Spark New Zealand Limited · NZX:SPK
Spark New Zealand — FY2021 Earnings Presentation
27 slides from Spark New Zealand's earnings presentation
Slide 1: Summary
ummary Jolie Hodson, Chief Executive Officer Stefan Knight, Finance Director
Slide 2: Results overview
Results overview PAGE 2 SPARK
Slide 3: FY21 Operating Conditions and Performance
FY21 Operating Conditions and Performance • Stronger than expected New Zealand economic recovery, with low unemployment and GDP back in growth. • Closed international borders and the loss of roaming revenue resulted in top-line revenue decline. • Strong underlying revenue performance in mobile and c
Slide 4: FY21 Financial Snapshot
FY21 Financial Snapshot Resilient revenues and disciplined cost reduction delivered EBITDAI growth towards the top end of guidance. $3,593m $1,124m $384m REVENUE(1) EBITDAI(2) NPAT(3) (0.8%) decrease vs. FY20 1.0% increase vs. FY20 (8.6%) decrease vs. FY20 $354m $433m 25.0c CAPEX FREE CASH FLOW(4) T
Slide 5: Strategy update
Strategy update PAGE 5 SPARK
Slide 6: FY21 Established Market Performance
FY21 Established Market Performance $852m $670m BROADBAND $443m CLOUD, SECURITY, & MOBILE SERVICE REVENUE REVENUE SERVICE MANAGEMENT 0.5% increase vs. FY20 (1.5%) decrease vs. FY20 5.5% increase vs. FY20 Leading Mobile Service Revenue(1) #1 Broadband (1) #1 Hybrid Cloud(2) Strong momentum in service
Slide 7: Strategic Update: World Class Capabilities and Culture
Strategic Update: World Class Capabilities and Culture Strong progress across core capabilities supporting ongoing transition to digital services future • 600k unique MySpark App users completing ~3.6m interactions per month – supporting a 32% increase in digital sale and change customer journeys. S
Slide 8: Infrastructure Review
Infrastructure Review PAGE 8 SPARK
Slide 9: Infrastructure Review Recap
Infrastructure Review Recap Overview In February we announced a review of our infrastructure assets, with the aim of driving greater capital efficiency, increased resilience, and better experiences for customers. Spark has a significant infrastructure asset portfolio, and we have seen an increased i
Slide 10: Clear approach to the assets in each class
Clear approach to the assets in each class CLASS 1 CLASS 2 CLASS 3 INVEST OPTIMISE SHARED OWNERSHIP & GROW INVESTMENT MODELS IMPORTANT FOR ASSETS THAT ARE COMPETITIVE ADVANTAGE IMPORTANT FOR NETWORK ASSETS THAT CAN BE AND RESILIENCE RESILIENCE SHARED • Active mobile • Regional & local network • Pass
Slide 11: Class 1: Invest & Grow
Class 1: Invest & Grow CLASS 1 RATIONALE & OPPORTUNITY Retain control of assets that drive competitive advantage, accelerate smart automated network objectives, and support innovation and emerging INVEST technologies & GROW • Active mobile when combined with Spark’s spectrum holdings currently drive
Slide 12: Class 1: Invest & Grow
Class 1: Invest & Grow CLASS 1 CRITICAL NETWORK EXCHANGE & DATACENTRE OPPORTUNITY Leverage growth and changing dynamics of datacentre market through substantial investment in datacentre capacity and multi-access edge compute INVEST • Investing in a material upgrade of critical exchange at Mayoral Dr
Slide 13: Class 2: Optimise Investment
Class 2: Optimise Investment CLASS 2 RATIONALE Focus on optimisation through efficient operation and investment while right-sizing the portfolio OPTIMISE • Regional and local network exchange portfolio provides a combination of resilience and housing for legacy network equipment; and is split across
Slide 14: Class 3: Shared Ownership Models
Class 3: Shared Ownership Models CLASS 3 RATIONALE & OPPORTUNITY Maximising the value of passive infrastructure assets through efficiency, increasing asset utilisation, and exploring shared ownership models SHARED OWNERSHIP Passive mobile towers are not considered a driver of competitive advantage.
