Spark New Zealand Limited H2 FY22 Results
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
MARKET RELEASE – WEDNESDAY, 24 AUGUST 2022
Spark delivers strong full year performance and announces plans
to increase FY23 dividend and return up to $350 million to
shareholders through on-market buy-back
• Disciplined strategy execution delivering strong full year performance with revenue back in growth,
EBITDAI
1
at the top end of guidance, and NPAT
2
in growth
• Spark outperformed the market in mobile service revenue growth
3
• Total FY22 dividend of 25 cents per share, 100% imputed, and guiding to an FY23 total dividend of 27
cents per share, 100% imputed
• ~$900 million in TowerCo proceeds to be used to maximise shareholder value, invest for growth, and
maintain financial strength and flexibility
Spark New Zealand (Spark) today announced its FY22 results, with revenue, EBITDAI, and NPAT all in
growth.
Spark Chair Justine Smyth said, “In a year marked by ongoing Covid-19 disruption and increasing economic
volatility, Spark has delivered an incredibly strong result, returning to revenue growth and delivering earnings
at the top end of guidance.
“Spark’s transition from its traditional telecommunications heritage to a more diversified and higher growth
digital services provider continues at pace. As we look to FY23 we have confidence in Spark’s ability to grow
free cash flow to ~$460-$500 million to fund our ordinary dividend. As a result, we are guiding to a total FY23
dividend of 27 cents, 100% imputed, funded through earnings and free cash flow growth. This is the first time
the total dividend has increased since 2016 and reflects the confidence we have in Spark’s strategy and future
growth potential.”
As announced in July, Spark has reached agreement to sell a 70% stake in its TowerCo business to the
Ontario Teachers’ Pension Plan (OTPP). Spark expects net cash proceeds
4
of ~$900 million at completion,
which is conditional on Overseas Investment Office approval and anticipated to occur in the first half of FY23.
Justine continued, “Following completion of the TowerCo transaction up to $350 million will be returned to
shareholders, which we intend to deliver through an on-market share buy-back. This will be subject to market
conditions at the time, and we may investigate alternative return options.
“A further $350 million will be invested in future growth
opportunities, such as digital infrastructure, scaling
Spark Health and Spark IoT, and accelerating the commercialisation of emerging technology, such as digital
identity and verifiable data through our subsidiary MATTR.
“The remaining funds will be used to offset debt headroom requirements resulting from the increased lease
liability of our long-term agreement with TowerCo to secure access to existing and new towers.
“With strong market momentum and the ability to accelerate investment in future growth, Spark is well
positioned to continue growing shareholder value in the years to come, as it helps its customers and Aotearoa
to win big in a digital world.”
1
Earnings before finance income and expense, income tax, depreciation, amortisation, and net investment income (EBITDAI) is a non-Generally Accepted
Accounting Practice performance measure that is defined and reconciled to net earnings in Spark New Zealand’s Financial Statements
2
Adjusted for the impact of cloud accounting standards change
3
Market share estimates sourced from IDC
4
After transaction costs
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
FY22 operating highlights
Revenue
5
increased 3.5% to $3,720 million, driven by an outperformance in mobile and wins in Spark Health.
Mobile service revenue grew 5.5%, with Spark outperforming the market
3
as data-driven marketing supported
a ~13% increase in customers on Endless plans, and pay-monthly, pre-paid, and business connections grew
steadily.
Following a redesign of its broadband plans Spark stabilised its base at 704,000, in line with its strategy to
maintain market leadership. While this drove a 4.6% revenue decline to $639 million, continued wireless
broadband connection growth of 16,000 helped to offset this impact through avoided input costs.
Cloud, security, and service management revenues grew modestly at 0.7% to $446 million, impacted by Covid
lockdowns, transformation project delays, supply chain disruption, and some execution challenges.
Spark’s future markets of Spark IoT and Spark Health made a material contribution to overall revenue growth.
Spark IoT revenue increased 22% as connections climbed 75% to 832,000, while Spark Health revenue
increased 46%, supported by new national contract wins.
Top line momentum and cost discipline drove a 2.8% increase in EBITDAI to $1,150 million, at the top end of
the guidance range. NPAT increased 7.6% to $410 million, driven by EBITDAI growth, with net financing,
depreciation and amortisation, and tax stable.
Free cash flow was lower than aspiration at $296 million, impacted by advanced purchasing of inventory and
capital expenditure items to mitigate supply chain disruption risks and the related impact on working capital.
Spark remains confident in achieving its FY23 free cash flow aspiration of ~$460-$500 million.
Commenting on the results Spark CEO Jolie Hodson said, “We have returned to revenue growth with a
market-leading result in mobile and our growth markets of IoT and digital health accelerating. We stabilised
our broadband base and are on track to deliver our FY23 target of ~30% of our customers on wireless,
reaching ~28% by the end of the financial year.
“With one year to run in our three-year strategy, we are on track to deliver our FY23 ambitions. We are a
simpler and more digital organisation, with 102 legacy mobile and broadband plans retired and digital
journeys
6
increasing by 23%. Our data and AI-driven marketing capability continues to mature, and we can
now better predict the needs of ~90% of Spark customer households, increasing conversion by 19%.
“As we deliver these simpler, more digital, and data-driven customer experiences, we are improving
engagement – with our customer interaction net promoter score (iNPS) up 9 points from FY21.
“We are on track to deliver the substantial investments we are making in the digital infrastructure that
underpins Aotearoa’s digital economy and our growth. At the end of FY22 5G was live in 21 locations across
the country and our Takanini data centre expansion is over 85% contracted and on track for completion in
2023.
“These results wouldn’t have been possible without the hard work of our Spark whānau, and the investments
we are making in building a high-performance, inclusive culture. We maintained high levels of engagement
despite Covid-19 disruptions, with our employee net promoter score (eNPS) at +70, and we were pleased to
see female representation increase from 42% to 47% in our senior leadership roles. We also made significant
progress closing our median gender pay gap, which reduced from 28% to 24%.
“We have continued to mature our sustainability practices, establishing an emissions reduction and energy
efficiency programme to drive action against our science-based target, and growing our not-for-profit
broadband service Skinny Jump by ~33% during the year – supporting 23,323 households that would
otherwise be excluded from the digital world.”
5
Operating revenues and other gains
6
For sales and service
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
FY23 guidance and outlook
Spark provided the following guidance for FY23, subject to no adverse change in operating outlook:
• EBITDAI: $1,185-$1,225 million (excluding any gain on sale for the TowerCo transaction)
• Capital expenditure (excluding spectrum): ~$410 million
• Total dividend per share: 27.0 cents per share, 100% imputed
Jolie finished, “It’s been a big year, and we were really happy to close it out with Spark ranking #2 against
international peers for total shareholder returns, with a compound annual growth rate of ~12% for three
years
7
.
“We are now in the final year of our three-year strategy, and firmly focussed on delivering what we said we
would for our shareholders. We are well placed to adapt to an inflationary environment, with resilient products
and services positioned well in the market. With the ability to invest in growth, and the investments we are
making in our capabilities today, we are excited about the potential tomorrow will bring, for Aotearoa, our
customers, and for Spark.”
Authorised by:
Alastair White
GM Capital Markets
For more information contact
For media queries please contact:
Ellie Cross
Corporate Relations Lead Partner
(64) 22 630 0665
ellie.cross@spark.co.nz
For investor queries please contact:
Chante Mueller
Head of Investor Relations
(64) 27 469 3062
chante.mueller@spark.co.nz
About Spark
As New Zealand's largest telecommunications and digital services company, Spark’s purpose is to help all of
New Zealand win big in a digital world. Spark provides mobile, broadband, and digital services to millions of
New Zealanders and thousands of New Zealand businesses.
www.sparknz.co.nz
7
1 July 2019 to 30 June 2022, see investor presentation appendix for detail on the peer group
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Results for announcement to the market
Name of issuer Spark New Zealand Limited
Reporting Period 12 months to 30 June 2022
Previous Reporting Period 12 months to 30 June 2021
Currency NZD – New Zealand Dollar
Amount (000s) Percentage change
Revenue from continuing
operations
$3,720,000 3.5%
Total Revenue $3,720,000 3.5%
Net profit/(loss) from
continuing operations
$410,000 7.6%
Total net profit/(loss) $410,000 7.6%
Final Dividend
Amount per Quoted Equity
Security
NZD$0.12500000 (comprised only of an ordinary dividend)
Imputed amount per Quoted
Equity Security
NZD$0.04861111
Record Date 16 September 2022
Dividend Payment Date 7 October 2022
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
As at 30 June 2022
NZD$0.34
As at 30 June 2021
NZD$0.34
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Movements from the prior period are compared to restated
amounts for H2 FY21 following Spark’s change in accounting
policy in relation to configuration and customisation costs
incurred in implementing Software as a Service (SaaS) cloud
computing arrangements. This was in response to the
International Financial Reporting Standards Interpretations
Committee (IFRIC) agenda decision, issued in April 2021.
The change in Spark’s earnings before finance income and
expense, income tax, depreciation, amortisation and net
investment income (EBITDAI) is provided in the addendum.
Authority for this announcement
Name of person
authorised
to make this announcement
Stefan Knight, Finance Director (CFO)
Contact person for this
announcement
Chante Mueller, Head of Investor Relations
Contact phone number +64 (0) 27 469 3062
Contact email address investor-info@spark.co.nz
Date of release through MAP
24 August 2022
Audited financial statements accompany this announcement.
Addendum:
Amount (000s) Percentage
change
Reported earnings before finance income and
expense, income tax, depreciation, amortisation
and net investment income (Reported EBITDAI)
NZD$1,150,000 2.8%
---
Distribution Notice
Section 1: Issuer information
Name of issuer Spark New Zealand Limited
Financial product name/description Ordinary Shares
NZX ticker code SPK
ISIN (If unknown, check on NZX
website)
NZ TELE001S4
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies No
Record date 16 September 2022
Ex-Date (one business day before the
Record Date)
15 September 2022
Payment date (and allotment date for
DRP)
7 October 2022 AUST & NZ;
21 October 2022 USA
Total monies associated with the
distribution
NZD $233,948,434
(1,871,587,475 shares @ $0.125 per share)
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD – New Zealand Dollar
Section 2: Distribution amounts per financial product
Gross distribution NZD$0.17361111
Gross taxable amount NZD$0.17361111
Total cash distribution NZD$0.12500000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount NZD$0.02205882
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed
Fully imputed
Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
28%
Imputation tax credits per financial
product
NZD$0.04861111
Resident Withholding Tax per
financial product
NZD$0.00868056
Section 4: Distribution re-investment plan
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
N/A N/A
Date strike price to be announced (if
not available at this time)
N/A
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
N/A
DRP strike price per financial product
N/A
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
N/A
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Stefan Knight, Finance Director (CFO)
Contact person for this
announcement
Chante Mueller, Head of Investor Relations
Contact phone number +64 (0) 27 469 3062
Contact email address investor-info@spark.co.nz
Date of release through MAP
24 August 2022
---
Spark Annual Report 2022
WHAKAMAUA
KO TE PAE ANAMATA
Hello Tomorrow
1
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
We’re on track to a re-imagined future that all
New Zealanders can share.
The challenges of the pandemic, and our urgent
need to transition to a low-carbon economy, have
brought into sharp focus the role technology must
play in enabling this change.
We’re continuing to simplify ourselves, and hone our
understanding of New Zealanders through data, to
serve Kiwis better. And we’re building the critical
infrastructure and introducing new technologies that
will enable and embolden New Zealanders to go
after what inspires them, in life and in business.
As Aotearoa rapidly digitises, we are acutely aware of
the responsibility we hold to help all New Zealanders
thrive in a digital world – no matter who they are or
where they’re from.
We are here to help New Zealanders build the
tomorrow they want.
Ko Te Pae Anamata, Whakamaua. Hello tomorrow.
Re-imagining
a future that all
New Zealanders
can share.
Spark ranked #2 against
international peers for
Total Shareholder Returns
(TSR), with a CAGR
1
of
~12% for three years
2
Up to $350 million will be
returned to shareholders
through an on-market share
buy-back
3
, and a further
$350 million invested in
future growth opportunities
Total FY22 dividend of
25.0 cents per share,
100% imputed, and
guiding to a total FY23
dividend of 27.0 cents per
share, 100% imputed –
funded through earnings
and free cash flow growth
#2 for total
shareholder
returns
Tower Co
transaction
to deliver net
proceeds of
~$900 million
4
Guiding
to FY23
dividend
growth
Highlights FY22
Creating significant shareholder value
1 CAGR – compound annual growth rate.
2 For the three year period 1 July 2019 to 30 June 2022. Peer group is not exhaustive but is a selected group of primarily
integrated telco operators that are deemed the closest peers to Spark in terms of market exposure.
3 Subject to market conditions at the time. Spark may investigate alternative return options.
4 Completion is conditional on Overseas Investment Office approval, which is anticipated to occur in H1 FY23.
2
Highlights FY22
For running header don't delete
Hello Tomorrow
Mobile service revenue
grew 5.5%, with Spark
outperforming the market
– supported by data-driven
marketing and brand strength
Strategic focus on
simplification, deep customer
insights, a smart, automated
network, and a high-
performance culture delivering
improved customer outcomes
– with iNPS
1
up 9 points to +29
Spark IoT revenues increased
22% as connections grew 75%
to 832,000 and Spark Health
grew revenues 46%
Mobile growth
outperforming
the market
Better
customer
experiences
Future market
growth
accelerating
Strategy execution driving market momentum
1 Customer interaction net promoter score.
3
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Contents
Ko Te Pae Anamata, Whakamaua –
Hello Tomorrow
About this report
5
How we create value
8
Spark’s operations
10
Spark performance snapshot FY22
11
Chair and CEO review
12
Our performance
16
Creating value for our customers
20
Creating value through our network and technology
30
Creating value for our people
40
Creating value for our environment
50
Creating value for our communities
56
Our Board
62
Our Leadership Squad
66
Our governance and risk management
68
Our suppliers
73
Leadership and Board remuneration
75
Financial statements
Financial statements
78
Notes to the financial statements
83
Independent auditor's report
124
Other information
Corporate governance disclosures
129
Spark’s managing risk framework roles and responsibilities
138
Sustainability appendix
Our Sustainability Framework
140
Our Sustainability Governance Framework
141
Materiality
142
Stakeholder engagement
144
Global Reporting Initiative (GRI) content index
145
Glossary
147
Contact details
148
4
Contents
Hello Tomorrow
About this report
• This is an integrated report to share our financial, social,
environmental and economic performance. To inform our
approach we’ve applied the International <IR> Framework
which considers the creation of value over the short, medium,
and long term, thinking holistically about the resources and
relationships the organisation uses or affects, and the
dependencies and trade-offs between them as value is created.
• At the heart of this approach is the <IR> value creation model
(laid out on page 8), which details the ‘capitals’ we draw upon,
our strategy and business model, and the outputs and
outcomes we deliver. We have a section of the report dedicated
to each of these capitals. Our detailed financial report is
covered in pages 78 – 123.
• In preparing the report we also use the Global Reporting
Initiative (GRI) standards, the most widely used global
sustainability reporting standard. This requires us to apply a
materiality lens to identify and report against the sustainability
issues most important to our business and our stakeholders.
We have a dedicated sustainability appendix at the back of the
report that includes our materiality matrix and our GRI index
that directs to where we have covered specific sustainability
topics in the report and elsewhere. See pages 139 – 146.
• This Annual Report is published alongside our FY22
Corporate Governance Statement, our FY22 Modern Slavery
Statement, and our FY22 Greenhouse Gas Inventory Report.
For the full suite of FY22 disclosures please visit
www.sparknz.co.nz/about/governance
Justine Smyth, CNZM
Chair
Charles Sitch
Chair Audit and Risk
Management Committee
Key dates
Annual Meeting 04 November 2022
FY23 half-year results announcement 22 February 2023
FY23 year-end results announcement 18 August 2023
This report covers the activities of Spark New Zealand Limited and
its subsidiaries for the period 1 July 2021 to 30 June 2022. It is
dated 24 August 2022 and is signed on behalf of the Board of
Spark New Zealand Limited by Justine Smyth, Chair and Charles
Sitch, Chair Audit and Risk Management Committee.
Spark Annual Report 2022
WHAKAMAUA
KO TE PAE ANAMATA
Hello Tomorrow
STATEMENT
MODERN SLAVERY
Spark Modern Slavery
Statement 2022
INVENTORY
GREENHOUSE GAS
Spark Greenhouse Gas
Inventory Report 2022
GOVERNANCE
CORPORATE
Spark Annual Corporate
Governance Statement 2022
5
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Te Korowai Tupu
Our Māori strategy, Te Korowai Tupu
(the cloak of growth), is about finding
the shared space between te ao Māori
and the corporate world. In this spirit
of partnership, threads of Te Korowai
Tupu have been woven throughout
this report and highlighted using the
Kora Aotearoa logo.
Relates to
Te Korowai Tupu
6
Te Korowai Tupu
For running header don't delete
Hello Tomorrow
Ko Te Pae Anamata, Whakamaua
Grasp the future horizon
On the front page of this report you will see the
words, Hello Tomorrow, and the accompanying
Te Reo Māori kupu, Ko Te Pae Anamata,
Whakamaua. Translated back into English, this
means Grasp the future horizon.
When considering Hello Tomorrow from a te ao
Māori perspective, we started at whakapapa (lineage)
– knowing who we are and where we come from.
Our whakapapa allows us to see the past as
mātauranga (wisdom) we have inherited as
mokopuna (descendants) ourselves. With this
understanding, the decisions we make in the present
benefit from the ancestral knowledge of our past.
Embraced by Te Korowai Tupu, we aspire for
Spark to create a meaningful impact on Te Ao
Kikokiko (the ever-changing world around us) so
that future generations can continue to grow and
thrive in a digital world.
We know that pursuing future horizons was
the motivation of our Tīpuna (ancestors) when
they discovered Aotearoa. Grounded in this
intergenerational aspiration, we welcome the
opportunities of what is yet to be known, yet
to be done, and yet to be learned.
Ko te pae anamata, Whakamaua – grasp the
future horizon.
7
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
A culture that
develops and
empowers
our people
Investment in
resilient,
adaptable
infrastructure for
New Zealand’s
future
Innovation to
create value for
Spark and our
customers
Providing leading
products and
services that
connect
and enable
New Zealanders
Create a
Sustainable Spark
Economic
Recovery and
Transformation
Champion Digital
Equity
Te Korowai
Tupu
Including the elements of our Sustainability Framework
and Te Korowai Tupu – see page 140
How we create value
WHAT WE RELY ON
Our customers
Social capital
Consumers and organisations
that are enabled by our
products and services
Financial capital
Financial capital
Equity, debt and cash generated
through our operations
Our network
and technology
Manufactured + intellectual capital
Our mobile sites, data networks,
systems, processes and digital
services capability
Our people
Human + intellectual capital
Engaged, adaptive and
inclusive teams that are the
heart of our business
Our environment
Natural capital
Energy, materials and impacts
of our operations
Our communities
Social + human capital
Our communities around
New Zealand and the communities
across our global supply chain
OUR BUSINESS MODEL
G
O
V
E
R
N
A
N
C
E
B
U
S
I
N
E
S
S
S
T
R
A
T
E
G
Y
W
h
a
k
a
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a
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a
,
W
e
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m
p
o
w
e
r
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a
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a
t
o
,
W
e
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u
c
c
e
e
d
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o
g
e
t
h
e
r
T
ū
h
o
n
o
,
W
e
C
o
n
n
e
c
t
M
ā
i
a
,
W
e
a
r
e
B
o
l
d
TO HELP
WIN BIG
OUR PURPOSE
IN A DIGITAL WORLD
O
U
R
V
A
L
U
E
S
8
How we create value
For running header don't delete
Hello Tomorrow
OUTPUTS FY22OUTCOMES FY22
• 200% increase in mobile network
capacity over past three years
• 12 additional 5G locations with 5G now
live in 21 locations across New Zealand
• Investment in mobile core and Optical
Transport Network 2.0 to build adaptability,
resilience and capacity
Connected and resilient
New Zealand
Enabling a connected NZ and providing infrastructure
to support innovation
See page 30
• 2.5 million mobile connections
• 704,000 broadband connections
• Consumer and small business
interaction score (iNPS) +29
• Growth of technology solutions to
solve real-world business problems
Connected customers
Enabling our customers to realise the benefits of digital
technology and enabling their own value creation
See page 20
• $3,720 million operating revenues
and other gains
• $410 million net earnings
• 25 cents per share dividend
Capital for future investment
Enabling future investment in our business and providing
market returns to grow financial capital for our shareholders
See page 16
• Employee Net Promoter Score (eNPS) +70
• 40:40:20 gender representation at
Board, Leadership Squad, and senior
leadership levels
• ~50% of employees sharing ethnicity data
• Mahi Tahi employee wellbeing
strategy launched
• Investment in learning and development
Engaged and inclusive teams
Enabling the success of our business and our people
and growing New Zealand’s human capital
See page 40
• 18,299 tCO
2
e scope 1 and 2 emissions
• 545 tonnes of e-waste recovered
• 20,609 mobile phones collected
for recycling
• Efficiencies enabled across other sectors
Reduced draw on natural capital
Enabling efficient use of natural capital across
all sectors
See page 50
• Skinny Jump benefitting
23,323 households
• 586 connections to the Digital
Marae Connectivity Programme
• Improved approach to supplier risk
through Modern Slavery Framework
• Community investment through
Spark Foundation
Connected and empowered
communities
Enabling all New Zealanders to benefit from the
digital world and improving social outcomes across
our value chain
See page 56
9
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Spark’s operations
Fibre Transport Network
Data Centres
Earth Station Satellite Link
Corporate Offices
Tasman Global Access Cable
Connections to Australia
Connection to Australia
Connection to USA
Connection to USA
Southern Cross Cable
Southern Cross Next Cable
We operate the following brands and businesses
CommunityConsumerBusinessOther brandsGrowth markets
98%
of New Zealanders
reached by our
4G network
99%
of the population
reached by our
Cat-M1 IoT network
~
1,500
mobile sites supporting
more than 2.5 million
mobile connections
24
regional business hubs
5 ,14 4
1
New Zealand
employees
16
data centres
704k
Broadband connections
67
retail stores
1 Total headcount including full-time, part-time and fixed-term employees.
Spark is New Zealand’s largest telecommunications and
digital services company. Our customers range from consumers
and households to small businesses, not-for-profits, government,
and large enterprise clients. Across all our services – mobile,
broadband, cloud services, digital services, and entertainment
– we have relevance for almost every New Zealander.
10
Spark’s operations
For running header don't delete
Hello Tomorrow
Spark performance snapshot FY22
1 Earnings before finance income and expense, income tax,
depreciation, amortisation and net investment income
(EBITDAI) and capital expenditure are non-Generally
Accepted Accounting Practice (non-GAAP) measures.
These measures are defined and reconciled in note 2.5 of
the financial statements.
2 Prior year EBITDAI and net earnings have been restated
due to implementation of the IFRS Interpretations
Committee (IFRIC) agenda decision. This required
configuration and customisation costs incurred in
implementing Software-as-a-Service (SaaS) cloud
computing arrangements to be expensed rather than
capitalised as part of intangible assets.
3 Free cash flows is a non-GAAP measure and is calculated
on page 9 of Spark's FY22 Detailed Financials.
4 Interaction Net Promoter Score, a measure of customer
engagement.
5 FY21 iNPS has been restated to +20 as detailed on
page 76.
6 Net Promoter Score, a measure of employee
engagement.
Operating revenues and other gains
$3,720m 3.5%
EBITDAI
1
$1,150m 2.8%
2
Net earnings
$410m 7. 6%
2
Broadband revenue
$639m 4.6%
Voice revenue
$285m 7. 5 %
Consumer and small business iNPS
4
+29 9 points
5
Employee NPS
6
+70 6 points
Mobile revenue
$1,351m 3 .1%
Cloud security and service management revenue
$446m 0.7%
Capital expenditure
1
$410m +17. 5 %
2
Free cash flows
3
$296m 31.6%
11
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Justine Smyth, Chair
and Jolie Hodson, CEO
Ko Te Pae
Anamata,
Whakamaua
Tēnā koutou
12
Chair & CEO review
Hello Tomorrow
Chair & CEO review
Over the past year Spark has made
significant progress against our three-year
strategy, we achieved market-leading
growth in mobile, and we were pleased
to be ranked #2 against our international
peers for total shareholder returns, with
a compound annual growth rate of ~12%
for three years.
We have achieved this in a year of ongoing
disruption. The first half saw prolonged
Covid-19 lockdowns across the country,
with Auckland in particular spending 107
days locked down. In the second half we
have seen economic volatility stemming
from the ongoing impacts of Covid-19
and the war in Ukraine, including high
inflation, labour shortages, and supply
chain constraints.
For Spark the most material impact
continued to be our lower levels of mobile
roaming revenue, as travel remained
restricted for much of the year. As border
restrictions ease and travel recommences,
we are optimistic that we will see roaming
revenue return.
Like all businesses we are operating in an
incredibly tight labour market, and skills
shortages in the technology sector are an
ongoing challenge. We continue to work
collaboratively across the sector to build a
talent pipeline over the longer term, while
increasing our focus on internal talent
mobility in the short term. We also continue
to tightly manage our supply chain, holding
more stock on shore and working to longer
lead times to mitigate the impact of delays.
The rising cost of living has brought the
issue of digital equity back into the
spotlight and made the inclusivity of our
purpose, to help all of New Zealand win big
in a digital world, all the more relevant.
We continue to invest in community-led
solutions to bridge the digital divide
through Spark Foundation, and in the last
year, we have grown our not-for-profit
broadband service, Skinny Jump, by
~33% – supporting 23,323 households
that would otherwise be excluded from
the digital world.
While disruption remains the norm, we are
optimistic about Aotearoa’s future, and well
positioned for growth.
We have seen a rapid acceleration in
digitisation and technology convergence,
with 5G, multi-access edge compute
(MAEC)
1
, data and artificial intelligence
(AI), internet of things (IoT), and cloud
computing combining to deliver powerful
solutions. Our significant investments in the
digital infrastructure underpinning these
technologies will allow us to lead the
development of new commercialisation
opportunities in the years ahead.
Maximising value for
our shareholders
In these uncertain times, we know our
shareholders are looking for consistent
returns and to ensure that capital is
deployed and used effectively.
Following the infrastructure review we
conducted during the last financial year,
we established TowerCo as a subsidiary
company to improve the performance,
utilisation, and efficiency of our passive
mobile infrastructure assets (such as the
towers and poles that the active
components or ‘smarts’ of our network sit
on), and to explore the introduction of
third-party capital.
This culminated in the agreement to sell
a 70% stake in TowerCo to the Ontario
Teachers’ Pension Plan (OTPP) just after
the close of FY22. OTPP is a high-calibre
investor with a long-term partnering focus,
net assets of C$241.6 billion, and
significant experience managing a portfolio
of infrastructure investments globally.
The transaction is conditional only on
Overseas Investment Office approval,
which is anticipated to occur during the first
half of FY23. It will deliver net proceeds of
~$900 million and values the business at
$1.175 billion, representing an FY23
pro-forma EBITDA multiple of 33.8x
2
.
As the anchor tenant, and by retaining a
30% stake, Spark remains a key strategic
partner as the business grows.
The Board reviewed Spark’s Capital
Management Policy and released a
new Capital Management Framework,
which is designed to grow long term
shareholder value through disciplined
investment, while returning excess capital
to shareholders and maintaining financial
strength and flexibility.
As we look to FY23, we have confidence
in our ability to grow free cash flow to
~$460 to $500 million, to fund our ordinary
dividend. This growth reflects the changes
we have made to evolve from a traditional
telecommunications business to a more
diversified and higher growth digital
services provider.
As a result, we are guiding to a total
FY23 dividend of 27 cents, 100% imputed,
funded through earnings and free cash
flow growth. This is the first time the total
dividend has increased since 2016 and
reflects the confidence we have in Spark’s
strategy and future growth potential.
In addition, following completion of the
TowerCo transaction, up to $350 million
will be returned to our shareholders, which
we intend to deliver through an on-market
share buy-back. This is subject to market
conditions at the time and we may
investigate alternative return options.
A further $350 million will be invested in
future growth opportunities such as digital
infrastructure, scaling Spark Health and
Spark IoT, and accelerating the
commercialisation of emerging technology,
such as digital identity and verifiable data
through our subsidiary MATTR.
The remaining funds will be used to offset
debt headroom requirements resulting
from the increased lease liability of our long
term agreement with TowerCo to secure
access to existing and new towers.
“ While disruption
remains the norm,
we are optimistic
about Aotearoa’s
future, and well
positioned for growth.”
1 MAEC – Multi-access Edge Computing (MAEC) extends the capabilities of cloud computing by bringing it to the edge of the network. While traditional cloud computing
occurs on remote servers that are situated far from the customer and a device, MAEC allows this processing to take place much closer to the end customer – meaning
data has to travel a shorter distance, decreasing latency and the amount of data sent across the network can be reduced, reducing congestion and delivering a better
customer experience.
2 Assumes FY23 EBITDA of NZ$34.8 million as at 30 June 2023.
13
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Our FY22 performance
We were pleased FY22 delivered a return
to growth, with revenue increasing 3.5%
to $3,720 million, driven by our out
performance in mobile and Spark Health
contract wins.
We achieved mobile service revenue
growth of 5.5%, with Spark outperforming
the market as data-driven marketing
supported a ~13% increase in customers
on Endless plans, and pay-monthly,
pre-paid, and business connections
grew steadily.
We redesigned our broadband plans to
improve transparency, simplicity, and our
competitiveness, stabilising our customer
base at 704,000, in line with our strategy
to maintain market leadership. While this
drove a 4.6% revenue decline to $639
million, continued wireless broadband
connection growth of 16,000, helped offset
this impact through avoided input costs.
We now have ~28% of our broadband
base on wireless and are on track to meet
our FY23 target of ~30%.
Our cloud, security, and service
management revenue grew modestly at
0.7% to $446 million, falling short of our
5-8% target. Our performance was
impacted by the extended lockdowns in
the first half, which restricted access to
customer sites, delays to transformation
projects, and supply chain disruption.
We also experienced execution
challenges in some areas of the business,
and we are now focussed on lifting
performance through refreshed products
and pricing and further growing our
cloud specialist skills.
We continued to see strong momentum in
our future growth markets. Spark Health
delivered revenue growth of 46%, winning
national health contracts, and launching its
new cloud-based digital health platform,
Kete Waiora. Spark IoT grew revenue 22%
and connections 75% to 832,000 and took
a significant stake in partner Adroit, to
accelerate future growth in sustainable
monitoring solutions.
Combining our top-line growth with our
long-term focus on disciplined cost
reduction, we delivered EBITDAI growth
of 2.8% to $1,150 million, towards the top
end of our guidance range.
NPAT increased by 7.6% to $410 million,
driven by EBITDAI growth, with net
financing, depreciation and amortisation,
and tax stable.
Free cash flows were lower than aspiration
at $296 million, impacted by advanced
purchasing of inventory and capital
expenditure items to mitigate supply chain
disruption risks and the related impact on
working capital. We remain confident in
achieving our FY23 free cash flow
aspiration of ~$460-$500m.
We were pleased to confirm a total
FY22 dividend of 25 cents per share,
100% imputed, for our shareholders,
completing a strong result, with all
guidance metrics achieved.
Clear progress against
our strategy
We continued to build the core
capabilities that are differentiating Spark
in a competitive market.
We are a simpler organisation with more
intuitive, digital channels for our customers.
We retired 102 legacy mobile and
broadband plans during the year, while
increasing digital journeys for sales and
service by 23% – delivering a 17.5%
reduction in customer care calls, and 18%
growth in online revenue. We successfully
completed the implementation of a new
enterprise resource planning system,
which will improve the efficiency of our
internal operations, supporting better
customer outcomes.
We continued to hone our data capability
to better understand our customers’ needs.
Our data and AI-driven marketing
capability continues to mature, and we can
now better predict the needs of ~90% of
Spark customer households and make
recommendations for more than half of our
small-medium business customers –
increasing marketing campaign conversion
by 19% year on year.
As we deliver simple, digital, and data-
driven customer experiences, we are
improving customer engagement – with
our interaction net promoter score (iNPS)
up 9 points from FY21 to +29.
We are building a smart, automated
network at pace, to underpin Aotearoa’s
digital economy and our future growth.
The Covid-19 lockdowns that occurred in
the first half delayed our build program,
with Alert Level restrictions preventing us
from undertaking builds for several
months. Despite this challenge we have
made strong progress towards our goal of
90% population coverage by the end of
calendar year 2023 – expanding or
launching new coverage in 12 locations
during the year. At the end of FY22 we had
5G live in 21 locations across the country.
We were pleased to see the New Zealand
Government and iwi come to an
agreement on spectrum allocation, which
recognises Māori interests. We believe this
should pave the way for the C-band
spectrum auction to proceed in a timely
fashion. Any further delays to this process,
or to the provision of 600 MHz spectrum,
will impact our roll-out and ability to meet
our coverage targets.
As our economy digitises at pace, we are
boosting capacity and resilience. Our
Takanini Data Centre expansion is on track
for delivery in 2023 and over 85%
contracted, while our Mayoral Drive
Exchange upgrade is complete. The build
of our Optical Transport Network 2.0
1
– the
fibre backbone of our network – is also 87%
complete, and we were pleased to
welcome customers onto the new
Southern Cross NEXT cable, which has
almost doubled international capacity for
New Zealand.
Investing in our people and culture is
always a priority, and we were pleased
to maintain high levels of people
engagement despite Covid-19
disruptions, with our employee net
promoter score (eNPS) at +70.
1 The Optical Transport Network (OTN) is the high speed backbone of Spark’s network, stretching from the Far North to the bottom of the South Island. The OTN uses light
signals through optical fibre cables to carry all of Spark's data traffic up and down the country through diverse paths, ensuring resilient, fast connectivity for all users.
14
Chair & CEO review
For running header don't delete
Hello Tomorrow
We delivered comprehensive and
widely-available learning experiences for
our people and launched a new wellbeing
strategy, Mahi Tahi, to support mind health,
connection and sustained performance.
Our FY23 40:40:20 gender diversity target
has been achieved at the Board,
Leadership Squad, and senior leadership
levels, and we were pleased to see female
representation increase from 42% to 47%
in our senior leadership roles. We also
made significant progress closing our
median gender pay gap, which has
reduced from 28% to 24%.
We still have some work ahead of us to
achieve our 40:40:20 target Spark-wide,
with women comprising 34% of our total
workforce. Covid-19 made it more
challenging to create opportunities for
change over a number of years, and as
such, while our ambition does not change,
we believe we are more likely to reach our
representation target in 2024, and our
median gender pay gap target in 2025.
To drive further progress we have created
integrated workforce plans that lift gender
participation team-by-team across the
business and expect to see further
movement during FY23.
We also improved our understanding of
Spark’s ethnic diversity, which is a key
enabler of targeted action to improve
representation. At the start of FY22 only
19% of Spark people had shared their
ethnicities with us, and by the conclusion
this had increased to ~50%.
Supporting our transition
to a low carbon economy
As we look to the future, we know the
window to take meaningful action to
prevent the worst impacts of climate
change is closing fast and every business
must act.
We have continued to mature our
sustainability practices, establishing an
emissions reduction and energy efficiency
programme to drive action against our
science-based target of reducing scope
1 and 2 emissions 56% by 2030, from an
FY20 baseline. Over the past year we saw
a 15% emissions reduction, through a
combination of grid decarbonisation and
energy efficiency improvements within
Spark. We are pleased our underlying
performance is laying the foundations for
future emissions reductions and we are
heading in the right direction, however we
acknowledge our FY22 emissions are still
higher than our FY20 baseline. To meet
our science-based target we are
exploring how we can decouple our
growth from emissions by linking
our energy procurement to new sources
of renewable electricity.
We have linked our financing to our
sustainability performance – with Spark
Finance establishing three Sustainability-
Linked Loans totalling NZ$425 million and
New Zealand’s first Sustainability-Linked
Bond of NZ$100 million.
We signed up to the Climate Leaders
Coalition's (CLC) higher statement of
ambition – covering mitigation, adaptation,
and transition – and Jolie stepped into the
role of CLC Convenor, to work alongside
CLC signatories and collectively raise the
bar on what business leadership on climate
action looks like.
We believe technology has an important
role to play on this journey, enabling
businesses across a range of sectors to
decarbonise and improve environmental
performance. We are already seeing this
come to life in some parts of our business,
with over half of our Spark IoT FY22
revenue linked to environmental
solutions – from more efficient use of water
on farm to enabling the deployment of
electric car charging stations to more areas
across the country.
As we harness the power of technology
to digitise and adapt, we are acutely
aware of the urgent need to address our
digital divide. With 1 in 5 New Zealanders
digitally excluded in some way, our
long-term focus on lifting digital equity
remains a strategic priority.
Hello Tomorrow
The theme of this year’s report is Ko Te Pae
Anamata, Whakamaua – Hello Tomorrow.
Over the coming months you will start to
see us use these words in our marketing
and across our business.
But Hello Tomorrow is more than just
words on an advertisement. It brings to life
the role we believe Spark can play as an
enabler of change that helps move
New Zealand forward and speaks to the
mindset we are taking into the years to
come. A mindset of innovation and
optimism about what is possible.
Thank you
We are both personally very proud of the
results Spark has delivered, and the value
created for shareholders in FY22.
None of this would have been possible
without the mahi of our Spark whānau
and the ongoing support of our customers,
suppliers, partners, and shareholders – and
for this, we thank you.
Noho ora mai
[be well]
“ We are building a
smart, automated
network at pace,
to underpin
Aotearoa’s digital
economy and our
future growth.”
Justine Smyth, CNZM
Chair
Jolie Hodson
CEO
15
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Our performance
1 EBITDAI is a non-Generally Accepted Accounting Practice (non-GAAP)
measure and is not comparable to the New Zealand Equivalents
to International Financial Reporting Standards (NZ IFRS) measures.
This measure is defined in note 2.5 of the financial statements.
2 Prior year EBITDAI and net earnings have been restated due to
implementation of the IFRIC agenda decision. This required configuration
and customisation costs incurred in implementing SaaS cloud computing
arrangements to be expensed rather than capitalised as part of
intangible assets.
3 Endless plans are Spark’s mobile plans with unlimited calling minutes,
unlimited SMS and an allowance of data to use at the maximum available
speed, after which they are able to continue using mobile data but at a
reduced speed.
Operating revenues and other gains
• Mobile revenue growth of $40 million, or 3.1%, has been
driven by a growth of service revenue of $47 million due to
pre-paid, post-paid and business connections growth and
existing customers transferring to our Endless plans³, and
an increase in outbound roaming as travel restrictions eased.
This was partially offset by a reduction in non-service
revenue of $7 million, or 1.5%, due to a reduction in handset
revenue as lower numbers of units were sold in FY22
resulting from Covid-19 related supply constraints.
• Broadband revenues declined mainly due to customers
migrating off legacy plans and being acquired on lower
priced in-market plans.
• Procurement revenues increased by $124 million, or 30.0%,
mainly due to strong sales of both licensing software and
procurement hardware, particularly in the health sector.
Partner service sales also increased due to businesses
investing in equipment for employees to work from home.
• Cloud, security and service management revenue
growth slowed to $3 million or 0.7% in FY22, with cloud
growth reflecting a shift away from private cloud to
lower-margin public cloud and lower annuity security
revenues. Managed data and networks revenue growth
of $1 million was driven by increased collaboration revenue,
particularly in call centre line volumes, largely offset by
lower volumes of network project work due to completion
of large projects in the prior year.
• Voice revenues declined due to a combination of continued
connection losses as voice becomes a smaller part of the
business and lower voice usage of existing customers.
FY21 included non-recurring refunds of $16 million for
historic wire maintenance charges.
• Other operating revenues grew $15 million, or 10.9%, due
to growth in the Sport, Qrious, Health and IoT businesses.
• Other gains of $26 million, down $2 million from FY21,
were mainly generated from the sale of mobile
network equipment and gains on lease modifications
and terminations.
$ MILLION
MOBILE
BROADBAND
VOICE
CLOUD, SECURITY AND
SERVICE MANAGEMENT
PROCUREMENT
AND PARTNERS
MANAGED DATA,
NETWORKS AND SERVICES
OTHER OPERATING REVENUES
AND OTHER GAINS
FY22
FY21
400
600
800
1,000
1,200
1,400
200
0
$3,720m 3.5% year-on-year
EBITDAI
1
$1,150 m
2.8%
2
16
Our performance
Hello Tomorrow
Our performance
300
325
350
375
400
425
450
475
500
525
550
1,550
1,650
1,750
$ MILLION
PRODUCT
COSTS
LABOUROTHER
FY22
FY21
Operating expenses
• Product costs increased by $101 million, or 6.3%, broadly in
line with revenues with the major drivers being increased
costs of $114 million in procurement that reflects the growth
in revenue and sales, partially offset by a $28 million
reduction in mobile handset costs.
• Labour costs were broadly flat year on year with an increase
of only $2 million, or 0.4%.
• Other operating expenses decreased by $7 million, or 1.8%,
due to a reduction in network support costs of $21 million,
partially offset by an increase in bad debt expense of
$11 million as expenditure returned to normal levels
following the FY21 release of Covid-19 expected loss
provisions not required.
$2,570m 3.9% year-on-year
Other
• Total depreciation and amortisation was broadly flat.
Depreciation and amortisation for property plant and
equipment and intangibles was $5 million lower due to an
increase in asset lives and ceasing depreciation on assets
held for sale. This was partly offset by higher depreciation
on right-of-use assets and leased customer equipment.
• Net finance expense was relatively consistent, with both
finance income and finance expense decreasing as a result
of lower interest rates.
• Tax expense increased by $2 million in line with the
increased earnings before tax for the period, partly offset
by an increase in non-taxable gains on the sale of mobile
network equipment and lower foreign taxes.
0
100
200
300
400
500
600
DEPRECIATION
AND AMORTISATION
NET FINANCE
EXPENSE
TAX
EXPENSE
$ MILLION
FY22
FY21
Net earnings
$410m
7. 6%
2
Earnings per share
21.9 cents
6.3%
2
Dividends per share
25.0 cents
No change
17
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
620
670
720
770
820
870
$ MILLION
PAYMENTS FOR INCOME TAX
FY21
RECEIPTS FROM INTEREST
RECEIPTS FROM CUSTOMERS
PAYMENTS FOR INTEREST ON LEASED
CUSTOMER EQUIPMENT ASSETS
PAYMENTS FOR INTEREST ON DEBT
PAYMENTS FOR INTEREST ON LEASES
PAYMENTS TO SUPPLIERS
AND EMPLOYEES
FY22
Operating cash flows
$841m 1.4%
1
Cash flows
• Operating cash flows decreased by $12 million with
increased earnings and lower tax payments being more
than offset by increased working capital due to higher
inventory levels to reduce supply chain risk and timing
of customer invoicing.
• Investing cash outflows were $116 million higher than the
prior year with increased payments for property, plant and
equipment, intangibles and capacity, due to early capital
purchases to reduce supply chain risk, combined with
increased long-term investments (largely for Southern
Cross). There were no spectrum purchases in FY22.
• Financing cash outflows decreased by $108 million primarily
due to net proceeds from debt in FY22, partially offset
by higher payments for dividends resulting from reduced
uptake of the dividend reinvestment plan.
YEAR ENDED 30 JUNE
2022
$M
RESTATED
1
2021
$M
Free cash flows
2
296433
• Free cash flows were down $137 million to $296 million
in FY22, with the primary drivers being advanced inventory
and capital purchases to mitigate supply chain risk and
timing of payables and receivables which has mostly
unwound subsequent to balance date.
2022
RESTATED
1
2021
YEAR ENDED 30 JUNE$M$M
Net cash flows from operating activities841853
Net cash flows from investing activities(492)(376)
Net cash flows from financing activities(350)(458)
Net cash flows(1)19
1 Prior year cash flows have been restated by $5 million due to implementation
of the IFRIC agenda decision. This required configuration and customisation
costs incurred in SaaS cloud computing arrangements to be expensed rather
than capitalised as part of intangible assets.
2 Free cash flows is a non-GAAP measure and is calculated on page 9 of Spark’s
FY22 Detailed Financials.
18
Our performance
Hello Tomorrow
Key capital expenditure projects for the year included:
• Continued investment in the converged communication
network (CCN), advancing our exit strategy for the legacy
PSTN network through ongoing fixed-line customer
migration to IP-based voice services, and further investment
in Spark’s wider, multi-year core lifecycle and expansion
initiative, which will progressively increase greater resilience
into our core network.
• Investment in international cable construction and capacity
purchases as Spark continued to invest in Southern Cross
and Tasman Global Access international cable capacity to
meet upward trends in customer demand for data.
• IT systems investment included lifecycle investment and
licencing for internal IT systems, enhancements to products
and IT systems to improve the customer experience and the
completion of the first phase to implement a replacement
ERP system and integrate this into Spark systems.
• Continued investment in Spark’s mobile core and
radio access network (RAN) delivering greater network
capacity and coverage, plus an uplift in Spark’s 5G
investment to accelerate our roll out of this technology,
creating the foundation for the emergence of new
technology and experiences.
• Data centre spend includes the modernisation of the
Mayoral Drive exchange and the commencement of
the data centre expansion project at Takanini.
• Plant, fixed network and core sustain includes investment
in the fibre build programme, new core network, fixed
network broadband and carrier ethernet expansions to
meet customer demand for services and traffic growth
across the network.
$410m
Capital expenditure
3
Capital expenditure to operating revenues
11. 0 % (F Y21 9.7%)
āīfiflŌ
īūōflŌ īfiū īūŌūīŌ ū
flŌ ū
ūūīūāŌ
āŌūflŌ
Ō
ī
āŌūī
āūŌflŌūīŌūflŌ īŌ fi ūŌ
ī
$
5
3
M
$
7
M
$
1
5
M
$
2
2
M
$
3
1
M
$
7
M
$
1
2
5
M
$
1
5
0
M
3 Capital expenditure is a non-GAAP measure and is defined in note 2.5
of the financial statements.
19
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Creating value for
our customers
Supporting our customers’ own
business models and their value
creation for New Zealand
Our customers range from consumers and
households, to small businesses, not-for-profits,
governments and enterprise clients. From
mobile and broadband to cloud, IT, and
managed services, as New Zealand’s largest
telecommunications and digital services
company, we have relevance for almost every
New Zealander.
As our country adapts to the realities of living
with Covid-19, inflationary pressures, an uncertain
global outlook, and the imperative of living more
sustainably, we want to help our customers to
win big in a digital world and become more
productive and sustainable through technology.
OUTCOMES FY22
Connected customers
20
Creating value for our customers
Hello Tomorrow
Creating value for our customers
Customer experience
We have an enduring focus on improving
the experiences of our customers at Spark,
by making their interactions with us simple
and effective. This work is showing up in
customer feedback, with our measure of
customer satisfaction, our interaction net
promoter score (iNPS), up 9 points from
FY21 to +29.
Transparency and simplicity
As a business that’s been around for some
time now, we have legacy (old) products
and services that need to be retired
as part of our efforts to simplify our
systems and ensure our customers are
getting the most of what we have to offer.
We have a number of programmes under
way to achieve this.
The Spark App and MySpark web portal
now provide our customers with a rolling
12-month view of their mobile and
broadband usage and spend, allowing
them to compare this against their current
plan’s allowances and price at a glance.
During the year we trialled a right-planning
programme called Made for You
(consumer) and Forward Report (SME),
which prompts broadband customers
to check they are on the best plan for
their needs through an email with a
personalised view of their current usage
and a recommendation on the best plan
available. We aim to use the insights
gained through this trial to extend the
programme in FY23.
We are also removing legacy mobile
and broadband plans from the market,
with 102 plans removed during the year
and 350,000 customers migrated onto
modern plans.
In October 2021 we launched a new
broadband line-up, to offer greater
transparency, simplicity, and more value
for less. This change was made in response
to feedback from our customers –
providing them with one set price each
month, clear descriptions about the
suitability of each plan for individual
household needs, even better value, and
the ability to ‘pick and mix’ our world-class
entertainment services at a discounted rate.
This new line-up has resonated strongly,
with our broadband connections returning
to growth during FY22.
Making it easier for our customers
to interact with Spark
This year we’ve continued to make it easier
for our customers to interact with Spark.
We’ve been further developing our
‘Unified Frontline’ model, which empowers
our customer care and retail teams to move
between different customer touchpoints
(such as online chat, contact centres, or
retail stores) depending on where the
customer demand is at the time. This allows
our customers to access skilled assistance
through a channel that works best for them
and builds the capabilities of our team
members. The long running lockdowns
in the first half of FY22 accelerated our
progress in this space, allowing us to
refocus retail team members into
supporting customers via other channels,
while we converted our stores into
emergency distribution centres for
contactless pick-up.
Our alternative way of contacting Spark,
asynchronous messaging, continued to
be popular with customers who enjoy the
flexibility it provides. This allows a customer
to message Spark in our app or on tools
like Facebook Messenger or WhatsApp
– removing the need to call and wait for
a conversation in real time, as the chat
window stays ‘live’ and alerts customers
when someone is available to assist them.
Our customers have rated this option four
times higher for customer experience
than voice calls.
We continued to build the functionality
of the MySpark App with new tools such
as App Shop and the ability to performance
test and troubleshoot a broadband
connection. The App now has around
1,400,000 unique users and in an average
month sees over 800,000 interactions.
In FY22 we saw a 23% increase in
customer journeys taken digitally for sales
and service, which resulted in a 17.5%
decline in customer care interactions
and delivered an estimated $4.5 million
EBITDAI benefit, through reduced costs
to serve and increased sales of core
products and accessories.
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Using data to personalise
customer interactions
Having a deep understanding of our
customers and their needs allows us to
create better experiences and more
relevant offers.
We have been developing our data
capability for a number of years now and
through the use of artificial intelligence
and machine learning we are now able to
better predict the needs of our customers
and deliver them the right product or
service at the right time. This has delivered
an uplift in data driven marketing
campaign conversion of 19% year-on-year,
while maintaining a 16% increase in
marketing efficiency.
We have extended this capability into
our Spark Business Hubs, that support our
small to medium business (SME)
customers. Our customer recommendation
model now covers nearly 50% of our SME
customers and helps our teams to better
identify if our customers are on the right
service and how Spark can best support
their business.
When utilising this capability, we are
guided by our AI Principles, which
are published on our website:
www.sparknz.co.nz/about/governance
Bringing New Zealanders the
entertainment that moves them
Spark is focussed on bringing
New Zealanders the best of entertainment,
offering access to a range of entertainment
services including Netflix, Spotify, Xbox,
Neon and Spark Sport.
Spark Sport
Spark Sport has delivered an action-packed
year of sporting entertainment to fans,
despite Covid-19 continuing to impact
a number of codes.
Highlights of the year included a successful
second season of cricket, with a brand-new
commentary set-up that places the
commentators in the thick of the action;
elevating our cricket production and
providing greater insights for fans; Spark
Sport’s sponsorship of Kiwi F2 rising star
Liam Lawson’s 2022 season; and significant
improvements to platform functionality,
including scheduling features, annual and
six-month passes, and improved sign-up
and payment journeys.
Spark Sport continued to broaden the
sports available to subscribers, acquiring
a number of new rights during the financial
year including, US Open Tennis
Championship, International Basketball
Federation (FIBA), UEFA European Football
Championships 2024 and 2028, Netball
Australia, United Rugby Championship,
Crankworx World Tour, UCI Mountain Bike
World Cup, FIA World Rally Championship,
and the Pacific Four Women’s Rugby Series.
