Preliminary results for the year ended 31 March 2017 (FY17)

  • Headline EBITDA (1) +17% to £304m

  • Customer base returned to growth in Q4 (+22k) with positive net adds in Retail and Wholesale

  • Q4 churn reduced to 1.40% (Q3: 1.64%)

  • Over 1m customers now on new plans with 59% of on-net Retail base in-contract

  • Strong growth in TalkTalk Business Ethernet base (+8k) fuelling Data revenue growth

  • New operational structure and fewer, simpler priorities to drive growth

  • Review of mobile strategy to create alternative less capital intensive offering

  • Leverage reduced to 2.57x, new debt facilities secured, and dividend reset.

FY17 Financial Highlights

  • Total revenue -3% to £1,783m (FY16: £1,835m); On-net -4% to £1,342m (FY16: £1,399m)

  • Corporate revenues (ex-Carrier) + 4%; Data +31%, Legacy Voice -18%

  • FY On-net base -49k, with growth in Q4 of 22k

  • £34m of benefits delivered from MTTS; cumulative £87m delivered

  • Statutory Profit Before Tax £70m (FY16: £14m); statutory EPS 6.1p (FY16: 0.2p)

  • Final dividend 5.0p (FY16: 10.58p), total FY17 dividend 10.29p (FY16: 15.87p)

Looking forward

  • New price plans and falling churn underpin confidence in driving customer base growth

  • Retail base growth and continuing growth in TTB to drive return to growth in Group revenues

  • FY18 headline EBITDA(1) expected to be £270m-£300m as a result of SAC investment to drive growth

  • FY18 Dividend reset to 7.5p; growth expected to resume once business returns to earnings growth and leverage has reduced towards 2.0x

(1) Headline EBITDA is defined in Note 1, and reconciled to Statutory measures in Note 7.

Charles Dunstone, Executive Chairman of TalkTalk commented:

“I’m enjoying having a more ‘hands on role’ at TalkTalk and I’m very excited about the progress we have already made and the prospects for the business. The promotion of Tristia Harrison and Charles Bligh to their new positions has created a clear and simpler operating structure and I can already see the difference they are making. My focus for the company is growth, cash generation and profit – in that order. We will be smart about how we invest, focusing on our fixed network, avoiding other capital intensive distractions. In light of these new priorities, we have also decided to reset the dividend as we look to deliver growth and strong sustainable shareholder returns over the long term.”

Tristia Harrison, Chief Executive of TalkTalk commented:

“The last 12 months have seen the business lay down solid foundations from which to drive sustainable base and revenue growth in both our Retail and B2B businesses. This will allow us to build upon our core strength as a value for money fixed line connectivity provider as we focus on delivering growth, improving our customers’ experience, investing in and future-proofing our fixed network, and driving operational efficiencies across the business, whilst being more disciplined and smarter with our assets.”

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