annual report 2014
talktalk telecom group plc
talktalk t elecom group plc  annual report 2014 our year at a glance
we are the uk’s leading value 
for money provider of fixed line 
broadband voice telephony 
mobile and television services
our strategy is delivering
“ we are demonstrating real growth from our investment in tv and with 
over 1 million customers today this is a scale business that is growing 
faster than all the other uk tv operators put together“
– dido harding ceo
in this report
strategic report overview
our year at a glance ifc
chairman’s statement 01
financial highlights 01
strategic report strategy
our business model 02
uk telecoms regulation 04
our strategy 05
chief executive officer’s statement 06
measuring our performance 10
strategic report performance
chief financial officer’s statement 11
people 15
principal risks and uncertainties 16
sustainability review 18
governance
board of directors and advisors 20
corporate governance 21
directors’ remuneration report 26
directors’ report 40
directors’ responsibilities statement 41
financial statements
independent auditor’s report 42
group income statement 46
group statement of comprehensive income 47
group statement of changes in equity 48
group balance sheet 49
group cash flow statement 50
notes to the consolidated financial statements  51
company balance sheet 80
company reconciliation of movement 
in shareholders’ funds 81
notes to the company financial statements 82
other information
five year record unaudited 86
glossary 87
financial calendar 88
talktalk telecom group plc annual report 2014 talktalk telecom group plc annual report 2014
01
chairman’s statement
strategic report overview strategic report strategy strategic report performance governance financial statements other information
this has been a year of significant investment in growth for 
talktalk as a result of which we have ended the year with 
nearly one million 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 the 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 800p that in addition 
to our interim dividend of 400p gives a total payout 
for the year of 1200p
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 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 dunstone
chairman
financial highlights
statutory earnings per share p
2014
2013
31
113
73
headline revenue £m
2014
2013
1727
1670
34
headline ebitda £m
2014
2013
213
290
27
dividend per share p
2014
2013
120
104
 154 02
talktalk telecom group plc annual report 2014
read more about our 
extensive network at 
wwwtalktalkgroupcom
our network coverage
over the past eight years we have built one of the uk’s largest broadband and voice customer bases attracting those 
looking 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 network
our business model is based on leveraging our extensive and costefficient nextgeneration network assets in which 
we have invested c£1bn to date to offer consumers and businesses value for money products and services
our business model
at the heart of our network is the state of the art unbundling 
equipment dslams msans and ethernet switches that 
we have installed in over 3000 bt exchanges – 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 highspeed highcapacity allip national 
backbone that enables efficient and flexible routing of voice 
and data traffic 
access to the copper infrastructure that connects uk 
premises to bt’s nationwide exchange footprint is price 
regulated by ofcom while we lease the fibre backhaul 
to connect exchanges to our core network and dark 
fibre that comprises our collector ring and core network 
on very competitive terms from multiple providers 
this combination 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 competitors
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 allip 
nature of our 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 
50–100 times at falling marginal operating costs this will 
allow us to support growing customer demand for high 
speeds and greater data consumption with longer term 
opportunities to build fibre to the premise fttp and 
converged fixedmobile products 
our network gives us a strong value for 
money advantage
we are able to offer our consumer and business customers 
services at significantly lower cost than our cable and 
incumbent competitors this is because we operate the 
uk’s most extensive nextgeneration network ngn which 
is comprised of our own advanced highly costeffective 
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 covers approximately 95 of uk homes operating 
in 3027 exchanges these exchanges are connected via 
our own highspeed highcapacity allip national network 
enabling us to carry all of our customers’ voice and data 
traffic efficiently and cost effectively our customers 
benefit through optimised broadband speeds and quality 
as well as access to our growing range of lower cost value 
add products and services for example our allip 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 exchange
msan and dslams supplying 
adsl fttc efm and  
ethernet access services
copper
optical
exchange backhaul
nx1gbps optical circuits 
supplied by btor and vm 
collector node
extend reach of 
core network
 
 
or
netﬂ ix
google
akamai
caching
caches deployed in 
our edge sites serving 
400gbps at peak
collector nodes
dark ﬁ bre 40gbps and 
10 gbps optical circuits 
supplied by geo btw bt
zayo hibernia vm and sse
core optical networks
two separate national networks  
with 8tbps huawei and 
16tbps inﬁ nera of capacity strategic report overview strategic report strategy strategic report performance governance financial statements other information
03
talktalk telecom group plc annual report 2014
services 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 
services such as our groundbreaking homesafe™ our 
unique networkbased 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 which 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 catchup and ondemand services and 
an open platform for future application driven innovation 
our tv offering has enjoyed strong growth during fy14 
as it 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 launched the uk’s 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 competitive prices in the 
market for both simonly and handsets as a result 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 one of the fastest growing 
b2b telecom businesses in the uk we believe there is 
significant opportunity to use our network to grow all 
our next generation products within talktalk business 
in january 2013 we began offering an ethernet over fibre 
service which delivers highspeed symmetrical services 
at a significantly lower price point than traditional ethernet 
technologies we also launched an 80mbps product 
with generous 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 businesses 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 100000 post office 
customers onto our network was a major milestone for 
the business
market overview
household internet access continued to rise in 2013 with eight in ten households now having broadband access 
the average uk household owns three different types of internetenabled device and 86 have at least one this is 
driving significant growth in people accessing the internet from mobileenabled devices significant scope for growth 
remains however amongst specific demographic groups 20 of households remain offline rising to nearly 50 of 
those aged 65–74 and twothirds 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 followed 
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 connection 
bskyb’s 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 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 in a strong position and will only 
improve further as we grow our tv and mobile bases 
onnet base million
2014
2013
4060
3870
onnet customers 
2014
2013
97
95
our customers
we are the uk’s leading value for money provider of fixed line broadband voice telephony television and mobile 
services we serve four million residential and business customers under the talktalk and talktalk business brands 04
talktalk telecom group plc annual report 2014
uk telecoms regulation
the uk telecoms market is regulated by ofcom which sets the charges and other terms for wholesale access 
to infrastructure and associated services provided by bt openreach openreach where openreach is deemed 
to enjoy ‘significant market power’ ofcom’s objective is to ensure that these wholesale products enable effective 
retail competition in the market so that consumers and businesses benefit from a choice of services and retail 
service providers compliance with regulation is monitored internally by the regulatory compliance committee 
as detailed 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 homes gea access to bt’s next generation access 
ngafibre 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 
particularly in the case of llu gives us very reasonable certainty 
of costs going forward
llu charge control 
talktalk appealed ofcom’s 2012 llu charge control decision 
as did openreach which resulted in a £112 reduction in the 
201314 mpf rental charge 
this charge control ended on 31 march 2014 in late may 2014 
ofcom is expected to publish for notification to the european 
commission the new charge control for the period to 
31 march 2017 the current proposals are for an annual price 
change of between cpi 425 and cpi 300
next generation access 
openreach provides wholesale access to its nga infrastructure 
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 
at present neither the price of gea nor the margin between 
the gea price and bt’s retail price are regulated in late may 2014 
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 
its wholesale price for nga gea and its retail prices 
the threshold for ofcom for opening an investigation is 
if there are ‘reasonable grounds for suspecting the ‘act’ 
has been infringed’ talktalk expects a decision on the future 
approach for this investigation later in 2014
ethernet dispute appeal
in december 2012 ofcom published its determination to 
resolve a dispute regarding openreach’s 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 others 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 performance
talktalk strives to work closely with openreach to deliver the 
best service for our customers for example 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 dispute
ofcom has resolved a dispute regarding whether openreach 
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 framework
the government is currently considering whether to introduce 
changes to the framework of how ofcom decisions can be 
appealed and in particular whether the current ‘meritsbased’ 
standard should be changed
european commission single market regulation
the ec and european parliament is currently considering 
the single market draft regulation if introduced this could 
have a number of impacts on the mobile and fixed 
telecommunications market the most relevant area for 
talktalk is the socalled ‘net neutrality’ regulation
new communications bill 
the government had previously stated it was its intention to 
introduce a new communications 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 
britain’s digital platform for growth’ setting out areas for action 
digital economy 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 approaches 
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 
and would have required communications providers to 
retain more communications data than they currently do so 
in april 2013 the government announced it was dropping the 
communications data bill in the queen’s speech in may 2013 
it was stated that the government would bring further alternative 
proposals to help manage the problem of matching internet 
protocol addresses at this time nothing further has been published 
voluntary measures on parental controls
following 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 talktalk’s homesafe™ service he also 
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 providers 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 material for 
talktalk are
several other areas 
of current or 
potential legislation 
are significant for 
talktalk
glossary
c p i    consumer price 
index
fttc fibre to the cabinet
gea  generic ethernet 
access
isp   internet service 
provider
llu  local loop 
unbundling
mpf full unbundling
nga  next generation 
access
ngn  next generation 
network
rpi  retail price index
smpf partial unbundling
wlr  wholesale 
line rental strategic report overview strategic report strategy strategic report performance governance financial statements other information
05
talktalk telecom group plc annual report 2014
our strategy
our corporate strategy revolves 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 six main principles
1  leveraging the talktalk network
talktalk has the uk’s most extensive allip next generation 
network ngn covering c95 of all uk homes with advanced 
proprietary equipment located in over 3000 exchanges 
by investing in nextgeneration switching and data transmission 
technology we have been able to further extend our network 
and cost advantage 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 50–100 times over the next five years and increase resilience 
and flexibility whilst reducing network downtime this investment 
will be within our long term capex guideline of 6 of revenues
2  value for money products
we have an established position as the uk’s leading value for 
money provider across phone and broadband for consumers 
and businesses tv and mobile products for consumers 
we also offer customers high speed f ibre to the c abinet 
through bt’s 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 
sustainable revenue growth and positions us to take advantage 
of favourable usage and sociodemographic trends with a 
growing number of older and smaller households in the uk 
growing data usage and growing triple play penetration
3  scale
building on our large and established fixed line phone and 
broadband base we are able to achieve significant scale benefits 
from offering our customers additional products such as pay tv 
mobile fibre and for businesses highspeed data connectivity
4  simple systems and processes
to date since demerger we have delivered over £100m of cost 
savings through integration and backoffice 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 access methods simplify and 
upgrade our systems make better use of our data and drive 
increasing online selfservice 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  d i s ru p t i v e i n n o v a t io n
we 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 unlimited 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 femtocells and an in  home 4g network
6  a brighter place for everyone
our 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 06
talktalk telecom group plc annual report 2014
fy14 business review
summary
our 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 margin of 123 our investment in scaling the tv base 
had its most pronounced effect in h1 with ebitda margins of 90 
on revenue growth of 18 and total subscriber acquisition costs 
of £174m as expected h2 results showed a strong rebound in 
profitability with ebitda margin of 155 on 50 revenue growth 
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 56 year on year accelerating 
significantly from 13 growth in h1 to 99 in h2 the dividend for 
the year of 120p 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 160–170 and dividend 
growth of 15 and are on track 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 uk
accelerating growth in tv– 687000 customers added c25 
of fully unbundled base
we added 687000 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 gradually 
to scale 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 
with a third of tv connections new to talktalk 
the plus tv proposition has continued to prove popular both 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 settop box 
and bundled features free anytime calls and seven sky channels 
we have continued to develop our content proposition through 
fy15 with some significant new additions to our range such as 
sky on demand sky movies sky entertainment sky sports 
picturebox nbc universal – new  subscription video on demand 
svod service and new linear channels such as jstv and kyknet 
thema international sony entertainment tv sony asia tv 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 add a similar number of tv customers 
in fy15 as we did in fy14 which would take penetration to nearly 40 
of our onnet base our primary target market remains the large base 
of freeview households in the uk c18m and we continue to expect 
that in time nearly all of our onnet customers will convert 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 highly
a range of survey and usage data from our tv customers including 
those that have been with us for over a year now consistently point 
to high 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 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 
catchup tv without having to exit 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 programming in the uk viewing data across 
all platforms shows that the vast majority of tv viewing even for 
paytv subscribers is of live and catchup freetoair content 
other features that all our customers rate highly include the ease 
of access to a wide range of flexible nonsubscription pay content 
this 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 being able to select and pay for only 
the precise content they wish to access 
content purchasing behaviour encouraging for future revenue
whilst 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 future incremental revenues with an average 
arpu for payperview movies and boosts combined of c£900 
with over 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£250
with over twelve months of data from our growing base we are pleased 
to report that early purchasing behaviours have proved resilient and 
are consistent with our understanding of what our familyorientated 
valueseeking customers want to watch payperview movie demand 
has grown steadily over the last twelve months with customers 
purchasing on average just over one movie per month generating 
an incremental arpu of c£400 
“ talktalk is all about giving customers consistently the best value 
for money experience in the market”
chief executive officer’s statement strategic report overview strategic report strategy strategic report performance governance financial statements other information
07
talktalk telecom group plc annual report 2014
content boost purchases have also remained resilient although 
as we had expected essentials customers take longer to begin 
their pay content journey and initially tend to buy fewer boosts 
nevertheless the average boost arpu of essentials and plus 
customers at c£1100 is providing good incremental revenue for us 
tv customers’ earlylife churn significantly lower than that of 
broadband customers
very few of our earliest tv customers have reached the end of 
their first contract term so it remains too early to assess their 
outofcontract churn behaviour 
however the high levels of satisfaction with their service that our 
tv customers are reporting and the consistency of their content 
purchasing behaviour has translated into materially lower earlylife 
churn than for their dual play counterparts average monthly churn 
on the tv base through fy14 was approximately half that seen from 
our dual play base 
the lower earlylife churn significantly higher net promoter score and 
lower surveyed propensity to churn give us a great deal of confidence 
that mature triple play customers will also churn at a materially lower 
rate than dual play customers
2 continuing progress in mobile and fibre adding 
incremental value
7 of onnet customers now taking mobile
we added 109000 new customers to our mobile base during the year 
comprising 7 of our onnet base versus 45 of the base a year ago 
mobile customers continue to add incremental value 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 our innovation agenda for delivering long term growth and we see 
real opportunity to drive higher levels of penetration and value creation
5 of onnet customers taking fibre
we added 134000 new customers to our fibre base during the year 
comprising 5 of our onnet base versus 2 of the base a year ago 
bandwidth usage continues to grow 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 
an average of 34gb of content a month during fy14 – 46 more than 
a year ago however at current prices and 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 eg 
where distance from the exchange dictates copper speeds of less 
than 3mbps
3 talktalk business – one of the fastest growing b2b 
telecom businesses in the uk
another year of strong performance 
talktalk business has delivered a strong performance with corporate 
revenues growing by 56 year on year and accelerating significantly 
through the year h1 13 h2 99 high margin data products 
revenues 375 year on year have been a key driver of this 
performance with growth running in excess of the established 
decline in traditional voice revenues our suite of flexible and 
competitive ethernet products based on our market leading 
national ethernet footprint has helped us win significant new 
direct and partner business during the year
revenues from wholesale broadband connectivity products through 
our partner channel also showed strong growth during the year in q3 
we completed the migration of 103000 post office customers onto 
our base with revenues from these customers contributing to growth 
across onnet corporate and offnet
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 this is a powerful testament to the strength of 
talktalk business’s strategy business model and competitive 
positioning in its chosen markets  
a focused strategy to grow revenues and profitability
talktalk business’s strategy is consistent with the group strategy 
of leveraging our network scale and capability to build market 
share in value for money products whilst simplifying its systems 
and processes and launching innovative new products to deliver 
sustained and profitable long term growth 
our network is scaled for peak evening usage by consumers 
allowing talktalk business to use excess daytime capacity for 
business customers this together with our ethernet capability 
over 3000 of our exchanges are ethernet enabled with 95 
country coverage allows talktalk business to offer a wide range 
of competitively priced highmargin allip data connectivity 
products with data revenue growth running faster than the decline 
in legacy lowmargin 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 our competitors 08
talktalk telecom group plc annual report 2014
3 talktalk business – one of the fastest growing b2b 
telecom businesses in the uk continued
maintaining our strong partner relationships
our partner channel has continued to grow through fy14 of particular 
note is the successful migration of post office phone and broadband 
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 terms 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 
for end customers
growing data product penetration in enterprise
we saw strong growth in our direct business with a number of new 
contracts to supply wide area network solutions for medium and 
large businesses including iceland group mpls network covering 
840 sites for a six year term hutchison 3g mpls network covering 
360 sites for a three year term the dx group mpls network covering 
72 sites for a five year term selfridges mpls network covering 
twelve sites for a three year term and fullers mpls network covering 
200 sites for a three year term as a result we ended fy14 with over 
17000 ethernet lines connected c70 more than a year ago
growing market share in small businesses
we simplified our connectivity propositions for small businesses 
during the year launching amongst other things the uk’s most 
competitive business phone and broadband package for just £400 
per month excluding line rental in addition we streamlined our sales 
and service processes for this important and growing segment and 
see significant opportunity to grow market share
4 progress in making talktalk simpler – a £40m 
cost opportunity
we 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 transformation leveraging data and brilliant 
selfservice we commenced a programme to cease provision of 
noncore legacy access methods such as ip stream built a detailed 
roadmap for a groupwide systems upgrade some of which has 
already been implemented in talktalk business improved data 
standards and executive level reporting and launched a service and 
billing app – mytalktalk – on both the ios and android platforms that 
has been adopted by 100000 customers in just two months
these initiatives together with the continuing benefits of some of 
our legacy programmes delivered £145m of savings during fy14
looking forward we expect the four main programmes to drive 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 our offnet ip stream base rebrand our aol base 
and significantly reduce the number of consumer and b2b tariffs 
our systems 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 customer 
journeys to further encourage our customers to selfserve 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 and falling 
costs per add
reducing sac is one of the key drivers 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 
both elements during fy14 
we continued to make significant progress in two of the leading 
indicators of churn during the second half of the year with customer 
call volumes down 173 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 important effect is seen in our triple play 
customers whose earlylife 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 onnet churn which having spiked at 
17 in q2 subsequently fell to 16 in q3 and 15 in q4 
as an illustration reducing churn to 12 the top end of the  
08–12 range that mature triple play operators report over 
the next three years primarily by driving tv penetration across 
the base and further improving customer service would lead 
to a cumulative saving of c£30m over the period through fewer 
gross adds
we have also made significant progress in reducing cpa tv cpa 
fell during the year as planned with the launch of our lower cost 
essentials proposition and growing selfinstallation of the service 
tv cpa across the second half of the year averaged c£130 compared 
to c£170 in the first half similarly broadband cpa fell from c£190 
in the 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 savings in hardware costs and increasing selfservice driving 
a cumulative saving in excess of £70m over the next three years
chief executive officer’s statement continued  strategic report overview strategic report strategy strategic report performance governance financial statements other information
09
talktalk telecom group plc annual report 2014
6 longer term opportunities for delivering 
sustained growth
in april we announced that we have joined forces with sky and cityfibre 
to create a new company that will deliver ultrafast broadband 
services in the city of york the new joint venture company plans to 
build a state of the art citywide pure f ibre to the p remise fttp 
network to deliver broadband speeds of 1 gigabit 1000mbps 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 be the first time that a uk city has been connected with such 
high speeds on a citywide 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 openreach’s infrastructure 
our initial investment in the joint venture which will see us deploying 
to 20000 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 
delivering a significantly lower cost per home passed than for the 
current fttc infrastructure 
we expect to announce the process for selecting the next two 
cities in due course and are excited by the long term potential 
for a national rollout
in conjunction with our plans to build a converged fixedmobile offer 
using our 4g spectrum and femtocells such a national rollout would 
allow us to offer our customers seamless unlimited and low cost 
connectivity in their homes and businesses and significant 
opportunities to drive growth over the longer term 
guidance 
fy15
 ƥ customer numbers
  we expect to deliver modest growth in net adds in fy15 and 
a similar number of tv net additions to fy14
 ƥ revenue overheads and presac ebitda
  we expect fy15 revenues to grow by at least 4 driven by modest 
growth in customer numbers and arpu and growth in talktalk 
business revenues we expect overheads as a percentage of 
revenue to fall below the level reported for fy13 driving presac 
ebitda margins ahead of those reported for fy13
 ƥ 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 driving strong growth in headline ebitda 
with margin in the range of 16–17
 ƥ net debt
  capex is expected to be within our guideline of 6 of revenue 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 items related to making talktalk simpler are 
expected to be £20m–£25m
 ƥ 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
fy15–fy17
in november 2013 we raised our fy14–fy17 revenue cagr target 
from 2 to 4 and set our medium term ebitda margin target of 25 
to be achieved by fy17 we remain confident that we are on track to 
achieve both our revenue and margin targets
we expect revenue growth to be supported by modest growth in total 
customer numbers arpu progress from 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 two other components sac and overhead reduction 
we expect to reduce sac by requiring fewer gross adds to maintain 
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 selfservice 
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 to 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 selfservice model 
these initiatives are expected to deliver further savings in excess 
of £40m by fy17
 
 
dido harding
chief executive officer
14 may 2014 non financial metrics
financial metrics
10
talktalk telecom group plc annual report 2014
measuring our performance
we use the following key performance indicators kpis to measure our progress against 
our key strategic priorities
performance
definition 
the net of new broadband 
customers joining talktalk and 
those leaving talktalk
comment 
we have delivered positive net 
adds growth in fy14 this is in 
line with our stated objective of 
modest base growth
onnet churn  broadband net adds ‘000
performance
15
16
17
14
16
16
15
15
definition 
the percentage of our onnet 
customer base leaving talktalk
comment 
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 ofcom
tv net adds ‘000
performance
definition 
the net of new customers 
joining talktalk tv and those 
leaving talktalk tv
comment 
demand for tv accelerated this 
year with the launch of our 
essentials proposition the 
growth reflects the investment 
made in fy14
fibre and mobile net 
adds ‘000
performance
definition 
the net of new customers 
connecting to fibre and mobile 
and those disconnecting from 
fibre and mobile
comment 
growth in fibre remains 
modest except where it can 
deliver transformational 
improvements in a customer’s 
broadband experience 
performance
corporate revenue £m revenue growth 
performance
presac and marketing 
ebitda margin 
performance
headline ebitda 
margin 
performance
110
2013 2014 2013 2014 2013 2014 2013 2014
185
175
167
160
80
150
fibre
mobile
331
296
318
297
19
4
10
10
8
5
10
q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4
91
87
82
80
80
80
80
82
170
178
155
90
definition 
total revenue growth on same 
period in the prior year
comment 
acceleration of revenue growth 
in fy14 driven by the upsell of 
our customers onto tv mobile 
and fibre along with base growth 
and price inflation
definition 
revenue from our corporate 
products including voice data 
and carrier services
comment 
acceleration in c orporate 
revenues due to growth in 
data products 
definition 
presac and marketing ebitda 
as a percentage of revenue
comment 
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 year
definition 
headline ebitda as a  
of revenue
comment 
investment in scaling tv has 
led to the reduction in ebitda 
margin in fy14 investment 
during the year was h1 weighted
2012 2014 2013 2014 2013 2014 2013 2014
h2 h1 h1 h2 h2 h1 h1 h2 q1 q2 q3 q4 q1 q2 q3 q4 h2 h1 h1 h2
2013
h2 h1
24
24
34
27
24
32
35
23
50
19
01
18
40
48
30
35
47
22
15
22
21
7 strategic report overview strategic report strategy strategic report performance governance financial statements other information
11
talktalk telecom group plc annual report 2014
overview
we 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 18 in h1 to 50 in h2 delivering the first full 
year of year on year revenue growth since demerger of 34 
the full year ebitda margin of 123 fy13 174 also reflects this 
investment in growth the investment was weighted to the first half of the 
year resulting in an h1 ebitda margin of 90 the second half of the 
year saw a significant improvement in margin to 155 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 cagr 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 154 year on year in line with our 
commitment to grow the dividend for the year by a minimum of 15
headline financial information
 
