Spark New Zealand Limited FY23 Results
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
MARKET RELEASE – FRIDAY, 18 AUGUST 2023
Spark delivers to guidance with revenue, EBITDAI, and NPAT
all in growth
• Reported revenue
1
, EBITDAI
2
, and NPAT
3
all in growth, driven by one-off proceeds from the
strategic divestment of a majority stake in Spark’s TowerCo business
• Adjusted revenue, EBITDAI, and NPAT all in growth, with mobile performance a standout
• Free cash flow growth at top end of aspiration, largely funding the total FY23 dividend of 27cps,
100% imputed – an increase of 2cps vs. FY22
Spark New Zealand (Spark) today announced its FY23 results, with revenue, EBITDAI, and NPAT all in
growth.
Spark Chair Justine Smyth said, “In a challenging year for all businesses in Aotearoa, Spark’s strong
revenue growth and disciplined cost control has underpinned earnings and dividend growth for our
shareholders. The Board and I are pleased to complete the current three-year strategy period delivering
to guidance, and with a strong platform for future growth.
“Over the last three years Spark’s locally unique data and AI capability, simplified portfolio, and
significant network and technology investments have delivered market leadership in mobile, a stabilised
leadership position in broadband, and strong growth in high-tech categories such as IoT and digital
health.
“The strategic review of Spark’s infrastructure assets resulted in the divestment of a 70% stake in its
TowerCo business to the Ontario Teachers’ Pension Plan for $911 million, enabling us to return value to
shareholders while investing in future growth. We allocated up to $350 million of these proceeds to an
on-market share buy-back
4
, and at the end of June $146 million had been returned to shareholders.
“As we look to FY24, we have confidence in Spark’s ability to continue to grow earnings and free cash
flow and are guiding to a higher total FY24 dividend of 27.5 cents per share, 100% imputed.”
FY23 operating highlights
The TowerCo transaction and exit of Spark Sport resulted in a net EBITDAI gain of $529 million,
contributing to a 20.7% increase in reported revenues to $4,491 million, a 49.7% increase in EBITDAI to
$1,722 million, and NPAT of $1,135 million.
When adjusting for the one-off benefit, revenues increased 5.1% to $3,908 million, underpinned by
mobile service revenue growth of 9%. Spark is number one in mobile market share by service revenue
and total connections
5
, with the strength of its dual brands Spark and Skinny, product innovation, and the
ongoing return of roaming supporting connection and value growth.
Broadband connections remained broadly stable in line with strategy, with high levels of competition
driving a 2% revenue decline to $626 million and rising input costs continuing to put pressure on retail
margins. These costs were passed through in price increases during the year and when combined with
1
Operating revenues and other gains
2
Earnings before finance income and expense, income tax, depreciation, amortisation, and net investment income (EBITDAI) is a non-Generally Accepted
Accounting Practice performance measure that is defined and reconciled to net earnings in Spark New Zealand’s Financial Statements
3
Net Profit After Tax
4
Subject to market conditions at the time. Spark may investigate alternative return options
5
Market share estimates sourced from IDC as at 30 June 2023
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
the ongoing growth in wireless broadband supported profitability in a highly competitive sector. Spark
achieved its three-year ambition of 30% of its base on wireless broadband.
Cloud, security, and service management revenues decreased 2.2% to $436 million, impacted by the
mix shift from private cloud to public cloud and service management activity normalising post Covid-19.
While digital health revenues were impacted by delays, and deferrals due to health sector reforms, IoT
and digital health collectively contributed $122 million of revenue, and IoT surpassed its three-year target
of 1.2 million connected devices, growing 76% to 1.46 million.
When combined with disciplined cost control adjusted EBITDAI grew 3.7% to $1,193 million, in line with
guidance. Adjusted NPAT increased 5.6% to $433 million, driven by EBITDAI growth, lower depreciation
and amortisation costs, and partially offset by higher tax expense.
Free cash flow was towards the upper end of the FY23 aspiration at $489 million, driven by EBITDAI
growth and disciplined capital management.
Commenting on the results, Spark CEO Jolie Hodson said, “In a volatile economic environment we have
remained firmly focussed on delivering what we said we would in this last year of our three-year strategy,
while charting a path for the future.
“In mobile we lead the market on both connections and service revenue, and we have maintained our
leading position in broadband in the face of ongoing input cost escalation and high levels of competition.
“I am particularly pleased that we have been able to shift from our traditional telco roots to broader digital
services over the last three years, with legacy products like landline voice now below 6% of overall
revenues and a growing high-tech portfolio. We have made strong progress in our digital identity
business MATTR, which recently secured a significant contract with the New South Wales (NSW)
Government in Australia as technology partner on the NSW Digital ID and Verifiable Credentials
programme.
“In business we continued to see the mix shift from private to public cloud impacting margins, while
service management revenues normalised as we cycled the Covid-19 period that included a higher level
of activity in the health sector. We are actively refocusing the business to adapt to these trends,
realigning our cost base to changed margin profiles, and investing in product innovation within enterprise
service management and hybrid cloud, where Spark is uniquely positioned to lead.
“Overall, we have finished the three-year strategy period in a strong position and with momentum in our
key markets. We have a clear plan for the next three years and the ability to invest to develop new
revenue streams. We have allocated $250-$300 million to invest in the high growth data centre market
and are further expanding our Takanini campus while also investigating other options.
“We have continued our 5G rollout at pace, with 77 locations across the country, and we have made a
fast start on our plans to invest $40-$60 million in 5G Standalone, which will enable New Zealanders to
realise the full potential of 5G.
“The growth we have achieved has been underpinned by a sustained focus on doing business well –
investing in the capability, wellbeing, and engagement of our people, improving the experiences of our
customers, and creating a sustainable Spark.
“As we look to the future we are well placed to continue adapting as our country and markets evolve, and
we are optimistic about the role Spark can play in empowering the people and businesses creating
Aotearoa’s tomorrow.”
FY24 guidance
Spark provided the following guidance for FY24, subject to no adverse change in operating outlook:
• EBITDAI: $1,215-$1,260 million
Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand
• Capital expenditure: ~$510-$530 million
• Total dividend per share: 27.5 cents per share, 100% imputed
Authorised by:
Alexa Preston
Finance Lead Partner – Group Performance & Investor Relations
For more information contact
For media queries please contact:
Althea Lovell
Corporate Relations Lead 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
Spark is New Zealand's largest telecommunications and digital services company, with a purpose 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
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Results for announcement to the market
Name of issuer Spark New Zealand Limited
Reporting Period 12 months to 30 June 2023
Previous Reporting Period 12 months to 30 June 2022
Currency NZD - New Zealand Dollar
Amount (000s) Percentage change
Revenue from continuing
operations
NZD$4,491,000 20.7%
Total Revenue NZD$4,491,000 20.7%
Net profit/(loss) from
continuing operations
NZD$1,135,000 176.8%
Total net profit/(loss) NZD$1,135,000 176.8%
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 15 September 2023
Dividend Payment Date 6 October 2023
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
As at 30 June 2023: NZD$0.61 As at 30 June 2022: NZD$0.34
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
18 August 2023
Audited financial statements accompany this announcement.
Addendum:
Amount (000s) Percentage
change
Reported earnings before finance income and expense,
income tax, depreciation, amortisation and net investment
income (Reported EBITDAI)
NZD$1,722,000 49.7%
Adjusted
1
earnings before finance income and expense,
income tax, depreciation, amortisation and net investment
income (Adjusted EBITDAI)
NZD$1,193,000 3.7%
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
$583 million and the one-off provision of $54 million for Spark Sport. EBITDAI and Adjusted
EBITDAI are non-GAAP measures which are defined and reconciled in note 2.5 of Spark’s
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 X Quarterly
Half Year Special
DRP applies No
Record date 15 September 2023 AUST, NZ & USA;
Ex-Date (one business day before the
Record Date)
14 September 2023 AUST, NZ & USA;
Payment date (and allotment date for
DRP)
6 October 2023 AUST & NZ;
16 October 2023 USA
Total monies associated with the
distribution
NZD$249,075,122
(1,845,000,906 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
18 August 2023
---
Hello tomorrow
Spark Annual Report 2023
ANAMATAKO TE PAE
WHAKAMAUA
Tahutahuna te
Kora Karakia:
the Spark Karakia
Papā te whatitiri,
hikohiko te uira
The thunder peels,
the lightning flashes
Ko te pae anamata,
whakamaua, kia ngita
Fix your attention
to the future horizon and secure it
Kei reira te kora e
pūrātoke ana
There, is a small gleaming fragment
Kua kitea te kora
e pūrātoke ana
We have found the small
gleaming fragment
Mā wai rā te kora e tutungi,
e poipoi?
Who will light and nurture
this spark?
Mā tātou te kora e tutungi,
e poipoi
It is us who will light and nurture
the spark!
Tahutahuna te kora, (hī!)
Set fire to the spark, yes!
te kora whitawhita, (hī!)
The zealous spark, yes!
te kora tangata ēi!
The spark of humanity!
The 2023 financial year saw us complete the three-year strategy we
started in mid-2020, while setting a path for the future.
Our last strategy started at a time when the world around us was
turned upside down by COVID-19. While the most challenging days
of the pandemic are now behind us, its impacts linger on and
Aotearoa continues to change rapidly.
New Zealand is getting bigger, older, and more diverse and globally
we now face greater political volatility and cost of living challenges
than we have for many years. Compounding this is the universal
challenge of climate change, which is causing more frequent and
extreme weather events on our shores and highlighting the urgent
need for adaptation and our transition to a low-carbon economy.
Despite these challenges, we are optimistic about our country’s
future and the role Spark can play in supporting its growth.
That’s why our mission for the years ahead is to empower the
people and businesses creating Aotearoa’s tomorrow.
We will bring New Zealanders the best digital-first experiences,
curated to their needs. We will invest in the networks and high-tech
solutions that embolden our customers to innovate, grow and
become more sustainable through technology. We will create an
innovation culture that fuels our progress and equips our people
to thrive in an increasingly digital world. And we will do it all
without wavering from our commitments to Toitū Sustainability
and Te Korowai Tupu – our Māori Strategy.
Ko te pae anamata whakamaua. Hello tomorrow.
Empowering the people
and businesses creating
Aotearoa’s tomorrow
Spark New Zealand Annual Report 2023
1
Spark New Zealand Annual Report 2023
Ko te pae anamata, whakamaua
FY23 highlights
8%
GROWING
SHAREHOLDER
RETURNS
per share
27c
Total FY23 dividend of 27 cents
per share, 100% imputed,
with a value of $501 million
1
–
up from 25 cents per share
in FY22. $146 million
returned through on-market
share buy-back
1 This includes the dividend paid for H1FY23 of $252 million and the estimated
dividend to be paid for H2FY23 of $249 million.
MOBILE LEADING
THE MARKET
growth
9%
Mobile service revenue
grew 9%, supported by
data-driven marketing,
brand strength, product
innovation and growing
data usage – maintaining
market leading position
10%
BETTER
CUSTOMER
EXPERIENCES
MySpark app
unique users
1.57m
Interaction net promoter
score +31 points and
MySpark app unique
users growing 10% YoY
to 1.57 million
Highlights FY23
TowerCo transaction
enabling returns to
shareholders and
investment in
future growth
REALISING THE
VALUE OF
INFRASTRUCTURE
ASSETS
in proceeds
$911m
9%
Highlights FY23
Highlights FY23
Hello tomorrow2
WIRELESS
BROADBAND
GROWTH
of broadband base
30%
Meeting three-year
ambition by growing
wireless broadband from
20% of our base to 30%,
providing customer
choice and supporting
broadband profitability
76%
NEW
TECHNOLOGY
INVESTMENTS
IoT connections
1.46m
5G in 77 locations across the
country, Internet of Things
2
connections up 76% to 1.46
million, Takanini data centre
expansion and satellite trials
underway
2 The Internet of Things is a network of physical objects that are embedded with sensors, software, or
other technologies to capture data and share this with other devices or systems over the internet.
3 From FY23 we changed how we measure the engagement of our people to a more comprehensive
engagement score.
ENGAGED
PEOPLE
engagement
70%
Employee engagement
remains strong at 70%
3
,
approaching upper quartile
performance among large
New Zealand businesses, with
continued investment in skills
development, progression,
wellbeing and diversity
Skinny Jump connecting over
27,000 households in need
and new research launched
showing digital technology
could support at least 42%
of the emissions reductions
required to hit New Zealand's
2030 carbon budget targets
TECHNOLOGY
FOR GOOD
households
27k
+
10pp
14%
Ko te pae anamata, whakamaua
3
Spark New Zealand Annual Report 2023
Contents
Ko te pae anamata, whakamaua
– hello tomorrow
About this report
5
How we create value
6
Spark’s operations
8
Spark’s performance snapshot FY23
9
Chair and CEO review
10
Our new strategy
14
Our performance
18
Creating value for our customers
22
Creating value through our network and technology
32
Creating value for our environment
42
Creating value for our people
50
Creating value for our communities
62
Our governance and ESG management
68
Our risk management
72
Our Board and Leadership Squad
78
Leadership and Board remuneration
85
Financial statements
Financial statements
88
Notes to the financial statements
93
Independent auditor's report
136
Other information
Corporate governance disclosures
141
Spark’s managing risk framework roles and responsibilities
150
Sustainability appendix
Materiality
151
Stakeholder engagement
153
Global Reporting Initiative (GRI) content index
155
Glossary
157
Contact details
159
4Hello tomorrow
Contents
Contents
About this report
• This is an integrated report that shares our financial, social, environmental and
economic performance. To inform our approach we’ve applied the
International <IR> Framework, which considers the creation of value over the
short, medium and long term, thinking holistically about the resources and
relationships the organisation uses or affects and the dependencies and
trade-offs between them as value is created.
• At the heart of this approach is the <IR> value creation model (laid out on
pages 6 and 7), which details the ‘capitals’ we draw upon, our strategy and
business model, and the outputs and outcomes we deliver. We have a section
of the report dedicated to each of these capitals. Our detailed financial report
is covered in pages 88–139.
• The report also applies the Global Reporting Initiative (GRI) standards, the
most widely used global sustainability reporting standard. This requires us to
apply a materiality lens to identify and report against the sustainability issues
most important to our business and our stakeholders. We have a dedicated
sustainability appendix at the back of the report that includes our materiality
matrix and our GRI index that directs to where we have covered specific
sustainability topics in the report and elsewhere. See pages 151–156.
• We report climate-related disclosures against the TCFD (Taskforce on
Climate-related Financial Disclosures) Framework and, where possible, we
have aligned to the incoming External Reporting Board (XRB) requirements.
See pages 74 – 77.
• This Annual Report is published alongside a suite of other disclosures covering
the FY23 period, including our Corporate Governance Statement, our Modern
Slavery Statement and our Greenhouse Gas Inventory Report. For the full suite
of FY23 disclosures please visit https://www.sparknz.co.nz/about/governance/
Justine Smyth, CNZM
Chair
Charles Sitch
Chair Audit and Risk
Management Committee
Key dates
Annual Meeting
03 November 2023
FY24 half-year results announcement
28 February 2024
FY24 year-end results announcement
23 August 2024
This report covers the activities of Spark New Zealand Limited and
its subsidiaries for the period 1 July 2022 to 30 June 2023. It is
dated 18 August 2023 and is signed on behalf of the Board of
Spark New Zealand Limited by Justine Smyth, Chair, and Charles
Sitch, Chair Audit and Risk Management Committee.
Hello tomorrow
Spark Annual Report 2023
ANAMATAKO TE PAE
WHAKAMAUA
Spark Greenhouse Gas
Inventory Report 2023
INVENTORY
GREENHOUSE GAS
Spark Modern Slavery
Statement 2023
S TATEMENT
MODERN SLAVERY
CORPORATE
GOVERNANCE
Spark Annual Corporate
Governance Statement 2023
Spark New Zealand Annual Report 2023
5
Spark New Zealand Annual Report 2023
Ko te pae anamata, whakamaua
A culture that
develops and
empowers
our people
Investment in
resilient, adaptable
infrastructure for
New Zealand’s
future
Innovation to
create value for
Spark and our
customers
Providing leading
products and
services that
connect
and enable
New Zealanders
Economic
Transformation
Digital
Equity
Sustainable
Spark
Te Korowai
Tupu
Including the elements of our Sustainability Framework pages 14 and 16
How we create value
WHAT WE RELY ON
Our customers
Social capital
Consumers and organisations
that are enabled by our
products and services
Financial capital
Financial capital
Equity, debt and cash generated
through our operations
Our network
and technology
Manufactured + intellectual capital
Our mobile sites, data networks,
systems, processes and digital
services capability
Our people
Human + intellectual capital
Engaged, adaptive and
inclusive teams that are the
heart of our business
Our environment
Natural capital
Energy, materials and impacts
of our operations
Our communities
Social + human capital
Our communities around
New Zealand and the communities
across our global supply chain
OUR BUSINESS MODEL
G
O
V
E
R
N
A
N
C
E
B
U
S
I
N
E
S
S
S
T
R
A
T
E
G
Y
W
h
a
k
a
m
a
n
a
,
W
e
E
m
p
o
w
e
r
M
a
t
o
m
a
t
o
,
W
e
S
u
c
c
e
e
d
T
o
g
e
t
h
e
r
T
ū
h
o
n
o
,
W
e
C
o
n
n
e
c
t
M
ā
i
a
,
W
e
a
r
e
B
o
l
d
TO HELP
WIN BIG
OUR PURPOSE
IN A DIGIT AL WORLD
O
U
R
V
A
L
U
E
S
6
How we create value
Hello tomorrow
How we create value
OUTPUTS FY23OUTCOMES FY23
• 120% increase in mobile capacity over the past
three years
• 56 additional locations with 5G now live in 77
locations across New Zealand
• Investment in mobile core and Optical Transport
Network 2.0 to build adaptability, resilience and
capacity
Connected and resilient
New Zealand
Enabling a connected New Zealand and providing
infrastructure to support innovation
See page 32
• 2.7 million mobile connections, up from
2.5 million in FY22
• 699,000 broadband connections, down 5,000
from FY22
• Consumer and small business interaction
score (iNPS), up 2 points from FY22 to +31
• Growth of technology solutions to solve
real-world business problems
Connected customers
Enabling our customers to realise the benefits of digital
technology and enabling their own value creation
See page 22
• $4,491 million reported operating revenue
and other gains. Adjusted operating revenue
and other gains up 5.1% to $3,908 million
• $1,135 million reported net earnings. Adjusted
net earnings up 5.6% to $433 million
• 27 cents per share dividend, up 2 cents per
share from FY22
Capital for future investment
Enabling future investment in our business and providing
market returns to grow financial capital for our shareholders
See page 9
Engaged and inclusive teams
Enabling the success of our business and our people
and growing New Zealand’s human capital
See page 50
• Employee engagement score of 70%
• 40:40:20 gender representation at Board,
Leadership Squad and senior leadership levels
• 83% of employees sharing ethnicity data
• Investment in learning and development
Reduced draw on natural capital
Enabling a reduced draw on natural capital in our
business and through our customers' use of
technology
See page 42
• 13,318 tCO
2
e scope 1 and 2 emissions, down
29.8% from FY22
• 559 tonnes of e-waste recovered, up 14 tonnes
from FY22
• 14,913 mobile phones collected for recycling,
down 5,696 from FY22
• Efficiencies enabled across other sectors
• Skinny Jump benefitting 27,341 households, up
from 23,323 in FY22
• 622 connections to the Digital Marae Connectivity
Programme, up from 586 in FY22
• Improved approach to supplier risk through
Modern Slavery Framework
• Community investment through Spark Foundation
Connected and empowered
communities
Enabling all New Zealanders to benefit from the
digital world and improving social outcomes across
our value chain
See page 62
7
Spark New Zealand Annual Report 2023
Ko te pae anamata, whakamaua
Spark’s operations
Fibre Transport Network
Data Centres
Earth Station Satellite Link
Corporate Offices
Tasman Global Access Cable
Connection through Australia
to the rest of the world
Connection through Australia
to the rest of the world
Connection through USA
to the rest of the world
Connection through USA
to the rest of the world
Southern Cross Cable
Southern Cross Next Cable
98%
of New Zealanders
reached by our
4G network
99%
of the population
reached by our Internet
of Things network
1
24
regional business hubs
5,432
New Zealand
employees
16
data centres
699k
broadband connections
63
retail stores
Spark is New Zealand’s largest telecommunications and
digital services company. Our customers range from
individual New Zealanders and households to small
businesses, not-for-profits, government and large enterprise
clients. Across all our services – mobile, broadband, cloud
services, digital services and entertainment – we have
relevance for almost every New Zealander.
We operate the following brands and businesses
CommunityConsumerBusinessOther brandsGrowth markets
Active infrastructure on
~
1,500
mobile sites supporting
more than 2.7 million
mobile connections
(internet of things)
1 Cat-M1 Internet of Things network.
8
Spark’s operations
Hello tomorrow
Spark’s operations
Spark’s performance snapshot FY23
1 Adjusted for the impact of the net gain on sale of Connexa (formerly TowerCo)
of $583 million, within other gains, and the one-off provision of $54 million for
Spark Sport, within operating expenses. There were no adjusting items in FY22.
2 Earnings before finance income and expense, income tax, depreciation,
amortisation and net investment income (EBITDAI) and capital expenditure are
non-Generally Accepted Accounting Practice (non-GAAP) measures. These
measures are defined and reconciled in note 2.5 of the financial statements.
3 Adjusted for the impact of the net gain on sale of Connexa of $583 million,
the one-off provision of $54 million for Spark Sport, the $5 million net gain
on dilution of the investment in the Connexa group and related tax impacts
of $168 million. There were no adjusting items in FY22.
4 Free cash flow is a non-GAAP measure and is calculated on page 9 of Spark’s
FY23 Detailed Financials. The prior year comparative has been restated to align
with the FY23 definition for free cash flow.
5 Interaction Net Promoter Score, a measure of customer engagement.
Adjusted operating revenue and other gains
1
$3,908m 5 .1%
Reported operating revenue and other gains
$4,491m 20.7%
Adjusted EBITDAI
1,2
$1,193m 3.7%
Reported EBITDAI
2
$1,722m 49.7%
Reported net earnings
$1,13 5m 176 . 8%
Adjusted net earnings
3
$433m 5.6%
Broadband revenue
$626m -2.0%
Free cash flow
4
$489m 12.9%
Consumer and small business iNPS
5
+31 2 points
Mobile revenue
$1,470m 8.8%
Cloud security and service management revenue
$436m -2.2%
Capital expenditure
2
$515m
Employee engagement
70%
New measure
9
Spark New Zealand Annual Report 2023
Ko te pae anamata, whakamaua
Spark performance snapshot FY23
Ko Te Pae
Anamata,
Whakamaua
Tēnā koutou,
Justine Smyth, Chair,
and Jolie Hodson, CEO
10Hello tomorrow
Chair and CEO review
Chair and CEO review
Over the last twelve months we have been
focussed on delivering what we said we
would in the final year of our three-year
strategy, while setting a path for the future.
It is fair to say the last three years were a
time like no other. When we created the
strategy no one had heard of a lockdown,
and it was inconceivable that New Zealand
would close its borders to the world. But
like all businesses in Aotearoa, we had to
adapt at pace to a constantly changing
environment, and it is testament to the
execution capability of the Spark whānau
that we were able to do so without
wavering from our strategic goals.
Through the locally unique data and AI
capability we have developed, our
simplified portfolio, and the significant
network and technology investments we
have made, we have achieved market
leadership in mobile, stabilised our number
one position in broadband and scaled our
growth markets of Internet of Things and
digital health. Our business fundamentals
are stronger – with higher customer and
people engagement, consistently growing
brand strength and top quartile
sustainability performance.
During these uncertain times we know our
shareholders have been looking for
consistent returns. Through a focus on
effective portfolio management and
maximising the value of Spark’s
considerable portfolio of infrastructure
assets, we have grown shareholder value
over the last three years.
Our infrastructure review resulted in the
strategic divestment of a 70% stake in our
TowerCo business to the Ontario Teachers’
Pension Plan (OTPP) for $911 million and
when combined with our decision to exit
Spark Sport, delivered a net EBITDAI gain
on sale of $529 million. We committed to
return up to $350 million of these proceeds
to shareholders through an on-market
share buy-back, with $146 million returned
at the end of June.
We have allocated an equal amount to
investment in future growth, with $250-
$300 million to be invested in the high-
growth data centre market and $40-$60
million into 5G Standalone, which will open
up new commercialisation opportunities
across our portfolio.
The TowerCo business was rebranded to
Connexa during the year, and successfully
acquired the passive mobile tower assets of
2degrees from its owners Macquarie Asset
Management and Aware Super Limited.
This resulted in our shareholding diluting
from 30% to approximately 17% of the
resulting larger business, and will deliver
greater operational efficiencies that will
support more infrastructure sharing, better
network economics, and faster deployment
of new digital infrastructure across Aotearoa.
We completed FY23 maintaining our ~31%
EBITDAI margins and growing sustainable
free cash flow to support a higher dividend.
As we look to FY24, we have confidence in
our ability to continue to grow earnings and
our free cash flow to ~$490 to $530 million
and are guiding to a total FY24 dividend of
27.5 cents, 100% imputed.
This is a strong finish to the last three years,
with Spark strengthening its competitive
position in key markets, and ranking #4 for
shareholder returns when compared to
global peers – with a three-year total
shareholder returns CAGR of 9.3%.
“ Over the last twelve months
we have been focussed on
delivering what we said we
would in the final year of our
three-year strategy, while setting
a path for the future.”
Spark New Zealand Annual Report 2023
Ko te pae anamata, whakamaua
11
Spark New Zealand Annual Report 2023
Our FY23 performance
As a result of the TowerCo gain on sale, our
FY23 reported revenue grew 20.7% to
$4,491 million. When adjusting for this
transaction, revenue increased 5.1% to
$3,908 million, driven largely by our
standout performance in mobile.
Mobile service revenue grew 9% to
$980 million and we continue to lead the
market, as mobile connections grew and
roaming returned to 86% of pre-COVID-19
levels. Our dual brands Spark and Skinny
continue to meet a wide range of customer
needs, and the launch of our new Team Up
mobile plans delivered greater value to our
customers and growth for Spark.
We continue to lead the market in
broadband, and while revenue declined
2% to $626 million, ongoing growth in
wireless broadband supported profitability
in a highly competitive sector and we
achieved our three-year ambition of 30%
of our base on wireless.
Cloud, security and service management
revenue decreased 2.2% to $436 million,
as the mix shift from private cloud to public
cloud continued and service management
activity normalised post COVID-19. We are
actively refocussing the business to adapt
to these trends, realigning our cost base to
changed margin profiles and investing in
product innovation within enterprise
service management and hybrid cloud,
where Spark is uniquely positioned to lead.
During the year we announced the
expansion of our portfolio to include
new satellite services for our customers.
Through a partnership with Lynk Global we
will start trialling a text-to-mobile service at
the end of 2023, and in partnership with
Netlinkz, we will supply Starlink business-
grade satellite broadband to business
customers following the completion of
trials currently underway.
We continued to see strong growth in
Internet of Things with revenue up 33% and
total connected devices growing 76% to
1.46 million – surpassing our three-year
target of ~1.2 million. While digital health
revenues were impacted by delays and
deferrals due to health sector reforms,
digital health and Internet of Things
collectively contributed $122 million of
revenue during the year.
As a result, we delivered adjusted EBITDAI
growth of 3.7% to $1,193 million, in line
with guidance, and adjusted Net Profit After
Tax (NPAT) growth of 5.6% to $433 million,
driven by EBITDAI growth, lower
depreciation and amortisation costs,
partially offset by higher tax expense.
Free cash flow was towards the upper end
of our FY23 aspiration at $489 million,
driven by EBITDAI growth and disciplined
capital management.
We were pleased to confirm a total FY23
dividend of 27 cents per share for our
shareholders, 100% imputed and an
increase of 8.0% or 2 cents year on year.
Looking forward –
our new strategy
Looking ahead to the next three years, we
know the pace of change and disruption
will only accelerate from here. The world
around us is changing rapidly and we need
to change with it.
Aotearoa is growing, getting older and
becoming more diverse. This brings
tailwinds from higher immigration, which
support mobile and broadband growth,
and headwinds as we have larger numbers
exiting the workforce and fewer entering,
over time.
Our business customers are facing
inflationary cost pressures, supply chain
challenges and labour shortages, which is
forcing a focus on efficiency and
productivity. The opportunity for Spark is to
harness the power of emerging and
converged technologies to provide new
solutions to these challenges that haven’t
been possible in the past.
As we have shaped our new strategy we
have done so with our changing country in
mind, to position Spark for success in
multiple potential futures.
Our three-year focus is on empowering the
people and businesses creating Aotearoa’s
tomorrow. As an enabling business our
success will be measured in the success of
others. We will bring New Zealanders the
best digital first experiences, curated to
their needs, and support local businesses
big and small to grow and become more
productive and sustainable through
technology.
We will build on the progress we have
made over the last three years through our
capability-led approach by continuing to
invest in our key sources of differentiation
– our data and AI capability, simpler and
more digital customer experiences, our
network and technology investment and
the strength of our people and culture.
Finally, how we do business will remain just
as important as what we will do, with a
focus on Toitū Sustainability at Spark and
integrating te ao Māori into our business,
an enduring part of our new strategy.
“ We are proud of the results
Spark has delivered during
FY23 and over the last three-
year strategy period and the
value we have created for our
shareholders.”
Hello tomorrow12
Chair and CEO review
For running header don't delete
Toitū Sustainability
at Spark
Over the last three years we have made
strong progress across our sustainability
focus areas, which is reflected in our
acceptance into the Dow Jones
Sustainability Australia Index and our
ranking in the top quartile of the Worldwide
Benchmarking Alliance’s Digital Inclusion
Benchmark.
To support Aotearoa’s economic
transformation, we have accelerated our
5G rollout, expanded rural coverage and
undertaken research into the role digital
technology can play to meet New Zealand’s
climate change challenge.
We have invested a cumulative $5 million
into community-led digital equity solutions
through Spark Foundation and grown our
not-for-profit broadband service Skinny
Jump 150% to support over 27,000 homes
across the country – with over $6 million of
data provided for free during FY23 alone.
And we have made significant
improvements to our own business. We
established our science-based emissions
reduction target and efficiency programme
and we have enhanced our ethical supply
chain processes and supplier auditing.
We still have more work to do to increase
female representation within Spark and to
meet our 40:40:20 target. We held flat in
FY23, with women representing 34% of our
workforce. We did, however, make strong
progress reducing our gender pay gap
from 28% in FY20 to 21.6% at the end of
FY23. We have also made progress
expanding our focus to ethnic diversity
– with over 83% of our people now sharing
their ethnicity with us, which will enable
targeted initiatives to increase
representation in the future.
Our new Sustainability Framework is
outlined on page 17 and commits Spark to
a clear set of Key Performance Indicators
(KPIs) that we will hold ourselves
accountable to annually in this report. We
believe this is an ambitious roadmap that is
focussed in the areas Spark can make the
most meaningful contribution.
This framework sits alongside our Māori
strategy, Te Korowai Tupu, which remains a
strategic focus. We continue to integrate te
ao Māori across our business, and in the
next three years our ambition is to grow
both Māori and Pasifika representation
within Spark by five percentage points.
Thank you
We are proud of the results Spark has
delivered during FY23 and over the last
three-year strategy period and the value
we have created for our shareholders.
We would like to recognise the hard work
and commitment of the Spark whānau that
has delivered these results.
We would also like to acknowledge the
extraordinary efforts of the teams who
supported our customers during Cyclone
Gabrielle – working around the clock to
restore connectivity to communities and to
ensure our customers were able to
reconnect with loved ones as quickly as
possible. Thank you also to our
shareholders, customers, suppliers and
partners, for your ongoing support.
Ngā mihi nui
[thank you]
Justine Smyth, CNZM
Chair
Jolie Hodson
CEO
Ko te pae anamata, whakamaua
13
Spark New Zealand Annual Report 2023
Our FY24-FY26 strategy:
empowering the people and businesses creating Aotearoa’s tomorrow
Our values
TŪHONO: we connect
WHAKAMANA: we empower
MATOMATO: we succeed together
MĀIA: we are bold
Our purpose
TO HELPALL OF
WIN BIGIN A DIGITAL WORLD
NEW ZEALAND
Āwhinatia ngā tāngata katoa o Aotearoa
kia matomato te tipu i te ao matihiko
Our FY26
outcomes
Low/mid
single digit CAGR
EBITDAI growth
>10%
Free cash flow
growth
+10 lift
Customer
engagement
Top decile
People
engagement
Top quartile
Sustainability
benchmarking
Our FY24-26 focus
We will empower the people and businesses creating Aotearoa’s tomorrow by:
Bringing New Zealanders the best digital-first
experiences, curated to their needs
LEAD
Mobile
LEAD
SME & Business
OPTIMISE
Broadband
GROW
High-tech Solutions
Enabling New Zealand businesses to grow and become
more productive and sustainable through technology
Our
enablers
Next evolution
technology
Simple, data-driven
organisation
Innovation culture
Our commitment:
to stand together
for generations
to come
Economic
Transformation
Toitū Sustainability at SparkTe Korowai Tupu
Digital
Equity
Sustainable
Spark
Our Māori
Strategy
14Hello tomorrow
Our new strategy – FY24-FY26
Our new strategy – FY24-FY26
Spark’s plan on a page
During the year we launched our new
three-year strategy, which sets out our
ambitions to FY26.
The new strategy builds on the progress we
have made over the last three years
through our capability-led approach and
investment into new growth markets and
positions Spark for success in multiple
potential futures. We will continue to
accelerate Spark’s transition from its
telecommunications roots to broader
digital services by investing in digital
infrastructure and high-tech solutions that
will generate new revenue streams.
This includes a $250-$300 million
investment into the high-growth data
centre market, and $40-$60 million
investment into the development of 5G
standalone and multi-access edge
compute, which will open up new
commercialisation opportunities in mobile,
broadband and digital services.
Our focus over the next three years will be
to empower the people and businesses
creating Aotearoa’s tomorrow by:
• Bringing New Zealanders the best
digital first experiences, curated to
their needs
»We will deepen our use of data-
driven personalisation for individuals
and households and leverage our
technology investments to enable
us to continue to lead mobile and
optimise broadband.
• Enabling New Zealand businesses to
grow and become more productive
and sustainable through technology
»We will lead SME (small-medium
enterprises) by delivering scalable,
standardised technology solutions
that meet the needs of our
customers.
»We will lead business by
accelerating simplification and
portfolio focus to deliver growth
and efficiency, and by enabling our
customers to become more
productive and sustainable
through technology.
»We will grow high-tech solutions for
our enterprise and government
customers by leveraging new
capabilities and technology
convergence to create innovative
solutions to problems that unlock
new value.
We will build on our capability-led
approach established over the last
three-years by focussing on a set of
enablers that give us a competitive
advantage and underpin growth in
established and new markets:
1. Next evolution technology
We will continue to deliver a highly secure,
automated and resilient network, while
investing in the digital infrastructure our
customers need to grow. We will deploy
5G standalone nationwide to create the
opportunity for us to provide ‘fibre-like’
experiences, accelerating our
competitiveness and fuelling new
growth areas.
2. Simple, data-driven organisation
We will unite our focus on simplification
and data and extend the competitive
advantage we have built in mobile and
broadband further into SME, and across to
business, and the Spark enterprise at large.
3. Innovation culture
We will offer our people opportunities to
learn and develop skills that will fuel our
growth ambitions and prepare them for the
future of work. This will differentiate Spark
by creating a culture of learning and
innovation, progression opportunities and
top decile people engagement.
How we do business will remain just as
important as what we will do.
Toitū Sustainability at Spark is integrated
into Spark’s business strategy through our
commitment to the three pillars of
Economic Transformation, Digital Equity
and a Sustainable Spark. These
commitments sit alongside our Māori
Strategy, Te Korowai Tupu, which informs
how we develop strong connections with
Māori and builds our understanding of
te ao Māori.
• Toitū Sustainability at Spark
»We will continue to pursue
growth that supports Aotearoa
New Zealand’s economic
transformation, protects our natural
environments and helps to close the
digital divide.
• Te Korowai Tupu
»Our Māori Strategy finds the shared
space between te ao Māori and the
corporate world, with a focus on
meaningful partnerships that
increase Māori participation and
progression in our sector and
supports the revitalisation of
te reo Māori.
With this focus we will deliver sustainable
growth for our shareholders, measured by:
• Delivering top-line revenue growth
through reinvestment in the business,
which when combined with sustained
cost discipline, will deliver low-mid
single digit CAGR
2
EBITDAI growth.
• Disciplined capital management and
free cash flow growth, which will grow
dividends for our shareholders and
generate market-leading total
shareholder returns.
• Lifting customer engagement by +10.
• Achieving top decile people
engagement.
• Maintaining top quartile sustainability
benchmarking.
1 5G standalone refers to a network that has a 5G
core, as well as 5G on mobile towers rather than
non-standalone 5G, which uses a combination
of existing 4G LTE architecture with a 5G radio
access network (RAN).
2 Compound Annual Growth Rate.
Ko te pae anamata, whakamaua
15
Spark New Zealand Annual Report 2023
Te Korowai
Tupu
Our Māori strategy, Te Korowai Tupu (the
cloak of growth), takes the threads of a
tangata whenua (indigenous people)
world view that can be woven across Kora
Aotearoa (Spark New Zealand) – into our
strategies, actions, and values.
Te Korowai Tupu is inspired, driven, and led
by kawa (protocol), tikanga (process), and
kaupapa Māori, and supported by Spark’s
talented group of Māori leaders – our
Kaiārahi.
Over the next three years we will focus on:
• Meaningful partnerships that deliver
great outcomes for Māori
• Increasing Māori representation within
Spark and the broader technology
sector
• Te Tiriti o Waitangi principles of
protection, partnership, and
participation
• Supporting the normalisation of te reo
Māori (language) and tikanga Māori
(practices)
In doing so, our aim is to find the shared
space between te ao Māori and the
corporate world. In this spirit of partnership,
threads of Te Korowai Tupu have been
woven throughout this report and
highlighted using the Kora Aotearoa logo.
Our new Sustainability
Framework
As we look to the next three years, we have
updated our Sustainability Framework to
provide greater transparency and
accountability. Our three key focus areas
are enduring and represent the highest
materiality to both Spark and our broad
range of stakeholders.
Each focus area has a clear set of
commitments with KPIs to track our
progress, which have been mapped to the
Sustainable Development Goals. We will
report on our progress against these KPIs
annually in our Integrated Report, while
continuing to provide updates at our half
and full-year results announcements.
In economic transformation we know that
the biggest contributions we can make are
to invest in the technologies that will help
our country transform; to expand
connectivity to more of the places
New Zealanders live and work; and to
support businesses to become more
sustainable through technology.
In digital equity we want to increase the
accessibility of our products and services,
while maintaining the highest security and
privacy standards; we will continue
supporting low-income households to
participate in the digital world; and we will
focus both Spark and Spark Foundation
investment on increasing Māori and Pasifika
participation in the technology sector.
Lastly, in Sustainable Spark we will continue
to invest in the capabilities, wellbeing and
diversity of our people; we will reduce our
impact on the natural environment; and we
will operate a responsible and ethical
business and supply chain.
We believe this is an ambitious roadmap
that is focussed in the areas where Spark
can make the most meaningful contribution
to Aotearoa.
“ Toitū Sustainability at
Spark is integrated
into Spark’s business
strategy through our
commitment to the
three pillars of
Economic
Transformation,
Digital Equity and a
Sustainable Spark.”
Relates to
Te Korowai Tupu
16
For running header don't delete
Hello tomorrow
Te Korowai Tupu
1. Excluding subsidiaries 2. Covering purchased goods and services and capital goods 3. Joint Audit Cooperation
TOITŪ SUSTAINABILITY
AT SPARK
TŪHONO: we connect WHAKAMANA: we empower MATOMATO: we succeed together MĀIA: we are bold
Economic
Transformation
Empower
New Zealand
to transform to a
high productivity,
low carbon
economy
Our commitmentKPIs
Sustainable
Development Goals
Sustainable
Spark
Be bold in our
business to have a
positive impact on
our people, the
environment and
our communities
Champion digital
equity so all
New Zealanders
can thrive in a
digital future
Digital
Equity
Emerging technology:
we will invest in the digital
technologies and
infrastructure Aotearoa needs
to transform
• Deliver 5G Standalone
nationwide by FY26 to enable
innovation
Digital infrastructure:
we will expand connectivity to
more of the places New
Zealanders live and work
• Increase 5G connectivity to all
towns with a population
>1,500 by end FY26
Business digitisation:
we will support businesses to
harness the power of
technology to become more
sustainable
• Champion the integration of
digital technology into
Aotearoa’s climate change
planning
Products and services:
we will increase accessibility
and maintain the highest
security and privacy standards
• Maintain top quartile position
in the Worldwide
Benchmarking Alliance’s annual
Digital Inclusion Benchmark
Skills and pathways:
we will focus Spark and Spark
Foundation investment on
increasing Māori and Pasifika
participation in the
technology sector
• Increase Māori and Pasifika
participation within Spark by
+5 percentage points by
end FY26¹
Affordability:
we will support low income
households to participate in
the digital world
• Extend the reach of our
not-for-profit broadband
service Skinny Jump, with YoY
growth
Our people:
we will invest in the
capabilities and wellbeing of
our people and champion
diversity and inclusion
• Achieve 40:40:20 gender
representation across Spark by
June 2024
• Spark has a top decile
innovation culture by FY26
Our environment:
we will reduce our impact on
the natural environment
• Science-based target (SBTi):
reduce Scope 1 and 2
emissions 56% from
FY20-FY30 and ensure 70% of
our suppliers by spend
2
have
SBTi-aligned targets in place
by 2026
Governance:
we will operate a responsible
and ethical business and
supply chain
• Maintain top quartile
benchmark in the annual
Corporate Sustainability
Assessment
• Complete five JAC
3
aligned
supplier location audits annually
17
Spark New Zealand Annual Report 2023
Ko te pae anamata, whakamaua
Our performance
1 Earnings before finance income and expense, income tax, depreciation,
amortisation and net investment income (EBITDAI) and capital expenditure
are non-Generally Accepted Accounting Practice (non-GAAP) measures.
These measures are defined and reconciled in note 2.5 of the financial
statements.
2 Adjusted for the impact of the net gain on sale of Connexa of $583 million,
within other gains, and the one-off provision of $54 million for Spark Sport,
within other operating expenses. There were no adjusting items in FY22.
3 Adjusted for the impact of the net gain on sale of Connexa of $583 million,
the one-off provision of $54 million for Spark Sport, the $5 million net gain
on dilution of the investment in the Connexa group and related tax
impacts of $168 million. There were no adjusting items in FY22.
4 This represents the H1 FY23 first-half dividend of 13.5 cents per share,
together with the H2 FY23 second-half ordinary dividend declared of
13.5 cents per share. Referenced on page 19.
5 On 31 January 2022, Spark acquired the remaining 50% of Connect 8
Limited, a mobile infrastructure business.
Operating revenues and other gains
• Mobile revenue growth of $119 million, or 8.8%, has been
driven by a growth in service revenue of $81 million, or 9%, due
to mobile connections growth and an increase in roaming and
inbound travellers revenue, with borders being fully open from
the end of July 2022. Non-service revenue also grew by
$38 million, due to an increase in handset prices and higher
volumes of accessories sales.
• Broadband revenue declined mainly due to a decline in average
revenue per user (ARPU) with customers migrating off legacy
plans and being acquired on lower priced in-market plans.
• Procurement and partners revenue increased by $46 million, or
8.6%, mainly due to increased licencing renewals for software,
particularly in the health sector.
• Cloud, security and service management revenue was impacted
by the ongoing shift between private and public cloud and
service management workloads were impacted by lower activity
in the health sector post COVID-19.
• Managed data, networks and services revenue growth of $4
million was driven by customer growth, along with increased
connections in key products.
• Voice revenues declined due to a combination of connection
losses and associated lower calling volumes as part of a
continued shift from fixed line to wireless calling, together with a
return to normalised 0800 and fixed-to-mobile calling revenues
after the COVID-19 related spikes in FY22.
• Other operating revenue grew $89 million, or 58.6%, driven by
mobile infrastructure revenue, including a full-year contribution
of Connect 8
5
compared to five months in FY22, and IoT
revenue growth resulting from increased connections.
• Adjusted other gains of $33 million, up $7 million from FY22,
were mainly generated from the sale and acquisition of mobile
and data centre network equipment and other assets, and gains
on lease modifications and terminations.
• Excluded from the adjusted result is the net gain of $583 million
from the sale of Connexa (formerly TowerCo), which contained
Spark’s passive mobile tower assets.
$ MILLION
MOBILE
BROADBAND
VOICE
PROCUREMENT
AND PARTNERS
CLOUD, SECURITY AND
SERVICE MANAGEMENT
MANAGED DATA,
NETWORKS AND SERVICES
OTHER OPERATING REVENUES
AND OTHER GAINS
NET GAIN ON SALE OF
CONNEXA
FY23
FY22
FY23
adjusting
item
1,600
1,400
1,200
1,000
800
600
400
200
0
$4,491m 20.7%
($3,908m up 5.1% on an adjusted basis)
Reported EBITDAI
1
$1,722m
49.7%
Adjusted EBITDAI
1,2
$1,193m
3.7%
Adjusted net earnings
3
$433m 5.6%
Reported net earnings
$1,13 5m
176.8%
Hello tomorrow18
Our performance
Our performance
25
75
125
175
225
275
325
375
425
475
525
1,675
1,725
1,775
1,825
$ MILLION
PRODUCT
COSTS
LABOURSPARK SPORT
PROVISION
OTHER
FY23
FY22
FY23 adjusting item
Operating expenses
• Product costs increased by $108 million, or 6.4%, driven by
increases in mobile handset costs, procurement and mobile
infrastructure costs supporting the increased revenues, partially
offset by decreased voice costs as it continues to become a
smaller part of the business.
• Labour costs increased by $16 million, or 3.2%, due to the
inclusion of a full year of Connect 8 results, insourcing of field
services, growth in subsidiaries Entelar Group and MATTR, and
increased remuneration costs.
• Adjusted other operating expenses increased by $21 million, or
5.5%, including an $18 million increase in accommodation costs,
driven by operating charges under the new Connexa lease and a
$6 million increase in travel costs following the easing of travel
restrictions.
• Excluded from the adjusted result is $54 million for the Spark
Sport provision. This was taken in the year following the
announcement that TVNZ would become home for the majority
of Spark Sport content from 1 July 2023. The provision includes
ongoing obligations under content rights agreements that
extend to FY28.
$2 ,769m 7.7%
($2,715m
2
up 5.6% on an adjusted basis)
Other
• Total depreciation and amortisation reduced by $16 million.
Depreciation and amortisation for property, plant and equipment
and intangibles was $10 million lower, primarily driven by the
disposal of Connexa assets. Depreciation on right-of-use assets
reduced by $5 million due to a net decrease in mobile right-of-use
assets following the Connexa transaction.
• Net finance expense increased by $19 million, with both finance
income and finance expense increasing as a result of increasing
interest rates. The overall increase in the year was driven by higher
lease interest expense largely because of interest on the new
Connexa lease.
• Adjusted tax expense increased by $14 million, in line with the
increased adjusted earnings before tax for the period.
• Tax income on the adjusting items includes $14 million for the
Spark Sport provision and $154 million as a result of the Connexa
transaction. Note that income tax payments in FY23 were $190
million, up from $160 million in FY22.
0
100
200
300
400
500
600
DEPRECIATION
AND
AMORTISATION
NET
FINANCE
EXPENSE
NET TAX
INCOME ON
ADJUSTING ITEMS
ADJUSTED
TAX
EXPENSE
$ MILLION
FY23
FY22
FY23 adjusting item
Connexa gain on sale
$583m
Reported basic earnings per share
60.7 cents
17 7. 2%
Adjusted basic earnings per share
3
23.2 cents
5.9%
Dividends per share
4
27.0 cents
8.0%
Ko te pae anamata, whakamaua
19
Spark New Zealand Annual Report 2023
620
670
720
770
820
870
$ MILLION
RECEIPTS FROM INTEREST
FY22
PAYMENTS FOR INCOME TAX
RECEIPTS FROM CUSTOMERS
PAYMENTS FOR INTEREST ON DEBT
PAYMENTS FOR INTEREST ON LEASES
PAYMENTS FOR INTEREST ON LEASED
CUSTOMER EQUIPMENT ASSETS
PAYMENTS TO SUPPLIERS
AND EMPLOYEES
FY23
Cash flows
• Operating cash flows decreased by $41 million with
increased net earnings being more than offset by higher
payments for provisional tax in FY23 and higher payments
for interest on leases, driven by interest on the new
Connexa lease.
• Investing cash inflows were $917 million higher than the
prior year largely due to net proceeds from the sale of
Connexa of $893 million, after transaction costs, and $11
million of cash proceeds from the sale of assets. Reduced
payments to long-term investments offset increased spend
in capital assets due to additional spend in growth
opportunities. Payments for spectrum represent a
prepayment for spectrum rights to be received in FY24.
• Financing cash outflows increased by $846 million primarily
due to net repayments of debt in FY23 using Connexa
proceeds, $146 million of share repurchases under the
on-market share buy-back programme and higher payments
for dividends due to an increase in the H1 FY23 dividend to
13.5 cents.
• Free cash flow was $56 million higher in FY23, driven by the
increase in EBITDAI and lower payments for the capital
expenditure included in free cash flow
1
, partially offset by
increases in payments for interest and tax outlined above.
20232022
YEAR ENDED 30 JUNE$M$M
Net cash flows from operating activities800841
Net cash flows from investing activities425(492)
Net cash flows from financing activities(1,196)(350)
Net cash flows29(1)
Free cash flow
1
489433
1 Free cash flow is a non-GAAP measure and is calculated on page 9 of
Spark’s FY23 Detailed Financials. The prior year comparative has been
restated to align with the FY23 definition for free cash flow.
Operating cash flows
$800m - 4.9%
Hello tomorrow20
Our performance
For running header don't delete
Key capital expenditure projects for the year included:
• IT systems investment included lifecycle investment and
licencing for internal IT systems, enhancements to support
new products and deliver simple, intuitive customer
experiences, development of deep customer insight
functionality and expansion of enterprise systems capability.
• Data centre spend was primarily on the new facility at Takanini,
with supporting investment into the Mayoral Drive facility.
• Mobile network investment included continued investment in
Spark's radio access and 5G deployment, increasing capacity
and coverage for mobile and wireless broadband. It also
included sustain and resilience investment in mobile core.
• Fixed network and international cable capacity included
investment to meet future requirements for Spark's fibre and
transport network, continuation of our core network expansion
and resilience programme, advancement of our exit strategy
for the PSTN and international cable capacity purchases to
meet forecasted demand for data.
• Investment in the Radio Access Network (RAN) was to support
full 5G standalone (SA) capability as an enabler of future
revenues from emerging technologies.
$515m
Capital expenditure
2
Capital expenditure to adjusted operating revenues
IT SYSTEMS
DATA CENTRES
MOBILE NETWORK
FIXED NETWORK & INTERNATIONAL
CABLE CAPACITY
5G SA READINESS
PROPERTY
CLOUD
OTHER
$
4
2
M
$
2
3
M
$
1
9
M
$
1
0
M
$
1
1
6
M
$
9
3
M
$
9
8
M
$
1
1
4
M
2 Capital expenditure is a non-GAAP measure and is defined in note 2.5 of
the financial statements.
