Hello tomorrow Spark Annual Report FY24 ANAMATA KO TE PAE WHAKAMAUA Tahutahuna te Kora Karakia: the Spark Karakia Papā te whatitiri, hikohiko te uira The thunder peels, the lightning flashes Ko te pae anamata, whakamaua, kia ngita Fix your attention to the future horizon and secure it Kei reira te kora e pūrātoke ana There, is a small gleaming fragment Kua kitea te kora e pūrātoke ana We have found the small gleaming fragment Mā wai rā te kora e tutungi, e poipoi? Who will light and nurture this spark? Mā tātou te kora e tutungi, e poipoi It is us who will light and nurture the spark! Tahutahuna te kora, (hī!) Set fire to the spark, yes! te kora whitawhita, (hī!) The zealous spark, yes! te kora tangata ēi! The spark of humanity! Aotearoa New Zealand faces many interconnected challenges. The economic environment is tough, our productivity challenge is persistent, and climate change mitigation and adaptation is more urgent than ever before. The good news is that the pace of technological advancement is accelerating just as quickly as these challenges. Advanced digital technologies, such as generative AI, are changing the way people connect, communicate, and do business and have the potential to accelerate efficiency, productivity, and sustainability by enabling people and businesses to do things differently. To bring these opportunities to our shores New Zealand will need investment in the digital infrastructure that underpins all forms of technology and connects us to the world, in innovation to unlock and scale new use cases, and in skilled people who can make it all a reality. And this is where Spark comes in. As New Zealand’s largest telecommunications and digital services provider, our ambition is to empower the people and businesses creating Aotearoa’s tomorrow. During FY24 we have continued to progress our three-year strategy, SPK-26, to achieve this goal. We are investing in the digital infrastructure that will underpin Aotearoa’s digital economy and create long-term, sustainable growth for our shareholders. We have continued to improve customer experiences by making it easier to interact with Spark, we are backing our business customers to leverage technology to its fullest potential, and we are investing in the skills and development of the people who make it all possible – our Spark whānau. It has been a tough year for all New Zealand businesses, and Spark is not immune to these challenges. But we remain optimistic about our country’s potential, the ingenuity of New Zealanders, and the role technology will play in enabling great people and businesses to do great things. Ko te pae anamata whakamaua. Hello tomorrow. Accelerating Aotearoa through technology 1 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua FY24 highlights FY24 highlights FY24 highlights $1billion+ in mobile service revenue and #1 in mobile market share1 118MW 2 data centre development pipeline3 +38 consumer and small business customer experience (iNPS)4 up 7 points 67% employee engagement remains strong 1. Maintained #1 position in mobile market share by service revenue and total connections. Market share estimates sourced from IDC as at 30 June 2024. 2. Megawatts (MW). 3. In August, Spark entered into a conditional agreement to purchase land at Takanini, which would add 48MW to the site. This increased the total development pipeline from 70MW at the end of FY24 to 118MW at time of publishing. 4. Interaction net promoter score (iNPS), a measure of customer satisfaction. 2 Hello tomorrow FY24 highlights 103 locations, including cities and towns across Aotearoa, now have 5G 2 million+ devices connected to our Internet of Things (IoT) networks across New Zealand 10-year renewable energy partnership with Genesis Energy – will account for ~60% of Spark’s annual electricity requirements 31,776 households in need connected through our not-for-profit broadband service Skinny Jump 3 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua Ko te pae anamata, whakamaua – hello tomorrow About this report 5 How we create value 6 Our operations 8 Performance snapshot 10 Chair and CEO review 12 Our performance 14 Our Board and Leadership Squad 18 Creating value for our customers 24 Creating value through our network and technology 36 Creating value for our environment 46 Creating value for our communities 56 Creating value for our people 62 Remuneration report 74 Our governance and ESG management 82 Our risk management 88 Spark climate-related disclosures 90 Financial statements Financial statements 106 Notes to the financial statements 111 Independent auditor's report 152 Other information Corporate Governance disclosures 157 Spark’s managing risk framework roles and responsibilities 162 Sustainability appendix 163 Glossary 175 Contact details 177 Contents Hello tomorrow 4 Contents About this report • This is an integrated report that shares our financial, social, environmental, and economic performance. To inform our approach we have applied the InternationalFramework, which considers the creation of value over the short, medium, and long term, thinking holistically about the resources and relationships our organisation uses or affects and the dependencies and trade-offs between them as value is created. • At the heart of this approach is the value creation model (laid out on pages 6 and 7), which details the ‘capitals’ (the different resources and relationships that we rely on for our business activities) we draw upon, our strategy and business model, and the outputs and outcomes we deliver. We have a section of the report dedicated to each of these capitals. Our detailed financial report is covered in pages 106–155. • The report also applies the Global Reporting Initiative (GRI) standards, the most widely used global sustainability reporting standard. This requires us to apply a materiality lens to identify and report against the sustainability issues most important to our business and our stakeholders. We have a dedicated sustainability appendix at the back of the report that includes our materiality matrix and GRI index, to direct readers to where we have covered specific sustainability topics in the report and elsewhere. See pages 163–174. • This report includes climate risk reporting, which has been prepared in compliance with the Aotearoa New Zealand Climate Standards (NZ CS 1, NZ CS 2 and NZ CS 3) issued by the External Reporting Board (XRB). See pages 90–105. • This Annual Report is published alongside a suite of other disclosures covering the FY24 period, including our Corporate Governance Statement, our Modern Slavery and Human Rights Statement, and our Greenhouse Gas Inventory Report. For the full suite of FY24 disclosures please visit www.spark.co.nz/ online/about/our-company/governance Justine Smyth, CNZM Chair Gordon MacLeod Chair Audit and Risk Management Committee • This report covers the activities of Spark New Zealand Limited and its subsidiaries for the period 1 July 2023 to 30 June 2024. It is dated 23 August 2024 and is signed on behalf of the Board of Spark New Zealand Limited by Justine Smyth, Chair and Gordon MacLeod, Chair Audit and Risk Management Committee. Key dates Annual Meeting 01 November 2024 FY25 half-year results announcement 21 February 2025 FY25 year-end results announcement 20 August 2025 Hello tomorrow Spark Annual Report 2024 ANAMATA KO TE PAE WHAKAMAUA Spark Greenhouse Gas Inventory Report 2024 INVENTORY GREENHOUSE GAS CORPORATE GOVERNANCE Spark Annual Corporate Governance Statement 2024 Ko te pae anamata, whakamaua 5 Spark New Zealand Annual Report FY24 A culture that develops and empowers our people Investment in resilient, adaptable infrastructure for New Zealand’s future Innovation to create value for Spark and our customers Providing leading products and services that connect and enable New Zealanders Economic Transformation Digital Equity Sustainable Spark Te Korowai Tupu Including the elements of our Sustainability Framework on page 83 How we create value WHAT WE RELY ON Our customers Social capital Consumers and organisations that are enabled by our products and services Our finances Financial capital Equity, debt and cash generated through our operations Our network and technology Manufactured + intellectual capital Our mobile sites, data networks, systems, processes and digital services capability Our people Human + intellectual capital Engaged, adaptive and inclusive teams that are the heart of our business Our environment Natural capital Energy, materials and impacts of our operations Our communities Social + human capital Our communities around New Zealand and the communities across our global supply chain OUR BUSINESS MODEL G O V E R N A N C E B U SI N E S S S T R A T E G Y W h a k a m a n a, W e E m p o w e r M at o m at o, W e S u c c e e d To g et h e r T ū h o n o, W e C o n n e ct M āi a, W e ar e B ol d TO HELP WIN BIG OUR PURPOSE IN A DIGITAL WORLD O U R V A L U E S As part of Integrated Reporting, we use this diagram to show how we create value as a business. It starts with the forms of capital we rely on – from traditional forms of capital, such as financial capital, to broader forms of capital, such as manufactured or human capital. It then displays the outputs we have delivered as a result in FY24, alongside the longer-term outcomes we are trying to achieve. Hello tomorrow 6 How we create value OUTPUTS FY24 OUTCOMES • $350 million invested into our network and digital infrastructure in FY24 • 28% increase in mobile capacity from FY23 • 5G now live in 103 locations, including cities and towns across New Zealand, with 5G core build under way • 22.3MW of data centre capacity and 118MW development pipeline • Over 2 million devices now connected to our IoT networks • Rural Connectivity Group delivered its 500th rural cell tower • Established a network of satellite-connected small cells throughout the country Connected and resilient New Zealand Enabling a connected New Zealand and providing infrastructure to support innovation See page 36 • Over 2.7 million mobile connections, up 0.3% from FY23 • 687,000 broadband connections, down 12,000 from FY23 • Consumer and small business interaction score (iNPS) of +38, up 7 points from FY23 Connected customers Enabling our customers to realise the benefits of digital technology and enabling their own value creation See page 24 • $3,861 million operating revenue and other gains (down 14.0% on a reported basis and 1.2% on an adjusted basis1) • $316 million reported net profit after tax (down 72.2%) and $342 million adjusted net profit after tax (down 21%)2 • 27.5 cents per share dividend, up 0.5 cents per share from FY23 Capital for future investment Enabling future investment in our business and providing market returns to grow financial capital for our shareholders See page 10 High performing, engaged, and inclusive teams Enabling the success of our business and our people and growing New Zealand’s human capital See page 62 • Employee engagement score of 67%, down from 70% in FY23 • 40:40:20 gender representation at Leadership Squad and senior leadership levels • 78% of group-wide employees sharing ethnicity data • New internal skilling centre, Te Awe, upskilling and reskilling Spark people Protecting the environment Enabling a reduced draw on natural capital in our business and through our customers' use of technology See page 46 • New 10-year renewable energy partnership with Genesis Energy to supply ~60% of Spark’s annual electricity needs from January 2025 • 16,874 tCO2e scope 1 and 2 emissions, up 26.7% from FY23 • 450 tonnes of e-waste generated and recovered, a reduction of 109 tonnes from FY23 • 16,425 mobile phones collected for recycling and trade-in, up 1,306 from FY23 • Efficiencies enabled across other sectors through technology • Skinny Jump benefitting 31,776 households, up from 27,341 in FY23 • 659 marae connected through the Marae Digital Connectivity Programme, up from 622 in FY23 • Joint Audit Cooperation (JAC) membership supporting auditing of supply chain working conditions • Spark Foundation investment supporting improved digital equity in communities Connected and empowered communities Enabling all New Zealanders to benefit from the digital world and improving social outcomes across our value chain See page 56 1. The prior year is adjusted for the impact of the net gain on sale of Connexa of $583 million within other gains. 2. FY24 net earnings is adjusted for the impact of the zero-rating of tax depreciation on buildings, which has resulted in a $26 million non-cash increase in tax expense and corresponding reduction in the deferred tax asset. FY23 is adjusted for the impact of the net gain on sale of Connexa of $583 million, the one-off provision of $54 million for Spark Sport, the $5 million net gain on dilution of the investment in the Connexa group, and related tax impacts of $168 million. Ko te pae anamata, whakamaua 7 Spark New Zealand Annual Report FY24 OTN nodes OTN network Metro and Edge data centres Strategic Auckland data centre campuses Corporate offices Earth Station satellite link Southern Cross Cable (SX NOW) Southern Cross Cable (SX NEXT) Tasman Global Access Cable (TGA) Connection from Sydney, Australia to USA Connection to Sydney, Australia Connection to Sydney, Australia Connection to USA Our operations Spark is New Zealand’s largest telecommunications and digital services company. Our customers range from individual New Zealanders and households to small businesses, not-for-profits, government, and large enterprise clients. Across all our services – mobile, broadband, digital services, and digital infrastructure – we have relevance for almost every New Zealander. Hello tomorrow 8 Our operations 1. Cat-M1 Internet of Things network. 2. Includes Spark active equipment on 1,549 third party towers, 514 RCG towers, 98 small cells, and 15 temporary sites active at 30 June 2024. 5,291 employees >110k small-medium business customers 2,176 mobile sites housing our active infrastructure2 >22mw data centre capacity 24 regional business hubs 98% of New Zealanders reached by our 4G network >2.7m mobile connections 99% of the population reached by our Internet of Things network1 >680k broadband connections ~1,100 enterprise and government customers 61 retail stores We operate the following brands and businesses: Community Consumer Business Other brands Ko te pae anamata, whakamaua 9 Spark New Zealand Annual Report FY24 Performance snapshot Reported net earnings $316m 72.2% Adjusted net earnings3 $342m 21.0% Operating revenues and other gains $3,861m 14.0% Reported basis 1.2% Adjusted basis2 EBITDAI1 $1,163m 32.5% Reported basis 2.5% Adjusted basis2 IT revenue $692m 1.6% Data centre and high-tech revenue $116m 30.3% Broadband revenue $613m 2.1% Mobile service revenue $1,010m 3.1% 10 Hello tomorrow Performance snapshot 1. Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) and capital expenditure are non-Generally Accepted Accounting Practice (non-GAAP) measures. These measures are defined and reconciled in note 2.5 of the financial statements. 2. There were no adjusting items impacting EBITDAI in FY24. The prior year is adjusted for the impact of the net gain on sale of Connexa of $583 million, within other gains, and the one-off provision of $54 million for Spark Sport within operating expenses. 3. FY24 net earnings is adjusted for the impact of the zero-rating of tax depreciation on buildings which has resulted in a $26 million non-cash increase in tax expense and corresponding reduction in the deferred tax asset. FY23 is adjusted for the impact of the net gain on sale of Connexa of $583 million, the one-off provision of $54 million for Spark Sport , the $5 million net gain on dilution of the investment in Connexa and related tax impacts of $168 million. 4. Free cash flow is a non-GAAP measure and is calculated on page 8 of Spark's FY24 Detailed Financials. 5. Interaction Net Promoter Score, a measure of customer engagement. Employee engagement 67% 3pp Free cash flow4 $330m 32.5% Capital expenditure1 $518m 0.6% Consumer and small business iNPS5 +38 7 points Proposed design for Spark's Auckland CBD data centre expansion. 11 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua TowerCo and Spark Sport transactions, we have provided both reported and adjusted year-on-year comparisons – the latter of which strips out the impact of the one-off gain to provide a like-for-like performance comparison. FY24 EBITDAI of $1,163 million was down 2.5% on an adjusted basis and 32.5% on a reported basis. Reported NPAT declined 72.2% to $316 million as a result of cycling the TowerCo and Spark Sport transactions, lower EBITDAI, higher finance expenses and depreciation, and a one-off $26 million non-cash tax adjustment relating to recent Government policy changes. Adjusted NPAT, excluding this one-off item, declined 21% to $342 million. Lower EBITDAI and higher interest, lease costs, and non-cash earnings impacted free cash flow, which reduced 32.5% to $330 million. While we are disappointed to not achieve our FY24 performance ambitions, as we look to the year ahead, our business fundamentals are strong, and we continue to see opportunities for growth. Tēnā koutou, It has been a challenging year for Spark and for many businesses across Aotearoa, with recessionary economic conditions creating a tough operating environment. Public sector spending cuts and deferred private sector investment had a significant impact on IT services revenues, while lower consumer and business confidence impacted sales of mobile devices and accessories and intensified competitive pricing pressure, particularly in business mobile. We did see strong growth in many of our core markets such as mobile, where service revenue surpassed $1 billion for the first time, as well as cloud, data centres, and high-tech. This was not enough to offset subdued demand in other areas, and we could not adapt our cost base quickly enough as the market turned. This resulted in the lowering of FY24 EBITDAI guidance in May and an overall FY24 performance below our ambitions. Because our FY24 financial results are cycling the significant revenue and net profit declared in FY23 following the Our leadership in the growing mobile market will support top-line growth as demand for data continues to grow, customer experience remains strong, and annual price reviews enable us to realise the value of the significant investments we make into our network every year. Through our SPK-26 Operate Programme we made changes to our operating model during FY24, to align our teams to our new strategy and our labour costs to changing revenue trends, with the majority of these benefits to be realised in FY25. This work will continue to deliver further labour and opex cost reductions, improve margins, and insulate Spark from the economic environment. This includes a material change to our Enterprise and Government division, where we will integrate our subsidiaries into Spark to remove duplication, simplify our product portfolios and processes, and deliver better customer experiences with greater efficiency. It is never easy to make changes that impact our people, and we do not do so lightly. However, to compete in a challenging economic environment we must make the difficult but necessary decisions to ensure our cost base is sustainable. We will continue to provide our teams with the appropriate support to transition through these changes. Our data centre strategy is a significant mid-term growth opportunity. The New Zealand data centre market is predicted to grow from ~90MW today to ~500MW by 2030, driven by the acceleration of AI, and in particular Generative AI, and ongoing business migration to the cloud. With Spark’s potential development pipeline now sitting at 118MW, and three strategic Auckland locations primed for investment, we are well positioned to capture a significant share of this growth and maintain our competitive position in the market. Justine Smyth CNZM, Chair and Jolie Hodson MNZM, CEO. Chair and CEO review Hello tomorrow 12 Chair and CEO review people. We launched a new internal skilling centre, Te Awe, to upskill and reskill our people in new and emerging technologies, and enhanced our Mahi Tahi wellbeing programme with a new partnership with Clearhead, which gives our people access to six fully funded therapy sessions annually. Over 1,500 people have used the service so far, and in our most recent culture survey, 88% of our people said they believe their wellbeing is supported by their leaders at Spark. Overall, our environmental, social, and governance (ESG) practices have continued to mature, and we maintained our position in the Dow Jones Sustainability Australia Index and our ranking in the top quartile of the Worldwide Benchmarking Alliance’s Digital Inclusion Benchmark. Looking ahead As we look ahead, we know that challenging economic conditions will persist in the near term. Our SPK-26 strategy was built for resilience and growth, and that is the dual focus we take into FY25. We will drive greater efficiency across our business to reset our cost base to a more sustainable level, while continuing to invest in our growth engines of the future. We are pleased to be building on strong foundations. Our customers are getting better experiences, our people are engaged, and our sustainability credentials continue to strengthen. We would like to recognise the hard work and commitment of our Spark whānau, who remain committed to supporting our customers, and offer our sincere thanks to our shareholders for your ongoing support. Noho ora mai [be well] Justine Smyth CNZM Chair Jolie Hodson MNZM CEO The reinstatement of our Dividend Reinvestment Plan for the H2 FY24 dividend and a potential hybrid capital notes issuance will help fund our growth investments in the near term, and we will also explore other equity funding options such as capital partnerships. We remain committed to maintaining financial strength and flexibility and our investment grade credit rating, and the Board is pleased to confirm a total FY24 dividend of 27.5 cents per share for our shareholders, 100% imputed. Our FY24 Market Performance As topline growth was impacted by economic conditions and intensified competition, FY24 revenue of $3,861 million declined 1.2% on an adjusted basis and 14% on a reported basis. Mobile service revenue increased 3.1% to $1,010 million, driven by consumer connection growth, price increases, and stabilised roaming revenues, and partially offset by declines in the business market as price competition intensified. We were pleased to maintain our #1 position in mobile market share by service revenue and total connections. Broadband revenue declined 2.1% to $613 million, as lower consumer spending increased price-driven competition, particularly amongst non-telco competitors. As we continued to invest in digitisation and service innovation, we were pleased to see our measure of customer satisfaction (our interaction net promoter score) increase by 7 points to +38. In our digital services market, total IT revenue declined 1.6% to $692 million. This was driven by a 14.9% decrease in IT services revenue as economic conditions impacted demand and masked 3.5% growth in IT products, which was driven by continued strong growth in cloud as businesses digitise. Data centres revenue grew 54.2% to $37 million, as our Takanini campus expansion was completed on time and on budget, and new revenue streams came online. Our high-tech revenue grew 21.5% to $79 million, with Internet of Things (IoT) revenues up 53.3% and over 2 million devices now connected to our IoT networks. Our FY24 Toitū Sustainability Performance Every year we make significant investments into the digital infrastructure that underpins New Zealand’s economy, supports businesses both big and small to grow, and unlocks new commercialisation opportunities for Spark. In FY24 over $350 million was invested in our highly secure and resilient network and digital infrastructure, delivering a 28% increase in mobile network capacity and underpinning growth in data centres, IoT, and high-tech. We understand how important connectivity is to the lives of all New Zealanders, and we continued to expand the reach of our 5G network, increase rural connectivity, and support more equitable access to the digital world. We now support 31,776 households in need across the country through our not-for-profit broadband service Skinny Jump. Our scope 1 and 2 emissions increased 26.7% in FY24, largely driven by a one-off event at an exchange, when the release of fire suppressant was triggered by an alarm. Unfortunately, this means we are tracking 18.6% above the pathway required to reach our Science Based Targets initiative (SBTi) target. Without this event we would be tracking 5.7% above our pathway, as a result of the higher emissions factor of the New Zealand grid during the year. We did, however, make strong progress on future emissions reductions when we signed a ten-year renewable energy Power Purchase Agreement (PPA) with Genesis in May. In exploring renewable energy partnership opportunities, it was important to us to support investment in new renewable energy – rather than buying certificates for existing renewables that were added to the grid many years ago. This new partnership supported this ambition and will see us purchase all of the electricity generated by Genesis’ first solar farm in Lauriston Canterbury. The 63MW site will meet around 60% of our current annual requirements once it becomes operational in 2025 and will make a significant contribution towards our scope 1 and 2 emissions reduction target in the years ahead. During the year we also continued to invest in the development and wellbeing of our Ko te pae anamata, whakamaua 13 Spark New Zealand Annual Report FY24 Our performance 1 Earnings before finance income and expense, income tax, depreciation, amortisation, and net investment income (EBITDAI) and capital expenditure are non-Generally Accepted Accounting Practice (non-GAAP) measures. These measures are defined and reconciled in note 2.5 of the financial statements. 2 The prior year is adjusted for the impact of the net gain on sale of Connexa of $583 million, within other gains, and the one-off provision of $54 million for Spark Sport, within operating expenses. There were no adjusting items impacting EBITDAI in FY24. Operating revenues and other gains • Mobile revenue increased $4 million, or 0.3%, with mobile service revenue surpassing $1 billion for the first time, growing $30 million, or 3.1%. This was driven by connections growth, price increases in the consumer market, and increased roaming and was partly offset by price pressure in the government and enterprise sector. Non-service revenue declined $26 million, or 5.3%, due to lower volumes of handset and accessories sales as consumers delayed spending on new devices. • Broadband revenue declined $13 million, or 2.1% due to a decline in total broadband connection numbers of 12,000, or 1.7%, as competitor activity persisted, and lower average revenue per user (ARPU) as customers migrated off legacy plans. • IT revenue declined $11 million, or 1.6%. Within this, cloud revenue grew $16 million, or 7.7%, due to onboarding of new private cloud clients and increased public cloud uptake, but was more than offset by a $29 million, or 14.9%, decline in IT services revenue due to price pressure on re-signing of existing customers and a decline in project activity across the government and enterprise sector. • Procurement and partners revenue decreased $36 million, or 6.2%, mainly due to lower procurement volumes across the customer base, noting this was substantially offset by associated lower procurement costs. • Voice revenues declined $51 million, or 22.1%, due to connection losses and associated lower calling volumes as part of a continued shift from fixed line to wireless calling. Legacy voice revenues now contribute less than 5% of total revenue. • Data centre revenue increased $13 million, or 54.2%, as increased capacity became available following the completion of the second data centre pod at Takanini. • High-tech revenue increased $14 million, or 21.5%, driven by strong IoT connections and revenue growth and continued growth in MATTR, partly offset by a slight decline in Qrious following the completion of a number of large customer projects. $ MILLION FY24 FY23 MOBILE BROADBAND IT REVENUE PROCUREMENT AND PARTNERS VOICE DATA CENTRES HIGH-TECH OTHER OPERATING REVENUE AND OTHER GAINS NET GAIN ON SALE OF CONNEXA FY23 adjusting item 1,400 1,200 1,000 800 600 400 200 0 $3,861m (down 14.0% reported and down 1.2% adjusted2) Reported basic earnings per share 17.3 cents 71.5% Adjusted basic earnings per share3 18.7 cents 19.4% Mobile service revenue $1,010m 3.1% Dividends per share4 27.5 cents 1.9% Reported EBITDAI1 $1,163m 32.5% Adjusted EBITDAI1,2 $1,163m 2.5% Adjusted net earnings1,3 $342m 21.0% Reported net earnings $316m 72.2% • Other operating revenue declined $36 million, or 20.9%, primarily driven by the closure of the Spark Sport platform at the end of FY23. • Other gains increased $69 million to $102 million due to the sale of mobile network equipment, gains on lease modifications and terminations, and vendor investments into Spark’s network in support of revenue growth opportunities. • Excluded from the prior year adjusted result is the net gain of $583 million from the sale of Connexa (formerly ‘TowerCo’), which contained Spark’s passive mobile tower assets. Hello tomorrow 14 Our performance 0 200 400 600 800 1000 1200 1400 1600 1800 2000 $ MILLION PRODUCT COSTS LABOUR SPARK SPORT PROVISION OTHER FY24 FY23 FY23 adjusting item Operating expenses • Product costs decreased $53 million, or 2.9%, with declines broadly in line with decreases in associated revenues. This included lower procurement volumes, reduced voice connections, and the exit of Spark Sport and were partly offset by increases in cloud, IoT, and MATTR in line with revenue growth. • Labour costs were stable year-on-year with growth in Entelar Group and increased remuneration costs being offset by targeted reductions across the business in line with operating model changes. • Other operating expenses increased $35 million, or 8.7%, driven by a full year of charges under the Connexa lease arrangement, bad debt costs, and severance costs. • Excluded from the prior year adjusted result was a $54 million provision resulting from the closure of the Spark Sport business. $2,698m (down 2.6% on a reported basis and down 0.6% on an adjusted basis2) Other • Total depreciation and amortisation increased $23 million, or 4.6%, largely driven by higher costs associated with the increased capital spend across FY23 and FY24, combined with increased depreciation on right-of-use assets. • Net finance expense increased $47 million, driven by higher costs associated with both increased interest rates and higher debt levels, as well as increased interest on leases due to a full year of Connexa leases and long-term infrastructure leases. • Adjusted tax expense decreased $13 million, largely due to decreased adjusted earnings before tax for the period. • The $26 million non-cash tax adjustment in FY24 relates to the introduction of Government policy changes to remove the tax depreciation deduction on buildings, with a corresponding reduction in the associated deferred tax asset. In FY23 the tax income on the adjusting items includes $14 million for the Spark Sport provision and $154 million as a result of the Connexa transaction. 0 100 200 300 400 500 600 DEPRECIATION AND AMORTISATION NET FINANCE EXPENSE NET TAX INCOME ON ADJUSTING ITEMS TAX EXPENSE $ MILLION FY24 FY23 FY24 adjusting item FY23 adjusting item 3 FY24 net earnings is adjusted for the impact of the zero-rating of tax depreciation on buildings, which has resulted in a $26 million non-cash increase in tax expense and corresponding reduction in the deferred tax asset. FY23 is adjusted for the impact of the net gain on sale of Connexa of $583 million, the one-off provision of $54 million for Spark Sport, the $5 million net gain on dilution of the investment in the Connexa group, and related tax impacts of $168 million. 4 This represents the H1 FY24 first-half dividend of 13.5 cents per share, together with the H2 FY24 second-half ordinary dividend declared of 14.0 cents per share. Referenced on page 138. Ko te pae anamata, whakamaua 15 Spark New Zealand Annual Report FY24 670 690 710 730 750 770 790 810 FY23 NET CASH FLOWS FROM OPERATING ACTIVITIES RECEIPTS FROM CUSTOMERS PAYMENTS FOR INTEREST ON DEBT PAYMENTS FOR INTEREST ON LEASES RECEIPTS FROM INTEREST PAYMENTS FOR INTEREST ON LEASED CUSTOMER EQUIPMENT ASSETS PAYMENTS FOR INCOME TAX PAYMENTS TO SUPPLIERS AND EMPLOYEES FY24 NET CASH FLOWS FROM OPERATING ACTIVITIES $ MILLION 800 (79) (25) (9) (1) 0 1 77 764 Cash flows • Operating cash flows decreased $36 million due to higher payments for interest on debt. Lower receipts from customers resulting from lower revenues were substantially offset by a similar reduction in payments to suppliers. • Investing cash outflows of $550 million in FY24 were mainly due to payments for the purchase of property, plant and equipment and intangibles. While in FY23, this was an inflow of $425 million, mainly due to the receipt of net proceeds from the sale of the Connexa business of $893 million, partially offset by payments for the purchase of property, plant and equipment and intangibles of $475 million. • Financing cash outflows were $255 million in FY24 compared with an outflow of $1,196 million in FY23. The prior year included repayments of debt of $463 million following the sale of Connexa. In FY24 debt levels increased as funds were invested in capital projects in line with Spark’s strategy and the on-market share buy-back concluded. • Free cash flow of $330 million was $159 million lower in FY24, driven by the decline in EBITDAI, increased cash payments for capital expenditure included in free cash flow1, and increased interest payments. 2024 2023 YEAR ENDED 30 JUNE $M $M Net cash flows from operating activities 764 800 Net cash flows from investing activities (550) 425 Net cash flows from financing activities (255) (1,196) Net cash flows (41) 29 Free cash flow1 330 489 1 Free cash flow is a non-GAAP measure and is calculated on page 8 of Spark’s FY24 Detailed Financials. Operating cash flows $764m 4.5% Hello tomorrow 16 Our performance Capital expenditure in FY24 included the following key focus areas and projects: • Investment to support cloud, security, and service management revenue growth, including an uplift in software licensing to support Spark’s private cloud. • Fixed network and international cable capacity to meet future requirements for Spark's fibre and transport network, continuation of our core network expansion and resilience programme, advancement of our exit strategy for the PSTN, and international cable capacity purchases to meet forecasted demand for data. This includes enablement investment for Multi-Access Edge Compute (MAEC). • Lifecycle investment and licensing for internal IT systems, enhancements to support new products and deliver simple, intuitive customer experiences, expansion of enterprise systems capability, and investment in deep customer insights, automation, and artificial intelligence. This includes the development of foundational capability to support converged technology solutions. • Continued investment in Spark’s mobile core and radio access network (RAN) delivering greater network capacity and coverage. FY24 includes an uplift in Spark’s 5G investment to accelerate our rollout of this technology and provide a full 5G standalone capability as an enabler of future revenues from emerging technologies. • Completion of data centre capacity upgrades at the Takanini and Aotea Campuses in Auckland. Commencement of next stage of Takanini development, planned North Shore campus, and upgrades to the Waikato data centre. • Property investment in Spark’s corporate offices, retail stores fitouts and refits, and sustain investment for power and building services for Spark-owned exchanges and data centres. Cash payments for capital expenditure items (including capitalised interest and excluding spectrum payments) in the statement of cash flows were $592 million compared with capital expenditure of $518 million. The main drivers of this difference are related to network expenditure items that were received in FY23 but not paid for until FY24, together with payments of capex at the end of FY24 in relation to long term network projects that have not yet been implemented. $518m Capital expenditure2 Capital expenditure to adjusted operating revenues $ 1 7 8 M $ 1 5 9 M CLOUD FIXED NETWORK AND INTERNALTIONAL CABLE CAPACITY IT SYSTEMS MOBILE NETWORK AND 5G STANDALONE READINESS PROPERTY DATA CENTRES SUNDRY $ 1 1 M $ 4 1 M $ 1 0 M $ 3 7 M $ 8 2 M 2 Capital expenditure is a non-GAAP measure and is defined in note 2.5 of the financial statements. 3 Capital expenditure to operating revenues for FY23 is calculated on adjusted operating revenue (excluding the gain on Connexa sale) to enable a meaningful comparison. 13.4% (FY23 13.2%3) Ko te pae anamata, whakamaua 17 Spark New Zealand Annual Report FY24 Our Board and Leadership Squad Our Board 1. Justine Smyth CNZM Chair Justine joined the Board of Spark New Zealand in December 2011 and became Chair in 2017. She has extensive experience in governance, mergers and acquisitions, taxation, and the financial performance of large corporate enterprises, as well as small and medium enterprises (SMEs). Her background is in finance and business management, having been a Partner with Deloitte and Group Finance Director at Lion Nathan. Justine is currently Chair of The Breast Cancer Foundation New Zealand and Chair of Mondiale VGL Group and is a former director of Auckland International Airport Limited. Justine has a Bachelor of Commerce from the University of Auckland and is a Fellow of Chartered Accountants of Australia and New Zealand and a Chartered Fellow of the Institute of Directors. In 2020 Justine was appointed a Companion of the New Zealand Order of Merit for services to governance and women. 2. Alison Barrass Non-executive Director Alison joined the Board in September 2016. She brings a broad range of skills, including knowledge and expertise in the fast-moving consumer goods (FMCG) sector and in governance, leadership, and marketing-led innovation. Her background includes 30 years’ experience at major international FMCG companies, including PepsiCo, Kimberley-Clark, Goodman Fielder, and Griffins Foods. She is currently a director with Rockit Global, Zespri, Suncorp NZ, Babich Wines, and AA Insurance and is a former director of GWA Group and former Chair of Tom & Luke. Alison has a Bachelor of Science from the University of Southampton and a Business Diploma in Marketing from the University of Auckland. 1. 2. 3. 4. 5. 6. 7. 8. Hello tomorrow 18 Our Board and Leadership Squad 5. Jolie Hodson MNZM Chief Executive and Executive Director Jolie joined the Board in September 2019. Her appointment to CEO in July 2019 followed a substantial career within Spark, leading different areas of the operating business over a six-year period. As CEO, Jolie is responsible for ensuring the company has a sound strategy and builds a team around her that is able to deliver the digital infrastructure, products and services, and innovation that supports Spark’s customers and Aotearoa to win big in a digital world. Jolie is a strong advocate for diversity and inclusion, digital equity, and the role of technology in enabling Aotearoa’s transition to a high productivity, low-carbon economy. Jolie is a member of the Climate Leaders Coalition Steering Committee, including two years as the Convenor. In 2024 Jolie was recognised in the King’s Birthday Honours as a Member of the New Zealand Order of Merit for services to business, governance, and women. 6. Lisa Nelson Non-executive Director Lisa joined the Spark Board in May 2024. She is an accomplished finance and business development executive with 25 years of global operating experience across the financial services, software, and technology industries. Lisa most recently served as Managing Director of M12, Microsoft’s venture fund, which she co-founded. Prior to that she held various executive roles at Microsoft spanning business development, investor relations, strategy, financial reporting, and accounting. Lisa’s current governance appointments include Destiny Tech100 Inc, Seattle Bank, and Banqer Limited, a New Zealand-based edtech startup, and she is a former director of Astra Space Inc. Lisa’s advisory roles include several early-stage tech startups and ventures funds, including Movac in New Zealand. Lisa is based in Seattle, Washington, and is a certified public accountant licensed in the State of Washington and a Qualified Financial Expert in accordance with US Securities and Exchange Commission standards. 7. Sheridan Broadbent Non-executive Director Sheridan joined the Spark Board in August 2022 with an executive and governance career spanning telecommunications, ICT, infrastructure, and energy. Her governance experience includes her role as Independent Director for Manawa Energy and Downer EDI Limited. Previous governance experience includes her roles as Chair of Kordia, Chair of Pipeline and Civil Group, Director of Transpower, and former member of the Government’s Cyber Security Advisory Committee. Sheridan holds a Bachelor of Commerce from the University of Auckland, is a Chartered Member of the Institute of Directors, and is a graduate member of the Australian Institute of Company Directors. 8. Warwick Bray Non-executive Director Warwick joined the Board in September 2019. He brings over four decades of experience in the international telecommunications, technology, and media sectors, most recently in senior executive roles at Telstra. During his nine years at Telstra up until 2018, Mr Bray’s executive roles comprised Chief Financial Officer, Group Managing Director Product, Executive Director Mobile and Head of Corporate Strategy. Earlier in his career, he was a Managing Director at JP Morgan (London) and Dresdner Kleinwort Wasserstein (London) in telecommunications equity research. He also worked at McKinsey & Company in Europe, advising telecommunications companies on strategy, regulation, and operational improvement, and as a network systems engineer at Hewlett Packard. Mr Bray has served on the GSMA strategy committee, the boards of Hong Kong mobile business CSL and Australian pay TV operator Foxtel, and as Chairman of the Australian Mobile Telecommunications Association. He is currently a director with Woolworths Group. He holds a Bachelor of Science (Hons) and a Masters in Business Administration from the University of Melbourne. 3. David Havercroft Non-executive Director David joined the Board in October 2021, bringing skills and experience from a career in the technology industry that has spanned more than 35 years. He held a number of leadership roles at Spark New Zealand from 2009-2017, including Chief Operating Officer and Chief Technology Officer. Prior to this he held executive and management positions in IBM Asia Pacific, Cable & Wireless, and BT. David is currently a director of Westpac New Zealand, and was formerly a director of Kordia, Connect 8, Southern Cross Cable Network, and Kiwi Wealth. 4. Gordon MacLeod Non-executive Director Gordon joined the Board in August 2022. He is a highly credentialed business leader, who held a range of senior executive roles over a 15-year tenure at Ryman Healthcare Group, including Group CEO from June 2017 to October 2021. Prior to this Gordon was a Corporate Finance and Advisory Partner with PwC and was also the Finance Director of a high-tech UK listed company based on the Cambridge Science Park in England. Gordon is an Independent Director of NZX-listed Delegat Group, a trustee of Breast Cancer Foundation NZ, and is the Advisory Chair of two private companies. He holds a Bachelor of Commerce from the University of Canterbury, is a Fellow of Chartered Accountants of Australia and New Zealand, and a Member of the Institute of Directors. Ko te pae anamata, whakamaua 19 Spark New Zealand Annual Report FY24 Strategic role of the Board Spark’s Board plays a critical role in helping to guide and test company strategy, by engaging in an ongoing conversation with the Leadership Squad around key strategic decisions. These decisions are in relation to the long-term strategic planning and direction of the business and our ability to create value in the medium and long term. It also includes non-financial performance in areas such as customer experience, governance, and sustainability. The Board approves and monitors SPK-26 (our business strategy) and has oversight of cyber security and maturity, modern slavery, and climate change risk. For a detailed explanation of the Board’s oversight of climate risk and opportunities see page 91. As the body elected by shareholders to protect and enhance the value of Spark’s assets, the Board has oversight of Spark’s financials and the annual and three-year planning processes. Board members engage in robust discussions with management around the strategic direction of the business to test and ensure investment is going towards the things that will deliver the best outcomes for the company and shareholders. This flows through to Spark’s remuneration policies, where there is Board involvement in setting targets and hurdles for short-term and long-term incentives. Company Secretary The Company Secretary is responsible for supporting the effectiveness of the Board by ensuring that its policies and procedures are followed and for coordinating the completion and dispatch of the Board agendas and papers. The Company Secretary is a position distinct from the Leadership Squad and is accountable to the Board, via the Chair, on all governance matters, as further described in the Board Charter. Board renewal and succession Spark’s Board has an appropriate mix of tenure, skills, diversity, and experience. The Board skills matrix on page 21 outlines the qualifications, capabilities, geographic location, tenure, and gender of each member of the Board. Ethnicity information is available on page 72 of this report. There is an ongoing Board succession programme, which is focussed on finding new directors with relevant skills and experience that complement the diverse perspectives already represented around the table. During FY24, as part of the Board’s ongoing succession planning, Lisa Nelson joined the Board as an independent Non-executive Director, effective May 2024, and Charles Sitch resigned as an independent Non-executive Director with effect from 3 November 2023. We wish to thank Charles for his huge contribution to the Board over his twelve-year tenure. Charles played a unique role in guiding the business from its telco origins to the digital services provider it is today. Hello tomorrow 20 Our Board and Leadership Squad Justine Smyth Alison Barrass David Havercroft Gordon MacLeod Jolie Hodson Lisa Nelson Sheridan Broadbent Warwick Bray Qualifications BCOM, FCA, CFINSD BSC, DIP BUS, MARKETING BA BCOM, FCA BCOM, FCA BA BCOM BSC. (HONS), MBA Capability Strategic knowledge for scale telco/technology businesses Financial/commercial Risk management/regulatory and/or sustainability Customer insight/retail/brand People leadership and culture Listed company governance Capital markets/capital structure Digital/data/new markets Geographical location NZ NZ NZ NZ NZ USA NZ Australia Tenure (years) 12.7 7.9 2.9 2 4.9 0.2 2 4.9 Gender F F M M F F F M KEY: High capability Medium capability Board skills matrix To emphasise skills, the Board have specifically limited each Director to a maximum of six capabilities, including up to three high capabilities. Definitions of categories of capability: Strategic knowledge for scale telecommunications and technology businesses: experience as a senior executive in, or as a strategy professional advisor to, large telecommunications and/ or technology businesses. Financial/commercial: a strong accounting and finance background, most likely being a chartered accountant, having held the position of CFO in a significant publicly listed company, or leadership position in a professional services/advisory firm. Risk management/regulatory and/or sustainability: experience in identifying and mitigating both financial and non- financial risks, experience influencing public and regulatory policy decisions and outcomes, or experience in the design and application of sustainability frameworks. Customer insight/retail/brand: experience as a senior executive responsible for driving customer experience by effectively using insights, optimising customer journeys, and building brands. People leadership and culture: experience as a CEO of a significant publicly listed company or large private standalone company. Leadership skills including the ability to build organisational culture. Listed company governance: listed company Board experience other than Spark. Experience with sophisticated governance structures. Capital markets/capital structure: strong knowledge of debt and equity capital markets, and experience with mergers and acquisitions, and/or dealing with a range of funding sources and capital structuring models. Digital/data/new markets: experience as a senior executive in, or as a professional advisor to, digital and/or data businesses, or businesses in emerging or new markets. Experience in the use of digital channels and the latest innovative and digital technologies. Ko te pae anamata, whakamaua 21 Spark New Zealand Annual Report FY24 Our Leadership Squad 1. Greg Clark SME and Consumer Director As SME and Consumer Director, Greg is responsible for leading the retail, channels, and small-medium business teams that focus on delivering great outcomes for our customers. Greg joined Spark in 2013 and led the transformation of the broader retail network and Spark’s SME operating model, delivering strong revenue growth and higher levels of customer engagement, before joining the Leadership Squad in July 2023. Prior to this he held a number of senior roles across the telecommunications industry in New Zealand and Australia, including Allphones, Nokia, and Ericsson. Greg has a Bachelor of Commerce and Administration from Victoria University, Wellington. 2. Heather Polglase People and Culture Director Heather was appointed People and Culture Director in September 2019. She joined Spark in 2013 and has over 20 years’ experience as a Human Resources (HR) professional, with a proven track record for business transformation, talent management, leadership development, and succession planning across a range of industries, including FMCG, retail, hospitality, technology, and telecommunications. At Spark, Heather has held various senior HR positions and delivered a number of critical initiatives, including being a key architect of Spark’s leadership and development programme to build high-performing teams and leaders. Prior to joining Spark, Heather was a senior HR leader for almost a decade within Progressive Enterprises then spent two years in Australia leading HR, Strategy & Change Management at Dan Murphy’s. She has a Bachelor of Business Studies Degree (Hospitality Management) from Auckland University of Technology. 3. John Wesley-Smith Strategy and Regulatory Director John Wesley-Smith joined the Leadership Squad in August 2023 as Strategy and Regulatory Director, responsible for leading the development of Spark’s business strategy and Spark’s contributions to industry, regulatory, and public policy processes. John joined Spark in 2005 and has led Spark’s industry and regulatory affairs teams for the last 14 years. 1. 2. 3. 4. 5. 6. 7. 8. 9. Hello tomorrow 22 Our Leadership Squad He has played a pivotal role in many of Spark’s major capital investments and transactions and represents Spark on the Board of the Southern Cross Cable Network. John started his career as a solicitor at Russell McVeagh and has a Bachelor of Laws and a Bachelor of Commerce from Victoria University of Wellington. 4. Leela Ashford (nee Gantman) Corporate Relations and Sustainability Director Leela joined Spark as Corporate Relations and Sustainability Director in January 2020, bringing with her over 20 years’ experience in corporate and agency roles in New Zealand and Australia. Prior to joining Spark, Leela was Head of Communications at Fletcher Building, and before this External Relations Director at beverages group Lion in Australia. As Spark’s Corporate Relations and Sustainability Director, Leela is responsible for reputation management, internal communications, government, industry, and community engagement, the company’s sustainability strategy, and the charitable activities of the Spark Foundation. She also serves as a Trustee on the Spark Foundation Board. Leela holds a Bachelor of Arts in Communications from the University of Technology Sydney. 5. Mark Beder Customer Director – Enterprise and Government As Customer Director for Enterprise and Government, Mark supports corporate, enterprise, and government customers to grow and become more productive and sustainable through technology, leading the B2B sales, technology, and service teams across Spark. He is also responsible for Spark's investments into emerging technologies and growth markets, including digital health, data centre infrastructure, the internet of things (IoT), and converged technology solutions. Prior to this Mark held a range of senior technology positions within Spark, most recently as the Chief Operating Officer, where he was responsible for building a highly resilient, automated, and secure network through investments into fixed and mobile networks, IT infrastructure, operations centres, cyber defence, and physical infrastructure. Prior to joining Spark, Mark worked for Ernst & Young Consulting in Auckland. He has a Bachelor of Commerce from the University of Auckland. 6. Matt Bain Data and Marketing Director As Data and Marketing Director, Matt brings his digital marketing and customer experience skills to place the customer at the centre of Spark’s strategies. Matt joined Spark in 2018, and was previously based in Amsterdam as European Managing Director for brand experience agency AKQA, with responsibility for over 500 employees across five countries. Over a 20-year international career, Matt has worked with some of the world’s biggest brands, including Nike, Heineken, Mini, Rolls Royce, Siemens, EA Sports, Audi, Phillips, Tommy Hilfiger, and KLM amongst others. He has extensive experience using data, and technologies like Artificial Intelligence (AI) to enable organisations to better understand and predict their customers’ needs more accurately. Matt holds a Master of Commerce from the University of Auckland. 7. Melissa Anastasiou General Counsel As General Counsel, Melissa leads Spark’s legal and compliance functions, providing Spark with strategic legal and commercial guidance, ensuring the business acts lawfully and with the utmost integrity. She has also played a pivotal role in leading out Spark’s diversity and inclusion programme. Melissa joined Spark in 2009 and undertook a range of legal roles across the organisation before being appointed as Group General Counsel in 2012. Prior to joining Spark, Melissa spent a number of years as a Senior Legal Counsel for United Kingdom (UK) mobile provider Telefonica O2. She also has extensive experience working for leading corporate law firms in Auckland and the UK. Melissa has a Bachelor of Laws from Victoria University of Wellington. 8. Renee Mateparae Network and Operations Director Renee joined the Leadership Squad in July 2023 as Network and Operations Director. In this role she is responsible for Spark’s highly resilient, automated, and secure networks, including fixed and mobile networks, operations centres, physical infrastructure, and cyber defence. Renee joined Spark in 2017 and led the rollout of our 5G and Internet of Things networks during her time as Technology Evolution Tribe Lead. Prior to this, Renee held a number of leadership roles across the product and ventures areas of the business. Prior to Spark Renee held several senior roles at Air New Zealand, Accenture, and Macquarie Group. In 2019 Renee was appointed to the board of The Warehouse Group for a two-year term as part of the Future Directors programme. Renee has an honours degree in Engineering, specialising in Automation & Control Engineering, as well as a post-graduate diploma in Business from Massey University. 9. Stefan Knight Chief Financial Officer Stefan was appointed Chief Financial Officer in December 2019. Stefan has been with Spark since 2003 and has worked across a range of finance and business performance related roles. He played a key role over recent years in important Spark initiatives, including the Turnaround and Quantum business improvement programmes and, more recently, was part of the leadership group that helped shape the organisation’s move to an Agile way of working. Stefan is a Chartered Accountant and began his career at Deloitte working across both Audit and Corporate Finance. Stefan has a Bachelor of Commerce in Accounting and Finance from the University of Auckland. Ko te pae anamata, whakamaua 23 Spark New Zealand Annual Report FY24 Creating value for our customers Social capital As New Zealand’s largest telecommunications and digital services company, we have relevance for almost every New Zealander. Our customers range from individual New Zealanders and households, to small businesses, not-for-profits, government, and large enterprise customers, delivering mobile, broadband, cloud, and digital services. We are excited by the opportunities digitisation brings and recognise our responsibility to help Aotearoa leverage new capabilities to become more productive and sustainable through technology. Connected customers OUTCOMES 24 Hello tomorrow Creating value for our customers Customer experience We have an enduring focus on improving the experiences of Spark customers, by making their interactions with us simple and effective. This work is showing up in customer feedback, with our measure of customer satisfaction, our interaction net promoter score (iNPS) up 7 points to +38 in FY24. A simple, data driven organisation A core pillar of our strategy is to create a simple, data driven organisation, which will underpin our ability to improve customer experiences, drive efficiency, and support future growth. In October, we completed our Plan Simplification Programme, where we moved customers from legacy broadband plans to newer plans that are more suited to customer needs. As part of this, we migrated over 73,400 customers from legacy fibre plans to new fibre plans, moved over 71,200 customers off our Unplan wireless plans to more fit-for- purpose wireless plans, and shifted over 10,900 mobile lines to current plans. Using data and AI to improve transparency Integrating a data driven approach throughout our business has allowed our teams to more effectively identify customer pain points and address the root causes. In FY24, we launched our 'emerging trends' tool – an AI-generated report that identifies monthly changes to customer experience. As an example, this report identified that customers were unhappy with our care team messaging service, particularly when they were passed from agent to agent. In response, the care team was able to make changes to limit the number of messages each agent could handle, which reversed the negative trend. During the year, we also integrated new technology into Spark's wireless broadband modems. This means we can now accurately measure speeds that our customers receive on our 4G and 5G wireless broadband plans, and share this information as an average on our website and in our marketing materials. As a result, our customers are better equipped with the information they need to understand the speeds they can expect when signing up for a wireless broadband plan with Spark. We also continued to optimise our right planning programme Made For You Review, which harnesses the power of AI to analyse a customer’s data, messaging, and calling usage, and then recommends the best and most cost-effective plan for them based on their activity. Spark's customer care teams underwent a major training programme in FY24 to equip them to understand the data served up by Made For You Review, so they can have better conversations with customers and guide them towards the right plan for their needs. When utilising any of our data and AI capabilities, we are guided by our AI Principles, Generative AI Policy, Privacy Values, and Privacy Policy, which ensure we take a responsible and ethical approach to the design and operation of AI technologies. Our AI Principles are published on our website, providing transparency for all our stakeholders: www.spark.co.nz/online/about/our- company/governance. See page 34 for further details on our AI Governance and privacy values. Up 7 points to +38 in FY24. CONSUMER AND SMALL BUSINESS INPS The Made For You Review campaign. Ko te pae anamata, whakamaua 25 Spark New Zealand Annual Report FY24 Bringing New Zealanders the best digital-first experiences In the last year we have continued to focus on digital-first care experiences for our customers, to better anticipate customer needs, reduce wait times, and improve the overall experience of interacting with Spark. Our retail and virtual care agents form our United Frontline (UFL) and support our customers across a variety of channels – including call centres, stores, and through digital messaging. Enabling our team to flow across channels ensures our customers receive timely responses and an experience that consistently ’feels like Spark’. This year we saw use of our messaging tool, which is available via the MySpark App or a customer’s preferred messaging app, surpass voice calling as the preferred customer contact method for the first time. Our UFL teams are now utilising the same online journey as our customers, rather than navigating more complex, separate systems. This means Spark agents can see exactly what our customers can see when providing support, which is enabling faster and more effective resolution. As part of our digital first approach to service, this year we introduced Outage Assist, which has significantly improved the service experience for customers experiencing fixed broadband outages. With Outage Assist, we can now proactively notify customers of an issue on their fixed broadband line and provide them with a unique fault tracking link, as well as unlimited calls, texts, and mobile data if they have a pay monthly mobile on the same account. This allows customers to track the resolution of the fault without having to call Spark and keeps them connected with extra mobile data. Customers can also troubleshoot and diagnose household speed issues at any time using the Spark Connection Check tool within the MySpark app. Since introducing Outage Assist, we saw a 35% decrease in our inbound broadband call volume when compared to the same period in FY23. To further enhance speed of resolution we introduced help videos as a new section in the MySpark app during the year. Initially targeting high volume query types, customers can be linked to these videos from web, phone, and messaging interactions before speaking with a Spark agent. We also introduced a multi-channel e-commerce experience using the MySpark app and website, which has driven a 26% increase in website and app revenue growth collectively. Introducing Hello Tomorrow In September we launched our new brand positioning, ‘Hello Tomorrow’, which will underpin our brand building efforts in the years ahead. Hello Tomorrow represents our belief that technology creates opportunities, and when you feel you have an opportunity today, it changes how you see tomorrow. We launched the new positioning with a TV campaign, which was shot from the point of view of a piece of technology. This technology narrates the commercial and shares that while it is capable of many things, it doesn’t know what it feels like to take a chance, like people do every day. This brings to life our belief that technology’s role is to enable people to do great things. “This year we saw use of our messaging tool surpass voice calling as the preferred customer contact method for the first time.” Hello tomorrow 26 Creating value for our customers Spark Open Audition In October we launched ‘Spark Open Audition’ – a nationwide search for Aotearoa’s next emerging musician who would receive $10,000 worth of prizes, including studio time at BIG FAN recording studio to help launch their career into the music industry. We encouraged applicants to enter by posting a ‘duet’ with a video of homegrown rapper JessB on TikTok. 