INTERIM FINANCIAL STATEMENTS
FY2025
Page 02 | Spark New Zealand Interim financial statements |
Interim financial statements
For the six months ended 31 December 2024
Interim financial statements | 3-6 |
Notes to the interim financial statements | 7-16 |
Independent auditor's review report | 17 |
These interim financial statements do not include all the notes and information normally included in the annual financial statements. Accordingly, they should be read in conjunction with the annual financial statements for the year ended 30 June 2024.
Page 03Spark New Zealand Interim financial statements
Statement of profit or loss and other comprehensive income
SIX MONTHS ENDED 31 DECEMBER
2024 | 2023 | ||
UNAUDITED | UNAUDITED | ||
NOTES | $M | $M | |
Operating revenues and other gains | 1,939 | 1,976 | |
Operating expenses1 | (1,520) | (1,446) | |
Earnings before finance income and | expense, income tax, depreciation, amortisation and net | ||
investment income (EBITDAI) | 4 | 419 | 530 |
Finance income | 15 | 14 | |
Finance expense | (75) | (63) | |
Depreciation and amortisation | (300) | (251) | |
Net investment income | - | (3) | |
Net earnings before income tax | 3 | 59 | 227 |
Income tax expense1 | (24) | (70) | |
Net earnings for the period | 4 | 35 | 157 |
Other comprehensive income | |||
Items that will not be reclassified to profit or loss: | |||
Revaluation of long-term investments designated at fair value through other comprehensive | |||
income | 5 | (3) | (12) |
Items that may be reclassified to profit or loss: | |||
Translation of foreign operations | - | (1) | |
Change in hedge reserves net of tax | (30) | (13) | |
Other comprehensive income for the period | (33) | (26) | |
Total comprehensive income for the period | 2 | 131 | |
Earnings per share | |||
Basic earnings per share (cents) | 1.9 | 8.6 | |
Diluted earnings per share (cents) | 1.9 | 8.5 | |
Weighted average ordinary shares (millions) - used for basic earnings per share | 1,829 | 1,835 | |
Dilutive potential ordinary share (options) | 1 | 3 | |
Weighted average ordinary shares and options (millions) - used for diluted earnings per share | 1,830 | 1,838 | |
See accompanying notes to the interim financial statements.
1 These balances have been impacted by the transformation costs associated with Spark's SPK-26 Operate Programme, see note 2 for further details.
Page 04Spark New Zealand Interim financial statements
Statement of financial position
AS AT | AS AT | ||
31 DECEMBER | 30 JUNE | ||
2024 | 2024 | ||
UNAUDITED | AUDITED | ||
NOTES | $M | $M | |
Current assets | |||
Cash | 100 | 59 | |
Short-term receivables and prepayments | 894 | 915 | |
Short-term derivative assets | 6 | 1 | |
Inventories | 113 | 89 | |
Taxation recoverable | 57 | 6 | |
Assets classified as held for sale | 2.1 | 256 | - |
Total current assets | 1,426 | 1,070 | |
Non-current assets | |||
Long-term receivables and prepayments | 378 | 515 | |
Long-term derivative assets | 13 | 25 | |
Long-term investments | 5 | 132 | 206 |
Deferred tax assets | 31 | 17 | |
Right-of-use assets | 575 | 487 | |
Leased customer equipment assets | 63 | 70 | |
Property, plant and equipment | 1,433 | 1,394 | |
Intangible assets | 847 | 851 | |
Total non-current assets | 3,472 | 3,565 | |
Total assets | 4,898 | 4,635 | |
Current liabilities | |||
Short-term payables, accruals and provisions | 581 | 550 | |
Short-term derivative liabilities | 1 | - | |
Short-term lease liabilities | 107 | 96 | |
Debt due within one year | 6 | 552 | 414 |
Liabilities classified as held for sale | 2.1 | 6 | - |
Total current liabilities | 1,247 | 1,060 | |
Non-current liabilities | |||
Long-term payables, accruals and provisions | 55 | 56 | |
Long-term derivative liabilities | 76 | 78 | |
Long-term lease liabilities | 777 | 646 | |
Long-term debt | 6 | 1,308 | 1,205 |
Total non-current liabilities | 2,216 | 1,985 | |
Total liabilities | 3,463 | 3,045 | |
Equity | |||
Share capital | 906 | 810 | |