3 Capital expenditure to reported operating revenues is 11.5% (FY22 11.0%).
13. 2%
3
( F Y 2 2 11. 0 %)
Ko te pae anamata, whakamaua
21
Spark New Zealand Annual Report 2023
As New Zealand’s largest telecommunications and digital services company,
we have relevance for almost every New Zealander. Our customers range from
individual New Zealanders and households to small businesses, not-for-profits,
government and large enterprise customers, as we deliver mobile, broadband,
cloud, digital services and entertainment.
We are excited by the opportunities digitisation brings and recognise our
responsibility to help Aotearoa leverage new capabilities to become more
productive and sustainable through technology.
Creating value
for our
customers
Social capital
Connected customers
OUTCOMES FY23
22Hello tomorrow
Creating value for our customers
Creating value for our customers
Customer experience
We have an enduring focus on improving
the experiences of our customers at Spark,
by making their interactions with us simple
and effective. This work is showing up in
customer feedback, with our measure of
customer satisfaction, our interaction net
promoter score (iNPS), up 2 points to +31
in FY23.
Simplifying to deliver on today’s
customer needs
We have continued our focus on
simplification – retiring legacy products and
services and developing new and more
intuitive ones that better reflect our
customers’ needs.
This includes reducing the number of
legacy mobile and broadband plans
our customers have been using, by
recommending the most similar available
plan, based on their usage and current
charges. In FY23 we moved over 240,000
lines onto modern plans, enabling us to
retire 38 legacy plans across mobile and
broadband.
In October, we retired our 'Companion
Plans' and launched ‘Team Up’, which
offers customers savings based on the
number of plans they have with Spark –
with a percentage discount off each plan
of up to 35%.
During the year we also closed down our
Collect Calling and 0900 services, with
usage in steep decline and the technology
used to deliver these services reaching
end-of-life.
Transparency
In FY22 we provided our customers with a
rolling 12-month view of their mobile and
broadband usage in the MySpark App and
MySpark web portal, and this year we took
this a step further with roaming usage
monitoring. This allows customers to track
their calling, text and data usage and better
manage their roaming pack allowances
while travelling overseas.
After a successful trial of a new right-
planning programme for our consumer
customers, ‘Made for You Review’, in FY23
we launched the programme more
broadly. The ‘Made for You Review’
prompts customers to check they are on
the best plan for their needs, with an email
providing a personalised view of their
usage and a recommendation on the best
plan available to them.
We are now working to extend the
programme to all of our broadband
customers and those on selected
legacy plans.
Making it easier for our customers
to interact with Spark
This year we have continued to focus on
how we can further meet our customers’
preference to interact with Spark digitally,
by providing the most convenient and
seamless digital platforms for
communication and self-service.
At the heart of our interactions with our
customers is our ‘Unified Frontline’ (UFL)
team, where our people are cross-skilled
across multiple customer touchpoints (such
as messaging, contact centres or retail
stores) and then moved around based on
customer demand. Over the past year, we
have evolved this model to ensure that it
best serves our customers’ needs.
Our messaging tool, which is available via
the MySpark App or a customer’s preferred
messaging app, is becoming an increasingly
popular way for our customers to reach us.
Messaging allows customers to respond in
their own time to an ongoing conversation,
unlike calling or live chat, which require both
the customer and agent to be available to
talk at the same time. For our UFL team
members, it means they can support
customers during any quiet periods in stores
– ensuring we are taking every opportunity to
deliver timely responses to customer
queries. Use of our messaging tool has
increased by 10% in the last financial year,
and our MySpark App now has around
1.57 million unique users (growing 10%
year-on-year) with 2.33 million interactions
per month on average.
Over the past couple of years, we have
been working to introduce ‘Shadow Mode’,
which allows our UFL teams to use the
same online journey as our customers,
rather than navigating more complex,
separate systems. This means agents can
see exactly what our customers can see
when providing support, which enables
faster and more effective customer support.
We also made some changes to our
website shop through our ‘Future Web’
programme, implementing a new format
with a new look and feel that is more
intuitive for customers and better
integrates with our internal systems.
In FY23 we saw a 13% increase in customer
journeys taken digitally for sales and
service, contributing to a 12.6% decline in
customer care contact via voice.
+31
Our interaction net promoter score rose
2 points to +31 points in FY23.
Ko te pae anamata, whakamaua
23
Spark New Zealand Annual Report 2023
Supporting our customers through Cyclone Gabrielle
The impact of Cyclone Gabrielle was
significant, with large-scale power
outages and cuts to fibre backhaul
putting incredible pressure on
telecommunications networks in
impacted areas. We worked with
urgency to restore connectivity for
New Zealanders, which you can read
more about in the network and
technology section of this report.
We also moved quickly to put support
measures in place for our impacted
customers. Our seven-day support
package helped impacted mobile
customers stay connected:
• Prepaid mobile customers received
an extra 100GB of data and
unlimited calling and texting
• Pay monthly ‘Endless’ customers had
their reduced speed thresholds
removed, enabling them to access
max speeds.
• Pay monthly ’Rollover’ customers
had data caps lifted so they had
access to unlimited max speed data.
• All mobile customers received free
hot spotting so they could use their
data on other devices as well.
As our stores in impacted regions
recovered from any damage and
gradually opened their doors, they
became local support hubs offering
technical support, device recharging
and access to store WiFi.
We kept our customers informed on the
connectivity restoration progress
through a dedicated webpage and
social media and set up a dedicated
phone line to ensure our call centre
could prioritise support for impacted
customers.
Once services were resolved, we
proactively contacted our mobile,
landline and broadband customers in
the area, who had been without service
for an extended period, and applied
credits to their account for each day
they were without service. We also
offered impacted customers
disconnections without fees and our
Customer Link service, which allows
customers to pause their landline plan
and retain their phone number for six
months without incurring any charges.
Using data and AI to personalise
customer interactions
Having a deep understanding of our
customers and their needs allows us to create
better experiences and more relevant offers.
We have been developing our data capability
for a number of years now and through the
use of artificial intelligence and machine
learning we are now able to better predict the
needs of our customers and deliver them the
right product or service at the right time.
Market-leading data and AI capability,
combined with simplified portfolio, delivered
17% annual improvement in conversion and
9% efficiency gains.
We are using a similar capability for our
small to medium enterprise (SME)
customers, with a programme led by our
‘SMILE’ (SME Intelligence) squad. This
programme aims to understand where our
SME customers are on their digitisation
journey with insights generated through
artificial intelligence, which then enables our
team members to respond with the most
relevant products and services.
When utilising these capabilities, we are
guided by our AI Principles, our Privacy
Values and our Privacy Policy, which ensure
we take a responsible and ethical approach
to the design and operation of AI
technologies. Our AI principles are
published on our website, providing
transparency for all our stakeholders:
www.sparknz.co.nz/about/governance
Investing in our brand strength
Spark has one of the most well-known
brands in Aotearoa, and we continually
invest in our brand strength to support our
marketplace success. Our three-year
ambition to FY23 was to grow brand
strength by 10 percentage points. Over the
last 12 months we have focussed on driving
efficiency, effectiveness and impact for our
brands Spark and Skinny through data-
driven brand measurement that helps us
better understand how to connect with
current and potential customers.
We achieved strong growth of 7 percentage
points and our tracking shows that Spark
has the highest brand strength of all
telecommunications companies in
New Zealand, is the country’s most trusted
telco and has also taken a leadership
position in the Auckland market.
Hello tomorrow24
Creating value for our customers
For running header don't delete
Spark 5G Street Museum:
A 5G-powered, augmented
reality experience
From August 2022 through to June 2023,
we put a modern twist on the traditional
museum experience through our 5G Street
Museum – demonstrating what emerging
technologies like 5G can bring to art,
culture and entertainment. The Museum
showcased a co-created series of
5G-powered augmented reality (AR)
experiences that brought to life unseen
stories of some of our nation’s most iconic
creatives – Parris Goebel, Benee, David
Dallas, Teeks and Askew One.
The Spark 5G Street Museum app was
available free to download for all, with
exhibits initially available to view across
selected streets in Auckland, Hamilton,
Wellington, Christchurch and Dunedin.
Each exhibition explored new forms of
storytelling and self-expression through
the power of 5G and AR.
Bringing New Zealanders the
entertainment that moves them
Spark is focussed on bringing New
Zealanders the best of entertainment,
offering services such as Netflix and Spotify
with mobile and broadband plans, as well
as giving our customers the chance to get
closer to the music they love, thanks to our
entertainment partnerships.
Our partnership with Spark Arena and
other festivals allowed us to provide our
customers with exclusive pre-sales, unique
experiences and the opportunity to win
free tickets to shows via exclusive Spark
customer competitions. Spark Arena
hosted ~500,000 patrons during the year,
some of whom we also hosted at ‘S
Lounge’, a VIP space that Spark customers
and their guests can enjoy prior to shows.
To remind our customers of the extra
value available to them by being a Spark
customer, this year we introduced a
programme called ‘Value Playback’ –
which shows customers the true value they
get through Spark, including their personal
savings, additional benefits they could
take advantage of, as well as the broader
value all New Zealanders benefit from
through Spark.
Farewell to Spark Sport
In December we announced our decision
to exit the sports streaming market with
TVNZ becoming the home of the majority
of Spark Sport content from 1 July 2023.
After entering the sports streaming market
in 2019, we delivered a wide range of
high-quality sporting content to our
customers across Aotearoa, alongside our
valued partners. With New Zealand Cricket,
we successfully produced three seasons of
world-class cricket matches in
New Zealand, which grew cricket
viewership, particularly among younger
audiences, and increased the quality and
quantity of women’s cricket coverage.
At the same time, it was challenging to
reach the scale we aspired to across the
Spark Sport platform, with COVID-19
causing major disruption to sporting codes
globally. That slower than expected start,
coupled with the escalating costs of
content rights globally, made it difficult to
justify the type of investment Spark Sport
required when we have a wider range of
investment opportunities across our
broader business.
We worked with our partners to transition
their content over to TVNZ and also
supported our Spark Sport people to find
new employment opportunities within
the market.
Ko te pae anamata, whakamaua
25
Spark New Zealand Annual Report 2023
Partnering with
New Zealand businesses,
big and small
Spark is a trusted partner to New Zealand’s
business community, with customers
ranging from start-ups and family
businesses all the way through to
government and New Zealand’s most
complex and innovative enterprises.
Supporting small-medium
businesses
Spark supports over 110,000 small to
medium businesses (SMEs) around
New Zealand through our network of local
Business Hubs. We use a licensee model,
which means Business Hubs are locally
owned and have a deep understanding of
the needs of their customers. This ‘local like
you’ approach is resonating, with a 5-point
increase in our net promoter score over the
last year.
In a high-inflation environment we know
the number one concern for our SME
customers is escalating costs, and we
continued to support them to achieve
productivity and efficiency improvements
by leveraging the power of technology.
We also continued to encourage small
businesses more broadly to get their
businesses online and adopt digital tools
through our ongoing support of the Digital
Boost Alliance. Our CEO Jolie Hodson
served as Chair of the Governance Board
in FY22 for the Alliance’s first year of
operation. Greg Clark, our new Consumer
and SME Director, is now on the Board.
Approximately 62,000 small businesses
have participated in the Digital Boost
programme so far.
Spark Lab
Spark Lab aims to inspire SME businesses
with new perspectives, delivered through
engaging virtual and in-person events.
Over the past year, Spark Lab events have
covered important topics such as emerging
technology, designing healthy workplaces,
being good custodians of data and
implementing financially and
environmentally sustainable business
practices, so that we can help businesses
accelerate into tomorrow with confidence.
At a time when we are seeing the
possibilities for digital technology to
enable cross-sector transformation, Spark
Lab worked with experience design
company, Semi Permanent, to bring some
of the world’s top innovators to Auckland
for our ‘Future State’ event in March. Future
State was a keynote speaker event that
explored the driving forces behind the next
era of technological innovation. Speakers
shared new trends, practical advice and
new approaches to innovation with ~1,000
attendees, including many of our SME
customers, to support their commercial
success through technological and creative
development.
Partnering with Māori
businesses
Our partnership with Whāriki, an
independent network of Māori
professionals, business owners,
entrepreneurs and rangatahi (youth), is
now in its third year and helped to
deliver a series of four regional events
in Whangārei, Tāmaki Makaurau, Te
Whanganui ā Tara and Ōtautahi. The
‘Talking Tech, Digital & Pākihi Māori
– Developing Capability through
Kōrero’ events brought together
thought leaders, innovators and
entrepreneurs from across the motu to
discuss the challenges and aspirations
of Māori businesses in the tech industry.
We also continued our support of the
Kōkiri Māori Business Start-up
Accelerator, run by Te Wānanga o
Aotearoa, to ensure Māori businesses
receive the support and investment
they need to flourish as they pitch for
seed funding. This year, alongside
financial support, we have five leaders
from Spark who have volunteered to be
on the advisory boards of each start-up
to provide guidance and support. While
this is about providing technology
expertise to Māori start-ups
participating in the programme, the
reciprocal relationship also enables our
people to grow on their own te ao
Māori journeys.
Creating value for our customers
For running header don't delete
Hello tomorrow26
Supporting New Zealand’s large
enterprise businesses
Spark Business Group continued to
support New Zealand’s largest businesses
to grow and transform through technology,
with some notable examples outlined
below.
In January, Parliamentary Service
announced Spark as its new IST
(Information, Systems and Technology)
partner, with Spark now assisting with the
delivery of the IST strategic direction and
future technology roadmap for Parliament.
In December, our cloud business CCL was
appointed the multi-cloud managed
service partner for Christchurch City
Council and will provide a broad suite of
hybrid and multi-cloud capabilities.
Australasian infrastructure company, Fulton
Hogan, sought our cloud consulting
business, Leaven’s assistance to re-imagine
time consuming and high-risk road
inspections. Leaven developed an AI-based
observation platform in Amazon Web
Services (AWS), taking video footage of
road surfaces captured by a video camera
fixed to a road assessor’s vehicle. The
platform reviews millions of images of road
surface damage, classifying defects and
providing a maintenance schedule and
severity rating to estimate the scope of
repairs. Real-time processing ensures
datasets for each piece of road can be
assessed and compared as road inspectors
capture video.
Our call centre business Digital Island
supported telehealth service, Reach
Aotearoa (formerly known as CBG Research),
to develop an urgently needed national case
investigation service so that it could assist the
Ministry of Health in providing close contacts
of COVID-19 cases with information and
support. Digital Island developed a
sophisticated omnichannel contact centre
solution, which helped thousands of
New Zealanders to isolate safely, thereby
limiting the spread of the virus.
Spark’s data and AI business, Qrious,
teamed up with MyEnviro and Adroit to
create an environmental monitoring system
for a Mangaone catchment group of farms.
The software platform draws on the live
data provided by high-resolution water
testing sensors across the entire catchment,
monitoring water PH, dissolved oxygen,
conductivity and temperature, as well as a
scan-developed sensor measuring nitrates,
suspended solids and turbidity. This is
supported by a full weather station and two
soil moisture sensors. Data from the
sensors is uploaded to Adroit’s cloud via
Spark’s dedicated Cat-M1 Internet of
Things network, enabling energy efficient
transmission that conserves the battery of
isolated sensor equipment.
Supporting the digitisation
of the health sector
During the year, Aotearoa shifted away
from regional District Health Boards to
three national health services: Manatu
Hauora (Ministry of Health), Te Whatu Ora
(Health New Zealand) and Te Aka Whai Ora
(Māori Health Authority). The prior health
system review identified that developing
data and digital capability would be a
critical enabler of its transformation,
requiring partners with deep sector
experience, who can create solutions
that enable the delivery of improved
health outcomes.
With Spark Health having won national
contracts for digital services under the
newly established Te Whatu Ora last year,
we continue to provide Microsoft,
Non-Microsoft and Azure Software and IT
services to the sector.
Wholesale
Spark Wholesale supports New Zealand
and international service providers with
Mobile Virtual Network Operator (MVNO)
services, data transport national backhaul,
international connectivity and cloud,
internet, IP voice and satellite services.
In the past year, our wholesale business
continued to grow Spark’s data centre and
connectivity portfolios locally and
supported global carriers, Content Delivery
Networks (CDNs) and global cloud
partners with their growth plans within
New Zealand. We also supported global
cloud provider requirements for higher rate
wholesale international capacity services,
including 100Gbps and 400Gbps
bandwidths on submarine cable paths
out of New Zealand. Domestic and global
wholesale customers were also supported
with the new ‘application to person
messaging’ short messaging service
(A2P One), to help them communicate
by text with their New Zealand end-
customers effectively.
“ Spark is a trusted partner to
New Zealand’s business
community, with customers
ranging from start-ups and
family businesses all the way
through to government and
New Zealand’s most complex
and innovative enterprises.”
Ko te pae anamata, whakamaua
27
Spark New Zealand Annual Report 2023
Developing new services
for our customers with
emerging technology
MATTR
MATTR, a standalone Spark subsidiary
company, provides infrastructure for
verifiable data and digital trust. MATTR’s
Software as a Service (SaaS) Platform
products MATTR VII and MATTR Pi provide
enterprises, governments and people next
generation capabilities to support trusted
digital interactions.
MATTR products provide new, privacy
respecting, convenient ways for people
and organisations to hold their own digital
credentials securely on their device and be
able to selectively share their verifiable
credentials with different relying parties
either in person or over the internet.
In April, MATTR was appointed technology
partner for the New South Wales (NSW)
Government’s pioneering NSW Digital ID
and Verifiable Credentials program. MATTR
will provide products that enable verifiable
credentials to be issued via the NSW
Government’s apps and independently
verified by third parties – helping the
people of NSW prove who they are and
what they are eligible for, while limiting the
amount of personal information they need
to share.
MATTR offers both public and private cloud
deployments of its platform and currently
supports public cloud customers in
New Zealand, Australia, Europe, USA
and Canada.
Cyber security, customer
safety and privacy
Spark puts cyber security, customer safety
and privacy at the forefront of everything we
do. We work hard to ensure the security of
our own networks and also support our
corporate and enterprise customers with
their security needs. We offer customers a
breadth of capability to monitor and detect
attacks across their networks and information
architecture, reduce business security risk
and improve their security profiles.
Cyber security
The World Economic Forum’s Global Risk
Report 2023 identified widespread
cybercrime and cyber insecurity as one of
the top 10 most severe risks over the short
and long term. In New Zealand Spark is a
trusted advisor to businesses on cyber
security and works alongside cyber security
agencies to monitor and respond to threats.
Our Chief Information Security Officer
(CISO) has responsibility for Spark’s cyber
security, while all members of the Spark
Board’s Audit and Risk Management
Committee have governance responsibility.
We govern our security programme using
the industry’s best practice frameworks,
including ISO27001 and NIST CSF
(National Institute of Standards and
Technology Cyber Security Framework).
All Spark services and networks are built
with multiple checks in place during the
‘design’, ‘build’ and ‘operate’ phases, to
ensure that they are deployed with
industry-leading levels of security, and we
continually assess and measure our cyber
security maturity level.
Our cyber security strategy is shaped with
the following inputs:
• Dynamic road mapping: We adopt a
dynamic three-year outlook on our
security posture in an effort to predict
and prepare for potential cyber threats
in the coming years, whilst remaining
flexible to the realities of threats as they
arise. Roadmap management allows
our team to scrutinise the cyber security
strategy on a quarterly basis, taking into
account evolving global cyber security
threats and any new technologies we
can implement to enable and protect
our people and customers.
In FY23, Spark’s cyber defence tribe won the award for Best security team at the 2022 iSANZ awards.
“ We have a large
security
operations team
with over 100
security subject
matter experts.”
Hello tomorrow28
Creating value for our customers
For running header don't delete
• Maturity assessments: Our goal is to
always be aligned with, or even exceed,
the latest industry standards, to
consistently elevate our cyber security
maturity. We audit our security maturity
through internal and external audits,
with frameworks like NIST, SOC-CMM
and a proprietary CMMI Maturity model
developed by Accenture forming the
backbone of these assessments. In
FY23 we also partnered with Google’s
Mandiant to undertake a
comprehensive maturity assessment,
which will aid in our bi-annual external
board assurance audit.
• Alignment with Spark’s business
strategy: Our cyber security strategy is
carefully aligned to both our wider
business strategy and the network
evolution strategy to ensure it can
support the business as it evolves.
People also play a critical role in helping to
detect and defend against potential cyber
security threats. For that reason, everyone
at Spark is required to undertake regular
cyber security training modules, to equip
them in identifying and helping to mitigate
potential threats.
We have a large security operations team
with over 100 security subject matter
experts and processes that ensure
appropriate ownership, oversight and
ongoing risk management is applied to our
customers’ and Spark’s IT systems and data.
Our Incident Response Plan governs how
we respond to threats, and we have
invested heavily in our threat intelligence
platform. In FY23, Spark’s cyber defence
tribe won the award for Best Security Team
at 2022 iSANZ (Information and Security
Awards New Zealand).
Customer safety
Spark has an important role to play in
helping prevent New Zealanders falling
victim to increasingly sophisticated scams,
both by blocking scams when possible and
raising awareness with our customers.
As in previous years, we work to limit the
number of scam calls our customers
receive by monitoring unusual calling
activity and blocking offending numbers.
We work closely with the broader
New Zealand telecommunications industry
via the NZ Telecommunications Forum
(TCF) to share information so that numbers
can then be blocked across all networks.
We also block access to URLs featured in
scam texts to prevent customers
inadvertently clicking on the links. Where
possible, our security and fraud teams work
with law enforcement to identify and shut
down scamming operations but this is
challenging when they are located offshore.
Because we cannot stop scamming from
occurring, we are focussed on empowering
our customers to be vigilant when it comes
to scams. We regularly educate and alert
customers on fraudulent activity, including
through direct customer communications,
regular updates on our scam alert website,
sharing alerts about widespread scams on
our social media channels, partnering with
Netsafe on its educational scam call
brochure and ensuing our customer service
teams are equipped to assist with scam call
enquiries.
We also sell a landline product called Call
Screen, which contains technology that can
effectively help users protect themselves
from scam calls.
Ko te pae anamata, whakamaua
29
Spark New Zealand Annual Report 2023
Customer privacy
Protecting our customers’ personal
information is a responsibility we take
seriously. We’re committed to keeping
customers’ personal information safe and
managing it in ways that align with
customer expectations, Spark’s Privacy
Values and the law, including the Privacy
Act 2020 and the Telecommunications
Information Privacy Code 2020.
Our privacy programme
Spark’s Digital Trust team leads Spark’s
privacy programme, providing frameworks,
tools and training to support Spark people
to follow our Privacy Policy and Values, as
outlined below.
Internal processes and controls to
safeguard customer privacy:
• Risk assessments: New products and
services are assessed for any privacy
risks, with appropriate mitigations
embedded into design and
implementation. New vendors are also
screened to ensure privacy will be
managed appropriately.
• Personal information access
management: Spark’s Call Investigation
Centre (CIC) manages requests for
personal information from customers
and government agency requests for
“ We’re committed to
keeping customers’
personal information
safe and managing it in
ways that align with
customer expectations,
Spark’s Privacy Values
and the law.”
personal information. We report on
these requests in our Spark
Transparency Reports:
www.spark.co.nz/help/privacy-and-
safety/how-we-manage-privacy/
spark-transparency-report
• Responding to data breaches: Our
dedicated Data Breach Reporting Tool
enables any breaches to be reported
by Spark people and managed in a
customer-focussed way, in compliance
with the Privacy Act 2020.
Awareness and support for Spark’s people:
• Privacy resources: Spark’s Policy
Playbook contains guides for applying
privacy considerations to everyday
activities and comprehensive resources
are provided for Spark people online.
• Privacy training: All Spark people must
complete privacy training on joining
and annually.
• Support resolving privacy issues: Spark
people are encouraged to raise any
privacy issues they become aware of via
the Digital Trust team or Spark’s internal
online whistleblowing tool.
Supporting Spark customers:
• The Privacy and Online Safety section
on our website contains a range of tools
and services to help customers safely
manage their privacy and security.
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Privacy compliance and reporting
In FY23 Spark people reported 140 data
breaches for investigation with 28 of these
meeting the Privacy Act criteria for
notification to affected individuals and the
Office of the Privacy Commissioner (OPC).
Most notifiable breaches involved
fraudsters impersonating individuals using
personal information obtained from
non-Spark sources, such as compromised
online accounts or phishing (where
fraudsters trick individuals into sharing their
personal information). We also notified
impacted customers and the OPC of
unauthorised access to some MySpark and
Xtra Mail accounts. These incidents
generally occur when individuals enter
their credentials into a phishing website or
use the same password on other online
platforms, which have subsequently been
compromised and their credentials
harvested. These incidents follow broader
New Zealand trends, with phishing and
credential harvesting a key driver of reports
to CertNZ by individuals over the past year.
As fraudsters’ tactics continue to evolve we
continually review our internal processes
and educate our customers around best
practice password management and
avoiding scams.
In FY23 Spark received 19 substantiated
privacy complaints from customers, where
we identified opportunities for minor
enhancements to our practices and
processes, or targetted coaching. Spark
also received two substantiated complaints
via the OPC; one carried over from FY22
and one preliminary enquiry.
Marketing and legal compliance
Under our Code of Ethics, all Spark people
are responsible for ensuring we behave
ethically and comply fully with all
applicable laws and regulations. Spark’s
Legal and Compliance Policy sets out the
specific accountabilities that our people
have for complying with the law. Spark’s
people leaders make sure their teams
have the information and training
necessary to meet these standards, and
our Legal and Digital Trust teams support
our people with comprehensive
frameworks, tools, training and advice.
Every employee is required to complete
online training modules on the Code of
Ethics and how to apply it, and we reinforce
this training through regular internal
communication across the business. See:
www.sparknz.co.nz/about/governance
During FY23, there were no Advertising
Standards Authority decisions upheld
against Spark Group.
Spark continues to engage constructively
with the Commerce Commission as
appropriate, both proactively and
reactively, on a case-by-case basis to
ensure we are complying with all
applicable laws and regulations. This
includes working proactively with the
Commission on various ‘retail service
quality’ (RSQ) initiatives, such as greater
disclosure of broadband speeds.
Spark did not receive any formal sanction
by the Commerce Commission in FY23.
Having received a warning letter from the
Commerce Commission concerning the
historic sale of Spark’s wire maintenance
service to wireless and fibre customers in
August 2022, we have since undertaken all
agreed remediation steps. This includes
customer refunds and improving our
systems and processes to ensure this does
not happen again.
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31
Spark New Zealand Annual Report 2023
Creating value
through
our network
and technology
Manufactured + intellectual capital
Our extensive networks and valuable portfolio of digital infrastructure assets
underpin Aotearoa’s digital economy and help enable the people and businesses
creating our country’s tomorrow.
Our portfolio includes:
• Active infrastructure on ~1,500 mobile sites
• A 1,396km national fibre backhaul network
• Partnerships with local fibre networks and
Chorus to access the Ultra-Fast Broadband
(UFB) and national copper networks
• 16 data centres and 35 major network sites
(exchanges)
• A purpose-built Satellite Earth Station (SES)
in Warkworth
• ~41% shareholding in Southern Cross
Cable Network, which owns the Southern
Cross and the Southern Cross Next
international submarine cables.
• ~17% shareholding in Connexa
(formerly TowerCo)
Connected and resilient New Zealand
OUTCOMES FY23
32Hello tomorrow
Creating value through our network and technology
Creating value through our network and technology
Smart, automated
and unconstrained
Building a smart, automated network with
unconstrained capacity was one of the core
capabilities we identified in our three-year
strategy to FY23. With exponential growth
in demand for data ongoing across the
motu, we continued to invest in the digital
infrastructure our customers need to grow.
5G and emerging technologies
We have now deployed 5G into 77
locations and following the allocation of
80MHz of C Band spectrum from the
New Zealand Government, we continue
working towards nationwide coverage.
At the same time, we’re taking the
opportunity to upgrade 4G capacity on
many of our cell towers.
In parallel to increasing and densifying our
5G coverage across Aotearoa, our 5G
standalone capability continues to mature,
and we are committing $40-$60 million to
its development over the next three years.
5G standalone refers to a network that has
a 5G core, as well as 5G on mobile towers
– and this delivers enhanced performance
and lower latency, unlocking capabilities,
such as multi-access edge compute and
network slicing.
In January, we carried out a successful
deployment trial with Ericsson and Red Hat,
which demonstrated the ease with which a
standalone, cloud-native
1
solution can be
deployed and the low latency, high
bandwidth and reliability it can deliver to
enable high-performance use cases, such
as real-time video analytics.
While 5G networks in New Zealand today
use frequencies adjacent to 4G, in the
future these 5G networks will be able to
use a higher frequency range, known as
millimetre wave (mmWave). 5G in this
frequency range offers the opportunity for
optimised performance, faster speeds on
5G connectivity and improved customer
experiences. We are exploring 5G
technology operating in mmWave
spectrum and in July 2022, we conducted
New Zealand’s first rural trial of mmWave
technology. The trial achieved a peak
speed of 2.4 Gbps at a range of 3km and
1.4 Gbps at an extended range of 7km.
The internet of over a million things
Spark IoT (Internet of Things) solutions
have continued to grow, surpassing one
million ‘things’ being connected via Spark’s
networks this financial year. The growth
demonstrates the momentum behind
business adoption and cements Spark as
one of New Zealand’s largest IoT providers,
with connections growing 76% to 1.46
million and revenue growth of 33% over
the year.
IoT solutions enable businesses to monitor
things in the natural and physical worlds
around them, collecting data that can then
be analysed and used to inform decision-
making. This makes IoT a natural enabler of
initiatives that improve productivity, health
and safety, and sustainability. Our solutions
are now connecting tsunami gates, natural
water sources, forests, livestock, electricity
and water meters, construction equipment,
business fleets, pharmacy refrigerators and
much more.
We deliver these solutions through a range
of different Spark networks, each catering
to different business use cases, depending
on bandwidth and coverage requirements.
Networks delivering Spark IoT solutions
include our 3G, 4G and 5G mobile
networks, our Cat-M1 network, our NB-IoT
network and our LoRaWAN network.
Specialist IoT devices are used to record
and capture the data customers want to
monitor, and IoT platforms with dashboard
and alert features can be used by our
customers to act immediately on the
insights gathered.
Our purpose-built Innovation Studio in
Auckland allows New Zealand businesses
to explore and learn about emerging
technologies across IoT, 5G, multi-access
edge compute and mixed reality. The
studio also provides a space for our IoT
team to work with selected businesses to
co-create solutions that can help them
solve the challenges they face.
For examples of real-life Internet of Things
solutions in action, see the following two
pages for case studies.
1 An application that was designed to reside in the
cloud from inception.
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33
Spark New Zealand Annual Report 2023
Internet of Things sensors are continuously
monitoring conditions, providing valuable
real-time data. The data is transmitted to
Fire and Emergency New Zealand (FENZ),
who will be able to take action if conditions
present a fire danger. This means that in the
event of a fire, emergency teams can
strategically position ground and aerial
personnel at the most effective locations or
even track changes in wind speed and
direction to stay ahead of the event.
The technology will help protect the forest,
neighbouring properties and wildlife. And
the public will also be able to check out
things like pollen count, temperatures,
rainfall, and other environmental data
online, which could be helpful for
asthmatics or allergy sufferers.
Over the year, we have continued to
develop our ‘high-tech’ capabilities, such
as AI, machine learning, 5G standalone,
multi-access edge compute and the
Internet of Things.
Up until now these capabilities have
operated largely independently of each
other but globally we are seeing a rapid
acceleration of convergence or the
bringing together of these different
technologies to solve business problems
where it was not possible or cost-effective
to do so in the past.
Over the next three years we will bring our
high-tech solutions together to deliver our
customers converged, end-to-end business
solutions. Considering the challenges
New Zealand businesses are currently
facing – high inflation, labour shortages,
and adapting to climate change – we
believe technology convergence has an
important role to play in boosting
productivity and sustainability outcomes
across our economy.
Solving real-life business challenges
with high-tech solutions
Protecting Christchurch’s Waitākiri, Bottle
Lake Forest Park from fire threats
More than 800 hectares of commercial pine
trees, regenerating native ferns, orchids,
grasses and shrubs in Christchurch’s
Waitākiri, Bottle Lake Forest Park are now
protected by New Zealand’s first
environmental sensing and early fire
detection network through a trial we
conducted with Christchurch City Council
and our technology partner Attentis.
The trial saw the installation of five
self-powered sensors that will deliver
environmental monitoring, live micro-
climate weather updates, air quality and
ground temperature information and visual
and thermal imaging that assists in early fire
detection. The 360-degree cameras and
“ Globally, we are seeing
a rapid acceleration of
convergence or the
bringing together of
different high-tech
capabilities to solve
business problems
where it was not
possible or cost-effective
to do so in the past.”
The convergence of our
high-tech capabilities
New Zealand’s first environmental sensing and early fire detection network has been deployed at
Christchurch’s Waitākiri, Bottle Lake Forest Park.
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Trialling 5G and AI-powered industrial
robotics with the University of Auckland
We have been working with researchers
from the University of Auckland to explore
the potential of 5G to transform the world
of industrial robotics. Industrial robots are
commonly used in electronics, food and
medical manufacturing as they can be
programmed to carry out automated tasks
with precision and accuracy. In a recent
trial, a research team from the University's
Faculty of Engineering explored whether
they could be controlled remotely in the
cloud via a 5G network.
The researchers measured the connection’s
latency (whether there is any ‘lag’) and jitter
(how reliable and consistent the connection
is) by testing various public and private 5G
network settings and sending data
between Auckland, Sydney, London,
Singapore and Oregon (USA). Through this
trial the team learned that the key to
achieving optimal speeds and reliability
performance is to incorporate artificial
intelligence (AI) algorithms to compensate
for any issues during data transmission.
In the long term, the researchers imagine
this technology could have the potential to
enable a range of activities that are not
possible today – for example, the remote
operation of robots to work in dangerous
environments.
Safeguarding animal vaccines with Internet
of Things technology
In December, our Internet of Things teams
worked with agriculture business PGG
Wrightson to deploy a solution that
monitors animal vaccine fridge
temperatures to reduce the likelihood of
vaccines going to waste through
insufficient storage measures.
Temperature and humidity sensors
installed in the fridges are now providing
real-time information through a centralised
dashboard and issuing alerts any time they
get too warm, whether due to a faulty
fridge, loss of power or a door being left
ajar. Previously, manual fridge monitoring
meant issues weren’t always detected early
enough resulting in not enough vaccines
available for stock, expensive losses and
lots of paperwork. This solution has
successfully reduced these risks and staff
have been freed up to help customers or
tend to other pressing issues in their day.
Spark New Zealand Annual Report 2023
Watercare uses Internet of Things solution
to better service commercial properties
Watercare has started rolling out smart
loggers on water meters for commercial
premises in Auckland to better manage
water usage across the city, save on manual
reads and improve billing accuracy for
commercial premises. The managed
service solution designed by Spark IoT
(Internet of Things) includes a device and
Subscriber Identity Module (SIM)
management platform to make it much
easier to manage devices and data at scale.
The new smart meters mean Watercare can
focus on efficiency gains thanks to having
near real-time data across the connected
non-residential properties, which provide a
detailed overview of their water use. Faults
and leaks are more easily identified and
fixed, leading to cost and water savings
across the board.
Monitoring water quality with Christchurch
City Council
We have been working with Smart
Christchurch and specialist environmental
monitoring company Adroit to install
sensors near various water sources along
the Ōtākaro-Avon river, which will enable
Christchurch City Council to respond more
quickly to water contamination events. The
goal for the Council is to have the ability to
see pollution events unfold in real time and
potentially take preventative action. Each
sensor station is powered by its own solar
panel and takes water measurements every
15 minutes. The data is then uploaded to
the Adroit Cloud platform via the Spark
Cat-M1 network.
Water sensors have been installed near various water sources along the Ōtākaro-Avon river enabling
Christchurch City Council to respond quicker to water contamination events.
Ko te pae anamata, whakamaua
35
Spark New Zealand Annual Report 2023
Network resiliency in the face of
accelerating natural disasters
Cyclone Gabrielle response
New Zealand is no stranger to extreme
weather events, and in the vast majority of
situations our telecommunications
networks hold up incredibly well. However,
Cyclone Gabrielle was an exceptionally
extreme weather event that caused
significant and sustained power outages
and destroyed many roads and bridges
that hold fibre backhaul – which connects
mobile towers to mobile exchanges.
As a result of this, more than 600 mobile
towers (across Spark, One New Zealand
and 2degrees) went offline during the
storm. Within Spark’s network only one of
our cell sites sustained physical damage
– all our outages were caused by power
outages or fibre cuts. While our cell sites
have back-up batteries, these only last
around four to eight hours and generators
rely on a steady supply of diesel, and need
to be refuelled regularly, which poses
Health & Safety challenges, particularly for
remote areas or areas where roading
infrastructure has been impacted.
While most copper landlines will continue
to work even when there is a power
outage, for the most part even copper
broadband/landlines will not function once
the batteries running the local street-side
cabinet they are served from run out.
Unfortunately, when power networks are
out for long periods of time, this inevitably
affects all forms of communications
networks.
The Telecommunications Emergency
Forum, a working party made up of key
network operators and retailers,
coordinated by the Telecommunications
Forum (TCF), was activated immediately
and worked alongside the National
Emergency Management Agency (NEMA)
to coordinate an urgent industry response.
Generators and dispatch satellite units
were flown into the affected areas via
helicopter, and our teams were on the
ground to restore connectivity as soon as it
was safe to do so.
As a result of these efforts, within 96 hours,
more than 90% of impacted towers were
back online.
Enhancing telecommunications resilience
Our customers rely on us to provide
networks and technology that is highly
reliable and available in the face of
unpredictable events – from unexpectedly
high levels of usage during COVID-19
lockdowns, to extreme weather events.
New Zealand’s telecommunications industry
already invests hundreds of millions of
dollars into its networks each year, and at
Spark, we invest more than $100 million
into network resilience every year.
Following the recent severe weather events
around Aotearoa, the telecommunications
industry has been focussed on how
resilience to natural disasters can be further
enhanced. In May, the TCF prepared a
report exploring current industry
investment in resiliency measures and what
more can be done in the future. The report
considers the interconnectedness of
infrastructure during an emergency –
particularly telecommunications networks,
electricity infrastructure and roading – and
what this means for future preparations and
responses and what could be possible with
government co-investment and other
forms of support. The report contributes to
the Government’s established ‘Cyclone
Gabrielle Taskforce’, which in part seeks to
establish what can be done to ensure
New Zealand’s infrastructure is resilient to
unpredictable events. The report was
prepared with input from TCF members
and can be found on the TCF’s website
under ‘2023 Telecommunications
Resilience Plan’ at: www.tcf.org.nz/
industry/resources/publications/reports
For more information on the Governance
of climate risk, see page 74.
“ At Spark, we
invest more than
$100 million into
network resilience
every year.”
Mobile network availability
Mobile network availabilityFY22FY23
Availability of 4G/LTE network due to site outages
*
99.85%99.69%
* Calculated as the total availability time of all sites minus outages / total availability time of all sites.
The YoY change reflects the impacts of extreme weather events in FY23.
Entelar Group loading helicopter with power generators for our cell sites in Gisborne during
Cyclone Gabrielle.
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A stronger, higher capacity fibre backbone
for our network
Our Optical Transport Network 2.0 (or
OTN2.0), stretching from Auckland to
Christchurch, is now complete,
strengthening our network resilience and
capacity. The OTN is the existing fibre
backbone of our network, providing core
connectivity between the main cities in
New Zealand, transporting all our
customers’ mobile, broadband, landline
and business traffic and connecting Spark’s
network with other service providers and
with international cable networks.
The new OTN2.0 will replace the OTN over
time and has ’self-healing’ capabilities. This
means that it enables the light signals that
carry data across fibre to automatically
change their path when a cut to that fibre
occurs, automatically restoring services
where it is possible to do so. OTN2.0 has
seven times the data capacity of the OTN,
which will support Spark’s 5G rollout and
give our fixed and mobile networks
enough capacity to meet ongoing growth
in data consumption.
Trialling the role satellite can
play in resilience
We believe satellite has an important
role to play in adding an additional
layer of connectivity resilience. In
May, we announced a partnering
agreement with Netlinkz – an
ASX-listed network-as-a-service
technology company. Netlinkz will
supply Starlink business-grade
satellite broadband to customers
later in the calendar year, following
trials with a small number of
New Zealand businesses. This will
help businesses to continue
providing services to New
Zealanders in the event of extreme
weather events or other disruptions
to traditional connectivity.
In addition, we intend to begin trials
for a satellite-to-mobile service with a
subset of Spark mobile customers as
early as this calendar year in
partnership with satellite provider
Lynk Global. The initial trial service
will enable text messaging
periodically during the day, building
towards a more regular service
during 2024 as more commercial
satellites are deployed. At that time,
the service will be offered to Spark
customers more broadly. We also
intend to offer voice and data
services in the future, as these
services become reliably available.
We are also taking more ownership of our
fibre backhaul network through our access
and aggregation programme. This will
support our future 5G ambitions with
fit-for-purpose backhaul with significant
capacity uplift, network automation and
improved resilience. At the end of FY23,
more than 200 cell sites had been
integrated into this new network and we
have an ambition to integrate a further
200+ cell sites by the end of FY24.
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Spark New Zealand Annual Report 2023
Priority cellular services for the
Public Safety Network
In November, we announced a new joint
venture that provides users of the Public
Safety Network with the ability to roam
across both Spark and One New Zealand’s
mobile networks, improving redundancy in
the event of network impacts. The new
communications service, which was
established by Next Generation Critical
Communications Poutama Whai Tikanga
Pāpāho, will be used by New Zealand's
frontline emergency responders, including
Fire and Emergency New Zealand (FENZ),
Police, Hato Hone St John and Wellington
Free Ambulance, and will eventually see
Public Safety Network communications
prioritised across both networks.
Future proofing 111 calls
Spark operates a 111 service for
New Zealand known as ICAP (Initial
Call Answering Point), which means when
someone calls 111, a specially trained
Spark operator answers and transfers the
call to an operator for FENZ, Ambulance
(Hato Hone St John and Wellington Free
Ambulance) or New Zealand Police.
Previously, our ICAP system relied on
several end-of-life technologies, so in
August we completed a complex migration
to a new platform to ensure this essential
service can remain reliable into the future.
The new platform is more resilient,
provides a more user-friendly experience
for our ICAP operators, including better
flexibility when managing high call
volumes, and operates using more modern
and reliable technologies. The migration
was completed successfully with no
interruptions to 111 services.
Establishment of mobile towers
business Connexa
The sale of a 70% stake in Spark’s mobile
towers to the Ontario Teachers’ Pension
Plan Board for ~$911 million was
completed during the first half of FY23,
with the new independent business
branding itself as Connexa.
In June Connexa acquired 2degrees’
passive mobile telecommunications
towers from its owners, Macquarie Asset
Management and Aware Super. We
believe this will deliver greater operational
efficiencies that will support more
infrastructure sharing, better network
economics, and faster deployment of
new digital infrastructure across Aotearoa.
Because we did not contribute equity
to the acquisition, our shareholding in
Connexa was diluted from 30% to
approximately 17% of the resulting larger
business following completion of the
acquisition.
Connexa is now the home of our ‘passive’
mobile assets, which includes the towers
and light-poles that carry our ‘active’ assets,
such as our radio equipment. Our focus
is now on our active assets, or the ‘smarts’
of our network, that drive our differentiation
in the market, and we continue to own
these assets.
Connexa is well placed to deliver our build
programme of 670 towers over the next
10 years and Spark has already been
working with Connexa on our accelerated
5G rollout, delivering six new sites
during FY23.
The creation of Entelar Group
Entelar Group provides services such as
fibre and mobile builds, service and field
delivery, integrated supply chain, IT
distribution and mobile repair, testing and
service capabilities for Spark and other
customers, including Connexa.
Investing in our Data Centres
Excellent progress has been made on both
our Takanini Data Centre campus
expansion and our Mayoral Drive Exchange
upgrade to host significantly more
wholesale and cloud data centre services.
The first stage of our Takanini Data Centre
Campus expansion was completed in
August 2023, with the second stage to be
developed in FY24. This will increase
capacity by an additional 10MW of which
85% has been contracted and 100%
committed.
At our Mayoral Drive Exchange, the first
stage of upgrades has been completed
and great progress is being made on stage
two, and we are pleased to have our first
large international customer already
operational.
The data centre built-capacity market is
expected to rapidly expand over the next
three to five years and we will be investing
$250-$300 million into this high-growth
market to deliver long-term reliable returns
for our shareholders.
$9 11m
from the sale of a 70% stake in Spark‘s
mobile towers.
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Connecting rural Aotearoa
Improving rural connectivity remains a
key priority for Spark as we, alongside
our industry partners, work to close the
geographical digital divide. While our
networks reach 98% of New Zealanders,
there are significant challenges in providing
coverage across mountainous, foliage-
dense terrain with highly dispersed
populations.
In December 2022 the Rural Connectivity
Group (RCG) completed its contract to
build 400 cell towers in rural New Zealand
under the Government’s Rural Broadband
Initiative Phase 2 and Mobile Blackspot
Fund programmes. The contract was
delivered on time and within budget
and successfully provided connectivity
to ~32,000 households, ~1,000 km of
state highways and 100 tourist locations.
This included 20 large-scale, off-grid towers
and a modern mobile network for the
Chatham Islands.
The RCG is a joint venture between Spark,
One New Zealand, and 2degrees to share
the costs of building rural mobile
infrastructure where it would otherwise not
be commercially viable.
As part of the agreement we signed with
the Crown for the allocation of C-band
mobile spectrum, Spark, One New Zealand
and 2degrees have each committed an
additional $24 million in funding to the
RCG between 2023 and 2025, for the
expansion of mobile coverage further into
rural New Zealand and the further
reduction of mobile black spots on State
highways. We have also committed to
accelerating our own deployment of
Spark’s 5G network to 25 regional towns,
including new 5G sites that would not
otherwise have been built under our
existing commercial deployment plans.
When we combine that commitment with
our broader 5G rollout plans, our ambition
is to expand 5G connectivity to all towns
with a population of more than 1,500
people by the end of June 2026.
We will also extend our Internet of Things
networks into more rural areas, which will
enable rural businesses to make the most
of this technology. Our upcoming satellite
rollout will also help to plug blackspots in
particularly isolated rural areas that mobile
networks cannot reach.
“ Our ambition is
to expand 5G
connectivity to
all towns with a
population of
more than 1,500
people by the end
of June 2026.“
RCG cell tower at Lindis Pass providing mobile coverage for 4km of State Highway 73, powered by 36 solar panels.
Ko te pae anamata, whakamaua
39
Spark New Zealand Annual Report 2023
622
A total of 622 marae have been connected
through our Marae Digital Connectivity
programme.
60%
To date, we have decommissioned almost
60% of our PSTN
1
switches.
Closing our 3G network to make way for 5G in rural Aotearoa
In line with announcements from
New Zealand’s other mobile network
operators, in March we confirmed that
we will close down our legacy 3G
network towards the end of 2025. The
3G network currently uses limited radio
spectrum that is required to roll out 5G
in rural areas, so closing it will enable us
to re-farm that spectrum for use in our
rural 5G rollout.
We recognise that this network closure
may cause concern for the few rural
communities where there is currently
only 3G available, which is why we will
be enhancing our 4G network in these
areas ahead of the closure.
At the same time, we are aware that
some of our customers are still
connecting to 3G in areas where 4G is
available. Predominantly, this is due to
customers using devices that can’t make
voice calls over 4G
1
, and therefore still
use 3G, so it’s important that these
devices are replaced ahead of the 3G
network closures of all mobile network
operators. Other customers may have
the capability on their phone but need
to enable it in their settings or they may
have purchased a phone overseas, or
from and importer, that is not
compatible with the spectrum our 4G
network operates in.
We will be getting in touch directly with
customers to support them to make any
necessary device replacements over the
next two years.
1 Mobile voice calls over 4G are technically
known as VoLTE (Voice over LTE).
Making mobile calls over WiFi
connections
We launched WiFi calling services on a
range of mobile devices in August last year.
WiFi Calling, also known as Voice over WiFi,
allows our customers to make and receive
voice calls using a suitable WiFi connection
even if there is no mobile coverage. This
makes it a great option for those with poor
or no mobile coverage but a steady
broadband connection.
WiFi Calling works the same way a regular
cellular mobile call does using the dialling
functions on your phone – the difference is
how the call is transmitted. WiFi Calling
uses a WiFi connection to carry the call
instead of the cellular network but can
handover between WiFi and cellular during
a call for a continuous connection while on
the go.
We expect to launch texting over WiFi in
the first half of FY24.
1 Public Switched Telephone Network.
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Creating value through our network and technology
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Connecting rural marae
The Marae Digital Connectivity
Programme aims to improve digital
access in provincial and rural Aotearoa
by connecting marae to reliable internet
and providing iwi, hapū and whānau
with access to technology, including
cloud storage, digital security networks,
and state-of-the art hardware. Spark is
the key delivery partner working
alongside Te Puni Kōkiri and Crown
Infrastructure Partners.
One of the immediate benefits has
been enabling whānau who lived
elsewhere to stay connected to their
hapū and join hui or wānanga virtually.
The technology will also help marae to
work with their rangatahi (young
people) to support new skills
development, while supporting local
communities to innovate and create
new business opportunities – such as
hosting wānanga or conferences and
collaborating virtually.
Comprehensive training on how to use
the technology was rolled out around
the country by Te Wānanga o Aotearoa
as part of the initiative and a total
of 622 marae had been connected
through the programme at the end
of FY23.
Migrating customers off legacy
technology onto future-proof
alternatives
We continue to migrate customers off
end-of-life technology and onto modern
alternatives already used by the majority
of New Zealanders – including the
retirement of the Public Switched
Telephone Network (PSTN).
The Spark-operated PSTN – the traditional
way of providing landline services – was
built in the 1980s and is rapidly reaching
end-of-life. The network’s components
have not been manufactured since 2003
and the people with the skills needed to
maintain it are getting harder to find. The
majority of New Zealanders have already
made the switch to fibre or wireless
proactively. In 2017 we had over a million
customers on the PSTN and by the end of
June 2023 we had 118,000 with around
5,500 customers on average migrating off
this technology every month. As customers
move off the PSTN, Spark is also able to
decommission legacy PSTN equipment. To
date, we have decommissioned almost
60% of our NEAX switches, which has
resulted in a significant decrease in Spark’s
power usage and carbon emissions.
In a separate programme to Spark’s PSTN
shut down, Chorus is gradually
withdrawing its copper network as it also
reaches end-of-life. The copper network
includes the physical lines carrying calls
and data.
Spark is taking an area-by-area approach to
our PSTN shut down programme, focusing
on areas where the vast majority of
customers have access to alternative
technologies, such as fibre and wireless. In
cases where customers have no alternative,
we are working with them on a case-by-
case basis to ensure they stay connected.
We have a dedicated customer service
team for customers going through either a
PSTN or copper migration and offer free
in-home visits where required.
