careers in technology by hosting 100
primary school-aged girls at our Spark
City campus for Superhero Daughter
Day; and
>>
Helping New Zealand businesses find
their edge through Spark Lab, a
multiplatform thought leadership
platform providing videos, articles,
events and business tools.
590
schools and charitable
organisations received payroll
giving donations in FY18

Page 28Spark New Zealand Annual Report 2018Environmental, social & governance reporting
Addressing and responding to
climate risk
As a technology business, Spark has a
relatively low emissions profile. However,
we are focused on continuing to challenge
ourselves to go further in reducing our
greenhouse gas emissions (measured in
CO2 equivalent) – both direct and indirect.
We are also looking at how we may need
to adapt to the risks presented by climate
change.
CARBON TARGET FOR 2025
In 2016 we set an ambition to reduce
greenhouse gas emissions (measured in
tonnes of CO
2
e) by 25% from FY16 levels
by 2025.
Over the past financial year, we have seen
our total emissions increase on FY17 and
(slightly) on the base year of FY16. There
are two main drivers of these increases:
1. The increase from the base year of FY16
was primarily due to an increase in value
chain emissions – air travel and
customers’ electricity consumption in
Spark’s data centres (reflecting
significant growth in our data centre
business).
Spark believes environmental
sustainability can be an important
driver of innovation in New Zealand.
Environment
0
FY18FY17FY16FY15FY14
10,000
20,000
30,000
OTHER
TRAVEL
REFRIGERANT
FLEET
DIESEL
ELECTRICITY
GREENHOUSE GAS EMISSIONS
Tonnes-CO
2
e
TARGET FOR FY18
$360k
ACTUAL IN FY18
$397k
TARGET FOR FY19
$360k
Network recycling revenue
2. Spark’s largest emission source is
electricity and as we source our
electricity from the national grid, our
emissions profile is impacted year to
year by the extent to which New Zealand
can rely on hydro generation rather than
thermal generation (which depends in
turn on rainfall into hydro catchment
areas). FY18 was a dry year and so
consequently Spark’s electricity supply
relied more on thermal sources (as did
the rest of New Zealand).
We are taking steps to address these
separate drivers of higher emissions, to
ensure we are still on track to reach our
2025 target.
We continue to focus on alternatives to air
travel where possible, such as video
conferencing.
While we can’t control how much of
New Zealand’s electricity is from renewable
sources in any given year, we can ensure
we are as efficient as possible in our use of
electricity – therefore protecting ourselves
in those years when thermal generation is
higher.

Page 29
Significant growth in Spark’s data centre
business has driven a 5% increase in
electricity consumption over the past two
years. However, core network electricity
consumption is down 1.5% since the base
year despite a significant increase in traffic
across our networks (including a greater
than five times increase on our mobile
network alone), due to increasing
efficiencies as we adopt new technology.
A good example of this is the transition
from the ageing PSTN network to our new
IP-based converged communication
network (CCN), which is a much more
efficient technology.
We are also taking small but important
steps when it comes to use of electricity in
our own offices – such as ensuring any new
office spaces are designed to be
sustainable and efficient in their use of
electricity (see following section on
‘Building Design’ below).
These increasing efficiencies give us
confidence we can manage down our
carbon footprint despite our customers’
insatiable thirst for our services.
NETWORK RECYCLING
Spark’s waste management strategy
proactively manages and coordinates
removal and recycling in an efficient and
cost-effective manner. In FY18 Spark
recovered a total of 497 tonnes of recycling
made up of 41 tonnes of Network e-waste
material and 455 tonnes of Network metals,
cables and batteries. Batteries made up 254
tonnes of the e-waste.
ENERGY EFFICIENT VEHICLES
Spark has joined New Zealand's 30 largest
companies in committing to 30% of our
corporate fleet being electric by October
2019. To date, we have 10 fully electric
vehicles. We have around 133 other
vehicles coming off lease or at the end of
their economic lives over the next 12–18
months, and the majority of these will be
replaced with electric vehicles.
TARGET FOR FY18
35,000
mobile phones recycled
ACTUAL IN FY18
25,422
TARGET FOR FY19
35,000
CURRENT FLEET INCLUDES:
10 fully electric vehicles
47 hybrid (non plug-in)
vehicles
AMBITION
30% of fleet electric or
plug-in hybrid by
October 2019
RE:MOBILE
Energy-efficient vehicles
25,422
mobile phones recycled
in F Y18
BUILDING DESIGN
Spark announced that we will lease a new
high-profile 5,000 sqm office in
Christchurch overlooking Cathedral
Square. Due for completion in 2019, the
building will co-locate the approximately
450 people who have been spread across
four locations since the 2011 earthquake.
The purpose-built facility features a base
isolation system designed to keep our
team safe in the event of an earthquake, as
well as a range of key sustainability
technologies, including a solar control
glazing system, low-energy lighting, rain
water tanks to provide water to toilets and
advanced chiller beam units to control
heating and cooling.
Green Star, an internationally recognised
rating system, has awarded the property
5 stars, acknowledging New Zealand
excellence in building design. NABERS NZ,
a system for rating energy efficiency of
office buildings, has given the building a
minimum of 4.5 stars, recognising
excellent performance.
Once this building is complete, our three
main offices in Auckland, Wellington and
Christchurch, housing around 2,600 of our
people, will be designed to these high
standards.
MOBILE PHONE RECYCLING
Spark aims to reduce the impact of
unwanted mobile phones by encouraging
customers and employees to recycle
handsets. As a member of the
Telecommunications Forum’s RE:MOBILE
product stewardship scheme, Spark
supplies recycling bins in all retail stores
and in many office buildings around the
country. In FY18, 25,422 mobile phones
were recycled through the RE:MOBILE
programme, with a percentage of the
profits going to the environmental charity
Sustainable Coastlines.

