Updates to financial reporting and adoption of NZX Rules

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


MARKET RELEASE
4 December 2018

Updates to external reporting of financial results and adoption of revised NZX Listing Rules
To assist investors and analysts in recalibrating their models Spark has today released
restated FY17 and FY18 financials, and translated FY19 guidance, to reflect changes to
the presentation of Spark’s financial results from FY19. These changes arise from:
• Adoption of the new accounting standards - NZ IFRS 15 Revenue from contracts with
customers and NZ IFRS 16 Leases; and
• Changes to the disclosure of Spark’s long-term investments.

Alongside these changes Spark has also made a number of other improvements to the
structure and detail of its externally reported financials, including:
• Changes to reflect Spark’s shift to Agile and the associated cessation of Spark’s
previous business unit structure; and
• Adoption of the new NZX Listing Rules from 1 January 2019 which will apply to its
reporting of FY19 interim results.

The resulting impacts on reported FY17 and FY18 financial results are outlined in both
the attached supplementary presentation and the attached detailed financials
workbook. While these updates are all ‘non-cash’ and therefore have no impact on
reported total cashflow it should be noted that:
1. EBITDA is now replaced by ‘Earnings before finance expense and income, net
investment income, income tax, depreciation and amortisation’ or EBITDAI – with
the new ‘net investment income’ category including dividend income from Southern
Cross (and any other investments) together with Spark’s share of associates’ and
joint ventures’ net profits and losses;
2. Reported EBITDAI and EBITDAI margin increase due to adoption of new accounting
standards;
3. Reported Net Profit after Tax (NPAT) and earnings per share reduce due to adoption
of new accounting standards;
4. Following Spark’s move to Agile the primary segmental lens has moved from
business unit to product; with business units now removed from all external
reporting;
5. Revenue and associated costs for each product are now separately identified; to
provide a view of gross margin by product; and

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


6. To provide a more informed view of margin generated by cloud, security and service
management an additional measure called ‘contribution margin’, which includes
directly attributable labour costs and other expenses, has been introduced

Translated FY19 guidance
Spark has previously issued FY19 guidance excluding impacts from the adoption of NZ
IFRS 15 and NZ IFRS 16 accounting standards.

To ensure FY19 guidance can be appropriately compared to restated FY17 and FY18
actuals and interim and full year FY19 results, Spark has today released translated FY19
guidance including impacts from the adoption of NZ IFRS 15 and NZ IFRS 16 accounting
standards. This translated FY19 guidance replaces FY19 guidance previously issued to
the market.

Current
FY19 Guidance
(1)


Including adjustments for:
• New approach to disclosure
of Spark’s long-term
investments
Impact from
adoption of
NZ IFRS 15
Impact from
adoption of
NZ IFRS 16
Translated
FY19 Guidance
(1)

Including adjustments for:
• New approach to disclosure of
Spark’s long-term
investments; and
• Adoption of NZ IFRS 15 and
NZ IFRS 16 accounting
standards
Total Revenues
$3,600m to $3,670m
Excludes projected $10m-$20m
Southern Cross Dividend
($75m) $5m
$3,530m to $3,600m
Excludes projected $10m-$20m
Southern Cross Dividend
EBITDAI
$1,025m to $1,055m
Excludes projected $10-$20m
Southern Cross dividend and
profits and losses from associates’
and joint ventures’
($30m) $70m
$1,065m to $1,095m
Excludes projected $10-$20m
Southern Cross dividend and
profits and losses from associates’
and joint ventures’
Capex
(2)

~$410m - - ~$410m
Earnings per
share
23c to 24c (0.5c) (0.5c) 22c to 23c
Dividend per
share
Total 25.0cps
at least 75% imputed
(3)

- -
Total 25.0cps
at least 75% imputed
(3)

(1)
Guidance subject to no adverse change in operating outlook
(2)
Includes purchase of property, plant and equipment and intangible assets, capacity purchases (including Southern
Cross) but excludes leased customer equipment assets
(3)
Likely to be made up of an ordinary dividend topped up by a special dividend to maintain a total dividend per share
of 25.0c

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


New cashflow measure
While the adoption of new accounting standards and changes to the disclosure of
Spark’s long-term investments do not impact reported total cashflow, they do reduce
the effectiveness of EBITDAI and NPAT as proxies for cashflow. Therefore, Spark is
introducing a new cashflow measure, that will supplement existing metrics, to:
• Better communicate the cashflow generated by Spark;
• Provide a measure that is not impacted by changes in accounting standards; and
• Facilitate a clearer reconciliation of any movement in net debt to underlying
business performance.
The new measure is identified as “cash from operations minus payments for leases and
capital expenditure (excl. spectrum)” and will be provided as part of ongoing external
financial reporting.
Translated financial aspirations
The intent of Spark's three-year aspirations in respect of both dividends and cost
efficiency (as first communicated to the market at Spark’s June 2017 Investor Day) are
unchanged. However, as adoption of new accounting standards and changes to the
disclosure of Spark’s long-term investments impact both reported EBITDAI margin and
reported earnings per share, these aspirations have been translated as follows:
From:
• Increase EBITDA margin to low 30% through a focus on cost reductions and selected
investment in sustainable growth; and
• Deliver a sustainable total dividend that is fully funded by earnings per share of 25c
or above – timing uncertain
To:
• Increase EBITDAI margin to at least 31% through a focus on cost reductions and
selected investment in sustainable growth; and
• Deliver a sustainable total dividend of 25 cents or above that is not supplemented
by debt – timing uncertain
Spark’s FY19 dividend guidance remains unchanged with Spark still anticipating paying a
total dividend of 25cps
(1)
(at least 75% imputed), subject to no adverse change in
operating outlook.
(1)
Likely to be made up of an ordinary dividend topped up by a special dividend to maintain a total dividend per share
of 25c

