Preliminary results for the 12 months to 31 March 2012 (FY12)

  • 20% Headline EBITDA margin target achieved in H2, ahead of schedule
  • 33% growth in Headline EPS and Operating free cash flow
  • 61% growth in full year DPS to 9.0p - to grow by at least 15% in FY13 and FY14
  • Q4 net customer losses reduced to 13,000; 100k net fully unbundled customers added
  • Medium term EBITDA margin target raised to 25%; 2% revenue CAGR maintained

FY 2012 financial headlines

  • Headline EBITDA(1) up 18.1% to £326m (FY11: £276m)
  • Underlying EBITDA(2) up 14.9% to £317m; underlying margin 18.8%; (FY11:15.6%)
  • Operating free cash flow(3) up 32.7% to £207m (FY11: £156m)
  • Total revenue £1,687m (FY11: £1,765m); H2 flat on H1
  • Statutory profit before tax £127m (FY11: £57m)
  • Headline earnings per share(1) up 33.3% to 18.0 pence (FY11: 13.5 pence)
  • Final dividend 6.4 pence per share, taking full year dividend to 9.0 pence (+61%)

(1) Excludes exceptional charges and tax credit and amortisation of acquisition intangibles – see Note 3.
(2) Excludes £9m profit on disposal of freehold property assets.
(3) Operating free cash flow is stated before exceptional costs

Q4 operating metrics
Net adds -13,000 (Q3: -43,000)   Total revenue £421m (Q3: £422m)
Fully unbundled net adds 100k (Q3: 63k)   Broadband revenue £313m (Q3: £312m)
On-net customers 92% (Q3: 90%)   Broadband ARPU £25.6 (Q3: £25.3m)
Plus customers 1m (Q3: 883,000)      

Dido Harding, Chief Executive of TalkTalk commented:

We have delivered our 20% EBITDA margin target significantly ahead of schedule. Our focus on improving customer service has driven a real improvement in customer numbers and we are on track to deliver total customer growth in the current quarter. Our strategy has delivered a materially more profitable and stable customer base and a leaner, more efficient cost structure, giving us a strong platform from which to invest in growth opportunities such as YouView.

We are underscoring our confidence in the long term prospects for the business by raising our medium term EBITDA margin target to 25% and a commitment to grow the FY13 and FY14 dividend by at least 15% per annum, while at the same time investing in growth.

We will achieve our growth and margin targets through continued expansion of our network, further operating efficiencies, adding more services to become a genuine quad play, growing scale in our business to business operations and increasing our sales of superfast broadband. We believe the successful implementation of this strategy, supported by our financial strength, will deliver significant customer and shareholder value.

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