Page 30Spark New Zealand Annual Report 2018Environmental, social & governance reporting
The Board plays a pivotal role in
overseeing the strategic direction of
Spark and ensuring the right strategic
programmes are put in place and then
implemented.
High standards of
corporate governance
The Board and management are
committed to ensuring that Spark
maintains a high standard of corporate
governance and adheres to high ethical
standards as illustrated by:
>>
Spark continuing to follow all Principles
and Recommendations of the ASX
Corporate Governance Council
notwithstanding that this is no longer
mandatory due to its Foreign Exempt
Listing;
>>
Spark’s adoption of all
Recommendations of the NZX
Corporate Governance Code;
>>
Spark continuing to be a constituent of
the FTSE4Good Index Series following
independent assessment according
to the FTSE4Good criteria; and
>>
Voluntary reporting on Environment,
Social and Governance matters by Spark
generally.
The Board also plays a pivotal role in
overseeing the strategic direction of Spark
and ensuring the right strategic
programmes are put in place and then
implemented.
Board succession
Justine Smyth, an existing Spark director
with extensive governance experience
including time as the Chair of Spark’s Audit
and Risk Management and Human
Resources and Compensation Committees,
was appointed as Spark’s Chair effective
3 November 2017, succeeding Mark
Verbiest who retired from the Board
following Spark’s 2017 Annual Meeting.
Illustrating the strength of Board
succession planning, the following Board
Committee changes were also effective
3 November 2017:
Governance
Diversity
The Board recognises that building
diversity across Spark is critical for
delivering enhanced business
performance, including building diversity
of thought within the Board and its various
sub-committees. As illustrated by the
Board skills matrix later in this section, the
Board has an appropriate mix of skills,
diversity and experience to be ambitious
and deliver on those ambitions, enabling
Spark to tackle the challenges and
opportunities of the digital era.
Role of the Board
A key factor in Spark’s long-term growth
framework is strong governance, with focus
areas including proactive risk management
policies and having a diverse Board.
The Board of Directors is elected by
shareholders to protect and enhance the
value of the assets of Spark in the interests
of Spark and its shareholders. The Board
has statutory responsibility for the affairs
and activities of Spark, which in practice is
achieved through delegation to the
Managing Director and others who are
charged with the day-to-day leadership and
management of the company.
More information regarding the respective
roles and responsibilities of the Board
and management is set out in the Board
Charter, which can be found at:
www.sparknz.co.nz/about/governance.
The Board regularly reviews and assesses
Spark’s governance structures and
processes to ensure that they are
consistent with international best practice
in both form and substance.
Diverse Board
50%
of Board is female

Page 31
Board skills matrix

Justine SmythAlison BarrassPaul BerrimanAlison GerryPip GreenwoodIdo LefflerSimon MoutterCharles Sitch
Qualifications
BCom, FCA,
CFINSD
BSc, Political
Science, Dip Bus,
Marketing
MBA, BSc, CEng
BMS (HONS),
MAppFin
LLBBBS
ME, BE (HONS),
BSc
MBA, LLB,
BCom
Spark-specific Skills
Telco Experience
Retailing and Marketing
Digital/Technology/
Innovation
Operations
Generic Skills
Executive Leadership
and Strategy
Governance
Financial
Risk and Compliance
Legal and Regulation
People
Capital Markets
Geographical locationNZNZHong KongNZNZAustralia/USANZUSA
Tenure years
6.7 1.9 6.7 2<1 4 66.7
Gender
FFMFFMMM
>>
Ms Smyth succeeded Mr Verbiest as
Chair of the Nominations and Corporate
Governance Committee;
>>
Alison Gerry succeeded Ms Smyth as the
Chair of the Audit and Risk Management
Committee; and
>>
Alison Barrass succeeded Ms Smyth as
the Chair of the Human Resources and
Compensation Committee.
Following the retirement of Mark Verbiest,
the Board sought to appoint a new
director with relevant skills and experience
who would complement the diverse
perspectives already present around
Spark’s Board table. On 14 December
2017 the Spark New Zealand Board
subsequently announced the
appointment of Pip Greenwood as a
non-executive director.
Ms Greenwood is widely regarded as one
of New Zealand’s top commercial lawyers
and has significant experience in
governance, risk and compliance, legal
and regulation, as well as capital markets.
Ms Greenwood’s appointment took effect
on 1 April 2018.
Future Director
Spark also appointed Nagaja Sanatkumar
as its first ‘future director’ on 4 December
2017. The Future Directors programme is
run by the New Zealand Institute of
Directors and aims to give young, talented
people with an interest in corporate
governance the opportunity to observe
and participate in Boardroom discussions.
The aspiring directors attend all Board
meetings but they have no voting rights
and are not involved in decision-making.
Ms Sanatkumar is currently the General
Manager of Global eCommerce at
innovative New Zealand clothing retailer
Icebreaker and has an extensive
background in technology and marketing,
with a focus on digital and e-commerce
customer experiences.

Page 32Spark New Zealand Annual Report 2018Environmental, social & governance reporting
Spark’s purpose is to help all
New Zealanders win big in a digital
world. To achieve this we must
successfully execute our business
strategy and plan, while maintaining
high standards of operational
performance. Strong corporate
governance, including a highly
effective and integrated risk
management framework, helps
Spark people to make good
business decisions that create
stakeholder value.
Risk
In early 2018 Spark assessed the future
needs and alignment of the Managing Risk
Framework (MRF) as part of its Agile
transformation. Through consultation with
the Board and Leadership Squad it was
decided that benchmarking the framework
to COSO ERM: 2017 would provide a
leading practice aligned and fit-for-
purpose MRF.
COSO’s ERM framework is structured into
five risk management process domains.
Each one is supported by explanatory
principles. Each domain plays an
important and evolving part in the
management of Spark’s risks.
The framework is mandated by Spark’s
Managing Risk Policy. Additional guidance
is provided by Spark’s core policies that
help Spark’s people manage specific risks.
Principal Risks
Spark’s current principal risks and their
mitigation measures are summarised below.
CUSTOMER EXPERIENCE
Improving customer experience is
essential to grow and retain customers and
achieve our planned financial
performance. To make customers the focus
of our business, Spark has undertaken an
Agile transformation. Key features include
adopting an Agile customer-experience
focused organisational design and ways of
working so that customer centricity is
embedded in the design and delivery of
Spark’s products, services and solutions.
Customer experience targets have also
been embedded as incentive measures.
MOBILE
Intense competition in a mature market
keeps retail prices low and necessitates
significant added value in market offers to
enable competitive differentiation. This
pressures Spark’s mobile business
margins. Spark has adopted new Agile
ways of working to improve our business
and operating cost-efficiency. Our new
Agile Mobile product and segment tribes
are fully leveraging multibrand capabilities
and new strategic growth initiatives to help
us compete more effectively in today’s
price-sensitive markets.
BROADBAND
The New Zealand broadband market is
largely commoditised and intensely
competitive. This places Spark’s customer
scale and product margins under pressure.
Spark is responding by continuing to
migrate our copper broadband customers
onto fibre and wireless access
technologies to improve customer
experience and product economics. Our
new Agile product and segment tribes are
focusing on leveraging the product and
service mix across Spark’s brands to
succeed in price-sensitive markets.
IT SERVICES
Spark must continuously improve the
efficiency of its IT service delivery and
margin performance to achieve
sustainable earnings from this business
portfolio. A competitive market creates
high levels of price pressure that squeezes
margins.