18-year-old Dunedin local, Niamh Crooks, was voted by Aotearoa as the winner, with her original song, ‘Devotion’ striking a chord with New Zealanders. The campaign generated over 17 million views, with #SparkOpenAudition trending number two on TikTok. Spark Game Arena We launched Spark Game Arena during FY24 with a nationwide online tournament, 'The Rise Cup featuring Fortnite'. Delivered in partnership with leading esports organiser LetsPlay.Live, over 1,200 tournament participants competed over three weekends for the chance to win a share of $30,000. Our ambition is for Spark Game Arena to become the home of gaming at Spark through partnerships with leading brands, industry partners, and events. Spark Game Arena aims to offer exciting new gaming products and experiences, while maintaining a commitment to safe, inclusive, and equitable experiences, which is underscored by partnerships with Netsafe and Spark Foundation partner, Digital Natives Academy. Noise Control In partnership with Spotify, we launched Noise Control in August – a first of its kind music show. Hosted by DJ duo The Katayanagi Twins, Noise Control presented 10 live music events in Auckland, offering Spark customers exclusive access to intimate performances and Q&A sessions with top local artists. Featuring musicians like Riiki Reid, Troy Kingi, Muroki, and There’s a Tuesday, Noise Control put a spotlight on emerging kiwi talent and provided our customers with an unforgettable experience. Bringing New Zealanders the entertainment that moves them Ko te pae anamata, whakamaua 27 Spark New Zealand Annual Report FY24 Empowering the businesses creating Aotearoa’s tomorrow Spark is a trusted partner to New Zealand’s business community, supporting businesses of all sizes to harness the power of technology to become more productive and sustainable. Supporting the growth of small- medium businesses Spark supports over 110,000 small to medium businesses (SMEs) around New Zealand through our network of 24 local Business Hubs. Each Business Hub is locally owned through our licensee model, meaning they have a deep understanding of the needs of their local customers. Customers are responding positively to this ‘local like you’ model, with our SME customer satisfaction score up +8 points in FY24 to +48. Our SME customers are feeling the pressures of a tough economic environment, with their number one concern being escalating costs. With this in mind, our focus is on enabling SMEs to use technology to become more productive – so they can do more, with less. In FY24, we launched our ‘right-sized solutions’ campaign, which supports our SME customers with plans and technology that meet their individual needs. In FY24, we also continued our partnership with the Government’s Digital Boost programme, which equips small business owners with the practical skills needed to get their businesses online. More than 69,000 SME users have engaged with the platform to date. Our Director of Consumer and SME, Greg Clark, sits on the Digital Boost Alliance’s Board of Governance. Spark also provided the connectivity and IT solutions for Digital Boost’s Tech Boost service, that is helping businesses access fit-for-purpose IT gear and tools, which launched in June. Spark Business Lab Spark Business Lab educates and engages SME businesses through events, educational content, and hands-on digital workshops across the country. In FY24, Spark Business Lab delivered two events in its Future State series, presented in collaboration with Semi Permanent. In November, global sustainability leaders in food, fashion, and design travelled to Wellington to present 'Future State 002: The Turning Point', which focussed on how businesses can embrace circularity in their own supply chains. In May, an audience of 700 gathered at Spark Arena for 'Future State 003: Ahead of the Curve’, where leaders from organisations such as Ikea, Accenture, and NYU Stern Business School explored the driving forces behind their digital transformation. Supporting kaupapa Māori Spark’s business customers include a variety of Māori businesses across the country. In FY24, we partnered with the Media Design School to offer students an opportunity to respond to a real client brief, like one they might encounter in the industry. The students were challenged to design a campaign to help Spark celebrate Matariki and encourage rangatahi to explore careers in technology. The selected concept was called 'Matariki Hunga Nui' and presented an augmented reality experience that aimed to bring people together under the stars of Matariki. In this concept, augmented reality offered users an immersive experience that guided them in learning how to use Te Waka o Rangi – the celestial navigation tool – to locate Ngā Whetū o Matariki. Matariki Hunga Nui was awarded silver in the Student & Academic Toitanga at the Designers Institute of New Zealand Best Design Awards. During the year we supported our partner Te Pūtahitanga o Te Waipounamu, an organisation that seeks to create social impact by investing directly in initiatives developed by whānau or community groups. This involved hosting Te Pūtahitanga o Te Waipounamu at Te Tihi Health conference in Hamilton, taking them for a tour of our Innovation Studio and offering them a place on our AI for Business Mini MBA, alongside other Māori business partners. Future State 003 at Spark Arena. Hello tomorrow 28 Creating value for our customers Harnessing the power of AI to combat disease outbreaks in livestock A mass disease outbreak could have a devastating effect on livestock, the farming community, and New Zealand’s economy. Concerned by this, veterinary startup, Ingenum wanted to develop an early warning system to detect notifiable diseases in livestock and enable a timely biosecurity response. With the knowledge that tell-tale signs of disease may be hidden within the plethora of on-farm data being captured every day around the country, Ingenum, partnered with Qrious to develop an AI solution. The team developed Sentinel-AI – a bespoke AI system that integrates inputs from multiple sources, including government agencies, veterinary practices, on-farm technology and abattoirs and analyses the incoming data in real time, while respecting the privacy of its sources. In the process it develops a ‘picture’ of typical patterns of livestock health, which allows it to detect and flag any anomalies that may be indicative of disease. This real-time data tracking will enable all stakeholders, including disease response teams, to get ahead of the curve and make better informed decisions to protect Aotearoa’s biosecurity and farming industry. Spark Business Group Spark Business Group continued to support New Zealand’s largest businesses and government ministries to harness the power of technology for productivity and growth, with some notable examples outlined below. As businesses continue to migrate their operations to the cloud, in FY24 Spark’s cloud business, CCL, launched CloudIQ – a managed hybrid cloud service designed to help businesses seamlessly manage their diverse cloud platforms, including on-premise, private, and public clouds. CloudIQ leverages CCL’s local data centres, as well as partnerships with major global cloud providers, to provide flexible cloud solutions designed to meet businesses’ needs today and to prepare them for the future. During FY24, Spark also introduced ServiceFlex, a modular IT service management solution that combines smart technology, automation, and AI to enhance IT service delivery. ServiceFlex provides features such as IT service desk solutions, proactive insights, and interactive key performance indicator (KPI) measures, and is designed to streamline IT operations, improve user experience, and reduce costs through automated processes. ServiceFlex is aimed at corporates, enterprises, and government organisations, and was launched with New Zealand Red Cross and Fidelity Life as foundation customers. In March, Spark’s data and AI business Qrious celebrated a decade of pioneering data and AI innovation in New Zealand. Qrious has implemented transformative technological solutions across a variety of sectors. For example, Qrious is helping the world’s largest marketer of kiwifruit, Zespri, to unlock its data to get the highest quality fruit possible onto consumers’ plates, and developing an AI-powered disease detection system with Ingenum. The Qrious team. Ko te pae anamata, whakamaua 29 Spark New Zealand Annual Report FY24 Accelerating Aotearoa businesses one technology generation forward In February, Spark and the New Zealand Institute of Economic Research (NZIER) launched a new report titled ‘Accelerating Aotearoa businesses one technology generation forward’ – examining the state of New Zealand's productivity challenge, and the role advanced digital technologies can play in solving it. The study combined insights from global research into small advanced economies, economic modelling by NZIER, and Spark’s knowledge of current and future opportunities enabled by digital technology. It revealed that a 20% uplift in the use of advanced digital technologies is predicted to increase industry output by up to $26 billion over the next decade and GDP by as much as 2.08% per year. Innovation in action To launch these findings, we brought our business customers, industry experts, and media together to witness innovation in action. Across seven life-size showcases, technology experts demonstrated the productivity benefits to be gained through the implementation of advanced digital technologies. Audiences saw how the use of AI reduces the time it takes to assess damage on New Zealand roads, down from 66 days to just seven, how extended reality headsets can save precious time for both medical specialists and patients, and how a converged technology solution with MPI is combining on-board cameras with IoT, AI, machine learning, cloud computing, and data and analytics, to enable better verification of catch reporting data from commercial fishing activities. To help boost the adoption of advanced digital technologies among New Zealand’s largest organisations, we committed $15 million to an Innovation Fund for our business and government customers, with $12 million allocated to customers already, and an additional $3 million will be available for customers to apply for over three years. AI for Business Mini MBA As part of the research, NZIER asked businesses about their knowledge gaps when it comes to advanced digital technologies – with 44% of respondents stating they did not have enough information about AI to make use of it in their businesses. This inspired Spark to launch New Zealand's first AI for Business Mini MBA programme. In May, 150 business leaders from a variety of sectors embarked on a four-week intensive programme to build their competitive edge with AI. The programme was offered exclusively to Spark business customers and presented in collaboration with Section, a world-leading business education platform based in North America. The course was designed to help participants design AI strategies fit for their businesses. 100% of participants surveyed said they will apply the learnings within their business and 78% said they would consider using Spark to help implement an AI solution for their business. A Spark Health showcase of the future of digital health in New Zealand. Hello tomorrow 30 Creating value for our customers Spark Health Spark Health continued to provide digital services, including software and IT services, to Te Whatu Ora (Health New Zealand). As a result of the macroeconomic environment and a slow down in Government spending, in FY24 Spark Health refreshed its growth strategy with a greater emphasis on the private sector, including primary and community healthcare providers. Here it aims to support customers with digital transformation and emerging technologies such as data, cloud, and AI. As part of this new focus on the private sector, Spark Health added two experienced clinicians as Digital Clinician Leads to the team – Professor Matthew Parson, Clinical Chair of Gerontology, and Dr Karl Cole, a General Practitioner. Spark Wholesale Spark Wholesale supports New Zealand and international service providers with Mobile Virtual Network Operator (MVNO) services, data transport, national backhaul, international connectivity, cloud, internet, IP voice, and satellite services. In the past year, our wholesale business continued to grow by supporting local and global providers, including Content Delivery Networks (CDNs) and cloud platform partners, with their data growth needs. This included providing global cloud providers with higher rate, wholesale international capacity services, including 100Gbps and 400Gbps bandwidths, on Southern Cross and TGA submarine cable paths out of New Zealand and strong growth in the ‘application to person messaging’ SMS (A2P One) service, which supports global communication platform providers with their messaging solutions to New Zealanders. Spark was recognised on the international stage in January 2024 at the Pacific Telecommunications Council Awards, where we received the ‘Outstanding Carrier Solutions Provider’ award for investments into our national optical transport network and its self-healing capabilities, which provides resilient connectivity between New Zealand’s major cities. MATTR MATTR operates in a new market of Trust Technology – or what we call TrustTech for short. The TrustTech market is focussed on addressing the challenges governments, businesses, and individuals all face in the digital world, where trust is difficult to establish and hard to maintain. It is an umbrella term for platform capabilities that enable end-to-end trust lifecycle management, for example digital identity credentials. During the year MATTR expanded its operations in Australia and North America, with business development talent in place across both markets. In Australia, MATTR continues to work as the technology provider to the NSW Government’s Digital ID and Verifiable Credentials programme and in July announced a new partnership with Austroads, a member-owned collective comprising the transport authorities of Australia and New Zealand. Austroads is creating a National Digital Trust Service (DTS), which will provide critical digital infrastructure to support Australian jurisdictions in delivering Mobile Drivers Licences (mDL). MATTR will be working closely with Austroads to power the first stage of the project, a pre- production version of the DTS, based on the MATTR VII platform. A Spark Health showcase of the future of digital health in New Zealand. Mini MBA turbo charges AI journey for Te Pūtahitanga o Te Wai Pounamu Te Pūtahitanga o Te Waipounamu is a social impact investment agency working on behalf of eight Te Waipounamu iwi to determine solutions to support whānau development. Martin Conway, Toki Kaupapa Matua (Projects Specialist), says his employer is motivated by the potential productivity gains offered by AI, allowing kaimahi (employees) more time for engagement with whānau, supporting their commissioned initiatives, and communities they serve. For his final report in the AI for Business Mini MBA course, Martin presented an AI use case that aims to streamline the funding application process by an additional 20%. Martin says that once Te Pūtahitanga o Te Waipounamu’s policy and procedures protecting data sovereignty, and outlining AI governance, are in place, this will be a starting point for the use of AI into other workstreams. While AI will complement the expertise and talent within their workforce, he is keen to emphasise the point that whānau voice is at the heart of all that they do, which is something that cannot be replaced by AI. Ko te pae anamata, whakamaua 31 Spark New Zealand Annual Report FY24 Keeping our customers safe online Spark puts cyber security, customer safety, and privacy at the forefront of everything we do. We invest in the security of our own networks and also support our business customers with their security needs. We offer customers a breadth of capability to monitor and detect attacks across their networks and information architecture, reduce business security risk, and improve their security profiles. Cyber security The World Economic Forum’s Global Cyber security Outlook Report 2024 identified a stark divide between cyber-resilient organisations and those that are struggling. The report predicts that emerging technologies will exacerbate challenges related to cyber resilience, especially for those that are less capable. In New Zealand, Spark is a trusted advisor to businesses on cyber security and works alongside cyber security agencies and partners, to monitor and respond to threats. Our Chief Information Security Officer (CISO) has responsibility for Spark’s cyber security, while the Audit and Risk Management Committee of Spark’s Board has governance responsibility. We govern our security programme using the industry’s best practice frameworks, including ISO27001 and NIST CSF (National Institute of Standards and Technology Cyber Security Framework). All Spark services and networks are built with multiple checks in place during the ‘design’, ‘build’, and ‘operate’ phases, to ensure they are deployed with industry leading levels of security, and we continually assess and measure our cyber security maturity level. Our cyber security strategy is shaped with the following inputs: • Dynamic road mapping: we adopt a dynamic three-year outlook on our security posture in an effort to predict and prepare for potential cyber threats in the coming years, whilst remaining flexible to the realities of threats as they arise. Roadmap management allows our team to scrutinise our cyber security strategy on a quarterly basis, considering evolving global cyber security threats and any new technologies we can implement to enable and protect our business, people, and customers. • Maturity assessments: our goal is to always be aligned with, or even exceed, the latest industry standards to consistently elevate our cyber security maturity. We audit our security maturity through internal and external audits, with frameworks like NIST, SOC-CMM, and a proprietary CMMI Maturity model developed by Accenture forming the backbone of these assessments. In FY24 we partnered with Google’s Mandiant to undertake a comprehensive maturity assessment, which will enable us to continue to evolve and uplift our maturity even further. • Alignment with Spark’s business strategy: our cyber security strategy is carefully aligned to both our wider business strategy and the network evolution strategy, to ensure it can support our business objectives. The Cyber Defence Tribe at the 2023 New Zealand Women in Security Awards. Spark people also play a critical role in helping to detect and defend against potential cyber security threats. For that reason, all our people are required to undertake regular cyber security training, to equip them in identifying and helping to mitigate potential threats. We have a large cyber security team with over 150 security subject matter experts and processes that ensure appropriate ownership, oversight, and ongoing risk management is applied to our customers’ and Spark’s IT systems and data. Our Incident Response Plan governs how we respond to threats, and we have invested heavily in our threat intelligence platform. In August, Spark entered into a partnership with leading global cyber security provider, Radware, to resell its suite of security solutions to enterprise customers. As part of this partnership, we have also integrated Radware’s Cloud DDoS Protection Service into our existing IT infrastructure as an added layer of protection against complex DDoS attacks – where multiple ‘bots’ are used to send massive amounts of internet traffic to a website server, causing it to become overloaded and unable to handle legitimate user requests. In November, Spark’s Cyber Defence Tribe won the award for Best Place to Work at the 2023 New Zealand Women in Security Awards. Hello tomorrow 32 Creating value for our customers Online safety We recognise the important role we must play in protecting our customers from the growing list of threats they face online – including scams, cyber security risks, and objectionable material. Scams Spark has an important role to play in helping prevent our customers falling victim to increasingly frequent and sophisticated scams. Because we cannot stop scamming from occurring, we are focussed on blocking scams where we can and empowering our customers to be vigilant. We work to limit the number of scam calls our customers receive by monitoring unusual calling activity and blocking offending numbers. We also block many messages containing known ‘bad URLs’, to prevent customers inadvertently clicking on the links. To further strengthen our defence against malicious activity, in February we integrated the Malware Free Networks service from the Government Communications Security Bureau’s (GCSB’s) National Cyber Security Centre into our network. This service helps to reduce incidences of mobile and broadband customers inadvertently downloading malware onto their devices, by blocking confirmed malicious websites on our network. In April, we further enhanced our customer protections by introducing a new automated Short Message Service (SMS) scam firewall. The firewall, which is informed by a global database of confirmed scam content, significantly reduce the amount of scam texts being received. This is by our customers detecting URLs, phrases, and ‘calls to action’ that are known to be used in SMS scam campaigns, and blocking them – preventing them being received by the customer. We have been monitoring outgoing SMS traffic patterns from our own network in an effort to detect scams for many years, and while this has resulted in a significant reduction in scam SMSs sent from our own network, the new filter improves our ability to detect and block this activity coming through to our customers from other mobile networks as well. During FY24 we added another layer of protection to help prevent people falling victim to fraudulent Spark impersonations via email, by adopting a technology called ‘Brand Indicators for Message Identification’ (BIMI). BIMI shows either our trademarked logo or a blue verification tick in the sender section of some email platforms when the communications are legitimate. We also provide a number of products and services to further protect customers from scams. This includes a landline product called Call Screen, a cordless home phone that contains technology that can effectively help customers protect themselves from scam calls, and McAfee Security Standard on eligible broadband plans, which helps to protect customers from scams, viruses, and other threats. While these measures collectively provide safer online experiences, we continue to regularly remind our customers of the evolving scam landscape and the importance of remaining vigilant online. Illegal child sexual abuse material (CSAM) Child sexual abuse material is abhorrent and illegal and a growing issue in Aotearoa and globally. To help protect our customers from this content, and to help stop its dissemination, we implement a range of blocking measures on our network and provide additional tools for our customers to utilise on their own devices. Spark has been a long-standing participant in the Department of Internal Affairs’ (DIA) Digital Child Exploitation Filter, which blocks CSAM. Our Corporate Relations and Sustainability Director is a member of the Independent Reference Group that maintains oversight of the filter. During FY24 we announced an additional agreement with DIA to block access to websites containing CSAM on our network. Building on this progress, in March we announced we would become the first New Zealand internet service provider to become a member of the Internet Watch Foundation (IWF) allowing us to block CSAM contained on the Foundation’s URL List on our network. This list includes criminal websites that have been individually assessed by an IWF analyst and is updated twice daily. We also formally endorsed WeProtect Global Alliance’s ‘11 Voluntary Principles to Counter Online Child Sexual Exploitation and Abuse’, which provides a framework for the digital industry to help combat online child exploitation. Tools and education to protect our customers We educate and alert customers to fraudulent activity through our scam alert webpage, our social media channels, direct customer communications, and via our customer service teams. We also partner with Netsafe to develop and disseminate scam education material, such as brochures, which are available in store or online. We also provide all our broadband customers with access to Net Shield, which helps to block harmful content and enables safe searching. Our customers can turn the Net Shield service on and off as regularly as needed, by logging into their account on the Spark website. “We recognise the important role we must play in protecting our customers from the growing list of threats they face online – including scams, cyber security risks, and objectionable material.” Ko te pae anamata, whakamaua 33 Spark New Zealand Annual Report FY24 Using technology safely and protecting customer privacy Using technology safely and protecting our customers’ personal information are responsibilities we take seriously. As we continue to embed new technologies like data and analytics and artificial intelligence (AI) through our business processes, we also continue to evolve our approach to AI and data ethics, privacy, and governance, to ensure we have the right guardrails in place to protect our customers’ information. We are committed to keeping customers’ personal information safe and managing it in ways that align with customer expectations, Spark’s Artificial Intelligence Principles, Spark’s Privacy Values, and the law, including the Privacy Act 2020, and the Telecommunications Information Privacy Code 2020. Data and AI governance The rapid development of AI technologies brings many benefits to New Zealand, while also presenting increasingly complex challenges in ensuring that both data and data applications, are used by people and organisations ethically, safely, and lawfully. Spark’s use of AI is guided by our Artificial Intelligence Principles, which focus on a responsible and ethical approach to the design and operation of AI technologies within our business. Our principles are focussed around seven key areas: human centred; ethical design; diversity, inclusivity, and bias; safety and reliability; privacy; informed human decision-making; and explicability and transparency. These Principles are regularly reviewed and updated as we continue on our AI journey. During FY24 we evolved our data governance strategy, restructuring our governance forums to enable a more targeted and purposeful approach. We established an AI Executive Governance Committee, which provides executive oversight of Spark’s deployment of AI across the business, including investment choices, benefit realisation, and associated changes to operating model design. We also established a Data Ethics Committee, which is more specifically focussed on ensuring we are using data and data applications, including AI, ethically, legally, safely, and in line with stakeholder expectations. Operational matters have now been integrated into our Information Security Risk Management Committee, which oversees data security and other risk domains more broadly. The Data Ethics Committee includes representatives from the Leadership Squad, together with relevant subject matter experts and provides oversight as our Artificial Intelligence Principles are further embedded into our systems and processes. Up until this year our use of AI within Spark has been narrowly deployed against specific use cases and controlled by a centralised, specialist team who have continued to ensure our use of this technology aligns to our Artificial Intelligence Principles. For example, we have used AI to implement data-driven marketing and to increase automation within our network. The acceleration of Generative AI opens up new opportunities for a much broader number of Spark people to utilise AI in their day-to-day activities and is another pillar to our overall AI roadmap. We are piloting and then scaling different use cases across the business while enhancing our deployment approach in a carefully structured and staged manner. As this occurs, we will establish clear ownership by senior leaders across the business for change management in their areas, supported by our subject matter experts, and while maintaining Leadership Squad oversight through our governance forums. To support this, during FY24 the Data Ethics Committee oversaw the creation and adoption of a new Generative AI Policy. This is an internal policy that operationalises our Artificial Intelligence Principles by providing specific usage guidelines for our people who are working with Generative AI tools within Spark. We are now disseminating and embedding this policy, in line with the staged rollout of Generative AI tools across the business. To further embed our AI principle of privacy into our processes, we also require all new AI work that uses personal information in a new way to go through a Privacy Impact Assessment, which is then reviewed by a Privacy Ambassador (as explained below) or Privacy Officer. The Privacy Ambassador either approves, declines or helps reframe requests that sit within guidelines, or escalates the request to the Privacy Officer and the Spark Legal team (as required) for further investigation and discussion. This process ensures that any privacy aspects of proposed data and AI work are considered prior to any development commencing. Hello tomorrow 34 Creating value for our customers Our privacy programme Spark’s Digital Trust team leads Spark’s privacy programme, providing frameworks, tools, and training to support Spark people to follow our Privacy Policy and Values. Internal processes and controls to safeguard customer privacy: • Risk assessments New products and services are assessed for any privacy risks, with appropriate mitigations embedded into their design and implementation. For many of our business units, these assessments are conducted by Spark Privacy Ambassadors – specially trained team members equipped with Spark-made assessment tools and supported by dedicated privacy experts. New vendors are also screened to ensure privacy will be managed appropriately. • Personal information access management Spark’s Call Investigation Centre (CIC) manages requests for personal information from customers and government agencies. We report agency request volumes in our Spark Transparency Reports: www.spark.co. nz/help/privacy-and-safety/how-we- manage-privacy/spark-transparency- report • Responding to data breaches Our dedicated Data Breach Reporting Tool enables any breaches to be reported by our people and managed in a customer-focussed way and in compliance with the Privacy Act 2020. Awareness and support for our people: • Privacy resources Our Policy Playbook contains guides for applying privacy considerations to everyday activities and comprehensive resources are provided for our people online. • Privacy training All our people must complete privacy training on joining and annually, to ensure privacy considerations and Privacy Act compliance remains top of mind. • Resolving privacy issues Our people are encouraged to raise any privacy issues they become aware of via the Digital Trust team or Spark’s internal online whistleblowing tool, the Honesty Box. Supporting our customers: • The Privacy and Online Safety section on our website contains a range of tools and services to help customers safely manage their privacy and security. Privacy compliance and reporting In FY24 our people reported 228 data breaches for investigation, with 30 of these meeting the Privacy Act criteria for notification to affected individuals and the Office of the Privacy Commissioner (OPC). Most notifiable breaches involved fraudsters using personal information obtained from non-Spark sources, such as compromised online accounts or phishing (where fraudsters trick individuals into sharing their personal information). As fraudsters’ tactics continue to evolve, we continually review and update our internal processes and educate our customers around best practice password management and avoiding scams. In FY24 Spark received 17 substantiated privacy complaints from customers and two substantiated complaints through the OPC. These enabled us to identify opportunities for targeted coaching or appropriate enhancements to our practices and processes. Legal and regulatory compliance Under our Code of Ethics all our people are responsible for ensuring we behave ethically and comply fully with all applicable laws and regulations. Spark’s Legal and Compliance Policy sets out the specific accountabilities that our people have for complying with the law. Our people leaders make sure their teams have the information and training necessary to meet these standards, and our Legal and Digital Trust teams support our people with comprehensive frameworks, tools, training, and advice. Every employee is required to complete online training modules on the Code of Ethics and how to apply it, and we reinforce this training through regular internal communication across the business. See: www.spark.co.nz/online/about/ our-company/governance We continue to engage constructively with the Commerce Commission as appropriate, both proactively and reactively, on a case-by-case basis to ensure we are complying with all applicable laws and regulations. This includes working proactively with the Commission on various ‘retail service quality’ (RSQ) initiatives such as consistency of mobile service coverage information. There were no significant instances of non-compliance with laws or regulations, including in respect of marketing communications, in FY24. Ko te pae anamata, whakamaua 35 Spark New Zealand Annual Report FY24 Creating value through our network and technology Manufactured + intellectual capital Our extensive networks and valuable portfolio of digital infrastructure assets underpin Aotearoa’s digital economy and enable the people and businesses creating our country’s tomorrow. Our portfolio includes: • Active infrastructure on 2,176 mobile sites1 • Network connectivity across ~9,400km national fibre backhaul2 • Partnerships with local fibre networks and Chorus to access the ultrafast broadband (UFB) and national copper networks • 22.3MW data centre capacity and 118MW potential development pipeline3 • 35 major network sites (exchanges) • A purpose-built Satellite Earth Station in Warkworth • 41% shareholding in Southern Cross Cable Network, which owns the Southern Cross and the Southern Cross Next international submarine cables • 17% shareholding in mobile towers business Connexa Connected and resilient New Zealand OUTCOMES 1. Includes Spark active equipment on 1,549 third party towers, 514 Rural Connectivity Group (RCG) towers, 98 small cells, and 15 temporary sites as active at 30 June 2024. 2. Includes ~1,400km of Spark owned fibre, and ~8,000km of shared fibre active at 30 June 2024. 3. In August, Spark entered into a conditional agreement to purchase land at Takanini, which would add 48MW to the site. This increased the total development pipeline from 70MW at the end of FY24 to 118MW at time of publishing. 36 Hello tomorrow Creating value through our network and technology Investing in digital infrastructure and next evolution technology New and emerging technologies, such as multi-access edge computing, cloud, IoT, and generative AI, are changing the way we work and connect. These technologies are underpinned by a diverse range of digital infrastructure that is built and operated by Spark and other industry participants. This includes fibre backhaul, which provides the ‘backbone’ connectivity to our fixed and mobile networks; 5G infrastructure, which delivers enhanced network performance for our customers; submarine cables, which carry large amounts of data and connect New Zealand to the world; and data centres, which house the large amounts of data needed for these high-tech tools to operate. During FY24, we invested over $350 million to deliver a highly secure, automated, and resilient network, and in the digital infrastructure that unlocks new commercialisation opportunities, supercharges the competitiveness of our products and services, and supports our customers to grow. Our AI and IT Transformation Programme At Spark, investment in data and AI has been a key feature of our strategy for many years. These capabilities enable us to serve our customers more effectively by better anticipating their needs and help us to deliver our services more efficiently. A pillar of SPK-26 is to create a simple data driven organisation. To deliver this ambition, we have established a Transformation Programme that brings together our work in AI and IT – with the aim of deepening our use of AI, while integrating data and IT across Spark to create efficiencies through the right architecture, automation, and standardisation. We believe that broadening and deepening the use of AI in our business will deliver three key things: • Better customer and people experiences • A fitter and faster business • Higher growth We have dedicated squads who are testing and deploying specific generative AI use cases into different parts of the business, to identify our biggest areas of opportunity. As an example, we are now using AI in our call centres to map customers to the right queue and help address their needs more quickly and effectively. As we explore further AI use cases we are guided by our Artificial Intelligence Principles, our Privacy Values, and our Privacy Policy, which can be accessed on our website: www.spark.co.nz/online/ about/our-company/governance. See page 34 for further details on our AI Governance and Privacy. Ko te pae anamata, whakamaua 37 Spark New Zealand Annual Report FY24 Investing in our data centres Accelerating growth in our data centre business is a core focus of Spark’s strategy. With data usage increasing exponentially, and the proliferation of generative AI, demand for data centre capacity is growing rapidly. We are well positioned to capture our share of this growth, with our nationwide data centre network, our own significant capacity usage, complementary digital infrastructure, such as our fibre networks and subsea cable assets, our relationships with cloud hyperscalers, and our ability to provide products and services direct to customers. Our existing data centre portfolio includes 22.3 MW of total capacity focussed on Auckland (where most current data centre demand is), as well as regional centres such as the Waikato, Bay of Plenty, Wellington, Christchurch, and Dunedin. In Auckland our ambition is to establish three large-scale data centre campuses, including our largest site at Takanini, our CBD site on Mayoral Drive, and a planned development on the North Shore. In FY24 we completed a 10MW expansion of our Takanini campus on time and on budget, which now has a total capacity of 12.3MW. The expansion included a highly energy efficient cooling system, which uses ambient air to cool the data centre. Following the conclusion of the financial year, in August, Spark entered into an agreement to purchase adjacent land at Takanini, bringing Takanini’s total potential development pipeline to ~63MW. Design is currently under way for a phased expansion. This brings our overall development pipeline to 118MW, and when combined with our existing capacity, means we can grow our total data centre business to over 140MW in the future. As we invest in this growth opportunity, we are targeting returns of ~10-15%1. Our Auckland CBD data centre is strategically sought after due to its customer ecosystem and location as a key connection point for international submarine cable systems and national networks. We are currently expanding capacity at this site to add an additional 1MW of capacity, and an adjacent Spark-owned site provides the potential to add another 15MW of capacity in the future. During the year we also received resource consent to build a new, large-scale data centre on Auckland’s North Shore as part of a 43-hectare masterplan development with global surf park creators Aventuur. The development will use an innovative heat exchange system enabling excess heat produced by the data centre to warm the water of the nearby surfing lagoon, while an onsite seven-hectare solar farm will supply renewable energy back into the data centre. Facility Status Site Capacity (MW) Auckland – Takanini Campus Built 12 Auckland – Aotea Campus Built 3 Other sites Built 7 Total capacity built 22 Auckland – Aotea Campus Under construction 1 Total capacity under construction 1 Auckland – North Shore Campus Development pipeline 40 Auckland – Takanini Campus Development pipeline 632 Auckland – Aotea Campus Development pipeline 15 Total development pipeline (as at Aug 2024) 1182 Total potential capacity (as at Aug 2024) ~140 The North Shore site will become Spark’s third strategic Auckland location, with capacity for a staged build of a 40MW campus over time. Outside of Auckland, during the year we also partnered with the University of Waikato to take over the management of its existing data centre facility on campus, with the University becoming an anchor customer at the site. We have further investment planned to upgrade and grow capacity and operate the site as a key edge data centre for Spark and our business customers. An edge data centre is located closer to where the data is being used, reducing the time it takes for data to travel back and forth. This enables faster access and better performance for various applications and services. A render of the large-scale data centre on Auckland’s North Shore. 1. Target internal rate of return over the expected investment horizon. 2. In August, Spark entered into a conditional agreement to purchase land at Takanini, which would add 48MW to the site. This increased the total development pipeline from 70MW at the end of FY24 to 118MW at time of publishing. Hello tomorrow 38 Creating value through our network and technology Unlocking the power of 5G Our national 5G rollout has continued at pace, with 5G now live in 103 locations across Aotearoa, from large cities to smaller regional towns. This means almost half the population can now access 5G through Spark’s network. As we build our 5G network across the country, we are also working on making it more advanced and powerful. 5G is not just about faster internet on your phone, it can also improve the performance and reliability of many services and applications, such as video streaming, gaming, and smart solutions. We are currently deploying a 5G core network, which will deliver a true end-to-end 5G experience, without any dependency on legacy technologies – known as 5G standalone. 5G standalone allows us to create different service slices of the network that can be tailored for different purposes, referred to as network slicing. This means we can optimise the network to suit the specific needs of different customers and industries. We are already testing this technology across a range of different use cases with customers. For example, we have recently started a trial that brings together a 5G Standalone private network with AI computer vision to help keep people safe in a manufacturing environment. Cameras detect whether people are wearing the appropriate safety gear, while blurring the images for privacy. Anyone who is not complying with the health and safety requirements will appear red on the screen, enabling intervention. This can enhance accident prevention and injury reduction across a wide range of industries. “Our national 5G rollout has continued at pace, with 5G now live in 103 locations.” Ko te pae anamata, whakamaua 39 Spark New Zealand Annual Report FY24 The Internet of Things (IoT) Spark IoT connections have continued to grow, surpassing two million during FY24. IoT solutions enable businesses to monitor things in the natural and physical worlds around them, collecting data that can then be analysed and used to inform decision- making. We deliver these solutions through a range of different Spark IoT networks, each catering to different business use cases depending on bandwidth and coverage requirements. Specialist IoT devices are used to record and capture the data customers want to monitor, and IoT platforms with dashboard and alert features can be used by our customers to act immediately on the insights gathered. In October, Spark acquired all of the remaining shares in Adroit, a leading Internet of Things provider that specialises in technology solutions for real-time environmental monitoring, with solutions that are used across worksites, construction, agriculture, aquaculture, councils, and infrastructure sectors. During the year, Spark's Innovation Studio underwent a refresh to bring it up to speed with the rapid pace of technological change. The refreshed Studio showcases the latest innovative technologies across different customer use cases, including asset management, critical communications, smart environments, construction, water, and emerging technology. Since its opening in 2021, the Studio has seen over 400 tour groups across businesses and industry coming through to learn more about technologies, such as AI, computer vision, and IoT, and to view real-life examples from local organisations who are using these technologies to solve business problems. Using IoT for continuous monitoring of geotechnical environments Many areas in New Zealand are prone to slips, resulting in delays and road closures. This is particularly relevant with the increase in extreme weather events in Aotearoa. Monitoring for tilt or slope changes can be hazardous, labour- intensive, and time-consuming, resulting in delayed data gathering, health and safety risks, and a lack of accuracy. Adroit has been working with customers in the infrastructure sector to provide an IoT solution using satellite-connected Tiltmeter technology, to monitor tilt or slope changes in various structures or geotechnical environments. Highly accurate rotation data allows trend monitoring that can help detect movement of slopes and structures, as well as being used as early warning systems for catastrophic structural failure. Real-time data allows for immediate analysis and interpretation of monitoring results, which in turn enables quick decision-making and timely intervention to mitigate risks – providing early warning of potential hazards, such as landslides, sinkholes, or structural instability. Tiltmeters can be instrumental in preventing road closures and keeping New Zealand's biggest industries moving around the country. The updated Innovation Studio. A showcase demonstration of the tiltmeter solution. Hello tomorrow 40 Creating value through our network and technology Harnessing converged technology to make the fishing industry more sustainable In FY24 Spark worked with the Ministry for Primary Industries (MPI) to install cameras on inshore commercial fishing vessels to help verify fishers’ reported catch and effort data and to ensure the sustainability of New Zealand marine life is managed by the fishing industry in a modern way. This technology solution is breaking new ground by bringing together on-board cameras with IoT, AI, machine learning, cloud computing, and data and analytics. Spark is providing the technology, cameras, software, and transmission process that enables the verification of fisher-reported data, to help inform fisheries management decision-making. An important component of the system is the processing of video footage that happens onboard the vessel. Previously, all data had to be put on a disc and couriered, but with this automated system, when a vessel is in range of Spark’s 4G mobile network, the footage is uploaded to the cloud, where further processing takes place. Using AI and machine learning, when the system detects human in-frame activities, the cameras move into high-definition capture and the relevant encrypted footage is stored and marked for upload. This reduces footage storage and review costs and allows for more targeted review of the footage by MPI, while also protecting fishers’ privacy by targeting in-frame activities. The convergence of our high-tech capabilities Up until now our high-tech capabilities – such as 5G standalone, AI, and IoT – have operated largely independently of each other, but globally we are seeing a rapid acceleration of technology convergence. Converged solutions bring these different technologies together to solve business problems where it was not possible or cost-effective to do so in the past. Considering the challenges New Zealand businesses are currently facing, we believe technology convergence has an important role to play in boosting productivity and sustainability outcomes across our economy. During FY24 we have embarked on a number of converged technology customer trials, to inform our development of key use cases that can be scaled further in future years. “Technology convergence has an important role to play in boosting productivity and sustainability outcomes across our economy.” A showcase of the converged technological solution on a makeshift fishing trawler. Ko te pae anamata, whakamaua 41 Spark New Zealand Annual Report FY24 Enhancing the resilience of our network Our customers rely on us to provide networks and technology that is highly reliable in the face of unpredictable events. We make significant investments into network resiliency annually, and following increasingly severe weather events around Aotearoa, we have been focussed on how resilience to natural disasters can be further enhanced. Working collaboratively as an industry As an industry, we invest heavily in disaster preparedness, with around $1.62 billion being invested each year to maintain and upgrade networks. During major incidents, the sector comes together through our industry group, the Telecommunications Forum (TCF), which coordinates operators, other infrastructure sectors, including electricity and roading, as well as government, to restore services. Over the last year, mobile network operators have continued working together to identify critical sites offering widespread coverage so they can be prioritised for restoration. Maintaining coverage during power outages One of the main reasons for telecommunications outages is a loss of power. Most of our mobile sites are equipped with battery backup and the ability to connect standalone generators when those battery reserves are exhausted, which provides short-term continuity of coverage during power outages. We are now working with our partners to extend battery life on major, critical sites to ensure they can withstand power outages for longer periods of time. We are also working on an automation solution for our cell towers to improve the management of power consumption during power outages. This means that our cell towers will be able to monitor their own power consumption, detect when they are unable to draw power from the grid, and automatically prioritise connectivity for essential communications functions, such as calls and texts. Establishing Aotearoa’s Public Safety Network We have established a joint venture with One NZ to support the operational capability of New Zealand’s emergency services through the establishment of the Public Safety Network. The Network, which was established by Next Generation Critical Communications Poutama Whai Tikanga Pāpāho, is used by New Zealand's frontline emergency responders, including Fire and Emergency New Zealand, Police, Hato Hone St John, and Wellington Free Ambulance, and provides emergency services teams with access to roaming across both the Spark and One NZ networks, to improve redundancy. Deploying satellite to bolster resilience Satellite has an important role to play by adding an additional layer of resilience to traditional networks. While using fibre to connect cell towers to the network ensures we can support the day-to-day activities New Zealanders expect to be able to do on their mobile phones, fibre cables run along the ground, including under roads and over bridges, both of which can become damaged during a natural disaster. This is where satellite backhaul plays an important role in resilience – substituting fibre temporarily to allow for basic connectivity, such as texts and calls. During the year we established a network of satellite-connected small cells throughout the country, which can be deployed to provide access to a basic level of mobile connectivity during emergencies when fibre backhaul (which connects a cell tower back into the network) becomes compromised. These satellite-connected emergency small cells are housed in five strategic locations in Northland, Auckland, Gisborne, Palmerston North, and Canterbury, making them readily available to deploy should the Spark mobile network be impacted by a fibre outage. Our longer-term ambition is to enable our strategically placed permanent cell towers to automatically switch to satellite backhaul if required, ensuring we can provide connectivity when our customers need it most. We are also currently trialling direct satellite-to-mobile technology with our partner Lynk Global, before offering the service to Spark customers at scale as more satellites are deployed. Hello tomorrow 42 Creating value through our network and technology Improving customer experiences and resilience through AI and automation We are trialling the use of generative AI and machine learning to detect anomalies in the network and generate insights for our engineers, such as ‘I have observed multiple voice call drops in a metro site in Auckland’. This enables our engineers to quickly turn their attention to that site, diagnose the issue, and respond to prevent it becoming more widespread. We are also running trials of generative AI within our operations team. This will allow us to interact and query various knowledge bases in real time using simple prompts such as, ‘I want to see how many users on a cell site are impacted by this issue’ or ‘I want to see why traffic is unusually slow on this cell tower’. This also has the potential to predict maintenance requirements and automate corrective actions in future. Working with government to improve resilience While we are making great progress in preparing our network for future disruptions, we are committed to working alongside the industry and government to explore further opportunities to improve resilience. To support this, we are engaging with officials to ensure important policy enablers that support network resiliency are in place. This includes the continued release of spectrum, which enables us to keep extending 5G coverage; ensuring proposed Resource Management Act 1991 reforms support the rollout of telecommunications infrastructure in a changing built environment; ensuring digital infrastructure is considered in Aotearoa’s climate change planning; enabling cross-sector collaboration on resilience; and ongoing investment in public and private partnerships, like the Rural Connectivity Group. OTN nodes Planned OTN 2.0 nodes OTN network WHANGAREI WARKWORTH ROTORUA TAUPO MASTERTON DUNEDIN INVERCARGILL QUEENSTOWN TAURANGA NAPIER PALMERSTON NORTH PORIRUA NEW PLYMOUTH LEVIN NELSON TIMARU BLENHEIM HAMILTON AUCKLAND WELLINGTON CHRISTCHURCH A stronger backbone for our network Over recent years we have been investing in the next generation of our Optical Transport Network (OTN), which is the fibre backbone of our network and connects Aotearoa’s major cities to the core of the network. Last year, we completed building our OTN 2.0, which has multiple redundancy paths and ‘self-healing’ capabilities. This means it enables the light signals that carry data up and down the country to automatically divert to an alternative path if a fibre cut occurs, swiftly restoring services where it is possible to do so. Our OTN 2.0 has seven times the data capacity of the OTN, which is supporting our 5G rollout and providing our fixed and mobile networks with enough capacity to meet ongoing growth in data consumption. We are also building our access and aggregation network which will provide diverse paths between our cell towers and our OTN 2.0, with its own self-healing capabilities to improve resilience further. Additionally, we have three geographically diverse, highly resilient Spark network data centres providing core voice and mobile services located in Auckland, Porirua, and Christchurch. Ko te pae anamata, whakamaua 43 Spark New Zealand Annual Report FY24 Connecting New Zealand with the world During FY24, we completed the fourth upgrade of the Tasman Global Access Network (TGA) cable system through a consortium with Telstra and One NZ. This further increases capacity on the cable to service growing demand for connectivity between Australia and New Zealand. Mobile network availability Mobile network availability FY23 FY24 Availability of 4G network due to site outages* 99.69% 99.87% * Calculated as the total availability time of all sites minus outages / total availability time of all sites. Connecting rural Aotearoa Improving rural connectivity remains a key priority for Spark as we, alongside our industry partners, work to close the geographical digital divide. While our networks reach 98% of New Zealanders, there are significant challenges in providing coverage across mountainous, foliage- dense terrain, with highly dispersed populations. The Rural Connectivity Group We are a partner in the Rural Connectivity Group (RCG), a joint venture with One NZ and 2degrees that enables us to share the costs of building rural mobile infrastructure where it would otherwise not be commercially viable. In June, the RCG connected its 500th rural cell site at Anawhata, serving a coastal community between Piha and Bethells Beach on Auckland’s west coast. As a result of the connectivity provided by the RCG, 33,000 previously unconnected households across the country now have internet connectivity, and mobile coverage is available across