Reserves | (447) | (414) | |
Retained earnings | 976 | 1,194 | |
Total equity | 1,435 | 1,590 | |
Total liabilities and equity | 4,898 | 4,635 | |
See accompanying notes to the interim financial statements. | |||
On behalf of the Board | |||
Justine Smyth, CNZM | Jolie Hodson, MNZM | ||
Chair | Chief Executive |
Authorised for issue on 21 February 2025
Page 05Spark New Zealand Interim financial statements
Statement of changes in equity
FOREIGN | |||||||
SHARE-BASED | CURRENCY | ||||||
SIX MONTHS ENDED 31 DECEMBER 2024 | RETAINED | HEDGE | COMPENSATION | REVALUATION | TRANSLATION | ||
SHARE CAPITAL | EARNINGS | RESERVES | RESERVE | RESERVE | RESERVE | TOTAL | |
UNAUDITED | $M | $M | $M | $M | $M | $M | $M |
Balance at 1 July 2024 | 810 | 1,194 | 12 | 4 | (407) | (23) | 1,590 |
Net earnings for the period | - | 35 | - | - | - | - | 35 |
Other comprehensive income for the period | - | - | (30) | - | (3) | - | (33) |
Total comprehensive income for the period | - | 35 | (30) | - | (3) | - | 2 |
Contributions by, and distributions to, owners: | |||||||
Dividends | - | (254) | - | - | - | - | (254) |
Supplementary dividends | - | (23) | - | - | - | - | (23) |
Tax credit on supplementary dividends | - | 23 | - | - | - | - | 23 |
Dividend reinvestment plan | 94 | - | - | - | - | - | 94 |
Issuance of shares under share schemes | 3 | - | - | 1 | - | - | 4 |
Other transfers | (1) | 1 | - | (1) | - | - | (1) |
Total transactions with owners for the period | 96 | (253) | - | - | - | - | (157) |
Balance at 31 December 2024 | 906 | 976 | (18) | 4 | (410) | (23) | 1,435 |
FOREIGN | |||||||
SHARE-BASED | CURRENCY | ||||||
SIX MONTHS ENDED 31 DECEMBER 2023 | RETAINED | HEDGE | COMPENSATION | REVALUATION | TRANSLATION | ||
SHARE CAPITAL | EARNINGS | RESERVES | RESERVE | RESERVE | RESERVE | TOTAL | |
UNAUDITED | $M | $M | $M | $M | $M | $M | $M |
Balance at 1 July 2023 | 965 | 1,371 | 11 | 2 | (387) | (22) | 1,940 |
Net earnings for the period | - | 157 | - | - | - | - | 157 |
Other comprehensive income for the period | - | - | (13) | - | (12) | (1) | (26) |
Total comprehensive income for the period | - | 157 | (13) | - | (12) | (1) | 131 |
Contributions by, and distributions to, owners: | |||||||
Dividends | - | (249) | - | - | - | - | (249) |
Supplementary dividends | - | (25) | - | - | - | - | (25) |
Tax credit on supplementary dividends | - | 25 | - | - | - | - | 25 |
Share buy-back | (159) | - | - | - | - | - | (159) |
Issuance of shares under share schemes | 4 | - | - | 1 | - | - | 5 |
Other transfers | - | 1 | - | (1) | - | - | - |
Total transactions with owners for the period | (155) | (248) | - | - | - | - | (403) |
Balance at 31 December 2023 | 810 | 1,280 | (2) | 2 | (399) | (23) | 1,668 |
Page 06Spark New Zealand Interim financial statements
Statement of cash flows
SIX MONTHS ENDED 31 DECEMBER
2024 | 2023 | ||
UNAUDITED | UNAUDITED | ||
NOTES | $M | $M | |
Cash flows from operating activities | |||
Receipts from customers | 1,977 | 1,972 | |
Receipts from interest | 15 | 13 | |
Payments to suppliers and employees | (1,566) | (1,519) | |
Payments for income tax | (78) | (101) | |
Payments for interest on debt | (46) | (31) | |
Payments for interest on leases | (24) | (23) | |
Payments for interest on leased customer equipment assets | (3) | (4) | |
Net cash flows from operating activities | 7 | 275 | 307 |
Cash flows from investing activities | |||
Proceeds from sale of property, plant and equipment | 2 | 14 | |
Receipts from finance leases | - | 1 | |
Payments for purchase of business, net of cash acquired | (2) | (2) | |
Receipts from loans receivable | 3 | 10 | |
Payments for, and advances to, long-term investments | - | (1) | |
Payments for purchase of property, plant and equipment, intangibles (excluding spectrum), and | |||
capacity | (228) | (347) | |
Payments for capitalised interest | (4) | (6) | |
Net cash flows from investing activities | (229) | (331) | |
Cash flows from financing activities | |||