Page 33
TECHNOLOGY PERFORMANCE
(NETWORK AND IT)
Services impacting events may occur
affecting the performance of Spark’s
networks and IT platforms and the
customer products and services they
support. This can damage our reputation
and reduce our ability to attract and retain
customers. These events can occur when
introducing new or operating existing
technology or when technology assets
reach the end of their economic or
engineering lives. Spark continues to
heavily invest in our mobile, data and fixed
and IT technology platforms to improve
service resilience, customer experience,
capacity and economic efficiency.
LOWEST OPERATING COST
Spark must manage its operating costs to
offset falling prices associated with the
commoditisation of our key markets if it is
to avoid impairing its margins and
earnings. To prevent this Spark must
continually improve our business
efficiency. Spark’s Quantum programme is
designed to deliver continued business
efficiency benefits over time. Key focus
areas of this programme include product
costs of sale, labour cost and other
material costs like financing mix and
interest costs.
MONETISING DATA GROWTH
Decreasing technology asset lifecycles and
rapid growth in customer data
consumption necessitates increased levels
of technology platform and network
capacity investment. When combined with
an environment of intense price-led
competition, it may become difficult for
Spark to monetise our network and IT asset
investment at economically sustainable
levels. To avoid this Spark continues to
invest in technology that lowers the per
unit cost of data carriage. These
investments include augmentation of
Optical Transport and Carrier Ethernet
fibre networks and the core and edge
mobile networks. New builds such as
Spark’s Converged Communications
Network integrates the processing of
voice, data and media traffic from all
access platforms at lower costs than the
legacy platforms it replaces. We have also
undertaken planning and trials around 5G
technology, which will enable further
monetisation of data growth with lower
costs of data.
IT AND DATA SECURITY BREACH
A major cyber or data security breach
would impact customer confidence
causing churn, increasing IT security costs
or resulting in fines. Spark relies on a best
practice aligned security operating model
and uses our privacy compliance
framework to keep networks and customer
information secure. Examples include
regular maturity assessments of the model
to inform calculated and continuing
investment in security threat and
monitoring response capability.
REGULATORY
Regulatory changes have potential to affect
the level of earnings Spark achieves for its
shareholders. The Government’s
Telecommunications (New Regulatory
Framework) Amendment Bill introduces an
entirely new regulatory framework from
2020 for fixed-line services provided to
Spark by Chorus and other local fibre
companies. The bill also grants the
Commerce Commission new powers to
monitor and enforce retail service-level
quality levels. How this regulatory
framework is implemented may have
important consequences for the retail and
wholesale telecommunications markets
Spark operates in. Similarly, the Commerce
Commission is presently undertaking a
mobile market study, considering all
aspects of mobile market structure and
performance, to identify whether any
aspect of the mobile market warrants
closer regulatory attention. Spark mitigates
regulatory risks through proactive
engagement with government, the
regulator and industry stakeholders and
we develop strategies to mitigate these
risks as they emerge.
COMPLIANCE OBLIGATIONS
Spark must comply with all relevant
legislation and regulations,
telecommunications service obligations
(TSO), NZX Listing Rules, applicable ASX
Listing Rules and the corporate
governance requirements of the NZX and
Financial Markets Authority (FMA). We
continue to voluntarily comply with the
ASX Corporate Governance Principles and
Recommendations (despite being granted
foreign exempt listing status by the ASX in
2015). Spark’s Digital Trust Team regularly
engage with the business to provide legal
and other compliance support, including
tools, training and advice.

Page 34Spark New Zealand Annual Report 2018Performance
YEAR ENDED 30 JUNE
20182017% CHANGE
Operating revenues and other gains
$M
3,6493,6141.0%
Operating expenses
$M
(2,657)(2,594)2.4%
Share of associates’ and joint ventures’ net losses
$M
(3)(4)(25.0%)
Reported earnings before interest, income tax,
depreciation and amortisation (EBITDA)
1
$M
9891,016(2.7%)
Adjusted EBITDA
1
$M
1,0381,0162.2%
Reported net earnings
$M
385418(7.9%)
Adjusted net earnings
1
$M
4204180.5%
Key performance indicators
Spark results overview
1 EBITDA, adjusted EBITDA, adjusted net earnings, adjusted earnings per share and capital expenditure are non-Generally Accepted Accounting Practice (GAAP) measures and are
not comparable to the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) measures. These measures are defined and reconciled on page 40.
2 Includes wireless broadband connections.
3 Employee numbers are full-time equivalents, including contractors, and are measured as at 30 June.
Total mobile connections
2,458K
▲
2.8%
Total capital expenditure
$413M
▼
0.5%
Earnings per share
21. 0 cents
▼
7.9%
Adjusted earnings per share
1
22.9 cents
▲
0.4%
Total dividends per share
25 cents
FY17
25 cents
Broadband connections
2
700K
▲
1.9%
Capital expenditure to
operating revenues
11 . 3 %
FY17
11.5%
Employee numbers
3
5,507
▼
4.6%
Connections
Financial performance
Capital expenditure
1
Investors
People

Page 35
Net earnings movements
EBITDA
$989M
▼
$27M
▼
2.7%
ADJUSTED EBITDA
$1,038M
▲
$22M
▲
2.2%
OPERATING REVENUES
AND OTHER GAINS
$3,649M
▲
$35M
▲
1.0%
Mobile revenue
▲

$83M
▲

6.9%
Strong mobile service revenue
growth of $36 million, or 4.6%,
was driven by increased
average revenue per user
and connection growth.
Other mobile revenue, which
increased $47 million, or
11.3%, continues to be
driven by the sale of
high-end mobile devices.
Cloud, security and
service management
▲

$49M
▲

15.1%
Growth reflects strong
customer demand for the
benefits and flexibility that
Cloud-based ‘as-a-Service’
products offer.
Broadband revenue
▼

$4M
▼

0.6%
Broadband revenue
decreased despite an
increase in connections due
to increased migration to
lower-priced but higher-
margin wireless broadband
products since FY17.
Procurement and partners
▲

$8M
▲

2.3%
Procurement and partners
revenue increased due to
greater volumes over the
period.
Voice revenue
▼

$83M
▼

12.7%
Voice revenue continued to
decline, albeit at a slightly
accelerated rate, as a greater
proportion of customers opt
for broadband-only services
to their homes or businesses.
Managed data and
networks revenue
▼

$17M
▼

8.2%
Managed data revenue
continued to decline due to
the migration of business and
wholesale customers off
traditional data products, and
ongoing price pressure.
Other gains
▼

$10M
▼

50.0%
FY18 includes other gains of
$10 million related to the sale
of 50% of Connect 8 while
FY17 included $20 million
from the sale of surplus land
in Mayoral Drive, Auckland.
Other operating revenue
▲

