Spark New Zealand Limited · NZX:SPK
Spark New Zealand — FY2024 Earnings Presentation
27 slides from Spark New Zealand's earnings presentation, August 2024
Slide 1: FY24 Results Summary
“a Spark” hello tomorrow Spark New Zealand FY24 Results Summary Jolie Hodson, Chief Executive Officer Stefan Knight, Chief Financial Officer
Slide 2: FY24 financial snapshot
Spark New Zealand | Copyright © 2024 FY24 financial snapshot $3,861m $1,163m $342m 1.2% decrease vs. adjusted FY23 2.5% decrease vs. adjusted FY23 21.0% decrease vs. adjusted FY23 ADJUSTED REVENUE(1)(2) ADJUSTED EBITDAI(2)(3) ADJUSTED NPAT(2)(4) $518m $330m 14.0 cps 0.6% increase vs. FY23 32.5% decr
Slide 3: FY24 results summary
FY24 results summary Spark New Zealand | Copyright © 2024 Performance below aspiration, growth targeted in FY25 as SPK-26 Operate Programme accelerates FY24 growth offset by subdued demand in some markets, with cost interventions to be realised in FY25 • Mobile service revenues surpassed $1 billion
Slide 4: Telco market performance
Spark New Zealand | Copyright © 2024 Telco market performance Mobile growth sustained while consumer and business spending came under increasing pressure in second half $1,010m MOBILE SERVICE REVENUE $613m MARKET SHARE(1) 21% 1% 3.1% increase vs. FY23 2.1% decrease vs. FY23 MOBILE SERVICE REVENUE BR
Slide 5: Digital services market performance
Spark New Zealand | Copyright © 2024 Digital services market performance IT services impacted by economic slowdown, while data centres and high-tech revenues grew $692m $37m $79m 1.6% decrease vs. FY23 54.2% Increase vs. FY23 21.5% increase vs. FY23 TOTAL IT REVENUE DATA CENTRES REVENUE HIGH-TECH RE
Slide 6: Toitū sustainability performance
Spark New Zealand | Copyright © 2024 Toitū sustainability performance ESG practices continue to mature, maintaining inclusion in the Dow Jones Sustainability Australia Index (DJSI) ECONOMIC DIGITAL SUSTAINABLE TRANSFORMATION EQUITY SPARK Tracking 18.6% above SBTi(1) emissions reduction 5G in 103 loc
Slide 7: FY24 indicators of success
Spark New Zealand | Copyright © 2024 FY24 indicators of success Measure Target 30 June 2024 Status Mobile service revenue growth ~5% Solid Progress Additional sites that are 5G capable +180-200 sites Solid Progress Wireless broadband connections +10k-15k Not Achieved IT and procurement revenue growt
Slide 8: SPK-26 Strategy Update
SPK-26 Strategy Update
Slide 9: Dual focus on resilience and growth through SPK-26
Dual focus on resilience and growth through SPK-26 Spark New Zealand | Copyright © 2024 Long-term strategy enduring, with near-term growth enabled by mobile and cost programme • FY25 mobile market growth predicted to be ~3%(1), fuelled by ongoing demand for data • Spark focus on dual brand strategy,
Slide 10: New Zealand data centre market set for rapid expansion
Spark New Zealand | Copyright © 2024 New Zealand data centre market set for rapid expansion Growth drivers and return profile make data centres an attractive long-term investment for shareholders • New Zealand data centre demand is growing rapidly • Cloud migration still growing and driving uptake o
Slide 11: Spark data centre development pipeline has grown to 118MW
Spark New Zealand | Copyright © 2024 Spark data centre development pipeline has grown to 118MW Built capacity at 88% contracted utilisation, potential to scale business significantly over next 5-7 years FACILITY STATUS SITE CAPACITY (MW) DATA CENTRE SITE CAPACITY (MW) Auckland – Takanini Campus Buil
Slide 12: Three strategic Auckland locations deliver compelling investment portfolio
Three strategic Auckland locations deliver compelling investment portfolio Spark New Zealand | Copyright © 2024 FY25 data centre investment of ~$70m-$90m to fund expansion, as future capital funding is secured Takanini Data Centre North Shore Data Centre Aotea (CBD) Data Centre Overview • 12MW site,
Slide 13: SPK-26 Operate Programme update