Proceeds from debt | 5,427 | 7,310 | |
Repayments of debt | (5,237) | (6,821) | |
Payments for dividends | (160) | (249) | |
Payments for share buy-back | - | (159) | |
Receipts from lease incentive | 22 | - | |
Payments for leases | (44) | (38) | |
Payments for leased customer equipment assets | (11) | (20) | |
Net cash flows from financing activities | (3) | 23 | |
Net cash flows | 43 | (1) | |
Opening cash position | 59 | 100 | |
Closing cash position | 102 | 99 | |
Cash included in assets classified as held for sale | 2.1 | 2 | - |
Cash | 100 | 99 | |
Closing cash position | 102 | 99 | |
See accompanying notes to the interim financial statements.
Page 07 | Spark New Zealand Interim financial statements |
NOTES TO THE INTERIM FINANCIAL STATEMENTS
Note 1 About this report
Reporting entity
These unaudited interim financial statements are for Spark New Zealand Limited (the Company) and its subsidiaries (together Spark or 'the Group') for the six months ended 31 December 2024.
The Company is incorporated and domiciled in New Zealand, registered under the Companies Act 1993 and is an FMC reporting entity under the Financial Markets Conduct Act 2013. The Company is listed on the New Zealand Stock Exchange (NZX) and the Australian Securities Exchange (ASX).
Basis of preparation
The interim financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand equivalents to International Accounting Standard 34: Interim Financial Reporting and International Accounting Standard 34: Interim Financial Reporting, as appropriate for profit-oriented entities.
The accounting policies adopted are consistent with those followed in the preparation of Spark's annual financial statements for the year ended 30 June 2024. The preparation of the interim financial statements requires management to make estimates and assumptions. Spark has been consistent in applying the estimates and assumptions adopted in the annual financial statements for the year ended 30 June 2024. Certain comparative information has been updated to conform with the current year's presentation.
Financial instruments are either carried at amortised cost, less any provision for impairment, or fair value. The only significant variances between instruments held at amortised cost and their fair value relate to long-term debt. There were no changes in valuation techniques during the period. Spark's derivatives are held at fair value, calculated using discounted cash flow models and observable market rates of interest and foreign exchange prices. This represents a level two measurement under the fair value measurement hierarchy, being inputs other than quoted prices included within level one that are observable for the asset or liability. The fair value of receivables and prepayments are approximately equal to their carrying value.
As at 31 December 2024, capital expenditure amounting to $718 million (30 June 2024: $684 million) had been committed under contractual arrangements.
New and amended standards
NZ IFRS 18 Presentation and Disclosure in Financial Statements (NZ IFRS 18) will replace NZ IAS 1 Presentation of Financial Statements and may have a material impact on Spark's disclosures. NZ IFRS 18 has been issued but is not yet effective until periods commencing on or after 1 January 2027.
NZ IFRS 18 sets out the requirements for the presentation and disclosure of information in financial statements, and will not change net profit reported, but how results are presented on the statement of profit or loss and other comprehensive income and what information is disclosed in the notes. Spark is yet to determine the disclosure impacts of this standard and whether it will adopt it prior to the year ending 30 June 2028. The key changes of NZ IFRS
18 are expected to be:
- A more structured statement of profit or loss and other comprehensive income, including new subtotals, and income and expenses classified into three categories (operating, investing and financing).