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


Adoption of new NZX listing rules
Spark is adopting the new NZX Listing Rules from 1 January 2019 which will apply to its
reporting of FY19 interim results. As a result, Spark will no longer produce a half-year
interim report booklet in the form it has previously, but will publish:
• A market release;
• A supplementary results presentation;
• Interim financial statements; and
• A detailed financial schedule
Commentary on performance will be covered at a high level in the market release and
in more detail as part of the results presentation that is already released alongside
Spark’s interim financial statements.
Investors and analysts are also invited to attend a presentation via teleconference to
discuss these updates to Spark’s external reporting.
DATE: Tuesday, 04 December 2018
TIME: 9.00 am (AEDT)
11.00 am (NZDT)
If you would like to join via teleconference, please use the following dial-in numbers:
AUDIO CONFERENCE ID: 3393587
Country Date Time Dial In
New Zealand 04/12/18 11.00am NZDT 0800 444 845
Australia 04/12/18 09.00am AEDT 1800 175 864
USA 03/12/18 5.00pm EST 1855 823 0291
Hong Kong 04/12/18 06.00am HKT 800 963 435
Singapore 04/12/18 06.00am SGT 800 616 2312
Japan 04/12/18 07.00am JST 012 099 4106
UK 03/12/18 10.00pm GMT 080 8234 1368

Please dial into the teleconference 10 minutes before the start of the presentation.

- ENDS –
For media queries, please contact:
Lucy Fullarton
Corporate Relations Partner
+64 (0) 21 070 6197

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


For investor relations queries, please contact:
Dean Werder
Finance Lead Partner, Product and Performance
+64 (0) 27 259 7176

Updates to External Reporting
Investor and Analyst Briefing: December 2018

2
Summary
As outlined at Spark’s FY18 results announcement the
presentation of Spark’s financial results will change from FY19
onwards as a result of:
•Adoption of the new accounting standards -NZ IFRS 15 Revenue from
contracts with customers and NZ IFRS 16 Leases;
•Changes to the disclosure of Spark’s long-term investments;
•Spark’s shift to Agile and the associated cessation of Spark’s previous
business unit structure; and
•Other elective changes to the structure and detail of external disclosures
This presentation provides a view of impacts arising from these changes. A
detailed financial workbook, containing restated financials for FY17 and FY18,
has also been released alongside this presentation –it should be noted that:
•FY18 accounting standard adjustments have been audited by KPMG
•FY17 accounting standard adjustments reflect estimated impacts to aid
comparability
FY19 guidance has also been translated to reflect impacts from these changes
and is provided in more detail on slide 8 of this presentation.
While these updates have no impact onreported total
cashflow it should be noted that:
1.EBITDA is now replaced by ‘earnings before finance expense and
income, net investment income, income tax, depreciation and
amortisation’ or
EBITDAI
–with the new ‘net investment income’
category including dividend income from Southern Cross (and any other
investments) together with Spark’s share of associates’ and joint ventures’
net profits and losses
2.These changes reduce the effectiveness of EBITDAI and NPAT as proxies
for cashflow. Therefore, Spark is introducing a new cashflow metric that
will supplement exiting metrics and be included as part of Spark’s
ongoing external financial reporting
3.Reported EBITDAI and EBITDAI margin increase due to adoption of new
accounting standards
4.Reported net earnings after tax and earnings per share reduce due to
adoption of new accounting standards
5.Spark is adopting the new NZX Listing Rules from 1 January 2019 which
will apply toits reporting of FY19 interim results.As a result Spark will no
longer produce a half-year interim report booklet, in the form it has
previously, but will publish a market release, a supplementary results
presentation, interim financial statements and a detailed financial
schedule. Commentary on performance will be covered at a high level in
the market release and in more detail as part of the results presentation
that is already released alongside Spark’s interim financial statements.
1
2
3
4
5

