Spark New Zealand Limited H1 FY23 Results
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
MARKET RELEASE - WEDNESDAY, 22 FEBRUARY 2023
EMBARGOED UNTIL [DATE] [delete this row if not required]
Spark delivers H1 FY23 results
• Reported revenue
1
, EBITDAI
2
, and NPAT all in growth, driven by one-off proceeds from
the strategic divestment of a majority stake in Spark’s TowerCo business
• Up to $350 million to be returned to shareholders through an on-market share buy-back
and an additional ~$90-$110 million to be invested in digital infrastructure and emerging
technologies in the second half
• While adjusted revenue increased as a result of a standout performance in mobile, higher
product costs and intensifying competition in broadband and cloud contributed to margin
pressure in the half, with adjusted EBITDAI and NPAT declining
• H1 FY23 dividend of 13.5 cents per share declared, 100% imputed
Spark New Zealand Limited (Spark) today announced its results for the first half of FY23, with
reported revenue, EBITDAI, and NPAT all in growth, driven by a one-off benefit from the strategic
divestment of a majority stake in Spark’s TowerCo business, which delivered proceeds of
$911 million and a net gain on sale of $584 million.
During the half Spark also announced its decision to exit the sports streaming market through a
content partnership agreement with TVNZ, resulting in a one-off provision of $52 million.
The resulting net gain of the tower transaction and sport exit was $532 million, driving a 34.1%
increase in reported revenue to $2,534 million, a 93.7% increase in reported EBITDAI to
$1,042 million, and an increase in reported NPAT to $837 million.
Spark declared an H1 FY23 dividend per share of 13.5 cents, 100% imputed.
Spark New Zealand Chair Justine Smyth said: “Since the conclusion of the half we have been
reminded once again of the urgency of our climate change response. The significant weather
events we have experienced have destroyed homes, impacted livelihoods, and most sadly of all,
taken lives. While Spark’s network infrastructure was not significantly damaged, due to
widespread power outages and fibre cuts we did see services impacted in the worst affected
regions. We have been focused on supporting our customers and working alongside our industry
peers to restore services with urgency.
“Looking to the future, we must work closely across sectors to set clear adaptation plans and
determine the best way to direct co-investment by Government and the private sector into the
infrastructure we will need as we face into a more volatile climate."
Commenting on the TowerCo proceeds, Smyth reconfirmed Spark’s dual approach of delivering
returns to shareholders and investing in future growth.
“We know that in these uncertain times, and in a high inflationary environment, our shareholders
are looking for reliable and consistent returns. With that in mind, we are pleased to confirm that
our on-market share buy-back will commence following our Investor Strategy Briefing
3
on April 5,
and will return up to $350 million of the TowerCo proceeds to shareholders.
“We have also allocated $350 million of these proceeds to invest back into growth, with a focus
on digital infrastructure, data centres, and emerging technologies, with ~$90-$110 million of this
allocation to be used in FY23.”
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 Principles (non-GAAP) performance measures
3
Subject to market conditions
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
When adjusting for the one-off benefit from the TowerCo transaction, Spark’s adjusted revenue
increased 3.2% to $1,950 million, driven largely by a standout performance in mobile. Mobile
service revenue increased 8.8% to $480 million, benefiting from the increasing demand for data
from customers, the return of roaming revenues, and data-driven marketing delivering customers
personalised offers and boosting conversion to higher value plans.
While core products and services remained resilient, higher product costs and intensifying
competition in broadband and cloud contributed to margin pressure in the half, with adjusted
EBITDAI down 5.2% to $510 million. Adjusted NPAT declined 7.8% to $165 million, driven by
lower EBITDAI and higher finance expense.
Broadband revenue fell 3.4% to $313 million as Spark’s FY22 price refresh rolled through.
Margins were also squeezed through inflationary input cost increases that occurred during the
half. Spark implemented price increases in response and expects to see the benefits of that
change in the second half. Despite these challenges, Spark maintained its broadband base and
is on track to meet its FY23 target of 30% of its base on wireless, reaching approximately 29% in
the half.
Cloud, security, and service management revenues decreased 4.5% to $214 million as the mix-
shift towards public cloud continued, resulting in repricing of private cloud and impacting margins.
Managed services revenue was also impacted by lower project activity.
In future markets, Spark IoT reached a milestone of one million connected devices during the
half, with connections up 39% to 1.2 million and revenue up 21% year-on-year. Spark Health
maintained revenues, with digital transformation opportunities expected to grow as public sector
health reforms progress.
During the half Spark also progressed a series of digital infrastructure investments and
partnerships that will support future growth and efficiency gains. Spark’s investment in an
expansion of its Takanini data centre progressed to plan and is expected to complete in the
second half. A new joint venture was established – Hourua – which was awarded the contract to
provide priority cellular services to the Public Safety Network, used by frontline emergency
responders.
Finally, the independent mobile towers business that was formed following the TowerCo
transaction, Connexa, announced it had reached an agreement with Macquarie Asset
Management and Aware Super to acquire 2degrees’ passive mobile telecommunications tower
assets. The transaction is expected to deliver greater operational efficiencies, better network
economics, and faster deployment of new digital infrastructure.
Spark CEO Jolie Hodson said: “We want to acknowledge the tragic loss of life and devastation
communities across the North Island are experiencing as a result of Cyclone Gabrielle.
“We know how critical our services are for people during an emergency and our absolute priority
has been on urgently restoring connectivity and supporting our customers.
“As we now emerge from the immediate response, we will turn our focus to the bigger
discussions we must have as a country on the level of resilience we will need all our
infrastructure to have in the future. Investment in resilient and adaptive infrastructure has been a
strategic focus for Spark for many years and this will not change.”
Reflecting on the half year results Jolie said the strong growth experienced in mobile was
contrasted by challenging broadband and cloud markets. “Like all businesses in Aotearoa Spark
has been navigating uncertain and inflationary economic conditions.
“We continued to see exceptional growth in our largest category of mobile, with the ongoing
return of roaming revenues, the increasing demand for data from our customers, and our use of
data insights to offer our customers products and services based on their specific needs.
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
“The highly competitive nature of the broadband market was exacerbated by inflationary input
cost increases, and while we have passed these through in several areas, we don’t expect to see
the benefits of those changes until the second half.
“We have also been mindful to ensure we are leveraging our multi-brand portfolio to offer
products across the price spectrum, so that New Zealanders can access a plan regardless of
their budget. Ongoing growth in wireless broadband supports our ability to do this, and we were
pleased to reach 29% of our base on wireless during the half.
“In cloud we saw an ongoing mix-shift towards public cloud, which has impacted private cloud
revenue and margins, while the uncertain economic environment has contributed to lower
managed service project activity. We are focused on accelerating simplification across our
business portfolio and maximising our competitiveness in hybrid cloud, which is showing strong
demand as customers seek diversification and a transition path to public cloud services.”
Spark remains committed to meeting its FY23 guidance of $1,185-$1,225 million
4
, and expects
to be lower in the range. Total FY23 dividend guidance of 27.0cps, 100% imputed
5
, was also
confirmed. Total growth capex for FY23 is now expected to be ~$145-165 million – an increase
of ~$90-110 million, to be funded from TowerCo proceeds. As a result, FY23 Capital Expenditure
Guidance is updated from ~$410 million to ~$520 million.
Spark will release details of its next three-year strategy covering the period FY24-FY26 at an
Investor Strategy Briefing on 5 April 2023.
Authorised by:
Alastair White
GM Capital Markets
For more information contact
For media queries please contact:
Althea Lovell
Corporate Relations Partner
(64) 21 222 2992
althea.lovell@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
4
Excluding the net gain of $534 million for the sale of TowerCo and provision for Spark Sport. EBITDAI guidance subject to no adverse change in
operating outlook
5
Subject to no adverse change in operating outlook
---
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 6 months to 31 December 2022
Previous Reporting Period 6 months to 31 December 2021
Currency NZD - New Zealand Dollar
Amount (000s) Percentage change
Revenue from continuing
operations
NZD$2,534,000 34.1%
Total Revenue NZD$2,534,000 34.1%
Net profit/(loss) from
continuing operations
NZD$837,000 367.6%
Total net profit/(loss) NZD$837,000 367.6%
Interim/Final Dividend
Amount per Quoted Equity
Security
NZD$0.13500000 (comprised only of an ordinary dividend)
Imputed amount per Quoted
Equity Security
NZD$0.05250000
Record Date 17 March 2023
Dividend Payment Date 6 April 2023
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
As at 31 December 2022:
NZD$0.66
As at 31 December 2021:
NZD$0.33
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Changes in Spark’s earnings before finance income and
expense, income tax, depreciation, amortisation and net
investment income (EBITDAI) are 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
22 February 2023
Unaudited 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$1,042,000 93.7%
Adjusted
1
earnings before finance income and expense,
income tax, depreciation, amortisation and net investment
income (Adjusted EBITDAI)
NZD$510,000 (5.20%)
1
Adjusted earnings before finance income and expense, income tax, depreciation, amortisation
and net investment income (EBITDAI) reflects the impact of the net gain on sale of Connexa of
$584 million, the one-off provision of $52 million for Spark Sport. EBITDAI and Adjusted
EBITDAI are non-GAAP measures which are defined and reconciled in note 5 of Spark’s interim
financial statements.
---
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 TELE0001S4
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies No
Record date 17 March 2023 AUST & NZ;
16 March 2023 USA
Ex-Date (one business day before the
Record Date)
16 March 2023 AUST & NZ;
15 March 2023 USA
Payment date (and allotment date for
DRP)
6 April 2023 AUST & NZ;
17 April 2023 USA
Total monies associated with the
distribution
NZD$252,877,142
(1,873,164,015 shares @ $0.135 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$0.18750000
Gross taxable amount NZD$0.18750000
Total cash distribution NZD$0.13500000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount NZD$0.02382353
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$0.05250000
Resident Withholding Tax per
financial product
NZD$0.00937500
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
N/A
N/A
Date strike price to be announced (if
not available at this time)
N/A
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
N/A
DRP strike price per financial product
N/A
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
N/A
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Stefan Knight, Finance Director (CFO)
Contact person for this
announcement
Chante Mueller, Head of Investor Relations
Contact phone number +64 (0) 27 469 3062
Contact email address investor-info@spark.co.nz
Date of release through MAP
22 February 2023
---
FY2023
INTERIM
FINANCIAL
S TATEMENTS
Interim financial
statements
For the six months ended 31 December 2022
These interim financial statements do not include all the notes
and information normally included in the annual financial
statements. Accordingly, they should be read in conjunction with
the annual financial statements for the year ended 30 June 2022.