Connecting New Zealand with
the world
Southern Cross NEXT cable
In July 2022, Southern Cross Cable Limited
(SCCL) celebrated the completion of the
Southern Cross NEXT cable between
Australia, New Zealand, the United States
and Pacific Islands Fiji, Tokelau and Kiribati.
The new cable expands New Zealand’s
global connectivity by an additional 72
terabits per second – almost doubling total
international capacity.
The Southern Cross submarine cable
already provided the shortest routes
between Auckland and Los Angeles and
Auckland and Sydney and now also has the
shortest route between Sydney and Los
Angeles, providing diversity in the
Southern Pacific (all other existing cables
pass through Hawaii).
The launch of the Southern Cross NEXT
cable provides long-term certainty and
capacity for Spark and its wholesale
customers for decades to come.
We have been working with Southern
Cross this year to create a ‘point of
presence’ for the Southern Cross Cable
Network at our Mayoral Drive data centre,
making it more accessible to customers.
Tasman Global Access Network
(TGA) cable
Having completed the third upgrade of
the TGA cable system in FY22, through
a consortium with Telstra and One
New Zealand, this year we have been
working on its fourth upgrade, which is
anticipated to complete in December
2023. This will further increase capacity
on the cable to service growing demand
for connectivity between Australia and
New Zealand.
Recovering retired submarine cables
While older, retired submarine cables are
benign structures, this year we have begun
recovering and repurposing them. In June,
we recovered and sold our old ANZCAN
(Australia, New Zealand, Canada) cable to
Subsea Environmental Services, a
US-based organisation founded on the
principle of responsibly recovering and
recycling out-of-service submarine
telecommunications cables.
Ko te pae anamata, whakamaua
41
Spark New Zealand Annual Report 2023
Creating value
for our
environment
Natural capital
We rely upon natural capital through the diverse materials drawn from around the world to
manufacture the physical assets that make up our networks and technology, and the devices our
customers use. We also draw upon natural resources to power our technology and our broader
business operations.
Our networks, distributed across New Zealand, are also impacted by changes in the environment,
which has implications for the resilience of our infrastructure and the supporting services required
to operate them.
Through the products and services we provide our customers are able to live and work more
sustainably and productively, enabling them to reduce their impact on the environment and use of
natural resources.
We can reduce our draw on natural capital and shift towards circular and renewable operating
models. And by being deliberate about our role in enabling emissions reductions and climate
adaptation we can ensure our customers and all of New Zealand can realise the benefits of digital
technology in protecting natural capital and responding to environmental challenges.
Enabling a reduced draw on natural capital in our
business and through our customers’ use of technology
OUTCOMES FY23
42Hello tomorrow
Creating value for our environment
Creating value for our environment
Our approach to
environmental
management
Spark’s Environmental Policy sets out our
expectations for our people to consider
environmental impacts when making
decisions at work, including examining our
business practices, understanding their
impacts, and taking reasonable steps to
reduce our environmental footprint. This is
available at: www.sparknz.co.nz/about/
governance
The policy was first introduced in FY21 and
since that time we have implemented an
online training programme for all
employees to learn about our approach to
sustainability and the expectations for them
to consider environmental impacts in their
day-to-day activities. This was launched in
August 2022.
For our most material environmental topics,
particularly our energy use and emissions,
we have formal governance processes in
place. We measure and report our energy
use and emissions on a quarterly basis, with
this information shared in updates to our
Technology Leadership Team, who act as a
governance group for our emissions
reduction work.
We also report our emissions performance,
alongside other quarterly sustainability
KPIs, to our Leadership Squad. The
Leadership Squad act as a steering
committee for sustainability across Spark
through a standing quarterly agenda item
at their regular meetings. We believe
sustainability is relevant to all areas of the
business, so key updates and decisions are
participated in by all members of our
leadership team. The Spark Board also
receives quarterly updates on key
sustainability topics, and our performance
against our emissions reduction target
is integrated into our half-year financial
reporting.
A dedicated Emissions Reduction
Squad has oversight of our emissions
performance. The Tribe Lead for Network
Simplification is the champion for
emissions reduction in the technology
team. This is the area of the business
responsible for retiring legacy network
assets – Spark’s largest source of energy
reductions and electronic waste.
In June we also hired a dedicated
Environmental Manager to lead the
development of our emissions
reduction programme and other
environmental actions.
Ko te pae anamata, whakamaua
43
Spark New Zealand Annual Report 2023
Spark's SBTi-verified
science-based emissions
reduction target
The Science Based Targets initiative (SBTi)
is established as the global standard for
corporate emissions reduction targets.
Over 3,100 organisations have set
verified emissions reduction targets since
it launched in 2015. In New Zealand
21 companies have set targets, with a
further ten committed to set targets
within two years.
All SBTi targets must have a strict absolute
reduction target for Scope 1 and 2
emissions, and also include a separate
Scope 3 target if these emissions are
greater than 40% of the total footprint.
• Scope 1: Direct emissions from sources
owned or controlled by Spark
• Scope 2: Indirect emissions from
purchased electricity
• Scope 3: Indirect emissions from other
sources in the value chain – e.g.,
production of purchased materials,
transportation, business travel and use
of sold products
SBTi targets are set against sector-specific
emissions trajectories. The ICT sector
pathways were developed with the
International Telecommunications Union
(ITU) based on projected growth and
efficiency gains, giving Spark a reduction
target of 56% over the next decade.
Since we established our target, we have
rescoped our emissions reporting and
baseline to account for changes to our
business. These changes are detailed in
our GHG Inventory Report, published at:
www.sparknz.co.nz/sustainability/
environment. This includes:
• The sale of a 70% stake in our passive
mobile tower assets to Connexa. At
these sites we have retained ownership
of the site electricity consumption and
associated emissions. This includes
emissions from electricity used to run
cooling systems and lights, alongside
active mobile network equipment.
Where the ownership of cooling
systems has transitioned to Connexa,
we have removed associated
refrigerant fugitive emissions from our
GHG reporting, including re-baselining
back to our FY20 baseline year. This
has reduced our fugitive emissions for
our baseline year by 124 tonnes CO
2
e
or 0.67% of our total scope 1 and 2
emissions.
• The investment to take full control of
Connect 8, which has been integrated
into the Entelar Group. This includes the
integration of a fleet of field services
vehicles and equipment, and two
depots. This has increased our reported
emissions from fleet for our baseline
year by 536 tonnes CO
2
e or 3.0% of our
total scope 1 and 2 emissions.
These changes are not significant enough
to require us to recalculate our SBTi
emissions reduction target, which remains
at a 56% reduction from FY20 to FY30.
The reporting scope changes have been
applied to our FY20 emissions baseline,
meaning our ambition level remains
the same.
70%
Spark New Zealand commits that 70% of its
suppliers by spend covering purchased
goods and services and capital goods, will
have SBTi-aligned targets in place by 2026.
56%
Spark New Zealand commits to reduce
absolute Scope 1 and 2 GHG emissions
56% by 2030 from a FY2020 base year.
SPARK’S SBTi-VERIFIED EMISSIONS
REDUCTION TARGET
PSTN switches being decommissioned.
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Creating value for our environment
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Reduction pathway
required to meet
FY30 target
FY23FY22FY21FY20
Mobile combustion -
Vehicle fleet
Fugitive emissions
Data Centre
Fixed Network
Mobile Network
Corporate/Retail
Natural gas combustion
Stationary combustion -
Diesel generators
GHG emissions (tCO
2
e)
Baseline year
0
5,000
10,000
15,000
20,000
25,000
Greenhouse Gas Inventory Report
We publish a standalone Greenhouse Gas Inventory Report
alongside our Annual Report. The report is independently assured
and is prepared in accordance with The Greenhouse Gas Protocol.
It includes detailed reporting on our emissions and energy use.
See www.sparknz.co.nz/sustainability/environment/ for more
information.
Spark Greenhouse Gas
Inventory Report 2023
INVENTORY
GREENHOUSE GAS
Our emissions
In the past year we saw our emissions
reduce significantly, with our scope 1 and 2
emissions down 29.8% and now tracking
below our SBTi pathway, aligned to our
56% reduction target from FY20 to FY30.
Our electricity use, as the source of power
for our networks and infrastructure, is our
largest source of emissions. The emissions
intensity of the electricity we use is
dependent on whether it is generated
renewably or from fossil fuels such as coal
and gas. The mix of sources determines our
emissions factor per unit of electricity.
Our FY21 emissions were significantly
higher than our FY20 baseline. This was
due to dry hydrological conditions which
saw a significant increase in non-renewable
electricity generation on the New Zealand
grid. In FY22 this trend was reversed, with a
cleaner electricity mix and underlying
reductions in energy use delivering a
significant emissions reduction.
This trend continued over the past year,
driven by ongoing reductions in the grid
emissions factor, which is down from
0.1108 kg/kWh to 0.0696 kg/kWh, or a
37.1% reduction.
Our scope 1 emissions have increased
13.6%, driven by an increase in vehicle fleet
emissions which are up 24.2%, mostly due
to increased diesel use from the Entelar
Group fleet as a result of our Connect 8
acquisition. We also saw a significant
increase in stationary combustion, up
21.1%, as we have purchased diesel to
fill new tanks for expanded energy
storage alongside expanded data centre
investment.
Greenhouse gas emissions
Performance against our scope 3
supplier engagement target
Over the past year the percentage of our
spend with suppliers with SBTi-aligned
targets in place has increased slightly to
around 33%, the majority of which have
been verified by the SBTi. Two of our key
local suppliers are in the process of
finalising SBTi-verified targets, which will
significantly increase our spend
percentage. Around 23% of our spend is
with suppliers that have publicly committed
to setting targets within the next two years.
Our new SAP Ariba supplier management
platform provides an opportunity to gather
more data on supplier environmental
commitments, including emissions
reduction targets and alignment and
validation against SBTi methodology. For
local suppliers, membership of the
New Zealand Climate Leaders Coalition,
of which Spark is a member, is a step we
may encourage. Membership requires
businesses to work towards implementing
a science-based target. Our largest
supplier by spend, Chorus, recently joined
the Coalition.
For global suppliers, our membership of
the global industry group, the Joint Audit
Cooperation (JAC), offers a chance to
engage suppliers alongside other
telecommunications companies with
similar SBTi-verified supplier engagement
targets. For more information on JAC and
how we are developing our approach to
engaging suppliers on sustainability and
ESG matters, please see the Our Suppliers
section on page 70.
Ko te pae anamata, whakamaua
45
Spark New Zealand Annual Report 2023
Electricity consumption
Over the past year electricity accounted for
79.8% of our scope 1 and 2 emissions. The
majority of our electricity use is in powering
our fixed networks, data centres, and
mobile network. Emissions from our
electricity use reduced significantly in line
with the lower emissions factor, with our
scope 2 emissions down 36.0% on FY22.
Our underlying electricity use has grown
slightly, driven by increased investment in
our 5G mobile networks and data centres.
Overall electricity use is up 1.8%, with
152.6 GWh consumed in FY23.
We have a long-running programme of
network simplification, including the
decommissioning of legacy equipment
such as the public switched telephone
network (PSTN), which has driven year-on-
year reductions in electricity use across
our business. We continue to reduce
electricity consumption through a focus
on energy efficiency and removing old,
inefficient equipment.
We are also investing in new infrastructure
as traffic grows across our network. This is
important to support innovation to drive
emissions reductions and productivity
across all sectors. This includes the rollout
of 5G, and investment to expand our data
centres. Although energy efficiency is a
focus in our rollout of new infrastructure
and in the construction of new data centre
space, we expect our electricity usage to
slowly increase over time.
Supporting renewable energy
investments
In New Zealand we benefit from a high
share of existing renewable generation. In a
typical year over 80% of all electricity
supplied comes from renewable sources,
which means when compared to many
operators in other markets our emissions
are low. However, to achieve our SBTi
target, we need to further reduce the
emissions intensity of our electricity,
particularly as we invest in more digital
infrastructure for the future.
It is projected that the New Zealand grid
will continue to decarbonise over the next
decade, aligned with New Zealand’s
national emissions reduction budgets and
plans. In addition to expected national
improvements, Spark is actively pursuing
options to link our electricity purchasing to
new renewable electricity generation
capacity. Our partnership with our electricity
provider includes a commitment to work
with Spark to achieve our SBTi target.
We are currently working with our partner
to accelerate options for procuring new
renewable generation capacity, and
exploring options for on-site renewable
generation, such as solar. On-site solar
generation is an option in some sites with
significant areas to house panels. In these
cases, on-site generation works alongside
electricity provided by the grid, which
would be required to provide the majority
of electricity to our network sites.
Business travel
Flights and business travel are classed as
scope 3 emissions, so are not included in
our SBTi emissions reduction target.
However, business travel is a significant
source of emissions which is easily
influenced by our policies and behaviour.
COVID-19 restrictions significantly reduced
our business travel over the previous three
years. This has bounced back over the past
year, with our emissions up 288% year-on-
year. Despite this our FY23 business travel
emissions are still 25.8% below our FY20
baseline year for reporting. We have
implemented processes to monitor
travel-related emissions and determine if
any further action is required to manage
business travel.
Case study: Energy efficiency in our mobile network
Mobile data speeds, latency, and other
functions have leapt forward with each
new mobile generation. Energy
efficiency per unit of data has also
improved as technology evolves. This
means that as the upgrade from 4G to
5G delivers a more than 500% increase
in the data transmission rate, the cell
tower equipment may require up to
60% more power.
This increase will be offset with the
removal of legacy equipment, such as our
decommissioning of the PSTN and the
shutdown of our 3G network, which was
announced in the past year. But as mobile
traffic continues to grow, we need to
maintain a focus on energy efficiency.
At our Hagley Park East mobile site in
Christchurch, we have piloted a suite of
energy saving features with our network
partner Samsung. These smart features
switch the mobile site to lower power
states at off-peak times.
The pilot showed a 20.7% reduction in
power consumption in the remote radio
unit, and an overall 10.6% reduction in
electricity use at the site. Alongside the
energy saving the overall data volume
for the sites was similar to the baseline,
with no impact on site coverage.
Following the success of the pilot we
have rolled the feature out to over
300 sites with the same capabilities
nationwide.
FY23FY22FY21FY20
Data Centre
Fixed network
Mobile network
Corporate/Retail
Residual Supply
Factor
GWh consumed
tCO
2
e/GWh
69.62
110.77
124.69
99.28
0
20
40
60
80
100
120
140
160
180
200
0
20
40
60
80
100
120
140
160
180
200
Electricity consumption
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Our fleet
Spark’s fleet is responsible for 12.5% of our
reported scope 1 and 2 emissions. Our
reporting now includes Connect 8 fleet
data, which forms part of Entelar Group,
and has been backdated to our baseline
year. Our FY23 fleet emissions were up
24.2% on the previous year, with increased
fuel use across all areas of our fleet. In our
core fleet this is expected as this is the first
full year reported without COVID-19
restrictions and therefore a higher level of
vehicle use.
In the past year we piloted an ‘Electric First’
policy for the Spark Corporate Fleet,
including individually-assigned vehicles,
with all vehicles due for renewal to be
replaced by an Electric Vehicle (EV). In
FY23 all vehicles introduced to the Spark
corporate fleet were electric or Plug-in
Hybrid Electric Vehicles (PHEVs), with an
increase in 30 EVs.
At the end of FY23 we had three pure
petrol or diesel vehicles remaining in the
core Spark fleet of 197 vehicles. We had 41
full electric vehicles, up from 11 in the
previous year, 21 PHEVs and 132 hybrids.
We still have progress to make across the
broader Spark fleet, including with our
subsidiaries. Across the rest of the Spark
Group we have 182 vehicles, of which two
are full EV, one is a PHEV, 64 are hybrids
and 115 are non-EV.
E-waste and network
recycling
Spark has a long-standing programme to
managing end-of-life network equipment
and technology. Recovered equipment is
separated into different waste streams
– such as printed circuit boards, copper
cables, lead batteries, and all types of
metals. These materials are processed by
our local recycling partners and then some
components are sent overseas for
recycling, reselling, or reusing.
In FY23 we recovered a total of 559 tonnes
of e-waste, up slightly from 545 tonnes in
FY22. Of this, 154 tonnes were network
e-waste (up 3 tonnes on FY22), and 405
tonnes were metals, cables, and batteries
(up 11 tonnes). We continue to improve our
recycling collections focussing on education
within Spark and working with some of our
larger customers to support them to
responsibly recycle their surplus equipment.
Mobile phone recycling
In FY23 Spark received 14,913 mobile
devices for recycling, down from 20,609 in
FY22. This continues a longer-term trend of
reduced recycling collection numbers.
As mobile devices are becoming more
advanced and robust their lifecycles have
extended, meaning customers are
replacing their devices less frequently and
we are experiencing a lower volume of
recycling as a result. However, we still only
take back a small proportion of the total
number of devices sold each year.
Electrical and electronic products have
been designated as Priority Products under
the Waste Minimisation Act 2008.
Designation as a priority product means
that an accredited Product Stewardship
Scheme must be implemented to manage
waste streams associated with the product
categories.
Spark is a member of the
Telecommunication Forum’s (TCF)
RE:MOBILE product stewardship scheme.
The RE:MOBILE scheme was one of the first
industry schemes voluntarily accredited by
the Ministry for the Environment (MfE)
under the provisions of the Act. Since the
Priority Product designation, the Product
Stewardship Scheme accreditation lapsed
in April 2021. The TCF is working closely
with MfE to work through the new
accreditation process. In the meantime,
MfE has confirmed that it will continue to
support and recognise the scheme whilst
reaccreditation is being worked through.
We are working with our industry partners
and the TCF to boost the awareness of the
scheme and to overcome the barriers
consumers experience in recycling their
devices.
The current RE:MOBILE scheme takes
unused mobile phones, and either
refurbishes and on-sells them in overseas
markets or recycles them to recover the
materials used. Profit from the scheme is
donated to the charity Sustainable
Coastlines.
Alongside the Spark Foundation, we also
support the Recycle A Device (RAD)
scheme to collect and refurbish used
laptops for students and others in need of
a device. See page 65 for more information.
Ko te pae anamata, whakamaua
47
Spark New Zealand Annual Report 2023
In the past year we partnered with
sustainability consultancy thinkstep-ANZ
to develop research on the role digital
technology can play in supporting
Aotearoa New Zealand’s response to the
challenge of climate change. This work
combined global and local perspectives to
quantify emissions reductions
opportunities and inform future action.
The research modelled and quantified
digital technology enabled emissions
reductions opportunities across different
sectors and identified a series of
recommendations based on these findings.
The overarching finding showed that digital
technology can support annual emissions
reductions of at least 7.2 Mt by 2030 –
equivalent to 42% of the reductions
required to meet Aotearoa’s carbon
budget targets.
We launched the research at an industry
briefing with former Prime Minister Hon
Jacinda Ardern, Minister for Climate
Change and Associate Minister for the
Environment (Biodiversity) Hon James
Shaw, Spark Chair Justine Smyth, and Spark
CEO Jolie Hodson.
Our aim in conducting this research was to
not only improve awareness of the role
technology can play in decarbonisation,
but to also encourage action. Since its
launch we have been engaging with
businesses in the sectors we studied – in
particular Transport, Energy and Industry,
and Agriculture – to integrate these
findings into sector-based emissions
reduction planning, and to strengthen the
role of digital technology in New Zealand’s
overall climate mitigation approach. We are
also contributing to the development of a
Technology Roadmap alongside NZTech,
with the aim of integrating this into
New Zealand’s next Emissions
Reduction Plan.
“ Our research showed
that digital technology
can support annual
emissions reductions of
at least 7.2 Mt by 2030
– equivalent to 42% of
the reductions required
to meet Aotearoa’s
carbon budget targets.”
Meeting the climate challenge
through digital technology
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Ko te pae anamata, whakamaua
49
Spark New Zealand Annual Report 2023
Creating value
for our people
Human + intellectual capital
Our success relies on our team of talented and diverse people. A career at Spark
offers opportunities to learn, grow and belong to a business that encourages
leading-edge learning and development, holistic wellbeing and the chance to be
part of a team that operates in a diverse and inclusive agile environment.
Engaged and inclusive teams
OUTCOMES FY23
50Hello tomorrow
Creating value for our people
Creating value for our people
Employee engagement
In FY23 we changed how we measure the
engagement of our people – moving from
our former Employee Net Promoter Score
(eNPS) to a more comprehensive
engagement score and establishing a
baseline of 67% across the group in Q1.
This measure reflects employee motivation,
likelihood to remain with Spark and how
likely they are to recommend Spark as an
employer. The average score for
New Zealand companies with 1,000+
employees is 66%.
We were pleased to see strong people
engagement recorded using this new
measure, with our overall average
engagement score for FY23 at 70%.
Our ambition is to achieve top decile
engagement by FY26.
We use data and insights from our people
to continuously improve our employee
experience and maintain high levels of
engagement over time. In FY23, we
undertook a company-wide culture survey
and were pleased to have 89% of our
people participate, sharing their thoughts
and feedback on our culture. Some of the
highlights from the survey included 79% of
our people feeling like they belong at
Spark, 75% feeling like they have
confidence in their business unit leaders
and 67% who feel like they have good
career opportunities at Spark.
The survey and our quarterly pulse checks
provide us with important insights on
where we can do better, the drivers of
engagement and how we can continue to
build a high-performance culture, where all
our people feel like they belong.
Ways of working
Our agile maturity
Our Agile ways of working support us to
deliver our strategic goals through
collaboration, communication, learning and
experimentation. Continuing to embed
and lift our agile practices throughout the
business remains a key focus. We evaluate
our agile maturity using an ’Agile Maturity
Assessment’, or AMA, which rates the
maturity of best practice across our squads
and teams on a scale of 1–5. We have seen
further uplift in our maturity during FY23
and now have 89% of squads (teams) with
an AMA of greater than 3.75 out of 5
(compared with 66% in FY22). Spark
delivers certified agile programmes to
further embed agile practices into our own
business and also offer these externally for
customers and partners. In FY23 we added
the ICAgile Product Ownership Accreditation
to our offering. Across Spark, 188 people
and 72 external businesses completed and
were certified from these courses.
Hybrid working
Creating a great workplace is key to how
we continue to build our high performance,
adaptive and inclusive culture.
Following a couple of years of COVID-19
lockdowns and remote working, we
recognised that our people wanted some
flexibility, but we also wanted to regain the
team, social and in-person interactions they
enjoyed before the pandemic, which helps
our people build strong relationships and
collaborate effectively as teams. Being ‘in
person’ in the office also enables
spontaneous and informal interactions that
are more difficult to replicate virtually.
With insights from our people and clarity
about what our customers and teams
needed, in March we provided our people
with a clear direction about hybrid working.
This was to ensure consistent standards
across the business – all in the pursuit of
better outcomes for our people, teams,
customers and business.
As part of this, we asked all teams (who are
able to do so, based on how they deliver to
customer needs) to adopt hybrid ways of
working and commit to at least three days
in the office, with two days then flexible
(where team members can choose to either
be in the office or work remotely). These
teams were also asked to set a day each
week when everyone in their team comes
into a shared office space, to collaborate
and connect in person.
Our hybrid ways of working underpin our
ambition to continue to build an
organisation where effective team
practices, collaboration, and innovation are
key to how we create great experiences for
our people and customers.
79%
of our people feel like they belong at Spark
1 ICAgile is an accreditation and certification body for agile training.
Fifty Albert Street
In May we announced that our
Auckland teams will be moving to a
new office space in early 2025.
Fifty Albert Street is a next generation
development in the heart of
Auckland’s CBD where Spark will
occupy the first six storeys.
The inclusive space will feature a
dedicated learning experience
centre, an interactive technology
hub, parents’ room, prayer room, all
gender bathrooms, cafeteria and
town hall space, external fresh air
balconies and a private outdoor
space just for Spark people.
The building’s credentials align with
our commitments to sustainability,
including a 6 Green-Star energy
efficiency rating and a 5-Star
NABERS
1
rating.
1 National Australian Built Environment
Rating System
Ko te pae anamata, whakamaua
51
Spark New Zealand Annual Report 2023
Investing in the
development of our
people
Continuous learning and innovation
capability is a core focus of how we
develop our people at Spark. We want to
enable personal growth and adaptability,
so our people are open to diverse ideas
and perspectives, can adapt at pace and
sustain high performance.
We enable this through quality coaching,
leading-edge learning and development
programmes and with a deliberate focus
on progressing our own people through
new roles and on-the-job learning
experiences within our organisation.
Leadership pathways
In FY23, we announced changes to our
Leadership Squad, with three newly
created roles filled internally. These were
the appointment of Greg Clark as
Consumer and SME Director, Renee
Mateparae as Network and Operations
Director and our Chief Operating Officer,
Mark Beder moving into the role of
Customer Director – Enterprise and
Government. Following the close of FY23
but prior to publishing this report, we
made another appointment to the
Leadership Squad, with Regulatory and
Industry Affairs Lead John Wesley-Smith
moving into the newly created position of
Strategy and Regulatory Director. This
discipline extends right across the
organisation and during the year we
moved 50 (or 10%) of our people from our
Service Operations teams into other roles
within the business.
Leadership development
programmes
In FY23 we designed and launched a new
leadership programme called Spark
Leaders, in partnership with BTS Australia
to complement our Agile Leaders
Programme. The programme has a range
of learning experiences that equip leaders
with the confidence to cultivate a strong
culture, offer a consistent people
experience and deliver great team
outcomes. We delivered two cohorts to
120 leaders and feedback from participants
was extremely positive, with an overall NPS
of 90%.
We also continued to deliver our flagship
Agile Leaders Programme, which aims to
create the conditions for leadership of
innovation and adaptivity across Spark.
The programme is a significant investment
in our key talent who we want to develop
and progress. It runs over six months with a
focus on building environments for people
to thrive, leading innovation through
design thinking, using leadership empathy
for connection and belonging and
coaching for sustainable high performance.
In FY23, we concluded cohorts nine and 10
and launched cohort 11 with 53 leaders
involved in the programme. So far, around
30% of our people who have completed
the ALP programme have progressed to
other roles within Spark.
For all of our leadership programmes
we consistently meet our 40:40:20 gender
commitments and ensure a diverse mix
of people are participating, considering
diverse experiences, skills, ethnicity,
business team and career stage.
“ We want to enable
personal growth and
adaptability, so our
people are open to
diverse ideas and
perspectives and able
to adapt at pace and
sustain high
performance.“
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Spark Gigs
We continued the roll-out of Spark Gigs,
our talent marketplace, built around an
online platform that allows our people to
build a profile of their skills, experience,
passions and aspirations and then using AI,
matches these skills and future ambitions
with available opportunities within the
business. Those opportunities could be a
temporary job assignment in another team,
an informal opportunity to put their skills to
use to achieve something outside of their
day-to-day role or in the form of a
mentoring opportunity, helping them to
learn from someone else.
People within Spark can make use of Spark
Gigs‘ skills-matching AI technology to
locate people with specific skills, or those
wanting to learn those new skills, and get
them to help with a project or initiative.
Likewise, those who want to guide and
support others can put themselves
forward as mentors and Spark Gigs
locates potential mentees.
Spark Gigs gives all our people a chance
to learn new skills to help them to make a
move into a different part of the business,
and at the same time creates an internal
‘ready’ talent pipeline of people who may
move to where the need is within Spark. In
the future this platform will allow us to link
our Learning and Development
frameworks with gigs and career areas of
interest for our people.
Internal skill internships
In FY23, Spark created an internal
internship programme that offers our
frontline teams – those working in our
stores and call centres – an opportunity to
participate in new skilling and role
opportunities. Successful participants
complete two to three months of work
experience in a new part of the business,
while also retaining their current role.
Participants may then be offered
permanent opportunities at the
completion of the programme.
In addition, participants also receive
foundational learning and certifications to
ensure they have the relevant
qualifications to bolster their future
careers. This training is further
complemented by mentoring and
networking events where cohorts share
learnings with their peers. In the last year
we ran two internship programmes with 19
participants and 14 successful placements
(with 50% female representation). This
internship prototype will fuel our further
skills focus moving forward.
Compliance and
mandatory training
There is a requirement for all Spark
employees and contractors to complete
mandatory e-learning modules when they
commence working at Spark. These
learning modules ensure proficiency in
core foundational areas, such as health
and safety, legal, privacy, decision-making,
reporting and security.
Completion of these modules is
monitored by people leaders and
reported more formally on a quarterly
basis. We use regular reporting to ensure
there is ongoing visibility of completion
for all Spark employees.
As part of our ISO27001 accreditation
there are additional modules required for
completion prior to gaining access to
systems and sensitive information, to
maintain high-quality standards when
dealing with information, customer data
and security. These are closely monitored
and audited to ensure compliance and the
necessary governance. Spark undertakes
recertification every three years for ISO
27001 with the last certification issued in
July 2022. Further surveillance audits are
undertaken each year to ensure a high
level of compliance.
Spark people participating in our flagship Agile Leaders Programme.
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53
Spark New Zealand Annual Report 2023
Health, Safety and
Wellbeing
Mahi Tahi – Wellbeing
We continued to weave Mahi Tahi, Spark’s
wellbeing programme, into our people
experiences and ways of working
throughout FY23, so that wellbeing
remained a key focus for our people
and leaders.
Mahi Tahi works in partnership with our
people to support their goals at work and
in life. The four pillars of the Mahi Tahi
framework are closely aligned with Te
Whare Tapa Wha (the four cornerstones of
Māori health).
1. Healthy work environment: Providing
our people with a place to work that
looks after more than just physical safety
but also mental and social wellbeing.
2. Connection, collaboration and
community: Ensuring we have
meaningful activities in place so our
people can foster strong connections
with those they work with and
care about.
3. Mind health: Supporting strong mental
health capacity and confidence and
fostering a growth mindset.
4. Energy: Building a culture where we
help our people keep their batteries
charged, so they can perform at
their best.
We have an online Wellbeing Hub, which
includes opportunities for our people to
book sessions with our Spark-certified
Mahi Tahi coaches, access support through
our Employee Assistance Provider (EAP) or
book a one-on-one appointment with one
of our qualified psychologists, who we
have partnered with directly to provide
specialist care to our people in
critical need.
This increase in support options and
reducing stigma with mental health
challenges has started to see more support
accessed by our people through different
channels. Since its introduction, we have
seen more than 10% of our workforce seek
support from either EAP or our
psychologists. Our most recent culture
survey pulse check showed that 70% of our
people are happy with the tools and
support available to them and 89% of our
people shared that they feel well
supported by their people leader when it
comes to their wellbeing.
During FY23, we held a number of
in-person and virtual Mahi Tahi hui with
mental health and wellbeing experts such
as clinical psychologists, Amanda Moate
and Tiare Tolks; resilience expert, Dr Lucy
Hone; Clearhead founder, Dr Angela Lim;
and Take a Breathe app founder, Sarah
Laurie. Each shared tips and strategies
alongside our own leaders and people on
maintaining and improving wellbeing and
reducing anxiety.
Insights from our people have told us that
anxiety is one of the top issues, so we have
continued our partnership with Take a Breath
– a breathing app designed to reduce stress
and anxiety. Around 40% of our people have
used this app so far, noting it has helped
them to combat anxiety and improve their
sleep. Thirty percent of our people have also
gifted the app to their friends and whānau.
So far, we have trained 55 Mahi Tahi coaches
(with 35 trained in FY23) and already had
more than 200 of our people access
specialist psychology expert support with
Amanda Moate and Tiare Tolks. Our
coaches, who are trained and supervised by
our specialists, act as first-line support to our
people when they’re working day to day.
This may see our coaches supporting
leaders, teams or individuals to help them
with their energy, focus or finding ways to
seek different support options.
To really integrate Mahi Tahi into our core
business practices, our People and Culture
partners work closely with our senior leaders
to incorporate wellbeing objectives and KPIs
into their quarterly planning.
89%
of our people felt well supported by their
leader when it comes to wellbeing
Spark people showing their support on Pink Shirt Day 2023.
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Health and safety
Spark has a well-established health and
safety management system, focussed on
continuous improvement. Our Health,
Safety and Wellbeing Strategy is built
around four pillars which are:
• Strategy and Framework: A strong
health and safety management
framework providing a platform for
success
• Hazard and Risk Management:
Proactive ‘owners’ approach to health
and safety and the management of
critical hazards and associated risks
• Leadership and Ownership: A culture of
empowerment at every level
• Resources and Supporting Activity:
A commitment by the business to
ensuring the resources and capabilities
are in place to deliver the health and
safety strategy.
No Spark employee or contractor suffered
serious injury or death over the year, and
our TRIFR (Total Recordable Incident
Frequency Rate) held flat at 2.13 for FY23.
No notifiable events were reported under
current New Zealand Health and Safety
legislation or health and safety
prosecutions or notices issued to Spark by
WorkSafe (New Zealand Regulator) during
the same period.
Based on the experiences of the last few
years, our pandemic planning and
response activities now incorporate lessons
from COVID-19 and the impact severe
weather events have had on our people
and places across New Zealand. We
continue to follow a risk-based approach
for our activities and work collaboratively
across the business to ensure we have the
right response and resources in place to
support emergency preparedness.
In FY23 we continued to work with our
Wider Leadership Group to further foster
health and safety employee empowerment
and participation as part of our Tribe, Unit,
and Centre of Excellence (CoE) meetings
and routine events continuing strong
governance for health and safety across
Spark. We continued our work with our
wholly-owned subsidiaries to identify the
areas of greatest priority to support the
development, application and monitoring
of a health and safety continuous
improvement framework.
Spark’s health and safety system and injury
management programme was reviewed by
the Accident Compensation Commission
(ACC) under the Employers Accredited
Programme (AEP) in August 2022. The
audit outcome was very positive, with Spark
retaining its tertiary status and remaining
accredited in the same programme for
another 12 months.
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55
Spark New Zealand Annual Report 2023
Diversity, equity
and inclusion
Our focus and commitment on diversity,
equity and inclusion is embedded into our
day-to-day activities, standards and
business practices. It is a strategic business
priority and key enabler of our business
strategy and culture.
This focus has helped us create an
environment where our people feel
comfortable bringing their whole selves to
work, regardless of gender, ethnicity,
orientation, age, experience,
neurodivergence or ability.
In November, Spark’s efforts to create a
more inclusive and equitable work
environment was recognised at the Deloitte
Top 200 Awards, receiving the Diversity
and Inclusion Award for 2023.
Spark’s Blue Heart kaupapa
in action
Our Blue Heart kaupapa sets the standards
of behaviour, alongside our values,
to foster a culture of connection and
belonging. It is a visible icon of our
heart-led approach to diversity and
inclusion.
Blue Heart cultural celebrations and events
remain an important part of bringing our
people together and in FY23 we
celebrated key moments, such as
International Women’s Day (IWD), Lunar
New Year, Diwali, Eid celebrations and
Matariki events at our offices throughout
the country.
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Vaka Pasifika
Vaka Pasifika is Spark’s Pacific Canoe – a
community of the ~5% of Spark people
who identify as Pasifika, formed in 2017
with a mission to empower, grow and build
the capability of Pasifika peoples at Spark.
In support of this strategic ambition, the
Vaka Pasifika group recently released their
new strategy called ‘Folauga mo Taeao –
A Journey to Tomorrow’. The strategy sets
out three key pillars over the next horizon
of growing and supporting Pasifika
aspirations at Spark, including growing the
capability and leadership skills of the Vaka
Pasifika team, growing Spark’s cultural
knowledge and enabling Spark to become
an industry champion for Pasifika.
Pride
Spark has been a long-time supporter of
the Rainbow Community, and in March we
once again engaged in the Auckland Pride
festival. In June we supported International
Pride Month through a series of events at
our corporate offices across the country.
We are committed to our continued
support of OUTLine NZ, a national charity
that offers a free support line for members
of the LGBTQIA+ community and family
and friends. In FY23, this included
equipment, software and tech support to
keep OUTLine’s support line and online
chat support service running.
OUTLine NZ has also been included in our
Mahi Tahi suite of specialist support
offerings, providing our people with
specialist rainbow-affirming counselling.
Our continued commitment, led by our
Spark Pride committee and community, is
to recognise, nurture and enhance
belonging and connection throughout
Spark for our LGBTQIA+ community.
Te Korowai Tupu
Ko te whāinga kia hāpai te ahurea
ahurei o Aotearoa whānui, ki te ao, kia
ngita. We want our culture at Spark to
both reflect and uplift Aotearoa
New Zealand’s unique cultural heritage,
and this is where our Māori strategy,
Te Korowai Tupu (the cloak of growth),
comes in.
Te Korowai Tupu takes the threads of
a tangata whenua world view that can
be woven across Kora Aotearoa, or
Spark New Zealand – into our strategies,
actions and values – and is a core
commitment of our new business
strategy.
Spark’s Kaiārahi (Māori group) guide
and support the delivery of the strategy
within our business. In FY23 the Kaiārahi
created a set of guiding objectives that
will continue to steer our mahi and our
objective of weaving te ao Māori
throughout our business. This also
included a refresh of the Te Korowai
Tupu narrative and the introduction of a
new karakia that was composed
specifically for Spark and is now being
embraced by teams across the business.
In FY23 we continued to promote our
people’s understanding of te ao Māori
by delivering cultural responsiveness
modules, and Te Ara Reo, our Māori
language pathway strategy, which
delivers te reo Māori learning
opportunities to our people at beginner
and intermediate levels.
We continued to work in partnership to
bring our strategy to life, alongside our
key partners – Te Wānanga o Aotearoa,
Whāriki, Kōkiri, Arataki Systems, Kiwa
Digital, Education Perfect and Te
Pūtahitanga o te Waipounamu.
In June we also celebrated Matariki
across our corporate offices with a
range of activities, including
performances, demonstrations, lots of
kai and a karakia challenge.
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Spark New Zealand Annual Report 2023
Our diversity performance
We believe in the idea that what gets
measured gets done and we take a
data-led approach to achieving our
Diversity and Inclusion ambitions.
Having a greater understanding of who we
are will allow us to create experiences and
provide support that is tailored to the
diverse needs of our people.
Improving female representation
Over the past year we have continued to
focus on improving female representation
across the group and reducing our gender
pay gap. Our ambition is to achieve 40:40:20
representation Spark wide by the end of
FY24, which refers to 40% men, 40% women
and 20% of any gender (as well as gender
diverse representatives) and to reduce our
median gender pay gap by 10 percentage
points from FY20 to 18% by the end of FY25.
Overall, across the group we saw female
representation remain flat at 34% in FY23.
While overall representation appears static,
it masks positive movement and change
across the business and good progress in
embedding standards and business
practices. Within the core Spark business,
female representation is higher at 37%,
while in our wholly-owned subsidiaries
representation is significantly lower at 21%.
In FY23 we reviewed and reset our targets
for each business area – including overall
representation targets and guidance on the
starter and leaver gender mix that we
would need to see to achieve our
ambitions. We made strong progress in
shifting our recruitment of females, moving
from 33% to 41% in FY23, but this was
partially offset by an increase in the
proportion of leavers who were female
(35% to 38%). Improving female
representation, particularly in the
technology focussed areas of our business,
remains a priority. This is an industry-wide
challenge and we continue to work actively
alongside our industry peers, external
technology institutions, and other thought
leaders to create a New Zealand-wide
pipeline of women in technology careers.
Our People & Culture Partners are
continuously upskilled with tools to
increase our leaders’ capability to address
the gender pay gap and recruit for
diversity. We also educate our senior
leaders across the business by providing
resources, standards and guidelines and
data insights that help them to hire talented
candidates with diversity in mind and track
their progress against their goals and our
Spark-wide ambitions. Each area has an
action plan to achieve its representation
goals in addition to maintaining recruitment
standards, such as 40:40:20 shortlists.
Within our Board, Leadership Squad (LS),
and Wider Leadership Group (senior roles
outside Board and LS), we continue to
maintain a 40:40:20 representation, which
is fundamental to reaching our broader
diversity ambitions.
Our Board is 50% female and 50% male,
with four female directors (including our
CEO) and four male directors. One new
female and one new male director joined
our Board in August and one male director
retired at the Annual Meeting in November.
Over the past year one female leader
resigned from our Leadership Squad,
taking the female-to-male ratio to a 56%
female and 44% male split. With the
changes we have made at the start of FY24,
the female-to-male ratio is now 55% female
and 45% male.
21.6%
Our median gender pay gap has reduced
from 24% in FY22 to 21.6%.
34%
Female representation across Spark.
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Reducing our gender pay gap
We are pleased to see our median gender
pay gap reduce further from 24% in FY22
to 21.6%. We also monitor the difference in
mean (average) pay, which remained the
same at 13%. Achieving our pay gap
ambitions is closely linked to our approach
to improving representation and Spark
continues to support a New Zealand-wide
pipeline of females in technology careers
through our partnerships with external
technology institutions and influencers
such as GirlBoss NZ.
Our Diversity and Inclusion Policy sets out
our framework in this area. www.sparknz.
co.nz/about/governance/
Gender pay ratio
CategoryNumber of employees
in category
Pay Ratio:
Mean
1
Pay Ratio:
Median
2
Leadership: Spark’s wider
leadership group, including the
Leadership Squad
FY23: 77
(44 Male, 33 Female)
FY22: 70
FY23: 4%
FY22: -1%
FY23: -9%
FY22: -12%
Technology: Employees who work
in technology focussed areas of
the business
FY23: 2,717
(2,101 Male, 604 Female)
FY22: 2,338
FY23: -12%
FY22: -9%
FY23: -23%
FY22: -20%
Customer Channels: People
primarily employed within our
contact centres and retail operations
FY23: 892
(446 Male, 441 Female)
FY22: 971
FY23: -1%
FY22: -1%
FY23: 0%
FY22: 0%
Rest of Spark: Including corporate,
product, marketing and customer
units
FY23: 1,746
(987 Male, 751 Female)
FY22: 1,765
FY23: -17%
FY22: -15%
FY23: -23%
FY22: -17%
Total5,432FY23: -13%
FY22: -13%
FY23: -22%
FY22: -24%
1 Pay Ratio = (mean female salary – mean male salary)/mean male salary.
2 Pay Ratio = (median female salary – median male salary)/median male salary.
Calculated using hourly On Target Earnings or Total Base Remuneration plus Short-Term
Incentive Target values as at 30 June 2023. Negative pay gap values indicate that the median
or mean earnings for women are less than those for men.
Demographics of our workforce
Including permanent and fixed-term employees of Spark and its directors, as of 30 June 2023.
Gender
1
Age
Number of
people
Female %Male %Female #Male #Gender
diverse #
5
Under 30
years old
30 – 50
years old
Over 50
years old
Directors850%50%FY23: 4FY23: 40%0%100%
+1+7%-7%FY22: 3FY22: 4no change-14%+14%
Leadership
Squad
2
956%44%FY23: 5FY23: 40%56%44%
-1-4%+6%FY22: 6FY22: 4no change-44%+44%
Other
leadership
roles
3
6841%59%FY23: 28FY23 401%69%29%
+8-6%+6%FY22: 28FY22: 32-1%-8%+7%
Permanent
starters
1,27441%59%FY23: 518FY23: 74935%52%12%
+19+8%-8%FY22: 413FY22: 840-4%-1%+4%
Permanent
leavers
1,14438%60%FY23: 434 FY23: 687 30%56%13%
-217+3%-5%FY22: 472FY22: 888+2%-4%+1%
Total
4
5,43934%66%FY23: 1,832
FY22: 1,729
FY23: 3,582
FY22: 3,413
FY23: 10
FY22: Not
reported.
19%56%24%
+2800%0%-1%-2%+2%
1 For the purposes of NZX Listing Rule 3.8.1(c) no directors or members of the Leadership Squad self-identify as gender diverse.
2 Includes the CEO who is also included as a Director in the line above. The Leadership Squad is considered ‘senior managers’ for the purposes of the Financial Markets
Conduct Act 2013 and ’senior executives’ for the purposes of the ASX Corporate Governance Council’s Principles and Recommendations.
3 Substantive roles that report directly to members of the Leadership Squad.
4 Includes non-executive directors. Spark’s employee headcount, including our CEO, is reported as 5,432.
5 Gender diverse totals only reported in total figures. There are an additional 15 people who prefer not to answer this question.
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Spark New Zealand Annual Report 2023
Improving ethnic representation
across Spark
Diversity does not start and end with
gender and we have increased our focus
on ethnic diversity over the last two years.
In keeping with our data-led approach to
change, one of our strategic ambitions was
to increase the percentage of our people
sharing their ethnicity data with us to 80%.
We are proud that from our starting
strategy position of only ~19%, to 50% in
FY22, we achieved 83% by FY23.
As at 30 June 2023, the available data on
our people shows that 47% come from NZ
European or European ethnic backgrounds
with 38% reporting a diverse range of
Asian ethnicities, with the largest groups
being Indian (16% overall), Southeast Asian
(8%) and Chinese (7%). Four percent of our
people are Māori and 5.5% report Pacific
ethnicities, most commonly Samoan (2%).
Our senior levels have a higher proportion
of people from NZ European/European
ethnicities with 84% of our people in
leadership roles (Leadership Squad and
Wider Leadership Group) included in this
grouping. Now that we have ethnicity
information for a high proportion of Spark
employees, we will focus more in FY24 on
using this information to gain insights on
how we can attract, retain and progress a
diverse range of people across our
organisation as well as sustain an inclusive
culture. As part of our new strategy from
FY24–FY26, we have also made a
commitment to increasing Māori and
Pasifika representation at Spark, with an
ambition to lift this by a combined
5 percentage points.
Percentages based on permanent and fixed-term employees at Spark as of 30 June 2023 who had provided ethnicity data (n=3,423). NZ
European/European includes all European ethnicities (e.g. British, German) and Australian European. Excludes employees in Spark’s wholly-
owned subsidiaries. Spark collects information on main and other ethnicity where an individual identifies with more than one ethnicity.
Consistent with the Champions for Change methodology, where an individual reports two ethnicities, each is counted as 0.5.
0102030405060708090100
Rest of Spark
Wider
Leadership
Group
Leadership
Squad
Board
Total
NZ European/
European
Asian
Pacific Peoples
Middle East,
Latin America
and Africa
Māori
Other
83%
At end of June 2023.
9. 5%
Of Spark people are Māori or Pacific peoples.
PERCENTAGE OF EMPLOYEES
SHARING THEIR ETHNICITY DATA
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Parental leave
Spark provides a parental leave policy for
eligible employees, regardless of gender,
sexuality, age or whether the employee is
giving birth or adopting a child.
In FY23, we refreshed our parental offering
– Whakapuāwai – to offer better support to
primary parents through the process of
having children and returning to work but
also encouraging secondary parents to be
able to take a more active role in that journey
to support more equitable outcomes.
FY23 Parental Leave numbersFemaleMale
1
Employees who took parental leave1024
Employees who returned to work after taking parental leave703
Employees who were due to return to work723
Return to work rate
2
97%100%
Employees who returned to work after taking parental leave who remain
employed 12 months after their return to work
352
Employees returning from parental leave in prior reporting period622
Retention rate
3
56%100%
1 Males who took fewer than 30 days paternity leave have been excluded.
2 Return-to-work rate = Total number of employees who returned to work after parental leave, divided by the
total number of employees due to return to work after taking parental leave.
3 Retention rate = Total number of employees retained 12 months after returning to work following a period of
parental leave, divided by the total number of employees returning from parental leave in the prior reporting period.
Whakapuāwai, which means ‘to cause to
blossom’, will see Spark top-up the
Government’s parental leave contributions
so that primary carers receive 100% of
their normal salary for 26 weeks, with
continued employer KiwiSaver
contributions of 3% during their parental
leave period. Secondary carers will also
receive four weeks paid leave (increased
from two), so they can be present to
support their partner and whānau during
those pivotal first few weeks of their
baby’s life.
The package also includes a phased
return-to-work policy for primary carers,
who can work 80% of their regular hours
on 100% salary for the first three months of
their return.
Eligibility for Parental Leave is in
accordance with Government legislation.
“ Spark provides a
parental leave policy
for eligible employees,
regardless of gender,
sexuality, age or
whether the employee
is giving birth or
adopting a child.”
KIWISAVER
(PAID THROUGH THE PERIOD OF
PARENTAL LEAVE).
CONTINUATION
OF
AT
3%
Whakapuāwai means to cause to blossom
26 WEEKS
SALARY FOR
10 0 %
80 %
WORK
PAY
10 0 %
OF HOURS, ON
(FOR THE FIRST 3 MONTHS
OF YOUR RETURN)
PARENTS’
SUPPORT
NETWORK
BESPOKE
PARENTAL
LEAVE
TOOLKIT
SECONDARY
CARERS PAID
LEAVE
WEEKS
4
OF
SPECIALIST
TRANSITION
SUPPORT &
COACHING
SPARK’S PARENTAL LEAVE OFFERING
STARTING FROM JANUARY 1ST 2023
OF TOMORROW
THE SEEDSNURTURING
WHAKAPUĀWAI
Ko te pae anamata, whakamaua
61
Spark New Zealand Annual Report 2023
Creating value
for our
communities
Social + human capital
We work alongside New Zealand communities to harness the power of technology
and create a positive digital future for all. Our products and services help our
communities to stay connected and enable the provision of community services.
Beyond the direct impacts of our products, we want to play a bigger role in building
healthy, connected, and equitable communities.
Connected and empowered communities
OUTCOMES FY23
62Hello tomorrow
Creating value for our communities
Creating value for our communities
Digital Equity
It is estimated that one in five people in
New Zealand currently experience some
form of digital exclusion
1
.
There are clear and compelling reasons for
Aotearoa New Zealand to bridge this
digital divide. In May 2023, Spark
Foundation and NERA Economic
Consulting released a report outlining the
economic opportunity that a home
broadband connection provides for a
household – which showed that providing
more homes with internet connectivity
could benefit New Zealand’s economy by
around $464–$737 million per year.
Although digital equity is more complex
than simply having an internet connection
at home and a device to get online, this is
certainly the starting line – and table stakes
for people to be able to participate in an
increasingly digital world.
At Spark our commitment to digital equity
starts with our purpose – to help all of
New Zealand win big in a digital world –
and is guided by the Government’s Digital
Inclusion Blueprint, which identified four
elements of digital inclusion: motivation,
access, skills, and trust.
Improving access and affordability
through Skinny Jump
Skinny Jump is Spark’s not-for-profit wireless
broadband service for people who find cost
a barrier to having an internet connection at
home. The service is entirely prepaid, so
there are no long-term contracts or credit
checks needed, and all it takes to get set
up is registering through a community
partner and plugging in the modem.
Jump is delivered by a dedicated squad of
Spark people alongside a community
partner network, which is overseen by
Digital Inclusion Alliance Aotearoa (DIAA)
and includes over 300 local organisations
nationwide, spanning community libraries
and community hubs amongst others.
There are now 27,341 households across
the country who are actively using Skinny
Jump. For wireless broadband an active
connection is defined as a customer having
used their modem in the last 30 days.
However Skinny Jump customers are more
likely to have infrequent internet use as
they have to reprioritise their monthly
spending when budgets are tight. This is
why for Jump, we also measure customers
who have used their modem in the last 90
days, and in FY23 this totalled more than
30,000 households.
Jump provides customers with 35GB of
data for just $5, with the first 15GB of data
each month free. Customers can purchase
up to six top-ups a month, which means
Jump customers can access 225GB of data
for just $30 a month.