3
FY17 and FY18 restatements
Adoption of NZ IFRS 15
NZ IFRS 15 sets out the requirements for recognising revenue and costs from contracts with customers and
is required to be adopted from FY19 onwards
Impact on previously reported financials
due to adoption of NZ IFRS 15
FY17
$m
FY18
$m
Operating revenues and other gains(50)(69)
Operating expenses2639
EBITDAI(24)(30)
Depreciation and amortisation--
Net investment income--
Finance income1418
Finance expense-
Net earnings before income tax(10)(12)
Tax expense--
Net earnings after income tax(10)(12)
Earnings per share (cents)(0.5)(0.7)
Background
•Replaces NZ IAS 18 revenue and related interpretations and sets out the requirements for
recognising revenue and costs from contracts with customers
•Requires entities to apportion revenue earned from contracts to individual promises, or
performance obligations, on a relative stand-alone selling price basis
•Spark has elected to transition to NZ IFRS 15 using the full retrospective method
Impact on Spark’s externally reported financials
1.For Spark’s ‘interest free’ device offers a portion of associated operating revenue, reflecting
the credit risk of the customer, moves to interest income outside of EBITDAI and is
recognised over the term of the interest free period, rather than in the first month of the
interest free arrangement. As the total value of devices on interest free arrangements
increased during FY17 and FY18 there has been a net deferral of interest income following
adoption of NZ IFRS 15; resulting in a reduction in reported NPAT.
2.Spark’s Spotify and Netflix offers, along with certain cloud, security and service
management revenue, move to being treated as agency arrangements with this resulting in
associated costs for these offers being net off against associated operating revenue. This
results in a net reduction in reported operating revenue, but no change in EBITDAI.
3.The deferral of commission costs is applied retrospectively and due to the timing and
composition of Spark’s prior treatment, this has resulted in a net decrease in earnings for
FY17 and FY18 on adoption of NZ IFRS 15
4.Where Spark provides value added services such as Lightbox as part of a mobile or
broadband plan, revenue must be allocated to each component of that offer. Spark has
calculated the revised allocation of revenue to each these components, however to be
consistent with how the business is managed and performance assessed, has elected to
retain allocated revenue within the same product category in which revenues are currently
reported. For example, revenue attributable to Lightbox as part of a bundled broadband
offer will continue to be reported within broadband revenue.

4
FY17 and FY18 restatements
Adoption of NZ IFRS 15
(1)
Examples are provided for illustrative purposes only and do not reflect Spark’s actual NZ IFRS 15 adjustments
(2)
Mobile ARPU calculated as monthly net mobile service revenue divided by average monthly connections
Tw o e x a m p l e s
(1)
are provided below to illustrate impacts from adoption of the NZ IFRS 15 accounting standard
Shift from operating revenue to interest income for ‘interest free’
device sales; at a rate reflecting the credit risk of the customer
Example: Interest free device sold for $2,000 and repaid ‘interest
free’ over a period of 24 months
Before IFRS 15After IFRS 15
Day 1
Next 24
Months
Total 24
Months
Day 1
Next 24
Months
Total 24
Months
Mobile
device
revenue
$2,000$2,000$1,700$1,700
Mobile cost
of sale
($2,000)($2,000)$2,000$2,000
EBITDAI---($300)-($300)
Interest
Income
$300$300
Net profit
before
income tax
---($300)$300-
Spotify and Netflix offers, along with certain cloud, security and
service management revenue, move to being treated as agency
arrangements
Example: $150 (excl. GST) pay-monthly mobile plan with Spotify
subscription included as a value added service
Before IFRS 15After IFRS 15
Mobile plan revenue$150$100
Spotify ‘revenue’-$25
Spotify cost-($20)
Net mobile service revenue$150$130
Mobile product costs$20-
EBITDAI$130$130
Monthly ARPU
(2)
$150$130
12

5
FY17 and FY18 restatements
Adoption of NZ IFRS 16
NZ IFRS 16 sets out the requirements for recognition of most leases and is being early adopted by Spark
from FY19 onwards
Impact on previously reported financials
due to adoption of NZ IFRS 16
FY17
$m
FY18
$m
Operating revenues and other gains23
Operating expenses7066
EBITDAI7269
Depreciation and amortisation(52)(47)
Net investment income--
Finance income11
Finance expense(33)(31)
Net earnings before income tax(12)(8)
Tax expense--
Net earnings after income tax(12)(8)
Earnings per share (cents)(0.7)(0.4)
as at 30 June 2018
$m
Total assets410
Total liabilities(475)
Net assets(65)
Retained earnings(65)
Background
•Replaces NZ IAS 17 Leasesand removes the distinction between operating and
finance leases. Similar to the current finance lease model, this results in the
recognition of “right of use” assets and related lease liability balances
•As a result, rental payments for leases previously recorded in relation to operating
leases -including corporate property leases, mobile cell site leases and customer
equipment leases -will move from being included in operating expenses, within
EBITDAI, to depreciation and finance expenses outside of EBITDAI
•The impact on net earnings before income tax from an individual lease, over its
term, is unchanged
•However the new standard results in a higher interest expense in early years, and
lower interest expense in the later years of a lease when compared with the current
straight-line expenses profile of operating leases; similar to a table mortgage.
Impact on Spark’s externally reported financials
1.Thefully retrospective application of NZ IFRS 16 restatements results in
thecombined depreciation and interest expense, forany lease in the early years
of its cycle, being higher thanthe operating expenses previously recognised
within Spark’s externally reported financials. WithSpark’s long-term corporate
propertyleases (which account for 80% of total adjustments under NZ IFRS 16)
being in the early years of their lease period, bothnet earnings before tax and
retained earningssubsequentlydecrease following application of NZ IFRS 16.
2.Change in the treatment of leases where Spark acts as the intermediate party (i.e.
back-to-back leases)