$9M
▲

5.1%
Other operating revenue growth was driven by the continued
progress of Spark Ventures’ businesses, such as Qrious
(including the purchase of Ubiquity in July 2017) and a $3
million gain associated with the buy-back of retail stores,
partially offset by $11 million lower Southern Cross dividends.
OPERATING EXPENSES
($2,657M)
▲
$63M
▲
2.4%
Payments to
telecommunications
operators
▼
$39M
▼
5.7%
Decrease in baseband and
access charges and
broadband costs from the
uptake of wireless
broadband.
Labour
▼
$37M
▼
6.7%
Labour costs have decreased
despite costs associated with
business acquisitions due to
lower staff levels as we
transition to the lowest cost
operator model and the
implementation of the
Quantum programme.
Mobile costs
▲

$43M
▲

9.9%
Increase in mobile costs
reflects increased mobile
revenue, in particular mobile
device costs.
Other operating
expenses
▲

$28M
▲

5.6%
Increase due to a higher level
of advertising campaigns (up
$15 million), higher electricity
prices and higher impairment
expenses (up $5 million).
IT services costs
▲
$19M
▲
4.5%
IT services costs increased in
line with the growth in cloud,
security and service
management revenues.
Costs of change
▲
$49M
Costs of change associated
with Spark’s 'Quantum'
performance improvement
programme to radically
simplify and digitise
processes, products and
services. These include
external subject matter
expertise ($12 million),
relocation and property lease
costs ($4 million),
restructuring expenses
($26 million), programme
office functions ($3 million)
and product and system
decommissioning costs
($4 million).
SHARE OF
ASSOCIATES’ AND
JOINT VENTURES’
NET LOSSES
($3M)
▼
$1M
▼
25.0%
Spark’s holdings in associates and joint ventures has decreased, resulting in lower net losses
recognised, including the exit of Putti during the period.
NET EARNINGS
$385M

▼
$33M
▼
7.9%
ADJUSTED NET
EARNINGS
$420M

▲
$2M
▲
0.5%
EBITDA
$989M
▼
$27M
▼
2.7%
Income tax expense
$140M
▼
$2M
▼
1.4%
Decrease in line with the
decrease in net earnings
before tax.
Depreciation and
amortisation expense
$434M
▲

$4M
▲

0.9%
Small increase due to shorter
average useful lives of new
technologies offsetting lower
average capital expenditure
levels in the past three years.
Net finance expense
$30M
▲

$4M
▲

15.4%
Increase due to a $4 million
increase in finance expenses.
This reflects an increase in
average debt and stable
interest rates compared to the
prior year, partially offset by
higher capitalised interest.

Page 36Spark New Zealand Annual Report 2018Performance
Adjusted EBITDA and adjusted net earnings
As detailed on page 40 Spark presents adjusted EBITDA and adjusted net earnings when the year includes significant items greater than
$25 million. As included in the table above, FY18 included $49 million of costs of change and adjusted EBITDA and adjusted net
earnings for the year are reconciled as follows:
20182017
YEAR ENDED 30 JUNE
$M$M% CHANGE
Reported EBITDA9891,016(2.7%)
Add: costs of change49–NM
Adjusted EBITDA1,0381,0162.2%
Reported net earnings after tax385418(7.9%)
Add: costs of change49–NM
Less: tax effect on costs of change(14)–NM
Adjusted net earnings
4204180.5%
Adjusted EBITDA increased $22 million, or 2.2%, and adjusted net earnings increased $2 million or 0.5%.
$M
1,016
11,038(49)
989
45
(10)
2017 Reported
EBITDA
2018 Reported
EBITDA
Other
gains
Operating
revenues
Share of
associates' &
joint ventures'
net losses
Operating
expenses
2018 Adjusted
EBITDA
Costs of
change
900
920
940
960
980
1,000
1,020
1,040
1,060
1,080
1,100
(14)
A summary of the results of Spark’s key business units are outlined on pages 42 to 45. Further details of the FY18 and historical
performance of Spark are available in a separate financials file on the investor section of our website at: investors.sparknz.co.nz/
investor-centre.
In FY19 following a shift to Agile ways of working and change in Spark’s operating model, the current business unit segmentation
will no longer be applicable. A revised segment disclosure will be provided in the FY19 financial statements.

Page 37
Cash flows
Spark’s principal sources of liquidity are operating cash flows and external borrowing from established debt programmes and bank
facilities. The full statement of cash flows is provided on page 50 in the financial statements. The following provides a summary of the cash
inflows and outflows from operating, investing and financing activities during the year and the movements compared to FY17.
CASH INFLOWSCASH OUTFLOWS
NET CASH FLOWS
FROM OPERATING
ACTIVITIES
$777M
▲
$60M
▲
8.4%
Cash received from customers
$3,508M
▲
2.4%
Increase is consistent with the increase in operating
revenues from the prior year and movements in
working capital.
Payments to suppliers
and employees
($2,592M)
▼
0.7%
Decrease largely driven by
working capital
improvements.
Income
tax payments
($167M)
▲
16.8%
Increase in tax payments
due to the timing of tax
payments.
Dividend receipts
$50M
▼
24.2%
Decrease in Southern Cross dividend receipts due to
lower dividends during the year and the timing of cash
receipts.
Net interest payments
($22M) No change
No change in net interest payments reflecting lower costs
of debt and higher capitalised interest offsetting an
increase in average net debt during the year.
NET CASH FLOWS
FROM INVESTING
ACTIVITIES
($484M)
▲
$104M
▲
27.4%
Proceeds from sale of
businesses
$8M
▲
$8M
Proceeds from the sale of
50% of Connect 8 during
the year, with no sales in
F Y17.
Proceeds from sale of
property, plant and
equipment
$1M
▼
96.3%
Minor asset sales during
FY18, compared to $27
million received from the
sale of Mayoral Drive in
F Y17.
Payments for capital
expenditure and
capitalised interest paid
($422M)
▲
4.5%
Payments largely consistent
with capital expenditure for
the period, with the increase
driven by higher capitalised
interest and movement in
working capital.
Payments for, and
advances to,
long-term investments
($20M)
▲
300.0%
Payments for FY18,
including investment in
GlobeTouch, PropertyNZ
and the Rural Connectivity
Group and advances to
Southern Cross. There
were no significant
investments in FY17.
Payments for purchase of business
($51M)
▲
47M
Payments during the period included the acquisitions of
Ubiquity, Digital Island and the buy-back of retail stores
with only minor acquisitions in FY17.
NET CASH FLOWS
FROM FINANCING
ACTIVITIES
($290M)
▼
$47M
▼
13.9%
Net proceeds
from debt
$174M
▲
35.9%
A net increase in short
and long-term debt to
support acquisitions
activity and the top up of
dividends.
Receipts from
finance leases
$2M
▲
100.0%
Small increase in receipts
from finance leases
during the period.
Dividend
payments
($458M) No change
No change in dividend
payments as dividends
declared per share remained
unchanged.
Payments for
finance leases
($8M) No change
No change in payments for
finance leases during the
period.