thousands of kilometres of roads and 110 tourist hotspots. Last year, Spark, One NZ, and 2degrees each committed an additional $24 million in funding to the RCG between 2023 and 2025, as part of an agreement with the Crown to expand mobile coverage further into rural New Zealand and reduce mobile black spots on state highways. We have also accelerated our own deployment of 5G in the regions, with 5G connectivity now available in 103 towns with a population over 1,500 – which is 66% of our FY26 ambition. Connecting rural marae The Marae Digital Connectivity Programme aims to improve digital access in provincial and rural Aotearoa by connecting marae to reliable internet and providing iwi, hapū, and whānau with access to technology, including cloud storage, digital security networks, and state-of-the-art hardware. Spark is the key delivery partner working alongside Te Puni Kōkiri and Crown Infrastructure Partners. One of the immediate benefits has been enabling whānau who lived elsewhere to stay connected to their hapū and join hui or wānanga virtually. The technology will also help marae to work with their rangatahi to support new skills development, while supporting local communities to innovate and create new business opportunities – such as hosting wānanga or conferences and collaborating virtually. Comprehensive training on how to use the technology was rolled out around the country by Te Wānanga o Aotearoa as part of the initiative and a total of 659 marae have been connected through the programme at the end of FY24. Hello tomorrow 44 Creating value through our network and technology Migrating customers off legacy technology onto future-proof alternatives We continue to migrate customers off end-of-life technology and onto modern alternatives already used by the majority of New Zealanders across the country, such as fibre and wireless. This includes the retirement of the Public Switched Telephone Network (PSTN) and our 3G network. Retiring the Public Switched Telephone Network (PSTN) The Spark-operated PSTN – the traditional way of providing landline services – was built in the 1980s and is rapidly reaching end-of-life. The network’s components have not been manufactured since 2003 and the people with the skills needed to maintain it are getting harder to find. The majority of New Zealanders have already made the switch to fibre or wireless proactively. In 2017, we had over a million customer lines on the PSTN, by the end of FY24 only 77,000 remained. Around 3,200 customer lines, on average, migrate off this technology every month. As customers move off the PSTN, we are able to decommission legacy PSTN equipment. To date, we have decommissioned almost 65% of our PSTN switches, which has resulted in a significant decrease in our power usage and carbon emissions. Over the past year, we developed and implemented a solution for customers who rely on the legacy PSTN system for their voice services but have limited access to fibre or wireless alternatives. The solution, called MSAN (multi-service access nodes) enables our customers to maintain their copper line but instead of using the PSTN switch, it connects them to our new Access and Aggregation Network. This solution enables us to continue decommissioning PSTN switches while ensuring our customers remain connected until more advanced solutions become available in their region. In a separate programme to Spark’s PSTN shut down, Chorus is gradually withdrawing its copper network as it also reaches end-of-life. The copper network includes the physical lines carrying calls and data. We have a dedicated customer service team for customers going through either a PSTN or copper migration and offer free in-home visits where required. Closing our 3G network to make way for 5G in rural Aotearoa In FY23 we confirmed that we will close down our legacy 3G network towards the end of 2025. The 3G network currently uses limited radio spectrum that is required to rollout 5G in rural areas, so closing it will enable us to re-farm that spectrum for use in our rural 5G rollout. We recognise that this network closure may cause concern for the few rural communities where there is currently only 3G available, which is why we have continued to enhance our 4G network in these areas ahead of the closure. At the same time, we are aware that some of our customers are still connecting to 3G in areas where 4G is available. Predominantly, this is due to customers using devices that can’t make voice calls over 4G (mobile voice calls over 4G are technically known as VoLTE – Voice over LTE) and therefore still use 3G, so we have continued working with customers to make sure that these devices are replaced ahead of the 3G network closure. Ko te pae anamata, whakamaua 45 Spark New Zealand Annual Report FY24 Creating value for our environment Natural capital We rely upon natural capital through the diverse materials drawn from around the world to manufacture the physical assets that make up our networks and technology, and the devices our customers use. We also draw upon natural resources to power our technology and our broader business operations. Our networks, distributed across New Zealand, are also impacted by changes in the environment, which has implications for the resilience of our infrastructure and the supporting services required to operate them. Through the products and services we provide, our customers are able to live and work more sustainably and productively, enabling them to reduce their impact on the environment and use of natural resources. We can reduce our draw on natural capital and shift towards circular and renewable operating models. And by being deliberate about our role in enabling emissions reductions and climate adaptation, we can ensure our customers and all of New Zealand can realise the benefits of digital technology in protecting natural capital and responding to environmental challenges. OUTCOMES Protecting the environment and enabling positive environmental outcomes through our customers’ use of technology 46 Hello tomorrow Creating value for our environment Our approach to environmental management We have a focus on continuous improvement in our environmental management. Despite this, we saw a significant increase in our scope 1 and 2 emissions in FY24, putting us above our emissions reduction target pathway – our primary environmental KPI. See page 49 for more information on our performance. Spark’s Environmental Policy sets out our expectations for our people to consider environmental impacts when making decisions at work, including examining our business practices, understanding their impacts, and taking reasonable steps to reduce our environmental footprint. This is available at: www.spark.co.nz/online/ about/our-company/governance To help our people understand their role in creating a sustainable Spark, we have an online training module for all employees that provides information on our approach to sustainability and our expectation that our people consider environmental impacts in their day-to-day activities. We also communicate our progress to our employees through regular sustainability newsletters and direct engagement with teams across the business. Working within Spark’s agile operating model we have an established governance process to manage our most material environmental topics. This includes an Emissions Reduction Squad, led by our Environment Manager and comprising employees working in a variety of roles across the Spark Group. This squad is split into three workstreams, focussed on mobile networks, data centres, and fleet. Over the past year the squad worked to build energy costs and emissions considerations into our capital deployment and funding decision-making processes and templates. We measure and report our energy use and emissions on a quarterly basis, alongside other broader sustainability KPIs, to our Leadership Squad. The Leadership Squad acts as a steering committee for sustainability across Spark through a standing agenda item at quarterly meetings. We believe sustainability is relevant to all areas of the business, so key updates and decisions are participated in by all members of our Leadership Squad. The Spark Board is provided a sustainability update on a quarterly basis, including as part of annual integrated reporting for year- end. In the past year these updates covered a range of topics, including performance against KPIs (including tracking emissions and energy use) and also on broader topics, such as climate risk. Technology for emissions reduction We believe technology has an important role to play in enabling emissions reductions across our economy. The role of digital technology in enabling decarbonisation is broad – it provides secure access to remote services, which helps people to reduce commuting; it can connect and monitor physical assets and natural environments, which creates insights that people and systems can then act on; it can influence behaviour; and it underpins the creation of low-carbon industries and jobs. To quantify this role, we undertook research with thinkstep-anz during our last financial year. Through this study we found that digital technologies can support annual emissions reductions of 7.2 Mt by 2030 – equivalent to 42% of the reductions required to meet Aotearoa’s carbon budget targets. This highlights the opportunity for Spark to support our business customers to respond to climate change through our broad range of technology solutions. During the year we continued to advocate for technology to be integrated into the Government’s next Emissions Reduction Plan, to ensure Aotearoa realises the full potential digital technology can bring to the climate challenge. In partnership with NZTech, the Ministry of Business, Innovation, and Employment, and the Ministry for the Environment, we supported the development of a framework for New Zealand's first Climate Technology Roadmap. Climate Technology Roadmaps have been used in many offshore markets to integrate technology into national climate responses. The Technology for Emissions Reduction report is a first step towards developing such a Roadmap for New Zealand and draws on perspectives from hundreds of New Zealand businesses to provide actionable steps to integrate climate technology into business practices. Launching the Technology for Emissions Reduction report with Minister of Climate Change Simon Watts and NZTech. 7.2Mt The annual emissions reduction digital technologies can support by 2030. Ko te pae anamata, whakamaua 47 Spark New Zealand Annual Report FY24 Spark New Zealand commits to reduce absolute scope 1 and 2 GHG emissions 56% by 2030 from a FY2020 base year. Spark New Zealand commits that 70% of its suppliers by spend covering purchased goods and services and capital goods, will have SBTi-aligned targets in place by 2026. This means Spark is committed to pursuing this target and we are working towards it. For clarity, this is not a guarantee that we will meet this target. The Science Based Targets initiative (SBTi) is established as the global standard for corporate emissions reduction targets. Over 5,000 organisations have set verified emissions reduction targets since it launched in 2015. All SBTi targets must have a strict absolute reduction target for scope 1 and 2 emissions and also include a separate scope 3 target if these emissions are greater than 40% of the total footprint. SBTi targets are set against sector-specific emissions trajectories. The ICT sector pathways were developed with the International Telecommunications Union (ITU) based on projected growth and efficiency gains. The wording of SBTi targets are set and verified by the Science Based Targets initiative, and follow a common format requiring companies to ‘commit’ to the target that has been established. For Spark this is as follows: Spark’s SBTi-verified science-based emissions reduction target Direct emissions from sources owned or controlled by Spark SCOPE 1 SCOPE 2 SCOPE 3 Indirect emissions from purchased electricity Indirect emissions from other sources in Spark’s value chain Emissions from the Spark Group fleet, as well as natural gas and diesel generators, which are used as alternative energy sources for Spark’s data centres and mobile and fixed networks, and refrigerants (air conditioning and chillers), which are used for cooling in data centres. Electricity purchased for corporate office, retail, data centres, mobile network, and fixed network. Purchased goods and services, capital goods, fuel- and energy-related activities (not included in scope 1 or 2), transportation and distribution, waste generated in operations, business travel, employee commuting, upstream leased assets (emissions from the operation of assets leased by Spark that are not included in scope 1 or scope 2), use of sold products, downstream leased assets (customer on-charge for data centres), franchises, and investments. SUPPLIERS have SBTi-aligned targets 70% REDUCTION from a FY20 base year 56% Spark’s SBTi target covers our scope 1, 2, and 3 emissions sources Spark climate-related disclosures Our climate-related disclosures include climate risk reporting, which has been prepared in compliance with the Aotearoa New Zealand Climate Standards (NZ CS 1, NZ CS 2 and NZ CS 3) issued by the External Reporting Board (XRB). See page 90. Hello tomorrow 48 Creating value for our environment Performance against our scope 1 and 2 emissions reduction target In the past year we saw our emissions increase, with our scope 1 and 2 emissions up 26.7%. This means we are tracking 18.6% above the SBTi pathway required to reach our 56% reduction target from FY20 to FY30. The majority of this increase was driven by our scope 1 emissions, which rose by 73.4%. This significant rise was primarily due to a one-time event that led to higher fugitive emissions. Without this event we would be tracking 5.7% above our scope 1 and 2 SBTi pathway. See ‘Fugitive emissions’ on page 52 where we explain the reason for this increase. We also saw increases in our scope 2 emissions due to higher electricity usage and the higher emissions factor of the New Zealand grid. Our scope 2 electricity use, which powers our networks and infrastructure, remains our largest overall source of emissions related to our direct operations, at 72.3% of our total scope 1 and 2 emissions. The emissions intensity of the electricity we use is dependent on whether it is generated renewably or from fossil fuels, such as coal and gas. The mix of sources determines our emissions factor per unit of electricity. Over the past year our scope 2 emissions increased 14.8%, driven by a 2.6% increase in electricity consumption and an 11.9% increase in the grid emissions factor. See ‘Electricity consumption’ on page 50 for more information. Our scope 1 emissions associated with fleet also increased slightly, up 6.6% compared to FY23. This was due to more diesel consumption as a result of additional field service vehicles added to our Entelar Group fleet. We saw a decrease in reported stationary diesel combustion emissions (measured through diesel purchase records from the year) of 82 tonne of CO2e, down 20.9% compared to FY23. This reduction was due to having no major diesel tank top-ups this year, in contrast to FY23 where a significant volume of diesel was purchased to fill tanks at our new data centre facilities. Greenhouse Gas Inventory Report We publish a standalone Greenhouse Gas Inventory Report alongside our Annual Report. It includes detailed reporting on our emissions and energy use. See www.spark.co.nz/online/about/ sustainability/environment for more information. Spark Greenhouse Gas Inventory Report 2024 INVENTORY GREENHOUSE GAS Reduction pathway required to meet FY30 target FY24 FY23 FY22 FY21 FY20 Mobile combustion - Vehicle fleet Fugitive emissions Data Centre Fixed Network Mobile Network Corporate/Retail Natural gas combustion Stationary combustion - Diesel generators GHG emissions (tCO2e) Baseline year 0 5,000 10,000 15,000 20,000 25,000 Ko te pae anamata, whakamaua 49 Spark New Zealand Annual Report FY24 Electricity consumption In the past year we have seen an increase in electricity consumption across the Spark Group, as we have continued to rollout our 5G network and invested to increase data centre capacity. Overall electricity consumption is up 2.6%, from 152.6 GWha to 156.6 GWh. The majority of the variance in our emissions since setting our target against our FY20 baseline has been in changes to annual hydrological conditions impacting hydroelectric generation. This saw a significant increase in non-renewable electricity generation on the New Zealand grid in FY21. In FY22 and FY23 this trend was reversed, with a cleaner electricity mix and underlying reductions in energy use delivering significant emissions reduction over the previous two years. In FY24 we saw this trend reverse again, with a slight increase in the grid emissions factor, which is up from 0.0696 kg/kWhb to 0.0779 kg/kWh, an 11.9% increase. We expect our fixed network consumption to continue to decrease over time, with our data centres set to become our largest energy users over the medium term. In FY24, our electricity consumption associated with data centres increased by 8.2%. Our investment in expanded connectivity, network capacity, and data centre capacity is important to support innovation and enable emissions reductions across all sectors of the economy. However, we cannot pursue this growth without also reducing our own emissions against our SBTi target pathway. Our strategy is to decouple our business growth from emissions growth by working in partnership with our energy partner to utilise our electricity procurement to support the development of new renewable energy generation in New Zealand. This creates additional generation capacity to meet growing demand and supports New Zealand’s overarching climate goals. In May we announced a renewable energy partnership with Genesis Energy. Long-term energy plan A reliable and sustainable supply of energy is essential to power Spark’s infrastructure and to enable future growth. The New Zealand energy system is facing a number of challenges from the impacts of climate change, the increased pressure put on generation through electrification of industrial processes, and the longer-term transition to 100% renewable electricity generation. Because of this, a focus on efficient use of energy is important. The largest user of electricity across the Spark Group is our fixed networks, which includes our exchanges and legacy copper networks. We have a long-running programme of network simplification, including the decommissioning of legacy equipment, such as the public switched telephone network (PSTN), which has driven year-on-year reductions in electricity use across our business. Over the last year our fixed network energy consumption reduced 5.5%. We will continue to reduce electricity consumption through a focus on energy efficiency and removing old, inefficient equipment. FY24 FY23 FY22 FY21 FY20 Data centre Fixed network Mobile network Corporate/Retail Residual Supply Factorc GWh consumed tCO2e/GWh 69.62 77.95 110.77 124.69 99.28 0 20 40 60 80 100 120 140 160 180 200 0 20 40 60 80 100 120 140 160 180 200 a. Gigawatt hours (GWh). b. Kilowatt hour (kWh). c. The Residual Supply Factor is the grid emission factor we use to calculate our market-based scope 2 emissions to measure performance against our emissions target. It is the amount of CO2e per unit of electricity consumed. “Our strategy is to decouple our business growth from emissions growth by working in partnership with our energy partner to utilise our electricity procurement to support the development of new renewable energy generation in New Zealand. ” Hello tomorrow 50 Creating value for our environment Renewable energy partnership with Genesis Energy Through our existing energy supply agreement, dating back to 2021, Spark has been working with our energy partner, Genesis Energy, on opportunities to work together to achieve Spark’s SBTi target. In May 2024 this culminated in the announcement of a new renewable energy partnership with Genesis. Under a ten-year Power Purchase Agreement (PPA), we will purchase all of the electricity generated by Genesis’ first solar farm in Lauriston Canterbury. The 63MW Lauriston solar farm is expected to generate enough electricity to meet 60% of our current annual requirements and will make a significant contribution towards our scope 1 and 2 emissions reduction target. The energy generated by the Lauriston site will be zero-carbon and we will be able to count this renewable energy against our market-based scope 2 emissions target through the transfer of Renewable Energy Certificates. These certificates transfer the renewable attributes of the energy to Spark and enable transparent tracking and reporting. In exploring renewable energy partnership opportunities, it was important to us to support investment in new renewable energy – rather than buying certificates for existing renewables that were added to the grid many years ago. It is only through the addition of new renewable sources that New Zealand’s grid will further decarbonise and our country will reach its long-term climate goals. Long-term commercial commitments, delivered by PPAs, support new renewable generation to become operational faster by providing projects with commercial backing and increasing confidence to invest in further developments. Under the agreement, the remaining 40% of our electricity needs will continue to be sourced by Genesis from the grid as occurs today. However, as we continue to grow our energy use, and we look beyond our FY30 emissions target to our long-term transition to net-zero, we will ultimately need to transition 100% of our electricity consumption to new renewable sources. The partnership with Genesis includes a commitment to explore additional renewable energy opportunities, supporting Genesis to achieve its target to have 95% renewable generation by 2035. Ko te pae anamata, whakamaua 51 Spark New Zealand Annual Report FY24 Fugitive emissions In FY24 we worked closely with our refrigerant supplier to enhance our fugitive emissions reporting. Beginning in Q3, we now receive monthly refrigerant recharge data. This improvement has allowed us to transition from a screening method to a more accurate measurement of refrigerant recharges, enabling year-round monitoring. Through this improved methodology, we identified slow refrigerant leaks as the most common source of fugitive emissions. During the last quarter of the year, an alarm triggered a fire suppressant gas flood response at one of our exchange sites. Due to the high global warming potential of the gas released, this incident resulted in emissions of 1,892 tonnes CO2e. This contributed to a 311% increase in our fugitive emissions compared to FY23. In FY25 we plan to deploy IoT sensors across relevant assets and investigate low-carbon refrigerant alternatives to avoid similar events occurring in the future. Our fleet In FY24, Spark’s fleet was responsible for 10.5% of our reported scope 1 and 2 emissions. Our FY24 fleet emissions were up 6.6% on the previous year, due to increased fuel use in the fleet of our subsidiary Entelar Group. Entelar Group provides services to all of New Zealand, including network and fibre build and maintenance. This work requires an extensive tool-of-trade fleet that is partially made up of diesel fuelled utes and vans. To keep pace with business demands, Entelar added 19 diesel vehicles to its field fleet in FY24, while also looking for opportunities to adopt more sustainable options, including 26 new hybrids to support non-field operations and the ongoing removal of petrol vehicles. We introduced our ‘Electric First’ policy for the Spark corporate fleet in FY22, with all vehicles due for renewal to be replaced by an electric vehicle (EV). Over the past year we have made great progress in transitioning our Spark Corporate fleet to EV. However, we continue to face challenges across the Spark Group, particularly in areas where low-carbon alternatives for tool-of-trade vehicles are limited. We also have roles that require long-distance travel or involve areas with insufficient fast charging infrastructure, proving a barrier to the uptake of EV. For those who have range and charging issues, we have looked to extend the leases on hybrid vehicles. Additionally, when a low-carbon vehicle is no longer needed in one part of the business, we reassign it to another driver who is operating a less efficient vehicle, improving the overall efficiency of our fleet. We are continually monitoring the New Zealand market for new electric vehicle options, focussing on models that offer extended range and field-service capabilities. Spark New Zealand fleet composition Vehicle type Spark Spark subsidiaries EV 80 (+39) 4 (+2) PHEV 13 (-8) 0 (-2) Hybrid 85 (-47) 76 (+24) Combustion engine 3 (N/C) 201 (+1) Total 181 (-16) 281 (+25) Bracketed figures represent the change from FY23. Hello tomorrow 52 Creating value for our environment Our scope 3 emissions Scope 3 emissions refer to the emissions that are created across a company’s value chain. For example, the emissions created by the manufacturing of goods and delivery of services used to run a business, or through the use of the products and services customers buy from that business. At Spark this includes a wide variety of sources, including the production of purchased goods, transportation, business travel, and the way our customers use our products. Performance against our scope 3 supplier engagement target The percentage of our spend with suppliers with SBTi-aligned targets in place has increased to around 43%, up from 33% last year. A number of our largest suppliers by spend are our peers in the New Zealand telecommunications sector. One of our key local suppliers achieved SBTi verification of their science-based target in the past year, a second is finalising an SBTi-verified target, and a third has committed to set a target in the next two years. Across our global supply chain approximately 21% of our spend is with suppliers that have publicly committed to setting targets within the next two years. As we have strengthened our ethical supply chain processes we have implemented a process to survey key suppliers on an annual basis. This provides an opportunity to gather more data on supplier environmental governance, compliance, and commitments, including emissions reduction targets and alignment and validation against SBTi methodology. For global suppliers our membership of the global industry group, the Joint Audit Cooperation (JAC) initiative, provides a platform to engage suppliers alongside other telecommunications companies with similar SBTi-verified supplier engagement targets. For more information on our approach to engaging suppliers on sustainability and ESG matters, refer to our Modern Slavery and Human Rights Statement: www.spark.co.nz/online/about/ our-company/governance Business travel Flights and business travel are classed as scope 3 emissions, so are not included in our scope 1 and 2 SBTi emissions reduction target. However, business travel is a significant source of emissions that can be easily influenced by our policies and behaviour. Following the post-Covid travel rebound we saw in FY23, emissions associated with business travel have reduced by 13% in FY24, which is 35.4% below our FY20 baseline. We saw a decrease across all business travel activities, and most notably a 32.1% reduction in domestic air travel emissions. To contain growth in business travel we have implemented a new sign-off process for international travel. We have also built quarterly travel data into our sustainability dashboard to maintain greater oversight and determine whether any further action is required to manage business travel. 43% The percentage of our spend with suppliers with SBTi-aligned targets. Ko te pae anamata, whakamaua 53 Spark New Zealand Annual Report FY24 Reducing e-waste Electronic waste is our most significant waste impact. We produce a significant volume of electronic waste across our direct operations and indirectly through the downstream impacts of customer equipment at end-of-life. E-waste also includes valuable and potentially hazardous elements. It is therefore important for us to focus on circularity in our e-waste management, to enable materials to be recycled and to reduce environmental harm through improper disposal. E-waste and network recycling Spark has a long-standing programme to manage end-of-life network equipment and technology. Recovered equipment is separated into different waste streams – such as printed circuit boards, copper cables, lead batteries, and all types of metals. These materials are processed by our local recycling partners and then some components are sent overseas for recycling, reselling, or reusing. In FY24 we recovered a total of 450 tonnes of e-waste, down from 559 tonnes in FY23. Of this, 138 tonnes were network e-waste (down 16 tonnes on FY23) and 312 tonnes were metals, cables, and batteries (down 101 tonnes). The reduction in recovered e-waste was the result of fewer PSTN switches being decommissioned in FY24 compared to FY23, as well as a number of smaller switches being removed compared to previous years. We continue to improve our recycling collections focussing on education within Spark and working with some of our larger customers to support them to responsibly recycle their surplus equipment. Alongside the Spark Foundation, we also support the Recycle A Device (RAD) scheme through our subsidiary, Entelar Group, to provide logistics support towards the collection and refurbishment of used laptops for students and others in the community in need of a device. See page 60 for more information. Mobile phone recycling and trade-ins In FY24 Spark received 16,425 mobile devices for recycling and trade-in, up from 15,119 in FY23. This increase was due to a rise in trade-in numbers. Trade-ins are becoming more popular with our customers, allowing them to unlock value from their older devices. Most trade-in devices we receive go on to be refurbished and resold, extending their lifecycle and keeping them in circulation. When we receive devices that are unable to be redeployed, we recover essential materials and send them on to be reused in new products. Product stewardship scheme development Following the 2020 amendment to the Waste Minimisation Act 2008, electrical and electronic products have been designated as Priority Products. This designation mandates the implementation of product stewardship schemes, ensuring manufacturers, importers, and retailers take responsibility for the entire lifecycle of these products. Spark is a member of the Telecommunication Forum’s (TCF’s) RE:MOBILE product stewardship scheme, one of the first industry schemes voluntarily accredited by the Ministry for the Environment (MfE) under the provisions of the 2008 Act. The RE:MOBILE scheme takes unused mobile phones, and either refurbishes and on-sells them in overseas markets or recycles them to recover the materials used. Profit from the scheme is donated to the charity Sustainable Coastlines. The accreditation for RE:MOBILE lapsed in April 2021 and TCF is now seeking re-accreditation under the new provisions in the 2020 Act. MfE continues to recognise the scheme as TCF work through this process. Spark is a part of the TCF Product Stewardship working group contributing to the review of RE:MOBILE and the re- accreditation process. Hello tomorrow 54 Creating value for our environment Our water usage We practise water conservation across our data centre portfolio, using it only when necessary for maintaining humidity, equipment upkeep, and the evaporative cooling of outdoor chillers during hot weather. At sites with closed-loop cooling systems, water is recirculated, eliminating the need for ongoing consumption. Water is also a key consideration in the design of our data centres. Our newest pod at the Takanini data centre uses a free air-cooling system, utilising the ambient outdoor air to cool servers and equipment. Our future data centres are being designed to use similar air-cooled methods or closed loop cooling systems to minimise reliance on municipal water supply. In FY25 we plan to introduce new processes to measure our total water consumption across all business operations, including our data centres. We will also implement IoT water metering systems where we require further insights into our consumption, to enable more detailed reporting in the future. Proposed design for Spark’s Takanini data centre expansion. Ko te pae anamata, whakamaua 55 Spark New Zealand Annual Report FY24 Creating value for our communities Social + Human Capital We work alongside New Zealand communities to harness the power of technology to create a positive digital future for all. Our products and services help our communities to stay connected and enable the provision of community services. Beyond the direct impacts of our products, we want to play a bigger role in building healthy, connected, and equitable communities. Connected and empowered communities OUTCOMES 56 Hello tomorrow Creating value for our communities Championing digital equity At Spark our commitment to digital equity starts with our purpose – to help all of New Zealand win big in a digital world. Digital equity starts with having access to devices and a connection to the internet but it doesn’t stop there. To close the digital divide our communities need the skills to use technology, trust in the digital world, and the motivation to participate. Spark’s investment into the community In FY24 we committed nearly $10 million in free data and funding, as well as significant internal resources, to achieve our digital equity ambitions and contribute to our communities. In FY24 Spark donated nearly $2 million to Spark Foundation, with $1.5 million designated specifically for community projects, and the remaining funding operational costs. Spark also funds the Spark Give and Spark Volunteer programmes, which match employee charitable donations (up to a total pool of $250,000 per annual year) and provides all Spark people with one day leave a year to commit to volunteering. Spark’s subsidised broadband service Skinny Jump has been designed to operate on a not-for-profit basis – with the revenue generated covering the costs of the free modems, community partner network, product development, and customer care and education. The commercial value of the data provided to households in need through Skinny Jump totalled over $7.7 million in FY24. Zakir Ahmed, Waheed Ahmed and Amjad Mahmood after getting connected by Skinny Jump and Red Cross. New Kiwis get connected online through Skinny Jump and New Zealand Red Cross For many refugees who arrive in New Zealand, getting connected to the internet is vital for settling in a new country, learning a new language, and staying in touch with their families and friends. However, they often face barriers such as cost, language, and lack of knowledge about local processes. That's why Spark Foundation and Digital Inclusion Alliance Aotearoa (DIAA) have partnered with New Zealand Red Cross to provide Awhi Matihiko, a digital inclusion programme that supports refugees to access and use the internet. Awhi Matihiko offers Skinny Jump, a low-cost wireless broadband service, as well as digital skills training and support. Zakir Ahmed, Waheed Ahmed, and Amjad Mahmood are three refugees from Pakistan who arrived in Masterton in September 2023. They were assisted by the Red Cross team to get set up with Awhi Matihiko and connected the modem in their home. "When I arrived here, I was worried about how we would contact our families in Pakistan. Getting connected through Skinny Jump allows us to stay in contact with them and tell them what our lives are like in New Zealand," Waheed says. Amjad adds: "It helps us learn English, and to prepare for the theory test for our driver licences." Zakir agrees: "Without internet many things would be difficult, including speaking to people here and to our families. Having the internet is a plus point for us." Through Awhi Matihiko, Zakir, Waheed, and Amjad are not only able to access the internet but also to develop their digital skills and confidence. ~$10m Spark's investment into digital equity in FY24. Ko te pae anamata, whakamaua 57 Spark New Zealand Annual Report FY24 Seniors Connect In FY23, Spark held an event called ALL IN, which brought our people together to learn more about the digital divide and to work together on solutions. As part of the event, our people brainstormed ways to tackle digital equity, with close to 1,000 ideas generated. These ideas were filtered down to ten concepts for Spark to explore, taking into consideration the feasibility and desirability of each idea. The idea that was chosen as the first to pursue posed the following question: “How might we enable Spark people to use their volunteer time to close the digital divide for seniors in New Zealand?” This complements the work of Skinny Jump, which is focussed on cost as a barrier to connectivity, and Spark Foundation, which is focussed on Māori and Pacific youth. And with an ageing population here in Aotearoa, supporting digital equity for our senior New Zealanders is a logical area of focus for Spark. To explore this idea further, we established a squad called ‘Seniors Connect’, who kicked things off by engaging with key community organisations across the country, to understand what problems seniors are facing when it comes to using digital technology, what services already exist in the community, and what Spark can do to meaningfully support seniors to thrive in an increasingly digital world. The Seniors Connect Squad is now designing a service framework that will equip our retail store teams to support seniors effectively, while also connecting our customers to broader digital equity services across the community. We are also exploring how our people can utilise their volunteering days to support this work. Improving access and affordability through Skinny Jump Skinny Jump is Spark’s not-for-profit wireless broadband service for people who find cost a barrier to having an internet connection at home. The service is entirely prepaid, so there are no long-term contracts or credit checks needed, and all it takes to get set up is registering through a community partner and plugging in the modem. Jump is delivered by a dedicated squad of Spark people alongside a community partner network, which is overseen by Digital Inclusion Alliance Aotearoa (DIAA) and includes nearly 300 local organisations nationwide, spanning community libraries and community hubs amongst others. There are now over 31,776 households across the country who are actively using Skinny Jump. For wireless broadband an active connection is defined as a customer having used their modem in the last 30 days. However, Skinny Jump customers are more likely to have infrequent internet use as they have to reprioritise their monthly spending when budgets are tight. This is why for Jump, we also measure customers who have used their modem in the last 90 days, and in FY24 this totalled more than 33,993 households. Jump provides customers with 35GB of data for just $5, with the first 15GB of data each month free. Customers can purchase up to six top-ups a month, which means Jump customers can access 225GB of data for just $30 a month. In FY24 Skinny Jump continued its key partnerships, including the ‘Ciena Jump for Students Fund’, which gives eligible students a free Skinny Jump connection until the end of the school year. There are now 1,160 students using the Ciena Jump for Students Fund. Skinny Jump also continued to support the ‘Awhi Matihiko: Red Cross Digital Settlement Package’ – a collaboration with New Zealand Red Cross, Internet NZ, and Digital Inclusion Alliance Aotearoa that gives new refugees a free Skinny Jump connection (for 12 months), a laptop, and digital skills training. Hello tomorrow 58 Creating value for our communities Te Ao Matihiko receives $1 million investment from Spark Foundation In December, Spark Foundation announced a $1 million investment over the next three years in Te Ao Matihiko, the newly formed national organisation for Māori in technology, which launched in October. Māori participation in the technology sector remains low, with the latest NZTech report ‘Digital Skills for Tomorrow, Today’ indicating only 4.8% of the sector identifies as Māori. Te ao Matihiko has an ambitious vision to change this, by becoming the strategic backbone organisation for Māori in technology. It will do this by building a community of Māori in technology and pathways into the sector; raising visibility of Māori in the sector; strengthening and safeguarding Māori culture within digital spaces; and advocating for policy and system change. The support provided by Spark Foundation will allow Te Ao Matihiko to establish its Board and governance structures, create a longer-term 20-year roadmap, build operational capacity, and grow its membership base. Spark Foundation investment In FY24 Spark Foundation invested over $2 million into organisations and projects that accelerate digital equity. This includes funding received from Spark, in addition to proceeds from the sale of the Spark Foundation’s art collection, which was completed in FY23. Around 80% of project funding supports nine multi-year partnerships, which span around two to five years. The rest is allocated to smaller, one-off grants. During the year Spark Foundation launched a partner wellbeing initiative, Poipoia, in response to feedback from partners about mental health challenges their teams were experiencing. As part of this initiative, Spark Foundation provided partners with funding to support wellbeing activities or resources for their people, as well as access to the ‘Clearhead’ app through Spark’s own Mahi Tahi wellbeing programme. Clearhead offers a range of online tools in addition to six fully funded therapy sessions a year, to support mental health. Feedback from partners has been extremely positive and Poipoia will be continued in FY25. Championing digital equity through Spark Foundation Spark Foundation leads Spark’s work in the community. The Foundation has a single-minded focus on digital equity, and its vision is that no New Zealander is left behind in a digital world. It has focussed its strategy on the areas it can make the biggest difference – digital access, digital skills and pathways, and digital wellbeing. Spark Foundation allocates funding for programmes through a strategic partnership approach, working with organisations whose objectives are aligned to improving digital equity for Aotearoa. Most partnerships focus on empowering and equipping the next generation of digital thinkers and creators, especially Māori and youth, who are disproportionately impacted by digital exclusion. Last year, Spark Foundation refreshed its strategic direction for the next three years, recognising the significant progress already made improving digital access through Skinny Jump and programmes such as Recycle A Device (RAD). While the Foundation’s three focus areas remain, over the coming years the focus on building digital skills and pathways into technology for Māori and Pasifika will be upweighted. We believe that equitable participation in our sector is the ultimate expression of digital equity. Members of the Spark Foundation team and Board met with Te Ao Matahiko representatives at Te Kuirau Marae. Ko te pae anamata, whakamaua 59 Spark New Zealand Annual Report FY24 Spark Foundation partnerships in FY24 Digital access Recycle A Device: Recycle A Device (RAD) takes second-hand laptops donated by businesses and households, teaches local ākonga (students) to refurbish them, and then gets them into the hands of those who need them the most. The result is an end-to-end process of device collection, refurbishment, distribution, and disposal that enhances digital equity at every level – providing highly sought-after tools, access, and skills to rangatahi (young people) while also offering the added environmental benefit of diverting e-waste from landfill by giving these laptops a second life. Once devices have been refurbished, they are gifted to students within the school community itself or to other community organisations for distribution to people in need. As well as Spark Foundation funding, Spark subsidiary Entelar Group partners with RAD to provide logistics support. In the last year, over 1,300 laptops were gifted to those in need, and RAD also ran 28 one-day workshops where over 420 rangatahi learned the tech engineering skills needed to repair laptops. Porirua Access Connectivity and Education (PACE): Following a community talanoa in 2020 organised by Spark’s Vaka Pasifika team, a community initiative, PACE, formed to specifically address the digital access, connectivity, and education divide in Porirua. In FY24, PACE ran a school-based community Wi-Fi pilot at three schools, which is now being rolled out to more schools across Porirua. PACE has also purchased devices that it is offering to families under a cost sharing model, which provides the option to split costs three ways between PACE, the school, and the family. Digital skills and pathways Digital Natives Academy (DNA): DNA has been a Spark Foundation partner for nearly six years. A kaupapa Māori organisation, DNA Charitable Trust was established in 2014 to illuminate digital pathways and to inspire young people and their families to create, transform, shape, and develop their own digital tools. In April, 132 students came together to design the marae of the future for Te Ahi Orokohanga, a Minecraft Build event. In collaboration with Ngā Kura ā Iwi o Aotearoa, Local Gecko Productions, and Te Papatipu Matihiko Charitable Trust, DNA provided a culturally safe, empowering space for tamariki and rangatahi to explore the digital world and hosted and live-streamed the entire event in Te Reo Māori. Fibre Fale: Founded by two young Pacific leaders, Julia Arnott-Neenee and Eteroa Lafaele, Fibre Fale creates pathways for Pacific people into the technology sector through education, advocacy, and facilitation. In FY24 Fibre Fale has focussed on showing up in places where their community is active, like social media. Here they have shared educational, relatable, and honest storytelling content. In June Nu’uali’ Eteroa Lafaete was awarded joint Hi-Tech Young Achiever at the NZ Hi-Tech Awards. P-Tech: A public education model designed by educators and the technology sector to address New Zealand’s science, technology, engineering and mathematics (STEM) skills gap. Participating schools collaborate with private companies that provide students with mentorships, worksite visits, and paid internships. On completing the programme, students will have both their National Certificate of Educational Achievement (NCEA) qualifications and a New Zealand Diploma aligned to industry needs. In addition, successful graduates typically earn first-in-line consideration at affiliated industry partners when applying for jobs. In FY24 P-Tech recruited 120 students, bringing the total number of students to 350 across all five year levels of the programme. Pūhoro STEMM Academy: A kaupapa Māori initiative that aims to improve representation of Māori in Science, Technology, Engineering, Maths, and Mātauranga. Working with schools, Pūhoro supports iwi-affiliated rangatahi Māori from NCEA level 1 through to higher education, helping to guide them into high-value careers. Spark Foundation is a funder of the Hawke’s Bay regional programme, which supports eight schools. In FY24, Spark Foundation supported the aspirations of Pūhoro to double down on digital technology skills by providing further funding investment to support the new Kaiarataki Matihiko, digital tech lead role. Spark Foundation partner hui 2024 at Ōrākei Marae. Hello tomorrow 60 Creating value for our communities Hihiko Te Rawa Auahau: Delivered by Toi Kai Rawa, the Bay of Plenty’s Māori economic development agency, Hihiko Te Rawa Auahau is focussed on delivering customised innovation plans to accelerate digital inclusion in the wider Bay of Plenty region, specifically tailored to the individual kura (schools) and communities they are working with. In FY24, Hihiko Te Rawa Auahau held three Hihiko STEAM (science, technology, engineering, arts and maths) Innovation Days at Te Whare Wānanga o Awanuiārangi campus in Whakatāne. These events provided opportunities for ākonga (students) to interact with a range of innovators from STEAM sectors across the region. Take2: A programme that aims to break the cycle of crime through technology, Take2 teaches incarcerated individuals to code, enabling meaningful employment opportunities once they are released. Spark Foundation has supported Take2 for four years, with FY24 marking the final year of funding. Digital wellbeing Digital Discipline: A programme that offers support to young people dealing with social media addiction through education, awareness, and strategies to balance the online world with the real world. Digital Discipline is currently focussed on South and West Auckland communities with further collaborations across the country. Spark Foundation has funded Digital Discipline for three years, with FY24 marking the final year of funding. Other partnerships and funding In addition to multi-year partnerships, Spark Foundation also made smaller, one-off grants to a range of digital equity initiatives including The Light Project, Tāiki E!, Māori Tech leaders wānanga, Aquabots, Sticks ‘n Stones, and AI Sandbox. SAGE Engineering club SAGE Engineering Club is a group of five girls aged between 13-17 who qualified to represent New Zealand at the International SeaPerch Competition (underwater robotics) in May. The team participated in four different robotics and engineering competitions throughout the year and placed second in the High School Division at the New Zealand Aquabots Competition, which qualified them to represent New Zealand internationally. SAGE Engineering Club was the only all-girls team to qualify. SAGE Engineering Club needed $40,000 to make it to the international competition in the USA. In line with its mission to support youth who are disproportionately impacted by inequity to explore a future in technology, Spark Foundation contributed $5,000 to SAGE Engineering Club’s Givealittle and rallied Spark people to donate. SAGE Engineering Club made it to the USA and ranked 17th out of 75 high school teams in the International SeaPerch Competition. Connecting our people to our communities Spark encourages our people to give back to the community through our Spark Give and Spark Volunteer programmes. Spark Give Our payroll giving programme, Spark Give, enables our people to donate to schools and charities via their pay. Spark matches donations towards our four key partners through Spark Give dollar-for-dollar (up to a cap of $250,000 per year). Our people also have the option to donate to their personal causes, and Spark continued to match most registered charities (except schools and religious organisations) dollar-for-dollar (up to $500 per person per year, up to a total of $50,000 per year). In FY24 Spark Give donations included: Employee Donations: $307,497 (FY23: $366,431) Spark’s Matching: $47,622 (FY23: $59,239) Number of employees participating: 342 (FY23: 205) Spark Volunteer Spark employees can take one volunteer day each year, for skills or mission-based volunteering. Skill-based volunteering means our people focus on opportunities to use their specialised skills and talents to assist not-for-profits. Mission-based volunteering means volunteering with organisations whose work aligns with digital equity. Some of the organisations that our people volunteered for over the year include Pride, Lifeline, Sustainable Coastlines, Summer of Tech, Shadow Tech, Hatch, GirlBoss NZ, P-Tech, Trees that Count, and Take2. In FY24 volunteer leave days were as follows: Total staff eligible for volunteering: 5,291 (FY23: 4,259) Total employee participation: 610 days by 633 people (FY23: 462 days) % of employee participation: 12% (FY23: 11%) SAGE Engineering Club at the International SeaPerch Competition. Ko te pae anamata, whakamaua 61 Spark New Zealand Annual Report FY24 Creating value for our people Human + Intellectual Capital Our success relies on our team of talented and diverse people. A career at Spark offers opportunities to learn, grow, and belong to a business that encourages leading-edge learning and development, holistic wellbeing support and services, and the chance to be part of a high- performing team that operates in an inclusive agile environment, that can unlock innovation. High performing, engaged, and inclusive teams OUTCOMES 62 Hello tomorrow Creating value for our people 67% Spark people engagement in FY24. Ko te pae anamata, whakamaua 63 Spark New Zealand Annual Report FY24 Employee engagement We measure the engagement of our people using regular, confidential surveys and pulse checks that provide us with a comprehensive engagement assessment that reflects employee motivation, likelihood to remain with Spark, and how likely our people are to recommend Spark as an employer. Feedback from these surveys is shared with our people, with improvement actions then co-created within teams to improve our ways of working and culture. As a business, this has led to a number of improvements over the last year, such as changes to our annual remuneration review, our Quarterly Business Review (QBR) processes, and the development of a new management development programme. Participation in our surveys has remained strong, with 86% of our people taking part in our final FY24 survey, which ensures we have high quality and reliable insights to take action on. In this end of year survey, our people engagement score was 67%, which is above the New Zealand median for large companies, but down 3% from a year ago. While we had tracked as high as 71% during FY24, our end of year survey was conducted after we made a range of changes across different teams, to align our operating model to our new strategy, and respond to challenging market conditions. Understandably, these organisational changes had an impact on how our people were feeling in those areas of the business. We remain focussed on our ambition to achieve top decile engagement by FY26. The survey also showed that 80% of our people are proud to work for Spark and 84% feel comfortable bringing their whole selves to work, which indicates our inclusion initiatives continue to resonate with our people, and we are an employer who differentiates based on our culture and employee engagement. Te Awe Skills Hub team and cohort. Hello tomorrow 64 Creating value for our people Innovation culture A key pillar of SPK-26 is creating an Innovation Culture that will fuel our future growth ambitions and differentiate Spark through top decile people engagement. As part of this, we will continue to evolve our ways of working, invest in strategic skill development, attract, develop, and retain a diverse pipeline of future talent and use data and insights to co-create inclusive and differentiated employee experiences. Investing in strategic skill development Continuous learning and building skills and capabilities that enable innovation is a core focus of how we develop our people at Spark. We want to enable personal growth and adaptability, so our people are clear on what our customers want and need, are open to diverse ideas and perspectives, can adapt at pace, and sustain high performance. We enable this through quality coaching, leading-edge learning and development programmes and with a deliberate focus on progressing our own people through new roles and learning experiences across our organisation. Spark Cloud Academy In FY24, we teamed up with one of our partners, AWS, to launch the Spark Cloud Academy – to upskill our people working in our cloud business and deepen their knowledge and understanding of cloud services and solutions. The cloud market is a key focus area for Spark, and this training offers our teams the opportunity to become cloud experts and better support our customers to find the best mix of different cloud solutions that match their needs. Establishing our new skilling centre – Te Awe As the pace of technological advancement continues to accelerate, it is critical to upskill, reskill, and cross-skill our people to prepare for a future of work that is ‘already here’. Te Awe was created in response to the surge in demand for skills in new technologies, such as AI, data and analytics, and cloud. It is a skills acceleration programme within Spark that is building the ‘hard to access’ specialist digital skills we need to support our strategic ambitions. ‘Te Awe’ comes from the te reo Māori word, ‘awe’ – which refers to the white feathers of an albatross that are traditionally used to adorn kākahu (clothing), korowai (cloaks), and makawe (hair). In te ao Māori, the adornment of feathers symbolises strength, power, and influence, and in Pasifika cultures, feathers are also used to adorn fine mats to enhance value. So, the name Te Awe was chosen as a nod to Spark’s commitment to Te Tiriti and our strategic ambition to increase Māori and Pasifika participation at Spark by 5 percentage points by the end of FY26. During FY24 we kicked off our first two programmes in data analytics & visualisation and Generative AI, with 200 people progressing through this training. As a company with a long-standing commitment to digital equity, we also want to ensure that the skills shift we are experiencing does not further entrench existing inequities within our sector and our society. Our plan is to explore how we can now work with key partners to potentially open Te Awe up to broader community interest, to ensure we are intentionally growing a more inclusive high-tech workforce pipeline for the future. “For all of our leadership programmes we aim to meet our 40:40:20 gender commitments in addition to ensuring a diverse mix of people are participating when considering ethnicity, business unit, role, and stage in career.” Spark Māori Development Lead Riki Hollings celebrating his Corporate Change Tōtara award at the Te Matihiko awards. Ko te pae anamata, whakamaua 65 Spark New Zealand Annual Report FY24 Leadership development We continued to deliver our flagship Agile Leaders Programme (ALP), which supports our ambition to create an Innovation Culture at Spark, underpinned by high performance leadership skills and experiences. The programme is a significant investment in our key talent and runs over six months, with a focus on building the environments for people to thrive, innovate through design thinking, use leadership empathy for connection and belonging, and coach for sustainable high performance. In FY24, a total of 38 leaders participated in the programme, with 67% of ALP alumni having progressed to other roles or expanded the scopes of their roles within Spark. In June we launched a new programme called Leadership Essentials. This has been designed to deliver consistent learning and development that unlocks the potential growth and movement of our leaders at the layer below Spark’s Wider Leadership Group. It is focussed on resetting our standards for leadership across key capability growth areas, in alignment with our three-year strategy and both identifying and further investing in the development of top talent from this group. We are redirecting some of our prior investment in ALP to this important programme, to further accelerate performance and results. Our pilot cohort was launched in June 2024, and we have a roadmap for delivering further cohorts this calendar year, formed from new and existing leaders across the business who are committed to developing their own and their team members’ skills and learning. Our ambition is to ensure all our middle-layer leaders attend the programme over time. For all of our leadership programmes we aim to meet our 40:40:20 gender commitments in addition to ensuring a diverse mix of people are participating when considering ethnicity, business unit, role, and stage in career. Compliance and mandatory training There is a requirement for all our employees and contractors to complete mandatory e-learning modules when they commence working at Spark. These learning modules ensure proficiency in core foundational areas, such as health and safety, legal, privacy, decision-making, reporting, and security. Completion of these modules is monitored by people leaders and reported more formally on a quarterly basis. We use regular reporting to ensure there is ongoing visibility of completion for all our people. As part of our ISO27001 accreditation there are additional modules required for completion prior to gaining access to systems and sensitive information, to maintain high quality standards when dealing with information, customer data, and security. These are closely monitored and audited to ensure compliance and the necessary governance. We undertake recertification every three years for ISO 27001, with the last certification issued in July 2023. Further surveillance audits are undertaken each year to ensure a high level of compliance. 