2014
£m
2013
£m
growth 
decline
onnet 1259 1170 76
offnet 128 178 281
corporate 340 322 56
revenue 1727 1670 34
gross margin 958 919 42
 555 550 
operating expenses excluding amortisation and depreciation 427 395 81
ebitda presac and marketing 531 524 13
sac and marketing 318 234 359 
headline ebitda 213 290 266
 123 174  
exceptional items 22 9
statutory ebitda 191 299 361
depreciation and amortisation 112 102 98
nonoperating amortisation 21 52 596
share of joint ventures 7 4 750
operating profit 51 141 638
finance costs 20 19 53
profit before tax 31 122 746
tax 3 22 864
profit after tax 28 100 720
revenue
revenue grew 34 to £1727m fy13 £1670m and accelerated 
during the year as the benefits of our investment in growth during the 
first half materialised growth increased to 50 in h2 from 18 in h1 
the fifth successive quarter of revenue growth 
onnet revenues increased 76 to £1259m fy13 £1170m growth 
of 84 in the second half of the year h1 68 was driven by take up 
of tv fibre and mobile the increase in the size of the base and price 
inflation onnet customers those who are on our network are able 
to get the greatest value from us 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 
to 360000 in h2 versus 327000 in h1
corporate revenues delivered another strong year of growth increasing 
56 to £340m fy13 £322m growth accelerated during the year 
with 99 in the second half versus 13 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 
a result of significant new corporate customer wins during the year 
overall data revenues grew 375 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
offnet revenues continued to decline this year as expected reducing 
by 28 to £128m fy13 £178m as a result of the continued decline 
in our voice only and offnet broadband bases
chief financial officer’s statement 12
talktalk telecom group plc annual report 2014
gross margin
gross margin continued to expand during the year increasing from 
552 in h1 to 558 in h2 increasing our full year gross margin by 
50 basis points to 555 fy13 550 and delivering a gross profit 
of £958m fy13 £919m 
this has been driven by the increased proportion of our customers 
on our network the shift in our talktalk business towards higher 
margin data products the benefit of reduced regulatory pricing from 
1 april 2013 alongside price inflation partially offset by the impact 
of declining high margin consumer voiceonly revenues and the 
increase in lower margin fibre tv content and wholesale services
operating expenses
operating expenses increased to £427m fy13 £395m the increase 
has been driven by the temporary operating costs 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 £145m have been delivered in the year from our 
operating efficiencies programme making talktalk simpler we have 
continued to invest in our network capacity to provide the increased 
bandwidth and greater resiliency that our customers require
sac and marketing
sac 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 reducing 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 selfinstall broadband cost 
per add also declined in h2 as more customers were acquired online
ebitda
ebitda decreased to £213m fy13 £290m reflecting an ebitda 
margin of 123 fy13 174 incremental investment in growth of 
£112m impacted the profile through the year with a 90 ebitda 
margin in h1 improving significantly to 155 in h2 as the benefits of 
investment drove revenue growth and overall sac spend declined
exceptional items
the 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 
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 ebitda
statutory ebitda after exceptional items has decreased 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 
making talktalk simpler and from the change in vat treatment 
relating to prompt payment discounts
depreciation and amortisation
depreciation and amortisation charges increased to £112m fy13 £102m 
as a result of continued capital investment in the network and it systems
amortisation of acquisition intangibles
the amortisation charged on acquisition intangibles decreased to 
£21m fy13 £52m as the aol customer base acquired in 2006 
became fully amortised in fy13 
statutory profit before tax
profit 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 amortisation charge
earnings per share
  2014 2013
growth 
decline
headline earnings £m 61 132 538
basic eps 68p 149p 544
diluted eps 66p 140p 529
statutory earnings £m 28 100 720
basic eps 31p 113p 726
diluted eps 30p 106p 717
eps on a headline basis is provided alongside our statutory measures 
to allow easier comparison year on year due to the impact of 
exceptional items 
headline eps decreased to 68p fy13 149p driven by the decrease 
in ebitda as a result of investing in growth with the profile during the year 
showing a significant improvement from 08p in h1 to 68p for the full year 
the basic number of shares increased to 901m fy13 884m driven 
primarily by the 237m shares which were issued in november 2013 
statutory eps decreased to 31p fy13 113p
cash flow and net debt
  2014 2013
growth 
decline
headline ebitda 213 290 27
working capital 30 11 100
capex 107 104 3
operating free cash flow 76 175 57
exceptional items – bes 3 27  
exceptional 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 41 100
opening net debt 393 434 9
closing net debt 497 393 26
chief financial officer’s statement continued strategic report overview strategic report strategy strategic report performance governance financial statements other information
13
talktalk telecom group plc annual report 2014
working capital
our working capital outflow of £30m fy13 £11m has 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 group’s investment in growth
capital expenditure
capital expenditure in the year of £107m fy13 £104m represents 
62 of revenue fy13 62 during the year we continued to invest 
in the network rolling out to a further 303 exchanges and increased 
network capacity to 12tb fy13 09tb alongside investing in it 
systems to support continued growth
exceptional items
net spend on exceptional items of £23m fy13 inflow of £8m was 
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 settlement for the 
overcharging of certain wholesale ethernet circuits
acquisitions
acquisitions 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
dividends
our dividend policy is to return to 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 of 695p and the interim dividend for fy14 of 40p 
the board has declared a final dividend of 80p 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 120p which provides dividend cover of 06 times fy13 14 times
share purchases
in 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 participant’s ves 
shares in return 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 
to cover anticipated future options exercises offsetting this the 
trust received £6m on the exercise of options by employees
net debt
net debt in the year increased by £104m fy13 reduction of £41m 
to £497m 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 the h2 outflow of 
£24m was driven by the improvement in operating free cashflow as a 
result of improved ebitda
taxation and treasury
  2014 2013
  headline statutory headline statutory
operating profit 94 51 184 141
finance costs 20 20 19 19
profit before tax 74 31 165 122
tax 13 3 33 22
profit after tax 61 28 132 100
headline tax rate 18   20  
finance costs
net finance costs of £20m fy13 £19m comprised the blended 
interest charge on debt of 339 fy13 358 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 interest payments as a result of higher 
average net debt
taxation
our 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 standard 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 
revaluation 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
funding
operations are financed with committed bank facilities retained 
profits and equity during the year we made use of overdrafts and 
uncommitted facilities to assist with working capital management 
subsidiaries are funded centrally with an emphasis on efficient 
cash management
funding comprises a £560m revolving credit facility which matures 
in november 2015 a £30m bilateral loan facility that matures in 
march 2015 and 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 policy to refinance our facilities 
significantly in advance of maturity dates and we have commenced 
refinancing discussions ahead of the expiry of current facilities 14
talktalk telecom group plc annual report 2014
movement in reserves
the purchase of shares by the employee share ownership trust and 
the exercise of options by employees resulted in a net movement in 
reserves of £30m
policy
we 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 interest 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 
in line with best practice to ensure effective management of our 
interest and foreign exchange risk
capital structure
the board reviews the capital structure of the group on an annual 
basis net debtebitda at 31 march 2014 was 23 times fy13 14 times 
driven primarily by the group’s investment in growth and an increased 
dividend payout the board is confident that this will fall over the 
medium term and that such a reduction will make it appropriate 
to consider a return of excess capital to shareholders in order 
to maintain an efficient capital structure
accounting developments
the adoption of accounting standards in the year has had no material 
effect on the financial statements
going concern
the directors have acknowledged 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 
our future development performance and position are set out 
in the business review our financial position cash and borrowing 
facilities are described within this chief financial officer’s statement 
in addition note 19 in the financial statements describes how we 
manage financial risk including foreign exchange risk interest risk 
and liquidity risk 
the breadth of our base our value for money proposition 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 facilities was £175m our forecasts and 
projections taking in to account reasonably possible changes in 
trading performance indicate that there is sufficient headroom 
to our facilities and that this together with our market positioning 
means that we are well placed to manage our business risks successfully 
and have adequate resources to continue in operational existence 
for the foreseeable future the directors have therefore adopted 
the going concern basis of accounting when preparing the 
consolidated financial statements
 
