Talktalk Telecom Group PLC (TALK) 2014年年度報告「LSE」.pdf

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1、Annual Report 2014TalkTalk Telecom Group PLCOur year at a glanceWe are the UKs leading value for money provider of fixed line broadband,voice telephony,mobileandtelevision services.Our strategy is delivering“We are demonstrating real growth from our investment in TV and with over 1 million customers

2、 today,this is a scale business that is growing faster than all the other UK TV operators put together.“Dido Harding,CEOIn this reportStrategic report:OverviewOur year at a glance IFCChairmans statement 01Financial highlights 01Strategic report:StrategyOur business model 02UK telecoms regulation 04O

3、ur strategy 05Chief Executive Officers statement 06Measuring our performance 10Strategic report:PerformanceChief Financial Officers statement 11People 15Principal risks and uncertainties 16Sustainability review 18GovernanceBoard of Directors and advisors 20Corporate governance 21Directors Remunerati

4、on Report 26Directors Report 40Directors responsibilities statement 41Financial statementsIndependent auditors report 42Group income statement 46Group statement of comprehensive income 47Group statement of changes in equity 48Group balance sheet 49Group cash flow statement 50Notes to the consolidate

5、d financial statements 51Company balance sheet 80Company reconciliation of movement inshareholdersfunds 81Notes to the Company financial statements 82Other informationFive year record(unaudited)86Glossary 87Financial calendar 88TalkTalk Telecom Group PLC Annual Report 2014TalkTalk Telecom Group PLC

6、Annual Report 201401Chairmans statementStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial statementsOther informationThis has been a year of significant investment in growth for TalkTalk,as a result of which we have ended the year with nearly one millio

7、n TV customers.TalkTalk Business has also had a very good year,delivering strong growth in a market where few other B2B operators are showing growth.As a result we reported our first full year of revenue growth since demerger.We saw a substantial improvement in profitability in the second half of th

8、e year which,despite our investment in TV during the first half,allowed us to grow the dividend by the 15%we committed to in FY12.I am pleased to report therefore that for FY14 the Board has declared a final dividend of 8.00p that,in addition to our interim dividend of 4.00p,gives a total pay-out fo

9、r the year of 12.00p.These are substantial achievements that highlight the sustainable power of leveraging our network to deliver value for money products to consumers and businesses across the UK,while also creating value for shareholders.It has been another year of significant change and challenge

10、 for our employees,and the Board and I would like to thank them for their efforts and for their continuing commitment to TalkTalk and to our customers.Sir Charles DunstoneChairmanFinancial highlightsStatutory earnings per share(p)201420133.111.3-73%Headline revenue(m)201420131,7271,670+3.4%Headline

11、EBITDA(m)20142013213290-27%Dividend per share(p)2014201312.010.4+15.4%02TalkTalk Telecom Group PLC Annual Report 2014Read more about our extensive network at:Our network coverageOver the past eight years,we have built one of the UKs largest broadband and voice customer bases,attracting those looking

12、 for significant bill savings.FY14 saw us continue to grow significantly as we successfully deliver our quad play strategy,particularly in our value for money TV proposition,built on the YouView platform.Our networkOur business model is based on leveraging our extensive and cost-efficient next-gener

13、ation network assets,in which we have invested c.1bn to date,to offer consumers and businesses value for money products and services.Our business modelAt the heart of our network is the state of the art unbundling equipment(DSLAMs,MSANs and Ethernet switches)that we have installed in over 3,000 BT e

14、xchanges the largest such deployment in the UK.This allows us to take control of the copper line that connects customer premises to the exchange.The exchanges are connected via collector nodes and 10Gbps collector rings to our dark fibre core optical network a high-speed,high-capacity all-IP nationa

15、l backbone that enables efficient and flexible routing of voice and data traffic.Access to the copper infrastructure that connects UK premises to BTs nationwide exchange footprint is price regulated by Ofcom,while we lease the fibre backhaul(toconnect exchanges to our core network)and dark fibre(tha

16、t comprises our collector ring and core network)on very competitive terms from multiple providers.Thiscombination of owned and leased assets confers a structural cost advantage that allows us to offer fixed line broadband and Ethernet connectivity at significantly lower retail prices than our compet

17、itors.We have leveraged this cost advantage to build a sustainable broadband market share at the value end of the UK fixed line market and,since 2012,have begun to further leverage our network with fast growing IPTV(for consumers)and Ethernet products(for businesses).The scale and all-IP nature of o

18、ur network also allows us to scale it very efficiently for growing usage.Over the next five years we plan to expand the bandwidth capacity on our network by 50100 times at falling marginal operating costs.This will allow us to support growing customer demand for high speeds and greater data consumpt

19、ion,with longer term opportunities to build fibre to the premise(FTTP)and converged fixed-mobile products.Our network gives us a strong value for money advantageWe are able to offer our Consumer and Business customers services at significantly lower cost than our cable and incumbent competitors.This

20、 is because we operate the UKs most extensive next-generation network(NGN),which is comprised of our own advanced,highly cost-effective equipment.It also means that TalkTalk is able to be the only ISP that is committed to offering totally unlimited broadband across all its consumer packages.Our NGN

21、covers approximately 95%of UK homes,operating in 3,027 exchanges.These exchanges are connected via our own high-speed,high-capacity all-IP national network,enabling us to carry all of our customers voice and data traffic efficiently and cost effectively.Our customers benefit through optimised broadb

22、and speeds and quality as well as access to our growing range of lower cost,value add products and services.For example,our all-IP Content Delivery Network which runs over our NGN puts content closer to the end user to increase the quality of experience for our TV customers.Unbundled exchangeMSAN an

23、d DSLAMs supplying ADSL,FTTC,EFM and Ethernet access servicesCopperOpticalExchange backhaulNx1Gbps optical circuits supplied by BTOR and VM Collector nodeExtend reach of core network OR,Netfl ixGoogleAkamaiCachingCaches deployed in our Edge sites,serving 400Gbps at peakCollector nodesDark fi bre,40G

24、bps and 10 Gbps optical circuits supplied by Geo,BTW,BTZayo,Hibernia,VM and SSECore optical networksTwo separate national networks with 8Tbps(Huawei)and 1.6Tbps(Infi nera)of capacityStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial statementsOther info

25、rmation03TalkTalk Telecom Group PLC Annual Report 2014Services to consumers TalkTalk is strongly positioned as the leading value for money phone,broadband and TV provider for UK homes.We are differentiated by our clear and simple tariff structure,low prices,flexibility and inclusion of valuable serv

26、ices,such as our ground-breaking HomeSafe,our unique network-based security service,which is available free of charge for all customers on our network and protects the whole home from viruses and inappropriate content.In the prior year we successfully launched our TV proposition for Plus customers,w

27、hich included a free YouView set top box and in FY14 we launched a lower priced TV proposition for our Essentials customers.TalkTalk is one of seven partners behind YouView including the BBC,ITV and BT.YouView is a broadband based television service with differentiated catch-up and on-demand service

28、s,and anopen platform for future application driven innovation.Our TV offering has enjoyed strong growth during FY14 asit represents a powerful proposition for mass market value seekers who want flexible access to premium content without the need to enter into costly long term subscriptions.We also

29、launched the UKs lowest priced totally unlimited broadband proposition,SimplyBroadband,which is targeted at customers who want a great value broadband product.We grew TalkTalk Mobile during FY14.Available exclusively to TalkTalk customers,TalkTalk Mobile offers simplicity,range and some of the most

30、competitive prices in the market for both SIM-only and handsets.Asaresult,our mobile offering continues to gain strong traction amongst our base.Services to businesses TalkTalk Business continues to drive innovation and competitive product development that leverages our NGN capability and is in fact

31、 one of the fastest growing B2B telecom businesses in the UK.We believe there is significant opportunity to use our network to grow all ourNext Generation products within TalkTalk Business.In January 2013,we began offering an Ethernet over Fibre service which delivers high-speed symmetrical services

32、 at a significantly lower price point than traditional Ethernet technologies.We also launched an 80Mbps product withgenerous data allowances and network prioritisation targeted at small and medium sized businesses.The year also saw us launch a very competitive Next Generation Voice service for busin

33、esses requiring high performance data and voice services,which we have made widely available to channel partners.Our partner channel continued to grow in FY14,and the migration of over 100,000 Post Office customers onto our network was a major milestone for the business.Market overviewHousehold inte

34、rnet access continued to rise in 2013,with eight in ten households now having broadband access.Theaverage UK household owns three different types of internet-enabled device,and 86%have at least one.This is driving significant growth in people accessing the internet from mobile-enabled devices.Signif

35、icant scope for growth remains,however,amongst specific demographic groups;20%of households remain offline,rising to nearly 50%of those aged 6574 and two-thirds of those aged 75 and over.There are four key players in the broadband and TV market.BT Retail is the largest broadband service provider,fol

36、lowed by BSkyB.Virgin Media,the cable provider,is the third largest player followed by TalkTalk.TalkTalk is the largest unbundler.BT Retail and Virgin Media are positioned at the premium end of the market,with significantly higher price points.They focus on speed and reliability of broadband connect

37、ion.BSkyBs focus is on cross selling broadband and voice to its pay TV base,providing discounts to customers who take all three products with them.BT Retail is also now competing with BSkyB on pay TV content rights,specifically sports.Within this context,TalkTalk is clearly positioned as the leading

38、 provider for customers seeking a best value and reliable voice,broadband and TV service.For TV in particular,we have a unique proposition for those homes who want flexible access to premium content without costly long term subscriptions.We believe this reputation for value for money puts TalkTalk i

39、n a strong position and will only improve further as we grow our TV and mobile bases.On-net base(million)201420134.0603.870On-net customers(%)201420139795Our customersWe are the UKs leading value for money provider of fixed line broadband,voice telephony,television and mobile services.We serve four

40、million residential and business customers under the TalkTalk and TalkTalk Business brands.04TalkTalk Telecom Group PLC Annual Report 2014UK telecoms regulationThe UK telecoms market is regulated by Ofcom,which sets the charges and other terms for wholesale access toinfrastructure and associated ser

41、vices provided by BTOpenreach(Openreach),where Openreach is deemed toenjoy Significant Market Power.Ofcoms objective is to ensure that these wholesale products enable effective retailcompetition in the market,so that consumers and businesses benefit from a choice of services and retail serviceprovid

42、ers.Compliance with regulation is monitored internally by the Regulatory Compliance Committee asdetailed on page 16.TalkTalk relies upon a number of wholesale products from Openreach to be able to offer services to its customers.The key wholesale products we buy are LLU(the copper connections into h