Interim financial statements3
Notes to the interim financial statements7
Independent auditor’s review report19
Page 02
Spark New ZealandInterim financial statements
Statement of profit or loss and other comprehensive income
SIX MONTHS ENDED 31 DECEMBER
20222021
UNAUDITEDUNAUDITED
NOTES$M$M
Operating revenues and other gains
1
2,534 1,890
Operating expenses
1
(1,492) (1,352)
Earnings before finance income and expense, income tax,
depreciation, amortisation and net investment income (EBITDAI)5 1,042 538
Finance income 16 14
Finance expense (43) (37)
Depreciation and amortisation (248) (257)
Net investment income (1) (1)
Net earnings before income tax4 766 257
Tax income /(expense)
1
71 (78)
Net earnings for the period5 837 179
Other comprehensive income
Items that will not be reclassified to profit or loss:
Revaluation of long-term investments designated at fair value
through other comprehensive income6 (26) (3)
Items that may be reclassified to profit or loss:
Translation of foreign operations (1)–
Change in hedge reserves net of tax 5 31
Other comprehensive income for the period (22) 28
Total comprehensive income for the period 815 207
Earnings per share
Basic earnings per share (cents) 44.7 9.6
Diluted earnings per share (cents) 44.6 9.6
Weighted average ordinary shares (millions) 1,872 1,868
Weighted average ordinary shares and options (millions) 1,875 1,870
See accompanying notes to the interim financial statements.
1 These balances have been materially impacted by the Connexa transaction and the Spark Sport provision, see notes 3 and
5 for further details.
Page 03
Spark New ZealandInterim financial statements
Statement of financial position
AS AT
31 DECEMBER
AS AT
30 JUNE
20222022
UNAUDITEDAUDITED
NOTES$M$M
Current assets
Cash 286 71
Short-term receivables and prepayments 824 839
Short-term derivative assets– 5
Inventories 108 107
Taxation recoverable 4 1
Assets classified as held for sale– 198
Total current assets 1,222 1,221
Non-current assets
Long-term receivables and prepayments
1
378 197
Long-term derivative assets 32 13
Long-term investments
1
6 275 212
Deferred tax assets
1
44 –
Right-of-use assets
1
531 508
Leased customer equipment assets 77 90
Property, plant and equipment 1,174 1,109
Intangible assets 833 839
Total non-current assets 3,344 2,968
Total assets 4,566 4,189
Current liabilities
Short-term payables, accruals and provisions 464 460
Taxation payable– 40
Short-term derivative liabilities 2 1
Short-term lease liabilities
1
73 52
Debt due within one year7 148 293
Liabilities classified as held for sale– 94
Total current liabilities 687 940
Non-current liabilities
Long-term payables, accruals and provisions 97 64
Long-term derivative liabilities 95 77
Long-term lease liabilities
1
774 292
Long-term debt7 852 1,233
Deferred tax liabilities– 108
Total non-current liabilities 1,818 1,774
Total liabilities 2,505 2,714
Equity
Share capital 1,111 1,105
Reserves (375) (352)
Retained earnings 1,325 722
Total equity 2,061 1,475
Total liabilities and equity 4,566 4,189
See accompanying notes to the interim financial statements.
1 These balances have been materially impacted by the Connexa transaction, see note 3 for further details.
On behalf of the Board
Justine Smyth, Chair Jolie Hodson, Chief Executive
Authorised for issue on 22 February 2023
Page 04
Spark New ZealandInterim financial statements
Statement of changes in equity
SIX MONTHS ENDED
31 DECEMBER 2022
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVES
SHARE-
BASED
COMPEN-
SATION
RESERVE
RE-
VALUATION
RESERVE
FOREIGN
CURRENCY
TRANS-
LATION
RESERVETOTAL
UNAUDITED$M$M$M$M$M$M$M
Balance at 1 July 2022 1,105 722 8 5 (343) (22) 1,475
Net earnings for the period – 837 – – – – 837
Other comprehensive income/(loss)
for the period – – 5 – (26) (1) (22)
Total comprehensive income/(loss)
for the period – 837 5 – (26) (1) 815
Contributions by, and distributions to,
owners:
Dividends – (234) – – – – (234)
Supplementary dividends – (24) – – – – (24)
Tax credit on supplementary
dividends – 24 – – – – 24
Issuance of shares under share
schemes 3 – – (1) – – 2
Other transfers 3 – – – – – 3
Total transactions with owners for
the period 6 (234) – (1) – – (229)
Balance at 31 December 2022 1,111 1,325 13 4 (369) (23) 2,061
SIX MONTHS ENDED
31 DECEMBER 2021
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVES
SHARE-
BASED
COMPEN-
SATION
RESERVE
RE-
VALUATION
RESERVE
FOREIGN
CURRENCY
TRANS-
LATION
RESERVETOTAL
UNAUDITED$M$M$M$M$M$M$M
Balance at 1 July 2021 1,084 779 (63) 3 (288) (23) 1,492
Net earnings for the period – 179 – – – – 179
Other comprehensive income/(loss)
for the period – – 31 – (3) – 28
Total comprehensive income/(loss)
for the period – 179 31 – (3) – 207
Contributions by, and distributions to,
owners:
Dividends – (233) – – – – (233)
Supplementary dividends – (23) – – – – (23)
Tax credit on supplementary
dividends – 23 – – – – 23
Dividend reinvestment plan 8 – – – – – 8
Issuance of shares under share
schemes 4 – – – – – 4
Other transfers (1) – – – – – (1)
Total transactions with owners for
the period 11 (233) – – – – (222)
Balance at 31 December 2021 1,095 725 (32) 3 (291) (23) 1,477
Page 05
Spark New ZealandInterim financial statements
Statement of cash flows
FOR THE SIX MONTHS ENDED 31 DECEMBER
20222021
UNAUDITEDUNAUDITED
NOTES$M$M
Cash flows from operating activities
Receipts from customers 1,975 1,901
Receipts from interest 16 13
Payments to suppliers and employees (1,460) (1,327)
Payments for income tax (120) (93)
Payments for interest on debt (23) (23)
Payments for interest on leases (15) (10)
Payments for interest on leased customer equipment assets (4) (3)
Net cash flows from operating activities8 369 458
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 1 –
Proceeds from sale of business3 894 –
Proceeds from long-term investments– 3
Receipts from finance leases 1 2
Payments for, and advances to, long-term investments (2) (39)
Payments for purchase of property, plant and equipment,
intangibles (excluding spectrum), and capacity (246) (216)
Payments for capitalised interest (5) (3)
Net cash flows from investing activities 643 (253)
Cash flows from financing activities
Net (repayments of)/proceeds from debt (517) 99
Payments for dividends (234) (225)
Payments for leases (31) (33)
Payments for leased customer equipment assets (15) (25)
Net cash flows from financing activities (797) (184)
Net cash flow 215 21
Opening cash position 71 72
Closing cash position 286 93
See accompanying notes to the interim financial statements.
Page 06
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 1 About this report
Reporting entity
These unaudited interim financial statements
are for Spark New Zealand Limited (the
‘Company’) and its subsidiaries (together
‘Spark’ or ‘the Group’) for the six months ended
31 December 2022.
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.
Basis of preparation
The interim financial statements have been
prepared in accordance with Generally
Accepted Accounting Practice in New Zealand
(NZ GAAP) and comply with the New Zealand
equivalent to International Accounting Standard
34: Interim Financial Reporting and International
Accounting Standard 34: Interim Financial
Reporting, as appropriate for profit-oriented
entities.
Except for the implementation of the
amendment to New Zealand equivalents to
International Financial Reporting Standard
(NZ IFRS) 16 Leases, the accounting policies
adopted are consistent with those followed in
the preparation of Spark’s annual financial
statements for the year ended 30 June 2022.
The preparation of the interim financial
statements requires management to make
estimates and assumptions. Spark has been
consistent in applying the estimates and
assumptions adopted in the annual financial
statements for the year ended 30 June 2022.
Certain comparative information has been
updated to conform with the current
year’s presentation.
Financial instruments are either carried at
amortised cost, less any provision for
impairment, or fair value. The only significant
variances between instruments held at
amortised cost and their fair value relate to
long-term debt. There were no changes in
valuation techniques during the period. Spark’s
derivatives are held at fair value, calculated
using discounted cash flow models and
observable market rates of interest and
foreign exchange. This represents a Level 2
measurement under the fair value measurement
hierarchy, being inputs other than quoted prices
included within Level 1 that are observable for
the asset or liability.
At 31 December 2022, capital expenditure
amounting to $466 million (31 December 2021:
$350 million) had been committed under
contractual arrangements.
New and amended standards
Spark has adopted amendments issued for
NZ IFRS 16 Leases which add subsequent
measurement requirements for sale and
leaseback transactions that satisfy the
requirements in NZ IFRS 15 Revenue from
contracts with customers to be accounted for
as a sale. The amendments require a seller-
lessee to subsequently measure lease liabilities
arising from a leaseback in a way that it does
not recognise any amount of the gain or
loss that relates to the right-of-use it retains.
This amendment resulted in the inclusion
of an estimate of variable lease payments
in the measurement of the lease liability
recognised with Connexa Limited (Connexa),
see note 3 for the opening leaseback liability
balances recognised.
Page 07
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 2 Significant transactions and events for the current period
The following significant transactions and events
affected the financial performance and financial
position of Spark for the six month period to
31 December 2022:
Capital expenditure
• Spark’s additions to property, plant and
equipment and intangible assets were
$250 million, details of which are available
in a separate detailed financials file on the
investor section of Spark’s website at:
investors.sparknz.co.nz/investor-centre.
Dividends
• Dividends paid during the six month period
ended 31 December 2022 in relation to the
H2 FY22 second-half dividend (ordinary
dividend of 12.5 cents per share) totalled
$234 million or 12.5 cents per share.
Connexa
• On 14 October 2022, Spark completed the
sale of Connexa (formerly TowerCo) to
Ontario Teachers’ Pension Plan (OTPP) Board
and reinvested in a 30% share of the Connexa
group, through the holding company
FrodoCo Holdings Limited (FrodoCo). A
breakdown of the impact on the Group is
contained within note 3.
• The intention is to use the proceeds from
the sale to; return up to $350 million to
shareholders through an on-market share
buy-back (further details are provided in
note 10), invest a further $350 million in
future growth opportunities and to offset
debt headroom requirements resulting from
the increased lease liability from Spark’s
long-term agreement with Connexa. At
31 December 2022, the excess proceeds had
been used to reduce debt with no drawdowns
on Spark’s bank funding arrangements,
commercial paper significantly reduced to
$40 million and $131 million of cash was held
on deposit.
• On 15 December 2022, Spark announced
that Connexa reached an agreement with
2degrees Mobile (2degrees), to acquire
2degrees’ passive mobile telecommunications
tower assets. Spark will not contribute
equity to the acquisition, which will result in
its shareholding in FrodoCo being diluted
from 30% to approximately 17%. The
transaction is anticipated to occur by the
end of the 2023 calendar year, conditional on
Overseas Investment Office and Commerce
Commission approval.
Spark Sport
• On 16 December 2022, Spark announced
that Television New Zealand will become the
home for the majority of Spark Sport content,
subject to rights holder agreement, from
1 July 2023. As a result, a one-off provision
of $52 million has been recognised in the
period, which includes ongoing obligations
under content rights agreements that extend
to FY28.
Page 08
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 3 Sale of Connexa
During the period Spark sold its subsidiary Connexa which contained its passive mobile tower
assets. Under the terms of the transaction, Spark has entered into a 15 year lease agreement with
Connexa to secure access to existing and new towers. Spark has also retained a 30% interest in the
Connexa group, through the holding company FrodoCo, which is equity accounted for as an
investment in associate.
