Spark New Zealand Limited · NZX:SPK
Spark New Zealand — Spark New Zealand Ltd Ord — H1 FY23 Earnings Presentation
24 slides from Spark New Zealand's earnings presentation, Feb 21, 2023
Slide 1: Spark New Zealand H1 FY23 Results Summary
Spark= Spark New Zealand H1 FY23 Results Summary Jolie Hodson, Chief Executive Officer Stefan Knight, Finance Director
Slide 2: Results overview
Results overview PAGE 2 SPARK
Slide 3: H1 FY23 financial snapshot
H1 FY23 financial snapshot Reported revenue and earnings growth driven by TowerCo sale, with a challenging operating environment impacting adjusted performance $2,534m $1,042m $837m 34.1% increase vs. reported H1 FY22 93.7% increase vs. reported H1 FY22 NM vs. reported H1 FY22 REPORTED REVENUE(1) RE
Slide 4: Results summary
Results summary Effective portfolio management enabling shareholder returns in tough economic environment • Strategic divestment of a majority stake in Spark’s passive mobile infrastructure assets resulted in reported revenue, EBITDAI, and NPAT growth • TowerCo transaction delivered proceeds of $911
Slide 5: Established market performance
Established market performance Standout performance in mobile, while competitive pressures squeezed margins in broadband and cloud $480m $313m $214m 8.8% increase vs. H1 FY22 (3.4%) decrease vs. H1 FY22 (4.5%) decrease vs. H1 FY22 MOBILE SERVICE BROADBAND CLOUD, SECURITY AND REVENUE REVENUE SERVICE
Slide 6: H1 FY23 future market performance
H1 FY23 future market performance Strategic decision to exit sports streaming market to enable more focussed future growth investment ahead • Achieved milestone of one million connected devices, with connections up 39% to 1.2 million • Revenue up 21% YoY driven by continued strong connectivity growt
Slide 7: Core capabilities laying foundations for next phase of strategy
Core capabilities laying foundations for next phase of strategy Continued to build differentiation in the market through capability-led strategy SIMPLE, INTUITIVE • Simplification continues with a further 81,000 customer mobile and broadband lines migrated to new plans CUSTOMER • ‘Team Up’ mobile pr
Slide 8: Continual ESG improvements underpinning sustainable growth
Continual ESG improvements underpinning sustainable growth Spark now placed in top quartile of S&P Corporate Sustainability Assessment benchmark • Ongoing progress towards gender diversity targets • Provisional scope 1 and 2 emissions down ~35% vs H1 FY22 to 7,500 tonnes CO2e, driven by higher share
Slide 9: FY23 indicators of success
FY23 indicators of success Key indicators largely on track, with performance lift required in cloud and health Strategic Pillar Focus Area Measure Target 30 June 2023 Status Customer experience Consumer and small business iNPS +6 point lift On Track Data driven insights Uplift in data-driven marketi
Slide 10: Financials
SPARK PAGE 10 Financials
Slide 11: H1 FY23 reported financial performance summary
H1 FY23 reported financial performance summary Reported financials include significant impacts from TowerCo sale and Spark Sport TVNZ content partnership agreement $2,534m REPORTED REVENUE • Reported revenue includes $584m gain on sale as a result of divestment of majority stake in passive mobile in
Slide 12: H1 FY23 adjusted financial performance summary
H1 FY23 adjusted financial performance summary(1) Adjusted results reflect challenging operating conditions and uncertain economic environment $1,950m ADJUSTED REVENUE Revenue growth driven by: • Outstanding performance in mobile Up $60m or 3.2% vs. GROWTH(2) • Growth in procurement related software
Slide 13: Financials
Financials REPORTED REPORTED CHANGE REPORTED ADJUSTED CHANGE H1 FY22 H1 FY23 H1 FY22 H1 FY23 $m $m $m $m Operating revenues and other gains 1,890 2,534 34.1% 1,890 1,950 3.2% Operating expenses (1,352) (1,492) (10.4%) (1,352) (1,440) (6.5%) EBITDAI 538 1,042 93.7% 538 510 (5.2%) Finance income 14 16
Slide 14: H1 FY23 operational performance summary
H1 FY23 operational performance summary Adjusted revenue increase driven by standout performance in mobile • Strong performance in mobile boosted by a $20m increase in roaming revenues in the half(3) • Procurement growth driven by strong software sales, particularly in health • Increase in other ope
Slide 15: Second half performance outlook
Second half performance outlook Remain committed to delivering FY23 EBITDAI guidance of $1,185m-$1,225m (1), now expected to be lower in the range Spark’s seasonal weighting of earnings to the second half combined with mobile roaming tailwinds, further stabilisation in broadband, and continued cost
Slide 16: H1 FY23 capital investment
H1 FY23 capital investment FY23 capital investment guidance updated with an additional ~$90-$110m capital investment committed in H2 FY23 funded by TowerCo proceeds Capital expenditure ($m) H1 FY22 H1 FY23 • H1 FY23 capital investment of $250m(1) up $32m vs. H1 FY22 Cloud 7 11 • Upweight of first ha
Slide 17: H1 FY23 free cash flow
H1 FY23 free cash flow Delivered free cash flow of $115m with cash conversion of 102% • Free cash flow of $115m down $49m vs. H1 FY22 • H1 FY23 free cash flow impacted by: H1 FY23 Free Cash Flow Summary ($m) 1,200 • $28m lower EBITDAI 1,042 1,000 • $27m higher tax payments due to timing (with a lowe
Slide 18: Net debt
Net debt Reported net debt down $724m, reflecting repayment of short-term debt following receipt of TowerCo proceeds • Reported net debt to EBITDAI ratio of 0.66x(1) consistent with an Movement in net debt during H1 FY23 ($m) S&P A- credit rating 1,800 2 1,600 • Spark’s internal capital management p
Slide 19: Guidance
Guidance(1) FY22 Actual FY23 Guidance Changes to previous FY23 Guidance $1,185m-$1,225m Expect to be lower in the range EBITDAI $1,150m (excludes net gain on sale of $584m for TowerCo - transaction and Spark Sport provision of $52m) Capital expenditure(2) $410m ~$410m ~$520m(3) Total 25.0cps Total 2
Slide 20: Summary
Summary In final six months of three-year strategy, and on track to deliver FY23 ambitions Delivered consistent financial performance over the last three-years despite challenging operating conditions including Covid, rapidly rising inflation, and ongoing macro-economic uncertainty Investment in wor
Slide 21: Appendix
SPARK PAGE 21 Appendix
Slide 22: FY23 Connexa P&L impact summary
FY23 Connexa P&L impact summary Following completion of the Connexa divestment - an updated summary of the expected P&L financial impacts is below Previous FY22 Results Market Release There are two key changes to the disclosures previously made as part FY23 FY24 of Spark’s FY22 results: $m $m Other
Slide 23: FY23 Connexa statement of financial position impact summary
FY23 Connexa statement of financial position impact summary The significant balances included within the statement of financial position as at 31 December 2022 as a result of the Connexa transaction were as follows: 31 December 2022 UNAUDITIED $M Description of the balance relating to the Connexa tr
Slide 24: Disclaimer
Disclaimer This announcement may include forward-looking statements regarding future events and the future financial performance of Spark New Zealand. Such forward-looking statements are based on the beliefs of and assumptions made by management along with information currently available at the time
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