We continue to focus on accelerating
strategic partnership opportunities to drive
improved returns.
Beyond Binary code:
making the internet
more gender inclusive
Data can play a valuable role in helping
businesses to better serve the needs of
their customers. But for Kiwis who are
beyond the gender binary of male and
female, when that data isn’t collected or
used correctly it can create deeply
negative experiences on a daily basis.
This year, Spark launched Beyond
Binary Code, an initiative co-created
with OutLine Aotearoa and non-binary
communities, that aims to stop
non-binary communities feeling
invisible online.
The Beyond Binary Code is a simple
online tool that builds a ‘copy and paste’
HTML code, which amends online forms
to include options specific to their use
cases such as name and legal name,
pronouns, prefixes, and a variety of
gender options that acknowledge
gender diverse communities including
non-binary and takatāpui as well as an
open field for individuals to enter their
own, or if they would rather not say. In
addition, the code also helps businesses
evaluate whether gender-related data
needs to be captured at all, what to
capture if it’s required, and how they
might do this in a way that enables
people of all genders to be seen and
heard online.
Alongside input from OutLine Aotearoa
and non-binary communities, the
recommendations generated by
Beyond Binary Code are informed by
Statistics New Zealand’s updated
standards on how data related to
gender, sex and variations of sex
characteristics should be collected, and
best practices from a range of reputable
sources including the New Zealand
Human Rights Commission and
Te Ngākau Kahukura.
The code provides businesses with a
trusted source to improve their gender
data collection practices and in turn
helps them to build more inclusive,
gender-friendly online experiences for
their employees and customers.
https://www.spark.co.nz/online/
beyondbinarycode/
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Partnering with
New Zealand businesses,
big and small
Spark supports businesses across the
spectrum, from start-ups and local dairies,
to New Zealand’s most complex and
innovative enterprise businesses
and government.
Supporting small-medium kiwi
businesses
Spark supports over 110,000 small to
medium businesses (SME) around
New Zealand through our network of local
Business Hubs. Our ‘local like you’
approach to supporting small, regionally
based business is resonating, with a
20-point increase in our net promoter
score over the last year.
During the year we expanded our Business
Hub offering for customers, through
partnerships with local IT providers, as
well as the Internet of Things. These new
services are supporting our SME customers
as they seek productivity, efficiency, and
sustainability solutions.
We continued to encourage small
businesses more broadly to get their
businesses online and adopt digital tools
through our ongoing support of the
Digital Boost Alliance, with our CEO
Jolie Hodson taking on the role of Chair
of the Governance Board for its first year.
In support of the Alliance, Spark provides
free Microsoft 365 or Google Workspace
for a year with any small business phone/
broadband package. More than 30,000
small businesses have participated in
Digital Boost training so far.
Inspiring small to medium
businesses through Spark Lab
Spark Lab aims to inspire SME businesses
with new perspectives, delivered through
engaging virtual and in-person events.
Over the past year, Spark Lab events
have covered important topics such as
emerging technology, designing healthy
workplaces, being good custodians of
data, and implementing financial
and environmentally sustainable
business practices.
In May 2022 Spark Lab partnered with the
Sustainable Business Network and other
leading New Zealand businesses on the
Climate Action Toolbox, which provides
support to businesses looking to start their
carbon emission reduction journeys.
https://www.tools.business.govt.nz/
climate/spark
Partnering with Māori
businesses
In partnership with the Whāriki Māori
Business Network, we launched a series
of four regional events in Tāmaki
Makaurau, Whangārei, Te Whanganui-a-
tara, and Ōtautahi, to upskill Pakihi
Māori (Māori businesses) on digital
tools and technology.
We also continued our support of the
Kōkiri Māori Business Start-up
Accelerator, run by Te Wānanga o
Aotearoa, to ensure Māori business
received the support and investment
they need to flourish as they pitch for
seed funding.
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Supporting New Zealand’s larger
enterprise businesses
We provide business-to-business services
to our larger enterprise customers through
Spark Business Group, which brings
together best-in-class expertise and
capabilities to connect, enable, and
transform New Zealand businesses. Spark
Business Group can provide end-to-end
support to customers across the full
spectrum of digital services including
collaboration, connectivity, customer
experience, data and AI, cloud, IT sourcing,
IoT, modern workplace, security,
transformation, and innovation.
During the year Spark supported Total
Property Group in its shift to a cloud-
managed network service, guided Contact
Energy as it adopted Genesys PureCloud
for its contact centre, and helped the
Department of Conservation shift to a
cloud hosted, digital workspace platform.
Spark was also re-appointed as a Managed
Services outsource supplier for the
Department of Corrections.
CCL is Spark’s hybrid cloud provider. Over
the past year, CCL delivered a number of
transformational projects, including a
significant cloud migration for Dunedin
City Council, and a computer vision and
machine-learning solution for a leading
infrastructure customer, enabling it to
identify, locate, and classify road defects.
CCL published the State of New Zealand
Cloud Transformation report during the
year, which surveyed more than 400 of
New Zealand’s technology decision-makers
and business leaders on their approaches
to cloud adoption and transformation. The
research highlights that there is no
‘one-size-fits-all’ approach to cloud
adoption, with organisations embracing
public, private, and hybrid cloud
deployments – demonstrating that many
organisations need to take a progressive
approach to moving to and embracing
the cloud.
Leaven is Spark’s cloud consulting
business. It helped a number of
organisations embrace public cloud during
the year – including Metro Performance
Glass’ move from on-premise infrastructure
to the cloud, and the migration of the
Southern District Health Board’s 100
servers to Microsoft Azure.
Digital Island, Spark’s cloud communication
and collaboration business, saw strong
interest in cloud-based contact centre
solutions as businesses continued to
negotiate the challenges of remote and
hybrid working. It supported a range of
customers including Red Cross, LANtech,
and CBG Health to implement and realise
the benefits of Amazon Connect for their
contact centres.
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Qrious is Spark’s data analytics and artificial
intelligence (AI) business. The past year saw
businesses further embrace data and AI, a
trend that was corroborated by the State of
AI in New Zealand 2021 Report that Qrious
released in October in partnership with
Spark, the AI Forum, and the Ministry of
Business, Innovation and Employment.
Over the past year, Qrious helped Auckland
DHB understand bed occupancy, patient
care needs and staffing requirements and
was selected as Oranga Tamariki’s
enterprise data and analytics partner.
While each of the businesses within Spark
Business Group offer compelling services
individually, we are excited about the
opportunities to bring these capabilities
together in end-to-end converged
technology solutions that solve real-world
business problems.
During the year Spark Business Group was
thrilled to be appointed prime supplier by
the Ministry for Primary Industries (MPI) to
manage the roll-out, training, and support
for the installation of on-board cameras on
New Zealand in-shore fishing vessels.
This project combines on-board cameras
with IoT, artificial intelligence and machine
learning, cloud computing, and data and
analytics to provide clearer, independent
data to help inform policy decisions,
scientific research, and fisheries
management – and leverages expertise
from across Spark, Spark IoT, Qrious,
CCL, Leaven, and Entelar.
Spark Business Group is also supporting
KiwiRail with a fuel optimisation project to
help the Interislander ferry service run more
efficiently. By combining weather data and
machine learning to predict fuel
consumption, and adopting data-driven
sailing techniques, the project aims to
reduce fuel costs and carbon emissions.
Spark Business Group is supporting the
initiative with connectivity, IoT devices,
dashboards, modelling, analytics, and
reporting, bringing together capability
from across Spark, Spark IoT, and Qrious.
Supporting the digitisation of the
health sector
The health sector is preparing for a period
of significant change as it shifts away from
regional District Health Boards to three
national health services: Te Whatu Ora
(Health New Zealand), Te Aka Whai Ora
(Māori Health Authority) and the Public
Health Agency. This change is occurring
during a time of unprecedented challenge
as the sector supports New Zealanders
through Covid-19.
Developing data and digital capability
has been identified within the health
system review as a critical enabler of
its transformation, requiring partners
with deep sector experience, who can
create solutions that deliver improved
health outcomes.
Digital health is a future growth market
in Spark’s three-year strategy and Spark
Health grew strongly during the year,
winning national contracts for digital
services under the newly established
Te Whatu Ora. Under these contracts
Spark Health will provide Microsoft,
Non-Microsoft, and Azure Software and
IT services to the Ministry of Health,
Te Whatu Ora, Te Aka Whai Ora, the
Public Health Agency, and other health
entities like ACC and Pharmac.
Spark Health also delivered a cloud-based
digital health platform, that aims to support
a digital health ecosystem. Kete Waiora
(the basket of health and wellness) is
powered by Spark Health partner Get
Real Health and enables healthcare and
disability providers to create digital
customer experiences via a personal
health record, while also helping to
provide a unified view of their patients.
Wholesale
Spark Wholesale supports New Zealand
and international services providers with
Mobile Virtual Network Operator (MVNO),
data transport national backhaul,
international connectivity, cloud, internet
and satellite services.
In the past year, the Wholesale business
continued to grow Spark’s data centre and
connectivity portfolios locally and
supported Content Delivery Networks
(CDNs) and global cloud partners with their
growth plans within New Zealand.
When the devastating volcano and tsunami
in Tonga affected connectivity to the region
in early 2022, Spark Wholesale worked
with local telecommunications provider,
Digicel Tonga, and other Tongan-based
organisations, to procure emergency
satellite equipment to connect Tonga to Fiji
and provide voice and data connectivity.
This equipment was delivered to Tonga by
New Zealand Defence Force aircraft and
provided temporary connectivity until full
services could be restored.
Connect 8
In January Spark took full ownership of
Connect 8 – an infrastructure and civil
engineering provider to the
telecommunications, water, and power
sectors. Prior to this, Spark owned 50% of
the business, but decided to bring Connect
8 back into the Spark group to support the
acceleration of its 5G roll-out.
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Developing new services
for our customers with
emerging technology
MATTR
Spark subsidiary MATTR contributes to
the development of technology standards
and creates software that allows data to
be verified in a digital environment, safely
and securely. This helps to remove the
challenges of digital security, privacy,
and data verification, supporting trusted
online interactions – a critical enabler of
an increasingly digital economy.
MATTR’s flagship platform product,
MATTR VII, provides general-purpose
building blocks and products that are
simple, accessible, and easy to use, with
pre-built extensions that make it possible
to plug the platform into a customer’s
existing applications.
MATTR reached the stage of
commercialisation during the year,
working in partnership with early adopters
in New Zealand and overseas – with
MATTR solutions now available in
Australia, the United States, Canada
and shortly in Europe.
In New Zealand MATTR supported the
creation of the New Zealand Ministry of
Health’s international and domestic
vaccination certificates as part of its
Covid-19 response. An example of
MATTR’s work offshore includes its pilot
of privacy-respecting micro-credentials
for Canadian learners created for the
Association of Registrars of the
Universities and Colleges of Canada
(ARUCC). This solution allows students
to hold and share their verifiable
credentials when seeking employment
or signing up for new learning journeys.
MATTR also continues to engage in the
US Department of Homeland Security’s
Silicon Valley Innovation Program and
received an award from the US National
Science Foundation Convergence
Accelerator in a collaboration with
Washington University and iProov (a UK
based genuine presence testing company).
Cyber security, customer
safety and privacy
Spark puts cyber security, customer safety,
and privacy at the forefront of everything
we do. We work hard to ensure the security
of our own networks and also support
our corporate and enterprise customers
with their security needs. We offer
customers a breadth of capability to
monitor and detect attacks across their
networks and information architecture,
reduce business security risk, and improve
their security profile.
Cyber security
The annual National Cyber Security Centre
(NCSC) Cyber Threat Report shows that
serious cyber threats targeting Aotearoa
continue to grow, with an increase in the
frequency and sophistication of incidents
recorded in the past year. Spark takes this
threat seriously and works hard to ensure
the safety and security of both our own
and our customers’ networks.
Our Chief Information Security Officer
(CISO) has responsibility for Spark’s cyber
security, while all members of the Spark
Board’s Audit and Risk Management
Committee have governance responsibility.
We govern our security programme using
the industry’s best practice frameworks,
including ISO27001 and NIST CSF
(National Institute of Standards and
Technology Cyber Security Framework).
All Spark services and networks are built
with multiple checks in place during the
‘design’, ‘build’ and ‘operate’ phases,
to ensure that they are deployed with
industry leading levels of security. We work
to ensure we operate at an incredibly high
standard using continuous assessment
and measurement of our cyber security
maturity level. Our security roadmap
includes initiatives that will enhance our
wider cyber security capabilities.
People play a critical role in helping to
detect and defend against potential cyber
security threats. For that reason, everyone
at Spark is required to undertake a cyber
security training module, to equip them
in identifying and preventing any attacks.
We have one of the largest security
operation centres in the country with
over 100 security subject matter experts.
We have processes in place to ensure that
appropriate ownership, oversight, and
ongoing risk management is applied to
our customers’ and Spark’s IT systems and
data, with our cyber security subject matter
experts providing oversight. Our processes
are independently assured by our risk
and internal audit functions and are often
externally validated by qualified cyber
security consultants or auditors. In FY22,
our CISO, Josh Bahlman was awarded
the ‘Best Security Leader Award’ at
New Zealand’s Annual Information
Security Awards.
We have a Spark cyber security incident
response plan which governs how we
respond to any cyber security threats.
We have invested heavily in building our
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threat intelligence platform and adopting
industry best practice frameworks, such as
MITRE ATT&CK (a curated knowledge base
and model for cyber adversary behaviour),
to ensure we continue to evolve our ability
to protect and detect potential threats.
We have also invested in security
automation, orchestration, and machine
learning, to stay ahead of ever evolving
security threats.
Customer safety
Spark has an important role to play in
helping prevent New Zealanders falling
victim to increasingly sophisticated scams,
both by blocking scams when possible,
and raising awareness with our customers.
In the last twelve months, we saw a
significant increase in text message scams
with the arrival of the ‘Flubot’ malware in
New Zealand. The sophisticated malware
disguised itself as an application or update,
which if downloaded on an Android
mobile, would gain access to functions
such as online banking and contact lists.
Once the malware was downloaded on
someone's device, they became an
'infector', sending bulk scam texts from
the phone number without the
customer’s knowledge, including to
international numbers which meant
customers incurred charges.
To help mitigate the impact of this scam,
Spark worked with the Department of
Internal Affairs to identify infected mobile
phones and send communications to
impacted customers, urging them
to perform a factory reset and remove
the malware. Where unusually high levels
of international messages were being sent,
we removed the charges and temporarily
blocked the ability to send text messages
until a factory reset was performed.
The Flubot malware infrastructure has since
been disrupted by the Dutch Police,
rendering it inactive.
As in previous years, we work to limit the
number of scam calls our customers
receive by monitoring unusual calling
activity and blocking offending numbers.
We work closely with the broader New
Zealand telecommunications industry via
the NZ Telecommunications Forum (TCF)
to share information so that numbers can
then be blocked across all networks.
We also block access to URLs featured
in scam texts to prevent customers
inadvertently clicking on the links.
Where possible, our security and fraud
teams work with law enforcement to
identify and shut down scamming
operations, but this is challenging when
they are located offshore.
Because we cannot stop scamming from
occurring, we are focussed on empowering
our customers to be vigilant when it comes
to scams to help prevent them falling
victim. We regularly educate and alert
customers on fraudulent activity, including
through direct customer communications,
regular updates on our scam alert website,
sharing alerts about widespread scams on
our social media channels, partnering
with Netsafe on its educational scam call
brochure, and ensuing our customer
service teams are equipped to assist with
scam call inquiries.
We also sell a landline product called Call
Screen, which contains technology that can
effectively help users protect themselves
from scam calls.
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Customer privacy
Protecting our customers’ personal
information is a responsibility we take
seriously. We’re committed to keeping
customers’ personal information safe
and managing it in ways that align with
customer expectations and applicable
laws, including the Privacy Act 2020
and the Telecommunications Information
Privacy Code 2020.
In FY22 we launched a set of actionable
privacy values. Protection, transparency
and autonomy, fairness, innovation,
empathy, and tikanga represent what Spark
believes to be at the heart of customer
privacy. These guide and underpin the
decisions Spark people make.
In FY22 we piloted a new distributed
Privacy Ambassador programme, which
empowers trained Spark people to
conduct privacy risk assessments.
The framework leverages the business,
technology, and product expertise of
our people, combining it with privacy
knowledge and the support of an
automated decision-making tool.
New data ideas are assessed by a privacy
ambassador and, if required, passed to
Spark’s Digital Trust (privacy) and Legal
teams for more advice. This model was
piloted successfully within three areas
of the business and will be rolled out
across Spark in FY23.
Our broader privacy programme
Spark’s Digital Trust team runs Spark’s
privacy programme and supports Spark
people with tools and training to help
ensure everyone follows our Privacy Policy.
Spark’s privacy programme includes:
Processes and controls: to safeguard
customer information throughout business
activities. For example:
• Privacy in products and services: new
products and services are assessed with
a privacy lens to highlight any key risks
and design requirements. New cloud
vendors are screened to ensure privacy
will be managed appropriately.
• Transparency: Spark reports on
government requests for personal
information in our Spark transparency
reports (www.spark.co.nz/help/other/
about-your-privacy-with-spark).
• Data breach reporting: we work hard to
foster a culture where Spark people feel
safe reporting any possible privacy
issues or data breaches. We have a
dedicated Data Breach reporting tool,
enabling breaches to be reported and
managed in a customer focussed way,
in compliance with the New Zealand
Privacy Act 2020. We also have an
Honesty Box where any privacy issues
can be reported anonymously.
Training Spark people: all Spark people
must complete privacy training when
they join Spark and annually thereafter.
This ensures everyone understands
Spark’s legal obligations under the Privacy
Act 2020, our Privacy Policy, and the
privacy values underpinning the decisions
we make.
Spark’s internal website, Privacy at Spark,
is a central online space where our people
can access key information, such as our
privacy values and privacy behaviours.
They can also access guidance and
training, report data breaches and request
privacy assessments.
Spark’s Policy Playbook includes a section
dedicated to data and privacy, showing
how to apply privacy considerations to
everyday activities.
Supporting Spark customers: we offer
a range of tools and services to help
customers stay safe and manage their
privacy and security. These are available
on our website at www.spark.co.nz/privacy
and include security tools, resources to
help customers protect their information
online, and ways for customers to
contact us with privacy-related questions
or concerns.
Privacy compliance and reporting
In FY22 Spark people reported 123
potential data breaches for investigation,
using the internal data breach reporting
tool. Most data breaches were caused by
human error. As a result, we were able to
focus internal training and resources on
preventing and managing these breaches.
For example, in FY22 we launched a series
of mini-learning modules for our people,
which are mandatory for teams who
manage customer data. We also made
process changes to support our people
in withstanding phishing attempts.
In FY22 there were five incidents that met
the criteria for data breach notification
under the Privacy Act 2020. Spark notified
impacted customers and the Office of the
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Privacy Commissioner (OPC) of these
incidents. We also notified impacted
customers and the Office of the Privacy
Commissioner of unauthorised access to
some MySpark and Xtra Mail accounts,
which occurred because Spark customers
had used their Spark or Xtra Mail login
credentials (email and password
combination) on other platforms – and
when these other platforms were
compromised, their credentials were
harvested. Unfortunately, these credential
harvesting attacks are commonplace on
digital platforms but we continue to
educate our customers around best
practice password management to help
protect against this scenario.
In FY22 Spark received 22 substantiated
privacy complaints from customers (some of
these complaints related to the data
breaches reported above) and one
substantiated privacy complaint via the OPC.
Marketing and legal compliance
Under our Code of Ethics all Spark people
are responsible for ensuring we behave
ethically and comply fully with all
applicable laws and regulations. Spark’s
Legal and Compliance Policy sets out the
specific accountabilities that our people
have for complying with the law. Spark’s
people leaders make sure their teams have
the information and training necessary to
meet these standards, and our Legal and
Digital Trust teams support our people with
comprehensive frameworks, tools, training,
and advice. Every employee is required to
complete online training modules on the
Code of Ethics and how to apply it, and we
reinforce this training through regular
one-on-one and broader internal
communication across the business. See:
www.sparknz.co.nz/about/governance
During FY22, there were no Advertising
Standards Authority decisions upheld
against Spark Group.
Spark continues to engage constructively
with the Commerce Commission as
appropriate, both proactively and
reactively, on a case-by-case basis to
ensure we are complying with all
applicable laws and regulations. Spark did
not receive any formal sanction by the
Commerce Commission in FY22.
In early August 2022 the Commerce
Commission issued a warning letter to
Spark concerning the historic sale of Spark’s
wire maintenance service to wireless and
fibre customers. Wire maintenance is a
service available to customers with in-home
wiring – it was created when customers
were predominately using copper-based
services, which require maintenance at
times. When we introduced fibre products
they were originally bundled with landlines,
which also used copper wiring, and so the
service was extended to fibre customers
as well.
While some fibre customers benefited from
the service, it was not applicable for the
majority. So, in 2020 we stopped offering
wire maintenance on fibre connections and
began proactively removing the service on
current fibre connections. We’ve since
refunded all eligible existing Spark
customers and have worked hard to
contact eligible former customers advising
them of their available refund to claim.
To date approximately 95% of
eligible former customers have claimed
their refund.
We also identified a small number of
wireless broadband customers who were
charged for the wire maintenance service
as a result of separate historical system
errors. We have communicated to, and
processed refunds for, all wireless
customers who were charged in error.
We recognise this falls short of the high
standards of product management our
fibre and wireless customers both expect
and deserve, and we have apologised to
anyone impacted. We are committed to
improving our systems and processes to
ensure this does not happen again.
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Creating value
through
our network
and technology
Manufactured + intellectual capital
Our extensive networks and valuable portfolio of
digital infrastructure assets underpin Aotearoa’s
digital economy and support New Zealanders to
work, learn, and connect in the digital world.
Our portfolio includes:
• ~1,500 mobile cell sites throughout
New Zealand
• A 1,320km national fibre backhaul network
• Partnerships with local fibre networks and
Chorus to access the UFB and national
copper networks
• 16 data centres and 35 major network
sites (exchanges)
• A purpose-built Satellite Earth Station (SES)
in Warkworth
• ~41% shareholding in Southern Cross Cable
Network, which owns the Southern Cross
and the Southern Cross Next international
submarine cables.
Connected and
resilient New Zealand
OUTCOMES FY22
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Creating value through our network & technology
Creating value through our network & technology
Creating value from our
infrastructure assets
Following the infrastructure review we
conducted during the last financial year,
in FY22 we established TowerCo as a
subsidiary company to improve the
performance, utilisation, and efficiency
of our passive mobile infrastructure
assets, and to explore the introduction
of third-party capital.
Our passive mobile assets include the
towers and light-poles that house our
active assets, such as our radio equipment
and spectrum. Now that mobile operators
have largely homogenous network
coverage, our passive mobile assets are
no longer a point of competitive advantage
– it is our active assets, or the ‘smarts’ of
our network, that drive our differentiation
in the market.
As such, it made sense to explore how we
could better realise the value of our passive
mobile assets, to maximise value for
shareholders and enable us to invest in
future growth opportunities.
TowerCo will also enable us to deliver
better outcomes and service experience
for our customers and Aotearoa through
faster, more efficient deployment of
digital infrastructure.
The infrastructure build programmes
needed to support New Zealand’s
increasing data needs and new
technologies like 5G, and potentially 6G
in the future, will be very different from the
build programmes of today – requiring
many more, smaller sites, closer to the end
customer, and greater overall densification.
A specialist towers business will be better
place to deliver build programmes of this
scale and complexity, while improving
co-location rates, reducing costs, and
increasing speed to market.
TowerCo became operational on 1 July
2022, and on 12 July 2022 we confirmed
we had reached agreement for the Ontario
Teachers’ Pension Plan Board to acquire
a 70% stake in the TowerCo business.
Smart, automated
networks
Building a smart, automated network is
one of the core capabilities we identified
in our three-year strategy to FY23.
Our ambition is to deliver unconstrained
core network capacity that allows us to
deliver the products and services our
customers need, when they need them,
with 5G and IoT deployed nationwide.
We continue to make significant
investments in resilience, building
a virtualised core with automated
management, while retiring legacy
technologies that are reaching end-of-life.
Asset / EquipmentOwnership
1Active radio-transmission
equipment
Spark /
third parties2Backhaul router
3Backhaul fibre
4Transmission masts and towers
TowerCo
5Fencing / gates
6Access facilities
7Huts (incl. rack space
and cabinets)
8Rooftop walkways / ladders
9Fire suppression and
security systems
10DC power, back-up
generators and batteries
11Airconditioning units
12Mobile only freehold sites
13Other passive equipment
SPARK / TOWERCO
ASSET SPLIT ON A
TYPICAL MACRO TOWER
Standard configuration of a Macro tower
The transaction is conditional only on
Overseas Investment Office approval,
which is anticipated to occur during
the first half of FY23.
The transaction will deliver net proceeds
of ~$900 million and values the business
at $1.175 billion, representing a FY23
pro-forma EBITDA multiple of 33.8x
1
.
Under the terms of the deal, we have
entered into a long term agreement with
TowerCo (plus rights of renewal) to secure
access to existing and new towers, with
a build commitment of 670 sites over
the next 10 years.
Spark is the anchor tenant and retains
a 30% stake in TowerCo, ensuring we are a
key strategic partner as the business grows.
1 Assumes FY23 EBITDA of NZ$34.8 million as at
30 June 2023.
13
11
9
3
10
9
2
5
8
6
4
1
12
7
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Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Creating value through our network & technology
Networks of the future
Building 5G for New Zealand
at pace
A year ago we announced an acceleration
of our 5G roll-out, investing $125 million
in mobile connectivity during FY22 with
the aim of delivering 5G coverage to
approximately 85% of Spark’s sites and
90% of the New Zealand population by
the end of calendar year 2023 (assuming
the necessary spectrum is made available
by the Government).
The Covid-19 lockdowns that occurred
in the first half of FY22 delayed our build
program, with Alert Level restrictions
preventing us from undertaking builds for
several months. Despite this challenge we
have made strong progress towards our
goal, with coverage expanded or launched
in 12 additional locations. By the end of
FY22 we had 5G live in 21 locations
in total, including Auckland, Hamilton,
New Plymouth, Palmerston North,
Gisborne, Whangarei, Christchurch,
Wellington, Dunedin, and Invercargill.
We continue to be reliant on the allocation
of spectrum by the New Zealand
Government to meet our coverage targets.
We were pleased to see the Government
and Iwi come to an agreement on
spectrum allocation during the year, which
recognises Māori interests in radio
spectrum. Our hope is that this paves the
way for the C-band spectrum auction to
proceed in a timely fashion. The provision
of 600 MHz spectrum is also critical to our
ability to deliver 5G coverage far and wide.
As we’ve deployed 5G we have also been
able to upgrade 4G capacity at the same
time. This has created significant additional
capacity for customers using our mobile
networks, with a ~200% increase in
network capacity over the last three years.
In recent months, as 5G technology has
matured, Spark has started developing its
‘standalone’ 5G capability, which will
unlock even more benefits such as multi
access edge compute (MAEC) and network
slicing
1
. We have also conducted trials
using mmWave
2
spectrum to test long-
range, high-speed coverage.
Hira Bhana mixes generational knowledge with tech
solutions to safeguard family business
Spark worked with Adroit to support specialist market gardener, Hira Bhana, to install
highly accurate sensors at multiple locations around his family’s market gardens to
measure soil temperature, moisture, and electrical conductivity. Data from these
sensors is transmitted in real-time to a visual dashboard for employees to make
decisions on watering, fertilising, and harvesting.
The solution provides workers with easily accessible real-time data through an app
which shows reporting and analytics to improve decision making on the farm. This
solution allows the Bhana team to set parameters that enable automation of farming
processes, resulting in consistent, high-quality decision making, and ultimately
delicious, high-quality produce.
1 Network slicing allows the operator to ‘slice’ its network to support different types of services through each
‘slice’. Multiple slices can be tuned independently to meet different quality of service parameters. For
example, one slice may simply need a standard speed connection to enable office email, another might be
tuned to support very low data IoT devices, while another slice may need high reliability and ultra-low
latency to support robotics.
2 Millimetre waves, also known as extremely high frequency (EHF), is a band of radio frequencies that has
wavelengths between 1 mm and 10 mm. These frequencies can carry massive amounts of data at very high
speeds. That makes them ideal for accommodating the massive increase in data demanded from new 5G
use cases such as augmented/virtual reality, cloud gaming, video analytics and other cloud-compute
capabilities.
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5G experimentation
Spark’s first 5G Multi Access
Edge Compute (MEC) pilot
with EnviroNZ
Spark and Qrious have developed
an AI-powered computer vision pilot
for EnviroNZ and enhanced it with
5G connectivity and local AWS
edge computing.
The computer vision system helps solve
a key business issue for EnviroNZ –
identifying health and safety risks at its
waste transfer station. The solution is
a hazard detection system that uses AI
to detect if people are too close to
excavators working in the waste disposal
area. Using computer vision and IoT
(Internet of Things) video cameras, it
identifies and tracks people and
excavators within a specified detection
zone and calculates distances between
them. The Qrious system can trigger
alerts when a person is identified as
being too close to an excavator.
To help explore the potential of Mobile
Edge Compute within this pilot, the
EnviroNZ video feed has been
transitioned from a fibre connection to
a 5G connection and is demonstrating
the benefits of lower latency and faster
processing that 5G brings.
Developing standalone
5G with AWS and Mavenir
Telecommunication companies in
New Zealand are currently implementing
‘non-standalone’ 5G – which means
that while networks have been updated
to 5G, data centres and network cores
are still running on legacy, non-5G
systems, which are dependent on
4G infrastructure.
To lay the groundwork for Spark to roll
out standalone 5G at scale in future, and
validate the anticipated benefits of 5G,
Spark has created and run two proof-of-
concepts for standalone 5G with
technology partners Nokia (cell site
infrastructure), OPPO (5G devices),
Mavenir (5G standalone cloud-native
core solution) and AWS (multi access
edge computing and 5G optimised
cloud solutions).
A standalone 5G network enables
low-latency access to multi access
edge compute solutions, allowing
customers to deploy solutions that can
compute capacity from the network
core right to the customer’s office,
factory or workplace.
To test these benefits Spark has
deployed a Mavenir 5G cloud-native
core solution on AWS Snowball Edge,
a physically rugged device that provides
edge computing and data transfer
services. This is Mavenir’s first global
edge deployment on AWS Snowball
Edge. Using an AWS Snowball Edge
device allowed Spark to create a
highly portable edge solution (that is
literally contained in a suitcase) to
process and store data close to where
it’s generated, enabling low-latency and
real time responsiveness.
Since Spark launched 5G, our initial use
case has been to increase both speed
and capacity in Spark’s wireless
broadband and mobile products.
But we were curious to see how our
wireless broadband service would
further benefit from operating on
a 5G standalone network.
As a test, Spark has deployed a Mavenir
5G standalone cloud-native core solution
on AWS Outpost, a fully managed
service delivering AWS infrastructure
and services to virtually any on-
premise or edge location. This is the
first New Zealand mobile network
deployment on AWS Outposts.
Testing a wireless broadband service
on this proof-of-concept showed
faster download speeds and reduced
latency when compared to pre-
deployment results.
For customers, this provides a better
experience and supports applications
such as instant video streaming, cloud
hosted gaming, and the reaction times
required for driverless vehicles.
The 5G standalone network opens the
door on capacity and low latency to
help accelerate IoT trends, such as
connected cars, smart cities, and IoT
in the home and office.
Spark explores future
connectivity options using
5G mmWave
Spark has conducted New Zealand’s
first rural trial of 5G millimetre wave
(mmWave) technology, achieving
a peak speed of 2.4 Gbps at a range
of 3 km and 1.4 Gbps at extended
range of 7 km. Spark is exploring
5G technology operating in mmWave
spectrum to showcase the potential
benefits of fibre-like data speeds
using 5G connectivity.
A 5G mmWave test site has been set
up in Mouse Point, North Canterbury
by Spark and its technology partner
Nokia, with spectrum loaned from the
Ministry of Business, Innovation
& Employment (MBIE).
Agricultural supply business PGG
Wrightson has a store in nearby
Culverden, 6km south from the test site.
They are participating in the trial of the
5G mmWave service, which will allow
them to run their rural operations over
5G, fibre-like connectivity.
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The power of the Internet
of Things
The Internet of Things (IoT) is a future
growth market in Spark’s three-year
strategy. We see significant opportunities
for us to support New Zealand businesses
across all sectors as they transition to future
ways of working and pursue productivity,
efficiency, and sustainability improvements.
To realise the benefit of an IoT solution,
three components are required: a network
to connect devices to; the connected
devices themselves (the hardware); and
a platform to collate and analyse the data
you are collecting (the software).
IoT networks
The range of ways that IoT devices are
now being used means that different
networks are required, depending on
where the devices are located, how much
data they are transmitting, and their level
of power consumption.
Spark currently provides IoT over a range
of different network types on common
infrastructure:
1. Our 3G, 4G and 5G mobile networks:
suitable for IoT devices that need to
transmit greater quantities of data at high
speeds – for example security video
monitoring. As 5G rolls out, it will unlock
many more advanced use cases for IoT
in the future.
2. Our Cat-M1 network: suitable for
lower-powered, energy efficient devices,
that need to operate for a long time
without being replaced, for example
smart building monitors or fleet trackers.
The Spark Cat-M1 network is activated
on all Spark 4G cell sites and on all Rural
Connectivity Group (RCG) sites, reaching
over 99% of the population.
3. NB-IoT network: suitable for cost-
effective devices that need to send small
amounts of data over multi-year time
periods, for example water metering and
gas metering. Spark has now rolled out
NB-IoT coverage to nearly 60% of Spark
4G towers and all RCG towers, providing
connectivity to 75% to 832,000.
4. Our LoRaWAN network: similar to
NB-IoT, suitable for cost-effective devices
that need to send small amounts of data
over multi-year time periods. LoRaWAN
is particularly effective in locations where
coverage or cost of cellular applications
are not feasible – for example water or
soil sensors. The Spark LoRaWAN network
is deployed to 185 sites providing
approximately 70% population coverage.
Spark also deploys low-cost coverage in
a box (CIAB) solutions where coverage
is not available.
Hawke's Bay District
Health Board (DHB)
keep vaccines and
medications at the
right temperature
The traditional way of monitoring
refrigerated medication is manual
and time intensive, and if a fridge
door isn’t fully shut, all the
medication in the fridge may be
rendered unusable.
Spark and the DHB team devised a
much smarter, end-to-end solution.
Temperature, humidity, and open/
close sensors were installed around
the hospital’s fridges that send
information to the Spark IoT Bridge
platform. Because the DHB’s
concrete-dense buildings aren’t
conducive to good network
coverage, technical difficulties were
overcome thanks to the installation
of LoRaWAN indoor gateways.
Live temperature information is now
transmitted to the Spark IoT Bridge
dashboard and users around the
hospital know immediately if a
threshold is breached and can take
timely action.
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IoT devices
A specialist IoT device is required to record
and capture the data you want to track.
Spark partners to offer our customers a
wide range of devices that work across a
wide range of use cases. In the past year,
Spark grew the number of IoT devices
connected to the Spark network by 75%
to 832,000.
IoT platforms
To make sense of the data collected, an IoT
platform is required to collate and analyse
the data and, in some cases, create
recommendations or automate responses
to certain events. This creates business
value by ensuring the business can act on
what they are measuring.
In the past year, Spark has worked with
Qrious to develop the Spark IoT Bridge
Platform. Built in Microsoft Azure, it
amalgamates a variety of IoT monitoring
solutions into one central dashboard,
providing customers timely access to
the data they need for informed
decision-making, wherever they are.
Napier Port are using Spark IoT Bridge
to create a centralised operational view
of temperature and energy use monitoring
of their substations as well as open/close
detection of their Tsunami gates,
helping to manage and reduce their
organisational risk.
Spark NZ takes significant
shareholding in Adroit
Spark has partnered with leading
environmental IoT provider Adroit to
support customers with innovative IoT
solutions, taking a significant holding in
the environmental IoT technology business.
Adroit has developed solutions for key
sectors including aquaculture, agriculture,
construction, manufacturing, and
environmental compliance.
There is significant demand from
New Zealand businesses for IoT
environmental monitoring and this
investment strengthens our already
successful partnership and helps us
accelerate the adoption of sustainable
monitoring solutions to enable healthier,
more environmentally friendly
communities through the power of IoT.
Spark and Adroit have already
implemented IoT solutions for a range
of customers, including a real-time water
quality monitoring solution for Mercury
New Zealand’s New Zealand's Waikato
River catchment.
Investing in our Data Centres
At the start of the year, we announced
that we would upgrade our Mayoral Drive
Exchange to host significantly more
wholesale and cloud data centre services
and invest in a significant expansion of our
Takanini Data Centre campus. We have
made significant progress in both these
programmes of work and despite significant
inflationary and supply chain challenges,
the build cost has been well managed.
The first stage of the Mayoral Exchange
upgrade was completed in August, and
will give Spark a modern, centralised
network and cloud hub with capability
and resilience that is attractive to
international wholesale customers.
The first stage of expansion at the Takanini
Data Centre Campus – an 8MW data hall
– is on track for delivery in 2023, with
foundations complete and groundwork
now underway. Over 85% of capacity has
now been contracted.
Network resilience
Our customers rely on us to provide
networks and technology that is highly
reliable and available in the face of
unpredictable events – from unexpectedly
high levels of usage during lockdowns,
to extreme weather events.
To deliver on these expectations, we are
focussed on building highly resilient,
‘self-healing’ networks, that have built-in
and automated redundancy options when
things go wrong.
We are also playing our part to ensure
that our industry is contributing towards
planning for the climate change risks of
the future. This year we provided feedback
on the draft National Adaptation Plan,
which brings together the Government’s
efforts to plan and prepare to deal with
climate change risks. The plan prioritises
managing risk to lifeline utilities including
telecommunications and digital services.
We have also analysed potential risk from
future climate impacts on our infrastructure
as part of our TCFD-aligned climate risk
report. See page 72 for more information.
Additional third core network
for mobile
In FY22 we added a third core network
to our existing 3G mobile network core.
This adds operational flexibility to our
mobile networks and creates additional
resilience for the South Island. With
increasing migration of services towards
4G/5G mobile, and away from PSTN
towards new IP voice communications,
the addition of this third core network will
be extended to IP voice services to provide
the stability and diversity needed for
New Zealand’s future connectivity needs.
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Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Optical Transport Network 2.0
In FY22, we made significant progress in
the build of our next generation Optical
Transport Network or OTN2.0, which is now
87% complete and which will strengthen
our network resilience and capacity. The
OTN is the existing fibre backbone of our
network, providing core connectivity
between the main cities in New Zealand,
transporting all our customers’ mobile,
broadband, landline, and business traffic,
and connecting Spark’s network with other
service providers and with international
cable networks.
The new OTN2.0, which is an addition to
the existing transport network and will
replace the OTN over time, has ’self-
healing’ capabilities. This allows the light
signals that carry the data to automatically
change their path after a fibre cut,
automatically restoring services where
it is possible to do so. OTN2.0 has five
times the data capacity of the OTN,
which will support Spark’s 5G roll-out
and give our fixed and mobile networks
enough capacity to meet ongoing
growth in data consumption.
The OTN2.0 roll-out is a two-year project,
which started in Auckland, and expanded
towards Hamilton, Wellington, and
Christchurch – with completion expected
in FY23.
OTN2.0 is now complete across the
North Island from Auckland heading south
through the centre, east, and west coasts
of the North Island and across existing
and one new Cook Strait cable crossing.
The roll-out of OTN2.0 across the
South Island is progressing quickly, with
two routes to Christchurch completed
and a third route via the Kaikoura coast
currently under construction. Customers
are already using the completed parts
of OTN2.0. Initially the new OTN2.0
equipment will overlay the existing
transport network, however it will be
gradually replaced over time.
Mobile access and aggregation
As we move towards our ambition of a
wireless future, enabled by unconstrained
capacity in our core network, Spark is
upgrading its Access and Aggregation
(A&A) network to support our future 5G
ambitions with fit-for-purpose backhaul
with significant capacity uplift, network
automation and improved resilience.
The three-year Access and Aggregation
programme will allow Spark to establish
its own national fibre backhaul network for
its mobile networks and managed data
customers. Over the past year, Spark has
completed design and commenced
roll-out, successfully commissioning its first
set of A&A nodes through an automation-
first approach and migrating its first cluster
of 10 cell sites to this next generation
network. During FY23, Spark will build out
the A&A network across New Zealand.
CHRISTCHURCH
- Spark DC Christchurch Airport
KERIKERI
WHANGAREI
DARGAVILLE
WARKWORTH
ROTORUA
TAUPO
WANGANUI
MASTERTON
ASHBURTON
OTN 2.0 nodes
Other OTN nodes
OTN 2.0 network
OTN 2.0
network under construction
OAMARU
DUNEDIN
INVERCARGILL
CROMWELL
OMARAMA
WANAKA
QUEENSTOWN
TAURANGA
NAPIER
PALMERSTON
NORTH
NEW PLYMOUTH
LEVIN
NELSON
TIMARU
BLENHEIM
HAMILTON
Paeroa
Tokoroa
Pahiatua
Kaikoura
Geraldine
St Arnaud
Greymouth
RICCARTON
Morrinsville
PORIRUA
AUCKLAND
- Glenfield
- Mayoral Drive
- Papakura
- Mount Albert
- Takanini DC
- Southern Cross Whenuapai
- Southern Cross Takapuna
WELLINGTON
- Wellington
- Porirua
- Trentham DC
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Connecting rural
New Zealand
While our mobile and broadband networks
serve the vast majority of New Zealanders,
the geography of New Zealand and
the economics of connecting dispersed
rural communities mean that it is
challenging to reach those people who
are not connected today.
To help address this challenge, the Rural
Connectivity Group (RCG) – a joint venture
between Spark, Vodafone, and 2degrees
– has been contracted by Crown
Infrastructure Partners to deliver the
Government’s Rural Broadband Initiative
Phase 2 (RBI2) and Mobile Blackspot Fund
programmes. This partnership helps bridge
the digital divide for rural communities,
ensuring the rural sector can remain
competitive internationally.
During the financial year RCG has built
more than 120 sites, bringing the total build
to more than 360 sites across Aotearoa.
The programme delivers 4G wireless
broadband coverage to ~30,200
homes and businesses and provides
mobile coverage to over 830 kilometres
of state highways.
The RCG model has attracted global
interest and is believed to be one of the
first in the world where three mobile
operators share spectrum, radio, and
backhaul. It uses a 4G Multi Operator Core
Network to deliver broadband and mobile
services, which helps make the most
efficient use of the radio spectrum available,
and lower network integration costs.
Outside our participation in RCG, we
continued to expand our own mobile
network into smaller towns and provincial
areas, building new sites in the Coromandel
and Hastings during the year, while
upgrading our existing 4G network to
ensure we can continue to provide the
capacity our customers need.
These capacity investments in our rural
mobile sites have enabled us to extend
the availability of our unlimited broadband
plans to an additional 30,000 rural
households during the year, reducing costs
for customers in certain areas by up to
$71 a month. Customers in eligible areas
can move to our Everyday Wireless plan
which is $60 per month for unlimited data.
Marae Digital Connectivity Programme
The Marae Digital Connectivity Programme aims to improve digital access in
provincial and rural Aotearoa by connecting marae to reliable internet and
providing iwi, hapū and whānau with access to technology including cloud
storage, digital security networks and state of the art hardware. Spark is the key
delivery partner alongside the Ministry of Business, Innovation and Employment
and Te Puni Kōkiri.
One of the immediate benefits has been enabling whānau who lived elsewhere
to stay connected to their hapū and join hui or wānanga virtually. The technology
will also help marae to work with their young people to support new skills
development, while supporting local communities to innovate and create new
business opportunities – such as hosting wānanga or conferences and
collaborating virtually.
Comprehensive training on how to use the technology was rolled out around the
country by Te Wānanga o Aotearoa as part of the initiative and a total of 586
marae have been connected through the programme at the end of FY22.
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Spark New Zealand Annual Report 2022
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Migrating customers off
legacy technology onto
future-proof alternatives
We continue to migrate customers off
end-of-life technology, and onto modern
alternatives already used by the majority
of Kiwis across the country – including our
retirement of the Public Switched
Telephone Network (PSTN).
The Spark operated PSTN – the traditional
way of providing landline services – was
built in the 1980s and is rapidly reaching
end-of-life. The network’s components
have not been manufactured since 2003
and the people with the skills needed to
maintain it are getting harder to find. The
majority of New Zealanders have already
made the switch to fibre or wireless
proactively. In 2017 we had over a million
customers on the PSTN – by the end of
June 2022 we had 186,000 with around
7,000 customers on average migrating off
this technology every month. As customers
move off the PSTN, Spark is also able to
decommission legacy PSTN equipment.
In the last year, we have removed 49 NEAX
switches which has resulted in a significant
decrease in Spark’s power usage over
the last year.
In a separate programme to Spark’s PSTN
shutdown, Chorus is gradually withdrawing
its copper network as it also reaches
end-of-life. The copper network includes
the physical lines carrying calls and data.
Spark is taking an area-by-area approach to
our PSTN shut down programme, focusing
on areas where the vast majority of
customers have access to alternative
technologies. In cases where customers
have no alternative, we are working with
them on a case-by-case basis to ensure
they stay connected.
We have a dedicated customer service
team for customers going through either
a PSTN or copper migration and offer free
in-home visits where required.
Evolving New Zealand’s public
phone booth network
The gradual retirement of the copper and
PSTN networks has also prompted Spark
to evolve its approach to managing
New Zealand’s network of public phone
booths, as these are reliant on both
legacy technologies.
In May, Spark announced it was exploring
options to invest in more modern
technology and capability for phone
booths in high foot traffic areas, while
CHORUS COPPER LINES
CHORUS COPPER LINES
Landline and/or
broadband over copper
Landline and/or
broadband over copper
PSTN
PSTN LOCATED INSIDE ~700 TELEPHONE
EXCHANGES THROUGHOUT NZ
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gradually withdrawing poorly utilised
booths as their hardware reaches end-of-
life over a number of years.
Call volumes on the fixed-line phone booth
network have declined by nearly 70%
over the last four years, and approximately
90% of them are being used for an average
of less than 3 minutes per day. The use of
our WiFi hot spotting has followed a similar
downward trajectory.
The withdrawal of low-use phone booths
started with a small number in Auckland’s
North Shore, East Auckland, and
Wellington South in June – in line with
the gradual retirement of Spark’s PSTN
and Chorus’s copper network.
Connecting New Zealand
with the world
Southern Cross NEXT cable
Southern Cross Cable Limited (SCCL)
has celebrated the completion of the
Southern Cross NEXT cable between
Australia, New Zealand, the United States
and Pacific Islands Fiji, Tokelau, and Kiribati.
The new cable expands New Zealand’s
global connectivity by an additional 72
terabits per second – almost doubling total
international capacity.
The Southern Cross submarine cable was
already the shortest routes between
Auckland and Los Angeles, and Auckland
and Sydney and now also has the
shortest route between Sydney and
Los Angeles, providing diversity in the
Southern Pacific (all other existing cables
pass through Hawaii).
The launch of the Southern Cross NEXT
cable provides long term certainty
and capacity for Spark and its wholesale
customers for decades to come.
Tasman Global Access Network
(TGA) cable
The third upgrade of the TGA cable
system was undertaken in FY22. Capacity
on the cable has increased to over 5.1
terabytes across the three system owners,
more than four times the original cable
system capacity.
FIBRE LINE
WIRELESS SIGNAL
Landline and/or
broadband over fibre
Landline and/or
broadband over wireless
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Spark New Zealand Annual Report 2022
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Creating value for
our people
Human + intellectual capital
Our success relies on our talented and diverse
team of people and our culture of inclusion and
high performance. We want to create a culture
where our people lean into challenges,
champion the customer, continuously grow, and
adapt at pace. We want our people to feel they
can bring their whole selves to work, that they
have opportunities to grow and develop, and
that they are connected to our purpose – to help
all of New Zealand win big in a digital world.
Engaged and
inclusive teams
OUTCOMES FY22
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Creating value for our people
Future of work
The last few years of border closures,
combined with the accelerated pace of
digital transformation within New Zealand
businesses, has meant that demand
for highly skilled technology talent far
exceeds availability. The technology sector
is set for exponential growth over the
next few years which will further exacerbate
this skills shortage.
This has reinforced the need to widen the
talent pool by creating pathways for
New Zealanders of all backgrounds into
the technology sector, and we want to
actively play our part in this change.
We have established several partnerships
with tertiary institutions designed to help
identify, upskill, and recruit future talent
with the skills we need, while also building
diversity in our teams.
We also continued to establish and
maintain our partnerships with
organisations focussed on encouraging
more young women, Māori, and Pasifika
into the industry. In FY22, we worked with:
• AWS re/Start, which focuses on
developing cloud computing skills
and offering on the job training to
program graduates with a specific
focus on Māori and Pasifika
• Girl Boss NZ, which encourages
more young Kiwi women to study
and consider STEM (through which
we offer internships and mentorship)
• Pūhoro STEMM Academy, a kaupapa
Māori programme that supports
rangatahi transition from secondary
school to tertiary education, internships,
industry opportunities, and employment
in the technology sector
Feedback from our people during FY22
has been strong – with our Employee Net
Promoter score (eNPS), a key measure of
engagement, tracking at +70. This matches
our FY23 target of +70, however is down
6 points from our FY21 score of +76.
We know that connection is key to
maintaining our culture of belonging and
inclusion, which wasn’t as easy to achieve
during FY22, due to the prolonged
Covid-19 lockdowns during the first half
of the year. We use our eNPS insights to
continuously improve our employee
experience and maintain high levels of
engagement over time.
Spark has continued to grow its
employment brand reputation in the
external market, being recognised as a
great place to work through a number
of awards in FY22, including the ‘D&I
Champion Award’ at the Reseller Women
in Tech ICT Awards, the ‘5-Star Employer
of Choice Award’ from HRD New Zealand,
and by being named as one of the top 5
places to work in New Zealand by LinkedIn.
Our agile maturity
Lifting our agile maturity and continuing
to integrate agile best practice throughout
the business remains a key focus.
We evaluate this using a measure called
the ’Agile Maturity Assessment’, or AMA,
which rates the maturity of best practice
on a scale of one to five. We have seen
further uplift in our maturity during FY22
and now have 66% of squads (teams) with
an AMA of greater than 3.75 out of 5
(compared with 33% in FY21).
Spark also delivers certified agile
programmes to further embed relevant
agile practices into our own business
and externally for customers or partners.
These courses have been adapted for
online facilitation and over the past year,
125 people completed and were certified
for these courses.
• P-Tech, a three-way partnership that
brings the tech industry, high school
and tertiary organisations together to
help students transition from getting
an education to starting a career
through mentoring, worksite visits,
and paid internships.
Investing in continuous learning
and development
We are focussed on the growth of our
people and developing the skills and
cultural conditions needed for creative
confidence and experimentation, which
drive innovation. Our Learning and
Development Strategy is focussed on
providing opportunities for progression
through broad access to learning
environments and experiences that align to
our strategy. We pride ourselves on
offering great ’on the job’ learning
experiences, which we know make up over
two-thirds of skill and career development.
We delivered our Gold Standard Leader
Programme to 55 potential and new
leaders in FY22, with a specific focus on
continuing to mature our agility. We have
used this experience to build our new
Leadership Development programme for
entry to mid-level leaders.