88% of our people believe that their people leader genuinely cares about their wellbeing. Hello tomorrow 66 Creating value for our people Our culture survey showed that 88% of our people believe that their people leader genuinely cares about their wellbeing and 78% of our people say that when they are unwell, they take the time off they need to recover. Our people have also told us that anxiety is an important issue, so we have continued our partnership with Take a Breath – a breathing app designed to reduce stress and anxiety. Nearly half of our people have used this app so far, noting it has helped them to combat anxiety and improve their sleep. 10% of our people have also gifted the app to their friends and whānau. A foundation of our Mahi Tahi programme are our Mahi Tahi coaches, with 20 additional coaches trained in FY24, bringing our total to 40 internally accredited wellbeing peer coaches. Our coaches, who are trained and supervised by our qualified psychologists, act as first-line support to our people when they’re working day to day. This includes supporting leaders, teams, or individuals to help them with their energy, focus, or finding ways to seek different support options. In FY24, our Mahi Tahi coaches completed over 215 coaching sessions with Spark people. In November 2023, Spark was awarded the ‘New Horizon’ award for an innovative approach to wellbeing, at the Southern Cross Wayfinder Awards, which celebrate leadership in workplace wellbeing. Health, safety, and wellbeing Mahi Tahi – wellbeing Wellbeing continues to remain a clear priority and focus at Spark, with Mahi Tahi, Spark’s wellbeing programme, being a key component of our ways of working and Health, Safety, and Wellbeing system. Mahi Tahi works in partnership with our people to support their goals at work and in life. The four pillars of the Mahi Tahi framework are closely aligned with Te Whare Tapa Wha (the four cornerstones of Māori health): 1. Healthy work environment – providing our people with a place to work that looks after more than just physical safety but also mental and social wellbeing 2. Connection, collaboration, and community – ensuring we have meaningful activities in place so our people can foster strong connections with those they work with and care about 3. Mind health – supporting strong mental health capacity and confidence and fostering a growth mindset 4. Energy – building a culture where we help our people keep their batteries charged, so they can perform at their best As part of our Mahi Tahi offering, we have an online Wellbeing Hub that includes opportunities for our people to book sessions with our Spark-certified Mahi Tahi coaches, access support through our employee assistance provider (EAP), or book a one-on-one appointment with one of our qualified psychologists, who we have partnered with directly to provide specialist care to our people in critical need. To really integrate Mahi Tahi into our core business practices, our People and Culture partners work closely with our senior leaders to incorporate wellbeing objectives and KPIs into their quarterly planning. During FY24 we launched a new partnership with Clearhead to facilitate our EAP services and offering. Clearhead is an app-based assistance service that gives our people access to knowledge and tools to support them with their mental wellbeing, as well as the ability to book six fully funded therapy sessions annually with trained psychologists and counsellors. This new partnership was a result of feedback from our people who told us that although our previous EAP was useful, many of our people were experiencing long wait times for professional help. Over 1,500 (28%) of our people have registered to use the service in the last year. Entelar Group1 team members completing an on site installation. Ko te pae anamata, whakamaua 67 Spark New Zealand Annual Report FY24 Health, Safety, and Wellbeing System at Spark Spark has a well-established health and safety management system, focussed on continuous improvement. Our Health, Safety, and Wellbeing Strategy is built around four pillars: • Strategy and framework – a strong health and safety management framework providing a platform for success • Hazard and risk management – proactive ‘owners’ approach to health and safety and the management of critical hazards and associated risks • Leadership and ownership – a culture of empowerment at every level • Resources and supporting activity – a commitment by the business to ensuring the resources and capabilities are in place to deliver the health and safety strategy Our system covers all of Sparks workers (employees and contractors) and workplaces, and aligns to the requirements of the health and safety at work act (2015) and other legal and regulatory requirements. During FY24 no Spark employee or contractor suffered serious injury or death over the year. Our TRIFR (Total Recordable Incident Frequency Rate) increased to 3.5 primarily due to an increase in the number of recordable soft tissue injuries. No notifiable events were reported under current New Zealand health and safety legislation, and Spark received no health and safety prosecutions or notices issued by WorkSafe. Based on the experiences of the last few years, our planning and response activities now incorporate lessons from the pandemic and the impact severe weather events had on our people and places across New Zealand. We are always looking for continuous improvement in our practices based on what is happening in society and organisational environments. We continue to follow a risk-based approach for our activities and work collaboratively across the business to ensure we have the right response and resources in place to support emergency preparedness. In FY24 we continued to work with our Wider Leadership Group to foster health and safety employee empowerment and participation as part of our Tribe, Unit, and Centre of Excellence (CoE) meetings and routine events. We continued our work with our wholly owned subsidiaries to identify the areas of greatest priority to support the development, application, and monitoring of a health and safety continuous improvement framework. 1. Entelar Group provides services such as fibre and mobile builds, service and field delivery, integrated supply chain, IT distribution and mobile repair, testing and service capabilities for Spark and other customers, including Connexa. Hello tomorrow 68 Creating value for our people Diversity, equity, and inclusion Our commitment to diversity, equity, and inclusion is embedded into our day-to-day activities, standards, and business practices. It is a strategic business priority and key enabler of our performance and culture. Our focus on diversity, equity, and inclusion, including our Blue Heart kaupapa, has helped us create an environment where our people feel comfortable bringing their whole selves to work, regardless of gender, ethnicity, orientation, age, experience, neurodivergence, or ability. Spark’s Blue Heart kaupapa in action Our Blue Heart kaupapa sets the standards of behaviour, alongside our values, to foster a culture of connection and belonging. It is a visible icon of our heart-led approach to diversity and inclusion. Blue Heart cultural celebrations and events remain an important part of bringing our people together and in FY24 we celebrated key moments, such as International Women’s Day, Lunar New Year, Diwali, and Matariki events at our offices throughout the country. During FY24, we also held our very first ‘bring your Tamariki to work day’ at Spark City in Auckland, where our people were invited to bring their children to work to experience a range of fun activities and digital experiences. Ko te pae anamata, whakamaua 69 Spark New Zealand Annual Report FY24 Te Korowai Tupu Our Māori strategy, Te Korowai Tupu (the cloak of growth), is a pillar of our SPK-26 strategy and applies a tangata whenua worldview across our strategies, actions, and values within Kora Aotearoa, also known as Spark New Zealand. Our kaiārahi (Māori ambassadors) provide guidance and support to ensure a kaupapa Māori-led delivery of the strategy throughout the business. In FY24, we continued to embed both te reo Māori and tikanga Māori into our everyday practices to achieve a better understanding of our indigenous culture. This included te reo lessons (for beginners and intermediate levels) with either online or classroom options, tikanga learning and development programmes for leaders, and Te Tiriti o Waitangi workshops. Our cultural intelligence Māori app Tuia te Ao provides a tool for our people to use to kick-start their learning journey, and includes important aspects of te reo Māori me ōna tikanga. In the last year over 300 of our people chose to participate in one of the options available. Key partnerships continue to enable us to deliver on our Te Korowai Tupu aspirations, including Te Wānanga o Aotearoa, Whāriki, Kiwa Digital, Education Perfect, and Te Pūtahitanga o te Waipounamu. In June, we also celebrated Matariki across our corporate offices, with a range of activities, including performances, demonstrations, and lots of kai (food). Vaka Pasifika Vaka Pasifika is Spark’s Pacific Canoe – a community of the 5% of Spark people who identify as Pasifika, formed in 2017 with a mission to empower, grow, and build the capability of Pasifika peoples at Spark. During FY24 the Vaka Pasifika group continued to promote its strategy ‘Folauga mo Taeao – A Journey to Tomorrow’, to the business through engagement with senior leaders and people leaders. The strategy sets out three key pillars over the next horizon to grow and support Pasifika aspirations at Spark, including growing the capability and leadership skills of the Vaka Pasifika team, growing Spark’s cultural knowledge, and enabling Spark to become an industry champion for Pasifika. Pride Spark has been a long-time supporter of the rainbow community. In FY24 we celebrated Pride at Spark by launching a Blue Heart Pride pin (that was designed by one of our people) for our people to purchase, with proceeds from the sales donated to OutLine Aotearoa. We also held Pride celebrations across our offices around the country, including Drag Bingo events in Auckland, Wellington and Christchurch. After consultation with Spark’s Rainbow Committee during FY24, we want to upweight our focus on internal initiatives in FY25, to find more ways to support our rainbow community to feel a sense of belonging at Spark. With that ambition in mind, in June we launched our ‘Allyship at Spark’ programme – inviting our people to make a pledge to become an ally of the LGBTQIA+ community and help us foster a more inclusive environment at Spark. Everyone who makes the pledge receives a special Spark rainbow lanyard as a visual symbol of support for our rainbow community. Over the last year, we have also continued to rollout our new email signatures, which enable our people to display their preferred pronouns. These initiatives, led by our Spark Pride Committee, aim to recognise, nurture, and enhance belonging and connection throughout Spark for our LGBTQIA+ community. Our diversity performance We believe in the idea that what gets measured matters and gets done. We take a data and insight-led approach to improving and delivering our diversity and inclusion practices and ambitions. Having a greater understanding of who we are will allow us to create experiences and provide support that is tailored to the diverse needs of our people. Improving female representation Over the past year we have continued to focus on improving female representation across the Group and achieving our ambition of 40:40:20 representation Spark-wide, which refers to 40% men, 40% women, and 20% of any gender (as well as gender diverse representatives). We have not been able to achieve this ambition at a Group-wide level in FY24, with female representation remaining flat at 34%. Within the core Spark business, female representation is higher at 37%, while in our wholly owned subsidiaries (CCL, MATTR, Digital Island, and Entelar Group) representation is significantly lower at 22%. This is reflective of what is an industry-wide challenge, particularly within some of our subsidiaries’ sectors, and requires long term focus and action to continue to challenge the status quo and create change. We continue to work actively alongside our industry peers, external technology institutions, and other thought leaders to create meaningful opportunities for a New Zealand-wide pipeline of women in technology careers. We remain committed to our 40:40:20 target as part of our SPK-26 strategy and will continue to report progress on this annually to our stakeholders and through our membership of Champions for Change. Our People & Culture Partners continued to support our senior leaders across the business by providing resources, standards and guidelines, and data insights that help them to hire talented candidates with diversity in mind and track their progress against their goals and our Spark-wide ambitions. Each area has an action plan to achieve its representation goals in addition to maintaining recruitment standards such as 40:40:20 shortlists. Within our Leadership Squad and Wider Leadership Group (senior roles outside Board and Leadership Squad), we maintained 40:40:20 representation, which is fundamental to reaching our broader diversity ambitions. Our Board is 63% female and 37% male, with five female directors (including our CEO) and three male directors. One new female Director joined our Board in May, and one male Director retired at the Annual General Meeting in November. For FY24, our Leadership Squad was 55% female and 45% male. At the end of FY24 one female leader resigned from our Leadership Squad, taking the female-to- male ratio to a 50% female and 50% male split for FY25. Reducing our gender pay gap Our ambition is to reduce our median gender pay gap by 10 percentage points from FY21 to 18% by the end of FY25. Our median gender pay gap for FY24 is unchanged from FY23 at 22%, but we did see improvement in our mean (average) gender pay gap from 13% to 12%. Achieving our pay gap ambitions is closely linked to our approach to improving female representation and progression in specialist skilled areas and roles, as outlined above. Our Diversity and Inclusion Policy sets out our framework in this area: www.spark.co.nz/online/about/our- company/governance Gender pay ratio Category Number of employees in category Pay ratio: mean1 Pay ratio: median2 Leadership: Spark’s wider leadership group, including the Leadership Squad FY24: 83 (46 Male, 37 Female) FY23: 77 (44 Male, 33 Female) FY24: -1% FY23: -4% FY24: 19% FY23: 9% Technology: employees who work in technology-focussed areas of the business FY24: 2,728 (2081 Male, 647 Female) FY23: 2,717 (2101 Male, 604 Female) FY24: 12% FY23: 12% FY24: 20% FY23: 23% Customer Channels: people primarily employed within our contact centres and retail operations FY24: 820 (418 Male, 402 Female) FY23: 892 (446 Male, 441 Female) FY24: 0% FY23: 1% FY24: 0% FY23: 0% Rest of Spark: including corporate, product, marketing, and customer units FY24: 1,582 (890 Male, 692 Female) FY23: 1,746 (987 Male, 751 Female) FY24: 16% FY23: 17% FY24: 17% FY23: 23% Total 5,291 FY24: 12% FY23: 13% FY24: 22% FY23: 22% 1. Pay Ratio = (mean male salary – mean female salary)/mean male salary 2. Pay Ratio = (median male salary – median female salary)/median male salary Calculated using hourly On Target Earnings or Total Base Remuneration plus Short-Term Incentive Target values as at 30 June 2024. Our previous reports presented negative pay gap values where median or mean earnings for women were less than those for men – we have aligned with other reporting practices so that a negative gap means women earn more. Hello tomorrow 70 Creating value for our people Gender1 Age Number of people Female % Male % Female # Male # Other/ gender not disclosed6 Under 30 years old 30 – 50 years old Over 50 years old Directors 8 63% 37% FY24: 5 FY24: 3 0% 14% 86% 0 +13% -13% FY23: 4 FY23: 4 no change +14% -14% Leadership Squad2 113 55% 45% FY24: 6 FY24: 5 0% 55% 45% +2 -1% +1% FY23: 5 FY23: 4 no change -1% +1% Other leadership roles4 72 43% 57% FY24: 31 FY24: 41 2% 58 % 40% +4 +2% -2% FY23: 28 FY23: 40 +1% -11% +11% Permanent starters 844 39% 59% FY24: 330 FY24: 497 33% 56% 11% -430 -2% no change FY23: 518 FY23: 749 -2% +4% -1% Permanent leavers 975 38% 60% FY24: 369 FY24: 583 28% 53% 18% -169 no change no change FY23: 434 FY23: 687 -2% -3% +5% Total5 5,298 34% 66% FY24: 1,778 FY23: 1,832 FY24: 3,435 FY23: 3,582 FY24: 16 FY23: 10 17% 57% 26% -141 0% 0% -2% +1% +2% 1. For the purposes of NZX Listing Rule 3.8.1(c) no directors or members of the Leadership Squad self-identify as gender diverse. 2. Includes the CEO who is also included as a Director in the line above. 3. The Leadership Squad was 10 people as at 1 July 2024 with Tessa Tierney leaving Spark on 30 June 2024. The Leadership Squad is considered ‘senior managers’ for the purposes of the Financial Markets Conduct Act 2013 and ’senior executives’ for the purposes of the ASX Corporate Governance Council’s Principles and Recommendations. 4. Substantive roles that report directly to members of the Leadership Squad. 5. Includes non-executive directors. Spark’s employee headcount, including our CEO, is reported as 5,291. 6. Gender diverse totals only reported in total figures. There are an additional 61 people have not provided/prefer not to disclose their gender. Employee types Total Auckland Wellington Christchurch Other region Contract type Female Male Female Male Female Male Female Male Female Male Other / Gender not disclosed Total Permanent full time 1,534 3,280 828 1,759 231 613 263 482 212 426 70 4,884 Permanent part time 227 136 62 49 24 18 64 21 77 48 6 369 Temporary full time 14 17 4 11 2 4 3 0 5 2 2 33 Temporary part time 3 2 2 1 0 0 1 0 0 1 0 5 Casual (non- guaranteed hours) 7 3 0 0 1 1 6 2 0 0 0 20 Total 1,785 3,438 896 1,820 258 636 337 505 294 477 78 5,311 Based on headcount. Casual contracts include any individuals on a non-guaranteed hours basis that were active as at 30 June 2024 and had received remuneration for hours worked in FY24. Demographics of our workforce Including permanent and fixed-term employees of Spark and its directors, as of 30 June 2024. Ko te pae anamata, whakamaua 71 Spark New Zealand Annual Report FY24 Improving ethnic representation across Spark Diversity does not start and end with gender and we have increased our focus on ethnic diversity over the last few years. We achieved our ambition to capture the ethnicity data of 80% of our core Spark employees last year from a baseline of 19%. This year we focussed on capturing this data for our wider group, including Entelar, CCL, and MATTR. We were pleased to achieve a Group-wide figure of 78% by the end of FY24, with only Digital Island now excluded from this data set. As at 30 June 2024, the available data on our people shows that 47% come from New Zealand European or European ethnic backgrounds; 37% report a diverse range of Asian ethnicities, with the largest groups being Indian (15% overall), Southeast Asian (8%), and Chinese (7%); 4% of our people are Māori; and 5% report Pacific ethnicities, most commonly Samoan (2%). A higher proportion of people from New Zealand European or European ethnicities are in leadership roles at Spark (including the Leadership Squad and Wider Leadership Group) at 79%, down slightly from 84% in FY23. In FY24 we have continued our focus on attracting, retaining, and progressing a diverse range of people across our organisation, as well as sustaining an inclusive culture. As part of SPK-26 we have an ambition to lift Māori and Pasifika representation by a combined 5 percentage points by FY26. In FY24 we have held flat, with Māori and Pasifika representing 9% of our workforce. This remains a continued focus in the years ahead, and through our new internal skilling centre, Te Awe, and existing partnerships we plan to engage a diverse pipeline of future talent to be upskilled and reskilled for roles within Spark or the technology sector more broadly. 0 10 20 30 40 50 60 70 80 90 100 Rest of Spark Wider Leadership Group Leadership Squad Board Total NZ European/ European Asian Pacific peoples Middle East, Latin America and Africa Māori Other Percentages based on permanent and fixed-term employees at Spark; employees as of 30 June 2024 who had provided ethnicity data (n=4015). NZ European/European includes all European ethnicities (e.g. British, German) and Australian European. Excludes employees in Digital Island. Spark collects information on main and other ethnicity where an individual identifies with more than one ethnicity. Consistent with the Champions for Change methodology, where an individual reports more than one ethnicity these are represented equally (e.g. two ethnicities represented as 0.5 each). 78% The percentage of Spark people sharing their ethnicity data with us. Hello tomorrow 72 Creating value for our people Parental leave Spark provides a parental leave policy for eligible employees, regardless of gender, sexuality, age or whether the employee is giving birth or adopting a child. As part of our parental offering, Whakapuāwai, Spark tops-up the Government’s parental leave contributions so that primary carers receive 100% of their normal salary for 26 weeks, with continued employer KiwiSaver contributions of 3% during their parental leave period. Secondary carers also receive four weeks’ paid leave (increased from two), so they can be present to support their partner and whānau during those pivotal first few weeks of their baby’s life. The package also includes a phased return to work policy for primary carers, who can work 80% of their regular hours on 100% salary for the first three months of their return. Eligibility for Parental Leave is in accordance with government legislation. In FY24 we had 139 employees take parental leave, with 88% of parents due to return to work in FY24 coming back and 62% of returners in FY23 remaining with us for 12 months or more, up from 56% in FY23. FY23 parental leave numbers Female Male1 Employees who took parental leave 136 3 Employees who returned to work after taking parental leave 75 1 Employees who returned to work after taking parental leave who remain employed 12 months after their return to work 38 1 Return to work rate2 88% 100% Retention rate3 62% 100% 1. Males who took fewer than 30 days paternity leave have been excluded 2. Return to work rate = total number of employees who returned to work after parental leave, divided by the total number of employees due to return to work after taking parental leave 3. Retention rate = total number of employees retained 12 months after returning to work following a period of parental leave, divided by the total number of employees returning from parental leave in the prior reporting period. “Spark provides a parental leave policy for eligible employees, regardless of gender, sexuality, age or whether the employee is giving birth or adopting a child.” Ko te pae anamata, whakamaua 73 Spark New Zealand Annual Report FY24 Alison Barrass Chair of the HRCC Hello tomorrow 74 Remuneration report A note from Alison Barrass, Chair of the HRCC Tēnā koutou, As the Chair of the Human Resources and Compensation Committee (HRCC), I am pleased to present Spark’s Remuneration Report for FY24. This year we have consolidated relevant annual report information into a single remuneration report, which outlines our commitment to transparent and equitable remuneration practices that align with our strategic objectives and foster a high-performance culture. Throughout the year, the HRCC has reviewed and refined our remuneration framework and practices to ensure they remain competitive and fair, supporting the attraction, retention, and motivation of our talented workforce. Our approach is underpinned by robust governance and benchmarking against industry standards, ensuring that our policies reflect both market conditions and the long-term interests of our shareholders. At Spark, we seek to remunerate our people with competitive salaries, so we can recruit and retain the best talent. In keeping with our focus on customer experience, we incorporate customer satisfaction measures alongside EBITDAI and key strategic initiatives into our short- term incentive (STI) measures each year. Key highlights of our remuneration activities this year include: • A focus on fair pay: as part of our FY24 Salary Review we ensured that we delivered higher than inflation adjustments to our lowest paid employees taking into consideration benchmarks such as the voluntary Living Wage standard, and that individuals earning less than $100,000 were a focus at this time, due to inflationary pressures in the market. • A rejuvenated Spark Share approach: we endorsed a new partnership with Sharesies which delivered our largest employee Share Scheme participation since inception, with 1,200 participants and nearly 1,000,000 shares issued. • Inclusion of ESG measures in incentives: we included environmental and diversity goals in our long-term incentive (LTI) for the second year running in FY24, and will see these continue in the FY25 LTI grant. I am proud that Spark is one of the first companies in New Zealand to link its LTI to its sustainability ambitions. Looking ahead, the HRCC will continue to evaluate and enhance our remuneration practices, ensuring they remain fit for purpose in a dynamic and challenging business and talent environment. We are committed to maintaining a remuneration framework that not only rewards individual and collective success but also upholds our values and drives sustainable growth. I would like to extend my gratitude to all our employees for their dedication and contributions over the past year. Together, we will continue to build a thriving and inclusive workplace where everyone can achieve their best. Thank you for your continued support. Ngā mihi nui, Alison Barrass Remuneration report Spark remunerates our people with salaries in line with the market, alongside consideration of performance, scope, skills, and experience, to recruit and retain the best talent. We have an annual salary review process for all eligible permanent employees. For most employees this is based on our Contribution Model, which considers employee development in their ‘craft’, as well as the application of people skills, customer focus, and commercial acumen. The aim is to ensure progression is transparent, with a five-step career ladder from beginner to expert and clearly defined competencies to progress against. Salary ranges for steps are benchmarked against the New Zealand market. In February 2024, the Board approved a salary review allocation for FY25 (salaries from 1 July 2024), which was based on our Contribution Models with additional allocations, including higher increases for our lowest paid employees, taking into consideration factors such as inflation and the (voluntary) Living Wage benchmark. As part of this process, we also reviewed some salary ranges to ensure that they were competitive against the market. Fixed remuneration All Spark employee packages include a fixed remuneration component that is set based on contribution, experience, and market relativities. Fixed remuneration consists of base salary. KiwiSaver sits outside fixed remuneration and as such, employees with KiwiSaver receive employer contributions on top of base salary and cash incentives. A number of Spark-funded benefits, including medical and life insurances, are also available to eligible employees on top of fixed remuneration. Short-term incentive schemes Spark operates a small number of short-term incentive schemes, from monthly and quarterly commission and sales incentive plans to annual cash-based short-term incentives. Some employees in specific sales positions may have a component of their remuneration subject to individual or divisional sales performance targets, such that their total remuneration potential is directly linked to the acquisition and retention of profitable business for Spark. For senior leaders, including the Leadership Squad, a component of their remuneration package is at risk in the form of a discretionary annual cash-based Short-Term Incentive (STI). Spark’s STI scheme rewards senior leaders for the achievement of annual performance objectives, with payments awarded from a fixed cash pool that is set based on overall Spark performance against financial and/or non-financial annual performance objectives. The actual payment to individuals is at the sole discretion of Spark and takes into account contributing factors such as performance and the performance of individual parts of the business. Eligibility to participate in the STI scheme on an annual basis is at the discretion of the company and is targeted at individuals in senior roles who play a significant role in driving the overall performance of Spark. The STI scheme rules contain a clawback provision that allows Spark to clawback any payments made under the STI scheme, for a period of 12 months following the payment. FY24 short-term incentive scheme outcomes For FY24, substantively all STI participants shared the same Spark Group targets comprising of EBITDAI, customer experience measures, as well as additional measures based on our three-year strategy. The on-target percentages are provided in the table below. Where the result of a performance metric falls below a specified threshold, there is no payment for that proportion of the STI. Where results exceed the target, the payment can scale to up to twice the target percentage with a maximum overall payment of 200%. The FY24 Group performance outcome, as approved by the Board, is summarised in the table below. Performance metric % Target Outcome Result Group EBITDAI 50% $1,245m 0% Did not meet threshold Customer experience – iNPS and digital journey completion rate (JCR) 25% +37 (iNPS) 55% (JCR) 28% Exceeded target (iNPS) Achieved threshold (JCR) High tech revenue (MATTR, Qrious, IoT, Spark Health) 25% $196m 0% Did not meet threshold Total payment 100% 0% No payment through STI scheme as EBITDAI threshold was not met As the EBITDAI threshold was not met for FY24, no payments were approved for Spark STI this year. Ko te pae anamata, whakamaua 75 Spark New Zealand Annual Report FY24 Remuneration at Spark Long-term incentive schemes Spark believes that some senior leaders should have part of their remuneration linked to the long-term performance of the Company, so for the Leadership Squad and a select group of senior leaders, a long-term incentive forms part of their remuneration package. Spark’s long-term incentive targets focus on total shareholder return as well as environment and social governance targets. In FY24, Spark operated one main scheme: the Spark New Zealand Long Term Incentive Scheme. FY21 long-term incentive outcome The FY21 long-term grant, issued in 2020, did not vest in FY24 (2023) as the absolute Total Shareholder Return hurdle was not achieved. Grant year Securities Performance period Performance measure Vesting outcome FY21 Options September 2020 – September 2023 Absolute Total Shareholder Return (TSR), hurdle – Spark’s annual cost of equity + 1% compounding 100% lapsed - 3 year TSR result was 20.35% compared with a 31.60% target FY24 long-term incentive scheme performance measures For FY24 members of the Leadership Squad (including the CEO) and selected senior leaders were granted options under the Spark Long-Term Incentive Scheme (LTI). Under the scheme, participants were granted options at the start of the three-year vesting period. The number of options granted equalled the gross LTI value divided by the volume weighted average price of Spark New Zealand shares for the 20 days prior to the grant date. Subject to satisfaction of each performance hurdle and continued employment, at vesting the portion of options associated with each achieved target convert to Spark shares based on a zero exercise price. Where a target is not met the associated portion of options simply lapse. Vesting of the FY24 LTI grant (September 2023) is contingent on participants’ continued employment with Spark through to September 2026 with vesting depending on meeting or exceeding set performance measures. 75% of the allocated shares will vest based on aTSR exceeding cost of equity +1.5% (compounding annually) over the vesting period and 25% will vest based on performance against environmental and diversity targets. aTSR is a measure of share price appreciation and dividends paid over the three-year period of the grant. Measure Target Weighting Absolute Total Shareholder Return Cost of equity + 1.5% compounding 75% Scope 1-3 Emissions Reduce absolute scope 1 and scope 2 GHG emissions by at least 33.6% against baseline GHG performance. Scope 3 - at least 70% of suppliers by spend have established supplier science-based targets. 12.5% Gender pay gap (median) Reducing gender pay gap by six percentage points to 16% 12.5% FY25 long-term incentive scheme For FY25, members of the Leadership Squad, including the CEO, and selected senior leaders will be granted options under a similar scheme as FY24 with performance measures relating to Spark’s ESG performance alongside an absolute Total Shareholder Return (aTSR) performance hurdle. FY25 short-term incentive scheme target The mechanics of the FY25 STI will be the same as those for FY24. Group results will be the main determinate of the STI pool, with substantively all participants sharing the same Group measures. The FY25 Group measures will be a combination of EBITDAI, customer experience, and our three-year strategy. Measure Weighting EBITDAI 50% Customer experience (iNPS and digital) 30% Digital infrastructure 20% Hello tomorrow 76 Remuneration report Employee remuneration The table below shows the number of employees and former employees, not being directors of Spark, who, in their capacity as employees, received remuneration and other benefits during FY24 totalling NZ$100,000 or more1. Range Current Former Total Range Current Former Total $100,000 – $110,000 303 22 325 $350,001 – $360,000 2 0 2 $110,001 – $120,000 307 35 342 $360,001 – $370,000 3 0 3 $120,001 – $130,000 303 16 319 $370,001 – $380,000 4 1 5 $130,001 – $140,000 275 19 294 $380,001 – $390,000 1 0 1 $140,001 – $150,000 298 17 315 $390,001 – $400,000 3 2 5 $150,001 – $160,000 279 19 298 $400,001 – $410,000 2 0 2 $160,001 – $170,000 211 18 229 $420,001 – $430,000 0 1 1 $170,001 – $180,000 136 8 144 $430,001 – $440,000 1 0 1 $180,001 – $190,000 114 7 121 $440,001 – $450,000 2 0 2 $190,001 – $200,000 103 8 111 $450,001 – $460,000 0 1 1 $200,001 – $210,000 55 9 64 $460,001 – $470,000 1 0 1 $210,001 – $220,000 57 3 60 $470,001 – $480,000 1 1 2 $220,001 – $230,000 42 5 47 $480,001 – $490,000 0 1 1 $230,001 – $240,000 39 5 44 $510,001 – $520,000 1 0 1 $240,001 – $250,000 20 6 26 $530,001 – $540,000 1 0 1 $250,001 – $260,000 13 1 14 $550,001 – $560,000 2 0 2 $260,001 – $270,000 12 1 13 $580,001 – $590,000 1 0 1 $270,001 – $280,000 10 2 12 $590,001 – $600,000 1 1 2 $280,001 – $290,000 5 1 6 $600,001 – $610,000 0 1 1 $290,001 – $300,000 11 0 11 $620,001 – $630,000 1 0 1 $300,001 – $310,000 12 1 13 $660,001 – $670,000 1 0 1 $310,001 – $320,000 17 2 19 $670,001 – $680,000 1 0 1 $320,001 – $330,000 4 1 5 $710,001 – $720,000 1 0 1 $330,001 – $340,000 5 0 5 $770,001 – $780,000 1 0 1 $340,001 – $350,000 5 0 5 $860,001 – $870,000 1 0 1 2,668 215 2,883 1. The table includes base salaries, short-term incentives and vested long-term incentives. The table does not include: amounts paid after 30 June 2024 relating to FY24; long-term incentives that have been granted and have yet to vest (based on grant values, the total value of which was NZ$12.8 million as at 30 June 2024); product and service concessions received by employees; contributions paid towards health and other insurances; and contributions paid to the Government Superannuation Fund (a legacy benefit provided to a small number of employees). As a result of organisational changes in FY24 a significant number of employees with base salaries under $100,000 appear in this table due to redundancy payments. Ko te pae anamata, whakamaua 77 Spark New Zealand Annual Report FY24 Employee benefits The following table sets out benefits provided to employees during FY24 by employee group:1 Full-time permanent employees Part-time permanent employees Fixed-term / casual employees Parental leave Yes Yes Yes2 Insurance cover: • Medical • Life and terminal illness • Income protection • Trauma Yes Yes3 No Spark account credit4 Yes Yes No Ability to participate in Spark Share5 Yes Yes No Volunteer day6 Yes Yes No Spark Give7 Yes Yes No8 Eligibility to join Marram9 Yes Yes No Eligible for purchased leave10 Yes Yes No Mahi Tahi – wellbeing support11 Yes Yes Yes Leadership Squad remuneration All Leadership Squad packages include a fixed remuneration component that is set based on contribution, experience, and market relativities. Fixed remuneration supports the attraction, motivation, and retention of highly skilled executives. Fixed remuneration consists of base salary. A component of each executive's remuneration package is at risk in the form of a discretionary annual cash-based STI. Spark’s STI scheme rewards executives for the achievement of annual performance objectives, which vary from year to year. Executives are also granted options annually under the Spark LTI scheme. Under that scheme, participants are granted options at the start of a three-year vesting period with vesting subject to a performance hurdle or hurdles. 1. Excludes benefits offered to some subsidiaries, which differ from Spark’s overall benefits suite. 2. Eligibility for Parental Leave is in accordance with government legislation. 3. Employees must work at least 15 hours a week to be eligible. 4. Employees with active Spark mobile or broadband accounts will receive monthly credits of $120, which can be used towards Spark products or services. 5. Spark’s employee share purchase scheme provides a simple and cost effective way for Spark NZ employees to acquire discounted shares through an interest free loan paid off over three years, giving employees a real stake in the future success of the company. 6. The opportunity for Spark employees to take a day of paid volunteer leave. 7. For specific charities, Spark will match employee donations dollar-for-dollar, up to a $500 annual matching cap. 8. Casual employees are ineligible. 9. Marram Trust offers access to accommodation across New Zealand for discounted rates, as well as providing a basic level of healthcare cover. 10. The ability to purchase additional annual leave via a deduction of base salary. 11. Wellbeing support includes access to Clearhead including funded therapy sessions, specialist clinical support from our in-house psychotherapist and health psychologist, and subscription to the Take A Breath Platform. Remuneration mix The table below shows the standard FY25 remuneration mix for the Leadership Squad expressed as a percentage of fixed remuneration. The Short-Term Incentive (STI) scheme is expressed at target, with payment range from no payment, where no target thresholds are met to a maximum payment of double the target value, where all stretch targets are met. The Long-Term Incentive scheme (LTI) values represent the maximum LTI value. Leadership Squad remuneration Long-term incentive 40% of base Short-term incentive 50% of base Salary Base Performance evaluation The CEO annually reviews the performance of her direct reports. The evaluation is undertaken using criteria set by the CEO, including the performance of the business, the accomplishment of strategic and operational objectives, and other non- quantitative objectives agreed with the HRCC at the beginning of each financial year. The last Leadership Squad evaluations were undertaken during June 2024. Spark undertakes appropriate checks before appointing someone onto the Leadership Squad. Hello tomorrow 78 Remuneration report CEO remuneration Remuneration policy, strategy, and governance CEO Jolie Hodson’s remuneration package reflects the scope, risk, and complexity of her role and is set by the Board with reference to the remuneration of CEOs of similarly sized organisations. The Board reviewed the CEO remuneration package and it remains unchanged at 1 July 2024. CEO remuneration FY24 For FY24 the CEO’s remuneration package comprised a fixed cash component, an at-risk short-term incentive, and an at-risk long-term incentive, to be awarded under the Spark Long-Term Incentive Scheme. The targets and operation of the CEO’s STI and LTI is the same as described under Short-term incentive schemes and Long-term incentive scheme at pages 75 – 76. The construct of the CEO’s remuneration package is such that 60% of her remuneration package is at risk. The table below shows the target remuneration mix: Long-term incentive 75% of base Short-term incentive 75% of base Salary Base The CEO is also expected to maintain a holding of Spark shares as set out on page 80 of this report. Remuneration components Short-term incentive scheme The CEO is eligible for an annual cash- based short-term incentive, subject to the achievement of specific performance objectives set by the Board based on Spark’s strategy and business plan for the respective financial year. These objectives will be a combination of financial and non-financial measures. This is covered in more detail in the earlier STI scheme section. The Board assesses the CEO’s performance at the end of the financial year to determine the actual payment value of her short-term incentive, which is in the range of 0% to 200% of her target value. The FY24 Group performance outcome, as approved by the Board and applicable to the CEO, is summarised as follows: Performance metric % Target Outcome Result Group EBITDAI 50% $1,245m 0% Did not meet threshold Customer experience - iNPS and digital journey completion rate (JCR) 25% +37 (iNPS) 55% (JCR) 28% Exceeded target (iNPS) Achieved threshold (JCR) High tech revenue (MATTR, Qrious, IoT, Spark Health) 25% $196m 0% Did not meet threshold Total 100% 0% No payment through STI scheme as EBITDAI threshold was not met Long-term incentive scheme For FY24 the CEO’s annual LTI was granted as share options under the Spark Long Term Incentive Scheme. This is covered in more detail in the LTI scheme section. The LTI component of the CEO’s remuneration package is designed to link part of her remuneration to the long-term performance of Spark, and align her interests with those of shareholders, through the grant of options with a post-allocation performance hurdles. Performance hurdles Performance hurdles apply to long-term incentives made to the CEO. The hurdles are agreed by the Board and set a minimum level of performance that is required to be achieved over the period of each grant, for the LTI to be eligible to vest. For FY24, the targets were Spark’s aTSR over the period to meet or exceed Spark’s cost of equity plus 1.5% compounding annually (75% of grant) and three ESG targets (25% of grant). Spark must meet or exceed these targets over the period of the grant (from the date the options are granted to the date three years after that date) for the relevant proportion of the options to vest. If Spark does not meet the target, the associated proportion of those options will lapse. Testing to determine whether the aTSR and ESG performance hurdles have been met will occur at the end of the vesting period of the grant. The Board will receive independent advice to the effect that each performance hurdle has been met, or not met, in determining whether the CEO can exercise the options or whether the options will lapse. CEO termination Spark may terminate the CEO’s employment with three months’ notice. A payment of nine months base remuneration will be made, plus entitlements for annual performance incentives and long-term incentives, subject to the rules relating to these incentives, in the case of termination by Spark, other than for termination for cause. If there is a change of control that results in the CEO no longer being the CEO of a publicly listed company, then she will be able to terminate her employment with three months’ notice and receive payment as if Spark had terminated her employment. Spark may also terminate the CEO’s employment without notice for defined causes, in which case she will receive no further entitlement to any remuneration. Ko te pae anamata, whakamaua 79 Spark New Zealand Annual Report FY24 CEO remuneration The total remuneration earned or paid in FY24, and anticipated target remuneration expected to be earned or paid in FY25, by and to the CEO, Jolie Hodson is as follows: Period Base salary1 Short-term incentive2 Long-term incentive3 FY24 actual remuneration NZ$1,266,900 NZ$0 NZ$950,175, in the form of share options FY25 anticipated target remuneration NZ$1,266,900 NZ$950,175 NZ$950,175 in the form of share options 1. Base salary excludes employer contributions towards KiwiSaver and is not at risk. 2. The gross amount earned in FY23 and paid in FY24 was $501,692. 3. FY24 long-term incentive was granted in 2023 and, subject to performance hurdles, will vest in September 2026. The CEO’s FY21 long-term grant, issued in 2020, did not vest in FY24 (2023) as the Absolute TSR hurdle was not achieved: Grant year Securities Performance period Performance measure Vesting outcome Shares lapsed Value transferred FY21 Options September 2020 – September 2023 Absolute Total Shareholder Return (aTSR), hurdle – Spark’s annual cost of equity + 1% compounding 100% lapsed - 3-year TSR result was 20.35% compared with a 31.60% target 187,430 NZ$0 The CEO is expected to acquire and hold shares that are at least equivalent in value to 25% of the CEO’s base salary but ideally would increase this shareholding to 100% of base salary subject to the vesting of shares under any long-term incentive schemes. To fulfil this expectation, shares are to be acquired within a four-year period from 1 July 2019. As at 30 June 2024 the CEO holds 311,830 ordinary shares which exceeds the ideal shareholding requirement to hold shares that are at least equivalent in value to 100% of the CEO’s base salary. Board remuneration Director remuneration The remuneration of directors is reviewed annually by the Human Resources and Compensation Committee (HRCC), taking account of the company’s size and complexity and the responsibilities, skills, performance, and experience of the directors, with recommendations made to the Board for approval. Specialist independent consultants may be engaged from time to time to provide advice and ensure that the remuneration of Spark’s directors is appropriate and comparable to that of similar companies in New Zealand and Australia. Apart from the CEO, no Director of Spark receives compensation in the form of share options or restricted shares, nor do they participate in any bonus or profit-sharing plan. Non-executive directors are, however, expected to maintain a holding of Spark shares as set out on page 160 of this report. As is the case for employees, directors are required to comply with the Insider Trading Policy when buying or selling Spark shares and any such transactions are disclosed to the market. Remuneration components No superannuation or retirement allowance was paid to any Spark Director during FY24. Spark does not have service contracts with any Director, apart from the CEO, that provide for any benefits or remuneration in the event that a Director’s service with Spark is terminated. New Zealand-based non-executive directors are eligible for Spark-funded medical insurance, and all non-executive directors are also eligible for Spark-funded life insurance. FY24 Director remuneration The total remuneration available to non-executive directors is fixed by shareholders. The current annual remuneration limit is $1,630,000 approved at the annual meeting held in November 2017. Hello tomorrow 80 Remuneration report The fees payable to non-executive directors during FY24 were: Board/Committee1 Chair2 Member3 Board of Directors $381,700 $150,300 Audit and Risk Management Committee (ARMC) $40,500 $19,700 Human Resources and Compensation Committee (HRCC) $34,700 $17,400 1. All non-executive directors are members of the Nominations and Corporate Governance Committee (NOMs) and receive no additional fees for this role. 2. Committee chair and member fees were not payable to the Chair of the Board. Committee member fees were not payable to committee chairs. 3. Member fees were payable for each Committee. There is no increase to non-executive Director fees for FY25. Fees will continue to be paid out of the current shareholder-approved annual remuneration limit of $1,630,000. Committee membership as at 30 June 2024 was as follows: Human Resources and Compensation Committee Audit and Risk Management Committee Nominations and Corporate Governance Committee Alison Barrass (Chair) Sheridan Broadbent David Havercroft Lisa Nelson Justine Smyth Gordon MacLeod (Chair) Warwick Bray Sheridan Broadbent Lisa Nelson Justine Smyth (ex officio) Justine Smyth (Chair) Alison Barrass Warwick Bray Sheridan Broadbent David Havercroft Jolie Hodson Gordon MacLeod Lisa Nelson The total remuneration received by non-executive directors of Spark during FY24 was as follows:1 Name of Director Board fees2 Audit & Risk Management Committee fees Human Resources and Compensation Committee fees Total remuneration3 Justine Smyth $381,700 – – $381,700 Alison Barrass $150,300 – $34,700 $185,000 Warwick Bray $150,300 $19,700 $170,000 Sheridan Broadbent $150,300 $19,700 $17,400 $187,400 David Havercroft $150,300 – $17,400 $167,700 Gordon MacLeod4 $150,300 $33,378 – $183,678 Lisa Nelson5 $22,297 $2,922 $2,581 $30,0256 Charles Sitch7 $51,869 $13,976 – $65,845 Total $1,207,366 $89,676 $72,081 $1,371,348 1. The figures shown are gross amounts and exclude GST (where applicable) and are rounded to the nearest dollar. 2. All non-executive directors are members of the Nominations and Corporate Governance Committee (NOMs) and receive no additional fees for this role. 3. This table excludes contributions towards medical and life insurance of a total of $17,154. Spark meets costs incurred by directors that are incidental to the performance of their duties. This includes providing New Zealand-based directors with mobile phones and $120 per month which can be used towards Spark products or services and overseas-based directors with $400 per month phone allowances. Spark also meets the costs of directors’ Spark-related travel. As these costs are incurred by Spark to enable directors to perform their duties, no value is attributable to them as benefits to directors for the purposes of the above table. 4. Mr MacLeod was appointed Chair of the ARMC from 3 November 2023. 5. Ms Nelson was appointed a Director and a member of the ARMC and HRCC from 8 May 2024. 6. This figure includes the additional $2,225 Ms Nelson earned as a member of the MATTR Investment Committee during FY24 (as a pro-rata payment based on her time served on the Committee). Prior to joining the Board, Ms Nelson earned US$36,000 as a consultant to MATTR during FY24. 7. Mr Sitch resigned as a Director from 3 November 2023. Other directors’ fees Mr Richard Quince received a Director’s fee of NZ$10,000 (excluding GST) for acting as a Director of Teleco Insurance (NZ) Limited. Ko te pae anamata, whakamaua 81 Spark New Zealand Annual Report FY24 To achieve our purpose, Spark must successfully execute our business strategy while maintaining high standards of operational performance and corporate governance. Our Sustainability Framework focusses our ESG (Environmental, Social, Governance) activities in the areas we can make the most meaningful impact – New Zealand’s economic transformation, digital equity, and our own sustainable business practices. To realise these ambitions ESG is integrated into our ways of operating and governance, as outlined in this section. Maintaining high standards of corporate governance The Board regularly reviews and assesses Spark’s governance structures and processes to ensure that they are consistent with international best practice, in both form and substance. Spark has complied with the recommendations of the NZX Corporate Governance Code and substantially complied with the principles and recommendations of the ASX Corporate Governance Council’s Principles and Recommendations (4th Edition) for the FY24 reporting period. You can read about how we have complied with these recommendations and principles in Spark’s Annual Corporate Governance Statement FY24: www.spark.co.nz/online/about/ our-company/governance Copies of, and details about, Spark’s corporate governance policies, practices, and processes can be found on our website at: www.spark.co.nz/online/about/ our-company/governance Our Sustainability Framework Toitū Sustainability at Spark is integrated into SPK-26 and outlines our approach to ESG at Spark. Our Framework includes three key focus areas – Economic Transformation, Digital Equity, and a Sustainable Spark. These commitments sit alongside our Māori Strategy, Te Korowai Tupu, which informs how we develop strong connections with Māori and builds our understanding of Te Ao Māori. The framework is informed by our materiality assessment (see page 163). While the three focus areas are enduring, the activities within them will evolve over time to ensure we are responsive to our changing operating environment and the needs of our stakeholders. ESG reporting We seek to present a clear and transparent assessment of our ESG performance in our reporting. This report is prepared in accordance with the International Framework and with the Global Reporting Initiative (GRI). We focus our reporting on sustainability topics that substantively influence the assessments and decisions of stakeholders or have a significant environmental, social, or economic impact. We also consider whether a matter could substantively affect our ability to create value in the short, medium, or long term. A detailed appendix to this report (see pages 163 – 174) includes a summary of our approach to materiality, our GRI Index, and information on our stakeholders and memberships of organisations. Climate change and emissions reporting Our FY24 report incorporates climate- related disclosures, which have been prepared in compliance with the Aotearoa New Zealand Climate Standards (NZ CS 1, NZ CS 2 and NZ CS 3) issued by the External Reporting Board (XRB). Our climate-related disclosures are on page 90. Our governance and ESG management Spark’s standalone Greenhouse Gas Inventory Report provides a detailed account of our emissions. Deloitte provides limited assurance of the emissions included in the report, which is available here: www.spark.co.nz/online/about/our- company/governance In the past we have chosen to participate in voluntary disclosures to the Carbon Disclosure Project (CDP). However, with the introduction of mandatory climate disclosures in New Zealand we have chosen to focus our attention on our expanded disclosures against the new local reporting standards, meaning we will not submit a CDP response in FY24. We will review this position in future years. Modern slavery and human rights reporting Spark publishes a dedicated annual Modern Slavery and Human Rights Statement. We report how we are identifying, mitigating, and remedying modern slavery risks in our business and our supply chain, including actions taken over the past year to strengthen our systems and processes and audit and engage our suppliers. This statement provides a detailed summary of our approach to upholding our Human Rights Policy within our business, including our approach to human rights due diligence and how we are approaching the acceleration of technologies, such as AI and Generative AI. You can find this at: www.spark.co.nz/ online/about/our-company/governance Hello tomorrow 82 Our governance and ESG management 1. Excluding subsidiaries 2. Covering purchased goods and services and capital goods 3. Joint Audit Cooperation TOITŪ SUSTAINABILITY AT SPARK TŪHONO: we connect WHAKAMANA: we empower MATOMATO: we succeed together MĀIA: we are bold Economic Transformation Empower New Zealand to transform to a high productivity, low carbon economy Our commitment KPIs Sustainable Development Goals Sustainable Spark Be bold in our business to have a positive impact on our people, the environment and our communities Champion digital equity so all New Zealanders can thrive in a digital future Digital Equity Emerging technology: we will invest in the digital technologies and infrastructure Aotearoa needs to transform • Deliver 5G Standalone nationwide by FY26 to enable innovation Digital infrastructure: we will expand connectivity to more of the places New Zealanders live and work • Increase 5G connectivity to all towns with a population >1,500 by end FY26 Business digitisation: we will support businesses to harness the power of technology to become more sustainable • Champion the integration of digital technology into Aotearoa’s climate change planning Products and services: we will increase accessibility and maintain the highest security and privacy standards • Maintain top quartile position in the Worldwide Benchmarking Alliance’s annual Digital Inclusion Benchmark Skills and pathways: we will focus Spark and Spark Foundation investment on increasing Māori and Pasifika participation in the technology sector • Increase Māori and Pasifika participation within Spark by 5 percentage points by end FY26¹ Affordability: we will support low income households to participate in the digital world • Extend the reach of our not-for-profit broadband service Skinny Jump, with YoY growth Our people: we will invest in the capabilities and wellbeing of our people and champion diversity and inclusion • Achieve 40:40:20 gender representation across Spark • Spark has a top decile innovation culture by FY26 Our environment: we will reduce our impact on the natural environment • Science-based target (SBTi): reduce Scope 1 and 2 emissions 56% from FY20– FY30 and ensure 70% of our suppliers by spend2 have SBTi-aligned targets in place by 2026 Governance: we will operate a responsible and ethical business and supply chain • Maintain top quartile benchmark in the annual Corporate Sustainability Assessment • Complete five JAC3 aligned supplier location audits annually 83 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua Sustainability Governance Our sustainability governance structure helps us ensure sustainability is overseen at the highest levels of our organisation and embedded throughout our everyday operations. Hello tomorrow 84 Our governance and ESG management Leadership Squad Corporate Relations and Sustainability Director and Sustainability Team Steering Committees and Governance Forums: Human Rights and Supply Chain, Data Ethics, Climate Disclosures Quarterly Business Review (QBR) All Spark people Sustainability Framework Digital Equity Sustainable Spark Economic Transformation Emissions Reduction Squads Spark Foundation / Skinny Jump Squad Human Rights and Supply Chain Squad Governance and Reporting Squad Spark New Zealand Board of Directors Sets three-year business strategy and approves Sustainability Framework, including key policies and KPIs. Reviews sustainability progress quarterly. Reviews climate change and modern slavery risks. Corporate Relations and Sustainability Director has overarching responsibility for the Sustainability Framework and Spark’s progress against it. Sustainability Lead and Environment and Sustainability Manager lead execution through squads and reporting. Steering Committees and Governance Forums established to ensure Leadership Squad and subject matter expert oversight of progress against material sustainability focus areas and risks, where appropriate. Spark’s business strategy is executed through a Quarterly Business Review (QBR) process, with priorities agreed every three months. Sustainability is a standing priority on the QBR. Support execution of Sustainability Framework priorities and consider sustainability impacts in decision making. Identifies most material focus areas to guide activity and resource allocation. Cross-functional squads established to improve sustainability performance and integrate it across Spark. Spark Foundation has a sole focus on digital equity and is governed by a Board of Trustees. Skinny Jump is operated by a dedicated squad. Spark’s new Digital Equity Lead will report into the Corporate Relations and Sustainability Director, and have overarching responsibility for Spark’s digital equity investments. Approval of business strategy and Sustainability Framework, including key policies and KPIs. Reviews sustainability progress quarterly. Reviews climate change and modern slavery risks. Integrating ESG into our governance processes Spark is committed to the continuous improvement of our ESG performance. Our sustainability governance structure helps us ensure sustainability is overseen at the highest levels of our organisation and embedded throughout our everyday operations. Our Board and Leadership Squad have oversight of our sustainability performance. Quarterly updates on our performance against our sustainability KPIs are provided to the Leadership Squad, which serves as a business-wide sustainability steering committee. The Board has overall governance responsibility for sustainability and is provided with a quarterly update on sustainability performance. The Board also approves the sustainability framework and reviews and approves key policies related to ESG. In the past year we have evolved the structure of our squads that support our ESG performance. Our long-standing ESG Squad has