43、omes),GEA(access to BTs Next Generation Access(NGA)/Fibre to the Cabinet(FTTC)network)and Ethernet(fibre links used to connect exchanges to our core network and also to connect business customers).The price and terms of these are set by Ofcom though a triennial market review process which,particular

44、ly in the case of LLU,gives us very reasonable certainty of costs going forward.LLU Charge Control TalkTalk appealed Ofcoms 2012 LLU Charge Control decision(as did Openreach),which resulted in a 1.12 reduction in the 2013/14 MPF rental charge.This charge control ended on 31 March 2014.In late May 20

45、14,Ofcom is expected to publish(for notification to the European Commission)the new charge control for the period to 31March2017.The current proposals are for an annual price change of between CPI-4.25%and CPI+3.00%.Next Generation Access Openreach provides wholesale access to its NGA infrastructure

46、(predominantly FTTC),on an equivalent basis to all communication providers.The current Openreach wholesale product is GEA.TalkTalk uses GEA to provide its fibre broadband products.Atpresent,neither the price of GEA nor the margin between theGEA price and BTs retail price are regulated.In late May 20

47、14,Ofcom is expected to publish its proposals to impose margin squeeze regulations and how they will be operated.In response to a complaint by TalkTalk,Ofcom,in May 2013,started an investigation of whether BT has breached its Competition Act obligations by margin squeezing between itswholesale price

48、 for NGA(GEA)and its retail prices.Thethreshold for Ofcom for opening an investigation is ifthereare reasonable grounds for suspecting(the Act)hasbeeninfringed.TalkTalk expects a decision on the future approach for this investigation later in 2014.Ethernet dispute appealIn December 2012,Ofcom publis

49、hed its determination to resolve a dispute regarding Openreachs pricing for various Ethernet services in the period from April 2006 to July 2009,which required Openreach to repay TalkTalk for its overcharging.Openreach has appealed that decision to the Competition Appeal Tribunal(CAT).TalkTalk(and o

50、thers)has also appealed the decision arguing that the determination was too low.Further detail is provided in notes 9 and 27 to the consolidated financial statements.Openreach service performanceTalkTalk strives to work closely with Openreach to deliver the best service for our customers,for example

51、,the timely delivery of connections.As part of the Wholesale Local Access Market Review due in late May 2014,Ofcom will set new regulations in order to provide more effective incentives for Openreach to provide a high quality service.SLG disputeOfcom has resolved a dispute regarding whether Openreac

52、h should have paid TalkTalk compensation as a consequence of the late delivery of new MPF lines in 2012.Ofcom determined that whilst Openreach had breached its obligations,Ofcom did not as part of its determination require Openreach to pay TalkTalk any compensation.Appeals frameworkThe Government is

53、 currently considering whether to introduce changes to the framework of how Ofcom decisions can be appealed and,in particular,whether the current merits-based standard should be changed.European Commission Single Market RegulationThe EC and European Parliament is currently considering theSingle Mark

54、et Draft Regulation.If introduced this could havea number of impacts on the mobile and fixed telecommunications market.The most relevant area for TalkTalk is the so-called net neutrality regulation.New Communications Bill The Government had previously stated it was its intention to introduce a new C

55、ommunications Bill by the end of Parliament.Further to the review work already concluded,the Department for Culture,Media and Sport(DCMS)published a policy paper in July 2013 entitled Connectivity,content and consumers:Britains digital platform for growth setting out areas for action.Digital Economy

56、 Act This Act,enacted in 2010,requires ISPs to send notifications to customers and log which connections have been used for illegal file sharing.Expectations are that the earliest notifications could be sent is 2015.In parallel,TalkTalk and other ISPs are discussing with rights holders alternative a

57、pproaches.Pursuant to various court orders,TalkTalk is required to block access to certain sites that are used for illegal file sharing.Communications Data Bill The draft Communications Data Bill was published in 2012 andwould have required communications providers to retainmore communications data

58、than they currently do so.InApril 2013,the Government announced it was dropping the Communications Data Bill.In the Queens speech in May2013 itwas stated that the Government would bring further alternative proposals to help manage the problem of matching internet protocol addresses.At this time noth

59、ing further has beenpublished.Voluntary measures on parental controlsFollowing a formal Government consultation into parental controls,in June 2013 the Prime Minister announced that the other three major ISPs would introduce whole home filtering systems equivalent to TalkTalks HomeSafe service.He al

60、so announced that from December 2012 all providers had voluntarily agreed to ask every new customer if they want to use parental controls.This requirement was extended to include all existing customers by the end of December 2014.In December 2013,the DCMS asked Ofcom to report on progress made by pr

61、oviders in delivering their commitments.Its report is due to be published in mid 2014.As a Board member of the UK Council for Child Internet Safety,TalkTalk continues to engage actively with the Government about its policy for protecting children online.The areas regulated by Ofcom that are most mat

62、erial for TalkTalk are:Several other areas of current or potential legislation are significant for TalkTalk:GlossaryCPI:Consumer Price IndexFTTC:Fibre to the CabinetGEA:Generic Ethernet AccessISP:Internet Service ProviderLLU:Local Loop UnbundlingMPF:Full unbundlingNGA:Next Generation AccessNGN:Next

63、Generation NetworkRPI:Retail Price IndexSMPF:Partial unbundlingWLR:Wholesale Line RentalStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial statementsOther information05TalkTalk Telecom Group PLC Annual Report 2014Our strategyOur corporate strategy revol

64、ves around six interlinking elements,which combine leveraging our network to build scale in value for money products for consumers and businesses,systems and processes simplification,and disruptive innovation.Our strategy revolves around sixmainprinciples1 Leveraging the TalkTalk NetworkTalkTalk has

65、 the UKs most extensive all-IP Next Generation Network(NGN),covering c.95%of all UK homes with advanced,proprietary equipment located in over 3,000 exchanges.By investing in next-generation switching and data transmission technology we have been able to further extend our network and cost advantage.

66、The declining marginal cost of bandwidth allows substantial increases in capacity without compromising margins or capital expenditure limits.To accommodate expected future growth,we plan to expand network capacity by 50100 times over the next five years,and increase resilience and flexibility,whilst

67、 reducing network downtime.This investment will be within our long term capex guideline of 6%of revenues.2 Value for Money ProductsWe have an established position as the UKs leading value for money provider across phone and broadband(for consumers and businesses),TV and mobile products(for consumers

68、).We also offer customers high speed Fibre to the Cabinet through BTs GEA product.In addition,our extensive Ethernet presence allows us to offer competitively priced data products to businesses across the UK.Our value for money positioning and growing product offer drives customer loyalty and sustai

69、nable revenue growth,and positions us to take advantage of favourable usage and socio-demographic trends,with a growing number of older and smaller households in the UK,growing data usage and growing triple play penetration.3 ScaleBuilding on our large and established fixed line phone and broadband

70、base,we are able to achieve significant scale benefits from offering our customers additional products such as pay TV,mobile,fibre and for businesses,high-speed data connectivity.4 Simple Systems and ProcessesTo date since demerger,we have delivered over 100m of cost savings through integration and

71、back-office simplification programmes.However,as a relatively young business that has grown very rapidly,we have a significant opportunity to further simplify our technology platform and customer processes.Our“Making TalkTalk Simpler”programme comprises detailed initiatives to simplify tariffs and a

72、ccess methods,simplify and upgrade our systems,make better use of our data and drive increasing online self-service by customers.While lowering the costs of serving and acquiring customers,we also expect Making TalkTalk Simpler to lower customer churn by improving customer service and satisfaction.5

73、 Disruptive InnovationWe have a strong heritage of launching innovative and disruptive products that leverage our network scale and engineering expertise to save customers money.We were the first to offer free fixed line calls between customers,the first to launch free broadband,the first to offer u

74、nlimited downloads to broadband customers,the first to launch a free TV offer and the first to offer business broadband at under 5 per month.Our long term innovation agenda includes the potential to build the first 1Gbps FTTP network in the UK and an advanced fixed-mobile proposition incorporating f

75、emtocells and an in-home 4G network.6 A brighter place for everyoneOur employees are key enablers in delivering our strategic priorities and we have implemented structures and policies that foster and develop a uniquely agile and collaborative culture.06TalkTalk Telecom Group PLC Annual Report 2014F

76、Y14 Business ReviewSummaryOur results for the year clearly demonstrate that our strategy is driving revenue growth and will create sustainable shareholder value.In total we invested an incremental 112m in FY14 in growing the business,primarily through TV,and this is reflected in our full year EBITDA

77、 margin of 12.3%.Our investment in scaling the TV base had its most pronounced effect in H1 with EBITDA margins of 9.0%on revenue growth of 1.8%and total subscriber acquisition costs of 174m.As expected H2 results showed a strong rebound in profitability with EBITDA margin of 15.5%on 5.0%revenue gro

78、wth and after total subscriber acquisition costs of 144m.The year also highlighted the traction we are gaining in TalkTalk Business through its focus on value for money data connectivity products.Corporate revenues grew by 5.6%year on year,accelerating significantly from 1.3%growth in H1 to 9.9%in H

79、2.The dividend for the year of 12.0p is in line with our commitment to deliver returns to shareholders whilst also investing to grow the business.We expect to deliver further significant progress in FY15,with Headline EBITDA margin in the range of 16.0%17.0%and dividend growth of 15%,and are on trac

80、k to deliver our medium term financial targets of 4%CAGR in revenue and 25%EBITDA margin by FY17.In addition,we see further strong growth opportunities beyond the medium term from leveraging our network capability and customer scale.1.The fastest growing TV business in the UKAccelerating growth in T

81、V 687,000 customers added,c.25%offully unbundled baseWe added 687,000 customers to our fast growing YouView TV base during the year,more than all the other UK TV operators combined.The rate of additions accelerated through the year as awareness of our proposition grew.During Q3 we launched and began

82、 gradually toscale our Essentials TV proposition,expanding the addressable market for our triple play product.Accordingly we have seen an increase in the number of new customers coming to TalkTalk,withathird of TV connections new to TalkTalk.The Plus TV proposition has continued to prove popular,bot

83、h for existing customers wishing to upgrade from their Essentials phone and broadband packages,and for new to TalkTalk customers,highlighting the willingness of customers to pay a premium for differentiated functionality(recording to the local set-top box)andbundled features(free anytime calls and s

84、even Sky channels).Wehave continued to develop our content proposition through FY15,with some significant new additions to our range such as Skyondemand(Sky Movies,Sky Entertainment,SkySports);Picturebox(NBC Universal)new Subscription Video on Demand(SVOD)service;andnewlinear channels such as JSTV a

85、nd Kyknet(ThemaInternational),Sony Entertainment TV,SonyAsiaTV and Nicktoons.In addition,we reached an agreement with FilmFlex that will significantly increase our selection of TV on Demand(TVOD)titles.At the end of the year,just over 25%of our fully unbundled customers were triple play.We expect to