Spark New Zealand | Copyright © 2024 SPK-26 Operate Programme update Significant cost reduction focus continues in FY25 • Following H1 labour cost growth, operating model redesign held full year labour costs broadly flat at $512m • FY25 targeting net labour cost reduction of ~$50m through Enterprise
Slide 14: Accelerating AI deployment at scale
Spark New Zealand | Copyright © 2024 Accelerating AI deployment at scale Expanding use of AI through Generative AI deployment to support focus on customer experience and efficiency • Acceleration of Generative AI capabilities FUNCTIONALITY DESCRIPTION APPLICABILITY STATUS enables use cases with wide
Slide 15: Financials
Financials
Slide 16: Financials
Spark New Zealand | Copyright © 2024 Financials REPORTED REPORTED CHANGE ADJUSTED ADJUSTED CHANGE FY23 FY24 FY23 FY24 $m $m $m $m Operating revenues and other gains 4,491 3,861 (14.0%) 3,908 3,861 (1.2%) Operating expenses (2,769) (2,698) (2.6%) (2,715) (2,698) (0.6%) EBITDAI 1,722 1,163 (32.5%) 1,1
Slide 17: Revenue and opex performance summary
Revenue and opex performance summary Spark New Zealand | Copyright © 2024 Revenue down, while lower product and labour costs mostly offset by severance costs and inflationary pressures $3,861m $2,698m 1.2% decrease vs. adjusted FY23 0.6% decrease vs. adjusted FY23 ADJUSTED REVENUE ADJUSTED OPERATING
Slide 18: Capital investment
Spark New Zealand | Copyright © 2024 Capital investment(1) Investing in a secure and resilient network and digital infrastructure that underpins growth Capacity for resilience and growth • 98%+ mobile population coverage • 28% increase in mobile network capacity • 5G Standalone (SA) core build and s
Slide 19: Free cash flow and net debt
Free cash flow and net debt Spark New Zealand | Copyright © 2024 Free cash flow impacted by lower EBITDAI and higher non-cash earnings, with net debt exceeding 1.7x in the short term Movement in net debt during FY24 ($m) • ~$0.5bn lower opening net debt reflecting FY23 receipt of TowerCo proceeds, w
Slide 20: Capital Management Framework
Capital Management Framework Spark New Zealand | Copyright © 2024 Framework informs FY25 funding of dividend and capital investments, while maintaining an appropriate investment grade credit rating Strategic NPV ROI > Spark’s hurdle Long run capex to FY25 Approach Objectives #1 #2 #3 #4 alignment po
Slide 21: Outlook
Outlook
Slide 22: FY25 performance outlook
FY25 performance outlook(1) Spark New Zealand | Copyright © 2024 Targeting return to topline revenue growth; significant cost reductions and reduced capital investment • Targeting mobile service revenue growth of ~3% driven by ongoing demand for data, connection growth, and annual price reviews • Ta
Slide 23: FY25 indicators of success
Spark New Zealand | Copyright © 2024 FY25 indicators of success Measure Target 30 June 2025 Mobile service revenue growth ~3% Data centre revenue growth ~15% High-tech revenue growth ~20%-25% SPK-26 Operate Programme: ~$50m Net labour reduction ~$30m Net opex reductions Customer iNPS +3 points Lift
Slide 24: Guidance
Spark New Zealand | Copyright © 2024 Guidance(1) FY24 Actual FY25 Guidance EBITDAI $1,163m $1,165m-$1,220m Capital expenditure(2) $518m ~$460m-$480m Total 27.5 cps(3) Total 27.5 cps Dividend per share (100% imputed) (75% imputed) PAGE 24 (1) Subject to no material adverse change in operating outlook
Slide 25: Disclaimer
Spark New Zealand | Copyright © 2024 Disclaimer This announcement may include forward-looking statements regarding future events and the future financial performance of Spark New Zealand. Such forward-looking statements are based on the beliefs of and assumptions made by management along with inform
Slide 26: Appendix
Appendix
Slide 27: FY24 net debt metrics
Spark New Zealand | Copyright © 2024 FY24 net debt metrics FY23 FY24 Net Debt ($m) ($m) Net debt at hedged rates $1,039 $1,636 Net debt at hedged rates including lease liabilities $1,817 $2,377 Debt Ratios Borrowing costs (annualised) 5.5% 6.1% Weighted average debt maturity (years) 3.9 years 3.7 ye