been split into a Governance and Reporting Squad and a Human Rights and Supply Chain Squad. The Governance and Reporting Squad is an evolution of the ESG Squad, a cross-functional group accountable for our performance, reporting, and risk management, including representatives from Spark’s financial, risk, legal, investor relations, regulatory affairs, people and culture, and corporate relations functions. The squad is led by Spark’s Sustainability Lead. The newly established Human Rights and Supply Chain Squad is focussed on actions to further embed these topics into Spark’s day-to-day operations. The squad is also led by Spark’s Sustainability Lead, and includes representative from our value management (supply chain), legal, digital trust, and Entelar Group teams. This Squad reports to a dedicated Steering Committee including Leadership Squad representation from the Corporate Relations and Sustainability, Network and Operations, and People and Culture directors. Our Emissions Reduction Squad is led by Spark’s Environment Manager and comprises 20 employees working across the Spark Group. This Squad is split into three workstreams, focussed on mobile networks, data centres, and fleet. We measure and report our energy use and emissions on a quarterly basis to the Leadership Squad. For more information see the Our Environment section on page 47. In the past year we established a new Data Ethics Committee, which replaces our Data Governance Risk Committee. The Committee includes representatives from the Leadership Squad and provides oversight of our Artificial Intelligence Principles and how they are embedded into our ways of working, processes, and systems. For more information see our section on AI Governance on page 34. With the incoming Aotearoa New Zealand Climate Standards, the Board and Leadership Squad also adopted a formal due diligence process for Spark’s climate disclosures, including the creation of a Due Diligence Committee. The Committee includes representatives from the Leadership Squad who reviewed the disclosures against the requirements and principles of the Climate Standards. For more information see our section on climate-related disclosures on page 90. We publish a summary of our approach to sustainability at Spark on our website: www.spark.co.nz/online/about/ sustainability Benchmarking our ESG performance We benchmark our performance using a number of international frameworks, including the Corporate Sustainability Assessment (CSA). The CSA is a comprehensive benchmark of our ESG maturity against our peers, with good coverage against our material sustainability issues. The CSA is now a part of S&P Global and is the assessment framework behind inclusion in the Dow Jones Sustainability Index (DJSI) global series. Our approach to ESG management has seen our score, and relative ranking against global industry peers, increase year-on- year in the CSA benchmark into the top quartile of all global telecommunications companies. As a result, and in recognition of our progress and regional leadership, Spark is a member of the DJSI Australia Index, first joining in FY23 and maintaining our place on the index in FY24. We also participate in the Worldwide Benchmarking Alliance’s annual Digital Inclusion Benchmark. This includes an assessment of our broader social responsibility governance alongside a detailed assessment of our digital inclusion programmes. Spark is currently ranked in the top quartile of this benchmark. Ko te pae anamata, whakamaua 85 Spark New Zealand Annual Report FY24 Public policy and lobbying commitment Spark publishes a Public Policy and Lobbying Commitment that sets clear rules and processes for us to follow as we seek to engage on public policy, either directly or via government relations agencies. This is available on our website here: www.spark.co.nz/online/about/ our-company/governance This Commitment includes our policy to not make donations to political parties in New Zealand or any other jurisdictions. We also committed to disclosing our engagement with lobbying services providers. In the past year we have retained the services of government relations agency Thompson Lewis. As one of New Zealand’s largest businesses and a lifeline utility, we have an important role to play in the development of policies relevant to our sector and operations. We use this agency to provide additional resource that enables us to effectively fulfil this role. Our approach to tax The Spark Group Tax Strategy reflects our responsible and transparent approach to tax. We recognise that the taxes we pay help underpin Aotearoa’s economy in the same way that our ongoing investment in digital infrastructure will underpin Aotearoa’s digital economy. As a New Zealand-based company we believe that it is important to clearly articulate our tax contribution to provide certainty and confidence to all stakeholders. As a large business, we make a significant contribution to New Zealand’s tax base, including $189 million of New Zealand income taxes during FY24 (before any tax credits were applied). In FY24 Spark’s effective tax rate was 38.5%, which is higher than the New Zealand domestic tax rate of 28%, primarily due to the one-off tax impact arising from the removal of tax depreciation on commercial buildings that formed part of the New Zealand Government’s 2024 Budget announcements. Breakdown of income tax payments FY24 0 20 40 60 80 100 120 140 160 180 200 $ MILLION OVERSEAS TAX PAYMENTS TOTAL INCOME TAX PAID NZ INCOME TAX CONTRIBUTED TAX CREDITS (INC. FITC) PROVISIONAL TAX PAID $189m $0m $189m ($48m) ($141m) In addition to income tax paid by Spark, the Spark Group has payment and collection obligations across a wide range of tax types resulting in an excess of $586 million of taxes under management during FY24. Taxes under management OTHER NZ INCOME TAX PAYE GST $1 6 0 M $2 6 M $1 89 M $ 2 11 M The full tax strategy is available online: www.spark.co.nz/online/about/our- company/governance Hello tomorrow 86 Our governance and ESG management Ko te pae anamata, whakamaua 87 Spark New Zealand Annual Report FY24 of the Quarterly Business Review process. Each quarter the Leadership Squad communicates the top priorities for the business to the Wider Leadership Group, and supports execution with strategic guidance and access to extra resources as needed. Performance This domain involves maintaining a portfolio view of risks under active management. Examples include maintaining a principal risk profile that is used by the ARMC and Leadership Squad to understand relevant risks and how they are being managed. It also focuses on the quality of the embedded risk management practices that are used within functions across the business. These two views enable in-depth analysis of relevant business risks and how they are being managed from a top-down and bottom-up perspective. Review and revision This domain involves identifying and implementing opportunities to continuously improve risk management practices. Examples include regular internal and external assessments of the policy and framework. Information, reporting, and communication This domain focusses on guiding Spark on how to use the policy and framework. Examples include information pages, access to support channels, and education sessions. The policy and framework are assessed annually, and externally every three years to ensure they remain effective. All assessment results and agreed actions are shared with the ARMC to ensure they remain informed about the status of the policy and framework. Spark’s principal business risks Principal risk profiles are updated twice yearly. The last update was finalised in May 2024. The principal risk themes identified were: Protecting Spark and its customers from a major cyber-attack or data breach Evolving external threats, changing legislation, and high expectations from customers and stakeholders mean robust security and privacy roadmaps, and strong governance through the Information Security Risk Management Committee (which includes five members from the Leadership Squad is needed to ensure that significant risks are managed. The Cyber Security tribe is responsible for critical operational controls to ensure standards and compliance are upheld. Our Digital Trust team sets privacy frameworks and standards that Agile units need to apply to maintain appropriate operational controls for privacy. Spark also has a data retention policy, that sets out considerations and, in some cases, rules for data retention. Adherence audits for compliance with the data retention policy are performed by the Internal Audit team. Our risk management Managing risk Our risk policy and framework help our people to manage uncertainty and adapt to challenges as they pursue Spark’s strategy. Oversight by the Audit and Risk Management Committee (ARMC) and the diligent application of the defined roles and responsibilities across the business ensures our risk management system remains effective. The policy and framework are benchmarked to COSO ERM 2017 (COSO), a leading practice risk management standard. We also use other leading risk management standards like ISO31000:2018 and specific standards and guidance, where available, to benchmark and inform our risk management practices. Spark’s framework is structured into five risk management domains that all work together to enable a robust system for risk management. Below is a description of each domain and some examples of activities by domain to help understand the framework in more depth. These five domains are embedded in Spark’s Managing Risk Framework and ensure the ‘Three Lines of Defence’ Risk Model (1. Own and manage 2. Monitor and 3. Provide independent assurance) is utilised. Governance and culture This domain reinforces the importance of risk management and influences how people apply the framework. Managing risk is embedded in our organisational structure, our functional activities, and is supported by specialist resources from the Risk team. Examples include the risk policy and the defined governance structure that supports its application across Spark. More information on the roles and responsibilities are included in the table on page 162. Strategy and objective setting This domain focuses on integrating risk management into strategy setting and business planning. Examples include the consideration of risks and opportunities to business objectives when making strategy decisions and checking in with every function using a systematic method as part Hello tomorrow 88 Our risk management External reviews and certifications help to ensure that comprehensive security measures exist for the critical elements of our cyber security framework. These reviews include security maturity assessments and security device configuration audits to ensure our processes meet expected standards. Maintaining a resilient network and delivering technology and network leadership The use of established and proven delivery methods for large-scale network and technology projects (such as our 5G rollout) will help us to manage potential risks created by the delivery of new technologies and will also sustain our existing technology. This also includes long-term physical risk to infrastructure from climate change. With a high share of operational cost, Spark’s technology units also continue to execute net-cost reduction while maintaining operational standards. In addition to cost optimisation mitigations, technology units have robust operational risk management processes, which provide visibility and enable a coordinated response to risk. Estimating economic environment impacts and responding with balanced judgement The economic environment remains challenging, characterised by high costs, elevated interest rates, and rising unemployment, which is having a significant impact on customer behaviour. As a result, customers across all business segments are increasingly looking for ways to reduce their spending. The SME sector, in particular, is experiencing a higher rate of business closures, while the enterprise and government sector is experiencing the impact of government agency spending reductions and reduced private sector investment. Although Spark has been impacted less than some parts of the economy, Management continues to monitor this risk closely by adapting its strategies to ensure resilience and sustainability in our operations. Delivering planned artificial intelligence (AI) and business system transformation objectives Delivering planned AI and business system investments is a key enabler of SPK-26. A dedicated Transformation Lead and Programme has been established to lead these investments and ensure they are deployed in a complementary manner. Dedicated squads have been established to ensure deployment by teams with the required skills. Spark has identified key use cases for Generative AI to support growth and improved efficiency across the business. As Generative AI is developing rapidly, Spark’s Data and AI Governance approach has evolved during the year, to build on existing policies and practices that ensure a safe and ethical deployment of AI within the business. This is detailed on page 34. Migrating large corporate customers from legacy technologies and products, whilst balancing customer experience and churn remains a challenge when implementing business system transformation. This is managed through high levels of collaboration from internal resources and tools that model and support decision-making. Achieving revenue growth As Spark strives to achieve revenue growth, there is inherent risks associated with both our traditional and emerging revenue streams. Growth in our traditional revenue sources, such as mobile and broadband services, continue to face challenges from increased competition and market saturation. Meanwhile, our new revenue streams, including data centres, cloud, and high-tech, are subject to rapid technological changes, competition, and market acceptance risk. To mitigate these risks and ensure sustainable growth, our Leadership Squad continuously monitors and manages business strategies. This involves proactive intervention to address any issues and staying up to date with industry trends and technological advancements. Our aim is to strike a balance between risk and opportunity, and to steer Spark towards a future of innovation, while creating diverse and long-term revenue growth. Cost optimisation while maintaining operational standards and resilient service Executing net cost reduction is a strength for Spark, and we do it in a way that ensures operational delivery standards for customers are maintained. The recent redesign of the operating model, AI and automation, ongoing simplification, and digitising customer journeys help to provide Spark with a more sustainable operating model and cost base moving forward. To mitigate unintended risks (for example, customer service disruptions), the Leadership Squad has established a strong governance structure, coupled with a formal delivery methodology to ensure all initiatives are robustly tested. Trajectory toward targets is measured, which enables intervention and course corrections when required. Business continuity and crisis management The Business Continuity and Crisis Management Policy protects customers from the impact of disruptive events and ensures value-generating activities are resilient and comply with relevant external standards, for example Civil Defence and 111 obligations. Spark’s framework is benchmarked to ISO 22301 and ISO 22313, which are acknowledged as leading practice standards for business continuity. It is overseen by the ARMC in a similar way to the Managing Risk Policy and Framework. An internal Governance Committee consisting of tribe leads from across Spark, oversees and supports the implementation and maintenance of Business Continuity programme activities across the Spark Group. Regular reviews of the framework are performed by the Service Resilience and Risk and Internal Audit teams to ensure it is effective. External reviews and testing of key elements of the framework such as the Level One Crisis Management Plan and Team are also done to validate the effectiveness of Spark’s business continuity framework. Our continued investment in network resiliency, as outlined on page 42, also demonstrates application of the framework in practice. Ko te pae anamata, whakamaua 89 Spark New Zealand Annual Report FY24 Spark New Zealand Limited is a climate- reporting entity under Part 7A of the Financial Markets Conduct Act 2013 (FMA). These climate statements relate to the Spark Group, which consists of Spark New Zealand Limited and its subsidiaries. While Spark Finance Limited (a subsidiary of Spark New Zealand Limited) also meets the definition of a climate-reporting entity under the FMA, the Financial Markets Conduct (Climate Statements – Spark Finance Limited) Exemption Notice 2024 (available at www.fma.govt.nz/assets/ Exemption/Financial-Markets-Conduct- Climate-Statements-Spark-Finance- Limited-Exemption-Notice-2024.pdf) exempts it from the requirement to prepare climate statements. This section of our Annual Report is structured around the four themes of climate governance, strategy, risk management, and metrics and targets. However, in some instances, information is included in these climate statements by cross-reference to other sections of our Annual Report or to our stand-alone Greenhouse Gas Inventory Report. Deloitte provides limited assurance of the emissions included in the report, which is available here: https://investors.sparknz.co.nz/ investor-centre/?page=annual-reports. A table showing the location of each of our disclosures referenced against the requirements of the Aotearoa New Zealand Climate Standards is included on page 167. Approved on behalf of the Board on 22 August 2024. Justine Smyth CNZM Chair Gordon MacLeod Chair Audit and Risk Management Committee Spark climate-related disclosures Introduction Climate change has the potential to cause significant disruption to all New Zealand businesses, including Spark. This includes risks to our business due to changing economic conditions, disruption to our supply chain, operations, and infrastructure, and to our customers. Climate change also creates opportunities for Spark to support our customers to reduce their emissions and adapt to the potential impacts of a warming climate. Compliance with Climate Standards Spark introduced climate risk reporting, aligned to the international Task Force on Climate-related Financial Disclosures (TCFD) framework, in our FY21 Annual Report. This year’s report marks the first time we have reported under the new mandatory disclosure regime, which builds on the foundations of the voluntary TCFD standards. These climate statements have been prepared in compliance with the Aotearoa New Zealand Climate Standards (NZ CS 1, NZ CS 2 and NZ CS 3) issued by the External Reporting Board (XRB). Climate Standard NZ CS 2 provides a number of adoption provisions, which reporters may elect to use. Spark New Zealand has elected to apply the following adoption provisions in our first mandatory reporting period: • Adoption provision 1 (related to current financial impacts) • Adoption provision 2 (related to anticipated financial impacts) • Adoption provision 3 (related to transition plan). We have included details of the transition plan aspects of our strategy in this report, however intend to refine these disclosures in FY25 once anticipated regulatory guidance has been released. • Adoption provision 5 (related to comparatives for Scope 3 GHG emissions) • Adoption provision 6 (related to comparatives for metrics) • Adoption provision 7 (related to analysis of trends) Important notice, challenges, and uncertainties Our climate-related disclosures and the conclusions we make in these disclosures reflect our current understanding as at August 2024. This includes current and forward-looking information regarding climate change, its impact on Spark, and our response to it. Climate change, and the impacts it will have on individual businesses, is subject to significant uncertainty. The information in this report is based on estimates, judgements, assumptions, and incomplete data that we consider to be appropriate under current circumstances. As such, we caution reliance being placed on information that is subject to significant uncertainty and data limitations. This report includes forward-looking statements, including in relation to climate-related scenarios, targets, risks and opportunities, anticipated impacts, and transition plans. Such forward-looking statements are based on the beliefs of, and assumptions made by, our Management, along with information currently available at the time such statements were made. These forward-looking statements are not guarantees or predictions of future performance. Any statements in these climate statements that are not historical facts are forward looking statements. Hello tomorrow 90 Spark climate disclosures Climate governance Governance body oversight of climate risk and opportunities The Spark Board is the governance body responsible for oversight of climate-related risks and opportunities. The Board is informed and engaged on climate change through a number of regular processes: • through oversight of Spark’s overarching enterprise risk management system (via the ARMC), which incorporates our most material climate risks • through approval of, and engagement in, Spark’s climate scenario risk analysis processes and annual climate risk reporting • through quarterly sustainability updates from the Corporate Relations and Sustainability Director, and non-cyclical Board papers which include climate related risks or opportunities The Audit and Risk Management Committee (ARMC), a subcommittee of the Spark Board, assists the Board in relation to the oversight of the risk management framework and monitoring compliance with that framework. The ARMC meets at least four times each year and receives regular updates on all principal business risks, including regular updates on the key risk ‘Maintaining a resilient network’, which includes physical adaptation risk to our networks, and risk in our network supply chain (see detailed climate risk tables on pages 97). The papers from ARMC meetings are available to the Board and all directors may attend meetings of the ARMC. The Board is also responsible for Spark’s external climate reporting published with our annual financial disclosures. This includes review and approval of the climate risks and opportunities identified, which is published alongside our emissions metrics and performance against our climate targets. For this year’s disclosures the Board was engaged in our refreshed climate scenario analysis, to pressure test the climate scenario narratives and validate the identified effects on Spark. The Board is provided a sustainability update on a quarterly basis, including as part of annual integrated reporting for year- end. In FY24, these updates covered a range of topics, including performance against KPIs (including tracking emissions and energy use) and also on broader topics, such as climate risk. This, together with additional papers that contain climate- related content, mean that climate-related risks and opportunities are discussed regularly at Spark Board meetings. As the governance body for significant sustainability and climate-related decisions, the Board approves Spark’s sustainability framework, policies, and targets (such as Spark’s science-based emissions reduction target, approved in FY21), and approval of key initiatives, such as our renewable energy partnership with Genesis Energy (see page 51). Our directors are expected to continuously educate themselves to ensure that they have the appropriate expertise and can effectively perform their duties. Sustainability, together with risk management and regulatory, is one of the competencies assessed in our Board Skills Matrix (see page 21). The Board has been provided with briefings and sessions during FY24 to support further development of skills relating to the oversight and management of climate risk and to foster its climate expertise. Expertise is also gained by directors who have directorships in industries with related climate risks. Jolie Hodson, Spark CEO and Board member, is also a member of the Climate Leaders Coalition's Steering Committee. A description of how the Board considers climate-related opportunities when developing and overseeing Spark's strategy, and the way in which resiliency (related to physical risk) is integrated into our business, is set out on page 93. The Board is also responsible for remuneration policies. For our Leadership Squad and a select group of senior leaders, a long-term incentive (LTI) forms part of their remuneration package. This scheme is tied to performance measures relating to Spark’s ESG performance, including performance against our emissions reduction target, which constitutes 12.5% of the LTI performance assessment weighting. An overview of the climate-related risks and opportunities responsibilities as between the Spark Board and Management is described on page 92. Flooding caused by Cyclone Gabrielle. Ko te pae anamata, whakamaua 91 Spark New Zealand Annual Report FY24 Management’s role in climate risk and opportunities Climate-related responsibilities are assigned across a number of the Spark Leadership Squad (direct reports to the CEO) and supported by a number of internal governance groups and processes: • The Finance Director is responsible for management of our overarching risk management system • The Corporate Relations and Sustainability Director is responsible for Spark’s overall sustainability strategy • The Network and Operations Director is responsible for our most material climate change risks, which are integrated into the key risk ‘Maintaining a resilient network’ in our enterprise risk management system, and progress against our emissions reduction target For the preparation of these climate statements in FY24, the Board and Leadership Squad established a formal due diligence process and approved the establishment of a Due Diligence Committee to oversee the preparation of the climate statements. This Committee is comprised of the Leadership Squad members identified above, as well as the Spark General Counsel. For broader issues the full Leadership Squad serves as Spark’s sustainability steering group, with a standing agenda item each quarter to review performance against sustainability KPIs, discuss risks and opportunities and make decisions related to climate change and our broader sustainability work. The Corporate Relations and Sustainability Director then provides a quarterly sustainability update to the Spark Board. The key sustainability KPI that relates to climate change is our emissions reduction target – see page 105 for more information. In FY24, the Leadership Squad was also engaged in our refreshed climate scenario analysis, supporting the development of our climate scenario narratives and exploring the identified effects on Spark. The Leadership Squad is also engaged in the annual preparation and review of our Annual Report, meaning all Leadership Squad members are informed about climate-related risks and opportunities on an annual basis. The Leadership Squad is also regularly updated on risks identified in our Enterprise Risk Management System. Spark’s Risk, Audit and Fraud Lead provides a quarterly update to the ARMC, a subcommittee of the Board. Our risk management system helps our people to manage uncertainty and adapt to challenges as they pursue our strategy. A number of supporting squads are led by Spark’s Sustainability Lead and Environment Manager. This includes our Governance and Reporting Squad and Emissions Reduction Squad. These squads report progress to the Leadership Squad and Board through the quarterly sustainability updates. The Governance and Reporting squad is an evolution of the ESG Squad, a cross- functional group accountable for our performance, reporting, and risk management, including representatives from Spark’s financial, risk, legal, investor relations, regulatory affairs, people and culture, and corporate relations functions. The squad is led by Spark’s Sustainability Lead. The Emissions Reduction Squad is led by Spark’s Environment Manager and comprises 20 employees working across the Spark Group, mostly in Network and Operations. This squad is split into three workstreams, focussed on mobile networks, data centres, and fleet. Hello tomorrow 92 Spark climate disclosures Risk, Audit and Fraud Lead reports direct to Chair of ARMC, with parallel reporting line to Finance Director Spark Leadership Squad Sub-set of Leadership Squad with delegated climate change responsibilities, including as members of Due Diligence Committee established by the Spark Board for FY24 climate-related disclosures Sustainability Lead Reporting and Governance Squad Risk, Audit and Fraud Lead Environment Manager Emissions Reduction Squad Audit and Risk Management Committee Finance Director Network and Operations Director Corporate Relations and Sustainability Director General Counsel Spark Board Strategy and climate change Integration of climate change and transition planning into strategy Spark does not have a stand-alone climate transition plan. Our climate strategy and transition plan actions are integrated into our overarching strategy and business processes. Because of this interconnectedness we have chosen to integrate our climate disclosures within our integrated annual report. Our climate- related risk and opportunity tables (see pages 97 to 101) report the actions we are taking against each of the climate change risks and opportunities we have identified. As an infrastructure provider with assets distributed across New Zealand, we have robust processes established to manage physical risk across our business, which includes resilience to climate change alongside other hazards such as earthquake risk. We focus on ensuring that these existing business processes are prepared for the increase in frequency and severity of climate incidents, and that our investment in the resilience of our infrastructure is informed by the latest climate science. Resiliency (related to physical risk) is a key input into our network capital deployment and funding. For information on our investment into resilience see page 42. The Board and Leadership Squad considered opportunities from climate change when setting Spark’s three-year strategy launched in FY23. A key focus of the strategy is enabling New Zealand businesses to grow and become more productive and sustainable through technology, which explains how we will support New Zealand’s transformation to a high-productivity, low-carbon economy. The aspects of our strategy aligned to transition planning inform our capital deployment and funding decision-making process. For example, in October we acquired Adroit, a leading IoT provider that specialises in technology solutions for real-time environmental monitoring, with solutions that are used across worksites, construction, agriculture, aquaculture, councils, and infrastructure sectors. In the past year we have also added formal climate and emissions considerations into our capital deployment and funding decision-making processes. The sustainability elements of our strategy are expanded in our Toitū Sustainability at Spark framework, published on page 84 of this report. We include a description of our business model and strategy, using the Integrated Reporting capitals model, on page 6 of this report. Digital equity is a pillar of our sustainability framework. We know that as our economy decarbonises digital skills and access will become increasingly important for participation in society and the workplace, meaning digital equity is a key element of a socially just transition. See the Our Community section on pages 56 – 61 to learn more about our digital equity work. Another commitment, under the Sustainable Spark pillar of our sustainability framework, is to reduce our impact on the natural environment. This includes our plans to transition our operations towards a lower emissions future. We have set an emissions reduction target with the Science Based Targets Initiative (SBTi) to reduce our scope 1 and 2 emissions by 2030, as explained further on page 105. As the majority of our scope 1 and 2 emissions are from electricity, supporting investment in new renewable energy generation is our strategy to decouple our business growth from emissions growth, alongside other energy efficiency initiatives. Our SBTi target also includes a supplier engagement target that 70% of our suppliers by spend, covering purchased goods and services and capital goods, will have SBTi-aligned targets in place by 2026. To achieve this, we are engaging with suppliers to support and encourage them to establish their own science-based emissions reduction targets. Current impacts of climate change When considering physical impacts of climate change, over the last year we experienced no specific climate-related incidents beyond normal weather-related outages. In the previous year, the impact of Cyclone Gabrielle was significant. The cyclone caused significant and sustained power outages and destroyed many roads and bridges that hold fibre backhaul, which connects mobile towers to mobile exchanges. As a result of this, more than 600 mobile towers (across Spark, One New Zealand, and 2degrees) went offline during the storm. Within our network, only one of our cell sites sustained physical damage – all our outages were caused by power outages or fibre cuts. The Telecommunications Emergency Forum, a working party made up of key network operators and retailers, coordinated by the Telecommunications Forum (TCF), was activated immediately and worked alongside the National Emergency Management Agency (NEMA) to coordinate an urgent industry response. Generators and satellite units were flown into the affected areas via helicopter, and our teams were on the ground to restore connectivity as soon as it was safe to do so. As a result of these efforts, within 96 hours, more than 90% of impacted towers were back online. When considering transition opportunities, we continue to see growth in our high-tech revenues, which includes our IoT business. Much of this is driven by monitoring, including energy, water, and environmental monitoring. Although this is not driven by specific climate regulation, it is indicative of an increased focus among our customer base on investing in technology solutions for sustainability issues. We also continue to see interest from investors and customers in our climate change performance, including our emissions reduction target and reporting. This includes an increase in customer requests for scope 3 emissions data related to the products and services we supply. The role of satellite-enabled services is also evolving, both for fixed- broadband and direct to mobile services. Although resilience to weather events is one driver for early adoption, much of this market shift is driven by non-climate-related factors, such as coverage in rural areas. Ko te pae anamata, whakamaua 93 Spark New Zealand Annual Report FY24 Our climate risk tables outline all climate impacts and opportunities identified through our scenario analysis and internal risk processes. These include current impacts, which may increase over time, and potential future impacts. Climate scenario analysis Spark has undertaken climate scenario analysis to help it to identify its climate- related risks and opportunities and develop a better understanding of the resilience of our business model and strategy. Climate scenarios provide an opportunity for organisations to develop their internal capacity to better understand and prepare for the uncertain future impacts of climate change. They are plausible, challenging descriptions of how the future may develop based on a coherent and consistent set of assumptions about physical and transition risks: • Physical risks: risks relating to the physical impacts of climate change. Physical risks emanating from climate change can be event-driven (acute) such as increased severity of extreme weather events. They can also relate to longer-term shifts (chronic) in precipitation and temperature and increased variability in weather patterns, such as sea level rise • Transition risks: risks related to the transition to a low-emissions, climate- resilient global and domestic economy, such as policy, legal, technology, market and reputation changes associated with the mitigation and adaptation requirements relating to climate change. Over the past year Spark co-led a sector- wide approach to scenario development. A shared sector approach is recommended by the XRB. The sector scenarios were developed through a series of workshops, facilitated by environmental consultancy Tonkin + Taylor and our industry body The Telecommunications Forum (TCF). The process was guided by a focal question: “How could climate change plausibly disrupt the telecommunications sector over the short (5 years), medium (15 years), and long-term (30+ years)?” The sector-wide approach to climate risk supports collective engagement with other sectors and stakeholders. This is particularly important to inform long-term collaboration and planning and will be an important input to New Zealand’s next National Climate Change Risk assessment due to be published by the Climate Change Commission in 2026. Throughout the process the sector consulted with the Ministry for the Environment, the Climate Change Commission, and representatives from the energy sector who were integrated into the TCF process. Our three climate scenarios The three climate scenarios the telecommunications sector selected are outlined in the tables on pages 97–101. These scenarios align to the requirements in NZ CS 1 for entities to analyse three scenarios, and each draw from a range of widely used global and local scenario archetypes, for example the Intergovernmental Panel on Climate Change (IPCC) Shared Socioeconomic Pathways (SSPs), the National Institute of Water and Atmospheric Research (NIWA) representative concentration pathways (RCP) and the New Zealand Climate Change Commission decarbonisation pathways. They are also based on scenario archetypes that are consistent with those used by other infrastructure sectors in New Zealand to develop sector scenarios. The scenarios were designed and agreed in consultation across the sector. Given the broad range of inputs and alignment to recognised scenario archetypes we believe the scenarios capture a broad set of possible outcomes that are relevant and appropriate to assessing the resilience of our business model and strategy to climate-related risks and opportunities. A full report of the sector climate scenarios is published on the TCF and Spark websites. Entelar Group loading helicopter with power generators for our cell sites in Gisborne during Cyclone Gabrielle. Hello tomorrow 94 Spark climate disclosures This includes detailed descriptions of the emissions reduction pathways in each scenario and the assumptions underlying pathway development over time, including the policy and socioeconomic assumptions and macroeconomic trends.1 It also includes full descriptions of the relevant scenario narratives, and an outline of the process followed to develop the scenarios. The report is available here: https://s.spark.co.nz/4fXRsoH. These three scenarios have driven Spark’s internal climate scenario analysis, which applied the detailed scenarios to our business and strategy, to identify risks and opportunities specific to Spark. This was a stand-alone process, independent of our existing risk governance. The scope of our climate scenario analysis covers all of Spark's operations and the entire value chain, from upstream supply chain impacts to downstream impacts on our customers and the broader economy. It covers all business activities, operating companies, and subsidiaries. The scenario analysis builds upon our previous scenario analysis and climate risk reporting, which mapped against scenarios equivalent to the ‘disorderly’ (RCP 4.5) and ‘hothouse’ (RCP 8.5) scenarios. While external stakeholders and partners were involved in the sector-based scenario development, Spark’s internal process did not involve any external partners or stakeholders. The Spark Board and Leadership Squad were engaged in the scenario analysis, developing and pressure testing the potential effects on Spark across each of the three scenarios against a number of categories: • Economic • Business-to-business customers • Consumer customers • Government and policy • Infrastructure • Supply chain • Investors • Managed retreat • Social As noted on page 90, the Board has approved the climate-related risks and opportunities identified as a result of the scenario analysis process. Physical risk analysis As part of our scenario analysis process in FY24, we also updated our physical risk analysis against updated data and climate models newly released by the Ministry for the Environment in July 2024. This analysed risk to our infrastructure and assets against the risks of sea level rise/coastal flooding, temperature, wind and rain pattern changes. This modelling provides information on the number and location of sites that may be of greater risk, and enables us to quantify the scale of potential impact and the investment required to mitigate risk, for example by strengthening or relocating vulnerable sites. Through the analysis we identified a small number of assets vulnerable to direct physical risks. This includes 24 mobile sites and one regional exchange vulnerable to coastal flooding under a 20cm sea level rise scenario. This is less than 2% of our infrastructure sites. We acknowledge the limitations and uncertainty of this mapping approach, including the lack of localised information on interconnected physical risk. We will continue to update our physical risk analysis as new data becomes available, particularly data on supporting infrastructure. This will be an important input into our disclosure of anticipated financial impacts in future years. 1 See Section 4 and Appendix A of the sector climate scenarios. The assumptions used to create the sector scenarios were those that were considered to be most relevant to the sector. Specific assumptions were not included relating to energy pathways, carbon sequestration from afforestation, climate technology such as negative emissions technology, and nature-based solutions. Global climate and socioeconomic disruption New Zealand pathways and projections New Zealand telecommunications sector impacts and scenarios Scenario analysis of specific impacts and effects to Spark Disclosure Stages of scenario analysis Ko te pae anamata, whakamaua 95 Spark New Zealand Annual Report FY24 Scenario #1: Orderly transition Scenario #2: Disorderly transition Scenario #3: Hothouse Brief description of scenario narrative (further detail included in sector scenarios) New Zealand and the world transitions to net zero by 2050 with strong policy and market changes clearly signalled by the government. Physical impacts from climate change are limited and align with the SSP1-1.9 scenario. Average global temperatures are limited to 1.5 degrees above pre-industrial levels by 2050. New Zealand and the developed world are delayed in their transition to net zero. This results in a steady increase in temperature and physical impacts in alignment with SSP2-4.5 (2 degrees by mid- century). By 2030, prompted by a number of significant weather events, New Zealand and the developed world realise that urgent action is needed to reach net zero, which results in poorly signalled policy and market changes coinciding with increased adaptation and recovery costs creating significant medium-term challenges. New Zealand and the world abandon net zero targets, and there is no national or global movement to reduce emissions. Existing policies are reversed, and fossil fuel use continues. Physical impacts from climate change are severe with annual average global temperatures rising to 2 degrees above pre-industrial levels by 2050 and 3.6 degrees by 2100 (in alignment with SSP3-7.0). Scenario datasets • Intergovernmental Panel on Climate Change: SSP1-1.9 • NIWA: RCP 2.6 • Climate Change Commission: Tailwinds pathway • Intergovernmental Panel on Climate Change: SSP2-4.5 • NIWA: RCP 4.5 • Climate Change Commission: Headwinds pathway • Intergovernmental Panel on Climate Change: SSP3-7.0 • NIWA: RCP 8.5 • Climate Change Commission: Current policy Global temperature change 1.5˚C 2˚C >3˚C Transition risk Highest Medium Lowest Physical risk Lowest Medium Highest Policy response Early and strategic Slow until 2030, then reactive and significant Slow, market-led, focussed on adaptation Economic impact Highest in 5-year horizon, lowest over 30+ years Highest over 15-year horizon Highest over 30+ year horizon Time horizons for scenario analysis Short term Medium term Long term Time horizon 5 years 15 years 30 + years* Year relative to 2024 2030 2040 2055+ Rationale for selection and link to strategic planning horizons and capital deployment plans Aligns with emissions reduction target and with future-facing investment horizon Aligned with typical life of technology assets Aligned with further materialisation of physical risks, particularly on infrastructure * For risk analysis we used a timebound 30-year horizon. The 30+ year time horizon was used for long-term scenario development. Our climate scenarios Hello tomorrow 96 Spark climate disclosures Climate-related risks and opportunities The tables below outline the climate-related risks and opportunities that Spark has identified over the short, medium and long-term, together with the anticipated impacts of those climate-related risks and opportunities. As many of the risks and opportunities identified are present across all time horizons, we have explained the trend that these risks and opportunities follow across time horizons, identifying the horizon in which the risk or opportunity is most significant. Physical risks Risk description Scenario where risk is greatest Time horizon(s) Potential impacts (anticipated impacts pre-mitigation) Mitigations (transition plan actions integrated into strategy) Physical risk Damage to Spark infrastructure Increased weather events result in increased damage to Spark sites. This includes mobile network equipment, exchanges, data centres, data transport networks Present in all scenarios, but most significant under the Hothouse scenario Increasing in severity over time, most significant in the 30+ year time horizon Increased reactive maintenance costs (labour, fleet, contractors, and parts) Our physical risk analysis against the latest climate models shows only a small number of Spark sites are likely to face significant risk of direct physical damage, with a small number of mobile sites, and one regional exchange, in locations vulnerable to coastal inundation and flooding over a 30-year horizon. Adaptation cost to reinforce or relocate these sites is unlikely to be material over a 30-year time horizon. Exchange buildings and data centres are carefully located considering physical hazards. New data centre builds account for future climate scenarios. Our three geographically diverse, highly resilient network data centres provide core voice and mobile services, with each core able to operate independently. We already make significant investments into network resilience annually and continue to introduce new resilience initiatives. This sustained investment will lessen the impact of any future resilience standards Government may choose to introduce. See mitigations below for further detail or refer to the Enhancing the resilience of our network section on page 42 Increased customer disruptions impact revenue, brand, and reputation One-off adaptation costs for site strengthening and/or relocation Increased costs of new infrastructure builds to meet higher climate resilience standards, e.g. data centres Increased insurance cost or withdrawal of insurance Disruption to supporting infrastructure Increased weather events result in more outages and disruption to infrastructure that supports Spark’s operations Present in all scenarios, but most significant under the Hothouse scenario Increasing in severity over time, most significant in the 30+ year time horizon Passive tower infrastructure: increase in damage to passive tower infrastructure (e.g. tower masts) causes outages or creates damage to Spark’s active infrastructure We make significant investments into network resiliency annually and will continue to invest in new initiatives to adapt to our warming climate. This includes plans to extend battery life on major, critical mobile sites to ensure they can withstand power outages for longer periods of time, alongside improvements to cell tower management during outages to prioritise connectivity for essential communications functions, such as calls and texts. Ko te pae anamata, whakamaua 97 Spark New Zealand Annual Report FY24 Risk description Scenario where risk is greatest Time horizon(s) Potential impacts (anticipated impacts pre-mitigation) Mitigations (transition plan actions integrated into strategy) Physical risk (continued) Disruption to supporting infrastructure (continued) Electricity: increase in frequency and duration of grid outages results in increased network outages For prolonged outages portable generators are used to provide power to mobile sites. Large-scale fixed generators are in place at critical exchange and data centre sites, which can operate continuously without grid power. To improve backhaul resiliency we have established a network of satellite-connected temporary small cells throughout the country for use in emergencies. We are also implementing backup satellite backhaul at a number of permanent cell towers. We are providing business grade Starlink satellite services to our business customers, while trialling direct satellite-to-mobile technology with our partner Lynk Global, before offering the service to Spark customers at scale as more satellites are deployed. Ongoing investment in our Optical Transport Network (OTN) provides multiple redundancy paths and ‘self-healing’ capabilities. Our access and aggregation network will provide diverse and self-healing pathways between our cell towers and our networks. We also have plans to continue to work alongside our industry peers through the TCF to prepare for future events cohesively across our sector. Over the last year, mobile network operators have identified critical sites offering widespread coverage so they can be prioritised for restoration. For more detail refer to the Enhancing the resilience of our network section on page 42 Fibre backhaul: increased frequency of backhaul (fibre) outages caused by flooding, landslips, and road and/or bridge damage along transport corridors Road transport: road transport network damage limits ability to reach sites to perform maintenance and upgrades or address outages, e.g. installing and/or fuelling generators, restoring backhaul connectivity Supply chain disruption Physical climate impacts (e.g. factory fire/ flooding) disrupt global supply for critical inputs, including network equipment and customer devices. Increased global weather events increase competition and demand for network spares. Present in all scenarios, but most significant under the Hothouse scenario Increasing in severity over time, most significant in the 30+ year time horizon Constrained supply of network equipment increases costs, limits ability to respond to reactive maintenance needs, and slows opportunities for investment in new technologies We are engaging with our suppliers to understand their climate risk processes and critical failure points. For critical inventory items and spares we continually review our working capital levels to hold appropriate levels of stock in-country. Disruption to supply chain for customer devices (e.g. mobile handsets, modems etc.) limits ability to serve customers, impacting revenue, brand, and reputation Hello tomorrow 98 Spark climate disclosures Risk description Scenario where risk is greatest Time horizon(s) Potential impacts (anticipated impacts pre-mitigation) Mitigations (transition plan actions integrated into strategy) Transition risk Telecommunications market disruption Customers in rural or vulnerable locations shift to satellite or alternative technologies Present in all scenarios Already happening to a degree, likely to increase to be most material in the 15-year time horizon Loss of customers in rural and/or vulnerable locations to satellite providers Technology evolution will continue to influence the market. Over the short/ medium term it is clear that satellite can complement telecommunications, enabling customers to be served in areas where it is uneconomic to provide mobile connectivity or there is greater risk of service disruption due to climate-related events. Many people in remote locations have already adopted satellite broadband for non-climate reasons. We are working in partnership with satellite providers to provide satellite-enabled services to our customers. Over the long-term 30+ year horizon there is lower certainty on the impact of technology evolution on Spark. Regulation and government intervention Regulation of network resilience standards, coordination of managed retreat Most likely under the Orderly scenario Most likely in the short-term 5-year horizon Inflexible regulation could mandate inefficient investment and reduce ability to innovate and adapt to evolving technologies, e.g. satellite We are engaging with local and central Government to advocate for a coordinated approach to adaptation and resilience with clear cost benefit analysis supporting any new standards. For more detail refer to the Enhancing the resilience of our network section on page 42 Most likely under the Disorderly scenario Most likely in the 15-year time horizon Uncoordinated approach to managed retreat may lead to investment uncertainty Supply chain disruption Rapid adoption of low-emissions technologies disrupts supply of input materials to digital technologies Most likely under the Orderly scenario Most likely in the short-term 5-year horizon Constrained supply of network equipment increases costs and limits ability to respond to reactive maintenance needs, also slowing opportunities for investment in new technologies We are engaging with our suppliers to understand their climate risk processes and critical failure points. For critical inventory items and spares we work with our suppliers and partners to ensure we hold appropriate levels of stock in-country. Most likely under the Disorderly scenario Most likely in the 15-year time horizon Disruption to supply chain for customer devices (e.g. mobile handsets, modems etc.) limits ability to serve customers, impacting revenue, brand and reputation Transition risks Ko te pae anamata, whakamaua 99 Spark New Zealand Annual Report FY24 Risk description Scenario where risk is greatest Time horizon(s) Potential impacts (anticipated impacts pre-mitigation) Mitigations (transition plan actions integrated into strategy) Transition risk (continued) Economic disruption GDP reduction caused by economic transformation and climate events Present across all scenarios and time horizons, but most material across the following: Reduced revenue caused by reduced economic activity that is unevenly distributed across customer sectors We maintain a flexible business plan and can adjust to shifting economic conditions. We are planning for long-term climate impacts across our customer base by understanding exposure to high-risk sectors and regions. Disorderly due to combined transition and physical impacts 15-year Hothouse due to significant long-term physical impacts 30+ year Meeting stakeholder expectations Increased investor, customer, and community expectations drive behaviour change and impact investment opportunities Most likely under the Orderly scenario Most likely in the short-term 5-year horizon Investors: shifting capital to low-carbon, low-risk organisations that are well- positioned for climate transition and other ESG risks ESG is integrated into our business strategy. We have a Sustainability Framework that guides continual improvement, and clearly established governance frameworks with oversight at the highest level, through our Board. We have established a near-term science-based emissions reduction target for our scope 1 and 2 emissions, which has been verified by the SBTi. This establishes our own internal decarbonisation pathway, which we are making progress against, including our 10-year Power Purchase Agreement with Genesis Energy that supports the generation of new renewable energy in New Zealand. We benchmark our performance via the Corporate Sustainability Assessment, which informs the Dow Jones Sustainability Index. For more detail refer to our governance and ESG management section on page 82. Customers: consumers and business customers shifting spend to organisations aligned to their climate expectations and broader sustainability concerns Renewable energy: risk that insufficient new renewable energy generation capacity limits data centre growth opportunities due to customer requirements and national decarbonisation expectations Hello tomorrow 100 Spark climate disclosures Risk description Scenario where risk is greatest Time horizon(s) Potential impacts (anticipated impacts pre-mitigation) Mitigations (transition plan actions integrated into strategy) Transition risk (continued) Access to capital Disruption to global markets limits access to capital Most significant under the Hothouse scenario Not a short-term risk. Most significant in the 30+ year time horizon Limited access to capital for future investment We are not a heavy emitting business, and as outlined above, we have an approach to ESG that drives continual improvement. As a digital services company, we enable climate mitigation and adaptation through the services we provide. We maintain a Capital Management Framework that emphasises financial strength and flexibility of the balance sheet through an investment grade credit rating. Climate-related opportunities Risk description Scenario where risk is greatest Time horizon(s) Potential impacts (anticipated impacts pre-mitigation) Mitigations (transition plan actions integrated into strategy) Climate-related opportunities Opportunity for climate mitigation services Innovation and provision of digital and high-tech services that support customers to become more productive, efficient, and sustainable. Most significant under the Orderly scenario Most significant in the 5 and 15-year horizons Increased revenue from advanced and / or converged digital solutions This opportunity is integrated into our FY26 strategy. We have converged technology use cases in trial with customers. Our IoT business provides solutions to customers that deliver environmental benefits, with connections and revenues continuing to grow year-on-year. We have completed research on the key sectors where the greatest emissions reduction opportunities lie. We have partnered with NZTech to explore how to integrate these opportunities into New Zealand’s second Emissions Reduction Plan. Opportunities for climate adaptation services Providing services to enable customers to adapt to climate change, including environmental monitoring to track physical risks such as flooding, wind, fire etc. Present across all scenarios and time horizons, but most material across the following: Increased revenue from IoT and monitoring services, which monitor climate risks Our IoT business provides solutions to customers that deliver environmental benefits, with connections and revenues continuing to grow year-on-year. In FY24 we bolstered our capability with the acquisition of environmental IoT company Adroit, which now forms part of Spark IoT. Disorderly 15-year Hothouse 30+ year Ko te pae anamata, whakamaua 101 Spark New Zealand Annual Report FY24 Climate risk management Processes and tools for identifying, assessing, and managing climate- related risks and integration into overall risk management processes Our climate scenario analysis is our primary process for identifying new and emerging risks and opportunities from climate change. We completed our first climate scenario analysis in FY21, the results of which were published in our FY21 Annual Report. The risks and opportunities identified through this process have been reviewed and approved annually by our Board and Leadership Squad as part of annual reporting processes. For FY24 we refreshed our scenario analysis – see the Climate Scenario Analysis section on page 94 for more information on the processes we have followed to identify and assess risk, and the time horizons considered by our analysis. Our analysis included physical risk analysis and a high-level quantification of potential financial risks. As noted in the Strategy section of these climate statements, the scenario analysis process undertaken in FY24 considered Spark's entire value chain. Our climate scenario analysis is an input into our overarching risk governance. Our risk policy and framework are benchmarked to COSO ERM 2017 (COSO), a leading practice risk management standard. We also use other leading risk management standards like ISO31000:2018 and specific standards and guidance, where available, to benchmark and inform our risk management practices. Within our overarching risk framework, we update our principal risk profiles twice a year. Our risk framework is how we prioritise different types of risks across the organisation. This considers risks to Spark delivering against its three-year strategy. The materiality of risks is considered against the likelihood of occurrence and the scale of financial impact. ‘Maintaining a resilient network’ is one of the principal risks, which includes physical adaptation risk to our networks, and risk in our network supply chain, aligned to the physical risks identified through our climate scenario analysis. See our managing risk section (page 88) for more detailed information on how Spark manages principal risks. To ensure linkage between all of our sustainability/ESG risks (including climate change) we include a summary of sustainability risks in quarterly risk reporting to our Board and Leadership Squad. This lists our most material sustainability topics, identified through our sustainability materiality processes and our climate scenario analysis. We also map these topics across to our principal risks to show how we have integrated emerging and longer-term issues into our enterprise risk management approach. The timeframes for our climate scenario analysis (5, 15 and 30+ years) extend beyond the time horizons considered by our principal risk assessment which is aligned to our three-year strategy horizon. For emerging risks that fall outside of the principal risks described above, we identify actions for managing those risks outside the enterprise risk system. An example of an action from previous climate risk assessment is the research published into the role of digital technology in supporting emissions reductions (see page 47 for more information). Hello tomorrow 102 Spark climate disclosures Climate metrics and targets Climate-related metrics The table below sets out our key climate-related metrics for FY24, by reference to the relevant paragraph of NZ CS 1. Outside of the metrics below, Spark does not use any industry-based metrics or key performance indicators to measure and manage climate-related risks and opportunities. We have included information relating to the methods, assumptions and uncertainties associated with the below metrics within the table, with further detail of the methods, assumptions and uncertainties relating to our GHG emissions outlined in our GHG Inventory Report. Deloitte provides limited assurance of the emissions included in the report, which is available here: https://investors.sparknz.co.nz/ investor-centre/?page=annual-reports Metric category Metric Notes 22(a)(i) Scope 1 emissions (including comparatives and analysis of trends) FY24: 4,670 tCO2e FY23: 2,694 tCO2e FY22: 2,372 tCO2e See our GHG Inventory Report for breakdown of scope 1 emissions (page 15) and comparatives/ analysis of trends (pages 9, 10) 22(a)(ii) Scope 2 emissions (location-based) (including comparatives and analysis of trends) FY24: 11,684 tCO2e FY23: 10,301 tCO2e FY22: 16,318 tCO2e Using location-based method required by NZ CS 1. See our GHG Inventory Report for breakdown of scope 2 emissions (page 15) and comparatives/ analysis of trends (pages 9, 11) Scope 2 emissions (market-based) (including comparatives and analysis of trends) FY24: 12,204 tCO2e FY23: 10,624 tCO2e FY22: 16,609 tCO2e Using market-based approach aligned to our existing GHG reporting against our SBTi target. See our GHG Inventory Report for breakdown of scope 2 emissions (page 15) and comparatives/analysis of trends (pages 9, 11) 22(a)(iii) Scope 3 emissions FY24: 397,290 tCO2e See our GHG Inventory Report for breakdown of scope 3 emissions (page 16) and comparatives/ analysis of trends for selected categories (page 13) 22(b) GHG emissions intensity 0.107 kgCO2e / $ revenue. Calculated as total scope 1, 2 (market-based) and 3 emissions divided by revenue. 