86、 add a similar number of TV customers in FY15 as we did in FY14,which would take penetration to nearly 40%of our On-net base.Our primary target market remains the large base of Freeview households in the UK(c.18m)and we continue to expect that in time nearly all of our On-net customers will convert

87、to triple play in line with increasing recognition of the convenience and value of bundling,and as we drive increased awareness of our compelling content offer.TV customers continue to rate the service highlyA range of survey and usage data from our TV customers,including those that have been with u

88、s for over a year now,consistently point tohigh levels of satisfaction with our TV service.The vast majority of our TV customers(both those upgrading from phone and broadband and those who are new to TalkTalk)have previously used Freeview as their main TV service.Consequently the integrated IPTV and

89、 linear programming functionality provided by the YouView platform remains one of the most highly rated features of our service,with the YouView net promoter score at+25.While Plus customers value the ability to record programmes for future viewing,all customers value the ability to seamlessly watch

90、 catch-up TV,without having toexit the YouView programme guide.This remains the only programme guide currently available in the UK that offers this powerful functionality.The value our customers place on this is a direct function of the volume of high quality free public service broadcast(PSB)progra

91、mming in the UK.Viewing data across all platforms shows that the vast majority of TV viewing(even for pay-TV subscribers)is of live and catch-up free-to-air content.Other features that all our customers rate highly includethe ease ofaccess to a wide range of flexible,non-subscription pay content.Thi

92、s is especially so for those customers who have upgraded from Freeview and are exploring paid for content options for the first time.Equally,those customers who have switched from other pay TV platforms report high levels of satisfaction with the range of content available and the affordability of b

93、eing able to select and pay for only the precise content they wish to access.Content purchasing behaviour encouraging forfuturerevenueWhilst most of our TV customers have little or no previous experience of paying for content on their TV sets,their purchasing behaviour to date is encouraging for fut

94、ure incremental revenues,with an average ARPU forpay-per-view movies and boosts combined of c.9.00.Withover 28%of our TV customers buying some form of pay content every month,the overall TV base is therefore showing an ARPU uplift of c.2.50.With over twelve months of data from our growing base,we ar

95、e pleased to report that early purchasing behaviours have proved resilient and are consistent withour understanding of what our family-orientated,value-seeking customers want to watch.Pay-per-view movie demand has grown steadily over the last twelve months,with customers purchasing on average,just o

96、ver one movie per month,generating anincremental ARPU ofc.4.00.“TalkTalk is all about giving customers consistently thebestvalue for money experience in the market”Chief Executive Officers statementStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial stat

97、ementsOther information07TalkTalk Telecom Group PLC Annual Report 2014Content boost purchases have also remained resilient although aswehad expected,Essentials customers take longer to begin theirpay content journey and,initially,tend to buy fewer boosts.Nevertheless the average boost ARPU of Essent

98、ials and Plus customers at c.11.00 is providing good incremental revenue for us.TV customers early-life churn significantly lower than that of broadband customersVery few of our earliest TV customers have reached the end of theirfirst contract term,so it remains too early to assess their out-of-cont

99、ract churn behaviour.However,the high levels of satisfaction with their service that our TVcustomers are reporting,and the consistency of their content purchasing behaviour,has translated into materially lower early-life churn than for their dual play counterparts.Average monthly churn onthe TV base

100、 through FY14 was approximately half that seen from our dual play base.The lower early-life churn,significantly higher net promoter score and lower surveyed propensity to churn give us a great deal ofconfidence that mature triple play customers will also churn at a materially lower rate than dual pl

101、ay customers.2.Continuing progress in Mobile and Fibre adding incremental value7%of On-net customers now taking mobileWe added 109,000 new customers to our Mobile base during the year,comprising 7%of our On-net base versus 4.5%of the base a year ago.Mobile customers continue to add incremental value

102、 to us through a combination of standalone economics(each Mobile customer delivers a positive net present value across the life of the contract),and reduced churn and higher net promoter scores compared to dual play customers.As discussed below,developing our mobile proposition is a key element of o

103、ur innovation agenda for delivering long term growth,and we see real opportunity to drive higher levels of penetration and value creation.5%of On-net customers taking fibreWe added 134,000 new customers to our fibre base during the year,comprising 5%of our On-net base versus 2%of the base a year ago

104、.Bandwidth usage continues togrow rapidly:traffic on our network has almost trebled in the last three years,as customers use more devices and watch more video content online,and customers downloaded anaverage of 34GB of content a month during FY14 46%more than a year ago.However,at current prices an

105、d usage levels,demand for fibre from our customers remains modest because of the scale and capability of our existing network.With over 50%of fibre customers also taking TV from us,demand is very much driven by customers whose overall experience can be transformed by taking fibre,e.g.where distance

106、from the exchange dictates copper speeds of less than 3Mbps.3.TalkTalk business one of the fastest growing B2B telecom businesses in the UKAnother year of strong performance TalkTalk Business has delivered a strong performance,with Corporate revenues growing by 5.6%year on year and accelerating sign

107、ificantly through the year(H1:+1.3%,H2:+9.9%).High margin data products revenues(+37.5%year on year)have been a key driver of this performance with growth running in excess of the established declinein traditional voice revenues.Our suite of flexible and competitive Ethernet products based on our ma

108、rket leading nationalEthernet footprint has helped us win significant new directand partner business during theyear.Revenues from wholesale broadband connectivity products through our partner channel also showed strong growth during the year.In Q3 we completed the migration of 103,000 Post Office cu

109、stomers onto our base,with revenues from these customers contributing to growth across On-net,Corporate and Off-net.With three consecutive quarters of year on year growth in Corporate revenues,TalkTalk Business is one of the fastest growing B2B telecom businesses in the UK.Thisisa powerful testament

110、 to the strength of TalkTalk Businesss strategy,business model and competitive positioning in its chosen markets.A focused strategy to grow revenues and profitabilityTalkTalk Businesss strategy is consistent with the Group strategy ofleveraging our network scale and capability tobuild market sharein

111、value for money products,whilst simplifying its systems andprocesses and launching innovative new products to deliver sustained and profitable long term growth.Our network is scaled for peak evening usage by consumers,allowingTalkTalk Business to use excess daytime capacity for business customers.Th

112、is together with our Ethernet capability(over3,000 ofour exchanges are Ethernet enabled,with 95%countrycoverage)allows TalkTalk Business to offer a wide range ofcompetitively priced,high-margin,all-IP data connectivity products.With data revenue growth running faster than the decline inlegacy,low-ma

113、rgin voice revenues,TalkTalk Business is strongly placed to grow revenues and market share profitably.A key component of this is a focused approach to growth.We see three main segments where we are able to offer our customers significantly better value for money than ourcompetitors.08TalkTalk Teleco

114、m Group PLC Annual Report 20143.TalkTalk business one of the fastest growing B2B telecom businesses in the UK continuedMaintaining our strong partner relationshipsOur partner channel has continued to grow through FY14.Of particular note is the successful migration of Post Office phone and broadband

115、customers who came onto our base during Q3 as part of our five year contract with Fujitsu,the lead service integrator for the Post Office.This agreement,one of the largest of its type in our history,is testimony to the appeal of our network for partners seeking quality,flexibility and competitive te

116、rms.By working with partners we are able to leverage the low cost base of our network while not adding the significant complexity that comes with tailoring services directly forend customers.Growing data product penetration in EnterpriseWe saw strong growth in our direct business with a number of ne

117、w contracts to supply wide area network solutions for medium and largebusinesses including Iceland Group(MPLS network covering 840 sites for a sixyear term);Hutchison 3G(MPLS network covering 360sites for a three year term);the DX Group(MPLS network covering 72 sites for a five year term);Selfridges

118、(MPLS network covering twelve sites for a three year term)and Fullers(MPLS network covering 200sites for a three year term).As a result we ended FY14 with over 17,000 Ethernet lines connected,c.70%more than a year ago.Growing market share in small businessesWe simplified our connectivity proposition

119、s for small businesses during the year,launching amongst other things,the UKs most competitive business phone and broadband package for just 4.00 per month(excluding line rental).In addition,we streamlined our sales and service processes for this important and growing segment and see significant opp

120、ortunity to grow market share.4.Progress in Making TalkTalk Simpler a40m+costopportunityWe have made good progress across the detailed programmes behind Making TalkTalk Simpler during FY14.We have actioned a number of initiatives across our four major workstreams(Getting Customers Current,Systems Tr

121、ansformation,Leveraging Data and Brilliant Self-Service).We commenced a programme to cease provision of non-core legacy access methods such as IP Stream,builta detailed roadmap for a Group-wide systems upgrade(some of which has already been implemented in TalkTalk Business),improved data standards a

122、nd executive level reporting,and launched a service and billing app MyTalkTalk on both the iOS and Android platforms that has been adopted by 100,000 customers in just two months.These initiatives,together with the continuing benefits ofsome of ourlegacy programmes,delivered 14.5m ofsavings during F

123、Y14.Looking forward,we expect the four main programmes todrive a number of major initiatives in FY15 that will unlock further significant savings through FY16 and FY17.In terms of Getting Customers Current,we plan to sell ourOff-net IP Stream base,rebrand our AOL base andsignificantly reduce the num

124、ber of consumer and B2B tariffs.Oursystems transformation will focus on a significant enhancement of our CRM systems and upgrading our billing platform.We will be leveraging our customer data to enable better targeted marketing activity.There will be significant focus on improving our online custome

125、r journeys to further encourage our customers to self-serve to both reduce cost and improve customer experience.These initiatives are expected to contribute towards further cumulative savings of over 40m by FY17.5.SAC reduction from lower churn andfalling costsper addReducing SAC is one of the key d

126、rivers of achieving our 25%EBITDA margin target.We will reduce SAC through reducing churn,and therefore will need to recruit fewer new customers,and through reducing costs per add(CPA).We have made good progress on bothelements during FY14.We continued to make significant progress in two of the lead

127、ing indicators of churn during the second half of the year,with customer call volumes down 17.3%year on year and complaints to Ofcom down by 31%year on year.In addition,we have continued to see materially lower churn from customers taking additional products such as TV,mobile and fibre.The most impo

128、rtant effect is seen in ourtriple play customers whose early-life churn is around half that of dual play customers,with TV customers also reporting higher net promoter scores and lower intention to churn.We have begun to see the impact of these effects in our reported On-net churn which,having spike

129、d at 1.7%in Q2,subsequently fell to 1.6%in Q3 and 1.5%in Q4.As an illustration,reducing churn to 1.2%(the top end ofthe 0.8%1.2%range that mature triple play operators report)over thenext three years,primarily by driving TVpenetration across thebase and further improving customer service,would lead