 
stephen makin
chief financial officer
14 may 2014
chief financial officer’s statement continued strategic report overview strategic report strategy strategic report performance governance financial statements other information
15
talktalk telecom group plc annual report 2014
we have an ambitious approach to engaging with our employees we have protected 
and developed our unique culture expressed in our mission to ‘make britain better off’ 
and the values by which we do this our ‘brighter basics’ – customer innovate value 
people and community 
people
in fy14 we again saw a significant increase in employee engagement 
a key contributor to our success as a business 
leadership development
we recognise that the quality of our managers is vital to our 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 
four parts of the modular programme and are demonstrating 
measurable improvements in leadership capability the programme 
will continue 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 
following our first survey in december 2011 we committed to specific 
actions that would enable higher levels of employee engagement 
the annual survey was repeated in january 2014 with greater participation 
92 vs 89 in fy13 and a 6 increase in the overall engagement score
employee performance and development
we have continued to build tools to support employee development 
talktalku is our online hub for all learning and development and includes 
extensive facetoface and elearning options it has now had over 
30000 visits from our employees our annual performance management 
process has continued to provide a mechanism to drive achievement 
with all employees participating in a performance related variable 
bonus pay scheme 
employee recognition
recognising employees who drive our culture by actively demonstrating 
our brighter basics is extremely important to us our ‘onthespot’ 
award scheme enables senior managers to give instant recognition to 
employees while our highly popular ‘talktalk heroes’ scheme allows 
employees to nominate colleagues for their outstanding contribution 
in a wide range of areas from charity work to customer engagement
employee benefits and share ownership
we offer a comprehensive range of 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 in september 2012 
we issued every employee who was not currently part of another 
share option plan with a oneoff gift of 1000 nil priced share options 
through the ‘all employee share option award’ this is in addition 
to the annual talktalk saye scheme in which over 50 of our 
employees participate 
we believe in our employees being users of and advocates for 
our products in fy14 we continued to offer free home phone 
broadband fibre and tv as well as halfprice mobile packages 
employee consultation – one voice forum 
one voice is a consultation and information forum consisting of 
80 nominated employee representatives management and 
members of our people services team the forum meets regularly 
to discuss how the key issues we face as a business might affect 
our employees and to discuss relevant employee matters 
employee communication
we communicate with all employees on a weekly basis via ‘teamtalk’ 
a newsletter that incorporates various updates from across the 
business the weekly blog from dido harding continues to be popular 
with employees allowing for communication and feedback on topical 
issues in the group
in june 2013 we brought every ukbased employee together for a 
one day conference following which 87 of attendees said that they 
had a better understanding of talktalk’s strategic priorities we have 
repeated this event in may 2014 
the wire
in 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 diversity
we benefit enormously from our diverse workforce our people 
come from different backgrounds and cultures creating a vibrant 
working environment that thrives on new ideas and fresh thinking
the importance of diversity equality and nondiscrimination is 
highlighted in our equality policy and underpinned by our values 
which guide the respectful way we behave towards each other 
a breakdown by gender of the number of persons who were 
directors of the company senior managers and other employees 
as at 31 march 2014 is set out below 
68
23
senior management 
team
8
2
directors
1458
761
all talktalk 
employees
� male � female 16
talktalk telecom group plc annual report 2014
effective risk management is essential to the continued successful delivery of our strategy
principal risks and uncertainties
in common with other organisations we are affected by a number of risks not all of which are in our control some risks such as 
uk macroeconomic factors are likely to affect the performance of uk businesses generally while others are particular to our operations 
this section 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 
competition in the uk phone 
broadband and 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 broadening 
and enriching the products and services 
we offer and by finding ways to deliver 
greater value for our customers in fy14 
talktalk has continued to build on the 
successful launch of its tv service 
as part of the youview joint venture 
having acquired a tv customer base 
of close to 1 million by the end of fy14 
the consumer business also has a 
sizeable mobile base of c280000 
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  c o m p e t i t i v e 
environment
potential impact changes in bt’s 
regulated wholesale prices can 
significantly impact the group’s 
performance 
mitigation we have continued to actively 
participate in ofcom’s consultations 
impacting on wholesale prices especially 
the fixed access market review and 
local loop unbundlingwholesale line 
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 superfast broadband will be 
best served by reductions in wholesale 
prices or in the case of fibre a wider 
margin between wholesale and retail 
prices in addition the group continues 
to work with openreach to develop fibre 
products that incur lower set up and 
provisioning costs which will allow 
wholesale prices to reduce further 
2  re g u l a t o r y 
environment
potential impact failure to operate 
effective processes and controls 
across the group may have an adverse 
impact on the services we deliver to 
our customers leading to churn and 
non compliance with regulatory 
requirements the fines that ofcom 
can impose on the group and the 
associated negative publicity 
could adversely impact our brand 
and reputation
mitigation 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 
with delivering improvements in our 
complaints handling processes during 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 group’s regulatory compliance 
committee 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 director 
of quality  compliance has chaired a 
weekly operational compliance committee 
meeting throughout the year attended 
by senior executives
3  re g u l a t o r y 
compliance
potential impact we continue 
to review rationalise and integrate 
our it infrastructure to simplify the 
way in which we operate our business 
this could have an adverse impact on 
the services we provide to our customers 
and on our financial performance
mitigation the executive committee 
regularly monitors progress of significant 
change programmes and the associated 
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  c h a n g e 
management strategic report overview strategic report strategy strategic report performance governance financial statements other information
17
talktalk telecom group plc annual report 2014
potential impact failure to prevent 
the loss 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 
mitigation the group continually 
reviews and seeks best practice 
external guidance 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 further enhancements 
to the group’s data loss prevention 
capability and rollout 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 breaches 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 security
potential impact failure to maintain 
sufficient and acceptable levels of network 
and system performance for the group’s 
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 
is experienced by our customers 
we launched a technical excellence 
programme which has delivered a number 
of significant improvements in the 
infrastructure’s ongoing growth 
and management 
6  n e t w o r k 
stability and 
resilience
potential impact the business has 
a number of critical suppliers the 
performance of which could significantly 
affect the business’s 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 talktalk’s reputation 
and its ability to deliver products and 
services to its customers 
mitigation we continue to review and 
improve our processes and controls 
around supplier selection and inlife risk 
management this helps to reduce the 
likelihood and potential impact of business 
interruption due to supplier failure 
7  k e y s u p p l i e r s
potential impact failure to deliver 
a seamless and positive endtoend 
experience of talktalk’s 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 quality 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 selfhelp 
via the launch of a new online service 
centre and associated diagnostic tools 
and iii deliver better training and tools 
to our customer service teams so that 
queries and complaints can be handled 
more effectively 
8  c u s t o m e r 
experience
potential impact now that talktalk has 
successfully established its tv proposition 
the business must ensure it can continue 
to build scale effectively 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 essentials 
customers as functionality grows we 
continue to focus on maintaining the 
speed and performance of the settop 
box through an extensive customer 
feedback programme benchmarking 
tests and field research we continually 
develop and renew our partnerships with 
over 40 content providers to ensure 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 
to improve the customer experience – 
our selfinstall proposition is now our 
customers’ preferred setup method 
and we have also developed propositions 
and services for customers requiring 
wireless connectivity
9  s c a l i n g t v 18
talktalk telecom group plc annual report 2014
our community brighter basic sets out our belief that it’s not just 
about the money we believe that innovative digital communications 
can improve our society and environment and make britain better off 
our strategy is to help make our community a brighter place by 
motivating our people our customers and supply partners 
and by creating innovative products and services that empower 
our customers 
child internet safety
households and businesses are connecting ever more devices to the 
internet 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 users 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 fy13 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 so they can help their 
local communities we supported safer internet day through our 
partnerships with fsecure the uk council for child internet safety 
and mumsnet and we hosted internet safety workshops at various 
uk online centres in london and irlam 
in fy14 we announced that we are joining forces with other isps to create 
and fund a new multimillion pound campaign aimed at parents to 
raise awareness of how to tackle issues including cyberbullying and 
access to adult content online this new joint venture internet matters 
will also inform parents about wholehome parental controls like 
homesafe™ helping them make the right choices for their household 
digital inclusion
launching the talktalk digital heroes foundation
talktalk passionately believes that the internet makes britain better 
off and that no one should be excluded from all the benefits that it 
has to offer since 2011talktalk has 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 
and launched the talktalk digital heroes foundation through the 
foundation we aim to better support talktalk’s 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 part of our give something 
back employee scheme 
talktalk digital heroes awards 2013
we 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 technology in the most socially positive way at a very local level 
this year we awarded over £70000 in grants and prizes to twelve 
regional winners 
the judges were our chairman sir charles dunstone the uk’s digital 
champion baroness lane fox and the editor of the daily mirror 
lloyd embley they crowned scott freeman of the cybersmile 
foundation as the national talktalk digital hero 2013 and awarded 
him a £10000 prize scott was recognised for his outstanding work 
developing the cybersmile foundation the uk’s first dedicated 
cyberbullying charity the category of young digital hero open to 
anyone under 18 was won by chelsi jade beale this important and 
coveted prize awarded chelsi £4000 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 
about 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 understand the condition we raise 
funds for this worthy cause and its online platform through the 
talktalk digital heroes auction every november where fy14 saw 
a tremendous £300000 generated fy13 £220000 
apps for good
one of our digital heroes foundation hero projects chosen this year 
is the charity apps for 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 apps for good course 
and we sponsor an awards category in their annual awards over 
6000 apps for good students enter to compete in six categories 
sponsored by talktalk and others including barclaycard and blackberry 
code club
code club our second annual hero project connects primary schools 
with volunteers 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 cofounder of code club was our national digital heroes 
award winner in 2012 
talktalk digital champions
the 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 with 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 since the programme 
was launched we have now fulfilled over 60 volunteering opportunities 
in uk online centres across britain 
environmental sustainability
greenhouse gas emissions
this section includes our mandatory reporting of greenhouse gas 
emissions pursuant to the companies act 2006 strategic report 
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 communities
sustainability review strategic report overview strategic report strategy strategic report performance governance financial statements other information
19
talktalk telecom group plc annual report 2014
environmental sustainability continued
reporting year
our reporting year is the same as our fiscal year being 1 april to 31 march 
this greenhouse gas reporting year has been established to align with 
our financial reporting year
global greenhouse gas emissions data
for the year ended 31 march 2014
emissions from tonnes of co
2
e
combustion of fuel and operation of facilities 1999
electricity heat steam and cooling purchased  
for own use 15711
company’s chosen intensity measurement  
emissions reported above normalised to tonnes of 
co
2
e per average gigabit of bandwidth tco
2
egb 24
 average gigabit of bandwidth for the year ended 31 march 2014 is 746gbs
organisation boundary and responsibility
we report our emissions data using an operational control approach 
to define our organisational boundary 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 boundaries we do not have responsibility 
for any emission sources that are beyond the boundary of our 
operational control
methodology
we have used the main requirements of the department for 
environment food  rural affairs defra updated greenhouse gas 
reporting guidance environmental reporting guidelines  issued by 
defra in june 2013 data gathered to fulfil our requirements under 
the crc energy efficiency scheme and emission factors from the 
department of energy  climate changedefra’s 2013 update
the group’s journey to improve carbon efficiency began in 2011 when 
our chief executive officer set our objective to reduce our co
2
 emissions 
intensity in tonnes of co
2
 equivalent per gigabit tco2egb 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 co
2
 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 for the third year running 
tco
2
egb 2014 2013 2011
energy
1
 transport
2
 and hotels 91 145 317
1 primarily electricity but also some natural gas and back up generator fuel
2 includes rail air and car travel
100 renewable electricity
all of the units of electricity consumed by our ngn offices and uk 
call centres come from renewable sources 
sustainable forestry
we 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 equivalent this annual report 
is printed on certified 100 recycled paper
community investment
during the year the group was responsible for generating £640800 
2013 £517700 of income for registered charities including £340800 
of direct cash donations 2013 £283200 the group did not make 
any political donations in the current 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 refocused 
as ‘the talktalk digital heroes auction’ an evening to celebrate 
talktalk digital heroes and benefit ambitious about autism’s 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 auction 
engaging with our customers
we continued three customer driven cause related fundraising 
initiatives established last year 
 ƥ the first was our commitment to donate to ambitious about autism 
for every call made to our uk directory enquiries number 118 111
 ƥ our second initiative continued to reward 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 
 ƥ our third initiative is a donation to the charity cool earth when 
customers added our unique global minutes boost option to 
their phone package cool earth is the only charity dedicated 
to protecting endangered rainforests through engagement 
with indigenous communities one of the most effective ways 
to minimise co
2
 reaching our atmosphere
engaging with our colleagues
the group’s give something back initiative includes c ompany 
donations for our people who raise funds for a registered charity 
hundreds of our people took part in fundraising over the year
total co
2
e by emission type
�  combustion of fuel and 
operation of facilities
�  electricity heat steam 
and cooling purchased 
for own use
11 
89 
we retained both our ftse4good index membership and carbon saver gold standard certification other achievements 
in the year 20
talktalk telecom group plc annual report 2014
board of directors and advisors
chairman
sir charles dunstone
sir charles is the founder of carphone warehouse and created talktalk in 2002 he was appointed chairman of talktalk in 2010 sir charles has directed  
the development of talktalk to become one of the leading fixed line telecommunication businesses in the uk sir charles is chairman of the prince’s trust  
youview tv limited and carphone warehouse group plc
executives
dido harding
dido has been chief executive officer of talktalk since february 2010 prior to that 
dido was sainsbury’s convenience director having been appointed to sainsbury’s 
operating board in march 2008 dido joined sainsbury’s from tesco plc where she 
held a variety of senior roles dido is a nonexecutive director of the british land 
company plc and is a trustee of go on uk
stephen makin
stephen 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 to 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
nonexecutives
john gildersleeve
john joined the board in january 2010 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 west
ian joined the board in february 2011 he has been involved in the tmt sector for 
around 25 years as a manager director and investor ian held numerous roles at 
british sky broadcasting over eleven years latterly as managing director of the 
sky digital subscription business ian is also currently an investor in a range of 
small and medium sized businesses and cofounded top up tv in 2003 
ian was a supervisory board member of kabel deutschland
john allwood
john 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 plc 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 nonexecutive director of carphone warehouse group plc and a 
governor of exeter university 
brent hoberman
brent joined the board of talktalk in january 2010 brent cofounded lastminutecom 
in 1998 and was its chief executive officer until it was sold in 2005 he has subsequently 
founded and is chairman of mydeco and madecom and also cofounded 
profounders and founders forum brent is a director of easycarcom and is a 
nonexecutive director of guardian media group time out group and shazam 
sir howard stringer
sir howard joined the board in july 2012 until june 2013 he was chairman of 
the board of directors of sony corporation prior to his appointment as chairman 
sir howard was president and ceo of sony corporation before sony corporation 
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 tele–tv the media and technology company  
formed by bell atlantic nynex and pacific telesis
james powell
james joined the board in 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 g lobal head 
of product development head of t echnology strategy and cto for the 
reuters financial division he has also held senior leadership positions at 
solace systems citadel investment group and tibco finance technology
joanna shields
joanna joined the board in may 2013 she is a nonexecutive director  
of london stock exchange group plc and chief executive of tech city uk  
and business ambassador for digital industries she previously held senior 
executive roles at facebook realnetworks google and bebo
advisors
company secretary
tim morris
advisors
principal bankers
royal bank of scotland group plc 
dnb bank asa 
barclays plc 
hsbc bank plc 
lloyds tsb bank plc
corporate brokers
credit suisse europe limited 
1 cabot square london e14 4qj
barclays capital  
5 the north colonnade 
canary wharf london e14 4bb
registrars
equiniti limited  
aspect house spencer road  
lancing west sussex bn99 6da
auditor
deloitte llp  
2 new street square  
london ec4a 3bz strategic report overview strategic report strategy strategic report performance governance financial statements other information
21
talktalk telecom group plc annual report 2014
corporate governance
introduction
the 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 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 how the company has applied the principles and 
complied with the provisions of the code in particular this section 
summarises the board’s compliance with the five key principles 
of the code namely leadership effectiveness remuneration 
accountability and relations with shareholders
board balance and independence
the board has ten members seven of whom excluding the chairman 
are considered independent nonexecutive directors these are 
john gildersleeve deputy chairman ian west senior independent 
director john allwood brent hoberman sir howard stringer 
james powell and joanna shields 
therefore at least half of the board excluding the chairman 
are independent and notwithstanding 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 
the year amy stirling stepped down as chief financial officer on 
31 may 2013 and was replaced by stephen makin with effect from the 
same date joanna shields was appointed as a nonexecutive director 
on 16 may 2013 david goldie stepped down on 27 september 2013 
the company did not use an external search consultant in the 
appointment of nonexecutive directors during the period
the chairman and executive directors have service contracts that 
can be terminated by either the company or the director on twelve 
months’ notice
the nonexecutive 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 for loss of office these 
initial three year periods commenced on 20 january 2010 with the 
following exceptions ian west 8 february 2011 sir howard stringer 
26 july 2012 james powell 26 july 2012 and joanna shields 
16 may 2013
all directors in any event stand for reelection every year
leadership
how the board operates
the board has reserved certain matters and delegated others to the group’s 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 
group’s strategy annual budgets and other longer term planning
number of meetings attended 
board audit remuneration nomination
number of meetings 6 3 7 1
director board audit remuneration nomination
sir charles dunstone chairman 6 — — —
dido harding 6 — — —
amy stirling
1
— — — —
stephen makin
1
6 — — —
david goldie
2
2 — — —
john gildersleeve 6 3 7 1
ian west
3
6 2 7 1
john allwood 6 3 — 1
brent hoberman
4
6 — 6 —
sir howard stringer
5
5 — 3 —
james powell 6 3 — —
joanna 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 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 remuneration committee meetings due to personal reasons 
6 joanna shields was appointed on 16 may 2013 22
talktalk telecom group plc annual report 2014
corporate governance continued
leadership continued
how the board operates continued
as well as the formal meetings during the year the board met at other 
times as appropriate for approving certain announcements to shareholders 
it is important to the board that nonexecutive directors have 
the ability to influence and challenge appropriately to this end all 
nonexecutive directors are given a thorough induction to the group 
and take priority in board discussions all directors receive papers in 
advance of meetings they also receive regular reports and members 
of the group’s executive team are invited to present at board meetings 
so that the nonexecutive directors keep abreast of developments 
in the group 
the chairman meets regularly with just the nonexecutive directors 
prior to every other board meeting this ensures that any concerns 
can be raised and discussed outside of formal board meetings 
the senior independent director also attends these sessions 
where it is possible if required to discuss any matters with the 
other independent nonexecutive directors
the senior independent director also takes responsibility for 
performance evaluation of the board succession planning for 
the chairman and chairing nonexecutive director only meetings 
in addition he is an alternative point of contact for shareholders 
in the event that normal executive channels are not appropriate 
details of the senior independent director’s role are set out on 
the group’s website wwwtalktalkgroupcom
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 group’s investor relations director covering broker 
reports and the output of meetings with significant shareholders 
as stated below the board has also delegated certain matters 
to a number of board committees
effectiveness
performance evaluation and continued development
each board member has been subject to an internal performance 
review during the year where the balance of skills knowledge and 
experience of each director was reviewed this was undertaken 
by each 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 overall board effectiveness and individual contributions
as part of the performance review the ability of each director 
in particular the nonexecutive directors to demonstrate the 
required time commitment to the role was assessed
as a result of this performance evaluation the chairman confirms that 
each of the directors seeking reelection at the agm continues to be 
effective and has demonstrated the appropriate commitment to 
the role
the senior independent director also met with the other nonexecutive 
directors to assess the chairman’s effectiveness taking into account 
the views of executive directors 
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 d irectors to 
provide domestic internet services the key objectives of the evaluation 
which were agreed with the chairman and the company secretary 
in advance were to enhance board effectiveness and also the 
effectiveness of individual directors overall njmd’s review found 
the board was effectively run and administered njmd found neither 
areas of major concern nor any matters which are of particular 
concern in relation to individual directors
the company secretary ensures that the board is made aware of 
new laws regulations and other information appropriate to the group 
to ensure that all directors continually update their skills knowledge 
and familiarity of the group in order to fulfil their roles additionally 
each director has access to the advice and services of the company 
secretary and also has the ability to take independent external advice 
if required
diversity
the board understands the importance of having a diverse membership 
and recognises that diversity encompasses not only gender but also 
background and experience the board does not have a formal diversity 
policy and is generally opposed to the idea of stated quotas for females 
our equality policy applies equally to all appointments in the company 
and the board believes that appointments should be made solely on 
merit the key criterion being whether or not the appointee can add 
to or complement the existing range of skills and experience on the 
board notably the most recent board appointment was female this 
appointment was made on merit and not on gender the appointee 
being by far the strongest candidate for the position with her skill set 
and overall experience fitting the objective role description approved 
by the board at the outset of the recruitment process
board committees 
the board has established four committees audit remuneration 
nomination and regulatory compliance the first three are as required 
by the code and the fourth is to ensure the compliance of the group 
within the consumer regulatory environment in which it operates
audit committee
during the year the committee comprised the following independent 
nonexecutive directors john allwood chairman john gildersleeve 
ian west and james powell 
the chairman of the committee updates the board following each 
committee meeting on any significant issues that may have arisen 
in addition the chairman of the committee is happy to make himself 
available to investors on request during the year all requirements of 
the code in respect of the committee were met 
the group’s chief financial officer as well as representatives of the 
company’s external auditor and other members of senior management 
from finance tax and treasury legal and business assurance also 
attend these meetings by invitation of the committee the external 
and internal auditors have direct access to the committee during 
formal meetings and time is set aside for them to have private discussion 
with the committee in the absence of management attendees 
john allwood remains the member of the committee with relevant 
and recent financial experience as recognised by the consultative 
committee of accountancy bodies although all members are 
expected to be financially literate and have an understanding of
 ƥ the principles of contents of and developments in financial reporting 
accounting standards and statements of recommended practice
 ƥ key aspects of the company’s operations
 ƥ matters that influence or distort the presentation of accounts and 
key financial information strategic report overview strategic report strategy strategic report performance governance financial statements other information
23
talktalk telecom group plc annual report 2014
effectiveness continued
board committees continued
audit committee continued
 ƥ the principles of and developments in key applicable company 
law and other legislation relevant to the company
 ƥ the role of internal and external auditing and risk management
 ƥ the regulatory framework of the company’s business and
 ƥ environmental and social responsibility best reporting practices
during the year the formal calendar of items considered at each 
audit committee meeting within each annual cycle embraced 
the code requirements to 
 ƥ monitor the integrity of the financial statements of the company 
and any formal announcements relating to the company’s financial 
performance including reviewing significant financial reporting 
judgements contained in them 
 ƥ disclose the significant issues that the committee considered 
in relation to the financial statements and how these issues 
were addressed
 ƥ confirm that the consolidated financial statements taken as a 
whole are fair balanced and understandable to ensure that the 
narrative sections of the r eport are consistent with the financial 
statements and accurately reflect the group’s performance
 ƥ review the company’s internal financial controls and its internal control 
and risk management systems and to make recommendations to 
the board
 ƥ review the company’s arrangements by which employees may 
raise concerns in confidence
 ƥ monitor and review the effectiveness of the company’s internal 
audit function 
 ƥ make recommendations to the board in relation to the appointment 
reappointment and removal of the external auditor and to approve 
its remuneration and terms of engagement
 ƥ review the company’s policy on the engagement of the external 
auditor to supply nonaudit services 
 ƥ review and monitor the external auditor’s independence and objectivity 
and the effectiveness of the audit process taking into consideration 
relevant uk professional and regulatory requirements and
 ƥ disclose how the committee has assessed the effectiveness of 
the external audit process and provide information on the length 
of tenure of the current audit firm
the committee’s remit requires it to report to the board identifying 
any matters in respect of which it considers that action or improvement 
is needed and to make recommendations as to the steps to be taken 
significant judgements
the significant issues considered by the audit committee in the current year were as follows
significant issue  
considered by the committee how the issue was addressed by the committee 
the appropriateness of 
preparing the group financial 
statements for the half year 
and full year on a going 
concern basis
the committee considered papers prepared by management and taking into account the external auditor’s 
review of these papers and its assumptions concluded that management’s recommendation to prepare 
accounts on a going concern basis was appropriate
the treatment of exceptional 
items and their presentation 
within the group’s financial 
statements
the committee considered management’s presentation of separately disclosed items the committee also 
considered the views of our external auditor both on management’s policy and its application in fy14 at each 
meeting the committee reviews a paper prepared by management on actual and forecast levels of exceptional 
items including the nature of all the items the disclosure for inclusion in the consolidated financial statements 
is reviewed and agreed by the audit committee 
carrying value of goodwill 
and other intangibles 
the judgements in relation to goodwill impairment testing relate to the assumptions applied in calculating the 
value in use of the operating companies being tested for impairment the key assumptions applied in the 
calculation relate to the future performance expectations of the business which are driven by the group’s 
calculation of its weighted average cost of capital wacc and its assessment of long term growth rates  
the business plan used in the calculation is the five year plan which is approved by the group’s executive 
committee and the board the committee reviews and challenges management’s paper on the outcome  
of the impairment review 
revenue recognition the key area of judgement in respect of recognising revenue is identifying revenue arrangements including 
multiple deliverables when the group sells a number of products within a bundled transaction the total 
consideration from the arrangement is allocated to each element based on their relative fair values the 
committee reviews management’s papers on proposed accounting treatment for new products in addition 
the committee also considers the detailed reporting of the external auditor before agreeing on any potential 
changes to the group’s accounting policies 
taxation the key judgement in relation to taxation relates to the assumptions made in recognising deferred tax assets 
the taxation forecasting model prepared by management is based on the five year plan which is approved 
by the group’s executive committee and the board the committee reviews and challenges management’s 
paper which outlines the key principles and judgements used in the calculation  24
talktalk telecom group plc annual report 2014
corporate governance continued
effectiveness continued
board committees continued
audit committee continued
statement of directors in respect of the annual report and accounts
as required by the code the directors confirm that the annual report 
and accounts taken as a whole is fair balanced and understandable 
and provides the information necessary for shareholders to assess 
the company’s performance business model and strategy when 
arriving at this position the board was assisted by a number of 
processes including
 ƥ the annual report and accounts is drafted by appropriate senior 
employees across all areas of the business with overall supervision 
being provided by the director of group finance tax and treasury 
to ensure the report is consistent across all sections
 ƥ a comprehensive verification process is undertaken to ensure 
the factual accuracy of the entire annual report
 ƥ complete reviews of drafts of the report are undertaken by the 
executive directors and other members of the group’s executive 
committee and 
 ƥ the final draft is reviewed by the audit committee prior to final 
consideration by the board 
external audit 
the committee is responsible for the development implementation 
and monitoring of the company’s policy on external audit which 
assigns responsibility for monitoring the independence objectivity 
and compliance by the external auditor to the committee
deloitte was appointed as auditor in 2010 when the group demerged 
from carphone warehouse group plc in the year to 31 march 2014 
sharon thorne was newly appointed as the senior statutory auditor 
deloitte has confirmed its independence in a letter addressed to 
the directors 
in the year to 31 march 2014 the audit committee adopted a formal 
framework to review the effectiveness of the external audit process 
and audit quality an auditor assessment tool is completed annually 
by each member of the audit committee the chief financial officer 
and other members of senior management who are invited to attend 
the audit committee meetings the assessment tool covers all aspects 
of the audit process from the audit partner’s interaction with the 
audit committee through to the planning and delivery of the audit 
the feedback from this process has been considered by the audit 
committee and is provided to both the auditor and to senior management 
the results in the current year were reviewed at the march audit 
committee meeting and show that overall the committee believes 
our external auditor is performing as expected however if this 
situation should change in the future management will agree an 
action plan with the external audit partner which the audit committee 
will keep under review
the policy relating to the provision of nonaudit services by the external 
auditor specifies the types of work from which the external auditor 
is excluded for which the external auditor can be engaged without 
referral to the committee and for which a casebycase decision is 
required in order to safeguard the auditor’s objectivity and independence 
the ratio of nonaudit fees to audit fees is monitored by the committee 
any work proposed in excess of 50 of the audit fee is referred to the 
committee amounts below this are discussed with the chairman of 
the committee 
a statement of fees paid or accrued for services from the external 
auditor during the period is set out below 
2014
£m
2013
£m
fees payable to the company’s  
auditor for the audit of the  
company’s annual accounts 01 01
audit of the group and its subsidiaries 
pursuant to legislation 04 04
audit services provided to all  
group companies 05 05
taxation and other services 02 01
total group auditor’s remuneration 07 06
in the current year the group incurred nonaudit fees of £239000 
fees relating to tax services of £140000 principally comprised technical 
advice associated with relevant uk and international fiscal law and 
regulations other fees of £99000 mainly represented hr consultancy 
advice having undertaken a review of the nonaudit related work the 
committee has satisfied itself that the services undertaken during 
the year did not prejudice the external auditor’s independence
the chairman of the committee updates the board following each 
committee meeting the committee’s terms of reference which are 
available on request from the company secretary and are published 
on the group’s website wwwtalktalkgroupcom comply with the code 
in light of the assessments and review undertaken the committee 
recommended to the board that deloitte llp be retained as the auditor 
of the company this recommendation was endorsed by the board 
deloitte llp has expressed its willingness to continue in office as 
auditor and a resolution to reappoint deloitte llp will be proposed 
at the forthcoming agm 
remuneration
remuneration committee
during the year the committee comprised the following independent 
nonexecutive directors john gildersleeve chairman brent hoberman 
ian west and sir howard stringer 
other directors including the chief executive officer the company 
secretary the group human resources director and advisors attend 
by invitation of the committee a detailed description of the committee’s 
remit and work during the period is contained in the directors’ 
remuneration report on pages 26 to 39
the chairman of the committee updates the board following each 
committee meeting 
the committee’s terms of reference which are available on request 
from the company secretary and are published on the group’s 
website wwwtalktalkgroupcom comply with the code strategic report overview strategic report strategy strategic report performance governance financial statements other information
25
talktalk telecom group plc annual report 2014
accountability
nomination committee
during the year the committee comprised the following independent 
nonexecutive directors john gildersleeve chairman john allwood 
and ian west
the committee is responsible for succession planning at board 
level overseeing the selection and appointment of directors 
regularly reviewing the structure size and composition of the board 
and making its recommendations to the board it assists in evaluating 
the commitments of individual directors and the balance of skills 
knowledge and experience on the board 
the committee has overseen the appointment of joanna shields as 
a nonexecutive director and also the appointment of stephen makin 
as chief financial officer during the period 
the chairman of the committee updates the board following each 
committee meeting
the committee’s terms of reference which are available on request 
from the company secretary and are published on the group’s 
website wwwtalktalkgroupcom comply with the code 
regulatory compliance committee
the members of this committee are john gildersleeve chairman 
dido harding chief executive officer and tim morris company 
secretary 
other senior executives of the group attend by invitation 
of the committee
the purpose of the committee is to provide the board with visibility 
of how the group remains compliant with those consumer regulations 
affecting its businesses from time to time its members therefore 
include those senior executives who are operationally responsible 
for implementing permanent changes necessary to ensure the 
group remains compliant 
such members are accountable to the committee and the board 
for the successful delivery of such changes
this committee meets at least four times a year and reports to the 
board accordingly the group also operates a weekly compliance 
committee made up of those senior executives including the chief 
executive officer responsible for all key areas of compliance across 
the group and is chaired by the company secretary targets set at 
these meetings are monitored against a weekly scorecard
risk management and internal control
the company has established a risk management programme that 
assists management throughout the company to identify assess 
and mitigate business financial operational and compliance risks 
the board views management of risk as integral to good business 
practice the programme is designed to support management’s 
decision making and to improve the reliability of business performance 
to ensure that all parts of the group have a good understanding of risk 
members of this team have conducted risk workshops and reviews 
within each of the main functions in the past year culminating in 
an assessment of key business risks by the executive directors and 
key management these risk assessments have been wideranging 
covering risks arising from the regulatory environment strategy 
counterparties and organisational change associated with major 
projects the risk management process operates throughout the 
group being applied equally to the main business units and corporate 
functions a risk report and update is provided at each board meeting 
the output of each assessment is a list of key strategic financial 
operational and compliance risks associated action plans and controls 
to mitigate identified risks are put in place where this is possible and 
to the extent considered appropriate by the board taking account of 
costs and benefits changes in the status of the key risks and updates 
on mitigation are reported regularly at each board meeting 
the directors have overall responsibility for the group’s system of 
internal controls and for reviewing their effectiveness the board 
delegates to executive management the responsibility for designing 
operating and monitoring these systems the systems are based 
on a process of identifying evaluating and managing key risks and 
include the risk management processes set out above the company 
has channels in place to enable employees to raise concerns about 
possible irregularities in financial reporting and other issues and for 
those matters to be investigaged
the systems of internal control were in place throughout the period 
and up to the date of approval of the annual report the effectiveness 
of these systems is periodically reviewed by the audit committee in 
accordance with the revised guidance in the turnbull report these 
systems are also refined as necessary to meet changes in the group’s 
business and associated risks the systems of internal control are 
designed to manage rather than eliminate the risk of failure to achieve 
business objectives they can only provide reasonable and not absolute 
assurance against material errors losses fraud or breaches of law 
and regulations 
the board has conducted an annual review of the effectiveness of 
the systems of risk management and internal control in operation 
during the year and up to the date of the approval of the annual 
report this was approved by the audit committee and the board 
the audit committee also adopts an internal audit charter each 
year in accordance with i nternational internal auditing standards
this is supported by the business assurance and internal audit function 
through an ongoing process for identifying evaluating and managing 
the risks faced by the group no significant weaknesses were identified 
in the year
relations with shareholders
the board believes it is important to explain business developments 
and financial results to the company’s shareholders and to understand 
any shareholder concerns the principal communication media used 
to impart information to shareholders are news releases including 
results announcements and company publications in all such 
communications care is taken to ensure that no price sensitive 
information is released
the chief executive officer and chief financial officer have lead 
responsibility for investor relations they are supported by an investor 
relations director who amongst other matters organises presentations 
for analysts and institutional investors there is a full programme of 
regular meetings and dialogue with major institutional shareholders 
fund managers analysts retail brokers and credit investors upon which 
the chairman ensures the board receives regular updates at board 
meetings the board also receives periodic reports on investors’ views 
of the performance of the company all the nonexecutive directors 
and in particular the chairman and senior independent director are 
available to meet with major shareholders if such meetings are required 
the company plans also to communicate with shareholders through 
the agm at which the chairman will give an account of the progress 
of the business over the last year and a review of current issues and 
provides the opportunity for shareholders to ask questions
the company’s agm provides all shareholders with the opportunity 
to vote on the resolutions put to shareholders information relating to 
votes cast will following the agm be available on the company’s website 
wwwtalktalkgroupcom
further financial and business information is available on the group’s 
website wwwtalktalkgroupcom 26
on behalf of the board i am pleased to present the directors’ report 
on remuneration for fy14
talktalk telecom group plc annual report 2014
introduction
the structure of this remuneration report for the year ended 
31 march 2014 has been reviewed and amended in line with the 
large and mediumsized companies and group accounts and 
reports amendment regulations 2013 ‘the regulations’
the structure of the report is therefore split into two sections
 ƥ the remuneration policy which sets out the company’s policy 
on remuneration for executive directors this policy will be put 
forward to shareholders for a binding vote at our 2014 agm and 
will be effective immediately it is intended that the policy will 
apply from that date for a period of three years 
 ƥ the annual report on remuneration which explains how the 
remuneration policy was applied in relation to executive directors 
for the year ended 31 march 2014 and how it will be implemented 
for the year ending 31 march 2015
aligning the remuneration policy with company 
strategy and performance
the remuneration committee recognises the importance of linking 
its remuneration policy and approach to business strategy and this 
has continued to be a focus over the past twelve months 
the group’s remuneration approach applies throughout the 
company and continues to be focused on enabling it to attract 
motivate and retain high quality talent and ensuring there is a 
transparent link between remuneration and strategy at all levels 
as well as the long term performance of the company
board changes during fy14
board resignations
amy stirling stepped down from the board in her role of chief financial 
officer effective from 31 may 2013 and left the company after 15 years 
on 30 september 2013
david goldie stepped down from the board in his role of group 
commercial director effective from 27 september 2013 and left 
the company after 14 years on 30 september 2013
board appointments
stephen makin joined the company on 15 april 2013 and was appointed 
to the board as chief financial officer on 31 may 2013 in line with our 
pay policy the remuneration committee decided that base pay would 
initially be set at the same level as that of the former chief financial 
officer increasing by £25000 from 1 october 2013
joanna shields was appointed to the board as a nonexecutive 
director on 16 may 2013
remuneration policy during fy14
over the course of the past twelve months the remuneration 
committee fully reviewed the remuneration policy for executive 
directors to ensure it was appropriate and fit for purpose 
the annual bonus scheme payout for executive directors and 
members of the executive committee this year has been determined 
by the remuneration committee to be paid at 64 of base pay
remuneration policy for fy15
the group aims to achieve its objectives of a simple and transparent 
approach to remuneration the remuneration policy is set out on 
pages 27 to 32 and details of how this policy will be implemented for 
the financial year ahead are set out on pages 33 to 39 with the 
following key changes being highlighted
 ƥ base pay award for dido harding effective from 1 july 2014 to 
reflect both her past and future contribution to the company
 ƥ introduction of an allemployee share match plan which was 
approved by shareholders at the july 2013 agm and
 ƥ a further award under the v alue enhancement scheme
 