The effect of the disposal to Spark is set out below:
14 OCTOBER
2022
UNAUDITED
$M
Net cash inflow arising on disposal of subsidiary 911
Less: incremental transaction costs
1
(17)
Net cash flow on sale of business 894
Property, plant and equipment and intangible assets disposed of (94)
Sale and leaseback right-of-use asset recognised 40
Sale and leaseback liability recognised (488)
Investment in the Connexa group
Investment in associate 89
Loans receivable from FrodoCo 148
Less: unearned revenue
2
(5)
Net gain on disposal 584
1 These incremental transaction costs include: success fees, legal fees, consultant fees and additional labour costs.
2 Unearned revenue relates to the sale of additional mobile tower assets which are still under construction. This revenue will
be recognised when these assets are delivered to Connexa, which is expected to occur within the next 12 months.
Impact of sale of Connexa on the statement of financial position as at 31 December 2022
The significant balances included within the statement of financial position as at 31 December 2022
as a result of the Connexa transaction were as follows:
31 DECEMBER
2022
UNAUDITED
DESCRIPTION OF THE BALANCE RELATING TO THE
CONNEXA TRANSACTION$M
Long-term receivables and
prepayments 150 Loans receivable from FrodoCo
Long-term investments 87 Investment in associate
Right-of-use assets
1
41 Sale and leaseback right-of-use asset
Deferred tax assets 126 Deferred tax asset on the lease with Connexa
Short-term lease liabilities
1
(15)Short-term portion of sale and leaseback liability
Long-term lease liabilities
1
(477)Long-term portion of sale and leaseback liability
1 These balances have increased since the transaction date due to additional sites being leased from Connexa between the
transaction date and 31 December 2022.
Page 09
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 4 Segment information
SIX MONTHS ENDED 31 DECEMBER
20222021
OPERATING
REVENUES
PRODUCT
COSTS
PRODUCT
MARGIN
OPERATING
REVENUES
PRODUCT
COSTS
PRODUCT
MARGIN
UNAUDITED$M$M$M$M$M$M
Mobile 732 (255) 477 678 (241) 437
Voice 122 (51) 71 146 (60) 86
Broadband 313 (164) 149 324 (158) 166
Cloud, security and service
management 214 (54) 160 224 (48) 176
Procurement and partners 319 (292) 27 301 (275) 26
Managed data, networks
and services 142 (78) 64 140 (75) 65
Other products
1
104 (55) 49 61 (28) 33
Segment results 1,946 (949) 997 1,874 (885) 989
1 Other products includes revenue from Entelar Group, Qrious, Internet of Things, Spark Sport and exchange building
sharing arrangements.
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 results exclude other
gains, labour, operating expenses, finance income and expense, depreciation and amortisation, net
investment income and income tax expense, as these are assessed at an overall Group level by the
Chief Executive.
NOTE 3 Sale of Connexa (continued)
Deferred tax assets and income tax credit
Due to the difference between the right-of-use assets and lease liabilities recognised at the date of
the transaction, a non-cash deferred tax asset of $126 million was recognised, with a corresponding
adjustment to tax income. As noted in the statement of cash flows on page 6, payments for income
tax in H1 FY23 were $120 million (H1 FY22: $93 million).
Assignment of ground leases
As part of the transaction, Spark assigned its ground leases for the mobile sites to be sold to
Connexa. As a result, Spark remeasured these lease liabilities to the next right of renewal as at this
point these leases will be novated to Connexa. This resulted in a $51 million reduction of the lease
liabilities and right-of-use assets which were held for sale. On the sale of Connexa the right-of-use
assets were replaced with finance lease receivables equal to the lease liabilities which were
transferred back from held for sale.
Page 10
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 4 Segment information (continued)
Reconciliation from segment product margin to consolidated net earnings before income tax
SIX MONTHS ENDED 31 DECEMBER20222021
UNAUDITED$M$M
Segment product margin 997 989
Other gains
Net gain on sale of Connexa 584 –
Gain on lease modifications and terminations 4 16
Labour (269) (263)
Other operating expenses
Network support costs (45) (44)
Computer costs (57) (55)
Accommodation costs (40) (30)
Advertising, promotions and communication (33) (34)
Bad debts (4) (3)
Impairment expense– (2)
Spark Sport provision (52)–
Other (43) (36)
Earnings before finance income and expense, income tax, depreciation,
amortisation and net investment income (EBITDAI) 1,042 538
Finance income
Finance lease interest income 4 6
Other interest income 12 8
Finance expense
Finance expense on long-term debt (22) (23)
Other interest and finance expenses (7) (4)
Lease interest expense (15) (10)
Leased customer equipment interest expense (4) (3)
Capitalised interest 5 3
Depreciation and amortisation expense
Depreciation - property, plant and equipment (114) (116)
Depreciation - right-of-use assets (36) (40)
Depreciation - leased customer equipment assets (19) (18)
Amortisation - intangible assets (79) (83)
Net investment income
Share of associates’ and joint ventures’ net losses (3) (1)
Interest income on loans receivable from associates and joint ventures 2 –
Net earnings before income tax 766 257
Page 11
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 5 Non-GAAP measures
Spark uses non-GAAP financial measures that are not prepared in accordance with 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.
Earnings before finance income and expense, income tax, depreciation, amortisation and net
investment income (EBITDAI)
Spark calculates EBITDAI by adding back finance expense, depreciation and amortisation and
income tax expense and subtracting finance income and net investment income (which includes
Spark’s share of net profits or losses from associates and joint ventures, interest income on loans
receivable from associates and joint ventures and dividend income) to net earnings. A reconciliation
of Spark’s EBITDAI and adjusted EBITDAI is provided below and based on amounts taken from, and
consistent with, those presented in these interim financial statements.
SIX MONTHS ENDED 31 DECEMBER20222021
UNAUDITED$M$M
Net earnings for the period reported under NZ IFRS 837 179
Less: finance income (16) (14)
Add back: finance expense 43 37
Add back: depreciation and amortisation 248 257
Less: net investment income 1 1
Add back: tax (income)/expense (71) 78
EBITDAI 1,042 538
Adjusted EBITDAI and adjusted net earnings
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. In the six months ended 31 December 2022 the net gain on sale of Connexa of
$584 million and the one off provision of $52 million for Spark Sport as described in note 2 were
deemed significant items to adjust. There were no significant items to adjust for the six months
ended 31 December 2021.
SIX MONTHS ENDED 31 DECEMBER20222021
UNAUDITED$M$M
EBITDAI 1,042 538
Less: gain on sale of Connexa (584)–
Add: Spark Sport provision 52 –
Adjusted EBITDAI 510 538
SIX MONTHS ENDED 31 DECEMBER20222021
UNAUDITED$M$M
Net earnings for the period reported under NZ IFRS 837 179
Less: gain on sale of Connexa (584)–
Add: Spark Sport provision 52 –
Less: tax effect of gain on sale of Connexa and Spark Sport provision (140)–
Adjusted net earnings 165 179
Page 12
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 6 Long-term investments
AS AT
31 DECEMBER
AS AT
30 JUNE
20222022
UNAUDITEDAUDITED
Measurement basis$M$M
Shares in HutchisonFair value through other
comprehensive income 79 105
Investment in associates and
joint ventures
Equity method
190 101
Other long-term investmentsCost 6 6
275 212
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 31 December 2022 the quoted price of Hutchison’s shares on the ASX was
AUD$0.055 (30 June 2022: AUD$0.070). The decrease in fair value of $26 million is recognised
in other comprehensive income (30 June 2022: $55 million decrease).
Included within investment in associates and joint ventures is $87 million for Spark’s investment in
the Connexa group, see note 3 for further details.
Investment in associates and joint ventures
Spark’s investment in associates and joint ventures at 31 December 2022 consists of the following:
NAMETYPECOUNTRYOWNERSHIPPRINCIPAL ACTIVITY
Adroit Holdings LimitedAssociate New Zealand47%Environmental IoT
solutions
Flok LimitedAssociate New Zealand38%Hardware and software
development
FrodoCo Holdings Limited
1
Associate New Zealand30%A holding company for
Connexa
Hourua Limited
2
Joint VentureNew Zealand50%Delivering the Public
Safety Network
Pacific Carriage Holdings
Limited, Inc.
AssociateUnited States41%A holding company
Rural Connectivity Group LimitedJoint VentureNew Zealand33%Rural broadband
Southern Cross Cables Holdings
Limited
AssociateBermuda41%A holding company
TNAS LimitedJoint VentureNew Zealand50%Telecommunications
development
1 Parent company for Connexa.
2 Spark and Vodafone established Hourua Limited to provide priority cellular services to the Public Safety Network which is
the new communications service that will be used by New Zealand’s frontline emergency responders.
Page 13
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 7 Debt
AS AT
31 DECEMBER
AS AT
30 JUNE
20222022
COUPON
RATE
UNAUDITEDAUDITED
FACE VALUEFACILITYMATURITY$M$M
Short-term debt
Commercial paperVariable< 2 months 40 160
40 160
Supplier financing arrangements
1
Amounts with a term less than
six months8.33%< 6 months– 19
Amounts due within one yearVariable< 2 years 8 14
Amounts due in more than a
yearVariable< 2 years 11 9
19 42
Bank funding
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
Domestic notes
100 million NZD4.51%10/03/2023 100 100
125 million NZD3.37%07/03/2024 121 122
125 million NZD3.94%07/09/2026 114 117
100 million NZD
3
4.37%29/09/2028 100 100
435 439
Foreign currency Medium Term Notes
Australian Medium Term Notes - 100 million AUD1.90%05/06/2026 95 97
Australian Medium Term Notes - 150 million AUD4.00%20/10/2027 151 158
Australian Medium Term Notes – 125 million AUD2.60%18/03/2030 109 113
Norwegian Medium Term Notes - 1 billion NOK
4
3.07%19/03/2029 151 152
506 520
1,000 1,526
Debt due within one year 148 293
Long-term debt 852 1,233
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 or
pay 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.
Page 14
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 7 Debt (continued)
There have been no changes in Spark’s short-term financing programmes, long-term financing
programmes or stand-by facilities since 30 June 2022. Excess proceeds from the Connexa
transaction were used to repay all bank funding in the period, see note 3 for further details.
The fair value of long-term debt, including long-term debt due within one year, based on market
observable prices, was $968 million compared to a carrying value of $960 million as at 31 December
2022 (30 June 2022: fair value of $1,359 million compared to a carrying value of $1,347 million).
AS AT
31 DECEMBER
AS AT
30 JUNE
20222022
UNAUDITEDAUDITED
$M$M
Total debt 1,000 1,526
Less short-term debt (40) (179)
Total long-term debt (including long-term debt due within one year) 960 1,347
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:
AS AT
31 DECEMBER
AS AT
30 JUNE
20222022
UNAUDITEDAUDITED
$M$M
Cash (286) (71)
Short-term debt at face value 40 179
Long-term debt at face value 1,033 1,417
Net debt at face value 787 1,525
To retranslate debt balances at swap rates where hedged by currency swaps 11 (3)
Net debt at hedged rates
1
798 1,522
Non-cash adjustments
Impact of fair value hedge adjustments
2
12 10
Unamortised discount – (1)
Net debt at carrying value 810 1,531
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.