We continued to deliver our flagship Agile
Leaders Programme, which aims to create
the conditions for innovation and adaptivity
across Spark. The programme is a
significant investment in the capability of
our people in key leadership roles and
those identified for development and
progression. It runs over six months with a
focus on building environments for people
to thrive, leading innovation through
design thinking, using leadership empathy
for connection and belonging, and
coaching for sustainable high performance.
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In FY22, 6 cohorts, and a total of 85 leaders,
have either started or completed the
programme, which will continue to be
delivered throughout FY23.
Over the course of the year Spark has also
improved the accessibility of learning
enterprise-wide, with an additional 383
people taking part in targeted learning
experiences, and more than 1,500 gaining
access to learning modules. These learning
experiences included our Accelerated
Leaders Programme, Thought Leadership
training with Gabrielle Dolan,
Communications Grit training, Presenting
with Impact, and our Beyond Binary
training module.
Compliance and mandatory
training
There is a requirement for all Spark
employees and contractors, to complete
mandatory modules when they commence
working at Spark, to ensure proficiency in
core foundational areas such as health and
safety, legal and privacy, policy, reporting
and security.
Completion of these modules is monitored
by people leaders and reported more
formally on a quarterly basis.
As part of our ISO27001 accreditation
there are additional modules required for
completion prior to gaining access to
systems and sensitive information, to
maintain high quality standards when
dealing with information, customer data,
and security. These are closely monitored
and audited to ensure compliance and the
necessary governance. We have recently
been recertified for this ISO standard in
July 2022.
Spark Gigs
In May we launched Spark Gigs – an online
platform that allows Spark employees to
build a profile of their skills, experience,
passions and aspirations, and then using AI,
matches these existing skills and future
ambitions with available opportunities
within the business. Those opportunities
could be in the shape of an informal
opportunity to put their skills to use to help
achieve something outside of their
day-today role, or it could be in the form of
a mentoring opportunity, helping them to
learn from someone else.
People within Spark can make use of Spark
Gigs' skills-matching AI technology to
locate people with specific skills, or those
wanting to learn those new skills, and get
them to help with a project or initiative.
Likewise, those who want to guide and
support others can put themselves forward
as mentors, and Spark Gigs locates
potential mentees.
Spark Gigs gives all our people a chance to
learn new skills to help them to make a
move into a different part of the business,
and at the same time creates an internal
‘ready’ talent pipeline of people who can
move to where the need is within Spark. In
the future this platform will allow us to link
our learning and development frameworks
with gigs and career areas of interest for
our people.
Spark’s Wellbeing
Strategy – Mahi Tahi
Covid-19 provided a moment in time for us
to review our wellbeing strategy, and to
understand what really matters to our
people to support their life and work
experiences.
Spark undertook a wellbeing survey, and
through this data we could see that 10% of
our workforce needed more support for
mental health challenges, while 70% were
seeking tools and information to support
their overall wellbeing. So, we took the time
to reconsider our approach and created a
new strategy known as Mahi Tahi.
Mahi Tahi (partnership) recognises that we
work in partnership with our people to
support how their holistic goals at work and
in life are sustainably achieved which is a
key part of building an inclusive work
environment for everyone. With four pillars
of wellbeing, this framework is closely
aligned with Te Whare Tapa Wha (the four
cornerstones of Māori health).
1. Healthy work environment – providing
our people with a place to work that
looks after more than just physical safety
but also mental and social wellbeing.
2. Connection, collaboration, and
community – ensuring we have
meaningful activities in place so
our people can foster strong
connections with those they work
with and care about.
3. Mind health – supporting strong mental
health capacity and confidence and
fostering growth mindset muscle.
4. Energy – building a culture where
we help our people keep their
batteries charged, so they can
perform at their best.
We launched Mahi Tahi in September 2021
and went on to establish an online
Wellbeing Hub for all our people to
connect with our expert partners, including
Sarah Laurie, Founder of Take a Breath, (a
science-based breathing app and learning
platform) and our two resident Spark
specialist mental health experts, Mandy
Maoate and Tiare Tolks. We have since
onboarded our Pride partners, OutLine, to
further support our whānau with specialist
counselling support and reviewed our
overall EAP services approach.
The Mahi Tahi Wellbeing Hub was
designed to increase access for our people
at Spark to the tools and support available,
while allowing those experiencing acute
distress to book timely one-on-one
sessions with one of our experts.
The access to these tools and specialist
support is actively complemented by virtual
and in person wellbeing upskilling forums.
We also knew that while external specialist
support and channels are critical to great
wellbeing experiences at work the research
also showed us that having credible,
trained, and trusted people embedded
within a business is one of the top ways to
support employees’ wellbeing needs.
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To achieve this we selected, educated, and
‘Spark certified’ 25 of our own people to
become what we call Mahi-Tahi Coaches.
This network of trusted and credible peers
were trained, and continuously supervised,
by our partner psychologists to offer
frontline support and guidance to our
people. These coaches have three hours
dedicated time each week to support our
wellbeing culture through coaching or
promoting wellbeing practices. Over FY23
these coaches will continue to embed their
proactive and reactive services through our
teams and people.
Health and Safety
Spark has a well-established health and
safety management system, focussed on
continuous improvement. Our Health,
Safety and Wellbeing Strategy is built
around the four pillars of our Gold
Standard:
• a strong health and safety
management framework
• a proactive ‘owners’ approach to health
and safety and the management of
critical hazards and associated risks
• a culture of empowerment at every level
• a commitment by the business to
ensuring the resources and capabilities
are in place to deliver the health and
safety strategy
No Spark employees or contractors
suffered serious injury or death over the
year, and our TRIFR (Total Recordable
Incident Frequency Rate) was 2.15 for
FY22, compared to 3.69 in FY21. The
reasons for this decline in our TRIFR
year-on-year were due to extended
Covid-19 lockdowns in the first half of
FY22, and an increase in uptake of our
hybrid ways of working post-covid, with
many of our people working from home
a few days each week. Our target for FY22
was to reduce our TRIFR to 3.0. No
notifiable events were reported under
current NZ Health and Safety legislation,
or health and safety prosecutions or notices
issued to Spark by WorkSafe (NZ Regulator)
during the same period.
In FY22 we continued to work with our
Wider Leadership Group to further foster
health and safety employee empowerment
and participation as part of our Tribe, Unit,
and Centre of Excellence (CoE) meetings
and routine events. We continued our work
with our wholly owned subsidiaries to
identify the areas of greatest priority to
support the development, application, and
monitoring of a health and safety
continuous improvement framework.
Spark’s health and safety system and injury
management programme was reviewed by
the Accident Compensation Commission
(ACC) under the Employers Accredited
Programme (AEP) in June 2021. The audit
outcome was positive with Spark retaining
its tertiary status and remaining accredited
in the same programme for another
12 months.
Covid-19
Managing our health and safety risks in
relation to preventing and limiting the
transmission of Covid-19 within our sites
remained a key priority in FY22. Through
our dedicated Covid-19 Response Squad,
we maintained our enhanced health and
safety protocols including encouraging our
people to get vaccinated and stay home
when sick, the use of masks in high transit
areas, Rapid Antigen Testing, social
distancing, robust cleaning practices across
sites, and of course the application of our
Mahi Tahi wellbeing services.
In October, following the Government
announcement on Covid-19 vaccination
mandates for employees in certain
businesses, Spark undertook a Health and
Safety Risk Assessment (HSRA) to identify
and assess Covid related risks within our
work environments. Spark committed to its
people to continuously review and adapt
its HSRA in line with changes in the external
environment and within our business to
ensure the safety and wellbeing of our
people, customers, and stakeholders.
This identified the need for Spark
employees and suppliers working in
high-risk roles to be fully vaccinated. We
later widened this requirement so that all
people working at a Spark site needed
proof-of-vaccination to enter the building.
This was consistent with advice from
the Government and Ministry of Health
at the time.
In March, when the vaccination
requirements from Government were
lifted, we reviewed our HRSA, and the
My Vaccine Pass requirement for access to
our corporate buildings and key sites was
removed. Our HSRA was subsequently
reviewed again in May, which saw the
removal of My Vaccine Pass requirements
for roles previously identified as high-risk
that were not covered under the
Government’s Public Health Vaccination
Order. Roles that remain covered under
that Order continue to operate with this
vaccination requirement in place.
Our priority has always been to protect the
health, safety and wellbeing of our people,
partners, and customers, while fulfilling
our role as an essential services provider.
Our focus on upholding our Gold
Standards and the ongoing review of both
our HSRA and our business risks, ensures
we are equipped to manage Covid-19
and any future pandemic or epidemic
conditions effectively across our teams
and sites and in line with the latest advice
from the Ministry of Health.
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Diversity, Equity,
and Inclusion
Our ambition is for diversity, equity and
inclusion to be part of “how things are done
at Spark” – embedded into our day-to-day
activities, standards, and business practices.
We want to create a world class, purpose-
fuelled employee experience, enabled by
an inclusive culture that fosters authentic
belonging for our people. Our focus on
diversity, equity and inclusion, symbolised
by our Blue Heart, has helped us create
an environment where all our people can
feel comfortable bringing their whole
selves to work, regardless of gender,
ethnicity, orientation, age, experience,
neurodivergence or ability.
Spark’s Blue Heart Kaupapa
in action
Our Blue Heart Kaupapa sets the standards
of behaviour and the values we stand for,
creating a culture of belonging. It is a visible
icon of our heart-led approach to diversity
and inclusion.
Cultural celebrations and mental health
awareness events remain an important part
of bringing our people together.
With the extended Covid-19 lockdowns
across the country, many of our Blue Heart
celebrations had to be shifted online,
however, we continued to celebrate the
wide range of cultures and communities
that make up the Spark whānau over the
course of FY22.
This included key moments such as
International Women’s Day (IWD) – when
we ran a number of events and workshops
focussed on this year’s theme, “break the
bias” – Lunar New Year, Diwali, and Eid
celebrations, and Matariki events celebrated
at our offices throughout the country.
Whole Hearted
In order to create meaningful movement
and change around ethnic diversity we
need access to quality data to provide us
with a benchmark of what our organisation
currently looks like, and greater insight into
the changes that we need to make to
improve representation. However, at the
start of FY22, only 19% of Spark employees
had shared their ethnicities with us.
To encourage a greater level of ethnicity
and cultural sharing across the business we
created an internal campaign called ‘Whole
Hearted’ to encourage our people to feel
comfortable in sharing the ethnicities they
most identify with. We were open and
transparent with our people in explaining
how this data would be used and how it
would enable Spark to create change –
giving us greater clarity on our ethnic
make-up, providing insights on how best
to serve our people from different
backgrounds, and allowing us to co-create
bespoke experiences and solutions with
our diverse communities.
Our goal was to increase the number of
Spark people who have let us know their
ethnic identity to 50% by the end of FY22
and 80% by the end of FY23. At the end of
FY22, ~50% of our people (excluding
employees in wholly-owned subsidiaries)
have shared their ethnicity data with us,
and this remains a focus for the year ahead.
Our focus in FY23 is to reach out to our
people armed with a greater
understanding of who we are, to create
experiences, support and initiatives that
reflect our increased cultural intelligence
across our business. We hope this will flow
into the attraction of new talent,
progression of diverse talent through the
business, and further our people’s sense
of connection and belonging.
Te Korowai Tupu
Our Māori business strategy, Te Korowai
Tupu (the cloak of growth), continues to
be weaved through the business to give
our people a wider understanding of
te ao Māori and to ensure our business
is reflective of Aotearoa today –a
multi-cultural society that respects the
indigenous people of the land.
In FY22 we continued to promote our
people’s understanding of te ao Māori
by delivering cultural responsiveness
modules, and Te Ara Reo, our Māori
language pathway strategy which
currently has over 150 of our people
learning te reo Māori at beginner and
intermediate levels.
We continued to work in partnership to
bring our strategy to life, and over the
last 12 months we have added to our
existing stable of key partners of Te
Wānanga o Aotearoa, Whāriki, Kōkiri,
Arataki Systems, Kiwa Digital, Te Taura
Whiri and Te Ipukarea and welcomed
Education Perfect and Te Pūtahitanga
o te Waipounamu.
Through our new partnership with
Hapai Tūhono we committed to
building our future Māori
leadership talent by supporting
their development pathways.
In June we also celebrated Matariki
across our corporate offices with
a range of activities including
performances, demonstrations, lots
of kai, and a waiata sing-off challenge.
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Pride
Spark has been a long-time supporter
of the Rainbow Community, and in March
we once again engaged in the Auckland
Pride and Spark Empowerment Initiative.
In June we supported International Pride
Month through a series of events at our
corporate offices across the country.
We are committed to our continued
support of OUTLine NZ, a national charity
that offers a free support line for members
of the LGBTQIA+ community and family
and friends. In FY22, this included the
co-creation and launch of the Beyond
Binary Code (see page 22 for more
information) and our ongoing support with
equipment, software and tech support to
keep OUTLine’s support line and online
chat support service running.
Alongside the Beyond Binary Code launch,
we launched a training module to help our
people to understand key concepts of
diversity, equity, and inclusion with a focus
on gender, sexuality, and gender fluidity.
The training module includes general
definitions and distinctions as well as basic
information on how to support an inclusive
workplace that respects and values those
from diverse gender backgrounds.
OUTLine NZ has also been included in
our Mahi Tahi suite of specialist support
offerings, providing our people with
specialist rainbow affirming counselling.
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Our diversity performance
Over the past year we have continued to
focus on improving female representation
across the group and reducing our gender
pay gap. We set a FY23 ambition two years
ago to achieve 40:40:20 representation
Spark-wide, which refers to 40% men,
40% women, and 20% of any gender (as
well as gender diverse representatives),
and to reduce our median gender pay
gap by 10 percentage points to 18%.
Although we have remained focussed on
this commitment throughout the last two
years and worked with all areas of our
business to bring about the change
we want to see, as we close out FY22,
we know that we will need longer to
reach these goals.
Covid-19 made it more challenging for
us to create opportunities for change,
and wow that improving gender diversity
in the technology industry, which is
predominantly male, is challenging to start
with. Within this new context, we’ve
decided to reset our timelines to reach
our goals. We’re not planning on resetting
our ambition, only our timeline to get there.
We believe that working towards 2024 for
our 40% female representation target and
2025 for our 18% pay gap reduction target
best reflects our market context and will
continue our momentum, while also
ensuring that this ambition is prioritised
across the business. And we will continue
to set ambitious goals on diversity and
inclusion in our next strategy, which will
be outlined next year.
Overall, across the group we saw female
representation remain broadly flat at 34%
compared to 35% in FY21. Within the
core Spark business the figure is higher
at 36%, while in our wholly-owned
subsidiaries representation is currently
significantly lower at 23%.
After a challenging period of lockdowns
and managing Covid-19, our in-year
tracking identified a lack of movement in
the first half of FY22, so we initiated new
activity to get greater traction heading into
FY23. This involved reviewing and resetting
targets for each business area – including
overall representation targets and
guidance on the starter and leaver gender
mix that we would need to see to achieve
these. In FY22 females represented only
33% of our starters, but 35% of our leavers.
Our People & Culture Partners have been
upskilled further with tools to close the
gender pay gap and recruit for diversity.
We have also educated our senior leaders
across the Group with these tools. Each
area now has an action plan to achieve its
representation goals in addition to
maintaining recruitment standards such as
40:40:20 shortlists. We therefore expect to
see further progress towards our ambition
in FY23.
Within our Board, Leadership Squad (LS)
and Wider Leadership Group (senior roles
outside Board and LS) we continue to
maintain a 40:40:20 representation, which
is fundamental to reaching our broader
diversity ambitions. We were pleased
to see the proportion of females in
our Wider Leadership Group increase
from 42% to 47%.
Our Board is 43% female and 57% male,
with three female directors (including our
CEO) and four male directors. One new
female and one new male director joined
our Board with effect from 1 August 2022
and one male director has signalled that
he will retire from our Board at the Annual
General Meeting in November 2022.
If the composition of our Board remains
unchanged at that date, at the conclusion
of the Annual General Meeting our Board
will be 50% female and 50% male.
Over the past year our Leadership Squad
has added a new female leader, increasing
the female to male ratio to a 60% female
and 40% male split.
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Spark implemented Contribution Models
when it flipped to agile, which are
designed to ensure equal pay for work
of equal value within each chapter of the
business and pay gaps within each ‘step’
of the model are reviewed annually as part
of our salary review process. Our ambition
is to reduce our overall median gender pay
gap – which is a measure that compares the
pay of all female employees to that of all
male employees, and therefore reflects
differences in the occupations that men
and women do within Spark. It is not to be
confused with a measure of equal pay for
equal work. Committing to reducing our
median gender pay gap means we must
focus not only on getting more women into
our business, but also ensuring that they
are proportionately represented in higher
paid roles.
Our median gender pay gap, which
presents the difference between the
median pay of our female and male
employees as a percentage of male pay,
has reduced from 28% in FY21 to 24%.
While our FY23 target is focussed on the
gap between median rates of pay, we also
monitor the difference in mean (average)
pay, which fell from 16% to 13%.
Achieving our pay gap ambitions is
closely linked to our approach to
improving representation and it is
essential that we continue to support a
New Zealand-wide pipeline of females
in technology careers given industry wide
challenges – including through Women
in Technology scholarships, collaboration
with influencers such as our work with
GirlBoss, and partnerships with external
technology educators.
Our Diversity and Inclusion Policy sets
out our framework in this area:
www.sparknz.co.nz/about/governance
Gender pay ratio
CategoryNumber of
employees
in category
Pay Ratio:
Mean
1
(Year-on-year
change)
Pay Ratio:
Median
2
(Year-on-year
change)
Leadership: Spark’s wider leadership group,
including the Leadership Squad
FY22: 70
FY21: 69
FY22: -1% (-6%)
FY21: 5%
FY22: -12% (-8%)
FY21: -4%
Network, Infrastructure & Security: Employees
that work in technology focussed areas of
the business
FY22: 2,338
FY21: 2,256
FY22: -9% (+6%)
FY21: -15%
FY22: -20% (+1%)
FY21: -21%
Customer Channels: People primarily employed
within our contact centres and retail operations
FY22: 971
FY21: 1,137
FY22: -1% (+1%)
FY21: -2%
FY22: 0%
(No change)
FY21: 0%
Rest of Spark: including corporate, product,
data, automation, marketing and customer units
FY22: 1,765
FY21: 1,621
FY22: -15% (+2%)
FY21: -17%
FY22: -17% (+8%)
FY21: -25%
Total5,144FY22: -13% (+3%)
FY21: -16%
FY22: -24% (+3%)
FY21: -28%
1 Pay Ratio = (mean female salary – mean male salary) / mean male salary
2 Pay Ratio = (median female salary – median male salary) / median male salary
Calculated using hourly On Target Earnings or Total Base Remuneration plus Short Term
Incentive Target values as at 30 June 2022. Negative pay gap values indicate that women
earn less on average than men. Note the median pay ratio shifted by 3.4 percentage points
from 27.8% in FY21 (rounded 28%) to 24.4% in FY22 (rounded 24%).
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Parental leave
Spark provides a parental leave policy for eligible employees, regardless of gender, sexuality, age or whether the employee is giving birth or
adopting a child. If an employee has been employed by Spark for a minimum of 12 months, then Spark will top up the Government’s parental
leave payments, so the employee receives 80% of their salary for 26 weeks. As a guaranteed minimum Spark ensures that the total amount
someone receives, less any Government paid primary carer's payments, will not be less than the equivalent of six weeks of ordinary salary.
Eligibility for Parental Leave is in accordance with Government legislation.
FY22 Parental leave numbersFemaleMale
1
Employees who took parental leave731
Employees who returned to work after taking parental leave621
Employees who returned to work after taking parental leave that remain employed 12 months after their return to work480
Return to work rate
2
87%100%
Retention rate
3
74%NA
1 Males that took fewer than 30 days paternity leave have been excluded.
2 Return to work rate = Total number of employees who returned to work after parental leave, divided by the total number of employees due to return to work after taking
parental leave.
3 Retention rate = Total number of employees retained 12 months after returning to work following a period of parental leave, divided by the total number of employees
returning from parental leave in the prior reporting period.
Demographics of our workforce
Including permanent and fixed-term employees of Spark and its directors, as at 30 June 2022.
Gender
1
Age
Number of
people
Female %Male %Female #Male #Under 30
years old
30 – 50
years old
Over 50
years old
Directors743%57%FY22: 3FY22: 40%14%86%
No change-14%+14%FY21: 4FY21: 3No changeNo changeNo change
Leadership Squad
2
1060%40%FY22: 6FY22: 40%100%0%
+1+5%-5%FY21: 5FY21: 4No changeNo changeNo change
Other leadership roles
3
6047%53%FY22: 28FY22 322%77%22%
+1+5%-5%FY21: 25FY21: 34-1%+2%+1%
Permanent starters125533%67%FY21: 413FY21: 84039%53%8%
540-6%+6%FY20: 281FY20: 434+9%-7%+2%
Permanent leavers136135%65%FY21: 472FY21: 88828%60%12%
+362+4%-4%FY20: 325FY20: 674-3%-7%-3%
Total
4
5,15134%66%FY22: 1,729FY22: 3,413 20%58%22%
+55-1%+1%FY21: 1,770FY21: 3,319+4%+2%+2%
1 For the purposes of NZX Listing Rule 3.8.1(c) no Directors or members of the Leadership Squad self-identify as gender diverse.
2 Includes the CEO who is also included as a Director in the line above – the FY21 figure has been restated as it excluded the CEO. The Leadership Squad is considered
‘senior managers’ for the purposes of the Financial Markets Conduct Act 2013 and ’senior executives’ for the purposes of the ASX Corporate Governance Council’s
Principles and Recommendations.
3 Substantive roles that report directly to members of the Leadership Squad.
4 Includes non-executive directors. Spark’s employee headcount, including our CEO, is reported as 5,144. Total reflects addition of Connect 8 headcount which are not
recorded as starters for the purposes of this table.
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Ethnicity
As a result of our Whole Hearted campaign
(see page 44) we are reporting on the
ethnic composition of Spark employees for
the first time in this Annual Report. As at
30 June 2022, the available data on our
people shows that 52% come from NZ
European or European ethnic backgrounds
with 35% reporting a diverse range of
Asian ethnicities, with the largest groups
being Indian (14% overall), Chinese (6%)
and Filipino (5%). Just over 4% of our
people are Māori and 5% report Pacific
ethnicities, most commonly Samoan.
Our senior levels have a higher proportion
of people from NZ European / European
ethnicities with 82% of our people in
leadership roles (Leadership Squad and
Wider Leadership Group) included in this
grouping. We will continue to improve our
data collection in FY23 to cover a higher
proportion of the organisation and use this
information to gain insights on how we can
attract, retain, and progress a diverse range
of people across our organisation.
Percentages based on permanent and
fixed-term employees at Spark employees
as at 30 June 2022 that had provided
ethnicity data (n=1869). NZ European /
European includes all European ethnicities
(e.g. British, German) and Australian
European. Excludes employees in Spark’s
wholly-owned subsidiaries. Spark collects
information on main and other ethnicity
where an individual identifies with more
than one ethnicity. Consistent with the
Champions for Change methodology,
where an individual reports two ethnicities,
each is counted as 0.5.
0102030405060708090100
Rest of Spark
Wider
Leadership
Group
Leadership
Squad
Board
Total
NZ European/
European
Asian
Pacific Peoples
Middle East,
Latin America
and Africa
Māori
Other
49
Spark New Zealand Annual Report 2022
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Hello Tomorrow
Reduced draw on
natural capital
Creating value for
our environment
Natural capital
With a network distributed across New Zealand,
and technology sourced from materials around
the world, we are reliant on natural capital to
make our business run.
We are also conscious of our own impact on the
environment, and the opportunity to use our
technology and expertise to support others to
use natural capital efficiently and responsibly.
We are committed to playing our part in reducing
our direct environmental impacts and engaging
with our suppliers to address impacts in our
supply chain.
OUTCOMES FY22
Creating value for our environment
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50
Spark through a standing quarterly agenda
item at Leadership Squad meetings.
We have decided that sustainability is
relevant to all areas of the business, so key
updates and decisions are participated in
by all members of our leadership team.
We have also established a quarterly
dashboard of performance against key
KPIs, including our emissions, which is
included in quarterly updates to our Board,
and shared with all employees.
Our Leadership Squad and Board have
also been engaged in our evaluation of
climate-related risks. We report these risks
using the TCFD (Taskforce on Climate-
related Financial Disclosure) framework.
Please see pages 71-72.
Spark’s SBTi-verified
science-based emissions
reduction target
The Science Based Targets initiative
(SBTi) is established as the global standard
for corporate emissions reduction targets.
Over 1400 organisations have set verified
emissions reduction targets since it
launched in 2015. In New Zealand
14 companies have set targets, with
a further six committed to set targets
within two years.
All SBTi targets must have a strict absolute
reduction target for scope 1 and 2
emissions, and also include a separate
scope 3 target if these emissions are
greater than 40% of the total footprint.
• Scope 1: Direct emissions from sources
owned or controlled by Spark
• Scope 2: Indirect emissions from
purchased electricity
• Scope 3: Indirect emissions from other
sources in the value chain – e.g.,
production of purchased materials,
transportation, business travel and use
of sold products
SBTi targets are set against sector-specific
emissions trajectories. The ICT sector
pathways were developed with the
International Telecommunications Union
(ITU) based on projected growth and
efficiency gains, giving Spark a reduction
target of 56% over the next decade.
The SBTi also sets rules for recalculating
targets for organisations that have
significant changes to their structure or
operations to ensure targets maintain a
consistent level of ambition. Changes
related to the planned sale of 70% of
TowerCo and the investment to take full
ownership of Connect 8 will mean that we
will assess any need to adjust or re-baseline
our emissions target in FY23.
A key pillar of our sustainability framework
is to help New Zealand transform to
a high productivity, low carbon economy.
We contribute to this through our
investment in infrastructure and innovation.
But we recognise we also have a role
to play to build awareness of the
opportunities to use digital technology
to overcome sustainability challenges. As
New Zealand’s largest telecommunications
and digital services company, it’s important
that we show leadership in realising the
potential benefits of technology.
Our approach to
environmental
management
Spark has long-standing processes to
manage many of our environmental
impacts. However, these processes were
not aligned under a common policy or
governance framework. Over the past
two years we have been focussed on
maturing our approach to environmental
management.
Our Environmental Policy, which is available
at: www.sparknz.co.nz/about/governance,
sets out our expectations for our people
to consider environmental impacts when
making decisions at work, including
examining our business practices,
understanding their impacts, and taking
reasonable steps to reduce Spark’s
environmental footprint. The policy was
introduced in FY21, alongside our roll-out
of the Future Fit programme to engage our
employees around environmental choices.
For the year ahead we are rolling out a
sustainability training module for all
employees, which includes education on
the Environmental Policy and what it means
for our people when making decisions.
Over the past year our focus has been on
embedding our science-based emissions
reduction target into the business through
an emissions reduction and energy
efficiency programme. This is supported by
strengthened internal reporting capabilities
to provide a quarterly view of our emissions
and broader sustainability performance.
We have established quarterly reporting to
our Leadership Squad, who act as a
steering committee for Sustainability across
56%
Spark New Zealand commits to reduce
absolute Scope 1 and 2 GHG emissions
56% by 2030 from a FY2020 base year.
70%
Spark New Zealand commits that 70% of its
suppliers by spend covering purchased
goods and services and capital goods, will
have SBTi-aligned targets in place by 2026.
SPARK’S SBTi-VERIFIED EMISSIONS
REDUCTION TARGET
Linking our financing
to our sustainability
goals
In November 2021, Spark Finance
established three Sustainability-
Linked Loans totalling $NZ425
million tied to our environmental
and diversity performance. In
March 2022, Spark Finance issued
a NZ$100m Sustainability-Linked
Bond and established a
Sustainable Finance Framework,
which outlines Spark’s sustainable
financing focus areas and is aligned
to our Sustainability Framework.
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Spark New Zealand Annual Report 2022
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Greenhouse Gas Inventory Report
We publish a stand-alone Greenhouse
Gas Inventory Report alongside our
Annual Report. The report is independently
assured and is prepared in accordance
with The Greenhouse Gas Protocol.
It includes detailed reporting on our
emissions and energy use. See https://
www.sparknz.co.nz/sustainability/
environment/ for more information.
Spark Annual Report 2022
WHAKAMAUA
KO TE PAE ANAMATA
Hello Tomorrow
STATEMENT
MODERN SLAVERY
Spark Modern Slavery
Statement 2022
INVENTORY
GREENHOUSE GAS
Spark Greenhouse Gas
Inventory Report 2022
GOVERNANCE
CORPORATE
Spark Annual Corporate
Governance Statement 2022
Our emissions
Greenhouse gas emissions
In FY21 we saw a significant increase
in emissions against our FY20 baseline.
This was due to dry hydrological conditions
increasing the emissions intensity of the
electricity we consumed off the grid.
In FY22 this trend was reversed, with
a cleaner electricity mix and underlying
reductions in energy use delivering
a 15.2% emissions reduction.
Despite this our FY22 emissions are still
above our FY20 baseline, and we are not
yet reducing our emissions against a
pathway aligned to our science-based
target of a 56% reduction by FY30.
Positively, over a third of the emissions
reduction we delivered in FY22 was driven
by reduced fuel and electricity
consumption, factors within our direct
control. Over the past year we formed a
new squad that has established an
emissions reduction and energy efficiency
programme to maintain this momentum.
The main source of our emissions, and the
focus of the programme, is our network
infrastructure, which includes our exchange
sites, mobile towers, and data centres. The
programme also addresses emissions from
offices, retail, and fleet and business travel.
We are tracking emissions for each part of
the business against our SBTi reduction
pathway, with a target to reduce emissions
5.6% each year in line with our 10-year 56%
reduction target. We have also established
efficiency targets to ensure we are focussed
on improving underlying efficiency.
Reduction pathway
required to meet
FY30 target
FY22FY21FY20
Stationary combustion -
Diesel generators
Mobile combustion -
Vehicle fleet
Fugitive emissions
Data centre
Fixed Network
Mobile Network
Corporate/Retail
Natural gas combustion
GHG emissions (tCO
2
e)
Baseline year
0
5,000
10,000
15,000
20,000
25,000
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Creating value for our environment
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Hello Tomorrow
our energy provider to work with Spark to
achieve its SBTi target, through partnership
in creating an emissions reduction plan,
and through endeavours to link Spark’s
electricity use to new renewable energy
generation assets.
Business travel
We saw a 12% decrease in emissions
from business travel in the past year.
This reduction was expected due to
Covid-19 restrictions on air travel.
We want to maintain some of the
discipline and practices imposed by these
restrictions to limit future flying where it
makes sense and ensure we do not return
to previous levels. Compared to FY20 our
business travel emissions are down 81%,
saving around 2,600 tonnes CO
2
e of scope
3 emissions against previous levels.
0
20
40
60
80
100
120
140
160
180
FY22FY21FY20
Data centre
Fixed network
Mobile network
Corporate/Retail
Residual Supply
Factor
GWh consumed
tCO
2
e/GWh
110.77
124.69
99.28
0
20
40
60
80
100
120
140
160
180
Electricity accounts for over 80% of our
scope 1 and 2 emissions. Over the past
year our electricity use reduced by 3.9%.
This was driven by our programme of
network simplification, including the
decommissioning of legacy equipment
such as the public switched telephone
network (PSTN).
Although we can continue to reduce
electricity consumption through a focus
on energy efficiency and removing old,
inefficient equipment, we are also investing
in new infrastructure as traffic grows across
our network. This is important to support
innovation to drive emissions reductions
and productivity across all sectors.
This includes the roll-out of 5G, and
investment to expand our data centres.
Although energy efficiency is a focus in
our rollout of new infrastructure and in
the construction of new data centre space,
we expect our electricity usage to slowly
increase over time.
Electricity consumption
In New Zealand we benefit from a high
share of renewable generation on the
national grid. This means our emissions
from the electricity we use is relatively low
compared to organisations operating in
other markets. However, to achieve our
SBTi target, we need to further reduce the
emissions intensity of our electricity.
It is projected that the New Zealand grid
will continue to decarbonise over the next
decade, aligned with New Zealand’s
national emissions reduction budgets and
plans. In addition to expected national
improvements, Spark is actively pursuing
options to link our electricity purchasing
to new renewable electricity generation
capacity. In FY22 we reviewed our
electricity supply contracts, with
sustainability a key selection criterion
in this process and a deciding factor in
our purchasing decision. Our new energy
partnership includes a commitment from
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Spark New Zealand Annual Report 2022
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Spark’s Corporate Fleet Journey
Since 2019, we have been actively changing how our Fleet looks, by choosing
vehicles that reflect the Spark sustainability story. We've moved away from a
hybrid model of part owned/part leased, to a full leased and managed fleet,
with a mix of pool (shared) and assigned vehicles.
In FY23 we will pilot an ‘Electric First’ policy
for the broader Spark Corporate Fleet,
including individually-assigned vehicles,
with the intent for all vehicles due for
renewal (approximately 20 cars) to be EV.
We will use the results of the pilot to inform
a full transition of our fleet to EVs from
FY24 onwards. We will also engage with
our subsidiaries and Spark Business Hubs
to share our findings and support change
in the broader fleet.
In the year ahead we are also participating
in a hydrogen car-sharing scheme with
Toyota New Zealand and seven other
Auckland-based companies. We believe
emerging technologies will play an
important role in helping to solve
Aotearoa’s environmental challenges,
and working in partnership with other
businesses to explore these opportunities
is one of the ways we can support progress.
At the end of FY22 we had only eight
pure petrol or diesel vehicles remaining
in our core fleet of 236 vehicles. We had
11 full electric vehicles, 36 PHEVs and
181 hybrids. We have a further 69 vehicles
assigned to our subsidiaries CCL and
Digital Island, the majority of which were
petrol powered.
Performance against our
scope 3 supplier
engagement target
Over the past year the percentage of our
spend with suppliers with SBTi-aligned
targets in place has increased 5% to
around 30%, the majority of which have
been verified by the SBTi. Two of our key
local suppliers have formally committed
to setting an SBTi-verified target in the next
two years, including our largest supplier
by spend. Around 35% of our FY22 spend
is with suppliers formally committed to
setting a science-based target via the SBTi,
up around 10% year-on-year. We will
investigate options for a combined local
industry approach to share learnings on
the SBTi process.
Our fleet
Spark’s fleet is responsible for around 4%
of our reported emissions. As the electricity
powering our networks becomes cleaner
its impact will grow in importance as we
work towards our SBTi target.
In previous years we transitioned much of
our fleet to Plug-in Hybrid Electric Vehicles
(PHEVs). PHEVs should be regularly
plugged-in and charged to achieve the
best efficiency. Usage data from our fleet
shows these vehicles haven’t achieved their
potential efficiency due to a combination
of available infrastructure and driver
behaviour. Over the past two years the
majority of the PHEVs in our fleet have
been replaced by newer non-plugin
hybrids, such as the Toyota RAV4, which
are achieving better real-world efficiency.
We are in the process of transitioning all
shared pool vehicles to EVs (fully Electric
Vehicles), including installing dedicated
charging infrastructure. This work has been
completed at our Auckland Spark City
office and will be completed at our
Hamilton, Wellington, and Christchurch
offices in FY23.
F Y19
Spark commitment to 30% of
Fleet being Electric by end of
2019, met with Mini PHEVs.
FY20
Converted 98% of the fleet to
Hybrid as a minimum, with the
rollout of the Toyota RAV4 Hybrid.
FY21
Introduced full EV Pool
Vehicles in Spark City with the
rollout of 5 Nissan Leaf EVs.
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We have a strategy to engage our suppliers
to encourage them to set science-based
emissions reduction targets. Our new SAP
Ariba supplier management platform has
provided an opportunity to gather more
data on supplier environmental
commitments, including emissions
reduction targets and alignment and
validation against SBTi methodology.
For local suppliers, membership of the
New Zealand Climate Leaders Coalition
is a step we may encourage, which as
a membership requirement stipulates
businesses work towards implementing
a science-based target.
For global suppliers, our new membership
of the global industry group, the Joint
Audit Cooperation (JAC), offers a chance
to engage suppliers alongside other
telecommunications companies with
similar SBTi-verified supplier engagement
targets. For more information on JAC and
how we are developing our approach to
engaging suppliers on sustainability and
ESG matters, please see the Our Suppliers
section on page 73.
E-waste and
network recycling
Spark has a comprehensive programme for
managing end-of-life network equipment
and technology. This is separated into
different waste streams – such as mobile
phones, printed circuit boards, copper
cables, lead batteries, and all types of
metals. The different items are sorted,
processed by our recycling partners and
then some components are sent overseas
for recycling, reselling, or reusing.
In FY22 we recovered a total of 545 tonnes
of e-waste, down from 638 tonnes or 15%
on FY21. Of this, 151 tonnes was network
e-waste (up 14% on FY21), and 394 tonnes
was metals, cables, and batteries (down
22%). We continue to improve our recycling
collections focusing on education within
Spark and working with some of our larger
customers to support them to responsibly
recycle their surplus equipment.
In the past year this included partnering
with KiwiRail, which consumes close to
1400 items of computer hardware each
year. Spark Business Group partnered
with KiwiRail to establish a nationwide
programme of e-waste recycling starting
in Wellington, Auckland, and Christchurch.
Mobile phone recycling
In FY22 Spark received 20,609 mobile
devices for recycling, down from 28,715
in FY21. As mobile devices are becoming
more advanced and robust their lifecycles
have extended, meaning customers are
replacing their devices less frequently and
we are experiencing a lower volume of
recycling as a result.
Spark is a member of the
Telecommunication Forum’s (TCF)
RE:MOBILE product stewardship scheme.
The scheme takes unused mobile phones,
and either refurbishes and on-sells them in
overseas markets or recycles them. Profit
from the scheme is donated to the charity
Sustainable Coastlines.
Electrical and electronic products have
been designated as Priority Products
under the Waste Minimisation Act 2008.
Designation as a priority product means
that an accredited Product Stewardship
Scheme must be implemented to
manage waste streams associated with
the product categories.
The RE:MOBILE scheme was one of the
first industry schemes voluntarily accredited
by the Ministry for the Environment (MfE)
under the provisions of the Act. Since the
Priority Product designation, the Product
Stewardship Scheme accreditation lapsed
in April 2021. The TCF is working closely
with MfE to work through the new
accreditation process. In the meantime,
MfE has confirmed that it will continue to
support and recognise the scheme whilst
reaccreditation is being worked through.
We are working with our industry partners
and the TCF to boost the awareness
of the scheme and to overcome the
barriers consumers experience in recycling
their devices.
Alongside the Spark Foundation,
we also support the Recycle A Device
(RAD) scheme to collect and refurbish
used laptops for students and others
in need of a device. See page 58 for
more information.
FY22
Spark City pool went 100%
electric with the incorporation
of 3 Kia Niro EVs.
FY23+
Spark Corporate Fleet
to move to “EV first”
model.
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Creating value for
our communities
Social + human capital
We work alongside New Zealand communities
to harness the power of technology and
create a positive digital future for all.
Our products and services help our
communities to stay connected and enable
the provision of community services. Beyond
the direct impacts of our products, we want to
play a bigger role in building healthy,
connected, and equitable communities.
Connected and
empowered communities
OUTCOMES FY22
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Creating value for our communities
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Creating value for our communities
To ensure we continue to improve our
service and make it accessible to as many
people in need as possible, in FY22 the
Skinny Jump squad worked with Digital
Inclusion Alliance Aotearoa (DIAA) to
survey existing customers and learn more
about their experiences. This research
reinforced that access is only a first step,
and for many families other barriers such
as a lack of digital skills and trust in
technology can also reinforce the
digital divide.
These insights led to the implementation of
a number of new initiatives such as an
online safety brochure with all new Jump
modems, internal training modules for the
Skinny Care team (who are often the first
port-of-call for Jump customers who are
having issues with their connections), Jump
sign-up and help videos in multiple
languages, including te reo Māori, and an
update of the Skinny Jump app, to make it
more user friendly and easier for customers
who are unfamiliar with digital technology.
Digital Equity
It is estimated that 1 in 5 people in
New Zealand currently experience some
form of digital exclusion
1
. We want to
create a positive digital future where
everyone in Aotearoa has an opportunity
to participate in the digital world. Our
commitment to digital equity is clearly
outlined in our three-year strategy with a
bold target to connect 35,000 households
in need by the end of FY23.
Our efforts to bridge the digital divide
extend beyond affordable access and are
guided by the Government’s Digital
Inclusion Blueprint, which identified four
elements of digital inclusion: motivation,
access, skills, and trust.
Skinny Jump
Skinny Jump is Spark’s not-for-profit
wireless broadband service for people
who find cost a barrier to having an
internet connection at home. The service is
entirely prepaid, so there are no long-term
contracts or credit checks needed, and all
it takes to get set up is registering through
a community partner and plugging in
the modem.
Jump is delivered by a dedicated squad
of Spark people alongside a community
partner network, which is overseen by
Digital Inclusion Alliance Aotearoa (DIAA)
and includes over 300 local organisations
nationwide, spanning community libraries
and community hubs amongst others.
Since its relaunch in March 2020, when
the eligibility criteria were extended just
as Aotearoa was entering its first Covid-19
lockdown, the number of households
benefiting from Jump has increased from
around 5,000 to 23,323.
In June, Jump announced a boost to
its data allocation for customers, to keep
digitally excluded households across
Aotearoa connected as data usage and
cost-of-living pressures continue to rise.
Skinny Jump now provides 35GB of
data for just $5, with the first 15GB of data
each month free. Additionally, customers
have the option to purchase up to six
top-ups a month. All together this means
Jump customers can access 225GB for just
$30 a month.
In FY22 Skinny Jump continued its key
partnerships – the ‘Ciena Jump for Students
Fund’, which gives eligible students in low
decile schools a free Skinny Jump
connection until the end of the school year;
and ‘Awhi Matihiko: Red Cross Digital
Settlement Package,’ a collaboration with
New Zealand Red Cross, Internet NZ, and
Digital Inclusion Alliance Aotearoa that
gives new refugees a free Skinny Jump
connection (for 12 months), a laptop, and
digital skills training. There are now over
210 students using the Ciena Jump for
Students Fund and 45 households using
the Awhi Matihiko: Red Cross Digital
Settlement Package.
1 https://www.digital.govt.nz/dmsdocument/174~digital-inclusion-action-plan-20202021/html
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Spark Foundation
Spark Foundation leads Spark’s work in
the community. The Foundation has a
single-minded focus on digital equity, and
its vision is that no New Zealander is left
behind in a digital world. It has focussed
its strategy on the areas it can make the
biggest difference – digital access, digital
skills and pathways, and digital wellbeing.
Spark Foundation allocates funding for
programmes through a strategic
partnership approach, working with
organisations whose objectives are aligned
to improving digital equity for Aotearoa.
Most partnerships focus on empowering
and equipping the next generation,
especially Māori, Pasifika, and women.
Some of the Foundation’s key partnerships
include:
Digital Access
Recycle A Device
Recycle A Device (RAD) is a Spark
Foundation funded programme that takes
second-hand laptops donated by
businesses and households; teaches local
high school students to refurbish them;
and then gets them into the hands of those
who need them the most.
The result is an end-to-end process of
device collection, refurbishment,
distribution, and disposal that enhances
digital equity at every level – providing
highly sought-after tools, access, and skills
to high school students, while also offering
the added environmental benefit of
diverting e-waste from landfill by giving
these laptops a second life. Once devices
have been refurbished, they are transferred
to students within the school community
itself, or to other community organisations
for distribution to people in need. As well
as Spark Foundation funding, Entelar –
Spark’s ICT and logistics business – has
partnered with RAD providing all logistics
support. During FY22 RAD was awarded
the ‘Sustainability Through Technology’
Award at the NZ CIO Awards, and through
the programme 976 laptops were
refurbished and 696 were redistributed to
those in need. In addition, RAD now has 16
high schools training students, and three
Pasifika community groups training their
local communities across Aotearoa as part
of its refurbishment training programme.
Spark’s investment
into the community
Spark invests in the community
through financial donations,
subsidised broadband services, and
the volunteering time of its people.
Spark invests $1.7 million in the
Spark Foundation annually, with
$1.2 million of this being distributed
to community partners, and the
remaining funding operating costs.
This includes the Spark Give and
Spark Volunteer programmes, which
match employee charitable
donations (up to a total pool of
$250,000 per annual year)
and provides all Spark people
with one day leave a year to commit
to volunteering.
Spark’s subsidised broadband
service Skinny Jump has been
designed to operate on a not-for-
profit basis – with the revenue
generated covering the costs of the
free modems, community partner
network, product development,
and customer care and education.
The commercial value of the data
provided to households in need
through Skinny Jump totalled over
$4.5 million in FY22.
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Digital Skills and Pathways
• P-Tech: A public education model
designed by educators and the
technology sector to address
New Zealand’s STEM skills gap.
Participating schools collaborate with
private companies that provide
students with mentorships, worksite
visits, and paid internships. On
completing the programme, students
will have both their NCEA qualifications,
and a New Zealand Diploma aligned to
industry needs. In addition, successful
graduates typically earn first-in-line
consideration at affiliated industry
partners when applying for jobs. In
FY22, 59 Spark people provided
mentoring as part of this programme.
• Pūhoro: Spark Foundation and
Auckland Unlimited have collaborated
with Pūhoro to co-fund ‘Te Au Hangarau
– Accelerating Māori Participation in
tech’ research that explores the barriers
and contributing factors that limit Māori
participation and success in New
Zealand’s tech industry. The research will
be launched in FY23, and will inform
further action across the community,
education, and industry sectors.
Hihiko Te Rawa Auahau: Delivered by
Toi Kai Rawa, the Bay of Plenty’s Māori
economic development agency,
innovation hubs will be embedded into
30 Māori communities across the wider
Bay of Plenty over the next few years.
• Digital Future Aotearoa: Digital Future
delivers a range of programmes
including Code Club (a nationwide
network of over 400 coding clubs for
tamariki), alongside Professional
Learning Development (PLD) for
teachers of the digital technology
curriculum, and Recycle A Device
(RAD). In FY22 Foundation funding
supported Digital Future to explore
a governance and delivery model
that better serves and supports
Māori aspirations.
• Take2: A programme that aims to break
the cycle of crime through technology.
Take2 teaches incarcerated individuals
to code, enabling meaningful
employment opportunities once they
are released. During FY22 Spark
supported the Take2 team by providing
training through our Agile Academy,
and a design thinking workshop with
our People & Culture team. Our team
are working with Take2 to explore
future internship opportunities within
Spark. We want to ensure that we can
design a programme with appropriate
wrap-around services in place to
support graduates as they transition
into a working environment.
• Ngā Rauhanga ā Maui scholarships:
To recognise and support Rangatahi
Māori who are undertaking study,
training or are passionate about the
future of technology and innovation in
Aotearoa, Spark Foundation and
Spark’s Māori Strategy team have
funded two Ngā Rauhanga ā Maui
scholarships. These will be drawn in
October following the final summit in
Hamilton, and Spark Foundation and
Spark will host the scholarship
recipients in Auckland.
Digital Wellbeing
Te Iwi Matihiko: Designed and
delivered by Digital Natives Academy,
Te Iwi Matihiko is a values-based
approach to digital wellbeing that
draws from the Te Whare Tapa Whā
model of health but designed for
today’s youth. The programme aims to
introduce tamariki (9-11yrs), rangatahi
(12yrs+), and pakeke (adults) to the key
tools they will need to safely navigate
social media and online gaming.
• The Light Project: This is a pilot project
that aims to help youth, their whānau,
schools and wider communities to
navigate the challenges presented by
online pornography. It addresses one
of the biggest barriers to digital equity
amongst some New Zealand families
– a fear that the internet might cause
harm to tamariki and rangatahi.
• Digital Discipline: A new partnership in
FY22, Digital Discipline is a programme
that offers support to young people
dealing with social media addiction
through education, awareness, and
strategies to balance the online world
with the real world. Digital Discipline
is currently focussed on South and
West Auckland communities with
collaborations in Rotorua, Porirua
and Ōtautahi / Christchurch.
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Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
Connecting our people
to our communities
Spark encourages our people to give back
to the community through our Spark Give
and Spark Volunteer programmes.
Unfortunately, participation in Spark Give
and Spark Volunteer has been steadily
declining. There are many reasons for
this, including Covid-19, which has made
it a lot harder for charities to fundraise
or run volunteering events over the last
couple of years.
To reinvigorate both programmes,
Spark Foundation conducted a review,
gathering feedback from our people,
the community sector, and experts like
Volunteering New Zealand.
Digital Equity Coalition Aotearoa
Spark Foundation is an establishment
funder of the Digital Equity Coalition
Aotearoa (DECA), which brings together
over 100 community organisations
who have a focus on digital inclusion
and equity. DECA shines a light on
digital inclusion initiatives, identifies gaps,
advocates, and offers space for innovation
and cross-sector collaboration.
In addition to these multi-year partnerships,
Spark Foundation made smaller, one-off
grants to a range of digital equity initiatives
including 3BagsFull, Digital Warriors,
Te Matarau – The Māori Tech Association,
Tech Voyagers, House of Science, and Ko
Māui Hangarau.
What we learned is that our approach to
payroll matching was spread too thinly
across a large number of charities and
focussing on a smaller group of charities
would create a bigger impact and
contribute to more meaningful social
progress across Aotearoa
To identify a smaller group of key partners
for our Spark Give and Spark Volunteer
programmes, in FY22 we engaged our
people to vote for their top charities under
four pre-selected categories – Digital
Equity, Environment, Tamariki (children),
and Humanitarian. As part of this, our
people chose the following charities as
our official partners:
• Digital Equity – Skinny Jump (Ciena
Jump for Students Fund)
• Environment – Sustainable Coastlines
• Tamariki (children) – Starship
Foundation
• Humanitarian – St John
From FY23, Spark will match donations
towards these partners through Spark Give
dollar-for-dollar (up to a cap of $200,000
per year), and work with our four charity
partners to present more volunteering and
fundraising opportunities for our people
throughout the year.
In addition, our people also have the
option to donate to their personal causes,
and Spark will continue to match most
registered charities dollar for dollar
(up to $500 per person per year, up to
a maximum cap of $50,000 per year).
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Creating value for our communities
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Spark Volunteer
Spark employees can take one volunteer
day each year, and Spark Foundation
encourages skills and mission-based
volunteering. Skill-based volunteering
means our people focus on opportunities
that take advantage of their specialised
skills and talents to assist not-for-profits.
Mission-based volunteering means
volunteering with organisations whose work
aligns with the purpose of Spark – to help all
of New Zealand win big in a digital world.
Spark Foundation works with our people
to help them find an appropriate skill or
mission-based volunteering opportunities.
Some of the organisations that our people
volunteered for over the year include
Lifeline, Summer of Tech, Shadow Tech,
Hatch, GirlBoss NZ, P-Tech, Trees that Count
and Take2.
Volunteer leave days used in FY22
Total staff eligible for
Volunteering:
4,220
(2021: 4,358)
Total employee
participation:
246.5
(2021: 440 days)
% of Employee
participation:
6%
(2021: 10%)
Spark Give
Our payroll giving programme, Spark Give,
enables our people to donate to schools
and charities via their pay. In FY22, Spark
Foundation matched the amount
employees donate dollar-for-dollar up
to $500 per employee per annual year.