6
FY17 and FY18 restatements
Change in disclosure of Spark’s long-term investments
From FY19 onwards the disclosure of Spark’s long-term investments will also change to align with NZ IFRS 15
and to apply appropriate focus on core operational performance
Impact on previously reported financials
due to change in disclosure of Spark’s long-
term investments
FY17
$m
FY18
$m
Operating revenues and other gains(61)(50)
Operating expenses--
Share of associates’ and JV net
losses
43
EBITDAI(57)(47)
Depreciation and amortisation--
Net investment income5747
Finance income--
Finance expense--
Net earnings before income tax--
Tax expense--
Net earnings after income tax--
Earnings per share (cents)--
Background
The disclosure of Spark’s long-term investments has been changed to:
•Better align Spark’s disclosure of operating revenue with “revenue from contracts
with customers” as defined by NZ IFRS 15
•Apply more appropriate focus on the financial performance of the operational
activities of the business, with returns from joint ventures and associates to be now
reported separately
Impact on Spark’s externally reported financials
Will not result in a change in reported net earnings however the following will move
from being reported within EBITDA to now being recognised within a new
‘investment income’ category, reported outside of EBITDAI:
•Dividend income from Southern Cross; and
•Spark’s share of associates’ and joint ventures’ net profits and losses
Existing FY19 guidance has already been issued inclusive of impacts from this
disclosure change

7
FY17 and FY18 restatements
Combined impact
Reported
excludingimpacts from
new disclosures
Adoption of NZ IFRS 15
Revenue from contracts
with customers
Adoption of NZ IFRS 16
Leases
Change in disclosure of
Spark’s long-term
investments
Restated
includingimpacts from new
disclosures
FY17
$m
FY18
$m
FY17
$m
FY18
$m
FY17
$m
FY18
$m
FY17
$m
FY18
$m
FY17
$m
FY18
$m
Operating revenues and other gains3,6143,649(50)(69)23(61)(50)3,5053,533
Operating expenses(2,594)(2,657)26397066--(2,498)(2,552)
Share of associates’ (4)(3)----43--
EBITDAI1,016989(24)(30)7269(57)(47)1,007981
Depreciation and amortisation(430)(434)--(52)(47)--(482)(481)
Net investment income------57475747
Finance income1616141811--3135
Finance expense(42)(46)--(33)(31)--(75)(77)
Net earnings before income tax560525(10)(12)(12)(8)--538505
Tax expense(142)(140)------(142)(140)
Net earnings after income tax418385(10)(12)(12)(8)--396365
EBITDAI Margin (%)28.127.128.727.8
Earnings per share (cents)22.821.0(0.5)(0.7)(0.7)(0.4)--21.619.9
The resulting impact on reported FY17 and FY18 earnings is summarised below and provided in more detail in the
accompanying detailed financial workbook

8
FY19 guidance
(1)
Guidance subject to no adverse change in operating outlook
(2)
Includes purchase of property, plant and equipment and intangible assets, capacity purchases (including Southern Cross) but excludes leased customer equipment assets
(3)
Likely to be made up of an ordinary dividend topped up by a special dividend to maintain a total dividend per share of 25.0c
FY19 guidance has been translated to ensure it can be appropriately compared to restated FY17 and FY18
actualsandinterim and full year FY19 results
Previous
FY19 Guidance
(1)
Including adjustments for:
New approach to disclosure of Spark’s long-term investments
Impact from
adoption of
NZ IFRS 15
Impact from
adoption of NZ
IFRS 16
Translated
FY19 Guidance
(1)
Including adjustments for:
New approach to disclosure of Spark’s long-term investments; and
Adoption of NZ IFRS 15 and NZ IFRS 16 accounting standards
Total Revenues
$3,600m to $3,670m
excludes projected $10-$20m Southern Cross Dividend
($75m)$5m
$3,530m to $3,600m
excludes projected $10-$20m Southern Cross Dividend
EBITDAI
$1,025m to $1,055m
excludes projected $10-$20m Southern Cross dividend and
profits and losses from associates’ and joint ventures’
($30m)$70m
$1,065m to $1,095m
excludes projected $10-$20m Southern Cross dividend and profits and
losses from associates’ and joint ventures’
Capex
(2)
~$410m
--
~$410m
Earnings per share23c to 24c
(0.5c)(0.5c)
22c to 23c
Dividend per share
Total 25.0cps
at least 75% imputed
(3)
--
Total 25.0cps
at least 75% imputed
(3)