In FY23 Skinny Jump continued its key
partnerships, the ‘Ciena Jump for Students
Fund’, which gives eligible students in low
decile schools a free Skinny Jump
connection until the end of the school year,
and ‘Awhi Matihiko: Red Cross Digital
Settlement Package’ – a collaboration with
New Zealand Red Cross, Internet NZ, and
Digital Inclusion Alliance Aotearoa that
gives new refugees a free Skinny Jump
connection (for 12 months), a laptop, and
digital skills training. There are now over
445 students using the Ciena Jump for
Students Fund and 45 households using
the Awhi Matihiko: Red Cross Digital
Settlement Package.
1 www.digital.govt.nz/dmsdocument/174~digital-inclusion-action-plan-20202021/html
27k+
households across the country who are
actively using Skinny Jump.
“ Providing more homes
with internet
connectivity could
benefit New Zealand’s
economy by around
$464-$737 million
per year.”
Ko te pae anamata, whakamaua
63
Spark New Zealand Annual Report 2023
Championing digital equity through
Spark Foundation
Spark Foundation leads Spark’s work in the
community. The Foundation has a
single-minded focus on digital equity, and
its vision is that no New Zealander is left
behind in a digital world. It has focussed its
strategy on the areas it can make the
biggest difference – digital access, digital
skills and pathways, and digital wellbeing.
Spark Foundation allocates funding for
programmes through a strategic
partnership approach, working with
organisations whose objectives are aligned
to improving digital equity for Aotearoa.
Most partnerships focus on empowering
and equipping the next generation of
digital thinkers and creators, especially
Māori, Pasifika, and women.
In FY23, Spark Foundation refreshed its
strategic direction for the next three years,
recognising the significant progress
already made improving digital access.
While the Foundation’s three focus areas
remain, over the coming years the focus on
building digital skills and pathways into
technology for Māori and Pasifika will be
upweighted. We believe that equitable
participation in our sector is the ultimate
expression of digital equity.
To demonstrate our commitment to this
cause, Spark Foundation has also
implemented an ambition for its Board of
Trustees to achieve a 40:40:20 balance of
ethnicity – with 40% Māori, 40% of any
ethnicity, and 20% Pasifika. The current
Board of Trustees sits at 25% Māori, 25%
Pasifika and 50% other ethnicities.
In FY23, following a 10-year tenure, Chair
Andrew Pirie confirmed his intent to step
down from the Board of Trustees. Current
Trustee, Stacey Morrison (Te Arawa, Ngāi
Tahu), who has served on the Spark
Foundation Board for six years, was
appointed Chair of Spark Foundation,
effective 1 July 2023. Spark Foundation
extends a warm thank you to Andrew for
his contribution to Spark Foundation
during his tenure and welcomes Stacey to
the role.
Spark’s people go ‘ALL IN’
On July 26, Spark held an event at Spark Arena in Auckland (and other locations in
Hamilton, Tauranga, Wellington and Christchurch), as well as online, which brought Spark
people together to help solve the issue of how to bridge the country’s digital divide.
Around 1,500 people participated in ALL IN, which featured stories from six inspiring
rangatahi (youth) who each had their own personal story of experiencing digital
inequity and doing something to make a change.
There was Owyn Aitken and Hadi Doud – who co-founded Remojo Tech, the business
behind Recycle A Device, which is a programme that teaches high school students
how to refurbish donated second-hand devices, and then distributes them to
households in need. To’e Lokeni and Mannfred Sofara, who after years of having their
names mispronounced at school, created their digital platform Fa’amalosi (‘Say It
Right’) on a teacher’s laptop, and from devices they were able to borrow. Hope Cotton
who as one of the 880,000 people in New Zealand who is deaf or hard of hearing, is
spearheading a petition calling on the Government to institute legal captioning
requirements. And Rangipo Taukira-Mita, who developed an affordable technology-
backed water-testing programme to keep track of the quality of New Zealand’s rivers,
which has now expanded to reach marae across the country.
After being inspired by their stories, our people participated in an afternoon of
workshops where we brainstormed ways to combat digital inequity. Following the
event Spark created a dedicated squad of people from around the business to review,
refine and prioritise the generated ideas.
The first initiative to come off the back of ALL IN was Spark’s commitment to include
closed captioning on all its audio-visual assets, including TV and digital advertisements,
social media video content, and internal videos, to make them more accessible to
those who identify as Deaf and Hard of Hearing. The next initiative will launch in FY24.
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Creating value for our communities
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Spark Foundation
investment
In FY23 Spark Foundation invested over
$1.8 million into organisations and projects
that accelerate Digital Equity. Around 80%
of project funding supports nine multi-year
partnerships, which span around two to five
years. The rest is allocated to smaller,
one-off grants.
Spark Foundation
partnerships in FY23
Digital access
Recycle A Device
Recycle A Device (RAD) takes second-hand
laptops donated by businesses and
households; teaches local ākonga
(students) to refurbish them; and then gets
them into the hands of those who need
them the most.
The result is an end-to-end process of
device collection, refurbishment,
distribution, and disposal that enhances
digital equity at every level – providing
highly sought-after tools, access, and skills
to rangatahi (young people), while also
offering the added environmental benefit
of diverting e-waste from landfill by giving
these laptops a second life. Once devices
have been refurbished, they are gifted to
students within the school community itself,
or to other community organisations for
distribution to people in need. As well as
Spark Foundation funding, Spark
subsidiary, Entelar Group has partnered
with RAD providing logistics support. In the
last year, over 2,000 laptops were
refurbished and gifted. In addition, RAD ran
24 one-day workshops where rangatahi
learned the tech engineering skills needed
to repair laptops. This means that over 360
young people can be kaitiaki (caretakers) of
digital tools for their friends and whānau. In
June, RAD received the ‘Best Hi-Tech
Solution for the Public Good’ award at the
2023 New Zealand Hi-Tech Awards.
PACE: Porirua Access Connectivity
and Education
Following a community talanoa in 2020
organised by Spark’s Vaka Pasifika team,
a community initiative, PACE, formed to
specifically address the digital access,
connectivity and education divide in Porirua,
Wellington. In year one the focus has been
establishing the Governance team and
strategic plan. PACE will collaborate with
local established organisations, government
and non-government organisations to
accelerate its efforts in the wider community.
Digital skills and pathways
Te Au Hangarau: Improving
participation of Māori in tech: during
FY23, Spark Foundation co-funded a
piece of research alongside Tātaki
Auckland Unlimited, in conjunction with
Te Matarau, The Māori Tech Association,
to gain a better understanding of the
participation gap of Māori in the tech
sector. The purpose of the research was
to equip organisations across Aotearoa
with an understanding of the barriers
Māori talent face, so they could take
steps to address these and create more
inclusive environments. The qualitative
research, 'Te Au Hangarau', was
conducted by Pūhoro STEMM Academy
and Aatea Consultants. Some of the key
insights from the research included a
need to address the capability gap at a
much younger age – with more
responsibility placed on organisations
to collaborate with education facilities
to encourage Māori into Science
Technology Engineering Maths (STEM)
at a young age, and to provide better
access and opportunities for Māori, to
participate in the digital world. The
research can be accessed on the Tātaki
Auckland Unlimited website.
https://industry.aucklandnz.com/sites/
build_auckland/files/media-library/
documents/Te_Au_Hangarau_Insights_
Summary.pdf
Digital Natives Academy
Spark Foundation has been in
partnership with DNA for nearly
six years. A kaupapa Māori
organisation, Digital Natives
Academy (DNA) Charitable Trust
was established in 2014 to
illuminate digital pathways and to
inspire young people and their
families to create, transform,
shape and develop their own
digital tools. DNA continues to
grow from strength to strength in
the creative tech space, including
gaining Professional Leadership
Development (PLD) accreditation
and forming a strategic
partnership with Media Design
School. In 2019 DNA developed
digital wellbeing programme Te
Iwi Matihiko, and more recently
established Minecraft e-Sport
experience Mātauranga Wero
Hanga. It is piloting this
programme with 39 Kura ā Iwi to
develop their digital fluency
within a Māori medium context.
In addition, focussing within Te
Reo Māori space to support kura,
as well as working with those not
in education or employment who
want to explore digital and
creative pathways.
Ko te pae anamata, whakamaua
65
Spark New Zealand Annual Report 2023
Fibre Fale
Fibre Fale was founded by two young
Pacific leaders, Julia Arnott-Neenee and
Eteroa Lafaele, to create pathways for
Pacific people into the technology sector
through education, advocacy, and
facilitation. Launched in October, the
initiative is backed by a number of
corporate and philanthropic funders
including Spark Foundation, Perpetual
Guardian, Foundation North, and Fisher
and Paykel Healthcare Foundation.
P-Tech
P-Tech is a public education model
designed by educators and the technology
sector to address New Zealand’s STEM
skills gap. Participating schools collaborate
with private companies that provide
students with mentorships, worksite visits,
and paid internships. On completing the
programme, students will have both their
NCEA qualifications, and a New Zealand
Diploma aligned to industry needs. In
addition, successful graduates typically
earn first-in-line consideration at affiliated
industry partners when applying for jobs.
Pūhoro STEMM Academy: a kaupapa
Māori approach that aims to improve
representation of Māori in Science,
Technology, Engineering, Maths, and
Mātauranga. Working with schools,
Pūhoro supports iwi affiliated rangatahi
Māori from NCEA level 1 through to
higher education, helping to guide
them into high value careers. Spark
Foundation is a funder of the Hawke’s
Bay regional programme which
supports eight schools. In FY23, Spark
Foundation and Tātaki Auckland
Unlimited collaborated with Pūhoro to
co-fund ‘Te Au Hangarau – Accelerating
Māori Participation in Tech’ research,
outlined earlier.
Hihiko Te Rawa Auahau: delivered by
Toi Kai Rawa, the Bay of Plenty’s Māori
economic development agency,
innovation hubs will be embedded into
30 Māori communities across the wider
Bay of Plenty over the next few years.
Take2
A programme that aims to break the cycle
of crime through technology. Take2
teaches incarcerated individuals to code,
enabling meaningful employment
opportunities once they are released. In
addition to Spark Foundation funding,
during FY23 Spark supported the
programme by employing its first Take2
graduate into the business.
From Otara to NASA
In FY23, Spark Foundation
partnered with the Ōtara Youth Hub
to send a group of students from
the South Auckland suburb of
Otara to the 2023 Advance Space
Camp Expedition at NASA in
Alabama, USA.
The programme runs over seven
days where rangatahi engage in
various STEM activities as well as
astronaut training exercises,
engineering challenges, team-
building activities and an extended-
duration simulated space mission.
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Creating value for our communities
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Digital wellbeing
Digital Discipline
A programme that offers support to young
people dealing with social media addiction
through education, awareness, and
strategies to balance the online world with
the real world. Digital Discipline is currently
focussed on South and West Auckland
communities with collaborations in
Rotorua, Porirua, and Ōtautahi/
Christchurch. In the last year, Digital
Discipline released a music video with local
music artist, Sefa M., showcasing the
impacts that digital addiction can have on
an individual’s relationship and family.
Founder Tony Laulu was also featured on
The AM Show on Three, discussing the
negative impacts of social media on
teenagers.
Digital Equity Coalition Aotearoa
Spark Foundation is an establishment
funder of the Digital Equity Coalition
Aotearoa (DECA), which brings together
over 100 community organisations who
have a focus on digital inclusion and equity.
DECA shines a light on digital inclusion
initiatives, identifies gaps, advocates, and
offers space for innovation and cross-sector
collaboration.
Other partnerships and funding
In addition to multi-year partnerships,
Spark Foundation also made smaller,
one-off grants to a range of digital equity
initiatives including The Light Project, Ōtara
Community Builders (see below), Tāiki E! |
Māori Tech leaders wānanga, Flying High,
E-Steam 101 Vaka and Digital Tautua.
Spark’s investment into
the community
In FY23 we committed over $8 million in
funding and free data, as well as significant
internal resources, to achieve our digital
equity ambitions and contribute to our
communities.
In FY23 Spark donated nearly $1.6 million
to Spark Foundation, with $1 million
designated specifically for community
projects, and the remaining funding
operational costs. Combined with Spark
Foundation’s sale of its art collection, over
$1.8 million was invested into community
initiatives and projects that accelerate
digital equity.
Spark also funds the Spark Give and Spark
Volunteer programmes, which match
employee charitable donations (up to a
total pool of $250,000 per year) and
provides all Spark people with one day
leave a year to commit to volunteering.
Spark’s subsidised broadband service
Skinny Jump has been designed to operate
on a not-for-profit basis – with the revenue
generated covering the costs of the free
modems, community partner network,
product development, and customer care
and education. The commercial value of
the data provided to households in need
through Skinny Jump totalled over
$6.3 million in FY23.
Connecting our people to our
communities
Spark encourages our people to give back
to the community through our Spark Give
and Spark Volunteer programmes.
As participation in Spark Give and Spark
Volunteer had been steadily declining, in
FY23 Spark refreshed the programmes to
focus on a smaller group of charities to
create a bigger impact and contribute to
more meaningful social progress across
Aotearoa.
In FY22 our people voted for the following
charities as our official partners:
• Skinny Jump (Ciena Jump for
Students Fund)
• Sustainable Coastlines
• Starship Foundation
• Hato Hone St John
Spark Give
Our payroll giving programme, Spark Give,
enables our people to donate to schools
and charities via their pay.
Spark matches donations towards our four
key partners through Spark Give dollar-for-
dollar (up to a cap of $250,000 per year).
Our people also have the option to donate
to their personal causes, and Spark
continued to match most registered
charities (except schools and religious
organisations) dollar for dollar (up to $500
per person per year, up to a maximum cap
of $50,000 per year).
In FY23, Spark removed schools and
religious organisations from the eligibility
criteria for donation matching, to ensure
Spark funding is directed to community
groups most at need. This has seen the
value of donations made through Spark
Give during the year decline, however our
people can continue to donate to these
groups individually and still receive the tax
credits, but their donation won’t be
matched by Spark.
Spark Give results for the year
Employee Donations:$366,431
(FY22: $433,433)
Spark’s Matching:$59,239
(FY22: $157,775)
Number of employees
participating:
205
(FY22: 452)
Spark Volunteer
Spark employees can take one volunteer
day each year, for skills or mission-based
volunteering. Skills-based volunteering
means our people focus on opportunities
that take advantage of their specialised
skills and talents to assist not-for-profits.
Mission-based volunteering means
volunteering with organisations whose
work aligns with digital equity.
Some of the organisations that our people
volunteered for over the year include Pride,
Lifeline, Sustainable Coastlines, Summer of
Tech, Shadow Tech, Hatch, GirlBoss NZ,
P-Tech, Trees that Count and Take2.
Volunteer leave days used in FY23
Total staff eligible for
volunteering:
4,259
(2022: 4,220)
Total employee
participation:
462
(2022: 449 days)
% of employee
participation:
11%
(2022: 6%)
Ko te pae anamata, whakamaua
67
Spark New Zealand Annual Report 2023
To achieve our purpose, Spark must
successfully execute our business strategy
while maintaining high standards of
operational performance and corporate
governance.
Our Sustainability Framework, as outlined
on page 17, focusses our ESG
(Environmental, Social, Governance)
activities in the areas we can make the most
meaningful impact – New Zealand’s
economic transformation, digital equity,
and our own sustainable business
practices. To realise these ambitions ESG is
integrated into our ways of operating and
governance, as outlined in this section.
Maintaining high
standards of corporate
governance
The Board regularly reviews and assesses
Spark’s governance structures and
processes to ensure that they are consistent
with international best practice, in both
form and substance.
Spark has complied with the
recommendations of the NZX Corporate
Governance Code (dated 1 April 2023) and
substantially complied with the principles
and recommendations of the ASX
Corporate Governance Councils Principles
and Recommendations (4th Edition) for the
FY23 reporting period. You can read about
how we have complied with these
recommendations and principles in Spark’s
Annual Corporate Governance Statement
2023 at: www.sparknz.co.nz/about/
governance/
Copies of, and details about, Spark’s
corporate governance policies, practices
and processes can be found on our
website at: www.sparknz.co.nz/about/
governance/
Integrating ESG into our
governance processes
Spark is committed to the continuous
improvement of our ESG performance.
Our sustainability governance structure
helps us ensure sustainability is overseen
at the highest levels of our organisation
and embedded throughout our everyday
operations.
Our Board and Leadership Squad have
oversight of our sustainability performance.
Sustainability (covering all facets of ESG) is
a standing item at regular Leadership
Squad meetings, which serves as a
business-wide sustainability steering
committee. These meetings include
quarterly updates on performance against
our sustainability KPIs. The Board has
overall governance responsibility for
sustainability and is updated on
sustainability performance against the
same KPIs on a quarterly basis. The Board
also approves the sustainability framework
and reviews and approves all policies
related to ESG.
For day-to-day management our ESG
Squad is a cross-functional group
accountable for our performance,
reporting, and risk management. The
Squad is led by Spark’s Sustainability Lead,
and includes representatives from Spark’s
financial, risk, legal, investor relations,
supply chain, regulatory affairs, people and
culture, and corporate relations functions.
We publish a summary of our approach to
sustainability at Spark on our website:
www.sparknz.co.nz/sustainability/
Our Sustainability
Framework
Toitū Sustainability at Spark is integrated
into Spark’s business strategy through our
commitment to the three pillars of
Economic Transformation, Digital Equity,
and a Sustainable Spark. These
commitments sit alongside our Māori
Our governance and ESG management
Strategy, Te Korowai Tupu, which informs
how we develop strong connections with
Māori and builds our understanding of Te
Ao Māori. For more information, see ‘Our
new Sustainability Framework’ on page 17.
The framework is informed by our
materiality assessment (see page 151).
While the three focus areas are enduring,
the activities within them will evolve over
time to ensure we are responsive to our
changing operating environment and the
needs of our stakeholders.
ESG reporting
We seek to present a clear and transparent
assessment of our ESG performance in our
reporting. This report is prepared in
accordance with the International <IR>
Framework and with the Global Reporting
Initiative (GRI) Core Option. It also
incorporates climate risk disclosure aligned
to the recommendations of the Task Force
on Climate-related Financial Disclosures
(TCFD) and to the incoming Climate
Related Disclosures reporting
requirements.
We focus our reporting on sustainability
topics which substantively influence the
assessments and decisions of stakeholders
or have a significant environmental, social,
or economic impact. We also consider
whether a matter could substantively affect
our ability to create value in the short,
medium, or long term.
A detailed appendix to this report (see
pages 151–156) includes a summary of our
approach to materiality, our GRI Index, and
information on our stakeholders and
memberships of organisations.
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Our governance and ESG management
Our governance and ESG management
Benchmarking our ESG
performance
We benchmark our performance using a
number of international frameworks. These
include the Corporate Sustainability
Assessment (CSA). The CSA is a
comprehensive benchmark of our ESG
maturity against our peers, with good
coverage against our material sustainability
issues. The CSA is now a part of S&P Global
and is the assessment framework behind
inclusion in the Dow Jones Sustainability
Index (DJSI) global series.
Our approach to ESG management has
seen our score, and relative ranking against
global industry peers, increase year-on-
year in the CSA benchmark into the top
quartile of all global telecommunications
companies. As a result in the past year
Spark was invited to join the DJSI Australia
Index, recognising our progress and
regional leadership.
We also participate in the Carbon
Disclosure Project (CDP) and the
Worldwide Benchmarking Alliance’s annual
Digital Inclusion Benchmark. This includes
an assessment of our broader social
responsibility governance alongside a
detailed assessment of our digital inclusion
programmes. Spark is currently ranked in
the top quartile of this benchmark.
Sustainability Governance
Our sustainability governance structure helps us ensure sustainability is overseen at the highest levels of our organisation and embedded
throughout our everyday operations.
Digital
Equity
Approval of business strategy and sustainability framework.
Reviews climate change and modern slavery risks. Reviews
sustainability progress quarterly.
Sets three-year business strategy and approves sustainability
framework. Reviews climate change and modern slavery risks.
Reviews sustainability progress quarterly.
Sustainability Director and Lead design the sustainability framework
and ensure Spark makes progress against it.
Identifies focus areas of most materiality
to guide activity and resource allocation.
The Sustainability Lead works across Spark with a cross-functional
ESG Squad to improve sustainability performance and integrate it
into the business. Spark Foundation has a sole focus on digital
equity, and Skinny Jump is operated through a dedicated squad.
Spark’s business strategy is executed through the QBR process,
with priorities agreed every three months. Sustainability is a
standing priority on the QBR.
Support execution of sustainability framework priorities and
consider sustainability impacts in decision making.
Spark New Zealand Board of Directors
Leadership Squad
Corporate Relations and Sustainability Director
and Sustainability Lead
Sustainability framework
Quarterly Business Review (QBR)
All Spark people
Sustainability Lead and ESG Squad
Spark Foundation
Skinny Jump Squad
Sustainable
Spark
Economic
Transformation
Ko te pae anamata, whakamaua
69
Spark New Zealand Annual Report 2023
Human rights due
diligence
In FY22 we introduced our Human Rights
Policy. This Policy is an explicit commitment
to respect all internationally recognised
human rights and sets clear expectations
on how we will address human rights issues
across our value chain.
The Policy supplemented a number of
long-standing policies and processes to
protect and uphold human rights. For
example, our Supplier Code of Conduct,
which sets clear requirements for our
suppliers, and our Privacy Policy and values,
which outline clear expectations around
the protection of our customers’ rights
around their personal data.
To develop the policy we engaged internal
and external stakeholders and reviewed
our approach against our global peers. We
identified a number of areas of emerging
human rights impacts and have
implemented new policies and processes
to address these issues.
This included the publication of a set of AI
Principles, based upon existing internal
guidelines for the ethical use of AI (Artificial
Intelligence) technologies. For more
information see www.sparknz.co.nz/about/
governance/
In the past year we designed a new
customer human rights risk screening
process which we will roll out to key teams
in the year ahead. The majority of Spark’s
customers pose a low risk, and as a
New Zealand-based business most of our
customers operate exclusively within
New Zealand where strong protections exist.
This process requires us to consider if
services provided to customers pose any
risk of negative human rights impacts,
are used with vulnerable groups, or in
high-risk industries or geographies where
there is a greater risk of negative human
rights impacts.
The process will flag customers for further
consideration. The ESG Squad will conduct
the initial review and recommendation,
with complex, high-risk, or high-value cases
escalated to the Leadership Squad for a
final decision. In line with human rights best
practice, this includes understanding
opportunities to work in partnership with
customers to mitigate any risks and address
underlying human rights issues.
Together, our engagement with our
suppliers (see below), our internal policies
and processes, and our assessment of risk
in the use of technology by our customers,
represents our human rights due diligence
process across our value chain.
Engaging our suppliers
We rely on a combination of local and
global suppliers and partners to operate
our business. We have around 2,000
suppliers, ranging from the largest global
technology businesses to small local
operators. Each year we spend around
$2 billion to support our business and meet
our customers’ needs.
Our global supply chain is complex, with
many indirect suppliers providing the
source materials and components required
to deliver consumer electronics and
network infrastructure. We set clear
expectations for our suppliers related to
social and environmental performance
through our Supplier Code of Conduct,
which sets out the minimum standards we
expect from all our suppliers across labour
and human rights, health and safety,
environmental sustainability, and ethical
business practices. All new suppliers are
requested to sign up to the Code, or
demonstrate commitment to an equivalent
code of practice, as part of their
onboarding process. For more information,
visit: www.sparknz.co.nz/suppliers
We are in the process of transitioning our
supplier management system to the SAP
Ariba platform. This system provides
improved processes for data collection
from suppliers, including self-assessment
questionnaires and compliance
declarations, covering topics such as
modern slavery and science-based
emissions reduction targets. The system
also includes a risk module that enables us
to monitor suppliers across 300+ incident
types (such as ethical practices, labour
compliance, legal incidents, and
operational disruption), and then segment
suppliers into risk profiles as a result.
Auditing suppliers – Membership of
Joint Audit Cooperation (JAC) initiative
JAC is an international association of
telecommunications operators aiming to
align around a common set of requirements
and KPIs for ICT suppliers to uphold human
rights, social, labour, and environmental
standards. The association aims to verify,
develop, and assess the Corporate Social
Responsibility (CSR) implementation across
the manufacturing centres of suppliers in
the industry.
JAC has been running for over a decade
and has been gradually growing as new
operators join the initiative. JAC members
share resources and best practices. As of
June 2023, the association encompasses
26 telecommunications operators.
As a JAC member Spark is required to audit
a minimum of five supplier locations each
calendar year. The suppliers and locations
are mutually agreed and allocated across
the members. Findings and corrective
actions are also shared among all JAC
members, which provides visibility of risk
across a larger number of suppliers than
Spark would be able to audit individually
and a platform for collective industry
engagement to improve performance.
Across all of its members, JAC has
conducted a total of 910 audits and surveys
since its establishment in 2010 through to
2022. In the 2022 calendar year a total of 98
audits were carried out. Across these audits
549 corrective actions were raised during
audits by category of issue. The top audit
findings were related to Health and Safety,
Environment, and Working Hours.
Modern Slavery
Statement
Spark publishes a
dedicated annual
Modern Slavery
Statement. This
report provides a
detailed summary
of our approach to
addressing modern slavery and
managing broader risk in our supply
chain, including actions taken over
the past year to strengthen our
systems and processes
You can find this at: www.sparknz.
co.nz/about/governance/
Spark Modern Slavery
Statement 2023
S TATEMENT
MODERN SLAVERY
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Our governance and ESG management
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As we share many common global
suppliers with our industry peers many of
the sites audited are relevant to our own
supply chain, including a significant number
of sites within the past two years. Details
shared among JAC members are covered
by a non-disclosure agreement, which
means we cannot share details of JAC
audits conducted by other members
publicly, but we can use this information in
our own internal risk assessment, to inform
our engagement with suppliers, and to
prioritise and select suppliers for audits.
To undertake the assessments, we have
engaged a third-party auditor experienced
in delivering site assessments against the
JAC methodology. The suppliers identified
for audits include two manufacturing sites in
Asia, two service providers with significant
numbers of workers working offshore,
including our outsourced call centre
operations in the Philippines, and one of
our key suppliers in New Zealand. The first
of these audits is scheduled for August
2023, with our commitment to complete
five on-site audits by the end of the 2023
calendar year. We intend to report the
findings of these audits in our FY24 report.
Of the five supplier sites we initially
selected, one supplier manufacturing site in
Asia had already been audited by another
JAC member within the past two years,
meaning we already have access to a recent
assessment of performance. Because of this
we have selected a different supplier, a
service provider based offshore, for our
2023 audit programme.
For more information see:
www.jac-initiative.com
Public Policy and Lobbying
Commitment
Public interest in lobbying is growing, with
particular concern raised about lobbyists
switching between political and lobbying
roles and the potential conflicts of interest
created. In response, the Government
announced a number of measures aimed at
providing greater transparency around
lobbying at Parliament, including supporting
lobbyists to develop a voluntary code of
conduct to serve as a set of guidelines to
improve transparency and accountability.
In the past year Spark has published its
own Public Policy and Lobbying
Commitment to set clear rules and
processes for Spark to follow as it seeks to
engage on public policy, either directly or
via government relations agencies.
Spark has not made political donations for
many years, and in our annual reports we
have declared zero political donations as
part of our financial reporting. Our new
public Commitment formalises this practice
as an explicit policy that we will not make
donations to political parties in
New Zealand or any other jurisdictions.
We also committed to disclosing our
engagement with lobbying services
providers. In the past year we have retained
the services of government relations
agency Thompson Lewis. As one of
New Zealand’s largest businesses and a
lifeline utility we have an important role to
play in the development of policies relevant
to our sector and operations. We use this
agency to provide additional resource that
enables us to effectively fulfil this role.
Our approach to tax
We take a responsible and transparent
approach to tax. We recognise that the
digital economy is an important and
growing sector in New Zealand, and the
taxes we pay are an important source of
government revenue. The Spark Group Tax
Strategy follows the spirit of the law in
addition to the pure interpretation of the
law. We believe that it is important that
those in the sector pay the right amount of
tax to support the ongoing investment
required for New Zealand’s long-term
success. This includes the provision of
infrastructure, education, social and
environmental services we rely on as a
New Zealand-based company.
In FY23 Spark’s effective tax rate after
adjusting for the impacts of the Connexa
transaction and Spark Sport provision was
29.9%. This is higher than the New Zealand
domestic tax rate of 28%, primarily due to
tax payable on Spark’s share of Southern
Cross‘ underlying earnings. As a large
business, Spark makes a significant
contribution to New Zealand’s tax base.
Spark contributed $190 million of
New Zealand income taxes during FY23
(before any tax credits were applied).
In addition to income tax paid by Spark, the
Spark Group has payment and collection
obligations across a wide range of tax types
resulting in an excess of $617 million of
taxes under management during FY23.
Taxes under management
OTHER
NZ INCOME TAX
PAYE
GST
$
2
0
6
M
$
2
5
M
$
1
9
0
M
$
1
9
6
M
The full tax strategy is available online:
www.sparknz.co.nz/about/governance
0
20
40
60
80
100
120
140
160
180
200
$ MILLION
OVERSEAS
TAX PAYMENTS
TOTAL INCOME
TAX PAID
NZ INCOME TAX
CONTRIBUTED
TAX CREDITS
(INC. FITC)
PROVISIONAL
TAX PAID
$190m
$0m
$190m($50m)
($140m)
Breakdown of income tax
payments FY23
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71
Spark New Zealand Annual Report 2023
Strategy and objective setting
This domain focuses on integrating risk
management into strategy setting and
business planning. Examples include the
consideration of risks and opportunities to
business objectives when making strategy
decisions and checking in with every
function using a systematic method as
part of the Quarterly Business Review
Process. Each quarter the Leadership
Squad communicate the top priorities
for the business to the Wider Leadership
Group, and support execution with
strategic guidance and access to extra
resources as needed.
Performance
This domain involves maintaining a
portfolio view of risks under active
management. Examples include
maintaining a principal risk profile that is
used by the ARMC and Leadership Squad
to understand relevant risks and how they
are being managed. It also focuses on the
quality of the embedded risk management
practices that are used within functions
across the business. These two views enable
in-depth analysis of relevant business risks
and how they are being managed from a
top-down and bottom-up perspective.
Review and revision
This domain involves identifying and
implementing opportunities to
continuously improve risk management
practices. Examples include regular internal
and external assessments of the policy and
framework.
Information, reporting and
communication
This domain focuses on guiding Spark on
how to use the policy and framework.
Examples include information pages, access
to support channels, and education sessions.
The policy and framework are assessed
annually, and externally every three years,
to ensure they remain effective. All
assessment results and agreed actions are
shared with the ARMC to ensure they
remain informed about the status of the
policy and framework.
Spark’s principal
business risks
Principal risk profiles are updated twice
yearly. The last update was finalised in
May 2023. The principal risk themes
identified were:
Protecting Spark and its customers
from a major cyber-attack or data
breach
Evolving external threats, changing
legislation, and high expectations from
customers and stakeholders mean robust
security and privacy roadmaps and strong
governance, involving the Leadership
Squad, continue to be needed to ensure that
significant risks are managed. The Security
Tribe is responsible for critical operational
controls to ensure standards and compliance
are upheld. Our Digital Trust team sets
privacy frameworks and standards that Agile
units need to apply to maintain appropriate
operational controls for privacy. Spark also
has a data retention policy, which sets out
considerations and, in some cases, rules for
data retention. Adherence audits for
compliance with the data retention policy
are performed by the Internal Audit team.
External reviews and certifications help to
ensure that comprehensive security
measures exist for the critical elements of
our cyber security framework. These
reviews include security maturity
assessments and security device
configuration audits to ensure our
processes meet expected standards.
Our risk management
Managing risk
Our risk policy and framework helps our
people to manage uncertainty and adapt
to challenges as they pursue Spark’s
strategy. Oversight by the Audit and Risk
Management Committee (ARMC) and the
diligent application of the defined roles
and responsibilities across the business
ensures Spark’s risk management system
remains effective.
The policy and framework are
benchmarked to COSO ERM 2017 (COSO),
a leading practice risk management
standard. Spark also uses other leading risk
management standards like ISO31000:
2018 and specific standards and guidance,
where available, to benchmark and inform
its risk management practices.
Spark’s framework is structured into five risk
management domains that all work
together to enable a robust system for risk
management. Below is a description of
each domain and some examples of
activities by domain to help understand the
framework in more depth. These five
domains are embedded in Spark’s
Managing Risk Framework and ensure the
Three Lines of Defence Risk Model (1. Own
and manage 2. Monitor and 3. Provide
independent assurance) is utilised.
Governance and culture
This domain reinforces the importance of
risk management and influences how
people apply the framework. Managing
risk is embedded in Spark’s organisational
structure, its functional activities, and is
supported by specialist resources from the
Risk Team. Examples include the policy and
the defined governance structure that
supports its application across Spark. More
information on the roles and
responsibilities are included in the table on
page 81.
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Our risk management
Our risk management
Maintaining a resilient network and
delivering technology and network
leadership
The use of established and proven delivery
methods for large-scale network and
technology projects (such as our 5G rollout)
will help us to manage potential risks created
by the delivery of new technologies and will
also sustain our existing technology. This also
includes long term physical risk to
infrastructure from climate change. With a high
share of operational cost, Spark’s technology
units also continue to execute net-cost
reduction while maintaining operational
standards. In addition to cost optimisation
mitigations, technology units have robust
operational risk management processes,
which provide visibility and enable a
coordinated response to risk.
Estimating economic environment
impacts and responding with
balanced judgement
Rising interest rates and inflation is impacting
consumer behaviour and business
confidence and resulting in cost increases.
This is showing up most in the SME segment,
with more businesses being forced to close.
Recent weather events are also contributing
to increased costs for Spark and changing
customer behaviour in business and
consumer areas. Although Spark has been
impacted less than some parts of the
economy, management continues to monitor
this risk closely, particularly as unemployment
increases and with the economy recently
moving into a technical recession.
Executing simplification projects and
customer migrations
Spark continues to simplify its portfolio of
products and migrate customers to new
plans and modern technologies. This
objective introduces revenue and customer
experience risks because execution requires
cooperation by a complex set of
stakeholders and retiring legacy products is
challenging. In FY23, Spark’s mature
approach and capability for simplification
enabled it to make good progress towards
its simplification and legacy plan retirement
targets. Close monitoring and robust
processes enable Management to measure
simplification benefits and work through risks
and issues effectively, particularly when
trade-off decisions are required.
Cost optimisation while maintaining
operational standards and resilient
service
Executing net cost reduction is a strength
for Spark, and we do it in a way that
ensures operational delivery standards for
customers are maintained. To mitigate
unintended risks (for example, customer
service disruptions), the Leadership Squad
has established a strong governance
structure, coupled with a formal delivery
methodology to ensure all initiatives are
robustly tested. Trajectory toward targets is
measured, which enables intervention and
course corrections when required.
Achieving planned performance
when there are talent shortages
in New Zealand
Like most businesses Spark is impacted by
New Zealand’s labour shortages and access
to the people and skills it needs to execute
on its business strategy. Competition for
skilled people in certain fields (for example,
data and automation and artificial
intelligence) is high with low
unemployment and challenges attracting
skilled migrant workers. Costs associated
with attracting and retaining talent have
also increased. Mitigation strategies are in
place and proving effective with lower rates
of attrition. These include workforce plans,
succession and bench strength projects,
targeted internships, upskilling, increasing
internal talent mobility, and strategic
development programmes. Management
continues to actively manage this risk
across specifically impacted business teams.
Business continuity and crisis
management
The Business Continuity and Crisis
Management Policy protects customers
from the impact of disruptive events and
ensures value generating activities are
resilient and comply with relevant external
standards, for example, Civil Defence and
111 obligations.
Spark’s framework is benchmarked to ISO
22301 and ISO 22313, which are
acknowledged as leading practice
standards for business continuity. It is
overseen by the ARMC in a similar way to
the Managing Risk Policy and Framework.
Regular reviews of the framework are
performed by the Service Resilience and
Risk and Internal Audit Teams to ensure it is
effective. External reviews and testing of
key elements of the framework, such as the
Level One Crisis Management Plan and
Team, are also done to validate the
effectiveness of the framework. Spark’s
business continuity framework performed
well when called upon during the recent
weather events, like Cyclone Gabrielle. Our
continued investment in network resiliency,
as outlined on page 36–37, also
demonstrates application of the framework
in practice.
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73
Spark New Zealand Annual Report 2023
Climate-related risk
Climate change poses a risk to our
business due to potential disruption to our
supply chain, our infrastructure, and our
customers. A number of severe weather
events over the past year have highlighted
the impact that climate change can have on
the resilience of our networks and our ability
to provide connectivity to our customers.
We introduced climate risk reporting,
aligned to the international Task Force on
Climate-related Financial Disclosures
(TCFD) framework, in our FY21 Annual
Report. Changes in New Zealand
regulation will make climate risk reporting
mandatory for Spark and many other
large-scale New Zealand businesses from
2024 onwards. This will require us to report
in accordance with climate standards
published by the External Reporting Board
(XRB), which are aligned with the
international TCFD framework.
Governance of climate risk
The Spark Board and Leadership Squad are
engaged in Spark’s climate risk
management through the integration of
our most material climate risks into our
enterprise risk management system, and in
the design and implementation of our
longer-term climate scenario risk analysis.
The Audit and Risk Management
Committee (ARMC), a subcommittee of the
Spark Board, is responsible for Spark’s
overarching risk management. The ARMC
meets at least six times each year and
receives regular updates on all principal
business risks, including regular updates
on ‘Maintaining a resilient network’, which
includes physical adaptation risk to our
networks, and risk in our network supply
chain (see page 73). Sustainability is one of
the competencies assessed in our Board
Skills Matrix (see page 81), ensuring the
appropriate skills and competencies are
represented at Board level to manage
climate risk.
The Board is also responsible for
remuneration policies. For our Leadership
Squad and a select group of senior leaders,
a long-term incentive forms part of their
remuneration package. This scheme, from
FY23 onwards, is tied to performance
measures relating to Spark’s ESG
performance, including performance
against our emissions reduction target.
See page 87 for more information.
In setting Spark’s new three-year strategy,
the Board and Leadership Squad
considered risk and opportunities from
climate change. A key focus of the new
strategy is enabling New Zealand
businesses to grow and become more
productive and sustainable through
technology, which explains how we will
support New Zealand’s transformation to a
high productivity, low-carbon economy.
Our risk management system helps our
people to manage uncertainty and adapt to
challenges as they pursue Spark’s strategy.
Spark’s Chief Financial Officer is
responsible for our overarching risk
management system, with a parallel
reporting line for Spark’s Risk, Audit and
Fraud Lead directly into the Chair of the
ARMC. Spark’s Corporate Relations and
Sustainability Director is responsible for
Spark’s overall sustainability strategy. The
Chief Operating Officer (or Network and
Operations Director from 1 July 2023
onwards), is responsible for our most
material climate change risks, which are
integrated into ‘Maintaining a resilient
network’ in our enterprise risk management
system, alongside progress against our
SBTi-verified science-based emissions
reduction target.
Sustainability updates, which include
updates on our climate risk processes, are
provided to the Board a minimum of twice
a year, including the detailed annual
reporting process. The Leadership Squad
serves as Spark’s sustainability steering
group, with quarterly updates on
performance against sustainability KPIs.
The Board approves Spark’s sustainability
framework and reviews and approves all
policies and KPIs related to ESG and
sustainability. A more detailed explanation
of Spark’s sustainability governance is
available on page 69.
Our current climate scenario analysis was
completed in 2021. Both the Spark Board
and Leadership Squad were involved in the
design and implementation of the scenario
analysis and approved the findings. As we
plan to update our scenario analysis in the
year ahead, the Leadership Team and
Board will be engaged in the development
and scoping of the analysis and approve
the final findings.
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Climate impact on strategy
Our climate scenario risk analysis aligned
its timelines and financial materiality
thresholds to our standard enterprise risk
management system. It considered the
likelihood, impact, and urgency of risks
using three, 10, and 30-year time horizons.
The three-year horizon aligns to Spark’s
three-year strategy horizon. The 10-year
horizon aligns to risk management best
practice, and the 30-year horizon aligns to
the 2050-time horizon for national climate
scenario analysis, and New Zealand’s
net-zero commitment. We identified no
risks that met our highest ’Extreme’ risk
category, and seven that fell into lower risk
rating categories.
This analysis was undertaken through a
series of interviews with key teams across
Spark, with oversight of the Environment
and ESG Squads. This was supported by a
process to map our infrastructure against
publicly available climate scenario
modelling data, to understand the number
and location of sites that may be of
greater risk.
Our scenario analysis was completed
against two scenarios, mapping key sites
against 2050 climate scenarios aligned to
New Zealand’s first National Climate
Change Risk Assessment.
Scenario 1 – RCP 4.5: A future where early,
ambitious mitigation has limited
temperature change. This identifies risks to
Spark from rapid de-carbonisation, for
example from regulatory intervention, a
high carbon price.
Scenario 2 – RCP 8.5: A future where
insufficient early mitigation has led to
significant risk requiring adaptation to
rising temperatures. This identifies risks to
Spark from extreme weather events,
sea-level rise, and knock-on impacts on our
operating environment.
The incoming XRB Climate Related
Disclosure standards require analysis
against a third scenario. We are engaging
with our industry partners to discuss a
sector-wide approach to map the potential
impacts of climate change on
New Zealand’s telecommunications
networks as a whole. Our initial scenario
analysis considered risk to Spark assets
independently. However, our networks are
also reliant on other potentially vulnerable
infrastructure, such as power, fibre
backhaul, and roading infrastructure. So a
more detailed risk analysis must also
consider these interdependencies, and the
interconnected climate adaptation actions
required. We will also engage with other
stakeholders, including the Climate
Change Commission, in the lead up to the
preparation of New Zealand’s next National
Climate Change Risk assessment due
in 2026.
We will use this more detailed scenario
analysis to develop financial cost estimates
for anticipated impacts in order to meet
future disclosure requirements of the new
reporting standards. We are also
investigating adding formal climate and
emissions considerations into our capital
deployment and funding decision-
making processes.
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Spark New Zealand Annual Report 2023
OUR CLIMATE SCENARIO RISK ANALYSIS
Physical adaption riskIncludes impacts on network resilience and future investment, increased weather events, sea level rise,
planning and Resource Management Act (RMA) requirements, and insurance costs.
Rated as high likelihood with
low impact in the three-year
horizon, growing in impact over
the 10 and 30-year time
horizons.
We mapped key infrastructure against publicly available climate scenario models. This showed many of the most
extreme climatic changes expected to 2050 are in lightly-populated areas, for example on the West Coast of the
South Island. Most of the population, and therefore much of our network, is in coastal areas. Analysing site proximity
to coastal inundation risk zones, and factoring site elevation, shows only a small number of sites at greater than
moderate risk in 2050 under the RCP 8.5 scenario.
The impact of recent weather events has emphasised the importance of network resilience and physical adaption to
climate change. See page 36–37 for information on our work in building network resilience. We are engaging with
national stakeholders on an aligned approach to building resilience in telecommunications network, including:
• Engaging with industry, via the TCF, to investigate a combined analysis of long-term physical risk to New Zealand’s
telecommunications infrastructure;
• Actively monitoring RMA reform to inform our long-term adaptation work, including the development of a new
Climate Change Adaptation Act (CAA); and
• Engaging in the development of New Zealand’s first National Adaptation Plan which is intended to address the 43
priority risks identified in the National Climate Change Risk Assessment and the risk to the telecommunications
network.
Supply chain risk Includes increased supply lead times, increased air freight cost, increased supply cost, supply chain
disruption, and increased inventory and working capital
Rated as high likelihood with
low impact in the three-year
horizon, growing in impact over
the 10 and 30-year time
horizons.
The increasing number of extreme weather events across the globe increases the risk of disruption to our supply chain.
Growing competition for resources from emerging climate mitigation technologies such as EVs may also increase cost
and disruption. This is likely to drive increased cost and lead time on purchasing and require larger local inventory and
working capital to manage risk. This may impact our ability to provide devices to our customers and maintain and grow
our infrastructure.
We are implementing an enhanced supplier relationship management system which includes improved risk
monitoring, reporting, and supplier engagement processes. We have also joined the JAC (Joint Audit Cooperation)
initiative, a coalition of global telecommunications operators working together to ensure adherence to internationally
recognised standards along the ICT supply chain and upholding human rights, social, labour, and environmental
standards.
Provision of climate related
services (moderate risk/
opportunity rating)
Includes provision of monitoring and control devices and services, data analytics, AI and other potential
climate related services to enable emissions reductions
Rated as medium likelihood
with low business impact in the
three-year horizon, growing to
moderate impact in 3–10 years.
Digital technology has the opportunity to enable significant emissions reductions. We provide services that support
digitisation towards a low-carbon economy, but it is difficult to isolate business-as-usual digital transformation from
specific sustainability enablers.
A key focus of Spark’s new three-year strategy is enabling New Zealand businesses to grow and become more
productive and sustainable through technology. Through Spark IoT we already provide solutions with significant
sustainability benefits – from energy and water metering, fleet tracking and optimisation and water quality
monitoring.
In the past year, in partnership with sustainability consultancy thinkstep-anz, we published a report on how digital
technology can enable the transition towards a low-emissions, climate resilient future state. The report analysed the
scale of potential emissions reductions enabled by digital technology, finding 7.2 million tonnes of annual emissions
reductions could be enabled by 2030, which represents 42% of the emissions required for New Zealand to meet
domestic emissions budget over the next decade. See page 48 for a summary. The findings of the report are
enabling us to engage relevant sectors and partners to explore opportunities to accelerate adoption of technology,
and support Government to put in place policies and actions to remove barriers to technology adoption.
SBTi science-based
emissions reduction target
Includes the risk we will not meet
our SBTi target.
Moderate risk.Risk we will not achieve our Scope 1 and 2 reduction target or risk we will be unable to influence 70% of suppliers by
spend to adopt their own SBTi-aligned targets.
This risk rating reflects the ambition of our target, which will require significant effort over the next decade, particularly as
increased investment in infrastructure, including data centres and 5G rollout, is anticipated to increase energy useage.
Our planned actions reduce this risk rating to a ‘low’ rating. See page 44 for information on our SBTi target and plan.
MEDIUM RISK RATING
HIGH RISK RATING
Our climate change scenario-based risk assessment
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Metrics and targets
An explanation of Spark’s emissions
reporting, and our SBTi-verified emissions
reduction target, is provided in the Our
Environment section of this Report, see
page 42.
We also produce a standalone Greenhouse
Gas Inventory Report which provides a
detailed account of our emissions. The
report is assured by Deloitte and is
available here: www.sparknz.co.nz/
sustainability/environment
We provide a summary of metrics against
the incoming XRB Climate Related
Disclosures in our Sustainability Appendix
on page 154.
OUR CLIMATE SCENARIO RISK ANALYSIS
Social disruption
Medium likelihood, low impact
over the 30-year horizon
Low direct risk to Spark, however highlights the national risk of increased inequality as climate-intensive roles are
disestablished and the importance of digital equity in New Zealand’s transition. See page 63 for our work in digital equity.
Risk to New Zealand
economic activity
Medium likelihood, low impact
over the 30-year horizon
We referenced the Climate Change Commission’s projected cost of action to achieve New Zealand’s 2050 target,
which was approximately 1% of projected annual GDP by 2050.
Climate litigation
Low likelihood, low impact,
across all time horizons
Low likelihood, low impact, across all time horizons.
Considered low-risk as Spark is not linked to infrastructure or investments with heavy emissions.
LOW RISK RATING
Ko te pae anamata, whakamaua
77
Spark New Zealand Annual Report 2023
1. Justine Smyth, CNZM
Chair
Justine joined the Board of Spark
New Zealand in December 2011 and
became Chair in 2017. She has extensive
experience in governance, mergers and
acquisitions, taxation, and the financial
performance of large corporate enterprises
as well as small and medium enterprises
(SMEs). Her background is in finance and
business management, having been a
Partner with Deloitte, and Group Finance
Director at Lion Nathan. Justine is currently
Chair of Breast Cancer Foundation New
Zealand and Chair of Mondiale VGL Group
and is a former director of Auckland
International Airport Limited. Justine has
a Bachelor of Commerce from the
University of Auckland and is a Fellow of
Chartered Accountants of Australia and
New Zealand and a Chartered Fellow of
the Institute of Directors. In 2020 Justine
was appointed a Companion of the
New Zealand Order of Merit for services
to governance and women.
2. Alison Barrass
Non-executive Director
Alison joined the Board in September
2016. She brings a broad range of skills,
including knowledge and expertise in the
fast-moving consumer goods (FMCG)
sector and in governance, leadership, and
marketing-led innovation. Her background
includes 30 years’ experience at major
international FMCG companies, including
PepsiCo, Kimberley-Clark, Goodman
Fielder, and Griffins Foods. She is currently
a director with Rockit Global, Zespri and
Suncorp NZ, is Chair of Tom & Luke and
Babich Wines and is a former director of
GWA Group. Alison has a Bachelor of
Science from the University of
Southampton and a Business Diploma in
Marketing from the University of Auckland.
Our Board and Leadership Squad
3.
4.
1.
2.
7. 8.
5. 6.
Our Board
Hello tomorrow78
Our Board and Leadership Squad
Our Board and Leadership Squad
3. Warwick Bray
Non-executive Director
Warwick joined the Board in September
2019. He brings over four decades of
experience in the international
telecommunications, technology, and
media sectors, most recently in senior
executive roles at Telstra. During his nine
years at Telstra up until 2018, Mr Bray’s
executive roles comprised Chief Financial
Officer, Group Managing Director Product,
Executive Director Mobile and Head of
Corporate Strategy. Earlier in his career,
he was a Managing Director at JP Morgan
(London) and Dresdner Kleinwort
Wasserstein (London) in
telecommunications equity research. He
also worked at McKinsey & Company in
Europe, advising telecommunications
companies on strategy, regulation, and
operational improvement, and as a network
systems engineer at Hewlett Packard.
Mr Bray has served on the GSMA strategy
committee, the boards of Hong Kong
mobile business CSL and Australian pay
TV operator Foxtel and as Chairman of
the Australian Mobile Telecommunications
Association. He is currently a director
with Woolworths Group. He holds a
Bachelor of Science (Hons) and a Masters
in Business Administration from the
University of Melbourne.
4. Sheridan Broadbent
Non-executive Director
Sheridan joined the Spark Board in August
2022 with an executive and governance
career spanning telecommunications, ICT,
infrastructure, and energy. Her governance
experience includes her role as
Independent Director for Manawa Energy
and Chair of Pipeline and Civil Group.
Previous governance experience includes
her roles as Chair of Kordia, director of
Transpower and former member of the
Government’s Cyber Security Advisory
Committee. Sheridan holds a Bachelor of
Commerce from the University of Auckland,
is a Chartered Member of the Institute of
Directors, and is a graduate member of the
Australian Institute of Company Directors.
5. David Havercroft
Non-executive Director
David joined the Board in October 2021,
bringing skills and experience from a
career in the technology industry that has
spanned more than 35 years. He held a
number of leadership roles at Spark
New Zealand from 2009-2017, including
Chief Operating Officer and Chief
Technology Officer. Prior to this he held
executive and management positions in
IBM Asia Pacific, Cable & Wireless, and BT.