Spark Give results for the year
Employee Donations:$433,433
(FY21:
$466,022)
Spark’s Matching:$157,775
(FY21:
$179,486)
Number of employees
participating:
452
(FY21: 486)
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Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
1. Justine Smyth, CNZM
Chair
Justine joined the Board of Spark
New Zealand in December 2011 and
became Chair in 2017. She has extensive
experience in governance, mergers and
acquisitions, taxation, and the financial
performance of large corporate enterprises
as well as small and medium enterprises
(SMEs). Her background is in finance and
business management, having been a
Partner with Deloitte and Group Finance
Director at Lion Nathan. Justine is currently
Chair of The Breast Cancer Foundation
New Zealand and a former director of
Auckland International Airport Limited.
Justine has a Bachelor of Commerce from
the University of Auckland and is a Fellow
of Chartered Accountants of Australia
and New Zealand and a Chartered Fellow
of the Institute of Directors. In 2020 Justine
was appointed a Companion of the
New Zealand Order of Merit for services
to governance and women.
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 is currently
a director with GWA Group, Rockit Global,
Zespri and is Chair of Tom & Luke and
Babich Wines. Alison has a Bachelor of
Science from the University of
Southampton and a Business Diploma in
Marketing from the University of Auckland.
3. Paul Berriman
Non-executive Director
Paul joined the Board in December 2011,
bringing over 35 years of international
experience in telecommunications, media
and convergence. Until January 2021 he
was Group Chief Technology Officer of the
HKT Trust, where he was responsible for
leading the group’s product and
technology roadmap and strategic
1.
4.
7.
2.
5.
8.
3.
6.
9.
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Our Board
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Our Board
Our Board
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 a
Masters in Business Administration from
the University of Hong Kong. Paul is a
director of Rain Networks in South Africa,
and a former director of the global Next
Generation Mobile Networks Alliance of
mobile network operators.
4. Warwick Bray
Non-executive Director
Warwick joined the Board in September
2019. He brings over four decades of
experience in the international
telecommunications, technology and
media sectors, most recently in senior
executive roles at Telstra. During his nine
years at Telstra up until 2018, Warwick's
executive roles comprised Chief Financial
Officer, Group Managing Director Product,
Executive Director Mobile and Head of
Corporate Strategy. Earlier in his career,
he was a managing director at JP Morgan
(London) and Dresdner Kleinwort
Wasserstein (London) in
telecommunications equity research.
He also worked at McKinsey & Company in
Europe, advising telecommunications
companies on strategy, regulation and
operational improvement, and as a network
systems engineer at Hewlett Packard.
Warwick has served on the GSMA strategy
committee, the boards of Hong Kong
mobile business CSL and Australian pay
TV operator Foxtel and as Chairman of the
Australian Mobile Telecommunications
Association. He holds a Bachelor of
Science (Hons) and a Masters in Business
Administration from the University
of Melbourne.
5. Sheridan Broadbent*
Non-executive Director
Sheridan joined the Spark Board in August
2022 with an executive and governance
career spanning telecommunications, ICT,
infrastructure, and energy. Her governance
experience includes her roles as
Independent Director for Manawa Energy,
Cloudsource Holding (Safer Me), Chair-
elect of Pipeline and Civil Group, and
member of the Government’s Cyber
Security Advisory Committee. Previous
governance experience includes her roles
as Chair of Kordia and Director of
Transpower. Sheridan holds a Bachelor of
Commerce from the University of Auckland,
is a Chartered Member of the Institute of
Directors, and is a graduate member of the
Australian Institute of Company Directors.
6. David Havercroft
Non-executive Director
David joined the Board in October 2021,
bringing skills and experience from a
career in the technology industry that has
spanned more than 35 years. He held a
number of leadership roles at Spark
New Zealand from 2009-2017, including
Chief Operating Officer and Chief
Technology Officer. Prior to this he held
executive and management positions in
IBM Asia Pacific, Cable & Wireless, and BT.
David is currently a director of Westpac and
Kiwi Wealth, and was formerly a director of
Kordia, Connect 8 and Southern Cross
Cable Network.
7. Jolie Hodson
Chief Executive and Executive Director
Jolie joined the Board in September 2019.
As Chief Executive Officer Jolie is
responsible for ensuring Spark has a sound
strategy and applies her leadership to
delivering on that strategy, while building a
leadership team around her and a business
that is able to adapt to the fast-changing
world of digital services. Jolie joined Spark
in 2013 as CFO and held the roles of CEO
Spark Digital and Customer Director before
being appointed CEO on 1 July 2019.
Since joining the company, Jolie has played
a pivotal role in transforming Spark from a
legacy telco to a growing digital services
company. Prior to joining Spark Jolie
worked for 20 years in a range of senior
roles for the Lion Group and Deloitte. She
has a Bachelor of Commerce from the
University of Auckland and is a Fellow of
Chartered Accountants of Australia and
New Zealand.
8. Gordon MacLeod*
Non-executive Director
Gordon joined the Board in August 2022.
He is a highly credentialed business leader,
who held a range of senior executive roles
over a 15-year tenure at Ryman Healthcare
Group, where he most recently served as
CEO. Prior to this Gordon was a Corporate
Finance and Advisory Partner with PwC and
was also the Finance Director of a Hi-Tech
UK listed company based on the
Cambridge Science Park in England.
Gordon is an independent Director of NZX
listed Delegat Group and is also a trustee
of Breast Cancer Foundation NZ. He holds
a Bachelor of Commerce from the
University of Canterbury, is a Chartered
Accountant Fellow, and a Member of the
Institute of Directors.
9. 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 was
previously Chairman of the Board of Trinity
College at the University of Melbourne. He
holds a Masters in Business Administration
from Columbia Business School and a
Bachelor of Laws and a Bachelor of
Commerce from Melbourne University. He
is also a Graduate of the Australian Institute
of Company Directors.
*Joined the Board after FY22.
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Strategic role of the Board
Spark’s Board plays a critical role in helping
to guide and test company strategy, by
engaging in an ongoing conversation with
the Leadership Squad around key strategic
decisions. These decisions are in relation to
the long-term strategic planning and
direction of the business, including
non-financial performance and our ability
to create value in the medium and long
term. This includes customer experience,
governance and sustainability measures,
with the Board approving the business
strategy and sustainability framework and
reviewing climate change and modern
slavery risks.
As the body elected by shareholders to
protect and enhance the value of Spark’s
assets, the Board has oversight of Spark’s
financials and the annual and three-year
planning processes. Board members
engage in robust discussions with
management around the strategic direction
of the business to test and ensure
investment is going towards the things that
will deliver the best outcomes for the
company and shareholders. This flows
through to Spark’s remuneration policies
where there is Board involvement in setting
targets and hurdles for short-term and
long-term incentives.
Board changes
Pip Greenwood resigned as a non-
executive director with effect from 5
November 2021. The Board thanks Pip for
the valuable contribution she made during
her tenure. In FY22, the Spark Board also
announced the appointment of David
Havercroft (effective 1 October 2021) as a
non-independent, non-executive director,
and Gordon MacLeod and Sheridan
Broadbent (both effective 1 August 2022)
as independent, non-executive directors.
In June 2022, Paul Berriman announced
that he will retire at the next Annual
General Meeting in November 2022.
The Board thanks Paul for his huge
contribution during his tenure of over
ten years, including playing a key role
from the time of the demerger of Chorus
and throughout Spark’s transformation
from a legacy telco to New Zealand’s
largest telecommunications and digital
services provider.
Future Director
Spark supports the Future Directors
programme and appointed its third Future
Director, Sylvia Ding, effective 1 February
2022 for an initial period of 12 months.
The appointment has been extended until
31 May 2023. Ms Ding replaced outgoing
Future Director, Ana Wight, whose term
came to an end on 31 December 2021.
The Spark Board thanks Ana for her
valuable contribution during her time
as a Future Director.
Board succession
Spark’s Board has an appropriate mix of
tenure, skills, diversity, and experience.
The Board skills matrix on the following
page outlines the qualifications,
capabilities, geographical location, tenure
and gender of each member of the Board.
In line with our company-wide focus on
improving our understanding of the ethnic
diversity of our people, this is the first year
that we are providing information about
the ethnicity of our Board at an aggregate
level. This information is available on page
49 of this report.
There is an ongoing Board succession
programme, which is focussed on finding
new directors with relevant skills and
experience that complement the diverse
perspectives already represented around
the table. As Spark continues to transition
to a digital services future, the recent
appointment of Gordon MacLeod and
Sheridan Broadbent broadens the existing
skills and capabilities of the Board.
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Our Board
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Definitions of categories of
capability:
Strategic knowledge for scale telco/
technology businesses: experience as a
senior executive in, or as a strategy
professional advisor to, large telco/
technology businesses
Financial / commercial: a strong
accounting and finance background,
most likely being a chartered accountant,
having held the position of CFO in a
significant publicly listed company, or
leadership position in professional
services/advisory firm
Risk management / regulatory and/or
sustainability: experience in identifying
and mitigating both financial and non-
financial risks / experience with influencing
public and regulatory policy decisions and
outcomes / experience in the design and
application of sustainability frameworks
Customer insight / retail / brand:
experience as a senior executive
responsible for driving customer
experience including by effectively using
insights, optimising customer journeys and
building brand experience for customers
People leadership and culture: experience
as a CEO of a significant publicly listed
company or large private stand-alone
company. Leadership skills including the
ability to set appropriate organisation
culture.
Listed company governance: listed
company Board experience other than
Spark. Experience with sophisticated
governance structures
Capital markets / capital structure: strong
knowledge of debt and equity capital
markets, and experience with mergers and
acquisitions / experience dealing with
a range of funding sources and capital
structuring models.
Digital / data / new markets: experience as
a senior executive in, or as a professional
advisor to, digital and/or data business,
or businesses in emerging new markets.
Experience in the use of digital channels and
the latest innovative and digital technologies.
Board skills matrix
Justine
Smyth
Alison
Barrass
Paul
Berriman
Warwick
Bray
David
Havercroft
Charles
Sitch
Jolie HodsonSheridan
Broadbent
Gordon
MacLeod
Qualifications
BCOM, FCA,
CFINSD
BSC, DIP BUS,
MARKETING
MBA, BSC,
CENG
BSC, MBABAMBA, LLB,
BCOM
BCOM, FCABCOMBCOM, FCA
Capability
Strategic knowledge for scale telco/
technology businesses
Financial / commercial
Risk management / regulatory and/or
sustainability
Customer insight / retail / brand
People leadership and culture
Listed company governance
Capital markets / capital structure
Digital / data / media / new markets
Geographical location
NZNZHong KongAustraliaNZAustraliaNZNZNZ
Tenure (years)
10.75.910.72.90.910.72.9
Appointment
effective 1
August 2022
Appointment
effective 1
August 2022
Gender
FFMMMMFFM
The Board skills matrix identifies the predominant skills of each Director. The Board has specifically limited high capability and medium
capability to both having a maximum of two areas for each Director.
KEY:
High capability Medium capability
65
Spark New Zealand Annual Report 2022
Ko Te Pae Anamata, Whakamaua
1. Melissa Anastasiou
General Counsel
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.
2. Matt Bain
Marketing Director
As Marketing Director Matt brings his
outstanding digital marketing and
customer experience skills to place the
customer right at the centre of Spark’s
thinking and actions. Matt joined Spark
in 2018 and was previously 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 a 20-year career Matt has built an
impeccable international reputation with
some of the world’s greatest brands – Nike,
Heineken, Mini, Rolls Royce, Siemens, EA
Sports, Audi, Phillips, Tommy Hilfiger and
KLM amongst others. He has extensive
experience using data and technologies
like Artificial intelligence (AI) to enable
organisations to better understand and
predict their customers’ needs more
accurately. Matt holds a Master of
Commerce from the University of Auckland.
Our Leadership Squad
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Our Leadership Squad
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Our Leadership Squad
3. Aliza Beckett
Strategy Director
Aliza joined Spark in June 2022 and brings
more than 20 years’ experience in strategy
and corporate development, with a career
spanning multiple international markets
and a track record for delivering growth.
As Strategy Director, Aliza is responsible
for driving Spark’s growth strategies to
accelerate the transition from traditional
telecommunications services to a broader
range of digital services that capitalise on
the significant investments the business
is making in emerging technologies.
She was most recently Vice President of
Strategy and Corporate Development at
Liberty Global, a telecommunications
company based in the UK. Prior to this she
has held a variety of senior roles at Amazon
(Prime Video), Google (YouTube), and
McKinsey. Aliza holds a Bachelor of Arts
degree in History and Political Science from
the University of California, Berkeley.
4. Mark Beder
Chief Operating Officer
As Chief Operating Officer Mark leads the
significant investments Spark makes in
digital infrastructure that underpins
Aotearoa’s digital economy and ensures
Spark offers customers the best data
connectivity experience possible. This
includes Spark’s fixed and mobile networks,
data centre investments, IT infrastructure,
and the development of emerging
technologies such as the Internet of Things,
5G, and Edge compute.
Mark joined Spark in 2003 and held several
senior technology roles across the
business, before joining the leadership
team in 2016. In 2022 his title was changed
from Technology Director to Chief
Operating Officer, recognising the breadth
and depth of his role in leading Spark’s
operations and assets.
Mark has successfully led major technology
change programmes and digital
innovation, including Spark’s mobile
network evolution, the decommissioning
of legacy technology, and the demerger
from Chorus.
Before joining Spark Mark worked as
a Senior Manager for Ernst & Young
Consulting in Auckland. He has a
Bachelor of Commerce from the University
of Auckland.
5. Leela Gantman
Corporate Relations
and Sustainability Director
Leela joined Spark as Corporate Relations
and Sustainability Director in January 2020,
bringing with her close to 20 years’
experience in corporate and agency roles
in New Zealand and Australia.
Prior to joining Spark Leela was Head of
Communications at Fletcher Building, and
before this External Relations Director at
beverages group Lion in Australia.
As Spark’s Corporate Relations and
Sustainability Director Leela is responsible
for reputation management, internal
communications, government, industry,
and community engagement, the
Company’s sustainability strategy, and the
charitable activities of the Spark
Foundation. She also serves as a Trustee on
the Spark Foundation Board. Leela holds a
Bachelor of Arts in Communications from
the University of Technology Sydney.
6. Stefan Knight
Finance Director
Stefan was appointed Finance Director in
December 2019. Stefan has been with
Spark since 2003 and has worked across a
range of finance and business performance
related roles. He played a key role over
recent years in important Spark initiatives,
including the Turnaround and Quantum
business improvement programmes and,
more recently, was part of the leadership
group that helped shape the organisation’s
move to an Agile way of working.
Stefan is a Chartered Accountant and
began his career at Deloitte working across
both Audit and Corporate Finance.
Stefan has a Bachelor of Commerce
in Accounting and Finance from the
University of Auckland.
7. Grant McBeath
Customer Director
As Customer Director at Spark New
Zealand, Grant leads the customer facing
teams and is focussed on developing
clear insight into what customers value and
helping the teams deliver it.
Grant joined Spark in 2013 as General
Manager of Sales for the Spark Consumer
and SMB business. The role grew and he
picked up the Consumer and SME Sales,
Service and Operations teams, and he
had a period of six months as acting CEO
for Spark Home, Mobile and Business in
2018 prior to Spark transitioning to Agile
ways of working.
Prior to working for Spark, Grant held a
number of global roles at Nokia throughout
Asia, and other global roles with Chevron
Texaco, Coca-Cola and Cadbury in NZ.
Grant completed a BCom at the University
of Auckland, and also completed his MBA
from the Helsinki School of Economics.
8. Heather Polglase
People and Culture Director
Heather was appointed People and Culture
Director in September 2019. She joined
Spark in 2013 and has over 20 years
international experience as an HR
professional, with a proven track record
for business transformation, talent
management, leadership development,
and succession planning across a range
of industries including FMCG, retail,
hospitality, technology, and
telecommunications.
At Spark, Heather has held various senior
HR positions and delivered a number of
critical initiatives, including being a key
architect of Spark’s leadership and
development programme to build
high-performing teams and leaders.
Prior to joining Spark, Heather was a senior
HR leader for almost a decade within
Progressive Enterprises then spent two
years in Australia leading HR, Strategy
& Change Management at Dan Murphy’s.
She has a Bachelor of Business Studies
Degree (Hospitality Management) from
Auckland University of Technology.
9. Tessa Tierney
Product Director
As Product Director Tessa is responsible for
designing and delivering products and
service experiences that customers value.
Tessa is also responsible for shaping
Spark’s investments and maturing
capability in digital, IT, data, and experience
design to deliver on future business needs.
Tessa joined Spark in November 2015 as
the Manager of Brand, Communications
and Events for Spark Digital before moving
on to become Business Manager. In 2017,
Tessa joined the team that was responsible
for successfully transitioning Spark into an
Agile organisation and is regarded as one
of New Zealand’s leading Agile and
product development practitioners.
Tessa brings to the role more than 16 years
of experience in information and
communication technologies, having
previously held a variety of roles at
Vodafone New Zealand. She has a Diploma
in Communications Studies from Manukau
Institute of Technology.
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To achieve our purpose, Spark must
successfully execute our business strategy
while maintaining high standards of
operational performance and corporate
governance.
Maintaining high
standards of corporate
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.
Spark has complied with the
recommendations of the NZX Corporate
Governance Code and substantially
complied with the principles and
recommendations of the ASX Corporate
Governance Councils Principles and
Recommendations (4th Edition) for the
FY22 reporting period. You can read about
how we have complied with these
recommendations and principles in Spark’s
Annual Corporate Governance Statement
2022 at www.sparknz.co.nz/about/
governance
Copies of, and details about, Spark’s
corporate governance policies, practices
and processes can be found on our
website at: www.sparknz.co.nz/about/
governance
ESG governance
and reporting
Spark is committed to the continuous
improvement of our environmental, social,
and governance (ESG) performance.
We seek to present a clear and transparent
assessment of our ESG performance by
considering the GRI Standards and
Integrated Reporting International <IR>
Framework in our annual reporting.
Over the past year we have strengthened
our governance of ESG and sustainability.
Rather than establish a stand-alone
steering committee, our sustainability
governance structure helps us ensure
sustainability is overseen at the highest
levels of our organisation and embedded
throughout our everyday operations. Our
Board and Leadership Squad (LS) have
oversight of our sustainability performance.
Sustainability and ESG are standing items
at regular Leadership Squad meetings, with
quarterly updates on performance against
key KPIs, discussion of material topics and
updates on external context, and decisions
on key issues. The Board has overall
governance responsibility for sustainability
and is updated on sustainability
performance against key KPIs on a
quarterly basis. The Board also approves
the sustainability framework, and reviews
and approves all policies related to ESG.
For day-to-day management our ESG
Squad is a cross-functional group
accountable for ESG performance,
reporting, and risk management. The
Squad is led by Spark’s Sustainability Lead,
and includes representatives from Spark’s
financial, risk, legal, investor relations,
supply chain, regulatory affairs, and
corporate relations functions. Our
Sustainability Governance Framework can
be found on page 141.
In the past year we have continued to
embed ESG best-practice across the
organisation and benchmark our
performance using a number of
international frameworks. These include the
Corporate Sustainability Assessment (CSA).
The CSA is a comprehensive benchmark of
our ESG maturity against our peers, with
good coverage against our material
sustainability issues. The CSA is now a part
of S&P Global and is the assessment
framework behind inclusion in the Dow
Jones Sustainability Index (DJSI) global
series. We also participate in the Carbon
Disclosure Project (CDP), and the
Benchmarking Alliance’s Digital Inclusion
Benchmark.
We publish a summary of our approach to
sustainability at Spark on our website:
www.sparknz.co.nz/sustainability
Spark Human Rights Policy
Spark has a number of existing policies and
processes to protect and uphold human
rights. For example, our Supplier Code of
Conduct sets clear requirements for our
suppliers, and our Privacy Policy and
principles outline clear expectations
around the protection of our customers’
rights around their personal data.
In the past year we established a dedicated
Human Rights Policy, making an explicit
commitment to respect all internationally
recognised human rights and setting clear
expectations on how we will address
human rights issues across our value chain.
In developing the policy we engaged
internal and external stakeholders and
reviewed our approach against our global
peers. We identified a number of human
rights topics that were relevant to our
broader value chain, many of which were
already addressed through existing
policies and processes. This policy can be
found on our website:
www.sparknz.co.nz/about/governance
The impact of emerging technologies was
identified as a material topic. Although we
had a set of internal guidelines for the
ethical use of AI (Artificial Intelligence)
technologies, we did not have a public
commitment or policy. As a result, we have
recently published a set of external AI
Principles. For more information see
www.spark
nz.co.nz/about/governance
Our approach to tax
We take a responsible and transparent
approach to tax. We recognise that the
digital economy is an important and
growing sector in New Zealand, and the
taxes we pay are an important source of
government revenue. The Spark Group Tax
Strategy follows the spirit of the law in
addition to the pure interpretation of the
law. We believe that it is important that
those in the sector pay the right amount of
tax to support the ongoing investment
required for New Zealand’s long-term
success. This includes the provision of
infrastructure, education, social and
environmental services we rely on as a New
Zealand-based company.
In FY22 Spark’s effective tax rate was 29.4%,
which is higher than the New Zealand
domestic tax rate of 28%, primarily due to
tax payable on Spark’s share of Southern
Cross underlying earnings. As a large
business, Spark makes a significant
contribution to New Zealand’s tax base.
Spark contributed $159m of New Zealand
income taxes during FY22 (before any tax
credits were applied).
Our governance and risk management
68
Our governance and risk management
Hello Tomorrow
Our governance and risk management
0
20
40
60
80
100
120
140
160
180
200
$ MILLION
OVERSEAS
TAX PAYMENTS
TOTAL INCOME
TAX PAID
NZ INCOME TAX
CONTRIBUTED
TAX CREDITS
(INC. FITC)
PROVISIONAL
TAX PAID
$160m
($1m)
$159m($47m)
($112m)
Breakdown of income tax
payments FY22
In addition to income tax paid by Spark, the
Spark Group has payment and collection
obligations across a wide range of tax types
resulting in an excess of $538m of taxes
under management during FY22.
Taxes under management
FOREIGN INCOME TAX
OTHER
NZ INCOME TAX
PAYE
GST
$
1
7
7
M
$
1
M
$
2
4
M
$
1
5
9
M
$
1
7
7
M
The full tax strategy is available online:
https://www.sparknz.co.nz/about/
governance/
Managing risk
Our risk policy and framework helps our
people to manage uncertainty and adapt
to challenges as they pursue Spark’s
strategy. Oversight by the Audit and Risk
Management Committee (ARMC) and the
diligent application of the defined roles
and responsibilities across the business
ensures Spark’s risk management system
remains effective.
The policy and framework are
benchmarked to COSO ERM 2017 (COSO),
a leading practice risk management
standard. Spark also uses other leading risk
management standards like ISO31000:
2018 and specific standards and guidance,
where available, to benchmark and inform
it risk management practices.
Spark’s framework is structured into five risk
management domains that all work
together to enable a robust system for risk
management. Below is a description of
each domain and some examples of
activities by domain to help understand the
framework in more depth.
Governance and culture
This domain reinforces the importance of
risk management and influences how
people apply the framework. Managing risk
is embedded in Spark’s organisational
structure, its functional activities, and is
supported by specialist resources from the
Risk Team. Examples include the policy and
the defined governance structure that
supports its application across Spark. More
information on the roles and responsibilities
are included in the table on page 138.
Strategy and objective setting
This domain focuses on integrating risk
management into strategy setting and
business planning. Examples include the
consideration of risks and opportunities to
business objectives when making strategy
decisions and checking in with every
function using a systematic method as
part of the Quarterly Business Review
Process. Each quarter the Leadership
Squad communicate the top priorities
for the business to the Wider Leadership
Group, and support execution with
strategic guidance and access to extra
resources as needed.
Performance
This domain involves maintaining a
portfolio view of risks under active
management. Examples include
maintaining a principal risk profile that is
used by the ARMC and Leadership Squad
to understand relevant risks and how they
are being managed. It also focuses on the
quality of the embedded risk management
practices that are used within functions
across the business. These two views enable
in-depth analysis of relevant business risks
and how they are being managed from a
top-down and bottom-up perspective.
Review and revision
This domain involves identifying and
implementing opportunities to
continuously improve risk management
practices. Examples include regular
assessments of the policy and framework.
Information, reporting
and communication
This domain focuses on guiding Spark
on how to use the policy and framework.
Examples include information pages,
access to support channels, and education
sessions.
The policy and framework are assessed
annually, and externally every three years to
ensure they remain effective. All
assessment results and agreed actions are
shared with the ARMC to ensure they
remain informed about the status of the
policy and framework.
Spark’s principal business risks
Principal risk profiles are updated twice
yearly. The last update was finalised in
May 2022. The principal risk themes
identified were:
Estimating economic environment
impacts and responding with balanced
judgement
The effect of rising interest rates and
inflation is likely to negatively impact
consumer behaviour and business
confidence and result in cost increases.
Although the impact to Spark will be less
than some parts of the economy, there will
be some impact to consumer/SME
segments as wage subsidies expire and
businesses, tighten their spending.
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To mitigate this risk, Spark has identified
probable scenarios and response plans,
and tuned its performance monitoring to
track measures that indicate if anticipated
impacts are arriving so that we can
respond quickly.
Executing simplification projects
Spark continues to simplify its portfolio of
products and migrate customers to new
plans. This objective introduces revenue
and customer experience risks because
execution requires cooperation by a
complex set of stakeholders and retiring
legacy products is challenging. In FY22,
Spark’s mature approach and capability for
simplification enabled it to make good
progress towards its simplification and
legacy plan retirement targets. Close
monitoring by Management enables risk
and issues to be worked through
effectively, particularly when trade off
decisions are required.
Delivering technology and network
leadership
The use of already established and proven
delivery methods for large-scale network
and technology projects (such as our 5G
roll-out) will help us to manage potential
risks created by delivery of new
technologies and will also sustain our
existing technology. With a high share of
operational cost, Spark’s technology units
will also have to continue executing
net-cost reduction while maintaining
operational standards. In addition to cost
optimisation mitigations, technology units
continue to strengthen operational risk
management to ensure visibility and
coordinate risk response actions.
Maintaining customer trust in our
information security and privacy
controls
Evolving external threats, changing
legislation, and high expectations from
customers and stakeholders mean robust
security and privacy roadmaps and strong
governance, involving the Leadership
Squad, continue to be needed to ensure
that significant risks are managed. Security
and Privacy roadmaps jointly created with
Agile units and strong governance
involving the Leadership Squad help to
ensure that significant risks are managed.
The Security Tribe is responsible for critical
operational controls to ensure standards
and compliance are upheld. Our Digital
Trust team sets privacy frameworks and
standards that Agile units need to apply to
maintain appropriate operational controls
for Privacy. External reviews and
certifications help to ensure that critical
elements for our security risk management
remain healthy. These reviews include
security maturity validations and security
device configuration audits to ensure our
processes meet expected standards.
Cost optimisation while maintaining
operational standards
Executing net cost reduction is a strength
for Spark, we do it in a way that ensures
operational delivery standards for
customers are maintained. To mitigate
unintended risks, the Leadership Squad
has established a formal delivery structure.
This structure includes strong governance,
and all initiatives use road-tested execution
methodologies. Trajectory toward targets is
measured, which in turn enables
intervention and course corrections when
required
Achieving planned performance when
there is talent mobility shortages in
New Zealand
Like most businesses Spark is impacted by
New Zealand’s labour shortages and
access to the people and skills it needs to
execute on its business strategy.
Competition for skilled people is high with
low unemployment resulting from many
years of closed or partly-closed borders.
Costs associated with attracting and
retaining talent have also increased.
Mitigation strategies are in place and
continue to be developed. These include
workforce plans, succession and bench
strength projects, targeted internships,
upskilling, increasing internal talent
mobility, and strategic development
programmes. Management is very aware of
this risk and is actively managing it across
specifically impacted business teams.
Business continuity and crisis
management
The Business Continuity and Crisis
Management Policy protects customers
from the impact of disruptive events and
ensures value generating activities are
resilient and comply with relevant external
standards, for example Civil Defence and
111 obligations.
Spark’s framework is benchmarked to
ISO22301 and ISO 22313, which are
acknowledged as leading practice
standards for business continuity. It is
overseen by the ARMC in a similar way to
the Managing Risk Policy and Framework.
Regular reviews of the framework are
performed by the Risk and Internal Audit
Teams. External reviews and testing of key
elements of the framework such as the
Level One Crisis Management Plan and
Team are also done to ensure that the
framework remains effective.
Spark’s business continuity framework
performed well when called upon during
the Covid-19 pandemic. Spark continues to
navigate the pandemic’s impacts such as
supply chain issues, access to off-shore
talent and resources.
Our continued investment in network
resiliency, as outlined on pages 35-36, also
demonstrates application of the framework
in practice.
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Our governance and risk management
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Climate-related risk
Climate change poses a risk to our
business due to potential disruption to
our supply chain, our infrastructure, and
our customers. The Financial Sector
(Climate-related Disclosures and Other
Matters) Amendment Act 2021 has
implemented a requirement for climate-
related disclosures for larger New Zealand
businesses. The details of the climate-
related disclosure framework are under
consultation, but this will be largely aligned
to the requirements of the international
Task Force on Climate-related Financial
Disclosures (TCFD) framework.
Spark’s climate reporting aligns to the
TCFD framework requirements. Our
Leadership Squad and Board have been
engaged on the design of the risk process
and reviewed the findings. We will continue
to incorporate TCFD reporting into our
Integrated Report, providing an annual
process for the review of our climate-
related financial risks and disclosures.
In FY21 we completed our first scenario-
based climate risk analysis against two
scenarios. This initial analysis did not
identify any immediate or extreme risks. We
do not intend to complete a full climate
scenario analysis on an annual basis. Over
the past year there was no new available
data to significantly impact the conclusions
of this analysis.
Having access to data and modelling
is essential to support Spark and other
infrastructure providers to understand
where infrastructure assets, and the
services they provide, are exposed and
vulnerable to the impacts of climate risk.
This data will also inform long-term
decisions on infrastructure design and
investment, so the right infrastructure
is in the right places and the appropriate
programmes of work are in place to
maintain, upgrade, repair or replace
existing infrastructure.
Improving access to data and modelling
was included as a recommendation in
Spark’s submission on the draft National
Adaptation Plan. The Plan will build the
foundation for adaptation action so that all
sectors and communities are able to live
and thrive in a changing climate. The Plan
lists roads, rail, ports, airports, energy,
water, and telecommunications and digital
services as lifeline utilities. While the actions
in the Plan are important next steps,
industry and government will need to
continue to work closely to manage
national adaptation risk.
Our climate change
scenario-based risk
assessment:
Our climate risk assessment
considered two scenarios matching
those used by the National Climate
Change Risk Assessment produced
by Ministry for the Environment and
aligned to TCFD recommendations:
Scenario 1 - RCP 4.5: A future where
early, ambitious mitigation has
limited temperature change. This
identifies risks to Spark from rapid
de-carbonisation, for example from
regulatory intervention, a high
carbon price.
Scenario 2 - RCP 8.5: A future where
insufficient early mitigation has led
to significant risk requiring
adaptation to rising temperatures.
This identifies risks to Spark from
extreme weather events, sea-level
rise, and knock-on impacts on our
operating environment.
This analysis was undertaken
through a series of interviews with
key teams across Spark, with
oversight of the Environment and
ESG Squads. This was supported by
a process to map our infrastructure
against publicly available climate
scenario modelling data, to
understand the number and location
of sites that may be of greater risk.
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Our climate change scenario-based risk assessment
Our climate scenario risk analysis considered the likelihood, impact, and urgency of risks using 3, 10, and 30-year time horizons.
Using the same impact and likelihood categories as our standard enterprise risk management system we identified no risks that met
our highest ’Extreme’ risk category, and seven that fell into lower risk rating categories:
OUR CLIMATE SCENARIO RISK ANALYSIS
Physical adaption riskIncludes impacts on network resilience and future investment, increased weather events, sea level rise,
planning and Resource Management Act (RMA) requirements, and insurance costs.
Rated as high likelihood with
low impact in the 3-year horizon,
growing in impact over the 10
and 30 year time horizons.
We mapped key infrastructure against publicly available climate scenario models. This showed many of the most
extreme climatic changes expected to 2050 are in lightly-populated areas, for example on the West Coast of the South
Island. Most of the population, and therefore much of our network, is in coastal areas. Analysing site proximity to coastal
inundation risk zones, and factoring site elevation, shows only a small number of sites at greater than moderate risk in
2050 under the RCP 8.5 scenario.
In the next two years the RMA will be repealed and replaced with three new acts: the Natural and Built Environments Act;
the Strategic Planning Act; and the Climate Change Adaptation Act (CAA). We will actively monitor RMA reform to
inform our long-term adaptation work. Spark also engaged in the development of the New Zealand’s first National
Adaptation Plan. The Plan will focus on addressing the 43 priority risks identified in the National Climate Change Risk
Assessment and the risk to the telecommunications network.
Supply chain risk Includes increased supply lead times, increased air freight cost, increased supply cost, supply chain
disruption, and increased inventory and working capital
Rated as high likelihood with
low impact in the 3-year
horizon, growing in impact over
the 10 and 30 year time
horizons.
The increasing number of extreme weather events across the globe increases the risk of disruption to our supply chain.
Growing competition for resources from emerging climate mitigation technologies such as EVs may also increase cost
and disruption. This is likely to drive increased cost and lead-times on purchasing and require larger local inventory
and working capital to manage risk. This may impact our ability to provide devices to our customers and maintain and
grow our infrastructure.
In the past year we have implemented an enhanced supplier relationship management system which includes
improved risk monitoring, reporting, and supplier engagement processes. We have also joined the JAC (Joint Audit
Cooperation) initiative, a coalition of global telecommunications operators working together to ensure adherence to
internationally recognised standards along the ICT supply chain and upholding human rights, social, labour and
environmental standards
Provision of climate related
services
Includes provision of monitoring and control devices over Spark’s IoT network plus other potential
climate related services
Rated as medium likelihood
with low business impact in the
3 year horizon, growing to
moderate impact in 3-10 years.
Digital technology has the opportunity to enable significant emissions reductions. We provide services that support
digitisation towards a low-carbon economy, but it is difficult to isolate business-as-usual digital transformation from
specific sustainability enablers.
To assess this opportunity we analysed our IoT revenues that are related to climate or sustainability services such as
environmental monitoring services, energy efficiency, metering, or fleet management. This analysis found that
around half of our IoT revenue is associated with these services, and that this share is likely to grow alongside growth
in our IoT business.
In the past year we have done further evaluation of the opportunity for our industry to support New Zealand’s
transition to a low-carbon economy. The New Zealand Climate Change Commission (CCC) has modelled a number
of emissions pathways for the country to achieve its binding targets. However, the role of ICT is not prominent. Spark
is working with an external partner to combine existing global research insights with the CCC’s modelling and our
knowledge of current and future ICT opportunities to identify, quantify and prioritise future opportunities.
SBTi science-based
emissions reduction target
Includes the risk we will not meet
our SBTi target.
Moderate risk.Risk we will not achieve our Scope 1 and 2 reduction target or risk we will be unable to influence 70% of suppliers by
spend to adopt own SBTi-aligned targets.
This risk rating reflects the ambition of our target, which will require significant effort over the next decade. Our
planned actions reduce this risk rating to a ‘low’ rating. See page 51 for information on our SBTi target and plan.
Social disruption
Medium likelihood, low impact
over the 30 year horizon
Low direct risk to Spark, however highlights the national risk of increased inequality as climate-intensive roles are
disestablished and the importance of digital equity in New Zealand's transition. See page 57 for our work in digital equity.
Risk to NZ economic activity
Medium likelihood, low impact
over the 30 year horizon
We referenced the Climate Change Commission’s projected cost of action to achieve New Zealand’s 2050 target,
which was approximately 1% of projected annual GDP by 2050.
Climate litigation
Low likelihood, low impact,
across all time horizons
Considered low-risk as Spark is not linked to infrastructure or investments with heavy emissions.
MEDIUM RISK RATING
LOW RISK RATING
HIGH RISK RATING
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Our governance and risk management
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As a New Zealand-based telecommunications
and digital services company we rely on a
combination of local and global suppliers
and partners to operate our business. We
have around 2000 suppliers, ranging from
the largest global technology businesses to
small local operators providing local
services. Each year we spend around $2
billion to support our business and meet
our customers’ needs.
Our global supply chain is complex, with
many indirect suppliers providing the
source materials and components required
to deliver consumer electronics and
network infrastructure. We set clear
expectations for our suppliers related to
social and environmental performance
through our Supplier Code of Conduct.
Over the past year have worked hard to
implement processes and systems to
improve our monitoring of supply chain
risk and compliance, and to better engage
with our suppliers.
Spark’s Supplier Code
of Conduct
Spark is committed to sourcing our
products and services from suppliers that
provide safe working conditions, treat
workers with respect and dignity, and
conduct business in an environmentally and
socially responsible manner. Our Supplier
Code of Conduct sets out the minimum
standards we expect from all our suppliers
across labour and human rights, health
and safety, environmental sustainability,
and ethical business practices.
See: www.sparknz.co.nz/suppliers/
The Supplier Code of Conduct was first
introduced in FY18. To embed the Code,
we worked with our top 100 suppliers by
contract value to ensure they were signed
up to the Code or could demonstrate they
were adhering to an existing equivalent
code of practice.
All new suppliers are requested to sign up
to the Code as part of their onboarding
process. As part of the evaluation process,
the only suppliers who did not sign up to
Spark’s Code were either global suppliers
that had their own code of conduct, which
Spark deemed acceptable, or suppliers
deemed low-risk based on the services
provided and the nature of the supplier.
Since the introduction of the Supplier Code
of Conduct we have completed a small
number of supplier audits. Given travel
restrictions these have focussed on New
Zealand suppliers. We completed four
audits at the end of FY21 and beginning of
FY22, covering New Zealand-based
suppliers of accommodation, software, IT
services, and infrastructure businesses.
These audits did not find any material
issues of non-compliance with the Spark
Supplier Code of Conduct.
We recognise that much of our supply
chain risk lies overseas, and that we need
to strengthen our approach to identifying
risk in our supply chain and engaging
our suppliers.
Improving our Risk
Management and Supplier
Engagement processes
In FY22 we began transitioning our supplier
management system to the SAP Ariba
platform. This system provides improved
processes for data collection from
suppliers, including self-assessment
questionnaires and compliance
declarations, covering topics such as
modern slavery and science-based
emissions reduction targets.
The system also includes a risk module
that enables us to monitor suppliers across
300+ incident types (such as ethical
practices, labour compliance, legal
incidents, and operational disruption),
and then segment suppliers into risk
profiles as a result.
The migration process is enabling us to
refresh and update our supplier database,
with suppliers required to re-register and
provide a fresh commitment to our existing
Supplier Code of Conduct. We are also
collecting more detailed supplier
information to help us identify risk and
prioritise suppliers for audits. We
completed an initial risk assessment and
supplier prioritisation at the end of FY22.
This included data from the risk monitoring,
geographic risk aligned to World Economic
Forum risk factors, and a prioritisation of
strategic suppliers. This process identified
53 suppliers for further engagement, with
21 considered higher risk.
Auditing international
suppliers - Membership of
Joint Audit Cooperation
(JAC) initiative
Spark was accepted as a new member of
JAC in FY22. JAC is an international
association of telecommunications
operators aiming to align around a
common set of requirements and KPIs for
ICT suppliers to uphold human rights,
social, labour, and environmental
standards. JAC has been running for over a
decade and has been gradually growing as
new operators join the initiative.
JAC enables us to audit global suppliers
against a common industry methodology.
As a JAC member Spark is required to
audit a minimum of five supplier locations
each year which we will begin to
implement in FY23. The suppliers and
locations are mutually agreed and
allocated across the members. Findings
and corrective actions are also shared
among all JAC members, which provides
visibility of risk across a larger number of
suppliers than Spark would be able to audit
individually and a platform for collective
industry engagement to improve
performance.
A requirement of JAC membership is
alignment of our own policies and Supplier
Code of Conduct to JAC best-practice
guidance. In FY22 we published a new
Human Rights Policy which sets out Spark’s
commitment to uphold internationally
recognised Human Rights. See page 68
for more information.
JAC also runs a number of working groups
for telecommunications companies to
collaborate on shared issues. These include
groups focussed on the circular economy,
human rights, and climate change. The
climate change group will support our
scope 3 SBTi target, helping to engage with
global suppliers to encourage them to set
targets aligned to a 1.5 degrees pathway.
For more information see:
www.jac-initiative.com
Our suppliers
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Modern Slavery Statement
We are committed to taking meaningful
action to identify, mitigate and manage any
modern slavery risks and to continuously
improving our approach.
In the past year one of our strategic
suppliers notified us of a suspected breach
of their policies related to child or forced
labour. This related to a subcontractor in
their supply chain in the Philippines and is
not connected to product or services
provided to Spark. The supplier made the
decision to permanently block the supplier
and is undertaking remedial actions.
This has been reported in our Modern
Slavery Statement, which we publish each
year alongside our Annual Report.
See: www.sparknz.co.nz/about/governance
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Our suppliers
Hello Tomorrow
Our suppliers
Risk identification:
Modern slavery risk will be identified
through an ongoing human rights due
diligence process, aligned to our annual
sustainability materiality process, an annual
process of supply chain risk identification,
supplier self-assessments, independent
audits conducted through our
membership of the Joint Audit
Cooperation Initiative (JAC), and additional
local audits where needed. New suppliers
are screened for risk as they are
onboarded.
Risk mitigation:
The supply chain risk management
process identifies issues to be rectified
with suppliers, tracked through our SAP
Ariba system and, where relevant, via the
shared JAC database. Any non-supply
chain risks identified have mitigation
actions agreed and tracked by the ESG
Squad and through our overarching
sustainability governance.
Governance framework:
Modern Slavery reporting is integrated into
quarterly reporting to our Leadership
Squad, including issues identified and
progress against mitigation actions. Our
Leadership Squad and Board are also
engaged in the preparation of our annual
Modern Slavery Statement. Key policies
include our Human Rights Policy and our
Supplier Code of Conduct.
Reporting:
We report our progress, the effectiveness
of our approach and actions, and future
improvements in our annual Modern
Slavery Statement and in the Our Suppliers
section of our Annual Report.
Modern Slavery Framework
Modern
Slavery Risk
Supply
chain risk
management
Human Rights
Policy and due
diligence
Overarching
Sustainability
Governance
Annual
non-financial
reporting
Spark seeks to remunerate our people with
competitive salaries, paying in line with the
market so we can recruit and retain the best
talent. In keeping with our focus on
customer experience, we incorporate
customer satisfaction measures into our
performance incentives.
In February 2022, the Board approved a
salary review allocation for FY23 (salaries
from 1 July 2022) which was based on our
Contribution Models with additional
allocations for strategic actions including
lifting our minimum full-time salary to
$49,200 – above the Living Wage. As part
of this process we also reviewed several
salary staircases to ensure that they were
competitive against the market.
Leadership Squad
remuneration
Remuneration mix
The table below shows the standard FY22
remuneration mix for the Leadership Squad
expressed as a percentage of fixed
remuneration. The Short-Term Incentive
(STI) scheme is expressed at target, and the
maximum payment possible through the
scheme is double the target value. The
Long-Term Incentive scheme (LTI) values
represent the maximum LTI value.
Leadership Squad remuneration
Long-Term Incentive40% of base
Short-Term Incentive50% of base
SalaryBase
Fixed remuneration
All Spark employee packages – including
the Leadership Squad – include a fixed
remuneration component that is set based
on contribution, experience, and market
relativities. Fixed remuneration supports
the attraction, motivation, and retention of
highly skilled executives. For FY23 reviews,
the Board commissioned an external
remuneration consultancy to provide
detailed benchmarking information on our
Leadership Squad roles against a relevant
comparator group of NZ companies.
Fixed remuneration generally consists of
base salary. KiwiSaver sits outside fixed
remuneration and as such, employees with
KiwiSaver receive employer contributions
on top of base salary and cash incentives. A
number of Spark-funded benefits, including
medical and life insurances, are also
available to eligible employees on top of
fixed remuneration.
Short-term Incentive schemes
Spark operates a small number of
short-term incentive schemes, from
monthly and quarterly commission and
sales incentive plans to annual cash-based
short-term incentives. Some employees in
specific sales positions may have a
component of their remuneration subject
to individual or divisional sales
performance targets, such that their total
remuneration potential is directly linked to
the acquisition and retention of profitable
business for Spark.
For senior leaders, including the
Leadership Squad and CEO, a component
of their remuneration package is at risk in
the form of a discretionary annual
cash-based Short-Term Incentive (STI).
Spark’s STI scheme rewards senior leaders
for the achievement of annual performance
objectives, with payments awarded from a
fixed cash pool that is set based on overall
Spark performance against financial and/or
non-financial annual performance
objectives. The actual payment to
individuals is at the sole discretion of Spark
and takes into account contributing factors
such as performance, and the performance
of individual parts of the business.
Eligibility to participate in the STI scheme
on an annual basis is at the discretion of the
company and is targeted at individuals in
senior roles who play a significant role in
driving the overall performance of Spark.
The STI scheme rules contain a clawback
provision that allows Spark to clawback
any payments made under the STI
scheme, for a period of 12 months
following the payment.
FY22 Short-term incentive scheme
outcomes
For FY22 substantively all STI participants
shared the same Spark Group targets
comprising of EBITDAI, customer
experience measures, as well as additional
measures based on our three-year strategy.
The on target percentages are provided in
the table below. Where the result of a
performance metric falls below a specified
threshold, there is no payment for that
proportion of the STI. Where results exceed
the target the payment can scale to up to
twice the target percentage with a
maximum overall payment of 200%.
The FY22 Group performance outcome, as approved by the Board, is summarised as follows:
Performance metricWeightTargetResultOutcome
EBITDAI50%$1,150m Achieved target50%
Consumer and Small Business iNPS
25%
+26Exceeded target
31%
Digital Customer Effort Score50%Met threshold
Wireless Broadband connections
(net growth)
25%
22,000Not achieved
25%
Future market external revenue
1
$253mExceeded target
100%106%
1 Future markets revenue includes Health and IOT.
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Ko Te Pae Anamata, Whakamaua
Leadership and Board remuneration
Notes: We closed FY21 at +23 iNPS as
stated in our last annual report. In order to
have the broadest customer base
included in the survey, we have removed
the marketing opt out filters to maximise
the number of customers we survey. This
has resulted in a re-baseline of FY22 start,
from +23 down to +20 and means that on
a like-for-like basis our improvement was
+9 in FY22. For the purpose of STI we
exclude Skinny Jump connections for
Wireless Broadband.
Based on the above result, the total
available funding pool for all eligible STI
participants across Spark for FY22 was
$6.2 million. Total payments cannot
exceed $6.2 million.
FY23 Short-term incentive scheme
target
The mechanics of the FY23 STI will be the
same as those for FY22. Group results will
be the main determinate of the STI pool,
with substantively all participants sharing
the same Group measures. The FY23
group measures will be a combination of
EBITDAI, customer experience, and our
three-year strategy.
MeasureWeighting
EBITDAI50%
Customer experience
(iNPS and digital)
25%
3-year strategy – Future
markets revenue
25%
Long-term incentive schemes
Spark believes that some senior leaders
should have part of their remuneration
linked to the long-term performance of the
Company, so for the Leadership Squad and
a select group of senior leaders, a
long-term incentive forms part of their
remuneration package. In FY22, Spark
operated one main scheme: the Spark
New Zealand Long Term Incentive Scheme.
Performance evaluation
The CEO annually reviews the performance
of her direct reports. The evaluation is
undertaken using criteria set by the CEO,
including the performance of the business,
the accomplishment of strategic and
operational objectives, and other non-
quantitative objectives agreed with the
HRCC at the beginning of each financial
year. The last Leadership Squad evaluations
were undertaken during June 2022. Spark
undertakes appropriate checks before
appointing someone onto the
Leadership Squad.
CEO remuneration
Remuneration policy, strategy,
and governance
CEO Jolie Hodson’s remuneration package
reflects the scope and complexity of her
role and is set by the Board with reference
to the remuneration of CEOs of similarly
sized organisations. For the CEO’s FY23
remuneration review the Board
commissioned an external remuneration
consultancy to provide a detailed
benchmarking report based on a
comparator group of relevant NZ
companies.
CEO Remuneration FY22
For FY22 the CEO’s remuneration package
comprised a fixed cash component, an
at-risk short-term incentive, and an at-risk
long-term incentive, to be awarded under
the Spark Long-term Incentive Scheme.
The targets and operation of the CEO’s STI
and LTI is the same as described above
under Short term incentive schemes and
Long-term incentive scheme. The construct
of the CEO’s remuneration package is such
that 60% of her remuneration package is at
risk. The table below shows the target
remuneration mix:
Long-Term Incentive75% of base
Short-Term Incentive75% of base
SalaryBase
The CEO is also expected to maintain a
holding of Spark shares as set out on page
131 of this report.
FY22 / FY23 Long-term Incentive
Scheme
For FY22, members of the Leadership
Squad (including the CEO) and selected
senior leaders were granted options under
the Spark Long-Term Incentive Scheme
(LTI). Under the scheme, participants were
granted options at the start of the
three-year vesting period. The number of
options granted equalled the gross LTI
value divided by the volume weighted
average price of Spark New Zealand shares
for the 20 days prior to the grant date.
Subject to satisfaction of the performance
hurdle and continued employment, at
vesting each option converts to a Spark
share based on a zero exercise price. If the
target is not met, or the participant leaves,
then the options simply lapse.
For FY23, members of the Leadership
Squad, including the CEO, and selected
senior leaders will be granted options
under a similar scheme as FY22 with the
only change being the introduction of
new performance measures relating to
Spark’s ESG performance alongside an
absolute Total Shareholder Return
performance hurdle.
FY22 and FY23 Long-term Incentive
Scheme performance measures
Vesting of the FY22 LTI grant (September
2024) is contingent on participants’
continued employment with Spark through
to September 2024 and the company
achieving an absolute Total Shareholder
Return (aTSR) performance hurdle. aTSR is
a measure of share price appreciation and
dividends paid over the three-year period
of the grant. The target for this hurdle is
Spark’s cost of equity plus 1%
compounding annually.
For FY23, the Long-term Incentive Scheme,
75% of the allocated shares will vest based
on aTSR exceeding cost of equity +1.5%
(compounding annually) over the vesting
period and 25% will vest based on
performance against environmental and
diversity targets.
76
Leadership and Board remuneration
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Leadership and Board remuneration
Remuneration components
Short-term Incentive Scheme
The CEO is eligible for an annual cash-based short-term incentive, subject to the achievement
of specific performance objectives set by the Board based on Spark’s strategy and business
plan for the respective financial year. These objectives will be a combination of financial and
non-financial measures. This is covered in more detail in the earlier STI scheme section.
The Board assesses the CEO’s performance at the end of the financial year to determine the
actual payment value of her short-term incentive, which is in the range of 0% to 200% of her
target value.
The FY22 Group performance outcome, as approved by the Board and applicable to the
CEO, is summarised as follows:
Performance metricWeightTargetResultOutcome
EBITDAI50%$1,150m Achieved target50%
Consumer and Small Business iNPS
25%
+26Exceeded target
31%
Digital Customer Effort Score50%Met threshold
Wireless Broadband connections
(net growth)
25%
22,000Not achieved
25%
Future market external revenue
1
$253mExceeded target
100%106%
1 Future markets revenue includes Health and IOT.
Long-term Incentive Scheme
For FY22 the CEO’s annual LTI was granted
as share options under the Spark Long
Term Incentive Scheme. This is covered in
more detail in the earlier LTI scheme
section. The LTI component of the CEO’s
remuneration package is designed to link
part of her remuneration to the long-term
performance of Spark, and align her
interests with those of shareholders,
through the grant of options with a
post-allocation performance hurdle.