130、toacumulative saving ofc.30m over the period through fewer grossadds.We have also made significant progress in reducing CPA.TVCPA fellduring the year as planned,with the launch ofour lower cost Essentials proposition and growing self-installation of the service.TVCPA across the second half of the ye

131、ar averaged c.130 compared to c.170 in the first half.Similarly,broadband CPA fell from c.190 inthe first half to c.180 in the second half as we increased online recruitment activity and reduced third party commissions.We expect these trends to continue through FY15 and beyond,with volume related sa

132、vings in hardware costs and increasing self-service driving acumulative saving in excess of 70m over the next three years.Chief Executive Officers statement continued Strategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial statementsOther information09TalkTa

133、lk Telecom Group PLC Annual Report 20146.Longer term opportunities for delivering sustainedgrowthIn April,we announced that we have joined forces with Sky and CityFibre to create a new company that will deliver ultra-fast broadband services in the city of York.The new joint venture company plans to

134、build a state of the art,city-wide,pure Fibre to the Premise(FTTP)network to deliver broadband speeds of 1 gigabit(1,000Mbps)direct to tens of thousands of homes and businesses in York,offering customers better quality and value than is currently available with Fibre to the Cabinet(FTTC).This will b

135、e the first time that a UK city has been connected with such high speeds on a city-wide basis and will give us the opportunity to fully test a new cost effective approach to building a viable pure fibre network,independent from BT Openreachs infrastructure.Our initial investment in the joint venture

136、,which will see us deploying to 20,000 homes,will be 5m.Subsequent investment to deploy across the remainder of the city will be of similar order of magnitude.We believe the economics of our approach to FTTP could prove highly attractive,with a combination of scale and low cost build technology deli

137、vering a significantly lower cost per home passed than for the current FTTC infrastructure.We expect to announce the process for selecting the next two citiesin due course,and are excited by the long term potential foranational roll-out.In conjunction with our plans to build a converged fixed-mobile

138、 offer using our 4G spectrum and femtocells,such a national roll-out would allow us to offer our customers seamless,unlimited and low cost connectivity intheir homes and businesses,and significant opportunities to drive growth over the longer term.Guidance FY15 Customer numbers We expect to deliver

139、modest growth in net adds in FY15 and asimilar number of TV net additions to FY14.Revenue,Overheads and Pre-SAC EBITDA We expect FY15 revenues to grow by at least 4%,driven by modest growth in customer numbers and ARPU,andgrowth in TalkTalk Business revenues.We expect overheads as a percentage of re

140、venue to fall below thelevel reported for FY13,driving Pre-SAC EBITDA margins ahead of those reported for FY13.SAC&Marketing and Headline EBITDA Based on current volume expectations and falling costs per add for both broadband and TV customers,we expect SAC and Marketing costs to fall year on year,d

141、riving strong growth in Headline EBITDA,with margin in the range of 16%17%.Net debt Capex is expected to be within our guideline of 6%ofrevenue and working capital is expected to show outflows similar to FY14 as we see continuing strong growth in FY15 whilst also reducing costs.Cash exceptional item

142、s related to Making TalkTalk Simpler are expected to be 20m25m.Dividend While we shall continue to invest in growth in FY15,we are confident of achieving our medium term financial targets and,accordingly,expect to grow the FY15 dividend by no less than 15%.FY15FY17In November 2013,we raised our FY14

143、FY17 revenue CAGR target from 2%to 4%and set our medium term EBITDA margin target of 25%to be achieved by FY17.Weremain confident that we are on track to achieve bothour revenue and margin targets.We expect revenue growth to be supported by modest growth in total customer numbers,ARPU progress from

144、disciplined pricing and promotional activity,and growing scale in TV,mobile,and fibre.We also expect TalkTalk Business revenues to grow at a faster rate than the Group average,driven by data products and new product innovation.Revenue growth is a key component of our EBITDA margin target.There are t

145、wo other components:SACandoverhead reduction.We expect to reduce SAC by requiring fewer gross adds tomaintain our customer base as a consequence of lower churn from growing TV,mobile and fibre penetration and better customer service,and by reducing costs per add as a result of increased levels of se

146、lf-service and,over time,the falling costs of technology to provide TV.Our Making TalkTalk Simpler programme is a key enabler of overhead reductions.This will make it simpler for our customers to engage with us,whether it is to buy products and services,to manage their bills or to resolve problems.T

147、o achieve this simplicity we will reduce the number of tariffs and access methods we use;reduce the complexity of our systems;make better use of data;and drive a self-service model.These initiatives are expected to deliver further savings in excess of40m by FY17.Dido HardingChief Executive Officer14

148、 May 2014NON-FINANCIAL METRICSFINANCIAL METRICS10TalkTalk Telecom Group PLC Annual Report 2014Measuring our performanceWe use the following key performance indicators(KPIs)to measure our progress against ourkey strategic priorities.PerformanceDefinition The net of new broadband customers joining Tal

149、kTalk and those leaving TalkTalkComment We have delivered positive net adds growth in FY14.This is in line with our stated objective of modest base growthOn-net churn(%)Broadband net adds(000)Performance1.51.61.71.41.61.61.51.5Definition The percentage of our On-net customer base leaving TalkTalkCom

150、ment After a spike in Q2,churn has continued to fall back to levels seen towards the end of FY13 consistent with improving leading indicators such as reduced call volumes and complaints to OfcomTV net adds(000)PerformanceDefinition The net of new customers joining TalkTalk TV and those leaving TalkT

151、alk TVComment Demand for TV accelerated this year with the launch of our Essentials proposition.The growth reflects the investment made in FY14Fibre and mobile net adds(000)PerformanceDefinition The net of new customers connecting to fibre and mobile and those disconnecting from fibre and mobileComm

152、ent Growth in fibre remains modestexcept where it can deliver transformational improvements in a customers broadband experience PerformanceCorporate revenue(m)Revenue growth(%)PerformancePre-SAC and Marketing EBITDA margin(%)PerformanceHeadline EBITDA margin(%)Performance1102013201420132014201320142

153、013201418517516716080150FibreMobile33.129.631.829.7-19-410108510Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4918782808080808217.017.815.59.0Definition Total revenue growth on same period in the prior yearComment Acceleration of revenue growth in FY14 driven by the upsell of our cu

154、stomers onto TV,mobile and fibre along with base growth and price inflationDefinition Revenue from our Corporate products including voice,data and carrier servicesComment Acceleration in Corporate revenues due to growth in dataproducts Definition Pre-SAC and Marketing EBITDA as a percentage of reven

155、ueComment Improvement in margin in H2 FY14 due to acceleration of revenue growth and reduction in opex.Temporary cost of scaling TV has led to a decline year on yearDefinition Headline EBITDA as a%ofrevenueComment Investment in scaling TV has ledto the reduction in EBITDA margin in FY14.Investment d

156、uring the year wasH1 weighted20122014201320142013201420132014H2H1H1H2H2H1H1H2Q1Q2Q3Q4Q1Q2Q3Q4H2H1H1H22013H2H124243427243235235.0-1.9-0.11.8-4.0-4.8303547221522217Strategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial statementsOther information11TalkTalk Te

157、lecom Group PLC Annual Report 2014OverviewWe delivered accelerating revenue momentum during the year as a result of investing in TV and growth in our Corporate data business.The benefit of this investment through H2 was an acceleration in revenue growth from 1.8%in H1 to 5.0%in H2,delivering the fir

158、st full year of year on year revenue growth since demerger of 3.4%.The full year EBITDA margin of 12.3%(FY13:17.4%)also reflects this investment in growth.The investment was weighted to the first half of the year,resulting in an H1 EBITDA margin of 9.0%.The second half of the year saw a significant

159、improvement in margin,to 15.5%,as the benefits of investment drove an acceleration in revenue growth and as we reduced SAC and operating expenses.The strength in revenue growth this year and the uplift in profitability in H2 underpins our confidence in achieving our medium term revenue target of 4%C

160、AGR and medium term EBITDA margin target of 25%.At the same time as investing to grow the business we have delivered on our dividend commitments.The proposed dividend for the full year FY14 represents growth of 15.4%year on year,in line with our commitment to grow the dividend for the year by a mini

161、mum of 15%.Headline financial information2014m2013mGrowth(decline)On-net1,2591,1707.6%Off-net128178(28.1)%Corporate3403225.6%Revenue1,7271,6703.4%Gross margin9589194.2%55.5%55.0%Operating expenses excluding amortisation and depreciation(427)(395)8.1%EBITDA pre-SAC and Marketing5315241.3%SAC and Mark

162、eting(318)(234)35.9%Headline EBITDA213290(26.6)%12.3%17.4%Exceptional items(22)9Statutory EBITDA191299(36.1)%Depreciation and amortisation(112)(102)9.8%Non-operating amortisation(21)(52)(59.6)%Share of joint ventures(7)(4)75.0%Operating profit51141(63.8)%Finance costs(20)(19)5.3%Profit before tax311

163、22(74.6)%Tax(3)(22)(86.4)%Profit after tax28100(72.0)%RevenueRevenue grew 3.4%to 1,727m(FY13:1,670m)and accelerated during the year as the benefits of our investment in growth during the first half materialised.Growth increased to 5.0%in H2 from 1.8%in H1,the fifth successive quarter of revenue grow

164、th.On-net revenues increased 7.6%to 1,259m(FY13:1,170m).Growth of 8.4%in the second half of the year(H1:6.8%)was driven by take up of TV,fibre and mobile,the increase in the size of the base,and price inflation.On-net customers,those who are on our network,are able to get the greatest value from us

165、by taking more of our products and are our most satisfied customers.The most significant driver of growth has been through take up of TV,with net adds increasing to360,000 in H2 versus 327,000 in H1.Corporate revenues delivered another strong year of growth,increasing 5.6%to 340m(FY13:322m).Growth a

166、ccelerated during the year,with 9.9%in the second half versus 1.3%in H1.This was driven by the accelerating growth in data product revenues,which increased from 27%year on year in the first half to 47%year on year in the second as aresult of significant new corporate customer wins during the year.Ov

167、erall data revenues grew 37.5%year on year.This has offset the continued decline in legacy voice revenues driven by a move from premium rate numbers,and the decrease in regulated call termination rates.Off-net revenues continued to decline this year as expected,reducing by 28%to 128m(FY13:178m)as a

168、result of the continued decline inour voice only and Off-net broadband bases.Chief Financial Officers statement12TalkTalk Telecom Group PLC Annual Report 2014Gross marginGross margin continued to expand during the year,increasing from 55.2%in H1 to 55.8%in H2,increasing our full year gross margin by

