TIDMTALK
RNS Number : 7213I
TalkTalk Telecom Group PLC
21 June 2017
RNS Announcement
21 June 2017
For Immediate Release
TalkTalk Telecom Group PLC (the "Company")
Publication of Annual Report 2017 & Notice of Annual General
Meeting
The following documents have been posted or otherwise made
available to shareholders:
-- Annual Report 2017
-- Notice of 2017 Annual General Meeting
-- Form of Proxy for the 2017 Annual General Meeting
This announcement replaces the Company's announcement of 14 June
2016 in respect of the same subject matter.
In accordance with Listing Rule 9.6.1 a copy of each of these
documents has been uploaded to the National Storage Mechanism and
will be available for viewing shortly at:
http://www.morningstar.co.uk/uk/NSM
These documents are also available to view and download from the
Company's website at: http://www.talktalkgroup.com
Copies of the Annual Report 2017 and Notice of the 2017 Annual
General Meeting may also be obtained from:
Company Secretary
11 Evesham Street
London
W11 4AR
Extracts from the Annual Report 2017 in compliance with the
Disclosure and Transparency Rule 6.3.5 ("DTR 6.3.5")
The information below, which is extracted from the Annual Report
2017, is included solely for the purpose of complying with DTR
6.3.5. It should be read in conjunction with the Company's
Preliminary results announcement for the 12 months to 31 March 2017
issued on 10 May 2017 (at:
https://www.talktalkgroup.com/dam/jcr:813a729f-d203-47c8-9e47-35788d8425f6/TalkTalk%20Group%20FY17%20ARA.pdf
)
Together these constitute the material required by DTR 6.3.5 to
be communicated to the media in unedited full text through a
Regulatory Information Service. This material is not a substitute
for reading the full Annual Report 2017. All page numbers and
cross-references in the extracted information below refer to page
numbers in the Annual Report 2017.
For further information please contact:
Tim Morris, Company Secretary +44 (0)203 417 1000
For media enquiries, Isobel Bradshaw +44 (0) 20 3417 1027 / 07584 708351
Directors' Responsibilities
The Directors' responsibility statement below has been prepared
in conjunction with the Annual Report 2017, whereas this
dissemination document contains extracts from the Annual Report
2017 to comply with DTR 6.3.5.
Sir Charles Dunstone - Executive Chairman
Iain Torrens - Chief Financial Officer
Tristia Harrison - Chief Executive Officer
Charles Bligh - Chief Operating Officer
John Gildersleeve - Deputy Chairman
Ian West - Senior Independent Director
John Allwood - Non-Executive Director
Cath Keers - Non-Executive Director
Sir Howard Stringer - Non-Executive Director
Roger Taylor - Non-Executive Director
James Powell - Non-Executive Director
We confirm to the best of our knowledge:
1. The financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
2. The management report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
Principal risks and uncertainties
The Board has identified the following principal risks and
uncertainties to the Group, which the Group seeks to proactively
manage and monitor on an ongoing basis. The details of these
principal risks, and the controls in place for mitigating them, are
outlined below in no particular order of severity. In October 2016,
TalkTalk revealed simplified new branding reflecting its mission to
deliver simple, affordable, reliable and fair connectivity for
everyone. The principal risks have been identified and assessed
with consideration to the impact on the Group's ability to deliver
its strategy and therefore its mission.
The Group's risk management framework facilitates continuous and
ongoing discussion of risks and associated risk appetite to ensure
the appropriate focus is placed on mitigating principal risks. The
Board will continue to assess the principal risks and uncertainties
faced by the Group and will update the risks and mitigation plans
accordingly.
Customer trust and brand reputation
Risk and impact
Customer confidence and trust are critical to TalkTalk's
business, and the Company's operating approach always seeks to do
what is right for the customer. However, as a value for money
connectivity provider in the market, there is a risk that TalkTalk
is perceived as a 'budget' provider, associated with price rather
than quality and service.
Business and industry challenges including cyber threats and
scam calls also present a risk to brand reputation and trust.
Failure to maintain trust, improve brand reputation and offer a
positive customer experience may result in increased churn,
performance decline and loss of investor confidence.