- Non-GAAP,management performance measures are required to be disclosed in the financial statements and subject to audit.
- New disclosures are required for items currently labelled as 'other', with enhanced guidance on how to group information within the financial statements.
Page 08 | Spark New Zealand Interim financial statements |
NOTES TO THE INTERIM FINANCIAL STATEMENTS
Note 2 Significant transactions and events for the current period
The following significant transactions and events affected the financial performance and financial position of Spark for the six month period to 31 December 2024 or subsequent to balance date:
Debt programme (see note 6)
- On 28 November 2024, Spark extended the term of its $100 million committed revolving sustainability linked loan (SLL) facility with Commonwealth Bank of Australia by three years, to mature on 30 November 2027. Spark's SLL has a dual focus on the Group's environmental and gender diversity performance. For the SLL extension, the gender representation target has been replaced with a median gender pay gap target. The environmental targets remain unchanged.
- On 28 November 2024, Spark established a NZ$100 million committed revolving facility with Commonwealth Bank of Australia, to mature on 28 May 2025.
Capital expenditure
- Spark's additions to property, plant and equipment, intangible assets (excluding spectrum) and capacity right-of-use assets were $252 million (31 December 2023: $286 million).
Dividends
- Dividends paid during the six month period ended 31 December 2024 in relation to the H2 FY24 second-half ordinary dividend of 14.0 cents per share totalled $254 million. Of this, $94 million was reinvested through the dividend reinvestment plan with the shares issued at a 3% discount to the prevailing market price around the time of issue. The dividends paid during the comparative six month period to 31 December 2023 in relation to the H2 FY23 second-half ordinary dividend of 13.5 cents per share totalled $249 million, with no shares offered under the dividend reinvestment plan.
Connexa (see note 2.1)
- On 12 December 2024, Spark announced the sale of its remaining stake (~17%) in mobile towers business Connexa to global investment group CDPQ, with final proceeds expected to be around $310 million and completion anticipated to occur in the third quarter of FY25. More details on the anticipated transaction are contained within note 2.1.
Transformation costs (see note 4)
- Transformation costs of $29 million were incurred in the implementation of Spark's SPK-26 Operate Programme. The objectives of this programme are to redesign the organisational operating model, drive labour and operating cost reductions. The costs incurred related to largely labour restructuring and advisory costs.
Note 2.1 Assets and liabilities classified as held for sale
Connexa
On 12 December 2024, Spark announced the sale of the remaining ~17% interest in Connexa to global investment group CDPQ, with final proceeds expected to be around $310 million. As at 31 December 2024, the assets associated with Connexa have been classified as held for sale.
All necessary regulatory conditions have been satisfied and the sale is expected to complete in the third quarter of FY25.
Other Transactions
On 20 December 2024, Spark signed a sale and purchase agreement for the sale of its subsidiary Digital Island which is expected to be completed in the third quarter of FY25. The sale excludes Digital Island's mobile services business which will be transferred to Spark after completion. As at 31 December 2024, the assets, excluding its mobile customer base, and liabilities associated with Digital Island have been classified as held for sale.
In July 2024, Spark bought back a Business Hub from the previous licensee. Spark intends to re-sell the hub and anticipates the Business Hub will be sold in the third quarter of FY25.
Page 09 | Spark New Zealand Interim financial statements |
NOTES TO THE INTERIM FINANCIAL STATEMENTS
Note 2.1 Assets and liabilities classified as held for sale (continued)
The major classes of assets and liabilities classified as | held for sale are as follows: | |
AS AT 31 | ||
DECEMBER | ||
2024 | ||
UNAUDITED | $M | |
Cash | 2 | |
Short-term receivables and prepayments | 4 | |
Long-term receivables and prepayments | 1 | |
Long-term receivable1 | 171 | |
Long-term investments1 | 65 | |
Property, plant and equipment | 1 | |
Intangible assets | 12 | |
Total assets classified as held for sale | 256 | |
Short-term payables, accruals and provisions | 6 | |
Total liabilities classified as held for sale | 6 |
1 These balances relate to the investment in Connexa and associated shareholder loans.
No gain or loss was recognised in the statement of profit or loss on classification of the above assets and liabilities to held for sale.