 
 
john gildersleeve
remuneration committee chairman
14 may 2014
directors’ remuneration report
highlights of fy14
 ƥ no changes have been made to the remuneration policy 
during the year ended 31 march 2014
 ƥ we have reviewed and amended the structure of the 
directors’ remuneration report in line with new regulations 
to make it simpler and more transparent for our shareholders
our priorities for fy15
 ƥ to review the performance metrics for both our short term 
and long term incentive plans to ensure they remain aligned 
with both shareholder interests and the strategic growth 
plans of the company
 ƥ to make a further awards under the value enhancement 
scheme ves for executive directors and a small number 
of senior management aligned to delivering significant 
shareholder value
 ƥ to launch the company’s first share match plan to further 
encourage allemployee share ownership
the current regulations require the company’s auditor 
to report to the members on the ‘auditable part’ of this report 
marked  and to state in its opinion that this part of the 
report has been properly prepared in accordance with the 
companies act strategic report overview strategic report strategy strategic report performance governance financial statements other information
27
this section sets out the company’s policy on remuneration for executive directors 
the remuneration committee intends that subject to approval by shareholders 
and the binding vote the remuneration policy will take immediate effect following 
the agm and will apply for a period of three years
talktalk telecom group plc annual report 2014
directors’ remuneration report continued
remuneration policy
remuneration committee 
the remuneration committee is responsible for making 
recommendations to the board in relation to the individual 
remuneration packages for the executive directors and the 
chairman these recommendations comply with the remuneration 
policy which is set by the board and the terms of reference of the 
committee the committee works with the board to determine the 
balance of allocation of profits between employee incentives 
shareholder dividends and reinvestment into the group
remuneration approach
the aim of the remuneration policy is to support the group in
 ƥ aligning individual and business performance with the interests of 
shareholders through the delivery of clear and stretching targets
 ƥ strengthening the link between employee output and the delivery 
of shareholder value
 ƥ supporting the group’s overarching philosophy to maintain 
its ‘value player’ positioning in the marketplace
 ƥ attracting motivating and retaining high quality talent
 ƥ maintaining a stable efficient cost base 
 ƥ enabling the group’s remuneration strategy to be tailored 
to its changing circumstances and
 ƥ reflecting corporate governance best practice
the company firmly believes that remuneration should be structured 
in a fair and competitive way in order to incentivise individuals to 
achieve the highest levels of performance and takes a consistent 
approach throughout the group
packages are designed to be marketcompetitive with fixed 
remuneration set at market median levels variable rewards which 
are linked to challenging objectives based on the performance 
of the group are designed to reward exceptional performance 
and for the delivery of shareholder value creation 
employee and shareholder consultation
the remuneration committee did not formally consult with employees 
of the company on the details of the directors’ remuneration policy 
in reaching this decision the committee is mindful that with its strong 
culture of employee share ownership with over 50 of employees 
holding shares in the company employees have the opportunity to 
comment and vote on all elements of this report and policy in their 
capacity as shareholders employees are also given the opportunity 
to share their views through regular employee surveys and the 
allemployee consultation body ‘one voice’
the remuneration committee consults with major shareholders 
when setting the remuneration p olicy if any of these shareholders 
are opposed to the policy the committee endeavours to meet with 
them as appropriate to understand and respond to any issues they 
may have
remuneration components
we define our main fixed and performance related elements 
of remuneration as follows
 ƥ base pay car allowance benefits and pension contribution 
fixed and 
 ƥ annual performance bonus variable
in addition for executive directors executive committee members 
and other key senior management there are two long term incentive 
plans – the discretionary share option plan dsop and the value 
enhancement scheme ves
the ves is an alternative reward mechanism for executive directors 
and other members of the senior leadership team who will not 
participate in the dsop the remuneration committee intends that 
generally in any one year participants may only receive an award 
under the ves and no other long term incentive plan 
the committee reviews at least on an annual basis payout levels for 
executive directors at minimum ‘on target’ ‘stretch’ and ‘super stretch’ 
levels of performance in order to ensure alignment with our shareholders
malus and clawback
the rules of the annual performance bonus and long term incentive 
plans allow the remuneration committee to exercise its discretion in 
using malus or clawback provisions should it feel that it is in the best 
interests of the company and its shareholders the committee’s 
policy on the exercise of its discretion is set out in this remuneration p olicy
executive director shareholding requirement
to ensure that the interests of the executive directors are closely 
aligned to those of its shareholders the company requires executive 
directors to build over a number of years and retain a shareholding 
in the company of at least 200 of their annual salary 
for the purpose of this requirement the company requires these 
to be in unfettered and beneficially owned shares 28
talktalk telecom group plc annual report 2014
directors’ remuneration report continued
remuneration policy continued
summary of remuneration components of executive directors
component aim and link to strategy description of operation and any performance measures
further detail on maximum opportunity 
and framework used to assess performance
fixed
base pay
to attract and retain talent by 
ensuring base pay is competitive 
in the market
set at a level which incentivises 
executive directors to implement 
and deliver our business strategy
paid monthly in cash reviewed annually 
benchmarked against external market 
data from external specialists 
takes into account the individual’s 
skills experience and performance
the remuneration committee 
considers the level of the all
employee pay review when making 
recommendations and decisions  
on pay for executive directors 
any increase typically takes effect 
from 1 july annually
under normal circumstances no 
executive director will receive an 
increase in excess of 10 of their 
base pay in any given financial year
fixed
core benefits
designed to be competitive 
in the market
core benefits typically include
 ƥ a defined contribution pension scheme 
or a cash payment in lieu of a pension 
contribution in certain circumstances
 ƥ private medical insurance for executive 
directors and their immediate family and
 ƥ car allowancecompany car
executive directors are also entitled 
to participate on the same terms as 
all other employees in respect of  
the following benefits
 ƥ four times base pay life assurance
 ƥ income protection and
 ƥ annual leave
reviewed annually relative to 
the market
pension contributions are made 
through salary sacrifice with the 
company making a contribution of 
10 of base pay for the ceo and 
the cfo
if cash is paid in lieu of a pension 
contribution this will be subject to 
normal tax and ni deductions 
although the levels of company 
contributions vary all employees 
have the ability to join the company’s 
defined contribution pension scheme
fixed
voluntary 
benefits
benefits may vary dependent on 
the role of the individual and the 
personal choices they make
these voluntary benefits arrangements 
include the purchase of additional holiday 
and the ability to participate in allemployee 
share plans
reviewed periodically relative 
to the market strategic report overview strategic report strategy strategic report performance governance financial statements other information
29
talktalk telecom group plc annual report 2014
summary of remuneration components of executive directors continued
component aim and link to strategy description of operation and any performance measures
further detail on maximum opportunity 
and framework used to assess performance
variable
annual 
performance 
bonus
designed to focus executives 
on the business priorities for the 
financial year ahead and to align 
the individual’s remuneration 
with the delivery of superior 
business performance
the bonus scheme is based on a ‘balanced 
scorecard’ that is comprised of financial and 
nonfinancial measures which are reviewed 
annually such measures include group 
ebitda operating free cash flow customer 
and employee satisfaction measures and 
innovation
the measures and targets are set annually  
by the remuneration committee to ensure 
they are appropriately stretching for  
the delivery of ‘on target’ ‘stretch’ and 
‘super stretch’ performance 
at least 40 of the ‘balanced scorecard’ 
will be based on financial measures
payment is typically made in june
the remuneration committee 
retains the ability to exercise 
discretion to adjust payments up or 
down in exceptional circumstances 
where they feel this course of action 
is appropriate
the bonus scheme pays at the 
following levels
 ƥ on target awards for executive 
directors are equivalent to 60 
of base pay
 ƥ stretch awards for executive 
directors are equivalent to 110 
of base pay and
 ƥ super stretch maximum awards 
are equivalent to 170 of base pay 
variable
sharebased 
incentive plans
discretionary 
share option 
plan dsop
designed to reward and 
retain executives over the 
longer term whilst aligning 
an individual’s interests 
with those of shareholders
discretionary awards of nilcost options are 
granted over talktalk telecom group plc shares
level of vesting is dependent on achievement 
of performance targets usually over a 
three year performance period from the 
date of grant
for awards up to 2013 the performance 
measures have been 50 eps and 50 tsr
awards vest after three years from grant 60 
of the total vested options are exercisable in 
the third year with the remaining 40 being 
eligible for exercise from the fourth year
there is no intention to award dsop awards 
for those executive directors participating 
in the value enhancement scheme ves 
however this plan is included in the remuneration 
policy to give the remuneration committee 
flexibility to make an award in the case of a 
new hire
awards do not vest until the third 
anniversary of the date of grant and 
may have a deferral element
if employment ceases during the 
vesting period awards will by default 
lapse in full unless the remuneration 
committee exercises its discretion
the maximum level of award is a 
200 base pay multiple unless the 
board determines that exceptional 
circumstances exist which justify 
exceeding this limit in which case 
options will not exceed 300 of 
base pay
the dsop scheme rules were approved 
by shareholders in march 2010 
as part of the demerger from 
carphone warehouse 30
talktalk telecom group plc annual report 2014
directors’ remuneration report continued
remuneration policy continued
summary of remuneration components of executive directors continued
component aim and link to strategy description of operation and any performance measures
further detail on maximum opportunity 
and framework used to assess performance
variable
sharebased 
incentive plans
value 
enhancement 
scheme ves
designed to reward and retain 
executives over the longer term 
whilst aligning an individual’s 
interests with those of shareholders 
and in turn delivering significant 
shareholder value
the value enhancement scheme ves 
is designed to enable participants to share 
in the incremental value of the group in excess 
of an opening valuation as determined by the 
remuneration committee and agreed with 
hmrc each award entitles the participant to 
purchase a fixed number of separate shares 
‘participation shares’ in the subsidiary 
company talktalk group limited the holding 
company for the talktalk business
the number of talktalk shares issued 
to each participant is determined by the 
incremental value pool created above a 
7 return to shareholders
in order to avoid the possibility that value is 
created by a ‘rising tide’ rather than management 
performance the company’s total shareholder 
return will also be required to outperform the 
ftse 250 before any vesting is possible
the vesting of awards will be subject to 
continued employment and the satisfaction 
of performance conditions andor other 
specified events as determined by the 
remuneration committee
participation shares that are purchased by 
participants are acquired at market value and 
participants offered a loan from talktalk at a 
commercial rate of interest in order to fund 
such a purchase 
when the awards vest the participation shares 
will have a value equal to the corresponding 
percentage they represent of the incremental 
value if any of the talktalk businesses at the 
time of vesting in excess of the applicable 
opening valuation and shall then be purchased 
by the company for cash andor by the issue 
or transfer of ordinary shares in the capital 
of the company 
any loan made to the participants to acquire 
participation shares will be required to be 
repaid at that time if the market value of the 
participation shares is less than the amount  
of the outstanding loan and any accrued 
interest then the participant may be required 
to repay a proportion of the loan the amount 
of which the remuneration committee may 
use its discretion to determine
awards are discretionary and are 
made as a ‘block award’ to last four 
years rather than an annual award
each participant is entitled to 
purchase an agreed number of 
participation shares with no 
participant being awarded more than 
10 of the value of the pool created 
60 of the award vests after three 
years with the remaining 40 of 
the award vesting after four years
a cap on the total value of the awards 
that vest at the end of the four year 
period applies and total awards will not 
result in a dilution of the issued share 
capital of the company of more 
than 275
the ves rules were approved by 
shareholders in march 2010 as  
part of the demerger from 
carphone warehouse
executive directors and executive committee 
members will be required to hold 100 of any 
vested shares for a period of twelve months 
following vesting other participants will be 
required to hold 50 of vested shares for a 
twelve month period
participation shares are generally forfeited 
to the value of the original loan plus accrued 
interest in the event that a participant leaves 
the company prior to the vesting date strategic report overview strategic report strategy strategic report performance governance financial statements other information
31
talktalk telecom group plc annual report 2014
remuneration scenarios
the charts below illustrate the level of total remuneration the current executive directors could receive under the remuneration policy 
based on four levels of performance to ensure alignment with returns which are received by our shareholders at minimum ‘on target’ 
‘stretch’ and ‘super stretch’ levels of performance the ‘on target’ level of total remuneration represents performance in line with the 
company’s expectations and ‘super stretch’ is considered to be the maximum level of total remuneration in practice but the cap on 
the ves has intentionally been set at a level higher than this
other sharebased remuneration
talktalk saye scheme
the company operates an allemployee hmrc approved sharesave 
scheme which all eligible employees and executive directors are able 
to participate in all eligible employees are invited to join the scheme 
on an annual basis subject to maximum participation levels which 
are £500 per month from 6 april 2014 or in line with hmrc limits 
if these are increased details of current schemes can be found in 
the annual remuneration section of this report
talktalk share match plan ttg share match
during the course of the year the remuneration committee approved 
the introduction of an allemployee hmrc approved share match plan 
this enables eligible employees to purchase market priced shares 
by entering into a partnership share agreement and holding such 
shares in trust for up to a five year period the rules of the plan allow 
an employee maximum contribution of £1800 per annum or in line 
with hmrc limits if these are increased approval for the ttg share 
match was granted by shareholders at the agm on 24 july 2013
the remuneration committee at its discretion may award matching 
andor free shares to eligible participants matching shares may 
be granted up to a maximum ratio of two matching shares for each 
partnership share purchased by a participant free shares may 
be awarded up to a maximum value of £3600 tax free per annum 
or in line with hmrc limits if these are increased
it is proposed that employees will be invited to join the ttg share 
match from june 2014 onwards with the company providing one 
matching share for each partnership share purchased
service contracts and remuneration packages
service contracts for executive directors
under the executive directors’ service contracts both parties are 
required to give twelve months’ notice of termination of employment 
at the company’s discretion they may terminate the contract immediately 
and not require the director to work their notice and instead pay 
twelve months’ contractual pay plus benefits the executive directors’ 
service contracts also include a twelve month noncompete period
these contracts are available for inspection at the company’s 
registered office
recruitment policy for new hires
when hiring a new executive director the remuneration committee 
will align the remuneration package with the remuneration policy 
stated above including the maximum limits for each remuneration 
component the remuneration committee will take all relevant factors 
into consideration when making a remuneration decision on a new 
executive hire to ensure that these decisions are being made in the 
best interests of the company and its shareholders including but not 
limited to
 ƥ quantum
 ƥ type of remuneration being offered
 ƥ the impact on existing remuneration arrangements for other directors
 ƥ the remuneration package of any exiting equivalent director and
 ƥ the remuneration arrangements of the candidate in their previous role 
minimum
on target
stretch
super 
stretch
£m
� sharebased incentive plan ves � annual performance bonus � base pay taxable benefits and pension
notes
1 base pay is level of base pay from 1 july 2014 taxable benefits are at the level over the past year and pension is based on a 10 company contributioncash in lieu
2 annual performance bonus is at 60 of base pay for target performance 110 of base pay for stretch performance and 170 of base pay for super stretch performance
3 ves outcomes include assumed share price increases over the four year performance term
4 as ves is a ‘block award’ over a four year term rather than an annual award we have annualised the potential payout over a four year period
£4056000 £2385000
£1476000 £1020000
£951000 £695000
£621000 £455000
chief executive officer 
d harding
0 10 05 15 20 25 30 35 40 45
minimum
on target
stretch
super 
stretch
£m
chief financial officer 
s makin
0 10 05 15 20 25 30 35 40 45
100
65 35
42 41 17
15 23 62
100
65 35
45 43 12
19 29 52 32
talktalk telecom group plc annual report 2014
service contracts and remuneration packages 
continued
recruitment policy for new hires continued
in hiring a new executive director the remuneration committee may 
also make a ‘buyout’ award to an external candidate in compensation 
for any remuneration arrangements forfeited on leaving a previous 
employer in making such an award the committee will take into 
consideration relevant performance conditions vesting periods and 
the form in which the award was made it is usual that any ‘buyout’ awards 
will be made on a comparable basis in exceptional circumstances 
the remuneration committee may make an exceptional award under 
one of the company’s existing long term incentive plans in order 
to compensate a candidate for any remuneration arrangements 
forfeited on leaving a previous employer
the remuneration committee would only consider making such 
awards where the individual has lost an award as a result of joining 
the group and awards will be subject to continued employment and 
performance conditions as appropriate following the appointment 
of a new executive director the shareholders will be informed of the 
details as soon as practicable
there may be exceptional and unforeseen circumstances where 
the remuneration committee considers it appropriate to exercise 
discretion available under listing rule 942 r to grant an award to 
facilitate the recruitment of an executive director where a variable 
or performance related award is made under such circumstances 
the remuneration committee confirms that the award will be within 
the limits specified in the remuneration policy table
the remuneration committee emphasises that such discretion would 
only ever be used in genuinely unforeseen and exceptional events 
where it would be disproportionate to seek shareholder approval at 
a general meeting the remuneration committee considers that in 
practice such events would arise highly infrequently if at all for the 
duration of the remuneration policy where such an event arises 
the remuneration committee will consult with major shareholders 
and an explanation on how discretion has been exercised would be 
provided in the following year’s remuneration report 
relocation packages
there may be occasions when hiring a new executive director that a 
relocation package is awarded where a candidate andor the candidate’s 
immediate family relocate either on a temporary or permanent basis 
in order to fulfil their role for the best interests of the company and 
its shareholders in such instances the remuneration committee 
retains the right to compensate for reasonable and appropriate 
relocation expenses
expatriate packages
on appointing a new executive director the remuneration committee 
may offer assistance where a candidate andor the candidate’s 
immediate family is asked to relocate either on a temporary or 
permanent basis from an overseas location to the uk or from the 
uk to an overseas location in such instances the remuneration 
committee retains the right to compensate for reasonable and 
appropriate relocation expenses
remuneration policy for internal promotions
when an existing employee of the company is promoted internally 
to the role of executive director the remuneration committee will 
align the remuneration package with the remuneration policy stated 
above including the factors it takes into account for new hires
any remuneration awarded prior to promotion as an executive 
director will be retained and will be subject to the previous payment 
terms the shareholders will be informed of any such remuneration 
in the directors’ remuneration report following promotion
exit payments
the company operates the following policy in respect of exit payments
 ƥ executive directors have a twelve month notice period from the 
company and they in turn are asked to give the company twelve 
months’ notice
 ƥ exit payments in relation to the service contract are limited to no 
more than one year’s contractual pay plus other benefits and any 
contractual notice pay unless determined otherwise by the board 
in exceptional circumstances or unless otherwise dictated by law
 ƥ the remuneration committee may use its discretion to determine 
appropriate bonus amounts and the vesting of any sharebased 
award taking into consideration the individual circumstances 
under which an executive director is leaving the company
the default position is for annual bonus amounts and the vesting of 
sharebased awards for ‘good leavers’ to be prorated for time served 
from the start date of the scheme to the individual’s exit date and will 
be subject to the applicable rules of the scheme the remuneration 
committee will have sole discretion to determine the ‘good leaver’ 
status of an executive director the committee will determine on 
a case by case basis whether any vesting of a sharebased award 
is appropriate
fees for nonexecutive directors
the nonexecutive directors do not take part in discussions on their 
remuneration each of the nonexecutive directors has a letter of 
appointment substantially in the form suggested by the code and 
each has a three month notice period with no compensation for loss 
of office the company has no age limit for directors the dates of 
each contract are set out on page 37
the fees for nonexecutive directors are set out on page 37 of this report 
these fees are reviewed but not necessarily increased on an annual 
basis taking into account the responsibilities of the role and their 
participation in the various governance committees of the company
nonexecutive directors are not entitled to participate in any annual 
or long term incentive plans or any pension arrangements
external appointments
the board supports executive directors holding nonexecutive 
directorships of other companies and believes that any such 
appointments are part of the continuing development of the 
executive directors from which the company will ultimately 
benefit the board has reviewed all such appointments and those 
appointments that the board believes require disclosure pursuant 
to the code are set out on page 38 the board has also agreed that 
the directors may retain their fees from such appointments
directors’ remuneration report continued
remuneration policy continued strategic report overview strategic report strategy strategic report performance governance financial statements other information
33
talktalk telecom group plc annual report 2014
directors’ remuneration report continued
annual report on remuneration
single figure of remuneration