Mitigation
TalkTalk remains confident of the role for a well-regarded value
operator in the market and is committed to delivering a positive
end-to-end customer experience. The MTTS programme has delivered
improved customer experience through better quality and
availability of products and services. The remaining activities in
the programme have transitioned into business as usual with an
ongoing focus and commitment to continuous improvement of the
customer experience.
The organisation also continues to invest in network and systems
to support the provision of reliable products to customers as well
as ongoing investment in and focus on security (see data and cyber
security risk). In addition, TalkTalk continues to support
customers in dealing with the industry--wide issue of scam calls.
Initiatives such as the 'Beat the Scammers' campaign are designed
to help customers protect themselves from the threat of scams.
These activities have contributed to mitigating the risk and
driving an improving net risk position.
TalkTalk will continue to focus on existing as well as new
customers, guided by the four key principles we believe are
critical to being a value for money connectivity provider -
simplicity, affordability, reliability and fairness.
People
Risk and impact
TalkTalk recognises employees as a key asset and aspires to be a
'Great Place to Work' for all colleagues. We understand the
increasing challenges and importance in the market of attracting
and retaining the right talent to deliver current performance and
future growth aspirations. Failure to attract and retain required
talent and competencies may negatively impact our ability to
deliver on performance targets and strategic objectives.
TalkTalk has undertaken an extensive programme to understand and
implement the behavioural and values based changes required for the
Company to evolve from a start-up culture to a fully mature
business. Failure to successfully bring about this change may have
a negative impact on the Company's reputational and commercial
outlook.
In addition, the change in leadership in 2017 will need to be
carefully managed to ensure colleague engagement and more mature
business culture are maintained during this period.
Mitigation
Structured talent forecasting and assessment processes are in
place to ensure required talent is proactively understood. A people
scorecard is also in place for ongoing monitoring and oversight of
people risk and, where required, actions to further mitigate risk
exposures are identified and implemented. In addition, Group-wide
activities are carried out to assess the level of employee
engagement and insight gained is used to develop action plans to
ensure a highly engaged and motivated workforce is maintained. In
addition, the organisation has defined values which have been
recently reviewed to include a focus on commitment and
delivery.
The Executive Committee assesses the engagement level of the
workforce and, in addition, performs an annual assessment of talent
at senior management level to ensure the right leadership is in
place for motivating, inspiring and leading the workforce to
deliver on the corporate objectives.
A plan is in place to manage the leadership transition and the
activities described above will continue to be employed to
understand and maintain colleague engagement during this
period.
Competitive landscape
Risk and impact
TalkTalk is established as a value for money connectivity
provider in the fast growing quad play market. The value
proposition is a key part of the business model and to date has
provided competitor differentiation. Over the last year there has
been significant activity particularly in the retail competitive
landscape which presents continuously increasing gross risk. There
is a risk that this competitive backdrop makes it difficult for
TalkTalk to maintain its value credentials.
Mitigation
A clear pricing strategy is in place with ongoing monitoring of
pricing position and value proposition. The strategy is reviewed to
ensure it remains competitive and continues to support our position
as a value for money provider against the changing competitor
activity landscape. As a result, in FY17 TalkTalk launched its FLPP
with strong customer take-up. FLPP offers both new and existing
customers the opportunity to lock in their price for the term of
their contract guaranteeing no mid-contract price rises. The
introduction of FLPP forms part of the risk mitigation and driving
an improved net risk position.
In addition, competitor pricing activity is monitored to
understand customer and market impact and plans are revisited
accordingly if necessary. TalkTalk uses customer communications to
promote the value for money connectivity provider message and is
committed to helping customers understand the best positioned
package to meet their needs.
Changing market structure
Risk and impact
The UK telecommunications market structure is currently
experiencing significant change. Both the regulator and the
Government have acknowledged a pressing need to promote competition
and drive investment across the market, and TalkTalk is well placed
to participate in the opportunities that may result.
Ofcom made a series of announcements designed to improve the
performance of BT Openreach and make it easier for rivals to invest
in alternative networks. These included an agreement with BT to
legally separate Openreach in response to the regulator's Digital
Communications Review; proposed higher service standards for
Openreach; proposals to make it simpler for BT's rivals to use
existing Openreach infrastructure when building networks; and
proposed lower Openreach wholesale broadband prices. Ofcom also
sets out proposals for automatic compensation to retail customers,
which will impact all providers.