Performance hurdle
A performance hurdle applies to long-term
incentives made to the CEO. This hurdle is
agreed by the Board and sets a minimum
level of performance that is required to be
achieved over the period of each grant, for
the LTI to be eligible to vest. For FY22, a
performance hurdle of Spark’s TSR applies.
The target for this hurdle was Spark’s cost
of equity plus 1% compounding annually.
Spark’s TSR must meet or exceed this target
over the period of the grant (from the date
the options are granted to the date three
years after that date) for the options to vest.
If Spark’s TSR does not meet this target, all
of the options will lapse. Testing to
determine whether the TSR performance
hurdle has been met will occur at the end
of the vesting period of the grant. The
Board will receive independent advice to
the effect that the performance hurdle has
been met, or not met, in determining
whether the CEO can exercise the options
or whether the options will lapse.
CEO termination
Spark may terminate the CEO’s
employment with three months’ notice.
A payment of nine months base
remuneration will be made, plus
entitlements for annual performance
incentives and long-term incentives subject
to the rules relating to these incentives,
in the case of termination by Spark, other
than for termination for cause.
If there is a change of control that results
in the CEO no longer being the CEO of
a publicly listed company, then she will
be able to terminate her employment
with three months’ notice and receive
payment as if Spark had terminated
her employment.
Spark may also terminate the CEO’s
employment without notice for defined
causes, in which case she will receive no
further entitlement to any remuneration.
Board remuneration
Remuneration and strategy
The remuneration of Directors is reviewed
annually by the Human Resources and
Compensation Committee (HRCC) – taking
account of the company’s size and
complexity and the responsibilities, skills,
performance and experience of the
Directors – with recommendations made to
the Board for approval. Specialist
independent consultants may be engaged
from time to time to provide advice and
ensure that the remuneration of Spark’s
Directors is appropriate and comparable to
that of similar companies in New Zealand.
Apart from the CEO, no Director of Spark
receives compensation in the form of share
options or restricted shares, nor do they
participate in any bonus or profit-sharing
plan. Non-executive Directors are, however,
expected to maintain a holding of Spark
shares as set out on page 136 of this report.
As is the case for employees, Directors are
required to comply with the Insider Trading
Policy when buying or selling Spark shares
and any such transactions are disclosed to
the market.
Remuneration components
No superannuation or retirement allowance
was paid to any Spark Director during
FY22. Spark does not have service
contracts with any Director, apart from the
CEO, that provide for any benefits or
remuneration in the event that a Director’s
service with Spark is terminated.
New Zealand-based non-executive
Directors are eligible for Spark-funded
medical insurance, and all non-executive
Directors are also eligible for Spark-funded
life insurance.
77
Spark New Zealand Annual Report 2022
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Financial statements
Financial statements
79
Notes to the financial statements
83
Section 1 – General information
1.1About this report
83
1.2Key estimates and assumptions
83
1.3Significant transactions and events
84
1.4Impact of change in accounting policy
85
1.5Assets and liabilities classified as held for sale
86
Section 2 – Financial performance information
2.1Segment information
87
2.2Operating revenues and other gains
88
2.3Operating expenses
91
2.4Finance income, finance expense, depreciation,
amortisation and net investment income
92
2.5Non-GAAP measures
93
Section 3 – Assets
3 .1Receivables and prepayments
94
3.2Inventories
97
3.3Long-term investments
98
3.4Right-of-use assets
99
3.5Leased customer equipment assets
100
3.6Property, plant and equipment
101
3.7Intangible assets
103
3.8Net tangible assets
104
Section 4 – Liabilities and equity
4 .1Payables, accruals and provisions
105
4.2Lease liabilities
106
4.3Debt
108
4.4Capital risk management
109
4.5Equity and dividends
110
Section 5 – Financial instruments
5 .1Derivatives and hedge accounting
112
5.2Financial risk management
116
Section 6 – Other information
6 .1Income tax
119
6.2Employee share schemes
120
6.3Related party transactions
121
6.4Subsidiaries
122
6.5Reconciliation of net earnings to net cash flows from
operating activities
123
6.6Commitments and contingencies
123
Independent auditor’s report
124
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Statement of profit or loss and other comprehensive income
YEAR ENDED 30 JUNE
2022
RESTATED
1
2021
NOTES$M$M
Operating revenues and other gains2.2 3,720 3,593
Operating expenses2.3 (2,570) (2,474)
Earnings before finance income and expense, income tax, depreciation, amortisation and net
investment income (EBITDAI)2.5 1,150 1,119
Finance income2.4 26 34
Finance expense2.4 (74) (81)
Depreciation and amortisation2.4 (520) (521)
Net investment loss2.4 (1) (1)
Net earnings before income tax 581 550
Income tax expense6.1 (171) (169)
Net earnings 410 381
Other comprehensive income
Items that will not be reclassified to profit or loss:
Revaluation of long-term investments designated at fair value through other comprehensive
income3.3 (55) (87)
Items that may be reclassified to profit or loss:
Translation of foreign operations 1 –
Change in hedge reserves net of tax5.1 71 57
Other comprehensive income 17 (30)
Total comprehensive income 427 351
Earnings per share
Basic and diluted earnings per share (cents) 21.9 20.6
Weighted average ordinary shares (millions) 1,869 1,852
Weighted average ordinary shares and options (millions) 1,872 1,854
See accompanying notes to the financial statements.
1 Restated due to the implementation of the IFRS Interpretations Committee (IFRIC) agenda decision, see notes 1.1 and 1.4.
Financial statements
Spark New Zealand Annual Report 2022
79Ko Te pae Anamata, Whakamaua
Statement of financial position
AS AT
30 JUNE 2022
RESTATED
1
AS AT
30 JUNE 2021
NOTES$M$M
Current assets
Cash 71 72
Short-term receivables and prepayments3.1 839 768
Short-term derivative assets5.1 5 12
Inventories3.2 107 64
Taxation recoverable 1 -
Assets classified as held for sale1.5 198 -
Total current assets 1,221 916
Non-current assets
Long-term receivables and prepayments3.1 197 271
Long-term derivative assets5.1 13 24
Long-term investments3.3 212 227
Right-of-use assets3.4 508 647
Leased customer equipment assets3.5 90 77
Property, plant and equipment3.6 1,109 1,080
Intangible assets3.7 839 858
Total non-current assets 2,968 3,184
Total assets 4,189 4,100
Current liabilities
Short-term payables, accruals and provisions4.1 460 479
Taxation payable 40 23
Short-term derivative liabilities5.1 1 4
Short-term lease liabilities4.2 52 60
Debt due within one year4.3 293 373
Liabilities classified as held for sale1.5 94 –
Total current liabilities 940 939
Non-current liabilities
Long-term payables, accruals and provisions4.1 64 60
Long-term derivative liabilities5.1 77 91
Long-term lease liabilities4.2 292 406
Long-term debt4.3 1,233 1,030
Deferred tax liabilities6.1 108 82
Total non-current liabilities 1,774 1,669
Total liabilities 2,714 2,608
Equity
Share capital 1,105 1,084
Reserves (352)
(371)
Retained earnings 722 779
Total equity 1,475 1,492
Total liabilities and equity 4,189 4,100
See accompanying notes to the financial statements.
1 Restated due to implementation of the IFRIC agenda decision, see notes 1.1 and 1.4.
On behalf of the Board
Justine Smyth, CNZM Jolie Hodson
Chair Chief Executive
Authorised for issue on 24 August 2022
Financial statements
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Statement of changes in equity
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVES
SHARE-BASED
COMPEN-
SATION
RESERVE
REVALUATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVETOTAL
YEAR ENDED 30 JUNE 2022NOTE$M$M$M$M$M$M$M
Balance at 1 July 2021 1,084 779 (63) 3 (288) (23) 1,492
Net earnings – 410 – – – – 410
Other comprehensive income/(loss) – – 71 – (55) 1 17
Total comprehensive income/(loss) – 410 71 – (55) 1 427
Contributions by, and distributions to, owners:
Dividends4.5 – (467) – – – – (467)
Supplementary dividends – (46) – – – – (46)
Tax credit on supplementary dividends – 46 – – – – 46
Dividend reinvestment plan4.5 18 – – – – – 18
Issuance of shares under share schemes 4 – – 2 – – 6
Other transfers (1) – – – – – (1)
Total transactions with owners 21 (467) – 2 – – (444)
Balance at 30 June 2022 1,105 722 8 5 (343) (22) 1,475
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVES
SHARE-BASED
COMPEN-
SATION
RESERVE
REVALUATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVETOTAL
YEAR ENDED 30 JUNE 2021 – RESTATED
1
NOTE$M$M$M$M$M$M$M
Balance at 1 July 2020 949 870 (120) 2 (212) (23) 1,466
Net earnings – 381 – – – – 381
Other comprehensive income/(loss) – – 57 – (87) – (30)
Transfer to retained earnings on disposal of
historical long-term investments – (11) – – 11 – –
Total comprehensive income/(loss) – 370 57 – (76) – 351
Contributions by, and distributions to, owners:
Dividends4.5 – (461) – – – – (461)
Supplementary dividends – (47) – – – – (47)
Tax credit on supplementary dividends – 47 – – – – 47
Dividend reinvestment plan4.5 131 – – – – – 131
Issuance of shares under share schemes 4 – – 1 – – 5
Total transactions with owners 135 (461) – 1 – – (325)
Balance at 30 June 2021 1,084 779 (63) 3 (288) (23) 1,492
See accompanying notes to the financial statements.
1 Restated due to implementation of the IFRIC agenda decision, see notes 1.1 and 1.4.
Spark New Zealand Annual Report 2022
81Ko Te pae Anamata, Whakamaua
Statement of cash flows
YEAR ENDED 30 JUNE
2022
RESTATED
1
2021
NOTES$M$M
Cash flows from operating activities
Receipts from customers 3,656 3,547
Receipts from interest 24 32
Payments to suppliers and employees (2,606) (2,458)
Payments for income tax (160) (188)
Payments for interest on debt (48) (46)
Payments for interest on leases (19) (26)
Payments for interest on leased customer equipment assets (6) (8)
Net cash flows from operating activities6.5 841 853
Cash flows from investing activities
Proceeds from sale of property, plant and equipment – 6
Proceeds from sale of business – 30
Proceeds from long-term investments 4 6
Receipts from finance leases 3 6
Receipts from loans receivable – 1
Payments for purchase of business, net of cash acquired (7) (25)
Payments for, and advances to, long-term investments (59) (13)
Payments for purchase of property, plant and equipment, intangibles (excluding spectrum),
and capacity (425) (330)
Payments for purchase of spectrum intangible assets – (51)
Payments for capitalised interest (8) (6)
Net cash flows from investing activities (492) (376)
Cash flows from financing activities
Net proceeds from/(repayments of) debt4.4 214 (38)
Payments for dividends (449) (330)
Payments for leases (69) (56)
Payments for leased customer equipment assets (46) (34)
Net cash flows from financing activities (350) (458)
Net cash flows (1) 19
Opening cash position 72 53
Closing cash position 71 72
See accompanying notes to the financial statements.
1 Restated due to implementation of the IFRIC agenda decision, see notes 1.1 and 1.4.
Financial statements
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1
Section 1
General
information
1.1 About this report
Reporting entity
These financial statements are for Spark New Zealand Limited (the
Company) and its subsidiaries (together ‘Spark’ or ‘the Group’).
Spark is a major supplier of telecommunications and digital
services in New Zealand. Spark provides a full range of
telecommunications, information technology, media and other
digital products and services, including: mobile services; voice
services; broadband services; internet sports streaming services;
cloud, security and service management services; procurement
and partner services and managed data, networks and services.
The Company is incorporated and domiciled in New Zealand,
registered under the Companies Act 1993 and is an FMC reporting
entity under the Financial Markets Conduct Act 2013. The
Company is listed on the New Zealand Main Board equity security
market and the Australian Securities Exchange and the address of
its registered office is Spark City, 167 Victoria Street West, Auckland
1010, New Zealand.
Basis of preparation
The financial statements have been prepared in accordance with
Generally Accepted Accounting Practice in New Zealand (NZ
GAAP). They comply with New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS) and other applicable
Financial Reporting Standards, as appropriate for profit-oriented
entities. The financial statements also comply with International
Financial Reporting Standards (IFRS).
The measurement basis adopted in the preparation of these
financial statements is historical cost, modified by the revaluation of
certain investments and financial instruments, as identified in the
accompanying notes. These financial statements are expressed in
New Zealand dollars, which is Spark’s functional and presentation
currency. All financial information has been rounded to the nearest
million, unless otherwise stated. Certain comparative information
has been updated to conform with the current year’s presentation.
The principal accounting policies applied in the preparation of
these financial statements are set out in the accompanying notes
where an accounting policy choice is provided by NZ IFRS. A policy
is also included when it is new, has changed, is specific to Spark’s
operations, is significant or is material. Where NZ IFRS does not
provide an accounting policy choice, Spark has applied the
requirements of NZ IFRS but a detailed accounting policy is not
included.
Consideration of the IFRIC agenda decision
During the year ended 30 June 2022, Spark revised its accounting
policy in relation to configuration and customisation costs incurred
in implementing Software-as-a-Service (SaaS) cloud computing
arrangements. This was in response to the IFRIC agenda decision,
issued in April 2021, clarifying its interpretation of how current
accounting standards apply to these types of arrangements.
The IFRIC decision clarified that because SaaS arrangements are
service contracts that provide Spark with the right to access the
cloud provider’s application software over the contract period,
costs to configure or customise this software should be recognised
as operating expenses when the services are received. Previously
Spark had recorded these configuration and customisation costs as
part of the cost of an intangible asset and amortised these costs
over the useful lives of the software assets. A summary of the
impact of the change in accounting policy on the Group’s financial
statements is provided in note 1.4.
New and amended standards
Spark has adopted amendments issued for NZ IFRS 9 Financial
Instruments and NZ IFRS 16 Leases that address issues arising from
the reform of benchmark interest rates. These amendments have
not had a material impact on the Group’s financial statements.
1.2 Key estimates and assumptions
The preparation of these financial statements requires
management to make estimates and assumptions. These affect the
amounts of reported revenues and expenses and the measurement
of assets and liabilities as at 30 June. Actual results could differ
from these estimates.
The principal areas of judgement and estimation for Spark in
preparing these financial statements are found in the following
notes:
• Note 2.2 Operating revenues and other gains
• Note 3.1 Receivables and prepayments
• Note 3.4 Right-of-use assets
• Note 3.6 Property, plant and equipment
• Note 3.7 Intangible assets
• Note 4.2 Lease liabilities.
NOTES TO THE FINANCIAL STATEMENTS
Spark New Zealand Annual report 2022
83Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: GENErAL INFOrMATION
1.3 Significant transactions and events
The following significant transactions and events affected the
financial performance and financial position of Spark for the year
ended 30 June 2022 or subsequent to balance date:
Debt programme (see note 4.3)
• On 30 November 2021, Spark established three Sustainability-
Linked Loans totalling $425 million. These consist of: converting
an existing $200 million facility with Westpac New Zealand, to
mature on 30 November 2023; establishing a new $100 million
facility with Commonwealth Bank of Australia, to mature on
30 November 2024; and extending a $125 million facility with
MUFG Bank, Ltd., to mature on 30 November 2025.
• On 23 March 2022, Spark issued $100 million of unsecured,
unsubordinated Sustainability-Linked Bonds with an initial
interest rate of 4.37% maturing on 29 September 2028.
• On 25 March 2022, $100 million of unsecured fixed-rate bonds
with a coupon rate of 4.50% matured.
Long-term investments (see note 3.3)
• The fair value of Spark’s investment in Hutchinson
Telecommunications Australia Limited decreased by $55 million
during the year due to a decrease in its quoted share price from
AUD$0.110 to AUD$0.070. The change in fair value is recognised
within other comprehensive income.
• Spark contributed $53 million of equity to its Southern Cross
investment to fund the SX NEXT undersea cable build during
FY22. No dividends were received from Southern Cross during
FY22. Dividends have been suspended for the duration of the
SX NEXT build phase and are not expected to resume until at
least FY24.
Capital expenditure (see notes 2.5, 3.4, 3.6 and 3.7)
• Spark’s additions to property, plant and equipment, intangible
assets (excluding spectrum) and capacity right-of-use assets
were $410 million, details of which are provided in notes 3.4, 3.6
and 3.7 and on page 19 of this annual report.
Dividends (see note 4.5)
• Dividends paid during the year ended 30 June 2022 in relation
to the H2 FY21 second-half dividend (ordinary dividend of 12.5
cents per share) and H1 FY22 first-half dividend (ordinary
dividend of 12.5 cents per share) totalled $467 million or 25.0
cents per share, of this $18 million was settled through the
dividend reinvestment plan.
Leases (see notes 2.2, 3.1 and 3.6)
• On 1 December 2021, Chorus exercised its right of renewal for
the Spark exchange buildings lease. This resulted in a
combination of lease renewals, lease relinquishments, a new
operating lease and an annual price review. In exercising this
right Chorus renewed some space and relinquished some space.
As a result of these changes, Spark recognised an increase of
$81 million in property, plant and equipment assets for the
exchange space it has taken back control of from Chorus. This
was offset by a reduction of $69 million in finance leases no
longer receivable from Chorus and a gain of $12 million
reported within other gains for the price increases over the
remaining lease term.
Acquisitions (see note 3.7)
• On 31 January 2022, Spark acquired the remaining 50%
of its joint venture, Connect 8 Limited, a mobile
infrastructure business.
TowerCo (see note 1.5)
• On 12 July 2022, Spark confirmed the Ontario Teachers’ Pension
Plan Board will acquire a 70% interest in the TowerCo business,
with completion anticipated to occur in the first half of FY23.
More details on the anticipated transaction are contained within
note 1.5.
Financial statements
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1
1.4 Impact of change in accounting policy
Spark has changed its accounting policy in relation to SaaS arrangements in response to the IFRIC agenda decision that typically SaaS
arrangements do not give rise to an asset, and configuration and customisation costs will likely need to be expensed. This has reduced
EBITDAI, net earnings before tax, and total assets due to such expenses now being recognised as the services are received rather than
capitalised as an intangible asset and amortised over the software asset’s useful life. There has been no net impact on Spark’s statement of
cash flows. However, it has resulted in the reclassification of the applicable costs incurred from investing to operating activities.
The impact of the change in Spark’s accounting policy in relation to SaaS arrangements in response to the IFRIC agenda decision on the
comparative financials statements is as follows:
Statement of profit or loss and other comprehensive income
PREVIOUSLY
REPORTED
CHANGE IN
ACCOUNTING
POLICYRESTATED
YEAR ENDED 30 JUNE 2021$M$M$M
Operating expenses (2,469) (5) (2,474)
Earnings before finance income and expense, income tax, depreciation, amortisation
and net investment income (EBITDAI) 1,124 (5) 1,119
Depreciation and amortisation (523) 2 (521)
Net earnings before income tax 553 (3) 550
Net earnings for the period384 (3) 381
Earnings per share
Basic and diluted earnings per share 20.7 (0.1) 20.6
Statement of cash flows
YEAR ENDED 30 JUNE 2021
Payments to suppliers and employees (2,453) (5) (2,458)
Net cash flows from operating activities 858 (5) 853
Payments for purchase of property, plant and equipment, intangibles
(excluding spectrum) and capacity (335) 5 (330)
Net cash flows from investing activities
1
(381) 5 (376)
Statement of financial position
AS AT 1 JULY 2020
Intangible assets 843 (10) 833
Total assets 4,358 (10) 4,348
Deferred tax liabilities 61 (2) 59
Total liabilities 2,884 (2) 2,882
Retained earnings 878 (8) 870
Total equity 1,474 (8) 1,466
Total liabilities and equity 4,358 (10) 4,348
AS AT 30 JUNE 2021
Intangible assets 871 (13) 858
Total assets 4,113 (13) 4,100
Deferred tax liabilities 84 (2) 82
Total liabilities 2,610 (2) 2,608
Retained earnings 790 (11) 779
Total equity 1,503 (11) 1,492
Total liabilities and equity 4,113 (13) 4,100
1 Previously reported net cash flows from investing activities includes a reclassification of receipts from finance leases ($6 million) and receipts from loans receivable
($1 million) from net cash flows from financing activities to conform with the current year’s presentation.
Spark New Zealand Annual Report 2022
85Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: GENErAL INFOrMATION
1.5 Assets and liabilities classified as held for sale
During FY22 Spark commenced a process to transfer its passive mobile tower assets into a separate subsidiary, TowerCo, and to introduce
third-party capital into TowerCo. As at 30 June 2022 the assets and liabilities associated with TowerCo have been classified as held for sale.
On 12 July 2022 Spark confirmed the Ontario Teachers’ Pension Plan Board will acquire a 70% interest in the TowerCo business, with
completion anticipated to occur in the first half of FY23, conditional on Overseas Investment Office approval. The transaction will deliver
proceeds of approximately $900 million and values the business at $1.175 billion.
Under the terms of the deal, Spark has entered into a 15-year agreement with TowerCo (plus rights of renewal) to secure access to existing
and new towers, with a build commitment of 670 sites over the next 10 years.
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
2022
AS AT 30 JUNE$M
Right-of-use assets
1
95
Property, plant and equipment and intangible assets 97
Deferred tax assets 6
Total assets classified as held for sale 198
Payables, accruals and provisions 5
Lease liabilities
1
89
Total liabilities classified as held for sale 94
1 The leases associated with these balances will be assigned on transfer to TowerCo.
No gain or loss was recognised in the statement of profit or loss on classification of the above assets and liabilities to held for sale.
At the time the financial statements were authorised for issue the transaction had not yet completed and as such a final estimate of the
gain on sale has not been made.
Financial statements
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Section 2
Financial performance information
2.1 Segment information
The segment results disclosed are based on those reported to the Chief Executive and are how Spark reviews its performance.
Spark’s segments are measured based on product margin, which includes product operating revenues and direct product costs. The
segment result excludes other gains, labour, operating expenses, depreciation and amortisation, net investment income, finance income
and expense and income tax expense, as these are assessed at an overall Group level by the Chief Executive.
2022 2021
YEAR ENDED 30 JUNE
OPERATING
REVENUES
$M
PRODUCT
COSTS
$M
PRODUCT
MARGIN
$M
OPERATING
REVENUES
$M
PRODUCT
COSTS
$M
PRODUCT
MARGIN
$M
Mobile 1,351 (447) 904 1,311 (474) 837
Voice 285 (120) 165 308 (128) 180
Broadband 639 (321) 318 670 (331) 339
Cloud, security and service management 446 (103) 343 443 (85) 358
Procurement and partners 538 (485) 53 414 (371) 43
Managed data, networks and services 283 (146) 137 282 (137) 145
Other operating revenues
1
152 (72) 80 137 (67) 70
Segment result 3,694 (1,694) 2,000 3,565 (1,593) 1,972
1 See note 2.2 for a description of other operating revenues.
Reconciliation from segment product margin to consolidated net earnings before income tax
2022
RESTATED
2021
YEAR ENDED 30 JUNE $M$M
Segment product margin 2,0001,972
Other gains 2628
Labour (495)(493)
Other operating expenses (note 2.3) (381)(388)
Earnings before finance income and expense, income tax, depreciation, amortisation and net
investment income (EBITDAI) 1,1501,119
Finance income 2634
Finance expense (74)(81)
Depreciation and amortisation (520)(521)
Net investment loss (1)(1)
Net earnings before income tax 581550
Spark New Zealand Annual Report 2022
87Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL pErFOrMANCE INFOrMATION
2.2 Operating revenues and other gains
The accounting policies specific to Spark’s operating revenues are outlined below:
Contracts with customers
Spark records revenue from contracts with customers in accordance with the five steps in NZ IFRS 15:
1. Identify the contract with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price, which is the total consideration provided by the customer
4. Allocate the transaction price amount to the performance obligations in the contract based on their relative stand-alone selling prices
5. Recognise revenue when or as the performance obligation is satisfied.
Spark often provides products and services in bundled arrangements (for example, a broadband modem together with a broadband
service). Where multiple products or services are sold in a single arrangement, revenue is recognised in relation to each distinct good or
service. A product or service is distinct where, amongst other criteria, a customer can benefit from it on its own or together with other
resources that are readily available. Revenue is allocated to each distinct product or service in proportion to its stand-alone selling price
and recognised when, or as, control is transferred to the customer.
Generally, control for products is transferred and revenue recognised at the point in time it is delivered to the customer and for services,
control is transferred, and revenue recognised, over time as the service is provided. Revenue for performance obligations satisfied over
time is recognised using the ‘resources consumed by customers’ method or the ‘time-elapsed method’, as these best depict the transfer of
goods or services to customers.
Performance obligations, where Spark acts as an agent, includes some third-party media services and certain cloud, security and service
management contracts. Contracts with a significant financing component include those that have goods that were purchased on interest-
free payment terms of greater than 12 months.
The nature of the various performance obligations in our contracts with customers and when revenue is recognised is outlined below:
PERFORMANCE OBLIGATIONS
FROM CONTRACTS WITH CUSTOMERS
TIMING OF SATISFACTION
OF THE PERFORMANCE OBLIGATION AND PAYMENT
Mobile services, broadband services, media services, cloud,
security and service management services, managed data services
and rental of equipment
As the service is provided (usually monthly). Generally billed and
paid on a monthly basis.
Usage, other optional or non-subscription services, and pay-per-
use services
As the service is provided. Generally billed and paid on a monthly
basis.
Fixed modems, mobile handsets and other distinct goodsWhen control is passed to the customer, generally when the
customer takes possession of the goods. For goods sold in packages
or on interest-free terms, customers usually pay in equal instalments
over 6 to 36 months.
Installation or set-up services (where distinct)As the service is provided. Generally billed and paid following the
provision of the service.
Financial statements
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2.2 Operating revenues and other gains (continued)
20222021
YEAR ENDED 30 JUNE $M$M
Operating revenues
Mobile1,3511,311
Voice285308
Broadband639670
Cloud, security and service management446443
Procurement and partners538414
Managed data, networks and services283282
Other operating revenues152137
3,6943,565
Other gains
Net gain on sale of long-term investments/businesses–1
Gain on sale of property, plant and equipment and intangibles109
Gain on lease modifications and terminations1618
2628
Total operating revenues and other gains3,7203,593
Other operating revenues
Included in other operating revenues is revenue from Qrious, Internet of Things, Spark Sport, Connect 8 and exchange building sharing
arrangements. Total operating revenues includes, income from operating leases, for the year ended 30 June 2022 was $6 million (30 June
2021: $1 million).
Other gains
In the year ended 30 June 2022 other gains comprises a $10 million gain from the sale of property, plant and equipment (primarily in
relation to mobile network equipment), and gains from lease modifications and terminations of $16 million (this includes the $12 million
gain from the Chorus lease changes outlined in note 1.3).
In the year ended 30 June 2021 other gains included a $9 million gain from the sale of property, plant and equipment (primarily in relation
to mobile network equipment), $1 million gain from the sale of Spark’s long-term investment, NOW New Zealand Limited, and gains from
lease modifications and terminations of $18 million.
Spark New Zealand Annual Report 2022
89Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL pErFOrMANCE INFOrMATION
2.2 Operating revenues and other gains (continued)
Key estimates and assumptions
Determining the transaction price
Determining the transaction price of Spark’s contracts requires judgement in estimating the amount of revenue we expect to be
entitled to for delivering the performance obligations within a contract. The transaction price is the amount of consideration that
is enforceable and to which we expect to be entitled in exchange for the goods and services we have promised to our customer.
We determine the transaction price by considering the terms of the contract and business practices that are customary within
that product, as well as adjusting the transaction price for estimated variable consideration and for any effects of the time value
of money. The ‘expected value’ or ‘most likely amount’ methods are used to determine variable consideration and any amount
where it is determined that it is highly probable a revenue reversal will not subsequently occur is included in the transaction
price. In making this determination consideration is given to the likelihood and potential magnitude of the revenue reversal, as
well as factors outside of Spark’s influence, the time when the uncertainty is expected to be resolved and Spark’s experience with
similar types of contracts. Judgement is required to determine the discount rate underlying any time value of money calculations,
as well as whether the financing component in a contract is significant. Discounts, rebates, refunds, credits, price concessions,
incentives, penalties and other similar items are reflected in the transaction price at contract inception.
Determining the stand-alone selling price and the allocation of the transaction price
Determining the stand-alone selling price of performance obligations and the allocation of the transaction price between
performance obligations involves judgement. The transaction price is allocated to performance obligations based on the relative
stand-alone selling prices of the distinct goods or services in the contract. The best evidence of a stand-alone selling price is the
observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar
customers. If a stand-alone selling price is not directly observable, we estimate the stand-alone selling price taking into account
reasonably available information relating to the market conditions, entity-specific factors and the class of customer. In
determining the stand-alone selling price, we allocate revenue between performance obligations based on expected minimum
enforceable amounts to which Spark is entitled. Any amounts above the minimum enforceable amounts are recognised as
revenue as they are earned.
Distinct goods and services
We make judgements in determining whether a promise to deliver goods or services is considered distinct. We account for
individual products and services separately if they are distinct (i.e. if a product or service is separately identifiable from other
items in the bundled package and if the customer can benefit from it). The consideration is allocated between separate products
and services in a bundle based on their stand-alone selling prices.
Timing of satisfaction of performance obligations
We make judgements in determining whether performance obligations are satisfied over time or at a point in time, as well as the
methods used for measuring progress towards completed satisfaction of performance obligations. Refer to page 88 for Spark’s
accounting policy on timing of satisfaction of performance obligations.
Financial statements
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2.3 Operating expenses
2022
RESTATED
2021
YEAR ENDED 30 JUNE$M$M
Product costs 1,694 1,593
Labour 495 493
Other operating expenses
Network support costs 65 86
Computer costs 111 101
Accommodation costs 65 67
Advertising, promotions and communication 60 72
Bad debts 4 (7)
Impairment expense 2 2
Other 74 67
Total other operating expenses 381 388
Total operating expenses 2,570 2,474
Cost of inventories recognised as an expense
The cost of inventories recognised as an expense in relation to broadband modems, mobile devices and other accessories was
$343 million (30 June 2021: $381 million).
Lease expenses
Expenses relating to short-term leases and leases of low-value assets were $7 million (30 June 2021: $5 million). In the year ended 30 June
2022 rent concessions of less than $1 million were received as a result of Covid-19 and treated as a reduction of expenses (30 June 2021:
less than $1 million).
Donations
Donations for the year ended 30 June 2022 were $1,774,000 and comprised Spark’s donation to Spark Foundation of $1,734,000 and
other donations of $40,000 (30 June 2021: $1,722,000, comprised Spark’s donation to the Spark Foundation of $1,692,000 and other
donations of $30,000). Spark made no donations to political parties in the years ended 30 June 2022 or 30 June 2021.
Auditor’s remuneration
20222021
YEAR ENDED 30 JUNE$’000$’000
Audit of financial statements
Audit and review of financial statements
1
1,171 1,000
Other services
Regulatory audit work
2
54 50
Other non-assurance services
3
105 94
Total fees paid to auditor 1,330 1,144
1 The audit fee includes fees for both the annual audit of the financial statements and the review of the interim financial statements.
2 Regulatory audit work consists of the audit of telecommunications-related regulatory disclosures and reporting on trust deed requirements and solvency returns.
3 Other non-assurance services relate to taxation compliance services and administrative and other advisory services for the Corporate Taxpayer Group of which Spark,
alongside a number of organisations, is a member.
Spark New Zealand Annual Report 2022
91Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL pErFOrMANCE INFOrMATION
2.4 Finance income, finance expense, depreciation, amortisation
and net investment income
2022
RESTATED
2021
YEAR ENDED 30 JUNENOTES$M$M
Finance income
Finance lease interest income 9 13
Other interest income 17 21
26 34
Finance expense
Finance expense on long-term debt (45) (43)
Lease interest expense4.2 (19) (26)
Leased customer equipment interest expense (7) (8)
Other interest and finance expenses (11) (10)
(82) (87)
Plus: interest capitalised
1
8 6
(74) (81)
Depreciation and amortisation expense
Depreciation – property, plant and equipment3.6 (234) (242)
Depreciation – right–of–use assets3.4 (80) (77)
Depreciation – leased customer equipment assets3.5 (37) (36)
Amortisation – intangible assets3.7 (169) (166)
(520) (521)
Net investment loss
Share of associates’ and joint ventures’ net losses3.3 (1) (1)
(1) (1)
1 Interest was capitalised on property, plant and equipment and intangible assets under development for the year ended 30 June 2022 at an annualised rate of 4.4% (30
June 2021: 3.8%).
Financial statements
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2.5 Non-GAAp measures
Spark uses 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 products, 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 EBITDAI’ and ‘adjusted net earnings’ when a financial year includes significant items (such as gains,
expenses and impairments) individually greater than $25 million. There are no adjusting items for the years ended 30 June 2022 or 30
June 2021.
Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income
(EBITDAI)
Spark calculates EBITDAI by adding back depreciation and amortisation, finance expense and income tax expense and subtracting finance
income and net investment income (which includes dividend income and Spark’s share of net profits or losses from associates and joint
ventures) to net earnings. A reconciliation of Spark’s EBITDAI is provided below and based on amounts taken from, and consistent with,
those presented in these financial statements.
2022
RESTATED
2021
YEAR ENDED 30 JUNE$M$M
Net earnings reported under NZ IFRS 410 381
Less: finance income (26) (34)
Add back: finance expense 74 81
Add back: depreciation and amortisation 520 521
Less: net investment income 1 1
Add back: income tax expense 171 169
EBITDAI 1,150 1,119
Capital expenditure
Capital expenditure is the additions to property, plant and equipment and intangible assets (excluding goodwill, acquisitions and other
non-cash additions that may be required by NZ IFRS, such as decommissioning costs) and additions to capacity right-of-use assets where
such additions are paid up front.
2022
RESTATED
2021
YEAR ENDED 30 JUNENOTES$M$M
Additions to property, plant and equipment3.6 328 203
Additions to intangible assets3.7 156 187
Additions to capacity right-of-use assets3.4 8 13
Total additions 492 403
Less spectrum additions3.7– (51)
Less property, plant and equipment transfers from finance lease receivables 1.3 (81) (3)
Less capacity right-of-use assets paid over time3.4 (1)–
Capital expenditure 410 349
Spark New Zealand Annual Report 2022
93Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: ASSETS
Section 3 Assets
3.1 receivables and prepayments
20222021
AS AT 30 JUNE$M$M
Short-term receivables and prepayments
Trade receivables 371 314
Short-term prepayments 148 137
Short-term unbilled revenue 248 242
Short-term contract assets 2 5
Short-term contract costs 40 43
Short-term finance lease receivables 2 4
Other short-term receivables 28 23
839 768
Long-term receivables and prepayments
Long-term unbilled revenue 72 79
Long-term prepayments 1 -
Long-term contract costs 68 64
Long-term finance lease receivables 52 108
Other long-term receivables 4 20
197 271
Amounts are stated at their net carrying value, including expected credit loss allowance provisions. The fair value of finance lease
receivables is estimated to be $75 million (30 June 2021: $213 million) and the carrying amount of all other receivables, measured at
amortised cost, are approximately equivalent to their fair value because of the short term to maturity.
Contract assets
Contract assets primarily relate to Spark’s rights to consideration for performance obligations delivered but not billed at the reporting
date. Contract assets are transferred to receivables when the rights become unconditional. The following summarises significant changes
in those balances:
20222021
YEAR ENDED 30 JUNE$M$M
Opening balance as at 1 July 5 11
Additions from new contracts with customers, net of terminations and renewals 1 8
Transfer of contract assets to trade receivables (4) (14)
Closing balance as at 30 June 2 5
Financial statements
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3.1 receivables and prepayments (continued)
Contract costs
Contract costs include costs to obtain a contract (such as commission costs) and costs to fulfil a contract. These costs are expected to be
recovered and are therefore initially deferred and then recognised within operating expenses on a systematic basis that is consistent with
the transfer to the customer of the goods or services to which the asset relates. The following summarises significant changes in those
balances:
20222021
COSTS TO
OBTAIN A
CONTRACT
COSTS TO
FULFIL A
CONTRACTTOTAL
COSTS TO
OBTAIN A
CONTRACT
COSTS TO
FULFIL A
CONTRACTTOTAL
YEAR ENDED 30 JUNE$M$M$M$M$M$M
Opening balance as at 1 July 19 88 107 28 85 113
Additions 9 34 43 8 36 44
Amortisation recognised in operating expenses (11) (31) (42) (17) (33) (50)
Closing balance as at 30 June 17 91 108 19 88 107
Short-term contract costs 7 33 40 11 32 43
Long-term contract costs 10 58 68 8 56 64
Key estimates and assumptions
Determining the costs we incur to obtain or fulfil a contract that meets the deferral criteria within NZ IFRS 15 requires us to make
significant judgements. Further, where such costs can be deferred, determining the appropriate amortisation period to recognise
the costs within operating expenses requires management judgement, including assessing the expected average customer
tenure for consumer customers and the expected contract term for enterprise customers.
Expected credit loss allowance provision
Movements in the loss allowance provision are as follows:
20222021
YEAR ENDED 30 JUNE$M$M
Opening balance as at 1 July 17 31
Charged to costs and expenses 7 (4)
Bad debts recovered (3) (3)
Utilised(6)(7)
Closing balance as at 30 June
1
15 17
1 The total expected loss provision reduced by $14 million in FY21, of which $8 million reflected the release of additional provisions taken in FY20 primarily as a result of
Covid-19.
Spark New Zealand Annual Report 2022
95Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.1 receivables and prepayments (continued)
Spark has applied the simplified approach to providing for expected credit losses, which requires the recognition of a lifetime expected
loss provision for trade receivables, unbilled revenue, contract assets, contract costs, finance lease receivables and other receivables. The
calculation of the allowance provision incorporates forward-looking information, such as forecasted economic conditions.
The expected credit loss allowance provision has been determined as follows:
CURRENT≤ 1 MONTH> 1 MONTHTOTAL
AS AT 30 JUNE 2022$M$M$M$M
Expected loss rate1.2%2.5%10.3%1.7%
Gross carrying amount 823 40 39 902
Expected credit loss allowance provision 10 1 4 15
Short-term loss allowance provision 8 1 4 13
Long-term loss allowance provision 2 - - 2
AS AT 30 JUNE 2021$M$M$M$M
Expected loss rate1.4%2.5%9.5%1.8%
Gross carrying amount 837 40 42 919
Expected credit loss allowance provision 12 1 4 17
Short-term loss allowance provision 9 1 4 14
Long-term loss allowance provision 3 – – 3
The composition of the credit loss allowance provision between receivable types is as follows:
20222021
AS AT 30 JUNE$M$M
Trade receivables 7 7
Unbilled revenue 5 7
Contract assets and contract costs 2 2
Finance lease receivables 1 1
Expected credit loss allowance provision 15 17
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of
recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be
subject to enforcement activities to comply with the Group’s procedures for recovery of amounts due.
Key estimates and assumptions
The expected credit loss allowance provision is determined based on assumptions about the risk of default and expected loss
rates of customers and other counterparties. Spark uses judgement in making these assumptions and selecting the inputs to the
impairment calculation based on Spark’s past collection history, existing market conditions, as well as forward-looking estimates
at the end of the reporting period. Forward-looking estimates include assessment of forecasted changes to interest rates,
unemployment rates and Gross Domestic Product in New Zealand.
Financial statements
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3.1 receivables and prepayments (continued)
Finance lease receivables
Spark has a number of leases for space in exchange buildings, including as a lessor for space in Spark exchanges and a lessee for space in
Chorus exchanges. These leases include a legal right of offset, as Spark and Chorus settle the payments on a net basis and are therefore
shown as a net finance lease receivable or net lease liability on the statement of financial position.
In addition, Spark sublease a number of office building floors. Where sublease are for the whole of the remaining non-cancellable term of
the head lease, these are classified as a finance lease.
The profile of lease net receipts is set out below:
20222021
UNDISCOUNTEDDISCOUNTEDUNDISCOUNTEDDISCOUNTED
AS AT 30 JUNE$M$M$M$M
Less than one year
1
6 – 13 3
Between one and five years 16 (7) 41 (7)
More than five years 135 59 266 115
Net finance lease receivables 157 52 320 111
Plus short-term portion of finance lease receivables in liability position – 2 – 1
Total finance lease receivables 157 54 320 112
Less unearned finance income (103) – (208) –
Present value of finance lease receivables 54 54 112 112
Short-term finance lease receivables2 4
Long-term finance lease receivables 52108
1 Included within the discounted balance as at 30 June 2022 is a $2 million sublease receivable asset, offset by a $2 million liability relating to the Chorus finance lease
receivable (30 June 2021: $4 million sublease receivable asset, offset by a $1 million liability relating to the Chorus finance lease receivable).
The lease with Chorus, where Spark is the lessor, has multiple rights of renewals and the full lease term has been used in the majority of
the calculation of the financial lease receivable at lease inception, as it was likely that because of the specialised nature of the buildings,
the lease would be renewed to the maximum term.
3.2 Inventories
20222021
AS AT 30 JUNE$M$M
Goods held for resale 95 56
Content rights inventory 10 7
Maintenance materials and consumables 2 1
Total inventories 107 64
Content rights inventory
Spark enters into contracts for the right to stream digital content for sport. Content rights are stated at the lower of cost and net realisable
value, less accumulated amortisation and includes prepaid content that is not yet available for broadcast.
The amortisation of content rights is recognised within operating expenses on a straight-line basis over the live events across the
broadcast period. The content rights amortisation charge for the year ended 30 June 2022 was $20 million (30 June 2021: $28 million).
Spark New Zealand Annual Report 2022
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NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.3 Long-term investments
20222021
AS AT 30 JUNEMEASUREMENT BASIS$M$M
Shares in HutchisonFair value through other comprehensive income 105 160
Investment in associates and joint venturesEquity method 101 59
Other long-term investmentsCost 6 8
212 227
Spark holds a 10% interest in Hutchison Telecommunications Australia Limited (Hutchison) which is quoted on the Australian Securities
Exchange (ASX) and its fair value is measured using the observable bid share price as quoted on the ASX, classified as being within Level 1
of the fair value hierarchy. As at 30 June 2022 the quoted price of Hutchison’s shares on the ASX was AUD$0.070 (30 June 2021:
AUD$0.110). The decrease in fair value of $55 million is recognised in other comprehensive income (30 June 2021: $87 million decrease).
Investment in associates and joint ventures
Spark’s investment in associates and joint ventures at 30 June 2022 consists of the following:
NAMETYPECOUNTRYOWNERSHIPPRINCIPAL ACTIVITY
Adroit Holdings LimitedAssociate New Zealand38%Environmental IoT solutions
Flok LimitedAssociate New Zealand38%Hardware and software development
Pacific Carriage Holdings Limited, Inc.AssociateUnited States41%A holding company
Rural Connectivity Group LimitedJoint VentureNew Zealand33%Rural broadband
Southern Cross Cables Holdings LimitedAssociateBermuda41%A holding company
TNAS LimitedJoint VentureNew Zealand50%Telecommunications development
All investments in associates and joint ventures are measured using the equity method. Changes in the aggregate carrying amount of
Spark’s investment in associates and joint ventures was as follows:
20222021
ASSOCIATESJOINT VENTURESTOTALASSOCIATESJOINT VENTURESTOTAL
YEAR ENDED 30 JUNE$M$M$M$M$M$M
Opening balance as at 1 July 30 29 59 31 23 54
Additional investment during the year 56 3 59 5 8 13
Impairment – – – (1) – (1)
Disposals (4) (11) (15) (5) – (5)
Share of net losses – (1) (1) – (1) (1)
Deferred gains – – – – (1) (1)
Dividends received – (1) (1) – – –
Closing balance as at 30 June 82 19 101 30 29 59
Spark has suspended equity accounting for Pacific Carriage Holdings Limited, Inc. and Southern Cross Cables Holdings Limited (together
‘Southern Cross’) as their carrying values were reduced to nil. Spark has no obligation to fund Southern Cross’ deficits or repay dividends.
For the year ended 30 June 2022 Spark’s share of Southern Cross profits was not recognised because of the existence of historic
cumulative Southern Cross deficits. In the current year Southern Cross’ profit was $39 million (30 June 2021: $39 million).
Financial statements
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3.4 right-of-use assets
Spark is a lessee for a large number of leases, including:
• Property – Spark leases a number of office buildings and retail stores. Some of these leases have rights of renewal that are reasonably
certain to be exercised and therefore may have long expected lease terms
• Capacity arrangements – Spark enters into a number of indefeasible right-of-use capacity arrangements for cable capacity
• Mobile sites – Spark has entered into a number of agreements to allow the operation of mobile network infrastructure throughout
New Zealand
• Motor vehicles – Spark leases motor vehicles for use in sales, field operations and maintenance of infrastructure equipment
• Other – Spark leases equipment that is held at Spark premises and used to provide services to customers.
Movements in right-of-use assets are summarised below:
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening net book value281 224 117 4 21 647
Additions and acquisitions20 8 8 1 16 53
Assets classified as held for sale and other disposals– – (95)– – (95)
Remeasurements
1
(19)– 2 – – (17)
Depreciation charge(32)(21)(13)(2)(12)(80)
Closing net book value250 211 19 3 25 508
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2021$M$M$M$M$M$M
Opening net book value333 233 102 2 28 698
Additions74 13 27 4 11 129
Disposals(2)– (3)– (9)(14)
Remeasurements
2
(90)– 1 – – (89)
Depreciation charge(34)(22)(10)(2)(9)(77)
Closing net book value281 224 117 4 21 647
1 Remeasurements to property in FY22 primarily relate to modifications for corporate property leases and exiting of space in exchange buildings. The reduction in
property right-of-use assets for corporate property leases is substantially offset by a reduction in property lease liabilities (see note 4.2).
2 Remeasurements to property in FY21 primarily relate to modifications and changes of assumptions for leases, including market rent reviews and reductions in lease
terms for corporate property leases. The reduction in property right-of-use assets is substantially offset by a reduction in property lease liabilities (see note 4.2).
Of the $8 million within capacity additions for the year ended 30 June 2022, $7 million were fully paid on control being obtained and
therefore deemed capital expenditure as reconciled in note 2.5 (30 June 2021: all fully paid and deemed capital expenditure).
Income from sub-leasing right-of-use assets for the year ended 30 June 2022 was $3 million (30 June 2021: $1 million).
Spark New Zealand Annual Report 2022
99Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.4 right-of-use assets (continued)
Key estimates and assumptions
At inception of a contract Spark assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset, Spark assesses whether:
• The contract involves the use of an identified asset
• Spark has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use
• Spark has the right to direct the use of the asset.
At inception or on reassessment of a contract that contains a lease component, Spark allocates the consideration in the contract
to each lease component on the basis of their relative stand-alone prices. Spark recognises a right-of-use asset at the lease
commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically assessed for
impairment losses and adjusted for certain remeasurements of the lease liability.
3.5 Leased customer equipment assets
Spark acts as the intermediate party (as a lessee and a lessor) in a number of lease arrangements for customer premises equipment. Such
arrangements may also include an initial sale and leaseback transaction. A sale and leaseback transaction contains a genuine sale if control
of an asset is transferred under NZ IFRS 15. For Spark’s back-to-back lease arrangements we have assessed that a sale does not occur, as
control over the equipment remains with Spark instead of passing to the buyer-lessor.
Spark as the seller-lessee continues to recognise the leased customer equipment asset, which is initially measured at cost. The asset is
subsequently depreciated using the straight-line method based on the expected lease term. Movements in leased customer equipment
assets are summarised below:
20222021
YEAR ENDED 30 JUNE$M$M
Opening net book value77 86
Additions51 28
Disposals (1)(1)
Depreciation charge(37)(36)
Closing net book value90 77
AS AT 30 JUNE
Cost228 182
Accumulated depreciation and impairment losses(138)(105)
Closing net book value90 77
Leased customer equipment assets are leased to customers under operating leases. Amounts recovered from customers for the year
ended 30 June 2022 were $42 million (30 June 2021: $43 million).
Financial statements
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3.6 property, plant and equipment
TELECOMMUNI-
CATIONS
EQUIPMENT
AND PLANTFREEHOLD LANDBUILDINGSOTHER ASSETS
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening net book value648 61 207 79 85 1,080
Additions– – 82 10 236 328
Transfers162 – 11 21 (194)–
Acquisitions4 – – 4 6 14
Assets classified as held for sale and other disposals(15)– (59)(3)(2)(79)
Depreciation charge(168)– (28)(38)– (234)
Closing net book value631 61 213 73 131 1,109
AS AT 30 JUNE 2022
Cost3,394 61 534 507 131 4,627
Accumulated depreciation and impairment losses(2,763)– (321)(434)– (3,518)
Closing net book value631 61 213 73 131 1,109
TELECOMMUNI–
CATIONS
EQUIPMENT
AND PLANTFREEHOLD LANDBUILDINGSOTHER ASSETS
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2021$M$M$M$M$M$M
Opening net book value 641 60 198 114 108 1,121
Additions – – 40 – 163 203
Transfers 167 1 – 18 (186) –
Disposals –
– – (2) – (2)
Depreciation charge (160) – (31) (51) – (242)
Closing net book value 648 61 207 79 85 1,080
AS AT 30 JUNE 2021
Cost 4,006 61 550 553 85 5,255
Accumulated depreciation and impairment losses (3,358) – (343) (474) – (4,175)
Closing net book value 648 61 207 79 85 1,080
Spark New Zealand Annual Report 2022
101Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.6 property, plant and equipment (continued)
Joint arrangement
Spark has entered into a joint arrangement in relation to the construction and operation of the Tasman Global Access fibre-optic
submarine cable between Australia and New Zealand. As at 30 June 2022 the carrying value of Spark’s share of property, plant and
equipment and intangible assets in the joint operation was $30 million (30 June 2021: $30 million).
Key estimates and assumptions
Spark’s property, plant and equipment is measured at cost and depreciation is charged on a straight-line basis over the assets’
estimated useful lives. Determining the appropriate useful life of property, plant and equipment requires management
judgement, including the expected period of service potential, the likelihood technological advances will make the asset
obsolete, the likelihood of Spark ceasing to use it and the effect of government regulation.
The estimated useful lives of Spark’s property, plant and equipment is as follows:
Telecommunications equipment
Links and cables 10 – 50 years
Network transport 3 – 15 years
Mobile radio access network 5 – 25 years
Customer premises equipment 3 – 5 years
International cable and satellite 10 – 15 years
Buildings
Buildings 15 – 53 years
Furniture and fittings 3 – 15 years
Air conditioning 8 – 20 years
Power systems 3 – 25 years
Batteries 5 – 15 years
Other
Motor vehicles 3 – 10 years
Computer equipment 2 – 8 years
Internal IT system assets 3 – 15 years
The assessment of assets for impairment is based on a large number of factors, such as changes in current competitive
conditions, expectations of growth in the telecommunications industry, the discontinuance of services, the expected future cash
flows an asset is expected to generate and other changes in circumstances that indicate an impairment exists. Key judgements
include rates of expected revenue growth or decline, expected future margins and the selection of an appropriate discount rate
for valuing future cash flows.