David is currently a director of Westpac
New Zealand, and was formerly a director
of Kordia, Connect8, Southern Cross Cable
Network and Kiwi Wealth.
6. Jolie Hodson
Chief Executive and Executive Director
Jolie joined the Board in September 2019.
Her appointment to CEO in July 2019
followed a substantial career within Spark,
leading different areas of the operating
business over a six-year period. As CEO
Jolie is responsible for ensuring the
Company has a sound strategy and builds
a team around her that is able to deliver the
digital infrastructure, products and services,
and innovation that supports Spark’s
customers and Aotearoa to win big in a
digital world.
Prior to joining Spark Jolie worked for 20
years in a range of senior roles for the Lion
Group and Deloitte. She has a Bachelor of
Commerce from the University of Auckland
and is a Fellow of Chartered Accountants of
Australia and New Zealand.
7. Gordon MacLeod
Non-executive Director
Gordon joined the Board in August 2022.
He is a highly credentialed business leader,
who held a range of senior executive roles
over a 15-year tenure at Ryman Healthcare
Group, where he most recently served as
CEO. Prior to this Gordon was a Corporate
Finance and Advisory Partner with PwC and
was also the Finance Director of a Hi-Tech
UK listed company based on the
Cambridge Science Park in England.
Gordon is an Independent Director of
NZX-listed Delegat Group and a trustee of
Breast Cancer Foundation NZ. He holds a
Bachelor of Commerce from the University
of Canterbury, is a Fellow of Chartered
Accountants of Australia and New Zealand,
and a Member of the Institute of Directors.
8. Charles Sitch
Non-executive Director
Charles joined the Board in December
2011. He has more than 20 years’
experience in driving business strategy,
having worked for McKinsey & Company
from 1987, where he became senior
director in 2010, primarily working with
CEOs and boards on strategy and
operations turnarounds, before retiring in
2010. Since 2006 he has been involved in
various new business ventures. Charles was
previously Chairman of the Board of Trinity
College at the University of Melbourne. He
holds a Masters in Business Administration
from Columbia Business School and a
Bachelor of Laws and a Bachelor of
Commerce from Melbourne University. He
is also a Graduate of the Australian Institute
of Company Directors.
Ko te pae anamata, whakamaua
79
Spark New Zealand Annual Report 2023
Strategic role of the Board
Spark’s Board plays a critical role in helping
to guide and test company strategy, by
engaging in an ongoing conversation with
the Leadership Squad around key strategic
decisions. These decisions are in relation to
the long-term strategic planning and
direction of the business, including
non-financial performance and our ability
to create value in the medium and long
term. This includes customer experience,
governance, and sustainability measures,
with the Board approving the business
strategy and reviewing climate change,
cyber and modern slavery risks.
As the body elected by shareholders to
protect and enhance the value of Spark’s
assets, the Board has oversight of Spark’s
financials and the annual and three-year
planning processes. Board members
engage in robust discussions with
management around the strategic direction
of the business to test and ensure
investment is going towards the things that
will deliver the best outcomes for the
company and shareholders. This flows
through to Spark’s remuneration policies
where there is Board involvement in setting
targets and hurdles for short-term and
long-term incentives.
FY23 saw the Board provide oversight and
strategic support in the development of
Spark’s new three-year strategy and during
the sale of the 70% stake in Spark’s mobile
towers and the resulting decision to return
$350 million to its shareholders via an
on-market share buy-back.
1
Future director
Spark supports the Future Directors
programme and appointed its third Future
Director, Sylvia Ding, effective 1 February
2022 for an initial period of 12 months. This
appointment was further extended and her
term came to an end on 31 May 2023. The
Spark Board thanks Sylvia for her valuable
contribution during her time as a
Future Director.
Company Secretary
The Company Secretary is responsible for
ensuring the effectiveness of the Board by
ensuring that its policies and procedures
are followed and for coordinating the
completion and dispatch of the Board
agendas and papers. The Company
Secretary is a position distinct from the
Leadership Squad and is accountable to
the Board, via the Chair, on all governance
matters, as further described in the
Board Charter.
Board renewal and
succession
Spark’s Board has an appropriate mix of
tenure, skills, diversity, and experience.
The Board skills matrix on page 81 outlines
the qualifications, capabilities,
geographical location, tenure, and gender
of each member of the Board. Ethnicity
information is available on page 60 of
this report.
There is an ongoing Board succession
programme, which is focussed on finding
new directors with relevant skills and
experience that complement the diverse
perspectives already represented around
the table.
During FY23, as part of the Board’s
ongoing succession planning, Sheridan
Broadbent and Gordon MacLeod joined
the Board as independent non-executive
directors, both effective 1 August 2022,
and Paul Berriman resigned as a non-
executive director with effect from
4 November 2022.
1 Subject to market conditions at the time.
Spark may investigate alternative return options.
Hello tomorrow80
Our Board and Leadership Squad
For running header don't delete
Justine
Smyth
Alison
Barrass
Warwick
Bray
Sheridan
Broadbent
David
Havercroft
Jolie
Hodson
Gordon
MacLeod
Charles
Sitch
Qualifications
BCOM, FCA,
CFINSD
BSC, DIP BUS,
MARKETING
BSC, MBABCOMBABCOM, FCABCOM, FCAMBA, LLB,
BCOM
Capability
Strategic knowledge for scale telco/technology
businesses
Financial / commercial
Risk management / regulatory and/or sustainability
Customer insight / retail / brand
People leadership and culture
Listed company governance
Capital markets / capital structure
Digital / data / media / new markets
Geographical location
NZNZAustraliaNZNZNZNZAustralia
Tenure (years)
11.76.93.911.93.9
1
11.7
Gender
FFMFMFMM
The Board skills matrix identifies the predominant skills of each Director. The Board has specifically limited high capability and medium
capability to both having a maximum of two areas for each Director.
KEY: High capability Medium capability
Board skills matrix
Definitions of categories
of capability:
Strategic knowledge for scale telco/
technology businesses: experience as a
senior executive in, or as a strategy
professional advisor to, large telco/
technology businesses.
Financial / commercial: a strong
accounting and finance background, most
likely being a chartered accountant, having
held the position of CFO in a significant
publicly listed company, or leadership
position in professional services/
advisory firm.
Risk management/regulatory and/or
sustainability: experience in identifying
and mitigating both financial and non-
financial risks/experience with influencing
public and regulatory policy decisions and
outcomes/experience in the design and
application of sustainability frameworks.
Customer insight/retail/brand: experience
as a senior executive responsible for
driving customer experience including by
effectively using insights, optimising
customer journeys and building brand
experience for customers.
People leadership and culture: experience
as a CEO of a significant publicly listed
company or large private standalone
company. Leadership skills including the
ability to set appropriate organisation
culture.
Listed company governance: listed
company Board experience other than
Spark. Experience with sophisticated
governance structures.
Capital markets/capital structure: strong
knowledge of debt and equity capital
markets, and experience with mergers and
acquisitions/experience dealing with a
range of funding sources and capital
structuring models.
Digital/data/new markets: experience as a
senior executive in, or as a professional
advisor to, digital and/or data business, or
businesses in emerging new markets.
Experience in the use of digital channels
and the latest innovative and digital
technologies.
Ko te pae anamata, whakamaua
81
Spark New Zealand Annual Report 2023
1. 2. 3.
5. 6. 4.
7. 8. 9.
Our Leadership Squad
10.
11.
Previous
Leadership
Squad member
Hello tomorrow82
Our Board and Leadership Squad
For running header don't delete
3. Leela Gantman
Corporate Relations and
Sustainability Director
Leela joined Spark as Corporate Relations
and Sustainability Director in January 2020,
bringing with her 20 years’ experience in
corporate and agency roles in New Zealand
and Australia.
Prior to joining Spark Leela was Head of
Communications at Fletcher Building, and
before that External Relations Director at
beverages group Lion in Australia.
As Spark’s Corporate Relations and
Sustainability Director, Leela is responsible
for reputation management, internal
communications, government, industry,
and community engagement, the
Company’s sustainability strategy, and the
charitable activities of the Spark
Foundation. She also serves as a trustee on
the Spark Foundation Board. Leela holds a
Bachelor of Arts in Communications from
the University of Technology Sydney.
4. Stefan Knight
Chief Financial Officer
Stefan was appointed Chief Financial
Officer in December 2019. Stefan has been
with Spark since 2003 and has worked
across a range of finance and business
performance related roles. He played a
key role over recent years in important
Spark initiatives, including the Turnaround
and Quantum business improvement
programmes and, more recently, was
part of the leadership group that helped
shape the organisation’s move to an Agile
way of working.
Stefan is a Chartered Accountant and
began his career at Deloitte working
across both Audit and Corporate Finance.
Stefan has a Bachelor of Commerce in
Accounting and Finance from the
University of Auckland.
5. Heather Polglase
People and Culture Director
Heather was appointed People and Culture
Director in September 2019. She joined
Spark in 2013 and has over 20 years’
international experience as an HR
professional, with a proven track record for
business transformation, talent management,
leadership development, and succession
planning across a range of industries
including FMCG, retail, hospitality,
technology, and telecommunications.
At Spark, Heather has held various senior HR
positions and delivered a number of critical
initiatives, including being a key architect of
Spark’s leadership and development
programme to build high-performing teams
and leaders.
Prior to joining Spark, Heather was a senior
HR leader for almost a decade within
Progressive Enterprises then spent two years
in Australia, leading HR, Strategy & Change
Management at Dan Murphy’s. She has a
Bachelor of Business Studies Degree
(Hospitality Management) from Auckland
University of Technology.
6. Tessa Tierney
Product Director
As Product Director Tessa is responsible for
designing and delivering products and
service experiences that customers value.
Tessa is also responsible for shaping Spark’s
investments and maturing capability in
digital, IT, data, and experience design to
deliver on future business needs.
Tessa joined Spark in November 2015 as the
Manager of Brand, Communications and
Events for Spark Digital before moving on to
become Business Manager. In 2017, Tessa
joined the team that was responsible for
successfully transitioning Spark into an Agile
organisation and is regarded as one of New
Zealand’s leading Agile and product
development practitioners.
Tessa brings to the role more than 16 years
of experience in information and
communication technologies, having
previously held a variety of roles at Vodafone
New Zealand. She has a Diploma in
Communications Studies from Manukau
Institute of Technology.
1. Melissa Anastasiou
General Counsel
As General Counsel, Melissa leads Spark’s
legal and compliance functions, providing
Spark with strategic legal and commercial
guidance, ensuring the business acts
lawfully and with the utmost integrity. She
has also played a pivotal role in leading out
Spark’s diversity and inclusion programme.
Melissa joined Spark in 2009 and
undertook a range of legal roles across the
organisation before being appointed as
Group General Counsel in 2012.
Prior to joining Spark Melissa spent a
number of years as a Senior Legal Counsel
for UK mobile provider Telefonica O2. She
also has extensive experience working for
leading corporate law firms in Auckland
and the UK. Melissa has a Bachelor of Laws
from Victoria University of Wellington.
2. Matt Bain
Marketing Director
As Marketing Director, Matt brings his
outstanding digital marketing and
customer experience skills to place the
customer right at the centre of Spark’s
thinking and actions. Matt joined Spark in
2018 and was previously based in
Amsterdam as European Managing
Director for agency AKQA – one of the
world’s leading innovation and brand
experience agencies, with responsibility for
500+ employees across five countries.
Over a 20-year career Matt has built an
impeccable international reputation with
some of the world’s greatest brands – Nike,
Heineken, Mini, Rolls Royce, Siemens, EA
Sports, Audi, Phillips, Tommy Hilfiger and
KLM amongst others. He has extensive
experience using data and technologies
like Artificial intelligence (AI) to enable
organisations to better understand and
predict their customers’ needs more
accurately. Matt holds a Master of
Commerce from the University of Auckland.
Ko te pae anamata, whakamaua
83
Spark New Zealand Annual Report 2023
7. Mark Beder
1
Chief Operating Officer
As Chief Operating Officer during FY23,
Mark led the significant investments Spark
made in digital infrastructure that underpins
Aotearoa’s digital economy and ensured
Spark offered customers the best data
connectivity experience possible. This
included Spark’s fixed and mobile networks,
data centre investments, IT infrastructure,
and the development of emerging
technologies such as the Internet of Things,
5G, and multi-access edge compute.
Mark joined Spark in 2003 and held several
senior technology roles across the business,
before joining the Leadership Squad in
2016.
Mark has successfully led major technology
change programmes and digital innovation,
including Spark’s mobile network evolution,
the decommissioning of legacy technology,
and the demerger from Chorus.
Prior to joining Spark, Mark worked as a
Senior Manager for Ernst & Young Consulting
in Auckland. He has a Bachelor of Commerce
from the University of Auckland.
From 1 July, Mark commenced a new role
as Customer Director – Enterprise and
Government.
8. Greg Clark
*
SME and Consumer Director
As SME and Consumer and Director, Greg
is responsible for leading the retail,
channels, and small-medium business
teams that focus on delivering great
outcomes for our customers.
Greg joined Spark in 2013 and led the
transformation of the broader retail network
and Spark’s SME operating model, delivering
strong revenue growth and higher levels of
customer engagement, before joining the
Leadership Squad in July 2023.
Prior to this he held a number of senior
roles across the telecommunications
industry in New Zealand and Australia,
including Allphones, Nokia, and Ericsson.
Greg has a Bachelor of Commerce and
Administration from Victoria University,
Wellington.
9. Renee Mateparae
*
Network and Operations Director
Renee joined the Leadership Squad in July
2023 as Network and Operations Director,
responsible for the continued delivery of
Spark’s highly resilient, automated, and
secure networks. This includes Spark’s fixed
and mobile networks, operations centres,
physical infrastructure, and cyber defence.
Renee joined Spark in 2017 and led the
development of emerging technology,
including the roll-out of our 5G and
Internet of Things networks during her time
as Technology Evolution Tribe Lead. Prior to
this, Renee held a number of leadership
roles across the product and ventures areas
of the business.
Renee has extensive experience in
corporate strategy, business transformation,
and customer experience in New Zealand
and globally, holding several senior roles at
Air New Zealand prior to Spark, and with
Accenture and Macquarie Group before
that. In 2019 Renee was appointed to the
board of The Warehouse Group for a
two-year term as part of the Future
Directors programme.
Renee has an honours degree in
Engineering, specialising in Automation
& Control Engineering, as well as a
post-graduate diploma in Business from
Massey University.
10. John Wesley-Smith
*
Strategy and Regulatory Director
John Wesley-Smith joined the Leadership
Squad in August 2023 as Strategy and
Regulatory Director, responsible for leading
the development of Spark’s business
strategy and Spark’s contributions to
industry, regulatory, and public policy
processes.
John joined Spark in 2005 and has led
Spark’s industry and regulatory affairs teams
for the last 14 years. He has played a pivotal
role in many of Spark’s major capital
investments and transactions and
represents Spark on the Board of the
Southern Cross Cable Network.
John started his career as a solicitor at
Russell McVeagh and has a Bachelor of
Laws and a Bachelor of Commerce from
Victoria University of Wellington
11. Grant McBeath
Customer Director
As Customer Director during FY23, Grant
led Spark’s customer facing teams.
Grant joined Spark in 2013 as General
Manager of Sales for the Spark Consumer
and SMB business. The role grew to include
the Consumer and SME Sales, Service and
Operations teams, and over a period of six
months during 2018 Grant was acting CEO
for Spark Home, Mobile and Business. .
Prior to joining Spark, Grant held a number
of global roles at Nokia throughout Asia, as
well as Chevron Texaco, Coca-Cola, and
Cadbury in NZ. Grant completed a BCom at
the University of Auckland, and also
completed his MBA from the Helsinki
School of Economics.
In FY23, as a result of changes to the
Leadership Squad structure, Grant McBeath
made the decision to explore new
opportunities outside of Spark. Grant’s final
date as Customer Director was 30 June 2023.
Note: Spark appointed Aliza Beckett to the
role of Strategy Director during FY22. Aliza
resigned from her role at Spark in FY23, and
her final date as Strategy Director was 3
March 2023.
1 From 1 July, Mark commenced a new role as Customer Director – Enterprise and Government.
*Joined the Leadership Squad after FY23.
Hello tomorrow84
Our Board and Leadership Squad
Spark seeks to remunerate our people with
competitive salaries to recruit and retain
the best talent. In keeping with our focus
on customer experience, we incorporate
customer satisfaction measures into our
performance incentives.
In February 2023, the Board approved a
salary review allocation for FY24 (salaries
from 1 July 2023) which was based on our
Contribution Models with additional
allocations including lifting our minimum
full-time remuneration to $54,100 – above
the (voluntary) Living Wage rate at
September 2023. As part of this process we
also reviewed several salary staircases to
ensure that they were competitive against
the market.
Leadership Squad
remuneration
Remuneration mix
The table below shows the standard FY23
remuneration mix for the Leadership Squad
expressed as a percentage of fixed
remuneration. The Short-term Incentive
(STI) scheme is expressed as a target, with
payment ranging from no payment, where
no target thresholds are met to a maximum
payment of double the target value, where
all stretch targets are met. The Long-term
Incentive (LTI) scheme is expressed as the
maximum LTI value that can be achieved.
Leadership Squad remuneration
Long-Term Incentive40% of base
Short-Term Incentive50% of base
SalaryBase
Fixed remuneration
All Spark employee packages – including
the Leadership Squad – include a fixed
remuneration component that is set based
on contribution, experience, and market
relativities. Fixed remuneration supports
the attraction, motivation, and retention of
highly skilled executives. For FY24 reviews,
the Board received detailed benchmarking
information on our Leadership Squad roles
against a relevant comparator group of
New Zealand companies.
Fixed remuneration generally consists of
base salary. KiwiSaver sits outside fixed
remuneration and as such, employees with
KiwiSaver receive employer contributions
on top of base salary and cash incentives. A
number of Spark-funded benefits, including
medical and life insurances, are also
available to eligible employees on top of
fixed remuneration.
Short-term Incentive schemes
Spark operates a small number of
short-term incentive schemes, from
monthly and quarterly commission and
sales incentive plans to annual cash-based
short-term incentives. Some employees in
specific sales positions may have a
component of their remuneration subject
to individual or divisional sales
performance targets, such that their total
remuneration potential is directly linked to
the acquisition and retention of profitable
business for Spark.
For senior leaders, including the
Leadership Squad and CEO, a component
of their remuneration package is at risk in
the form of a discretionary annual
cash-based Short-Term Incentive (STI).
Spark’s STI scheme rewards senior leaders
for the achievement of annual performance
objectives, with payments awarded from a
fixed cash pool that is set based on overall
Spark performance against financial and/or
non-financial annual performance
objectives. The actual payment to
individuals is at the sole discretion of Spark
and takes into account contributing factors
such as performance, and the performance
of individual parts of the business.
Eligibility to participate in the STI scheme
on an annual basis is at the discretion of the
company and is targeted at individuals in
senior roles who play a significant role in
driving the overall performance of Spark.
The STI scheme rules contain a clawback
provision that allows Spark to clawback
any payments made under the STI
scheme, for a period of 12 months
following the payment.
FY23 Short-term incentive scheme
outcomes
For FY23 substantively all STI participants
shared the same Spark Group targets
comprising of EBITDAI, customer
experience measures, as well as additional
measures based on our three-year strategy.
The on-target percentages are provided in
the table below. Where the result of a
performance metric falls below a specified
threshold, there is no payment for that
proportion of the STI. Where results exceed
the target the payment can scale to up to
twice the target percentage with a
maximum overall payment of 200%.
The FY23 Group performance outcome, as approved by the Board, is summarised as follows:
Performance metric%OutcomeResult
Group EBITDAI50%31%Met threshold
Customer Experience – iNPS and Digital Journey
Completion Rate
25%22%
Met threshold (iNPS)
Achieved target
(JCR)
3-year strategy – Future markets revenue25%0%Not met
Total100%53%
Based on the above result, the total available funding pool for all eligible STI participants
across Spark for FY23 was $3.5 million. Total payments cannot exceed $3.5 million.
85
Spark New Zealand Annual Report 2023
Ko te pae anamata, whakamaua
Leadership and Board remuneration
Leadership and Board remuneration
FY24 Short-term incentive scheme target
The mechanics of the FY24 STI will be the
same as those for FY23. Group results will
be the main determinate of the STI pool,
with substantively all participants sharing
the same Group measures. The FY24
Group measures will be a combination of
EBITDAI, customer experience and our
three-year strategy.
MeasureWeighting
EBITDAI50%
Customer experience
(iNPS and digital)
25%
3-year strategy –
High tech revenue
25%
Long-term incentive schemes
Spark believes that some senior leaders
should have part of their remuneration
linked to the long-term performance of the
company, so for the Leadership Squad and
a select group of senior leaders, a
long-term incentive forms part of their
remuneration package. In FY23, Spark
operated one main scheme: the Spark
New Zealand Long-term Incentive Scheme.
FY23 / FY24 Long-term Incentive Scheme
For FY23, members of the Leadership
Squad (including the CEO) and selected
senior leaders were granted options under
the Spark Long-term Incentive Scheme.
Under the scheme, participants were
granted options at the start of the
three-year vesting period. The number of
options granted equalled the gross LTI
value divided by the volume weighted
average price of Spark New Zealand shares
for the 20 days prior to the grant date.
Subject to satisfaction of each performance
hurdle and continued employment, at
vesting the portion of options associated
with each achieved target convert to Spark
shares based on a zero exercise price.
Where a target is not met the associated
portion of options simply lapse.
CEO remuneration
Remuneration policy, strategy,
and governance
CEO Jolie Hodson’s remuneration
package reflects the scope, risk and
complexity of her role and is set by the
Board with reference to the remuneration
of CEOs of similarly sized organisations.
For FY24 the board has assessed that CEO
remuneration should remain unchanged.
CEO Remuneration FY23
For FY23 the CEO’s remuneration package
comprised a fixed cash component, an
at-risk short-term incentive, and an at-risk
long-term incentive, to be awarded under
the Spark Long-term Incentive Scheme.
The targets and operation of the CEO’s STI
and LTI is the same as described above
under Short-term incentive schemes and
Long-term incentive scheme. The construct
of the CEO’s remuneration package is such
that 60% of her remuneration package is at
risk. The table below shows the target
remuneration mix:
Long-Term Incentive75% of base
Short-Term Incentive75% of base
SalaryBase
The CEO is also expected to maintain a
holding of Spark shares as set out on page
143 of this report.
Remuneration components
Short-term Incentive Scheme
The CEO is eligible for an annual cash-
based short-term incentive, subject to the
achievement of specific performance
objectives set by the Board based on
Spark’s strategy and business plan for the
respective financial year. These objectives
will be a combination of financial and
non-financial measures. This is covered in
more detail in the earlier STI scheme
section. The Board assesses the CEO’s
performance at the end of the financial
year to determine the actual payment value
of her short-term incentive, which is in the
range of 0% to 200% of her target value.
For FY24, members of the Leadership
Squad, including the CEO, and selected
senior leaders will be granted options
under a similar scheme as FY23 with
performance measures relating to Spark’s
ESG performance alongside an absolute
Total Shareholder Return (aTSR)
performance hurdle.
FY23 and FY24 Long-term Incentive
Scheme performance measures
Vesting of the FY23 LTI grant (September
2022) is contingent on participants’
continued employment with Spark through
to September 2025 with vesting
depending on meeting or exceeding set
performance measures. 75% of the
allocated shares will vest based on aTSR
exceeding cost of equity +1.5%
(compounding annually) over the vesting
period and 25% will vest based on
performance against environmental and
diversity targets. aTSR is a measure of share
price appreciation and dividends paid over
the three-year period of the grant.
For FY24, the Long-term Incentive
Scheme, will be based on similar
performance measures updated for the
performance period.
Performance evaluation
The CEO annually reviews the performance
of her direct reports. The evaluation is
undertaken using criteria set by the CEO,
including the performance of the business,
the accomplishment of strategic and
operational objectives, and other non-
quantitative objectives agreed with the
HRCC at the beginning of each financial
year. The last Leadership Squad evaluations
were undertaken during June 2023. Spark
undertakes appropriate checks before
appointing someone onto the
Leadership Squad.
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Leadership and Board remuneration
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The FY23 Group performance outcome, as approved by the Board and applicable to the
CEO, is summarised as follows:
Performance metric%OutcomeResult
Group EBITDAI50%31%Met threshold
Customer Experience – iNPS and Digital Journey
Completion Rate
25%22%
Met threshold (iNPS)
Achieved target
(JCR)
3-year strategy – Future markets revenue25%0%Not met
Total100%53%
Long-term Incentive Scheme
For FY23 the CEO’s annual LTI was granted
as share options under the Spark Long
Term Incentive Scheme. This is covered in
more detail in the LTI scheme section. The
LTI component of the CEO’s remuneration
package is designed to link part of her
remuneration to the long-term
performance of Spark, and align her
interests with those of shareholders,
through the grant of options with a
post-allocation performance hurdle.
Performance hurdles
Performance hurdles apply to long-term
incentives made to the CEO. The hurdles
are agreed by the Board and set a
minimum level of performance that is
required to be achieved over the period of
each grant, for the LTI to be eligible to vest.
For FY23, the targets were Spark’s aTSR
over the period to meet or exceed Spark’s
cost of equity plus 1.5% compounding
annually (75% of grant) and three ESG
targets (25% of grant).
Spark must meet or exceed these targets
over the period of the grant (from the date
the options are granted to the date three
years after that date) for the relevant
proportion of the options to vest. If Spark
does not meet the target, the associated
proportion of those options will lapse.
Testing to determine whether the TSR and
ESG performance hurdles have been met
will occur at the end of the vesting period
of the grant. The Board will receive
independent advice to the effect that the
performance hurdle has been met, or not
met, in determining whether the CEO can
exercise the options or whether the options
will lapse.
CEO termination
Spark may terminate the CEO’s
employment with three months’ notice. A
payment of nine months base
remuneration will be made, plus
entitlements for annual performance
incentives and long-term incentives, subject
to the rules relating to these incentives, in
the case of termination by Spark, other than
for termination for cause.
If there is a change of control that results in
the CEO no longer being the CEO of a
publicly listed company, then she will be
able to terminate her employment with
three months’ notice and receive payment
as if Spark had terminated her
employment.
Spark may also terminate the CEO’s
employment without notice for defined
causes, in which case she will receive no
further entitlement to any remuneration.
Board remuneration
Remuneration and strategy
The remuneration of directors is reviewed
annually by the Human Resources and
Compensation Committee (HRCC) – taking
account of the company’s size and
complexity and the responsibilities, skills,
performance and experience of the
directors – with recommendations made to
the board for approval. Specialist
independent consultants may be engaged
from time to time to provide advice and
ensure that the remuneration of Spark’s
directors is appropriate and comparable to
that of similar companies in New Zealand
and Australia.
Apart from the CEO, no director of Spark
receives compensation in the form of share
options or restricted shares, nor do they
participate in any bonus or profit-sharing
plan. Non-executive directors are, however,
expected to maintain a holding of Spark
shares as set out on page 148 of this
report. As is the case for employees,
directors are required to comply with the
Insider Trading Policy when buying or
selling Spark shares and any such
transactions are disclosed to the market.
Remuneration components
No superannuation or retirement
allowance was paid to any Spark director
during FY23. Spark does not have service
contracts with any director, apart from the
CEO, that provide for any benefits or
remuneration in the event that a director’s
service with Spark is terminated. New
Zealand-based non-executive directors are
eligible for Spark-funded medical
insurance, and all non-executive directors
are also eligible for Spark-funded life
insurance.
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Financial statements
Financial statements
89
Notes to the financial statements
93
Section 1 – General information
1.1About this report
93
1.2Key estimates and assumptions
93
1.3Significant transactions and events
94
1.4Sale of Connexa
95
Section 2 – Financial performance information
2.1Segment information
97
2.2Operating revenues and other gains
98
2.3Operating expenses
101
2.4Finance income, finance expense, depreciation,
amortisation and net investment income
102
2.5Non–GAAP measures
103
Section 3 – Assets
3 .1Receivables and prepayments
105
3.2Inventories
108
3.3Long–term investments
109
3.4Right–of–use assets
110
3.5Leased customer equipment assets
111
3.6Property, plant and equipment
112
3.7Intangible assets
114
3.8Net tangible assets
115
Section 4 – Liabilities and equity
4 .1Payables, accruals and provisions
116
4.2Lease liabilities
117
4.3Debt
119
4.4Capital risk management
120
4.5Equity and dividends
121
Section 5 – Financial instruments
5 .1Derivatives and hedge accounting
123
5.2Financial risk management
127
Section 6 – Other information
6 .1Income tax
130
6.2Employee share schemes
132
6.3Related party transactions
133
6.4Subsidiaries
134
6.5Reconciliation of net earnings to net cash flows from
operating activities
135
6.6Commitments and contingencies
135
Independent auditor’s report
136
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Statement of profit or loss and other comprehensive income
YEAR ENDED 30 JUNE
20232022
NOTES$M$M
Operating revenues and other gains
1
2.2 4,491 3,720
Operating expenses
1
2.3 (2,769) (2,570)
Earnings before finance income and expense, income tax, depreciation, amortisation and net
investment income (EBITDAI)2.5 1,722 1,150
Finance income2.4 32 26
Finance expense2.4 (99) (74)
Depreciation and amortisation2.4 (504) (520)
Net investment income
1
2.4 1 (1)
Net earnings before income tax 1,152 581
Income tax expense
1
6.1 (17) (171)
Net earnings 1,135 410
Other comprehensive income
Items that will not be reclassified to profit or loss:
Revaluation of long–term investments designated at fair value through other comprehensive
income3.3 (44) (55)
Items that may be reclassified to profit or loss:
Translation of foreign operations – 1
Change in hedge reserves net of tax5.1 2 71
Other comprehensive income (42) 17
Total comprehensive income 1,093 427
Earnings per share
Basic earnings per share (cents)
1
60.7 21.9
Diluted earnings per share (cents)
1
60.6 21.9
Weighted average ordinary shares (millions) 1,870 1,869
Weighted average ordinary shares and options (millions) 1,873 1,872
See accompanying notes to the financial statements.
1 These items have been materially impacted by the Connexa transactions and the Spark Sport provision, see notes 1.3 and 1.4 for further details.
Financial statements
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Statement of financial position
AS AT
30 JUNE 2023
AS AT
30 JUNE 2022
NOTES$M$M
Current assets
Cash 100 71
Short–term receivables and prepayments3.1 899 839
Short–term derivative assets5.1 1 5
Inventories3.2 79 107
Taxation recoverable – 1
Assets classified as held for sale1.4 – 198
Total current assets 1,079 1,221
Non–current assets
Long–term receivables and prepayments
1
3.1 432 197
Long–term derivative assets5.1 27 13
Long–term investments
1
3.3 254 212
Deferred tax assets
1
6.1 55 –
Right–of–use assets
1
3.4 488 508
Leased customer equipment assets3.5 77 90
Property, plant and equipment3.6 1,264 1,109
Intangible assets3.7 806 839
Total non–current assets 3,403 2,968
Total assets 4,482 4,189
Current liabilities
Short–term payables, accruals and provisions
1
4.1 507 460
Taxation payable 25 40
Short–term derivative liabilities5.1 4 1
Short–term lease liabilities
1
4.2 78 52
Debt due within one year4.3 236 293
Liabilities classified as held for sale1.4 – 94
Total current liabilities 850 940
Non–current liabilities
Long–term payables, accruals and provisions
1
4.1 82 64
Long–term derivative liabilities5.1 94 77
Long–term lease liabilities
1
4.2 700 292
Long–term debt4.3 816 1,233
Deferred tax liabilities6.1 – 108
Total non–current liabilities 1,692 1,774
Total liabilities 2,542 2,714
Equity
Share capital 965 1,105
Reserves (396) (352)
Retained earnings
1
1,371 722
Total equity 1,940 1,475
Total liabilities and equity 4,482 4,189
See accompanying notes to the financial statements.
1 These balances have been materially impacted by the Connexa transactions and the Spark Sport provision, see notes 1.3 and 1.4 for further details.
On behalf of the Board
Justine Smyth, CNZM Jolie Hodson
Chair Chief Executive
Authorised for issue on 18 August 2023
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Financial statements
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Statement of changes in equity
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVES
SHARE–BASED
COMPEN–
SATION
RESERVE
REVALUATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVETOTAL
YEAR ENDED 30 JUNE 2023NOTES$M$M$M$M$M$M$M
Balance at 1 July 2022 1,105 722 8 5 (343) (22) 1,475
Net earnings – 1,135 – – – – 1,135
Other comprehensive income/(loss) – – 2 – (44) – (42)
Total comprehensive income/(loss) – 1,135 2 – (44) – 1,093
Contributions by, and distributions to, owners:
Dividends4.5 – (486) – – – – (486)
Supplementary dividends – (50) – – – – (50)
Tax credit on supplementary dividends – 50 – – – – 50
Share buy–back1.3 (146) – – – – – (146)
Issuance of shares under share schemes 4 – – (3) – – 1
Other transfers 2 – 1 – – – 3
Total transactions with owners (140) (486) 1 (3) – – (628)
Balance at 30 June 2023 965 1,371 11 2 (387) (22) 1,940
SHARE
CAPITAL
RETAINED
EARNINGS
HEDGE
RESERVES
SHARE–BASED
COMPEN–
SATION
RESERVE
REVALUATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVETOTAL
YEAR ENDED 30 JUNE 2022NOTE$M$M$M$M$M$M$M
Balance at 1 July 2021 1,084 779 (63) 3 (288) (23) 1,492
Net earnings – 410 – – – – 410
Other comprehensive income/(loss) – – 71 – (55) 1 17
Total comprehensive income/(loss) – 410 71 – (55) 1 427
Contributions by, and distributions to, owners:
Dividends4.5 – (467) – – – – (467)
Supplementary dividends – (46) – – – – (46)
Tax credit on supplementary dividends – 46 – – – – 46
Dividend reinvestment plan4.5 18 – – – – – 18
Issuance of shares under share schemes 4 – – 2 – – 6
Other transfers (1) – – – – – (1)
Total transactions with owners 21 (467) – 2 – – (444)
Balance at 30 June 2022 1,105 722 8 5 (343) (22) 1,475
See accompanying notes to the financial statements.
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Statement of cash flows
YEAR ENDED 30 JUNE
20232022
NOTES$M$M
Cash flows from operating activities
Receipts from customers 3,790 3,656
Receipts from interest 29 24
Payments to suppliers and employees (2,730) (2,606)
Payments for income tax (190) (160)
Payments for interest on debt (55) (48)
Payments for interest on leases (37) (19)
Payments for interest on leased customer equipment assets (7) (6)
Net cash flows from operating activities6.5 800 841
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 11 –
Proceeds from sale of business1.4 893 –
Proceeds from long–term investments – 4
Receipts from finance leases 3 3
Receipts from loans receivable 11 –
Payments for purchase of business, net of cash acquired – (7)
Payments for, and advances to, long–term investments (3) (59)
Payments for purchase of property, plant and equipment, intangibles (excluding spectrum),
and capacity (475) (425)
Payments for purchase of spectrum intangible assets (6) –
Payments for capitalised interest (9) (8)
Net cash flows from investing activities 425 (492)
Cash flows from financing activities
Net (repayments of)/proceeds from debt4.4 (463) 214
Payments for dividends (486) (449)
Payments for share buy–back (146) –
Payments for leases (64) (69)
Payments for leased customer equipment assets (37) (46)
Net cash flows from financing activities (1,196) (350)
Net cash flows 29 (1)
Opening cash position 71 72
Closing cash position 100 71
See accompanying notes to the financial statements.
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1
Section 1
General
information
1.1 About this report
These financial statements are for Spark New Zealand Limited
(the Company) and its subsidiaries (together Spark or the Group).
Spark is a major supplier of telecommunications and digital
services in New Zealand. Spark provides a full range of
telecommunications, information technology, media and other
digital products and services, including: mobile services; voice
services; broadband services; cloud, security and service
management services; procurement and partners services;
managed data, networks and services; and data centres.
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 Stock Exchange (NZX) and
the Australian Securities Exchange (ASX) and the address of its
registered office is Spark City, 167 Victoria Street West, Auckland
1010, New Zealand.
Basis of preparation
The financial statements have been prepared in accordance with
Generally Accepted Accounting Practice in New Zealand (NZ
GAAP). They comply with New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS) and other applicable
Financial Reporting Standards, as appropriate for profit–oriented
entities. The financial statements also comply with International
Financial Reporting Standards (IFRS).
The measurement basis adopted in the preparation of these
financial statements is historical cost, modified by the revaluation of
certain investments and financial instruments, as identified in the
accompanying notes. These financial statements are expressed in
New Zealand dollars, which is Spark’s functional and presentation
currency. All financial information has been rounded to the nearest
million, unless otherwise stated. Certain comparative information
has been updated to conform with the current year’s presentation.
The principal accounting policies applied in the preparation of
these financial statements are set out in the accompanying notes
where an accounting policy choice is provided by NZ IFRS. A policy
is also included when it is new, has changed, is specific to Spark’s
operations, is significant or is material. Where NZ IFRS does not
provide an accounting policy choice, Spark has applied the
requirements of NZ IFRS but a detailed accounting policy is not
included.
New and amended standards
In FY23, 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 1.4 for the opening leaseback liability balances recognised.
Spark has also adopted amendments to NZ IAS 7 Statement of
Cash Flows and NZ IFRS 7 Financial Instruments: Disclosures for
Supplier Finance Arrangements which outline disclosure
requirements for these arrangements. These disclosures are
included in notes 4.3 and 5.2.
1.2 Key estimates and assumptions
The preparation of these financial statements requires
management to make estimates and assumptions. These affect the
amounts of reported revenues and expenses and the measurement
of assets and liabilities as at 30 June. Actual results could differ
from these estimates.
The principal areas of judgement and estimation for Spark in
preparing these financial statements are found in the following
notes:
• Note 1.4 Sale of Connexa
• Note 2.2 Operating revenues and other gains
• Note 3.1 Receivables and prepayments
• Note 3.4 Right–of–use assets
• Note 3.6 Property, plant and equipment
• Note 3.7 Intangible assets
• Note 4.2 Lease liabilities
NOTES TO THE FINANCIAL STATEMENTS
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NOTES TO THE FINANCIAL STATEMENTS: GENErAL INFOrMATION
1.3 Significant transactions and events
The following significant transactions and events affected the
financial performance and financial position of Spark for the year
ended 30 June 2023 or subsequent to balance date:
Connexa (see notes 1.4, 2.5 and 4.3)
• On 14 October 2022, Spark completed the sale of Connexa
(formerly TowerCo) to Ontario Teachers’ Pension Plan Board
(OTPP) and reinvested in a 30% share of the Connexa group,
through the holding company FrodoCo Holdings Limited
(FrodoCo). In return Spark received net proceeds of $893 million,
being $911 million cash inflow less $18 million transaction costs.
A breakdown of the impact on the Group is contained within
note 1.4.
• 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 (see further details below), invest a further $350 million in
future growth opportunities (as at 30 June 2023, $101 million
was invested), and to offset debt headroom requirements
resulting from the increased lease liability from Spark’s long–term
agreement with Connexa (see note 4.3 for further details).
• On 15 December 2022, Spark announced that Connexa reached
an agreement with 2degrees Mobile (2degrees), to acquire
2degrees’ passive mobile telecommunications tower assets. The
transaction completed on 23 June 2023. Spark did not
contribute equity to the acquisition, which resulted in its
shareholding in FrodoCo being diluted from 30% to 17%. A net
gain on dilution of $5 million was recognised, see note 2.5 for
further details.
Share buy–back (see note 4.5)
• On 5 April 2023, Spark commenced the on–market share buy–
back. The shares are being 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 reserves the
right to vary, suspend without notice, or terminate the buy–back
programme at any time. As at 30 June 2023, 28 million shares
with a value of $146 million had been repurchased and
cancelled under the scheme.
Dividends (see note 4.5)
• Dividends paid during the year ended 30 June 2023 in relation
to the H2 FY22 second–half dividend (ordinary dividend of 12.5
cents per share) and H1 FY23 first–half dividend (ordinary
dividend of 13.5 cents per share) totalled $486 million or 26.0
cents per share.
Debt programme (see note 4.3)
• Connexa proceeds were used to repay the maturing bond of
$100 million (see further details below), reduce bank funding
arrangements to $115 million, reduce commercial paper to $90
million and $11 million of cash was held on deposit.
• On 10 March 2023, $100 million of unsecured fixed–rate bonds
with a coupon rate of 4.51% matured.
• On 20 April 2023, Spark extended the term of its NZ$200 million
committed standby revolving credit facility with ANZ Bank
New Zealand Limited as the new facility agent (previously
Citisecurities) by one year, to mature on 30 April 2026.
Long–term investments (see note 3.3)
• The fair value of Spark’s investment in Hutchinson
Telecommunications Australia Limited decreased by $44 million
during the year due to a decrease in its quoted share price from
AU$0.070 to AU$0.042. The change in fair value is recognised
within other comprehensive income.
• Spark contributed no further equity to its Southern Cross
investment to fund the SX NEXT undersea cable build during
FY23. No dividends were received from Southern Cross during
FY23, however Southern Cross partially repaid $11 million of a
shareholder loan. Dividends have been suspended for the
duration of the SX NEXT build phase and are not expected to
resume until at least FY24.
Capital expenditure (see notes 2.5, 3.4, 3.6 and 3.7)
• Spark’s additions to property, plant and equipment, intangible
assets (excluding spectrum) and capacity right–of–use assets
were $515 million, details of which are provided in notes 2.5, 3.4,
3.6 and 3.7 and on page 21 of this annual report.
Spark Sport (see notes 2.3, 3.2 and 4.1)
• On 16 December 2022, Spark announced that Television
New Zealand would become the home for the majority of Spark
Sport content from 1 July 2023. As a result, a one–off provision of
$54 million was recognised, which includes ongoing obligations
under content rights agreements that extend to FY28. The
balance of the provision at 30 June 2023 was $46 million.
The Spark Sport platform was withdrawn from service on
30 June 2023.
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1
1.4 Sale of Connexa
During FY22 Spark commenced a process to transfer its passive mobile tower assets into a separate subsidiary, Connexa, and to introduce
third–party capital into Connexa. As at 30 June 2022, the assets and liabilities associated with Connexa were classified as held for sale.
The major classes of assets and liabilities comprising the operations classified as held for sale were as follows:
AS AT
30 JUNE 2022
$M
Right–of–use assets 95
Property, plant and equipment and intangible assets 97
Deferred tax assets 6
Total assets classified as held for sale 198
Payables, accruals and provisions 5
Lease liabilities 89
Total liabilities classified as held for sale 94
During FY23 Spark sold its subsidiary Connexa. Under the terms of the transaction, Spark has entered into a 15 year lease agreement
(plus rights of renewal) with Connexa to secure access to existing and new towers. Spark also retained a 30% interest in the Connexa
group, through the holding company FrodoCo, which is equity accounted for as an investment in associate. Following Connexa’s
subsequent acquisition of 2degrees’ passive mobile telecommunications tower assets, this retained investment has reduced to 17% and is
still equity accounted for.
The Connexa disposal resulted in a net gain of $583 million as set out below:
14 OCTOBER
2022
$M
Net cash inflow arising on disposal of subsidiary 911
Less: incremental transaction costs
1
(18)
Net cash flow on sale of business 893
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 583
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 were still under construction at transaction date. This revenue is recognised as these
assets are delivered to Connexa.
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NOTES TO THE FINANCIAL STATEMENTS: GENErAL INFOrMATION
1.4 Sale of Connexa (continued)
Impact of sale of Connexa on the statement of financial position as at 30 June 2023
The significant balances included within the statement of financial position as at 30 June 2023 as a result of the sale of Connexa were as
follows:
AS AT
30 JUNE 2023
$MDESCRIPTION OF THE BALANCE RELATING TO THE CONNEXA SALE
Long–term receivables and prepayments 156 Loans receivable from FrodoCo
Long–term investments 85 Investment in associate
Right–of–use assets 39 Sale and leaseback right–of–use asset
Deferred tax assets 124 Deferred tax asset on the lease with Connexa
Short–term lease liabilities (17)Short–term portion of sale and leaseback liability
Long–term lease liabilities (465)Long–term portion of sale and leaseback liability
Deferred tax assets
Due to the difference between the right–of–use assets and lease liabilities recognised at the date of the transaction, a deferred tax asset of
$126 million was recognised, with a corresponding adjustment (reduction) to tax expense. The balance of the deferred tax asset at 30
June 2023 was $124 million. As noted in the statement of cash flows on page 92, payments for income tax in the year ended 30 June 2023
were $190 million (30 June 2022: $160 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.
Key estimates and assumptions
Determining control has passed
Judgement was required in determining whether control passed to Connexa for the assets sold and leased back under a sale
and leaseback transaction. Key elements considered were the appropriate accounting standard to apply when assessing whether
control had passed, and determining the unit of account to use to assess the sale and leaseback element.
Lease liabilities
See note 4.2 for details of key estimates and assumptions for lease liabilities.
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2
Section 2
Financial performance information
2.1 Segment information
The segment results disclosed are based on those reported to the Chief Executive and are how Spark reviews its performance.
Spark’s segments are measured based on product margin, which includes product operating revenues and direct product costs. The
segment 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.
2023 2022
YEAR ENDED 30 JUNE
OPERATING
REVENUES
$M
PRODUCT
COSTS
$M
PRODUCT
MARGIN
$M
OPERATING
REVENUES
$M
PRODUCT
COSTS
$M
PRODUCT
MARGIN
$M
Mobile 1,470 (486) 984 1,351 (447) 904
Broadband 626 (328) 298 639 (321) 318
Procurement and partners 584 (517) 67 538 (485) 53
Cloud, security and service management 436 (108) 328 446 (103) 343
Managed data, networks and services 287 (155) 132 283 (146) 137
Voice 231 (98) 133 285 (120) 165
Other products
1
241 (110) 131 152 (72) 80
Segment results 3,875 (1,802) 2,073 3,694 (1,694) 2,000
1 See note 2.2 for a description of other operating revenues.
Reconciliation from segment product margin to consolidated net earnings before income tax
20232022
YEAR ENDED 30 JUNE $M$M
Segment product margin 2,0732,000
Other gains 61626
Labour (511)(495)
Other operating expenses
2
(456)(381)
Earnings before finance income and expense, income tax, depreciation, amortisation and net
investment income (EBITDAI) 1,7221,150
Finance income 3226
Finance expense (99)(74)
Depreciation and amortisation (504)(520)
Net investment income 1(1)
Net earnings before income tax 1,152581
2 See note 2.3 for a breakdown of other operating expenses.
97
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NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL pErFOrMANCE INFOrMATION
2.2 Operating revenues and other gains
The accounting policies specific to Spark’s operating revenues are outlined below:
Contracts with customers
Spark records revenue from contracts with customers in accordance with the five steps in NZ IFRS 15:
1. Identify the contract with a customer
2. Identify the performance obligations in the contract
3 Determine the transaction price, which is the total consideration provided by the customer
4. Allocate the transaction price amount to the performance obligations in the contract based on their relative stand–alone selling prices
5. Recognise revenue when or as the performance obligation is satisfied.
Spark often provides products and services in bundled arrangements (for example, a broadband modem together with a broadband
service). Where multiple products or services are sold in a single arrangement, revenue is recognised in relation to each distinct good or
service. A product or service is distinct where, amongst other criteria, a customer can benefit from it on its own or together with other
resources that are readily available. Revenue is allocated to each distinct product or service in proportion to its stand–alone selling price
and recognised when, or as, control is transferred to the customer.
Generally, control for products is transferred and revenue recognised at the point in time it is delivered to the customer and for services,
control is transferred, and revenue recognised, over time as the service is provided. Revenue for performance obligations satisfied over
time is recognised using the ‘resources consumed by customers’ method or the ‘time–elapsed’ method, as these best depict the transfer of
goods or services to customers.
Performance obligations, where Spark acts as an agent, includes some third–party media services and certain cloud, security and service
management contracts. Contracts with a significant financing component include those that have goods that were purchased on interest–
free payment terms of greater than 12 months.
The nature of the various performance obligations in our contracts with customers and when revenue is recognised is outlined below:
PERFORMANCE OBLIGATIONS
FROM CONTRACTS WITH CUSTOMERS
TIMING OF SATISFACTION
OF THE PERFORMANCE OBLIGATION AND PAYMENT
Mobile services, broadband services, media services, cloud,
security and service management services, managed data services
and rental of equipment
As the service is provided (usually monthly). Generally billed and
paid on a monthly basis.
Usage, other optional or non–subscription services, and pay–per–
use services
As the service is provided. Generally billed and paid on a monthly
basis.
Fixed modems, mobile handsets and other distinct goodsWhen control is passed to the customer, generally when the
customer takes possession of the goods. For goods sold in packages
or on interest–free terms, customers usually pay in equal instalments
over 6 to 36 months.
Installation or set–up services (where distinct)As the service is provided. Generally billed and paid following the
provision of the service.
Network infrastructureAs the goods or services are provided. Generally billed when
milestones are completed and revenue recognised when the
milestones are completed or once control of goods passes to the
customer.
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2.2 Operating revenues and other gains (continued)
20232022
YEAR ENDED 30 JUNENOTE $M$M
Operating revenues
Mobile 1,470 1,351
Broadband 626 639
Procurement and partners 584 538
Cloud, security and service management 436 446
Managed data, networks and services 287 283
Voice 231 285
Other operating revenues 241 152
3,875 3,694
Other gains
Net gain on sale of Connexa1.4 583 –
Gain on sale and acquisition of property, plant and equipment and intangibles 20 10
Gain on lease modifications and terminations 13 16
616 26
Total operating revenues and other gains 4,491 3,720
Other operating revenues
Included in other operating revenues is revenue from mobile infrastructure, Qrious, Internet of Things, Spark Sport, MATTR and exchange
building sharing arrangements.
Other gains
In the year ended 30 June 2023 other gains comprise the net gain on sale of Connexa of $583 million, gain on the sale and acquisition of
property, plant and equipment (primarily in relation to mobile and data centre network equipment and other assets of $20 million), and
gains from lease modifications and terminations of $13 million.
In the year ended 30 June 2022 other gains included a gain on the sale of property, plant and equipment (primarily in relation to mobile
network equipment of $10 million), and gains from lease modifications and terminations of $16 million (this included a $12 million gain
from Chorus lease changes).
99
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NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL pErFOrMANCE INFOrMATION
2.2 Operating revenues and other gains (continued)
Key estimates and assumptions
Determining the transaction price
Determining the transaction price of Spark’s contracts requires judgement in estimating the amount of revenue we expect to be
entitled to for delivering the performance obligations within a contract. The transaction price is the amount of consideration that
is enforceable and to which we expect to be entitled in exchange for the goods and services we have promised to our customer.
We determine the transaction price by considering the terms of the contract and business practices that are customary within
that product, as well as adjusting the transaction price for estimated variable consideration and for any effects of the time value
of money. The ‘expected value’ or ‘most likely’ amount methods are used to determine variable consideration and any amount
where it is determined that it is highly probable a revenue reversal will not subsequently occur is included in the transaction
price. In making this determination consideration is given to the likelihood and potential magnitude of the revenue reversal, as
well as factors outside of Spark’s influence, the time when the uncertainty is expected to be resolved and Spark’s experience with
similar types of contracts. Judgement is required to determine the discount rate underlying any time value of money calculations,
as well as whether the financing component in a contract is significant. Discounts, rebates, refunds, credits, price concessions,
incentives, penalties and other similar items are reflected in the transaction price at contract inception.