169、 50basis points to 55.5%(FY13:55.0%)and delivering a gross profit of958m(FY13:919m).This has been driven by the increased proportion of our customers onour network,the shift in our TalkTalk Business towards higher margin data products,the benefit of reduced regulatory pricing from 1April 2013,alongs

170、ide price inflation,partially offset by the impact ofdeclining high margin Consumer voice-only revenues,and the increase in lower margin fibre,TV content and wholesale services.Operating expensesOperating expenses increased to 427m(FY13:395m).The increase has been driven by the temporary operating c

171、osts of scaling TV,which principally comprised additional costs to serve that we do not expect to recur in FY15 as our new products become established.Incremental annualised benefits of 14.5m have been delivered in theyear from our operating efficiencies programme,Making TalkTalk Simpler.We have con

172、tinued to invest in our network capacity to provide the increased bandwidth and greater resiliency that our customers require.SAC and MarketingSAC and Marketing spend increased to 318m(FY13:234m)as we invested to deliver revenue growth.The investment was H1 weighted with a total spend of 174m,reduci

173、ng to 144m in H2.Spend on acquiring new TV customers of 53m was no more in H2 FY14 than in H2 FY13,despite the significantly higher volumes.Cost per add declined with the launch of Essentials TV and the move to self-install.Broadband cost per add also declined in H2 as more customers were acquired o

174、nline.EBITDAEBITDA decreased to 213m(FY13:290m)reflecting an EBITDA margin of 12.3%(FY13:17.4%).Incremental investment in growth of 112m impacted the profile through the year,with a 9.0%EBITDA margin in H1 improving significantly to 15.5%in H2 as the benefits of investment drove revenue growth and o

175、verall SAC spend declined.Exceptional itemsThe net exceptional charge in the year of 22m(FY13:credit 9m)comprised 20m of investment in our Making TalkTalk Simpler operating efficiency programme(FY13:7m),where activity increased during the course of the year as we began implementations,a charge of 5m

176、 arising from a change in allowable VAT treatment in relation to prompt payment discounts during the year,offset by the receipt of a credit of 3m(FY13:27m)from BT in settlement for the overcharging of wholesale Ethernet circuits.Statutory EBITDAStatutory EBITDA after exceptional items has decreased

177、year on year by 108m to 191m(FY13:299m),with the significant improvement from H1 of 68m to 123m in H2 driven by the improvement in Headline EBITDA,offset by an increase in our exceptional costs during the second half of the year as we increased activity on MakingTalkTalk Simpler and from the change

178、in VAT treatment relatingto prompt payment discounts.Depreciation and amortisationDepreciation and amortisation charges increased to 112m(FY13:102m)as a result of continued capital investment in the network and IT systems.Amortisation of acquisition intangiblesThe amortisation charged on acquisition

179、 intangibles decreased to 21m(FY13:52m)as the AOL customer base acquired in 2006 became fully amortised in FY13.Statutory profit before taxProfit before tax decreased 91m year on year to 31m(FY13:122m),reflecting the reduction in statutory EBITDA and the increase in depreciation,offset by a lower am

180、ortisation charge.Earnings per share20142013Growth(decline)Headline earnings(m)61132(53.8)%Basic EPS6.8p14.9p(54.4)%Diluted EPS6.6p14.0p(52.9)%Statutory earnings(m)28100(72.0)%Basic EPS3.1p11.3p(72.6)%Diluted EPS3.0p10.6p(71.7)%EPS on a Headline basis is provided alongside our statutory measures to

181、allow easier comparison year on year,due to the impact of exceptional items.Headline EPS decreased to 6.8p(FY13:14.9p),driven by the decrease in EBITDA as a result of investing in growth,with the profile during the year showing a significant improvement from 0.8p in H1 to 6.8p for the fullyear.The b

182、asic number of shares increased to 901m(FY13:884m),driven primarily by the 23.7m shares which were issued in November 2013.Statutory EPS decreased to 3.1p(FY13:11.3p).Cash flow and net debt20142013Growth(decline)Headline EBITDA213290(27)%Working capital(30)(11)100%Capex(107)(104)3%Operating free cas

183、h flow76175(57)%Exceptional items BES 327Exceptional items VAT(5)Exceptional items Operating effiencies(21)(19)11%Acquisitions and disposals(8)(4)100%Dividends paid(99)(87)14%Interest and tax(17)(16)6%Net purchase of own shares(33)(35)(6)%Net cash flow(104)41100%Opening net debt(393)(434)(9)%Closing

184、 net debt(497)(393)26%Chief Financial Officers statement continuedStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial statementsOther information13TalkTalk Telecom Group PLC Annual Report 2014Working capitalOur working capital outflow of 30m(FY13:11m)has

185、 been driven by the accelerated revenue growth in the second half of the year offset by an increase in current liabilities as a result of the weighting of capital investment and the Groups investment in growth.Capital expenditureCapital expenditure in the year of 107m(FY13:104m)represents 6.2%of rev

186、enue(FY13:6.2%).During the year we continued to invest in the network,rolling out to a further 303 exchanges,and increased network capacity to 1.2tb(FY13:0.9tb),alongside investing in IT systems to support continued growth.Exceptional itemsNet spend on exceptional items of 23m(FY13:inflow of 8m)was

187、driven by 21m of costs associated with our operating efficiencies programme,Making TalkTalk Simpler,including redundancies,site closure,consultancy and project team costs,and the 5m payment to HMRC in respect of the VAT treatment change during the year.Offsetting this was 3m received from BT in sett

188、lement for the overcharging of certain wholesale Ethernet circuits.AcquisitionsAcquisitions in the year of 8m(FY13:4m)represents a 5m investment in the YouView joint venture(FY13:6m)and 3m completing the acquisition of Future Office Communications Limited.DividendsOur dividend policy is to return to

189、 shareholders 50%of basic Headline earnings per share in the form of ordinary dividends.As a result of the impact on Headline earnings of our investment in TV,we committed to dividend growth at a minimum of 15%for FY14.Dividends of 99m paid in the year(FY13:87m)comprised the final dividend for FY13

190、of 6.95p and the interim dividend for FY14 of 4.0p.The Board has declared a final dividend of 8.0p which will be paid,subject to approval at the AGM on 23 July 2014 for shareholders on the register at 4 July 2014.The total declared dividend for the year was 12.0p,which provides dividend cover of 0.6

191、 times(FY13:1.4 times).Share purchasesIn September 2013,the second tranche of both the TalkTalk Group Value Enhancement Scheme and the Carphone Warehouse TalkTalk Group Value Enhancement Scheme(together referred to as VES schemes)vested.As part of this,we purchased the participants VES shares in ret

192、urn for a combination of the issue of new PLC shares and cash resulting in a cash outflow of 15m(FY13:35m).Share repurchases totalling 24m(10 million shares)were made during the year(FY13:nil)by the Employee Benefit Trust in order tocover anticipated future options exercises.Offsetting this,the trus

193、t received 6m on the exercise of options by employees.Net debtNet debt in the year increased by 104m(FY13:reduction of 41m)to497m(FY13:393m).Our net cash outflow of 104m(FY13:inflow of 41m)was H1 weighted as we invested for growth and paid the final dividend for FY13,driving an outflow in H1 of 80m.

194、The H2 outflow of 24m was driven by the improvement in operating free cashflow as a result of improved EBITDA.Taxation and treasury20142013HeadlineStatutoryHeadlineStatutoryOperating profit9451184141Finance costs(20)(20)(19)(19)Profit before tax7431165122Tax(13)(3)(33)(22)Profit after tax6128132100H

195、eadline tax rate18%20%Finance costsNet finance costs of 20m(FY13:19m)comprised the blended interest charge on debt of 3.39%(FY13:3.58%)alongside the amortisation charge in relation to facility fees of 3m(FY13:3m).Net interest paid in the year increased to 17m(FY13:16m),principally driven by higher i

196、nterest payments as a result of higher average net debt.TaxationOur effective Headline tax rate for the year was 18%(FY13:20%),representing a tax charge of 13m(FY13:33m).The tax charge for the year on statutory earnings was 3m(FY13:22m).The principal differences between the tax charge and the standa

197、rd rate of corporation tax are the recognition of deferred tax assets on a further 45m tranche of acquired Tiscali losses,offset by the impact of a 3%reduction in the statutory tax rate(21%from 1 April 2014 and 20%from 1 April 2015 previously 23%).The rate reduction has had the effect of the revalua

198、tion of our deferred tax assets downwards and has therefore resulted in a 16m charge through the income statement.We have made no corporation tax payments during the year(FY13:nil).FundingOperations are financed with committed bank facilities,retained profits and equity.During the year,we made use o

199、f overdrafts and uncommitted facilities to assist with working capital management.Subsidiaries are funded centrally,with an emphasis on efficient cashmanagement.Funding comprises a 560m revolving credit facility,which matures inNovember 2015,a 30m bilateral loan facility that matures in March2015,an

200、d a 75m term loan that matures in November 2015.The terms of our facilities are similar and the covenants are identical.At 31 March 2014,490m(FY13:400m)had been drawn down under these facilities.We are in compliance with the covenant conditions on all funding facilities at the year end.It is our pol

201、icy to refinance our facilities significantly in advance of maturity dates,and we have commenced re-financing discussions ahead of the expiry of current facilities.14TalkTalk Telecom Group PLC Annual Report 2014Movement in reservesThe purchase of shares by the Employee Share Ownership Trust and the

202、exercise of options by employees resulted in a net movement in reserves of 30m.PolicyWe are exposed to limited cross border transactional commitments and these are hedged using forward currency contracts.Interest rate risk is managed by the use of interest rate swaps.The Group aims to fix the intere

203、st cost on a proportion of its net debt over a weighted average period,as agreed from time to time.The Group Treasury function operates within the framework approved by the Board,inlinewith best practice,to ensure effective management of our interest and foreign exchange risk.Capital structureThe Bo

204、ard reviews the capital structure of the Group on an annual basis.Net debt/EBITDA at 31 March 2014 was 2.3 times(FY13:1.4 times),driven primarily by the Groups investment in growth and an increased dividend pay-out.The Board is confident that this will fall over the medium term and that such a reduc

205、tion will make it appropriate toconsider a return of excess capital to shareholders in order tomaintain an efficient capital structure.Accounting developmentsThe adoption of accounting standards in the year has had no material effect on the financial statements.Going concernThe Directors have acknow

206、ledged the guidance Going Concern and Liquidity Risk:Guidance for Directors of UK Companies 2009,published by the FRC in October 2009.Our business activities,together with the factors likely to affect ourfuture development,performance and position are set out intheBusiness Review.Our financial posit