Slide 15: Strategic Update: Future Markets
Strategic Update: Future Markets Building foundations in future markets in support of long term growth • IoT connection growth underpinned by Spark’s IoT networks which cover ~99% of the population(2): connection growth of 83% vs. FY20, with over 450k devices connected across a range of industries i
Slide 16: Strategic Update: Sustainability
Strategic Update: Sustainability Significant progress establishing strong sustainability foundations across Spark: • Launched new Sustainability Framework to the market and operationalised it into the business. • Grew Skinny Jump connections by 5.6k – a 58% increase vs. FY20 and surpassing 15k conne
Slide 17: FY21 Indicators of Success
FY21 Indicators of Success Strategic Pillar Focus Area Measure Target 30 June 2021 Status Customer Experience Consumer and small business iNPS 8 point lift Not achieved(1) 15% efficiency gain in Data driven insights 80% of customer base(2) in household view(3) enabling Achieved World Class Capabilit
Slide 18: FY21 Guidance Delivered
FY21 Guidance Delivered FY20 Actual FY21 Guidance FY21 Actuals EBITDAI $1,113m $1,100m to $1,130m $1,124m Capital expenditure $354m $374m ~$350m FY21 Spectrum Renewals(1) - $50m $51m Dividend per share 25.0cps 25.0cps 25.0cps(2) (H1 75% imputed, H2 100% imputed) (100% imputed) (100% imputed) PAGE 18
Slide 19: Financials
SPARK PAGE 19 Financials
Slide 20: FY21 Financial Performance Summary
FY21 Financial Performance Summary Strong momentum in key markets and disciplined cost reduction resulting in all FY21 guidance metrics met ($30m) $41m $11m ($36m) ($5m) 25.0c REVENUE OPEX EBITDAI NPAT(1) FREE CASH FLOW TOTAL FY21 MOVEMENT MOVEMENT MOVEMENT MOVEMENT MOVEMENT DIVIDEND (0.8%) decrease
Slide 21: Financials
Financials FY20(1) FY21 CHANGE $m $m Operating revenues and other gains 3,623 3,593 (0.8%) Operating expenses (2,510) (2,469) (1.6%) EBITDAI 1,113 1,124 1.0% Finance income 36 34 (5.6%) Finance expense (94) (81) (13.8%) Depreciation and amortisation (488) (523) (7.2%) Net investment income 1 (1) NM
Slide 22: FY21 Operational Performance Summary
FY21 Operational Performance Summary Ambition to return to revenue growth in FY22 by maintaining established market momentum and accelerating future market growth $3,593m $2,469m $1,124m REVENUE OPERATING EXPENSES EBITDAI (0.8%) decrease vs. FY20 (1.6%) decrease vs. FY20 1.0% increase vs. FY20 FY21
Slide 23: FY21 Capital Investment and Free Cash Flow
FY21 Capital Investment and Free Cash Flow $354m $51m $405m $433m $4m $0.25c CAPEX excluding spectrum + SPECTRUM = TOTAL CAPEX including spectrum (2) FREE CASH FLOW WORKING CAPITAL TOTAL FY21 DIVIDEND (5.3%) decrease vs. FY20 1800MHz & 2100MHz 8.3% increase vs. FY20 (1.1%) decrease vs. FY20 Increase
Slide 24: Net Debt
Net Debt Reported net debt to EBITDAI ratio of 1.16x(1) consistent with S&P A- credit rating Movement in net debt during FY21 ($m) 1,400 • Total net debt of $1,303m, down $46m YoY due to: • EBITDAI growth; 38 (42) 10 1,300 1,303 • Planned reduction in capital investment; 51 • Strong DRP participatio
Slide 25: FY22 indicators of success
FY22 indicators of success Strategic Pillar Focus Area Measure Target 30 June 2022 Customer experience Consumer and small business iNPS +6 point lift Data driven insights Uplift in data driven marketing campaign conversion(1) 15% World class capability Smart automated networks Accelerate 5G 10-15 lo
Slide 26: Guidance
Guidance(1) FY21 Actual FY22 Guidance EBITDAI $1,124m $1,130m-$1,160m Capital expenditure(2) $354m ~$400m Total 25.0cps(3) Total 25.0cps Dividend per share (100% imputed) (100% imputed) PAGE 26 SPARK (1) Subject to no adverse change in operating outlook (2) Excluding expenditure on mobile spectrum o
Slide 27: 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