Determining the stand–alone selling price and the allocation of the transaction price
Determining the stand–alone selling price of performance obligations and the allocation of the transaction price between
performance obligations involves judgement. The transaction price is allocated to performance obligations based on the relative
stand–alone selling prices of the distinct goods or services in the contract. The best evidence of a stand–alone selling price is the
observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar
customers. If a stand–alone selling price is not directly observable, we estimate the stand–alone selling price taking into account
reasonably available information relating to the market conditions, entity–specific factors and the class of customer. In
determining the stand–alone selling price, we allocate revenue between performance obligations based on expected minimum
enforceable amounts to which Spark is entitled. Any amounts above the minimum enforceable amounts are recognised as
revenue as they are earned.
Distinct goods and services
We make judgements in determining whether a promise to deliver goods or services is considered distinct. We account for
individual products and services separately if they are distinct (i.e. if a product or service is separately identifiable from other
items in the bundled package and if the customer can benefit from it). The consideration is allocated between separate products
and services in a bundle based on their stand–alone selling prices.
Timing of satisfaction of performance obligations
We make judgements in determining whether performance obligations are satisfied over time or at a point in time, as well as the
methods used for measuring progress towards completed satisfaction of performance obligations. Refer to page 98 for Spark’s
accounting policy on timing of satisfaction of performance obligations.
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2.3 Operating expenses
20232022
YEAR ENDED 30 JUNE$M$M
Product costs 1,802 1,694
Labour 511 495
Other operating expenses
Network support costs 65 65
Computer costs 109 111
Accommodation costs 83 65
Advertising, promotions and communication 56 60
Bad debts 9 4
Impairment expense – 2
Spark Sport provision 54 –
Other 80 74
Total other operating expenses 456 381
Total operating expenses 2,769 2,570
Cost of inventories recognised as an expense
The cost of inventories recognised as an expense in relation to broadband modems, mobile devices and other accessories was
$376 million (30 June 2022: $343 million).
Lease expenses
Expenses relating to short–term leases and leases of low–value assets were $6 million (30 June 2022: $7 million). No rent concessions
were received as a result of COVID–19 and treated as a reduction of expenses (30 June 2022: less than $1 million).
Donations
Donations for the year ended 30 June 2023 were $1,767,000 and comprised Spark’s donation to Spark Foundation of $1,635,000 and
payroll giving donations of $132,000 (30 June 2022: $1,774,000, comprised Spark’s donation to the Spark Foundation of $1,734,000 and
other donations of $40,000). Spark made no donations to political parties in the years ended 30 June 2023 or 30 June 2022.
Auditor’s remuneration
20232022
YEAR ENDED 30 JUNE$’000$’000
Audit of financial statements
Audit and review of financial statements
1
1,142 1,171
Other services
Regulatory audit work
2
58 54
Other assurance services
3
35 –
Other non–assurance services
4
17 105
Total fees paid to auditor 1,252 1,330
1 The audit fee includes fees for both the annual audit of the financial statements and the review of the interim financial statements.
2 Regulatory audit work consists of the audit of telecommunications–related regulatory disclosures and reporting on trust deed requirements and solvency returns.
3 Other assurance services relates to assurance over the Group’s greenhouse gas emissions.
4 Other non–assurance services relate to administrative and other advisory services for the Corporate Taxpayer Group of which Spark, alongside a number of
organisations, is a member. The 2022 comparative also includes fees for taxation compliance services.
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NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL pErFOrMANCE INFOrMATION
2.4 Finance income, finance expense, depreciation, amortisation
and net investment income
20232022
YEAR ENDED 30 JUNENOTES$M$M
Finance income
Finance lease interest income 8 9
Other interest income 24 17
32 26
Finance expense
Finance expense on long–term debt (50) (45)
Lease interest expense4.2 (39) (19)
Leased customer equipment interest expense (7) (7)
Other interest and finance expenses (12) (11)
(108) (82)
Plus: interest capitalised
1
9 8
(99) (74)
Depreciation and amortisation expense
Depreciation – property, plant and equipment3.6 (227) (234)
Depreciation – right–of–use assets3.4 (75) (80)
Depreciation – leased customer equipment assets3.5 (36) (37)
Amortisation – intangible assets3.7 (166) (169)
(504) (520)
Net investment income
Share of associates' and joint ventures' net losses
2
3.3 (16) (1)
Interest income on loans receivable from associates and joint ventures 8 –
Net gain on remeasurement of equity accounted investments
2
3.3 9 –
1 (1)
1 Interest was capitalised on property, plant and equipment and intangible assets under development for the year ended 30 June 2023 at an annualised rate of 4.3%
(30 June 2022: 4.4%).
2 Included within share of associates’ and joint ventures’ net losses is $4 million of transaction costs incurred by Connexa in relation to the 2degrees transaction.
Therefore this and the net gain on remeasurement of equity accounted investments represent the net gain on dilution of the investment in the Connexa group
excluded from the adjusted result in note 2.5.
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2.5 Non–GAAp measures
Spark uses non–GAAP financial measures that are not prepared in accordance with NZ IFRS. Spark believes that these non–GAAP financial
measures provide useful information to readers to assist in the understanding of the financial performance, financial position or returns of
Spark. These measures are also used internally to evaluate performance of products, to analyse trends in cash–based expenses, to
establish operational goals and allocate resources. However, they should not be viewed in isolation, nor considered as a substitute for
measures reported in accordance with NZ IFRS, as they are not uniformly defined or utilised by all companies in New Zealand or the
telecommunications industry.
Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income
(EBITDAI)
Spark calculates EBITDAI by adding back finance expense, depreciation and amortisation and income tax expense and subtracting finance
income and net investment income (which includes Spark’s share of net profits or losses from associates and joint ventures, interest
income on loans receivable from associates and joint ventures, gains on remeasurement of equity accounted investments and dividend
income) to net earnings. A reconciliation of Spark’s EBITDAI is provided below and based on amounts taken from, and consistent with,
those presented in these financial statements.
20232022
YEAR ENDED 30 JUNE$M$M
Net earnings reported under NZ IFRS 1,135 410
Less: finance income (32) (26)
Add back: finance expense 99 74
Add back: depreciation and amortisation 504 520
Less: net investment income (1) 1
Add back: tax expense 17 171
EBITDAI 1,722 1,150
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 year ended 30 June 2023, the net gain on sale of Connexa of
$583 million together with the subsequent $5 million net gain arising from the dilution of the investment in the Connexa group and the
one off provision of $54 million for Spark Sport were deemed significant items to adjust. There were no significant items to adjust for the
year ended 30 June 2022.
20232022
YEAR ENDED 30 JUNE$M$M
EBITDAI 1,722 1,150
Less: net gain on sale of Connexa (583) –
Add: Spark Sport provision 54 –
Adjusted EBITDAI 1,193 1,150
20232022
YEAR ENDED 30 JUNE$M$M
Net earnings reported under NZ IFRS 1,135 410
Less: net gain on sale of Connexa (583) –
Add: Spark Sport provision 54 –
Less: net gain on dilution of the investment in the Connexa group
1
(5) –
Less: tax effect of net gain on sale of Connexa, Spark Sport provision and dilution of the investment in the
Connexa group (168) –
Adjusted net earnings 433 410
1 This includes the net gain on remeasurement of equity accounted investments, less costs associated with the transaction recognised in share of associates’ and joint
ventures’ net losses. See note 2.4 for more details.
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Spark New Zealand Annual report 2023
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NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL pErFOrMANCE INFOrMATION
2.5 Non–GAAp measures (continued)
Capital expenditure
Capital expenditure is the additions to property, plant and equipment and intangible assets (excluding spectrum, goodwill, acquisitions,
assets fully funded by customers or vendors and other non–cash additions that may be required by NZ IFRS, such as decommissioning
costs) and additions to capacity right–of–use assets where such additions are paid up front.
20232022
YEAR ENDED 30 JUNENOTES$M$M
Additions to property, plant and equipment3.6 379 328
Additions to intangible assets3.7 133 156
Additions to capacity right–of–use assets3.4 25 8
Total additions 537 492
Less: assets fully funded by customers or vendors 3.6(22)–
Less: property, plant and equipment transferred from finance lease receivables3.6 – (81)
Less: capacity right–of–use assets paid over time3.4– (1)
Capital expenditure 515 410
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Section 3 Assets
3.1 receivables and prepayments
20232022
AS AT 30 JUNE$M$M
Short–term receivables and prepayments
Trade receivables 410 371
Short–term prepayments 154 148
Short–term unbilled revenue 261 248
Short–term contract assets 2 2
Short–term contract costs 42 40
Short–term finance lease receivables 9 2
Other short–term receivables 21 28
899 839
Long–term receivables and prepayments
Long–term unbilled revenue 95 72
Long–term prepayments 6 1
Long–term contract costs 98 68
Long–term finance lease receivables 74 52
Long–term loans receivable 159 4
432 197
Amounts are stated at their net carrying value, including expected credit loss allowance provisions. The fair value of finance lease
receivables is estimated to be $75 million (30 June 2022: $75 million) and the carrying amount of all other receivables, measured at
amortised cost, are approximately equivalent to their fair value.
Contract assets
Contract assets primarily relate to Spark’s rights to consideration for performance obligations delivered but not billed at the reporting
date. Contract assets are transferred to receivables when the rights become unconditional. The following summarises significant changes
in those balances:
20232022
YEAR ENDED 30 JUNE$M$M
Opening balance as at 1 July 2 5
Additions from new contracts with customers, net of terminations and renewals 1 1
Transfer of contract assets to trade receivables (1) (4)
Closing balance as at 30 June 2 2
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NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.1 receivables and prepayments (continued)
Contract costs
Contract costs include costs to obtain a contract and costs to fulfil a contract. These costs are expected to be recovered and are therefore
initially deferred and then recognised within operating expenses on a systematic basis that is consistent with the transfer to the customer
of the goods or services to which the asset relates. The following summarises significant changes in those balances:
20232022
COSTS TO
OBTAIN A
CONTRACT
COSTS TO
FULFIL A
CONTRACTTOTAL
COSTS TO
OBTAIN A
CONTRACT
COSTS TO
FULFIL A
CONTRACTTOTAL
YEAR ENDED 30 JUNE$M$M$M$M$M$M
Opening balance as at 1 July 17 91 108 19 88 107
Additions 10 61 71 9 34 43
Amortisation recognised in operating expenses (6) (33) (39) (11) (31) (42)
Closing balance as at 30 June 21 119 140 17 91 108
Short–term contract costs 4 38 42 7 33 40
Long–term contract costs 17 81 98 10 58 68
Key estimates and assumptions
Determining the costs incurred to obtain or fulfil a contract that meets the deferral criteria within NZ IFRS 15 requires significant
judgement. Further, where such costs can be deferred, determining the appropriate amortisation period to recognise the costs
within operating expenses requires management judgement, including assessing the expected average customer tenure for
consumer customers and the expected contract term for enterprise customers.
Expected credit loss allowance provision
Movements in the loss allowance provision are as follows:
20232022
YEAR ENDED 30 JUNE$M$M
Opening balance as at 1 July 15 17
Charged to costs and expenses 10 7
Bad debts recovered (2) (3)
Utilised(7)(6)
Closing balance as at 30 June 16 15
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3.1 receivables and prepayments (continued)
Spark has applied the simplified approach to providing for expected credit losses, which requires the recognition of a lifetime expected
loss provision for short–term; trade receivables, unbilled revenue, contract assets, contract costs, finance lease receivables and other
receivables. The calculation of the allowance provision incorporates Spark's previous collection history and forward–looking information,
such as forecasted economic conditions.
The expected credit loss allowance provision has been determined as follows:
CURRENT≤ 1 MONTH> 1 MONTHTOTAL
AS AT 30 JUNE 2023$M$M$M$M
Expected loss rate1.0%2.9%10.8%1.3%
Gross carrying amount 1,116 34 37 1,187
Expected credit loss allowance provision 11 1 4 16
Short–term loss allowance provision 8 1 4 13
Long–term loss allowance provision 3 – – 3
AS AT 30 JUNE 2022$M$M$M$M
Expected loss rate1.2%2.5%10.3%1.7%
Gross carrying amount 823 40 39 902
Expected credit loss allowance provision 10 1 4 15
Short–term loss allowance provision 8 1 4 13
Long–term loss allowance provision 2 – – 2
The composition of the credit loss allowance provision between receivable types is as follows:
20232022
AS AT 30 JUNE$M$M
Trade receivables 7 7
Unbilled revenue 6 5
Contract assets and contract costs 2 2
Finance lease receivables 1 1
Expected credit loss allowance provision 16 15
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of
recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write–off. However, financial assets that are written off could still be
subject to enforcement activities to comply with the Group’s procedures for recovery of amounts due.
Key estimates and assumptions
The expected credit loss allowance provision is determined based on assumptions about the risk of default and expected loss
rates of customers and other counterparties. Spark uses judgement in making these assumptions and selecting the inputs to the
impairment calculation based on Spark’s past collection history, existing market conditions, as well as forward–looking estimates
at the end of the reporting period. Forward–looking estimates include assessment of forecasted changes to interest rates,
unemployment rates and Gross Domestic Product in New Zealand.
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NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.1 receivables and prepayments (continued)
Finance lease receivables
Spark has a number of leases for space in exchange buildings, including as a lessor for space in Spark exchanges and a lessee for space in
Chorus exchanges. These leases include a legal right of offset, as Spark and Chorus settle the payments on a net basis and are therefore
shown as a net finance lease receivable or net lease liability on the statement of financial position.
Spark assigned its ground leases for the mobile site assets sold to Connexa which has resulted in Spark recording finance lease
receivables equal to the lease liabilities for these leases. Spark is unwinding these balances over the remaining term to the next right of
renewal, at which point these will be novated.
In addition, Spark subleases a number of office building floors. Where subleases are for the whole of the remaining non–cancellable term
of the head lease, these are classified as a finance lease.
The profile of lease net receipts is set out below:
20232022
UNDISCOUNTEDDISCOUNTEDUNDISCOUNTEDDISCOUNTED
AS AT 30 JUNE$M$M$M$M
Less than one year
1
14 7 6 –
Between one and five years 31 5 16 (7)
More than five years 141 69 135 59
Net finance lease receivables 186 81 157 52
Plus short–term portion of finance lease receivables in liability position– 2 – 2
Total finance lease receivables 186 83 157 54
Less unearned finance income (103) – (103)–
Present value of finance lease receivables 83 83 54 54
Short–term finance lease receivables 9 2
Long–term finance lease receivables 74 52
1 Included within the discounted balance as at 30 June 2023 are $9 million sublease receivable assets, offset by a $2 million liability relating to the Chorus finance lease
receivable (30 June 2022: $2 million sublease receivable asset, offset by a $2 million liability relating to the Chorus finance lease receivable).
The lease with Chorus, where Spark is the lessor, has multiple rights of renewals and the full lease term has been used in the majority of
the calculation of the financial lease receivable at lease inception, as it was likely that because of the specialised nature of the buildings,
the lease would be renewed to the maximum term.
3.2 Inventories
20232022
AS AT 30 JUNE$M$M
Goods held for resale 79 95
Content rights inventory– 10
Maintenance materials and consumables– 2
Total inventories 79 107
Content rights inventory
Spark previously entered into contracts for the right to stream digital content for sport. These content rights were stated at the lower of
cost and net realisable value, less accumulated amortisation and included prepaid content that was not yet available for broadcast.
The amortisation of content rights was recognised within operating expenses on a straight–line basis over the live events across the
broadcast period. The content rights amortisation charge for the year ended 30 June 2023 was $26 million (30 June 2022: $20 million).
The Spark Sport platform was withdrawn from service on 30 June 2023.
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3.3 Long–term investments
20232022
AS AT 30 JUNEMEASUREMENT BASIS$M$M
Shares in HutchisonFair value through other comprehensive income 61 105
Investment in associates and joint venturesEquity method 187 101
Other long–term investmentsCost 6 6
254 212
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 30 June 2023 the quoted price of Hutchison’s shares on the ASX was AU$0.042 (30 June 2022: AU$0.070).
The decrease in fair value of $44 million is recognised in other comprehensive income (30 June 2022: $55 million decrease).
Included within investment in associates and joint ventures is $85 million for Spark’s investment in the Connexa group, see note 1.4 for
further details.
Investment in associates and joint ventures
Spark’s investment in associates and joint ventures at 30 June 2023 consists of the following:
NAMETYPECOUNTRYOWNERSHIPPRINCIPAL ACTIVITY
Adroit Holdings LimitedAssociate New Zealand47%Environmental IoT solutions
FrodoCo Holdings Limited
1
Associate New Zealand17%A holding company for Connexa
Flok LimitedAssociate New Zealand38%Hardware and software development
Hourua Limited
2
Joint VentureNew Zealand50%Delivering the Public Safety Network
Pacific Carriage Holdings Limited, Inc.AssociateUnited States41%A holding company
Rural Connectivity Group LimitedJoint VentureNew Zealand33%Rural broadband
Southern Cross Cables Holdings LimitedAssociateBermuda41%A holding company
TNAS LimitedJoint VentureNew Zealand50%Telecommunications development
1 Parent company for Connexa.
2 Spark and One NZ established Hourua Limited to provide priority cellular services to the Public Safety Network which is the new communications service that will be
used by New Zealand’s frontline emergency responders.
All investments in associates and joint ventures are measured using the equity method. Changes in the aggregate carrying amount of
Spark’s investment in associates and joint ventures were as follows:
20232022
ASSOCIATESJOINT VENTURESTOTALASSOCIATESJOINT VENTURESTOTAL
YEAR ENDED 30 JUNE$M$M$M$M$M$M
Opening balance as at 1 July 82 19 101 30 29 59
Additional investments during the year 92 1 93 56 3 59
Disposals – – – (4) (11) (15)
Share of net losses (15) (1) (16) – (1) (1)
Remeasurement on dilution 9 – 9 – – –
Dividends received – – – – (1) (1)
Closing balance as at 30 June 168 19 187 82 19 101
Spark has suspended equity accounting for Pacific Carriage Holdings Limited. Inc, and Southern Cross Cables Holdings Limited (together
‘Southern Cross’) as their carrying values were reduced to nil. Spark has no obligation to fund Southern Cross’ deficits or repay dividends.
For the year ended 30 June 2023 Spark’s share of Southern Cross profits was not recognised because of the existence of historic
cumulative Southern Cross deficits. In the current year Southern Cross’ profit was $34 million (30 June 2022: $39 million).
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NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.4 right–of–use assets
Spark is a lessee for a large number of leases, including:
• Property – Spark leases a number of office buildings and retail stores. Some of these leases have rights of renewal that are reasonably
certain to be exercised and therefore may have long expected lease terms
• Capacity arrangements – Spark enters into a number of indefeasible right-of-use capacity arrangements for cable capacity
• Mobile sites – Spark has entered into a number of agreements to allow the operation of mobile network infrastructure throughout
New Zealand
• Motor vehicles – Spark leases motor vehicles for use in sales, field operations and maintenance of infrastructure equipment
• Other – Spark leases equipment that is held at Spark premises and used to provide services to customers.
Movements in right–of–use assets are summarised below:
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2023$M$M$M$M$M$M
Opening net book value250 211 19 3 25 508
Additions9 25 42 2 8 86
Assets transferred back from held for sale
1
– – 7 – – 7
Assets classified as held for sale and other disposals(3)– (3)– – (6)
Remeasurements
2
(39)– 5 – 2 (32)
Depreciation charge(31)(24)(5)(2)(13)(75)
Closing net book value186 212 65 3 22 488
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening net book value281 224 117 4 21 647
Additions and acquisitions20 8 8 1 16 53
Assets classified as held for sale and other disposals– – (95)– – (95)
Remeasurements
2
(19)– 2 – – (17)
Depreciation charge(32)(21)(13)(2)(12)(80)
Closing net book value250 211 19 3 25 508
1 Relates to right-of-use assets which were held for sale as at 30 June 2022, but not sold as part of the Connexa transaction and therefore transferred back to right-of-use
assets.
2 Remeasurements to property in FY23 and FY22 primarily relate to modifications for corporate property leases and exiting of space in exchange buildings. The
reduction in property right-of-use assets for corporate property leases is substantially offset by a reduction in property lease liabilities (see note 4.2).
All capacity additions for the year ended 30 June 2023 were fully paid on control being obtained and therefore deemed capital
expenditure as defined and reconciled in note 2.5 (30 June 2022: $8 million of capacity additions with $7 million fully paid and deemed
capital expenditure).
Income from sub-leasing right-of-use assets for the year ended 30 June 2023 was $2 million (30 June 2022: $1 million).
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3.4 right–of–use assets (continued)
Key estimates and assumptions
At inception of a contract Spark assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset, Spark assesses whether:
• The contract involves the use of an identified asset
• Spark has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use
• Spark has the right to direct the use of the asset.
At inception or on reassessment of a contract that contains a lease component, Spark allocates the consideration in the contract
to each lease component on the basis of their relative stand-alone prices. Spark recognises a right-of-use asset at the lease
commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically assessed for
impairment losses and adjusted for certain remeasurements of the lease liability.
3.5 Leased customer equipment assets
Spark acts as the intermediate party (as a lessee and a lessor) in a number of lease arrangements for customer premises equipment. Such
arrangements may also include an initial sale and leaseback transaction. A sale and leaseback transaction contains a genuine sale if control
of an asset is transferred under NZ IFRS 15. For Spark’s back-to-back lease arrangements we have assessed that a sale does not occur, as
control over the equipment remains with Spark instead of passing to the buyer-lessor.
Spark as the seller-lessee continues to recognise the leased customer equipment asset, which is initially measured at cost. The asset is
subsequently depreciated using the straight-line method based on the expected lease term. Movements in leased customer equipment
assets are summarised below:
20232022
YEAR ENDED 30 JUNE$M$M
Opening net book value90 77
Additions32 51
Disposals (9)(1)
Depreciation charge(36)(37)
Closing net book value77 90
AS AT 30 JUNE
Cost216 228
Accumulated depreciation and impairment losses(139)(138)
Closing net book value77 90
Leased customer equipment assets are leased to customers under operating leases. Revenue received from these arrangements and
other operating leases for the year ended 30 June 2023 were $50 million (30 June 2022: $48 million).
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NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.6 property, plant and equipment
TELECOMMUNI–
CATIONS
EQUIPMENT
AND PLANTFREEHOLD LANDBUILDINGSOTHER ASSETS
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2023$M$M$M$M$M$M
Opening net book value631 61 213 73 131 1,109
Additions
1
2 – – 5 372 379
Transfers265 – 63 21 (349)–
Assets transferred back from held for sale
2
– – 2 – – 2
Depreciation charge(169)– (24)(34)– (227)
Foreign exchange movement1 – – – – 1
Closing net book value730 61 254 65 154 1,264
AS AT 30 JUNE 2023
Cost3,614 61 598 523 154 4,950
Accumulated depreciation and impairment losses(2,884)– (344)(458)– (3,686)
Closing net book value730 61 254 65 154 1,264
1 Included in additions is $22 million of assets fully funded by customers or vendors.
2 Relates to assets which were held for sale as at 30 June 2022, but not sold as part of the Connexa transaction and therefore transferred back to property, plant and
equipment.
TELECOMMUNI–
CATIONS
EQUIPMENT
AND PLANTFREEHOLD LANDBUILDINGSOTHER ASSETS
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening net book value 648 61 207 79 85 1,080
Additions – – 82 10 236 328
Transfers 162 – 11 21 (194) –
Acquisitions 4 – – 4 6 14
Assets classified as held for sale and other disposals (15) – (59) (3) (2) (79)
Depreciation charge (168) – (28) (38) – (234)
Closing net book value 631 61 213 73 131 1,109
AS AT 30 JUNE 2022
Cost 3,394 61 534 507 131 4,627
Accumulated depreciation and impairment losses (2,763) – (321) (434) – (3,518)
Closing net book value 631 61 213 73 131 1,109
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3.6 property, plant and equipment (continued)
Joint arrangement
Spark has entered into a joint arrangement in relation to the construction and operation of the Tasman Global Access fibre-optic
submarine cable between Australia and New Zealand. As at 30 June 2023 the carrying value of Spark’s share of property, plant and
equipment, intangible assets and capacity right-of-use assets in the joint operation was $30 million (30 June 2022: $30 million).
Key estimates and assumptions
Spark’s property, plant and equipment is measured at cost and depreciation is charged on a straight-line basis over the assets’
estimated useful lives. Determining the appropriate useful life of property, plant and equipment requires management
judgement, including the expected period of service potential, the likelihood technological advances will make the asset
obsolete, the likelihood of Spark ceasing to use it and the effect of government regulation.
The estimated useful lives of Spark’s property, plant and equipment are as follows:
Telecommunications equipment
Links and cables 10 – 50 years
Network transport 3 – 15 years
Mobile radio access network 5 – 25 years
Customer premises equipment 3 – 5 years
International cable and satellite 10 – 15 years
Buildings
Buildings 15 – 53 years
Furniture and fittings 3 – 15 years
Air conditioning 8 – 20 years
Power systems 3 – 25 years
Batteries 5 – 15 years
Other
Motor vehicles 3 – 10 years
Computer equipment 2 – 8 years
Internal IT system assets 3 – 15 years
The assessment of assets for impairment is based on a large number of factors, such as changes in current competitive
conditions, expectations of growth in the telecommunications industry, the discontinuance of services, the expected future cash
flows an asset is expected to generate and other changes in circumstances that indicate an impairment exists. Key judgements
include rates of expected revenue growth or decline, expected future margins and the selection of an appropriate discount rate
for valuing future cash flows.
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NOTES TO THE FINANCIAL STATEMENTS: ASSETS
3.7 Intangible assets
SOFTWARE
SPECTRUM
LICENCES
OTHER
INTANGIBLESGOODWILL
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2023$M$M$M$M$M$M
Opening net book value 326 175 21 234 83 839
Additions
1
– – – – 133 133
Transfers 128 – – – (128) –
Amortisation charge (144) (17) (5) – – (166)
Closing net book value 310 158 16 234 88 806
AS AT 30 JUNE 2023
Cost 2,022 334 103 282 88 2,829
Accumulated amortisation and impairment losses (1,712) (176) (87) (48) – (2,023)
Closing net book value 310 158 16 234 88 806
SOFTWARE
SPECTRUM
LICENCES
OTHER
INTANGIBLESGOODWILL
WORK IN
PROGRESSTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening net book value 307 193 49 222 87 858
Additions
1
– – – – 156 156
Transfers 160 – – – (160) –
Acquisitions – – – 12 – 12
Assets classified as held for sale and other disposals – – (18) – – (18)
Amortisation charge (141) (18) (10) – – (169)
Closing net book value 326 175 21 234 83 839
AS AT 30 JUNE 2022
Cost 1,911 336 103 282 83 2,715
Accumulated amortisation and impairment losses (1,585) (161) (82) (48) – (1,876)
Closing net book value 326 175 21 234 83 839
1 Total software capitalised in the year ended 30 June 2023 includes $69 million (30 June 2022: $59 million) of internally generated assets. Other software capitalised in
the year includes software licences and externally supplied labour.
Key estimates and assumptions
Intangible assets are amortised over their useful lives on a straight-line basis, except goodwill, which is tested for impairment
annually. Determining the appropriate useful life of an intangible asset requires management judgement, including assessing the
expected period of service potential, the likelihood technological advances will make it obsolete and the likelihood of Spark
ceasing to use it.
The estimated useful lives of Spark intangible assets are as follows:
Spectrum licences 2 – 21 years
Software 2 – 12 years
Customer contracts and brands 5 – 10 years
Other intangible assets 2 – 100 years
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3.7 Intangible assets (continued)
Goodwill
Goodwill by cash–generating unit (CGU) is presented below:
20232022
AS AT 30 JUNE$M$M
Mobile 34 34
Broadband 3 3
Cloud, security and service management 170 170
Qrious 14 14
Digital Island 13 13
234 234
During the years ended 30 June 2023 and 30 June 2022 no impairment arose as a result of the assessment of the carrying value of
goodwill. Headroom currently exists in each CGU and, based on the sensitivity analysis performed, no reasonably possible changes in the
assumptions would cause the carrying amount of the CGUs to exceed their recoverable amounts.
Key estimates and assumptions
Goodwill is assessed annually for impairment using a value-in-use model, which estimates the future cash flows, based on the
FY24 Board-approved business plan, applied to the next three years, with key assumptions being forecast earnings and capital
expenditure for each CGU. The forecast financial information is based on both past experience and future expectations of CGU
performance. The major inputs and assumptions used in performing an impairment assessment that require judgement include
revenue forecasts, operating cost projections, customer numbers and customer churn, discount rates, growth rates and future
technology paths.
Nil terminal growth was applied to all CGUs and a pre-tax discount rate of 11.7% was utilised for the year ended 30 June 2023
(30 June 2022: 10.6%).
3.8 Net tangible assets
The calculation of Spark’s net tangible assets per share and its reconciliation to the statement of financial position is presented below:
20232022
AS AT 30 JUNE$M$M
Total assets 4,482 4,189
Less: intangible assets (806) (839)
Less: total liabilities(2,542) (2,714)
Net tangible assets 1,134 636
Number of shares outstanding (in millions) 1,845 1,872
Net tangible assets per share$0.61$0.34
Net tangible assets per share is a non-GAAP financial measure that is not defined in NZ IFRS. Total assets include assets held for sale and
right-of-use assets. Total liabilities include lease liabilities.
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NOTES TO THE FINANCIAL STATEMENTS: LIAbILITIES ANd EquIT y
Section 4 Liabilities and equity
4.1 payables, accruals and provisions
20232022
AS AT 30 JUNE$M$M
Short-term payables, accruals and provisions
Trade accounts payable and accruals 290 260
Revenue billed in advance 96 80
Accrued personnel costs 39 38
Accrued interest 3 3
GST payable 21 37
Short-term sale and leaseback liabilities 30 35
Short-term provisions 19 2
Other short-term payables and accruals 9 5
507 460
Long-term payables, accruals and provisions
Long-term sale and leaseback liabilities 45 52
Long-term provisions 32 5
Other long-term payables and accruals 5 7
82 64
Trade accounts payable and sale and leaseback liabilities are financial instruments held at amortised cost.
Provisions
The following table summarises movements in provisions in the year:
SPARK SPORT
PROVISION
MAKE GOOD
PROVISIONS TOTAL
YEAR ENDED 30 JUNE 2023$M$M$M
Opening balance as at 1 July – 7 7
Additional provisions made in the year 54 – 54
Amounts utilised during the year (10) (1) (11)
Unwinding of discount 2 – 2
Unused amounts reversed – (1) (1)
Closing balance at 30 June 46 5 51
Short-term provisions 18 1 19
Long-term provisions 28 4 32
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4.2 Lease liabilities
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2023$M$M$M$M$M$M
Opening lease liability balance 290 3 20 3 26 342
Leases entered into during the year 9 – 492 2 8 511
Liabilities transferred back from held for sale
1
– – 34 – – 34
Liabilities classified as held for sale and other disposals (4) – (2) – – (6)
Interest expense 11 – 27 – 1 39
Principal repayments (45) (1) (41) (2) (13) (102)
Remeasurements
2
(41) – (1) – – (42)
Balance at the end of the year 220 2 529 3 22 776
Short-term portion of finance lease receivable 2 – – – – 2
Total lease liability balance 222 2 529 3 22 778
Short-term lease liabilities 40 – 28 2 8 78
Long-term lease liabilities 182 2 501 1 14 700
Lease liabilities - non-cancellable commitments
3
296 2 524 3 22 847
PROPERTYCAPACITY
MOBILE
SITES
MOTOR
VEHICLESOTHERTOTAL
YEAR ENDED 30 JUNE 2022$M$M$M$M$M$M
Opening lease liability balance 325 2 113 4 21 465
Leases entered into during the year and acquisitions20 2 7 1 17 47
Liabilities classified as held for sale and other disposals– – (89)– – (89)
Interest expense12 – 6 – 1 19
Principal repayments(53)(1)(19)(2)(13)(88)
Remeasurements
2
(14)– 2 – – (12)
Balance at the end of the year290 3 20 3 26 342
Short-term portion of finance lease receivable2 – – – – 2
Total lease liability balance292 3 20 3 26 344
Short-term lease liabilities37 1 2 2 10 52
Long-term lease liabilities255 2 18 1 16 292
Lease liabilities - non-cancellable commitments
3
148 3 10 3 26 190
1 Relates to lease liabilities which were held for sale as at 30 June 2022, but either assigned or, not sold as part of the Connexa transaction and therefore transferred back
to lease liabilities.
2 Remeasurements to property in FY23 and FY22 primarily relate to modifications for corporate property leases. The reduction in lease liabilities is substantially offset by
a reduction in property right-of-use assets (see note 3.4).
3 Relates to the discounted lease liability for future minimum rental commitments for non-cancellable periods of leases, excluding rights of renewal, which are at Spark’s
option, including leases committed to that have not yet commenced.
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NOTES TO THE FINANCIAL STATEMENTS: LIAbILITIES ANd EquIT y
4.2 Lease liabilities (continued)
Key estimates and assumptions
Spark recognises a lease liability at the lease commencement date. The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, Spark’s incremental borrowing rate. Generally, Spark uses its incremental borrowing rate as
the discount rate, with adjustments for the type and term of the lease.
Lease payments included in the measurement of the lease liability comprise:
• Fixed payments, including in-substance fixed payments
• Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date
• Amounts expected to be payable under a residual value guarantee
• The exercise price under a purchase option that Spark is reasonably certain to exercise
• Lease payments in an optional renewal period if Spark is reasonably certain to exercise an extension option.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in
future lease payments arising from a change in an index or rate, if there is a change in Spark’s estimate of the amount expected
to be payable under a residual value guarantee or if Spark changes its assessment of whether it will exercise a purchase or
extension option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use
asset or it is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Spark has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have lease terms of
12 months or less and leases of low-value assets. Spark recognises the lease payments associated with these leases within
operating expenses on a straight-line basis over their lease terms.
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4.3 debt
Debt is recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, debt is classified and
measured at amortised cost plus, for hedged liabilities that are in a fair value hedging relationship, adjustments for fair value changes
attributable to the risk being hedged. Any difference between cost and redemption value (including fair value changes) is recognised in
the statement of profit or loss over the period of the borrowings, using the effective interest rate method.
20232022
AS AT 30 JUNE$M$M
FACE VALUEFACILITYCOUPON RATEMATURITY
Short–term debt
Commercial paperVariable< 3 months 90 160
90 160
Supplier financing arrangements
1
Amounts with a term less than six months 8.33%< 6 months – 19
Amounts due within one yearVariable< 31/05/2024 9 14
Amounts due in more than a yearVariable< 31/05/2024 – 9
9 42
Bank funding
Westpac New Zealand Limited
2
200 million NZDVariable30/11/2023 15 140
Commonwealth Bank of Australia
2
100 million NZDVariable30/11/2024 100 100
MUFG Bank, Ltd.
2
125 million NZDVariable30/11/2025 – 125
115 365
Domestic notes
100 million NZD4.51%10/03/2023 – 100
125 million NZD3.37%07/03/2024 122 122
125 million NZD3.94%07/09/2026 116 117
100 million NZD
3
4.37%29/09/2028 100 100
338 439
Foreign currency Medium Term Notes
Australian Medium Term Notes – 100 million AUD1.90%05/06/2026 97 97
Australian Medium Term Notes – 150 million AUD4.00%20/10/2027 154 158
Australian Medium Term Notes – 125 million AUD2.60%18/03/2030 112 113
Norwegian Medium Term Notes – 1 billion NOK
4
3.07%19/03/2029 137 152
500 520
1,052 1,526
Debt due within one year 236 293
Long–term debt 816 1,233
1 With respect to arrangements with outstanding liabilities at 30 June 2023, including those entered into in prior years, financing providers have paid suppliers a total of
$30 million and Spark has made payments against these arrangements of $21 million, resulting in a closing liability of $9 million as at 30 June 2023. Amounts paid
under these arrangements are presented in the statement of cash flows 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.
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NOTES TO THE FINANCIAL STATEMENTS: LIAbILITIES ANd EquIT y
4.3 debt (continued)
None of Spark’s debt is secured and all debt ranks equally with other liabilities. There are no financial covenants over Spark’s debt,
however, there are certain triggers in the event of default, as defined in the various debt agreements. There have been no events of default
over Spark’s debt in the years ended 30 June 2023 and 30 June 2022.
The fair value of long-term debt, including long-term debt due within one year, based on market observable prices, was $973 million
compared to a carrying value of $962 million as at 30 June 2023 (30 June 2022: fair value of $1,359 million compared to a carrying value
of $1,347 million).
20232022
AS AT 30 JUNE$M$M
Total debt 1,052 1,526
Less short–term debt (90) (179)
Total long–term debt (including long–term debt due within one year) 962 1,347
4.4 Capital risk management
Spark manages its capital considering shareholders’ interests, the value of Spark’s assets and the Company’s credit rating. The Board is
committed to the Company maintaining an investment grade rating and its capital management policies are designed to ensure this
objective is met. As part of this commitment, and in line with credit rating metrics, Spark currently manages its debt levels to ensure that
the ratio of adjusted net debt at hedged rates (being inclusive of associated derivatives and leases) to EBITDAI does not exceed 1.7 times
on a long-run basis.
As at 30 June 2023 the Company’s Standard and Poor’s credit ratings for long-term and short-term debt was, respectively, A- and A-2 with
outlook stable (30 June 2022: same).
Net debt
Net debt at hedged rates, the primary net debt measure Spark monitors, includes long-term debt at the value of hedged cash flows due to
arise on maturity, plus short-term debt, less any cash. Net debt at carrying value includes the non-cash impact of fair value hedge
adjustments and any unamortised discount.
Net debt at hedged rates is a non-GAAP measure and is not defined in accordance with NZ IFRS but is a measure used by management.
A reconciliation of net debt at hedged rates and net debt at carrying value is provided below:
20232022
AS AT 30 JUNE$M$M
Cash (100) (71)
Short-term debt at face value 90 179
Long-term debt at face value 1,035 1,417
Net debt at face value 1,025 1,525
To retranslate debt balances at swap rates where hedged by currency swaps 14 (3)
Net debt at hedged rates
1
1,039 1,522
Non-cash adjustments
Impact of fair value hedge adjustments
2
1110
Unamortised discount (1) (1)
Net debt at carrying value 1,049 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.
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4.4 Capital risk management (continued)
A reconciliation of movements in net debt is provided below:
CASH FLOWSNON–CASH MOVEMENTS
YEAR ENDED 30 JUNE 2023
AS AT 1 JULY
2022
$M
PROCEEDS
$M
PAYMENTS
$M
INTEREST
AMORTISATION
$M
FAIR VALUE
CHANGES
$M
FOREIGN
EXCHANGE
MOVEMENT
$M
OTHER
$M
AS AT 30 JUNE
2023
$M
Cash(71)(13,908)13,879––––(100)
Short–term debt179247(337)1–––90
Long–term debt1,3478,924(9,297)1(3)(17)7962
Derivatives76–––417–97
Net debt 1,531 (4,737) 4,245 2 1 – 7 1,049
CASH FLOWSNON–CASH MOVEMENTS
YEAR ENDED 30 JUNE 2022
AS AT 1 JULY
2021
$M
PROCEEDS
1
$M
PAYMENTS
$M
INTEREST
AMORTISATION
$M
FAIR VALUE
CHANGES
$M
FOREIGN
EXCHANGE
MOVEMENT
$M
OTHER
$M
AS AT 30 JUNE
2022
$M
Cash(72)(24,730)24,731––––(71)
Short–term debt1581,524(1,503)––––179
Long–term debt1,24519,512(19,326)1(103)8101,347
Derivatives(18)–––102(8)–76
Net debt 1,313 (3,694) 3,902 1 (1) – 10 1,531
1 $7 million of proceeds were received in the prior year from closing out derivatives and are included in the net proceeds from debt as shown in statement of cash flows.
These derivatives were in a cash flow hedge relationship, so do not form part of net debt and are not included in the above table.
4.5 Equity and dividends
Share capital
Movements in the Company’s issued ordinary shares were as follows:
20232022
YEAR ENDED 30 JUNENUMBERNUMBER
Shares at the beginning of the year 1,871,587,475 1,867,125,093
Cancelled shares acquired under the on-market share buy-back programme (28,197,250) –
Dividend reinvestment plan – 3,735,931
Issuance of shares under share schemes and other transfers 1,610,681 726,451
Shares at the end of the year 1,845,000,906 1,871,587,475
All issued shares are fully paid and have no par value. Shareholders of ordinary shares have the right to vote at any general meeting of the Company.
Dividends
20232022
YEAR ENDED 30 JUNE
CENTS PER
SHARE$M
CENTS PER
SHARE$M
Previous year second half-year dividend 12.5 234 12.5 233
First half-year dividend 13.5 252 12.5 234
Total dividends in the year 26.0 486 25.0 467
Second half-year dividend declared subsequent to balance date not provided for 13.5 249 12.5 234
Events after balance date
On 17 August 2023 the Board approved the payment of a second-half ordinary dividend of 13.5 cents per share or approximately
$249 million. This ordinary 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.
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NOTES TO THE FINANCIAL STATEMENTS: LIAbILITIES ANd EquIT y
4.5 Equity and dividends (continued)
H1 FY23 H2 FY23
ORDINARY DIVIDENDS ORDINARY DIVIDENDS
Dividends declared
Ordinary shares 13.5 cents 13.5 cents
American Depositary Shares
1
42.11 US cents 40.65 US cents
Imputation
Percentage imputed100%100%
Imputation credits per share 5.2500 cents 5.2500 cents
Supplementary dividend per share
2
2.3824 cents 2.3824 cents
‘Ex’ dividend dates
New Zealand Stock Exchange16/03/2314/09/23
Australian Securities Exchange16/03/2314/09/23
American Depositary Shares 15/03/2314/09/23
Record dates
New Zealand Stock Exchange17/03/2315/09/23
Australian Securities Exchange17/03/2315/09/23
American Depositary Shares 16/03/2315/09/23
Payment dates
New Zealand and Australia 6/04/236/10/23
American Depositary Shares 17/04/2316/10/23
1 Spark’s American Depositary Shares, each representing five ordinary Spark shares and evidenced by American Depositary Receipts (ADRs), are traded over-the-
counter in the United States. This is a Level 1 ADR programme that is sponsored by Bank of New York Mellon. For H2 FY23 these are based on the exchange rate at
10 August 2023 of NZ$1 to US$0.6022 and a ratio of five ordinary shares per one American Depositary Share. The actual exchange rate used for conversion is
determined in the week prior to payment when the Bank of New York Mellon performs the physical currency conversion.
2 Supplementary dividends are paid to non-resident shareholders.
Dividend Reinvestment Plan
The Company has a dividend reinvestment plan under which shareholders can elect to receive dividends in additional shares. For
the year ended 30 June 2023 no shares were issued (30 June 2022: $18 million were issued) in lieu of dividends. Shares issued in
lieu of dividends are excluded from dividends paid in the statement of cash flows.
The dividend reinvestment plan has been suspended for the FY23 dividends and for the foreseeable future.
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Section 5 Financial instruments
5.1 derivatives and hedge accounting
20232022
DERIVATIVE
ASSETS
DERIVATIVE
LIABILITIES
DERIVATIVE
ASSETS
DERIVATIVE
LIABILITIES
AS AT 30 JUNE$M$M$M$M
Designated in a cash flow hedge27 (1)18 (2)
Designated in a fair value hedge– (13)– (12)
Designated in a dual fair value and cash flow hedge– (84)– (64)
Other1 – – –
28 (98)18 (78)
Short–term derivatives1 (4)5 (1)
Long–term derivatives27 (94)13 (77)
Spark’s derivatives are held at fair value, calculated using discounted cash flow models and observable market rates of interest and foreign
exchange prices. This represents a level two measurement under the fair value measurement hierarchy, being inputs other than quoted
prices included within level one that are observable for the asset or liability. As at 30 June 2023 and 30 June 2022 no derivative financial
assets or derivative financial liabilities have been offset in the statement of financial position. The potential for offsetting of any derivative
financial instruments is $13 million (30 June 2022: $8 million), which if applied would result in a reduction of derivative assets and
derivative liabilities.
Hedge accounting
Derivatives are hedge accounted when they are designated into an effective hedge relationship as a hedging instrument. The nature and
the effectiveness of the hedge accounting relationship will determine where the gains and losses on remeasurement are recognised.
Derivatives are designated:
• Fair value hedges, where the derivative is used to manage interest rate risk in relation to debt
• Cash flow hedges, where the derivative is used to manage the variability in cash flows of highly probable forecast transactions
• Dual fair value and cash flow hedges, where the derivative is used to hedge the interest rate risk on foreign debt and the variability in
cash flows due to movements in foreign exchange rates.
At inception, each hedge relationship is formalised in hedge documentation. Hedge accounting is discontinued when the hedge
instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. Spark determines the existence of an
economic relationship between the hedging instrument and the hedged item based on the currency, amount and timing of respective
cash flows, reference interest rates, tenors (time to maturity), repricing dates, maturities and notional amounts. Spark assesses whether the
derivative designated in each hedging relationship is expected to be, and has been, effective in offsetting the changes in cash flows of the
hedged item using the hypothetical derivative method.
Derivatives in hedge relationships are designated based on a hedge ratio of 1:1. In these hedge relationships the main source of
ineffectiveness is the effect of the counterparty and Spark’s own credit risk on the fair value of the derivatives, which is not reflected in the
change in the fair value of the hedged item attributable to changes in foreign exchange and interest rates.
Cash flow hedges
Cross-currency interest rate swaps and interest rate swaps are jointly designated in cash flow hedges to manage interest and foreign
exchange rate risk on debt. The hedged cash flows will affect Spark’s statement of profit or loss and other comprehensive income as
interest and principal amounts are repaid over the remaining term of the debt.
Interest rate swaps are designated in cash flow hedges to manage the interest rate exposure of highly probable forecast variable rate debt
and aggregate variable interest rate exposures created by swapping local or foreign currency fixed-rate debt into variable rate debt.
Spark also enters into forward exchange contracts to hedge forecast foreign currency purchases, the majority expected to be made within
12 months. The related cash flows are recognised in the statement of profit or loss and other comprehensive income over this period.
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NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL INSTruMENTS
5.1 derivatives and hedge accounting (continued)
A reconciliation of movements in the hedge reserves, net of tax, is outlined below:
20232022
YEAR ENDED 30 JUNE$M$M
Opening balance as at 1 July 8 (63)
(Loss) /gain recognised in other comprehensive income (4) 52
Amount reclassified to finance expense 5 12
Amount reclassified to property, plant and equipment/intangible assets and inventory 1 6
Amount reclassified to other operating expenses – 1
Total movements to other comprehensive income 2 71
Other transfers 1 –
Closing balance as at 30 June 11 8
Included within the closing balance at 30 June 2023 is $4 million relating to the cost of hedging reserve (30 June 2022: $3 million). The
movement in the hedge reserves includes $8 million in the change in fair value of interest rate swaps less $2 million associated deferred
tax and $3 million for forward foreign exchange contracts (30 June 2022: $98 million in the change in fair value of interest rate swaps less
$27 million associated deferred tax).
Fair value hedges
Interest rate swaps are designated in a fair value hedge to manage interest rate risk in relation to debt. The gain or loss from remeasuring
the interest rate swaps and debt at fair value is recognised in the statement of profit or loss and other comprehensive income. During the
year ended 30 June 2023 there has been no material ineffectiveness on fair value hedging relationships (30 June 2022: no material
ineffectiveness) and as a result no material changes have been recognised in profit and loss.
Dual fair value and cash flow hedges
Spark has Australian dollar (AUD) and Norwegian krone (NOK) denominated debt. As part of Spark’s risk management policy, cross-
currency interest rate swaps (CCIRSs) are entered into to convert all of the proceeds of the debt issuances to New Zealand dollars and
convert the foreign currency fixed rate of the debt issuance to a New Zealand dollar floating rate. To mitigate profit or loss volatility, the
CCIRSs were designated into a dual fair value and cash flow hedge relationship. The foreign currency basis element of the CCIRSs are
excluded from the designation and are separately recognised in other comprehensive income in a cost of hedging reserve.
For fair value hedges the gain or loss from remeasuring the CCIRSs and debt at fair value is recognised in the statement of profit or loss
and other comprehensive income. For cash flow hedges gains or losses deferred in the cash flow hedge reserve will be reclassified to
Spark’s statement of profit or loss and other comprehensive income as interest and principal amounts are repaid over the remaining term
of the debt.
The change in fair value of the hedging instruments relating to the foreign currency basis component of the CCIRSs are recognised in
other comprehensive income and accumulated in a cost of hedging equity reserve. Subsequently, the cumulative amount is transferred to
profit or loss at the same time as the hedged item impacts profit or loss.