9
Other reporting changes
Segment reporting
Spark has also madea number ofother improvementsto the structure and detail of its externally reported
financials
Required changes to reflect Spark’s shift to
Agileand the associated cessation of Spark’s
previous business unit structure
Elective changes to provide greater performance insight and to improve the
consistency of segmental reporting
Primary segment lens will move from business
unit to product
In line with Spark’s current reporting, product
disclosures will be provided to a gross margin
level, with both revenue and associated costs for
each product separately noted
Consistent with current reporting practices a
customer segment split of operating revenues
will be provided for each product
Labour and other operating expenses will be
reported at a consolidated Group level, without
any product or customer segment split
Mobile device
insurance revenue
To ensure consistency with reporting of similar products, mobile device insurance revenue has been moved
from other revenue to mobile service revenue
Cloud, security and
service management
margin
To provide a more informed view of margins generated by cloud, security and service management an
additional margin measure, identified as contribution margin, has been introduced.Contribution margin is
defined as reported gross margin less labour and other costs that are directly attributable to the
implementation and ongoing support of specific customer services.
Procurement and
partners revenue
Procurement and partners revenue updated to consistently capture revenue generated by all customer
segments and subsidiaries. The resulting minor increase in procurement and partners revenue is largely due
to a reclassification of revenues previously reported in cloud, security and service management.
Managed internet
revenue
To provide a clearer view of broadband and managed data performance, revenues associated with managed
internet services have been moved from broadband revenue to managed data revenue
Voice connectionsA breakdown of voice connections by technology type has been introduced; to be more consistent with
current broadband disclosures and to provide greater insight into the profile of migration onto newer digital
technologies
Voice over IP (VoIP)
revenue
To ensure consistency with reporting of similar products, VoIP revenue has been moved from calling revenue
to voice access revenue
Voice value added
services revenue
To ensure consistency with reporting of similar non-bundled products, revenues associated with voice value
added services (such as messaging and other smartphone services) have been moved from calling revenue to
other voice revenue
Product costsAs part of moving to product as the primary segmental lens all “other intercarrier cost of sales” and some
“other operating expenses” are now directly allocated to product costs for each relevant product-set
Depreciation expenseDepreciation expenses are now split into the following categories:
•Depreciation of plant, property and equipment;
•Depreciation of right-of-use assets; and
•Depreciation of leased customer equipment

10
The adoption of new accounting standards andchanges to
the disclosure of Spark’s long-term investmentsdo not
impact reported total cashflow. However they do reduce
the effectiveness of EBITDAI and NPAT as proxies for
cashflow.
Therefore, Spark is introducing a new cashflow measure,
that will supplement existing metrics, to:
1.Better communicate the cashflow generated by Spark;
2.Provide a measure that is not impacted by changes in
accounting standards; and
3.Facilitate a clearer reconciliation of any movement in
net debt to underlying business performance
Spectrum purchases are excluded from this measure -to
ensure that it provides a more stable and consistent
measure of underlying cash generation.
To e n a b l e r e c o n c i l i a t i o n o f t h i s m e a s u r e t o S p a r k ’s c a s h f l o w
statement, a new category will be created within Spark’s
cashflow statement called “payments for purchase of
spectrum”
Other reporting changes
New cashflow measure
Reported
excludingimpacts
from new
disclosures
FY17
$m
FY18
$m
Cash received from customers3,4253,508
Interest receipts1415
Dividend receipts6650
Payments to suppliers and employees(2,609)(2,595)
Income tax payments(143)(167)
Interest payments(36)(37)
Cash from operations717777
minus
Payments for leases(8)(8)
Payments for purchase of property, plant, equipment & intangibles (excl. spectrum)
(1)
(398)(414)
Cash from operations minus payments for leases and capital expenditure
(excl. spectrum)
(2)
311355
The new measure is identified as “cash from operations
minus payments for leases and capital expenditure (excl.
spectrum)” and will be provided as part of ongoing
external financial reporting
(1)
No spectrum purchases were made in either FY17 or FY18
(2)
Overall cash from operations minus payments for leases and capital expenditure (excl. spectrum)is not impacted by new disclosures

11
Disclaimer
This announcement may include forward-looking statements regarding future events and the future financial performance
of Spark New Zealand. Such forward-looking statements are based on the beliefs of and assumptions made by
management along with information currently available at the time such statements were made.
These forward-looking statements may be identified by words such as ‘guidance’, ‘anticipate’, ‘believe’, ‘estimate’,
‘expect’, ‘intend’, ‘will’, ‘plan’, ‘may’, ‘could’, ‘ambition’, ‘aspiration’ and similar expressions. Any statements in this
announcement that are not historical facts are forward-looking statements. These forward-looking statements are not
guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors,
many of which are beyond Spark New Zealand’s control, and which may cause actual results to differ materially from those
projected in the forward-looking statements contained in this announcement.
Factors that could cause actual results or performance to differ materially from those expressed or implied in the forward-
looking statements are discussed herein and also include Spark New Zealand's anticipated growth strategies, Spark New
Zealand's future results of operations and financial condition, economic conditions and the regulatory environment in
New Zealand, competition in the markets in which Spark New Zealand operates, risks related to the sharing arrangements
with Chorus, other factors or trends affecting the telecommunications industry generally and Spark New Zealand’s
financial condition in particular and risks detailed in Spark New Zealand's filings with NZX and ASX. Except as required by
law or the listing rules of the stock exchanges on which Spark New Zealand is listed, Spark New Zealand undertakes no
obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