22(c) Transition risks – amount or percentage of assets or business activities vulnerable to transition risks Not quantifiable for individual assets or activities. We have identified enterprise-wide transition risks, with the most material risks related to medium/ long-term economy-wide economic impacts of climate change. As such, these relate to the entire Spark business rather than to an identifiable amount or percentage of assets or business activities. 22(d) Physical risks – amount or percentage of assets or business activities vulnerable to physical risks <2% of all sites identified in physical risk analysis. Refer to the Physical risk analysis section on page 95. 22(e) Climate-related opportunities: amount of percentage of assets or business activities aligned with climate related opportunities Not quantifiable for individual assets or activities. It is not possible to distinguish climate-related opportunities from broader telecommunications and digital service assets and activities. Our infrastructure, (e.g. mobile networks, data centres) supports solutions aligned to climate-related opportunities, as they enable technologies and services that deliver climate mitigation and adaptation. Ko te pae anamata, whakamaua 103 Spark New Zealand Annual Report FY24 Metric category Metric Notes 22(f) Capital deployment: amount of capital expenditure, financing, or investment deployed toward climate-related risks and opportunities Not quantifiable Due to the nature of our business the majority of Spark’s capital expenditure is to build capacity, coverage, or resilience of our infrastructure – all of which contribute towards to both climate risk and opportunity. For example, our investment in network resilience, expanded mobile networks and data centres. 22(g) Internal emissions price: price per metric tonne of CO2e used Range considered, escalating over time: $72.1-88.3 (2024)… $100.0-144.0 (2030)… We use a range of escalating emissions prices, including an emissions price aligned to the Climate Change Commission’s demonstration pathway, to assess emissions reduction opportunities. We have built indirect carbon cost into energy costs models for investment analysis, incorporating Renewable Energy Certificate (REC) costs into lifecycle energy cost. 22(h) Management remuneration linked to climate-related risks and opportunities Refer to the Climate Governance section on page 91. 24(a) GHG measurement / reporting standards Our GHG Inventory report has been prepared in accordance with The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) (‘the GHG Protocol’). 24(b) GHG consolidation approach Operational control approach A detailed description of consolidation approach is available in on page 18 of our GHG Inventory Report: ‘Appendix A: Organisational boundary’ 24(c) Source of emissions factors and GWP rates A detailed list of emissions factor and greenhouse warming potential (GWP) rate sources is available on page 24 of our GHG Inventory Report: ‘Guidance documents used in the preparation of Carbon Footprint’. 24(d) Summary of specific exclusions from emissions reporting A detailed description of our reporting methodology and approach is available in on pages 21–24 of our GHG Inventory Report: ‘Appendix B: Operational boundary’. Hello tomorrow 104 Spark climate disclosures Our emissions reduction target Spark’s emissions reduction target received verification by the Science Based Targets initiative (SBTi) in 2021. SBTi targets must have a strict absolute reduction target for scope 1 and 2 emissions, and also include a separate scope 3 target if these emissions are greater than 40% of the total footprint. SBTi targets are set against sector-specific emissions trajectories. The ICT sector pathways were developed with the International Telecommunications Union (ITU) based on projected growth and efficiency gains. The wording of SBTi targets are set and verified by the Science Based Targets initiative, and follow a common format requiring companies to ‘commit’ to the target that has been established. For Spark this is as follows: • Spark New Zealand commits to reduce absolute scope 1 and 2 GHG emissions 56% by 2030 from a FY2020 base year. • Spark New Zealand commits that 70% of its suppliers by spend covering purchased goods and services and capital goods, will have SBTi-aligned targets in place by 2026. This means Spark is committed to pursuing this target and we are working towards it. For clarity, this is not a guarantee that we will meet this target. Our scope 1 and 2 target has been verified by SBTi as in line with a 1.5 degree pathway. Our supplier target is an engagement target, which means that it does not directly require us to reduce our emissions, but indirectly contributes to limiting global warming to 1.5 degrees by requiring us to engage with our suppliers in relation to setting their own science- based targets. To achieve our target, we are pursuing emissions reductions within our direct value chain. Spark does not intend to use carbon offsets to achieve our target. This approach aligns to SBTi rules which do not allow carbon offsets to be counted against emission targets. This target is a near-term target to FY30, and a first step towards establishing a long-term target contributing to New Zealand’s net-zero ambition to 2050, which we plan to explore in the coming year. Further information on our SBTi target is available on page 48 of this report, together with a description of our performance against the target. Ko te pae anamata, whakamaua 105 Spark New Zealand Annual Report FY24 Financial statements Financial statements 106 Notes to the financial statements 111 Section 1 - General information 1.1 About this report 111 1.2 Key estimates and assumptions 111 1.3 Significant transactions and events 112 Section 2 - Financial performance information 2.1 Segment information 113 2.2 Operating revenues and other gains 114 2.3 Operating expenses 117 2.4 Finance income, finance expense, depreciation, amortisation and net investment income 118 2.5 Non-GAAP measures 119 Section 3 – Assets 3.1 Receivables and prepayments 121 3.2 Inventories 124 3.3 Long-term investments 125 3.4 Right-of-use assets 126 3.5 Leased customer equipment assets 127 3.6 Property, plant and equipment 128 3.7 Intangible assets 130 3.8 Net tangible assets 131 Section 4 – Liabilities and equity 4.1 Payables, accruals and provisions 132 4.2 Lease liabilities 133 4.3 Debt 135 4.4 Capital risk management 136 4.5 Equity and dividends 137 Section 5 – Financial instruments 5.1 Derivatives and hedge accounting 139 5.2 Financial risk management 143 Section 6 – Other information 6.1 Income tax 146 6.2 Employee share schemes 148 6.3 Related party transactions 149 6.4 Subsidiaries 150 6.5 Reconciliation of net earnings to net cash flows from operating activities 151 6.6 Commitments and contingencies 151 Independent auditor’s report 152 Hello tomorrow 106 Statement of profit or loss and other comprehensive income YEAR ENDED 30 JUNE 2024 2023 NOTES $M $M Operating revenues and other gains1 2.2 3,861 4,491 Operating expenses1 2.3 (2,698) (2,769) Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) 2.5 1,163 1,722 Finance income 2.4 30 32 Finance expense 2.4 (144) (99) Depreciation and amortisation 2.4 (527) (504) Net investment income1 2.4 (8) 1 Net earnings before income tax 514 1,152 Income tax expense1 6.1 (198) (17) Net earnings 316 1,135 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 3.3 (20) (44) Items that may be reclassified to profit or loss: Translation of foreign operations (1) – Change in hedge reserves net of tax 5.1 1 2 Other comprehensive income (20) (42) Total comprehensive income 296 1,093 Earnings per share Basic earnings per share (cents)1 17.3 60.7 Diluted earnings per share (cents)1 17.3 60.6 Weighted average ordinary shares (millions) – used for basic earning per share 1,825 1,870 Dilutive potential ordinary share (options) – 3 Weighted average ordinary shares (millions) – used for diluted earnings per share 1,825 1,873 See accompanying notes to the financial statements. 1 The 2023 comparative items were materially impacted by the Connexa transactions and the Spark Sport provision, see note 2.5 for further details. 107 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua Statement of financial position AS AT 30 JUNE 2024 AS AT 30 JUNE 2023 NOTES $M $M Current assets Cash 59 100 Short–term receivables and prepayments 3.1 915 899 Short–term derivative assets 5.1 1 1 Inventories 3.2 89 79 Taxation recoverable 6 – Total current assets 1,070 1,079 Non–current assets Long-term receivables and prepayments 3.1 515 432 Long-term derivative assets 5.1 25 27 Long-term investments 3.3 206 254 Deferred tax assets 6.1 17 55 Right-of-use assets 3.4 487 488 Leased customer equipment assets 3.5 70 77 Property, plant and equipment 3.6 1,394 1,264 Intangible assets 3.7 851 806 Total non–current assets 3,565 3,403 Total assets 4,635 4,482 Current liabilities Short-term payables, accruals and provisions 4.1 550 507 Taxation payable – 25 Short-term derivative liabilities 5.1 – 4 Short-term lease liabilities 4.2 96 78 Debt due within one year 4.3 414 236 Total current liabilities 1,060 850 Non–current liabilities Long-term payables, accruals and provisions 4.1 56 82 Long-term derivative liabilities 5.1 78 94 Long-term lease liabilities 4.2 646 700 Long-term debt 4.3 1,205 816 Total non–current liabilities 1,985 1,692 Total liabilities 3,045 2,542 Equity Share capital 810 965 Reserves (414) (396) Retained earnings 1,194 1,371 Total equity 1,590 1,940 Total liabilities and equity 4,635 4,482 See accompanying notes to the financial statements. On behalf of the Board Justine Smyth, CNZM Jolie Hodson, MNZM Chair Chief Executive Authorised for issue on 23 August 2024 108 Financial statements Hello tomorrow Statement of changes in equity SHARE CAPITAL RETAINED EARNINGS HEDGE RESERVES SHARE–BASED COMPEN– SATION RESERVE REVALUATION RESERVE FOREIGN CURRENCY TRANSLATION RESERVE TOTAL YEAR ENDED 30 JUNE 2024 NOTES $M $M $M $M $M $M $M Balance at 1 July 2023 965 1,371 11 2 (387) (22) 1,940 Net earnings – 316 – – – – 316 Other comprehensive income – – 1 – (20) (1) (20) Total comprehensive income – 316 1 – (20) (1) 296 Contributions by, and distributions to, owners: Dividends 1.3, 4.5 – (494) – – – – (494) Supplementary dividends – (48) – – – – (48) Tax credit on supplementary dividends – 48 – – – – 48 Share buy-back 1.3 (159) – – – – – (159) Issuance of shares under share schemes 4 – – 3 – – 7 Other transfers – 1 – (1) – – – Total transactions with owners (155) (493) – 2 – – (646) Balance at 30 June 2024 810 1,194 12 4 (407) (23) 1,590 SHARE CAPITAL RETAINED EARNINGS HEDGE RESERVES SHARE–BASED COMPEN– SATION RESERVE REVALUATION RESERVE FOREIGN CURRENCY TRANSLATION RESERVE TOTAL YEAR ENDED 30 JUNE 2023 NOTES $M $M $M $M $M $M $M Balance at 1 July 2022 1,105 722 8 5 (343) (22) 1,475 Net earnings – 1,135 – – – – 1,135 Other comprehensive income – – 2 – (44) – (42) Total comprehensive income – 1,135 2 – (44) – 1,093 Contributions by, and distributions to, owners: Dividends 4.5 – (486) – – – – (486) Supplementary dividends – (50) – – – – (50) Tax credit on supplementary dividends – 50 – – – – 50 Share buy-back 1.3, 4.5 (146) – – – – – (146) Issuance of shares under share schemes 4 – – (3) – – 1 Other transfers 2 – 1 – – – 3 Total transactions with owners (140) (486) 1 (3) – – (628) Balance at 30 June 2023 965 1,371 11 2 (387) (22) 1,940 See accompanying notes to the financial statements. 109 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua Statement of cash flows YEAR ENDED 30 JUNE 2024 2023 NOTES $M $M Cash flows from operating activities Receipts from customers 3,711 3,790 Receipts from interest 28 29 Payments to suppliers and employees (2,653) (2,730) Payments for income tax (189) (190) Payments for interest on debt (80) (55) Payments for interest on leases (46) (37) Payments for interest on leased customer equipment assets (7) (7) Net cash flows from operating activities 6.5 764 800 Cash flows from investing activities Proceeds from sale of property, plant and equipment 34 11 Proceeds from sale of business1 4 893 Proceeds from long-term investments 7 – Receipts from finance leases 1 3 Receipts from loans receivable 10 11 Payments for purchase of business, net of cash acquired (5) – Payments for, and advances to, long-term investments (1) (3) Payments for purchase of property, plant and equipment, intangibles (excluding spectrum) and capacity (582) (475) Payments for purchase of spectrum intangible assets (8) (6) Payments for capitalised interest (10) (9) Net cash flows from investing activities (550) 425 Cash flows from financing activities Net proceeds from/(repayments of) debt 4.4 510 (463) Payments for dividends 4.5 (494) (486) Payments for share buy-back 1.3 (159) (146) Payments for leases (78) (64) Payments for leased customer equipment assets (34) (37) Net cash flows from financing activities (255) (1,196) Net cash flows (41) 29 Opening cash position 100 71 Closing cash position 59 100 See accompanying notes to the financial statements. 1 The 2023 comparative was the net cash flow on the sale of Connexa. 110 Financial statements Hello tomorrow 1 Section 1 General information 1.1 About this report Reporting entity These financial statements are for Spark New Zealand Limited (the Company) and its subsidiaries (together Spark or the Group). Spark is a major supplier of telecommunications and digital services in New Zealand. Spark provides a full range of telecommunications, information technology, media and other digital products and services, including: mobile services; broadband services; IT products; IT services; voice services; procurement and partner services; high-tech and data centres. 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) and the address of its registered office is Spark City, 167 Victoria Street West, Auckland 1010, New Zealand. Basis of preparation The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand equivalents to IFRS Accounting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. The financial statements also comply with IFRS Accounting Standards (IFRS). The measurement basis adopted in the preparation of these financial statements is historical cost, modified by the revaluation of certain investments and financial instruments, as identified in the accompanying notes. These financial statements are expressed in New Zealand dollars, which is Spark's functional and presentation currency. All financial information has been rounded to the nearest million, unless otherwise stated. Certain comparative information has been updated to conform with the current year's presentation. The material accounting policies applied in the preparation of these financial statements are set out in the accompanying notes where an accounting policy choice is provided by NZ IFRS. A policy is also included when it is new, has changed, is specific to Spark's operations or is material. Where NZ IFRS does not provide an accounting policy choice, Spark has applied the requirements of NZ IFRS but a detailed accounting policy is not included. New and amended standards NZ IFRS 17 Insurance Contracts (NZ IFRS 17), is effective for FY24 and while Spark does have subsidiaries which provide insurance, this is not material to the Group, therefore there is no material impact on these financial statements from the adoption of NZ IFRS 17. 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. 1.2 Key estimates and assumptions The preparation of these financial statements requires Management to make estimates and assumptions. These affect the amounts of reported revenues and expenses and the measurement of assets and liabilities as at 30 June. Actual results could differ from these estimates. The principal areas of judgement and estimation for Spark in preparing these financial statements are found in the following notes: • Note 2.2 Operating revenues and other gains • Note 3.1 Receivables and prepayments • Note 3.4 Right-of-use assets • Note 3.6 Property, plant and equipment • Note 3.7 Intangible assets • Note 4.2 Lease liabilities NOTES TO THE FINANCIAL STATEMENTS 111 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: General information 1.3 Significant transactions and events The following significant transactions and events affected the financial performance and financial position of Spark for the year ended 30 June 2024 or subsequent to balance date: Share buy-back (see note 4.5) • On 6 April 2023, Spark commenced an on-market share buy-back, which was further extended on 8 April 2024. The shares were acquired on the NZX and ASX, at prices in line with the prevailing market price from time to time during the period of the buy-back. As at 30 June 2024, 60 million shares with a value of $305 million had been repurchased and cancelled under the scheme. In the year ended 30 June 2024, 32 million shares with a value of $159 million were repurchased. The last purchase was made in December 2023. The on-market share buy-back programme has now been withdrawn. Dividends (see note 4.5) • Dividends paid during the year ended 30 June 2024 in relation to the H2 FY23 second-half dividend (ordinary dividend of 13.5 cents per share) and H1 FY24 first-half dividend (ordinary dividend of 13.5 cents per share) totalled $494 million or 27.0 cents per share. Debt programme (see note 4.3) • On 27 October 2023, Spark extended the term of its $200 million committed revolving Sustainability-Linked Loan facility with Westpac New Zealand Limited by three years, to mature on 30 November 2026. • On 7 March 2024, $125 million of unsecured, unsubordinated fixed-rate bonds with a coupon rate of 3.37% matured. • On 18 March 2024 Spark issued two series of unsecured, unsubordinated fixed-rate bonds; $125 million with a coupon rate of 5.21%, maturing on 18 September 2029, and $175 million with a coupon rate of 5.45%, maturing on 18 September 2031. • On 29 April 2024, Spark extended the term of its $200 million committed standby revolving credit facility provided through participating Australasian and global banks by one year, to mature on 30 April 2027. • On 30 May 2024, Spark established a $100 million committed revolving facility with Bank of New Zealand, maturing on 30 May 2025. Long-term investments (see note 3.3) • The fair value of Spark's investment in Hutchinson Telecommunications Australia Limited decreased by $20 million during the year due to a decrease in its quoted share price from AU$0.042 to AU$0.028. The change in fair value is recognised within other comprehensive income. • Spark contributed no further equity to its Southern Cross investment during FY24. Southern Cross has now fully repaid its shareholder loan, with $10 million received in FY24, and Spark received an additional $7 million in FY24 in the form of a capital reduction. Capital expenditure (see notes 2.5, 3.4, 3.6 and 3.7) • Spark's additions to property, plant and equipment, intangible assets (excluding spectrum) and capacity right-of-use assets were $518 million, details of which are provided in notes 2.5, 3.4, 3.6 and 3.7 and on page 17 of this Annual Report. 112 Financial statements Hello tomorrow 2 Section 2 Financial performance information 2.1 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 reclassified the comparative segment results to: • Redistribute certain revenues between two new categories IT products (previously cloud, collaboration, managed data and networks) and IT services (previously service management and security) • Move Qrious, Internet of Things, and MATTR from other products into a new high-tech category • Split data centres out from cloud, and split co-location out from other products to create a combined data centres category. There is no change to the overall Spark reported result because of these changes. 2024 2023 YEAR ENDED 30 JUNE OPERATING REVENUES $M PRODUCT COSTS $M PRODUCT MARGIN $M OPERATING REVENUES $M PRODUCT COSTS $M PRODUCT MARGIN $M Mobile 1,474 (484) 990 1,470 (486) 984 Procurement and partners 548 (483) 65 584 (517) 67 Broadband 613 (325) 288 626 (328) 298 IT products 527 (252) 275 509 (230) 279 Voice 180 (81) 99 231 (98) 133 IT services 165 (43) 122 194 (33) 161 High-tech 79 (34) 45 65 (19) 46 Data centres 37 (2) 35 24 (2) 22 Other products1 136 (45) 91 172 (89) 83 Segment results 3,759 (1,749) 2,010 3,875 (1,802) 2,073 1 See note 2.2 for a description of other products. Reconciliation from segment product margin to consolidated net earnings before income tax 2024 2023 YEAR ENDED 30 JUNE $M $M Segment product margin 2,010 2,073 Other gains 102 616 Labour (512) (511) Other operating expenses2 (437) (456) Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) 1,163 1,722 Finance income 30 32 Finance expense (144) (99) Depreciation and amortisation (527) (504) Net investment income (8) 1 Net earnings before income tax 514 1,152 2 See note 2.3 for a break down of other operating expenses. 113 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Financial performance information 2.2 Operating revenues and other gains The accounting policies specific to Spark’s operating revenues are outlined below: Contracts with customers Spark records revenue from contracts with customers in accordance with the five steps in NZ IFRS 15: 1. Identify the contract with a customer 2. Identify the performance obligations in the contract 3. Determine the transaction price, which is the total consideration provided by the customer 4. Allocate the transaction price amount to the performance obligations in the contract based on their relative stand-alone selling prices 5. Recognise revenue when or as the performance obligation is satisfied. Spark often provides products and services in bundled arrangements (for example, a broadband modem together with a broadband service). Where multiple products or services are sold in a single arrangement, revenue is recognised in relation to each distinct good or service. A product or service is distinct where, amongst other criteria, a customer can benefit from it on its own or together with other resources that are readily available. Revenue is allocated to each distinct product or service in proportion to its stand-alone selling price and recognised when, or as, control is transferred to the customer. Generally, control for products is transferred and revenue recognised at the point in time it is delivered to the customer and for services, control is transferred, and revenue recognised, over time as the service is provided. Revenue for performance obligations satisfied over time is recognised using the 'resources consumed by customers' method or the 'time-elapsed' method, as these best depict the transfer of goods or services to customers. Performance obligations, where Spark acts as an agent, includes some third-party media services and certain cloud, security and service management contracts. Contracts with a significant financing component include those that have goods that were purchased on interest- free payment terms of greater than 12 months. The nature of the various performance obligations in our contracts with customers and when revenue is recognised is outlined below: PERFORMANCE OBLIGATIONS FROM CONTRACTS WITH CUSTOMERS TIMING OF SATISFACTION OF THE PERFORMANCE OBLIGATION AND PAYMENT Mobile services, broadband services, media services, cloud, security and service management services, managed data services and rental of equipment As the service is provided (usually monthly). Generally billed and paid on a monthly basis. Usage, other optional or non-subscription services, and pay-per- use services As the service is provided. Generally billed and paid on a monthly basis. Fixed modems, mobile handsets and other distinct goods When control is passed to the customer, generally when the customer takes possession of the goods. For goods sold in packages or on interest-free terms, customers usually pay in equal instalments over 6 to 36 months. Installation or set-up services (where distinct) As the service is provided. Generally billed and paid following the provision of the service. Network infrastructure As the goods or services are provided. Generally billed when milestones are completed and revenue recognised when the milestones are completed or once control of goods passes to the customer. 114 Financial statements Hello tomorrow 2 2.2 Operating revenues and other gains (continued) 2024 2023 YEAR ENDED 30 JUNE $M $M Operating revenues Mobile 1,474 1,470 Procurement and partners 548 584 Broadband 613 626 IT products 527 509 Voice 180 231 IT services 165 194 High-tech 79 65 Data centres 37 24 Other products 136 172 3,759 3,875 Other gains Net gain on sale of Connexa – 583 Gain on sale and acquisition of property, plant and equipment 62 20 Gain on lease modifications and terminations 36 13 Gain on sale of long-term business 4 – 102 616 Total operating revenues and other gains 3,861 4,491 Other products Included in other products is revenue from mobile infrastructure, exchange building sharing arrangements and Spark Sport (in the comparative). Other gains In the year ended 30 June 2024, other gains comprise gains on the sale of property, plant and equipment, together with the fair value of vendor funded equipment to support revenue growth opportunities (primarily in relation to mobile and data centre network equipment and other assets) of $62 million, gains from lease modifications and terminations of $36 million (primarily relates to mobile sites), and gain on sale of long-term business of $4 million. In the year ended 30 June 2023, other gains included the net gain on sale of Connexa of $583 million, gain on the sale and acquisition of property, plant and equipment (primarily in relation to mobile and data centre network equipment and other assets of $20 million), and gains from lease modifications and terminations of $13 million. 115 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Financial performance information 2.2 Operating revenues and other gains (continued) Key estimates and assumptions Determining the transaction price Determining the transaction price of Spark’s contracts requires judgement in estimating the amount of revenue we expect to be entitled to for delivering the performance obligations within a contract. The transaction price is the amount of consideration that is enforceable and to which we expect to be entitled in exchange for the goods and services we have promised to our customer. We determine the transaction price by considering the terms of the contract and business practices that are customary within that product, as well as adjusting the transaction price for estimated variable consideration and for any effects of the time value of money. The 'expected value' or 'most likely' amount methods are used to determine variable consideration and any amount where it is determined that it is highly probable a revenue reversal will not subsequently occur is included in the transaction price. In making this determination consideration is given to the likelihood and potential magnitude of the revenue reversal, as well as factors outside of Spark’s influence, the time when the uncertainty is expected to be resolved and Spark’s experience with similar types of contracts. Judgement is required to determine the discount rate underlying any time value of money calculations, as well as whether the financing component in a contract is significant. Discounts, rebates, refunds, credits, price concessions, incentives, penalties and other similar items are reflected in the transaction price at contract inception. Determining the stand-alone selling price and the allocation of the transaction price Determining the stand-alone selling price of performance obligations and the allocation of the transaction price between performance obligations involves judgement. The transaction price is allocated to performance obligations based on the relative stand-alone selling prices of the distinct goods or services in the contract. The best evidence of a stand-alone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. If a stand-alone selling price is not directly observable, we estimate the stand-alone selling price taking into account reasonably available information relating to the market conditions, entity-specific factors and the class of customer. In determining the stand-alone selling price, we allocate revenue between performance obligations based on expected minimum enforceable amounts to which Spark is entitled. Any amounts above the minimum enforceable amounts are recognised as revenue as they are earned. Distinct goods and services We make judgements in determining whether a promise to deliver goods or services is considered distinct. We account for individual products and services separately if they are distinct (i.e. if a product or service is separately identifiable from other items in the bundled package and if the customer can benefit from it). The consideration is allocated between separate products and services in a bundle based on their stand-alone selling prices. Timing of satisfaction of performance obligations We make judgements in determining whether performance obligations are satisfied over time or at a point in time, as well as the methods used for measuring progress towards completed satisfaction of performance obligations. Refer to page 114 for Spark's accounting policy on timing of satisfaction of performance obligations. 116 Financial statements Hello tomorrow 2 2.3 Operating expenses 2024 2023 YEAR ENDED 30 JUNE $M $M Product costs 1,749 1,802 Labour 512 511 Other operating expenses Network support costs 73 65 Computer costs 115 109 Accommodation costs 96 83 Advertising, promotions and communication 54 56 Bad debts 15 9 Spark Sport provision 1 54 Other 83 80 Total other operating expenses 437 456 Total operating expenses 2,698 2,769 Cost of inventories recognised as an expense The cost of inventories recognised as an expense in relation to broadband modems, mobile devices and other accessories was $354 million (30 June 2023: $376 million). In the prior year, before Spark Sport was withdrawn from service, a content rights amortisation charge of $26 million was recognised in operating expenses. Lease expenses Expenses relating to short-term leases and leases of low-value assets were $7 million (30 June 2023: $6 million). Donations Donations for the year ended 30 June 2024 were $2,181,000 and comprised Spark's donation to Spark Foundation of $2,099,000 and payroll giving and other donations of $82,000 (30 June 2023: $1,767,000, comprised Spark's donation to the Spark Foundation of $1,635,000 and other donations of $132,000). Spark made no donations to political parties in the years ended 30 June 2024 or 30 June 2023. Auditor’s remuneration 2024 2023 YEAR ENDED 30 JUNE $’000 $’000 Audit of financial statements Audit and review of financial statements1 1,283 1,142 Other services Regulatory audit work2 62 58 Other assurance services3 44 35 Other non–assurance services4 17 17 Total fees paid to auditor 1,406 1,252 1 The audit fee includes fees for both the annual audit of the financial statements and the review of the interim financial statements. 2 Regulatory audit work consists of the audit of telecommunications-related regulatory disclosures and reporting on solvency returns. 3 Other assurance services relate to assurance over the Group's greenhouse gas emissions. 4 Other non-assurance services relate to administrative and other advisory services for the Corporate Taxpayer Group of which Spark, alongside a number of organisations, is a member. 117 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Financial performance information 2.4 Finance income, finance expense, depreciation, amortisation and net investment income 2024 2023 YEAR ENDED 30 JUNE NOTES $M $M Finance income Finance lease interest income 8 8 Other interest income 22 24 30 32 Finance expense Finance expense on debt (75) (50) Lease interest expense 4.2 (48) (39) Leased customer equipment interest expense (8) (7) Other interest and finance expenses (23) (12) (154) (108) Plus: interest capitalised1 10 9 (144) (99) Depreciation and amortisation expense Depreciation – property, plant and equipment 3.6 (235) (227) Depreciation – right–of–use assets 3.4 (89) (75) Depreciation – leased customer equipment assets 3.5 (33) (36) Amortisation – intangible assets 3.7 (170) (166) (527) (504) Net investment income Share of associates' and joint ventures' net losses2 3.3 (17) (16) Interest income on loans receivable from associates and joint ventures 12 8 Impairment of investments (2) - Net disposal and remeasurement of equity-accounted investments2 (1) 9 (8) 1 1 Interest was capitalised on property, plant and equipment and intangible assets under development for the year ended 30 June 2024 at an annualised rate of 5.7% (30 June 2023: 4.3%). 2 Included within share of associates' and joint ventures' net losses in the 2023 comparative is $4 million of transaction costs incurred by Connexa in relation to the 2degrees transaction which diluted Spark's investment in the Connexa group. Therefore, this and the net gain on remeasurement of equity accounted investments represent the net gain on dilution of the investment in the Connexa group which is excluded from the comparative adjusted result in note 2.5. 118 Financial statements Hello tomorrow 2 2.5 Non–GAAP measures Spark uses non-GAAP financial measures that are not prepared in accordance with NZ IFRS. Spark believes that these non-GAAP financial measures provide useful information to readers to assist in the understanding of the financial performance, financial position or returns of Spark. These measures are also used internally to evaluate performance of products, to analyse trends in cash-based expenses, to establish operational goals and allocate resources. However, they should not be viewed in isolation, nor considered as a substitute for measures reported in accordance with NZ IFRS, as they are not uniformly defined or utilised by all companies in New Zealand or the telecommunications industry. Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) Spark calculates EBITDAI by adding back finance expense, depreciation and amortisation and income tax expense, subtracting finance income and adjusting for net investment income (which includes Spark’s share of net profits or losses from associates and joint ventures, interest income on loans receivable from associates and joint ventures, net gain on remeasurement of equity accounted investments and dividend income) to net earnings. A reconciliation of Spark’s EBITDAI is provided below and based on amounts taken from, and consistent with, those presented in these financial statements. 2024 2023 YEAR ENDED 30 JUNE $M $M Net earnings reported under NZ IFRS 316 1,135 Less: finance income (30) (32) Add back: finance expense 144 99 Add back: depreciation and amortisation 527 504 Add/(Less): net investment income 8 (1) Add back: income tax expense 198 17 EBITDAI 1,163 1,722 Adjusted EBITDAI and adjusted net earnings Spark’s policy is to present ‘adjusted EBITDAI’ and ‘adjusted net earnings’ when a financial year includes significant items (such as gains, expenses and impairments) individually greater than $25 million. In the year ended 30 June 2024, the tax effects resulting from the zero-rating of tax depreciation on buildings effective for Spark from 1 July 2024 of $26 million was deemed a significant item to adjust. In the year ended 30 June 2023, the net gain on sale of Connexa of $583 million together with the subsequent $5 million net gain arising from the dilution of the investment in the Connexa group and the one off provision of $54 million for Spark Sport were deemed significant items to adjust. 2024 2023 YEAR ENDED 30 JUNE $M $M EBITDAI 1,163 1,722 Less: net gain on sale of Connexa – (583) Add: Spark Sport provision – 54 Adjusted EBITDAI 1,163 1,193 Net earnings reported under NZ IFRS 316 1,135 Less: net gain on sale of Connexa – (583) Add: Spark Sport provision – 54 Less: net gain on dilution of the investment in the Connexa group1 – (5) Less: tax effect of net gain on sale of Connexa, Spark Sport provision and dilution of the investment in the Connexa group – (168) Add: tax effects resulting from the zero-rating of tax depreciation on buildings effective for Spark from 1 July 2024 26 – Adjusted net earnings 342 433 1 This includes the net gain on remeasurement of equity accounted investments, less costs associated with the transaction recognised in share of associates' and joint ventures' net losses. See note 2.4 for more details. 119 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Financial performance information 2.5 Non–GAAP measures (continued) Capital expenditure Capital expenditure is the additions to property, plant and equipment and intangible assets (excluding spectrum, goodwill, acquisitions, assets fully funded by customers or vendors and other non-cash additions that may be required by NZ IFRS, such as decommissioning costs) and additions to capacity right-of-use assets where such additions are paid up front. 2024 2023 YEAR ENDED 30 JUNE NOTES $M $M Additions to property, plant and equipment 3.6 387 379 Additions to intangible assets 3.7 213 133 Additions to capacity right-of-use assets 3.4 10 25 Total additions 610 537 Less: assets fully funded by customers or vendors 3.6, 3.7 (50) (22) Less: spectrum additions 3.7 (23) – Less: addition to intangible assets on acquisition1 3.7 (11) – Less: other (8) – Capital expenditure 518 515 1 Acquisition of Adroit Holdings Limited and Circle Investments Limited in FY24. Net debt Net debt at hedged rates, the primary net debt measure Spark monitors, includes long-term debt at the value of hedged cash flows due to arise on maturity, plus debt due within one year, less any cash. Net debt at carrying value includes the non-cash impact of fair value hedge adjustments and any unamortised discount. Net debt at hedged rates is a non-GAAP measure and is not defined in accordance with NZ IFRS but is a measure used by management. A reconciliation of net debt at hedged rates and net debt at carrying value is provided in note 4.4. 120 Financial statements Hello tomorrow 3 Section 3 Assets 3.1 Receivables and prepayments 2024 2023 AS AT 30 JUNE $M $M Short-term receivables and prepayments Trade receivables 431 410 Short-term prepayments 135 154 Short-term unbilled revenue 276 261 Short-term contract assets 2 2 Short-term contract costs 47 42 Short-term finance lease receivables 6 9 Other short-term receivables 18 21 915 899 Long-term receivables and prepayments Long-term unbilled revenue 111 95 Long-term prepayments 66 6 Long-term contract costs 91 98 Long-term finance lease receivables 75 74 Long-term loans receivable 166 159 Other long-term receivables 6 – 515 432 Amounts are stated at their net carrying value, including expected credit loss allowance provisions. The fair value of finance lease receivables is estimated to be $72 million (30 June 2023: $75 million) and the carrying amount of all other receivables, measured at amortised cost, are approximately equivalent to their fair value. Contract assets Contract assets primarily relate to Spark's rights to consideration for performance obligations delivered but not billed at the reporting date. Contract assets are transferred to receivables when the rights become unconditional. 121 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Assets 3.1 Receivables and prepayments (continued) Contract costs Contract costs include costs to obtain a contract and costs to fulfil a contract. These costs are expected to be recovered and are therefore initially deferred to the statement of financial position and then recognised within operating expenses on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. The following summarises changes in those balances: 2024 2023 COSTS TO OBTAIN A CONTRACT COSTS TO FULFIL A CONTRACT TOTAL COSTS TO OBTAIN A CONTRACT COSTS TO FULFIL A CONTRACT TOTAL YEAR ENDED 30 JUNE NOTES $M $M $M $M $M $M Opening balance as at 1 July 21 119 140 17 91 108 Additions 13 52 65 10 61 71 Transferred to leased customer equipment assets 3.5 – (4) (4) – – – Transferred to intangible assets 3.7 – (4) (4) – – – Transferred to property, plant and equipment 3.6 – (1) (1) – – – Amortisation recognised in operating expenses (8) (50) (58) (6) (33) (39) Closing balance as at 30 June 26 112 138 21 119 140 Short-term contract costs 6 41 47 4 38 42 Long-term contract costs 20 71 91 17 81 98 Key estimates and assumptions Determining the costs incurred to obtain or fulfil a contract that meet the deferral criteria within NZ IFRS 15 requires significant judgement. Further, where such costs can be deferred, determining the appropriate amortisation period to recognise the costs within operating expenses requires management judgement, including assessing the expected average customer tenure for consumer customers and the expected contract term for enterprise customers. Expected credit loss allowance provision Movements in the loss allowance provision are as follows: 2024 2023 YEAR ENDED 30 JUNE $M $M Opening balance as at 1 July 17 15 Charged to costs and expenses 17 11 Bad debts recovered (2) (2) Utilised (12) (7) Closing balance as at 30 June 20 17 122 Financial statements Hello tomorrow 3 3.1 Receivables and prepayments (continued) Spark has applied the simplified approach to providing for expected credit losses, which requires the recognition of a lifetime expected loss provision for short-term: trade receivables, unbilled revenue, contract assets, contract costs, finance lease receivables and loans receivable. The calculation of the allowance provision incorporates Spark's previous collection history and forward-looking information, such as forecasted economic conditions. The expected credit loss allowance provision has been determined as follows: CURRENT ≤ 1 MONTH > 1 MONTH TOTAL AS AT 30 JUNE 2024 $M $M $M $M Expected loss rate 1.2% 1.4% 8.8% 1.6% Gross carrying amount 1,107 74 68 1,249 Expected credit loss allowance provision 13 1 6 20 Short-term loss allowance provision 8 1 6 15 Long-term loss allowance provision 5 – – 5 AS AT 30 JUNE 2023 $M $M $M $M Expected loss rate 1.1% 1.7% 9.5% 1.4% Gross carrying amount 1,087 59 42 1,188 Expected credit loss allowance provision 12 1 4 17 Short-term loss allowance provision 8 1 4 13 Long-term loss allowance provision 4 – – 4 The composition of the credit loss allowance provision between receivable types is as follows: 2024 2023 AS AT 30 JUNE $M $M Trade receivables 8 7 Unbilled revenue 7 6 Contract assets and contract costs 3 2 Finance lease receivables 1 1 Loans receivable 1 1 Expected credit loss allowance provision 20 17 The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities to comply with the Group’s procedures for recovery of amounts due. Key estimates and assumptions The expected credit loss allowance provision is determined based on assumptions about the risk of default and expected loss rates of customers and other counterparties. Spark uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on Spark's past collection history, existing market conditions, as well as forward-looking estimates at the end of the reporting period. Forward-looking estimates include assessment of forecasted changes to interest rates, unemployment rates and Gross Domestic Product in New Zealand. 123 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Assets 3.1 Receivables and prepayments (continued) Finance lease receivables Spark has a number of leases for space in exchange buildings, including as a lessor for space in Spark exchanges and a lessee for space in Chorus exchanges. These leases include a legal right of offset, as Spark and Chorus settle the payments on a net basis and are therefore shown as a net finance lease receivable or net lease liability on the statement of financial position. In FY23, Spark assigned its ground leases for the mobile site assets sold to Connexa, which resulted in Spark recording finance lease receivables equal to the lease liabilities for these leases. Spark is unwinding these balances over the remaining term to the next right of renewal, at which point these will be novated. In addition, Spark subleases a number of office building floors. Where subleases are for the whole of the remaining non-cancellable term of the head lease, these are classified as a finance lease. The profile of lease net receipts is set out below: 2024 2023 UNDISCOUNTED DISCOUNTED UNDISCOUNTED DISCOUNTED AS AT 30 JUNE $M $M $M $M Less than one year1 11 4 14 7 Between one and five years 30 5 31 5 More than five years 135 71 141 69 Net finance lease receivables 176 80 186 81 Plus short-term portion of finance lease receivables in liability position – 1 – 2 Total finance lease receivables 176 81 186 83 Less unearned finance income (95) – (103) – Present value of finance lease receivables 81 81 83 83 Short-term finance lease receivables 6 9 Long-term finance lease receivables 75 74 1 Included within the discounted balance as at 30 June 2024 are $5 million sublease receivable assets, offset by a $1 million liability relating to the Chorus finance lease receivable (30 June 2023: $9 million sublease receivable asset, offset by a $2 million liability relating to the Chorus finance lease receivable). The lease with Chorus, where Spark is the lessor, has multiple rights of renewals and the full lease term has been used in the majority of the calculation of the financial lease receivable at lease inception, as it was likely that because of the specialised nature of the buildings, the lease would be renewed to the maximum term. 3.2 Inventories 2024 2023 AS AT 30 JUNE $M $M Goods held for resale 89 79 Total inventories 89 79 124 Financial statements Hello tomorrow 3 3.3 Long–term investments 2024 2023 AS AT 30 JUNE MEASUREMENT BASIS $M $M Shares in Hutchison Fair value through other comprehensive income 41 61 Investment in associates and joint ventures Equity method 161 187 Other long-term investments Cost 4 6 206 254 Spark holds a 10% interest in Hutchison Telecommunications Australia Limited (Hutchison), which is quoted on the Australian Securities Exchange (ASX) and its fair value is measured using the observable bid share price as quoted on the ASX, classified as being within Level 1 of the fair value hierarchy. As at 30 June 2024 the quoted price of Hutchison’s shares on the ASX was AU$0.028 (30 June 2023: AU$0.042). The decrease in fair value of $20 million is recognised in other comprehensive income (30 June 2023: $44 million decrease). Included within investment in associates and joint ventures is $71 million (30 June 2023: $85 million) for Spark’s investment in the Connexa group. Investment in associates and joint ventures Spark's investment in associates and joint ventures at 30 June 2024 consists of the following: NAME TYPE COUNTRY OWNERSHIP PRINCIPAL ACTIVITY Flok Limited Associate New Zealand 38% Hardware and software development FrodoCo Holdings Limited Associate New Zealand 17% A holding company for Connexa Hourua Limited Joint Venture New Zealand 50% Delivering the Public Safety Network Pacific Carriage Holdings Limited, Inc. Associate United States 41% A holding company Rural Connectivity Group Limited Joint Venture New Zealand 33% Rural broadband Southern Cross Cables Holdings Limited Associate Bermuda 41% A holding company TNAS Limited Joint Venture New Zealand 50% Telecommunications development All investments in associates and joint ventures are measured using the equity method. Changes in the aggregate carrying amount of Spark's investment in associates and joint ventures were as follows: 2024 2023 ASSOCIATES JOINT VENTURES TOTAL ASSOCIATES JOINT VENTURES TOTAL YEAR ENDED 30 JUNE $M $M $M $M $M $M Opening balance as at 1 July 168 19 187 82 19 101 Additional investments during the year – 1 1 92 1 93 Disposals (3) – (3) – – – Return of capital (7) – (7) – – – Share of net losses (15) (2) (17) (15) (1) (16) Remeasurement on dilution – – – 9 – 9 Closing balance as at 30 June 143 18 161 168 19 187 Spark has suspended equity accounting for Pacific Carriage Holdings Limited Inc and Southern Cross Cables Holdings Limited (together ‘Southern Cross’) as their carrying values were reduced to nil. Spark has no obligation to fund Southern Cross deficits or repay dividends. For the year ended 30 June 2024, Spark's share of Southern Cross profits was not recognised because of the existence of historic cumulative Southern Cross deficits. In the current year Southern Cross profit was $46 million (30 June 2023: $34 million). 125 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Assets 3.4 Right–of–use assets Spark is a lessee for a large number of leases, including: • Property – Spark leases a number of office buildings and retail stores. Some of these leases have rights of renewal that are reasonably certain to be exercised and therefore may have long expected lease terms • Capacity arrangements – Spark enters into a number of indefeasible right-of-use capacity arrangements for cable capacity • Mobile sites – Spark has entered into a number of agreements to allow the operation of mobile network infrastructure throughout New Zealand • Motor vehicles – Spark leases motor vehicles for use in sales, field operations and maintenance of infrastructure equipment • Other - Spark leases equipment that is held at Spark premises and used to provide services to customers PROPERTY CAPACITY MOBILE SITES MOTOR VEHICLES OTHER TOTAL YEAR ENDED 30 JUNE 2024 NOTES $M $M $M $M $M $M Opening net book value 186 212 65 3 22 488 Additions and acquisitions 10 10 13 4 60 102 Transferred from leased customer equipment assets 3.5 – – – – 8 8 Disposals (3) – – – – (3) Remeasurements1 4.2 (29) – 7 1 7 (19) Depreciation charge (32) (25) (7) (3) (22) (89) Closing net book value 132 197 78 5 75 487 PROPERTY CAPACITY MOBILE SITES MOTOR VEHICLES OTHER TOTAL YEAR ENDED 30 JUNE 2023 $M $M $M $M $M $M Opening net book value 250 211 19 3 25 508 Additions 9 25 42 2 8 86 Assets transferred back from held for sale2 – – 7 – – 7 Assets classified as held for sale and other disposals (3) – (3) – – (6) Remeasurements1 (39) – 5 – 2 (32) Depreciation charge (31) (24) (5) (2) (13) (75) Closing net book value 186 212 65 3 22 488 1 Remeasurements to property in FY24 and FY23 primarily relate to modifications for corporate property leases. The reduction in property right-of-use assets for corporate property leases is substantially offset by a reduction in property lease liabilities (see note 4.2). 2 Relates to right-of-use assets that were held for sale as at 30 June 2022 but not sold as part of the Connexa transaction and therefore transferred back to right-of-use assets. All capacity additions for the years ended 30 June 2024 and 30 June 2023 were fully paid on control being obtained and therefore deemed capital expenditure as defined and reconciled in note 2.5. Income from subleasing right-of-use assets for the year ended 30 June 2024 was $2 million (30 June 2023: $2 million). 126 Financial statements Hello tomorrow 3 3.4 Right–of–use assets (continued) Key estimates and assumptions At inception of a contract Spark assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, Spark assesses whether: • The contract involves the use of an identified asset • Spark has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use • Spark has the right to direct the use of the asset At inception or on reassessment of a contract that contains a lease component, Spark allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. Spark recognises a right-of-use asset at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically assessed for impairment losses and adjusted for certain remeasurements of the lease liability. 3.5 Leased customer equipment assets Spark acts as the intermediate party (as a lessee and a lessor) in a number of lease arrangements for customer premises equipment. Such arrangements may also include an initial sale and leaseback transaction. A sale and leaseback transaction contains a genuine sale if control of an asset is transferred under NZ IFRS 15. For Spark’s back-to-back lease arrangements we have assessed that a sale does not occur, as control over the equipment remains with Spark instead of passing to the buyer-lessor. Spark also acts as a lessor, where there is no intermediate party, for customer premises equipment. Spark as the seller-lessee or lessor (when the lease is an operating lease) continues to recognise the leased customer equipment asset, which is initially measured at cost. The asset is subsequently depreciated using the straight-line method based on the expected lease term. Movements in leased customer equipment assets are summarised below: 2024 2023 YEAR ENDED 30 JUNE NOTES $M $M Opening net book value 77 90 Additions 32 32 Transferred to right-of-use assets 3.4 (8) – Transferred from contract costs 3.1 4 – Disposals (2) (9) Depreciation charge (33) (36) Closing net book value 70 77 AS AT 30 JUNE Cost 205 216 Accumulated depreciation and impairment losses (135) (139) Closing net book value 70 77 Leased customer equipment assets are leased to customers under operating leases. Revenue received from these arrangements and other operating leases for the year ended 30 June 2024 were $50 million (30 June 2023: $50 million). 127 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Assets 3.6 Property, plant and equipment TELECOMMUNI– CATIONS EQUIPMENT AND PLANT FREEHOLD LAND BUILDINGS OTHER ASSETS WORK IN PROGRESS TOTAL YEAR ENDED 30 JUNE 2024 NOTE $M $M $M $M $M $M Opening net book value 730 61 254 65 154 1,264 Additions and acquisitions1 1 – 1 26 359 387 Transfers 243 (2) 28 47 (316) – Disposals (5) – – (18) – (23) Transfer from contract costs 3.1 – – – – 1 1 Depreciation charge (179) – (25) (31) – (235) Closing net book value 790 59 258 89 198 1,394 AS AT 30 JUNE 2024 Cost 3,470 59 619 520 198 4,866 Accumulated depreciation and impairment losses (2,680) – (361) (431) – (3,472) Closing net book value 790 59 258 89 198 1,394 TELECOMMUNI– CATIONS EQUIPMENT AND PLANT FREEHOLD LAND BUILDINGS OTHER ASSETS WORK IN PROGRESS TOTAL YEAR ENDED 30 JUNE 2023 $M $M $M $M $M $M Opening net book value 631 61 213 73 131 1,109 Additions1 2 – – 5 372 379 Transfers 265 – 63 21 (349) – Assets transferred back from held for sale2 – – 2 – – 2 Depreciation charge (169) – (24) (34) – (227) Foreign exchange movement 1 – – – – 1 Closing net book value 730 61 254 65 154 1,264 AS AT 30 JUNE 2023 Cost 3,614 61 598 523 154 4,950 Accumulated depreciation and impairment losses (2,884) – (344) (458) – (3,686) Closing net book value 730 61 254 65 154 1,264 1 Included in additions is $42 million (30 June 2023: $22 million) of assets fully funded by customers or vendors. 2 Relates to assets that were held for sale as at 30 June 2022, but not sold as part of the Connexa transaction and therefore transferred back to property, plant and equipment. 128 Financial statements Hello tomorrow 3 3.6 Property, plant and equipment (continued) Joint arrangement Spark has a joint arrangement relating to the construction and operation of the Tasman Global Access fibre-optic submarine cable between Australia and New Zealand. As at 30 June 2024, the carrying value of Spark's share of property, plant and equipment, intangible assets and capacity right-of-use assets in the joint operation was $31 million (30 June 2023: $30 million). Key estimates and assumptions Spark's property, plant and equipment is measured at cost and depreciation is charged on a straight-line basis over the assets' estimated useful lives. Determining the appropriate useful life of property, plant and equipment requires Management judgement, including the expected period of service potential, the likelihood technological advances will make the asset obsolete, the likelihood of Spark ceasing to use it and the effect of government regulation. The estimated useful lives of Spark's property, plant and equipment are as follows: Telecommunications equipment Links and cables 9 - 50 years Network transport 2 - 15 years Mobile radio access network 5 - 25 years Customer premises equipment 3 - 5 years International cable and satellite 10 - 15 years Buildings Buildings 15 - 53 years Furniture and fittings 3 - 20 years Air conditioning 5 - 20 years Power systems 3 - 25 years Batteries 5 - 15 years Other Motor vehicles 6 years Computer equipment 2 - 8 years Internal IT system assets 3 - 15 years The assessment of assets for impairment is based on a large number of factors, such as changes in current competitive conditions, expectations of growth in the telecommunications industry, the discontinuance of services, the expected future cash flows an asset is expected to generate and other changes in circumstances that indicate an impairment exists. Key judgements include rates of expected revenue growth or decline, expected future margins and the selection of an appropriate discount rate for valuing future cash flows. 