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5.1 derivatives and hedge accounting (continued)
The details of the hedging instruments are as follows:
NOTIONAL
AMOUNT OF
HEDGING
INSTRUMENT
STATEMENT
OF FINANCIAL
POSITION
LINE ITEM
CARRYING AMOUNT OF
THE HEDGING INSTRUMENT
LIFE–TO–DATE
CHANGE–IN–
VALUE USED FOR
CALCULATING
HEDGE
INEFFECTIVE–
NESSASSETSLIABILITIES
AS AT 30 JUNE 2023$M$M$M
Cash flow hedges
Interest rate swaps NZD 620m Derivatives 26 – 26
Forward foreign exchange contracts NZD 77m Derivatives 1 (1) –
Fair value hedges
Interest rate swaps NZD 250m Derivatives – (13) (13)
Fair value and cash flow hedges
Cross-currency swaps AUD 150m Derivatives – (14) (14)
Cross-currency swap NOK 1b Derivatives – (37) (37)
Cross-currency swaps AUD 125m Derivatives – (23) (23)
Cross-currency swaps AUD 100m Derivatives – (10) (10)
27 (98) (71)
NOTIONAL
AMOUNT OF
HEDGING
INSTRUMENT
STATEMENT
OF FINANCIAL
POSITION
LINE ITEM
CARRYING AMOUNT OF
THE HEDGING INSTRUMENT
LIFE–TO–DATE
CHANGE–IN–
VALUE USED FOR
CALCULATING
HEDGE
INEFFECTIVE–
NESSASSETSLIABILITIES
AS AT 30 JUNE 2022$M$M$M
Cash flow hedges
Interest rate swaps NZD 640m Derivatives 13 (2) 11
Forward foreign exchange contracts NZD 78m Derivatives 5 – 5
Fair value hedges
Interest rate swaps NZD 350m Derivatives – (12) (12)
Forward foreign exchange contracts NZD 18m Derivatives – – –
Fair value and cash flow hedges
Cross-currency swaps AUD 150m Derivatives – (10) (10)
Cross-currency swap NOK 1b Derivatives – (21) (21)
Cross-currency swaps AUD 125m Derivatives – (23) (23)
Cross-currency swaps AUD 100m Derivatives – (10) (10)
18 (78) (60)
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Spark New Zealand Annual report 2023
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NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL INSTruMENTS
5.1 derivatives and hedge accounting (continued)
The details of hedged items are as follows:
STATEMENT OF
FINANCIAL POSITION
LINE ITEM
CARRYING AMOUNT OF
THE HEDGED ITEM
ACCUMULATED AMOUNT OF
FAIR VALUE HEDGE ADJUSTMENTS
ON THE HEDGED ITEM INCLUDED
IN THE CARRYING AMOUNT OF
THE HEDGED ITEM
LIFE–TO–DATE
CHANGE–IN–
VALUE USED FOR
CALCULATING
HEDGE
INEFFECTIVE–
NESSASSETSLIABILITIESASSETSLIABILITIES
AS AT 30 JUNE 2023$M$M$M$M$M$M
Cash flow hedges
Aggregated variable interest rate exposure – – – – – (26)
Fair value hedges
Domestic Notes Long–term debt – (238) 13 – 13
Fair value and cash flow hedges
Australian Medium Term Note (AUD 150m) Long–term debt – (154) 9 – 14
Norwegian Medium Term Note (NOK 1b) Long–term debt – (137) 15 – 37
Australian Medium Term Note (AUD 125m) Long–term debt – (112) 23 – 23
Australian Medium Term Note (AUD 100m) Long–term debt – (97) 11 – 10
– (738) 71 – 71
STATEMENT OF
FINANCIAL POSITION
LINE ITEM
CARRYING AMOUNT OF
THE HEDGED ITEM
ACCUMULATED AMOUNT OF
FAIR VALUE HEDGE ADJUSTMENTS
ON THE HEDGED ITEM INCLUDED
IN THE CARRYING AMOUNT OF
THE HEDGED ITEM
LIFE–TO–DATE
CHANGE–IN–
VALUE USED FOR
CALCULATING
HEDGE
INEFFECTIVE–
NESSASSETSLIABILITIESASSETSLIABILITIES
AS AT 30 JUNE 2022$M$M$M$M$M$M
Cash flow hedges
Aggregated variable interest rate exposure – – – – – (11)
Committed foreign exchange transactions – – – – – (5)
Fair value hedges
Domestic Notes Long–term debt – (339) 12 – 12
Fair value and cash flow hedges
Australian Medium Term Note (AUD 150m) Long–term debt – (158) 7 – 10
Norwegian Medium Term Note (NOK 1b) Long–term debt – (152) 11 – 21
Australian Medium Term Note (AUD 125m) Long–term debt – (113) 25 – 23
Australian Medium Term Note (AUD 100m) Long–term debt – (97) 13 – 10
– (859) 68 – 60
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5.2 Financial risk management
a) Market risk
Spark is exposed to market risk primarily from changes in foreign
currency exchange rates and interest rates. Spark employs risk
management strategies, including the use of derivative financial
instruments, to manage these exposures through a Board-
approved treasury policy, which provides the framework within
which treasury-related activities are conducted.
Spark manages the concentration of exposures using well-defined
market and credit risk limits and through timely reporting to senior
management. All contracts have been entered into with high-credit
quality financial institutions. The risk associated with these
transactions is that the fair value or cash flows of financial
instruments will change due to movements in market rates or, in
the case of default by a counterparty, through the cost of
replacement at the current market rates.
Currency risk
Nature of the risk
Currency risk is the risk that eventual New Zealand dollar net cash
flows from transactions undertaken by Spark will be adversely
affected by changes in foreign currency exchange rates.
Exposure and risk management
Spark’s total net exposure (from non-derivative financial
instruments) to foreign currency as at 30 June 2023 is $553 million
(30 June 2022: $559 million). This includes $152 million long-term
debt principal denominated in NOK (30 June 2022: $163 million)
and $408 million long-term debt principal denominated in AUD
(30 June 2022: $414 million). The remaining exposure is primarily
trade payables and other receivables denominated in United
States dollars (USD).
Spark manages currency risk arising from foreign currency debt
through hedging. Spark’s long-term debt issued in NOK and AUD
is fully hedged using cross-currency interest rate swaps to convert
foreign currency cash flows into floating-rate New Zealand dollar
exposures.
Currency risk from capital and operational expenditure in foreign
currencies (and related trade payables) has been substantially
hedged by entering into forward exchange contracts.
Sensitivity to foreign currency movements
As at 30 June 2023 a movement of 10% in the New Zealand dollar
would (after hedging) impact the statement of profit or loss by less
than $1 million (30 June 2022: less than $1 million) and the
statement of changes in equity by less than $11 million (30 June
2022: less than $12 million). This analysis assumes a movement in
the New Zealand dollar across all currencies and only includes the
effect of foreign exchange movements on monetary financial
instruments.
Interest rate risk
Nature of the risk
Interest rate risk is the risk that fluctuations in interest rates impact
Spark’s cash flows, financial performance or the fair value of its
holdings of financial instruments.
Exposure and risk management
Spark is exposed to interest rate risk from its financing activities,
which primarily include loans and debt issuance either at fixed or
floating rates. For floating-rate exposures Spark employs the use of
derivative financial instruments to reduce its exposure to
fluctuations in interest rates, with the objective to minimise the cost
of net borrowings and to minimise the impact of interest rate
movements on interest expense and net earnings.
Cross-currency interest rate swaps are used to convert foreign
currency debt into floating-rate New Zealand dollar exposures.
Interest rate swaps are used to convert floating-rate exposures into
fixed-rate exposures and vice versa. As a result Spark’s interest rate
exposure is limited to New Zealand only.
Sensitivity to interest rate movements
As at 30 June 2023 a movement in interest rates of 25 basis points
would (after hedging) impact the statement of profit or loss by less
than $1 million (30 June 2022: less than $1 million) and the
statement of changes in equity by less than $1 million (30 June
2022: less than $1 million).
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NOTES TO THE FINANCIAL STATEMENTS: FINANCIAL INSTruMENTS
5.2 Financial risk management (continued)
b) Credit risk
Nature of the risk
Credit risk arises in the normal course of Spark’s business on cash,
receivables and derivative financial instruments if a counterparty
fails to meet its contractual obligations.
Exposure and risk management
Spark is exposed to credit risk if customers and counterparties fail
to make payments in respect of:
• Payment of trade and other receivables as they fall due; and
• Contractual cash flows of derivative assets held at fair value.
Spark’s assets subject to credit risk as at 30 June 2023 were $1,299
million (30 June 2022: $976 million).
Spark considers the probability of default upon initial recognition
of cash, receivables and derivative assets and whether there has
been a significant and ongoing increase in credit risk at the end of
each reporting period. To assess this Spark compares the risk of
default occurring on these assets at the reporting date, with the risk
of default at the date of initial recognition. Available, reasonable
and supportive forward-looking information is considered,
especially the following indicators:
• External credit rating (as far as available)
• Actual or expected significant adverse changes in business,
financial or economic conditions that are expected to cause a
significant change to the customer or counterparty’s ability to
meet their obligations
• Significant changes in the value of the collateral supporting the
obligation or in the quality of third-party guarantees or credit
enhancements.
Spark considers a financial asset to have low credit risk when the
asset is held with a high-credit quality financial institution or with a
party that has a strong financial position with no past due amounts.
Spark manages its exposure using a credit policy that includes
limits on exposures with significant counterparties that have been
set and approved by the Board and are monitored on a regular
basis. Spark places its cash and derivative financial instruments
with high-credit quality financial institutions and does not have
significant concentration of risk with any single financial institution.
Spark has significant shareholder loans and finance lease
receivables which are deemed low credit risk. Concentration of
credit risk for trade and other receivables is limited because of
Spark’s large customer base.
Spark has certain derivatives and debt arrangements that are
subject to bilateral credit support agreements that require Spark or
its counterparties to post collateral funds to support the value of
certain derivatives subject to certain agreed threshold amounts. As
at 30 June 2023 no collateral was posted (30 June 2022: nil).
Letters of credit and guarantees may be held over some receivable
amounts. The carrying amounts of financial assets represent the
maximum credit exposure.
c) Liquidity risk
Nature of the risk
Liquidity risk represents Spark’s ability to meet its contractual
obligations as they fall due.
Exposure and risk management
Spark uses cash and derivative financial instruments to manage
liquidity and evaluates its liquidity requirements on an ongoing
basis. In general, Spark generates sufficient cash flows from its
operating activities to meet its financial liabilities. As at
30 June 2023 Spark had current assets of $1,079 million and
current liabilities of $850 million (30 June 2022: current assets of
$1,221 million and current liabilities of $940 million). Positive
operating cash flows enable working capital to be managed to
meet short-term liabilities as they fall due.
In the event of any shortfalls Spark has the following financing
programmes:
• An undrawn committed standby facility of $200 million with a
number of creditworthy banks (30 June 2022: $200 million)
• Committed bank facilities of $425 million with $115 million
drawn as at 30 June 2023 (30 June 2022: $425 million facilities
with $365 million drawn)
• Undrawn committed bank overdraft facilities of $15 million with
New Zealand banks (30 June 2022: $15 million).
There are no compensating balance requirements associated with
these facilities.
Spark’s liquidity policy is to maintain unutilised committed facilities
of at least 110% of the next 12 months’ forecast peak net funding
requirements, including coverage for short-term capital market
issues. Spark’s funding policy requires that no more than 30% of
long-term debt (including undrawn and standby facilities) can
mature within the next 12 months, which has been met.
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5.2 Financial risk management (continued)
c) Liquidity risk (continued)
Maturity analysis
The following table provides an analysis of Spark’s remaining contractual cash flows relating to financial liabilities. Contractual cash flows
include contractual undiscounted principal and interest payments.
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS0–6 MONTHS6–12 MONTHS1–2 YEARS2–5 YEARS5+ YEARS
AS AT 30 JUNE 2023$M$M$M$M$M$M$M
Non-derivative financial liabilities
Trade payables290290290 – – – –
Sale and leaseback liabilities 75 76 18 17 20 21 –
Lease liabilities 778 1,224 57 56 104 274 733
Short and long-term debt 1,052 1,285 227 150 36 469 403
Derivative financial liabilities
Interest rate swaps (net settled) 13 (14) (3) (3) (5) (2) (1)
Cross–currency interest rate swaps
(gross settled)
Inflows – (650) (6) (11) (17) (315) (301)
Outflows 84 755 22 21 38 351 323
Forward exchange contracts (gross settled)
Inflows – (46) (46) – – – –
Outflows 1 46 46 – – – –
2,293 2,966 605 230 176 798 1,157
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS0–6 MONTHS6–12 MONTHS1–2 YEARS2–5 YEARS5+ YEARS
AS AT 30 JUNE 2022$M$M$M$M$M$M$M
Non-derivative financial liabilities
Trade payables 260 260 260 – – – –
Sale and leaseback liabilities 87 93 22 25 24 22 –
Lease liabilities 344 434 35 30 52 111 206
Short and long-term debt 1,526 1,765 568 126 164 310 597
Derivative financial liabilities
Interest rate swaps (net settled) 14 – 3 – – (2) (1)
Cross–currency interest rate swaps
(gross settled)
Inflows – (686) (6) (11) (17) (161) (491)
Outflows 64 771 14 17 34 197 509
Forward exchange contracts (gross settled)
Inflows – (18) (18) – – – –
Outflows – 18 18 – – – –
2,295 2,637 896 187 257 477 820
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NOTES TO THE FINANCIAL STATEMENTS: OTHEr INFOrMATION
Section 6 Other information
6.1 Income tax
Income tax expense
The income tax expense is determined as follows:
20232022
YEAR ENDED 30 JUNE$M$M
Statement of profit or loss and other comprehensive income
Current income tax
Current year income tax expense (excluding adjusting items) (209) (177)
Current year income tax expense on adjusting items
1
31–
Adjustments in respect of prior periods (3) (1)
Deferred income tax
Depreciation, provisions, accruals, tax losses and other adjustments (excluding adjusting items) 24 8
Depreciation, provisions, accruals, tax losses and other adjustments on adjusting items
2
137–
Adjustments in respect of prior periods 3 (1)
Income tax expense recognised in the statement of profit or loss and other comprehensive income (17) (171)
1 This includes $26 million for the costs associated with assets disposed of in the sale of Connexa, $2 million for the unwind of the deferred tax asset explained below for
the Connexa transaction and $2 million of current tax for the Spark Sport provision.
2 Due to the difference between the right-of-use assets and lease liabilities recognised at the date of the sale of Connexa, a deferred tax asset of $126 million was
recognised, with a corresponding adjustment (reduction) to tax expense. The balance of the deferred tax asset at 30 June 2023 was $124 million. The Spark Sport
provision had a deferred tax impact at 30 June 2023 of $12 million. The current tax impact of adjusting items of $31 million together with the deferred income tax
impact of $137 million is $168 million (see note 2.5). The total tax expense on an adjusted (non-GAAP) basis for FY23 was $185 million.
Reconciliation of income tax expense
20232022
YEAR ENDED 30 JUNE$M$M
Net earnings before income tax 1,152 581
Tax at current rate of 28% (323) (163)
Adjustments to taxation
Non-assessable gains on sale
1
317 (3)
Other non-assessable items (6) 3
Tax effects of non-New Zealand profits (5) (7)
Adjustments in respect of prior periods – (1)
Total income tax expense
2
(17) (171)
1 Comprises the tax effect of the $583 million net gain on sale of Connexa, being $163 million, the $126 million deferred tax impact described above and the $26 million
current tax impact of the costs associated with the assets disposed of and other adjustments of $2 million.
2 Includes the tax effect of the net gain on sale of Connexa and the Spark Sport provision, being a credit to tax of $168 million (see note 2.5). The total tax expense on an
adjusted (non-GAAP) basis for FY23 was $185 million.
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6.1 Income tax (continued)
Deferred tax assets and liabilities
Deferred tax assets and liabilities are offset in the statement of financial position and presented as a net deferred tax liability.
The movement in the deferred tax assets and liabilities is provided below:
FIXED ASSETSLEASES
PROVISIONS &
ACCRUALSOTHERTOTAL
ASSETS/(LIABILITIES)$M$M$M$M$M
Opening balance as at 1 July 2022 (58) (3) (7) (40) (108)
Amounts recognised in statement of profit or loss and other
comprehensive income
Relating to the current period
1
9 123 14 15 161
Adjustments in respect of prior periods
2
(13) 3 14 (1) 3
Amounts recognised in equity relating to the current year – – – (1) (1)
Closing balance as at 30 June 2023 (62) 123 21 (27) 55
FIXED ASSETSLEASES
PROVISIONS &
ACCRUALSOTHERTOTAL
ASSETS/(LIABILITIES)$M$M$M$M$M
Opening balance as at 1 July 2021 (77) (19) (5) 19 (82)
Amounts recognised in statement of profit or loss and other
comprehensive income
Relating to the current period 20 16 (2) (26) 8
Adjustments in respect of prior periods (1) – – – (1)
Amounts recognised in equity relating to the current year – – – (27) (27)
Amounts classified as held for sale – – – (6) (6)
Closing balance as at 30 June 2022 (58) (3) (7) (40) (108)
1 Amounts relating to the current period include timing differences for the Connexa lease and the Spark Sport provision.
2 Adjustments in respect of prior periods reflect changes in the prior year tax balances used for financial reporting and tax return completion. In the current year these
primarily relate to reclassifications between categories to align with the current year's presentation.
Spark has not recognised the tax effect of accumulated unrestricted losses and temporary differences amounting to AU$461 million at
30 June 2023 based on the relevant corporation tax rate of Australia (30 June 2022: AU$461 million). These losses and temporary
differences may be available to be carried forward to offset against future taxable income. However, utilisation is contingent on the
production of taxable profits over a significant period of time and is subject to compliance with the relevant taxation authority
requirements.
Spark has a negative 32 million imputation credit account balance as at 30 June 2023 due to the timing of dividend and tax payments
(30 June 2022: negative 16 million). The imputation credit account had a positive balance as at 31 March 2023 and 31 March 2022.
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NOTES TO THE FINANCIAL STATEMENTS: OTHEr INFOrMATION
6.2 Employee share schemes
Spark operates share-based compensation plans that are equity settled as outlined below.
Share option scheme
From September 2019, members of the Leadership Squad (including the CEO) and selected senior leaders have been granted options
under the new Spark Long-Term Incentive (LTI) scheme. Under the scheme participants are granted options at the start of the three-
year vesting period. The number of options granted equals the gross LTI value divided by the volume weighted average price of Spark
New Zealand shares for the 20 days prior to the grant date. Subject to satisfaction of the performance hurdle and continued employment,
at vesting each option converts to a Spark share based on a zero exercise price. If the target is not met (or the participant leaves Spark
employment) then the options simply lapse, with exceptions for redundancy, death and disablement. Spark enables participants to meet
tax obligations through PAYE by authorising the sale of a sufficient number of shares on their behalf.
Vesting of the LTI grants are contingent on: participants’ continued employment with Spark for three years from grant date (subject to
exceptions); and the Company achieving the specified performance hurdles. The performance hurdle targets are set annually and for
grants issued in 2019, 2020, 2021 this was the Company’s cost of equity plus 1% compounding annually. For grants issued in 2022, 75%
of the allocated shares will vest based on the performance hurdle target of the Company’s cost of equity plus 1.5% compounding annually
and 25% will vest based on performance against environmental and diversity targets. Options with an intrinsic value of $15 million
(30 June 2022: $14 million) remain outstanding at 30 June 2023 and have a weighted average remaining life of 1.3 years (30 June 2022:
1.3 years).
Historic restricted share schemes (RSS)
A restricted share scheme was initially introduced for selected employees in September 2001. For new allocations after August 2015
these were replaced by two new restricted share schemes
• Spark New Zealand Long-Term Incentive Scheme
• Spark New Zealand Managing Director Long-Term Incentive Scheme.
The Spark New Zealand Long-Term Incentive Scheme was for the senior leaders including the Leadership Squad and delivered one
scheme with the same set of rules under one long-term incentive, with a performance hurdle in place. The Spark New Zealand Managing
Director Long-Term Incentive Scheme related to the previous Managing Director, Simon Moutter.
Under these restricted share schemes, ordinary shares in the Company were issued to Spark Trustee Limited. Participants purchase shares
from Spark Trustee Limited with funds lent to them by the Company and which were held on their behalf by Spark Trustee Limited. If the
individual was still employed by Spark at the end of the vesting period (generally three years) and applicable performance hurdles were
met, the employee was provided a cash bonus, which was used to repay the loan and the shares were then transferred to the individual.
The target for this hurdle was the Company’s cost of equity plus 1% compounding annually. The last year when RSS shares were granted
was FY19 therefore FY22 was the last year where RSS shares vested.
Information regarding shares and options awarded under these schemes is as follows:
20232022
OPTIONSOPTIONSRSS
NUMBER OF
OPTIONS
NUMBER OF
OPTIONS
NUMBER OF
SHARES
Opening balance as at 1 July 2,840,293 1,845,544 566,041
Granted 1,144,179 1,042,944 –
Vested (964,574) – (566,041)
Lapsed (93,834) (48,195) –
Closing balance as at 30 June 2,926,064 2,840,293 –
Percentage of total ordinary shares0.16%0.15%0.00%
The fair value of the employee services received in exchange for the grant of equity instruments is recognised as an expense, with a
corresponding entry in equity. The total charge recognised for this scheme for the year ended 30 June 2023 was $1.4 million (30 June
2022: $1.3 million). The expense relating to the restricted share schemes for the year ended 30 June 2022 was $0.1 million. As at 30 June
2023, $2.1 million of share scheme awards remain unvested and not expensed (30 June 2022: $1.6 million). This expense, measured at its
fair value based on a valuation model, will be recognised over the remaining vesting period of the awards. On 19 September 2022, the
options granted in September 2019 vested, the prevailing market rate at this date was $5.06 per share.
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6
6.3 related party transactions
Related parties of Spark include the associate and joint venture companies listed in note 3.3 and key management personnel detailed
below.
Interest of directors in certain transactions
A number of the Company’s directors are also directors of other companies and any transactions undertaken with these entities have been
entered into on a commercial basis.
Transactions with associate and joint venture companies
Spark’s transactions with associates and joint ventures include the following:
• Spark provided network operations and management services to Southern Cross in respect of its operations in New Zealand
• Spark made payments to Southern Cross in connection with capacity it has purchased on Southern Cross’ network
• Spark made payments to Southern Cross for operational expenditure relating to cable maintenance
• Southern Cross made a partial repayment for a shareholder loan
• Spark made payments to Adroit Holdings Limited for operational expenditure relating to environmental IoT services and hardware and
received payments for IoT warehousing
• Spark received revenue from Rural Connectivity Group for the sale of mobile backhaul equipment
• Spark received payments from Hourua Limited for milestones delivered for the Public Safety Network and for use of Spark’s corporate
office space
• Spark made payments to Connexa for access to mobile towers, this includes lease and operating charges. Spark also received payments
from Connexa for transition services, rental recovery, maintenance, site build and interest on shareholder loans. Further details of the
impact of Connexa to Spark can be found in note 1.4.
• Spark made payments to Connect 8 Limited in the prior year for fibre and telecommunications construction services until the full
acquisition of the entity on 31 January 2022.
Balances and amounts in respect of these transactions with associate and joint venture companies are set out in the table below:
20232022
AS AT AND FOR THE YEAR ENDED 30 JUNE$M$M
Revenues
1
21 5
Expenses (23) (13)
Capacity acquired and other capital expenditure
2
(18) (15)
Receivables
3
167 20
Payables (4) –
Lease liabilities
4
482 –
1 Including interest income on shareholder loans.
2 As at 30 June 2023 Spark has committed to purchases of $22 million for cable capacity from Southern Cross (30 June 2022: $49 million).
3 Receivables include shareholder loans to Connexa, including one non-interest bearing loan, and one interest bearing loan set at a market rate at the time of drawdown.
4 Payments made for related party lease liabilities in the year were $28 million.
Key management personnel compensation
20232022
YEAR ENDED 30 JUNE$’000$’000
Directors’ remuneration
1
1,473 1,263
Salary and other short–term benefits 7,509 8,116
Share–based compensation 784 743
9,766 10,122
1 Excludes Chief Executive remuneration.
The table above includes remuneration of the Chief Executive and the other members of the Leadership Squad, including amounts paid
to members of the Leadership Squad who left during the year ended 30 June or were in acting Leadership Squad positions. Like other
Spark employees, members of the Leadership Squad also receive product and service concessions. In addition, where members of the
Leadership Squad are KiwiSaver members, they receive contributions towards their KiwiSaver schemes.
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NOTES TO THE FINANCIAL STATEMENTS: OTHEr INFOrMATION
6.4 Subsidiaries
Subsidiaries are all entities over which Spark has control. The significant subsidiary companies of Spark and their activities are as follows:
NAMECOUNTRYOWNERSHIPPRINCIPAL ACTIVITY
Computer Concepts LimitedNew Zealand100%IT infrastructure and business cloud services
Connect 8 LimitedNew Zealand100%Mobile infrastructure business
Digital Island LimitedNew Zealand100%Business telecommunications provider
Entelar LimitedNew Zealand100%Mobile phone repair and equipment distribution
Entelar Group LimitedNew Zealand100%
Telecommunications and IT infrastructure build and maintenance
services, and distribution and supply chain services
Gen-i Australia Pty LimitedAustralia
1
100%
Provides international wholesale and outsourced telecommunications
services
Mattr LimitedNew Zealand 94%Software company focused on decentralised identity and verifiable data
Qrious LimitedNew Zealand100%Data analytics business
Revera LimitedNew Zealand100%IT infrastructure and data centre provider
Spark Finance LimitedNew Zealand100%A Group finance company
Spark New Zealand Trading LimitedNew Zealand100%Telecommunications and digital services company
TCNZ (Bermuda) LimitedNew Zealand100%A holding company
Teleco Insurance LimitedBermuda
1
100%A Group insurance company
Telecom New Zealand USA LimitedUnited States
1
100%Provides international wholesale telecommunications services
Telecom Southern Cross LimitedNew Zealand100%A holding company
1 These foreign incorporated entities are tax resident in New Zealand.
The financial year end of all significant subsidiaries is 30 June.
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6.5 reconciliation of net earnings to net cash flows from operating activities
20232022
YEAR ENDED 30 JUNE$M$M
Net earnings for the year 1,135 410
Adjustments to reconcile net earnings to net cash flows from operating activities
Depreciation and amortisation 504 520
Bad and doubtful accounts 10 7
Deferred income tax
1
(159) (6)
Share of associates' and joint ventures' net losses
2
16 1
Interest income on loans receivable from associates and joint ventures (8) –
Net gain on remeasurement of equity accounted investments
2
(9) –
Impairments– 2
Gain on sale and acquisition of property, plant and equipment and intangibles (20) (10)
Gain on lease modifications and terminations (13) (16)
Net gain on sale of Connexa (583) –
Other (7) –
Spark Sport provision 54 –
Changes in assets and liabilities net of effects of non-cash and investing and financing activities
Movement in receivables and related items (110) (52)
Movement in inventories 28 (41)
Movement in current taxation (14) 17
Movement in payables and related items (24) 9
Net cash flows from operating activities 800 841
1 Primarily relates to the net gain on sale of Connexa, see note 6.1 for further details.
2 Included within share of associates’ and joint ventures’ net losses is $4 million of transaction costs incurred by Connexa in relation to the 2degrees transaction, therefore
this and the net gain on remeasurement of equity accounted investments represent the net gain on dilution of the investment in the Connexa group excluded from the
adjusted result in note 2.5.
6.6 Commitments and contingencies
Capital and other commitments
As at 30 June 2023, capital expenditure contracted for, but not yet incurred, was $515 million (30 June 2022: $498 million) with
$293 million due in the year ending 30 June 2024. Commitments principally relate to spectrum, telecommunications network equipment,
data centre infrastructure and cable capacity.
On 12 May 2023, Spark signed an agreement with the Crown for a direct allocation of C-band mobile spectrum under a new model where
the revenue is directly invested into accelerated mobile network upgrades that benefit provincial and rural New Zealand. Included in total
capital commitments above is $18 million for this spectrum, $6 million was prepaid in the year ended 30 June 2023.
As at 30 June 2023 Spark had other supplier commitments of $588 million (30 June 2022: $689 million), with $352 million due in the year
ending 30 June 2024. Commitments include mobile handsets, subscription services, modems and licences.
Contingencies
No ongoing claims, investigations or inquiries are expected to have a significant effect on Spark’s financial position or profitability.
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Independent auditor’s report
To the Shareholders of Spark New Zealand Limited
Opinion
We have audited the consolidated financial statements of Spark New Zealand Limited and its subsidiaries (the
‘Group’), which comprise the consolidated statement of financial position as at 30 June 2023, and the
consolidated statement of profit and loss and other comprehensive income, statement of changes in equity
and statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages 89 to 135, present fairly, in all
material respects, the consolidated financial position of the Group as at 30 June 2023, and its consolidated
financial performance and cash flows for the year then ended in accordance with New Zealand Equivalents to
International Financial Reporting Standards (‘NZ IFRS’) and International Financial Reporting Standards (‘IFRS’).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and International
Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
We are independent of the Company in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand)
issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards), and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
Our firm carries out other assignments for Spark New Zealand Limited in relation to regulatory audit, other
assurance related services (such as trustee reporting) and non-assurance services provided to the Corporate
Taxpayers Group, of which the Group is a member. These services have not impaired our independence as
auditor of the Group. In addition to this, the Chief Executive has both a sister and brother-in-law that are
partners at Deloitte. These Deloitte partners are not involved in the provision of any services to the Group and
its subsidiaries and this matter has not impacted our independence. Also, partners and employees of our firm
deal with the Group on normal terms within the ordinary course of trading activities of the business of the
Group. The firm has no other relationship with, or interest in the Group.
Audit materiality
We consider materiality primarily in terms of the magnitude of misstatement in the financial statements of the
Group that in our judgement would make it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced (the ‘quantitative’ materiality). In addition, we also
assess whether other matters that come to our attention during the audit would in our judgement change or
influence the decisions of such a person (the ‘qualitative’ materiality). We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Independent auditor’s report
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Independent auditor’s report
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Key audit matterHow our audit addressed the key audit matter
Revenue recognition
The Group’s reported operating revenue of $3,875m, (2022:
$3,694m) includes:
• Mobile $1,470m (2022: $1,351m)
• Broadband $626m (2022: $639m)
• Procurement and partners $584m (2022: $538m)
• Cloud, security and service management $436m (2022:
$446m)
• Managed data, networks and services $287m (2022: $283m)
• Voice $231m (2022: $285m)
• Other operating revenues $241m (2022: $152m)
Revenue recognition is considered to be a key audit matter.
For Mobile and Broadband revenue, and to a lesser extent other
revenue streams, there is an inherent risk around the accuracy
and timing of revenue recognition given the complexity of
systems and the large volume of data processed; moreover,
judgement is required for multiple element arrangements. This
risk is most pronounced for new or changing product plans and
prices.
Cloud, security and service management revenue requires
significant management judgements and estimates, particularly
for larger contracts, which are bespoke and cover several
accounting periods.
The judgements and estimates that significantly impact the
accuracy of revenue recognition for these contracts include:
• identifying the separate performance obligations;
• assessing whether the performance obligations are satisfied
at a point in time or over time; and
• determining the amount and appropriate method of
measuring the costs of fulfilling the performance obligations
or, where appropriate, the completeness and valuation of
provisions against contracts that are expected to be loss-
making.
Contract costs incurred to fulfil a contract arising from these
contracts require significant estimation in determining their
recoverability, and the appropriate period of amortisation.
Disclosures relating to revenue recognition and the revenue
stream breakdown can be found in Note 2.2. Operating
revenues and other gains. Refer also to Note 3.1 Contract costs
for further information on costs to fulfil a contract.
Our audit approach included both controls testing and substantive
procedures. For our procedures on the design and operating
effectiveness of controls over significant IT systems, we involved our
IT specialists.
Our audit procedures included:
Across Mobile and Broadband, and Cloud, security and service
management revenue streams:
• assessing the appropriateness of the revenue recognition policies
for the products and services offered by the Group, which
included but were not limited to:
»challenging the Group’s assessment for each performance
obligation about whether the customer can benefit from the
product or service on its own or together with readily available
resources;
»assessing the allocation of the transaction price to the
performance obligations by comparing the stand-alone selling
price assigned to observed market prices or estimated prices;
and
»examining the stages at which revenue for each performance
obligation is recognised.
• testing of manual journal entries recorded in the general ledger
relating to revenue recognition.
Mobile and Broadband:
• testing of the design and implementation, and the operating
effectiveness of automated controls and interfaces between
relevant IT applications, measurement and billing of revenue, and
the recording of entries in the general ledger. We also tested the
access controls and change management controls over the
relevant billing systems;
• testing of the design and implementation, and the operating
effectiveness of manual controls over the initiation, authorisation,
recording and processing of revenue transactions. This included
evaluating process controls over authorising new price plans and
rate changes and the adjustments to the relevant billing systems;
• testing the design and implementation of revenue recognition
controls, including rating and billing during the year as it relates to
new or changing product plans;
• recalculating revenue recognised to evaluate that the processing
by the relevant telecommunication system is materially correct;
• reviewing new product plans in the current year to understand
each of the performance obligations in the bundled offering;
• for new product plans that provide a bundle of services, assessing
whether the customer can benefit from the product or service on
its own or together with readily available resources; and
• assessing the recognition and timing of costs to acquire and costs
to fulfil customer contracts.
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Key audit matterHow our audit addressed the key audit matter
Cloud, security and service management:
• testing of cloud, security and service management contracts for
appropriate revenue recognition and provisioning for contracts
that were expected to be loss-making. We considered the future
forecast profitability and the contractual terms to assess the
recoverability of the contract-specific assets and to determine if
any contracts required loss provisions; and
• testing a sample of revenue transactions recorded during the year
by agreeing to supporting evidence, which included cash receipts,
customer contracts, and invoices. We focused our work on
contracts which we regarded as higher risk because of the nature
of the contract and the stage of delivery.
Carrying value of property, plant & equipment
and intangible assets
The Group has property, plant & equipment and intangible assets
of $2,070m (2022: $1,948m).
There are a number of areas where judgements significantly
impact the carrying value of property, plant & equipment and
intangible assets and their respective depreciation and
amortisation profiles. These areas are as follows:
• the impact of planned or unexpected replacement technology
which will impact the way in which an asset is used or is
expected to be used;
• the determination of whether to capitalise or expense costs,
particularly for capitalised labour;
• the useful economic life of the asset; and
• the timely transfer and commencement of depreciation of
assets transferred from work in progress.
Changes in these judgements may have a significant impact on
the results of the Group. Due to the significance of these
judgements and the materiality of these assets to the
consolidated Statement of Financial Position, this is considered a
key audit matter.
Refer to notes 3.6 and 3.7.
Our audit procedures included the following:
• testing of the design and implementation of controls over the
acquisition and disposal of assets;
• assessing the appropriateness of capitalisation of costs incurred
on capital projects, by examining a sample of additions to identify
whether the expenditure meets the definition of an asset in
accordance with the applicable accounting standards;
• assessing the reasonableness of the internal labour rates used to
capitalise internal labour;
• assessing the appropriateness of the date from which assets
commenced being depreciated;
• assessing the allocated useful economic lives, by comparing to
industry benchmarks and our knowledge of the business and its
operations; and
• reviewing Board minutes and performing enquiries with
management personnel around the prevailing risks of
technological obsolescence and assessing their impact on the
useful lives/impairment risk of existing assets.
We assessed the application of the Group’s annual asset life review.
This included assessing judgements made by the Group on:
• the appropriateness of asset lives applied in the calculation of
depreciation and amortisation;
• the nature and impact of changes on the business from Spark’s
strategy, including which specific assets are impacted; and
• the extent of the impact of these changes on the carrying value of
identified property, plant and equipment and software intangible
assets.
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Other information
The directors are responsible on behalf of the Group for the other information. The other information
comprises the information in the Annual Report that accompanies the consolidated financial statements and
the audit report.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and consider whether it is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If so, we are required to report that fact. We have nothing to report in this regard.
Directors’
responsibilities for the
consolidated financial
statements
The directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
directors determine is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
for the audit of the
consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs and ISAs (NZ) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located on
the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1
This description forms part of our auditor’s report.
Restriction on use
This report is made solely to the Company’s shareholders, as a body. Our audit has been undertaken so that
we might state to the Company’s shareholders those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company’s shareholders as a body, for our audit work, for this report,
or for the opinions we have formed.
Jason Stachurski, Partner for Deloitte Limited
Auckland, New Zealand
18 August 2023
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Other
information
140
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Other information
Other information
Stock exchange listings
Spark’s ordinary shares are listed on the NZX and ASX. Spark is admitted to the Official List of ASX as a foreign exempt issuer. As an NZX listed
issuer and ASX foreign exempt issuer, Spark complies with NZX Listing Rules and applicable ASX Listing Rules.
Spark’s American Depositary Shares, each representing five ordinary Spark shares and evidenced by American Depositary Receipts (ADRs),
are traded over-the-counter in the United States. This is a Level 1 ADR programme that is sponsored by Bank of New York Mellon.
Spark Finance Limited, a wholly-owned subsidiary of Spark New Zealand Limited, has debt securities listed on the NZDX. Details of debt
securities issued by Spark Finance Limited can be found in Spark Finance Limited’s reports at: investors.sparknz.co.nz/Investor-Centre
Director remuneration
The total remuneration available to non-executive directors is fixed by shareholders. The current annual remuneration limit is $1,630,000
approved at the annual meeting held in November 2017.
The fees payable to non-executive directors during FY23 were:
BOARD/COMMITTEE
1
CHAIR
2
MEMBER
3
Board of Directors$381,700$150,300
Audit and Risk Management Committee (ARMC)$40,500$19,700
Human Resources and Compensation Committee (HRCC)$34,700$17,400
1. All non-executive directors are members of the Nominations and Corporate Governance Committee (NOMs) and receive no additional fees for this role.
2. Committee chair and member fees were not payable to the Chair of the Board. Committee member fees were not payable to committee chairs.
3. Member fees were payable for each committee.
There is no increase to non-executive director fees for FY24. Fees will continue to be paid out of the current shareholder-approved annual
remuneration limit of $1,630,000.
Fees are broadly aligned to the market positioning outlined in the independent Ernst & Young benchmarking report that was distributed
alongside the 2017 Notice of Annual Meeting.
Committee membership as at 30 June 2023 was as follows:
HUMAN RESOURCES AND
COMPENSATION COMMITTEE
AUDIT AND RISK
MANAGEMENT COMMITTEE
NOMINATIONS AND
CORPORATE GOVERNANCE COMMITTEE
Alison Barrass (Chair)
Sheridan Broadbent
David Havercroft
Justine Smyth
Charles Sitch (Chair)
Warwick Bray
Sheridan Broadbent
Gordon MacLeod
Justine Smyth (ex officio)
Justine Smyth (Chair)
Alison Barrass
Warwick Bray
Sheridan Broadbent
David Havercroft
Jolie Hodson
Gordon MacLeod
Charles Sitch
Corporate governance disclosures
Spark New Zealand Annual Report 2023
141Ko te pae anamata, whakamaua
The total remuneration received by non-executive directors of Spark during FY23 was as follows:
1
NAME OF DIRECTORBOARD FEES
2
AUDIT & RISK
MANAGEMENT
COMMITTEE FEES
HUMAN
RESOURCES AND
COMPENSATION
COMMITTEE FEES
TOTAL
REMUNERATION
3
Justine Smyth$381,700––$381,700
Alison Barrass$150,300–$34,700$185,000
Paul Berriman
4
$51,870$6,799–$58,669
Warwick Bray$150,300$19,700 $170,000
Sheridan Broadbent
5
$137,639$9,850
6
$15,934$163,423
David Havercroft$150,300$17,400$167,700
Gordon MacLeod
7
$137,639$18,194$155,833
Charles Sitch$150,300$40,500-$190,800
Total$1,310,048$95,043$68,034$1,473,125
1. The figures shown are gross amounts and exclude GST (where applicable) and are rounded to the nearest dollar.
2. All non-executive directors are members of the Nominations and Corporate Governance Committee (NOMs) and receive no additional fees for this role.
3. This table excludes contributions towards medical and life insurance of a total of $14,285. Spark meets costs incurred by directors that are incidental to the performance of their
duties. This includes providing New Zealand-based directors with mobile phones and $120 per month which can be used towards Spark products or services and overseas-based
directors with $400 per month phone allowances. Spark also meets the costs of directors’ Spark-related travel. As these costs are incurred by Spark to enable directors to perform
their duties, no value is attributable to them as benefits to directors for the purposes of the above table.
4. Mr Berriman resigned as a director from 4 November 2022.
5. Ms Broadbent was appointed a director and a member of the HRCC from 1 August 2022.
6. Ms Broadbent was appointed a member of the ARMC from 1 January 2023.
7. Mr MacLeod was appointed a director and a member of the ARMC from 1 August 2022.
CEO remuneration
The total remuneration earned or paid in FY23, and anticipated target remuneration expected to be earned or paid in FY24, by and to the
CEO, Jolie Hodson is as follows:
PERIODBASE SALARY
1
SHORT-TERM INCENTIVE
2
LONG-TERM INCENTIVE
3
FY23 actual remunerationNZ$1,266,900NZ$501,692NZ$950,175, in the form of share options
FY24 anticipated target remunerationNZ$1,266,900 NZ$950,175NZ$950,175 in the form of share options
1. Base salary excludes employer contributions towards KiwiSaver and is not at risk.
2. FY23 actual short-term incentive was earned in FY23 and will be paid in FY24. The gross amount earned in FY22 and paid in FY23 was $977,850. FY24 anticipated short-term
incentive will be earned in FY24 and paid in FY25.
3. FY23 long-term incentive was granted in 2022 and, subject to performance hurdles, will vest in September 2025.
The following CEO long-term incentives vested in FY23:
GRANT YEARSECURITIES
PERFORMANCE
PERIOD
PERFORMANCE
MEASURE
VESTING
OUTCOME
SHARES
TRANSFERRED
VALUE
TRANSFERRED
1
FY20OptionsSeptember 2019
– September 2022
Absolute TSR
2
,
hurdle – Spark’s
annual cost of
equity + 1%
compounding
100% – 3 year TSR
result was 44.50%
compared with a
32.63% target
203,317NZ$1,012,519
1. Represents the value of the shares for tax purposes on the basis of permitted valuation methods.
2. Total Shareholder Return.
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The CEO is expected to acquire and hold shares that are at least equivalent in value to 25% of the CEO’s base salary but ideally would increase
this shareholding to 100% of base salary subject to the vesting of shares under any Long-Term Incentive schemes. To fulfil this expectation
shares are to be acquired within a four-year period from 1 July 2019. As at 30 June 2023 the CEO held 311,830 ordinary shares, which exceeds
the ideal shareholding requirement to hold shares that are at least equivalent in value to 100% of the CEO’s base salary.
Other directors’ fees
Mr Richard Quince received a director’s fee of NZ$10,000 (excluding GST) for acting as a director of Teleco Insurance (NZ) Limited.
Board and committee meeting attendance for FY23
The Board held eight formal meetings and three special meetings during FY23. The table below shows director attendance at these Board
meetings and committee member attendance at committee meetings. Sub-committees of the Board also met regularly throughout the year to
consider matters of special importance.
BOARDARMCHRCCNOMS
Total number of meetings held11884
Alison Barrass10–84
Paul Berriman
1
64–1
Warwick Bray118–4
Sheridan Broadbent
2
10374
David Havercroft10–74
Jolie Hodson
3
11884
Gordon MacLeod
4
108–4
Charles Sitch118–4
Justine Smyth
5
11684
1. Mr Berriman resigned as a director from 4 November 2022.
2. Ms Broadbent was appointed as a director, member of the HRCC and NOMs from 1 August 2022 and was appointed a member of the ARMC from 1 January 2023.
3. Ms Hodson attended ARMC and HRCC meetings as Executive Director.
4. Mr MacLeod was appointed as a director and a member of the ARMC and NOMs from 1 August 2022.
5. Ms Smyth attended ARMC meetings in an ex officio capacity.
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Director independence
As part of the formal independence assessment, the Board considered all business relationships and close personal ties between Spark and
any companies of which a non-executive director is an employee, director or substantial shareholder (if any). The Board has determined, based
on information provided by directors regarding their interests, that at 30 June 2023 Ms Barrass, Mr Bray, Ms Broadbent, Mr MacLeod, Mr Sitch
and Ms Smyth were independent.
The Board determined that Ms Hodson was not independent due to her position as CEO, and Mr Havercroft was not independent due to his
recent relationships with Spark, which have now ceased.
The criteria for determining director independence and conflict of interest may be found in the Board Charter at: www.sparknz.co.nz/about/
governance
Director interests
• In accordance with sections 140 and 211(e) of the Companies Act 1993, the table below lists the general disclosures of interests made by
Directors in the interests register that remained current, including changes made to those interests, during FY23:
DIRECTORENTITYRELATIONSHIP
Alison BarrassGWA Group Limited
Suncorp NZ Limited
Rockit Global Limited (and related companies)
Tom & Luke Holdings Limited
Babich Wines Limited
Zespri Group Limited
Institute of Directors
Ceased to be director
Appointed director
Director and shareholder
Director and Chair
Chair
Director
Member of the Nominations Committee
Warwick BrayWoolworths Group LimitedAppointed Director
Sheridan BroadbentCloudsource Holding Limited
Manawa Energy Limited
Pipeline and Civil Limited
Pipeline Group Limited
PLC Plant Limited
Cybersecurity Advisory Committee
Business Leaders’ H&S Forum
Ceased to be director
Director
Director and Chair
Director and Chair
Director and Chair
Ceased to be Committee member
Deputy Chair
David HavercroftKiwi Wealth Investments General Partner Limited
Kiwi Wealth Management Limited
Kiwi Investment Management Limited
Kiwi Wealth Limited
Portfolio Custodial Nominees Limited
W3 Capital Limited
Westpac New Zealand Limited
Ceased to be director
Ceased to be director
Ceased to be director
Ceased to be director
Ceased to be director
Director
Director
Jolie HodsonDigital Boost Alliance Aotearoa
MATTR Limited
NZ Telecommunications Forum Inc.
Climate Leaders Coalition
Ceased to be Chair
Director
Board member
Convenor of the Coalition’s CEO Steering Group
Gordon MacLeodDelegat Group Limited
Spanbild Holdings Limited
Breast Cancer Foundation NZ
Director
Board advisor
Trustee
Justine SmythMondiale VGL Group Limited
Breast Cancer Foundation NZ
MATTR Limited
Appointed director and Chair
Chair and Trustee
Director
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Directors disclosed, pursuant to section 148 of the Companies Act 1993, the following acquisitions and disposals of relevant interests in Spark
shares during FY23:
NAMEDATE NATURE OF TRANSACTIONCONSIDERATION NUMBER OF SHARES
Sheridan Broadbent26 August 2022Purchase of ordinary shares by
Mariachi Desperados Trust
$26,623.505,000
19 September 2022Purchase of ordinary shares by
Mariachi Desperados Trust
$51,41910,000
Jolie Hodson19 September 2022Issue of optionsServices to Spark178,870
3 October 2022Conversion of optionsServices to Spark203,317
3 October 2022Sale of ordinary shares$403,355.1080,995
Justine Smyth2 September 2022Purchase of ordinary shares
by PJ Trust
$175,408.4432,733
7 September 2022Purchase of ordinary shares
by PJ Trust
$21,049.223,913
14 September 2022Purchase of ordinary shares
by PJ Trust
$179,346.1233,354
• Directors disclosed, for the purposes of section 162 of the Companies Act 1993, that insurance was renewed for Spark’s directors and
senior managers for the 12-month period from 1 June 2023 and deeds of indemnity provided to all directors and specified senior
managers of Spark.
Employee benefits
The following table sets out benefits provided to employees during FY23 by employee group
1
:
FULL-TIME PERMANENT
EMPLOYEES
PART-TIME PERMANENT
EMPLOYEES
FIXED-TERM / CASUAL
EMPLOYEES
Parental LeaveYe sYe sYe s
2
Insurance cover:
• Medical
• Life & Terminal Illness
• Income Protection
• Trauma
Ye sYe s
3
No
Spark Account Credit
4
Ye sYe sNo
Ability to participate in Spark
Share
5
Ye sYe sNo
Volunteer Day
6
Ye sYe sNo
Spark Give
7
Ye sYe sNo
8
Eligibility to join Marram
9
Ye sYe sNo
Eligible for Purchased Leave
10
Ye sYe sNo
Mahi Tahi – Wellbeing support
11
Ye sYe sYe s
1. Excludes benefits offered to some subsidiaries, which differ from Spark’s overall benefits suite.
2. Eligibility for Parental Leave is in accordance with Government legislation.
3. Employees must work at least 15 hours a week to be eligible.
4. Employees with active Spark mobile or broadband accounts will receive monthly credits of $120, which can be used towards Spark products or services.
5. Spark’s employee share purchase scheme provide a simple and cost-effective way for Spark NZ employees to acquire discounted shares through an interest free loan paid off over
three years, giving employees a real stake in the future success of the company.
6. The opportunity for Spark employees to take a day of paid volunteer leave.
7. For specific charities, Spark will match employee donations dollar-for-dollar, up to a $500 annual matching cap.
8. Casual employees are ineligible.
9. Marram Trust offers access to accommodation across New Zealand for discounted rates, as well as providing a basic level of healthcare cover.
10. The ability to purchase additional annual leave via a deduction of base salary.
11. Wellbeing support includes our Employee Assistance Programme, access to wellbeing coaches, counselling with OutLine Aotearoa, specialist clinical support from our in-house
psychotherapist and health psychologist and subscription to the Take A Breath Platform.
Spark New Zealand Annual Report 2023
145Ko te pae anamata, whakamaua
Employee remuneration
The table below shows the number of employees and former employees, not being directors of Spark, who, in their capacity as employees,
received remuneration and other benefits during FY23 totalling NZ$100,000 or more
1
.
RANGECURRENTFORMERTOTALRANGECURRENTFORMERTOTAL
$100,000 – $110,00034633379$360,001 – $370,000303
$110,001 – $120,00027326299$370,001 – $380,000213
$120,001 – $130,00027822300$380,001 – $390,000112
$130,001 – $140,00026216278$390,001 – $400,000101
$140,001 – $150,0002425247$400,001 – $410,000213
$150,001 – $160,0001897196$420,001 – $430,000303
$160,001 – $170,00012213135$440,001 – $450,000202
$170,001 – $180,00086692$450,001 – $460,000404
$180,001 – $190,00080383$470,001 – $480,000112
$190,001 – $200,00064468$480,001 – $490,000202
$200,001 – $210,00047249$500,001 – $510,000202
$210,001 – $220,00026228$510,001 – $520,000101
$220,001 – $230,00023427$520,001 – $530,000101
$230,001 – $240,00020222$540,001 – $550,000101
$240,001 – $250,00016218$570,001 – $580,000101
$250,001 – $260,00011213$580,001 – $590,000112
$260,001 – $270,00011213$590,001 – $600,000101
$270,001 – $280,00010111$620,001 – $630,000101
$280,001 – $290,000426$740,001 – $750,000101
$290,001 – $300,000213$890,001 – $900,000101
$300,001 – $310,000538$900,001 – $910,000101
$310,001 – $320,000404$980,001 – $990,000101
$320,001 – $330,000101$1,130,001 – $1,140,000101
$330,001 – $340,000213$1,150,001 – $1,160,000101
$340,001 – $350,000404$1,560,001 – $1,570,000101
$350,001 – $360,000112 21661652331
1. The table includes base salaries, short-term incentives and vested long-term incentives. The table does not include: amounts paid after 30 June 2023 relating to FY23; long-term
incentives that have been granted and have yet to vest (based on grant values, the total value of which was NZ$11.1 million as at 30 June 2023); product and service concessions
received by employees; contributions paid towards health and other insurances; contributions paid to the Government Superannuation Fund (a legacy benefit provided to a small
number of employees); and, if the individual is a KiwiSaver member, contributions of 3% of gross earnings towards that individual’s KiwiSaver scheme.
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Shareholdings
As at 30 June 2023 there were 1,845,000,906 Spark ordinary shares on issue, each conferring to the registered holder the right to one vote on
a poll at a meeting of shareholders on any resolution, held as follows:
SIZE OF HOLDINGNUMBER OF HOLDERS
1
%NUMBER OF SHARES%
1–1,00012,94629.876,494,4770.35
1,001–5,00018,45242.5747,926,9652.60
5,001–10,0006,16314.2245,560,0352.47
10,001–100,0005,55212.81129,025,8416.99
100,001 and over2290.531,615,993,58887.59
Total43,342 100.001,845,000,906100.00
1. Includes 1,777,157 shares on issue held by Spark Trustee Limited on behalf of 1,283 holders for Spark Share (FY22: 1,744,191 shares on issue held by Spark Trustee Limited on
behalf of 1,321 holders of Spark Share).