Spark New Zealand
Group result - reported
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Operating revenues and other gains1,7381,7671,7611,7723,5053,533280.8%
Operating expenses(1,273)(1,225)(1,305)(1,247)(2,498)(2,552)(54)2.2%
EBITDAI4655424565251,007981(26)(2.6%)
Depreciation and amortisation expense(242)(240)(237)(244)(482)(481)1(0.2%)
Net investment income332427205747(10)(17.5%)
Finance income161516193135412.9%
Finance expense(37)(38)(37)(40)(75)(77)(2)2.7%
Net earnings before income tax235303225280538505(33)(6.1%)
Tax expense(65)(77)(63)(77)(142)(140)2(1.4%)
Net earnings for the period170226162203396365(31)(7.8%)
Capital expenditure224191262151415413-2(0.5%)
852261651903113554414.1%
Reported EBITDAI margin26.8%30.7%25.9%29.6%28.7%27.8%(1.0%)(3.4%)
Reported effective tax rate27.7%25.4%28.0%27.5%26.4%27.7%1.3%5.0%
Capital expenditure to operating revenues12.9%10.8%14.9%8.5%11.8%11.7%(0.2%)(1.3%)
Reported earnings per share9.2912.358.8511.0821.6419.93-1.71(7.9%)
Group result - adjusted
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Operating revenues and other gains1,7381,7671,7611,7723,5053,533280.8%
Adjusted operating expenses(1,273)(1,225)(1,292)(1,211)(2,498)(2,503)(5)0.2%
Adjusted EBITDAI4655424695611,0071,030232.3%
Depreciation and amortisation expense(242)(240)(237)(244)(482)(481)1(0.2%)
Net investment income332427205747(10)(17.5%)
Finance income161516193135412.9%
Finance expense(37)(38)(37)(40)(75)(77)(2)2.7%
Adjusted net earnings before income tax235303238316538554163.0%
Adjusted tax expense(65)(77)(67)(87)(142)(154)(12)8.5%
Adjusted net earnings for the period17022617122939640041.0%
Adjusted EBITDAI margin26.8%30.7%26.6%31.7%28.7%29.2%0.4%1.5%
Adjusted effective tax rate27.7%25.4%28.2%27.5%26.4%27.8%1.4%4.9%
Adjusted earnings per share9.2912.359.3412.5021.6421.840.200.9%
Movement
Cash from operations minus payments for leases and
capital expenditure (excl. spectrum)
Spark presents adjusted EBITDAI and adjusted net earnings when the year includes significant items greater than $25 million. FY18
included $49 million of costs of change and adjusted EBITDAI and adjusted net earnings for the year were as follows:
Movement
The tax effect on costs of change in H1 FY18 is $4m and in H2 FY18 is $10m. There were no adjusting items in FY17.

Spark New Zealand
Gross margin by product
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Mobile341363356376704732284.0%
Voice221204189180425369(56)(13.2%)
Broadband146152158157298315175.7%
Cloud, security and service management1291441521632733154215.4%
Procurement and partners222317234540(5)(11.1%)
Managed data and networks62635457125111(14)(11.2%)
Other225125347359(14)(19.2%)
Total Spark Group9431,0009519901,9431,941(2)(0.1%)
Connections
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
000's000's000's000's000's000's000's%
Mobile connections2,3532,3922,4372,4582,3922,458662.8%
Voice connections by type
1
POTS & ISDN629567491400567400(167)(29.5%)
VoIP414447524452818.2%
Voice over LTE-1114141114327.3%
670622552466622466(156)(25.1%)
Broadband connections
Copper497431384346431346(85)(19.7%)
Fibre1381722062381722386638.4%
Wireless4084104116841163238.1%
675687694700687700131.9%
Group FTE's
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18#%
FTE permanent5,6645,5545,3845,2665,5545,266(288)(5.2%)
FTE contractors 279220230241220241219.5%
Total FTE5,9435,7745,6145,5075,7745,507(267)(4.6%)
Dividends
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18$%
Ordinary dividends (cents per share)11.0011.0011.0011.0022.0022.00--%
Special dividends (cents per share)1.501.501.501.503.003.00--%
12.5012.5012.5012.5025.0025.00--%
Movement
1
Voice connections include all voice technology types, including POTS, ISDN, VoIP and wireless voice. Voice connections exclude
connections where Spark also provide a bundled broadband service, but include all wholesale voice connections (including those
where the underlying customer has a bundled broadband service).
Movement
Movement
Movement