to aid shareholders’ understanding and in line with the new regulations in the table below we provide a single figure of remuneration for each 
executive director the information for nonexecutive directors is included in the table on page 37
year ended 31 march 2014
executive director
base pay
1
 £000
taxable 
benefits
2
 £000
pension
3
£000
bonuses
4
 £000
ltip
5
£000
saye
gain
6
£000
2014
total
£000 
d harding 500 16 50 320 5955 1 6842
a stirling
7
63 2 3 — — — 68
d goldie
8
100 8 20 — — — 128
s makin
9
373 15 37 239 — 1 665
aggregate emoluments 1036 41 110 559 5955 2 7703
1  value of base pay received in the year 
2  value of benefits received by the director in the year 
the components of taxable benefits are as follows 
• car allowance – cash amount received in the year and 
• private medical insurance – cost to the company in the year for the executive director and their family
3 value of pension contribution or cash in lieu made by the company in the year
4 value of annual bonus payable in respect of the year and based on performance for the financial year
5 value of ves and dsop awards which vested during the year and any dividend payments due on these vestings
6 under the 2013 saye scheme both d harding and s makin were granted 4687 options on 14 june 2013 at an option price of £192
7  the figures in this table are for the period a stirling was a director to 31 may 2013 the base pay taxable benefits and pension received for her employment not as a director 
up to 30 september 2013 amounted to £134000 and ltip amounted to £3411994
8 the figures in this table are for the period d goldie was a director to 27 september 2013 the ltip received whilst in employment after that date amounted to £3411994
9 s makin’s base pay was £375000 from his start date to 30 september 2013 it was increased to £400000 effective 1 october 2013
year ended 31 march 2013
executive director
base pay
1
 £000
taxable 
benefits
2
 £000
pension
3
£000
bonuses
4
 £000
ltip
5
£000
saye
gain
6
£000
2013
total
£000 
d harding 500 16 51 334 4716 — 5617
a stirling 375 9 19 250 2774 — 3427
d goldie 200 15 40 133 2774 — 3162
aggregate emoluments 1075 40 110 717 10264 — 12206
1 value of base pay received in the year 
2  value of benefits received by the director in the year 
the components of taxable benefits are as follows 
• car allowance – cash amount received in the year and 
• private medical insurance – cost to the company in the year for the executive director and their family
3 value of pension contribution or cash in lieu made by the company in the year
4 value of annual bonus payable in respect of the year and based on performance for the financial year
5 value of ves and dsop awards which vested during the year and any dividend payments due on these vestings
6 no saye options were granted to executive directors as part of the 2012 saye
base pay
year ended 31 march 2014
during the course of the year ended 31 march 2014 remuneration for 
executive directors was reviewed in line with market trends peer group 
benchmarking and current internal practices peer group analysis was 
conducted by towers watson using a group of 21 companies in the 
ftse with comparable revenue and market capitalisation no base 
pay increases were made to executive directors in the year except 
for stephen makin who received a base pay increase to £400000 
effective 1 october 2013 in line with his employment offer 
dido harding has received no base pay increase since joining the 
company in 2010
for the year ended 31 march 2014 average base pay increases for all 
other employees was 3
year ending 31 march 2015
following the committee’s review of executive remuneration during 
the year ended 31 march 2014 it was decided to increase the base pay 
of the ceo to £550000 effective from 1 july 2014 this increase will 
be the first since her appointment in 2010 therefore on an annualised 
basis represents an increase of approximately 25 per annum and 
is in line with the group’s policy to set base pay at market median 
in determining this increase the committee also took into consideration 
the contribution the ceo has made to the business in particular the 
significant strength in leadership which has resulted in the growth of 
the market capitalisation of the company from £900m to around 
£28bn since her appointment in february 2010
for the year ending 31 march 2015 average base pay increases for 
all other employees will be 3 this is applied as a 25 all employee 
increase with a further 05 for performance and market related 
increases on a discretionary basis
the following sections set out how the company’s remuneration policy was 
implemented in the year ended 31 march 2014 and how it will be implemented 
for the year ending 31 march 2015 34
talktalk telecom group plc annual report 2014
pension contributions

year ended 31 march 2014
during the course of the year executive directors received company 
pension contributions in line with the remuneration policy there 
were no directors who were members of a defined benefit pension 
scheme during the year 
dido harding received a 10 of base pay employer contribution to her 
pension and made a contribution of 5 of her base pay up to 1 march 2014 
when she left the pension scheme for the year ended 31 march 2014 
this 10 of base pay was paid partly to the pension arrangement with 
the balance being paid as cash in lieu 
stephen makin received a 10 of base pay contribution into his 
private pension plan
david goldie received a cash equivalent of 20 of base pay in lieu 
of pension payments
the pension schemes provided for other employees of the group 
are included in note 4 to the consolidated financial statements
year ending 31 march 2015
in the year ending 31 march 2015 pension contributions from the 
company for dido harding and stephen makin will continue to be 
capped at 10 of base pay in line with the remuneration policy 
dido harding’s pension contribution will be paid as a cash payment in lieu
annual performance bonus
year ended 31 march 2014
for the year ended 31 march 2014 the annual performance bonus was 
based on a ‘balanced scorecard’ blend of financial and nonfinancial 
measures as set out in the table below 
executives had an incentive opportunity in the range of 0 to 170 
of base pay performance for the year achieved 106 of the target 
bonus potential resulting in a bonus payment of 64 of base pay 
performance against each of the measures is set out below
measure weighting achievement
headline group ebitda 20 missed
operating free cash flow 10 missed
onnet arpu 10 super stretch
talktalk business revenue 10 stretch
net promoter score 10 between minimum 
and target
onnet churn 20 missed
tv launch and customer 
experience
10 super stretch
employee engagement 5 stretch
innovation 5 super stretch
when determining bonus payments the remuneration committee 
takes into account performance against the measures above 
overall business performance and individual performance of 
executive directors
significant investment in the year in our rapidly growing tv business 
has resulted in some financial measures being confirmed at below 
minimum strong performance against the remainder of the scorecard 
has resulted in bonus being paid out to executive directors at just 
above target levels
the remuneration committee has judged that the targets are 
commercially sensitive and remain so even on a retrospective basis 
as they could give competitors insight into talktalk’s business 
planning process
the remuneration committee is satisfied that this bonus has provided 
an excellent link between reward and operating performance and the 
creation of further shareholder value
year ending 31 march 2015
during the course of the year a review of the annual bonus scheme 
was conducted to ensure that the performance measures in the 
balanced scorecard continue to be aligned to company strategy 
the performance measures and their weightings for the year ending 
31 march 2015 are set out below 
performance measure weighting
headline group ebitda 15
operating free cash flow 10
consumer revenue 10
talktalk business revenue 10
net promoter score 10
churn 25
tv launch and customer experience 10
innovation 10 
the board has determined that the disclosure of performance 
targets continue to be deemed commercially sensitive and are 
therefore not disclosed in this report these targets are determined 
within the context of a longer term business plan and the disclosure 
of these targets could give information to talktalk competitors to the 
detriment of business performance
the committee will disclose performance against all these measures 
in next year’s directors’ remuneration report
there is no change to the annual bonus policy for executive directors 
which is set out in the remuneration policy table with the exception 
of new performance measures and weightings shown above 
directors’ remuneration report continued
annual report on remuneration continued strategic report overview strategic report strategy strategic report performance governance financial statements other information
35
talktalk telecom group plc annual report 2014
sharebased incentive plans

year ended 31 march 2014
the single figure of remuneration includes amounts for the value of 
options to acquire ordinary shares in the company granted to or held 
by the directors details of the options for the directors who served 
during the year are as follows
the talktalk group value enhancement scheme
as stated in the remuneration policy  the value enhancement 
scheme ves was designed to enable participants to share in the 
incremental value of the group in the excess of an opening valuation 
as determined by the remuneration committee and agreed with 
hmrc with the initial valuation being on 1 april 2009
as performance conditions are satisfied and the award vests the 
participation shares are purchased by talktalk through the issue 
of talktalk telecom group plc shares or satisfied by shares held 
by the group esot p articipation shares which are purchased by 
participants are acquired at market value and participants are 
offered a loan from talktalk at a commercial rate of interest in 
order to fund such a purchase 
60 of the scheme vested in 2012 with the remaining 40 vesting 
in 2013 
the remuneration committee determined that the performance 
condition of a 5 tsr hurdle once 7 has been returned to 
shareholders had been achieved and therefore the scheme vested 
resulting in a pool shared amongst talktalk participants of £42m 
the calculations which determined the value of this pool have 
been independently audited
vesting of the remaining 40 of the ves resulted in the directors 
receiving the following share holdings
director
2014 
 share
of pool
2014
number
 of shares
d harding
1
10 1881567
a stirling
2
6 1210356
d goldie
2
6 1210356
22 4302279
1 all shares must be held for a minimum of twelve months from receipt
2 no holding restriction due to the fact that employment ceased on 30 september 2013
the remaining percentage of allocated shares in the ves pool is held 
by other senior management of the group 
interest on outstanding loans was charged at 4 during the year 
2013 4 and interest bearing loans which the directors had in 
relation to the ves were repaid in full when the remaining 40 of 
the scheme vested
there was no clawback in respect of this scheme during the year 
ended 31 march 2014 and no nonexecutive directors participated 
in this scheme in addition no further ves awards were made in the 
year ended 31 march 2014
talktalk discretionary shares
the talktalk discretionary share option plan dsop is designed 
to provide a long term incentive plan for certain employees of the 
talktalk group it is the intention of the committee that generally 
in any one year participants may only receive an award under one 
such scheme
awards under the dsop granted during the year or where 
performance periods ended during the year are set out below
2010 g rant
the dsop awarded in 2010 was approved by hmrc and the exercise 
of the options is subject to continuing employment and performance 
conditions which are set out below 
these awards were made at the time of demerger from the carphone 
warehouse group in order to incentivise senior directors and other 
members of the management population to develop and grow the new 
standalone business therefore the board awarded all participants 
a multiple of 200 base pay which vested on achievement of a 5 tsr 
hurdle being reached a further 100 base pay award also vested 
providing that the share price of the company was calculated as at 
least £240 in the five day period leading up the vesting date 50 of 
the options granted under this award vested on 28 march 2013 but 
were exercisable following the announcement of the preliminary 
results on 16 may 2013 the remaining 50 vested on 12 november 2013
other than the ceo no executive or nonexecutive directors 
participated in this scheme
there was no clawback in respect of this scheme during the year 
ending 31 march 2014
2013 grant
a further dsop was granted in june 2013 dsop 2013 under the 
dsop rules approved by shareholders in 2010 and is an unapproved 
scheme the exercise of these options is subject to continuing 
employment and two performance conditions which are set out 
in the table below
level of performance
vesting 
level
eps 
cagr
tsr 
cagr
minimum 25 50 50 
target 40 50 50 
stretch 70 50 50 
super stretch 100 50 50
awards are triggered within a range from 18 to 26 for compound 
annual growth of eps and from 5 to 147 for compound annual 
growth of tsr if the minimum performance requirement is met 
a total of 25 of the award will vest rising to 40 for target 70 
for stretch and 100 for super stretch performance
awards under this scheme vest in may 2016 the awards held by  
executive directors are detailed in the table on the following page
there was no clawback in respect of this scheme during the year 
ended 31 march 2014 and no nonexecutive directors participated 
in this scheme
the performance conditions for the dsop 2012 were also based on 
an equal split of achieving a compound tsr and a compound eps measure 
over the performance period awards being triggered within a range 
from 10 to 19 for compound annual growth of both these measures 36
talktalk telecom group plc annual report 2014
directors’ remuneration report continued
annual report on remuneration continued
sharebased incentive plans continued
year ended 31 march 2014
scheme interests awarded in the year
director
number
 of shares
 allocated
d harding 452489
s makin 339367
791856
total dsop under option at year ended 31 march 2014
director
scheme 
type
type 
of award
performance
conditions
apply
4
average share 
price used
 for grant
face value
of award
1
minimum level 
of award
vesting 
date
d harding dsop 2012 nil priced unapproved yes £122 £1250000 25 may 2015 
2
dsop 2013 nil priced unapproved yes £221 £1000000 25 june 2016 
3
s makin dsop 2013 nil priced unapproved yes £221 £750000 25 june 2016 
3
£3000000
1 face value is calculated as the number of options awarded multiplied by the average share price over the five day period prior to grant
2 60 exercisable from may 2015 and remaining 40 exercisable twelve months thereafter
3 60 exercisable from june 2016 and remaining 40 exercisable twelve months thereafter
4 performance conditions are set out on page 35
year ending 31 march 2015
the talktalk group value enhancement scheme ves
the company proposes to make a further ves award under the rules 
of the ves already approved by shareholders as a oneoff award to 
executive directors and a limited number of members of the senior 
leadership team
the board strongly believes that due to the evolving and dynamic 
nature of the company and its growth aspirations a further award 
under the ves will continue to closely align the senior team to 
shareholders’ interests and to further incentivise the executive team 
to create significant value for shareholders for the next phase of 
development of the business
the level of award granted to each individual during the year ending 
31 march 2015 will be determined by the remuneration committee 
the awards will recognise the individual’s performance including 
exceptional performance but no individual executive director shall 
be awarded more than 10 of the ves pool in addition the total value 
of the ves awards will be subject to the cap set out in the 
remuneration policy
it is expected that all executive directors will participate in the ves 
rather than the dsop in the year ending 31 march 2015 
talktalk discretionary shares
the remuneration committee intends to make an award in 2014 under 
the dsop rules approved by shareholders in 2010 to members of the 
senior management group
the exercise of any options awarded under this scheme will be 
dependent on continued employment and the achievement of 
performance conditions which have not currently been determined 
and will be published in next year’s directors’ remuneration report 
awards under this scheme will vest in 2017 
allemployee share plans

allemployee share option award
the allemployee share option award was granted in september 2012 
and vested in september 2013 under the dsop rules approved by 
shareholders in 2010 a shareholder resolution approved at the 2013 
agm permitted a waiver of the three year vesting period the award was 
designed to reward all employees not currently part of another share 
option plan to foster allemployee share ownership each qualifying 
employee was awarded 1000 nil priced share options no awards 
were made to executive directors nonexecutive directors or senior 
managers the exercise of the options was subject to continuing 
employment on the vesting date in september 2013 and there were 
no performance conditions in relation to this grant these options 
lapsed on resignation of an employee
on vesting of the scheme a total of two million shares were awarded 
to the company’s employee population
talktalk saye scheme
the talktalk saye scheme is a saveasyouearn share option scheme 
and is approved by hmrc the saye scheme is administrated by a 
duly authorised committee of the board all uk executive directors 
and employees of talktalk and participating companies within the 
group are eligible to participate in the saye scheme as long as they 
have been employed for a qualifying period to participate in the saye 
scheme an eligible employee must enter into a saye contract and 
agree to make monthly contributions between £5 and £250 increasing 
to £500 per month from 1 april 2014 for a specified period of three 
or five years 
options granted to acquire talktalk shares under the saye scheme 
have an option price determined by the talktalk board which will be 
not less than the higher of 80 of the middle market quotation price 
or their nominal value strategic report overview strategic report strategy strategic report performance governance financial statements other information
37
talktalk telecom group plc annual report 2014
allemployee share plans continued
talktalk saye scheme continued
details of the share options for executive directors under the talktalk 
saye scheme which were exercised from 1 july 2013 are shown below 
any unexercised options expired on 1 january 2014 amy stirling also 
exercised 8897 options on the same date but was no longer a director 
of the company on the date of exercise
exercises
shares 
under option option price
scheme 
maturity date
d harding 8897 £102 1 july 2013
d goldie 8897 £102 1 july 2013
no nonexecutive directors participated in this scheme
further details of the features and operations of the saye can be 
found in note 5 to the consolidated financial statements
allemployee share match plan ttg share match
during the course of the year the remuneration committee approved 
the introduction of an allemployee hmrc approved share match plan 
this enables eligible employees to purchase market priced shares by 
entering into a partnership share agreement and holding such shares 
in trust for up to a five year period approval for the ttg share match 
was granted by shareholders at the agm on 24 july 2013
no awards were made under this scheme during the period
the remuneration committee notes that the ttg share match is due 
to launch to all employees in june 2014
additional information
shareholding requirements
executive directors are required to build and retain a minimum 
shareholding in the company equivalent to 200 of base pay 
current shareholdings are set out below for executive directors
director
holding 
requirement
as a  of 
base pay
actual 
holding
requirement 
satisfied
actual share
 ownership 
as a  of 
base pay
2
d harding 200 4253390 yes 2725
s makin
1
200 20000 no 17
1 appointed to the board on 31 may 2013
2 share price on 31 march 2014 used for calculation
whilst there are no shareholding requirements for nonexecutive 
directors this is encouraged within the company
ordinary shares of 01p
director 31 march 2014 31 march 2013 date of contract
c dunstone 294059396 294059396 20 january 2010
j gildersleeve 245138 245138 20 january 2010
i west 346023 346023 8 february 2011
j allwood 10000 10000 20 january 2010
b hoberman 12882 12882 20 january 2010
h stringer 10000 – 26 july 2012
j powell 1000 – 26 july 2012
j shields – – 16 may 2013
fees for nonexecutive directors
remuneration for nonexecutive directors is set by the board taking 
account of the commitments and responsibilities of the role and their 
participation in the various governance committees of the company
the fees for nonexecutive directors and their appointment dates 
are set out in the tables below nonexecutive directors are not 
eligible to participate in annual bonus ltip and pension arrangements
nonexecutive director
fees 
£000
taxable 
benefits 
£000
2014 
total 
£000
fees 
£000
taxable 
benefits 
£000
2013 
total 
£000
c dunstone 360 1 361 360 1 361
j gildersleeve 85 – 85 85 – 85
i west 78 – 78 73 – 73
j allwood 68 – 68 60 – 60
b hoberman 50 – 50 50 – 50
h stringer 50 – 50 34 – 34
j powell 50 – 50 34 – 34
j shields
1
39 – 39 – – –
aggregate 
emoluments 780 1 781 696 1 697
1 appointed to the board on 16 may 2013
there were no changes to fee levels for nonexecutive directors in the 
year and no increases are proposed in the year ending 31 march 2015 
except where there are changes in the membership of the various 
committees of the board 
payments to past directors
there were no payments made to past directors in the year ended 31 march 2014 not disclosed elsewhere in the report
payments for loss of office
there were no payments made to executive directors past or present in the year ended 31 march 2014 in compensation for loss of office
the 2012 dsop award of 614754 options made to amy stirling lapsed on 30 november 2013
nonexecutive directors’ letters of appointment
the committees that nonexecutive directors serve on and dates of appointment are set out below
nonexecutive director committee membership
date first appointed  
to the board 
effective date of  
current letter 
of appointment
c dunstone — 20 january 2010 16 january 2013
j gildersleeve audit remuneration nomination compliance 20 january 2010 16 january 2013
j allwood audit nomination 20 january 2010 20 january 2013
b hoberman remuneration 20 january 2010 20 january 2013
i west audit remuneration nomination 8 february 2011 16 may 2013
h stringer remuneration 26 july 2012 26 july 2012
j powell audit 26 july 2012 26 july 2012
j shields
1
— 16 may 2013 16 may 2013
1 appointed to the board on 16 may 2013 38
talktalk telecom group plc annual report 2014
directors’ remuneration report continued
annual report on remuneration continued
additional information continued
fees for external appointments
director organisation
2014 
£000 
d harding british land plc the jockey club 71
d goldie energy assets group plc  
node4 holdings ltd whp holdings ltd
9 
charles dunstone is also chairman of carphone warehouse group plc 
which the company believes is a significant other commitment for him
advice and services provided to the remuneration committee
except when matters concerning their own positions are being 
considered the chief executive officer and the group human 
resources director are normally invited to attend the meetings 
of the remuneration committee the committee may discuss any 
matter affecting the chairman without the chairman being present
over the course of the year ended 31 march 2014 the remuneration 
committee appointed and was advised on matters relating to executive 
remuneration by towers watson the remuneration committee deems 
the advisors to be independent from the company and the advice 
they received during the year to be appropriate and objective
towers watson is a signatory to the remuneration consultants’ 
group code of conduct in relation to executive remuneration 
consulting in the uk
towers watson has also been appointed by the group hr director 
to advise the company on other matters in relation to employee 
remuneration such as variable pay plans and organisational pay 
band development over the course of the year
the fees paid for services are set out below
company nature of service
2014
£000
towers watson
1
remuneration benchmarking 
and long term incentive design
76
1 appointed on 28 november 2013
relative importance of spend on pay
the difference in actual expenditure between fy13 and fy14 on 
remuneration for all employees in comparison to distributions to 
shareholders by way of dividends is set out in the graphs below
comparing pay to performance
the following tables and chart show a comparison of total pay for the 
ceo since the listing of the company on 29 march 2010 with the 
remuneration of all other employees and with tsr
the regulations require a comparison with tsr performance over 
a five year period but due to the company’s listing in 2010 it is only 
possible to report for a four year period in this year’s report
single figure of 
remuneration
1
bonus as a  
of maximum 
available
shares vesting 
as a  of 
maximum
2
2011  
£000 767 199 —
2012  
£000 967 400 —
2013  
£000 5617 392 —
2014  
£000 6842 376 —
1  the increase in the single figure number in 2013 represents the vesting of the first ltip 
award since the listing of the company
2  it is not possible to show this value as the ves does not have a maximum  of shares 
however for information the 2010 dsop award vested at 100 of the maximum
the table below shows the percentage change in remuneration between 
2013 and 2014 for the ceo and all other employees of the group
base pay
  change
taxable benefits
 change
annual bonus
 change
ceo — — 4
employees 3 1 2
dividend paid £m 
2014
2013
£99m
£87m
£12m
total employee pay £m
2014
2013
£125m
£133m
–£8m strategic report overview strategic report strategy strategic report performance governance financial statements other information
39
talktalk telecom group plc annual report 2014
additional information continued
tsr performance graph
the graph below shows the group’s performance compared to the tsr performance of the ftse 250 from the date of the group’s listing 
on 29 march 2010
the ftse 250 was selected as it is a broad market index of which the group is a member
29 march
2010
31 march
2011
t alkt alk t elecom group plc
31 march
2012
31 march
2013
31 march
2014
250
300
200
150
100
50
0
ftse 250
this remuneration report has been prepared in accordance with the 
large and mediumsized companies and group accounts and reports 
amendment regulations 2013 ‘regulations’ issued under the 
companies act the uk corporate governance code the gc 100 
and investor group directors’ remuneration reporting guidance and 
the executive remuneration principles published by the association 
of british insurers in november 2013 the constitution and operation 
of the remuneration committee are in compliance with the code 
in framing its remuneration policy the committee has given full 
consideration to the matters set out in schedule a of the code and 
the regulations as required by the regulations resolutions to 
approve the remuneration policy section and the overall directors’ 
remuneration report will be proposed at the 2014 agm voting 
regarding the 2013 directors’ remuneration report was as follows
votes for
discretionary 
votes votes against votes withheld total votes
753604571 83850 21497951 156019 775342391
97 — 3 — 100
 