207、ion,cash and borrowing facilities are described within this Chief Financial Officers statement.In addition,note 19 in the financial statements describes how we manage financial risk,including foreign exchange risk,interest risk andliquidity risk.The breadth of our base,our value for money propositio

208、n,continuing improvements in operating efficiency and the largest unbundled network in the UK mean that the Directors are confident in our ability to continue to compete effectively in the UK telecoms sector.We have 665m of committed credit facilities and as at 31 March 2014 the headroom on these fa

209、cilities was 175m.Our forecasts and projections,taking in to account reasonably possible changes in trading performance,indicate that there is sufficient headroom toourfacilities and that this,together with our market positioning,means that we are well placed to manage our business risks successfull

210、y and have adequate resources to continue in operational existence forthe foreseeable future.The Directors have therefore adopted thegoing concern basis of accounting when preparing the consolidated financial statements.Stephen MakinChief Financial Officer14 May 2014Chief Financial Officers statemen

211、t continuedStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial statementsOther information15TalkTalk Telecom Group PLC Annual Report 2014We have an ambitious approach to engaging with our employees.Wehaveprotected anddeveloped our uniqueculture,expressed

212、 in our mission to Make Britain better off and the values by which we do this,ourBrighter Basics Customer,Innovate,Value,People andCommunity PeopleIn FY14 we again saw a significant increase in employee engagement,akeycontributor to our success as a business.Leadership developmentWe recognise that t

213、he quality of our managers is vital toour future success and we have continued our commitment to leadership development through our ongoing programme Leading a Brighter Business.A total of 550 of our managers have now completed fourpartsof the modular programme and are demonstrating measurable impro

214、vements in leadership capability.The programme willcontinue in FY15.Employee engagement Our engagement survey and action plan enable us to listen and respond to our employees and help us to create and sustain an environment where they are motivated,stay with us and enjoy working for TalkTalk.Followi

215、ng our first survey in December 2011,we committed to specific actions that would enable higherlevels of employee engagement.Theannual survey wasrepeated in January 2014 with greater participation(92%vs 89%in FY13)and a 6%increase in the overallengagement score.Employee performance and developmentWe

216、have continued to build toolstosupport employee development.TalkTalkU isouronline hub for all learning and development and includes extensive face-to-face and eLearning options.It has nowhad over 30,000 visits from our employees.Our annual performance management process has continued to provide a me

217、chanism todrive achievement with allemployees participating in a performance related variable bonus pay scheme.Employee recognitionRecognising employees who drive our culture by actively demonstrating our Brighter Basics is extremely important to us.Our OntheSpot award scheme enables senior managers

218、 to give instant recognition to employees,while our highly popular TalkTalk Heroes scheme allows employees to nominate colleagues for their outstanding contribution in a widerange of areas,from charity work to customer engagement.Employee benefits and share ownershipWe offer a comprehensive range of

219、 flexible employee benefits,which we are continually improving,so employees can make choices to suit their lifestyles.Share ownership is an important part of our culture.InSeptember 2012,we issued every employee,who wasnot currently part of another share option plan,with aone-off gift of 1,000 nil p

220、riced shareoptions through the All Employee Share Option Award.This isin addition tothe annual TalkTalk SAYE Scheme,inwhich over 50%of our employees participate.We believe in our employees being users of,and advocates for,ourproducts.In FY14,we continued to offer free home phone,broadband,fibreand T

221、V,as well as half-price mobile packages.Employee consultation One Voice forum One Voice is a consultation andinformation forum consisting of 80nominated employee representatives,management and members of our People Services team.The forum meets regularly todiscuss how the key issues we face as a bus

222、iness might affect ouremployees and to discuss relevant employee matters.Employee communicationWe communicate with all employees on a weekly basis via TeamTalk,anewsletter that incorporates various updates from across the business.The weekly blog from Dido Harding continues tobepopular with employee

223、s,allowing forcommunication and feedback on topical issues inthe Group.In June 2013,we brought every UK-based employee together for a oneday conference,following which 87%of attendees said that they had a better understanding of TalkTalks strategic priorities.Wehave repeated this event in May 2014.T

224、he WireIn FY15,we will be introducing a new intranet site,which we see as a critical communication and collaboration tool for the business.It will enable colleagues to find each other easily,keep up to date on Company news and work together by sharing documents in dedicated workspaces.Gender and div

225、ersityWe benefit enormously from our diverse workforce;our people comefrom different backgrounds and cultures,creating a vibrant working environment that thrives on new ideas and fresh thinking.The importance of diversity,equality and non-discrimination is highlighted in our Equality Policy and unde

226、rpinned by our values,which guide the respectful way we behave towards each other.Abreakdown by gender of the number of persons who were Directorsof the Company,senior managers and other employees asat 31 March 2014 is set out below.6823Senior management team82Directors1,458761All TalkTalk employees

227、 Male Female16TalkTalk Telecom Group PLC Annual Report 2014Effective risk management is essential to the continuedsuccessful delivery of our strategyPrincipal risks and uncertaintiesIn common with other organisations,we are affected by a number of risks,not all of which are in our control.Some risks

228、,such as UKmacroeconomic factors,are likely to affect the performance of UK businesses generally,while others are particular to our operations.Thissection sets out the material risks to the Group and how we seek to mitigate them in the day to day running of our business.Potential impact:Increased co

229、mpetition in the UK phone,broadbandand TV(triple play)market may impact financial performance.Mitigation:We regularly monitor the product offerings of our key competitors as well as the latest market and consumer trends.This ensures we identify opportunities to strengthen our competitive position by

230、 broadening andenriching the products and services we offer and by finding ways to deliver greater value for our customers.In FY14,TalkTalk has continued tobuild on the successful launch of itsTV service aspartof the YouView joint venture,having acquired a TV customer base ofclose to1 million by the

231、 end of FY14.TheConsumer business also has a sizeable mobile base of c.280,000 customers through its Mobile Virtual Network Operator proposition.These product offerings enable the business to compete more effectively with other triple and quad play providers in the marketplace.1 Competitive environm

232、entPotential impact:Changes in BTs regulated wholesale prices can significantly impact the Groups performance.Mitigation:We have continued to actively participate in Ofcoms consultations impacting on wholesale prices,especially the Fixed Access Market Review and Local Loop Unbundling/Wholesale Line

233、Rental Charge Control.In particular,we have provided Ofcom with evidence,argument and expert opinion to support the case that competition,consumers interests and the development of a mass market for super-fast broadband will be best served by reductions in wholesale prices or,in the case of fibre,aw

234、ider margin between wholesale and retail prices.Inaddition,the Group continues to work with Openreach to develop fibre products that incur lower set up and provisioning costs,which will allow wholesale prices toreduce further.2 Regulatory environmentPotential impact:Failure to operate effective proc

235、esses and controls acrossthe Group may have an adverse impact onthe services we deliver to ourcustomers,leading to churn and non-compliance with regulatory requirements.The fines that Ofcom canimpose on the Group and the associated negative publicity couldadversely impact our brand andreputation.Mit

236、igation:There has been continued focus this year on improving processes and controls and clarifying lines of accountability both in first line operations and in our second line assurance function.There has been significant progress withdelivering improvements in our complaints handling processes dur

237、ing the period.This has resulted in a significant reduction in the overall volume of Ofcom complaints from our customers and in our market share of complaints for the sector.The Groups Regulatory Compliance Committee has continued toconvene throughout the year to monitor the mitigation of operationa

238、l risks,which could give rise to customer complaints and regulatory breaches.TheDirector ofQuality&Compliance has chaired a weekly operational Compliance Committee meeting throughout the year,attended by senior executives.3 Regulatory compliancePotential impact:We continue toreview,rationalise and i

239、ntegrate ourITinfrastructure to simplify the wayinwhich we operate our business.This could have an adverse impact on theservices we provide to our customers and on our financial performance.Mitigation:The Executive Committee regularly monitors progress of significant change programmes and the associ

240、ated risks.The Group Change Forum,comprised of senior managers,is responsible for establishing and monitoring adherence to the governance framework within which change is managed.4 Change managementStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovernanceFinancial stat

241、ementsOther information17TalkTalk Telecom Group PLC Annual Report 2014Potential impact:Failure to prevent theloss or exploitation of personally identifiable or commercially sensitive information could result in loss of competitive advantage,regulatory fines,damage to the brand and ultimately churn.M

242、itigation:The Group continually reviews and seeks best practice externalguidance on its data security capability and invests in and implements new solutions,both to prevent and detect security breaches.In FY14,there have been initiatives including increased hardware and removable media encryption,fu

243、rther enhancements tothe Groups data loss prevention capability and roll-out of advanced solutions to protect customer credit card details.The Group has also adopted a Ten Steps to Cyber Security programme,to increase protection against intrusion and attack;improve detection and management of breach

244、es;and increase protection against loss of personal data.The Data Governance Council meets monthly to review progress against the risk mitigation plans aligned to the Ten Steps to Cyber Security.5 Data securityPotential impact:Failure to maintain sufficient and acceptable levels of network and syste

245、m performance for the Groups Consumer and Business customers could lead to complaints and ultimately churn.Mitigation:There has been significant focus during the year on ensuring optimum levels of capacity are delivered and maintained to ensure no congestion isexperienced by our customers.Welaunched

246、 a Technical Excellence programme,which has delivered a number of significant improvements in the infrastructures ongoing growth andmanagement.6 Network stability and resiliencePotential impact:The business has anumber of critical suppliers,the performance of which could significantly affect the bus

247、inesss operational and financial performance.TalkTalk relies on a number of key suppliers to provide network,equipment and services.A failure in their people,systems or processes or a failure to act in an ethically responsible manner could significantly affect TalkTalks reputation and its ability to

248、 deliver products and services to its customers.Mitigation:We continue to review and improve our processes and controls around supplier selection and in-life risk management.This helps to reduce the likelihood and potential impact of business interruption due to supplier failure.7 Key suppliersPoten

249、tial impact:Failure to deliver aseamless and positive end-to-end experience of TalkTalks products and services and to deal with customers queries and complaints effectively could damage our brand and lead to churn.Mitigation:We are committed to continually reviewing and improving the level and quali

250、ty of customer service we provide.This financial year,we have delivered a number of initiatives to i)reduce the likelihood of customers experiencing service issues,ii)improve the ability of our customers to self-help via the launch of a new Online Service Centre and associated diagnostic tools and i

251、ii)deliver better training and tools toour Customer Service teams so that queries and complaints can be handled more effectively.8 Customer experiencePotential impact:Now that TalkTalk has successfully established its TV proposition,the business must ensure it can continue to build scale effectively