Page 15
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 8 Reconciliation of net earnings to net cash flows from operating activities
SIX MONTHS ENDED 31 DECEMBER20222021
UNAUDITED$M$M
Net earnings for the period 837 179
Adjustments to reconcile net earnings to net cash flows from operating
activities
Depreciation and amortisation 248 257
Bad and doubtful accounts 5 5
Deferred income tax (147) (14)
Share of associates’ and joint ventures’ net losses 3 1
Impairments– 2
Gain on lease modifications and terminations (4) (16)
Net gain on sale of Connexa (584)–
Other (4)–
Spark Sport provision 52 –
Changes in assets and liabilities net of effects of non-cash and investing
and financing activities
Movement in receivables and related items (4) (16)
Movement in inventories (1) (29)
Movement in current taxation (44) 1
Movement in payables and related items 12 88
Net cash flows from operating activities 369 458
Page 16
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 9 Dividends
On 22 February 2023, the Board approved the payment of a first half ordinary dividend of 13.5 cents
per share or approximately $253 million. The dividend will be 100% imputed. In addition,
supplementary dividends totalling approximately $26 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.
H1 FY23
ORDINARY DIVIDENDS
Dividends declared
Ordinary shares13.5 cents
American Depositary Shares
1
42.17 US cents
Imputation
Percentage imputed100%
Imputation credits per share5.2500 cents
Supplementary dividend per share
2
2.3824 cents
‘Ex’ dividend dates
New Zealand Stock Exchange16/03/2023
Australian Securities Exchange16/03/2023
American Depositary Shares 15/03/2023
Record dates
New Zealand Stock Exchange17/03/2023
Australian Securities Exchange17/03/2023
American Depositary Shares 16/03/2023
Payment dates
New Zealand and Australia 6/04/2023
American Depositary Shares 17/04/2023
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 H1 FY23, these are based on the exchange rate at 17 February 2023 of NZ$1 to US$0.6247
and a ratio of five ordinary shares per one American Depositary Share. The actual exchange rate used for conversion is
determined in the week prior to payment when the Bank of New York performs the physical currency conversion.
2 Supplementary dividends are paid to non-resident shareholders.
Dividend Reinvestment Plan
The Company has a dividend reinvestment plan under which shareholders can elect to receive
dividends in additional shares. For the six months ended 31 December 2022 no shares were issued
(31 December 2021: shares with a total value of $8 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 H1 FY23 dividend and for the
foreseeable future.
Page 17
Spark New ZealandInterim financial statements
Notes to the interim financial statements
NOTE 10 Events occurring after the reporting period
On 22 February 2023, Spark New Zealand Limited announced that it has allocated up to
NZ$350 million to undertake an on-market share buy-back that will commence after the Investor
Strategy Briefing on 5 April 2023. The shares will be acquired on the NZX and ASX, at prices that
are in line with the prevailing market price from time to time during the period of the buy-back.
Spark reserved the right to vary, suspend without notice, or terminate the buy-back programme at
any time.
Page 18
Spark New ZealandInterim financial statements
Independent Auditor’s Review Report
to The Shareholders of Spark New Zealand Limited
Conclusion
We have reviewed the condensed consolidated interim financial statements (‘interim financial
statements’) of Spark New Zealand Limited (‘the Company’) and its subsidiaries (‘the Group’) which
comprise the statement of financial position as at 31 December 2022, and, the statement of profit or
loss and other comprehensive income, statement of changes in equity and statement of cash flows
for the six months ended on that date, and a summary of significant accounting policies and other
explanatory information on pages 3 to 18.
Based on our review, nothing has come to our attention that causes us to believe that the interim
financial statements of the Group do not present fairly, in all material respects, the financial position
of the Group as at 31 December 2022 and its financial performance and cash flows for the six
months ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34
Interim Financial Reporting.
Basis for Conclusion
We conducted our review in accordance with NZ SRE 2410 (Revised) Review of Financial Statements
Performed by the Independent Auditor of the Entity (‘NZ SRE 2410 (Revised)’). Our responsibilities
are further described in the Auditor’s Responsibilities for the Review of the Interim Financial
Statements section of our report.
We are independent of the Group in accordance with the relevant ethical requirements in
New Zealand relating to the audit of the annual financial statements, 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 the regulatory
audit, other assurance related services (such as trustee reporting), compliance services and non-
assurance services provided to the Corporate Taxpayer Group. 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 Company and its subsidiaries and this matter has not impacted our
independence. Also, partners and employees of our firm deal with 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.
Directors’ responsibilities for the interim financial statements
The directors are responsible on behalf of the Company for the preparation and fair presentation of
the interim financial statements in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34
Interim Financial Reporting and for such internal control as the directors determine is necessary to
enable the preparation and fair presentation of the interim financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s responsibilities for the review of the interim financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review.
NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our attention that
causes us to believe that the interim financial statements, taken as a whole, are not prepared, in all
material respects, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim
Financial Reporting.
Page 19
Spark New ZealandInterim financial statements
A review of the interim financial statements in accordance with NZ SRE 2410 (Revised) is a limited
assurance engagement. We perform procedures, primarily consisting of making enquiries, primarily
of persons responsible for financial and accounting matters, and applying analytical and other
review procedures. The procedures performed in a review are substantially less than those
performed in an audit conducted in accordance with International Standards on Auditing
(New Zealand) and consequently do not enable us to obtain assurance that we might identify in an
audit. Accordingly, we do not express an audit opinion on the interim financial statements.
Restriction on use
This report is made solely to the Company’s shareholders, as a body. Our review has been
undertaken so that we might state to the Company’s shareholders those matters we are required to
state to them in a review 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 engagement, for this report, or for the conclusions we have formed.
Jason Stachurski, Partner
for Deloitte Limited
Auckland, New Zealand
22 February 2023
Page 20
Spark New ZealandInterim financial statements
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
Paige Howard-Smith
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 enquiries)
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 enquiries)
Fax +61 2 9287 0303
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
Spark New Zealand Limited
ARBN 050 611 277
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
For more information
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
insight
creative.co.nz
SPARK071 02/23
Page 21
Spark New ZealandInterim financial statements
investors.sparknz.co.nz
ARBN 050 611 277
---
SPARK
PAGE
2
Results overview
SPARK
$2,534m
34.1% increase vs. reported H1 FY22
$1,042m
93.7% increase vs. reported H1 FY22
$837m
NM vs. reported H1 FY22
REPORTED REVENUE
(1)
REPORTED EBITDAIREPORTED NPAT
$1,950m
3.2% increase vs. reported H1 FY22
$510m
(5.2%) decrease vs. reported H1 FY22
$165m
(7.8%) decrease vs. reported H1 FY22
ADJUSTED REVENUE
(1)(2)
ADJUSTED EBITDAI
(2)(3)
ADJUSTED NPAT
(2)
$250m
14.7% increase vs. H1 FY22
$115m
(29.9%) decrease vs. H1 FY22
$13.5c
Total FY23 dividend guidance confirmed at 27.0cps
CAPEX
(3)
FREE CASH FLOWH1 FY23 DIVIDEND
Reported revenue and earnings growth driven by TowerCo sale, with a challenging operating environment impacting adjusted
performance
PAGE
3
H1 FY23 financial snapshot
(1)
Operating revenues and other gains
(2)
EBITDAI is adjusted for the impact of TowerCogain on sale of $584m included in revenue and the Spark Sport provision of $52m included in operating expenses. Net EBITDAI impact of $532m. NPAT is further adjusted for the tax effect of the Spark Sport provision $14m
and a credit to tax expense of $126m arising fromthe TowerCotransaction
(3)
Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) and capital expenditure (CAPEX) are non-Generally Accepted Accounting Principles (non-GAAP) performance measures that are defined in note 5 of
Spark’s interim financial statements and note 2.5 of Spark’s 2022 Annual Report
SPARK
EFFECTIVE PORTFOLIO
MANAGEMENT DELIVERING
SHAREHOLDER VALUE
•Strategic divestment of a majority stake in Spark’s passive mobile infrastructure assets resulted in reported revenue, EBITDAI, and NPAT growth
•TowerCo transaction delivered proceeds of $911 million
(1)
and a net gain on sale of $584 million
•Decision to exit the sports streaming market resulted in a one-off provision of $52 million – enabling Spark to focus future capital investment in growth
areas with nearer-term returns
•The resulting net gain of the tower transaction and sport exit was $532 million, driving a 34.1% increase in reported revenueto$2,534 million, a 93.7%
increase in reported EBITDAI to $1,042 million, and an increase in reported NPAT to $837 million
•Commencing on-market share buy-back following Spark’s 5 April 2023 Investor Strategy Briefing to return up to $350 million of proceeds from TowerCo
transaction to shareholders (subject to market conditions)
•Spark will also invest $350 million for growth, with ~$90-$110 million of incremental investment in digital infrastructure and emerging technologies in FY23
•Declared an H1 FY23 dividend of 13.5 cents, 100% imputed and confirmed total FY23 dividend guidance of 27.0cps, 100% imputed
CHALLENGING
OPERATING
ENVIRONMENT
•Like all businesses, Spark is navigating uncertain economic conditions as New Zealanders and businesses adapt to the inflationary environment
•Since the conclusion of the half this has been compounded for many communities by recent extreme weather events.Spark has been focused on supporting
its customers and restoring services with urgency.While Spark’s services were affected, this was largely due to power outages and fibre cuts – with
mobile infrastructure remaining intact
•Within the half, while core products and services remained resilient, higher product costs and intensifying broadband and cloud competition contributed to
margin pressure in the half, with adjusted EBITDAIdown 5.2% to $510 million and adjusted NPAT down 7.8% to $165 million
•Adjusted revenues increased 3.2% to $1,950 million, largely driven by standout mobile performance, with mobile service revenue up 8.8% as roaming
revenues return, and data-driven marketing differentiates Spark in the market
•Future markets are well positioned for growth, with healthcare sector digitisation expected to accelerate as public sector reforms progress, and Spark IoT
continuing to scale – reaching the milestone of 1.2 million connections during the half
•While broadband remains challenging with ongoing price competition and rising access prices further squeezing margins, Spark is on track to meet its target
of 30% of its baseon wireless by end FY23 – hitting ~29% in the first half
•As reported in the FY22 results, the scaling of public cloud in New Zealand resulted in a repricing of private cloud, reducing revenues and eroding margins.
Spark is focussed on accelerating simplification and meeting customer demand for hybrid cloud environments while investing innew data centre assets
PAGE
4
Results summary
Effective portfolio management enabling shareholder returns in tough economic environment
(1)
Proceeds before transaction costs of $17m
SPARK
PAGE
5
$480m
8.8% increase vs. H1 FY22
$313m
(3.4%) decrease vs. H1 FY22
$214m
(4.5%) decrease vs. H1 FY22
MOBILE SERVICE
REVENUE
BROADBAND
REVENUE
CLOUD, SECURITY AND
SERVICE MANAGEMENT REVENUE
Continued strong mobile performance with ARPU
and connection growth across pay monthly and pre-
paid, and roaming returning to more than 75% of
pre-Covid levels
Price refresh and scaling of precision marketing
into broadband portfoliomaintaining connection
base in line with strategy
Cloud mix-shift trend continues, with volume growth
in lower-margin public cloud and co-location being
offset by lower private cloud volumes and repricing
Simplification combined with data-driven marketing
resulting in ~10% increase in the proportion of
Spark’s mobile customers on Endless plans
Inflationary input cost increases, higher fibre base,
and retail competition squeezed margins.