The 20 largest registered holders of Spark shares at 30 June 2023 were:
NAME
1
NUMBER OF SHARES%
1.HSBC Nominees (New Zealand) Limited
2
324,970,37917.61
2.HSBC Nominees (New Zealand) Limited
2
212,112,73411.50
3.JP Morgan Chase Bank158,805,1008.61
4.Citibank Nominees (NZ) Limited109,178,8365.92
5.BNP Paribas Nominees NZ Limited
3
99,851,4385.41
6.HSBC Custody Nominees (Australia) Limited62,786,2173.40
7.Custodial Services Limited62,775,5433.40
8.National Nominees New Zealand Limited50,013,4622.71
9.Accident Compensation Corporation49,843,3652.70
10.Forsyth Barr Custodians Limited36,461,0281.98
11.New Zealand Superannuation Fund Nominees Limited35,552,6501.93
12.Citicorp Nominees Pty Limited34,156,3061.85
13.FNZ Custodians Limited34,043,3341.85
14.JP Morgan Nominees Australia Pty Limited 32,028,6881.74
15.JB Were (NZ) Nominees Limited26,241,2921.42
16.BNP Paribas Nominees NZ Limited
3
25,440,9871.38
17.Premier Nominees Limited23,898,1471.30
18.New Zealand Depository Nominee23,695,5481.28
19.New Zealand Permanent Trustees Limited21,378,2661.16
20.Public Trust16,192,5590.88
1. The shareholding of New Zealand Central Securities Depository Limited (custodian for members trading through NZClear) has been reallocated to the applicable members.
2. Has a different holder identification number to the other HSBC Nominees (New Zealand) Limited entry.
3. Has a different holder identification number to the other BNP Paribas Nominees NZ Limited entry.
Spark New Zealand Annual Report 2023
147Ko te pae anamata, whakamaua
According to substantial holder notices as at 30 June 2023 the substantial holders in Spark were as follows:
NAMENUMBER OF ORDINARY SHARES% OF ORDINARY SHARES ON ISSUE
1
Blackrock Investment Management (Australia) Limited161,169,5328.74
1. Based on issued share capital of 1,845,000,906 as at 30 June 2023.
As at 30 June 2023 directors, or entities related to them, held relevant interests (as defined in the Financial Markets Conduct Act 2013) in Spark
shares as follows:
NAME
RELEVANT INTEREST IN SPARK SHARES AT 30 JUNE 2023
NUMBER%
1
Alison Barrass37,7160.002
Warwick Bray31,230
2
0.002
Sheridan Broadbent15,000
3
0.001
David Havercroft100,0860.005
Jolie Hodson867,976
4
0.047
Charles Sitch39,350
5
0.002
Justine Smyth500,201
6
0.027
1. Each percentage stated has been rounded to the nearest 1/1000th of a percent.
2. Relevant interest in beneficial ownership of 31,230 ordinary shares held by WDB Insight Pty Limited.
3. Relevant interest in beneficial ownership of 15,000 ordinary shares held by Mariachi Desperados Trust.
4. Includes 311,830 ordinary shares and 556,146 options.
5. Relevant interest in beneficial ownership of 39,350 ordinary shares held by Sitch Superannuation Pty Limited.
6. Relevant interest in beneficial ownership of 375,201 ordinary shares held by Miksha Trust and beneficial ownership of 125,000 ordinary shares held by PJ Trust.
All non-executive directors are expected to hold Spark shares. Subject to personal circumstances (that should be discussed with the Chair or,
in the case of personal circumstances of the Chair, with the Chair of the ARMC, as appropriate), there is an expectation that each non-executive
director will purchase and hold an amount of shares that are at least equivalent in value to the non-executive director base member fee as
at the date of their appointment or, in the case of directors appointed before 1 July 2017, this was as at 1 July 2017. Shares are to be purchased
within a three-year period from the date of appointment or, in the case of directors appointed before 1 July 2017, this was within a three-year
period from that date. To assess whether this expectation has been met, the aggregate purchase price for all shares acquired, less the
aggregate sale price for all shares disposed (if any), is used to calculate value.
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Subsidiary company directors
The following people held office as directors of subsidiary companies at 30 June 2023. Alternate directors are indicated with an (A).
SUBSIDIARY COMPANYPRINCIPAL ACTIVITYCURRENT DIRECTORSDIRECTORS WHO
RETIRED DURING
THE YEAR
Computer Concepts LimitedIT infrastructure and Cloud services M Anastasiou, G McBeath, S Knight
Connect 8 LimitedMobile infrastructure businessM Beder, H Polglase, M SheppardR Singh, C Phipps
Digital Island LimitedBusiness telecommunications providerS Knight, G McBeath
Entelar Group LimitedTelecommunications and IT
infrastructure build and maintenance
services, and distribution and supply
chain services
M Beder, H Polglase, M Sheppard
Entelar LimitedMobile phone repair and equipment
distribution
M Beder, H Polglase, M SheppardR Singh, J Bahlman,
G Clark
Gen-i Australia Pty LimitedProvides international wholesale and
outsourced telecommunications
services
F Evett, I Hopkins
MATTR LimitedSoftware company focussed on
decentralised identity and verifiable data
C Barber, J Hodson, J Smyth, S Knight
Qrious LimitedData analytics businessS Knight, M Anastasiou
Revera LimitedIT infrastructure and data centre
provider
M Anastasiou, G McBeath, S Knight
Spark Finance LimitedGroup finance companyM Anastasiou, M Sheppard, S Knight,
A White
Spark New Zealand Cables LimitedInvestment companyM Sheppard, L Urquhart
Spark New Zealand Trading LimitedTelecommunications and digital
services company
M Anastasiou, S Knight, M Beder
Spark Trustee LimitedTrustee companyM Anastasiou, S Knight
TCNZ Australia Investments Pty
Limited
Australian operationsF Evett, I Hopkins
TCNZ (Bermuda) LimitedHolding companyJ Wesley-Smith, J Wong
TCNZ Financial Services LimitedInvestment companyM Anastasiou, F Evett
TCNZ (United Kingdom) Securities
Limited
Holding/investment companyF Evett, M Palmer, J Reader
Teleco Insurance LimitedGroup insurance companyC Phipps, C Feathers, A White,
M Anastasiou (A), F Evett (A)
Teleco Insurance (NZ) LimitedMobile phone insuranceA White, R Quince
Telecom Capacity LimitedHolding companyS Knight, J Wong
Telecom Enterprises LimitedInvestment companyM Anastasiou, S Knight
Telecom New Zealand (UK)
Enterprises Limited
Holding/investment companyF Evett, M Sheppard
Telecom New Zealand USA LimitedProvides international wholesale
telecommunications services
A Preston, J WongD Reeve
Telecom Pacific LimitedHolding companyM Anastasiou, M Sheppard
Telecom Southern Cross LimitedHolding companyM Anastasiou, S Knight
Telecom Wellington Investments
Limited
Investment companyM Anastasiou, F Evett
Spark New Zealand Annual Report 2023
149Ko te pae anamata, whakamaua
Spark’s managing risk framework roles and responsibilities
ACTIVITY PERFORMED
BOARD
& ARMC
LEADER-
SHIP
SQUAD RISK
LEGAL
(DIGITAL
TRUST)
ORG
UNIT
LEADS
CENTRE OF
EXCELLENCE
LEADS
POLICY
OWNERS
ALL
SPARK
PEOPLE
Approves the Managing Risk Policy
✔
Monitors the managing risk framework
✔
Reviews principal risk dashboard (quarterly)
✔
Performs other items from its charter
✔
Prepares strategy and annual plan
✔
QBR process and next 90-day priorities
✔
Coaches and guides Leads
✔
Owner for principal risks
✔
Designs and continuously improves the managing
risk framework
✔
Helps the business apply the framework
✔
Profiles the principal and next 90-day risks for LS and
ARMC
✔
Helps Leads to capture their risks for the QBR Memo
✔
Executes Internal Audit plan (objective assurance)
✔
Designs and continuously improves the
empowerment framework
✔
Creates empowerment & functional guidance kits
✔
Oversees essential policies and webpage
✔
Creates and delivers training modules
✔
Use the Empowerment and Managing
Risk Frameworks
✔
Understand and adhere with the essential policies
✔
Maintain view of risks for OKRs and fill in QBR Memo
✔
Provide input into principal risk process
✔
Escalate risks to LS or Risk Team (if required)
✔
Review risk sections in QBR packs across Spark
✔
Maintain view of risks for their OKRs and fill in QBR
✔
Support Leads to manage identified risks
✔
Provide input into principal risks
✔
Maintain policy and guidance material
✔
Complete assessments of effectiveness
✔
Participate in policy owner working groups
✔
Follow this framework and the essential policies
✔
Make informed decisions after assessing the benefits
and risks
✔
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As an integrated report we have included disclosure on our sustainability performance throughout this report. Pages 6 and 7 detail our
integrated reporting value creation model, aligned to the ‘capitals’ which each have a dedicated section in the report.
This report is prepared in accordance with the International <IR> Framework and with the Global Reporting Initiative (GRI) Core Option. It also
incorporates climate risk disclosure aligned to the incoming New Zealand Climate Related Disclosure reporting recommendations aligned to
the Task Force on Climate-related Financial Disclosures (TCFD) framework.
We publish a summary of our approach to sustainability at Spark on our website: https://www.sparknz.co.nz/sustainability/
Materiality
To prioritise Spark’s reporting on sustainability topics we follow the GRI materiality principle (set out in GRI 101) to identify and prioritise topics
which substantively influence the assessments and decisions of stakeholders or have a significant environmental, social, or economic impact.
We also consider the materiality principles of the Integrated Reporting International <IR> Framework, considering whether a matter could
substantively affect Spark's ability to create value in the short, medium, or long term.
Our assessment of material topics includes analysis of stakeholder feedback, review of industry peers, and interviews with external
stakeholders. Internally we consult with a range of employees, including members of our strategy, finance, community, corporate relations, risk,
legal & regulatory, and people and culture teams, to determine Spark’s view of topics meeting the GRI materiality principle criteria.
We have updated our materiality matrix for FY23. This includes incorporating AI alongside trust in privacy and security, merging network
resilience and climate adaptation into a single topic, increasing the importance of disaster crisis response and the role of digital technology in
addressing sustainability challenges.
Sustainability appendix
• Resilient, adaptable network infrastructure
• Customer experience, support and partnership
• Trust in data privacy, security and AI
• Digital equity
• Equipping people for the future of work
• Operational excellence and financial performance
• Building partnerships for a strong Aotearoa
• Resilient infrastructure and climate adaptation
• Role of digital technology in addressing
sustainability challenges
• Disaster and crisis response
• Competition and regulation
• Diversity and Inclusion
• Ethical behaviour in our business
• Ethical supply chain and procurement practices
• Responsible employment practices
• Operational efficiency, emissions and waste
• Heath, Safety and Wellbeing
• Investment in innovation
• Product stewardship
• Responsible and fair use of our products
and services
• Community investment
• Infrastructure impact
• Ta x
SIGNIFICANCE OF ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS
INFLUENCE ON STAKEHOLDER ASSESSMENTS AND DECISIONS
Issue moved up from FY22 due to greater influence on stakeholder assessments and decisions
Spark New Zealand Annual Report 2023
151Ko te pae anamata, whakamaua
Our most material sustainability issues
TOPICTOPIC DESCRIPTION AND SCOPEREFERENCE
Resilient infrastructure and
climate adaptation
The resilience of our infrastructure. Our long-term adaptation to
climate change.
Our network and technology
Pages 32 – 41
Climate change risk
Pages 74 – 77
Customer experience, support
and partnership
Providing high-quality, reliable products and services that enable
our customers. Rectifying issues where they may arise. Partnering
with our customers to enable their success through digital
technology.
Our customers
Pages 22 – 31
Trust in data privacy, security
and AI
How we collect, use and share personal information and how we
keep it safe. Building trust in our products and services. Ethical
use of AI technologies.
Our customers
Pages 22 – 31
Digital equityProviding equitable access to telecommunications products and
services and to the benefits of digital technology.
Our communities
Pages 62– 67
Disaster and crisis responseThe role of telecommunications in responding to natural disasters
and crisis events.
Our network and technology
Pages 32 – 41
Equipping people for the future
of work
Developing and upskilling for future ways of working including
building digital skills aligned to digital equity outcomes.
Our people
Pages 50 – 61
Our communities
Pages 62 – 67
Operational excellence and
financial performance
Executing our business strategy to build financial capital. Our performance
Pages 18 – 21
Financial statements
Pages 88 – 139
Building partnerships for a
strong Aotearoa
Focus on community partnerships and collaboration aligned to
our Māori Strategy, Te Korowai Tupu.
Our communities
Pages 62 – 67
Te Korowai Tupu
Page 57
The role of digital technology in
addressing sustainability
challenges
Opportunities to use digital technology to address sustainability
challenges such as climate mitigation, climate adaptation, water
quality, biodiversity loss. Partnering with our customers to
increase their resilience, productivity and sustainability.
Our environment
Pages 42– 49
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Stakeholder engagement
Spark engages with a broad range of stakeholders as detailed in the table below. We have also engaged a small number of stakeholders
specifically for the purposes of developing and improving our non-financial reporting and as part of our reporting materiality process. In
selecting the stakeholders we engage with, we are guided by the definition set out in GRI 101: which is, “entities or individuals that can
reasonably be expected to be significantly affected by the organisation’s activities, products or services; or whose actions can reasonably be
expected to affect the ability of the organisation to implement its strategies or achieve its objectives.”
STAKEHOLDER GROUPHOW WE ENGAGE
Spark employees• Regular engagement surveys and use of ‘sounding boards’ on large programmes of work
• Comprehensive programme of internal communication and engagement from Leadership Squad (through
roadshows and online channels)
• Engagement with cross-section of employees in the preparation of this report
ShareholdersRegular engagement with investors including:
• Semi-annual earnings announcements, together with semi-annual post result investor briefings;
• Annual meeting that allows shareholders a chance to meet and ask questions directly of the Spark Board and
Management;
• Regular investor roadshows; and
• Periodic investor strategy briefings
Suppliers• Ongoing conversations with our suppliers – both informal and formal
Customers• Regular feedback from customers on their experiences with us and their views of Spark as a business through
our Net Promotor Score methodology and through our Voice of the Customer programme
• Meetings with customers on sustainability topics, sharing sustainability focus areas and exploring
opportunities to work together
Government• Engagement with central Government on issues related to the telecommunications industry, infrastructure
investment, environmental sustainability, and digital equity
• Engagement with local government to manage the process and impacts of infrastructure investment
Media• Responding to media enquiries and through a proactive programme of engagement with key members of
New Zealand’s media
Local communities• We engage with local communities affected by our activities, in particular where we are building new network
infrastructure
Community partners• Spark Foundation works in partnership with community partners on an ongoing basis
Industry organisations• Engagement with a number of industry organisations, representing the telecommunications and technology
sector, community groups, and the New Zealand business community
External initiatives Spark subscribes to or endorses
• Spark is a founding member of the Climate Leaders Coalition (CLC). The CLC is a group of CEOs who have collectively committed to
voluntary action on climate change, measuring and publicly reporting on their emissions, and setting an absolute target for reducing
emissions in line with the Paris Agreement. Spark’s CEO, Jolie Hodson, is the Convenor of the CLC.
• Spark has committed to a Government-accredited voluntary Product Stewardship scheme for mobile phones, which is actioned by the
Re:Mobile initiative. See page 47.
• Spark is a member of the Digital Boost Alliance which is a Government-led initiative that brings together the public sector and corporate
sector to help small-medium businesses and individuals across Aotearoa lift their use of digital technologies.
Spark was an active member of the following associations in FY23:
• International Telecommunication Union (Radiocommunication
Sector membership)
• Infrastructure New Zealand
• GSM Association (GSMA)
• New Zealand Internet Task Force
• Telecommunications Forum (TCF)
• NZ Tech (Including Internet of Things Alliance and AI Industry
Forum)
• TUANZ
• Business NZ
• Sustainable Business Council
• Sustainable Business Network
• Global Women (including Champions for Change)
• Joint Audit Cooperation (JAC) initiative
• Digital Boost Alliance
• Digital Equity Coalition Aotearoa (DECA) (membership through
Spark Foundation)
Spark New Zealand Annual Report 2023
153Ko te pae anamata, whakamaua
Climate change metrics and targets
Our detailed Climate Risk section is on pages 74–77.
Information on our emissions and SBTi target is available in the Our Environment section on page 44.
Our standalone Greenhouse Gas Inventory Report is available at: www.sparknz.co.nz/sustainability/environment
NZ CS1 Ref.Metric CategoryFY23 Notes
22(a)(i)Scope 1 emissions2,694 tCO
2
e
22(a)(ii)Scope 2 emissions
(location-based)
10,301 tCO
2
e
Scope 2 emissions
(market-based)
10,624 tCO
2
e
22(a)(iii)Scope 34,818 tCO
2
eSee our GHG Inventory Report
www.sparknz.co.nz/sustainability/
environment for detail on our scope 3
emissions reporting inclusions
22(b)GHG emissions intensity0.003 kgCO
2
e / $ revenueScope 1 and 2 emissions divided
by reported revenue
22(c)Transition risks – amount or
percentage of assets or business
activities vulnerable to transition
risks
0% – no material risks identified due
to transition risk
22(d)Physical risks – amount or
percentage of assets or business
activities vulnerable to physical risks
<2% of all sites identified in initial
analysis
Analysing site proximity to coastal
inundation risk zones, and factoring
site elevation, shows only a small
number of sites at greater than
moderate risk in 2050 under the RCP
8.5 scenario
22(e)Climate-related opportunities:
amount of percentage of assets or
business activities aligned with
climate related opportunities
100%: all telecommunications and
digital technologies present
opportunities for decarbonisation
22(f)Capital deployment: amount of
capital expenditure, financing, or
investment deployed toward
climate-related risks and
opportunities
N/A Due to the nature of our business the
majority of Spark’s capital
expenditure is to build capacity,
coverage, or resilience of our
infrastructure – all of which contribute
towards to both climate risk and
opportunity
22(g)Internal emissions price: price per
metric tonne of CO
2
e used
Escalating:
$51.68 (FY22)...
$138.42 (FY30)...
$186.02 (FY40)...
We have used an emissions price
aligned to the Climate Change
Commission’s demonstration pathway
in benchmarking emissions reduction
opportunities
22(h)Management remuneration linked
to climate-related risks and
opportunities
Included in Long-term Incentive
Scheme
See Leadership and Board
Remuneration Section Page 86
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Global Reporting Initiative (GRI) content index
Our disclosure against each material topic includes our management approach, considering the requirements of GRI 103:
Management Approach.
Note: CGS refers to Spark’s Annual Corporate Governance Statement, which may be found here:
www.sparknz.co.nz/about/governance
IndicatorDisclosurePage number/reference
GRI 102: General disclosures 2016
102-1Name of the organisation5
102-2Activities, brands, products and services8
102-3Location of headquarters159
102-4Location of operations8
102-5Ownership and legal form134, 141
102-6Markets served8
102-7Scale of the organisation8
102-8Information on employees and other workers59, 60
102-9Supply chain70, 71
102-10Significant changes to the organisation and its supply chain94
102-11Precautionary principle or approach43
102-12External initiatives153
102-13Membership of associations153
102-14Statement from senior decision-maker10
102-16Values, principles, standards and norms of behaviour6, 53, 68, CGS Principle 1
102-18Governance structure78–84, CGS Principles 2, 3 and 4
102-40List of stakeholder groups153
102-41Collective bargaining agreements<1% of Spark employees in FY23
102-42Identifying and selecting stakeholders153
102-43Approach to stakeholder engagement153
102-44Key topics and concerns raised152
102-45Entities included in the consolidated financial statements93, 134
102-46Defining report content and topic boundaries5, 151
102-47List of material topics151, 152
102-48Restatements of information44 (Emissions reporting)
102-49Changes in reportingN/A
102-50Reporting period5
102-51Date of most recent reportSpark’s FY23 Annual Report was
published on 18 August 2023
102-52Reporting cycleSpark reports annually. Our financial
year is 1 July – 30 June
102-53Contact point for questions relating to the report159
102-54Claims of reporting in accordance with GRI standards5, 151
102-55GRI content index155, 156
102-56External assurance136–139, GHG Inventory Report
GRI 200 Economic Standard Series
201-2Financial implications and other risks and opportunities due to climate
change
74–77
203-1Infrastructure investments and services supported32–41
206-1Legal actions for anti-competitive behaviour, anti-trust and monopoly
practices
31
207-1Approach to tax71
Spark New Zealand Annual Report 2023
155Ko te pae anamata, whakamaua
IndicatorDisclosurePage number/reference
GRI 300 Environmental Standard Series
305-1Direct (Scope 1) emissions45, GHG Inventory Report
305-2Energy indirect (Scope 2) emissions45, GHG Inventory Report
305-3Other indirect (Scope 3) emissions45, GHG Inventory Report
306-2Management of significant waste-related impacts47
306-3Waste generated47
308-1New suppliers that were screened using environmental criteria70, 71
308-2Negative environmental impacts in the supply chain and actions taken70, 71
GRI 400 Social Standard Series
401-1New employee hires and employee turnover59
401-2Benefits provided to full-time employees that are not provided to
temporary or part-time employees
145
401-3Parental leave61
403-1 (2018)Occupational health and safety management system55
403-9 (2018)Work-related injuries55
404-2Programmes for upgrading employee skills and transition assistance
programmes
50-61
405-1Diversity of governance bodies and employees59, 60, 81
405-2Ratio of basic salary and remuneration of women to men59
414-1New suppliers that were screened using social criteria70, 71
414-2Negative social impacts in the supply chain and actions taken70, 71
417-3Incidents of non-compliance concerning marketing communications31
418-1Substantiated complaints concerning breaches of customer privacy and
losses of customer data
31
156
Other information
For running header don't delete
Hello tomorrow
Glossary
3Gthird-generation mobile network as defined by the International Telecommunications Union.
4Gfourth-generation mobile network as defined by the International Telecommunications Union.
5Gfifth-generation mobile network as defined by the International Telecommunications Union.
5G standalonea network that has a 5G core as well as 5G on mobile towers rather than non-standalone 5G which uses a
combination of existing 4G LTE architecture with a 5G radio access network (RAN).
ADRan American Depositary Receipt.
ARMCthe Audit and Risk Management Committee.
ARPUaverage revenue per user.
ASXthe Australian Securities Exchange.
Burstableable to exceed maximum bandwidths for short periods
CCLComputer Concepts Limited.
CCNConverged Communications Network.
CompanySpark New Zealand Limited.
EBITDAIearnings before finance income and expense, income tax, depreciation, amortisation and net investment income.
eNPSemployee net promoter score, a measure of employee satisfaction.
GRIthe Global Reporting Initiative.
Groupthe Group in relation to these financial statements, which are prepared for Spark New Zealand Limited (the
Company) and its subsidiaries (together the Group).
HRCCthe Human Resources and Compensation Committee.
iNPSinteraction net promoter score, a measure of customer satisfaction.
IoTthe internet of things.
IFRSInternational Financial Reporting Standards.
LT Elong-term evolution.
LT Ilong-term incentive, which is part of the Spark Leadership Squad and CEO’s remuneration.
Millimeter wavesmillimeter waves, also known as extremely high frequency (EHF), is a band of radio frequencies that has
wavelengths between 1 mm and 10 mm. These frequencies can carry massive amounts of data at very high
speeds. That makes them ideal for accommodating the massive increase in data demanded from new 5G use
cases such as augmented/virtual reality, cloud gaming, video analytics and other cloud-compute capabilities.
Multi-access edge
computing (MAEC)
extends the capabilities of cloud computing by bringing it to the ‘edge’ of the network. While traditional cloud
computing occurs on remote servers that are situated far from the customer and device, MAEC allows this
processing to take place much closer to the end customer – meaning data has to travel a shorter distance,
decreasing latency, and the amount of data sent across the network can be reduced, reducing congestion and
delivering a better customer experience.
Network slicingallows the operator to ‘slice’ its network to support different types of services through each ‘slice’. Multiple slices
can be tuned independently to meet different quality of service parameters. For example, one slice may simply
need a standard speed connection to enable office email, another might be tuned to support very low data
Internet of Things devices, while another slice may need high reliability and ultra-low latency to support robotics.
NOMsthe Nominations and Corporate Governance Committee.
NPSNet Promoter Score.
NZ GAAPGenerally Accepted Accounting Practice in New Zealand.
NZ IASNew Zealand International Accounting Standard.
NZ IFRSNew Zealand Equivalent to International Financial Reporting Standards.
NZXNZX Limited.
OKRObjectives and Key Results.
Spark New Zealand Annual Report 2023
157Ko te pae anamata, whakamaua
OTNOptical Transport Network (OTN) – the high speed backbone of Spark’s network, stretching from the Far North to the
bottom of the South Island. The OTN uses light signals through optical fibre cables to carry all of Spark's data traffic
up and down the country through diverse paths, ensuring resilient, fast connectivity for all users.
PSTNPublic Switched Telephone Network.
QBRQuarterly Business Review.
SMESmall and Medium Enterprise.
Southern CrossSouthern Cross Cables group of companies, which consists of two sister companies, Southern Cross Cables
Holdings Limited and Pacific Carriage Holdings Limited and their subsidiaries.
STIShort-Term Incentive, which is part of Spark Leadership Team and CEO remuneration.
TRIFRTotal Recordable Incident Frequency Rate per million Spark employee hours worked.
TSRTotal Shareholder Return and is a measure of share price appreciation and dividends paid over a given period.
Glossary (continued)
158
Other information
For running header don't delete
Hello tomorrow
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
For more information
For inquiries about transactions, changes of address or dividend payments contact the share registries below.
New Zealand registry
Link Market Services Limited
Level 30, PwC Tower
15 Customs Street West
Auckland 1142
PO Box 91976
Auckland 1142
Ph +64 9 375 5998 (investor inquiries)
enquiries@linkmarketservices.com
www.linkmarketservices.co.nz
Australian registry
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Australia
Locked Bag A14
Sydney South NSW 1235
Australia
Ph +61 1300 554 484 (investor inquiries)
Fax +61 2 9287 0303
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
United States registry
Computershare Investor Services
P.O. Box 43078
Providence, RI02940-3078
United States of America
Ph +1 888 BNY ADRS (+1 888 269 2377) or
+1 201 680 6825 (from outside the
United States)
shrrelations@cpushareownerservices.com
www.mybnymdr.com
Spark New Zealand Limited
ARBN 050 611 277
For inquiries about Spark’s operating and financial performance contact:
investor-info@spark.co.nz
Investor Relations
Spark New Zealand Limited
Private Bag 92028
Auckland 1142
New Zealand
investors.sparknz.co.nz
insightcreative.co.nz
SPARK072
Spark New Zealand Annual Report 2023
159Ko te pae anamata, whakamaua
Contact details
Spark New Zealand Limited
Annual Report 2023
investors.sparknz.co.nz
ARBN 050 611 277
---
Results overview
$4,491m
20.7% increase vs. reported FY22
$1,722m
49.7% increase vs. reported FY22
$1,135m
NM vs. reported FY22
REPORTED REVENUE
(1)
REPORTED EBITDAI
(3)
REPORTED NPAT
$3,908m
5.1% increase vs. reported FY22
$1,193m
3.7% increase vs. reported FY22
$433m
5.6% increase vs. reported FY22
ADJUSTED REVENUE
(1)(2)
ADJUSTED EBITDAI
(2)(3)
ADJUSTED NPAT
(2)
$515m
25.6% increase vs. FY22
$489m
12.9% increase vs. FY22
27.0c
8% increase vs. FY22
CAPEX
(3)(4)
FREE CASH FLOWTOTAL FY23 DIVIDEND
Closing the last year of 3-year strategy with revenue, EBITDAI, free cash flow, and NPAT all in growth
PAGE
3
FY23 financial snapshot
(1)
Operating revenues and other gains
(2)
EBITDAI is adjustedfor the impact of the TowerCo gain on sale of $583m included in revenue and the Spark Sport provision of $54m included in operating expenses. Net EBITDAI impact of $529m. NPAT is further adjusted for the $5 million net gain on dilution of the
investment in the Connexa group, the tax effect of the Spark Sport provision of $14m and a credit to tax expense of $154m arising from the TowerCo transaction
(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 2.5
of Spark’s financial statements
(4)
Capex up 25.6% as TowerCo proceeds are invested
REVENUE GROWTH AND
COST CONTROL UNDERPINNED
EARNINGS AND DIVIDEND GROWTH
•TowerCo transaction and Spark Sport exit resulted in a net EBITDAI gain of $529 million, contributing to
reported revenues of $4,491 million, EBITDAI of $1,722 million, and NPAT of $1,135m
•Adjusted revenues increased 5.1% to $3,908 million, underpinned by mobile service revenue growth
of 9%
•Future markets of Health and IoT collectively contributed $122 million of revenue
•Delivered adjusted EBITDAI growth of 3.7% to $1,193 million, in line with guidance, with adjusted
NPAT up 5.6% to $433 million
•Generated free cash flow of $489 million, towards the top end of aspiration and largely funding the
dividend
•Completed 42% of on-market share buy-back, returning $146 million of TowerCo proceeds to
shareholders
•Declared H2 FY23 dividend of 13.5 cps and a total FY23 dividend of 27 cps – an increase of8.0% or 2
cents YoY, in line with guidance
•FY24 free cash flow aspiration of ~$490m-$530m, guiding to a highertotal FY24 dividend of 27.5cps
PAGE
4
FY23 results summary
Focussed execution delivered revenue, EBITDAI, and NPAT growth
SPARK
STRATEGY DELIVERY
BUILDS PLATFORM FOR
FUTURE GROWTH
•FY21-23 strategy delivered stronger fundamentals – higher customer and people engagement,
consistently growing brand strength, and top-quartile sustainability performance
•Maintained #1 position in mobile and broadband markets and achieved ~30% of broadband base
on wireless broadband
•5G investments maturing and will underpin future growth in consumer and B2B markets
•Effective portfolio management released capital to invest in the high-growth data centre market,
with further investment at existing Takanini campus
•Market leading data and AI capability, combined with simplified portfolio, delivered 17% annual
improvement in conversion and 9% efficiency gains
•Strong employee engagement at 70%
•Simpler, digital, and data-driven customer experiences improving customer iNPS score to +31 in
FY23, a growth of 9 points sinceFY20
•3-year TSR CAGR of 9.3%, ranking Spark at #4 against global peers
(1)
PAGE
5
FY21-23 strategy summary
(1)
See slide 31 in appendix
Completed FY21-23 strategy period delivering to guidance and with a strong platform for future growth
PAGE
6
$980m
9.0% increase vs. FY22
$626m
2.0% decrease vs. FY22
$436m
2.2% decrease vs. FY22
$122m
1% increase vs. FY22
MOBILE SERVICE
REVENUE
BROADBAND
REVENUE
CLOUD, SECURITY AND
SERVICE MANAGEMENT REVENUE
FUTURE MARKET
REVENUE
Service revenue growth driven by
strong connection growth, and the
return of roaming to 86% of
pre-Covid levels
30% of broadband base on wireless
broadband, achieving 3-year
strategic ambition
Cloud revenue decline driven by ongoing
mix shift between private and public cloud.
Private cloud revenues stable for three
consecutive halves
IoT revenue growth of 33% YoY,
underpinned by connectivity growth of
76% to 1.46 million, exceeding FY23
target of ~1.2 million
Launch of new ‘Team Up’ proposition
and price refresh implemented across
the portfolio in H2
Maintained broadly stable revenues and
connections for three consecutive halves,
in line with strategy
New managed hybrid cloud service,
CloudIQ, launched in July 2023
to drive incremental revenueand
improve cost base
Spark Health revenues impacted by
delays, and deferrals caused by
health sector reforms
Secured long-term rights to 5G
spectrum, 5G now in 77 locations,
Standalone trials complete and
network build underway
Broadband input costs continue to rise
with price increases passed through to
customers during the year
Lower service management revenues as
health sector digital transformation activity
normalises post-Covid. New Enterprise
Service Management product launched to
improve customer experience and drive
incremental revenue
Spark Sport exit completed
Key market performance
Core market of mobile a stand-out, with strong connection and service revenue growth
PAGE
7
CREATE A
SUSTAINABLE SPARK
ECONOMIC RECOVERY
ANDTRANSFORMATION
CHAMPION
DIGITAL EQUITY
Ongoing progress towards gender diversity targets and
ethnicity data sharing at83%. Spark receivedthe
Diversity and Inclusion Champion Award at theDeloitte
Top 200 Awards in November
Working alongside NZ Tech to promote the role of a
Technology Roadmap in the next national
Emissions Reduction Plan
Skinny Jump supporting 27k+ households in need to
access the digital world – with $6.3 million worth of
free data provided in FY23
Joint Audit Cooperation (JAC) members completed
98 supplier audits collectively in 2022. Spark annual
supplier audits in progress, with five to be completed
by end of 2023
Digital infrastructure investments progressing to plan,
with 5G in 77 locations at end FY23 and an additional
$24 million committed to Rural Connectivity Group
between 2023-2025
Spark Foundation partner Recycle A Device named
2023 NZ Hi-Tech AwardsBest Hi-Tech Solution
for the Public Good
Scope 1 and 2 emissions down 29.8% vs. FY22 to
13,318 tonnes CO
2
e, driven by a higher share of
renewables on the grid. Emissions on track against
SBTi target pathway
622 marae now digitally connected through the
Marae Digital Connectivity Programme
Spark placed in the top quartile of the
Worldwide Benchmarking Alliance’s
2023 Digital Inclusion Benchmark
Top-quartile sustainability benchmarking delivered through 3-year strategy
Continual improvement across environmental, social, and governance metrics
PAGE
8
FY23 indicators of success
Strategic PillarFocus AreaMeasureTarget 30 June 2023Status
World class capability
Customer experienceConsumer and small business iNPS+6 point liftNot Achieved
(1)
Data-driven insightsUplift in data-driven marketing campaign conversion15%
(2)
Exceeded
Smart automated networks5G roll out40-50 locationsExceeded
Growth mindsetsEmployee engagement
(3)
70%Achieved
Grow established
markets
WirelessMobile service revenue growth5-8%Exceeded
BroadbandPercentage of broadband base on wireless~30%Achieved
Cloud
Cloud, security and service management
revenue growth
2-5%Not Achieved
Accelerate future markets
Spark IoTNumber of connected IoT devices~1.2m connectionsExceeded
Spark HealthGrowth in Spark Health Digital Platform Revenues10-15%
(4)
Not Achieved
Lowest cost providerDeliver best costEBITDAI margin~31%Achieved
Build a sustainable future
Championing digital equitySkinny Jump connections+5kSolid Progress
Sustainable Spark
Reduction in scope 1 and 2 emissions year-on-year to hit
SBTi emissions reduction pathway
18.6% reductionExceeded
(1)
iNPS grew 2 points vs FY22. iNPS has grown 9 points vs. FY20
(2)
Spark consumer base
(3)
A new measure introduced in FY23
(4)
Excluding procurement and telco revenues
Key indicators largely on track, performance lift required in Cloud and Health, iNPS growing but lower than target
Strategy update
PAGE
10
We start FY24 from a position of competitive strength
With strong fundamentals, differentiation, and investment that will fuel long-term, high-quality returns
Strong
fundamentals
Data and AI a
unique advantage
in local market
Mobile
leading
the market
Data centres
and high-tech
investments to
grow margins
Disciplined
cost control
#1 in key markets,
consistent growth in
customer and people
engagement, brand,
sustainability
Competitive lead
on personalisation
driving higher
acquisition and
retention
Strong mobile service
revenue growth over
the last three years
Data centres,
converged tech,
health, and MATTR
to grow revenues
and margin
Strong track record of
adapting to changing
conditions and
securing best cost
Our purpose
We will empower the people and businesses creating Aotearoa’s tomorrow by:
Our FY24-26 focus
Our
enablers
Our commitment:
to stand together
for generations
to come
MATOMATO: we succeed together
TŪHONO: we connect
WHAKAMANA: we empower
MĀIA: we are bold
Āwhinatia ngā tāngata katoa o Aotearoa kia
matomato te tipu i te ao matihiko
NEW ZEALAND
TO HELPALL OF
WIN BIGIN A DIGITAL WORLD
Our values
Simple, data-driven
organisation
Sustainable
Spark
Economic
Transformation
Digital
Equity
Toitū Sustainability at Spark
Next evolution
technology
Innovation
culture
Enabling New Zealand Businesses to grow and become
more productive and sustainable through technology
GROW
High-tech Solutions
LEAD
SME and Business
Bringing New Zealanders the best digital-first
experiences, curated to their needs
OPTIMISE
Broadband
LEAD
Mobile
Te Korowai Tupu
Our
Māori Strategy
Our FY26
outcomes
Low / mid
singledigit CAGR
EBITDAI growth
>10%
Free cash
flow growth
+10 lift
Customer
engagement
Top decile
People
engagement
Top quartile
Sustainability
benchmarking
35%
19%
18%
7%
4%
17%
Broadband Connection Market Share
SparkOne2Degrees
TrustpowerContact EnergyRest of market
#1 in mobile market share by service revenue and total
connections
(2)
#1 in market share by connections and revenue
(2)
Mobile service revenue on track to
exceed $1bn next year
Higher wholesale access charges continue to put
pressure on retail margins in a competitive market
Tailwinds from 5G rollout enabling higher data use
cases and ongoing return of roaming
Remain focussed on maintaining base, stabilising
revenues, and creating owners' economics through
wireless broadbandwhich is now at 30% of the base
PAGE
12
Clear strategy to maintain leadership in key markets
Maintain mobile momentum, continue stabilising broadband, re-align cost base and product focus in cloud
(1)
Mobile service revenue market share does not add to 100% due to rounding
(2)
Market share estimates sourced from IDC as at 30 June 2023
MOBILEBROADBANDSME & BUSINESS
#1 in SME market for telecommunications, with a
growing presence in IT and the opportunity to scale
further into higher value solutions
Leading end-to-end IT services provider in business,
with digital infrastructure asset portfolio
complementing a comprehensive product
and service offering
Launch of new enterprise service management offering
in July 2023, with specialist practices established to
enhance customer access to technical expertise
#1 private cloud operator in New Zealand.
Launch of hybrid cloud offering, Cloud IQ, in July 2023
as cloud demand continues to grow. Government
customers comprise ~70% of private cloud revenues,
with the majority of these workloads likely to remain in
locally-owned data centres
Focus on simplification and re-aligning cost base
of B2B to changed margin profiles to improve
profitability in FY24
45%
35%
20%
1%
Mobile Service Revenue Market Share
(1)
SparkOne2DegreesMVNO
PAGE
13
MOBILEBROADBANDWHOLESALE
Partnership with Lynk Global announced in June.
Spark mobile customers can opt-in to a trial of
a text-only satellite-to-mobile service by the
end of 2023, with a full rollout envisaged by 2024
Partnership with ASX-listed Netlinkz announced in
May 2023, providing Spark business customers
with enterprise-grade Starlink Satellite broadband
Spark operates New Zealand’s largest
Earth Station in Warkworth
Will allow mobile customers to use phones in more
areas that aren’t easily reached by traditional
mobile coverage
A trial is currently underway with select
business customers, with a full rollout planned
for late-2023
Full suite of satellite services, with connections to
several major orbital positions. Dedicated satellite
design, planning, and management team delivering
best-in-market expertise
Satellite portfolio expansion will create new revenue opportunities
Satellite plays an important role in increasing resilience in Aotearoa and will help close coverage gaps over time
PAGE
14
MOBILE AND EDGEDATA CENTRESMATTR
$40-$60 million 5G Standalone investment
progressing to plan with network build
commenced, and multi-access edge compute use
cases underway.Targeting delivery of 5G
Standalone nationwide and 5G connectivity
to all towns with a population of >1,500
by the end of FY26
Takanini 10MW campus expansion completed in
August 2023and is 85% contracted and
100%committed. 1MW of capacity is under
construction at the Aotea campus and will complete
in FY24. Combined this will bring built data centre
capacityto22MW
MATTR continues to focus on global markets, with
customers across the US, Canada, Switzerland,
Australia, and New Zealand. Recently won a multi-
year contract with the NSW Government as
technology partner for its digital identity and
verifiable credentials programme
5G densification and Standalone rollout providing
greater coverage and capacity, increasing WBB
addressable market, and providing new
opportunities to monetise the network for
business customers
$250m-$300m of growth capex to be invested in
data centres, targeting RoI of 9-10%. Opportunity to
invest in further expansion at Takanini site, while
also investigating other locations
MATTR generates annuity revenues from platform
products via a SaaS model or licencing revenue for
software toolkits,with opportunities for
further growth
Strategic growth investments progressing to plan
Investments into high-tech solutions and data centres on track and will underpin new revenue streams
Spark Data Centres
SPARK
PAGE
16
Data centre market in New Zealand
New Zealand’s data centre market is in the early stage of rapid growth
•New Zealand’s data centre market is expected to rapidly expand over the next three to
five years
•Amazon, Microsoft, and Google have announced plans to deliver New Zealand data
centre ‘regions’ in Auckland over 2023-2025
•Hyperscale cloud providers typically have multiple (often three or more) separate data
centre sites within a 'region'. Globally, these tend to be a mix of ‘self-build' by the
hyperscaler, alongside leasing capacity from co-location providers like Spark
•Demand for data storage continues to grow as data scales. Generative AI will increase
processing capacity requirements
•Private cloud will continue to be required to manage many existing workloads which are
either incompatible with modern public cloud environments or require more stringent
data protection and sovereignty
•Hybrid cloud will grow as customers need toeffectively balance workloads across multiple
cloudenvironments
(1)
Based on public commitments and market information on future intentions
~85MW
~200MW
~300MW
2023202620272030
Auckland Data Centre Built Capacity (MW)
(1)
PAGE
16
SPARK
PAGE
17
Spark’s existing data centre capabilities
Leverage existing data centre business
New Zealand’s most extensivenetwork of
customer data centres across 16 sites with $24m
in data centre portfolio revenue. Existing land and
building assets are being leveraged to build out
additional capacity
Existing capabilities
Spark has extensive technical, engineering,
security, and infrastructure capabilities which are
leveraged to provide a high-quality data centre
service.We operate a large Security Operations
Centre providing 24/7 monitoring and response on
physical and cyber security
Connectivity is a key differentiator
Spark has the ability to provide international
(subsea), national, and metro fibre services
alongside data centre services. This enables
customers to have a single provider on a broader
end-to-end service, leveraging Spark's common
service, network, and operations teams and
reducing handoffs and network risk
Customer relationships
As a leader in cloud Spark has an advantage over
pure play data centre operators, with the ability to
create additional value for hyperscale and
international customers as a sales channel to
market. Spark can also provide data centre
customers with a holistic suite of IT and telco
capabilities alongside cloud services
Spark is well positioned to continue to grow its share of the New Zealand data centre market
PAGE
17
SPARK
PAGE
18
Sparkoperates the mostextensive network of data centres nationwide
Diversity of assets meet requirements of hyperscalers, Government, business and SME customers
HYPERSCALE CLOUDCARRIER HOTELMETROEDGE
Total site MW loadUp to 50MW2-10MW0.5-5MW<0.5MW
Typical customer profile
Hyperscale and other cloud /
international providers,
enterprise, Government
co-location
High-value interconnectand
Content Delivery Network,
enterprise and Government
co-location
Enterpriseand Government
co-location
Edge compute
Local co-location
Interconnect
Edge compute
Business model
Economics driven by scale,
and build and operational
efficiency
Premium pricing based on
location and interconnect
density and attractiveness
Smaller regional data centres
targeted primarily at local
customers, supports broader
Spark services
Small local data centres for
local presence and lowest
latency. Emerging Edge
opportunity
Locations
Auckland – Takanini Campus
Auckland – additional campus
(planned)
Auckland CBD – Aotea Campus
– Mayoral Drive and Airedale
Auckland x2 sites
Wellington x2 sites
Christchurch x4 sites
Hamilton
Tauranga
Nelson
Dunedin
Invercargill
SPARK
PAGE
19
PAGE
19
•Takanini 10MW campus expansion completed in August 2023and is
85% contracted and 100%committed. 1MW of capacity is under
construction at the Aotea campus and will complete in FY24.
Combined this will bring built data centre capacityto22MW
•Land is held at existing sitesfor an additional 19MWof
furtherdevelopment.Of this land, 5MW will be developed as the next
stage of construction at Takanini in FY24
•Capital deployed to the end FY23 is connected to investments that are
fully committed to customers. This revenue will begin to scale in FY24,
and will grow for several years until full billing
•Takanini construction completed on-budget and within ~20 months of
the first groundwork. The build is highly efficient, with free air-cooled
solution minimising electricity and water use(design PUE <1.2) with
flexibility to incorporate liquid cooling for higher density as required
•$250m-$300m of growth capex funded via TowerCo proceeds has
been earmarked for data centre investment over the next three years,
targeting a RoI of 9-10%. Investment decisions to proceed to build
further space will be driven by achieving acceptable returns,
andcustomer uptake
METRICDEFINITIONFY22FY23
FY24
Projection
Capacity builtTotal site load commissioned10MW11MW22MW
Capacity under construction
Total site load in design and
construction
12MW11MW5MW
Development pipelineLand held, concept for development19MW19MW14MW
Weighted Average Lease
Expiry
Represents customers in new
purpose-built data centres only
-16.5 years~16.5years
Rack utilisation
Contracted and reserved racks across
dedicated data centres and exchanges
87%84%Target88%
Target PUE
Target power usage efficiency for new
purpose-built data centres only
--<1.2
RevenueTotal data centre portfolio revenue$23m$24m~$35m
Capital expenditure
Capital investment in new purpose-
built data centres
$31m$114m~$80-$100m
(1)
(1)
Including land acquisition
Generating long-term annuity revenues with inflationary pricing protections and supportive tailwinds
Data centre investment will continue to scale in FY24
Financials
PAGE
21
Financials
REPORTED
FY22
$m
REPORTED
FY23
$m
CHANGEREPORTED
FY22
$m
ADJUSTED
FY23
$m
CHANGE
Operating revenues and other gains3,7204,49120.7%3,7203,9085.1%
Operating expenses(2,570)(2,769)(7.7%)(2,570)(2,715)(5.6%)
EBITDAI1,1501,72249.7%1,1501,1933.7%
Finance income263223.1%263223.1%
Finance expense(74)(99)(33.8%)(74)(99)(33.8%)
Depreciation and amortisation(520)(504)3.1%(520)(504)3.1%
Net investment income(1)1NM(1)(4)NM
Net earnings before tax expense5811,15298.3%5816186.4%
Tax expense(171)(17)90.1%(171)(185)(8.2%)
Net earnings after tax expense4101,135NM4104335.6%
Capital expenditure
(1)
41051525.6%41051525.6%
Free cash flow43348912.9%43348912.9%
EBITDAI margin30.9%38.3%7.4pp30.9%30.5%(0.4pp)
Effective tax rate29.4%1.5%(27.9pp)29.4%29.9%0.5pp
Capital expenditure to operating revenues and other gains11.0%11.5%0.5pp11.0%13.2%2.2pp
Basic Earnings per Share21.9c60.7c38.8c21.9c23.2c1.3c
Total Dividend per Share25.0c27.0c2c25.0c27.0c
2c
(1)
Excluding expenditure on mobile spectrum
PAGE
22
FY23 revenue
(1)
performance
Top line revenue growth underpinned by ongoing strength in mobile
•Ongoing growth in mobile service revenue, boosted by
connection growth, product innovation, and return of roaming
•Increase in other product revenue due to Entelar Group growth,
growth in MATTR, and new public safety network (Hourua)
revenues
•Higher software procurement, primarily in health sector
•Full year contribution from Connect 8 following 100% acquisition
•Future Markets revenue growth in IoT (33% YoY) driven by
connectivity growth
•Broadband revenue decline stabilising, with benefits of retail
price increase implemented in H1 flowing through
•Lower cloud, security, and service management revenue,
primarily due to lowerproject activity as we cycled the Covid-19
period that included a higher level of activity in the health sector
•Higher voice revenue decline as calling volumes across 0800 and
fixed to mobile normalise post-Covid. Future headwinds from
voice expected to moderate as it trends below ~5% of
totalrevenues
•Other gains includes sale of mobile network equipment and
other assets, and gains on lease modifications and terminations
(1)
Operating revenues and other gains
(2)
Future Markets: Spark Sport and IoT (Health revenues included in IT)
(2)
5834,491
Product
PAGE
23
FY23 operating cost performance
Higher costs primarily in support of revenue growth coupled with inflationary environment
•Increase in product costs mainly due togrowth in
procurement and higher mobile handset costs and
volumes
•Other product costs increase driven by full year impact of
Connect 8 cost base post-acquisition, and higher Spark
Sport costs
•Increase in labour costs driven by insourcing field services,
full year contribution of Connect 8, and investment in
high-tech growth businesses
•Other operating expenses increase driven by:
oIncreased accommodation costs due to corporate
site maintenance post-Covid restrictions;
oOperating charges related to Connexa leases; and
oHigher travel expense following the easing of travel
restrictions, albeit lower than pre-Covid travel levels
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24
Capital investment of $515m in line with guidance, TowerCo proceeds funding investment in future growth
FY23 capital investment
(1)
Capital expenditure
(1)
($m)FY22FY23
Maintenance capital expenditure
Cloud1519
Converged Communications Network2217
International cable construction and capacity purchases725
IT systems150116
Mobile network10098
Core sustain and resiliency5369
Other715
Total maintenance capital expenditure354359
Growth capital expenditure
5G acceleration2542
Data centres31114
Total growth capital expenditure56156
Total capital expenditure410515
Total capital expenditure to adjusted operating revenue
and other gains
11.0%13.2%
•Significant progress in 5G rollout, now in 77 locations
•Increase in core sustain and resiliency investment, supporting continuation of
core network expansion and further bolstering network resilience
•Higher international capacity purchases to meet demand for data with new SX
Next cable live, providing customers with greater access to global connectivity
•Growth capex of $156m in support of future revenue growth and long-term
returns:
oPhase 1 of investment in data centre expansion through site
enhancement and increased capacity at Mayoral Drive and expansion
of Takanini data centre completed
oInvestment in 5G Standalone and multi-access edge compute trials to
explore proof-of-concepts for new use cases in preparation for
nationwide rollout
o$101m of TowerCo proceeds allocated in FY23 with the remaining
$249m to be invested during FY24-FY26 in line with strategy
(1)
Excluding expenditure on mobile spectrum. Capital expenditure is a non-GAAP measure and is defined in note 2.5 of Spark’s financial statements
PAGE
25
Delivered free cash flow of $489m towards the top end of aspiration
FY23 free cash flow
•Free cash flow of $489m up $56m vs. FY22
•Favourable H2 free cash flow performance due to lower cash capex
•Growth in free cash flow supporting total FY23 dividend of 27 cps, an
increase of 2cps vs. FY22
•FY24 free cash flow driven by:
•EBITDAI growth of ~2%-6%; and
•Capital investment in line with plan
•FY24 free cash flow aspiration of ~$490m-$530msupporting a growing
dividend, with FY24 total dividend guidance increasing to 27.5 cps
(100% imputed)
1,722
489
(547)
(70)
(190)
(98)
(328)
400
800
1,200
1,600
2,000
EBITDAIOther Gains &
Provisions
Net InterestTaxLeasesCash CapexFree Cash Flow
FY23 Free Cash Flow Summary ($m)
(1)
(1)
Other gains and provisions of $547m predominantly related to the TowerCo gain on sale and outside of free cash flow
PAGE
26
Lower net debt reflecting proceeds from the To w e r C o transaction
Net debt
•Reported net debt at hedged rates of $1,039m. Decrease in net debt reflects the
receipt of To w e r C o proceeds offset by:
oHigher growth capex with $101m of To w e r C o proceeds invested into data centres
and acceleration of 5G Standalone and multi-access edge compu
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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.