252、.Failure to closely monitor our customers experience of our TV service and constantly improve service performance and the quality and value of our content offering could adversely impact our brand and reputation,leading to churn.Mitigation:In FY14,we launched a lower priced TV proposition for our Es

253、sentials customers.As functionality grows,we continue to focus on maintaining the speed and performance of the set-top box through an extensive customer feedback programme,benchmarking tests and field research.We continually develop and renew our partnerships with over 40content providers to ensure

254、a broad range of family entertainment as we build scale.In addition,our YouView partnership has been extended for another five years.Finally,we continue toimprove the customer experience our self-install proposition is now our customers preferred set-up method and we have also developed propositions

255、 and services for customers requiring wirelessconnectivity.9 Scaling TV18TalkTalk Telecom Group PLC Annual Report 2014Our Community Brighter Basic sets out our belief that its not just about the money.We believe that innovative digital communications can improve our society and environment and make

256、Britain better off.Our strategy is to help make our community a brighter place by motivating our people,our customers and supply partners,andbycreating innovative products and services that empower ourcustomers.Child internet safetyHouseholds and businesses are connecting ever more devices to the in

257、ternet,and we want to empower our customers to protect themselves from security risks and inappropriate content.We offer HomeSafe,which automatically protects every device on a home broadband connection,free with all our Consumer broadband packages.HomeSafe is built into our network and prevents use

258、rs from reaching sites in categories they deem inappropriate.It is also capable of automatically blocking access to sites that are believed to harbour viruses or other security threats.HomeSafe was the first of its kind in the UK and has now been activated by over 1 million TalkTalk customers.In FY1

259、3,we tailored a similar service specifically for Business customers called WorkSafe.This service is free with all Business Broadband and Superpowered Fibre Business Broadband services.As well as offering our customers the safety they deserve online,we have also trained colleagues on internet safety

260、so they can help their local communities.We supported Safer Internet Day through our partnerships with F-Secure,the UK Council for Child Internet Safety and Mumsnet,and we hosted internet safety workshops at various UKOnline Centres in London and Irlam.In FY14,we announced that we are joining forces

261、 with other ISPs to create and fund a new multi-million pound campaign aimed at parents,to raise awareness of how to tackle issues including cyber-bullying and access to adult content online.This new joint venture,Internet Matters,will also inform parents about whole-home parental controls like Home

262、Safe,helping them make the right choices for their household.Digital inclusionLaunching the TalkTalk Digital Heroes FoundationTalkTalk passionately believes that the internet makes Britain better off and that no one should be excluded from all the benefits that it hasto offer.Since 2011,TalkTalk has

263、 been supporting and celebrating various projects,charities and individuals who are using digital technology at a very local level to make a positive social impact.In November 2013,TalkTalk decided to take this one step further andlaunched the TalkTalk Digital Heroes Foundation.Through the Foundatio

264、n,we aim to better support TalkTalks community initiatives,including the annual TalkTalk Digital Heroes Awards,our annual Digital Heroes Auction as well as two annually elected hero projects.We will also engage our people in supporting the work of the Foundation through volunteering opportunities as

265、 part of our Give Something Back employee scheme.TalkTalk Digital Heroes Awards 2013We continue to run our flagship annual awards in partnership with charity Citizens Online and the Daily Mirror.The awards aim to reward and celebrate individuals,nominated by their communities,who use digital technol

266、ogy in the most socially positive way at a very local level.This year we awarded over 70,000 in grants and prizes to twelve regional winners.The judges were our Chairman,Sir Charles Dunstone,the UKs Digital Champion,Baroness Lane Fox,and the editor of the Daily Mirror,LloydEmbley.They crowned Scott

267、Freeman of the Cybersmile Foundation as the national TalkTalk Digital Hero 2013 and awarded him a 10,000 prize.Scott was recognised for his outstanding work developing the Cybersmile Foundation,the UKs first dedicated cyber-bullying charity.The category of Young Digital Hero,open to anyone under 18,

268、was won by Chelsi Jade Beale.This important and coveted prize awarded Chelsi 4,000 funding for her project,which provides computer training and support to elderly residents living in sheltered accommodation.Ambitious about Autism This year we continued our support for long term partner Ambitious abo

269、ut Autism,the national charity for children and young people with autism.They provide services,raise awareness and understanding,and campaign for change.Talk about Autism is their safe,friendly,online community where affected families can share their experiences,get support and help others to unders

270、tand the condition.We raise funds for this worthy cause and its online platform through the TalkTalk Digital Heroes Auction every November,where FY14 saw atremendous 300,000 generated(FY13:220,000).Apps for GoodOne of our Digital Heroes Foundation hero projects chosen this year is the charity Apps f

271、or Good,which works with schools to teach young people to create mobile and social apps to solve problems that matter to them.Like us,they believe in the power of using the internet to make our communities a better place.As part of our partnership,we fund four schools around our sites to run the App

272、s for Good course and we sponsor an awards category in their annual awards.Over 6,000 Apps for Good students enter to compete in six categories sponsored by TalkTalk and others including Barclaycard and BlackBerry.Code ClubCode Club,our second annual hero project,connects primary schools with volunt

273、eers who want to run a weekly after school coding club for nine and ten year olds.Code Club provides the lesson structures for the volunteers and the aim is that after two years of the course,every child will be able to build their own website or app themselves.Claire Sutcliffe,the co-founder of Cod

274、e Club,was our national Digital Heroes Award winner in 2012.TalkTalk Digital ChampionsThe Digital Champions programme was launched last year as part of our wider employee community scheme,Give Something Back,which gives all employees paid time off to volunteer and fundraise for good causes.Working w

275、ith UK Online Centres this year,we have trained over 50 employees across the UK to become TalkTalk Digital Champions.Our Digital Champions are matched with their local UK Online Centre,so they can pass on their basic online skills to help more people get online and enjoy the benefits of the internet

276、.Since the programme was launched we have now fulfilled over 60 volunteering opportunities in UK Online Centres across Britain.Environmental sustainabilityGreenhouse gas emissionsThis section includes our mandatory reporting of greenhouse gas emissions pursuant to the Companies Act 2006(Strategic Re

277、port and Directors Report)Regulations 2013(the Regulations)from activities for which the Group is responsible.Helping make Britain better off through digital inclusion,environmental sustainability and stronger communitiesSustainability reviewStrategic report:OverviewStrategic report:StrategyStrategi

278、c report:PerformanceGovernanceFinancial statementsOther information19TalkTalk Telecom Group PLC Annual Report 2014Environmental sustainability continuedReporting yearOur reporting year is the same as our fiscal year,being 1 April to 31March.This greenhouse gas reporting year has been established to

279、align with our financial reporting year.Global greenhouse gas emissions dataFor the year ended 31 March 2014:Emissions from:Tonnes of CO2eCombustion of fuel and operation of facilities1,999Electricity,heat,steam and cooling purchased for own use15,711Companys chosen intensity measurement:Emissions r

280、eported above,normalised to tonnes of CO2e per average gigabit of bandwidth*(tCO2e/Gb)24*Average gigabit of bandwidth for the year ended 31 March 2014 is 746Gb/s.Organisation boundary and responsibilityWe report our emissions data using an operational control approach to define our organisational bo

281、undary,which meets the definitional requirements of the Regulations in respect of those emissions for which we are responsible.We have reported on all material emission sources,which we deem ourselves to be responsible for.These sources align with our operational control and financial control bounda

282、ries.We do not have responsibility for any emission sources that are beyond the boundary of our operational control.MethodologyWe have used the main requirements of the Department for Environment Food&Rural Affairs(Defra)updated greenhouse gas reporting guidance,Environmental Reporting Guidelines,is

283、sued by Defra in June 2013;data gathered to fulfil our requirements under theCRC Energy Efficiency Scheme;and emission factors from the Department of Energy&Climate Change/Defras 2013 update.The Groups journey to improve carbon efficiency began in 2011 when our Chief Executive Officer set our object

284、ive:to reduce our CO2 emissions intensity,in tonnes of CO2 equivalent per gigabit(tCO2e/Gb),by 25%by April 2021,relative to FY11.The scope of emissions captured by this objective is more wide ranging than those required to be disclosed as part of the Regulations.The scope is extended to include CO2

285、emissions from all sources including those for which the Group is not directly responsible(including,for example,commercial flights).Our internal tracking also shows that our approach is working,as despite growing the network in line with customer usage and volume,we have improved energy intensity f

286、or the third year running:tCO2e/Gb201420132011Energy(1),transport(2)and hotels91145317(1)Primarily electricity,but also some natural gas and back up generator fuel.(2)Includes rail,air and car travel.100%renewable electricityAll of the units of electricity consumed by our NGN,offices and UK call cen

287、tres come from renewable sources.Sustainable forestryWe display FSC and PEFC certification marks on the envelopes of our consumer direct marketing and bills,recognising our decision to source paper from certified sustainable sources.In fact,where possible,we replace printed materials with an online

288、equivalent.ThisAnnual Report is printed on certified 100%recycled paper.Community investmentDuring the year,the Group was responsible for generating 640,800(2013:517,700)of income for registered charities,including 340,800 ofdirect cash donations(2013:283,200).The Group did not make any political do

289、nations inthecurrent or prior year.We focus primarily on providing time and money via engagement with three key stakeholder groups:Engaging with our supply partners In November 2013,TalkTalk hosted our fourth annual fundraising auction on behalf of Ambitious about Autism.This year we re-focused as t

290、heTalkTalk Digital Heroes Auction:an evening to celebrate TalkTalk Digital Heroes and benefit Ambitious about Autisms exciting digital project,TalkTalk about Autism to align with our overarching sustainability strategy.Our supply partners were invited to attend,with many donating unique lots for the

291、 auction.Engaging with our customersWe continued three customer driven cause related fundraising initiatives established last year.The first was our commitment to donate to Ambitious about Autism for every call made to our UK directory enquiries number:118 111.Our second initiative continued to rewa

292、rd customers who return to us routers that have been diagnosed as end of life.We pay for the postage,refurbish or safely recycle the equipment and then donate 1 to charity on their behalf.Our third initiative is a donation to the charity Cool Earth when customers added our unique Global Minutes Boos

293、t option to theirphone package.Cool Earth is the only charity dedicated toprotecting endangered rainforests through engagement withindigenous communities,one of the most effective ways tominimise CO2 reaching our atmosphere.Engaging with our colleaguesThe Groups Give Something Back initiative includ

294、es Company donations for our people who raise funds for a registered charity.Hundreds of our people took part in fundraising over the year.Total CO2e by emission type Combustion of fuel and operation of facilities Electricity,heat,steam andcooling purchased forown use11%89%We retained both our FTSE4