john gildersleeve
remuneration committee chairman
14 may 2014 40
talktalk telecom group plc annual report 2014
suppliers payment policy
it is the company’s policy to develop and maintain key commercial 
relationships with its suppliers one aspect of which is payment 
timing to obtain mutually agreed payment terms the company 
has commercially agreed longer credit terms with one of its larger 
corporate suppliers excluding this supplier the underlying average 
credit period taken on trade payables was 32 days 2013 39 days 
including this supplier the average credit period taken was 42 days 
2013 48 days 
contracts with controlling shareholders
there are no material contracts with controlling shareholders except 
as disclosed in the directors’ remuneration report on pages 26 to 39 
no director is entitled to any compensation for loss of office on a 
takeover or change of control of the company details of employee 
share schemes are set out in note 5 to the financial statements 
shares held by the group esot abstain from voting
share capital
the rights and obligations relating to the company’s shares are set out in 
the articles of association the articles of association can be requested 
from the company secretary at the company’s registered office 
there are no restrictions on the transfer of ordinary shares in the capital 
of the company other than those which may be imposed by law from 
time to time in accordance with the disclosure and transparency 
rules certain employees are required to seek approval to deal in the 
company’s shares the company is not aware of any agreements 
between shareholders that may result in restrictions on the transfers 
of securities andor voting rights 
there is a general right of the company to purchase its own shares 
as set out at article 16 of the company’s articles of association 
in addition at the agm in 2013 the directors were granted the right 
to acquire 93124407 shares this right expires on the date of the 
2014 agm or 24 october 2014 whichever is the sooner 
the articles of association may be changed by special resolution
details in the movements in authorised and issued share capital during 
the period are provided in notes 21 and 22 to the financial statements
appointment of directors
the rules relating to the appointment andor removal of directors 
are contained in section o of the company’s articles of association 
the powers of the directors are set out in the company’s articles 
of association 
property plant and equipment
movements in property plant and equipment are set out in note 12 
to the financial statements 
dividends 
the company may by resolution in a general meeting declare 
dividends in accordance with the respective rights of the members 
but no dividend can exceed the amount recommended by the board
significant shareholdings
at 14 may 2014 the company had been notified of the following 
interests in the company’s shares
name
number 
of shares
percentage 
of share capital
charles dunstone 294059396 3079
david ross 116160528 1216
capital research  
and management company 61162000 640
jupiter asset management 37379821 391
group esot 34130266 357
fidelity worldwide investment uk ltd 30634947 321
alken asset management llp 30564840 320
the total interests of the directors are detailed in the directors’ 
remuneration report on pages 26 to 39
going concern
on the basis of current financial projections and facilities available 
the directors are satisfied that the group has adequate resources 
to continue in operation for the foreseeable future and consequently 
the financial statements continue to be prepared on the going concern 
basis as discussed in the chief financial officer’s statement on 
page 14
directors’ indemnities
directors’ liability insurance is provided for directors 
equal opportunities
we celebrate diversity and have an equality policy which ensures that 
everyone is provided with the same opportunities for employment 
career development training and promotion as part of this policy 
applications for employment by disabled persons are fully considered 
bearing in mind the abilities of the applicant concerned in the event 
of employees becoming disabled during employment a thorough 
process is followed and support provided including income support 
insurance to try to secure their employment
audit information
each of the persons who is a director at the date of approval of this 
annual report confirms that
 ƥ so far as the director is aware there is no relevant audit information 
of which the company’s auditor is unaware and
 ƥ the director has taken all the steps that heshe ought to have taken 
as a director in order to make himselfherself aware of any relevant 
audit information and to establish that the company’s auditor is 
aware of the information
this confirmation is given and should be interpreted in accordance 
with the provisions of section 418 of the companies act 2006
by order of the board
talktalk telecom group plc
11 evesham street 
london w11 4ar
ts morris
company secretary
14 may 2014
directors’ report strategic report overview strategic report strategy strategic report performance governance financial statements other information
41
talktalk telecom group plc annual report 2014
directors’ responsibilities statement
the directors are responsible for preparing the annual report and the 
financial statements in accordance with applicable law and regulations
company law requires the directors to prepare financial statements 
for each financial year under that law the directors are required to 
prepare the group financial statements in accordance with international 
financial reporting standards ifrss as adopted by the european 
union and article 4 of the ias regulation and have elected to prepare 
the parent company financial statements in accordance with united 
kingdom generally accepted accounting practice united kingdom 
accounting standards and applicable law under company law the 
directors must not approve the accounts unless they are satisfied 
that they give a true and fair view of the state of affairs of the 
company and of the profit or loss of the company for that period 
in preparing the group financial statements international accounting 
standard 1 requires that directors
 ƥ properly select and apply accounting policies
 ƥ present information including accounting policies in a 
manner that provides relevant reliable comparable and 
understandable information 
 ƥ provide additional disclosures when compliance with the specific 
requirements in ifrss are insufficient to enable users to understand 
the impact of particular transactions other events and conditions 
on the entity’s financial position and financial performance and
 ƥ make an assessment of the company’s ability to continue 
as a going concern
in preparing the parent company financial statements the directors 
are required to
 ƥ select suitable accounting policies and then apply them consistently
 ƥ make judgements and accounting estimates that are reasonable 
and prudent
 ƥ state whether applicable uk accounting standards have been 
followed subject to any material departures disclosed and 
explained in the financial statements and
 ƥ prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the company will 
continue in business
the directors are responsible for keeping adequate accounting records 
that are sufficient to show and explain the company’s transactions and 
disclose with reasonable accuracy at any time the financial position of 
the company and enable them to ensure that the financial statements 
comply with the companies act 2006 they are also responsible for 
safeguarding the assets of the company and hence for taking reasonable 
steps for the prevention and detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity of the 
corporate and financial information included on the company’s website 
legislation in the united kingdom governing the preparation and 
dissemination of financial statements may differ from legislation 
in other jurisdictions
responsibility statement 
we confirm that to the best of our knowledge
 ƥ 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
 ƥ the strategic 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 and
 ƥ the annual report and financial statements taken as a whole are 
fair balanced and understandable and provide the information 
necessary for shareholders to assess the company’s performance 
business model and strategy
by order of the board
 
 
d harding   s makin 
chief executive officer  chief financial officer
14 may 2014   14 may 2014 42
talktalk telecom group plc annual report 2014
independent auditor’s report 
to the members of talktalk t elecom group plc
opinion on financial statements  
of talktalk telecom group plc
in our opinion
 ƥ the financial statements give a true and fair view of the state of the group’s and 
of the parent company’s affairs as at 31 march 2014 and of the group’s profit for 
the year then ended
 ƥ the group financial statements have been properly prepared in accordance 
with international financial reporting standards ifrss as adopted by the 
european union
 ƥ the parent company financial statements have been properly prepared in 
accordance with united kingdom generally accepted accounting practice and
 ƥ the financial statements have been prepared in accordance with the requirements 
of the companies act 2006 and as regards the group financial statements 
article 4 of the ias regulation
the financial statements comprise the group income statement the group 
statement of comprehensive income the group statement of changes in equity 
the group and parent company balance sheets the group cash flow statement 
the parent company reconciliation of movements in shareholders’ funds and the 
related notes 1 to 28 the financial reporting framework that has been applied in 
the preparation of the group financial statements is applicable law and ifrss as 
adopted by the european union the financial reporting framework that has been 
applied in the preparation of the parent company financial statements is 
applicable law and united kingdom accounting standards united kingdom 
generally accepted accounting practice
separate opinion in relation to ifrss  
as issued by the iasb
as explained in note 1 to the group financial statements in addition to complying 
with its legal obligation to apply ifrss as adopted by the european union the 
group has also applied ifrss as issued by the international accounting standards 
board iasb
in our opinion the group financial statements comply with ifrss as issued by 
the iasb
going concern as required by the listing rules we have reviewed the directors’ statement 
contained within the chief financial officer’s statement that the group 
is a going concern we confirm that
 ƥ we have concluded that the directors’ use of the going concern basis of 
accounting in the preparation of the financial statements is appropriate and
 ƥ we have not identified any material uncertainties that may cast significant 
doubt on the group’s ability to continue as a going concern
however because not all future events or conditions can be predicted this 
statement is not a guarantee as to the group’s ability to continue as a going concern
our assessment of risks of material 
misstatement
the assessed risks of material misstatement described opposite are those that 
had the greatest effect on our audit strategy the allocation of resources in the 
audit and directing the efforts of the engagement team strategic report overview strategic report strategy strategic report performance governance financial statements other information
43
talktalk telecom group plc annual report 2014
risk how the scope of our audit responded to the risk
revenue recognition 
revenue recognition surrounding
 ƥ the completeness over revenue due to the high 
volume of low value data the majority of the 
group’s revenue is generated from the output 
of billing systems and
 ƥ the accuracy and completeness of revenue 
recognised on transactions which are outside the 
normal billing process which by their nature carry 
a higher level of management judgement 
we tested the operating effectiveness of key it and business controls over the 
customer billing systems our tests assessed the operating effectiveness of 
controls put in place to ensure all services supplied to customers are input into 
and processed through the billing systems
this enabled us to obtain controls assurance over billing systems accounting for 
over 95 of total group revenue we subsequently applied a combination of 
substantive analytical review procedures and tests of detail to obtain assurance 
over the validity and completeness of the reported output of these systems
we performed substantive testing on a sample of nonsystematic adjustments 
which are outside of the normal billing process and therefore carry higher levels 
of management judgement these included revenue deferrals and the write back 
of historical credits applied to customer accounts to the income statement
disclosure of exceptional items and the 
presentation of adjusted measures in the 
financial statements
the disclosure of exceptional items and their 
presentation on the face of the income statement 
represents an audit risk given the level of 
management judgement involved areas of 
particular audit focus in the current year are 
exceptional costs recognised in relation to dual 
running costs internal labour costs and the “red 
routers” programme – all of which we deem to carry 
a higher level of judgement the nature of these 
costs have been defined in note 9 to the accounts
in addition to understanding the composition of exceptional items and agreeing a 
sample of items to supporting documentation we have challenged management’s 
rationale for the presentation of items within the income statement as exceptional 
particularly around the areas of higher judgement such as dualrunning to ensure 
the costs recognised as exceptional meet the criteria of the accounting policy 
for such items defined by the group within note 9 this includes assessing the 
incremental nature of the costs the extent to which the costs are nonrecurring 
whether they are specific to individual projects and considering whether they 
should be classified as part of underlying operations
our work has also included a review on a sample basis of items included within  
the income statement to identify income and expenses which were exceptional  
by nature but not separately identified
carrying value of goodwill and intangible assets
management is required to undertake an annual 
impairment review which incorporates judgements 
based on assumptions of future cash flows 
including assumptions around revenue growth 
margins and forecast cash flows the selection 
of appropriate discount rates and the assessment 
of the group’s cash generating units
we challenged management’s assumptions used in the impairment model 
for goodwill and intangible assets including specifically the determination of 
cash generating units the forecast cash flow projections for each cash generating 
unit and the discount rates in making this critical assessment of the cash flow 
projections we assessed historical forecasting accuracy and compared forecast 
profit margins to historical margins and benchmarked the discount rate and growth 
rates employed to available market data we critically assessed management’s 
position as to whether or not a reasonably possible change to key operating 
assumptions could result in an impairment in doing so we considered the 
sensitivity of the asset valuations to these assumptions in particular changes to 
the long term growth rate assumed and the growth of the tv and fibre customer 
bases we also considered the appropriateness of the related disclosures set out 
in note 11 to the accounts
treatment and presentation of deferred tax assets
the accounting treatment and presentation of the 
measurement of deferred tax assets relating to 
losses of video networks limited acquired with 
tiscali which have been disclosed within note 7 
the recognition of these deferred tax assets are 
judgemental as a result of their nature and reliance 
on management forecasts
we have reviewed correspondence with hmrc supporting the availability of these 
losses and have challenged management’s forecasts of future taxable profits to 
determine the appropriate quantum of v ideo network losses to recognise as a 
deferred tax asset
the audit committee’s consideration of these risks is set out on page 23
our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole and not to 
express an opinion on individual accounts or disclosures our opinion on the financial statements is not modified with respect to any of the 
risks described above and we do not express an opinion on these individual matters 44
talktalk telecom group plc annual report 2014
independent auditor’s report continued
to the members of talktalk t elecom group plc
our application 
of materiality
we define materiality as the magnitude of misstatement in the financial statements that makes it probable 
that the economic decisions of a reasonably knowledgeable person would be changed or influenced we 
use materiality both in planning the scope of our audit work and in evaluating the results of our work
we determined planning materiality for the group to be £6m 2013 £82m in determining materiality 
we made allowance for the impact of the subscriber acquisition costs related to tv customers which has 
reduced current year profits our materiality was therefore set by blending revenue and profit metrics to 
take this matter in to account on the basis of our risk assessment together with our assessment of the 
group’s overall control environment our judgement is that performance materiality for the group should 
be 70 of planning materiality namely £42m our objective in adopting this approach is to ensure that 
total detected and undetected audit differences do not exceed our planning materiality for the financial 
statements as whole
we agreed with the audit committee that we would report to the committee all audit differences in 
excess of £120000 as well as differences below that threshold that in our view warranted reporting 
on qualitative grounds
we also report to the audit committee on disclosure matters that we identified when assessing the 
overall presentation of the financial statements
an overview of the scope 
of our audit
our group audit was scoped by obtaining an understanding of the group and its environment including 
groupwide controls and assessing the risks of material misstatement at the group level based on that 
assessment we focused our group audit scope primarily on the talktalk consumer and talktalk business 
operating units each of these was subject to a full audit and represent 95 of the group’s total assets 
and revenues specific focused audit work was performed over group functions including those covering 
treasury and taxation our audit work at each division was executed at levels of materiality which were  
lower than group materiality
at the parent entity level we also tested the consolidation process and carried out analytical procedures 
to confirm our conclusion that there were no significant risks of material misstatement of the aggregated 
financial information of the remaining components not subject to audit
opinion on other matters 
prescribed by the 
companies act 2006
in our opinion
 ƥ the part of the directors’ remuneration report to be audited has been properly prepared in accordance 
with the companies act 2006 and
 ƥ the information given in the strategic report and the directors’ report for the financial year for which  
the financial statements are prepared is consistent with the financial statements
matters on which we are required to report by exception
adequacy of explanations 
received and accounting 
records
under the companies act 2006 we are required to report to you if in our opinion
 ƥ we have not received all the information and explanations we require for our audit or
 ƥ adequate accounting records have not been kept by the parent company or returns adequate for our 
audit have not been received from branches not visited by us or
 ƥ the parent company financial statements are not in agreement with the accounting records and returns
we have nothing to report in respect of these matters
directors’ remuneration under the companies act 2006 we are also required to report if in our opinion certain disclosures of 
directors’ remuneration have not been made or the part of the directors’ remuneration report to be 
audited is not in agreement with the accounting records and returns we have nothing to report arising 
from these matters
corporate governance 
statement
under the listing rules we are also required to review the part of the corporate governance statement 
relating to the company’s compliance with nine provisions of the uk corporate governance code  
we have nothing to report arising from our review
our duty to read other 
information in the annual 
report
under international standards on auditing uk and ireland we are required to report to you if in our 
opinion information in the annual report is
 ƥ materially inconsistent with the information in the audited financial statements or
 ƥ apparently materially incorrect based on or materially inconsistent with our knowledge of the group 
acquired in the course of performing our audit or
 ƥ otherwise misleading
in particular we are required to consider whether we have identified any inconsistencies between our 
knowledge acquired during the audit and the directors’ statement that they consider the annual report 
is fair balanced and understandable and whether the annual report appropriately discloses those 
matters that we communicated to the audit committee which we consider should have been disclosed 
we confirm that we have not identified any such inconsistencies or misleading statements strategic report overview strategic report strategy strategic report performance governance financial statements other information
45
talktalk telecom group plc annual report 2014
respective responsibilities 
of directors and auditor
as explained more fully in the directors’ responsibilities statement the directors are responsible for the 
preparation of the financial statements and for being satisfied that they give a true and fair view our 
responsibility is to audit and express an opinion on the financial statements in accordance with applicable 
law and international standards on auditing uk and ireland those standards require us to comply with 
the auditing practices board’s ethical standards for auditors we also comply with international standard 
on quality control 1 uk and ireland our audit methodology and tools aim to ensure that our quality 
control procedures are effective understood and applied our quality controls and systems include our 
dedicated professional standards review team strategically focused second partner reviews and 
independent partner reviews
this report is made solely to the company’s members as a body in accordance with chapter 3 of part 16 
of the companies act 2006 our audit work has been undertaken so that we might state to the company’s 
members those matters we are required to state to them in an auditor’s report and for no other purpose  
to the fullest extent permitted by law we do not accept or assume responsibility to anyone other than 
the company and the company’s members as a body for our audit work for this report or for the opinions 
we have formed
scope of the audit of the 
financial statements
an audit involves obtaining evidence about the amounts and disclosures in the financial statements 
sufficient to give reasonable assurance that the financial statements are free from material misstatement 
whether caused by fraud or error this includes an assessment of whether the accounting policies are 
appropriate to the group’s and the parent company’s circumstances and have been consistently applied 
and adequately disclosed the reasonableness of significant accounting estimates made by the directors 
and the overall presentation of the financial statements in addition we read all the financial and nonfinancial 
information in the annual report to identify material inconsistencies with the audited financial statements 
and to identify any information that is apparently materially incorrect based on or materially inconsistent 
with the knowledge acquired by us in the course of performing the audit if we become aware of any 
apparent material misstatements or inconsistencies we consider the implications for our report
 
sharon thorne fca senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and statutory auditor
london united kingdom 
14 may 2014 46
talktalk telecom group plc annual report 2014
group income statement
for the year ended 31 march
2014 2013
notes
before
amortisation of
acquisition
intangibles and
exceptional 
items 
£m 
amortisation of
acquisition
intangibles and
exceptional
items
£m
after
amortisation of
acquisition
intangibles and
exceptional 
items
£m
before
amortisation of
acquisition
intangibles and
exceptional 
items 
£m 
amortisation of
acquisition
intangibles and
exceptional
items
£m
after
amortisation of
acquisition
intangibles and
exceptional 
items
£m
revenue 2 1727 5 1722 1670 – 1670
cost of sales 769 – 769 751 – 751
gross profit 958 5 953 919 – 919
operating expenses excluding 
amortisation and depreciation 745 17 762 629 9 620
headline ebitda 213 22 191 290 9 299
depreciation 3 12 77 – 77 76 – 76
amortisation 3 11 35 21 56 26 52 78
share of results of joint venture 14 7 – 7 4 – 4
operating profit 3 94 43 51 184 43 141
finance costs 6 20 – 20 19 – 19
profit before taxation 74 43 31 165 43 122
taxation 7 13 10 3 33 11 22
profit for the year 61 33 28 132 32 100
attributable to the equity holders 
of the parent company 61 33 28 132 32 100
earnings per share 
headlinestatutory
basic pence 10 68 31 149 113
diluted pence 10 66 30 140 106
 a reconciliation of headline information to statutory information is provided in note 9 to the financial statements
the accompanying notes are an integral part of this group income statement all amounts relate to continuing operations 
  strategic report overview strategic report strategy strategic report performance governance financial statements other information
47
talktalk telecom group plc annual report 2014
group statement of comprehensive income
for the year ended 31 march
notes
2014
£m
2013
£m
profit for the year

28 100
other comprehensive income for the year
items that may be reclassified subsequently to the income statement
derivative financial instruments

19  3  2 
currency translation differences –  1 
total comprehensive income for the year 31 99
attributable to the equity holders of the parent company 31 99
 recognised within retained earnings and other reserves
the accompanying notes are an integral part of this group statement of comprehensive income
  48
talktalk telecom group plc annual report 2014
group statement of changes in equity
for the year ended 31 march 
notes
share 
capital
£m
share 
premium
£m
translation 
reserve
£m
demerger
reserve
£m
retained 
earnings 
and other 
reserves
£m
total
£m
at 1 april 2013 1 618 64 513 400 442
total comprehensive income for the year – – – – 31 31
issue of own shares

22 – 66 – – 78 12
taxation of items recognised directly in reserves – – – – 2 2
purchase of own shares – – – – 24 24
settlement of group esot – – – – 6 6
adjustment arising from change 
in non‑controlling interest – – – – 3 3
share‑based payments reserve credit 5 – – – – 4 4
equity dividends 8 – – – – 99 99
at 31 march 2014 1 684 64 513 239 347
 
notes
share 
capital
£m
share 
premium
£m
translation 
reserve
£m
demerger
reserve
£m
retained 
earnings 
and other 
reserves
£m
total
£m
at 1 april 2012 1 586 65 513 435 444
total comprehensive income for the year – – 1 – 98 99
issue of own shares