Financial statements
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3.7 Intangible assets
SOFTWARE
SPECTRUM
LICENCES
OTHER
INTANGIBLESGOODWILL
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening net book value 307 193 49 222 87 858
Additions
1
– – – – 156 156
Transfers 160 – – – (160) –
Acquisitions – – – 12 – 12
Assets classified as held for sale and other disposals – – (18) – – (18)
Amortisation charge (141) (18) (10) – – (169)
Closing net book value 326 175 21 234 83 839
AS AT 30 JUNE 2022
Cost 1,911 336 103 282 83 2,715
Accumulated amortisation and impairment losses (1,585) (161) (82) (48) – (1,876)
Closing net book value 326 175 21 234 83 839
1 Total software capitalised in the year ended 30 June 2022 includes $59 million of internally generated assets. Other software capitalised in the year includes software
licences and externally supplied labour.
SOFTWARE
SPECTRUM
LICENCES
OTHER
INTANGIBLESGOODWILL
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2021 - RESTATED$M$M$M$M$M$M
Opening net book value 343 158 59 222 51 833
Additions
1
– 51 – – 136 187
Transfers 100 – – – (100) –
Acquisitions – – 4 – – 4
Amortisation charge (136) (16) (14) – – (166)
Closing net book value 307 193 49 222 87 858
AS AT 30 JUNE 2021 - RESTATED
Cost 2,063 336 146 270 87 2,902
Accumulated amortisation and impairment losses (1,756) (143) (97) (48) – (2,044)
Closing net book value 307 193 49 222 87 858
1 Total software capitalised in the year ended 30 June 2021 includes $36 million of internally generated assets. Other software capitalised in the year includes software
licences and externally supplied labour.
Key estimates and assumptions
Intangible assets are amortised over their useful lives on a straight-line basis, except goodwill, which is tested for impairment
annually. Determining the appropriate useful life of an intangible asset requires management judgement, including assessing the
expected period of service potential, the likelihood technological advances will make it obsolete and the likelihood of Spark
ceasing to use it.
The estimated useful lives of Spark intangible assets is as follows:
Spectrum licences 2 – 21 years
Software 2 – 12 years
Customer contracts and brands 5 – 10 years
Other intangible assets 2 – 100 years
Spark New Zealand Annual Report 2022
103Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.7 Intangible assets (continued)
Goodwill
Goodwill by cash-generating unit (CGU) is presented below:
20222021
AS AT 30 JUNE$M$M
Mobile 34 28
Broadband 3 –
Cloud, security and service management 170 167
Qrious 14 14
Digital Island 13 13
234 222
On 31 January 2022, Spark acquired the remaining 50% of its joint venture, Connect 8 Limited, a fibre network construction company.
Goodwill recognised from the acquisition of $12 million has been allocated to each CGU that is expected to benefit from the synergies of
the transaction. Goodwill of $6 million has been allocated to the mobile CGU, $3 million to the broadband CGU and $3 million to the
cloud, security and service management CGU.
During the years ended 30 June 2022 and 30 June 2021 no impairment arose as a result of the assessment of the carrying value of
goodwill. Headroom currently exists in each CGU and, based on sensitivity analysis performed, no reasonably possible changes in the
assumptions would cause the carrying amount of the CGUs to exceed their recoverable amounts.
Key estimates and assumptions
Goodwill is assessed annually for impairment using a value-in-use model, which estimates the future cash flows, based on the
FY23 Board-approved business plan, applied to the next three years, with key assumptions being forecast earnings and capital
expenditure for each CGU. The forecast financial information is based on both past experience and future expectations of CGU
performance. The major inputs and assumptions used in performing an impairment assessment that require judgement include
revenue forecasts, operating cost projections, customer numbers and customer churn, discount rates, growth rates and future
technology paths.
Nil terminal growth was applied to all CGUs and a pre-tax discount rate of 10.6% was utilised for the year ended 30 June 2022
(30 June 2021: 10.0%).
3.8 Net tangible assets
The calculation of Spark’s net tangible assets per share and its reconciliation to the statement of financial position is presented below:
2022
RESTATED
2021
AS AT 30 JUNE$M$M
Total assets 4,189 4,100
Less intangible assets (839) (858)
Less total liabilities (2,714) (2,608)
Net tangible assets 636 634
Number of shares outstanding (in millions) 1,872 1,867
Net tangible assets per share$0.34$0.34
Net tangible assets per share is a non-GAAP financial measure that is not defined in NZ IFRS. Total assets includes assets held for sale and
right-of-use assets. Total liabilities includes lease liabilities.
Financial statements
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Section 4 Liabilities and equity
4.1 payables, accruals and provisions
20222021
AS AT 30 JUNE$M$M
Short-term payables, accruals and provisions
Trade accounts payable and accruals 260 270
Revenue billed in advance 80 80
Accrued personnel costs 38 37
Accrued interest 3 2
GST payable 37 34
Short-term sale and leaseback liabilities 35 34
Short-term provisions 2 3
Other short-term payables and accruals 5 19
460 479
Long-term payables, accruals and provisions
Long-term sale and leaseback liabilities 52 47
Long-term provisions 5 10
Other long-term payables and accruals 7 3
64 60
Trade accounts payable and sale and leaseback liabilities are financial instruments held at amortised cost.
Provisions
Total provisions as at 30 June 2022 were $7 million (30 June 2021: $13 million). New provisions of $1 million were made during the year
(30 June 2021: $10 million) and provisions of $7 million were utilised, released or transferred to held for sale (30 June 2021: $8 million).
The largest portion of the provisions relate to make-good provisions of $7 million (30 June 2021: $12 million).
Spark New Zealand Annual Report 2022
105Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: LIAbILITIES ANd EquITy
4.2 Lease liabilities
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening lease liability balance 325 2 113 4 21 465
Leases entered into during the year and acquisitions 20 2 7 1 17 47
Liabilities classified as held for sale and other disposals – – (89) – – (89)
Interest expense 12 – 6 – 1 19
Principal repayments (53) (1) (19) (2) (13) (88)
Remeasurements
1
(14) – 2 – – (12)
Balance at the end of the year 290 3 20 3 26 342
Short-term portion of finance lease receivable 2 – – – – 2
Total lease liability balance 292 3 20 3 26 344
Short-term lease liabilities37 1 2 2 10 52
Long-term lease liabilities255 2 18 1 16 292
Lease liabilities - non-cancellable commitments
2
148 3 10 3 26 190
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2021$M$M$M$M$M$M
Opening lease liability balance 443 2 99 2 26 572
Leases entered into during the year19 – 27 4 12 62
Disposals(2)
– (4)– (9)(15)
Interest expense19 – 6 – 1 26
Principal repayments(49)– (15)(2)(9)(75)
Remeasurements
3
(105)– – – – (105)
Balance at the end of the year325 2 113 4 21 465
Short-term portion of finance lease receivable1 – – – – 1
Total lease liability balance326 2 113 4 21 466
Short-term lease liabilities38 – 12 2 8 60
Long-term lease liabilities288 2 101 2 13 406
Lease liabilities - non-cancellable commitments
2
170 2 53 4 20 249
1 Remeasurements to property in FY22 primarily relate to modifications for corporate property leases. The reduction in lease liabilities is substantially offset by a
reduction in property right-of-use assets (see note 3.4).
2 Relates to the discounted lease liability for future minimum rental commitments for non-cancellable periods of leases, excluding rights of renewal, which are at Spark’s
option.
3 Remeasurements to property in FY21 primarily relate to modifications and changes of assumptions for leases, including market rent reviews and reductions in lease
terms for corporate property leases. The reduction in lease liabilities is substantially offset by a reduction in property right-of-use assets (see note 3.4).
Financial statements
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4.2 Lease liabilities (continued)
Key estimates and assumptions
Spark recognises a lease liability at the lease commencement date. The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, Spark’s incremental borrowing rate. Generally, Spark uses its incremental borrowing rate as
the discount rate, with adjustments for the type and term of the lease.
Lease payments included in the measurement of the lease liability comprise:
• Fixed payments, including in-substance fixed payments
• Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement
date
• Amounts expected to be payable under a residual value guarantee
• The exercise price under a purchase option that Spark is reasonably certain to exercise
• Lease payments in an optional renewal period if Spark is reasonably certain to exercise an extension option.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in
future lease payments arising from a change in an index or rate, if there is a change in Spark’s estimate of the amount expected
to be payable under a residual value guarantee or if Spark changes its assessment of whether it will exercise a purchase or
extension option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use
asset or it is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Spark has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have lease terms of
12 months or less and leases of low-value assets. Spark recognises the lease payments associated with these leases within
operating expenses on a straight-line basis over their lease terms.
Spark New Zealand Annual Report 2022
107Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: LIAbILITIES ANd EquITy
4.3 debt
Debt is recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, debt is classified and
measured at amortised cost plus, for hedged liabilities that are in a fair value hedging relationship, adjustments for fair value changes
attributable to the risk being hedged. Any difference between cost and redemption value (including fair value changes) is recognised in
the statement of profit or loss over the period of the borrowings, using the effective interest rate method.
20222021
AS AT 30 JUNE$M$M
FACE VALUEFACILITYCOUPON RATEMATURITY
Short-term debt
Short-term borrowingsVariable< 1 months – 3
Commercial paperVariable< 2 months 160 155
160 158
Supplier financing arrangements
1
Amounts with a term less than six months 8.33%< 6 months 19 –
Amounts due within one yearVariable< 2 years 14 14
Amounts due in more than a yearVariable< 2 years 9 18
42 32
Bank funding
The Hongkong and Shanghai Banking Corporation Limited100 million NZDVariable30/11/2021 – 100
MUFG Bank, Ltd.125 million NZDVariable30/11/2022 – 60
Westpac New Zealand Limited
2
200 million NZDVariable30/11/2023 140 –
Commonwealth Bank of Australia
2
100 million NZDVariable30/11/2024 100 –
MUFG Bank, Ltd.
2
125 million NZDVariable30/11/2025 125 –
365 160
Domestic notes
100 million NZD4.50%25/03/2022 – 101
100 million NZD4.51%10/03/2023 100 104
125 million NZD3.37%07/03/2024 122 130
125 million NZD3.94%07/09/2026 117 131
100 million NZD
3
4.37%29/09/2028 100 –
439 466
Foreign currency Medium Term Notes
Australian Medium Term Notes – 100 million AUD1.90%05/06/2026 97 106
Australian Medium Term Notes – 150 million AUD4.00%20/10/2027 158 177
Australian Medium Term Notes – 125 million AUD2.60%18/03/2030 113 132
Norwegian Medium Term Notes – 1 billion NOK
4
3.07%19/03/2029 152 172
520 587
1,526 1,403
Debt due within one year 293
373
Long-term debt 1,233 1,030
1 Supplier financing arrangements relate to amounts payable to suppliers on extended payment terms and are therefore considered as debt. Amounts paid under these
arrangements are presented in the statement of cashflows within financing activities.
2 These facilities are Sustainability-Linked Loans. Spark will receive lower interest rates if it achieves sustainability targets and higher rates on the loans if it falls short of
these targets.
3 This bond is a Sustainability-Linked Bond. The bond includes an interest rate step up depending on the achievement of a sustainability target as at 30 June 2026.
4 Norwegian krone.
Financial statements
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4.3 debt (continued)
None of Spark’s debt is secured and all debt ranks equally with other liabilities. There are no financial covenants over Spark’s debt,
however, there are certain triggers in the event of default, as defined in the various debt agreements. There have been no events of default
over Spark’s debt in the years ended 30 June 2022 and 30 June 2021.
The fair value of long-term debt, including long-term debt due within one year, based on market observable prices, was $1,359 million
compared to a carrying value of $1,347 million as at 30 June 2022 (30 June 2021: fair value of $1,270 million compared to a carrying value
of $1,245 million).
20222021
AS AT 30 JUNE$M$M
Total debt 1,526 1,403
Less short-term debt (179) (158)
Total long-term debt (including long-term debt due within one year) 1,347 1,245
4.4 Capital risk management
Spark manages its capital considering shareholders interests, the value of Spark’s assets and the Company’s credit rating. The Board is
committed to the Company maintaining an investment grade rating and its capital management policies are designed to ensure this
objective is met. As part of this commitment Spark currently manages its debt levels to ensure that the ratio of net debt at hedged rates
(being inclusive of associated derivatives) to EBITDAI does not materially exceed 1.4 times on a long-run basis, which for credit rating
purposes, Spark estimates equates approximately to adjusted net debt to EBITDA of 1.7 times. The difference between these two ratios is
primarily due to the credit rating agency managing adjustments for leases and captive finance operations.
As at 30 June 2022 the Company’s Standard and Poor’s credit ratings for long-term and short-term debt was, respectively, A- and A-2 with
outlook stable (30 June 2021: same).
Net debt
Net debt at hedged rates, the primary net debt measure Spark monitors, includes long-term debt at the value of hedged cash flows due to
arise on maturity, plus short-term debt, less any cash. Net debt at carrying value includes the non-cash impact of fair value hedge
adjustments and any unamortised discount.
Net debt at hedged rates is a non-GAAP measure and is not defined in accordance with NZ IFRS but is a measure used by management.
A reconciliation of net debt at hedged rates and net debt at carrying value is provided below:
20222021
AS AT 30 JUNE$M$M
Cash (71) (72)
Short-term debt at face value 179 158
Long-term debt at face value 1,417 1,212
Net debt at face value 1,525 1,298
To retranslate debt balances at swap rates where hedged by currency swaps (3) 5
Net debt at hedged rates
1
1,522 1,303
Non-cash adjustments
Impact of fair value hedge adjustments
2
1012
Unamortised discount (1) (2)
Net debt at carrying value 1,531 1,313
1 Net debt at hedged rates is the value of hedged cash flows due to arise on maturity and includes an adjustment to state the principal of foreign currency medium term
notes at the hedged currency rate.
2 Fair value hedge adjustments arise on domestic notes in fair value hedges and foreign currency medium term notes in dual fair value and cash flow hedges. These have
no impact on the cash flows to arise on maturity.
Spark New Zealand Annual Report 2022
109Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: LIAbILITIES ANd EquITy
4.4 Capital risk management (continued)
A reconciliation of movements in net debt is provided below:
CASH FLOWSNON-CASH MOVEMENTS
YEAR ENDED 30 JUNE 2022
AS AT 1 JULY
2021
$M
PROCEEDS
1
$M
PAYMENTS
$M
INTEREST
AMORTISATION
$M
FAIR VALUE
CHANGES
$M
FOREIGN
EXCHANGE
MOVEMENT
$M
OTHER
$M
AS AT 30 JUNE
2022
$M
Cash(72)(24,730)24,731––––(71)
Short-term debt1581,524(1,503)––––179
Long-term debt1,24519,512(19,326)1(103)8101,347
Derivatives(18)–––102(8)–76
Net debt 1,313 (3,694) 3,902 1 (1) – 10 1,531
1 $7 million of proceeds were received from closing out derivatives and are included in the net proceeds from debt as shown in statement of cash flows.
These derivatives were in a cash flow hedge relationship, so do not form part of net debt and are not included in the above table.
CASH FLOWSNON-CASH MOVEMENTS
YEAR ENDED 30 JUNE 2021
AS AT 1 JULY
2020
$M
PROCEEDS
$M
PAYMENTS
$M
INTEREST
AMORTISATION
$M
FAIR VALUE
CHANGES
$M
FOREIGN
EXCHANGE
MOVEMENT
$M
OTHER
$M
AS AT 30 JUNE
2021
$M
Cash(53)(8,996)8,977––––(72)
Short-term debt2282,044(2,115)1–––158
Long-term debt1,2443,323(3,290)(1)(48)7101,245
Derivatives(57)–––46(7)–(18)
Net debt 1,362 (3,629) 3,572 – (2) – 10 1,313
4.5 Equity and dividends
Share capital
Movements in the Company’s issued ordinary shares were as follows:
20222021
YEAR ENDED 30 JUNENUMBERNUMBER
Shares at the beginning of the year 1,867,125,093 1,837,044,943
Dividend reinvestment plan 3,735,931 29,190,684
Issuance of shares under share schemes and other transfers 726,451 889,466
Shares at the end of the year 1,871,587,475 1,867,125,093
All issued shares are fully paid and have no par value. Shareholders of ordinary shares have the right to vote at any general meeting of the Company.
Dividends
20222021
YEAR ENDED 30 JUNE
CENTS PER
SHARE$M
CENTS PER
SHARE$M
Previous year second half-year dividend 12.5 233 12.5 230
First half-year dividend 12.5 234 12.5 231
Total dividends in the year 25.0 467 25.0 461
Second half-year dividend declared subsequent to balance date not provided for12.5 234 12.5 233
Events after balance date
On 23 August 2022 the Board approved the payment of a second-half ordinary dividend of 12.5 cents per share or approximately
$234 million. This ordinary dividend will be 100% imputed. In addition, supplementary dividends totalling approximately
$23 million will be payable to shareholders who are not resident in New Zealand. In accordance with the Income Tax Act 2007,
Spark will receive a tax credit from Inland Revenue equivalent to the amount of supplementary dividends paid.
Financial statements
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4.5 Equity and dividends (continued)
H1 FY22 H2 FY22
ORDINARY DIVIDENDS ORDINARY DIVIDENDS
Dividends declared
Ordinary shares 12.5 cents 12.5 cents
American Depositary Shares
1
42.93 US cents 39.26 US cents
Imputation
Percentage imputed100%100%
Imputation credits per share 4.8611 cents 4.8611 cents
Supplementary dividend per share
2
2.2059 cents 2.2059 cents
‘Ex’ dividend dates
New Zealand Stock Exchange24/03/202215/09/2022
Australian Securities Exchange24/03/202215/09/2022
American Depositary Shares 24/03/202215/09/2022
Record dates
New Zealand Stock Exchange25/03/202216/09/2022
Australian Securities Exchange25/03/202216/09/2022
American Depositary Shares 25/03/202216/09/2022
Payment dates
New Zealand and Australia 8/04/20227/10/2022
American Depositary Shares 18/04/202221/10/2022
1 Spark’s American Depositary Shares, each representing five ordinary Spark shares and evidenced by American Depositary Receipts (ADRs), are traded over-the-counter
in the United States. This is a Level 1 ADR programme that is sponsored by Bank of New York Mellon. For H2 FY22 these are based on the exchange rate at 17 August
2022 of NZ$1 to US$0.6282 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 Mellon performs the physical currency conversion.
2 Supplementary dividends are paid to non-resident shareholders.
Dividend Reinvestment Plan
The Company has a dividend reinvestment plan under which shareholders can elect to receive dividends in additional shares.
For the year ended 30 June 2022 shares with a total value of $18 million (30 June 2021: $131 million) were issued in lieu of
dividends. Shares issued in lieu of dividends are excluded from dividends paid in the statement of cash flows.
The dividend reinvestment plan has been suspended for the H2 FY22 dividend and for the foreseeable future.
Spark New Zealand Annual Report 2022
111Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL INSTruMENTS
Section 5 Financial instruments
5.1 derivatives and hedge accounting
20222021
DERIVATIVE
ASSETS
DERIVATIVE
LIABILITIES
DERIVATIVE
ASSETS
DERIVATIVE
LIABILITIES
AS AT 30 JUNE$M$M$M$M
Designated in a cash flow hedge18 (2)10 (83)
Designated in a fair value hedge– (12)16 –
Designated in a dual fair value and cash flow hedge– (64)9 (7)
Other– – 1 (5)
18 (78)36 (95)
Short-term derivatives5 (1)12 (4)
Long-term derivatives13 (77)24 (91)
Spark’s derivatives are held at fair value, calculated using discounted cash flow models and observable market rates of interest, foreign
exchange and electricity prices. This represents a level two measurement under the fair value measurement hierarchy, being inputs other
than quoted prices included within level one that are observable for the asset or liability. As at 30 June 2022 and 30 June 2021 no
derivative financial assets or derivative financial liabilities have been offset in the statement of financial position. The potential for offsetting
of any derivative financial instruments is $8 million (30 June 2021: $20 million), which if applied would result in a reduction of derivative
assets and derivative liabilities.
Hedge accounting
Derivatives are hedge accounted when they are designated into an effective hedge relationship as a hedging instrument. The nature and
the effectiveness of the hedge accounting relationship will determine where the gains and losses on remeasurement are recognised.
Derivatives are designated:
• Fair value hedges, where the derivative is used to manage interest rate risk in relation to debt
• Cash flow hedges, where the derivative is used to manage the variability in cash flows of highly probable forecast transactions
• Dual fair value and cash flow hedges, where the derivative is used to hedge the interest rate risk on foreign debt and the variability in
cash flows due to movements in foreign exchange rates.
At inception, each hedge relationship is formalised in hedge documentation. Hedge accounting is discontinued when the hedge
instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. Spark determines the existence of an
economic relationship between the hedging instrument and the hedged item based on the currency, amount and timing of respective
cash flows, reference interest rates, tenors (time to maturity), repricing dates, maturities and notional amounts. Spark assesses whether the
derivative designated in each hedging relationship is expected to be, and has been, effective in offsetting the changes in cash flows of the
hedged item using the hypothetical derivative method.
Derivatives in hedge relationships are designated based on a hedge ratio of 1:1. In these hedge relationships the main source of
ineffectiveness is the effect of the counterparty and Spark’s own credit risk on the fair value of the derivatives, which is not reflected in the
change in the fair value of the hedged item attributable to changes in foreign exchange and interest rates.
Cash flow hedges
Cross-currency interest rate swaps and interest rate swaps are jointly designated in cash flow hedges to manage interest and foreign
exchange rate risk on debt. The hedged cash flows will affect Spark’s statement of profit or loss and other comprehensive income as
interest and principal amounts are repaid over the remaining term of the debt.
Interest rate swaps are designated in cash flow hedges to manage the interest rate exposure of highly probable forecast variable rate debt
and aggregate variable interest rate exposures created by swapping local or foreign currency fixed-rate debt into variable rate debt.
Electricity hedge contracts were designated in cash flow hedges to reduce electricity price risk from price fluctuations. These hedge
contracts established the price at which future specified quantities of electricity are purchased and settled. Any resulting differential to be
paid or received was recognised as a component of electricity costs through the term of the contracts.
Spark also enters into forward exchange contracts to hedge forecast foreign currency purchases, the majority expected to be made within
12 months. The related cash flows are recognised in the statement of profit or loss and other comprehensive income over this period.
Financial statements
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5.1 derivatives and hedge accounting (continued)
A reconciliation of movements in the hedge reserves, net of tax, is outlined below:
20222021
YEAR ENDED 30 JUNE$M$M
Opening balance as at 1 July (63) (120)
Gain recognised in other comprehensive income 52 57
Amount reclassified to finance expense 12 14
Amount reclassified to property, plant and equipment/intangible assets and inventory 6 (9)
Amount reclassified to other operating expenses 1 (5)
Total movements to other comprehensive income 71 57
Closing balance as at 30 June 8 (63)
Other amounts deferred in equity will be transferred to the statement of profit or loss over the next three years (30 June 2021: four years).
Included within the closing balance at 30 June 2022 is $3 million relating to the cost of hedging reserve (30 June 2021: $3 million).
The movement in the hedge reserves includes $98 million in the change in fair value of interest rate swaps less $27 million associated
deferred tax (30 June 2021: $68 million in the change in fair value of interest rate swaps less $19 million associated deferred tax,
$6 million in relation to electricity derivatives and $2 million for forward foreign exchange contracts).
Fair value hedges
Interest rate swaps are designated in a fair value hedge to manage interest rate risk in relation to debt. The gain or loss from remeasuring
the interest rate swaps and debt at fair value is recognised in the statement of profit or loss and other comprehensive income. During the
year ended 30 June 2022 there has been no material ineffectiveness on fair value hedging relationships (30 June 2021: no material
ineffectiveness)
and as a result no material changes have been recognised in profit and loss.
Dual fair value and cash flow hedges
Spark has Australian dollar (AUD) and Norwegian krone (NOK) denominated debt. As part of Spark’s risk management policy, cross-
currency interest rate swaps (CCIRSs) are entered into to convert all of the proceeds of the debt issuances to New Zealand dollars and
convert the foreign currency fixed rate of the debt issuance to a New Zealand dollar floating rate. To mitigate profit or loss volatility, the
CCIRSs were designated into a dual fair value and cash flow hedge relationship. The foreign currency basis element of the CCIRSs are
excluded from the designation and are separately recognised in other comprehensive income in a cost of hedging reserve.
For fair value hedges the gain or loss from remeasuring the CCIRSs and debt at fair value is recognised in the statement of profit or loss
and other comprehensive income. For cash flow hedges gains or losses deferred in the cash flow hedge reserve will be reclassified to
Spark’s statement of profit or loss and other comprehensive income as interest and principal amounts are repaid over the remaining term
of the debt.
The change in fair value of the hedging instruments relating to the foreign currency basis component of the CCIRSs are recognised in
other comprehensive income and accumulated in a cost of hedging equity reserve. Subsequently, the cumulative amount is transferred
to profit or loss at the same time as the hedged item impacts profit or loss.
Spark New Zealand Annual Report 2022
113Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL INSTruMENTS
5.1 derivatives and hedge accounting (continued)
The details of the hedging instruments are as follows:
NOTIONAL
AMOUNT OF
HEDGING
INSTRUMENT
STATEMENT OF
FINANCIAL
POSITION LINE
ITEM
CARRYING AMOUNT OF
THE HEDGING INSTRUMENT
LIFE-TO-DATE
CHANGE-IN-
VALUE USED FOR
CALCULATING
HEDGE
INEFFECTIVE-
NESSASSETSLIABILITIES
AS AT 30 JUNE 2022$M$M$M
Cash flow hedges
Interest rate swapsNZD 640m Derivatives 13 (2) 11
Forward foreign exchange contractsNZD 78m Derivatives 5 – 5
Fair value hedges
Interest rate swapsNZD 350m Derivatives – (12) (12)
Forward foreign exchange contractsNZD 18m Derivatives – – –
Fair value and cash flow hedges
Cross-currency swapsAUD 150m Derivatives – (10) (10)
Cross-currency swapNOK 1b Derivatives – (21) (21)
Cross-currency swapsAUD 125m Derivatives – (23) (23)
Cross-currency swapsAUD 100m Derivatives – (10) (10)
18 (78) (60)
AS AT 30 JUNE 2021
Cash flow hedges
Interest rate swapsNZD 780m Derivatives – (80) (80)
Forward foreign exchange contractsNZD 200m Derivatives 3 (3) –
Electricity derivatives66.24 GWh Derivatives 7 – 7
Fair value hedges
Interest rate swapsNZD 390m Derivatives 16 – 16
Forward foreign exchange contractsNZD 8m Derivatives – – –
Fair value and cash flow hedges
Cross-currency swapsAUD 150m Derivatives 9 – 9
Cross-currency swapNOK 1b Derivatives – (2) (2)
Cross-currency swapsAUD 125m Derivatives – (3) (3)
Cross-currency swapsAUD 100m Derivatives –
(2) (2)
35 (90) (55)
Financial statements
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5.1 derivatives and hedge accounting (continued)
The details of hedged items are as follows:
STATEMENT OF
FINANCIAL POSITION
LINE ITEM
CARRYING AMOUNT OF
THE HEDGED ITEM
ACCUMULATED AMOUNT OF
FAIR VALUE HEDGE ADJUSTMENTS
ON THE HEDGED ITEM INCLUDED
IN THE CARRYING AMOUNT OF
THE HEDGED ITEM
LIFE-TO-DATE
CHANGE-IN-
VALUE USED FOR
CALCULATING
HEDGE
INEFFECTIVE-
NESSASSETSLIABILITIESASSETSLIABILITIES
AS AT 30 JUNE 2022$M$M$M$M$M$M
Cash flow hedges
Aggregated variable interest rate exposure – – – – – (11)
Committed foreign exchange transactions – – – – – (5)
Fair value hedges
Domestic NotesLong–term debt – (339) 12 – 12
Fair value and cash flow hedges
Australian Medium Term Note (AUD 150m)Long–term debt – (158) 7 – 10
Norwegian Medium Term Note (NOK 1b)Long–term debt – (152) 11 – 21
Australian Medium Term Note (AUD 125m)Long–term debt – (113) 25 – 23
Australian Medium Term Note (AUD 100m)Long–term debt – (97) 13 – 10
– (859) 68 – 60
AS AT 30 JUNE 2021
Cash flow hedges
Aggregated variable interest rate exposure – – – – – 80
Highly probable forecast purchases of electricity – – – – – (7)
Fair value hedges
Domestic Notes Long-term debt – (407) – (17) (16)
Fair value and cash flow hedges
Australian Medium Term Note (AUD 150m) Long-term debt – (177) – (17) (9)
Norwegian Medium Term Note (NOK 1b) Long-term debt – (172) – (6) 2
Australian Medium Term Note (AUD 125m) Long-term debt – (132) 2 – 3
Australian Medium Term Note (AUD 100m)
Long-term debt – (106) 2 – 2
– (994) 4 (40) 55
Spark New Zealand Annual Report 2022
115Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL INSTruMENTS
5.2 Financial risk management
a) Market risk
Spark is exposed to market risk primarily from changes in foreign
currency exchange rates and interest rates. Spark employs risk
management strategies, including the use of derivative financial
instruments, to manage these exposures through a Board-
approved treasury policy, which provides the framework within
which treasury-related activities are conducted.
Spark manages the concentration of exposures using well-defined
market and credit risk limits and through timely reporting to senior
management. All contracts have been entered into with high-credit
quality financial institutions. The risk associated with these
transactions is that the fair value or cash flows of financial
instruments will change due to movements in market rates or, in
the case of default by a counterparty, through the cost of
replacement at the current market rates.
Currency risk
Nature of the risk
Currency risk is the risk that eventual New Zealand dollar net cash
flows from transactions undertaken by Spark will be adversely
affected by changes in foreign currency exchange rates.
Exposure and risk management
Spark’s total net exposure (from non-derivative financial
instruments) to foreign currency as at 30 June 2022 is $559 million
(30 June 2021: $598 million). This includes $163 million long-term
debt principal denominated in NOK (30 June 2021: $167 million)
and $414 million long-term debt principal denominated in AUD
(30 June 2021: $403 million). The remaining exposure is primarily
trade payables and other receivables denominated in United
States dollars (USD).
Spark manages currency risk arising from foreign currency debt
through hedging. Spark’s long-term debt issued in NOK and AUD
is fully hedged using cross-currency interest rate swaps to convert
foreign currency cashflows into floating-rate New Zealand dollar
exposures.
Currency risk from capital and operational expenditure in foreign
currencies (and related trade payables) has been substantially
hedged by entering into forward exchange contracts.
Sensitivity to foreign currency movements
As at 30 June 2022 a movement of 10% in the New Zealand dollar
would (after hedging) impact the statement of profit or loss by less
than $1 million (30 June 2021: less than $3 million) and the
statement of changes in equity by less than $12 million (30 June
2021: less than $19 million). This analysis assumes a movement in
the New Zealand dollar across all currencies and only includes the
effect of foreign exchange movements on monetary financial
instruments.
Interest rate risk
Nature of the risk
Interest rate risk is the risk that fluctuations in interest rates impact
Spark’s cash flows, financial performance or the fair value of its
holdings of financial instruments.
Exposure and risk management
Spark is exposed to interest rate risk from its financing activities,
which primarily include loans and debt issuance either at fixed or
floating rates. For floating-rate exposures Spark employs the use of
derivative financial instruments to reduce its exposure to
fluctuations in interest rates, with the objective to minimise the cost
of net borrowings and to minimise the impact of interest rate
movements on interest expense and net earnings.
Cross-currency interest rate swaps are used to convert foreign
currency debt into floating-rate New Zealand dollar exposures.
Interest rate swaps are used to convert floating-rate exposures into
fixed-rate exposures and vice versa. As a result Spark’s interest rate
exposure is limited to New Zealand only.
Sensitivity to interest rate movements
As at 30 June 2022 a movement in interest rates of 25 basis
points would (after hedging) impact the statement of profit or loss
by less than $1 million (30 June 2021: less than $1 million)
and the statement of changes in equity by less than $1 million
(30 June 2021: less than $2 million).
Financial statements
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5.2 Financial risk management (continued)
b) Credit risk
Nature of the risk
Credit risk arises in the normal course of Spark’s business on cash,
receivables and derivative financial instruments if a counterparty
fails to meet its contractual obligations.
Exposure and risk management
Spark is exposed to credit risk if customers and counterparties fail
to make payments in respect of:
• Payment of trade and other receivables as they fall due; and
• Contractual cash flows of derivative assets held at fair value.
Spark’s assets subject to credit risk as at 30 June 2022 were
$976 million (30 June 2021: $1,010 million).
Spark considers the probability of default upon initial recognition
of cash, receivables and derivative assets and whether there has
been a significant and ongoing increase in credit risk at the end of
each reporting period. To assess this Spark compares the risk of
default occurring on these assets at the reporting date, with the risk
of default at the date of initial recognition. Available, reasonable
and supportive forward-looking information is considered,
especially the following indicators:
• External credit rating (as far as available)
• Actual or expected significant adverse changes in business,
financial or economic conditions that are expected to cause a
significant change to the customer or counterparty’s ability to
meet their obligations
• Significant changes in the value of the collateral supporting the
obligation or in the quality of third-party guarantees or credit
enhancements.
Spark manages its exposure using a credit policy that includes
limits on exposures with significant counterparties that have been
set and approved by the Board and are monitored on a regular
basis. Spark places its cash and derivative financial instruments
with high-credit quality financial institutions and does not have
significant concentration of risk with any single party. Concentration
of credit risk for trade and other receivables is limited because of
Spark’s large customer base.
Spark has certain derivative and debt arrangements that are
subject to bilateral credit support agreements that require Spark or
its counterparties to post collateral funds to support the value of
certain derivatives subject to certain agreed threshold amounts.
As at 30 June 2022 no collateral was posted (30 June 2021: nil).
Letters of credit and guarantees may also be held over some
receivable amounts. The carrying amounts of financial assets
represent the maximum credit exposure.
c) Liquidity risk
Nature of the risk
Liquidity risk represents Spark’s ability to meet its contractual
obligations as they fall due.
Exposure and risk management
Spark uses cash and derivative financial instruments to manage
liquidity and evaluates its liquidity requirements on an ongoing
basis. In general, Spark generates sufficient cash flows from its
operating activities to meet its financial liabilities. As at 30 June
2022 Spark had current assets of $1,221 million and current
liabilities of $940 million (30 June 2021: current assets of $916
million and current liabilities of $939 million). Positive operating
cash flows enable working capital to be managed to meet
short-term liabilities as they fall due.
In the event of any shortfalls Spark has the following financing
programmes:
• An undrawn committed standby facility of $200 million with a
number of creditworthy banks (30 June 2021: $200 million)
• Committed bank facilities of $425 million with $365 million
drawn as at 30 June 2022 (30 June 2021: $575 million facilities
with $160 million drawn)
• Committed bank overdraft facilities of $15 million with
New Zealand banks (30 June 2021: $15 million).
There are no compensating balance requirements associated with
these facilities.
Spark’s liquidity policy is to maintain unutilised committed facilities
of at least 110% of the next 12 months’ forecast peak net funding
requirements, including coverage for short-term capital market
issues. Spark’s funding policy requires that no more than 30% of
long-term debt (including undrawn and standby facilities) can
mature within the next 12 months, which has been met.
Spark New Zealand Annual Report 2022
117Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL INSTruMENTS
5.2 Financial risk management (continued)
c) Liquidity risk (continued)
Maturity analysis
The following table provides an analysis of Spark’s remaining contractual cash flows relating to financial liabilities. Contractual cash flows
include contractual undiscounted principal and interest payments.
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS0–6 MONTHS6–12 MONTHS1–2 YEARS2–5 YEARS5+ YEARS
AS AT 30 JUNE 2022$M$M$M$M$M$M$M
Non-derivative financial liabilities
Trade payables 260 260 260 – – – –
Sale and leaseback liabilities 87 93 22 25 24 22 –
Lease liabilities 344 434 35 30 52 111 206
Short and long-term debt 1,526 1,765 568 126 164 310 597
Derivative financial liabilities
Interest rate swaps (net settled) 14 – 3 – – (2) (1)
Cross-currency interest rate swaps
(gross settled)
Inflows – (686) (6) (11) (17) (161) (491)
Outflows 64 771 14 17 34 197 509
Forward exchange contracts (gross settled)
Inflows – (18) (18) – – – –
Outflows – 18 18 – – – –
2,295 2,637 896 187 257 477 820
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS0–6 MONTHS6–12 MONTHS1–2 YEARS2–5 YEARS5+ YEARS
AS AT 30 JUNE 2021$M$M$M$M$M$M$M
Non-derivative financial liabilities
Trade payables 270 270 270 – – – –
Sale and leaseback liabilities 81 91 22 25 31
13 –
Lease liabilities 466 616 40 36 70 147 323
Short and long-term debt 1,403 1,509 330 120 130 301 628
Derivative financial liabilities
Interest rate swaps (net settled) 85 69 7 6 13 31 12
Cross-currency interest rate swaps
(gross settled)
Inflows – (695) (6) (11) (17) (159) (502)
Outflows 7 707 6 6 15 165 515
Forward exchange contracts (gross settled)
Inflows – (89) (85) (4) – – –
Outflows 3 92 87 5 – – –
2,315 2,570 671 183 242 498 976
Financial statements
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Section 6 Other information
6.1 Income tax
Income tax expense
The income tax expense is determined as follows:
20222021
YEAR ENDED 30 JUNE$M$M
Statement of profit or loss and other comprehensive income
Current income tax
Current year income tax expense (177) (172)
Adjustments in respect of prior periods (1) 4
Deferred income tax
Depreciation, provisions, accruals, tax losses and other 8 4
Adjustments in respect of prior periods (1) (5)
Income tax expense recognised in the statement of profit or loss and other comprehensive income (171) (169)
Reconciliation of income tax expense
2022
RESTATED
2021
YEAR ENDED 30 JUNE$M$M
Net earnings before income tax 581 550
Tax at current rate of 28% (163) (154)
Adjustments to taxation
Non-assessable gains on sale (3) 1
Other non-assessable items 3 (3)
Tax effects of non-New Zealand profits (7) (6)
Taxes paid in foreign jurisdictions - (6)
Adjustments in respect of prior periods (1) (1)
Total income tax expense (171) (169)
Spark New Zealand Annual Report 2022
119Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: OTHEr INFOrMATION
6.1 Income tax (continued)
Deferred tax assets and liabilities
Deferred tax assets and liabilities are offset in the statement of financial position and presented as a net deferred tax liability. The
movement in the deferred tax assets and liabilities is provided below:
FIXED ASSETSLEASES
PROVISIONS &
ACCRUALSOTHERTOTAL
ASSETS/(LIABILITIES)$M$M$M$M$M
Opening balance as at 1 July 2021 (77) (19) (5) 19 (82)
Amounts recognised in statement of profit or loss and other
comprehensive income
Relating to the current period 20 16 (2) (26) 8
Adjustments in respect of prior periods (1) – – – (1)
Amounts recognised in equity relating to the current year – – – (27) (27)
Amounts classified as held for sale – – – (6) (6)
Closing balance as at 30 June 2022 (58) (3) (7) (40) (108)
Opening balance as at 1 July 2020 – RESTATED (125) 27 – 39 (59)
Amounts recognised in statement of profit or loss and other
comprehensive income
Relating to the current period 20 (17) (1) 2 4
Adjustments in respect of prior periods (1) – (4) – (5)
Amounts recognised in equity relating to the current year – – – (22) (22)
Reclassifications 29 (29) – – –
Closing balance as at 30 June 2021 (77) (19) (5) 19 (82)
Spark has not recognised the tax effect of accumulated unrestricted losses and temporary differences amounting to AUD$461 million
at 30 June 2022 based on the relevant corporation tax rate of Australia (30 June 2021: AUD$461 million). These losses and temporary
differences may be available to be carried forward to offset against future taxable income. However, utilisation is contingent on the
production of taxable profits over a significant period of time and is subject to compliance with the relevant taxation authority requirements.
Spark has a negative 16 million imputation credit account balance as at 30 June 2022 due to the timing of dividend and tax payments
(30 June 2021: negative 18 million). The imputation credit account had a positive balance as at 31 March 2022 and 31 March 2021.
6.2 Employee share schemes
Spark operates share-based compensation plans that are equity settled as outlined below.
Restricted share schemes (RSS)
A restricted share scheme was initially introduced for selected employees in September 2001. For new allocations after August 2015 these
were replaced by two new restricted share schemes:
• Spark New Zealand Long-Term Incentive Scheme
• Spark New Zealand Managing Director Long-Term Incentive Scheme.
The Spark New Zealand Long-Term Incentive Scheme is for the senior leaders including the Leadership Squad and delivers one scheme
with the same set of rules under one long-term incentive, with a performance hurdle in place. The Spark New Zealand Managing Director
Long-Term Incentive Scheme related to the previous Managing Director, Simon Moutter.
Under these restricted share schemes, ordinary shares in the Company are issued to Spark Trustee Limited. Participants purchase shares
from Spark Trustee Limited with funds lent to them by the Company and which are held on their behalf by Spark Trustee Limited. If the
individual is still employed by Spark at the end of the vesting period (generally three years) and applicable performance hurdles are met,
the employee is provided a cash bonus, which must be used to repay the loan and the shares are then transferred to the individual. The
target for this hurdle is the Company’s cost of equity plus 1% compounding annually. The last year when RSS shares were granted was
FY19 therefore FY22 was the last year where RSS shares vested.
Financial statements
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6.2 Employee share schemes (continued)
Share option scheme
From September 2019, members of the Leadership Squad (including the CEO) and selected senior leaders have been granted options
under the new Spark Long-Term Incentive (LTI) scheme. Under the scheme participants are granted options at the start of the three-
year vesting period. The number of options granted equals the gross LTI value divided by the volume weighted average price of Spark
New Zealand shares for the 20 days prior to the grant date. Subject to satisfaction of the performance hurdle and continued employment,
at vesting each option converts to a Spark share based on a zero exercise price. If the target is not met (or the participant leaves Spark
employment) then the options simply lapse, with exceptions for redundancy, death and disablement. Spark enables participants to meet
tax obligations through PAYE by authorising the sale of a sufficient number of shares on their behalf.
Vesting of the LTI grants are contingent on: participants’ continued employment with Spark for three years from grant date (subject to
exceptions); and the Company achieving the specified performance hurdles. The performance hurdle targets are set annually and for
grants issued in 2019, 2020 and 2021 this was the Company’s cost of equity plus 1% compounding annually. Options with an intrinsic
value of $14 million (30 June 2021: $9 million) remain outstanding at 30 June 2022 and have a weighted average remaining life of
1.3 years (30 June 2021: 1.7 years).
Information regarding shares and options awarded under these schemes is as follows:
20222021
OPTIONSRSSOPTIONSRSS
NUMBER OF
OPTIONS
NUMBER OF
SHARES
NUMBER OF
OPTIONS
NUMBER OF
SHARES
Opening balance as at 1 July 1,845,544 566,041 998,125 1,086,461
Granted 1,042,944 – 939,898 –
Vested – (566,041) – (512,447)
Lapsed (48,195) – (92,479) (7,973)
Closing balance as at 30 June 2,840,293 – 1,845,544 566,041
Percentage of total ordinary shares0.15%0.00%0.10%0.03%
The fair value of the employee services received in exchange for the grant of equity instruments is recognised as an expense, with a
corresponding entry in equity. The total charge recognised for these schemes for the year ended 30 June 2022 was $1.3 million (30 June
2021: $1.8 million) and the expense relating to the restricted shares schemes was $0.1 million (30 June 2021: $1.2 million). As at 30 June
2022, $1.6 million of share scheme awards remain unvested and not expensed (30 June 2021: $1.6 million). This expense, measured at its
fair value based on a valuation model, will be recognised over the remaining vesting period of the awards.
6.3 related party transactions
Related parties of Spark include the associates and joint venture companies listed in note 3.3 and key management personnel detailed
below.
Interest of directors in certain transactions
A number of the Company’s directors are also directors of other companies and any transactions undertaken with these entities have been
entered into on a commercial basis.
Transactions with associate and joint venture companies
Spark’s transactions with associates and joint ventures include the following:
• Spark provided network operations and management services to Southern Cross in respect of its operations in New Zealand
• Spark made payments to Southern Cross in connection with capacity it has purchased on Southern Cross’ network
• Spark made payments to Southern Cross for operational expenditure relating to cable maintenance
• Spark made payments to Connect 8 Limited for fibre and telecommunications construction services until the full acquisition of the entity
on 31 January 2022
• Spark made payments to Adroit Holdings Limited for operational expenditure relating to environmental IoT services and hardware
following the acquisition of approximately 38% of the entity on 18 March 2022
• Spark received revenue from Rural Connectivity Group for the sale of mobile backhaul equipment
• Spark received revenue from Connect 8 Limited in the prior year for the sale of mobile network equipment.
Spark New Zealand Annual Report 2022
121Ko Te pae Anamata, Whakamaua
NOTES TO THE FINANCIAL STATEMENTS: OTHEr INFOrMATION
6.3 related party transactions (continued)
Balances and amounts in respect of these transactions with associate and joint venture companies are set out in the table below:
20222021
AS AT AND FOR THE YEAR ENDED 30 JUNE$M$M
Operating revenues 5 12
Operating expenses (13) (14)
Capacity acquired and other capital expenditure
1
(15) (23)
Receivables 20 18
Payables – (1)
1 As at 30 June 2022 Spark has committed to purchases of $49 million for cable capacity from Southern Cross (30 June 2021: $50 million).
Key management personnel compensation
20222021
YEAR ENDED 30 JUNE$’000$’000
Directors’ remuneration
1
1,263 1,292
Salary and other short-term benefits 8,116 7,577
Share-based compensation 743 831
10,122 9,700
1 Excludes Chief Executive remuneration.
The table above includes remuneration of the Chief Executive and the other members of the Leadership Squad, including amounts paid
to members of the Leadership Squad who left during the year ended 30 June or were in acting Leadership Squad positions. Like other
Spark employees, members of the Leadership Squad also receive product and service concessions. In addition, where members of the
Leadership Squad are KiwiSaver members, they receive contributions towards their KiwiSaver schemes.
6.4 Subsidiaries
Subsidiaries are all entities over which Spark has control. The significant subsidiary companies of Spark and their activities are as follows:
NAMECOUNTRYOWNERSHIPPRINCIPAL ACTIVITY
Computer Concepts LimitedNew Zealand100%IT infrastructure and business cloud services
Connect 8 LimitedNew Zealand100%Mobile infrastructure business
Digital Island LimitedNew Zealand100%Business telecommunications provider
Gen-i Australia Pty LimitedAustralia
1
100%
Provides international wholesale and outsourced telecommunications
services
Mattr LimitedNew Zealand 94%Software company focused on decentralised identity and verifiable data
Qrious LimitedNew Zealand100%Data analytics business
Revera LimitedNew Zealand100%IT infrastructure and data centre provider
Spark Finance LimitedNew Zealand100%A Group finance company
Spark New Zealand Trading LimitedNew Zealand100%Telecommunications and digital services company
TCNZ (Bermuda) LimitedNew Zealand100%A holding company
Teleco Insurance LimitedBermuda
1
100%A Group insurance company
Telecom New Zealand USA LimitedUnited States
1
100%Provides international wholesale telecommunications services
Telecom Southern Cross LimitedNew Zealand100%A holding company
Entelar Limited
(previously Telegistics Limited)New Zealand100%Mobile phone repair and equipment distribution
1 These foreign incorporated entities are tax resident in New Zealand.
Financial statements
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6
The financial year end of all significant subsidiaries is 30 June.
6.5 reconciliation of net earnings to net cash flows from operating activities
2022
RESTATED
2021
YEAR ENDED 30 JUNE$M$M
Net earnings for the year 410 381
Adjustments to reconcile net earnings to net cash flows from operating activities
Depreciation and amortisation 520 521
Bad and doubtful accounts 7 (4)
Deferred income tax (6) 2
Share of associates' and joint ventures' net losses 1 1
Impairments 2 2
Other gains (26) (28)
Other – (5)
Changes in assets and liabilities net of effects of non-cash and investing and financing activities
Movement in receivables and related items (52) (1)
Movement in inventories (41) 31
Movement in current taxation 17 (20)
Movement in payables and related items 9 (27)
Net cash flows from operating activities 841 853
6.6 Commitments and contingencies
Capital and other commitments
As at 30 June 2022 capital expenditure contracted for, but not yet incurred, was $498 million (30 June 2021: $173 million) with
$327 million due in the year ending 30 June 2023. Commitments principally relate to telecommunications network equipment, data centre
infrastructure and cable capacity.
As at 30 June 2022 Spark had other supplier commitments of $689 million (30 June 2021: $633 million), with $567 million due in the year
ending 30 June 2023. Commitments include mobile handsets, subscription services, modems, licences and content rights.
Contingencies
No ongoing claims, investigations and inquiries are expected to have a significant effect on Spark’s financial position or profitability.
Spark New Zealand Annual Report 2022
123Ko Te Pae Anamata, Whakamaua
Independent auditor’s report
To the Shareholders of Spark New Zealand Limited
Opinion
We have audited the consolidated financial statements of Spark New Zealand Limited and its subsidiaries (the
‘Group’), which comprise the consolidated statement of financial position as at 30 June 2022, and the
consolidated statement of profit and loss and other comprehensive income, statement of changes in equity
and statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages 79 to 123, present fairly, in all
material respects, the consolidated financial position of the Group as at 30 June 2022, and its consolidated
financial performance and cash flows for the year then ended in accordance with New Zealand Equivalents to
International Financial Reporting Standards (‘NZ IFRS’) and International Financial Reporting Standards (‘IFRS’).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and International
Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
We are independent of the Company in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand)
issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards), and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
Our firm carries out other assignments for Spark New Zealand Limited in relation to regulatory audit, other
assurance related services (such as trustee reporting), taxation compliance and non-assurance services
provided to the Corporate Taxpayers Group of which Spark New Zealand Limited is a member. These services
have not impaired our independence as auditor of the Group. In addition to this, the Chief Executive has both
a sister and brother-in-law that are partners at Deloitte. These Deloitte partners are not involved in the
provision of any services to the Group and its subsidiaries, and this matter has not impacted our
independence. Also, partners and employees of our firm deal with the Group on normal terms within the
ordinary course of trading activities of the business of the Group. The firm has no other relationship with, or
interest in the Group.
Audit materiality
We consider materiality primarily in terms of the magnitude of misstatement in the financial statements of the
Group that in our judgement would make it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced (the ‘quantitative’ materiality). In addition, we also
assess whether other matters that come to our attention during the audit would in our judgement change or
influence the decisions of such a person (the ‘qualitative’ materiality). We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
We determined materiality for the Group financial statements as a whole to be $27 million.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Independent Auditor’s report
Independent auditor’s report
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Key audit matterHow our audit addressed the key audit matter
Revenue recognition and recoverability of certain contract
cost assets
The Group’s reported operating revenue of $3,694m,
(2021: $3,565m) includes:
• Mobile $1,351m (2021: $1,311m)
• Voice $285m (2021: $308m)
• Broadband $639m (2021: $670m)
• Cloud, security, and service management $446m (2021:
$443m)
• Procurement and partners $538m (2021: $414m)
• Managed data, networks, and services $283m (2021: $282m)
• Other operating revenues $152m (2021: $137m)
Revenue recognition is considered to be a key audit matter.
For Mobile and Broadband revenue, and to a lesser extent other
revenue streams, there is an inherent risk around the accuracy
and timing of revenue recognition given the complexity of
systems and the large volume of data processed; moreover,
judgement is required for multiple element arrangements. This
risk is most pronounced for new or changing product plans and
prices.
Cloud, security and service management revenue requires
significant management judgements and estimates, particularly
for larger contracts, which are bespoke and cover several
accounting periods.