295、Good Index membership and Carbon Saver Gold StandardcertificationOther achievements inthe year20TalkTalk Telecom Group PLC Annual Report 2014Board of Directors and advisorsChairman:Sir Charles DunstoneSir Charles is the founder of Carphone Warehouse and created TalkTalk in 2002.He was appointed Chai

296、rman of TalkTalk in 2010.Sir Charles has directed the developmentof TalkTalk to become one of the leading fixed line telecommunication businesses in the UK.Sir Charles is Chairman of the Princes Trust,YouView TV Limited and Carphone Warehouse Group PLC.Executives:Dido HardingDido has been Chief Exec

297、utive Officer of TalkTalk since February 2010.Prior to that,Dido was Sainsburys Convenience Director,having been appointed to Sainsburys operating board in March 2008.Dido joined Sainsburys from Tesco PLC where she held a variety of senior roles.Dido is a Non-Executive Director of The British Land C

298、ompany PLC and is a Trustee of Go On UK.Stephen MakinStephen joined the Board as Chief Financial Officer of TalkTalk in 2013.Stephen is a Chartered Management Accountant with over 15 years of experience in senior finance roles,most recently at Shop Direct where he was Chief Financial Officer.Prior t

299、o that,he was Chief Executive Officer and Chief Financial Officer of London listed Umbro PLC,until its acquisition by Nike in 2008.Stephen spent the early part of his career at Asda,where he held a series of senior finance positions.Non-Executives:John GildersleeveJohn joined the Board in January 20

300、10.He is currently Chairman of The British Land Company PLC and deputy Chairman of Carphone Warehouse Group PLC.Previously he was an Executive Director of Tesco PLC.Ian WestIan joined the Board in February 2011.He has been involved in the TMT sector for around 25 years as a manager,director and inve

301、stor.Ian held numerous roles at British Sky Broadcasting over eleven years,latterly as Managing Director of the SkyDigital subscription business.Ian is also currently an investor in a range of smalland medium sized businesses and co-founded Top Up TV in 2003.Ianwasasupervisory board member of Kabel

302、Deutschland.John AllwoodJohn joined the Board of TalkTalk in 2010.He has spent his entire career in media and telecoms and held a number of senior executive positions in these sectors including Chief Executive of Orange UK,between 2000 and 2004.Prior to that John spent eight years at Mirror Group PL

303、C as Finance Director and Chief Executive.After leaving Orange he was Managing Director of Telegraph Media Group,and Chief Operating Officer and Finance Director of Mecom Group PLC.John is Non-Executive Director of Carphone Warehouse Group PLC and a Governor ofExeter University.Brent HobermanBrent j

304、oined the Board of TalkTalk in January 2010.Brent co-founded in 1998,and was its Chief Executive Officer until it was sold in 2005.He hassubsequently founded and is Chairman of mydeco and ,and alsoco-founded PROfounders and Founders Forum.Brent is a Director of easyC and is a Non-Executive Director

305、of Guardian Media Group,Time Out Group and Shazam.Sir Howard StringerSir Howard joined the Board in July 2012.Until June 2013,he was Chairman of theBoard of Directors of Sony Corporation.Prior to his appointment as Chairman,Sir Howard was President and CEO of Sony Corporation.Before Sony Corporation

306、,Sir Howard had a distinguished 30 year career as a journalist,producer and executive at CBS Inc.After seven years as President of CBS Inc,Sir Howard was Chairman and CEO of TELETV,the media and technology company formed by Bell Atlantic NYNEX and Pacific Telesis.James PowellJames joined the Board i

307、n July 2012.James is Chief Technology Officer of Thomson Reuters.In his 14 years at Reuters,James held a number of senior leadership positions including CTO for Enterprise;CTO and Global Head ofProductDevelopment;Head of Technology Strategy;and CTO for the ReutersFinancial division.He has also held

308、senior leadership positions at SolaceSystems,Citadel Investment Group and TIBCO Finance Technology.Joanna ShieldsJoanna joined the Board in May 2013.She is a Non-Executive Director of London Stock Exchange Group PLC and Chief Executive of Tech City UK and Business Ambassador for Digital Industries.S

309、he previously held senior executive roles at Facebook,RealNetworks,Google and Bebo.AdvisorsCompany SecretaryTim MorrisAdvisorsPrincipal bankers:Royal Bank of Scotland Group PLC DNB Bank ASA Barclays PLC HSBC Bank PLC Lloyds TSB Bank PLCCorporate brokers:Credit Suisse(Europe)Limited 1 Cabot Square,Lo

310、ndon E14 4QJBarclays Capital 5 The North Colonnade Canary Wharf,London E14 4BBRegistrars:Equiniti Limited Aspect House,Spencer Road Lancing,West Sussex BN99 6DAAuditor:Deloitte LLP 2 New Street Square London EC4A 3BZStrategic report:OverviewStrategic report:StrategyStrategic report:PerformanceGovern

311、anceFinancial statementsOther information21TalkTalk Telecom Group PLC Annual Report 2014Corporate governanceIntroductionThe Board is committed to the highest standards of corporate governance and in accordance with the Listing Rules of the UK Listing Authority,the Board confirms that the Company has

312、 throughout the year and as at the date of this Annual Report,complied with the provisions set out in the UK Corporate Governance Code(the Code).This section of the Annual Report,together with the Strategic Report,provides details of howthe Company has applied the principles and complied with the pr

313、ovisions of the Code.In particular,this section summarises the Boards compliance with the five key principles oftheCode,namely:leadership,effectiveness,remuneration,accountability and relations with shareholders.Board balance and independenceThe Board has ten members,seven of whom,excluding the Chai

314、rman,are considered independent Non-Executive Directors.These are JohnGildersleeve(Deputy Chairman),Ian West(Senior Independent Director),John Allwood,Brent Hoberman,Sir Howard Stringer,JamesPowell and Joanna Shields.Therefore,at least half of the Board(excluding the Chairman)areindependent and,notw

315、ithstanding the changes to the Board composition during the period,this has been the situation for all of FY14.The following changes to the Board have been announced during theyear:Amy Stirling stepped down as Chief Financial Officer on 31May 2013 and was replaced by Stephen Makin with effect from t

316、he same date.Joanna Shields was appointed as a Non-Executive Director on 16May2013.David Goldie stepped down on 27 September 2013.TheCompany did not use an external search consultant in the appointment of Non-Executive Directors during the period.The Chairman and Executive Directors have service con

317、tracts that can be terminated by either the Company or the Director on twelve months notice.The Non-Executive Directors are expected to serve for an initial period of three years,albeit that either party may terminate the appointment on three months notice with no compensation forloss ofoffice.These

318、 initial three year periods commenced on 20 January 2010,with the following exceptions:IanWest(8February 2011);SirHowardStringer(26 July 2012);JamesPowell(26July 2012);andJoanna Shields(16May 2013).AllDirectors in any event stand for re-election every year.LeadershipHow the Board operatesThe Board h

319、as reserved certain matters,and delegated others,to the Groups Executive Committee,which comprises Dido Harding(Chief Executive Officer),Stephen Makin(Chief Financial Officer)and other senior employees drawn from across the Group.Reserved matters include approving the Groups strategy,annual budgets

320、and other longer term planning.Number of meetings attended Board AuditRemunerationNominationNumber of meetings6371DirectorBoard AuditRemunerationNominationSir Charles Dunstone,Chairman6Dido Harding6Amy Stirling(1)Stephen Makin(1)6David Goldie(2)2John Gildersleeve6371Ian West(3)6271John Allwood631Bre

321、nt Hoberman(4)66Sir Howard Stringer(5)53James Powell63Joanna Shields(6)6(1)Amy Stirling stepped down as a Director and was replaced by Stephen Makin on 31 May 2013.(2)David Goldie was unable to attend one Board meeting due to a prior business commitment.David Goldie stepped down as a Director on 27

322、September 2013.(3)Ian West was unable to attend one Audit Committee meeting due to a prior business commitment.(4)Brent Hoberman was unable to attend one Remuneration Committee meeting due to a prior business commitment.(5)Sir Howard Stringer was unable to attend one Board Meeting and four Remunerat

323、ion Committee meetings due to personal reasons.(6)Joanna Shields was appointed on 16 May 2013.22TalkTalk Telecom Group PLC Annual Report 2014Corporate governance continuedLeadership continuedHow the Board operates continuedAs well as the formal meetings during the year,the Board met at other times a

324、s appropriate for approving certain announcements to shareholders.It is important to the Board that Non-Executive Directors have theability to influence and challenge appropriately.To this end all Non-Executive Directors are given a thorough induction to the Group and take priority in Board discussi

325、ons.All Directors receive papers in advance of meetings.They also receive regular reports and members of the Groups executive team are invited to present at Board meetings so that the Non-Executive Directors keep abreast of developments inthe Group.The Chairman meets regularly with just the Non-Exec

326、utive Directors prior to every other Board meeting.This ensures that any concerns can be raised and discussed outside of formal Board meetings.TheSenior Independent Director also attends these sessions whereitis possible,if required,to discuss any matters with the otherindependent Non-Executive Dire

327、ctors.The Senior Independent Director also takes responsibility for performance evaluation of the Board;succession planning for theChairman;and chairing Non-Executive Director only meetings.Inaddition,he is an alternative point of contact for shareholders intheevent that normal executive channels ar

328、e not appropriate.Details ofthe Senior Independent Directors role are set out on theGroups website().It is important to the Group that all Directors understand external views of the Group.To this end regular reports are provided to the Board by the Groups Investor Relations Director,covering broker

329、reports and the output of meetings with significant shareholders.Asstated below,the Board has also delegated certain matters toanumber of Board Committees.EffectivenessPerformance evaluation and continued developmentEach Board member has been subject to an internal performance review during the year

330、,where the balance of skills,knowledge and experience of each Director was reviewed.This was undertaken byeach member of the Board completing detailed questionnaires.The results of these were analysed by the Chairman,Senior Independent Director and the Board as a whole against the broad criteria of

331、overall Board effectiveness and individual contributions.As part of the performance review the ability of each Director,inparticular the Non-Executive Directors,to demonstrate the required time commitment to the role was assessed.As a result of this performance evaluation the Chairman confirms that

332、each of the Directors seeking re-election at the AGM continues to be effective and has demonstrated the appropriate commitment to therole.The Senior Independent Director also met with the other Non-Executive Directors to assess the Chairmans effectiveness,taking into account the views of Executive D

333、irectors.In compliance with the requirements of the Code,NJMD Corporate Services Limited(NJMD)was instructed by the Company to conduct an externally facilitated performance evaluation of the Board during the year.NJMD has no connection with the Company other than a contract to conduct the evaluation and a contract with one of its Directors to provide domestic internet services.The key objectives o