Spark New Zealand
Group operating revenues and other gains
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Operating revenues
Mobile
Service revenue379393395400772795233.0%
Other mobile revenue1971982182243954424711.9%
5765916136241,1671,237706.0%
Voice
Access160149136124309260(49)(15.9%)
Calling1121059895217193(24)(11.1%)
Videoconferencing282826295655(1)(1.8%)
Other voice revenue393633327565(10)(13.3%)
339318293280657573(84)(12.8%)
Broadband337336331334673665(8)(1.2%)
Cloud, security and service management1501661791913163705417.1%
Procurement and partners17817318417335135761.7%
Managed data and networks112113104103225207(18)(8.0%)
Other operating revenue46505757961141818.8%
Total operating revenues1,7381,7471,7611,7623,4853,523381.1%
Other gains-20-102010(10)(50.0%)
Total operating revenues and other gains1,7381,7671,7611,7723,5053,533280.8%
Wireless broadband revenues and connections are included in broadband revenues and connections.
Operating revenues and other gains by customer segment
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
Operating revenues and other gains$m$m$m$m$m$m$m%
Consumer7877807867871,5671,57360.4%
Business8358508668661,6851,732472.8%
Wholesale and other135157128142292270(22)(7.5%)
Eliminations(19)(20)(19)(23)(39)(42)(3)7.7%
1,7381,7671,7611,7723,5053,533280.8%
Net investment income
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
Net investment income$m$m$m$m$m$m$m%
Dividend income352628226150(11)(18.0%)
Share of associates' and joint ventures' net losses(2)(2)(1)(2)(4)(3)1(25.0%)
332427205747(10)(17.5%)
Finance income
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
Finance income$m$m$m$m$m$m$m%
Finance lease interest income87771514(1)(6.7%)
Other interest income889121621531.3%
161516193135412.9%
Movement
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Spark New Zealand
Revenue classification changes
Product nameServices providedPrevious categoryNew category
Cellphone insuranceOther operating revenueMobile service revenue
VoIP revenueVoice calling revenueVoice access revenue
Value value added voice
services
Voice calling revenueOther voice revenue
Managed internetBroadband revenueManaged data revenue
Provision of voice services over internet based
connection
Additional services over a voice line such as call
diversion, caller identification and other
smartphone services
Provision of internet services for a managed data
network
Additionally, the split of revenues between cloud, security and service management and procurement and partners has also been
reviewed. The majority of reallocation relates to the treatment of revenue from subsidiaries.
As part of the adoption of the Agile business model, the management of certain product lines have been reallocated from one part of
the business to another. The details of the key changes and the associated impact on revenue reporting are as follows:
Insurance coverage for accidental loss or
damage to purchased Mobile devices

Spark New Zealand
Group operating expenses
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Product costs
Mobile235228257248463505429.1%
Voice118114104100232204(28)(12.1%)
Broadband191184173177375350(25)(6.7%)
Cloud, security and service management2122272843551227.9%
Procurement and partners156150167150306317113.6%
Managed data and networks5050504610096(4)(4.0%)
Other product costs2419323343652251.2%
7957678107821,5621,592301.9%
Labour278272276237550513(37)(6.7%)
Other operating expenses
Network support costs31293131606223.3%
Computer costs40424143828422.4%
Accommodation costs2625322951611019.6%
Advertising, promotions and communication4128513369841521.7%
Bad debts99791816(2)(11.1%)
Impairment expense2-16275NM
Costs of change--1336-4949NM
Other5153434110484(20)(19.2%)
2001862192283864476115.8%
Total operating expenses1,2731,2251,3051,2472,4982,552542.2%
Depreciation and amortisation expense
Depreciation - property, plant and equipment122128129134250263135.2%
Depreciation - right-of-use assets191715163631(5)(13.9%)
Depreciation - leased customer equipment assets88881616--%
Amortisation of intangibles93878586180171(9)(5.0%)
242240237244482481(1)(0.2%)
Finance expense
Finance expense on long-term debt212325284453920.5%
Capitalised interest(2)(3)(4)(4)(5)(8)(3)60.0%
Lease interest expense161615143229(3)(9.4%)
Leased customer equipment interest expense221243(1)(25.0%)
37383740757722.7%
Adjusted operating expenses
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Total operating expenses1,2731,2251,3051,2472,4982,552542.2%
Less: costs of change--(13)(36)-(49)(49)NM
Adjusted operating expenses1,2731,2251,2921,2112,4982,50350.2%
Movement
Movement

Spark New Zealand
Analysis & KPI's - Mobile
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
Mobile revenue by type (Consumer and Business)$m$m$m$m$m$m$m%
Mobile service revenue372385388395757783263.4%
Other mobile revenue
1
1891872082103764184211.2%
5615725966051,1331,201686.0%
Wholesale and other mobile revenue
2
15191719343625.9%
Total mobile revenue5765916136241,1671,237706.0%
Mobile product costs
3
(235)(228)(257)(248)(463)(505)(42)9.1%
Mobile gross margin341363356376704732284.0%
Mobile gross margin %59.2%61.4%58.1%60.3%60.3%59.2%(1.2%)(1.9%)
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
Total mobile revenue by customer segment$m$m$m$m$m$m$m%
Consumer369378397409747806597.9%
Business19219419919638639592.3%
Wholesale and other15191719343625.9%
5765916136241,1671,237706.0%
Average revenue per user (ARPU) - 6 month activeH1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
Consumer and Business$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month%
Total ARPU27.4527.2727.5827.2527.3627.410.050.2%
Pay-monthly ARPU45.0545.0244.2943.3145.0343.79-1.24(2.7%)
Prepaid ARPU11.6511.7512.2012.1311.7012.170.474.0%
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
000's000's000's000's000's000's000's%
Pay-monthly connections1,0851,1081,1581,1891,1081,189817.3%
Prepaid connections1,2311,2481,2451,2361,2481,236-12(1.0%)
Internal connections4444440-%
Total mobile connections2,3202,3602,4072,4292,3602,429692.9%
1
Other mobile revenue includes handset sales and mobile interconnect.
2
Includes MVNO revenue.
3
Includes handset, interconnect and cellphone tower access costs.
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Number of mobile connections at period end - 6
month active - Consumer and Business
Movement