22 – 32 – – 63 31
taxation of items recognised directly in reserves – – – – 11 11
share‑based payments reserve credit 5 – – – – 6 6
equity dividends 8 – – – – 87 87
at 31 march 2013 1 618 64 513 400 442
   on 16 september 2013 the group’s remuneration committee determined that the relevant performance conditions of the ves schemes including the 5 tsr requirement had been 
satisfied meaning the ves participants were entitled to exercise the remaining 40 of their options as set out in note 5 the settlement of the schemes resulted in the recognition of 
share premium of £66m and a £78m movement in retained earnings and other reserves
  on 17 september 2012 the group’s remuneration committee determined that the relevant performance conditions of the ves schemes including the 5 tsr requirement had been 
satisfied meaning the ves participants were entitled to exercise 60 of their options as set out in note 5 the settlement of the schemes resulted in the recognition of share premium of 
£32m and a £63m movement in retained earnings and other reserves
the accompanying notes are an integral part of this group statement of changes in equity strategic report overview strategic report strategy strategic report performance governance financial statements other information
49
talktalk telecom group plc annual report 2014
group balance sheet
as at 31 march
notes
2014
£m
2013
£m
noncurrent assets
goodwill 11 479 479
other intangible assets 11 141 154
property plant and equipment 12 305 295
investment in joint venture 14 7 9
deferred tax assets 7 107 109
1039 1046
current assets
cash and cash equivalents 18 – 7
inventories 15 24 23
trade and other receivables 16 260 226
284 256
total assets 1323 1302
current liabilities
bank overdraft 18 7 –
trade and other payables 17 456 431
loans and other borrowings 18 30 25
corporation tax liabilities 14 16
provisions 20 2 5
509 477
noncurrent liabilities 
loans and other borrowings 18 460 375
provisions 20 7 8
467 383
total liabilities 976 860
net assets 347 442
equity
share capital 21 22 1 1
share premium 22 684 618
translation reserve 22 64 64
demerger reserve 22 513 513
retained earnings and other reserves 22 239 400
total equity 347 442
the accompanying notes are an integral part of this group balance sheet
these financial statements were approved by the board on 14 may 2014 they were signed on its behalf by
d harding   s makin 
chief executive officer  chief financial officer
14 may 2014   14 may 2014
  50
talktalk telecom group plc annual report 2014
group cash flow statement
for the year ended 31 march 
notes
2014
£m
2013
£m
operating activities
operating profit 51 141
adjustments for non ‑cash items
 share‑based payments 5 4 6
 depreciation 3 12 77 76
 amortisation 3 11 56 78
 share of losses of joint venture 14 7 4
 profit on disposal of subsidiaries 13 – 1
operating cash flows before movements in working capital 195 304
increase in trade and other receivables 36 37
increase in inventory 1 20
increase in trade and other payables 7 46
decrease in provisions 5 6
cash generated by operations 160 287
income taxes paid – –
net cash flows generated from operating activities 160 287 
investing activities
acquisition of subsidiaries and joint ventures net of cash acquired  13 14 8 6
disposal of subsidiaries and customer bases 13 – 2
acquisition of intangible assets 42 34
acquisition of property plant and equipment 65 70
cash flows used in investing activities 115 108
financing activities
settlement of group esot shares 6 –
net purchase of own shares 39 35
drawdown repayment of borrowings 23 90 35
interest paid 17 16
dividends paid 8 99 87
cash flows used in financing activities 59 173
net decrease increase in cash and cash equivalents 14 6
cash and cash equivalents at the start of the year 7 1
cash and cash equivalents at the end of the year 7 7
cash and cash equivalents for the purpose of this statement comprise
cash and cash equivalents 18 – 7
bank overdrafts 18 7 –
7 7
the accompanying notes are an integral part of this group cash flow statement  strategic report overview strategic report strategy strategic report performance governance financial statements other information
51
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements 
1 accounting policies and basis of preparation
basis of preparation
talktalk telecom group plc is incorporated in england and wales under the companies act 2006 
the consolidated financial statements of the company have been prepared in accordance with international financial reporting standards 
ifrs as adopted for use in the european union eu and as applied in accordance with the provisions of the companies act 2006 these 
financial statements therefore comply with article 4 of the european union international accounting standard regulation the company has 
elected to prepare its parent company financial statements in accordance with uk gaap
the financial statements have been prepared on the historical cost basis except for the revaluation of certain financial instruments and 
investments the financial statements are presented in sterling rounded to the nearest million because that is the currency of the principal 
economic environment in which the group operates
basis of consolidation
the consolidated financial statements incorporate the financial statements of the company entities controlled by the company its subsidiaries 
and entities which are joint ventures accounted for using the equity method made up to 31 march each year control is achieved where the 
company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities 
the results of subsidiaries acquired or sold during the year are included from or to the date on which control passed to or was relinquished 
by the group intercompany transactions and balances between subsidiaries are eliminated on consolidation
where necessary adjustments are made to the financial statements of subsidiaries and the results of joint ventures to bring accounting 
policies in line with those used by the group
going concern
the financial statements have been prepared on the going concern basis details of the considerations undertaken by the directors in reaching 
this conclusion are set out on page 14 within the chief financial officer’s statement
accounting policies
the group’s principal accounting policies which relate to the financial statements as a whole are set out below where an accounting policy 
is specific to one note the policy is described in the note to which it relates this section also shows new eu endorsed accounting standards 
amendments and interpretations whether these are effective in the current or later years in both cases it is explained how they are expected 
to impact the performance of the group 
revenue
revenue is stated net of vat and other sales related taxes and represents the gross inflow of economic benefit generated from the provision 
of fixed line tv and mobile telecommunications services all such revenue is recognised as the services are provided
 ƥ line rental is recognised in the period to which it relates
 ƥ voice and broadband subscriptions are recognised in the period to which they relate
 ƥ usage including voice and tv content is recognised in the period in which the customer takes the service
 ƥ promotional discounts are amortised on a straight line basis over the minimum contract period subject to an adjustment for incontract 
churn and
 ƥ data service solutions and other service contracts are recognised as the group fulfils its performance obligations
revenue is measured at fair value of the consideration received or receivable when the group sells a number of products within a bundled 
transaction the total consideration from the arrangement is allocated to each element based on their relative fair values the amount of 
revenue the group recognises for delivered elements is limited to the cash received
subscriber acquisition costs
subscriber acquisition costs include both third party costs of recruiting and retaining new customers as well as device costs these are 
expensed as incurred  52
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
1 accounting policies and basis of preparation continued
foreign currency translation and transactions
material transactions in foreign currencies are hedged using forward purchases or sales of the relevant currencies and are recognised in the 
financial statements at the exchange rates thus obtained unhedged transactions are recorded at the exchange rate on the date of the 
transaction hedge accounting as defined by ias 39 ‘financial instruments recognition and measurement’ has been applied in the current and 
preceding financial year by marking to market the relevant financial instruments at the balance sheet date and recognising the gain or loss 
through other comprehensive income in respect of cash flow hedges
the principal exchange rates against uk sterling used in these financial statements are as follows
average closing
2014 2013 2014 2013
euro 119 123 121 119
united states dollar 160 158 167 152
where a foreign operation is sold the gain or loss on disposal recognised in the income statement is determined after taking into account the 
cumulative currency translation differences that are attributable to the operation
leases
rental payments under operating leases are charged to the income statement on a straight line basis over the period of the lease lease incentives 
and rent free periods are amortised through the income statement over the period of the lease
gains or losses from sale and leaseback transactions are deferred over the life of the new lease to the extent that the rentals are considered to 
be above or below market rentals the remaining gain or loss is recognised within operating expenses in the year in which the sale is completed
financial instruments
financial assets and financial liabilities in respect of financial instruments are recognised in the group’s balance sheet when the group 
becomes a party to the contractual provisions of the instrument 
trade and other receivables
trade receivables loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified 
as loans and receivables loans and receivables are measured at amortised cost using the effective interest rate method less any impairment 
interest income is recognised by applying the effective interest rate except for short term receivables when the recognition of interest would 
be immaterial 
cash and cash equivalents
cash and cash equivalents and bank deposits consists of cash in hand 
trade payables
trade payables are other financial liabilities initially measured at fair value and subsequently measured at amortised cost
financial liabilities and equity instruments
financial liabilities and equity instruments issued by the group are classified according to the substance of the contractual arrangements 
entered into and the definitions of a financial liability and an equity instrument an equity instrument is any contract that evidences a residual 
interest in the assets of the group after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets the 
accounting policies adopted for specific financial liabilities and equity instruments are set out below
loans and other borrowings
loans and other borrowings represent committed and uncommitted bank loans bank overdrafts and loans from related parties these are 
initially measured at fair value which is equal to cost at inception and are subsequently measured at amortised cost using the effective 
interest rate method
bank fees and legal costs associated with the securing of external financing are capitalised and amortised over the term of the relevant facility 
all other borrowing costs are recognised in the income statement in the period in which they are incurred
bank overdrafts that are repayable on demand and form an integral part of the group’s cash management are included as a component of cash 
and cash equivalents for the purpose of the statement of cash flows
equity instruments
equity instruments issued by the group are recorded at the proceeds received net of direct issuance costs
shares in the company held by the group esot are shown as a reduction in shareholders’ funds other assets and liabilities held by the trust 
are consolidated with the assets of the group strategic report overview strategic report strategy strategic report performance governance financial statements other information
53
talktalk telecom group plc annual report 2014
1 accounting policies and basis of preparation continued
financial instruments continued
derivative financial instruments and hedge accounting
the group’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates the use of financial derivatives 
is governed by the framework approved by the board which provides written principles on the use of financial derivatives consistent with 
the group’s risk management strategy changes in values of all derivatives of a financing nature are included within investment income and 
financing costs in the income statement the group does not use derivative financial instruments for speculative purposes
derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each 
reporting date
hedge accounting is discontinued when the hedging instrument expires or is sold terminated exercised or no longer qualifies for hedge 
accounting or the company chooses to end the hedging relationship 
cash flow hedges
the group uses derivative instruments primarily interest rate swaps to manage its interest rate risk the group designates these as cash flow 
hedges the effective portion of changes in the fair value of these instruments is recognised in other comprehensive income the gain or loss 
relating to the ineffective portion is recognised immediately in the income statement 
measurement
the financial instruments included on the group’s balance sheet are measured at fair value or amortised cost the measurement of this fair 
value can in some cases be subjective and can depend on the inputs used in the calculations the different valuation methods are called 
‘hierarchies’ and are described below
 ƥ level 1 fair values measured using quoted prices unadjusted in active markets for identical assets or liabilities
 ƥ level 2 fair values measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability either 
directly or indirectly and
 ƥ level 3 fair values measured using inputs for the asset or liability that are not based on observable market data
critical accounting judgements and key sources of estimation uncertainty
the preparation of financial statements requires management to exercise judgement in applying the group’s accounting policies estimates 
and assumptions used in the preparation of the financial statements are continually reviewed and revised as necessary whilst every effort 
is made to ensure that such estimates and assumptions are reasonable by their nature they are uncertain and as such changes in estimates 
and assumptions may have a material impact
the areas involving the most sensitive estimates and assumptions that are significant to the financial statements are set out in more detail in 
the related notes
 ƥ tax note 7
 ƥ exceptional items note 9
 ƥ impairment of goodwill note 11
 ƥ capitalisation and useful economic lives of assets notes 11 and 12
 ƥ impairment of assets notes 11 and 12 and
 ƥ trade receivables note 16
application of significant new or amended eu endorsed accounting standards
amendments to ias 1 ‘presentation of financial statements presentation of items of other comprehensive income’ and ifrs 13 ‘fair value 
measurement’ became effective in the current reporting period these new and revised standards and interpretations have no material impact 
on the group
in addition the group has elected to early adopt ias 36 revised ‘impairment of assets’ ias 36 which is endorsed by the eu but not effective 
until periods beginning on or after 1 january 2014 the amendments to ias 36 enhance the disclosure requirements arising when recoverable 
amounts have been determined on the basis of fair value less costs of disposal they also limit the requirement to disclose the recoverable 
amount of an asset or cgu to periods in which an impairment loss has been recognised or reverses
we have chosen to adopt the amendments early as allowed by the standard with effect from 1 april 2013 54
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
1 accounting policies and basis of preparation continued
future accounting developments
at the date of authorisation of these financial statements the following significant standards and interpretations that have not been applied 
in these financial statements were in issue but not yet effective and in some cases had not yet been adopted by the eu
 ƥ ifrs 9 ‘financial instruments’
 ƥ ifrs 10 ifrs 12 and   
ias 27 amended  ‘investment entities’
 ƥ ias 32 amended  ‘offsetting financial assets and financial liabilities’
 ƥ ias 39 amended ‘novation of derivatives and continuation of hedge accounting’
 ƥ ifric 21 ‘levies’
the directors do not expect that the adoption of these standards will have a material impact on the financial statements of the group 
in future periods except as follows
 ƥ ifrs 9 will impact the
 • measurement and disclosure of financial instruments and 
 • disclosure of interest the group has in other entities
beyond the information above it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review 
has been completed 
2 segmental reporting
accounting policy
ifrs 8 ‘operating segments’ requires the segmental information presented in the financial statements to be that used by the chief operating 
decision maker to evaluate the performance of the business and decide how to allocate resources the group has identified the board as its 
chief operating decision maker the board considers the results of the business as a whole when assessing the performance of the business 
and making decisions about the allocation of resources accordingly the group has one operating segment
2014
£m
2013
£m
headline revenue 1727 1670
headline ebitda 213 290
depreciation 77 76
amortisation of operating intangibles 35 26
share of results of joint ventures 7 4
headline profit before interest and taxation note 9 94 184
amortisation of acquisition intangibles 21 52
exceptional items 22 9
operating profit 51 141
the group’s revenue is split by onnet offnet and corporate products as this information is provided to the group’s chief operating decision 
maker onnet and offnet comprise consumer and business customers that receive similar services 
2014
£m
2013
£m
on‑net 1259 1170
off‑net 128 178
corporate 340 322
1727 1670
the group has no material overseas operations as a result a split of revenue and total assets by geographical location has not been disclosed  strategic report overview strategic report strategy strategic report performance governance financial statements other information
55
talktalk telecom group plc annual report 2014
3 operating profit before interest and taxation
group profit before interest and taxation is stated after charging crediting
2014
£m
2013
£m
depreciation of property plant and equipment 77 76
amortisation of acquisition intangibles 21 52
amortisation of other operating intangible fixed assets 35 26
profit on disposal of subsidiaries and customer bases – 1
impairment of shared band limited – 1
impairment loss recognised on trade receivables 52 33
staff costs 125 133
cost of inventories recognised in expenses 123 67
rentals under operating leases 91 79
auditor’s remuneration

1 1
 a breakdown of auditor’s remuneration is disclosed within the governance section on page 24
4 employee costs
the average number of employees including executive directors was
2014
number
2013
number
administration 1516 1517
sales and customer management 792 998
2308 2515
the aggregate remuneration recognised in respect of these employees in the income statement comprised
2014
£m
2013
£m
wages and salaries 104 110
social security costs 13 14
other pension costs 4 3
121 127
share‑based payments note 5 4 6
125 133
the group provides various defined contribution pension schemes for the benefit of a significant number of its employees these are charged 
to the income statement as they become payable in accordance with the rules of the schemes
compensation earned by key management personnel is analysed below the key management personnel comprised the talktalk group 
executive board and board of directors
2014
£m
restated
2013
£m
salaries and fees 39 40
performance bonuses 18 19
benefits 02 01
pension costs 02 02
share‑based payments

