Spark New Zealand Limited · NZX:SPK
Spark New Zealand — FY2015 Earnings Presentation
26 slides from Spark New Zealand's earnings presentation, 2015
Slide 1: FY15 Financial Results
FY15 Financial Results Simon Moutter Managing Director Jolie Hodson Chief Financial Officer sparknz.co.nz Spark New Zealand Annual Results 2015 Investor Presentation
Slide 2: FY15 Highlights
Spark New Zealand 2015 FY15 Highlights • Clear strategy with solid execution and a greater focus on customers leading to a return to EBITDA growth in a challenging market • Brands continuing to perform strongly with improvements in preference measures and Net Promoter Score (NPS) scores across all s
Slide 3: Results scorecard
Spark New Zealand 2015 Results scorecard Key financials Product revenue Market share and connections 30 June FY15 H2 FY15 H2 Change 2015 Mobile share 41% (1) 2% (2) Mobile (revenue) Revenue (2.9%) (3.2%) Revenue 4.4% 6.4% Growth Mobile Customers Growth 2,178k 8.6% Broadband share (connections) 46% (
Slide 4: Strategy shifting into next phase
Spark New Zealand 2015 Strategy shifting into next phase FY16 & beyond: Drive market revenue/margin growth with continuing FY14 & FY15: Stabilised improvement in unit costs: revenue/margin and reduced costs: • Invest in market-leading digital products • Reduced prices to compete and services • Refoc
Slide 5: Executional discipline maintained
Spark New Zealand 2015 Executional discipline maintained Announced Rural intention to re- Voice over Digital First Launched Naked Wireless price following fibre Programme VDSL and ADSL Broadband draft FPP launched started launched Naked Ultra Connect Fibre released to Mobile Expanded 8 JV market SRA
Slide 6: Brands on the rise
Spark New Zealand 2015 Brands on the rise • Decision to rebrand delivering uplift in brand preference measures across wider segments • Spark New Zealand rising in reputation indices • Net promoter scores (NPS) improved across all key areas – in HMB up 10 points for consumers and 13 points for busine
Slide 7: Re-engineering & Turnaround contributing
Spark New Zealand 2015 Re-engineering & Turnaround contributing Re-engineering delivering Turnaround delivered • Simplified customer systems (CRM and • 3 year programme executed in 2 years SingleView) • Performance management capability with • Re-usable building blocks and agile architecture owners’
Slide 8: Reported Profit & Loss
Spark New Zealand 2015 Reported Profit & Loss FY15 FY14 CHANGE Reported Results $M $M % Revenues 3,531 3,638 (2.9%) Operating expenses (1) 2,569 2,702 (4.9%) EBITDA from continuing operations 962 936 2.8% Depreciation & amortisation 453 451 0.4% Net finance expenses 27 31 (12.9%) Income tax expense
Slide 9: EBITDA waterfall
Spark New Zealand 2015 EBITDA waterfall Underlying operating EBITDA improving on solid operational performance Investing in Operating Non-Operating growth options • Underlying operating EBITDA improved on solid operational performance • Divestments deliver one- off gains but are mostly offset by low
Slide 10: Revenue waterfall
Spark New Zealand 2015 Revenue waterfall Revenue rate of decline slowing as fixed calling is offset by mobile and IT services growth REVENUES • $52m reduction due to FY14 vs FY15 primary service regulatory 3,750 (1.5%) changes (nil impact on 3,700 margin) 29 2 29 3,650 3,638 52 43 70 • Strong growth
Slide 11: Operating Expenses waterfall
Spark New Zealand 2015 Operating Expenses waterfall Productivity improvements funding growth • $52m reduction due to primary service regulatory (3.1%) changes (nil impact on margin) • Cost of sales declined as UBA prices fell • Labour efficiencies driven by H1 FY15 re-organisation offset by growth i
Slide 12: Home, Mobile & Business
Spark New Zealand 2015 Spark Home, Mobile & Business Excellent performance in market flowing to sustained revenue and EBITDA growth • Revenue and EBITDA growth, with FY15 CHANGE H2 FY15 CHANGE increasing momentum in H2 FY15 $M % $M % • Excellent performance in Mobile with revenue up 8.5% and service
Slide 13: Digital
Spark New Zealand 2015 Spark Digital Repositioning work completed, now focused on operational effectiveness and high-quality deal- flow to stabilise earnings in FY16 • Impact of repositioning, contract re- negotiations and market pressure FY15 CHANGE H2 FY15 CHANGE $M % $M % evident in FY15 result •