The judgements and estimates that significantly impact the
accuracy of revenue recognition for these contracts include:
• identifying the separate performance obligations;
• assessing whether the performance obligations are satisfied
at a point in time or over time; and
• determining the amount and appropriate method of
measuring the costs of fulfilling the performance obligations
or, where appropriate, the completeness and valuation of
provisions against contracts that are expected to be loss-
making.
Contract costs incurred to fulfil a contract arising from these
contracts require significant estimation in determining their
recoverability, and the appropriate period of amortisation.
Disclosures relating to revenue recognition and the revenue
stream break down can be found in Note 2.2. Operating
revenues and other gains. Refer also to Note 3.1 Contract Costs
for further information on costs to fulfil a contract.
Our audit approach included both controls testing and substantive
procedures. For our procedures on the design and operating
effectiveness of controls over significant IT systems, we involved our
IT specialists.
Our audit procedures included:
Across Mobile and Broadband, and Cloud, security and service
management revenue streams:
• assessing the appropriateness of the revenue recognition policies
for the products and services offered by the Group, which
included but were not limited to:
– challenging the Group’s assessment for each performance
obligation about whether the customer can benefit from the
product or service on its own or together with readily available
resources;
– assessing the allocation of the transaction price to the performance
obligations by comparing the stand-alone selling price assigned to
observed market prices or estimated prices; and
– examining the stages at which revenue for each performance
obligation is recognised.
• testing of manual journal entries recorded in the general ledger
relating to revenue recognition.
Mobile and Broadband:
• Testing of the design and implementation, and the operating
effectiveness of automated controls and interfaces between
relevant IT applications, measurement and billing of revenue, and
the recording of entries in the general ledger. We also tested the
access controls and change management controls over the
relevant billing systems;
• Testing of the design and implementation, and the operating
effectiveness of manual controls over the initiation, authorisation,
recording and processing of revenue transactions. This included
evaluating process controls over authorising new price plans and
rate changes and the adjustments to the relevant billing systems;
• Testing the design and implementation of revenue recognition
controls, including rating and billing during the year as it relates to
new or changing product plans;
• Recalculating revenue recognised to evaluate that the processing
by the relevant telecommunication system is materially correct;
• Reviewing new product plans in the current year to understand
each of the performance obligations in the bundled offering;
• For new product plans that provide a bundle of services, assessing
whether the customer can benefit from the product or service on
its own or together with readily available resources; and
• Assessing the recognition and timing of costs to acquire and costs
to fulfil customer contracts.
Spark New Zealand Annual Report 2022
125Ko Te Pae Anamata, Whakamaua
Key audit matterHow our audit addressed the key audit matter
Cloud, security and service management:
• testing of cloud, security and service management contracts for
appropriate revenue recognition and provisioning for contracts
that were expected to be loss-making. We considered the future
forecast profitability and the contractual terms to assess the
recoverability of the contract-specific assets and to determine if
any contracts required loss provisions; and
• testing a sample of revenue transactions recorded during the year
by agreeing to supporting evidence, which included cash receipts,
customer contracts, and invoices. We focused our work on
contracts which we regarded as higher risk because of the nature
of the contract and the stage of delivery.
Carrying value of property, plant & equipment
and intangible assets
The Group has property, plant & equipment and intangible assets
of $1,948m (2021: $1,938m).
There are a number of areas where judgements significantly
impact the carrying value of property, plant & equipment and
intangible assets and their respective depreciation and
amortisation profiles. These areas are as follows:
• the impact of planned or unexpected replacement technology
which will impact the way in which an asset is used or is
expected to be used;
• the determination as to whether to capitalise or expense costs,
particularly in relation to internal labour costs;
• the useful economic life of the asset; and
• the timely transfer and commencement of depreciation of
assets transferred from work in progress.
Changes in these judgements may have a significant impact on
the results of the Group. Due to the significance of these
judgements and the materiality of these assets to the
consolidated Statement of Financial Position, this is considered a
key audit matter.
Refer to notes 3.6 and 3.7.
Our audit procedures included the following:
• testing of the design and implementation, and the operating
effectiveness of controls over the acquisition and disposal of
assets;
• assessing the appropriateness of capitalisation of costs incurred
on capital projects, by examining a sample of additions to identify
if the expenditure meets the definition of an asset in accordance
with the applicable accounting standards;
• assessing the reasonableness of the internal labour rates used to
capitalise internal labour;
• assessing the appropriateness of the date from which assets
commenced being depreciated;
• assessing the allocated useful economic lives, by comparing to
industry benchmarks and our knowledge of the business and its
operations; and
• reviewing Board minutes and performing inquiries with
management personnel around the prevailing risks of
technological obsolescence and assessing their impact on the
useful lives/impairment risk of existing assets.
We assessed the application of the Group’s annual asset life review.
This included assessing judgements made by the Group on:
• the appropriateness of asset lives applied in the calculation of
depreciation and amortisation;
• the nature and impact of changes on the business from Spark’s
strategy, including which specific assets are impacted; and
• the extent of the impact of these changes on the carrying value of
identified property, plant and equipment and software intangible
assets.
Independent auditor’s report
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Other information
The directors are responsible on behalf of the Group for the other information. The other information
comprises the information in the Annual Report that accompanies the consolidated financial statements and
the audit report.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and consider whether it is materially inconsistent with the
consolidated financial statements, or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If so, we are required to report that fact. We have nothing to report in this regard.
Directors’ responsibilities
for the consolidated
financial statements
The directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
directors determine is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
for the audit of the
consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs and ISAs (NZ) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located on
the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1
This description forms part of our auditor’s report.
Restriction on use
This report is made solely to the Company’s shareholders, as a body. Our audit has been undertaken so that
we might state to the Company’s shareholders those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company’s shareholders as a body, for our audit work, for this report,
or for the opinions we have formed.
Jason Stachurski, Partner for Deloitte Limited
Auckland, New Zealand
24 August 2022
Spark New Zealand Annual Report 2022
127Ko Te Pae Anamata, Whakamaua
Other
information
128
Other information
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Stock exchange listings
Spark’s ordinary shares are listed on the NZX and ASX. Spark is admitted to the Official List of ASX as a foreign exempt issuer. As an NZX listed
issuer and ASX foreign exempt issuer, Spark complies with NZX Listing Rules and applicable ASX Listing Rules.
Spark’s American Depositary Shares, each representing five ordinary Spark shares and evidenced by American Depositary Receipts (ADRs),
are traded over-the-counter in the United States. This is a Level 1 ADR programme that is sponsored by Bank of New York Mellon.
Spark Finance Limited, a wholly owned subsidiary of Spark New Zealand Limited, has debt securities listed on the NZDX. Details of debt
securities issued by Spark Finance Limited can be found in Spark Finance Limited’s reports at: investors.sparknz.co.nz/Investor-Centre
Director remuneration
The total remuneration available to non-executive directors is fixed by shareholders. The current annual remuneration limit is $1,630,000
approved at the annual meeting held in November 2017.
The fees payable to non-executive directors during FY22 were:
BOARD/COMMITTEE
1
CHAIR
2
MEMBER
3
Board of Directors$374,200$147,400
Audit and Risk Management Committee (ARMC)$39,700$19,300
Human Resources and Compensation Committee (HRCC)$34,000$17,100
1 All non-executive directors are members of the Nominations and Corporate Governance Committee (NOMs) and receive no additional fees for this role.
2 Committee chair and member fees were not payable to the Chair of the Board. Committee member fees were not payable to committee Chairs.
3 Member fees were payable for each committee.
From 1 July 2022 the non-executive directors’ fees increased by 2% (rounded to the nearest $100), to be paid out of the current shareholder-
approved annual remuneration limit of $1,630,000. This increase is expected to broadly maintain the market positioning outlined in the
independent Ernst & Young benchmarking report that was distributed alongside the 2017 Notice of Annual Meeting.
Committee membership as at 30 June 2022 was as follows:
HUMAN RESOURCES AND
COMPENSATION COMMITTEE
AUDIT AND RISK
MANAGEMENT COMMITTEE
NOMINATIONS AND
CORPORATE GOVERNANCE COMMITTEE
Alison Barrass (Chair)
David Havercroft
Justine Smyth
Charles Sitch (Chair)
Paul Berriman
Warwick Bray
Justine Smyth (ex officio)
Justine Smyth (Chair)
Alison Barrass
Paul Berriman
Warwick Bray
David Havercroft
Jolie Hodson
Charles Sitch
Corporate governance disclosures
Spark New Zealand Annual Report 2022
129Ko Te Pae Anamata, Whakamaua
The total remuneration received by non-executive directors of Spark during FY22 was as follows:
1
NAME OF DIRECTOR
2
BOARD FEES
3
AUDIT & RISK
MANAGEMENT
COMMITTEE FEES
HUMAN
RESOURCES AND
COMPENSATION
COMMITTEE FEES
TOTAL
REMUNERATION
4
Justine Smyth$374,200––$374,200
Alison Barrass$147,400–$34,000$181,400
Paul Berriman$147,400$19,300–$166,700
Warwick Bray$147,400$19,300 $166,700
Pip Greenwood
5
$51,269$6,713$5,948$63,930
David Havercroft
6
$110,550$12,825$123,375
Charles Sitch$147,400$39,700-$187,100
Total$1,125,619$85,013$52,773$1,263,405
1. The figures shown are gross amounts and exclude GST (where applicable) and are rounded to the nearest dollar.
2. Ms Broadbent and Mr MacLeod joined the Board from 1 August 2022 so no fees were payable in FY22.
3. All non-executive directors are members of the Nominations and Corporate Governance Committee (NOMs) and receive no additional fees for this role.
4. This table excludes contributions towards medical and life insurance of a total of $11,051. Spark meets costs incurred by directors that are incidental to the performance of their
duties. This includes providing New Zealand-based directors with mobile phones and $120 per month which can be used towards Spark products or services and overseas-based
directors with $400 per month phone allowances. Spark also meets the costs of directors’ Spark-related travel. As these costs are incurred by Spark to enable directors to perform
their duties, no value is attributable to them as benefits to directors for the purposes of the above table.
5. Ms Greenwood resigned as a director from 5 November 2021.
6. Mr Havercroft was appointed a director from 1 October 2021.
Former Managing Director remuneration
The following former Managing Director long-term incentives vested in FY22:
GRANT YEARSECURITIES
PERFORMANCE
PERIOD
PERFORMANCE
MEASURE
VESTING
OUTCOME
SHARES
TRANSFERRED
VALUE
TRANSFERRED
1
FY19Restricted Shares September 2018
– September 2021
Absolute TSR,
hurdle – Spark’s
annual cost of
equity +1%
compounding
100% – 3 year TSR
result was 49.54%
compared with a
34.66% target
168,907NZ$788,796
1. Represents the NZX listed price of Spark shares on the exercise/transfer date multiplied by the number of shares transferred.
Additionally, Mr Moutter’s FY20 Equity Incentive (essentially a deferred STI) vested on 20 September 2021, as the service condition was
satisfied. Accordingly, 111,003 redeemable ordinary shares converted to ordinary shares.
CEO remuneration
The total remuneration earned or paid in FY22, and anticipated target remuneration expected to be earned or paid in FY23, by and to the
CEO, Jolie Hodson is as follows:
PERIODBASE SALARY
1
SHORT-TERM INCENTIVE
2
LONG-TERM INCENTIVE
3
FY22 actual remunerationNZ$1,230,000NZ$977,850NZ$922,500 in the form of share options
FY23 anticipated target remunerationNZ$1,266,900NZ$950,175NZ$950,175 in the form of share options
1. Base salary excludes employer contributions towards KiwiSaver and is not at risk.
2. FY22 actual short-term incentive was earned in FY22 and will be paid in FY23. The gross amount earned in FY21 and paid in FY22 was $815,700. FY23 anticipated short-term
incentive will be earned in FY23 and paid in FY24.
3. FY22 long-term incentive was granted in FY22 and, subject to performance hurdles, will vest in September 2024.
130
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The following CEO long-term incentives vested in FY22:
GRANT YEARSECURITIES
PERFORMANCE
PERIOD
PERFORMANCE
MEASURE
VESTING
OUTCOME
SHARES
TRANSFERRED
VALUE
TRANSFERRED
1
FY19Restricted SharesSeptember 2018
– September 2021
Absolute TSR,
hurdle – Spark’s
annual cost of
equity + 1%
compounding
100% – 3 year TSR
result was 49.54%
compared with a
34.66% target
47,294NZ$220,863
1. Represents the NZX listed price of Spark shares on the exercise/transfer date multiplied by the number of shares transferred.
The CEO is expected to acquire and hold shares that are at least equivalent in value to 25% of the CEO’s base salary but ideally would increase
this shareholding to 100% of base salary subject to the vesting of shares under any long-term incentive schemes. To fulfil this expectation
shares are to be acquired within a four-year period from 1 July 2019. As at 30 June 2022 the CEO holds 189,508 ordinary shares which fulfils
this expectation to hold shares that are at least equivalent in value to 25% of the CEO’s base salary.
Other directors’ fees
Mr Richard Quince received a directors fee of NZ$10,000 (excluding GST) for acting as a director of Teleco Insurance (NZ) Limited. Ocorian
Services (Bermuda) Limited received directors fees of US$2,900 in relation to Ms Carol Feathers acting as a director of Teleco Insurance
Limited.
Board and committee meeting attendance for FY22
The Board held eight formal meetings during FY22. The table below shows director attendance at these Board meetings and committee
member attendance at committee meetings. Sub-committees of the Board also met regularly throughout the year to consider matters
of special importance.
BOARDARMCHRCCNOMS
Total number of meetings held8652
Alison Barrass8–52
Paul Berriman86-2
Warwick Bray86-2
Pip Greenwood
1
333-
David Havercroft
2
7-32
Jolie Hodson
3
8652
Charles Sitch86-2
Justine Smyth
4
8652
1. Ms Greenwood resigned as a director from 5 November 2021.
2. Mr Havercroft was appointed as a director from 1 October 2021.
3. Ms Hodson attended ARMC and HRCC meetings as Executive Director.
4. Ms Smyth attended ARMC meetings in an ex officio capacity.
Spark New Zealand Annual Report 2022
131Ko Te Pae Anamata, Whakamaua
Director independence
The Board has determined, based on information provided by directors regarding their interests, that at 30 June 2022 Ms Barrass, Mr Berriman,
Mr Bray, Mr Sitch and Ms Smyth were independent. The Board determined that Ms Hodson was not independent due to her position as CEO,
and Mr Havercroft was not independent due to his recent relationships with Spark which have now ceased.
The criteria for determining director independence and conflict of interest may be found in the Board Charter at:
www.sparknz.co.nz/about/governance
Director interests
Directors made the following entries in the interests register for FY22:
• Directors disclosed, pursuant to section 140 of the Companies Act 1993, interests in the following entities during FY22:
DIRECTORENTITYRELATIONSHIP
Alison BarrassSouthern Pastures Advisory Board
Institute of Directors
Heilala Vanilla Limited
Ceased to be Chair
Member of the nominations committee
Ceased to be director
Paul BerrimanMTS (Mobile Telesystems) PJSCBoard Member
David HavercroftW3 Capital Limited
Portfolio Custodial Nominees Limited
Kiwi Wealth Investments General Partner Limited
Kiwi Wealth Management Limited
Kiwi Investment Management Limited
Kiwi Wealth Limited
Westpac New Zealand Limited
Director
Director
Director
Director
Director
Director
Director
Jolie HodsonDigital Boost Alliance Aotearoa
Climate Leaders Coalition
Appointed Chair
Convenor of the Coalition’s CEO Steering Group
Justine SmythMATTR Limited
Auckland International Airport Limited
Director
Ceased to be a director
• Directors disclosed, pursuant to section 148 of the Companies Act 1993, the following acquisitions and disposals of relevant interests in
Spark shares during FY22:
NAMEDATE NATURE OF TRANSACTIONCONSIDERATION NUMBER OF SHARES
Jolie Hodson20 September 2021Issue of optionsServices to Spark189,846
5 October 2021Unrestricting of restricted
ordinary shares
Services to Spark47,294
Charles Sitch27 October 2021Purchase of ordinary sharesAUD$28,6376,621
• Directors disclosed, for the purposes of section 162 of the Companies Act 1993, that insurance was renewed for Spark’s directors and
senior managers for the 12-month period from 1 June 2022 and deeds of indemnity provided to all directors and specified senior
managers of Spark.
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Employee benefits
The following table sets out benefits provided to employees during FY22 by employee group
1
:
FULL-TIME PERMANENT
EMPLOYEES
PART-TIME PERMANENT
EMPLOYEES
FIXED-TERM / CASUAL
EMPLOYEES
Parental LeaveYe sYe sYe s
2
Insurance cover:
• Medical
• Life & Terminal Illness
• Income Protection
• Trauma
Ye sYe s
3
No
Spark Account Credit
4
Ye sYe sNo
Ability to participate in Spark
Share
5
Ye sYe sNo
Volunteer Day
6
Ye sYe sNo
Spark Give
7
Ye sYe sNo
8
Eligibility to join Marram
9
Ye sYe sNo
Eligible for Purchased Leave
10
Ye sYe sNo
Mahi Tahi – Wellbeing support
11
Ye sYe sYe s
1. Excludes benefits offered to some subsidiaries, which differ from Spark’s overall benefits suite.
2. Eligibility for Parental Leave is in accordance with Government legislation.
3. Employees must work at least 15 hours a week to be eligible.
4. Employees with Spark accounts will receive monthly credits of $120, which can be used towards Spark products or services.
5. Spark’s employee share purchase scheme.
6. The opportunity for Spark employees to take a day of paid volunteer leave.
7. For specific charities, Spark will match employee donations dollar-for-dollar, up to a $500 annual matching cap.
8. Only casual employees are ineligible.
9. Marram Trust offers access to accommodation across New Zealand for discounted rates, as well as providing a basic level of healthcare cover.
10. The ability to purchase additional annual leave via a deduction of base salary.
11. Wellbeing support includes our Employee Assistance Programme, access to wellbeing coaches, counselling with OutLine Aotearoa, specialist clinical support from our in-house
psychotherapist and health psychologist and subscription to the Take A Breath Platform.
Spark New Zealand Annual Report 2022
133Ko Te Pae Anamata, Whakamaua
Employee remuneration
The table below shows the number of employees and former employees, not being directors of Spark, who, in their capacity as employees,
received remuneration and other benefits during FY22 totalling NZ$100,000 or more
1
.
RANGECURRENTFORMERTOTALRANGECURRENTFORMERTOTAL
$100,000 – $110,00033739376$330,001 – $340,000202
$110,001 – $120,00030627333$340,001 – $350,000202
$120,001 – $130,00027123294$350,001 – $360,000404
$130,001 – $140,00022224246$360,001 – $370,000202
$140,001 – $150,0002089217$370,001 – $380,000202
$150,001 – $160,00014416160$390,001 – $400,000101
$160,001 – $170,0001034107$400,001 – $410,000202
$170,001 – $180,00083992$410,001 – $420,000303
$180,001 – $190,00054054$420,001 – $430,000213
$190,001 – $200,00051354$430,001 – $440,000303
$200,001 – $210,00030333$450,001 – $460,000314
$210,001 – $220,00027229$460,001 – $470,000202
$220,001 – $230,00017219$470,001 – $480,000202
$230,001 – $240,00017017$490,001 – $500,000101
$240,001 – $250,00016117$570,001 – $580,000101
$250,001 – $260,00012012$600,001 – $610,0001
01
$260,001 – $270,00011011$670,001 – $680,000101
$270,001 – $280,000707$800,001 – $810,000101
$280,001 – $290,000718$890,001 – $900,000101
$290,001 – $300,000202$980,001 – $990,000101
$300,001 – $310,000819$1,000,001 – $1,010,000101
$310,001 – $320,000415$1,080,001 – $1,090,000101
$320,001 – $330,000101Total19771672144
1. The table includes base salaries, short-term incentives and vested long-term incentives. The table does not include: amounts paid after 30 June 2022 relating to FY22; long-term
incentives that have been granted and have yet to vest (based on grant values, the total value of which was NZ$10.5 million as at 30 June 2022); product and service concessions
received by employees; contributions paid towards health and other insurances; contributions paid to the Government Superannuation Fund (a legacy benefit provided to a small
number of employees); and, if the individual is a KiwiSaver member, contributions of 3% of gross earnings towards that individual’s KiwiSaver scheme.
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Shareholdings
As at 30 June 2022 there were 1,871,587,475 Spark ordinary shares on issue, each conferring to the registered holder the right to one vote on
a poll at a meeting of shareholders on any resolution, held as follows:
SIZE OF HOLDINGNUMBER OF HOLDERS
1
%NUMBER OF SHARES%
1–1,00013,93030.806,994,5210.37
1,001–5,00018,95541.9049,499,2652.64
5,001–10,0006,35714.0546,910,6002.51
10,001–100,0005,75912.73133,949,7537.16
100,001 and over2370.521,634,233,33687.32
Total45,238100.001,871,587,475100.00
1. Includes 1,744,191 shares on issue held by Spark Trustee Limited on behalf of 1,321 holders for Spark Share.
The 20 largest registered holders of Spark shares at 30 June 2022 were:
NAME
1
NUMBER OF SHARES%
1.HSBC Nominees (New Zealand) Limited
2
344,596,47318.41
2.HSBC Nominees (New Zealand) Limited
2
206,329,38511.02
3.JP Morgan Chase Bank177,483,9429.48
4.Citibank Nominees (NZ) Limited144,768,5697.74
5.HSBC Custody Nominees (Australia) Limited66,095,7993.53
6.BNP Paribas Nominees NZ Limited
3
62,320,2883.33
7.Custodial Services Limited62,229,9473.32
8.Accident Compensation Corporation43,884,8652.34
9.New Zealand Superannuation Fund Nominees Limited38,004,1342.03
10.FNZ Custodians Limited34,758,5941.86
11.Forsyth Barr Custodians Limited33,636,1171.80
12.Citicorp Nominees Pty Limited33,320,8931.78
13.BNP Paribas Nominees NZ Limited
3
32,038,1871.71
14.National Nominees New Zealand Limited30,956,1521.65
15.JB Were (NZ) Nominees Limited26,444,7361.41
16.JP Morgan Nominees Australia Pty Limited26,158,2071.40
17.Premier Nominees Limited23,742,8351.27
18.New Zealand Depository Nominee22,716,2311.21
19.New Zealand Permanent Trustees Limited17,422,3170.93
20.Cogent Nominees Limited16,218,3540.87
1. The shareholding of New Zealand Central Securities Depository Limited (custodian for members trading through NZClear) has been reallocated to the applicable members.
2. Has a different holder identification number to the other HSBC Nominees (New Zealand) Limited entry.
3. Has a different holder identification number to the other BNP Paribas Nominees NZ Limited entry.
Spark New Zealand Annual Report 2022
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According to substantial holder notices as at 30 June 2022 the substantial holders in Spark were as follows:
NAMENUMBER OF ORDINARY SHARES% OF ORDINARY SHARES ON ISSUE
1
Blackrock Investment Management (Australia) Limited161,169,5328.61
1. Based on issued share capital of 1,871,587,475 as at 30 June 2022.
As at 30 June 2022 directors, or entities related to them, held relevant interests (as defined in the Financial Markets Conduct Act 2013) in Spark
shares as follows:
NAME
RELEVANT INTEREST IN SPARK SHARES AT 30 JUNE 2022
NUMBER%
1
Alison Barrass37,7160.002
Paul Berriman43,0000.002
Warwick Bray31,230
2
0.002
David Havercroft100,0860.005
Jolie Hodson770,101
3
0.041
Charles Sitch39,350
4
0.002
Justine Smyth430,201
5
0.023
1. Each percentage stated has been rounded to the nearest 1/1000th of a percent.
2. Relevant interest in beneficial ownership of 31,230 ordinary shares held by WDB Insight Pty Limited.
3. Includes 189,508 ordinary shares and 580,593 options.
4. Relevant interest in beneficial ownership of 39,350 ordinary shares held by Sitch Superannuation Pty Limited.
5. Relevant interest in beneficial ownership of 375,201 ordinary shares held by Miksha Trust and beneficial ownership of 55,000 ordinary shares held by PJ Trust.
All non-executive directors are expected to hold Spark shares. Subject to personal circumstances (that should be discussed with the Chair or,
in the case of personal circumstances of the Chair, with the Chair of the ARMC, as appropriate), there is an expectation that each non-executive
director will purchase and hold an amount of shares that are at least equivalent in value to the non-executive director base member fee as
at the date of their appointment or, in the case of directors appointed before 1 July 2017, as at 1 July 2017. Shares are to be purchased
within a three-year period from the date of appointment or, in the case of directors appointed before 1 July 2017, within a three-year period
from that date. To assess whether this expectation has been met, the aggregate purchase price for all shares acquired, less the aggregate sale
price for all shares disposed (if any), is used to calculate value.
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Subsidiary company directors
The following people held office as directors of subsidiary companies at 30 June 2022. Alternate directors are indicated with an (A).
SUBSIDIARY COMPANYPRINCIPAL ACTIVITYCURRENT DIRECTORSDIRECTORS WHO
RETIRED DURING
THE YEAR
Computer Concepts LimitedIT infrastructure and Cloud services M Anastasiou, G McBeath, S Knight
Connect 8 LimitedMobile infrastructure businessR Singh, C PhippsR Mateparae
Digital Island LimitedBusiness telecommunications providerS Knight, G McBeath
Entelar LimitedMobile phone repair and equipment
distribution
R Singh, J Bahlman, G Clark R Patel
Gen-i Australia Pty LimitedProvides international wholesale and
outsourced telecommunications
services
F Evett, I Hopkins
MATTR LimitedSoftware company focussed on
decentralised identity and verifiable data
C Barber, J Hodson, J Smyth, S KnightF Evett
Qrious LimitedData analytics businessS Knight, M AnastasiouN Morris
Revera LimitedIT infrastructure and data centre
provider
M Anastasiou, G McBeath, S Knight
Spark Finance LimitedGroup finance companyM Anastasiou, M Sheppard, S Knight,
A White
Spark New Zealand Cables LimitedInvestment companyM Sheppard, L Urquhart C Fraser
Spark New Zealand Trading LimitedTelecommunications and digital
services company
M Anastasiou, S Knight, M Beder
Spark TowerCo LimitedTelecommunications infrastructure
provider
1
S Knight , M AnastasiouN Morris
Spark Trustee LimitedTrustee companyM Anastasiou, S Knight
TCNZ Australia Investments Pty
Limited
Australian operationsF Evett, I Hopkins
TCNZ (Bermuda) LimitedHolding companyJ Wesley-Smith, J WongD Havercroft
TCNZ Financial Services LimitedInvestment companyM Anastasiou, F Evett
TCNZ (United Kingdom) Securities
Limited
Holding/investment companyF Evett, M Palmer, J Reader
Teleco Insurance LimitedGroup insurance companyC Phipps, C Feathers, A White,
M Anastasiou (A), F Evett (A)
Teleco Insurance (NZ) LimitedMobile phone insuranceA White, R Quince
Telecom Capacity LimitedHolding companyS Knight, J Wong
Telecom Enterprises LimitedInvestment companyM Anastasiou, S Knight
Telecom New Zealand (UK)
Enterprises Limited
Holding/investment companyF Evett, M Sheppard
Telecom New Zealand USA LimitedProvides international wholesale
telecommunications services
D Reeve, J Wong
Telecom Pacific LimitedHolding companyM Anastasiou, M Sheppard
Telecom Southern Cross LimitedHolding companyM Anastasiou, S Knight
Telecom Wellington Investments
Limited
Investment companyM Anastasiou, F Evett
1. Principal activity effective from 1 July 2022.
Spark New Zealand Annual Report 2022
137Ko Te Pae Anamata, Whakamaua
Spark’s managing risk framework roles and responsibilities
ACTIVITY PERFORMED
BOARD
& ARMC
LEADER-
SHIP
SQUAD RISK
LEGAL
(DIGITAL
TRUST)
ORG
UNIT
LEADS
CENTRE OF
EXCELLENCE
LEADS
POLICY
OWNERS
ALL
SPARK
PEOPLE
Approves the Managing Risk Policy
✔
Monitors the managing risk framework
✔
Reviews principal risk updates
✔
Performs other items from its charter
✔
Prepares strategy and annual plan
✔
Runs QBR process and determines priorities
✔
Coaches and guides Leads
✔
Assigned as owners of identified principal risks
✔
Designs and continuously improves the managing
risk framework
✔
Helps the business apply the framework
✔
Prepares principal risk updates for the LS and ARMC
✔
Helps Leads to capture their risks for the QBR
content
✔
Executes Internal Audit plan (objective assurance)
✔
Designs and continuously improves the
empowerment framework
✔
Creates empowerment & and functional
guidance kits
✔
Oversees essential policies and webpage
✔
Creates and delivers training modules
✔
Use the Empowerment and Managing
Risk Frameworks
✔
Understand and adhere with the essential policies
✔
Maintain view of risks for OKRs and fill in QBR Memo
✔
Provide input into principal risk process
✔
Escalate risks to LS or Risk Team (if required)
✔
Review risk sections in QBR packs across Spark
✔
Maintain view of risks for their OKRs and fill in QBR
✔
Support Leads to manage identified risks
✔
Provide input into principal risks
✔
Maintain policy and guidance material
✔
Complete assessments of effectiveness
✔
Participate in policy owner working groups
✔
Follow this framework and the essential policies
✔
Make informed decisions after assessing the benefits
and risks
✔
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Spark New Zealand Annual Report 2022
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Sustainability
appendix
Sustainability appendix
This appendix includes GRI-led information related to our most material topics, linking back into the content of the report and to other sources.
As an integrated report we have included disclosure on our sustainability performance throughout this report. Page 8 details our integrated
reporting value creation model, aligned to the ‘capitals’ which each have a dedicated section in the report.
This report is prepared in accordance with the International <IR> Framework and with the Global Reporting Initiative (GRI) Core Option. It also
incorporates climate risk disclosure aligned to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
We publish a summary of our approach to sustainability at Spark on our website. https://www.sparknz.co.nz/sustainability/
Our Sustainability Framework
Sustainability is integrated as a pillar of our business strategy, including our commitment to improving our environmental, social, and
governance performance. Our ambition is to create a positive digital future for all of New Zealand, with clear focus areas outlined in our
Sustainability Framework.
Our Sustainability Framework is informed by our materiality assessment (see page 142). While the three focus areas of the framework are
enduring, the activities within them will evolve over time to ensure we are responsive to our changing operating environment and the needs of
our stakeholders.
Our Sustainability Framework sits alongside our Māori Strategy, Te Korowai Tupu (the cloak of growth of Spark New Zealand), which informs
how we develop strong connections with Māori and builds our understanding of Te Ao Māori.
We will work alongside New Zealand to
harness the power of technology and
create a positive digital future for all.
FOR ALL OF
A POSITIVE
DIGITAL FUTURE
• Our people. We will invest in the capabilities and wellbeing of our people,
equipping them to thrive in a digital future. We will champion diversity and
inclusion, achieving 40:40:20 gender representation across Spark by June 2024.
• Environment. We will reduce our impact on the natural environment.
Our science-based emissions reduction target is to reduce Scope 1 and 2
emissions 56% from FY20–FY30 and ensure 70% of our spend is with suppliers
with science-based targets by FY26.
• Governance. We will operate a responsible and ethical business and supply
chain, and hold ourselves accountable for year-on-year improvement through
transparent reporting and participation in key external benchmarks.
• Infrastructure. We will focus our infrastructure investment on supporting
Aotearoa New Zealand’s transformation to a high productivity, low-carbon
economy.
• Business digitisation. We will support Kiwi businesses to adapt and
become more productive, resilient, and sustainable through technology.
• Digital skills. We will support New Zealanders and small-medium
businesses to upskill and adapt to new ways of working.
• Spark Foundation. We will invest in community partnerships that support
the Foundation’s mission to accelerate towards digital equity, with a focus
on digital access, digital skills and pathways, and digital wellbeing.
• Our products and services. We will continue to extend the reach of our
not-for-profi t broadband service Skinny Jump, improving accessibility for
35,000 households by June 2023.
• Security and privacy. We will support our customers to participate in the
digital world safely by putting cybersecurity, customer safety, and privacy at
the heart of everything we do.
Be bold in our
business to have
a positive impact
on our people, the
environment and
our communities.
Create a
Sustainable
Spark
Champion
Digital Equity
Champion digital
equity so all New
Zealanders have the
opportunity to thrive
in a digital future.
Economic
Recovery and
Transformation
Help New Zealand
transform to a high
productivity, low
carbon economy.
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Our Sustainability Governance Framework
Our sustainability governance structure helps us ensure sustainability is overseen at the highest levels of our organisation and embedded
throughout our everyday operations.
Approval of business strategy and sustainability framework.
Reviews climate change and modern slavery risks. Reviews
sustainability progress quarterly.
Sets three-year business strategy and approves sustainability
framework. Reviews climate change and modern slavery risks.
Reviews sustainability progress monthly.
Sustainability Director and Lead design the sustainability
framework and ensure Spark makes progress against it.
Identifies focus areas of most materiality
to guide activity and resource allocation.
The Sustainability Lead works across Spark with a cross-functional
ESG Squad to improve sustainability performance and integrate it
into the business. Spark Foundation has a sole focus on digital
equity, and Skinny Jump is operated through a dedicated squad.
Spark’s business strategy is executed through the QBR process,
with priorities agreed every three months. Sustainability is a
standing priority on the QBR.
Support execution of sustainability framework priorities and
consider sustainability impacts in decision making.
Spark New Zealand Board of Directors
Leadership Squad
Corporate Relations and Sustainability Director
and Sustainability Lead
Sustainability framework
Quarterly Business Review (QBR)
All Spark people
Sustainability Lead and ESG Squad
Create a
sustainable
Spark
Economic
recovery and
transformation
Championing
digital equity
Spark Foundation
Skinny Jump Squad
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Materiality
To prioritise Spark’s reporting on sustainability topics we follow the GRI materiality principle (set out in GRI 101) to identify and prioritise topics
which substantively influence the assessments and decisions of stakeholders or have a significant environmental, social, or economic impact.
We also consider the materiality principles of the Integrated Reporting International <IR> Framework, considering whether a matter could
substantively affect Spark's ability to create value in the short, medium, or long term.
Our assessment of material topics includes analysis of stakeholder feedback, review of industry peers and interviews with external
stakeholders. Internally we consult with a range of employees, including members of our strategy, finance, community, corporate relations, risk,
legal and HR teams, to determine Spark’s view of topics meeting the GRI materiality principle criteria.
In FY22 we have reviewed and updated our list of material impacts. This included a third-party review of our existing materiality assessment
against industry standards (SASB, WEF, GRI) and our global industry peers, including the requirements of our membership of the JAC initiative
(see page 73). Over the past year we have observed increased interest from our business customers in measuring their scope 3 emissions,
including emissions from the services provided by Spark. We have also linked our financing to our performance against our emissions
reduction target (see page 15). The implementation of the Australian Modern Slavery Act, and consultation on a similar act in New Zealand, has
raised interest in labour standards in our workforce and our supply chain. Consultation on New Zealand’s first National Adaptation Plan has also
raised the profile of long-term climate impacts and the topic of adapting to physical risk from climate change.
• Customer experience and support
• Data privacy and security
• Digital equity
• Equipping people for the future of work
• Operational excellence and financial performance
• Building partnerships for a strong Aotearoa
• Resilient, adaptable network infrastructure
• Supporting business customers through partnership
• Adaptation to physical risk from climate change
• Competition and regulation
• Diversity and Inclusion
• Ethical behaviour
• Ethical supply chain and procurement practices
• Operational efficiency, emissions and waste
• Responsible employment practices
• Disaster and crisis response
• Heath, Safety and Wellbeing
• Investment in innovation
• Leveraging services for community and
environmental outcomes
• Product stewardship
• Responsible and fair use of our products
and services
• Community investment
• Infrastructure impact
• Ta x
SIGNIFICANCE OF ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS
INFLUENCE ON STAKEHOLDER ASSESSMENTS AND DECISIONS
Issue moved up from FY21 due to greater influence on stakeholder assessments and decisions
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Our most material sustainability issues
TOPICTOPIC DESCRIPTION AND SCOPEREFERENCE
Customer experience and
support
Providing high-quality, reliable products and services that enable
our customers. Supporting our customers and rectifying issues
where they may arise.
Our customers
Pages 20–29
Data privacy and securityHow we collect, use and share personal information and how we
keep it safe. Building trust in our products and services.
Our customers
Pages 26–29
Digital equityProviding equitable access to telecommunication products and
services and to the benefits of digital technology.
Our communities
Pages 56–61
Equipping people for the future
of work
Developing and upskilling for future ways of working including
building digital skills aligned to digital equity outcomes.
Our people
Pages 40–49
Our communities
Pages 56–61
Operational excellence and
financial performance
Executing our business strategy to build financial capital.
Economic impact (greater focus on investment in resilient
infrastructure).
Our performance
Pages 16–19
Financial statements
Pages 78–82
Building partnerships for a
strong Aotearoa
Focus on community partnerships and collaboration aligned to
our Māori Strategy, Te Korowai Tupu.
Our communities
Pages 56–61
Te Korowai Tupu
Page 44
Resilient, adaptable network
infrastructure (inc. climate
adaptation)
The resilience of our infrastructure. Our long-term adaptation to
climate change.
Our network and technology
Pages 30–39
Climate change risk
Pages 71–72
Supporting business customers
through partnership
Partnering with our customers to support them through digital
technology to increase their resilience, productivity and
sustainability.
Our customers
Pages 20–29
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Stakeholder engagement
Spark engages with a broad range of stakeholders as detailed in the table below. We have also engaged a small number of stakeholders
specifically for the purposes of developing and improving our non-financial reporting and as part of our reporting materiality process.
In selecting the stakeholders we engaged with, we are guided by the definition set out in GRI 101: “entities or individuals that can reasonably
be expected to be significantly affected by the organisation’s activities, products or services; or whose actions can reasonably be expected
to affect the ability of the organisation to implement its strategies or achieve its objectives.”
STAKEHOLDER GROUPHOW WE ENGAGE
Spark employees• Regular engagement through eNPS (employee net promoter score) methodology and the Joyous real-time
employee feedback tool.
• Comprehensive programme of internal communication and engagement from Leadership Squad (through
roadshows and online channels).
• Engagement with cross-section of employees in the preparation of this report.
ShareholdersRegular engagement with investors including:
• Semi-annual earnings announcements, together with semi-annual post result investor briefings;
• Annual meeting that allows shareholders a chance to meet and ask questions directly of the Spark Board and
management;
• Regular investor roadshows; and
• Periodic investor strategy briefings.
Suppliers
• Ongoing conversations with our suppliers – both informal and formal.
Customers
• Regular feedback from customers on their experiences with us and their views of Spark as a business through
our Net Promoter Score methodology and through our Voice of the Customer programme.
• Meetings with customers on sustainability topics, sharing sustainability focus areas and exploring
opportunities to work together.
Government
• Engagement with central Government on issues related to the telecommunications industry, competition,
infrastructure investment, environmental sustainability and digital equity.
• Engagement with local government to manage the process and impacts of infrastructure investment.
Media
• Responding to media enquiries and through a proactive programme of engagement with key members of
New Zealand’s media.
Local communities
• Spark engages with local communities affected by our activities, in particular where we are building new
network infrastructure.
Community partners
• Spark Foundation works in partnership with community partners on an ongoing basis.
Industry organisations
• Engagement with a number of industry organisations, representing the telecommunications and technology
sector, community groups, and the New Zealand business community.
External initiatives Spark subscribes to or endorses
• Spark is a founding member of the Climate Leaders Coalition (CLC). The CLC is a group of CEOs who have collectively committed to
voluntary action on climate change, measuring and publicly reporting on their emissions, and setting an absolute target for reducing
emissions in line with the Paris Agreement. Spark’s CEO, Jolie Hodson, is the Convenor of the CLC. See page 15.
• Spark has committed to a government-accredited voluntary Product Stewardship scheme for mobile phones, which is actioned by the
Re:Mobile initiative. See page 55.
Spark was an active member of the following associations in FY22:
• International Telecommunication Union (Radiocommunication
Sector membership)
• GSM Association (GSMA)
• New Zealand Internet Task Force
• Telecommunications Forum (TCF)
• NZ Tech (Including Internet of Things Alliance and AI Industry
Forum)
• TUANZ
• Business NZ
• Sustainable Business Council
• Global Women (including Champions for Change)
• Joint Audit Cooperation (JAC) initiative
• Digital Boost Alliance
• Digital Equity Coalition Aotearoa (DECA) (membership through
Spark Foundation)
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Global Reporting Initiative (GRI) content index
Our disclosure against each material topic includes our management approach, considering the requirements of GRI 103:
Management Approach.
Note: CGS refers to Spark’s Annual Corporate Governance Statement, which may be found here:
www.sparknz.co.nz/about/governance
IndicatorDisclosurePage number / reference
GRI 102: General disclosures 2016
102-1Name of the organisation10
102-2Activities, brands, products and services10
102-3Location of headquarters148
102-4Location of operations10
102-5Ownership and legal form122, 129
102-6Markets served10
102-7Scale of the organisation10, 85
102-8Information on employees and other workers47, 48, 49
102-9Supply chain73
102-10Significant changes to the organisation and its supply chain84
102-11Precautionary principle or approach51
102-12External initiatives144
102-13Membership of associations144
102-14Statement from senior decision-maker12
102-16Values, principles, standards and norms of behaviour8, 42, CGS Principle 1
102-18Governance structure62 – 69, CGS Principles 2, 3 and 4
102-40List of stakeholder groups144
102-41Collective bargaining agreements<1% of Spark employees in FY22
102-42Identifying and selecting stakeholders144
102-43Approach to stakeholder engagement144
102-44Key topics and concerns raised144
102-45Entities included in the consolidated financial statements83
102-46Defining report content and topic boundaries5, 140, 142, 143
102-47List of material topics142, 143
102-48Restatements of informationGHG Inventory Report p7
102-49Changes in reportingN/A
102-50Reporting period5
102-51Date of most recent reportSpark’s FY22 Annual Report was
published on 24 August 2022
102-52Reporting cycleSpark reports annually. Our financial
year is 1 July – 30 June
102-53Contact point for questions relating to the report148
102-54Claims of reporting in accordance with GRI standards5, 140
102-55GRI content index145, 146
102-56External assurance124 – 127
GRI 200 Economic Standard Series
201-2Financial implications and other risks and opportunities due to climate
change
71, 72
203-1Infrastructure investments and services supported30 – 39
206-1Legal actions for anti-competitive behaviour, anti-trust and monopoly
practices
29
207-1Approach to tax68, 69
Spark New Zealand Annual Report 2022
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IndicatorDisclosurePage number / reference
GRI 300 Environmental Standard Series
305-1Direct (Scope 1) emissions52 and GHG Inventory Report
305-2Energy indirect (Scope 2) emissions52 and GHG Inventory Report
305-3Other indirect (Scope 3) emissions54 and GHG Inventory Report
306-2Management of significant waste-related impacts55
306-3Waste generated55
308-1New suppliers that were screened using environmental criteria54, 73
308-2Negative environmental impacts in the supply chain and actions taken73
GRI 400 Social Standard Series
401-1New employee hires and employee turnover48
401-2Benefits provided to full-time employees that are not provided to
temporary or part-time employees
133
401-3Parental leave48
403-1
(2018)
Occupational health and safety management system43
403-9
(2018)
Work-related injuries43
404-2Programmes for upgrading employee skills and transition assistance
programmes
41
405-1Diversity of governance bodies and employees47, 48, 49
405-2Ratio of basic salary and remuneration of women to men47
414-1New suppliers that were screened using social criteria73
414-2Negative social impacts in the supply chain and actions taken73 and Modern Slavery Statement
417-3Incidents of non-compliance concerning marketing communications29
418-1Substantiated complaints concerning breaches of customer privacy and
losses of customer data
29
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Glossary
3Gthird-generation mobile network as defined by the International Telecommunications Union.
4Gfourth-generation mobile network as defined by the International Telecommunications Union.
5Gfifth-generation mobile network as defined by the International Telecommunications Union.
ADRan American Depositary Receipt.
ARMCthe Audit and Risk Management Committee.
ASXthe Australian Securities Exchange.
CCLComputer Concepts Limited.
CCNConverged Communications Network.
CompanySpark New Zealand Limited.
EBITDAIearnings before finance income and expense, income tax, depreciation, amortisation and net investment income.
eNPSemployee Net Promoter Score and is our measure of employee satisfaction.
GRIthe Global Reporting Initiative, the most widely used global sustainability reporting standard.
Groupthe Group in relation to these financial statements, which are prepared for Spark New Zealand Limited
(the Company) and its subsidiaries (together the Group).
HRCCthe Human Resources and Compensation Committee.
iNPSInteraction Net Promoter Score is our measure of customer satisfaction.
IoTthe Internet of Things.
IFRSInternational Financial Reporting Standards.
LT ILong-Term Incentive, which is part of Spark Leadership Team and former Managing Director and CEO remuneration.
Millimetre wavesMillimetre waves, also known as extremely high frequency (EHF), is a band of radio frequencies that has
wavelengths between 1 mm and 10 mm. These frequencies can carry massive amounts of data at very high
speeds. That makes them ideal for accommodating the massive increase in data demanded from new 5G use
cases such as augmented/virtual reality, cloud gaming, video analytics and other cloud-compute capabilities.
Multi-access edge
computing
Multi-access Edge Computing (MAEC) extends the capabilities of cloud computing by bringing it to the ‘edge’ of
the network. While traditional cloud computing occurs on remote servers that are situated far from the customer
and device, MAEC allows this processing to take place much closer to the end customer – meaning data has to
travel a shorter distance, decreasing latency, and the amount of data sent across the network can be reduced,
reducing congestion and delivering a better customer experience.
Network slicingNetwork slicing allows the operator to ‘slice’ its network to support different types of services through each ‘slice’.
Multiple slices can be tuned independently to meet different quality of service parameters. For example, one slice
may simply need a standard speed connection to enable office email, another might be tuned to support very low
data IoT devices, while another slice may need high reliability and ultra-low latency to support robotics.
NOMsthe Nominations and Corporate Governance Committee.
NPSNet Promoter Score.
NZ GAAPGenerally Accepted Accounting Practice in New Zealand.
NZ IFRSNew Zealand Equivalent to International Financial Reporting Standards.
NZXNZX Limited.
OTNThe Optical Transport Network (OTN) is the high speed backbone of Spark’s network, stretching from the Far North
to the bottom of the South Island. The OTN uses light signals through optical fibre cables to carry all of Spark's
data traffic up and down the country through diverse paths, ensuring resilient, fast connectivity for all users.
PSTNPublic Switched Telephone Network.
QBRQuarterly Business Review.
SMESmall and medium enterprise.
Southern CrossSouthern Cross group of companies, which consists of two sister companies, Southern Cross Cables Holdings
Limited and Pacific Carriage Holdings Limited, Inc. and their subsidiaries.
SRANSingle Radio Access Network.
STIShort-Term Incentive, which is part of Spark Leadership Team and former Managing Director and CEO remuneration.
TRIFRTotal Recordable Incident Frequency Rate per million Spark employee hours worked.
TSRTotal Shareholder Return and is a measure of share price appreciation and dividends paid over a given period.
Spark New Zealand Annual Report 2022
147Ko Te Pae Anamata, Whakamaua
Contact details
Registered office
Level 2
Spark City
167 Victoria Street West
Auckland 1010
New Zealand
Ph +64 4 471 1638 or 0800 108 010
Company secretary
Silvana Roest
For more information
For inquiries about transactions, changes of address or dividend payments contact the share registries below.
New Zealand registry
Link Market Services Limited
Level 30, PWC Tower
15 Customs Street West
Auckland 1142
PO Box 91976
Auckland 1142
Ph +64 9 375 5998 (investor inquiries)
enquiries@linkmarketservices.com
www.linkmarketservices.co.nz
Australian registry
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Australia
Locked Bag A14
Sydney South NSW 1235
Australia
Ph +61 1300 554 484 (investor inquiries)
Fax +61 2 9287 0303
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
United States registry
Computershare Investor Services
P.O. Box 505000
Louisville, KY 40233-5000
United States of America
Ph +1 888 BNY ADRS (+1 888 269 2377) or
+1 201 680 6825 (from outside the
United States)
shrrelations@cpushareownerservices.com
www.mybnymdr.com
Spark New Zealand Limited
ARBN 050 611 277
For inquiries about Spark’s operating and financial performance contact:
investor-info@spark.co.nz
Investor Relations
Spark New Zealand Limited
Private Bag 92028
Auckland 1142
New Zealand
investors.sparknz.co.nz
148
Contact details
Hello Tomorrow
Contact details
insightcreative.co.nz
SPARK066
Ēkore e taea e te whenu Kotahi
ki te raranga i te whāriki, kia mōhio tātou ki a tātou.
Mā te mahitahi o ngā whenu,
ma te mahitahi o ngā kai raranga,
ka oti tenei whāriki.
I te o tinga, me titiro ki ngā pai ka puta mai.
Ā tāna wā, me titiro I ngā raranga i makere.
Nō te mea, he kōrero ano kei reira.
The tapestry of understanding cannot be woven
by one strand alone.
Only by the working together of strands, and the
working together of weavers, will such a tapestry
be completed.
When it has been completed, let us look at the
good that comes from it.
In time, we should also look at those stitches,
which have been dropped because they also
send a message.
Whakatauaki by Kukupa Tirikatene (Ngāi Tahu,
Kāti Māmoe, Waitaha, Ngāti Pahauwera,
Ngāti Toa Rangatira).