Page 38Spark New Zealand Annual Report 2018Performance
Capital expenditure
1

Total capital expenditure for FY18 was $413 million, a decrease of
$2 million, or 0.48%, on FY17 (noting that FY17 spend included
approximately $15 million for remediation and network resiliency
improvements following the November 2016 Kaikoura
earthquakes). FY18 capital expenditure was 11.3% of operating
revenues, within our target of 11%-12% of operating revenues and
decreasing slightly from 11.5% in FY17.
20182017
YEAR ENDED 30 JUNE$M$M
Cloud3942
Converged Communications
Network (CCN)3215
International cable construction
and capacity purchases 1434
IT systems113112
Mobile network115102
Plant, network and core sustain
and resiliency6267
Other3843
Total capital expenditure413415
Capital expenditure in FY18 included the following key focus
areas and projects:
• $39 million was invested in cloud-related capital expenditure
to support cloud, security and service management revenue
growth;
• $32 million was invested in the CCN, which will replace the
legacy PSTN network and enable us to deliver IP-based voice
services in the future;
• Investment in international cable construction and capacity
purchases was $14 million as Spark continued to invest in
Southern Cross international cable capacity albeit at lower
levels than in the prior year;
• IT systems investment of $113 million in FY18 was focused on
simplification, automation and digitisation across our
products, customer journeys and IT systems to remove
manually intensive tasks and improve customer experience.
This also included the continued build of Telecommunications-
as-a-Service IT platforms for Spark Digital clients to support its
substantial take up by eligible government agencies;
• $115 million was invested in Spark’s mobile network in FY18
to continue the deployment of the single radio access network
(SRAN) and Long-Term Evolution (LTE) sites, increased capacity
and coverage for wireless broadband, as well as lifecycle
investment and licensing in the mobile core;
• $62 million was invested in the fibre build programme, Optical
Transport Network (OTN) and Carrier Ethernet expansion to
meet customer demand for services and traffic growth across
the network as coverage expands. Various investments in
Spark-owned properties were also carried out; and
• Other capital expenditure of $38 million includes investment
in store refits, migrating Lightbox to a new platform, Connect 8
(before the sale of 50% in May 2018), Qrious and launch of
Spark’s first low-power IoT network (Lora WAN).
1 Capital expenditure is a non-GAAP measure and is defined on page 40.

Page 39
Dividends
Spark pays dividends on a semi-annual basis. A 75% imputed ordinary dividend of 11 cents per share was declared for H1 FY18,
together with a 75% imputed special dividend of 1.5 cents per share. A 75% imputed ordinary dividend of 11 cents per share has also
been declared for H2 FY18, together with a 75% imputed special dividend of 1.5 cents per share, bringing the total dividends for FY18
to 25 cents per share, consistent with FY17.
H1 FY18
ORDINARY
DIVIDENDS
H1 FY18
SPECIAL
DIVIDENDS
H2 FY18
ORDINARY
DIVIDENDS
H2 FY18
SPECIAL
DIVIDENDS
Dividends declared
Ordinary shares11.0 cents1.5 cents11.0 cents1.5 cents
American Depositary Shares40.59 US cents5.54 US cents36.17 US cents4.93 US cents
Imputation
Percentage imputed75%75%75%75%
Imputation credits per share3.2083 cents0.4375 cents3.2083 cents0.4375 cents
Supplementary dividend per share
2
1.4559 cents0.1985 cents1.4559 cents0.1985 cents
‘Ex’ dividend dates
New Zealand Stock Exchange15 Mar 201815 Mar 201820 Sep 201820 Sep 2018
Australian Securities Exchange15 Mar 201815 Mar 201820 Sep 201820 Sep 2018
American Depositary Shares 15 Mar 201815 Mar 201820 Sep 201820 Sep 2018
Record dates
New Zealand Stock Exchange16 Mar 201816 Mar 201821 Sep 201821 Sep 2018
Australian Securities Exchange16 Mar 201816 Mar 201821 Sep 201821 Sep 2018
American Depositary Shares 16 Mar 201816 Mar 201821 Sep 201821 Sep 2018
Payment dates
New Zealand and Australia 6 Apr 20186 Apr 20185 Oct 20185 Oct 2018
American Depositary Shares 20 Apr 201820 Apr 201815 Oct 201815 Oct 2018
1 Based on the exchange rate at 15 August 2018 of NZ$1 to US$0.6576 and a ratio of five ordinary shares per one American Depositary Share. The actual exchange rate used for
conversion is determined in the week prior to payment when the Bank of New York performs the physical currency conversion.
2 Supplementary dividends are paid to non-resident shareholders.
For FY19, subject to there being no material adverse changes in operating outlook, Spark anticipates paying an annual total dividend of
25 cents per share. This is likely to be made up of an ordinary dividend determined by earnings, topped up by a special dividend to
maintain a total dividend of 25.0 cents per share. It is currently anticipated that the FY19 ordinary and special dividend will be at least
75% imputed. The dividend reinvestment plan remains suspended.

Page 40Spark New Zealand Annual Report 2018Performance
Non-GAAP measures
This annual report includes non-GAAP financial measures that are
not prepared in accordance with New Zealand Equivalents to
International Financial Reporting Standards (‘NZ IFRS’). Spark
believes that these non-GAAP financial measures provide useful
information to readers to assist in the understanding of the
financial performance, financial position or returns of Spark.
These measures are also used internally to evaluate performance
of business units, to analyse trends in cash-based expenses, to
establish operational goals and allocate resources. However, they
should not be viewed in isolation, nor considered as a substitute
for measures reported in accordance with NZ IFRS, as they are not
uniformly defined or utilised by all companies in New Zealand or
the telecommunications industry.
Spark’s policy is to present ‘adjusted EBITDA’ and ‘adjusted net
earnings’ when the year includes significant items (such as gains,
expenses and impairments) greater than $25 million. In FY18
costs of change of $49 million associated with the Quantum
programme (as described on page 35) have been deemed an
adjusting item. There were no adjusting items in FY17.
EARNINGS BEFORE INTEREST, INCOME TAX, DEPRECIATION
AND AMORTISATION (EBITDA)
Spark calculates EBITDA by adding back depreciation and
amortisation, net finance expense and income tax expense
to net earnings. EBITDA includes Spark’s share of associate
and joint venture net losses. A reconciliation of Spark’s
EBITDA and adjusted EBITDA is provided below and based
on amounts taken from, and consistent with, those presented
in the financial statements.
20182017
YEAR ENDED 30 JUNE
$M$M
Net earnings for the period
reported under NZ IFRS
385418
Add back: depreciation and
amortisation
434430
Add back: net finance expense
3026
Add back: income tax expense
140142
EBITDA
9891,016
Add: costs of change
49–
Adjusted EBITDA
1,0381,016
ADJUSTED NET EARNINGS
Adjusted net earnings reflects adjusted EBITDA, together with any
adjustments to depreciation and amortisation and net finance
expense, whilst also allowing for any tax impact of those items.
20182017
YEAR ENDED 30 JUNE
$M$M
Net earnings for the period
reported under NZ IFRS
385418
Add: costs of change
49–
Less: tax effect on costs
of change
(14) –
Adjusted net earnings
420418
ADJUSTED EARNINGS PER SHARE
Spark calculates adjusted earnings per share using adjusted net
earnings as reconciled above ($420 million), divided by the
weighted average number of shares outstanding during the year
(1,834 million). Adjusted basic and diluted earnings per share for
FY18 was 22.9 cents.
CAPITAL EXPENDITURE
Capital expenditure is the additions to property, plant and
equipment and intangible assets, excluding goodwill, acquisitions
and other non-cash additions that may be required by NZ IFRS,
such as decommissioning costs.