Slide 14: Ventures model creating options
Spark New Zealand 2015 Spark Ventures model creating options Built and now In market and In fast start-up • Spark Ventures returned to Spark generating phase model now proven core revenue • Lessons learnt along the way • Digital services design and agile development capability a real asset for the c
Slide 15: Capital Expenditure now at target levels
Spark New Zealand 2015 Capital Expenditure now at target levels • Targeting sustainable long term Capex of below $400m per annum • Over time capital investment will be rebalanced from IT Re-engineering to other strategic programmes that deliver the best data (1) network and digital services capabili
Slide 16: We said our FY15 performance should be measured by:
Spark New Zealand 2015 We said our FY15 performance should be measured by: Measure Progress A winning culture which is inspired by customers, performance driven and highly Delivered competitive Spark brands programme driving greater brand differentiation, leadership, cut through Delivered and prefer
Slide 17: Materially increasing shareholder returns
Spark New Zealand 2015 Materially increasing shareholder returns Principles • Remain committed to conservative capital structure and single ‘A Band’ Credit Rating from S&P • Preferred method of shareholder distributions is to sustainably grow ordinary dividends over time in line with earnings growth
Slide 18: Bold strategic plan strengthened for next phase
Spark New Zealand 2015 Bold strategic plan strengthened for next phase In May 2013 we set out a bold strategy to shift from a traditional fixed and mobile infrastructure company to a future-oriented, competitive provider of communication, entertainment and IT services delivered over our networks and
Slide 19: Digital First Programme established
Spark New Zealand 2015 Digital First Programme established Being world class at digital services will allow us to win with our customers, our people and our shareholders 1 2 Loyal customers Outperform the market and our competitors Deliver innovative, Customer Cost experience advantage Move first an
Slide 20: With a clear plan for each product category
Spark New Zealand 2015 With a clear plan for each product category Our approach within each key category Category Goal…. Whilst…. Through Fixed voice, data Optimise margin Holding market share at A customer inspired low-end and driving uptake approach, all-of-life provider and broadband of high-end
Slide 21: Aiming for modest revenue growth
Spark New Zealand 2015 Aiming for modest revenue growth Modest revenue share growth • Gains in Data (Broadband and Managed Data) • Gains in Mobile Fast-growth segments • On-demand video (Lightbox) • Smart Living (Morepork) • Big Data (Qrious) • Cloud and Data Centres (Revera) Selective M&A • Conside
Slide 22: Productivity improvements will continue
Spark New Zealand 2015 Productivity improvements will continue Driven by technology and digital self-service enabling fundamental business change • Investments in networks, Re-engineering and Turnaround have laid the foundation • Re-engineering and the Digital First Programme are a catalyst for ongo
Slide 23: FY16 Guidance
Spark New Zealand 2015 FY16 Guidance FY15 Actuals FY16 Guidance Reported EBITDA (1) $962m 0-3% growth Capex (excl spectrum) $418m around $380m DPS (2) 20 cps fully imputed Ordinary Div 22 cps (2) +Special Div 3 cps At least 75% imputed (1) EBITDA guidance is relative to FY15 continuing operations an
Slide 24: We've executed the first phase of our strategy
Spark New Zealand 2015 Two years ago, we set out our strategy to transform the company, in two clear phases: 1. FY14 & FY15: Stabilise revenue/margin and reduce costs 2. FY16 & beyond: Drive market revenue/margin growth with continuing improvement in unit costs We’ve executed the first phase of our
Slide 25: Disclaimer
Spark New Zealand 2015 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 management as well as on assumptions made by and information curre
Slide 26: Appendix 1: Regulated input charges
Spark New Zealand 2015 Appendix 1: Regulated input charges FY14 FY15 FY16 From 1 Dec 2014 From 1 Dec 2015 Prices UCLL $23.52 $23.52 $26.74 (1) UBA $21.46 $10.92 $11.15 (1) $44.98 $34.44 $37.89 (1) • Broadband plan prices • Benefited from lower UBA • Based on 2 July 2015 2nd Impact lowered and value