Spark New Zealand Limited · NZX:SPK
Spark New Zealand — H1 FY22 Earnings Presentation
26 slides from Spark New Zealand's earnings presentation, February 2022
Slide 1: H1 FY22 Results Summary
Spark New Zealand a ; H1 FY22 Results Summary _ i . ° Jolie Hodson, Chief Executive Officer i Stefan Knight, Finance Director gk >
Slide 2: Results overview
Results overview PAGE 2 SPARK
Slide 3: H1 FY22 Results Summary
H1 FY22 Results Summary • Strong first half performance with revenue, EBITDAI, and NPAT in growth. • Standout performance in mobile, with Endless plans and precision marketing delivering the highest connection growth in the market(1), and increasing consumer demand for data driving ARPU growth. • Su
Slide 4: H1 FY22 Financial Snapshot
H1 FY22 Financial Snapshot Focussed execution against 2023 strategy driving growth and strong operational and financial performance $1,890m $538m $179m REVENUE(1) EBITDAI(2) NPAT 5.2% increase vs. H1 FY21 7.6% increase vs. H1 FY21(3) 21.8% increase vs. H1 FY21(3) $218m $183m 12.5c CAPEX FREE CASH FL
Slide 5: H1 FY22 Established Market Performance
H1 FY22 Established Market Performance $441m $324m BROADBAND $224m CLOUD, SECURITY, & MOBILE SERVICE REVENUE REVENUE SERVICE MANAGEMENT 5.0% increase vs. H1 FY21 (3.9%) decrease vs. H1 FY21 3.2% increase vs. H1 FY21 #1 Mobile Service Revenue(1) #1 Broadband (1) #1 Hybrid Cloud(2) Successful launch o
Slide 6: Strategy update
Strategy update PAGE 6 SPARK
Slide 7: Strategic Update: World Class Capabilities and Culture
Strategic Update: World Class Capabilities and Culture Core capabilities fuelling growth in established and future markets while delivering clear customer, financial, and operational benefits FY23 Aspiration FY23 Aspiration FY23 Aspirations H1 FY22 Highlights Revenue(1) Cost efficiencies(1) Operatio
Slide 8: Strategic Update: Future Markets
Strategic Update: Future Markets Momentum building in support of long-term growth – on track for overall FY23 revenue aspirations • IoT revenue and connection growth: strong growth across metering, transport, emergency services, smart environments, and asset management, ending half with YoY connecti
Slide 9: Strategic Update: Sustainability
Strategic Update: Sustainability Environment • Following the Science-Based Target Initiative’s (SBTi) verification of Spark’s emissions reduction target, the reduction requirements have been embedded into Spark’s new electricity purchasing agreement • Published independently assured Greenhouse Gas I
Slide 10: FY22 indicators of success
FY22 indicators of success Strategic Pillar Focus Area Measure Target 30 June 2022 Status Customer experience Consumer and small business iNPS +6 point lift On Track Data driven insights Uplift in data driven marketing campaign conversion(1) 15% On Track World class capability Smart automated Accele
Slide 11: Infrastructure Assets – Portfolio Management
Infrastructure Assets – PAGE 11 Portfolio Management SPARK
Slide 12: Infrastructure asset portfolio update
Infrastructure asset portfolio update Investments progressing against three classes of infrastructure assets identified in FY21. Critical network investments that will support future growth in mobile, WBB, and cloud: • Accelerated 5G rollout: progressing to plan, with ~50% sites to be upgraded by en
Slide 13: Spark TowerCo – Strategic review update
Spark TowerCo – Strategic review update STRATEGIC REVIEW UPDATE • Spark plans to transfer its passive mobile tower assets into a separate subsidiary, Spark TowerCo • Spark’s active mobile assets drive competitiveness – including the core network and radio equipment. Passive mobile assets include the
Slide 14: Spark TowerCo – Business snapshot
Spark TowerCo – Business snapshot SPARK TOWERCO ASSET SCOPE SPARK TOWERCO ASSET STRUCTURE • Spark TowerCo will: o Manage a significant portfolio of critical infrastructure assets, and own ~1,500(1) mobile sites with a tenancy ratio of 1.07 the passive infrastructure associated with ~1,250 of these s
Slide 15: Summary
Summary Benefits of three-year strategy flowing through to better customer outcomes and market differentiation Strong momentum in established markets Future markets making a significant contribution to overall revenue growth Strategic infrastructure investments supporting future growth, while Spark
Slide 16: Financials
SPARK PAGE 16 Financials
Slide 17: H1 FY22 Financial Performance Summary
H1 FY22 Financial Performance Summary Revenue, EBTIDAI and NPAT in growth generating free cash flow to support sustainable dividend $94m $56m $38m $32m $70m 12.5c REVENUE OPEX EBITDAI NPAT FREE CASH FLOW(1) H1 FY22 GROWTH GROWTH GROWTH GROWTH GROWTH DIVIDEND 5.2% increase vs. H1 FY21 4.3% increase v
Slide 18: Financials
Financials H1 FY21(1) H1 FY22 CHANGE $m $m Operating revenues and other gains 1,796 1,890 5.2% Operating expenses (1,296) (1,352) 4.3% EBITDAI 500 538 7.6% Finance income 17 14 (17.6%) Finance expense (43) (37) 14.0% Depreciation and amortisation (262) (257) 1.9% Net investment income - (1) NM Net e
Slide 19: H1 FY22 Operational Performance Summary
H1 FY22 Operational Performance Summary Solid first half financial performance – tracking around the top half of FY22 guidance $1,890m $1,352m $538m REVENUE OPERATING EXPENSES EBITDAI 5.2% increase vs. H1 FY21(1) 4.3% increase vs. H1 FY21(1) 7.6% increase vs. H1 FY21(1) • Secured ~60% of total marke
Slide 20: H1 FY22 Capital investment and free cash flow
H1 FY22 Capital investment and free cash flow • Phasing of capital investment in line with prior year with 55% of spend incurred in H1 FY22 • Uplift in mobile RAN investment in support of accelerated 5G rollout • Increased investment in IT systems in support of: $218m • Spark ERP system replacement;
Slide 21: Net Debt
Net Debt Reported net debt up $77m, including long-term investments in SX Next and rural connectivity Movement in net debt during H1 FY22 ($m) 1,500 • Reported net debt to EBITDAI ratio of 1.2x(1) consistent with S&P A- credit rating (3) (1) 1,400 • Sufficient debt headroom to execute strategy and f
Slide 22: Guidance
Guidance(1) FY21 Actual(2) FY22 Guidance EBITDAI $1,119m $1,130m-$1,160m Expected to be around top half of range Capital expenditure(3) $349m ~$400m Total 25.0cps Total 25.0cps(4) Dividend per share (100% imputed) (100% imputed) PAGE 22 (1)Subject to no adverse change in operating outlook SPARK (2)A
Slide 23: Reporting Date Change: FY22 Results
REPORTING DATE CHANGE FY22 Results Wednesday 24 August 2022 PAGE 23 10.00am SPARK
Slide 24: Appendix: Cloud accounting standards changes
Appendix Cloud accounting standards changes PAGE 24 SPARK
Slide 25: Cloud Accounting Standards Changes
Cloud Accounting Standards Changes Implementation of the IFRS interpretations Committee (IFRIC) agenda decision During the six months ended 31 December 2021, Spark revised its accounting policy in relation to configuration and customisation costs incurred in implementing Software-as-a-Service (‘SaaS
Slide 26: 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