Page 41

Page 42Spark New Zealand Annual Report 2018Performance
OPERATIONAL HIGHLIGHTS
>>
Strong mobile performance delivering
7.1% growth in service revenue with
continued growth in our $59 and $79
pay monthly plans driving 3.1% average
revenue per user growth;
>>
Successful launch of the unlimited
mobile plan, driving upsells;
>>
An increase of 30,000 customers using
wireless broadband, with 114,000 now
using the service, resulting in improved
customer experience and operating cost
savings;
>>
37% increase in Lightbox users from
260,000 to over 355,000 and launched a
new pay per view movies service,
introducing a new revenue stream for
Spark;
>>
Key partnerships thriving with customers
growing on both Netflix (200% year on
year growth) and Spotify (16% year on
year growth);
>>
16% reduction in inbound contact
centre volume;
>>
Our employee NPS (eNPS) has grown 21
points as employees continue to actively
engage in the transition towards Agile
and empowered ways of working;
>>
17% improvement in Skinny mobile
margin driven by a combination of
strong customer and average revenue
per user growth, as well as a
rationalisation of channels to realise
profitable growth;
>>
Strong performance in our brands with
improvements in NPS in both our Spark
and Skinny brands;
>>
Customer use of our chat service has
increased 56%; and
>>
Insourcing of the Spark retail stores has
delivered $5 million of EBITDA benefits.
FINANCIAL PERFORMANCE
Operating revenues increased by $25
million, or 1.2%, in FY18. This was primarily
driven by a $78 million, or 7.9%, increase
in mobile revenues, including mobile
service revenue growth of 7.1% from
continued connection gains and a 3.1%
increase in average revenue per user from
FY17. This increase was partially offset by a
$49 million, or 15.3%, decrease in voice
revenues, in line with previous trends, as a
greater proportion of customers opted for
a broadband-only service to their home or
business. Broadband revenues decreased
by $5 million, or 0.8%, due to increased
migration to lower-priced but higher-
margin wireless broadband products since
FY17. Cloud, security and service
management, procurement and partners,
managed data and networks and other
operating revenues remained relatively
stable, increasing $1 million.
Operating expenses increased by
$7 million, or 0.6%, from FY17 primarily
driven by increased mobile costs reflecting
increased mobile revenue and, in
particular, mobile device costs. There was
also increased promotional activity during
the period through Spark Arena, the ‘Little
can be Huge’ brand campaign and key
new product launches. These increases
were partially offset by a $16 million, or
11.8%, reduction in labour cost and
decreased input costs through increased
wireless broadband and voice
connections.
This resulted in an overall increase in
EBITDA of $18 million, or 2.1%, in FY18.
Spark Home,
Mobile &
Business
20182017
YEAR ENDED 30 JUNE$M$MCHANGE %
Operating revenues2,0652,0401.2%
Operating expenses(1,194)(1,187)0.6%
EBITDA
1
8718532.1%
EBITDA margin42.2%41.8%
Financial result
The Spark Home, Mobile & Business
division is made up of the Spark,
Skinny, Bigpipe and Lightbox brands
that provide more than two million
New Zealand consumers and SMEs
with access to the technology, digital
and entertainment services they need
to unleash their potential. It provides
a full range of data, voice and content
services across fibre, wireless and
copper broadband, 3G, 4G and 4.5G
mobile, online video entertainment
and nationwide Wi-Fi zones.
48,000
mobile connection growth
>50%
of broadband customers on
fibre or wireless technology
114,000
wireless broadband customers
1 Costs of change associated with the Quantum programme are excluded from the segment result and are included
within the Corporate Centre as reconciled in note 2.1 of the financial statements.

Page 43
OPERATIONAL HIGHLIGHTS
>>
Real momentum in transitioning the
business to be a digital services
provider, with approximately 65% of
revenues now driven by IT Services;
• Launched new security products,
to capture the growth potential in
this market; and
• Developed new online self-service
functionality to guide customers
through online journeys;
>>
Launch of new service model providing
consistent service experience for SME
business customers across all channels;
>>
Focused effort on increasing pro-active
contacts and issue resolution, driving
continued improvement in the customer
relationship NPS scores;
>>
Increased operational excellence
performance resulting in service desk
interaction NPS improving 28 points;
>>
Consistently good service delivery has
resulted in continued growth in the
profitability of our top IT Services clients;
and
>>
Significant customer wins creating the
pipeline for FY19 revenue growth.
FINANCIAL PERFORMANCE
Operating revenues increased by
$26 million, or 2.1%, in FY18. The primary
driver of growth was cloud, security and
service management revenue, which grew
$49 million, or 15.5%, reflecting strong
customer demand for ‘as-a-Service’
products. When coupled with growth in
procurement and partners of $9 million,
the revenue growth was substantially more
than the ongoing decline in higher margin
voice and managed data and networks,
albeit at lower margins. Voice revenue
decline accelerated in FY18 largely due to
price pressure on our contact centre
solutions.
Operating expenses increased by
$10 million, or 1.2%, in FY18. Most of the
growth was in operating expenses
required to support the revenue growth in
cloud, security and service management
and procurement and partners. Labour
decreased by $11 million, or 5.2%, with
new employees brought on to support the
growing cloud and security businesses
more than offset by decreases in other
areas through the Quantum programme.
Overall, Spark Digital EBITDA increased by
$16 million, or 4.2%, in FY18, with growth
in cloud, security and service management
and the ongoing cost reduction from
Quantum offsetting underlying higher
margin voice and managed data and
networks declines.
Spark
Digital
Spark Digital provides solutions for
the rapidly evolving needs of
business, enterprise and government
customers to meet the demands of
an increasingly globalised and
mobile customer base. Spark Digital
has unique experience and capability
to deliver customers some of the best
ICT solutions in New Zealand and is
committed to helping customers gain
the competitive advantage that
digital solutions can deliver.
20182017
YEAR ENDED 30 JUNE$M$MCHANGE %
Operating revenues1,2631,2372.1%
Operating expenses(863)(853)1.2%
EBITDA
1
4003844.2%
EBITDA margin31.7%31.0%
Cloud, security and service
management revenue increased
15. 5%
Financial result
1 Costs of change associated with the Quantum programme are excluded from the segment result and are included
within the Corporate Centre as reconciled in note 2.1 of the financial statements.