There is a risk that such significant change to the structure of
the industry could create opportunities for regulatory gaming or
fail to deliver the positive customer outcomes TalkTalk and Ofcom
expect.
Mitigation
TalkTalk has been a vocal advocate of competition and is well
placed to benefit from an increasing trend toward a more
pro-competition regulatory framework. This poses a significant risk
to incumbent players in the market, whilst presenting potentially
valuable opportunities for challengers. The business is actively
engaging with the necessary external stakeholders to share views
and attempt to deliver the best market and customer outcomes, as
well as to proactively understand and respond to the opportunities
and challenges presented by structured market changes.
Regulatory compliance
Risk and impact
The telecommunications sector is highly regulated, with
compliance over key customer focused regulations monitored by the
governing body, Ofcom. Another of the key governing bodies relevant
to the company is the Information Commissioner's Office (ICO). The
regulations and laws that TalkTalk must comply with, including
Ofcom General Conditions and data legislation including the Data
Protection Act, are designed to support customers and the
regulatory landscape is increasingly more demanding as it seeks to
further support customers. Failure to comply with regulatory
obligations may result in negative customer impact and/or
significant regulatory fines as experienced by TalkTalk following
the October 2015 cyber attack.
Mitigation
There has been continued focus 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 with delivering improvements in our
complaint handling processes during the period and there is
continued focus on reducing complaint volumes.
While other matters that took place before the cyber attack
remain under investigation by the ICO, since the cyber attack
TalkTalk has made significant investments in driving more robust
compliance and controls in the area of data protection.
The Group's Regulatory Compliance Committee, a subcommittee of
the Board, has continued to convene throughout the year to monitor
the mitigation of operational risks which could give rise to
customer complaints and regulatory breaches. The Group Legal
Counsel and Company Secretary has chaired weekly compliance
meetings throughout the year, attended by senior management.
There will be a significant amount of activity for the Group in
FY18 as it prepares for the introduction of the new General Data
Protection Regulation (GDPR) in May 2018 and delivers changes in
response to Ofcom's review and updates to various General
Conditions. The progress of this activity will be governed by the
existing Compliance Committee and meetings to ensure effective
delivery.
Data and cyber security
Risk and impact
Security of customer, commercial and colleague data poses
increasing reputational and financial risk to all businesses and
the gross risk remains ever increasing. In particular, the ongoing
rise in cyber and data related crime presents a significant
challenge in terms of securing data and systems against attack.
TalkTalk receives most of its revenue through card transactions and
like many businesses utilises third parties as part of doing
business. TalkTalk recognises that failure to successfully secure
data and systems against attack may have a material impact on brand
reputation and financial performance. Other associated costs may
also be incurred, including potential regulatory fines.
Mitigation
Since the cyber attack in October 2015, TalkTalk continues to
invest in and focus on actively implementing an ongoing programme
to build security capability. The organisation's security strategy
is centred around four strategic themes:
-- Secure by Design;
-- Secure in Operations;
-- Secure Third Parties; and
-- Secure Culture.
The strategy is underpinned by the NIST Cyber Security Framework
and is positioned to continuously improve the security maturity of
the organisation, as well as maintaining and updating ongoing
activities (such as monitoring activities, vulnerability scanning,
penetration testing and the data loss prevention solution) to
ensure they remain fit for purpose.
Since the cyber attack, significant investment has been made in
building out a bigger security function and capability including
establishing an in-house Security Operations Centre, bringing
currently outsourced monitoring activities in house, which is due
to go live in autumn 2017. Investment also continues to be made in
security related resource with the hire of a permanent Chief
Security Officer who joined the business in July 2016 and the Group
Data Protection Officer who joined in December 2016. The security
function will work closely with the Group Data Protection Officer
over the next twelve months to support delivery of the new data
protection requirements under the General Data Protection
Regulation. These activities and investments are supporting
management of the risk and improving net risk trajectory.