At the time these interim financial statements were authorised for issue the Connexa, Digital Island and Business Hub transactions had not yet completed.
Note 3 Segment information
The segment results disclosed are based on those reported to the Chief Executive and are how Spark reviews its performance. Spark's segments are measured based on product margin, which includes product operating revenues and direct product costs. The segment results exclude other gains, labour, other operating expenses, finance income and expense, depreciation and amortisation, net investment income and income tax expense, as these are assessed at an overall Group level by the Chief Executive.
Comparative segment results
Spark has made minor reclassifications of segment revenues and costs from IT products and IT services to data centres. There is no change to the overall Spark reported result because of these changes.
SIX MONTHS ENDED 31 DECEMBER | 2024 | 2023 | ||||
OPERATING | PRODUCT | PRODUCT | OPERATING | PRODUCT | PRODUCT | |
REVENUES | COSTS | MARGIN | REVENUES | COSTS | MARGIN | |
UNAUDITED | $M | $M | $M | $M | $M | $M |
Mobile | 739 | (251) | 488 | 749 | (253) | 496 |
Procurement and partners | 332 | (307) | 25 | 339 | (315) | 24 |
Broadband | 302 | (162) | 140 | 309 | (161) | 148 |
IT products | 264 | (139) | 125 | 261 | (122) | 139 |
Voice | 78 | (36) | 42 | 94 | (43) | 51 |
IT services | 72 | (23) | 49 | 80 | (14) | 66 |
High-tech | 41 | (19) | 22 | 35 | (13) | 22 |
Data centres | 25 | (2) | 23 | 22 | (1) | 21 |
Other products1 | 63 | (26) | 37 | 68 | (22) | 46 |
Segment results | 1,916 | (965) | 951 | 1,957 | (944) | 1,013 |
1 Other products includes mobile infrastructure and exchange building sharing arrangements.
Page 10Spark New Zealand Interim financial statements
NOTES TO THE INTERIM FINANCIAL STATEMENTS
Note 3 Segment information (continued)
Reconciliation from segment product margin to consolidated net earnings before income tax
SIX MONTHS ENDED 31 DECEMBER | 2024 | 2023 |
UNAUDITED | $M | $M |
Segment product margin | 951 | 1,013 |
Other gains | ||
Gain on sale and acquisition of property, plant and equipment and intangibles | 1 | 17 |
Gain on lease modifications and terminations | 22 | 2 |
Labour1 | (273) | (279) |
Other operating expenses | ||
Network support costs | (52) | (40) |
Computer costs | (74) | (52) |
Accommodation costs | (48) | (48) |
Advertising, promotions and communication | (31) | (33) |
Bad debts | (10) | (7) |
Other1 | (67) | (43) |
Earnings before finance income and expense, income tax, depreciation, amortisation and net investment | ||
income (EBITDAI) | 419 | 530 |
Finance income | ||
Finance lease interest income | 4 | 4 |
Other interest income | 11 | 10 |
Finance expense | ||
Finance expense on debt | (41) | (33) |
Lease interest expense | (25) | (24) |
Leased customer equipment interest expense | (3) | (4) |
Other interest and finance expenses | (10) | (8) |
Capitalised interest | 4 | 6 |
Depreciation and amortisation expense | ||
Depreciation - property, plant and equipment | (147) | (112) |
Depreciation - right-of-use assets | (50) | (42) |
Depreciation - leased customer equipment assets | (13) | (17) |
Amortisation - intangible assets | (90) | (80) |
Net investment income | ||
Share of associates' and joint ventures' net losses | (6) | (8) |
Interest income on loans receivable from associates and joint ventures | 6 | 6 |
Net loss on remeasurement of equity accounted investments | - | (1) |
Net earnings before income tax | 59 | 227 |
1 These balances have been impacted by the transformation costs associated with Spark's SPK-26 Operate Programme, see note 2 for further details.