Benefits of Spark’s pass through of input cost
increases is expected to flow through in H2
Managed services revenue impacted by
lower project and transition activity
Return of roaming combined with strong growth in
data usage driving increased total ARPU up $1 YoY
across entire mobile portfolio
On track to achieve FY23 aspiration of ~30% of
broadband base on wireless, reaching ~29%
during the half
Focus on improving performance in second half
through launch of enhanced hybrid cloud solutions
and bringing Enterprise Service Management
proposition to market
Established market performance
Standout performance in mobile, while competitive pressures squeezed margins in broadband and cloud
SPARK
SPARK IoT
•Achieved milestone of one million connected devices, with connections up 39% to 1.2 million
•Revenue up 21% YoY driven by continued strong connectivity growth and increased solutions revenue across multiple sectors –
including energy, industry, property, transport, food, forestry, and agriculture
•Implemented pilot with Christchurch City Council and Fire Emergency NZ in Bottle Lake Forest in response to challenges of a
warming climate – utilising sensors to detect fire risk and enabling a faster emergency response
SPARK HEALTH
•Digital health revenues maintained with digital transformation opportunities expected to grow as public health reforms progress
•Continue to target growth through core services and digital transformation projects in the private and public sectors
•Kete Waiora (Digital Health Platform) Health Wearables integration enabling individual health data to be captured in a personal
health record and shared with healthcare providers
SPARK SPORT
•Decision to exit sports streaming market announced during the half, as content rights costs continue to escalate
•Content partnership agreed with TVNZ, with the broadcaster taking the majority of Spark Sport content from 1 July 2023
(1)
•A one-off provision of $52 million has been recognised in H1 FY23, which includes ongoing obligations under content rights
agreements that extend from FY24 to FY28
PAGE
6
H1 FY23 future market performance
Strategic decision to exit sports streaming market to enable more focussed future growth investment ahead
(1)
Subject to rights holder agreement
SPARK
SIMPLE, INTUITIVE
CUSTOMER
EXPERIENCES
•Simplification continues with a further 81,000 customer mobile and broadband lines migrated to new plans
•‘Team Up’ mobile proposition launched, with take up and ARPU performance ahead of expectations since launch
•Roaming usage tracking now available in the Spark App, making it easier for customers to manage data while traveling
DEEP
CUSTOMER
INSIGHTS
•Data-driven marketing continues to reduce acquisition costs and improved conversion by ~17% YoY
•More than half of all marketing campaigns now automated – on track to cover 80% by end FY23
•Data and AI capability now being rolled out in business segment to improve returns
SMART,
AUTOMATED
NETWORK
•5G rollout on track for FY23 target with 64 5G locations now live across thecountry and 5G Standalone trials underway
•$24m of fundingcommittedto support rural connectivity in return for the allocation ofC-band spectrum
•New joint venture established, Hourua, awarded contract to provide priority cellular services to the Public Safety Network
•Data centre investment at Takanini progressing to plan and expected to complete in second half
•Connexa reaches agreement to acquire 2degrees’ passive mobile tower assets – further improving network economics in the future
GROWTH
MINDSET
•Gender pay gap at 22%, a 1pp YoY improvement, with females representing 33% of Spark’s workforce
•Achieved employee Net Promoter Score of +70
•Spark recognised with the Diversity and Inclusion Leadership Award at the Deloitte Top 200
PAGE
7
Core capabilities laying foundations for next phase of strategy
Continued to build differentiation in the market through capability-led strategy
SPARK
CREATE A
SUSTAINABLE SPARK
•Ongoing progress towards gender diversity targets
•Provisional scope 1 and 2 emissions down ~35% vs H1 FY22 to7,500tonnesCO2e, driven by higher share ofrenewables in
national electricity generation. These reductions bring our emissions on track with our SBTi target pathway
•FY22 S&P Corporate Sustainability Assessment score increased to top quartile, with Spark accepted into the Dow Jones
Sustainability Australia Index
ECONOMIC RECOVERY
ANDTRANSFORMATION
•Research launched into the role digital technology can play in addressing Aotearoa’s climate change – highlighting cross-sector
actions that could reduceannual emissions 7.2 Mt by 2030, equivalent to 42% of emissions budget targets
•Accelerated 5G rollout on track and spectrum allocation to recycle investment into improved rural connectivity
•Continued to invest in rural connectivity with over400 Rural Connectivity (RCG) sites now live, including59 new sites in the half
CHAMPION
DIGITAL EQUITY
•~25,000active Skinny Jump connections supporting low-income households to access the digital world
•Spark Foundationfunded 'Te Au Hangarau: The Wave of Technology' research launched – exploring how the technology industry
can increase Māori participation and progression
•‘ALL IN’ digital equity eventfor Spark people generated significant number of ideas to increase digital equity, with the top 3
prioritised for action in FY24 and beyond
PAGE
8
Continual ESG improvements underpinning sustainable growth
Spark now placed in top quartile of S&P Corporate Sustainability Assessment benchmark
SPARK
PAGE
9
FY23 indicators of success
Strategic PillarFocus AreaMeasureTarget 30 June 2023Status
World class capability
Customer experienceConsumer and small business iNPS+6 point liftOn Track
Data driven insightsUplift in data-driven marketing campaign conversion15%
(1)
Exceeding
Smart automated networks5G roll out40-50 locations
(2)
On Track
Growth mindsetseNPS+70On Track
Grow established
markets
WirelessMobile service revenue growth5-8%Exceeding
BroadbandPercentage of broadband base on wireless~30%On Track
CloudCloud, security and service management revenue growth2-5%Off Track
Accelerate future markets
Spark IoTNumber of connected IoT devices~1.2m connectionsExceeding
Spark Health
Growth in Spark Health Digital Platform Revenues
10-15%
(3)
Improvement Needed
Lowest cost providerDeliver best costEBITDAI margin~31%On Track
Build a sustainable future
Championing
digital equity
Skinny Jump connections+5kImprovement Needed
Sustainable
Spark
Reduction in scope 1 and 2 emissions year-on-year to hit
SBTi emissions reduction pathway
18.6% reductionOn Track
(1)
Spark consumer base
(2)
Contingent on NZ Government allocation of C-band spectrum
(3)
Excluding procurement and telco revenues
Key indicators largely on track, with performance lift required in cloud and health
SPARK
PAGE
10
Financials
SPARK
$2,534m
Up $644m or 34.1%
vs. H1 FY22
REPORTED REVENUE
GROWTH
(1)
•Reported revenue includes $584m gain on sale as a result of divestment of majority stake in passive mobile infrastructure
$1,492m
Up $140m or 10.4%
vs. H1 FY22
REPORTED OPEX
GROWTH
•Reported operating expenses includes $52m provision for exit of Spark Sport
•The provision represents ongoing obligations under content rights agreements that extend from FY24 to FY28
$1,042m
Up $504m or 93.7%
vs. H1 FY22
REPORTED EBITDAI
GROWTH
•Reported EBITDAI includes a net impact of $532m for TowerCo sale and Spark Sport provision
$837m
Up $658m
vs. H1 FY22
REPORTED NPAT
GROWTH
•NPAT is adjusted for the tax effect of the Spark Sport provision of $14m and credit to tax expense of $126m arising out of
the TowerCo transaction
PAGE
11
H1 FY23 reported financial performance summary
Reported financials include significant impacts from TowerCo sale and Spark Sport TVNZ content partnership agreement
(1)
Operating revenues and other gains
SPARK
$1,950m
Up $60m or 3.2% vs.
reported H1 FY22
ADJUSTED REVENUE
GROWTH
(2)
Revenue growth driven by:
•Outstanding performance in mobile
•Growth in procurement related software licencing revenues for health sector
•Higher other operating revenues through growth in new businesses
$1,440m
Up $88m or 6.5% vs.
reported H1 FY22
ADJUSTED OPEX
GROWTH
Increase in Opex driven by:
•Increased product costs to support mobile and procurement growth and higher sport content costs
•Higher other operating expenses reflecting post Covid normalisation
•Higher labour expense due to the acquisition of Connect 8
$510m
Down $28m or (5.2%) vs.
reported H1 FY22
ADJUSTED EBITDAI
GROWTH
EBITDAI impacted by growth in mobile being offset by:
•Declines in business segment, broadband, and return to normal calling behaviours post Covid
•Reinvestment of cost out benefits in support of future growth
$165m
Down $14m or (7.8%) vs.
reported H1 FY22
ADJUSTED NPAT
GROWTH
NPAT decreased due to:
•Lower EBITDAI
•Partially offset by lower tax expense in line with decrease in earnings
$115m
Down $49m or (29.9%) vs.
reported H1 FY22
FREE CASH FLOW
Free cash flow impacted by:
•Lower EBITDAI
•Phasing of capex
•Timing of tax payments
•Remain committed to FY23 free cash flow aspiration of ~$460m-$500m however expect to be lower in the range
$13.5c
Up 1.0c or 8% vs.