Page 44Spark New Zealand Annual Report 2018Performance
OPERATIONAL HIGHLIGHTS
>Rolled out 4.5G services to 31 locations
to enhance network performance and
capacity and are now on a pathway
to 5G;
>Successful results at New Zealand’s first
live 5G mobile test site achieving speeds
of 9 Gigabits per second and an indoor
trial achieving speeds of 18 Gigabits per
second;
>Continued decommissioning of the
PSTN network, with removal of
equipment from a total 72 exchanges, or
10%, of the PSTN network;
>Lifted revenue growth momentum in our
distribution business;
>Delivered Phase 1 of Converged
Communication Network, unlocking
further wireless broadband and wireless
voice potential;
>New fibre capacity of 415 kilometres
added to the network, 265 kilometres
built and 150 kilometres leased;
>Delivered efficiency savings through
procurement and supply chain activities
and effective inventory management;
>Sold 50% of Connect 8 Limited to
Electra Limited, with the new joint
venture acquiring Sky Communications
Limited, supporting our fibre expansion
programmes and growth in mobile
capacity;
>Delivered significant improvements to
customer websites, customer app and
customer relationship management
systems, with 71% of customer journeys
now designed digital first;
>Automated 12 high-volume processes
using robotic process automation to
remove manually intensive tasks and
improve customer experience;
>Developed cutting edge data and
automation capabilities through
establishing a data lake, aggregating
100+ terabytes of data; and
>Website and MySpark app updated to
provide the ability to complete more
self-service transactions.
FINANCIAL PERFORMANCE
Operating revenues and other gains
increased by $18 million, or 34.6%, in
FY18. This includes revenues from Chorus,
Telegistics Repair Limited, Connect 8
Limited (prior to the sale of 50% in May
2018) and partnering arrangements.
Mobile revenue and other operating
revenue increased $8 million, or 17.4%,
while voice revenue remained flat. Other
gains of $10 million were recognised in
relation to the sale of 50% of Connect 8.
Operating expenses reduced by
$5 million, or 1.3%, in FY18. This was
primarily driven by a $19 million, or 11.9%,
reduction in labour cost linked to the
Quantum programme. This decrease was
partially offset by a $14 million, or 5.8%,
increase in other operating expenses,
which includes the impact of higher spot
prices on electricity costs, increased direct
network costs and higher other expenses,
partly offset by lower bad debts expense.
Overall, Spark Connect & Platforms
EBITDA improved by $22 million, or 6.3%,
in FY18 due to both increased operating
revenues and other gains and reductions
in operating expenses.
Spark
Connect
& Platforms
20182017
YEAR ENDED 30 JUNE$M$MCHANGE %
Operating revenues and other gains 705234.6%
Operating expenses(394)(399)(1.3%)
Share of associates’ and joint ventures’
net losses(2)(1)100.0%
EBITDA
1
(326)(348)(6.3%)
Spark Connect is responsible for
Spark’s ongoing network
performance and technology
roadmap, core connectivity, physical
infrastructure and shared services
functions, with the objective of
lowering our cost per gigabyte of
data across our networks. Spark
Platforms is responsible for
leveraging previous investments in
our IT re-engineering programme to
re-invent customer experience
through digital and service
transformation.
31
locations have 4.5G
services and promising
5G trials under way
Improving customer
experience using digital first
journeys and automation
Financial result
1 Costs of change associated with the Quantum programme are excluded from the segment result and are included
within the Corporate Centre as reconciled in note 2.1 of the financial statements.

Page 45
OPERATIONAL HIGHLIGHTS
>Growth in Qrious revenue and EBITDA,
resulting from the merger of Qrious and
Ubiquity, key client opportunities for
customer intelligence and engagement
expertise;
>Launched first low-power IoT network
(Lora WAN) with more than 65%
population coverage already achieved;
>Continued decline in voice revenues
offset by strong growth in our Wholesale
backhaul and IoT revenues; and
>Spark Ventures portfolio expanded
through strategic minority investment in
international IoT business GlobeTouch
and acquisitions of Ubiquity and Digital
Island. Further investment was made in
homes.co.nz while Putti investment was
exited.
FINANCIAL PERFORMANCE
Operating revenues across Spark Ventures
& Wholesale decreased by $4 million, or
1.6%, in FY18. This was primarily due to
ongoing rationalisation of wholesale
legacy copper-based voice and data
services, which decreased $24 million, or
15.9%. This continues to be partially offset
by revenue growth in Qrious, IoT, new
wholesale data and mobile services and
revenue from Ubiquity and Digital Island
businesses, which together increased
$20 million, or 36.4%.
Operating expenses increased by
$16 million, or 14.0%, in FY18. This was
due to increased labour costs of $8 million,
primarily associated with the acquisitions
of Ubiquity and Digital Island. Increased
operating expenses to support growth in
Qrious, IoT and Digital Island were partly
offset by cost efficiencies in Wholesale,
Morepork and Ventures support areas.
Additionally, a $7 million impairment
expense was recorded in relation to
long-term investments, inventory and
property, plant and equipment.
Overall, Spark Ventures & Wholesale
EBITDA declined by $19 million, or 14.7%,
in FY18 due to the rationalisation of
legacy-based services by wholesale
customers, higher operating expenses to
support new businesses and impairment
costs, partially offset by earnings growth in
new ventures and reduced share of
associates’ and joint ventures’ net losses.
NB: Spark Ventures and Wholesale
includes Wholesale, Qrious, Morepork and
IoT operations, costs associated with
early-stage proof of concepts and pilots
and, where applicable, share of net profits
or losses associated with associate
investments.
Spark
Ventures
& Wholesale
20182017
YEAR ENDED 30 JUNE$M$MCHANGE %
Operating revenues 240244(1.6%)
Operating expenses(130)(114)14.0%
Share of associates’ and joint ventures’
net losses–(1)(100.0%)
EBITDA
1
110129(14.7%)
EBITDA margin45.8%52.9%
Spark Ventures & Wholesale is
responsible for the development of
a portfolio of new businesses and
services that will create long-term
value for Spark, along with the
stewardship of Spark’s Wholesale
products and services. Through a
balanced portfolio of partner, build,
acquire and invest activity, Spark
Ventures & Wholesale will identify
and unleash new markets, revenue,
business models and capabilities
through three growth engines:
differentiation, adjacencies and new
wholesale services.
Acquisitions of Ubiquity and
Digital Island
Strategic investment in
GlobeTouch and increased
investment in homes.co.nz
Financial result
1 Costs of change associated with the Quantum programme are excluded from the segment result and are included
within the Corporate Centre as reconciled in note 2.1 of the financial statements.

