Spark New Zealand Limited · NZX:SPK
Spark New Zealand — H1 FY21 Earnings Presentation
21 slides from Spark New Zealand's earnings presentation, February 2021
Slide 1: Spark New Zealand H1 FY21 Results Summary
Spark New Zealand H1 FY21 Results Summary Jolie Hodson, Chief Executive Officer Stefan Knight, Finance Director
Slide 2: Results overview
Results overview
Slide 3: H1 FY21 snapshot
H1 FY21 snapshot $1,796m $502m $148m REVENUE(1) EBITDAI(2) NPAT (1.5%) decrease from H1 FY20 0.4% increase from H1 FY20 (11.4%) decrease from H1 FY20 12.5c $113m $229m H1 FY21 DIVIDEND FREE CASH FLOW(4) CLOUD REVENUE(5) Total FY21 Dividend Guidance 126% increase from H1 FY20 4.6% increase from H1 FY
Slide 4: First half operating conditions
First half operating conditions New Zealand’s economy recovering sooner than expected, however the recent Auckland lockdown demonstrates uncertainty remains. Early indications of lower billing and collection risk – however, Government stimulus may continue to mask the full extent of the impact.
Slide 5: H1 FY21 Established Market Performance
H1 FY21 Established Market Performance WIRELESS CLOUD MOBILE BROADBAND CLOUD, SECURITY AND SERVICE MANEMENT Mobile service revenue market share(1) at 40.4%, up 0.2pp from H1 FY20 driven by pay monthly connection 23% of base on wireless – 165k Cloud, security and service management growth of 68k YoY
Slide 6: Strategic Update: World Class Capabilities and Culture
Strategic Update: World Class Capabilities and Culture Building the foundation to ignite revenue momentum as market conditions improve • Simplification progressing at pace – over 100 legacy plans retired in the half SIMPLE, INTUITIVE • 18% YoY reduction in total customer care interactions driven by
Slide 7: Strategic Update: Future Markets
Strategic Update: Future Markets • IoT connection growth: 65% YoY demonstrating strong demand for service offerings • Growing awareness: Connecting NZ to the things that matter national advertising campaign launched IoT(1) • Sector product development: water metering devices and platform launched •
Slide 8: Opportunities to grow the value of Infrastructure assets
Opportunities to grow the value of Infrastructure assets Increased interest in quality infrastructure assets. SPARK INFRASTRUCTURE ASSETS Spark has a significant infrastructure asset portfolio. We continue to review investment and partnership opportunities that make commercial sense and 1,500
Slide 9: FY21 indicators of success
FY21 indicators of success Strategic Pillar Focus Area Measure Target 30 June 2021 Status Customer Consumer and small business iNPS 8 point lift Improvement needed(1) Experience 15% efficiency gain in Data driven insights 80% of customer base(2) in household view(3) enabling On Track marketing spend
Slide 10: Financials
Financials
Slide 11: Financial summary
Financial summary Disciplined cost management delivering stable EBITDAI despite ongoing impacts of COVID-19 Top line revenue of $1,796m, $28m or 1.5% down on prior year due to: ($28m) $30m • Mobile service revenue decline due to loss of high-margin roaming revenue; and (1.5%) 2.3% • Higher rate of v
Slide 12: Financials
Financials H1 FY20 H1 FY21 CHANGE $m $m Operating revenues and other gains 1,824 1,796 (1.5%) Operating expenses (1,324) (1,294) (2.3%) EBITDAI 500 502 0.4% Finance income 18 17 (5.6%) Finance expense (46) (43) (6.5%) Depreciation and amortisation (234) (263) (12.4%) Net investment income (1) - 100%
Slide 13: Revenue
Revenue H1 FY21 revenue down 1.5% due to COVID-19 impacts and one-off provision H1 FY21 revenue impacts include: Revenue H1 FY20 vs H1 FY21 ($m) (1.5%) • Higher voice revenue decline of 20.6% due to non-recurring provision of $17m 1,830 to refund historical wire maintenance charges (underlying decli
Slide 14: Operating expenses
Operating expenses Operating expenses down 2.3% with targeted cost out programme offsetting revenue impacts Expenses H1 FY20 vs H1 FY21 ($m) (2.3%) 1,330 • $68m of gross cost-out delivered in H1 across product, other operating (6) expenses and labour. 1,320 Includes $44m (12) of cost out • Reduction
Slide 15: EBITDAI
EBITDAI Maintained EBITDAI through strong operational and cost disciplines despite impacts of COVID-19 EBITDAI H1 FY20 vs H1 FY21 ($m) • EBITDAI maintained through early intervention around cost 540 during COVID-19 lockdowns and then capitalising on improving market conditions to ignite revenue mome
Slide 16: Capital investment
Capital investment $55m reduction in spend on prior year, consistent with targeted reduction in full-year capital envelope from ~$370m to ~$350m excluding spectrum investment of $50m H1 H1 • Strong focus on more actively managing phasing of capital Capital expenditure ($m) FY20 FY21 expenditure over
Slide 17: Net debt
Net debt Total net debt of $1,400m, up $51m YoY. Net debt to EBITDAI ratio within Spark’s internal threshold of 1.4x Movement in net debt during FY21 ($m) 1,450 • Reported net debt to EBITDAI ratio of 1.35x(1) consistent 4 (8) 1 with S&P A- credit rating. 1,400 • Net debt expected to reduce during H
Slide 18: Free cash flow
Free cash flow Free cash flow of $113m, up $63m YoY, due to active management of working capital and higher cash conversation rate of 102% H1 FY21 free cash flow $113m $502m $192m $42m growth driven by: WORKING CAPITAL FREE CASH FLOW(1) EBITDAI CAPEX 126% increase from H1 FY20 0.4% increase from H1
Slide 19: Guidance
Guidance(1) FY20 Actual Previous FY21 FY21 Spectrum Change to FY21 Guidance Renewals(2) Guidance EBITDAI $1,113m $1,090m to $1,130m - $1,100m to $1,130m Capital - expenditure $374m ~$350m $50m Ordinary 25.0cps H1 FY20 Ordinary 23-25cps Ordinary 25.0cps(3) Dividend per share (75% imputed) ( 100% impu
Slide 20: Save the date: Managed Services Presentation
SAVE THE DATE Managed Services Presentation Wednesday 24 March 2021 10.00am
Slide 21: 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