FY2021 results are out. So time to try and find how the exciting new growth divisions are shaping up.
P68 of AR2021 is where the true calculation of profitability starts:
|
Operating Revenues |
less Product Costs |
less Labour Costs (1) |
less Other Operating Expenses (1) |
equals EBITDA |
'Other Operating Revenues' |
$137m |
$67m |
$19m |
$15m |
$36m |
Notes
1/ 'Labour Costs' and 'Other Operating Expenses' are estimated in fractional proportion (f) to the percentage of revenue turned over by the 'Other Operating Revenues' business unit.
f= 137/3565 = 3.843%; Labour Cost = 0.03843 x $491m = $19m, 'Other Operating Expenses' = 0.03843 x $385m = $15m
-------------------
EBITDA is a good proxy for cashflow. But barring some trunk transmission assets, most of the equipment at Spark is not long lived. Indeed there is significant investment now replacing the old PSTN telephone system and continuing the 5G mobile roll out. In my assessment, this means EBIT is the more important measure.
Depreciation & Amortisation ('Other Revenue') = 0.03843 x $523m = $20m
EBIT= EBITDA - DA = $36m - $20m = $16m
The interest charge against 'Other Revenue' = 0.03843 x [$34m - $81m] = -$2m.
NPAT = 0.72(EBIT - I) = 0.72($16m-$2m) = $10m
On page 68 of AR2021 we learn "Other operating revenues include revenue from Qrious, Internet of Things, Spark Sport, and exchange building sharing arrangements." I had previously assumed this category included 'Spark Health' as well. But it could be the Spark Health referred to as a promising potential future revenue business unit has yet to start from a zero base.
Whatever, the NPAT estimate for all those promising future growth initiatives looks to have turned the corner from loss making, and is now a small positive number. Albeit in overall terms, that profit is not significant.