129 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Assets 3.7 Intangible assets SOFTWARE SPECTRUM LICENCES OTHER INTANGIBLES GOODWILL WORK IN PROGRESS TOTAL YEAR ENDED 30 JUNE 2024 NOTE $M $M $M $M $M $M Opening net book value 310 158 16 234 88 806 Additions and acquisitions1 32 23 11 10 137 213 Transfers 152 – 2 – (154) – Transfer from contract costs 3.1 – – – – 4 4 Disposals (2) – – – – (2) Amortisation charge (144) (18) (8) – – (170) Closing net book value 348 163 21 244 75 851 AS AT 30 JUNE 2024 Cost 1,750 355 116 292 75 2,588 Accumulated amortisation and impairment losses (1,402) (192) (95) (48) – (1,737) Closing net book value 348 163 21 244 75 851 1 Included in additions is $8 million (30 June 2023: nil) of assets fully funded by customers or vendors. SOFTWARE SPECTRUM LICENCES OTHER INTANGIBLES GOODWILL WORK IN PROGRESS TOTAL YEAR ENDED 30 JUNE 2023 $M $M $M $M $M $M Opening net book value 326 175 21 234 83 839 Additions1 – – – – 133 133 Transfers 128 – – – (128) – Amortisation charge (144) (17) (5) – – (166) Closing net book value 310 158 16 234 88 806 AS AT 30 JUNE 2023 Cost 2,022 334 103 282 88 2,829 Accumulated amortisation and impairment losses (1,712) (176) (87) (48) – (2,023) Closing net book value 310 158 16 234 88 806 1 Total software capitalised in the year ended 30 June 2024 includes $84 million (30 June 2023: $69 million) of internally generated assets. Other software capitalised in the year includes software licences and externally supplied labour. Key estimates and assumptions Intangible assets are amortised over their useful lives on a straight-line basis, except goodwill, which is tested for impairment annually. Determining the appropriate useful life of an intangible asset requires Management judgement, including assessing the expected period of service potential, the likelihood technological advances will make it obsolete and the likelihood of Spark ceasing to use it. The estimated useful lives of Spark’s intangible assets are as follows: Spectrum licences 2 – 21 years Software 2 – 16 years Customer contracts and brands 5 – 10 years Other intangible assets 2 – 100 years 130 Financial statements Hello tomorrow 3 3.7 Intangible assets (continued) Goodwill Goodwill by cash–generating unit (CGU) is presented below: 2024 20231 AS AT 30 JUNE $M $M Mobile 34 34 Broadband 3 3 IT Products 117 117 IT Services 53 53 High-tech 20 14 Digital Island 17 13 244 234 1 Spark changed its cash-generating units from 1 July 2023 in line with the changes in Spark's segment reporting as outlined in note 2.1, the 2023 comparative has been restated to align with the updated CGUs. On 19 October 2023, Spark increased its holding in its investment in associate, Adroit Holdings Limited, an environmental IoT solutions company, from 47% to 100% making it a wholly owned subsidiary. Goodwill recognised from the acquisition of $6 million has been allocated to the High-tech CGU as this is the CGU that is expected to benefit from the synergies of the transaction. In addition, on 31 January 2024, Spark's subsidiary, Digital Island purchased 100% of the ordinary share capital of Circle Investments Limited, goodwill of $4 million was recognised on acquisition and has been allocated to the Digital Island CGU. During the years ended 30 June 2024 and 30 June 2023 no impairment arose as a result of the assessment of the carrying value of goodwill. Headroom currently exists in each CGU and, based on the sensitivity analysis performed, no reasonably possible changes in the assumptions would cause the carrying amount of the CGUs to exceed their recoverable amounts. Key estimates and assumptions Goodwill is assessed annually for impairment using a value-in-use model, which estimates the future cash flows, based on the FY25 Board-approved business plan, applied to the next three years, with key assumptions being forecast earnings and capital expenditure for each CGU. The forecast financial information is based on both past experience and future expectations of CGU performance. The major inputs and assumptions used in performing an impairment assessment that require judgement include revenue forecasts, operating cost projections, customer numbers and customer churn, discount rates, growth rates and future technology paths. Nil terminal growth was applied to all CGUs and a pre-tax discount rate of 11.3% was utilised for the year ended 30 June 2024 (30 June 2023: 11.7%). 3.8 Net tangible assets The calculation of Spark's net tangible assets per share and its reconciliation to the statement of financial position is presented below: 2024 2023 AS AT 30 JUNE $M $M Total assets 4,635 4,482 Less: intangible assets (851) (806) Less: total liabilities (3,045) (2,542) Net tangible assets 739 1,134 Number of shares outstanding (in millions) 1,814 1,845 Net tangible assets per share $0.41 $0.61 Net tangible assets per share is a non-GAAP financial measure that is not defined in NZ IFRS. Total assets include assets held for sale and right-of-use assets. Total liabilities include lease liabilities. Net tangible assets per share declined by $0.20 per share from 30 June 2023 as the prior year calculation was high due to lower debt levels following the sale of the Connexa business. The FY24 calculation was more aligned to the FY22 net tangible assets per share calculation of $0.34. 131 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Liabilities and equity Section 4 Liabilities and equity 4.1 Payables, accruals and provisions 2024 2023 AS AT 30 JUNE $M $M Short-term payables, accruals and provisions Trade accounts payable and accruals 299 290 Revenue billed in advance 112 96 Accrued personnel costs 36 39 Accrued interest 6 3 GST payable 51 21 Short-term sale and leaseback liabilities 26 30 Short-term provisions 12 19 Other short-term payables and accruals 8 9 550 507 Long-term payables, accruals and provisions Long-term sale and leaseback liabilities 34 45 Long-term provisions 15 32 Other long-term payables and accruals 7 5 56 82 Trade accounts payable and sale and leaseback liabilities are financial instruments held at amortised cost. Provisions The following table summarises movements in provisions in the year: SPARK SPORT PROVISION MAKE-GOOD PROVISIONS TOTAL YEAR ENDED 30 JUNE 2024 $M $M $M Opening balance as at 1 July 46 5 51 Additional provisions made in the year 1 - 1 Amounts utilised during the year (27) (1) (28) Unwinding of discount 3 - 3 Closing balance at 30 June 23 4 27 Short-term provisions 11 1 12 Long-term provisions 12 3 15 132 Financial statements Hello tomorrow 4 4.2 Lease liabilities PROPERTY CAPACITY MOBILE SITES MOTOR VEHICLES OTHER TOTAL YEAR ENDED 30 JUNE 2024 $M $M $M $M $M $M Opening lease liability balance 220 2 529 3 22 776 Leases entered into during the year 10 – 13 4 61 88 Transferred from sale and leaseback liabilities – – – – 8 8 Disposals (3) – (1) – – (4) Interest expense 8 – 36 – 4 48 Principal repayments (45) (1) (60) (3) (19) (128) Remeasurements1 (28) 1 (29) 1 8 (47) Balance at the end of the year 162 2 488 5 84 741 Short-term portion of finance lease receivable 1 – – – – 1 Total lease liability balance 163 2 488 5 84 742 Short-term lease liabilities 37 – 30 2 27 96 Long-term lease liabilities 126 2 458 3 57 646 Lease liabilities - non-cancellable commitments2 277 2 496 5 90 870 PROPERTY CAPACITY MOBILE SITES MOTOR VEHICLES OTHER TOTAL YEAR ENDED 30 JUNE 2023 $M $M $M $M $M $M Opening lease liability balance 290 3 20 3 26 342 Leases entered into during the year 9 – 492 2 8 511 Transferred back from held for sale3 – – 34 – – 34 Liabilities classified as held for sale and other disposals (4) – (2) – – (6) Interest expense 11 – 27 – 1 39 Principal repayments (45) (1) (41) (2) (13) (102) Remeasurements1 (41) – (1) – – (42) Balance at the end of the year 220 2 529 3 22 776 Short-term portion of finance lease receivable 2 – – – – 2 Total lease liability balance 222 2 529 3 22 778 Short-term lease liabilities 40 – 28 2 8 78 Long-term lease liabilities 182 2 501 1 14 700 Lease liabilities - non-cancellable commitments2 296 2 524 3 22 847 1 Remeasurements in FY24 and FY23 primarily relate to modifications for corporate property leases and mobile sites. For corporate properties, the reduction in lease liabilities is substantially offset by a reduction in property right-of-use assets (see note 3.4). For mobile site remeasurements there is not a corresponding adjustment in right-of-use assets as the majority of these adjustments relate to Connexa leases which have a smaller right-of-use asset due to the sale and leaseback transaction. 2 Relates to the discounted lease liability for future minimum rental commitments for non-cancellable periods of leases, excluding rights of renewal, which are at Spark's option, including leases committed to that have not yet commenced. 3 Relates to lease liabilities that were held for sale as at 30 June 2022, but either assigned or, not sold as part of the Connexa transaction and therefore transferred back to lease liabilities. 133 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Liabilities and equity 4.2 Lease liabilities (continued) Key estimates and assumptions Spark recognises a lease liability at the lease commencement date. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Spark's incremental borrowing rate. Generally, Spark uses its incremental borrowing rate as the discount rate, with adjustments for the type and term of the lease. Lease payments included in the measurement of the lease liability comprise: • Fixed payments, including in-substance fixed payments • Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date • Amounts expected to be payable under a residual value guarantee • The exercise price under a purchase option that Spark is reasonably certain to exercise • Lease payments in an optional renewal period if Spark is reasonably certain to exercise an extension option The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in Spark's estimate of the amount expected to be payable under a residual value guarantee or if Spark changes its assessment of whether it will exercise a purchase or extension option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or it is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Spark has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have lease terms of 12 months or less and leases of low-value assets. Spark recognises the lease payments associated with these leases within operating expenses on a straight-line basis over their lease terms. 134 Financial statements Hello tomorrow 4 4.3 Debt Debt is initially recognised at fair value less attributable transaction costs. Subsequent to initial recognition, debt is classified and measured at amortised cost plus, for hedged liabilities that are in a fair value hedging relationship, adjustments for fair value changes attributable to the risk being hedged. Any difference between cost and redemption value (including fair value changes) is recognised in the statement of profit or loss over the period of the borrowings, using the effective interest rate method. 2024 2023 $M $M AS AT 30 JUNE NOTE FACILITY COUPON RATE MATURITY Debt due within one year Commercial paper Variable < 3 months 208 90 208 90 Supplier financing arrangements1 Variable < 31/01/2029 21 9 21 9 Bank funding Westpac New Zealand Limited2 200 million NZD Variable 30/11/2023 – 15 Commonwealth Bank of Australia2 100 million NZD Variable 30/11/2024 100 – Bank of New Zealand 100 million NZD Variable 30/05/2025 85 – 185 15 Domestic notes 125 million NZD 3.37% 07/03/2024 – 122 – 122 Total debt due within one year 4.4 414 236 Long-term debt Supplier financing arrangements1 Variable < 31/01/2029 49 – 49 – Bank funding Westpac New Zealand Limited2 200 million NZD Variable 30/11/2026 – – Commonwealth Bank of Australia2 100 million NZD Variable 30/11/2025 – 100 MUFG Bank Ltd.2 125 million NZD Variable 30/11/2025 125 – 125 100 Domestic notes 125 million NZD 3.94% 07/09/2026 117 116 100 million NZD3 4.37% 29/09/2028 100 100 125 million NZD 5.21% 18/09/2029 124 – 175 million NZD 5.45% 18/09/2031 174 – 515 216 Foreign currency Medium Term Notes Australian Medium Term Notes – 100 million AUD 1.90% 05/06/2026 102 97 Australian Medium Term Notes – 150 million AUD 4.00% 20/10/2027 156 154 Australian Medium Term Notes – 125 million AUD 2.60% 18/03/2030 116 112 Norwegian Medium Term Notes – 1 billion NOK4 3.07% 19/03/2029 142 137 516 500 Total long-term debt 4.4 1,205 816 Total debt 1,619 1,052 1 With respect to arrangements with outstanding liabilities at 30 June 2024, including those entered into in prior years, financing providers have paid suppliers a total of $124 million and Spark has made payments against these arrangements of $54 million, resulting in a closing liability of $70 million as at 30 June 2024. Amounts paid under these arrangements are presented in the statement of cash flows within financing activities. (30 June 2023: financers have paid suppliers $30 million, payments of $21 million have been made by Spark, resulting in a closing liability of $9 million). 2 These facilities are Sustainability-Linked Loans. Spark will receive lower interest rates if it achieves sustainability targets or pay higher rates on the loans if it falls short of these targets. 3 This bond is a Sustainability-Linked Bond. The bond includes an interest rate step up depending on the achievement of a sustainability target as at 30 June 2026. 4 Norwegian krone. 135 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Liabilities and equity 4.3 Debt (continued) None of Spark's debt is secured and all debt ranks equally with other liabilities. There are no financial covenants over Spark's debt, however, there are certain triggers in the event of default, as defined in the various debt agreements. There have been no events of default over Spark's debt in the years ended 30 June 2024 and 30 June 2023. The fair value of total debt based on market observable prices was $1,635 million compared to a carrying value of $1,619 million as at 30 June 2024 (30 June 2023: fair value of $1,063 million compared to a carrying value of $1,052 million). 4.4 Capital risk management Spark manages its capital considering shareholders' interests, the value of Spark’s assets and the Company’s credit rating. The Board is committed to the Company maintaining an investment grade rating and its capital management policies are designed to ensure this objective is met. As part of this commitment, and in line with credit rating metrics, Spark currently manages its debt levels to ensure that the ratio of adjusted net debt at hedged rates (being inclusive of associated derivatives and leases) to adjusted EBITDAI does not exceed 1.7 times on a long-run basis. At 30 June 2024, Spark's net debt to EBITDAI (including lease liabilities) ratio was 2.1x, temporarily exceeding the 1.7x metric. Management remains committed to ensuring net debt to EBITDAI does not exceed 1.7x on a long-run basis. As at 30 June 2024, the Company’s S&P Global credit ratings for long-term and short-term debt was, respectively, A- and A-2 with outlook stable (30 June 2023: same). Net debt A reconciliation of net debt at hedged rates and net debt at carrying value is provided below: 2024 2023 AS AT 30 JUNE $M $M Cash (59) (100) Debt due within one year at face value 418 240 Long-term debt at face value 1,267 885 Net debt at face value 1,626 1,025 To retranslate debt balances at swap rates where hedged by currency swaps 10 14 Net debt at hedged rates1 1,636 1,039 Non-cash adjustments Impact of fair value hedge adjustments2 9 11 Unamortised discount (7) (1) Net debt at carrying value 1,638 1,049 1 Net debt at hedged rates is the value of hedged cash flows due to arise on maturity and includes an adjustment to state the principal of foreign currency medium term notes at the hedged currency rate. 2 Fair value hedge adjustments arise on domestic notes in fair value hedges and foreign currency medium term notes in dual fair value and cash flow hedges. These have no impact on the cash flows to arise on maturity. 136 Financial statements Hello tomorrow 4 4.4 Capital risk management (continued) A reconciliation of movements in net debt is provided below: CASH FLOWS NON–CASH MOVEMENTS YEAR ENDED 30 JUNE 2024 AS AT 1 JULY 2023 $M PROCEEDS $M PAYMENTS $M INTEREST AMORTISATION $M FAIR VALUE CHANGES $M FOREIGN EXCHANGE MOVEMENT $M OTHER $M AS AT 30 JUNE 2024 $M Cash (100) (19,625) 19,666 – – – – (59) Debt due within one year 236 2,101 (1,947) 1 3 – 20 414 Long-term debt 816 13,729 (13,373) – 10 4 19 1,205 Derivatives 97 – – – (14) (4) (1) 78 Net debt at carrying value 1,049 (3,795) 4,346 1 (1) – 38 1,638 CASH FLOWS NON–CASH MOVEMENTS YEAR ENDED 30 JUNE 2023 AS AT 1 JULY 2022 $M PROCEEDS $M PAYMENTS $M INTEREST AMORTISATION $M FAIR VALUE CHANGES $M FOREIGN EXCHANGE MOVEMENT $M OTHER $M AS AT 30 JUNE 2023 $M Cash (71) (13,908) 13,879 – – – – (100) Debt due within one year 293 307 (496) 1 – – 131 236 Long-term debt 1,233 8,864 (9,138) 1 (3) (17) (124) 816 Derivatives 76 – – – 4 17 – 97 Net debt at carrying value 1,531 (4,737) 4,245 2 1 – 7 1,049 4.5 Equity and dividends Share capital Movements in the Company’s issued ordinary shares were as follows: 2024 2023 YEAR ENDED 30 JUNE NUMBER NUMBER Shares at the beginning of the year 1,845,000,906 1,871,587,475 Cancelled shares acquired under the on-market share buy-back programme (31,803,206) (28,197,250) Dividend reinvestment plan – – Issuance of shares under share schemes and other transfers 957,780 1,610,681 Shares at the end of the year 1,814,155,480 1,845,000,906 All issued shares are fully paid and have no par value. Shareholders of ordinary shares have the right to vote at any general meeting of the Company. Dividends1 2024 2023 YEAR ENDED 30 JUNE CENTS PER SHARE $M CENTS PER SHARE $M Previous year second half-year dividend 13.5 249 12.5 234 First half-year dividend 13.5 245 13.5 252 Total dividends in the year 27.0 494 26.0 486 Second half-year dividend declared subsequent to balance date not provided for 14.0 254 13.5 249 1 Dividends paid disclosed above exclude supplementary dividends. For the year ended 30 June 2024, supplementary dividends paid were $48 million (30 June 2023: $50 million). 137 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Liabilities and equity 4.5 Equity and dividends (continued) Events after balance date On 22 August 2024 the Board approved the payment of a second-half ordinary dividend of 14.0 cents per share or approximately $254 million. This ordinary dividend will be 100% imputed. In addition, supplementary dividends totalling approximately $25 million will be payable to shareholders who are not resident in New Zealand. In accordance with the Income Tax Act 2007, Spark will receive a tax credit from Inland Revenue equivalent to the amount of supplementary dividends paid. H1 FY24 H2 FY24 ORDINARY DIVIDENDS ORDINARY DIVIDENDS Dividends declared Ordinary shares 13.5 cents 14.0 cents American Depositary Shares1 45.59 US cents 42.39 US cents Imputation Percentage imputed 100% 100% Imputation credits per share 5.2500 cents 5.4444 cents Supplementary dividend per share2 2.3824 cents 2.4706 cents ‘Ex’ dividend dates New Zealand Stock Exchange 21/03/24 12/09/24 Australian Securities Exchange 21/03/24 12/09/24 American Depositary Shares 21/03/24 13/09/24 Record dates New Zealand Stock Exchange 22/03/24 13/09/24 Australian Securities Exchange 22/03/24 13/09/24 American Depositary Shares 22/03/24 13/09/24 Payment dates New Zealand and Australia 5/04/24 4/10/24 American Depositary Shares 15/04/24 14/10/24 1 Spark’s American Depositary Shares, each representing five ordinary Spark shares and evidenced by American Depositary Receipts (ADRs), are traded over-the-counter in the United States. This is a Level 1 ADR programme that is sponsored by Bank of New York Mellon. For H2 FY24 these are based on the exchange rate at 16 August 2024 of NZ$1 to US$0.6055 and a ratio of five ordinary shares per one American Depositary Share. The actual exchange rate used for conversion is determined in the week prior to payment when the Bank of New York Mellon performs the physical currency conversion. 2 Supplementary dividends are paid to non-resident shareholders. Dividend Reinvestment Plan The dividend reinvestment plan has been reinstated for the H2 FY24 dividend after being suspended in 2022. Shares issued under the dividend reinvestment plan will be issued at a 3% discount to the prevailing market price around the time of issue. The last date for shareholders to elect to participate in the dividend reinvestment plan for the H2 FY24 dividend is 16 September 2024. Spark’s Dividend Reinvestment Plan Offer Document and Participation Notice can be found on Spark’s Investor Centre Website: investors.sparknz.co.nz. 138 Financial statements Hello tomorrow 5 Section 5 Financial instruments 5.1 Derivatives and hedge accounting 2024 2023 DERIVATIVE ASSETS DERIVATIVE LIABILITIES DERIVATIVE ASSETS DERIVATIVE LIABILITIES AS AT 30 JUNE $M $M $M $M Designated in a cash flow hedge 26 – 27 (1) Designated in a fair value hedge – (10) – (13) Designated in a dual fair value and cash flow hedge – (68) – (84) Other – – 1 – 26 (78) 28 (98) Short-term derivatives 1 – 1 (4) Long-term derivatives 25 (78) 27 (94) 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. As at 30 June 2024 and 30 June 2023 no derivative financial assets or derivative financial liabilities have been offset in the statement of financial position. The potential for offsetting of any derivative financial instruments is $11 million (30 June 2023: $13 million), which if applied would result in a reduction of derivative assets and derivative liabilities. Hedge accounting Derivatives are hedge accounted when they are designated into an effective hedge relationship as a hedging instrument. The nature and the effectiveness of the hedge accounting relationship will determine where the gains and losses on remeasurement are recognised. Derivatives are designated as: • Fair value hedges, where the derivative is used to manage interest rate risk in relation to debt • Cash flow hedges, where the derivative is used to manage the variability in cash flows of highly probable forecast transactions • Dual fair value and cash flow hedges, where the derivative is used to hedge the interest rate risk on foreign debt and the variability in cash flows due to movements in foreign exchange rates. At inception, each hedge relationship is formalised in hedge documentation. Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. Spark determines the existence of an economic relationship between the hedging instrument and the hedged item based on the currency, amount and timing of respective cash flows, reference interest rates, tenors (time to maturity), repricing dates, maturities and notional amounts. Spark assesses whether the derivative designated in each hedging relationship is expected to be, and has been, effective in offsetting the changes in cash flows of the hedged item using the hypothetical derivative method. Derivatives in hedge relationships are designated based on a hedge ratio of 1:1. In these hedge relationships the main source of ineffectiveness is the effect of the counterparty and Spark's own credit risk on the fair value of the derivatives, which is not reflected in the change in the fair value of the hedged item attributable to changes in foreign exchange and interest rates. Cash flow hedges Cross-currency interest rate swaps and interest rate swaps are jointly designated in cash flow hedges to manage interest and foreign exchange rate risk on debt. The hedged cash flows will affect Spark's statement of profit or loss and other comprehensive income as interest and principal amounts are repaid over the remaining term of the debt. Interest rate swaps are designated in cash flow hedges to manage the interest rate exposure of highly probable forecast variable rate debt and aggregate variable interest rate exposures created by swapping local or foreign currency floating-rate (variable) debt into fixed-rate debt. Spark also enters into forward exchange contracts to hedge forecast foreign currency purchases, the majority expected to be made within 12 months. The related cash flows are recognised in the statement of profit or loss and other comprehensive income over this period. 139 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Financial instruments 5.1 Derivatives and hedge accounting (continued) A reconciliation of movements in the hedge reserves, net of tax, is outlined below: 2024 2023 YEAR ENDED 30 JUNE $M $M Opening balance as at 1 July 11 8 Loss recognised in other comprehensive income (9) (4) Amount reclassified to finance expense 9 5 Amount reclassified to property, plant and equipment/intangible assets and inventory 1 1 Total movements to other comprehensive income 1 2 Other transfers – 1 Closing balance as at 30 June 12 11 Included within the closing balance at 30 June 2024 is $4 million relating to the cost of hedging reserve (30 June 2023: $4 million). The movement in the hedge reserves includes $1 million for forward foreign exchange contracts (30 June 2023: $8 million in the change in fair value of interest rate swaps less $2 million associated deferred tax and $3 million for forward foreign exchange contracts ). Fair value hedges Interest rate swaps are designated in a fair value hedge to manage interest rate risk in relation to debt. The gain or loss from remeasuring the interest rate swaps and debt at fair value is recognised in the statement of profit or loss and other comprehensive income. During the year ended 30 June 2024, there has been no material ineffectiveness on fair value hedging relationships (30 June 2023: no material ineffectiveness) and as a result, no material changes have been recognised in profit and loss. Dual fair value and cash flow hedges Spark has Australian dollar (AUD) and Norwegian krone (NOK) denominated debt. As part of Spark's risk management policy, cross- currency interest rate swaps (CCIRSs) are entered into to convert all of the proceeds of the debt issuances to New Zealand dollars and convert the foreign currency fixed rate of the debt issuance to a New Zealand dollar floating rate. To mitigate profit or loss volatility, the CCIRSs were designated into a dual fair value and cash flow hedge relationship. The foreign currency basis element of the CCIRSs are excluded from the designation and are separately recognised in other comprehensive income in a cost of hedging reserve. For fair value hedges, the gain or loss from remeasuring the CCIRSs and debt at fair value is recognised in the statement of profit or loss and other comprehensive income. For cash flow hedges, gains or losses deferred in the cash flow hedge reserve will be reclassified to Spark's statement of profit or loss and other comprehensive income as interest and principal amounts are repaid over the remaining term of the debt. The change in fair value of the hedging instruments relating to the foreign currency basis component of the CCIRSs are recognised in other comprehensive income and accumulated in a cost of hedging equity reserve. Subsequently, the cumulative amount is transferred to profit or loss at the same time as the hedged item impacts profit or loss. 140 Financial statements Hello tomorrow 5 5.1 Derivatives and hedge accounting (continued) The details of the hedging instruments are as follows: NOTIONAL AMOUNT OF HEDGING INSTRUMENT STATEMENT OF FINANCIAL POSITION LINE ITEM CARRYING AMOUNT OF THE HEDGING INSTRUMENT LIFE–TO–DATE CHANGE–IN– VALUE USED FOR CALCULATING HEDGE INEFFECTIVE– NESS ASSETS LIABILITIES AS AT 30 JUNE 2024 $M $M $M Cash flow hedges Interest rate swaps NZD 1b Derivatives 25 – 25 Forward foreign exchange contracts NZD 96m Derivatives 1 – 1 Fair value hedges Interest rate swaps NZD 425m Derivatives – (10) (10) Fair value and cash flow hedges Cross-currency swaps AUD 150m Derivatives – (11) (11) Cross-currency swap NOK 1b Derivatives – (32) (32) Cross-currency swaps AUD 125m Derivatives – (19) (19) Cross-currency swaps AUD 100m Derivatives – (6) (6) 26 (78) (52) NOTIONAL AMOUNT OF HEDGING INSTRUMENT STATEMENT OF FINANCIAL POSITION LINE ITEM CARRYING AMOUNT OF THE HEDGING INSTRUMENT LIFE–TO–DATE CHANGE–IN– VALUE USED FOR CALCULATING HEDGE INEFFECTIVE– NESS ASSETS LIABILITIES AS AT 30 JUNE 2023 $M $M $M Cash flow hedges Interest rate swaps NZD 620m Derivatives 26 – 26 Forward foreign exchange contracts NZD 77m Derivatives 1 (1) – Fair value hedges Interest rate swaps NZD 250m Derivatives – (13) (13) Fair value and cash flow hedges Cross-currency swaps AUD 150m Derivatives – (14) (14) Cross-currency swap NOK 1b Derivatives – (37) (37) Cross-currency swaps AUD 125m Derivatives – (23) (23) Cross-currency swaps AUD 100m Derivatives – (10) (10) 27 (98) (71) 141 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Financial instruments 5.1 Derivatives and hedge accounting (continued) The details of hedged items are as follows: STATEMENT OF FINANCIAL POSITION LINE ITEM CARRYING AMOUNT OF THE HEDGED ITEM ACCUMULATED AMOUNT OF FAIR VALUE HEDGE ADJUSTMENTS ON THE HEDGED ITEM INCLUDED IN THE CARRYING AMOUNT OF THE HEDGED ITEM LIFE–TO–DATE CHANGE–IN– VALUE USED FOR CALCULATING HEDGE INEFFECTIVE– NESS ASSETS LIABILITIES ASSETS LIABILITIES AS AT 30 JUNE 2024 $M $M $M $M $M Cash flow hedges Aggregated variable interest rate exposure – – – – – (25) Committed foreign exchange transactions – – – – – (1) Fair value hedges Domestic Notes Long–term debt – (415) 10 – 10 Fair value and cash flow hedges Australian Medium Term Note (AUD 100m) Long–term debt – (102) 8 – 6 Australian Medium Term Note (AUD 150m) Long–term debt – (156) 7 – 11 Australian Medium Term Note (AUD 125m) Long–term debt – (116) 21 – 19 Norwegian Medium Term Note (NOK 1b) Long–term debt – (142) 12 – 32 – (931) 58 – 52 STATEMENT OF FINANCIAL POSITION LINE ITEM CARRYING AMOUNT OF THE HEDGED ITEM ACCUMULATED AMOUNT OF FAIR VALUE HEDGE ADJUSTMENTS ON THE HEDGED ITEM INCLUDED IN THE CARRYING AMOUNT OF THE HEDGED ITEM LIFE–TO–DATE CHANGE–IN– VALUE USED FOR CALCULATING HEDGE INEFFECTIVE– NESS ASSETS LIABILITIES ASSETS LIABILITIES AS AT 30 JUNE 2023 $M $M $M $M $M $M Cash flow hedges Aggregated variable interest rate exposure – – – – – (26) Fair value hedges Domestic Notes Long–term debt and debt due within one year – (238) 13 – 13 Fair value and cash flow hedges Australian Medium Term Note (AUD 100m) Long–term debt – (97) 11 – 10 Australian Medium Term Note (AUD 150m) Long–term debt – (154) 9 – 14 Australian Medium Term Note (AUD 125m) Long–term debt – (112) 23 – 23 Norwegian Medium Term Note (NOK 1b) Long–term debt – (137) 15 – 37 – (738) 71 – 71 142 Financial statements Hello tomorrow 5 5.2 Financial risk management a) Market risk Spark is exposed to market risk primarily from changes in foreign currency exchange rates and interest rates. Spark employs risk management strategies, including the use of derivative financial instruments, to manage these exposures through a Board- approved treasury policy, which provides the framework within which treasury-related activities are conducted. Spark manages the concentration of exposures using well-defined market and credit risk limits and through timely reporting to senior management. All contracts have been entered into with high-credit quality financial institutions. The risk associated with these transactions is that the fair value or cash flows of financial instruments will change due to movements in market rates or, in the case of default by a counterparty, through the cost of replacement at the current market rates. Currency risk Nature of the risk Currency risk is the risk that eventual New Zealand dollar net cash flows from transactions undertaken by Spark will be adversely affected by changes in foreign currency exchange rates. Exposure and risk management Spark’s total net exposure (from non-derivative financial instruments) to foreign currency as at 30 June 2024 is $565 million (30 June 2023: $553 million). This includes $154 million long-term debt principal denominated in NOK (30 June 2023: $152 million) and $411 million long-term debt principal denominated in AUD (30 June 2023: $408 million). The remaining exposure is primarily trade payables and other receivables denominated in United States dollars (USD). Spark manages currency risk arising from foreign currency debt through hedging. Spark’s long-term debt issued in NOK and AUD is fully hedged using cross-currency interest rate swaps to convert foreign currency cashflows into floating-rate New Zealand dollar exposures. Currency risk from capital and operational expenditure in foreign currencies (and related trade payables) has been substantially hedged by entering into forward exchange contracts. Sensitivity to foreign currency movements As at 30 June 2024, a movement of 10% in the New Zealand dollar would (after hedging) impact the statement of profit or loss by less than $1 million (30 June 2023: less than $1 million) and the statement of changes in equity by less than $13 million (30 June 2023: less than $11 million). This analysis assumes a movement in the New Zealand dollar across all currencies and only includes the effect of foreign exchange movements on monetary financial instruments. Interest rate risk Nature of the risk Interest rate risk is the risk that fluctuations in interest rates impact Spark’s cash flows, financial performance or the fair value of its holdings of financial instruments. Exposure and risk management Spark is exposed to interest rate risk from its financing activities, which primarily include loans and debt issuance either at fixed or floating rates. For floating-rate exposures Spark employs the use of derivative financial instruments to reduce its exposure to fluctuations in interest rates, with the objective to minimise the cost of net borrowings and to minimise the impact of interest rate movements on interest expense and net earnings. Cross-currency interest rate swaps are used to convert foreign currency debt into floating-rate New Zealand dollar exposures. Interest rate swaps are used to convert floating-rate exposures into fixed-rate exposures and vice versa. As a result, Spark’s interest rate exposure is limited to New Zealand only. Sensitivity to interest rate movements As at 30 June 2024, a movement in interest rates of 25 basis points would (after hedging) impact the statement of profit or loss by less than $1 million (30 June 2023: less than $1 million) and the statement of changes in equity by less than $5 million (30 June 2023: less than $1 million). 143 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Financial instruments 5.2 Financial risk management (continued) b) Credit risk Nature of the risk Credit risk arises in the normal course of Spark’s business on cash, receivables and derivative financial instruments if a counterparty fails to meet its contractual obligations. Exposure and risk management Spark is exposed to credit risk if customers and counterparties fail to make payments in respect of: • Payment of trade and other receivables as they fall due; and • Contractual cash flows of derivative assets held at fair value. Spark’s assets subject to credit risk as at 30 June 2024 were $1,314 million (30 June 2023: $1,299 million). Spark considers the probability of default upon initial recognition of cash, receivables and derivative assets and whether there has been a significant and ongoing increase in credit risk at the end of each reporting period. To assess this Spark compares the risk of default occurring on these assets at the reporting date, with the risk of default at the date of initial recognition. Available, reasonable and supportive forward-looking information is considered, especially the following indicators: • External credit rating (as far as available) • Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the customer or counterparty's ability to meet their obligations • Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements. Spark considers a financial asset to have low credit risk when the asset is held with a high-credit quality financial institution or with a party that has a strong financial position with no past due amounts. Spark manages its exposure using a credit policy that includes limits on exposures with significant counterparties that have been set and approved by the Board and are monitored on a regular basis. Spark places its cash and derivative financial instruments with high-credit quality financial institutions and does not have significant concentration of risk with any single financial institution. Spark has significant shareholder loans and finance lease receivables which are deemed low credit risk. Concentration of credit risk for trade and other receivables is limited because of Spark’s large customer base. Spark has certain derivatives and debt arrangements that are subject to bilateral credit support agreements that require Spark or its counterparties to post collateral funds to support the value of certain derivatives subject to certain agreed threshold amounts. As at 30 June 2024, no collateral was posted (30 June 2023: nil). Letters of credit and guarantees may be held over some receivable amounts. The carrying amounts of financial assets represent the maximum credit exposure. c) Liquidity risk Nature of the risk Liquidity risk represents Spark's ability to meet its contractual obligations as they fall due. Exposure and risk management Spark uses cash and derivative financial instruments to manage liquidity and evaluates its liquidity requirements on an ongoing basis. In general, Spark generates sufficient cash flows from its operating activities to meet its financial liabilities. As at 30 June 2024, Spark had current assets of $1,070 million and current liabilities of $1,060 million (30 June 2023: current assets of $1,079 million and current liabilities of $850 million). Positive operating cash flows enable working capital to be managed to meet short-term liabilities as they fall due. In the event of any shortfalls Spark has the following financing programmes: • An undrawn committed standby facility of $200 million with a number of creditworthy banks (30 June 2023: $200 million) • Committed bank facilities of $525 million with $310 million drawn as at 30 June 2024 (30 June 2023: $425 million facilities with $115 million drawn) • Undrawn committed bank overdraft facilities of $15 million with New Zealand banks (30 June 2023: $15 million). There are no compensating balance requirements associated with these facilities. Spark's liquidity policy is to maintain unutilised committed facilities of at least 110% of the next 12 months’ forecast peak net funding requirements, including coverage for short-term capital market issues. Spark's funding policy requires that no more than 30% of long-term debt (including undrawn and standby facilities) can mature within the next 12 months, which has been met. 144 Financial statements Hello tomorrow 5 5.2 Financial risk management (continued) c) Liquidity risk (continued) Maturity analysis The following table provides an analysis of Spark's remaining contractual cash flows relating to financial liabilities. Contractual cash flows include contractual undiscounted principal and interest payments. CARRYING AMOUNT CONTRACTUAL CASH FLOWS 0–6 MONTHS 6–12 MONTHS 1–2 YEARS 2–5 YEARS 5+ YEARS AS AT 30 JUNE 2024 $M $M $M $M $M $M $M Non-derivative financial liabilities Trade accounts payable and accruals 299 299 299 – – – – Sale and leaseback liabilities 60 66 19 15 23 9 – Lease liabilities 742 1,025 65 63 118 283 496 Short and long-term debt 1,619 1,911 554 42 185 666 464 Derivative financial liabilities Interest rate swaps (net settled) 10 (10) (5) (3) (1) (1) – Cross-currency interest rate swaps (gross settled) Inflows – (636) (6) (11) (126) (353) (140) Outflows 68 717 21 19 142 395 140 Forward exchange contracts (gross settled) Inflows – (11) (11) – – – – Outflows – 11 11 – – – – 2,798 3,372 947 125 341 999 960 CARRYING AMOUNT CONTRACTUAL CASH FLOWS 0–6 MONTHS 6–12 MONTHS 1–2 YEARS 2–5 YEARS 5+ YEARS AS AT 30 JUNE 2023 $M $M $M $M $M $M $M Non-derivative financial liabilities Trade accounts payable and accruals 290 290 290 – – – – Sale and leaseback liabilities 75 76 18 17 20 21 – Lease liabilities 778 1,224 57 56 104 274 733 Short and long-term debt 1,052 1,285 227 150 36 469 403 Derivative financial liabilities Interest rate swaps (net settled) 13 (14) (3) (3) (5) (2) (1) Cross-currency interest rate swaps (gross settled) Inflows – (650) (6) (11) (17) (315) (301) Outflows 84 755 22 21 38 351 323 Forward exchange contracts (gross settled) Inflows – (46) (46) – – – – Outflows 1 46 46 – – – – 2,293 2,966 605 230 176 798 1,157 145 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Other information Section 6 Other information 6.1 Income tax Income tax expense The income tax expense is determined as follows: 2024 2023 YEAR ENDED 30 JUNE $M $M Statement of profit or loss and other comprehensive income Current income tax Current year income tax expense (excluding adjusting items) (148) (209) Current year income tax expense on adjusting items1 – 31 Adjustments in respect of prior periods (10) (3) Deferred income tax Depreciation, provisions, accruals, tax losses and other adjustments (excluding adjusting items) (42) 24 Depreciation, provisions, accruals, tax losses and other adjustments on adjusting items2 – 137 Adjustments in respect of prior periods 2 3 Income tax expense recognised in the statement of profit or loss and other comprehensive income (198) (17) 1 The comparative includes $26 million for the costs associated with assets disposed of in the sale of Connexa, $2 million for the unwind of the deferred tax asset explained below for the Connexa transaction and $2 million of current tax for the Spark Sport provision. 2 Due to the difference between the right-of-use assets and lease liabilities recognised at the date of the sale of Connexa in the prior year, a deferred tax asset of $126 million was recognised in FY23, with a corresponding adjustment (reduction) to tax expense. The balance of the deferred tax asset at 30 June 2023 was $124 million. The Spark Sport provision had a deferred tax impact at 30 June 2023 of $12 million. The current tax impact of adjusting items of $31 million together with the deferred income tax impact of $137 million is $168 million (see note 2.5). The total tax expense on an adjusted (non-GAAP) basis for FY23 was $185 million. Reconciliation of income tax expense 2024 2023 YEAR ENDED 30 JUNE $M $M Net earnings before income tax 514 1,152 Tax at current rate of 28% (144) (323) Adjustments to taxation Non-assessable gains on sale1 – 317 Other non-assessable items (11) (6) Tax effects of non-New Zealand profits (9) (5) Tax effects of tax depreciation on buildings (26) – Adjustments in respect of prior periods (8) – Total income tax expense2 (198) (17) 1 In the prior year this comprised the tax effect of the $583 million net gain on sale of Connexa, being $163 million, the $126 million deferred tax impact described above and the $26 million current tax impact of the costs associated with the assets disposed of and other adjustments of $2 million. 2 The comparative includes the tax effect of the net gain on sale of Connexa and the Spark Sport provision, being a credit to tax of $168 million (see note 2.5). The total tax expense on an adjusted (non-GAAP) basis for FY23 was $185 million. 146 Financial statements Hello tomorrow 6 6.1 Income tax (continued) Tax depreciation on buildings As announced as part of their election campaign, the Government enacted legislation to remove the tax depreciation on commercial and industrial buildings, effective from income tax years on or after 1 April 2024. This reduces the tax base of the building assets back to nil because depreciation can no longer be claimed on these assets from FY25 onwards. As deferred tax is calculated on the difference between the carrying amount of the asset and its tax base, the decrease of the tax base has reduced Spark’s deferred tax asset by $26 million. This also results in a one-off increase in tax expense of $26 million. Pillar Two legislation The OECD model GloBE rules, first released by the OECD in December 2021, are intended to ensure that large multinational enterprises (MNE) with annual revenue of €750m or more pay a minimum level of tax (based on an effective tax rate of 15%) on income arising in each country where they operate. Spark is an ‘in-scope‘ MNE under the GloBE rules due to its scale in New Zealand (where its Ultimate Parent Entity (UPE) is located) combined with its small international footprint of constituent entities (CE). The rules are complex with different adoption and implementation dates applying in different countries meaning the transformation of the international tax environment will continue unabated for some time. Spark has undertaken an initial impact assessment and has determined that the rules do not apply in relation to its financial year ended 30 June 2024. Spark expects GloBE reporting obligations to apply to its 30 June 2025 financial year (in respect of its CE’s in Australia and the United Kingdom). Additional GloBE reporting is expected to commence in other regions in relation to Spark’s 2026 financial year. However, no top up taxes are expected to be paid due to the availability of certain temporary safe harbours that apply through to 2028. Deferred tax assets and liabilities Deferred tax assets and liabilities are offset in the statement of financial position and presented as a net deferred tax asset. The movement in the deferred tax assets and liabilities is provided below: FIXED ASSETS LEASES PROVISIONS & ACCRUALS OTHER TOTAL ASSETS/(LIABILITIES) $M $M $M $M $M Opening balance as at 1 July 2023 (62) 123 21 (27) 55 Amounts recognised in the statement of profit or loss and other comprehensive income Relating to the current period (26) (16) (16) 16 (42) Adjustments in respect of prior periods – (1) 6 (3) 2 Amounts recognised in equity relating to the current year – – – 2 2 Closing balance as at 30 June 2024 (88) 106 11 (12) 17 FIXED ASSETS LEASES PROVISIONS & ACCRUALS OTHER TOTAL ASSETS/(LIABILITIES) $M $M $M $M $M Opening balance as at 1 July 2022 (58) (3) (7) (40) (108) Amounts recognised in the statement of profit or loss and other comprehensive income Relating to the current period1 9 123 14 15 161 Adjustments in respect of prior periods2 (13) 3 14 (1) 3 Amounts recognised in equity relating to the current year – – – (1) (1) Closing balance as at 30 June 2023 (62) 123 21 (27) 55 1 Amounts relating to the current period for the comparative include timing differences for the Connexa lease and the Spark Sport provision. 2 In the prior year, adjustments in respect of prior periods reflect changes in the prior year tax balances used for financial reporting and tax return completion, in the current year these primarily relate to reclassifications between categories to align with the current year's presentation. 147 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Other information 6.1 Income tax (continued) Spark has not recognised the tax effect of accumulated unrestricted losses and temporary differences amounting to AU$461 million at 30 June 2024 based on the relevant corporation tax rate of Australia (30 June 2023: AU$461 million). These losses and temporary differences may be available to be carried forward to offset against future taxable income. However, utilisation is contingent on the production of taxable profits over a significant period of time and is subject to compliance with the relevant taxation authority requirements. Spark has a negative 67 million imputation credit account balance as at 30 June 2024 due to the timing of dividend and tax payments (30 June 2023: negative 32 million). The imputation credit account had a positive balance as at 31 March 2024. 6.2 Employee share schemes Spark operates a share-based compensation plan that is equity settled as outlined below. Share option scheme From September 2019, members of the Leadership Squad (including the CEO) and selected senior leaders have been granted options under the new Spark Long-Term Incentive (LTI) scheme. Under the scheme participants are granted options at the start of the three- year vesting period. The number of options granted equals the gross LTI value divided by the volume weighted average price of Spark New Zealand shares for the 20 days prior to the grant date. Subject to satisfaction of the performance hurdle and continued employment, at vesting each option converts to a Spark share based on a zero exercise price. If the target is not met (or the participant leaves Spark employment) then the options simply lapse, with exceptions for redundancy, death and disablement. Spark enables participants to meet tax obligations through PAYE by authorising the sale of a sufficient number of shares on their behalf. Vesting of the LTI grants are contingent on participants’ continued employment with Spark for three years from grant date (subject to exceptions) and the Company achieving the specified performance hurdles. The performance hurdle targets are set annually and for grants issued in 2020 and 2021 this was the Company’s cost of equity plus 1% compounding annually. For grants issued in 2022 and 2023, 75% of the allocated shares will vest based on the performance hurdle target of the Company's cost of equity plus 1.5% compounding annually and 25% will vest based on performance against environmental and diversity targets. Options with an intrinsic value of $13 million (30 June 2023: $15 million) remain outstanding at 30 June 2024 and have a weighted average remaining life of 1.3 years (30 June 2023: 1.3 years). Information regarding options awarded under this scheme is as follows: 2024 2023 OPTIONS OPTIONS NUMBER OF OPTIONS NUMBER OF OPTIONS Opening balance as at 1 July 2,926,064 2,840,293 Granted 1,313,428 1,144,179 Vested – (964,574) Lapsed (1,018,509) (93,834) Closing balance as at 30 June 3,220,983 2,926,064 Percentage of total ordinary shares 0.18% 0.16% The fair value of the employee services received in exchange for the grant of equity instruments is recognised as an expense, with a corresponding entry in equity. The total charge recognised for this scheme for the year ended 30 June 2024 was $1.6 million (30 June 2023: $1.4 million). As at 30 June 2024, $2.5 million of share scheme awards remain unvested and not expensed (30 June 2023: $2.1 million). This expense, measured at its fair value based on a valuation model, will be recognised over the remaining vesting period of the awards. On 3 October 2023 the options granted in September 2020 lapsed. 148 Financial statements Hello tomorrow 6 6.3 Related party transactions Related parties of Spark include the associate and joint venture companies listed in note 3.3 and key management personnel detailed below. Interest of directors in certain transactions A number of the Company's directors are also directors of other companies and any transactions undertaken with these entities have been entered into on a commercial basis. Transactions with associate and joint venture companies Spark's transactions with associates and joint ventures include the following: • Spark provided network operations and management services to Southern Cross in respect of its operations in New Zealand • Spark made payments to Southern Cross in connection with capacity it has purchased on Southern Cross’ network • Spark made payments to Southern Cross for operational expenditure relating to cable maintenance • Southern Cross fully repaid the shareholder loan and returned capital to Spark through a capital reduction • Spark made payments to Adroit Holdings Limited for operational expenditure relating to environmental IoT services and hardware and received payments for IoT warehousing until the full acquisition of the entity on 19 October 2023 • Spark received revenue from Rural Connectivity Group for the sale of mobile backhaul equipment • Spark received payments from Hourua Limited for milestones delivered for the Public Safety Network and for use of Spark's corporate office space • Spark made payments to Connexa for access to mobile towers, this includes lease and operating charges. Spark also received payments from Connexa for transition services, rental recovery, maintenance, site build and interest on shareholder loans. Balances and amounts in respect of these transactions with associate and joint venture companies excluding Connexa are set out in the table below: 2024 2023 AS AT AND FOR THE YEAR ENDED 30 JUNE $M $M Revenues 18 7 Expenses (11) (14) Capacity acquired and other capital expenditure1 (10) (18) Receivables 3 11 Payables – (4) 1 As at 30 June 2024, Spark has committed to purchases of $22 million for cable capacity from Southern Cross (30 June 2023: $22 million). Given the significant nature of the balances and transactions with Connexa, these are separately disclosed below: 2024 2023 AS AT AND FOR THE YEAR ENDED 30 JUNE $M $M Revenues1 28 14 Expenses (15) (9) Receivables2 172 156 Lease liabilities3 (447) (482) Revenue billed in advance (4) – 1 Including interest income on shareholder loans. 2 Receivables include shareholder loans to Connexa, including one non-interest bearing loan, and one interest bearing loan set at a market rate at the time of drawdown. 3 Related party lease liabilities have an initial term of 15 years with options for right of renewal which have not been included in the measurement of the lease liability. Payments made for related party lease liabilities in the year were $47 million (30 June 2023: $28 million). 149 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua NOTES TO THE FINANCIAL STATEMENTS: Other information 6.3 Related party transactions (continued) Key management personnel compensation 2024 2023 YEAR ENDED 30 JUNE $’000 $’000 Directors’ remuneration1 1,371 1,473 Salary and other short–term benefits 6,575 7,509 Share–based compensation 784 784 8,730 9,766 1 Excludes Chief Executive remuneration. The table above includes remuneration of the Chief Executive and the other members of the Leadership Squad, including amounts paid to members of the Leadership Squad who left during the year ended 30 June or were in acting Leadership Squad positions. Like other Spark employees, members of the Leadership Squad also receive product and service concessions. In addition, where members of the Leadership Squad are KiwiSaver members, they receive contributions towards their KiwiSaver schemes. 6.4 Subsidiaries Subsidiaries are all entities over which Spark has control. The significant subsidiary companies of Spark and their activities are as follows: NAME COUNTRY OWNERSHIP PRINCIPAL ACTIVITY Computer Concepts Limited New Zealand 100% IT infrastructure and business cloud services Digital Island Limited New Zealand 100% Business telecommunications provider Entelar Group Limited New Zealand 100% Telecommunications and IT infrastructure build and maintenance services, and distribution and supply chain services Gen-i Australia Pty Limited Australia1 100% Provides international wholesale and outsourced telecommunications services Mattr Limited New Zealand 97% Software company focused on decentralised identity and verifiable data Qrious Limited New Zealand 100% Data analytics business Revera Limited New Zealand 100% IT infrastructure and data centre provider Spark Finance Limited New Zealand 100% A Group finance company Spark New Zealand Trading Limited New Zealand 100% Telecommunications and digital services company TCNZ (Bermuda) Limited New Zealand 100% A holding company Teleco Insurance Limited Bermuda1 100% A Group insurance company Telecom New Zealand USA Limited United States1 100% Provides international wholesale telecommunications services Telecom Southern Cross Limited New Zealand 100% A holding company 1 These foreign incorporated entities are tax resident in New Zealand. The financial year end of all significant subsidiaries is 30 June. 150 Financial statements Hello tomorrow 6 6.5 Reconciliation of net earnings to net cash flows from operating activities 2024 2023 YEAR ENDED 30 JUNE $M $M Net earnings for the year 316 1,135 Adjustments to reconcile net earnings to net cash flows from operating activities Depreciation and amortisation 527 504 Bad and doubtful accounts 17 10 Deferred income tax1 38 (159) Share of associates' and joint ventures' net losses 17 16 Interest income on loans receivable from associates and joint ventures (12) (8) Impairment of investments 2 – Net disposal and remeasurement of equity accounted investments 1 (9) Gain on sale and acquisition of property, plant and equipment and intangibles (62) (20) Gain on lease modifications and terminations (36) (13) Net gain on sale of Connexa – (583) Gain on sale of long-term businesses (4) – Spark Sport provision 1 54 Other 12 (7) Changes in assets and liabilities net of effects of non-cash and investing and financing activities Movement in receivables and related items (84) (110) Movement in inventories (8) 28 Movement in current taxation (31) (14) Movement in payables and related items 70 (24) Net cash flows from operating activities 764 800 1 The 2023 comparative primarily relates to the net gain on sale of Connexa. 6.6 Commitments and contingencies Capital and other commitments As at 30 June 2024, capital expenditure contracted for, but not yet incurred, was $684 million (30 June 2023: $515 million) with $185 million due in the year ending 30 June 2025. Commitments principally relate to spectrum, telecommunications network equipment, data centre infrastructure and cable capacity. As at 30 June 2024, Spark had other supplier commitments of $879 million (30 June 2023: $588 million), with $593 million due in the year ending 30 June 2025. Commitments include mobile handsets, subscription services, modems, licences, service and maintenance renewals, and power purchase agreements. Contingencies No ongoing claims, investigations or inquiries are expected to have a significant effect on Spark's financial position or profitability. 151 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua To the Shareholders of Spark New Zealand Limited Opinion We have audited the consolidated financial statements of Spark New Zealand Limited and its subsidiaries (the ‘Group’), which comprise the consolidated statement of financial position as at 30 June 2024, and the consolidated statement of profit and loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information. In our opinion, the accompanying consolidated financial statements, on pages 106 to 151, present fairly, in all material respects, the consolidated financial position of the Group as at 30 June 2024, and its consolidated financial performance and cash flows for the year then ended in accordance with New Zealand Equivalents to IFRS Accounting Standards (‘NZ IFRS’) as issued by the External Reporting Board and IFRS Accounting Standards (‘IFRS’) as issued by the International Accounting Standards Board Basis for opinion We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards), and we have fulfilled our other ethical responsibilities in accordance with these requirements. Our firm carries out other assignments for Spark New Zealand Limited in relation to regulatory audit requirements, other assurance related services (such as trustee reporting, Greenhouse Gas Emissions limited assurance and agreed upon procedures in relation to the sustainability-linked loans) and non-assurance services provided to the Corporate Taxpayers Group, of which the Group is a member. These services have not impaired our independence as auditor of the Company and Group. In addition to this, the Chief Executive has both a sister and brother-in-law that are partners at Deloitte. These Deloitte partners are not involved in the provision of any services to the Group and its subsidiaries, and this matter has not impacted our independence. Also, partners and employees of our firm deal with the Group on normal terms within the ordinary course of trading activities of the business of the Company and its subsidiaries. The firm has no other relationship with, or interest in, the Group. Audit materiality We consider materiality primarily in terms of the magnitude of misstatement in the financial statements of the Group that in our judgement would make it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced (the ‘quantitative’ materiality). In addition, we also assess whether other matters that come to our attention during the audit would in our judgement change or influence the decisions of such a person (the ‘qualitative’ materiality). We use materiality both in planning the scope of our audit work and in evaluating the results of our work. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Independent auditor’s report 152 Independent auditor’s report Hello tomorrow Key audit matter How our audit addressed the key audit matter Revenue recognition The Group recognised total revenues excluding other gains of $3,759m (2023: $3,875m) including: • Mobile $1,474m (2023: $1,470m) • Broadband $613m (2023: $626m) • Procurement and partners $548m (2023: $584m) • Voice $180m (2023: $231m) • IT products $527m (2023: $509m) • IT services $165m (2023: $194m) • High-tech $79m (2023: $$65m) • Data centres $37m (2023: $24m) • Other operating revenues $136m (2023: $172m) Revenue recognition is considered to be a key audit matter. For Mobile and Broadband revenue, and to a lesser extent other revenue streams, there is an inherent risk around the accuracy and timing of revenue recognition given the complexity of systems and the large volume of data processed; moreover, judgement is required for multiple element arrangements. This risk is most pronounced for new or changing product plans and prices. IT products and IT services require significant management judgements and estimates, particularly for larger contracts, which are bespoke and cover several accounting periods. The judgements and estimates that significantly impact the accuracy of revenue recognition for these contracts include: • identifying the separate performance obligations; • assessing whether the performance obligations are satisfied at a point in time or over time; and • determining the amount and appropriate method of measuring the costs of fulfilling the performance obligations or, where appropriate, the completeness and valuation of provisions against contracts that are expected to be loss- making. Disclosures relating to revenue recognition and the revenue stream breakdown can be found in Note 2.2. Operating revenues and other gains. Our audit approach included both controls testing and substantive procedures. For our procedures on the design and operating effectiveness of controls over significant IT systems, we involved our IT specialists. Our audit procedures included: Across Mobile, Voice and Broadband, and IT products and IT services revenue streams: • Assessing the appropriateness of the revenue recognition policies for the products and services offered by the Group, which included but were not limited to: • challenging the Group’s assessment for each performance obligation about whether the customer can benefit from the product or service on its own or together with readily available resources; • assessing the allocation of the transaction price to the performance obligations by comparing the stand-alone selling price assigned to observed market prices or estimated prices; and • examining the stages at which revenue for each performance obligation is recognised. Mobile, Voice and Broadband: • testing the design and implementation, and the operating effectiveness of automated controls and interfaces between relevant IT applications, measurement and billing of revenue, and the recording of entries in the general ledger. We also tested the access controls and change management controls over the relevant billing systems; • testing the design and implementation, and the operating effectiveness of manual controls over the initiation, authorisation, recording and processing of revenue transactions. This included evaluating process controls over authorising new price plans and rate changes and the adjustments to the relevant billing systems; • testing the design and implementation of revenue recognition controls, including rating and billing during the year as it relates to new or changing product plans; • recalculating revenue recognised to evaluate that the processing by the relevant telecommunication system is materially correct; • reviewing new product plans in the current year to understand each of the performance obligations in the bundled offering; • for new product plans that provide a bundle of services, assessing whether the customer can benefit from the product or service on its own or together with readily available resources; and • assessing the recognition and timing of costs to acquire and costs to fulfil customer contracts. 153 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua Key audit matter How our audit addressed the key audit matter IT products and IT services: • testing IT products and IT services contracts for appropriate revenue recognition and provisioning for contracts that were expected to be loss-making. We considered the future forecast profitability and the contractual terms to assess the recoverability of the contract-specific assets and to determine whether any contracts required loss provisions; and • testing a sample of revenue transactions recorded during the year by agreeing to supporting evidence, which included cash receipts, customer contracts, and invoices. We focussed our work on contracts which we regarded as higher risk because of the nature of the contract and the stage of delivery. Carrying value of property, plant & equipment and intangible assets The Group has property, plant & equipment of $1,394m (2023: $1,264m) and intangible assets excluding goodwill of $607m (2023: $572m). There are a number of areas where judgements significantly impact the carrying value of property, plant & equipment and intangible assets excluding goodwill, and their respective depreciation and amortisation profiles. These areas are as follows: • the impact of planned or unexpected replacement technology which will impact the way in which an asset is used or is expected to be used; • the determination whether to capitalise or expense costs, particularly for capitalised labour; • the useful economic life of the asset; and • the timely transfer and commencement of depreciation of assets transferred from work in progress. Changes in these judgements may have a significant impact on the results of the Group. Due to the significance of these judgements and the materiality of these assets to the Group’s Statement of Financial Position, this is considered a key audit matter. Refer to Notes 3.6 Property, plant and equipment and 3.7 Intangible assets. • Our audit procedures included the following: • testing of the design and implementation of controls over the acquisition and disposal of assets; • assessing the appropriateness of capitalisation of costs incurred on capital projects, by examining a sample of additions to identify whether the expenditure meets the definition of an asset in accordance with the applicable accounting standards; • assessing the reasonableness of the internal labour rates used to capitalise internal labour; • assessing the appropriateness of the date from which assets commenced being depreciated; • assessing the application of the Group’s annual asset life review. This included assessing judgements made by the Group on: • the appropriateness of asset lives applied in the calculation of depreciation and amortisation; • the nature and impact of changes on the business from Spark’s strategy, including which specific assets are impacted; and • the extent of the impact of these changes on the carrying value of identified property, plant and equipment and software intangible assets. • It also included: • assessing the allocated useful economic lives, by comparing to industry benchmarks and our knowledge of the business and its operations; and • reviewing Board minutes and performing enquiries with various management personnel around the prevailing risks of technological obsolescence and assessing their impact on the useful lives/impairment risk of existing assets. 154 Independent auditor’s report Hello tomorrow Other information The directors are responsible on behalf of the Group for the other information. The other information comprises the information in the Annual Report that accompanies the consolidated financial statements and the audit report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and consider whether it is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If so, we are required to report that fact. We have nothing to report in this regard. Directors’ responsibilities for the consolidated financial statements The directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. A further description of our responsibilities for the audit of the consolidated financial statements is located on the External Reporting Board’s website at: https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1 This description forms part of our auditor’s report. Restriction on use This report is made solely to the Company’s shareholders, as a body. Our audit has been undertaken so that we might state to the Company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed. Jason Stachurski, Partner for Deloitte Limited Auckland, New Zealand 23 August 2024 155 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua Other information Hello tomorrow 156 Other information Stock exchange listings Spark’s ordinary shares are listed on the NZX and ASX. Spark is admitted to the Official List of ASX as a foreign exempt issuer. As a NZX listed issuer and ASX foreign exempt issuer, Spark complies with NZX Listing Rules and applicable ASX Listing Rules. Spark’s American Depositary Shares, each representing five ordinary Spark shares and evidenced by American Depositary Receipts (ADRs), are traded over-the-counter in the United States. This is a Level 1 ADR programme that is sponsored by Bank of New York Mellon. Spark Finance Limited, a wholly owned subsidiary of Spark New Zealand Limited, has debt securities listed on the NZDX. Details of debt securities issued by Spark Finance Limited can be found in Spark Finance Limited’s reports at: https://investors.sparknz.co.nz/Investor-Centre Board and committee meeting attendance for FY24 The Board held eight formal meetings and one special meeting during FY24. The table below shows director attendance at these Board meetings and committee member attendance at committee meetings. Sub-committees of the Board also met regularly throughout the year to consider matters of special importance. Board ARMC HRCC NOMs Total number of meetings held 9 7 5 3 Alison Barrass 9 – 5 3 Warwick Bray 9 7 – 3 Sheridan Broadbent 9 7 5 3 David Havercroft 8 – 5 3 Jolie Hodson1 9 7 5 3 Gordon MacLeod 9 7 – 3 Lisa Nelson2 2 2 1 – Charles Sitch3 3 2 – 1 Justine Smyth4 9 7 5 3 1. Ms Hodson attended ARMC and HRCC meetings as Executive Director. 2. Ms Nelson appointed as a director and a member of the ARMC, HRCC and NOMs from 8 May 2024. 3. Mr Sitch resigned as a director from 3 November 2023. 4. Ms Smyth attended ARMC meetings in an ex officio capacity. Director independence As part of the formal independence assessment, the Board considered all business relationships and close personal ties between Spark and any companies of which a non-executive director is an employee, director or substantial shareholder (if any). The Board has determined, based on information provided by directors regarding their interests, that at 30 June 2024 Ms Barrass, Mr Bray, Ms Broadbent, Mr MacLeod, Ms Nelson and Ms Smyth were independent. The Board (other than Ms Smyth) has considered the tenure of Ms Smyth who has been a Director for 12.7 years, and Chair for 5.9 years as at 30 June 2024. The Board determined that Ms Smyth’s understanding of Spark and experience and skills in the industry add ongoing value to Spark. The Board are of the view that Ms Smyth’s tenure does not interfere with her capacity to bring an independent judgment to bear on issues before the Board, to act in the best interests of Spark, and to represent the interests of its financial product holders generally. The Board determined that Ms Hodson was not independent due to her position as CEO, and Mr Havercroft was not independent due to his prior relationships with Spark, which have now ceased. The criteria for determining director independence and conflict of interest may be found in the Board Charter at: www.spark.co.nz/online/about/our-company/governance Corporate governance disclosures Ko te pae anamata, whakamaua 157 Spark New Zealand Annual Report FY24 Director interests In accordance with sections 140 and 211(e) of the Companies Act 1993, the table below lists the general disclosures of interests made by Directors in the interests register that remain current, including changes made to those interests, during FY24: Director Entity Relationship Alison Barrass Rockit Global Limited (and related companies) Tom & Luke Holdings Limited Babich Wines Limited Zespri Group Limited Institute of Directors AA Insurance Limited Vero Insurance New Zealand Limited Asteron Life Limited Vero Liability Insurance Limited Director and shareholder Director and Chair Chair Director Chair of the Nominations Committee Appointed Board Chair Director Director Director Warwick Bray Woolworths Group Limited Director Sheridan Broadbent Manawa Energy Limited Pipeline and Civil Limited Pipeline Group Limited PLC Plant Limited Business Leaders’ H&S Forum Downer EDI Limited Director Ceased to be a Director and Chair Ceased to be a Director and Chair Ceased to be a Director and Chair Deputy Chair Appointed director David Havercroft W3 Capital Limited Westpac New Zealand Limited The Guitar Gallery Limited Director and shareholder Director Director and shareholder Jolie Hodson MATTR Limited NZ Telecommunications Forum Inc. Climate Leaders Coalition Director Appointed chair Convenor of the Coalition’s CEO Steering Group Gordon MacLeod Delegat Group Limited Spanbild Holdings Limited Breast Cancer Foundation NZ Director Appointed Advisory Chairman Trustee Lisa Nelson Astra Space Inc Destiny Tech100 Inc Seattle Bank MATTR Limited Investment Committee Banqer Limited Director and Compensation Committee chair Director and Audit Chair Director Committee Member Director Justine Smyth Mondiale VGL Group Limited Breast Cancer Foundation NZ MATTR Limited Director and Chair Chair and Trustee Director Directors disclosed, pursuant to section 148 of the Companies Act 1993, the following acquisitions and disposals of relevant interests in Spark shares during FY24: Name Date Nature of transaction Consideration Number of shares Sheridan Broadbent 22 August 2023 Purchase of ordinary shares by Mariachi Desperados Trust $25,310 5,000 8 September 2023 Purchase of ordinary shares by Mariachi Desperados Trust $24,806 5,000 4 December 2023 Purchase of ordinary shares by Mariachi Desperados Trust $25,714 5,000 Jolie Hodson 18 September 2023 Issue of options Services to Spark 188,467 3 October 2023 Lapse of options Services to Spark 187,430 Gordon MacLeod 21 August 2023 Purchase of ordinary shares $50,963 10,000 Hello tomorrow 158 Other information Directors’ insurance Directors disclosed, for the purposes of section 162 of the Companies Act 1993, that insurance was renewed for Spark’s directors and senior managers for the 12-month period from 1 June 2024 and deeds of indemnity provided to all directors and specified senior managers of Spark. Shareholdings As at 30 June 2024 there were 1,814,155,480 Spark ordinary shares on issue, each conferring to the registered holder the right to one vote on a poll at a meeting of shareholders on any resolution, held as follows: Size of holding Number of holders1 % Number of shares % 1–1,000 12,256 29.50 6,094,259 0.34 1,001–5,000 17,585 42.32 45,780,289 2.52 5,001–10,000 5,985 14.40 44,223,858 2.44 10,001–100,000 5,497 13.23 128,912,580 7.10 100,001 and over 229 0.55 1,589,144,494 87.60 Total 41,552 100.00 1,814,155,480 100.00 1. Includes: • 410,834 shares on issue held by Spark Trustee Limited on behalf of 346 holders for Spark Share; and • 1,636,356 shares on issue held by Sharesies Nominee Limited on behalf of 1,474 holders of Spark Share. FY23: 1,777,157 shares on issue held by Spark Trustee Limited on behalf of 1,283 holders of Spark Share. The 20 largest registered holders of Spark shares at 30 June 2024 were: Name1 Number of shares % 1. HSBC Nominees (New Zealand) Limited2 347,482,251 19.15 2. HSBC Nominees (New Zealand) Limited2 174,986,660 9.65 3. JP Morgan Chase Bank 151,948,767 8.38 4. BNP Paribas Nominees NZ Limited3 118,373,160 6.52 5. Citibank Nominees (NZ) Limited 108,416,567 5.98 6. Custodial Services Limited 64,967,662 3.58 7. Accident Compensation Corporation 61,875,532 3.41 8. HSBC Custody Nominees (Australia) Limited 61,182,369 3.37 9. New Zealand Superannuation Fund Nominees Limited 49,045,757 2.70 10. Citicorp Nominees Pty Limited 41,865,124 2.31 11. FNZ Custodians Limited 34,025,233 1.88 12. Forsyth Barr Custodians Limited 32,001,145 1.76 13. New Zealand Depository Nominee 30,504,984 1.68 14. Tea Custodians Limited 28,742,476 1.58 15. JB Were (NZ) Nominees Limited 27,706,305 1.53 16. New Zealand Permanent Trustees Limited 27,122,209 1.50 17. Premier Nominees Limited 23,768,370 1.31 18. BNP Paribas Nominees NZ Limited3 23,038,147 1.27 19. JP Morgan Nominees Australia Pty Limited 20,860,159 1.15 20. Public Trust 18,448,859 1.02 1. The shareholding of New Zealand Central Securities Depository Limited (custodian for members trading through NZClear) has been reallocated to the applicable members. 2. Has a different holder identification number to the other HSBC Nominees (New Zealand) Limited entry. 3. Has a different holder identification number to the other BNP Paribas Nominees NZ Limited entry. Ko te pae anamata, whakamaua 159 Spark New Zealand Annual Report FY24 According to substantial holder notices as at 30 June 2024 the substantial holders in Spark were as follows: Name Number of ordinary shares % of ordinary shares on issue1 Blackrock Investment Management (Australia) Limited 161,169,532 8.88 1. Based on issued share capital of 1,814,155,480 as at 30 June 2024. As at 30 June 2024 directors, or entities related to them, held relevant interests (as defined in the Financial Markets Conduct Act 2013) in Spark shares as follows: Name Relevant interest in Spark shares as at 30 June 2024 Number %1 Alison Barrass 37,7162 0.002 Warwick Bray 31,2303 0.002 Sheridan Broadbent 30,0004 0.002 David Havercroft 100,086 0.006 Jolie Hodson 869,0135 0.048 Gordon MacLeod 10,000 0.0005 Justine Smyth 500,2016 0.028 1. Each percentage stated has been rounded to the nearest 1/1000th of a percent. 2. Relevant interest in beneficial ownership of 37,716 ordinary shares held by Sharesies Nominee Limited. 3. Relevant interest in beneficial ownership of 31,230 ordinary shares held by WDB Insight Pty Limited. 4. Relevant interest in beneficial ownership of 30,000 ordinary shares held by Mariachi Desperados Trust. 5. Includes 311,830 ordinary shares and 557,183 options. 6. Relevant interest in beneficial ownership of 375,201 ordinary shares held by Miksha Trust and beneficial ownership of 125,000 ordinary shares held by PJ Trust. All non-executive directors are expected to hold Spark shares. Subject to personal circumstances (that should be discussed with the Chair or, in the case of personal circumstances of the Chair, with the Chair of the ARMC, as appropriate), there is an expectation that each non-executive director will purchase and hold an amount of shares that are at least equivalent in value to the non-executive director base member fee as at the date of their appointment or, in the case of directors appointed before 1 July 2017, this was as at 1 July 2017. Shares are to be purchased within a three-year period from the date of appointment or, in the case of directors appointed before 1 July 2017, this was within a three-year period from that date. To assess whether this expectation has been met, the aggregate purchase price for all shares acquired, less the aggregate sale price for all shares disposed (if any), is used to calculate value. Hello tomorrow 160 Other information Subsidiary company directors The following people held office as directors of subsidiary companies at 30 June 2024. Alternate directors are indicated with an (A). Subsidiary company Principal activity Current directors Directors who retired during the year Adroit Holdings Limited Environmental IoT solutions S Knight, M Stribling R Mateparae, M Sheppard Adroit IoT Limited Environmental IoT solutions S Knight, M Stribling Adroit Research Limited Environmental IoT solutions S Knight, M Stribling Circle Investments Limited Delivers innovative and cost-effective solutions to the Contact Centre Industry L Sheehan, D Werder S Knight, M Beder Computer Concepts Limited IT infrastructure and Cloud services M Anastasiou, M Beder, S Knight Digital Island Limited Business telecommunications provider S Knight, G Clark Entelar Group Limited Telecommunications and IT infrastructure build and maintenance services, and distribution and supply chain services H Polglase, M Sheppard, R Mateparae M Beder Gen-i Australia Pty Limited Provides international wholesale and outsourced telecommunications services F Evett, I Hopkins MATTR Limited Software company focussed on decentralised identity and verifiable data C Barber, J Hodson, J Smyth, S Knight MATTR Trading Australia Pty Limited Software company focussed on decentralised identity and verifiable data F Evett, M Leydin MATTR Trading US, Inc Software company focussed on decentralised identity and verifiable data N Fitzgerald Qrious Limited Data analytics business S Knight, M Anastasiou Revera Limited IT infrastructure and data centre provider M Anastasiou, S Knight, M Beder Spark Finance Limited Group finance company M Anastasiou, M Sheppard, S Knight A White Spark New Zealand Cables Limited Investment company M Sheppard, L Urquhart Spark New Zealand Trading Limited Telecommunications and digital services company M Anastasiou, S Knight, M Beder Spark Trustee Limited Trustee company M Anastasiou, S Knight TCNZ Australia Investments Pty Limited Australian operations F Evett, I Hopkins TCNZ (Bermuda) Limited Holding company J Wesley-Smith, J Wong TCNZ Financial Services Limited Investment company M Anastasiou, F Evett TCNZ (United Kingdom) Securities Limited Holding/investment company F Evett, J Reader, ManCorp (UK) Limited Teleco Insurance Limited Group insurance company S Knight, N Frost, F Evett (A) A White, C Phipps, C Feathers Teleco Insurance (NZ) Limited Mobile phone insurance S Knight, R Quince A White Telecom Capacity Limited Holding company S Knight, J Wong Telecom Enterprises Limited Investment company M Anastasiou, S Knight Telecom New Zealand (UK) Enterprises Limited Holding/investment company F Evett, M Sheppard Telecom New Zealand USA Limited Provides international wholesale telecommunications services J Wong, J Martin A Preston Telecom Pacific Limited Holding company M Anastasiou, M Sheppard Telecom Southern Cross Limited Holding company M Anastasiou, S Knight Telecom Wellington Investments Limited Investment company M Anastasiou, F Evett Ko te pae anamata, whakamaua 161 Spark New Zealand Annual Report FY24 Spark’s managing risk framework roles and responsibilities Activity performed Board & ARMC Leadership Squad Risk Legal (Digital Trust) Org Unit Leads Centre of Excellence leads Policy owners All Spark people Approves the Managing Risk Policy ✔ Monitors the managing risk framework ✔ Reviews principal risk dashboard (quarterly) ✔ Performs other items from its charter ✔ Prepares strategy and annual plan ✔ QBR process and next 90-day priorities ✔ Coaches and guides Leads ✔ Owner for principal risks ✔ Designs and continuously improves the managing risk framework ✔ Helps the business apply the framework ✔ Profiles the principal and next 90-day risks for LS and ARMC ✔ Helps Leads to capture their risks for the QBR Memo ✔ Executes Internal Audit plan (objective assurance) ✔ Designs and continuously improves the empowerment framework ✔ Creates empowerment & functional guidance kits ✔ Oversees essential policies and webpage ✔ Creates and delivers training modules ✔ Use the Empowerment and Managing Risk Frameworks ✔ Understand and adhere with the essential policies ✔ Maintain view of risks for OKRs and fill in QBR Memo ✔ Provide input into principal risk process ✔ Escalate risks to LS or Risk Team (if required) ✔ Review risk sections in QBR packs across Spark ✔ Maintain view of risks for their OKRs and fill in QBR ✔ Support Leads to manage identified risks ✔ Provide input into principal risks ✔ Maintain policy and guidance material ✔ Complete assessments of effectiveness ✔ Participate in policy owner working groups ✔ Follow this framework and the essential policies ✔ Make informed decisions after assessing the benefits and risks ✔ Hello tomorrow 162 Other information As an integrated report we have included disclosure on our sustainability performance throughout this report. Pages 6 and 7 detail our integrated reporting value creation model, aligned to the ‘capitals’ which each have a dedicated section in the report. This report is prepared in accordance with the International Framework and with the Global Reporting Initiative (GRI) Core Option. It also incorporates climate-related disclosures that have been prepared in compliance with the Aotearoa New Zealand Climate Standards (NZ CS 1, NZ CS 2 and NZ CS 3) issued by the External Reporting Board (XRB). We publish a summary of our approach to sustainability at Spark on our website. www.spark.co.nz/online/about/sustainability/ Materiality To prioritise Spark’s reporting on sustainability topics we follow the GRI materiality principle and processes (set out in GRI 3: Material Topics 2021) to identify and prioritise topics which substantively influence the assessments and decisions of stakeholders or have a significant environmental, social, or economic impact. We also consider the materiality principles of the Integrated Reporting International Framework, considering whether a matter could substantively affect Spark's ability to create value in the short, medium, or long term. We refresh our materiality analysis annually, as part of our integrated reporting process. Our assessment of material topics includes analysis of stakeholder feedback, review of industry peers, and interviews with external stakeholders. In previous years we have also engaged an external sustainability consultancy to independently review our materiality prioritisation. Internally we consult with a range of employees, including members of our strategy, finance, community, corporate relations, risk, legal, and HR teams, to determine Spark’s view of topics meeting the GRI materiality principle criteria. The purpose of our annual materiality review is to ensure we are capturing all topics that are material to our stakeholders, with a particular focus on identifying emerging topics. We have updated our materiality matrix for FY24. This reflects feedback from various stakeholders which has highlighted the increasing importance of data ethics, including data governance and sovereignty, with the increased profile and application of AI technologies. In the previous year changes included increasing the importance of disaster crisis response and the role of digital technology in addressing sustainability challenges. Sustainability appendix • Customer experience, support and partnership • AI and data ethics, privacy and governance • Digital equity • Building the workplace of the future • Operational excellence and financial performance • Partnering with Aotearoa • Resilient infrastructure and climate adaptation • Role of digital technology in addressing sustainability challenges • Disaster and crisis response • Cyber security • Competition and regulation • Diversity and Inclusion • Ethical behaviour in our business • Ethical supply chain and procurement practices • Responsible employment practices • Operational efficiency, emissions and waste • Heath, Safety and Wellbeing • Investment in innovation • Product stewardship and circular economy • Responsible and safe use of our products and services • Community investment • Infrastructure impact • Tax SIGNIFICANCE OF ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS INFLUENCE ON STAKEHOLDER ASSESSMENTS AND DECISIONS Our materiality matrix maps our material topics, with our assessment of the significance of economic, environmental and social impacts mapped on the horizontal ‘x’ axis, and the scale of influence on stakeholder assessments and decisions mapped on ‘y’ vertical axis, reflecting feedback and questions received from stakeholders related to our ESG reporting. Ko te pae anamata, whakamaua 163 Spark New Zealand Annual Report FY24 Our most material sustainability issues Topic Topic description and scope Reference Resilient infrastructure and climate adaptation The resilience of our infrastructure. Our long-term adaptation to climate change. Our network and technology Pages 36 – 45 Climate-related disclosures Pages 90 – 105 Customer experience, support and partnership Providing high-quality, reliable products and services that enable our customers. Rectifying issues where they may arise. Our customers Pages 24 – 35 Cyber security The security of our networks and products and the security support we provide to our business customers. Our customers Pages 24 – 35 AI and data ethics, privacy, and governance How we collect, use, store, and share personal information and how we keep it safe. Building trust in our products and services. Ethical use of data and data technologies, including AI. Our customers Pages 24 – 35 Digital equity This includes digital access and removing barriers to people getting connected; digital skills and career pathways into the technology sector; and digital safety and wellbeing – a broad focus area that ranges from the impacts of social media all the way through to protecting our customers from objectionable content and scams. Our customers Pages 24 – 35 Our communities Pages 56 – 61 Disaster and crisis response The role of telecommunications in responding to natural disasters and crisis events. Our network and technology Pages 36 – 45 Building the workforce of the future Developing and upskilling our people for future ways of working, including building digital skills that will support a just transition. Our people Pages 62 – 73 Our communities Pages 56 – 61 Operational excellence and financial performance Executing our business strategy to build financial capital. Our performance Pages 14 – 17 Financial statements Pages 106 – 155 Partnering with Aotearoa How we partner and collaborate with our communities, guided by the principles of Te Tiriti. Our communities Pages 56 – 61 Te Korowai Tupu Page 69 The role of digital technology in addressing sustainability challenges Opportunities to use digital technology to address sustainability challenges such as climate mitigation, climate adaptation, water quality, and biodiversity loss. Partnering with our customers to increase their resilience, productivity, and sustainability. Our network and technology Pages 40 – 41 Our environment Pages 46 – 47 Hello tomorrow 164 Other information Stakeholder engagement Spark engages with a broad range of stakeholders as detailed in the table below. We have also engaged a small number of stakeholders specifically for the purposes of developing and improving our non-financial reporting and as part of our reporting materiality process. In selecting the stakeholders we engage with, we are guided by the definition set out in GRI 1: Foundation 2021 “Individuals or groups that have interests that are affected or could be affected by an organisation’s activities.” Stakeholder group How we engage Spark employees • Regular engagement surveys and use of ‘sounding boards’ on large programmes of work • Comprehensive programme of internal communication and engagement from Leadership Squad (through roadshows and online channels) • Engagement with cross-section of employees in the preparation of this report Shareholders Regular engagement with investors including: • Semi-annual earnings announcements, together with semi-annual post result investor briefings; • Annual meeting that allows shareholders a chance to meet and ask questions directly of the Spark Board and Management; • Regular investor roadshows; and • Periodic investor strategy briefings Suppliers • Ongoing conversations with our suppliers – both informal and formal Customers • Regular feedback from customers on their experiences with us and their views of Spark as a business through our Net Promotor Score methodology and through our Voice of the Customer programme • Meetings with customers on sustainability topics, sharing sustainability focus areas and exploring opportunities to work together Government • Engagement with central Government on issues related to the telecommunications industry, infrastructure investment, environmental sustainability, and digital equity • Engagement with local government to manage the process and impacts of infrastructure investment Media • Responding to media enquiries and through a proactive programme of engagement with key members of New Zealand’s media Local communities • We engage with local communities, iwi, and hapū affected by our activities, in particular where we are building new network infrastructure • Through our Marae Digital Connectivity programme we have deployed hardware and connectivity to over 650 marae, and established relationships with hapū across the motu • Through Te Korowai Tupu we have a range of partners that help us support impactful initiatives that uplift Hapori Māori Community partners • Spark Foundation works in partnership with community partners on an ongoing basis Industry organisations • Engagement with a number of industry organisations, representing the telecommunications and technology sector, community groups, and the New Zealand business community Ko te pae anamata, whakamaua 165 Spark New Zealand Annual Report FY24 External initiatives Spark subscribes to or endorses • Spark is a founding member of the Climate Leaders Coalition (CLC). The CLC is a group of CEOs who have collectively committed to voluntary action on climate change, measuring and publicly reporting on their emissions, and setting an absolute target for reducing emissions in line with the Paris Agreement. Spark CEO, Jolie Hodson, is a member of the CLC Steering Committee. • Spark has committed to a voluntary Product Stewardship scheme for mobile phones, which is actioned by the Re:Mobile initiative. See page 47. • Spark is a member of the Digital Boost Alliance, which is a Government-led initiative that brings together the public and private sectors to help small-medium businesses and individuals across Aotearoa lift their use of digital technologies. Spark’s Consumer and SME Director Greg Clark sits on the Governance Board. • Spark’s Corporate Relations and Sustainability Director Leela Ashford is part of the Ministry for the Environment’s Climate Business Advisory Group, and the Department of Internal Affairs’ Independent Reference Group, which maintains oversight of the operation of the Digital Child Exploitation Filtering System (DCEFS). Spark was an active member of the following associations in FY24: • International Telecommunication Union (Radiocommunication Sector membership) • 3rd Generation Partnership Project (3GPP) • Infrastructure New Zealand • GSM Association (GSMA) • New Zealand Internet Task Force • Telecommunications Forum (TCF) • NZTech (Including Internet of Things Alliance and AI Industry Forum) • TUANZ • Business NZ • Sustainable Business Council • Sustainable Business Network • Global Women (including Champions for Change) • Joint Audit Cooperation (JAC) initiative • Digital Boost Alliance • Digital Equity Coalition Aotearoa (DECA) (membership through Spark Foundation) Hello tomorrow 166 Other information Climate disclosures index, metrics and targets Our detailed climate statements are on pages 90 – 105. The table below identifies the location of disclosures required by the Aotearoa New Zealand Climate Standards. This includes the specific disclosure requirements in NZ CS 1 (as amended by relevant paragraphs of NZ CS 2) and paragraphs 51 to 55 of NZ CS 3. Spark is relying on adoption relief in relation to the requirements at paragraphs 40 to 42 to disclose comparative information and an analysis of trends, and these are accordingly not included in the table below. NZ CS 1 Reference (or NZ CS 3 where identified) Detail Location Notes Governance Governance body oversight 7(a) The identity of the governance body responsible for oversight of climate-related risks and opportunities. Climate governance section, page 91 7(b) A description of the governance body’s oversight of climate-related risks and opportunities (see paragraph 8 requirements below). Climate governance section, page 91 8(a) The processes and frequency by which the governance body is informed about climate-related risks and opportunities. Climate governance section, page 91 8(b) How the governance body ensures that the appropriate skills and competencies are available to provide oversight of climate-related risks and opportunities. Climate governance section, page 91 8(c) How the governance body considers climate-related risks and opportunities when developing and overseeing implementation of the entity’s strategy. Climate governance section, page 91 Integration of climate change and transition planning into strategy, page 93 8(d) How the governance body sets, monitors progress against, and oversees achievement of metrics and targets for managing climate-related risks and opportunities, including whether, and if so how, related performance metrics are incorporated into remuneration policies. Climate governance section, page 91 Management's role 7(c) A description of management’s role in assessing and managing climate- related risks and opportunities (see paragraph 9 requirements below). Management’s role in climate risk and opportunities, page 92 9(a) How climate-related responsibilities are assigned to management-level positions or committees, and the process and frequency by which management-level positions or committees engage with the governance body. Management’s role in climate risk and opportunities, page 92 9(b) The related organisational structure(s) showing where these management-level positions and committees lie. Management’s role in climate risk and opportunities, page 92 9(c) The processes and frequency by which management is informed about, makes decisions on, and monitors, climate-related risks and opportunities. Management’s role in climate risk and opportunities, page 92 Strategy Current impacts and financial impacts 11(a) A description of current climate-related impacts (see paragraph 12 requirements below). Current impacts of climate change, pages 93 – 94 12(a) Current physical and transition impacts. Current impacts of climate change, pages 93 – 94 Ko te pae anamata, whakamaua 167 Spark New Zealand Annual Report FY24 NZ CS 1 Reference (or NZ CS 3 where identified) Detail Location Notes 12(b) The current financial impacts of physical and transition impacts identified in paragraph 12(a). We have elected to take adoption provision 1 – see page 90 12(c) If the entity is unable to disclose quantitative information for paragraph 12(b), an explanation of why that is the case. Scenario analysis 11(b) A description of the scenario analysis undertaken. Climate scenario analysis, page 94, Our three climate scenarios, pages 94 – 95 13 The scenario analysis undertaken to help identify its climate-related risks and opportunities and better understand the resilience of the organisation’s business model and strategy (see NZ CS 3, paragraph 51 requirements below). Climate scenario analysis, page 94, Our three climate scenarios, pages 94 – 95 NZ CS 1, 51 The methods and assumptions underlying the climate- related scenarios used, and the scenario analysis process employed (see NZ CS 3, paragraph 51(a) and (b) requirements below). Climate scenario analysis, page 94, Our three climate scenarios, pages 94 – 95 NZ CS 3, 51(a) The climate-related scenarios used, including: • A brief description of each scenario narrative. • The time horizons considered, including endpoints and whether the endpoints are determined by a year or temperature target. • A description of the various emissions reduction pathways in each scenario and the assumptions underlying pathway development over time, including the scope of operations covered, policy and socioeconomic assumptions, macroeconomic trends, energy pathways, carbon sequestration from afforestation and nature-based solutions and technology assumptions including negative emissions technology. • An explanation of why the entity believes the chosen scenarios are relevant and appropriate to assessing the resilience of the entity’s business model and strategy to climate-related risks and opportunities. • The sources of data used to construct each scenario. Our three climate scenarios, pages 94 – 95 Time horizons for scenario analysis, page 96 See section 4.0 ‘Scenario Methodology and Inputs of the industry scenario report (pages 19 – 20) The sector-based climate scenario report includes detailed descriptions of the emissions reduction pathways in each scenario and the assumptions underlying pathway development over time, It also includes full descriptions of the relevant scenario narratives used to support Spark’s internal analysis. The report is available here: https://s.spark. co.nz/4fXRsoH. NZ CS 3, 51(b) How the scenario analysis process has been conducted, including: • Whether scenario analysis is a standalone analysis or integrated within the entity’s strategy processes. • The governance process used to oversee and manage the scenario analysis process, including the role of the governance body and management. • If modelling has been undertaken, a clear description of what modelling was undertaken and why the model was chosen as the appropriate model. • Which external partners and stakeholders are involved. Climate scenario analysis, page 94, Our three climate scenarios, pages 94 – 95 Hello tomorrow 168 Other information NZ CS 1 Reference (or NZ CS 3 where identified) Detail Location Notes Climate-related risks and opportunities 11(c) A description of the climate-related risks and opportunities identified over the short, medium, and long term (see paragraph 14 requirements below). Physical risks, pages 97 – 98 Transition risks, pages 99 – 101 Climate-related opportunities, page 101 14(a) How the organisation defines short, medium, and long term and how the definitions are linked to its strategic planning horizons and capital deployment plans. Time horizons for scenario analysis, page 96 Integration of climate change and transition planning into strategy, page 93 Climate risk management, page 102 14(b) Whether the climate-related risks and opportunities identified are physical or transition risks or opportunities, including, where relevant, their sector and geography. Physical risks, pages 97 – 98 Transition risks, pages 99 – 101 Climate-related opportunities, page 101 We have separated our risk tables into physical and transition risks, and have a separate climate related opportunities table 14(c) How climate-related risks and opportunities serve as an input to internal capital deployment and funding decision-making processes. Integration of climate change and transition planning into strategy, page 93 Anticipated impacts and financial impacts 11(d) A description of the anticipated impacts of climate-related risks and opportunities (see paragraph 15 requirements below). Physical risks, pages 97 – 98 Transition risks, pages 99 – 101 Climate-related opportunities, page 101 15(a) The anticipated impacts of climate-related risks and opportunities reasonably expected by the organisation. Physical risks, pages 97 – 98 Transition risks, pages 99 – 101 Climate-related opportunities, page 101 15(b) The anticipated financial impacts of climate-related risks and opportunities reasonably expected by the organisation. We have elected to take adoption provision 2 – see page 90 15(c) A description of the time horizons over which the anticipated financial impacts of climate-related risks and opportunities could reasonably be expected to occur. 15(d) If an entity is unable to disclose quantitative information for paragraph 15(b), an explanation of why that is the case Transition plan aspects of strategy 11(e) A description of how the organisation will position itself as the global and domestic economy transitions towards a low-emissions, climate-resilient future state (see paragraph 16 requirements below). Integration of climate change and transition planning into strategy, page 93 16(a) A description of the organisation’s current business model and strategy. Integration of climate change and transition planning into strategy, page 93 We include a description of our business model and strategy, using the Integrated Reporting capitals model, on page 6 of this report. Ko te pae anamata, whakamaua 169 Spark New Zealand Annual Report FY24 NZ CS 1 Reference (or NZ CS 3 where identified) Detail Location Notes 16(b) The transition plan aspects of the organisation’s strategy, including how its business model and strategy might change to address its climate-related risks and opportunities. Integration of climate change and transition planning into strategy, page 93 Physical risks, pages 97 – 98 Transition risks, pages 99 – 101 Climate-related opportunities, page 101 Our climate-related risk and opportunity tables (see pages 97 – 101) includes information related to specific climate change risks and opportunities identified. 16(c) The extent to which transition plan aspects of the organisation’s strategy are aligned with its internal capital deployment and funding decision- making processes. Integration of climate change and transition planning into strategy, page 93 Physical risks, pages 97 – 98 Transition risks, pages 99 – 101 Climate-related opportunities, page 101 Our climate-related risk and opportunity tables (see pages 97 – 101) includes information related to specific climate change risks and opportunities identified. Risk management Processes for identifying, assessing and managing climate-related risks 18(a) A description of the organisation’s processes for identifying, assessing, and managing climate-related risks (see paragraph 19 requirements below). 19(a) The tools and methods used to identify, and to assess the scope, size, and impact of identified climate-related risks. Climate scenario analysis, page 94 Our three climate scenarios, pages 94 – 95 19(b) The short-term, medium-term, and long-term time horizons considered, including specifying the duration of each of these time horizons. Time horizons for scenario analysis, page 96 19(c) Whether any parts of the value chain are excluded. Our three climate scenarios, pages 94 – 95, Climate risk management, page 102 19(d) The frequency of assessment. Climate risk management, page 102 19(e) Processes for prioritising climate-related risks relative to other types of risks. Climate risk management, page 102 Integration into overall risk management processes 18(b) A description of how processes for identifying, assessing, and managing climate-related risks are integrated into overall risk management processes. Climate risk management, page 102 Metrics and targets Cross-industry metrics 21(a) The metrics that are relevant to all entities regardless of industry and business model (see NZ CS1 22(a-h) disclosures on pages 103 – 104). Climate-related metrics, pages 103 – 104 22(a – h) Climate-related metrics Climate-related metrics, pages 103 – 104 Hello tomorrow 170 Other information NZ CS 1 Reference (or NZ CS 3 where identified) Detail Location Notes Industry-based metrics and key performance indicators 21(b) Industry-based metrics relevant to the organisation’s industry or business model used to measure and manage climate-related risks and opportunities. Not applicable – none reported 21(c) Any other key performance indicators used to measure and manage climate-related risks and opportunities. Not applicable – none reported Targets 21(d) The targets used to manage climate-related risks and opportunities, and performance against those targets (see paragraph 23 requirements below). Our emissions reduction target, page 105 23(a) The time frame over which the target applies. Our emissions reduction target, page 105 23(b) Any associated interim targets. Not applicable 23(c) The base year from which progress is measured. Our emissions reduction target, page 105 23(d) A description of performance against the targets. Creating value for our environment section, pages 49 – 53 GHG emissions targets 23(e)(i) Whether the target is an absolute target or intensity target. Our emissions reduction target, page 105 23(e)(ii) The organisation’s view as to how the target contributes to limiting global warming to 1.5 degrees Celsius. Our emissions reduction target, page 105 23(e)(iii) The organisation’s basis for the view expressed in 23(e)(ii), including any reliance on the opinion or methods provided by third parties. Our emissions reduction target, page 105 23(e)(iv) The extent to which the target relies on offsets, whether the offsets are verified or certified, and if so, under which scheme or schemes. Our emissions reduction target, page 105 GHG emissions – methods, assumptions and estimation uncertainty 24(a – d) GHG reporting standard, consolidation approach, source of emissions factors and global warming (GWP) rates used, summary of specific exclusions of sources. Climate-related metrics, pages 103 – 104 NZ CS 3, 52 A description of the methods and assumptions used to calculate or estimate GHG emissions, and the limitations of those methods. GHG Inventory Report: “Appendix B: Operational boundary”, pages 21 – 24 A detailed description of our reporting methodology and approach is available in our GHG Inventory Report NZ CS 3, 53 Uncertainties relevant to the organisation’s quantification of its GHG emissions, including the effects of these uncertainties on the GHG emissions disclosures GHG Inventory Report: “Appendix B: Operational boundary”, pages 21 – 24 A detailed description of our reporting methodology and approach is available in our GHG Inventory Report NZ CS 3, 54 Explanation for any base year GHG emissions restatements. GHG Inventory Report: “Our base year for reporting”, page 14 No base year restatement made in FY24 NZ CS 3, 55 Statement of compliance with Aotearoa New Zealand Climate Standards. Compliance with climate standards, page 90 Ko te pae anamata, whakamaua 171 Spark New Zealand Annual Report FY24 Global Reporting Initiative (GRI) content index Spark New Zealand has reported in accordance with the GRI Standards for the period 1 July 2023 to 30 June 2024. Our reporting uses GRI 1: Foundation 2021. Note: CGS refers to Spark’s Annual Corporate Governance Statement, which may be found here: www.spark.co.nz/online/about/our-company/governance Our Greenhouse Gas (GHG) Inventory Report is available here: www.spark.co.nz/online/about/sustainability/environment Our Modern Slavery and Human Rights Statement is available here: www.spark.co.nz/online/about/sustainability/ethical-supply-chain GRI Standard Disclosure Location Notes GRI 2: General Disclosures 2021 2-1 Organisational details Pages 8 – 9, 111 2-2 Entities included in the organisation’s sustainability reporting Pages 8 – 9, 111, 150 The boundaries and scope of our sustainability reporting matches that of our financial statements, covering all activities covered under our consolidated financial reporting. 2-3 Reporting period, frequency and contact point Pages 5, 177 We report annually, aligned with our financial reporting 2-4 Restatements of information Page 54 We have added trade-in numbers to our reporting of mobile phones collected for recycling. This change has been back- dated to our FY23 numbers. 2-5 External assurance GHG Inventory Report – refer to Deloitte Independent Assurance Report Our emissions data within our GHG Inventory Report is externally assured (limited assurance)with oversight from the Board and Leadership Squad 2-6 Activities, value chain and other business relationships Pages 8 – 9 Modern Slavery and Human Rights Statement Our Modern Slavery and Human Rights Statement includes information on our supply chain 2-7 Employees Page 71 2-8 Workers who are not employees Modern Slavery and Human Rights Statement Pages 21 – 22 FY24: 2,600 FY23: 3,000 Reported headcount at 30 June 2-9 Governance structure and composition Pages 18 – 23, 82 – 85, 158 2-10 Nomination and selection of the highest governance body Corporate Governance Statement 2-11 Chair of the highest governance body Page 18 Our Chair is a non-executive director 2-12 Role of the highest governance body in overseeing the management of impacts Pages 82 – 85 Modern Slavery and Human Rights Statement Page 14 2-13 Delegation of responsibility for managing impacts Pages 82 – 85, 91 – 92 2-14 Role of the highest governance body in sustainability reporting Our GRI disclosures are included in our integrated report, which is reviewed and approved by our Board and Leadership Squad 2-15 Conflicts of interest Corporate Governance Statement Hello tomorrow 172 Other information GRI Standard Disclosure Location Notes 2-16 Communication of critical concerns Pages 82 – 85 Modern Slavery and Human Rights Statement Pages 14, 20 2-17 Collective knowledge of the highest governance body Page 91 Corporate Governance Statement Page 5 2-18 Evaluation of the performance of the highest governance body Corporate Governance Statement Page 6 2-19 Remuneration policies Pages 74 – 81 2-20 Process to determine remuneration Pages 74 – 81 2-21 Annual total compensation ratio Refer to remuneration section Pages 74 – 81 Not reported: we do not publish median salary. CEO remuneration is reported on pages 79 – 80 2-22 Statement on sustainable development strategy Page 13 Modern Slavery and Human Rights Statement Page 3 2-23 Policy commitments Modern Slavery and Human Rights Statement Our Human Rights Policy is available here: www.spark.co.nz/online/about/ our-company/governance 2-24 Embedding policy commitments Pages 35, 47, 65, 82 – 85 Modern Slavery and Human Rights Statement Page 13 2-25 Processes to remediate negative impacts Modern Slavery and Human Rights Statement Pages 14 – 29 2-26 Mechanisms for seeking advice and raising concerns Modern Slavery and Human Rights Statement Page 14 2-27 Compliance with laws and regulations Page 35 2-28 Membership associations Page 166 2-29 Approach to stakeholder engagement Page 165 2-30 Collective bargaining agreements <1% of employees are covered by collective bargaining agreements GRI 3: Material Topics 2021 3-1 Process to determine material topics Page 163 3-2 List of material topics Pages 163 – 164 3-3 Management of material topics Described topic-by-topic – refer to topic-specific disclosures below Topic standards GRI 201: Economic Performance 2016 201-2 Financial implications and other risks and opportunities due to climate change Pages 90 – 105 GRI 203: Indirect Economic Impacts 2016 203-1 Infrastructure investments and services supported Pages 36 – 45 GRI 206: Anti-competitive Behaviour 2016 206-1 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices Page 35 Ko te pae anamata, whakamaua 173 Spark New Zealand Annual Report FY24 GRI Standard Disclosure Location Notes GRI 207: Tax 2019 207-1 Approach to tax Page 86 GRI 305: Emissions 2016 305-1 Direct (scope 1) GHG emissions GHG Inventory Report 305-2 Energy indirect (scope 2) GHG emissions GHG Inventory Report 305-3 Other indirect (scope 3) GHG emissions GHG Inventory Report 305-5 Reduction of GHG emissions Pages 46 – 53 GHG Inventory Report GRI 306: Waste 2020 306-2 Management of significant waste-related impacts Page 54 GRI 308: Supplier Environmental Assessment 2016 308-1 New suppliers that were screened using environmental criteria Modern Slavery and Human Rights Statement Pages 16 – 20 308-2 Negative environmental impacts in the supply chain and actions taken Modern Slavery and Human Rights Statement Pages 16 – 20 GRI 401: Employment 2016 401-1 New employee hires and employee turnover Page 71 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees Page 78 401-3 Parental leave Page 73 GRI 403: Occupational Health and Safety 2018 403-1 Occupational health and safety management system Page 67 403-9 Work-related injuries Page 67 404-2 Programmes for upgrading employee skills and transition assistance programmes Pages 64 – 65 Reporting employee training programmes GRI 405: Diversity and Equal Opportunity 2016 405-1 Diversity of governance bodies and employees Pages 68 – 73 405-2 Ratio of basic salary and remuneration of women to men Page 70 GRI 408: Child Labor 2016 408-1 Operations and suppliers at significant risk for incidents of child labour Modern Slavery and Human Rights Statement Pages 16 – 20 GRI 409: Forced or Compulsory Labor 2016 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labour Modern Slavery and Human Rights Statement Pages 16 – 20 GRI 414: Supplier Social Assessment 2016 414-1 New suppliers that were screened using social criteria Modern Slavery and Human Rights Statement Pages 16 – 20 414-2 Negative social impacts in the supply chain and actions taken Modern Slavery and Human Rights Statement Pages 16 – 20 GRI 415: Public Policy 2016 415-1 Political contributions Pages 86, 117 GRI 417: Marketing and Labelling 2016 417-3 Incidents of non-compliance concerning marketing communications Page 35 GRI 418: Customer Privacy 2016 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data Page 35 Hello tomorrow 174 Other information Glossary 3G third-generation mobile network as defined by the International Telecommunications Union. 4G fourth-generation mobile network as defined by the International Telecommunications Union. 5G fifth-generation mobile network as defined by the International Telecommunications Union. 5G standalone a network that has a 5G core as well as 5G on mobile towers rather than non-standalone 5G which uses a combination of existing 4G LTE architecture with a 5G radio access network (RAN). ADR an American Depositary Receipt. ARMC the Audit and Risk Management Committee. ARPU average revenue per user. ASX the Australian Securities Exchange. CCL Computer Concepts Limited. CCN Converged Communications Network. Company Spark New Zealand Limited. EBITDAI earnings before finance income and expense, income tax, depreciation, amortisation, and net investment income. eNPS employee net promoter score, a measure of employee satisfaction. GRI the Global Reporting Initiative. Group the Group in relation to these financial statements, which are prepared for Spark New Zealand Limited (the Company) and its subsidiaries (together the Group). HRCC the Human Resources and Compensation Committee. iNPS interaction net promoter score, a measure of customer satisfaction. IoT the internet of things. IFRS International Financial Reporting Standards. LTE long-term evolution, as known as 4G. LTI long-term incentive, which is part of the Spark Leadership Squad and CEO’s remuneration. Millimeter waves millimeter waves, also known as extremely high frequency (EHF), is a band of radio frequencies that has wavelengths between 1 mm and 10 mm. These frequencies can carry massive amounts of data at very high speeds. That makes them ideal for accommodating the massive increase in data demanded from new 5G use cases such as augmented/virtual reality, cloud gaming, video analytics and other cloud-compute capabilities. Multi-access edge computing (MAEC) extends the capabilities of cloud computing by bringing it to the ‘edge’ of the network. While traditional cloud computing occurs on remote servers that are situated far from the customer and device, MAEC allows this processing to take place much closer to the end customer – meaning data has to travel a shorter distance, decreasing latency, and the amount of data sent across the network can be reduced, reducing congestion, and delivering a better customer experience. Network slicing allows the operator to ‘slice’ its network to support different types of services through each ‘slice’. Multiple slices can be tuned independently to meet different quality of service parameters. For example, one slice may simply need a standard speed connection to enable office email, another might be tuned to support very low data Internet of Things devices, while another slice may need high reliability and ultra-low latency to support robotics. NOMs the Nominations and Corporate Governance Committee. NPS Net Promoter Score. NZ GAAP Generally Accepted Accounting Practice in New Zealand. NZ IAS New Zealand International Accounting Standard. NZ IFRS New Zealand Equivalent to International Financial Reporting Standards. NZX NZX Limited. Ko te pae anamata, whakamaua 175 Spark New Zealand Annual Report FY24 OTN Optical Transport Network (OTN) - the high speed backbone of Spark’s network, stretching from the Far North to the bottom of the South Island. The OTN uses light signals through optical fibre cables to carry all of Spark's data traffic up and down the country through diverse paths, ensuring resilient, fast connectivity for all users. PSTN Public Switched Telephone Network. QBR Quarterly Business Review. SME Small and Medium Enterprise. Southern Cross Southern Cross Cables group of companies, which consists of two sister companies, Southern Cross Cables Holdings Limited and Pacific Carriage Holdings Limited and their subsidiaries. STI Short-Term Incentive, which is part of Spark Leadership Team and CEO remuneration. TRIFR Total Recordable Incident Frequency Rate per million Spark employee hours worked. TSR Total Shareholder Return and is a measure of share price appreciation and dividends paid over a given period. Hello tomorrow 176 Other information Contact details Registered office Level 2 Spark City 167 Victoria Street West Auckland 1010 New Zealand Ph +64 4 471 1638 or 0800 108 010 Company secretary Paige Howard-Smith For more information For inquiries about transactions, changes of address or dividend payments contact the share registries below. New Zealand registry MUFG Pension & Market Services Level 30, PwC Tower 15 Customs Street West Auckland 1142 PO Box 91976 Auckland 1142 Ph +64 9 375 5998 (investor inquiries) enquiries@linkmarketservices.com www.linkmarketservices.co.nz Australian registry MUFG Pension & Market Services Level 12 680 George Street Sydney NSW 2000 Australia Locked Bag A14 Sydney South NSW 1235 Australia Ph +61 1300 554 484 (investor inquiries) registrars@linkmarketservices.com.au www.linkmarketservices.com.au United States registry Computershare Investor Services P.O. Box 43078 Providence, RI02940-3078 United States of America Overnight/certified/registered delivery: Computershare 150 Royall Street, Suite 101 Canton, MA 02021 United States of America Ph +1 888 BNY ADRS (+1 888 269 2377) or +1 201 680 6825 (from outside the United States) shrrelations@cpushareownerservices.com www.computershare.com/investor Spark New Zealand Limited ARBN 050 611 277 For inquiries about Spark’s operating and financial performance contact: investor-info@spark.co.nz Investor Relations Spark New Zealand Limited Private Bag 92028 Auckland 1142 New Zealand investors.sparknz.co.nz insightcreative.co.nz SPARK079 Ko te pae anamata, whakamaua 177 Spark New Zealand Annual Report FY24 Ko te pae anamata, whakamaua investors.sparknz.co.nz ARBN 050 611 277 Spark New Zealand Limited Annual Report 2024 Spark New Zealand Limited Annual Report FY24