Page 46Spark New Zealand Annual Report 2018Financial statements
Financial
statements
Financial statements47
Notes to the financial statements51
Section 1 – General information
1.1 About this report
1.2 Key estimates and assumptions
1.3 Significant transactions and events in the financial year
Section 2 – Financial performance information
2.1 Segment information
2.2 Operating revenues and other gains
2.3 Operating expenses
2.4 Net finance expense
Section 3 – Operating assets and liabilities
3.1 Receivables and prepayments
3.2 Inventories
3.3 Payables, accruals and provisions
3.4 Property, plant and equipment
3.5 Intangible assets
Section 4 – Group structure
4.1 Long-term investments
4.2 Business combinations
4.3 Subsidiaries
4.4 Joint operation
Section 5 – Funding and risk
5.1 Debt
5.2 Derivatives and hedge accounting
5.3 Financial and capital risk management
5.4 Equity and dividends
Section 6 – Other information
6.1 Net tangible assets
6.2 Taxation
6.3 Employee share schemes
6.4 Related party transactions
6.5 Reconciliation of net earnings to net cash flows
from operating activities
6.6 Commitments
6.7 Contingencies
6.8 New accounting standards not yet adopted
Independent auditor's report84

Page 47
Statement of profit or loss and other comprehensive income
YEAR ENDED 30 JUNE
20182017
NOTES$M$M
Operating revenues and other gains2.2 3,649 3,614
Operating expenses2.3 (2,657) (2,594)
Share of associates’ and joint ventures’ net losses4.1 (3) (4)
Earnings before interest, income tax, depreciation and amortisation 989 1,016
Depreciation and amortisation3.4, 3.5 (434) (430)
Net finance expense2.4 (30) (26)
Net earnings before income tax 525 560
Income tax expense6.2 (140) (142)
Net earnings for the year 385 418
Other comprehensive income
Items that will not be reclassified to profit or loss:
Revaluation of long-term investments designated at fair value
through other comprehensive income (22) (11)
Items that may be reclassified to profit or loss:
Translation of foreign operations – (1)
Cash flow hedges net of tax5.2 (6) 11
Other comprehensive (loss) for the year (28) (1)
Total comprehensive income for the year 357 417
Earnings per share
Basic and diluted earnings per share (cents) 21.0 22.8
Weighted average ordinary shares (millions) 1,834 1,832
Weighted average ordinary shares and options (millions) 1,834 1,834
See accompanying notes to the financial statements.

Page 48Spark New Zealand Annual Report 2018Financial statements
On behalf of the Board
Justine Smyth, Chair Simon Moutter, Managing Director
Authorised for issue on 22 August 2018
Statement of financial position
AS AT 30 JUNE
20182017
NOTES$M$M
Current assets
Cash 55 52
Short-term receivables and prepayments3.1 648 610
Short-term derivative assets5.2 6 –
Inventories3.2 79 94
Taxation recoverable 19 –
Total current assets 807 756
Non-current assets
Long-term receivables and prepayments3.1 258 237
Long-term derivative assets5.2 10 7
Long-term investments4.1 98 108
Property, plant and equipment3.4 1,039 1,070
Intangible assets3.5 1,207 1,153
Total non-current assets 2,612 2,575
Total assets 3,419 3,331
Current liabilities
Short-term payables, accruals and provisions3.3 470 464
Short-term derivative liabilities5.2 – 30
Debt due within one year5.1 249 295
Taxation payable 3 2
Total current liabilities 722 791
Non-current liabilities
Long-term payables, accruals and provisions3.3 21 18
Long-term derivative liabilities5.2 63 45
Long-term debt5.1 948 692
Deferred tax liabilities6.2 124 134
Total non-current liabilities 1,156 889
Total liabilities 1,878 1,680
Equity
Share capital 941 935
Reserves (437) (406)
Retained earnings 1,037 1,122
Total equity 1,541 1,651
Total liabilities and equity 3,419 3,331
See accompanying notes to the financial statements.

Page 49
Statement of changes in equity
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVE
SHARE-
BASED
COMPEN-
SATION
RESERVE
REVALUATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVETOTAL
YEAR ENDED 30 JUNE 2018NOTES$M$M$M$M$M$M$M
Balance at 30 June 2017 935 1,122 (20) 5 (368) (23) 1,651
Adjustment on adoption of NZ IFRS 9
(net of tax)
3.1,
6.2 – (12) – – – – (12)
Balance at 1 July 2017 935 1,110 (20) 5 (368) (23) 1,639
Net earnings for the year – 385 – – – – 385
Other comprehensive income/(loss) – – (6) – (22) – (28)
Total comprehensive income/(loss) for the year – 385 (6) – (22) – 357
Contributions by, and distributions to, owners:
Dividends5.4 – (458) – – – – (458)
Supplementary dividends – (50) – – – – (50)
Tax credit on supplementary dividends – 50 – – – – 50
Issuance of shares under share schemes 6 – – (3) – – 3
Total transactions with owners 6 (458) – (3) – – (455)
Balance at 30 June 2018 941 1,037 (26) 2 (390) (23) 1,541
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVE
SHARE-
BASED
COMPEN-
SATION
RESERVE
REVALUATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVETOTAL
YEAR ENDED 30 JUNE 2017NOTE$M$M$M$M$M$M$M
Balance at 1 July 2016 923 1,162 (31) 9 (357) (22) 1,684
Net earnings for the year – 418 – – – – 418
Other comprehensive income/(loss) – – 11 – (11) (1) (1)
Total comprehensive income/(loss) for the year – 418 11 – (11) (1) 417
Contributions by, and distributions to, owners:
Dividends5.4 – (458) – – – – (458)
Supplementary dividends – (59) – – – – (59)
Tax credit on supplementary dividends – 59 – – – – 59
Issuance of shares under share schemes 8 – – (4) – – 4
Other transfers 4 – – – – – 4
Total transactions with owners 12 (458) – (4) – – (450)
Balance at 30 June 2017 935 1,122 (20) 5 (368) (23) 1,651
See accompanying notes to the financial statements.