In addition to the above, a robust governance structure remains
in place with the Security Committee meeting every two months. This
is a subcommittee of the Board, chaired by the Chief Executive,
with senior executive representation and including a Non-Executive
Board member.
Resilience and business continuity
Risk and impact
TalkTalk is reliant on its infrastructure as well as key third
party suppliers and partners in order to deliver quality products
and services to its customers. Network, system or third party
failure could result in significant disruption to services or
business processes, which may have a negative impact on customers
and therefore damage customer loyalty or drive complaints. It is
therefore important to establish resilience in the network and
require resilience from our third parties and partners. It is also
noted that in the event of an incident, TalkTalk must be able to
respond in an efficient and effective manner in order to minimise
impact on customers and performance.
Mitigation
Network resilience is assessed and monitored on a regular basis
and, over the last year, TalkTalk has continued to deliver network
improvements supporting greater resilience. Continuous monitoring
of network availability is also in place to ensure any issues are
identified in a timely manner. Where an incident does occur, a
robust incident response process is in place and exercised to
ensure effective response, followed by a problem management review
that is linked to service improvement. The Group recognises that
network resilience is also reliant on the dependency on BTOR for
the last mile and as such Ofcom focus on BTOR processes, systems
and controls should help mitigate the risk.
Other prioritised critical processes, systems and third parties
are identified and business owners are assigned accountability for
assessing resilience and implementing business continuity plans to
enable continuity of operations in the event of an incident.
TalkTalk also continues to invest in supporting appropriate
resilience on critical systems taking a risk-based approach. For
third parties, the relationship owners are assigned accountability
for requiring critical third parties to have adequate business
continuity plans in place and obtaining third party assurance that
their plans have been reviewed and tested on a regular basis.
Financial
Risk and impact
As with many organisations, TalkTalk must actively manage
liquidity risk. Other key financial risks include availability of
long term funding, the ability to comply with covenants and other
terms of funding arrangements, and foreign exchange and interest
rate risk.
In addition, there are a number of changes to accounting
standards that will be adopted in FY19, in particular IFRS 15 and
IFRS 16.
Mitigation
The Group Treasury function is responsible for managing the
Group's liquid resources and managing compliance with the terms of
funding agreements. Policies and operating procedures are in place
and these are regularly reviewed to ensure they remain appropriate
for the business. In addition, the Executive Committee and the
Board oversee the liquidity and funding position of the Group on a
regular basis and are required to provide approval on major and
significant funding decisions.
The Group Treasury function is also responsible for managing
foreign exchange and interest rate risks in line with the Group's
policy.
TalkTalk has established a change project to deliver the
required changes to accounting standards over accounting for
revenue from contracts with customers (IFRS 15) and lease
accounting (IFRS 16).
Change delivery and execution
Risk and impact
Delivery of performance objectives and development of the
business is reliant on the ability to successfully deliver
innovation and other operational changes required to support growth
and performance. Failure to effectively deliver significant change
programmes and associated benefits critical to TalkTalk's strategy
would result in an inability to deliver performance objectives and
limit
TalkTalk's competitive position in the market.
Mitigation
Following the implementation of a formal change framework for
significant change projects in FY16, TalkTalk has continued to
embed the framework more broadly for all change projects in FY17.
The framework is intended to ensure a desired level of quality is
reached throughout the lifecycle of each project and has supported
successful delivery of key change programmes in FY17, including the
introduction of FLPP.
The Group Change function remains a key control for facilitating
prioritisation discussions to ensure people and financial resources
are appropriately engaged, allocated and focused. Performance
measures for key change projects are defined and monitored and
regularly reviewed by Group Change. Monitoring and oversight of key
change projects occurs at both the business unit leadership team
level and by the Executive Committee on a regular basis, enabling
real time consideration of the potential impact of other
operational and strategic activities on change projects.
This information is provided by RNS
The company news service from the London Stock Exchange
END
NOAPGUGUQUPMUBG
(END) Dow Jones Newswires
June 21, 2017 05:03 ET (09:03 GMT)
Talktalk Telecom (LSE:TALK)
Historical Stock Chart
From Apr 2024 to May 2024
Talktalk Telecom (LSE:TALK)
Historical Stock Chart
From May 2023 to May 2024