reported H1 FY22
H1 FY23 DIVIDEND
•H1 FY23 dividend of 13.5cps, 100% imputed
•Total FY23 dividend guidance confirmed at 27.0cps, 100% imputed
•Commencing on-market buy-back to return up to $350m of proceeds from TowerCo transaction to shareholders
(3)
PAGE
12
H1 FY23 adjusted financial performance summary
(1)
(1)
Adjusted financial performance excludes the impacts of TowerCotransaction and Spark Sport provision
(2)
Operating revenues and other gains
(3)
Buy-back to commence after Spark’s April 2023 investor Strategy Briefing (subject to market conditions)
Adjusted results reflect challenging operating conditions and uncertain economic environment
SPARK
PAGE
13
Financials
REPORTED
H1 FY22
$m
REPORTED
H1 FY23
$m
CHANGEREPORTED
H1 FY22
$m
ADJUSTED
H1 FY23
$m
CHANGE
Operating revenues and other gains1,8902,53434.1%1,8901,9503.2%
Operating expenses(1,352)(1,492)(10.4%)(1,352)(1,440)(6.5%)
EBITDAI5381,04293.7%538510(5.2%)
Finance income141614.3%141614.3%
Finance expense(37)(43)(16.2%)(37)(43)(16.2%)
Depreciation and amortisation(257)(248)3.5%(257)(248)3.5%
Net investment income(1)(1)-%(1)(1)-%
Net earnings before tax expense257766NM257234(8.9%)
Tax expense(78)71NM(78)(69)11.5%
Net earnings after tax expense179837NM179165(7.8%)
Capital expenditure
(1)
21825014.7%21825014.7%
Free cash flow164115(29.9%)164115(29.9%)
EBITDAI margin28.5%41.1%12.6pp28.5%26.2%(2.3pp)
Effective tax rate30.4%(9.3%)(39.7pp)30.4%29.5%(0.9pp)
Capital expenditure to operating revenues and other gains11.5%9.9%(1.6pp)11.5%12.8%(1.3pp)
Basic Earnings per Share9.6c44.7c35.1c9.6c8.8c(0.8c)
Total Dividend per Share12.5c13.5c1.0c12.5c13.5c1.0c
(1)
Excluding expenditure on mobile spectrum
SPARK
$1,950m
3.2% increase vs. reported H1 FY22
ADJUSTED REVENUE
(1)
•Strong performance in mobile boosted bya $20mincrease inroaming revenues in the half
(3)
•Procurement growth driven by strong software sales, particularly in health
•Increase in other operating revenue primarily attributed to:
•100% acquisition of Connect8 in February 2022;
•Higher Spark Sport and Spark IoT revenues; and
•New Public Safety Network (Hourua) revenue
•Cloud, security and service management declined as mix shift towards public cloud continues, combined with managed services decline
•Broadband revenue impacted by adoption of lower ARPU plans following FY22 plan refresh and competitive landscape
•Voice revenue declined as calling volumes normalised post the extended Covid lockdown in H1 2022
•Decrease in other gains of $12m due to prior period gain relating to property leases
$1,440m
6.5% increase vs. reported H1 FY22
ADJUSTED OPEX
(2)
•Operating expenses up YoY as targeted cost out benefits continue to be reinvested in growth areas
•Overall increase in product costs to support mobile and procurement revenue growth, and increases in other product costs attributed to:
•Higher Spark Sport content costs
•Onboarding of Connect8 cost base
•Increase in labour primarily driven by full acquisition of Connect8
•Increase in other operating expenses due to increased maintenance for sites not able to be accessed during lockdowns and increased electricity costs
PAGE
14
H1 FY23 operational performance summary
(1)
Operating revenues and other gains. Adjusted for the impact of TowerCo gain on sale $584m
(2)
Adjusted for Spark Sport Provision $52m
(3)
Outbound roaming of $20m reported in mobile service revenue and $4m of inbound revenue reported in non-service revenue
Adjusted revenue increase driven by standout performance in mobile
SPARK
PAGE
15
Second half performance outlook
Remain committed to delivering FY23 EBITDAI guidance of $1,185m-$1,225m
(1)
, now expected to be lower in the range
(1)
Subject to no material change in operating outlook and excludes gain on sale for TowerCotransaction and impact of Spark Sport provision
Spark’s seasonal weighting of earnings to the second half combined with mobile roaming tailwinds, further stabilisation in
broadband, and continued cost discipline will support delivery of FY23 EBITDAI guidance
MOBILE SERVICE
REVENUE
•Ongoing strength in mobile with return of roaming accelerating towards 100% of pre-Covid levels
BROADBAND
•Targeting stabilisation in revenues
•Benefits of price increases implemented during H1 FY23 to offset inflationary input costs expected to flow through in H2 FY23
•Continue to target ongoing growth in wireless broadband to reduce cost and improve margins
VOICE
•Slowdown in rate of decline expected in H2 FY23 due to less elevated calling volumes in H2 FY22 as Covid subsided
CLOUD, SECURITY AND
SERVICE MANAGEMENT
•Unlikely to achieve revenue aspiration of ~2-5% due to ongoing competitive pressure in cloud and lower service management project activity
•New data centre infrastructure capacity to come online
OTHER REVENUES
AND GAINS
•Ongoing opportunities for equipment sales through normal management and life-cycling of network equipment
OPEX
•Continue to approach targeted cost out and tight management of discretionary spend to insulate from ongoing macro-economic uncertainty
SPARK
PAGE
16
H1 FY23 capital investment
•H1 FY23 capital investment of $250m
(1)
up $32m vs. H1 FY22
•Upweight offirst half capital investment primarily in support of Takanini
data centre expansion
•To t a l growth capex for FY23 now expected to be ~$145-$165m, an increase
of ~$90-$110m to be funded from To w e r C oproceedsand invested in:
•Uplift in data centre investment
•Accelerated 5G standalone rollout
•Additional investment in multi-access edge compute
•Investment in growth capex will deliver returns in line with Spark’s Capital
Management Framework
•As a result FY23 capital investment guidance is updated to ~$520m
•An update on the balance of the proceeds retained from the sale of
To w e r C o(~$240-$260m) allocated for future capital investment will be
provided as part of Spark’s upcoming investor strategy briefing
Capital expenditure ($m)H1 FY22H1 FY23
Cloud711
Converged Communications Network (CCN)1116
International cable construction and capacity purchases1-
IT systems8762
Mobile network7469
Core sustain and resiliency2636
Data centres950
Other36
Capital expenditure excluding mobile spectrum218250
Total capital expenditure to operating revenue and other gains11.5%9.9%
Maintenance capex197200
Growth capex2150
(1)
Excluding expenditure on mobile spectrum. Capital expenditure is a non-GAAP measure and is defined in Note 2.5ofSpark’s2022 Annual Report
FY23 capital investment guidance updated with an additional ~$90-$110m capital investment committed in H2 FY23 funded
by To w e r C oproceeds
SPARK
PAGE
17
H1 FY23 freecash flow
•Free cash flow of $115m down $49m vs. H1 FY22
•H1 FY23 free cash flow impacted by:
•$28m lower EBITDAI
•$27m higher tax payments due to timing (with a lower
final tax payment in H1 FY22 relating to the FY21 year)
•H2 FY23 free cash flow expected to be driven by:
•EBTIDAI growth driven by mobile and stabilisation in
broadband and voice;
•Timing of tax payments normalising; and
•Managing maintenance capital expenditure in line with
plan
•Remain committed to FY23 free cash aspiration of ~$460m-
$500m, but now expect to be lower in the range
•Year to date change in working capital, an improvement of
$30m
(1)
, primarily driven by timing of software licencing and
billing
(2)
Delivered free cash flow of $115m with cash conversion of 102%
1,042
115
(536)
(26)
(120)
(45)
(200)
200
400
600
800
1,000
1,200
EBITDAIOther Gains &
Provisions
Net InterestTaxLeasesMaintenance
Cash Capex
Free Cash Flow
H1 FY23 Free Cash Flow Summary ($m)
(1)
Working capital is not included in Spark’s calculation of free cash flow. The calculation of free cash flow is defined within the ‘cash flows’ worksheet of the H1 FY23 detailed financials
(2)
In H1 FY22 $66m of software licenses werebilled in H1 but not paid for until H2. In H1FY23 these were billed and paid for within the period
SPARK
PAGE
18
•Reported net debt to EBITDAI ratio of 0.66x
(1)
consistent with an
S&P A-credit rating
•Spark’s internal capital management policy has been to ensure that
on a long-run basis, reported net debt to EBITDAI does not exceed
1.4x. This metric does not consider leases
•Following the To w e r C otransaction, and to reflect the impact on
leases, Spark’s internal proxy for net debt to EBITDAI on a long-run
basis has been lowered to 1.0x to more closely align to the external
credit rating treatment
•Net debt will increase over time returning to more nomalisedlevels
as proceeds of To w e r C osale are distributed:
•Up to $350m to be returned to shareholders via an on-market
buy-back due to commence post Spark’s Investor Strategy
Briefing on 5 April 2023; and
•$350m invested in growth as capital investment is
upweighted to unlock future growth potential
Net debt
Reported net debt down $724m, reflecting repayment of short-term debt following receipt of To w e r C oproceeds
1,522
798
50
234
2
(115)
(894)
(1)
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Net debt as
at 30 June
2022
Free cash
flow
Growth
Capex
Dividends
paid
Business
acquisitions
and minority
investments
Proceeds
from asset
and business
sales
Other
movements
Net debt as
at 31
December
2022
Movement in net debt during H1 FY23 ($m)
(1)
Spark’s internal capital management policy is to ensure that on a long-run basis reported net debt to EBITDAI does not exceed 1.0x, which Spark estimates is approximately equivalent to S&P’s 1.7x adjusted net debt to EBITDAI threshold. Spark’s internal threshold of 1.0x
excludes S&Ps adjustments in relation to IFRS16 and captive finance operations
SPARK
PAGE
19
Guidance
(1)
FY22 ActualFY23 GuidanceChanges to previous FY23
Guidance
EBITDAI$1,150m
$1,185m-$1,225m
Expect to be lower in the range
(excludes net gain on sale of $584m for TowerCo
transaction and Spark Sport provision of $52m)
-
Capital expenditure
(2)
$410m~$410m~$520m
(3)
Dividend per share
Total 25.0cps
(100% imputed)
Total 27.0cps
(100% imputed)
-
(1)
Subject to no adverse change in operating outlook
(2)
Excluding expenditure on mobile spectrum
(3)
Previous capital expenditure guidance included growth capex of ~$50-$60m. Updated capital expenditure guidance includes growth capex of ~$145m-$165m an increase of ~$90-$110m to be funded from TowerCoproceeds
SPARK
Infinal six months of three-year strategy, and on track to deliver FY23 ambitions
PAGE
20
Summary
Investment in world class capabilities and culture have laid the foundations and created
differentiation and competitive advantage in the market
An evolved strategy for the next three-years will be shared on Wednesday 5 April 2023
Delivered consistent financial performance over the last three-years despite challenging operating
conditions including Covid, rapidly rising inflation, and ongoing macro-economic uncertainty
SPARK
PAGE
21
Appendix
SPARK
PAGE
22
FY23 ConnexaP&L impact summary
Following completion of the Connexadivestment - an updated summary of the expected P&L financial impacts is below
There are two key changes to the disclosures previously made as part
ofSpark’s FY22 results:
•Recognition of the gain on sale; and
•Net financing expense reflects updated IFRS treatment (unaudited)
forConnexaleases and loans
Financing expenses may differ from the expected financial impacts outlined
depending on:
•The timing of Connexa’sacquisition of 2degrees’ passive mobile tower
assets, if approved;
•Timing of theutilisation of proceeds from Spark’s divestment of To w e r C o;
and
•Final audited accounts from Connexa
Previous FY22 Results Market Release
FY23
$m
FY24
$m
Other gains
Operating revenue2(1)
Operating expenses(5)(8)
EBITDAI impact(3)(9)
