Annual General Meeting Year to March 2016 20 th July 2016 1 We - - PowerPoint PPT Presentation

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Annual General Meeting Year to March 2016

20thJuly 2016

We made considerable progress towards our goal of being the Value for Money provider in our sector: › Revenue up 2.4%, EBITDA up by 6.1% › Customers took more products: revenue generating units up 254,000 But the year was dominated by the cyber attack we suffered on October 21st › Took proactive decision to warn all customers immediately › 157k directly affected › Offered all our customers free credit monitoring and a free upgrade › £42m exceptional costs from cyber attack Business has recovered strongly since and we have learnt many important lessons that are enabling us to improve the business going forward

Strong recovery in Q4 post cyber attack › Lowest ever churn at 1.3% › Flat net adds › Focus on existing customers › Making TalkTalk Simpler benefits coming through › Strongest quarter of RGU growth +148k (90k mobile net adds, 72k Fibre net adds, -14k TV net adds) FY EBITDA £260m in line with guidance; material step up in H2 margin to 18.4% Net debt /EBITDA reduced to 2.6x (H1: 2.8x) Dividend per share up 15% to 15.87p in line with commitment

£76m £110m

Y-O-Y Revenue Growth

£110m £90m

Dividend per share

+15%

FY15 FY16 13.8p 15.9p

EBITDA

FY15

Y-O-Y Revenue Growth

FY16 H1 H2 FY £1,795m £1,838m £871m £912m £926m £924m +4.7% +0.2% +2.4% FY15 FY16 H1 H2 FY £245m £260m £110m £90m £170m £135m

• 18.2%

+25.9% +6.1%

Net Debt / EBITDA

H1 Year End 2.8x 2.6x

5 Lessons from last 6 months Implications for FY17 and beyond Customers valued our open and honest approach during the cyber attack:

• Vast majority (73%) believe we looked

after them

• 14% (489k) took free upgrade
• Brand trust (47%) and consideration

(57%) higher than they were before the cyber attack Our relentless focus on improving customer experience is paying off:

• Satisfaction growing
• Calls to contact centres down
• New systems working well

Value for money Quad-play is working If we look after our customers they return that loyalty in spades Customers know that we save them money, and protecting that position is always important Making TalkTalk Simpler is key to transforming from cheap to value for money:

• Starting to deliver meaningful benefits
• Critical to long term future

More work to do to simplify products and propositions to help customers make informed choices

• Abandoning line rental
• Taking learnings from free upgrade offer

into ongoing marketing

£76m £110m

119 129 (70) 148 Q1'16 Q2'16 Q3'16 Q4'16

Revenue Generating Units Added (k) Satisfaction with Customer Service

* Adjusted for bad debt disconnects (72k)

69% 72% 72% 72% 74% 69% 66% 64% 64% 70% 71% 73% May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 1.3% 1.4% 1.3% 1.3% 1.4% 1.6% 2.1% 1.3% Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16

Lowest ever monthly churn

34 34 41 37 36 38 35 37 35 30 36 30 45 47 Nov-14 Nov-15

TalkTalk is a brand I trust (%)

Resilient revenue performance (flat year on year) despite lower customer base Strong growth in Corporate revenue (+7.5%) and Data (+38.5%) Healthy growth in Revenue Generating Unit penetration (+6.8% year on year), driven by mobile and fibre On-net churn reduced year on year and stable quarter on quarter at 1.36% York fibre to the premise trial on track to deliver proof of concept Reiterating all FY financial guidance, including EBITDA of £320m-£360m

Key Customer Deliverables

Continue to improve our customers experience through our Making TalkTalk Simpler Program Learn from the “Free Upgrade” and simplify our products and promotions Improve our mobile proposition by moving from Voda to O2 and launching 4G Continue growing our quad play products and B2B data business Continue to rollout UFO in York

Key Financial Deliverables

Modest revenue growth EBITDA £320m-£360m Dividend at least in line with FY16 and covered by Free Cashflow Net debt at year end broadly similar to that at year end FY16 Net Debt / EBITDA expected to continue to fall towards 2x target