Gifted to Kora Aotearoa by Kukupa Tirikatene and
the Tirikatene whānau (Ngāi Tahu, Kāti Māmoe,
Waitaha, Ngāti Pahauwera, Ngāti Toa Rangatira).
investors.sparknz.co.nz
ARBN 050 611 277
---
SPARK
PAGE
2
Results overview
SPARK
STRONG FINANCIAL
PERFORMANCE – ALL
GUIDANCEMETRICS
ACHIEVED
•Return to revenue growth through market-leading mobile performance and Spark Health contract wins
•Market momentum combined with cost-discipline delivered EBITDAI growth at the top end of guidance, supporting a total
FY22 dividend of 25.0cps, 100% imputed
MAXIMISING
SHAREHOLDER
VALUE
•The Board reviewed Spark’s Capital Management Policy and released a new Capital Management Framework, designed
to grow long term shareholder value through disciplined investment, while returning excess capital to shareholders and
maintaining financial strength and flexibility
•Confidence in ability to grow free cash flow (FCF) to ~$460m-$500 million
(1)
in FY23. Guiding to a total FY23 dividend of
27.0cps, 100%imputed, funded through earnings and FCF growth
•Sale of 70% stake in TowerCo to Ontario Teachers Pension Plan
(2)
to generate ~$900 million in proceeds. Spark intends to:
oReturn up to $350 million to shareholders through an on-market share buy-back once the transaction completes
(3)
oRetain $350 million to invest in future growth and accelerate Spark’s transition to higher growth digital services
oRemaining proceeds usedto offset increase in lease liability
•Spark ranked #2 against international peers for Total Shareholder Returns, with CAGR of ~12%forthree years
(4)
FOCUSSED STRATEGY
EXECUTION GROWING
COMPETITIVE
ADVANTAGE
•Strategic focus on simplified products and systems and data and AI-driven marketing delivering a+9 increase in customer
engagement, increased conversion, and lower care costs
•Substantial infrastructure investments position Spark to lead on emerging commercialisation opportunities – as 5G, multi
access edge compute, AI, IoT, and cloud computing combine to deliver powerful use cases for businesses
•People engagement high at +70 and median gender pay gap closed by 3pp
•Strong sustainability outcomes, with 15.2% emissions reduction and 30%+ growth in digital equity product Skinny Jump
PAGE
3
Results summary
Creating value for shareholders – delivering on our strategy and maximising returns
(1)
Free cash flow of ~$460m-$500m under new methodology refer slide 29 in appendix
(2)
Transaction subject to Overseas Investment Office approval, with completion anticipated to occur in the first half of FY23
(3)
Subject to market conditions at the time. Spark may investigate alternative return opportunities
(4)
Refer slide 27 in appendix
SPARK
PAGE
4
FY22 financial snapshot
EBITDAI
(2)
$1,150m
REVENUE
(1)
$3,720m
NPAT
$410m
3.5% increase vs. FY21
H2 FY22 Dividend 12.5cps, 100%
imputed
25.0c
TOTAL FY22 DIVIDEND
(1)
Operating revenues and other gains
(2)
Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) and capital expenditure (CAPEX) are non-Generally Accepted Accounting Practice (non-GAAP) performance measures
that are defined in Note 2.5 of Spark’s financial statements
(3)
Adjusted for the impact of cloud accounting policy change
CAPEX
(2)
$410m
FREE CASH FLOW
$296m
2.8% increase vs. FY21
(3)
7.6% increase vs. FY21
(3)
17.5% increase vs. FY21
(3)
31.6% decrease vs. FY21
(3)
Focussed strategy execution resulting in strong financial performance with all guidance metrics achieved
SPARK
PAGE
5
$899m
5.5% vs. FY21
$639m
(4.6)% vs. FY21
$446m
0.7% vs. FY21
MOBILE SERVICE
REVENUE
BROADBAND
REVENUE
CLOUD, SECURITY, &
SERVICE MANAGEMENT REVENUE
Spark outperforming the market
(1)
in
mobile service revenue growth
Redesign of broadband plans
stabilised base at 704,000,
in line with strategy
Cloud revenue grew 1.7%, however revenue
and ARPU impacted by mix-shift to
public cloud
Data-driven marketing drove a ~13%
increase in customer base on Endless
plans, and pay-monthly, pre-paid, and
business connections grew steadily
Wireless broadband connections up
16,000, helping to offset revenue decline
through avoided input costs
Overall revenues impacted by H1 COVID
lockdowns, delays to transformation
projects, supply chain disruption, and some
execution challenges
Total ARPU up $1.42 or 4.9%, driven by
adoption of Endless plans across the
spectrum and more effective use of value-
added services (VAS)
~28% of overall broadband base now on
wireless – on track to meet
FY23 targetof ~30%
FY23 focus on product enhancement,
refreshed pricing, and further growing
specialist skills
Established market performance
Market leading mobile performance and continued growth in wireless and cloud
#1 Mobile Service Revenue
(1)
#1 Broadband revenue and connections
(1)
#1 Hybrid Cloud
(2)
(1)
Market share estimates sourced from IDC
(2)
Spark’s estimate based on independent market share data
SPARK
SPARK IoT
•Revenue grew 22%, driven by uptake across metering, transport, emergency services, smart environments, and
asset management
•IoT connections increased 75% to 832,000 connections
•Significant stake taken in partner Adroit – to accelerate future growth in sustainable monitoring solutions
SPARK HEALTH
•Revenue grew 46%, driven by continued growth in telco, IT services, and health products
•Digital health platform, Kete Waiora, live with three vendors onboarded
•National contract wins through newly established Te Whatu Ora (Health New Zealand)
SPARK SPORT
•Delivered successful second season of cricket with brand-new commentary set up, elevating cricket production and
providing greater insights for fans
•Focus remains on accelerating strategic partnership opportunities to drive improved returns
PAGE
6
FY22 future market performance
Spark IoT and Spark Health are now material contributors to revenue and drivers of growth
SPARK
SIMPLE, INTUITIVE
CUSTOMER
EXPERIENCES
•Customer experience improved through simplification and digitisation, with iNPS +9 points
•102 legacy mobile and broadband plans retired, and 350,000 customers migrated
•Digital journeys for sales and service increased 23% – delivering a 17.5% reduction in customer care calls and 18%
growth in online revenue
•New Spark App functionality –supporting ~1.4 million unique users and ~800,000 interactions on average per month
DEEP
CUSTOMER
INSIGHTS
•Data and AI-driven marketing capability maturing – now better predicting the needs of ~90% of Spark customer
households and making recommendations for more than half of SME customer base
•Uplift in data driven marketing campaign conversion of 19% YoY and delivered a 16% improvement in marketing
efficiency
•AI capability now extending into business segment
SMART,
AUTOMATED
NETWORK
•5G coverage extended or launched across 12 locations
(1)
. Meeting our CY23 target of ~90% population coverage is reliant
on NZ Government spectrum allocation.First 5G stand-alone core network built and first Multi Access Edge Compute
(MAEC) trials underway
•Takanini data centre expansion 30% complete, with more than 85% of capacity contracted
•Optical Transport Network 2.0 build 87% complete and ~50% of PSTN estate now decommissioned
•Southern Cross NEXT fibre cable launched, almost doubling international capacity and boosting resilience for Aotearoa
GROWTH
MINDSET
•High performance culture, with employee engagement at +70 (eNPS)
•Female representation increased from 42% to 47% at senior leadership level; median gender pay gap reduced from
28% to 24%; ethnicity data collection increased 30pp to ~50% of Spark people
•Mahi Tahi wellbeing strategy supporting sustainable performance
PAGE
7
Core capabilities continue to mature
(1)
Spark 5G available in 21 locations across New Zealand at end of FY22
Supporting growth in Spark’s established and future markets as capabilities embedded across the business
SPARK
PAGE
8
CREATE A
SUSTAINABLE SPARK
ECONOMIC RECOVERY AND
TRANSFORMATION
CHAMPION
DIGITAL EQUITY
Science-based target progress
•Emissions reduction programme operational, to
support science-based target (SBTi) of 56% scope 1
and 2 reduction by 2030 (from FY20 baseline)
•Emissions reduced 15.2% YoY, with 9.7% driven by a
reduction in NZ grid emissions intensity and 5.5%
driven by a reduction in underlying energy use
•While positive, emissions remain higher than our FY20
baseline and to meet our SBTi we must decouple our
growth from emissions by linking our energy
procurement to new sources of renewable electricity
•Progress against Scope 3 target, with ~30% of
suppliers by spend with an SBTi aligned target in place
Supporting decarbonisation through technology
•Technology has an important role to play in supporting
businesses to decarbonize
•Over half of Spark IoT’s FY22 revenue connected to
climate change and sustainability solutions, such as
energy and water metering, or environmental monitoring
•Signed up to Climate Leaders Coalition's (CLC) higher
statement of ambition – covering mitigation, adaptation,
and transition – with CEO Jolie Hodson now CLC
Convenor
•Supporting take-up of new technologies – hydrogen car
sharing trial, ‘Electric First’ fleet policy for FY23
Continued progress supporting digital equity
•Skinny Jump continues to provide a valuable
service for digitally excluded communities, with
connections now 23,323 – up 5,808, or ~33%, since
FY21
(1)
•Data allowances increased in FY22 to support
households impacted by cost-of-living increases –
Jump customers can now access up to 225GB a
month, with the first 15GB free
•~$4.5 million+ of data donated through Skinny
Jump in FY22
Maturing ethical supply chain practices
•New supply chain risk management system
implemented, and membership of global industry
group, the Joint Audit Cooperation (JAC), approved,
enabling auditing of global suppliers
•Human Rights Policy and Modern Slavery Framework
developed and endorsed by Board
Strong sustainability progress
Spark sustainability practices continue to mature, while we support a just transition to a low-carbon economy
(1)
FY21 base restated for ~2,000 data-only connections
SPARK
PAGE
9
FY22 indicators of success
Strategic PillarFocus AreaMeasureTarget 30 June 2022Status
World class capability
Customer experienceConsumer and small business iNPS+6 point liftExceeded
Data driven insightsUplift in data driven marketing campaign conversion
(1)
15%Exceeded
Smart automated
networks
Accelerate 5G10-15 locations
(2)
Achieved
Growth mindsetseNPS+70Achieved
Grow established markets
WirelessMobile service revenue growth2-4%Exceeded
BroadbandWireless broadband connections
(3)
+15-20kNot Achieved
CloudCloud, security and service management revenue growth5-8%Not Achieved
Accelerate future markets
IoTGrowth in number of connected IoT devices+300kExceeded
Spark Health
Growth in Spark Health revenues8-10%
Exceeded
Successful launch of Digital Health Platform
5 DHP customers onboardedNot Achieved
Lowest cost providerDeliver best costEBITDAI margin31%Achieved
Build a sustainable future
Championing digital
equity
Skinny Jump connections+5kAchieved
Sustainable SparkEstablish emissions reduction programme30 June 2022Achieved
(1)
Spark consumer base
(2 )
This includes a mix of new locations and existing locations where our 5G footprint will be expanded
(3)
Wireless broadband connection growth 16k including Skinny Jump, and 10k excluding Skinny Jump connections
Delivering the results we committed to our shareholders
SPARK
PAGE
10
Well positioned within the macro trends impacting our business
Resilient revenues and investments for the future will support adaptation and growth
GLOBAL ECONOMIC
DISRUPTION
CLIMATE CHANGE ACTION
AND ADAPTATION
TECHNOLOGY
CONVERGENCE
High inflation and cost-of-living crisis,
tight labour markets,
andconstrained supply chains
Window for action to avoid the worst
impacts of climate change closing fast,
requiring all businesses to accelerate
action and prepare to adapt
Tech convergence accelerating –as 5G,
multi-access edge compute (MAEC),
data and AI, IoT, and cloud computing
combine to deliver powerful solutions
•Broadband product and pricing refresh
and multi-brand strategy
•Boosted digital equity offering
•Increased focus on talent mobility
•Careful supply chain management
•Emissions reductions a priority
•Leveraging technology to support
decarbonisation for Spark and our
customers
•Digital infrastructure investment
supporting new use cases
•Increased focus on MAEC trials and
commercialisation opportunities
SPARK
PAGE
11
Tech convergence creating new commercialisation opportunities
•Solution combines on-board
cameras with IoT, AI and
machine learning, cloud
computing, and data and
analytics from Spark Business
Group
•Delivers clearer, independent
data to help inform policy
decisions, scientific research,
and fisheries management
MPI sustainable fishing solution
Improving patient care for AKL DHBImproving safety for EnviroWaste
Micro credentials for ARUCC
•Data and analytics solution that
optimises use of hospital
resources and promotes better
patient outcomes
•Dashboards share real-time
operational insights to better
manage bed capacity, staffing
and theatre utilisation, clinical
information, and compliance
reporting
•First pilot of 5G multi-access
edge compute (MAEC),
combined with AI-powered
computer vision
•Lower latency, 5G connectivity,
and faster processing times
supporting the AI hazard
detection system
•Pilot of privacy-respecting
micro-credentials for Canadian
learners created by MATTR for
the Association of Registrars of
the Universities and Colleges
of Canada (ARUCC)
•Allows students to hold and
share their verifiable
credentials when seeking
employment or signing up for
new learning journeys
We are already seeing the benefits of technology convergence solving real-world problems for our customers
SPARK
PAGE
12
Capital management and growth
SPARK
PAGE
13
Capital Management Policy
1
2
3
Strategic alignment
NPV positive
ROI greater than
Spark’s hurdle rate
in years 3-5
Key principles for
investing in growth
Maximising
shareholder
value
•Growing dividends via growth in earnings and sustainable free cash flow
•Dividend Policy: pay-out ratio of ~80%-100% of free cash flow
(1)
on a long
run basis with annual guidance expressed on a cents per share basis
•Returning excess capital to shareholders using capital management
options (e.g. on-market buybacks, special dividends)
Investing
for growth
•Investing to sustain and grow the business organically
•Investing for growth via mergers and acquisitions that are EPS accretive
over time
Maintaining
financial strength and
flexibility
•Committed to maintaining an appropriate investment grade credit rating
(1)
FCF defined as EBITDAI less tax paid, interest paid, maintenance capex (pre growth and spectrum capex), lease payments and pre any movements in working capital.Refer slide 29 of Appendix
(2)
Excluding any spectrum purchases and renewals
The Board reviewed Spark’s Capital Management Policy and has released a new Capital Management Framework
Capital Management Framework
Long run capex to
revenue ~10%-11%
(2)
SPARK
PAGE
14
How the Framework will be applied in FY23
Maximising
shareholder
value
•FY23 dividend of 27cps (100% imputed) funded through earnings and free
cash flow growth
•Up to $350m of proceeds from TowerCo transaction intended to be
returnedto shareholders via on-market buy-back post completion of the
transaction. The buy-back will be subject to market conditions. Spark may
investigate alternative return opportunities
Investing
for growth
•$350mcapex to beinvested in support of growth:
•Digital infrastructure investments, such as 5G acceleration, edge
computing, and data centres, accelerating our growth in Spark IoT and
Spark Health, and investing in emerging technologies
Maintaining
financial strength
and flexibility
•Remaining proceedsto offset increase in lease liability resulting from long-
term agreement with To w e r C oto secure access to existing and new towers
•Post completion, Spark’s net debt to EBITDA ratio is expected to fall
significantly, and then increase over time as funds are returned to
shareholders and investments are made
•Future financial flexibility maintained with ability to take on additional debt by
moving to BBB+ should it be required to support growth in line with the
principles for investing in growth noted on slide 13
Spark’s forecast free cash flow growth and TowerCo transaction proceeds will be used in line with Framework principles
Free cash flow growth
•As we look to FY23, we have confidence in
our ability to grow free cash flow to
~$460m-$500m
(1)
, to fund our ordinary
dividend
TowerCo proceeds
•As announced in July, Spark has reached
agreement to sell a 70% stake in its
TowerCo business to the Ontario Teachers’
Pension Plan (OTPP)
•Spark expects net cash proceeds of ~$900
million at completion (after transaction
costs), which is subject to Overseas
Investment Office approval, and is
anticipated to occur in the FY23 first half
(1)
Free cash flow of ~$460m-$500m under new methodology refer slide 29 in appendix
SPARK
PAGE
15
Financials
SPARK
PAGE
16
FY22 financial performance summary
REVENUE GROWTH
$3,720m
Up $127m or 3.5% vs. FY21
OPEX GROWTH
$2,570m
Up $96m or 3.9% vs. FY21
(1)
(1)
Adjusted for the impact of cloud accounting policy change
(2)
Free cash flow of ~$460m-$500m under new methodology refer slide 29 in appendix
(3)
Given the anticipated receipt of proceeds from the sale of 70% of TowerCo, the Dividend Reinvestment Plan has been suspended forthe H2 FY22 dividend and for the foreseeable future
EBITDAI GROWTH
$1,150m
Up $31m or 2.8% vs. FY21
(1)
NPAT GROWTH
$410m
Up $29m or 7.6% vs. FY21
(1)
TOTAL FY22 DIVIDEND
$25.0c
FREE CASH FLOW
$296m
Revenue growth driven by:
•Outperformance in mobile; and
•Spark Health and Spark IoT growth
Opex growth driven by:
•Higher procurement costs in
support of revenue growth; and
•Investment in future market growth
Top line momentum and cost
discipline resulting in EBITDAI at the
top end of guidance range
NPAT growth driven by EBITDAI growth
with net financing, D&A, and tax stable
Free cash flow of $296m, lower than
aspiration:
•Impacted by timing of working capital
and supply chain impacts
•Remain confident in FY23 free cash
flow aspiration of ~$460m-$500m
(2)
Total FY22 dividend of 25.0 cps
confirmed in line with guidance.
H2 FY22 dividend of 12.5 cps, 100%
imputed.
The Dividend Reinvestment Plan (DRP)
has been suspended for the H2 FY22
dividend and for the foreseeable
future
(3)
.
Delivering strong financial results with Revenue, EBITDAI and NPAT all in growth
Down $137m or (31.6%) vs. FY21
(1)
SPARK
PAGE
17
Financials
FY21
(1)
$m
FY22
$m
CHANGE
Operating revenues and other gains3,5933,7203.5%
Operating expenses(2,474)(2,570)(3.9%)
EBITDAI1,1191,1502.8%
Finance income3426(23.5%)
Finance expense(81)(74)8.6%
Depreciation and amortisation(521)(520)0.2%
Net investment income(1)(1)-%
Net earnings before tax expense5505815.6%
Tax expense(169)(171)(1.2%)
Net earnings after tax expense3814107.6%
Capital expenditure
(2)
34941017.5%
Free cash flow433296(31.6%)
EBITDAI margin31.1%30.9%(0.2pp)
Effective tax rate30.7%29.4%(1.3pp)
Capital expenditure to operating revenues9.7%11.0%1.3pp
Earnings per Share20.6c21.9c1.3c
Total Dividend per Share25.0c25.0c-
(1)
Adjusted for the impact of cloud accounting policy change
(2)
Excluding expenditure on mobile spectrum
SPARK
PAGE
18
FY22 operational performance summary
EBITDAI
$1,150m
2.8% increase vs. FY21
(1)
REVENUE
$3,720m
3.5% increase vs. FY21
OPERATING EXPENSES
$2,570m
3.9% increase vs. FY21
(1)
•Outperformance in mobile with highest revenue and
connection growth in the market
(2)
•Procurement growth driven by Health New Zealand
wins and ongoing demand for hardware and software
to support working from home
•Cloud revenue growth of 1.7% reflecting health
growth, offset by competitive pricing pressure. Lower
project activity across security and service
management as a result of Covid and supply chain
delays, and execution challenges
•Broadband revenue impacted by ongoing
competitive intensity and plan redesign to stabilise
base in line with strategy
•Voice revenue decline includes cycling of non-
recurring H1 FY21 wire maintenance charges
(underlying decline of ~12% in line with previous
trends)
•Future markets of Health and IoT grew 46% and 22%
respectively demonstrating ongoing future potential
•Operating expenses up YoY with gross benefits of
cost out reinvested in support of future market
growth
•Increase in product costs primarily driven by
increased procurement volumes
•Labour costs broadly flat, a pleasing outcome in a
tight labour market, balancing the retention of key
talent while continuing to invest in new markets
•Decrease in other operating expenses driven by:
•reduction in network support costs, and
precision marketing savings; partially offset by
•return to normal levels of bad debt expense
•Managing inflationary pressure through use of
multi-brands and refreshed pricing; increasing
automation, and targeted cost reduction
programmes
Revenue growth in established and future markets driving consistent earnings growth
•Delivered EBITDAI at the top end of
guidance range
•EBITDAI up $31m or 2.8% YoY reflecting
targeted return to revenue growth
•Prior period includes $16m of non-recurring
wire maintenance refunds.Other one off
items are broadly consistent across the
periods
•EBITDAI margin of ~31% in line with
aspiration
(1)
Adjusted for the impact of cloud accounting policy change
(2)
Market share estimates sourced from IDC
SPARK
MOBILE
•Total market mobile service revenue growth estimated to be ~2%-3% CAGR over the next 3-years to 2025
(1)
•Border reopening presents opportunity for return of roaming revenues. Estimating FY23 roaming revenue return of ~60%+ of
pre-Covid levels. Also expect pre-paid travellers to return increasing the connection base however, may dilute prepaid ARPU
•FY23 mobile service revenue growth aspiration ~5%-8%
BROADBAND
•Total market broadband connections forecasted to grow modestly at ~1%-1.5% CAGR over the next 3-years to 2025
(1)
•Our ambition is to maintain share in a competitive market through scaling data insight capability and precision marketing across
broadband portfolio and further roll out of 5G wireless broadband
•On track to achieve FY23 target of ~30% of broadband base on wireless
CLOUD, SECURITY
AND SERVICE
MANAGEMENT
•Public and private cloud markets are expected to continue growing
•Product and pricing refresh to improve market competitiveness and capitalise on hybrid-cloud opportunity
•Expecting higher than FY22 growth of ~2-5% in FY23, laying the foundations for a return to growth in line with market trends in
future years
FUTURE
MARKETS
•Building meaningful businesses in IoT and Health, helping customers to digitise, transform, improve experience and productivity
•Growth in IoT revenues driven by expansion of connected devices and related service revenue. Expect to grow to ~1.2m
connections by the end of FY23
•Continue to support the transformation of New Zealand’s health sector through tailored suite of IT and Managed Services
products and launch of Digital Health Platform (DHP) Kete Waiora. FY23 revenue growth aspiration of 10%-15%
(2)
•Continue to pursue strategic partnership opportunities in Sport to improve commercial returns
PAGE
19
Established and future market outlook
Delivering on three-year revenue and costs aspirationswith core capabilities supporting strong operational
performance and execution in established and future markets
(1)
Market share estimates sourced from IDC
(2)
Excluding procurement and telco revenues
SPARK
PAGE
20
•Investment in mobile core and Radio Access Network (RAN)
delivering greater network capacity and coverage
•Investment in IT systems in support of:
•Successful implementation of first phase of Spark ERP
system replacement;
•End of life IT infrastructure refresh; and
•Deep customer insight capability to unlock further data-
driven marketing opportunities
•Increase in ‘core, sustain and resiliency’ includes investment in
Optical Transport Network 2.0 (OTN) upgrade
•Continued investment in Converged Communication Network,
advancing exit strategy of legacy PSTN network
•Growth capex in FY22 equates to $56m supporting acceleration
of 5G roll-out with an additional $25m invested in FY22,
modernisation of Mayoral Drive exchange and the
commencement of data centre expansion at Takanini
•FY23 growth capex expected to be ~$50-$60m and is included in
FY23 capex guidance
FY22 capital investment
(1)
Excluding expenditure on mobile spectrum. Capital expenditure is a non-GAAP measure and is defined in Note 2.5 of Spark’s financial statements
(2)
Adjusted for the impact of cloud accounting policy change
Capital investment of $410m
(1)
in line with guidance and target envelope of ~10%-11% of revenue
Capital expenditure ($m)FY21
(2)
FY22
IT Systems117150
Mobile network106125
Core sustain and resiliency5553
Data centres131
Converged Communications Network (CCN)2722
Cloud2015
International cable construction and capacity purchases97
Other147
Capital expenditure excluding mobile spectrum349410
Total capital expenditure to operating revenue and other
gains
9.7%11.0%
Spectrum51-
Total capital expenditure and spectrum400410
Total Capital expenditure and spectrum to operating revenue
and other gains
11.1%11.0%
Maintenance capex354
Growth capex56
SPARK
PAGE
21
•Free cash flow of $296m down $137m YoY and lower
than aspiration of ~$420m-$460m
•Free cash flow negative impacts of $129m
predominately driven by:
•Advancedpurchases ofinventory and capital
to mitigate supply chain risk; and
•Timingof payables and receivableswhich has
subsequently unwound(primarily latereceipts
fromsome largewholesale customers, and
early payment of invoices due to ERP system
migration)
•Continued focus on working capital initiatives to
improve cashflow
•Remain confident in ability to generate sufficient free
cash flow to support a sustainable and growing
dividend
•FY23 Free cash flow aspiration of ~$460m-$500m
(1)
FY22 free cash flow
Free cash flow impacted by timing of payables and receivables and management of supply chain disruption
$129m supply chain and
temporary working
capital impacts
17
36
76
FY22 Free Cash Flow Summary ($m)
EBITDAI
Other Gains &
Impairments
Interest &
Tax
Leases
Working
Capital -
Inventory
Working
Capital -
Other
Free Cash
Flow
Cash
Capex
1,150
(1)
Free cash flow of ~$460m-$500m under new methodology refer slide 29 in appendix
SPARK
PAGE
22
•Reported net debt to EBITDAI ratio of 1.32x
(1)
consistent with
S&P A- credit rating
•Net debt position temporarily higher due to timing of
receivables and payables impacting free cash flow
•Business acquisitions includes investments in support of long-
term growth:
•Southern Cross NEXT;
•Full acquisition of Connect8;
•Rural connectivity via RCG; and
•Invested in IoT partner Adroit
•Issued a $100m, 6.5 year Sustainability-Linked Bond to
institutional investors in March
•Rising interest rates expected to have a modest impact on
financing costs with only ~35% of debt portfolio currently
subject to variable rates with one long-term debt maturity in
March 2023
•Committed to an investment grade credit rating with sufficient
headroom to execute strategy and invest for future growth as
outlined in Spark’s Capital ManagementFramework
Net debt
(1)
Spark’s internal capital management policy is to ensure that on a long-run basis reported net debt to EBITDAI does not exceed 1.4x; which Spark estimates is approximately equivalent to S&P’s 1.7x adjusted net debt to EBITDA threshold Spark’s
internal threshold of 1.4x excludes S&P’s adjustments in relation to IFRS16, and captive finance operations
Reported net debt up $219m, reflecting temporary working capital impacts and investments in long-term growth
1,303
1,522
449
66
4
(296)
(4)
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
Net debt as at
30 June 2021
Free cash flowDividends paidBusiness
acquisitions
and minority
investments
Proceeds from
asset and
business sales
Other
movements
Net debt as at
30 June 2022
Movement in net debt during FY22 ($m)
SPARK
PAGE
23
FY23 indicators of success
Strategic PillarFocus AreaMeasureTarget 30 June 2023
World class capability
Customer experienceConsumer and small business iNPS+6 point lift
Data driven insightsUplift in data driven marketing campaign conversion15%
(1)
Smart automated networks5G roll out40-50 locations
(2)
Growth mindsetseNPS+70
Grow established markets
WirelessMobile service revenue growth5-8%
BroadbandPercentage of broadband base on wireless~30%
CloudCloud, security and service management revenue growth2-5%
Accelerate future markets
Spark IoTNumber of connected IoT devices~1.2m connections
Spark HealthGrowth in Spark Health Revenues
10-15%
(3)
Lowest cost providerDeliver best costEBITDAI margin~31%
Build a sustainable future
Championing digital equitySkinny Jump connections+5k
Sustainable Spark
Reduction in scope 1 and 2 emissions year-on-year to hit SBTi emissions
reduction pathway
18.6% reduction
(1)
Spark consumer base
(2)
Contingent on NZ Government allocation of C-band spectrum
(3)
Excluding procurement and telco revenues
SPARK
PAGE
24
Guidance
(1)
FY22 ActualFY23 Guidance
EBITDAI$1,150m
$1,185-$1,225
(excludes any gain on sale for TowerCo transaction)
Capital expenditure
(2)
$410m~$410m
Dividend per share
Total 25.0cps
(100% imputed)
(3)
Total 27.0cps
(100% imputed)
(1)
Subject to no adverse change in operating outlook
(2)
Excluding expenditure on mobile spectrum
(3)
Given the anticipated receipt of proceeds from the sale of 70% of TowerCo, the Dividend Reinvestment Plan has been suspended forthe H2 FY22 dividend and for the foreseeable future
SPARK
Delivered strong financial returns and maximised shareholder value over last two years
PAGE
25
Now in final year of 2023 strategy
Core capabilities and high performance culture underpinning consistent delivery and
strategic execution
Strong momentum in future markets and new commercialisation opportunities
emerging from digital infrastructure and technology investments
A refreshed strategic plan for the next three years will be shared at an investor day
before the end of this financial year
SPARK
PAGE
26
Appendix
SPARK
PAGE
27
TSR
(1)
vs. International Peers
(2)
(1)
TSR calculated as share price and dividend per share (reinvested at the ex-dividend date). Three-year TSR over Spark’s FY20-FY22 period (1 July 2019 to 30 June 2022)
(2)
Peer group is not exhaustive but is a selected group of primarily integrated telco operators that are deemed the closest peers to Spark in terms of market exposure
Ranked #2 against international peers for three-year Total Shareholder Returns
14.7%
11.7%
11.6%
11.2%
7.9%
7.0%
5.8%
4.8%
1.7%
0.7%
(0.1%)
(0.6%)
(6.4%)
KT
Corporation
SparkDeutsche
Telekom
Telecom
Malaysia
BCESwisscomVodafone
Group
TelstraBT GroupVerizonAT&TOrangeSingTel
3-Year TSR CAGR
SPARK
~$900 million
PAGE
28
TowerCo transaction summary
•As announced in July, Spark has reached agreement to sell a 70%
stake in its TowerCo business to the Ontario Teachers’ Pension
Plan (OTPP)
•TowerCo will deliver better outcomes for customers and Aotearoa
through faster, more efficient deployment of digital infrastructure
•High-caliber investor with a long-term partnering focus and
significant experience managing a portfolio of infrastructure
investments globally
•Proceeds will maximise value for shareholders through direct
returns and by investing in future growth opportunities
•Spark will be the anchor tenant retaining a 30% stake –remaining
a key strategic partner as the business grows
•Spark continues to own all the ‘smarts’ of its network – such as
radio equipment and spectrum – which is what drives competitive
advantage and differentiation in the market
•Completion only conditional on Overseas Investment Office
approval and is anticipated to occur in the first half of FY23
$1.175 billion
33.8x
670 sites
15-year agreement
over 10 years – build commitment
FY23 pro-forma EBITDA multiple
Proceeds after transaction costs
to secure access to existing and new towers
Implied enterprise value
Creating significant shareholder value by enabling direct returns and investment in future growth
SPARK
PAGE
29
Defining free cash flow for Spark’s future dividend policy
The Capital Management Framework introduces a dividend policy to provide investors greater certainty on how the Board will consider dividends over the
long-run.
Dividend Policy: pay-out ratio of ~80%-100% of free cash flowon a long run basis,with annual guidance expressed on a cents per share basis.
Free cash flow has been redefined from FY23 to minimise the impact of short-term working capital volatility and to support incremental growth capital
expenditure.
FROM
Underlying free cash flow
PLUS:
Movements in working capital
EXCLUDES:
Spectrum;
Proceeds from asset sales; and
Payments of business acquisitions
TO
EBITDAI
LESS:
Other gains and impairments;
Interest;
Tax;
Lease costs; and
Maintenance capital expenditure
EXCLUDES:
Growth capital expenditure;
Spectrum; and
Movements in working capital
FREE CASH FLOW DEFINITION
FROMTO
FY22 ($)mFY22 ($)m
EBITDAI1,1501,150
Less:
Other gains and impairments2424
Interest4949
Tax160160
Lease costs112112
Capex433372
(1)
Net working capital movement76-
Free cash flow296433
(1)
Maintenance capital expenditure only. New methodology excludes growth capex of $56m and $5m growth capex prepayment
If this methodology had been applied in FY22 the impact would be as follows:
SPARK
PAGE
30
Indicative TowerCo financial summary
Following the completion of the TowerCo transaction, the anticipated impacts on Spark’s earnings are outlined below
EBITDAI impactsinclude:
Operating revenue:
•Reduction in co-location income
•FY23 impact offset by:
•Transitionary services charges to support establishment of TowerCo; and
•One-off reduction on make good provision for ground leases
Operating expenses:
•Reduced maintenance costs, offset by a portion of the lease charges that are
recognised within operating costs in accordance with IFRS16
EBTIDAI:
•TowerCo gain on sale is not included in this analysis, and is excluded from
FY23 EBITDAI guidance
Netearningsbefore tax impactsinclude:
Sale of TowerCo:
•TowerCo future net earnings will be accounted for in share of associates’ and
joint ventures’ net profits/(losses) below EBITDAI
•Reduction in depreciation and amortisationdue to sale of assets to TowerCo
•Reduction in depreciation and interest expense from assignment of ROU
assets and liabilities for ground leases
•Reduction in interest expense from cash received from TowerCo divestment
Creation of TowerCo lease obligation:
•Increase in interest expense and deprecation from new ROU asset and lease
liability reflecting access pricing from the lease arrangement with TowerCo
Financial impacts are subject to change up until divestment date and finalisation of gain on sale
These impacts have not been audited
Financial impacts do not include gain on sale or tax implications
Analysis based on divestment occurring in November 2022
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, any impacts or risks to Spark’s anticipated
growth strategies, future financial condition and operations, economic conditions or the regulatory environment in New Zealand arising
from or otherwise with Covid-19, 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 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Operating revenues and other gains1,8241,7991,7961,7971,8901,8303,5933,7201273.5%
Operating expenses(1,327)(1,189)(1,296)(1,178)(1,352)(1,218)(2,474)(2,570)(96)(3.9%)
EBITDAI4976105006195386121,1191,150312.8%
Finance income1818171714123426(8)(23.5%)
Finance expense(46)(48)(43)(38)(37)(37)(81)(74)78.6%
Depreciation and amortisation expense(237)(250)(262)(259)(257)(263)(521)(520)10.2%
Net investment income(1)2-(1)(1)-(1)(1)--%
Net earnings before income tax231332212338257324550581315.6%
Tax expense(69)(78)(65)(104)(78)(93)(169)(171)(2)(1.2%)
Net earnings for the period162254147234179231381410297.6%
Capital expenditure excluding spectrum 2441241901592181923494106117.5%
Free cash flows excluding spectrum
50388113320183113433296(137)(31.6%)
Reported EBITDAI margin27.2%33.9%27.8%34.4%28.5%33.4%31.1%30.9%(0.2%)
Reported effective tax rate29.9%23.5%30.7%30.8%30.4%28.7%30.7%29.4%(1.3%)
Capital expenditure to operating revenues and
other gains
13.4%6.9%10.6%8.8%11.5%10.5%9.7%11.0%1.3%
Reported basic and earnings per share (cents)8.813.98.012.59.612.420.621.91.36.3%
Gross margin by product
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Mobile405424407430437467
837904678.0%
Voice12311987938679
180165(15)(8.3%)
Broadband175166166173166152
339318(21)(6.2%)
Cloud, security and service management173175179179176167358343(15)(4.2%)
Procurement and partners202520232627
43531023.3%
Managed data, network and services706872736572
145137(8)(5.5%)
Other product153328423347
70801014.3%
Total product gross margin
9811,0109591,0139891,0111,9722,000281.4%
Other gains4314241610
2826(2)(7.1%)
Total gross margin
9851,0419631,0371,0051,0212,0002,026261.3%
Connections
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
000's000's000's000's000's000's000's000's000's
%
Mobile connections
1
2,5002,5192,4312,4212,4452,5032,4212,503823.4%
Voice connections by type
2
POTS and ISDN288220197168140113168113(55)(32.7%)
VoIP5461696969666966(3)(4.3%)
Voice over wireless2624232420172417(7)(29.2%)
368305289261229196261196(65)(24.9%)
Broadband connections by technology
Copper2111861571311139513195(36)(27.5%)
Fibre340367381395402415395415205.1%
Wireless
3
141156166178187194178194169.0%
692709704704702704704704--%
IoT Connections23927137247662383247683235674.8%
1
Mobile connections excluding MVNO connections but including legacy machine to machine and SIM based SmartWatch connections.
3
FY21 wireless broadband connections have been restated to include data only connections of 2,394.
FY21 vs FY22
FY21 vs FY22
FY21 vs FY22
2
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).
Spark New Zealand
Group FTE's
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
FTE permanent5,1194,9834,9614,8894,9214,9244,8894,924350.7%
FTE contractors 2001461211501902081502085838.7%
Total FTE5,3195,1295,0825,0395,1115,1325,0395,132931.8%
Dividends
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Ordinary dividends (cents per share)12.5012.5012.5012.5012.5012.5025.0025.00--%
Special dividends (cents per share)----------%
12.5012.5012.5012.5012.5012.5025.0025.00--%
FY21 vs FY22
FY21 vs FY22
Spark New Zealand
Group operating revenues and other gains
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Operating revenues
Mobile
Service revenue425423420432441458852899475.5%
Non-service revenue228212231228237215459452(7)(1.5%)
6536356516606786731,3111,351403.1%
Voice
Access958562675752129109(20)(15.5%)
Calling798171677068138138--%
Other voice revenue2323212019194138(3)(7.3%)
197189154154146139308285(23)(7.5%)
Broadband
1
345335337333324315670639(31)(4.6%)
Cloud, security and service management20921121722622422244344630.7%
Procurement and partners20720023617830123741453812430.0%
Managed data, network and services13414314014214014328228310.4%
Other operating revenue
2
7555578061911371521510.9%
Total operating revenues1,8201,7681,7921,7731,8741,8203,5653,6941293.6%
Other gains43142416102826(2)(7.1%)
Total operating revenues and other gains1,8241,7991,7961,7971,8901,8303,5933,7201273.5%
1
Wireless broadband revenues and connections are included in broadband revenues and connections.
2
Other operating revenues includes revenues from Consumer, Business, Wholesale and other customer segments.
Operating revenues and other gains by customer segment
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Operating revenues and other gains$m$m$m$m$m$m$m$m$m
%
Consumer8247577697797777571,5481,534(14)(0.9%)
Business9019169358971,0189521,8321,9701387.5%
Wholesale and other99126921219512121321631.4%
1,8241,7991,7961,7971,8901,8303,5933,7201273.5%
Finance income
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Finance income$m$m$m$m$m$m$m$m$m
%
Finance lease interest income766763139(4)(30.8%)
Other interest income11121110892117(4)(19.0%)
1818171714123426(8)(23.5%)
Net investment income
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Net investment income$m$m$m$m$m$m$m$m$m
%
Dividend income----------%
Share of associates' and joint ventures' net losses(1)2-(1)(1)-(1)(1)--%
(1)2-(1)(1)-(1)(1)--%
FY21 vs FY22
FY21 vs FY22
FY21 vs FY22
FY21 vs FY22
Spark New Zealand
Group operating expenses
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Product costs
Mobile248211244230241206474447(27)(5.7%)
Voice747067616060128120(8)(6.3%)
Broadband170169171160158163331321(10)(3.0%)
Cloud, security and service management363638474855851031821.2%
Procurement and partners18717521615527521037148511430.7%
Managed data, network and services64756869757113714696.6%
Other product costs602229382844677257.5%
8397588337608858091,5931,6941016.3%
Labour26824525623726323249349520.4%
Other operating expenses
Network support costs3732444244218665(21)(24.4%)
Computer costs494951505556101111109.9%
Accommodation costs3330323530356765(2)(3.0%)
Advertising, promotions and communication4731442834267260(12)(16.7%)
Bad debts710(1)(6)31(7)411NM
Impairment expense-2-22-22--%
Other4732373036386774710.4%
220186207181204177388381(7)(1.8%)
Total operating expenses1,3271,1891,2961,1781,3521,2182,4742,570963.9%
Finance expense
Finance expense
Finance expense on debt252821222322434524.7%
Other interest and finance expense7564471011110.0%
Lease interest expense151615111092619(7)(26.9%)
Leased customer equipment interest expense33443487(1)(12.5%)
5052464140428782(5)(5.7%)
Capitalised interest(4)(4)(3)(3)(3)(5)(6)(8)(2)(33.3%)
4648433837378174(7)(8.6%)
Depreciation and amortisation expense
Depreciation and amortisation expense
Depreciation - property, plant and equipment119114124118116118242234(8)(3.3%)
Depreciation - right-of-use assets283635424040778033.9%
Depreciation - leased customer equipment assets151219171819363712.8%
Amortisation of intangible assets75888482838616616931.8%
237250262259257263521520(1)(0.2%)
FY21 vs FY22
Spark New Zealand
Analysis & KPI's - Mobile
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Mobile revenue by type (Consumer and Business)$m$m$m$m$m$m$m$m$m
%
Mobile service revenue421419415427435451842886445.2%
Mobile non-service revenue
1
216197223221229205444434(10)(2.3%)
6376166386486646561,2861,320342.6%
1619131214172531624.0%
Total mobile revenue6536356516606786731,3111,351403.1%
Mobile product costs
3
(248)(211)(244)(230)(241)(206)(474)(447)275.7%
Mobile gross margin405424407430437467837904678.0%
Mobile gross margin %62.0%66.8%62.5%65.2%64.5%69.4%63.8%66.9%3.1%
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Total mobile revenue by customer segment$m$m$m$m$m$m$m$m$m
%
Consumer443419438441454444879898192.2%
Business194197200207210212407422153.7%
Wholesale and other1619131214172531624.0%
6536356516606786731,3111,351403.1%
Average revenue per user (ARPU) - 6 month active
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
(Consumer and Business)
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month%
Total ARPU28.4828.0528.5129.6630.1930.8429.0930.521.42 4.9%
Pay-monthly ARPU42.8241.1939.9740.3140.1741.0140.1440.600.46 1.1%
Prepaid ARPU13.2813.3714.3615.4216.2616.4714.8916.371.48 9.9%
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
000's000's000's000's000's000's000's000's000's
%
Pay-monthly connections1,2871,3301,3551,3861,4161,4371,3861,437513.7%
Prepaid connections1,1811,1611,0471,0081,0011,0381,0081,038303.0%
Internal connections44444444--%
Total mobile connections2,4722,4952,4062,3982,4212,4792,3982,479813.4%
1
Mobile non-service revenue includes handset sales and mobile interconnect.
2
Includes MVNO revenue.
3
Includes handset, interconnect and cellphone tower access costs.
4
Excludes MVNO connections but includes SIM based SmartWatch connections.
FY21 vs FY22
Wholesale and other customer segment mobile
revenue
2
FY21 vs FY22
FY21 vs FY22
Number of mobile connections at period end - 6
month active (Consumer and Business)
4
FY21 vs FY22
Spark New Zealand
Analysis & KPI's - Voice
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Revenue by type$m$m$m$m$m$m$m$m$m
%
Access958562675752129109(20)(15.5%)
Calling798171677068138138--%
Other voice revenue2323212019194138(3)(7.3%)
Total voice revenue197189154154146139308285(23)(7.5%)
Voice product costs
1
(74)(70)(67)(61)(60)(60)(128)(120)86.4%
Voice gross margin12311987938679180165(15)(8.3%)
Voice gross margin %62.4%63.0%56.5%60.4%58.9%56.8%58.4%57.9%(0.5%)
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
000's000's000's000's000's000's000's000's000's
%
POTS and ISDN288220197168140113168113(55)(32.7%)
VoIP5461696969666966(3)(4.3%)
Voice over wireless2624232420172417(7)(29.2%)
Total voice connections
2
368305289261229196261196(65)(24.9%)
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
000's000's000's000's000's000's000's000's000's
%
Consumer9349586047376037(23)(38.3%)
Business161157149138132119138119(19)(13.8%)
Wholesale and other11499826350406340(23)(36.5%)
Total voice connections
2
368305289261229196261196(65)(24.9%)
1
Includes voice access (baseband), interconnect, and international calling costs.
2
Excludes Cloud Telephony which has been moved to Managed Networks.
Analysis & KPI's - Broadband
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Total broadband revenue345335337333324315670639(31)(4.6%)
Broadband product costs
3
(170)(169)(171)(160)(158)(163)(331)(321)103.0%
Broadband gross margin175166166173166152339318(21)(6.2%)
Broadband gross margin %50.7%49.6%49.3%52.0%51.2%48.3%50.6%49.8%(0.8%)
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
000's000's000's000's000's000's000's000's000's
%
Copper2111861571311139513195(36)(27.5%)
Fibre340367381395402415395415205.1%
Wireless
4
141156166178187194178194169.0%
Total broadband connections692709704704702704704704--%
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
000's000's000's000's000's000's000's000's000's
%
Consumer591605598595593595595595--%
Business100103103105105104105104(1)(1.0%)
Wholesale and other11344545125.0%
Total broadband connections692709704704702704704704--%
3
Includes broadband access (UBA/UCLL/Fibre), modem and e-mail platform support costs.
Broadband connections by technology
FY21 vs FY22
Broadband connections by customer segment
FY21 vs FY22
FY21 vs FY22
Voice connections by type
FY21 vs FY22
Voice connections by customer segment
FY21 vs FY22
FY21 vs FY22
Spark New Zealand
Analysis & KPI's - Cloud, Security and Service management
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Cloud revenue11111411311611911422923341.7%
Security revenue1819192018193937(2)(5.1%)
Service management revenue80788590878917517610.6%
Cloud, Security and Service management revenue20921121722622422244344630.7%
Cloud, Security and Service management product costs(36)(36)(38)(47)(48)(55)(85)(103)(18)(21.2%)
Cloud, Security and Service management gross margin173175179179176167358343(15)(4.2%)
Cloud, Security and Service management gross margin %82.8%82.9%82.5%79.2%78.6%75.2%80.8%76.9%(3.9%)
Contribution margin (approximated) %
1
34.4%39.3%34.6%38.5%34.8%37.4%38.5%37.4%(1.1%)
Cloud KPI'sH1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Number of private cloud clients
2
361347329359346346359346(13)(3.6%)
Number of public cloud clients293305304335335353335353185.4%
Power usage efficiency for dedicated data-centre sites1.501.481.491.501.481.500.021.4%
Megawatt hours for dedicated data centre sites22,09122,87421,66422,18144,96543,845(1,120)(2.5%)
Security KPI'sH1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Number of security clients
2
1,1911,1831,1531,1741,1101,1071,1741,107(67)(5.7%)
Average monthly revenue per security client2,5192,6772,7462,8392,7032,8612,8392,861220.8%
Service management KPI'sH1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
Number of service management clients
2
681730671694712688694688(6)(0.9%)
Average monthly revenue per service management client19,57917,80821,11321,61420,36521,56021,61421,560(54)(0.2%)
Analysis & KPI's - Procurement and partners
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Procurement and partners revenue20720023617830123741453812430.0%
Procurement and partners product costs(187)(175)(216)(155)(275)(210)(371)(485)(114)(30.7%)
Procurement and partners gross margin20252023262743531023.3%
Procurement and partners gross margin %9.7%12.5%8.5%13.0%8.6%11.4%10.4%9.9%(0.5%)
Analysis & KPI's - Managed data, network and services
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Collaboration30353335384068781014.7%
Managed data and networks104108107107102103214205(9)(4.2%)
Managed data, network and services revenue13414314014214014328228310.4%
Managed data, network and services product costs
3
(64)(75)(68)(69)(75)(71)(137)(146)(9)(6.6%)
Managed data, network and services gross margin706872736572145137(8)(5.5%)
Managed data, network and services gross margin %52.2%47.6%51.4%51.4%46.4%50.3%51.4%48.4%(3.0%)
3
Includes wide area network access, international data, network backhaul and videoconferencing platform costs.
FY21 vs FY22
FY21 vs FY22
FY21 vs FY22
FY21 vs FY22
FY21 vs FY22
FY21 vs FY22
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.
2
The client count measures for private cloud, security and service management have been retrospectively updated following improvements in the classification of clients that
consume more than one variant of a service across the Spark Group.
Spark New Zealand
Statement of cash flows
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Cash flows from operating activities
Cash received from customers 1,861 1,733 1,828 1,719 1,901 1,755
3,5473,6561093.1%
Interest receipts 17 17 16 16 13 11
3224(8)(25.0%)
Payments to suppliers and employees (1,399) (1,104) (1,321) (1,137) (1,327) (1,279)
(2,458)(2,606)(148)(6.0%)
Payments for income tax (82) (58) (118) (70) (93) (67)
(188)(160)2814.9%
Payments for interest on debt (26) (26) (23) (23) (23) (25)
(46)(48)(2)(4.3%)
Payments for interest on leases (14) (16) (16) (10) (10) (9)
(26)(19)726.9%
Payments for interest on leased customer equipment assets
(3) (3) (4) (4) (3) (3)
(8)(6)225.0%
Net cash flows from operating activities 354 543 362 491 458 383
853841(12)(1.4%)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 13 - - 6 - -
6-(6)(100.0%)
Proceeds from sale of business - 23 8 22 - -
30-(30)(100.0%)
Proceeds from long-term investments - - - 6 3 1
64(2)(33.3%)
Receipts from finance leases 2 4 2 4 2 1
63(3)(50.0%)
Receipts from loans receivable - - - 1 - -
1-
(1)(100.0%)
Payments for purchase of businesses net of cash acquired
(11) - - (25) - (7)
(25)(7)1872.0%
Payments for, and advances to, long-term investments (30) (5) (4) (9) (39) (20)
(13)(59)(46)NM
Payments for purchase of property, plant and equipment,
intangibles (excluding spectrum) and capacity
(270) (117) (212) (118) (216) (209)
(330)(425)(95)(28.8%)
Payments for spectrum intangible assets - - - (51) - -
(51)-
51100.0%
Payments for capitalised interest (4) (4) (3) (3) (3) (5)
(6)(8)
(2)(33.3%)
Net cash flows from investing activities (300) (99) (209) (167) (253) (239)
(376)(492)(116)(30.9%)
Cash flows from financing activities
Net proceeds from/(repayments of) debt 207 (177) 100 (138) 99 115
(38)214252NM
Payments for dividends (229) (230) (167) (163) (225) (224)
(330)(449)(119)(36.1%)
Payments for leases (19) (23) (20) (36) (33) (36)
(56)(69)(13)(23.2%)
Payments for leased customer equipment assets (13) (15) (16) (18) (25) (21)
(34)(46)
(12)(35.3%)
Net cash flows from financing activities (54) (445) (103) (355) (184) (166)
(458)(350)10823.6%
Net cash flows - (1) 50 (31) 21 (22)
19(1)(20)NM
Opening cash position 54 54 53 103 72 93
53721935.8%
Closing cash position 54 53 103 72 93 71
7271(1)(1.4%)
FY21 vs FY22
Spark New Zealand
Analysis & KPIs - Free cash flows and movement in working capital
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
EBITDAI 497 610 500 619 538 612
1,1191,150312.8%
Excluding
Other gains and impairments
4 29 4 22 14 10
2624(2)(7.7%)
EBITDAI ex. other gains and impairments
493 581 496 597 524 602
1,0931,126333.0%
Less
Cash paid on capital expenditure 274 121 215 121 219 214
3364339728.9%
Cash paid on interest 26 28 27 21 23 26
484912.1%
Cash paid on tax payments 82 58 118 70 93 67
188160(28)(14.9%)
Cash paid on leases 30 34 34 50 56 56
841122833.3%
Total cash payments on capital expenditure, interest, tax
and lease
412 241 394 262 391 363 6567549814.9%
Underlying free cash flows
81 340 102 335 133 239 437372(65)(14.9%)
Less increases in working capital
Change in receivables (45) 50 (92) 104 (42) 104
126250NM
Change in payables 12 (43) 61 (45) (63) 78
1615(1)(6.3%)
Change in inventory 41 (46) (11) (20) 29 14
(31)4374NM
Change in contract assets (7) (9) (11) (2) (5) 3
(13)(2)1184.6%
Change in prepayments (excluding CAPEX) 19 (18) 12 (27) 37 (37)
(15)-15100.0%
Total change in working capital - increase/(decrease)
20 (66) (41) 10 (44) 162 (31)118149NM
Less
Non-cash adjustments
11 18 30 5 (6) (36)
35(42)(77)NM
Free cash flows
50 388 113 320 183 113 433296(137)(31.6%)
Less
Spectrum - - - 51 - -
51-(51)(100.0%)
Free cash flows (including spectrum)
50 388 113 269 183 113 382296(86)(22.5%)
Cash conversion94%108%102%97%110%79%97%79%-18%
FY21 vs FY22
Spark New Zealand
Group capital expenditure
H1 FY20H2 FY20H1 FY21H2 FY21H1 FY22H2 FY22FY21FY22
$m$m$m$m$m$m$m$m$m
%
Cloud168911782015(5)(25.0%)
Converged Communications Network (CCN)11715121111
2722(5)(18.5%)
International cable construction and capacity purchases -11181697(2)(22.2%)
IT systems705364538763
1171503328.2%
Mobile network922458487451
1061251917.9%
Core sustain and resiliency501534212627
5553(2)(3.6%)
Data centres1922
1
[TRUNCATED]
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.