Total net financing expense1117
Net earnings before tax88
FY23 Expected Connexa Impacts
Other gains584
Operating revenue2
Operating expenses(5)(8)
EBITDAI impact581(8)
Total net financing expense(3)5
Net earnings before tax579(3)
SPARK
PAGE
23
FY23 Connexastatement of financial position impact summary
The significant balances included within the statement of financial position as at 31 December 2022 as a result of the
Connexatransaction were as follows:
31 December 2022
UNAUDITIED
$MDescription of the balance relating to the Connexa transaction
Long-term receivables and prepayments
150
Loans receivable from FrodoCo
Long-term investments
87
Investment in associate
Right-of -use assets
(1)
41
Sale and leaseback right-of -use asset
Deferred tax assets
126
Deferred tax asset on the lease with Connexa
Short-term lease liabilities
(1)
(15)
Short-term portion of sale and leaseback liability
Long-term lease liabilities
(1)
(477)
Long-term portion of sale and leaseback liability
(1)
These balances have increased since the transaction date due to additional sites being leased from Connexabetween the transaction date and 31 December 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 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Operating revenues and other gains1,7961,7971,8901,8302,5341,8902,53464434.1%
Operating expenses(1,296)(1,178)(1,352)(1,218)(1,492)(1,352)(1,492)(140)(10.4%)
EBITDAI5006195386121,0425381,04250493.7%
Finance income17171412161416214.3%
Finance expense(43)(38)(37)(37)(43)(37)(43)(6)(16.2%)
Depreciation and amortisation(262)(259)(257)(263)(248)(257)(248)93.5%
Net investment income-(1)(1)-(1)(1)(1)--%
Net earnings before income tax212338257324766257766509NM
Tax income /(expense)(65)(104)(78)(93)71(78)71149NM
Net earnings for the period147234179231837179837658NM
Capital expenditure excluding spectrum 1901592181922502182503214.7%
Free cash flows excluding spectrum
132352164269115164115(49)(29.9%)
Reported EBITDAI margin27.8%34.4%28.5%33.4%41.1%28.5%41.1%12.6%
Reported effective tax rate30.7%30.8%30.4%28.7%(9.3%)30.4%(9.3%)(39.7%)
Capital expenditure to operating revenues and
other gains
10.6% 8.8% 11.5% 10.5% 9.9% 11.5% 9.9% (1.6%)
Reported basic earnings per share (cents)8.012.59.612.444.79.644.735.1NM
Reported diluted earnings per share (cents)8.012.59.612.444.69.644.635.0NM
Group result - adjusted
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Adjusted operating revenues and other gains1,7961,7971,8901,8301,9501,8901,950603.2%
Adjusted operating expenses(1,296)(1,178)(1,352)(1,218)(1,440)(1,352)(1,440)(88)(6.5%)
Adjusted EBITDAI500619538612510538510(28)(5.2%)
Finance income17171412161416214.3%
Finance expense(43)(38)(37)(37)(43)(37)(43)(6)(16.2%)
Depreciation and amortisation(262)(259)(257)(263)(248)(257)(248)93.5%
Net investment income-(1)(1)-(1)(1)(1)--%
Adjusted net earnings before income tax212338257324234257234(23)(8.9%)
Adjusted income tax expense(65)(104)(78)(93)(69)(78)(69)911.5%
Adjusted net earnings for the period147234179231165179165(14)(7.8%)
Capital expenditure excluding spectrum 1901592181922502182503214.7%
Free cash flows excluding spectrum
132352164269115164115(49)(29.9%)
Adjusted EBITDAI margin27.8%34.4%28.5%33.4%26.2%28.5%26.2%(2.3%)
Adjusted effective tax rate30.7%30.8%30.4%28.7%29.5%30.4%29.5%(0.9%)
Capital expenditure to adjusted operating
revenues and other gains
10.6% 8.8% 11.5% 10.5% 12.8% 11.5% 12.8% 1.3%
Adjusted basic earnings per share (cents)8.012.59.612.48.89.68.8(0.8)(8.3%)
Adjusted diluted earnings per share (cents)8.012.59.612.48.89.68.8(0.8)(8.3%)
H1 FY22 vs H1 FY23
Spark presents adjusted EBITDAI and adjusted net earnings when the year includes significant items individually greater than $25 million. H1 FY23
includes the net gain of $584 million on the sale of Connexa and a one-off provision of $52 million for Spark Sport. These two items are described in
further detail in Note 2 of the Interim Financial Statements. Adjusted EBITDAI and adjusted net earnings are as follows:
H1 FY22 vs H1 FY23
Spark New Zealand
Gross margin by product
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Mobile407430437467477
437477409.2%
Voice8793867971
8671(15)(17.4%)
Broadband166173166152149
166149(17)(10.2%)
Cloud, security and service management179179176167160
176160(16)(9.1%)
Procurement and partners2023262727
262713.9%
Managed data, network and services7273657264
6564(1)(1.5%)
Other product2842334749
33491648.5%
Total product gross margin
9591,0139891,01199798999780.8%
Other gains4241610588
16588572NM
Total gross margin
9631,0371,0051,0211,5851,0051,58558057.7%
Connections
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
000's000's000's000's000's000's000's000's
%
Mobile connections
1
2,4312,4212,4452,5032,6292,4452,6291847.5%
Voice connections by type
2
POTS and ISDN
3
215187159132107159107(52)(32.7%)
VoIP69696966606960(9)(13.0%)
Voice over wireless23242017142014(6)(30.0%)
307280248215181248181(67)(27.0%)
Broadband connections by technology
Copper157131113957911379(34)(30.1%)
Fibre381395402415423402423215.2%
Wireless
4
166178187194202187202158.0%
70470470270470470270420.3%
IoT connections3724766238321,1606231,16053786.2%
1
Mobile connections excluding MVNO connections but including legacy machine to machine and SIM based SmartWatch connections.
3
Prior year connection numbers have been restated to reflect updated POTS connection numbers.
4
FY21 wireless broadband connections have been restated to include data only connections of 2,394.
Group FTE's
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
FTE permanent4,9614,8894,9214,9244,9764,9214,976551.1%
FTE contractors 121150190208182190182(8)(4.2%)
Total FTE5,0825,0395,1115,1325,1585,1115,158470.9%
Dividends
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Ordinary dividends (cents per share)12.5012.5012.5012.5013.5012.5013.501.008.0%
Special dividends (cents per share)---------%
12.5012.5012.5012.5013.5012.5013.501.008.0%
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
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 operating revenues and other gains
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Operating revenues
Mobile
Service revenue420432441458480441480398.8%
Non-service revenue231228237215252237252156.3%
651660678673732678732548.0%
Voice
Access62675752455745(12)(21.1%)
Calling71677068597059(11)(15.7%)
Other voice revenue21201919181918(1)(5.3%)
154154146139122146122(24)(16.4%)
Broadband
1
337333324315313324313(11)(3.4%)
Cloud, security and service management217226224222214224214(10)(4.5%)
Procurement and partners236178301237319301319186.0%
Managed data, network and services14014214014314214014221.4%
Other product revenues
2
57806191104611044370.5%
Total operating revenues1,7921,7731,8741,8201,9461,8741,946723.8%
Other gains4241610416 4 (12)(75.0%)
Adjusted operating revenues and other gains1,7961,7971,8901,8301,9501,8901,950603.2%
Net gain on sale of Connexa----584-584584NM
Total operating revenues and other gains1,7961,7971,8901,8302,5341,8902,53464434.1%
1
Wireless broadband revenues and connections are included in broadband revenues and connections.
2
Other product revenues includes revenues from Consumer, Business, Wholesale and other customer segments.
Operating revenues and other gains by customer segment
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Operating revenues and other gains$m$m$m$m$m$m$m$m
%
Consumer769779777757797777797202.6%
Business9358971,0189521,0191,0181,01910.1%
Wholesale and other921219512171895718623NM
1,796 1,797 1,890 1,830 2,534 1,890 2,534 644 34.1%
Finance income
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Finance income$m$m$m$m$m$m$m$m
%
Finance lease interest income6763464(2)(33.3%)
Other interest income11108912812450.0%
17171412161416214.3%
Net investment income
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Net investment income$m$m$m$m$m$m$m$m
%
Share of associates' and joint ventures' net losses-(1)(1)-(3)(1)(3)(2)NM
----2-22100.0%
-(1)(1)-(1)(1)(1)--%
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
Interest income on loans receivable from associates and
joint ventures
Spark New Zealand
Group operating expenses
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m $m $m $m $m $m $m $m%
Product costs
Mobile244230241206255241255145.8%
Voice67616060516051(9)(15.0%)
Broadband17116015816316415816463.8%
Cloud, security and service management38474855544854612.5%
Procurement and partners216155275210292275292176.2%
Managed data, network and services6869757178757834.0%
Other product costs293828445528552796.4%
833760885809949885949647.2%
Labour25623726323226926326962.3%
Other operating expenses
Network support costs4442442145444512.3%
Computer costs5150555657555723.6%
Accommodation costs323530354030401033.3%
Advertising, promotions and communication44283426333433(1)(2.9%)
Bad debts(1)(6)31434133.3%
Impairment expense-22--2-(2)(100.0%)
Other37303638433643719.4%
207181204177222204222188.8%
Adjusted operating expenses1,296 1,178 1,352 1,218 1,440 1,352 1,440 88 6.5%
Spark Sport provision---- 52- 52 52 NM
Total operating expenses1,2961,1781,3521,2181,4921,3521,49214010.4%
Finance expense
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m $m $m $m $m $m $m $m%
Finance expense
Finance expense on long-term debt21222322222322(1)(4.3%)
Other interest and finance expense6447747375.0%
Lease interest expense1511109151015550.0%
Leased customer equipment interest expense4434434133.3%
46414042484048820.0%
Capitalised interest(3)(3)(3)(5)(5)(3)(5)(2)(66.7%)
43383737433743616.2%
Depreciation and amortisation expense
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m $m $m $m $m $m $m $m%
Depreciation and amortisation expense
Depreciation - property, plant and equipment124118116118114116114(2)(1.7%)
Depreciation - right-of-use assets35424040364036(4)(10.0%)
Depreciation - leased customer equipment assets1917181919181915.6%
Amortisation - intangible assets84828386798379(4)(4.8%)
262259257263248257248(9)(3.5%)
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
Spark New Zealand
Analysis & KPI's - Mobile
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Mobile revenue by type (Consumer and Business)$m$m$m$m$m$m$m$m
%
Mobile service revenue415427435451472435472378.5%
Mobile non-service revenue
1
22322122920523122923120.9%
638648664656703664703395.9%
1312141729142915NM
Total mobile revenue651660678673732678732548.0%
Mobile product costs
3
(244)(230)(241)(206)(255)(241)(255)(14)(5.8%)
Mobile gross margin407430437467477437477409.2%
Mobile gross margin %62.5%65.2%64.5%69.4%65.2%64.5%65.2%0.7%
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Total mobile revenue by customer segment$m$m$m$m$m$m$m$m
%
Consumer438441454444486454486327.0%
Business20020721021221721021773.3%
Wholesale and other1312141729142915NM
651660678673732678732548.0%
Average revenue per user (ARPU) - 6 month active
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
(Consumer and Business)
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month
$ per
month %
Total ARPU28.5129.6630.1930.8431.1930.1931.191.00 3.3%
Pay-monthly ARPU39.9740.3140.1741.0141.5940.1741.591.42 3.5%
Prepaid ARPU14.3615.4216.2616.4717.1116.2617.110.85 5.2%
H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23 H1 FY22 H1 FY23
000's000's000's000's000's000's000's000's
%
Pay-monthly connections1,3551,3861,4161,4371,4711,4161,471553.9%
Prepaid connections1,0471,0081,0011,0381,1311,0011,13113013.0%
Internal connections4444444--%
Total mobile connections2,4062,3982,4212,4792,6062,4212,6061857.6%
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.