Spark New Zealand
Analysis & KPI's - Voice
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
Voice revenue by type$m$m$m$m$m$m$m%
Access160149136124309260(49)(15.9%)
Calling1121059895217193(24)(11.1%)
Videoconferencing282826295655(1)(1.8%)
Other voice revenue393633327565(10)(13.3%)
Total voice revenue339318293280657573(84)(12.8%)
Voice product costs
1
(118)(114)(104)(100)(232)(204)28(12.1%)
Voice gross margin221204189180425369(56)(13.2%)
Voice gross margin %65.2%64.2%64.5%64.3%64.7%64.4%(0.3%)(0.4%)
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
000's000's000's000's000's000's000's%
POTS and ISDN629567491400567400(167)(29.5%)
VoIP414447524452818.2%
Voice over LTE-1114141114327.3%
Total voice connections670622552466622466(156)(25.1%)
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
000's000's000's000's000's000's000's%
Consumer124124118108124108(16)(12.9%)
Business211198185180198180(18)(9.1%)
Wholesale and other335300249178300178(122)(40.7%)
Total voice connections670622552466622466(156)(25.1%)
1
Includes voice access (baseband), interconnect, international calling and videoconferencing platform costs.
Analysis & KPI's - Broadband
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Total broadband revenue337336331334673665(8)(1.2%)
Broadband product costs
2
(191)(184)(173)(177)(375)(350)25(6.7%)
Broadband gross margin146152158157298315175.7%
Broadband gross margin %43.3%45.2%47.7%47.0%44.3%47.4%3.1%7.0%
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
000's000's000's000's000's000's000's%
Copper497431384346431346(85)(19.7%)
Fibre1381722062381722386638.4%
Wireless4084104116841163238.1%
Total broadband connections675687694700687700131.9%
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
000's000's000's000's000's000's000's%
Consumer58959760160459760471.2%
Business86909295909555.6%
Wholesale and other--11-11NM
Total broadband connections675687694700687700131.9%
2
Includes broadband access (UBA/UCLL/Fibre), modem and e-mail platform support costs.
Broadband connections by technology
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Broadband connections by segment
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Voice connections by type
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Voice connections by customer segmentMovement
Movement

Spark New Zealand
Analysis & KPI's - Cloud, Security and Service management
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Cloud, Security and Service managegement revenue1501661791913163705417.1%
Cloud, Security and Service management product costs(21)(22)(27)(28)(43)(55)(12)27.9%
Cloud, Security and Service management gross margin1291441521632733154215.4%
Cloud, Security and Service management gross margin %86.0%86.7%84.9%85.3%86.4%85.1%(1.3%)(1.5%)
Contribution margin (approximated) %
1
34.0%44.6%36.9%46.6%39.6%41.9%2.3%5.9%
Analysis & KPI's - Procurement and Partners
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Procurement and partners revenue17817318417335135761.7%
Procurement and partners product costs(156)(150)(167)(150)(306)(317)(11)3.6%
Procurement and partners gross margin222317234540(5)(11.1%)
12.4%13.3%9.2%13.3%12.8%11.2%(1.6%)(12.6%)
Analysis & KPI's - Managed data and networks
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Managed data and networks revenue112113104103225207(18)(8.0%)
Managed data and networks product costs
2
(50)(50)(50)(46)(100)(96)4(4.0%)
Managed data and networks gross margin62635457125111(14)(11.2%)
55.4%55.8%51.9%55.3%55.6%53.6%(1.9%)(3.5%)
2
Includes wide area network access, international data and network backhaul costs.
Movement
1
Contribution margin is defined as reported gross margin less labour and other costs that are directly attributable to the
implementation and ongoing support of specific contract services.
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Movement

Spark New Zealand
Group capital expenditure
H1 FY17H2 FY17H1 FY18H2 FY18FY17FY18
$m$m$m$m$m$m$m%
Cloud222019204239(3)(7.1%)
Converged Communications Network (CCN)3121715153217NM
International cable construction and capacity
purchases
142014-3414(20)(58.8%)
IT systems6052644911211310.9%
Mobile network693389261021151312.7%
Plant, network and core sustain and resiliency363138246762(5)(7.5%)
Other202321174338(5)(11.6%)
Total capital expenditure224191262151415413(2)(0.5%)
Movement
Capital expenditure is presented on an accruals basis, and includes purchase of property, plant and equipment and intangible assets,
capacity purchases (including Southern Cross) but excludes leased customer equipment assets.