H1 FY22 vs H1 FY23
Wholesale and other customer segment mobile
revenue
2
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
Number of mobile connections at period end - 6
month active (Consumer and Business)
4
H1 FY22 vs H1 FY23
Spark New Zealand
Analysis & KPI's - Voice
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Revenue by type$m$m$m$m$m$m$m$m%
Access62675752455745(12)(21.1%)
Calling71677068597059(11)(15.7%)
Other voice revenue21201919181918(1)(5.3%)
Total voice revenue154154146139122146122(24)(16.4%)
Voice product costs
1
(67)(61)(60)(60)(51)(60)(51)915.0%
Voice gross margin87938679718671(15)(17.4%)
Voice gross margin %56.5%60.4%58.9%56.8%58.2%58.9%58.2%(0.7%)
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
000's000's000's000's000's000's000's000's%
POTS and ISDN215187159132107159107(52)(32.7%)
VoIP69696966606960(9)(13.0%)
Voice over wireless23242017142014(6)(30.0%)
Total voice connections
3
307280248215181248181(67)(27.0%)
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
000's000's000's000's000's000's000's000's%
Consumer74776454466446(18)(28.1%)
Business151140134121106134106(28)(20.9%)
Wholesale and other82635040295029(21)(42.0%)
Total voice connections
3
307280248215181248181(67)(27.0%)
1
Includes voice access (baseband), interconnect, and international calling costs.
2
Prior year connection numbers have been restated to reflect updated POTS connection numbers.
3
Excludes Cloud Telephony which has been moved to Managed Networks.
Analysis & KPI's - Broadband
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m%
Total broadband revenue337333324315313324313(11)(3.4%)
Broadband product costs
4
(171)(160)(158)(163)(164)(158)(164)(6)(3.8%)
Broadband gross margin166173166152149166149(17)(10.2%)
Broadband gross margin %49.3%52.0%51.2%48.3%47.6%51.2%47.6%(3.6%)
H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23 H1 FY22 H1 FY23
000's000's000's000's000's000's000's000's%
Copper157131113957911379(34)(30.1%)
Fibre381395402415423402423215.2%
Wireless166178187194202187202158.0%
Total broadband connections70470470270470470270420.3%
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
000's000's000's000's000's000's000's000's%
Consumer59859559359559459359410.2%
Business103105105104104105104(1)(1.0%)
Wholesale and other3445646250.0%
Total broadband connections70470470270470470270420.3%
4
Includes broadband access (UBA/UCLL/Fibre), modem and e-mail platform support costs.
Broadband connections by technology
H1 FY22 vs H1 FY23
Broadband connections by customer segment
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
Voice connections by type
2
H1 FY22 vs H1 FY23
Voice connections by customer segment
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
Spark New Zealand
Analysis & KPI's - Cloud, security and service management
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Cloud revenue113116119114116119116(3)(2.5%)
Security revenue19201819181818--
Service management revenue85908789808780(7)(8.0%)
Cloud, security and service management revenue217226224222214224214(10)(4.5%)
Cloud, security and service management product costs(38)(47)(48)(55)(54)(48)(54)(6)(12.5%)
Cloud, security and service management gross margin179179176167160176160(16)(9.1%)
Cloud, security and service management gross margin %82.5%79.2%78.6%75.2%74.8%78.6%74.8%(3.8%)
Contribution margin (approximated) %
1
34.6%38.5%34.8%37.4%32.7%34.8%32.7%(2.1%)
Cloud KPIsH1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Number of private cloud clients
2
329359346346340346340(6)(1.7%)
Number of public cloud clients304335335353295335295(40)(11.9%)
Power usage efficiency for dedicated data-centre sites1.501.481.491.501.501.491.500.010.7%
Megawatt hours for dedicated data centre sites22,09122,87421,66422,18122,21221,66422,2125482.5%
Security KPIsH1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Number of security clients
2
1,1531,1741,1101,1071,0431,1101,043(67)(6.0%)
Average monthly revenue per security client2,7462,8392,7032,8612,8762,7032,8761736.4%
Service management KPIsH1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Number of service management clients
2
671694712688670712670(42)(5.9%)
Average monthly revenue per service management client21,11321,61420,36521,56019,90020,36519,900(465)(2.3%)
Analysis & KPI's - Procurement and partners
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Procurement and partners revenue236178301237319301319186.0%
Procurement and partners product costs(216)(155)(275)(210)(292)(275)(292)(17)(6.2%)
Procurement and partners gross margin2023262727262713.8%
Procurement and partners gross margin %8.5%13.0%8.6%11.4%8.5%8.6%8.5%(0.1%)
Analysis & KPI's - Managed data, network and services
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Collaboration3335384039383912.6%
Managed data and networks10710710210310310210311.0%
Managed data, network and services revenue14014214014314214014221.4%
Managed data, network and services product costs
3
(68)(69)(75)(71)(78)(75)(78)(3)(4.0%)
Managed data, network and services gross margin72736572646564(1)(1.5%)
Managed data, network and services gross margin %51.4%51.4%46.4%50.3%45.1%46.4%45.1%(1.3%)
3
Includes wide area network access, international data, network backhaul and videoconferencing platform costs.
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.
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
Spark New Zealand
Statement of cash flows
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Cash flows from operating activities
Receipts from customers 1,828 1,719 1,901 1,755 1,975
1,9011,975743.9%
Receipts from interest 16 16 13 11 16
1316323.1%
Payments to suppliers and employees (1,321) (1,137) (1,327) (1,279) (1,460)
(1,327)(1,460)(133)(10.0%)
Payments for income tax (118) (70) (93) (67) (120)
(93)(120)(27)(29.0%)
Payments for interest on debt (23) (23) (23) (25) (23)
(23)(23)--%
Payments for interest on leases (16) (10) (10) (9) (15)
(10)(15)(5)(50.0%)
Payments for interest on leased customer equipment assets
(4) (4) (3) (3) (4)
(3)(4)(1)(33.3%)
Net cash flows from operating activities 362 491 458 383 369
458369(89)(19.4%)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - 6 - - 1
-11NM
Proceeds from sale of business 8 22 - - 894
-894894NM
Proceeds from long-term investments - 6 3 1 -
3-(3)(100.0%)
Receipts from finance leases 2 4 2 1 1
21(1)(50.0%)
Receipts from loans receivable - 1 - - -
---NM
Payments for purchase of businesses net of cash acquired - (25) - (7) -
---NM
Payments for, and advances to, long-term investments (4) (9) (39) (20) (2)
(39)(2)3794.9%
Payments for purchase of property, plant and equipment,
intangibles (excluding spectrum) and capacity
(212) (118) (216) (209) (246)
(216) (246) (30) (13.9%)
Payments for spectrum intangible assets - (51) - - -
--
-NM
Payments for capitalised interest (3) (3) (3) (5) (5)
(3)(5)
(2)(66.7%)
Net cash flows from investing activities (209) (167) (253) (239) 643
(253)643896NM
Cash flows from financing activities
Net (repayments of)/proceeds from debt 100 (138) 99 115 (517)
99(517)(616)NM
Payments for dividends (167) (163) (225) (224) (234)
(225)(234)(9)(4.0%)
Payments for leases (20) (36) (33) (36) (31)
(33)(31)26.1%
Payments for leased customer equipment assets (16) (18) (25) (21) (15)
(25)(15)
1040.0%
Net cash flows from financing activities (103) (355) (184) (166) (797)
(184)(797)(613)NM
Net cash flows 50 (31) 21 (22) 215
21215194NM
Opening cash position 53 103 72 93 71
7271(1)(1.4%)
Closing cash position 103 72 93 71 286
93286193NM
Analysis & KPIs - Free cash flows and movement in working capital
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
EBITDAI 500 619 538 612 1,042
5381,04250493.7%
Excluding
Other gains and impairments
4 22 14 10 536
14536522NM
EBITDAI ex. other gains and impairments
496 597 524 602 506
524506(18)(3.4%)
Less
Cash paid on maintenance capital expenditure 185 104 188 184 200
188200126.4%
Cash paid on interest 27 21 23 26 26
2326313.0%
Cash paid on tax payments 118 70 93 67 120
931202729.0%
Cash paid on leases 34 50 56 56 45
5645(11)(19.6%)
Total cash payments on capital expenditure, interest, tax
and lease
364 245 360 333 391 360 391 31 8.6%
Free cash flow
1
132 352 164 269 115 164 115 (49) (29.9%)
Change in working capital
Change in receivables (92) 104 (42) 104 (59)
(42)(59)(17)(40.5%)
Change in payables 61 (45) (63) 78 3
(63)366NM
Change in inventory (11) (20) 29 14 1
291(28)(96.6%)
Change in contract assets (11) (2) (5) 3 3
(5)38NM
Change in prepayments (excluding CAPEX) 12 (27) 37 (37) 22
3722(15)(40.5%)
Total change in working capital - increase/(decrease)
(41) 10 (44) 162 (30) (44) (30) 14 31.8%
Cash conversion102%97%110%79%102%110%102%
-8%(7.1%)
H1 FY22 vs H1 FY23
H1 FY22 vs H1 FY23
1
As reported in H2 FY22 the 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. Comparative periods have been updated to reflect the new definition.
Spark New Zealand
Group capital expenditure
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
Maintenance Capex$m$m$m$m$m$m$m$m
%
Cloud9117811711457.1%
Converged Communications Network (CCN)1512111116
1116545.5%
International cable construction and capacity purchases 1816-1-(1)(100.0%)
IT systems6453876362
8762(25)(28.7%)
Mobile network5848623869
6269711.3%
Core sustain and resiliency3421262736
26361038.5%
Other95346
363100.0%
Total maintenance capital expenditure excluding spectrum
19015819715720019720031.5%
Growth Capex
5G acceleration
--1213-12-(12)(100.0%)
Data centres-192250
95041NM
Total growth capital expenditure excluding spectrum
-1213550215029NM
Total capital expenditure excluding spectrum
1901592181922502182503214.7%
Total capital expenditure excluding spectrum to operating
revenue and other gains
10.6% 8.8% 11.5% 10.5% 9.9% 11.5% 9.9%
Total capital expenditure excluding spectrum to adjusted
operating revenue and other gains
10.6% 8.8% 11.5% 10.5% 12.8% 11.5% 12.8%
Mobile spectrum-51---
---NM
Total capital expenditure including spectrum
1902102181922502182503214.7%
Total capital expenditure including spectrum to operating
revenue and other gains
10.6% 11.7% 11.5% 10.5% 9.9% 11.5% 9.9%
Total capital expenditure including spectrum to adjusted
operating revenue and other gains
10.6% 11.7% 11.5% 10.5% 12.8% 11.5% 12.8%
Analysis & KPI's - Capital expenditure depreciation and amortisation
H1 FY21H2 FY21H1 FY22H2 FY22H1 FY23H1 FY22H1 FY23
$m$m$m$m$m$m$m$m
%
Depreciation - property, plant and equipment124118116118114116114(2)(2.0%)
Depreciation - right-of-use assets
1
1111111111
1111-NM
Amortisation - intangible assets
84828386798379(4)(4.8%)
Total capital expenditure depreciation and amortisation
219211210215204210204(6)(2.9%)
1
Includes depreciation on capacity right-of-use assets only as these are included within Spark’s definition of capital expenditure.
H1 FY22 vs H1 FY23
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 upfront.
On adoption of NZ IFRS 16 Leases, assets associated with capacity arrangements which were previously recognised within intangible assets have been
reclassified to right-of-use assets. Payments for capacity purchases remain within Spark’s definition of capital expenditure. Total depreciation on property,
plant and equipment, depreciation on capacity right-of-use assets and amortisation of intangible assets is reconciled below:
H1 FY22 vs H1 FY23
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.