07 09
68 71
  the prior year sharebased payments charge has been restated from £22m to £09m this is to reflect the fact that the charge disclosed in the 2013 annual report showed the total 
charge across the life of the scheme for these employees rather than just the fy13 charge 56
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
5 sharebased payments
accounting policy
the group issues equitysettled sharebased payments to certain employees equitysettled sharebased payments are measured at 
fair value at the date of grant and expensed over the vesting period based on an estimate of the number of shares that will eventually vest
fair value is measured by use of a dividend discount or binomial model for sharebased payments with internal nonmarket performance criteria 
for example eps targets and a black scholes or monte carlo model for those with external ‘market’ performance criteria for example tsr targets
for schemes with nonmarket performance criteria the number of options expected to vest is recalculated at each balance sheet date based 
on expectations of performance against target and of leavers prior to vesting the movement in cumulative expense since the previous balance 
sheet date is recognised in the income statement with a corresponding entry in reserves
for schemes with market performance criteria the number of options expected to vest is adjusted only for expectations of leavers prior to vesting 
the movement in cumulative expense since the previous balance sheet date is recognised in the income statement with a corresponding 
entry in reserves
if a scheme is cancelled any remaining part of the fair value of the scheme is expensed immediately if a scheme is forfeited no further 
expense is recognised and any charges previously recognised are reversed
charges arise on loans that are provided to employees to fund the purchase of shares in the group as part of long term incentive plans 
to the extent to which the loans are not in certain circumstances repayable the cost of such loans is expensed over the course of the relevant 
incentive plans charges are also recognised on loans provided to employees to settle personal tax liabilities to the extent to which the loans 
are not in certain circumstances repayable the cost of such loans is expensed on grant 
in accordance with ifrs 2 ‘sharebased payment’ no cost has been recognised in respect of the options granted before november 2002 
group share schemes
the group’s share schemes are the discretionary share option plan dsop and saveasyouearn scheme saye 
in addition the group has a number of legacy cpw schemes
in order to aid the user of the accounts the dilutive effect on eps of each of the group schemes and legacy cpw schemes has been presented 
this has been calculated using an average share price for the financial year of £267 2013 £198
for the cpw legacy schemes there is no ifrs 2 charge in the current year 2013 £1m t he disclosures are limited to the dilutive effect on eps 
and the number of options outstanding at the end of the year
in september 2013 the remaining 40 of the ttg ves and the cpw ttg ves vested further information is set out in section vi of this note  strategic report overview strategic report strategy strategic report performance governance financial statements other information
57
talktalk telecom group plc annual report 2014
5 sharebased payments continued
summary of share schemes
year ended 31 march 2014
ifrs 2
charge 
£m
dilutive 
effect 
millions
options 
outstanding 
at end of 
the year 
millions
talktalk telecom group plc schemes
all employee share option award – 2012 2 1 –
dsop – 2013 grant 1 3 6
dsop – 2012 grant 1 5 10
dsop – 2010 grant – 4 2
saye – 2 4
total talktalk telecom group plc schemes 4 15 22
legacy carphone warehouse schemes
ttg ves and cpw ttg ves – 14 –
other employee share option schemes – 1 1
total legacy carphone warehouse schemes – 15 1
total 4 30 23
year ended 31 march 2013
ifrs 2
charge 
£m
dilutive 
effect 
millions
options 
outstanding 
at end of 
the year 
millions
talktalk telecom group plc schemes
all employee share option award – 2012 2 1 2
dsop – 2012 grant 1 5 12
dsop – 2010 grant 1 7 17
saye 1 3 6
total talktalk telecom group plc schemes 5 16 37
legacy carphone warehouse schemes
ttg ves and cpw ttg ves 1 38 –
other employee share option schemes – 2 1
total legacy carphone warehouse schemes 1 40 1
total 6 56 38
talktalk telecom group plc schemes
i all employee share option award – 2012
the all employee share option award – 2012 was granted in september 2012 under the dsop rules approved by shareholders in 2010 
the award of 1000 nil priced share options per qualifying employee was designed to reward all employees who were not part of another 
share option plan and to foster allemployee share ownership the exercise of options was subject to continuing employment at the vesting 
date in september 2013 and there are no performance conditions in relation to this award these options lapse on resignation of an employee 
on 12 september 2013 two million options vested and were exercised by qualifying employees 58
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
5 sharebased payments continued
talktalk telecom group plc schemes continued
ii dsop – 2013 grant
in june 2013 the group granted six million nil priced share option awards subject to absolute tsr and eps performance targets during december 2013 
and january 2014 the group granted a further 141000 options under the dsop – 2013 grant to a number of new senior employees the options 
are measured over a performance period to 31 march 2016 and will vest on the publication of the group’s 2016 annual report a total of 60 of 
the vested options are exercisable from the vesting date with the remaining 40 of options being exercisable twelve months later options are 
forfeited if an employee leaves the group before the options vest awards are triggered within a range from 5 to 26 for compound annual 
growth of tsr and eps if the minimum performance requirement is met a total of 25 of the award will vest rising to 40 for target 70 for 
stretch and 100 for super stretch
2014 
dsop – 2013 grant
number 
million
 waep 
£
outstanding at the beginning of the year – –
granted during the year 6 –
forfeited during the year – –
outstanding at the end of the year 6 –
exercisable at the end of the year – –
valuation method monte carlo
share price pence 228
exercise price pence nil
expected volatility 3000
expected exercise 6040 3040 years
risk free rate three yearsfour years 050080
expected dividend yield 445
fair value of options granted £m 30
the weighted average remaining contractual life of the dsop – 2013 grant is 92 years the talktalk dsop is designed to provide a long term 
incentive plan for senior employees of the group
iii dsop – 2012 grant
nil priced share option awards made under the dsop 2012 grant are subject to absolute tsr and eps performance targets with a cap and collar 
to address volatility in the market as detailed in the directors’ remuneration report the options are measured over a performance period to 
31 march 2015 and will vest on the publication of the group’s 2015 annual report a total of 60 of the vested options are exercisable from the 
vesting date with the remaining 40 of options being exercisable twelve months later options are forfeited if an employee leaves the group 
before the options vest awards are triggered within a range from 10 to 19 for compound annual growth of tsr and eps if the minimum 
performance requirement is met a total of 25 of the award will vest rising to 40 for target 70 for stretch and 100 for super stretch
2014 2013
dsop – 2012 grant
number 
million
waep 
£
number 
million
waep 
£
outstanding at the beginning of the year 12 – 11 –
granted during the year – – 1 –
forfeited during the year 2 – – –
outstanding at the end of the year 10 – 12 –
exercisable at the end of the year – – – –
the weighted average remaining contractual life of the dsop – 2012 grant is 79 years 2013 89 years strategic report overview strategic report strategy strategic report performance governance financial statements other information
59
talktalk telecom group plc annual report 2014
5 sharebased payments continued
talktalk telecom group plc schemes continued
iv dsop – 2010 grant
awards made under the dsop – 2010 grant are subject to tsr performance targets and were measured over a performance period to 28 march 2013 
options were forfeited if an employee left the group before the options vested on 28 march 2013 all options vested but they were not exercisable 
until after the preliminary announcement on 16 may 2013 the original date of vesting of 29 march 2013 was brought forward to 28 march 2013 
due to a bank holiday during the year ended 31 march 2014 15 million options were exercised
2014 2013
dsop – 2010 grant
number 
million
waep 
£
number 
million
waep 
£
outstanding at the beginning of the year 17 124 20 124
exercised during the year 15 123 – –
forfeited during the year – – 3 127
outstanding at the end of the year 2 127 17 124
exercisable at the end of the year 2 – – –
the weighted average remaining contractual life of the dsop – 2010 grant is 60 years 2013 70 years of the dsop – 2010 grant 472000 options 
were nil priced of which 236000 vested on 1 september 2012 and a further 236000 vested on 1 september 2013 all 472000 of these options 
were exercised in the year ended 31 march 2014
v saye
the scheme permits the granting of options to employees linked to a bank saye contract for a term of three or five years contributions from 
uk employees range from £5 to £250 options may be exercised at the end of the three or five year period at an exercise price determined at 
the invitation date the scheme is available for a period each year for employees to join 
exercise prices for the schemes are set out below
2013 grant 192p per share 
2012 grant  123p per share 
2011 grant  119p per share 
2010 grant 102p per share
2014 2013
number 
million
waep 
£
number 
million
waep 
£
outstanding at the beginning of the year 6 108 6 105
granted during the year 2 192 1 123
exercised during the year 3 103   – –
forfeited during the year 1 142 1 111
outstanding at the end of the year 4 152 6 108
exercisable at the end of the year – – – –
saye – 2013 grant
valuation method black scholes
share price pence 223
exercise price pence 192
expected volatility 2656
expected exercise years 38
risk free rate 118
expected dividend yield 466
fair value of options granted £m 08
the weighted average remaining contractual life of saye options is 23 years 2013 16 years  60
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
5 sharebased payments continued
talktalk telecom group plc schemes continued
vi ttg ves and cpw ttg ves
the ttg ves enables participants to share in up to 7 of any increase in the value of the group over an opening valuation representing invested 
capital at 1 april 2009 adjusted as relevant for changes in invested capital since that date the incremental value is measured after a minimum annual 
rate of return of 7 on this invested capital the group advanced loans to participants to enable them to purchase a shares in talktalk group limited 
the holding company of the group’s operating business the cpw ttg ves enables participants to share in 224 of any increase in the value of 
the group over an opening valuation representing invested capital at 1 april 2009 adjusted for the change in the group’s opening share price since 
1 april 2009 in line with the ttg ves the invested capital is adjusted for changes in invested capital since 1 april 2009 and the incremental value 
is measured after a minimum annual rate of return of 7 for the vesting in september 2013 this is capped at the september 2012 amount 
the rules of both schemes have been approved by shareholders
the group’s opening share price for this purpose represents an allocation of the share price of cpw at that rate based on the market capitalisation 
of the group and carphone warehouse group plc in the five days following demerger cpw advanced loans to participants to enable them to 
purchase c shares in talktalk group limited the holding company of the group’s operating businesses the group has an obligation to acquire 
the a and c shares if performance conditions are met to provide to participants the share of value described above 
the fair value of the schemes which has performance targets based on the growth of the market capitalisation of the group was estimated 
at the date of grant using a monte carlo model to initially value the a shares and then a black scholes model to calculate the option value 
the model combines the valuation price of a share at the date of grant with the probability of meeting performance criteria based on the 
expected value of the group at the date of grant discounted for the lack of marketability of the shares 
on 16 september 2013 the group’s remuneration committee determined that the relevant performance conditions of these ves schemes 
including the 5 tsr requirement had been satisfied meaning the ves participants were entitled to exercise the remaining 40 of their 
ves options on 19 november 2013 the participants’ options were acquired by the company for new ordinary shares in the company and 
cash resulting in a cash outflow of £15m the net issue of 237 million shares in the company was at a price of £278 per share being the average 
closing price of the company’s shares over the five working days from 12 to 18 november 2013 the settlement of the schemes resulted in a net 
movement in reserves of £12m being the recognition of share premium of £66m and a £78m debit in retained earnings and other reserves the 
£78m debit to reserves represents a total cash outflow of £15m and the value of new plc shares issued of £66m net of the repayment of the 
associated ves loans interest and a reduction in the group’s liability to settle the schemes
6 finance costs and investment revenue
finance costs are analysed as follows
2014
£m
2013
£m
interest on bank loans and overdrafts 16 14
facility fees and similar charges 4 4
unwinding of discount on provisions – 1
20 19
during the year ended 31 march 2012 the group refinanced its revolving credit facility and paid £7m in respect of facility fees this is being 
amortised over the expected life of the loan and is included within facility fees and similar charges above 
7 taxation
accounting policy
current tax including uk corporation tax and overseas tax is provided at amounts expected to be paid or recovered using the tax rates and 
laws that have been enacted or substantively enacted at the balance sheet date
deferred tax is provided on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base
deferred tax liabilities represent tax payable in future periods in respect of taxable temporary differences deferred tax assets represent tax 
recoverable in future periods in respect of deductible temporary differences and the carryforward of unused tax losses and credits deferred 
tax is determined using the tax rates that have been enacted or substantively enacted at the balance sheet date and are expected to apply 
when the deferred tax asset is realised or the deferred tax liability is settled
a deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can 
be utilised current and deferred tax is recognised in the income statement except where it relates to an item recognised directly in reserves 
in which case it is recognised directly in reserves
deferred tax assets and liabilities are offset where there is a legal right to do so in the relevant jurisdictions
critical judgements in applying the group’s accounting policy
the extent to which tax losses can be utilised depends on the extent to which taxable profits are generated in the relevant jurisdictions 
for the foreseeable future and on the tax legislation then in force and as such the value of associated deferred tax assets is uncertain strategic report overview strategic report strategy strategic report performance governance financial statements other information
61
talktalk telecom group plc annual report 2014
7 taxation continued
tax – income statement
the tax charge comprises
2014
£m
2013
£m
current tax
uk corporation tax 2 –
adjustments in respect of prior years
uk corporation tax – –
total current tax credit 2 –
deferred tax
origination and reversal of timing differences 7 18
effect of change in tax rate 16 5
adjustments in respect of prior years – deferred tax recognised 4 1
total deferred tax 5 22
total tax charge 3 22
the tax charge on headline earnings for the year ended 31 march 2014 is £13m 2013 £33m representing an effective tax rate on pretax profits 
of 18 2013 20 the tax charge on statutory earnings for the year ended 31 march 2014 is £3m 2013 £22m the reconciliation between the 
headline and statutory tax charge is shown in note 9 
the principal differences between the tax charge and the amount calculated by applying the standard rate of uk corporation tax of 23 
2013 24 to the profit before tax are as follows
2014
£m
2013
£m
profit before tax 31 122
tax at 23 2013 24 7 29
items attracting no tax relief or liability 1 1
effect of change in tax rate 16 5
adjustments in respect of prior years 4 1
movement in unrecognised tax losses during the year 15 12
total tax charge through income statement 3 22
tax – retained earnings and other reserves
tax on items recognised directly in retained earnings and other reserves are as follows
2014
£m
2013
£m
total tax charge through income statement 3 22
deferred tax credit recognised directly in retained earnings and other reserves 2 11
total tax charge through retained earnings and other reserves 1 11
the deferred tax credit recognised directly in retained earnings and other reserves for the years ended 31 march 2014 and 31 march 2013 relates to 
sharebased payments 62
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
7 taxation continued
tax – balance sheet
the deferred tax assets recognised by the group and movements thereon during the year are as follows
sharebased 
payments
£m
timing 
differences on
 capitalised 
costs
£m
tax
losses
£m
timing 
differences on 
acquisition 
intangibles
£m
other timing 
differences
£m
total
£m
at 1 april 2013 12 62 40 6 1 109
charge credit to the income statement 7 1 1 5 – 4
credit to reserves 2 – – – – 2
at 31 march 2014 7 61 39 1 1 107
share‑based 
payments
£m
timing 
differences on
 capitalised 
costs
£m
tax
losses
£m
timing 
differences on 
acquisition 
intangibles
£m
other timing 
differences
£m
total
£m
at 1 april 2012 1 71 56 11 3 120
charge credit to the income statement – 9 16 5 2 22
credit to reserves 11 – – – – 11
at 31 march 2013 12 62 40 6 1 109
no deferred tax assets and liabilities have been offset in either year except where there is a legal right to do so in the relevant jurisdictions 
on 2 july 2013 a reduction in the uk statutory rate of corporation tax was substantively enacted bringing the tax rate down from 23 to 21 
with effect from 1 april 2014 and from 21 to 20 with effect from 1 april 2015 accordingly the tax assets and liabilities recognised at 31 march 2014 
take account of these changes this has resulted in a tax charge to the income statement as the value of the group’s tax assets has been reduced
the asset also reflects the annual recognition of a further tranche of the tax losses acquired with tiscali uk limited including video networks 
limited based on the group’s rolling forecast this is in line with the group’s agreement with hmrc in 2012
at 31 march 2014 the group had unused tax losses of £702m 2013 £759m available for offset against future taxable profits a deferred tax 
asset of £39m 2013 £40m has been recognised in respect of £197m 2013 £172m of such losses based on expectations of recovery in the 
foreseeable future
no deferred tax asset has been recognised in respect of the remaining £505m 2013 £587m as there is insufficient evidence that there will be 
suitable taxable profits against which these losses can be recovered all losses may be carried forward indefinitely
8 dividends
accounting policy
dividend income is recognised when payment has been received final dividend distributions are recognised as a liability in the financial statements 
in the year in which they are approved by the relevant shareholders interim dividends are recognised in the year in which they are paid
the following dividends were paid by the group to its shareholders
2014
£m
2013
£m
ordinary dividends
final dividend for the year ended 31 march 2012 of 640p per ordinary share – 56
interim dividend for the year ended 31 march 2013 of 345p per ordinary share – 31
final dividend for the year ended 31 march 2013 of 695p per ordinary share 62 –
interim dividend for the year ended 31 march 2014 of 400p per ordinary share 37 –
total ordinary dividends 99 87
the proposed final dividend for the year ended 31 march 2014 of 800p per ordinary share on approximately 921 million ordinary shares £74m 
was approved by the board on 14 may 2014 and has not been included as a liability as at 31 march 2014
the group esot has waived its rights to receive dividends in the current and prior year and this is reflected in the analysis above strategic report overview strategic report strategy strategic report performance governance financial statements other information
63
talktalk telecom group plc annual report 2014
9 reconciliation of headline information to statutory information
accounting policy
headline results are stated before the amortisation of acquisition intangibles and exceptional items exceptional items are those that are 
considered to be oneoff nonrecurring in nature and so material that the directors believe that they require separate disclosure to avoid 
distortion of underlying performance and should be separately presented on the face of the income statement 
critical judgements in applying the group’s accounting policy
the classification of items as exceptional is subjective in nature and therefore judgement is required to determine whether the item is in line 
with the accounting policy criteria outlined above determining whether an item is exceptional is a matter of qualitative assessment making it 
distinct from the group’s other critical accounting judgements where the basis for judgement surrounds estimation
year ended 31 march 2014
ebitda
£m
profit 
before interest 
and tax
£m
profit 
before tax
£m
profit for 
the year
£m
headline results 213 94 74 61
exceptional items – operating expenses a 20 20 20 15
exceptional items – operating expenses c 3 3 3 2
exceptional items – revenue d 5 5 5 4
amortisation of acquisition intangibles e – 21 21 16
statutory results 191 51 31 28
year ended 31 march 2013
ebitda
£m
profit 
before interest 
and tax
£m
profit 
before tax
£m
profit for 
the year
£m
headline results 290 184 165 132
exceptional items – operating expenses a 7 7 7 5
exceptional items – operating expenses b 11 11 11 8
exceptional items – operating expenses c 27 27 27 21
amortisation of acquisition intangibles e – 52 52 40
statutory results 299 141 122 100
headline information is provided because the directors consider that it provides assistance in understanding the group’s underlying performance
a operating efficiencies – phase iii making talktalk simpler
during the year ended 31 march 2014 the group has continued a review of its operating structure to look for further opportunities to drive 
process and efficiency improvements over the medium term 
the initiatives that form part of the group’s making talktalk simpler programme which were implemented in the year ended 31 march 2014 were 
continued restructuring of the systems and processes in talktalk business to remove duplication and better align the sales and service model 
for future growth a review and consolidation of the outsourcing partners and rebalancing of the group’s onshore footprint and a proactive 
initiative to replace routers to align the estate across the group this has resulted in redundancy dual running property system project 
management and router replacement costs the total charge incurred in the year ended 31 march 2014 was £20m 2013 £7m
a total taxation credit of £5m has been recognised in the year ended 31 march 2014 2013 £2m
b operating efficiencies – phase ii consumer contact centre rationalisation
on 24 april 2012 the group announced the second stage of its contact centre rationalisation this resulted in consolidating and outsourcing 
operations in preston and northampton costs were incurred in respect of redundancy dual running and consultancy the total charge 
incurred in the year ended 31 march 2014 was £nil 2013 £11m
a total taxation credit of £nil has been recognised in the year ended 31 march 2014 2013 £3m
c wholesale ethernet services overcharges
in december 2012 ofcom determined that bt had overcharged the group for certain wholesale ethernet services accordingly bt was required 
to make repayments to the group for these overcharges a total of £3m has been recognised in the year ended 31 march 2014 2013 £27m
a total taxation charge of £1m has been recognised in the year ended 31 march 2014 2013 £6m
d revenue – hmrc vat ruling
in september 2013 a change to a previously agreed vat treatment in relation to prompt payment discounts was enforced by hmrc with 
immediate effect the incremental vat relating to this change in treatment has been paid by the group however the group has sought external 
legal advice on the hmrc decision and has subsequently appealed the decision to the vat tribunal due to both the unexpected nature pending 
appeal and short timeframe given to comply a total of £5m has been recognised in exceptional items in the year ended 31 march 2014 2013 £nil 
the tax credit was £1m in the year ended 31 march 2014 2013 £nil
e amortisation of acquisition intangibles
an amortisation charge in respect of acquisition intangibles of £21m was incurred in the year ended 31 march 2014 2013 £52m 
the tax credit was £5m in the year ended 31 march 2014 2013 £12m 64
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
10 earnings per share
earnings per share is shown on a headline and statutory basis to assist in the understanding of the performance of the group
2014
£m
2013
£m
headline earnings note 9 61 132
statutory earnings 28 100
weighted average number of shares millions
shares in issue 938 924
less weighted average holdings by group esot 37 40
for basic eps 901 884
dilutive effect of share options 30 56
for diluted eps 931 940
2014
pence
2013
pence
basic earnings per share
headline 68 149
statutory 31 113
2014
pence
2013
pence
diluted earnings per share
headline 66 140
statutory 30 106
there are no share options considered antidilutive in the year ended 31 march 2014 2013 nil
11 goodwill and other intangible assets
a goodwill
accounting policy
goodwill arising on the acquisition of subsidiary undertakings and businesses representing the excess of the fair value of the consideration 
given over the fair value of the identifiable assets and liabilities acquired is recognised initially as an asset at cost and is subsequently measured 
at cost less any accumulated impairment losses
on disposal of a subsidiary undertaking the relevant goodwill is included in the calculation of the profit or loss on disposal
critical judgements in applying the group’s accounting policy
the group has two cgus – consumer and talktalk business for the purpose of impairment testing at the acquisition date goodwill is allocated 
to each of the cgus expected to benefit from the synergies of the acquisition the group’s shared costs and assets relating mainly to infrastructure 
and central overheads are allocated across the two cgus based on the relative future cash flows that those shared costs support 
determining whether goodwill is impaired requires estimation of the value in use of the cgus to which the goodwill has been allocated 
the value in use calculation involves estimation of both the future cash flows of the cgus and the selection of appropriate discount rates 
to use to calculate present values strategic report overview strategic report strategy strategic report performance governance financial statements other information
65
talktalk telecom group plc annual report 2014
11 goodwill and other intangible assets continued
a goodwill continued
impairment of goodwill 
goodwill is not subject to amortisation but is tested for impairment annually or whenever there is an indication that the asset may be impaired 
this review is performed at a cgu level
impairment is determined by assessing the future cash flows of the cgu to which the goodwill relates the future cash flows of the group are 
taken from the board approved five year plan and extrapolated out to 20 years based on the uk’s long term growth rate this is discounted by 
the cgu’s weighted average cost of capital pretax to give the net present value of that cgu where the net present value of future cash flows is 
less than the carrying value of the unit the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cgu 
and then to the other assets of the cgu prorata on the basis of the carrying amount of each asset in the unit any impairment loss is 
recognised in the income statement and is not subsequently reversed
sensitivity analysis is performed using reasonably possible changes in the key assumptions 
2014
£m
2013
£m
opening cost and net book value 479 480
disposal note 13 – 1
closing cost and net book value 479 479
the goodwill acquired in business combinations is allocated at acquisition to the cgus that are expected to benefit from that business 
combination the allocation of goodwill across the cgus is as follows
2014
£m
2013
£m
consumer 337 337
talktalk business 142 142
479 479
impairment review 
the key assumptions used in the group’s goodwill impairment review are as follows
 ƥ long term growth rates
  long term revenue growth rates applied are based on the growth rate for the uk per the organisation for economic cooperation and 
development oecd the rate applied in the current year was 17 2013 11
 ƥ discount rate
  the underlying discount rate for each cgu is based on the uk ten year gilt rate adjusted for an equity risk premium and the systematic risk of 
the cgu the average pretax rate for both cgus used to discount the forecast cash flows is 84 2013 81 the assumptions used in the 
calculation of the cgus’ discount rate are benchmarked to externally available data the same discount rate has been applied to both cgus 
due to the similarity of risk factors and geographical location 
 ƥ capital expenditure
  forecast capital expenditure is based on senior management expectations of future required support of the network and current run rate 
of expenditure
 ƥ customer factors
  the key assumptions for the forecast cash flows of each of the cgus are based on expected customer growth rates arpu direct costs 
including acquisition costs and change in product mix the value assigned to each of these assumptions has been determined based on 
the extrapolation of historical trends in the group and external information on expected trends of future market developments 
sensitivity analysis has been performed for each key assumption and the directors have not identified any reasonably possible material 
changes in the key assumptions that would cause the carrying value of goodwill to exceed the recoverable amount
b other intangible assets
accounting policy
operating intangibles
operating intangibles include internal infrastructure and design costs incurred in the development of software for internal use internally 
generated software is recognised as an intangible asset only if it can be separately identified it is probable that the asset will generate future 
economic benefits and the development cost can be measured reliably where these conditions are not met development expenditure is 
recognised as an expense in the year in which it is incurred operating intangibles are amortised on a straight line basis over their estimated 
useful economic lives of up to eight years
acquisition intangibles
acquired intangible assets such as customer bases and other intangible assets acquired through a business combination are capitalised 
separately from goodwill and amortised over their expected useful lives of up to six years on a straight line basis the value attributed to such 
assets is based on the future economic benefit that is expected to be derived from them calculated as the present value of future cash flows 
after a deduction for contributory assets 66
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
11 goodwill and other intangible assets continued
b other intangible assets continued
critical judgements in applying the group’s accounting policy
impairment
at the acquisition date acquisition intangibles are allocated to each of the cgus expected to benefit from the synergies of the combination 
the group’s shared costs and assets relating mainly to infrastructure and central overheads are allocated across the two cgus based on the 
relative future cash flows 
determining whether the carrying amount of operating and acquisition intangibles have any indication of impairment requires judgement 
if an indication of impairment is identified further judgement is required to assess whether the carrying amount can be supported by the 
value in use of the cgu that the asset is allocated to 
the value in use calculation involves estimation of both the future cash flows of the cgus and the selection of appropriate discount rates 
to use to calculate present values
useful economic lives
the assessment of the useful economic lives of these operating and acquisition intangibles requires judgement amortisation is charged 
to the income statement based on the useful economic life selected this assessment requires estimation of the period over which the 
group will benefit from the assets
impairment of assets 
the group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered 
an impairment loss at each reporting date where an indicator of impairment exists the group makes a formal estimate of the asset’s 
recoverable amount and the extent of any impairment loss 
the recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use in assessing value in use the estimated 
cash flows are discounted to their present value using a pretax discount rate that reflects the current market assessments of the time 
value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted
if the recoverable amount of an asset is estimated to be less than the carrying amount the carrying amount of the asset or cgu is reduced 
to its recoverable amount 
other intangible assets are analysed as follows
operating 
intangibles
£m
acquisition 
intangibles
£m
total other 
intangibles
£m
opening balance at 1 april 2013 127 27 154
additions 43 – 43
amortisation 35 21 56
closing balance at 31 march 2014 135 6 141
cost gross carrying amount 303 98 401
accumulated amortisation 168 92 260
closing balance at 31 march 2014 135 6 141
operating 
intangibles
£m
acquisition 
intangibles
£m
total other 
intangibles
£m
opening balance at 1 april 2012 123 79 202
additions 30 — 30
amortisation 26 52 78
closing balance at 31 march 2013 127 27 154
cost gross carrying amount 260 326 586
accumulated amortisation 133 299 432
closing balance at 31 march 2013 127 27 154
operating intangibles
operating intangibles includes internally generated assets of net book value £39m 2013 £31m which are amortised over a period of up 
to eight years this includes additions of £15m 2013 £10m and an amortisation charge of £7m 2013 £5m in the year ended 31 march 2014 
included within operating intangibles is the following asset which is material to the group 
 ƥ trio the customer billing system which has a net book value of £76m 2013 £86m trio is amortised over a period of up to eight years 
depending on the release date of the relevant component the weighted average remaining useful economic life of the components of trio 
is four years 2013 five years  strategic report overview strategic report strategy strategic report performance governance financial statements other information
67
talktalk telecom group plc annual report 2014
11 goodwill and other intangible assets continued
b other intangible assets continued
acquisition intangibles
acquisition intangibles are removed from cost in the analysis in the year after they are fully amortised
all acquisition intangibles relate to customer bases
the customer bases relate primarily to the tiscali uk internet access business which was acquired in july 2009 the valuation of customer 
bases is derived from the discounted future cash flows expected from them after a deduction for contributory assets
at 31 march 2014 the tiscali customer base is material to the group with a net book value of £5m 2013 £23m and a remaining useful 
economic life of three months 2013 15 months
12 property plant and equipment
accounting policy
property plant and equipment are stated at cost net of depreciation and any provision for impairment depreciation is provided on all property 
plant and equipment at rates calculated to write off the cost less estimated residual value of each asset on a straight line basis over its 
expected useful life from the date it is brought into use as follows
short leasehold costs 10 or the lease term if less than ten years 
network equipment and computer hardware 125–50 per annum 
fixtures and fittings 20–25 per annum
critical judgements in applying the group’s accounting policy
the assessment of the useful economic lives of these assets requires judgement depreciation is charged to the income statement based 
on the useful economic life selected this assessment requires estimation of the period over which the group will benefit from the assets
determining whether the carrying amount of these assets has any indication of impairment also requires judgement if an indication of impairment 
is identified further judgement is required to assess whether the carrying amount can be supported by the value in use of the cgu that the 
asset is allocated to the value in use calculation involves estimation of both the future cash flows of the cgus and the selection of appropriate 
discount rates to calculate present values note 11 
impairment of assets 
property plant and equipment 
the group reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets have suffered an 
impairment loss at each reporting date the group uses the same methodology as set out in note 11 for operating and acquisition intangibles
 
leasehold
 improvements
£m
network 
equipment and 
computer 
hardware
£m
fixtures 
and fittings
£m
total
£m
opening balance at 1 april 2013 5 290 – 295
additions – 87 – 87
depreciation – 77 – 77
closing balance at 31 march 2014 5 300 – 305
cost gross carrying amount 6 671 6 683
accumulated depreciation and impairment charges 1 371 6 378
closing balance at 31 march 2014 5 300 – 305
 
leasehold
 improvements
£m
network 
equipment and 
computer 
hardware
£m
fixtures 
and fittings
£m
total
£m
opening balance at 1 april 2012 6 286 – 292
additions – 79 – 79
depreciation 1 75 – 76
closing balance at 31 march 2013 5 290 – 295
cost gross carrying amount 6 584 6 596
accumulated depreciation and impairment charges 1 294 6 301
closing balance at 31 march 2013 5 290 – 295 68
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
13 noncurrent asset investments
accounting policy
investments other than subsidiaries are initially recognised at cost being the fair value of the consideration given plus any transaction costs 
associated with the acquisition
investments are categorised as available for sale and are recorded at fair value changes in fair value together with any related taxation 
are taken directly to equity and recycled to the income statement when the investment is sold or determined to be impaired
noncurrent asset investments at 31 march 2014 related to a 73 2013 84 interest in shared band limited a telecommunications 
technology provider during the prior year the group impaired its investment to £nil 
a principal investments
the parent company has investments in the following subsidiary undertakings which principally affected the profits or losses or net assets of 
the group to avoid a statement of excessive length details of investments that are not significant have been omitted all holdings are in equity 
share capital and give the group an effective holding of 100 on consolidation
name country of incorporation or registration nature of business
talktalk group limited england and wales holding company
talktalk telecom holdings limited

england and wales holding company
talktalk communications limited england and wales telecommunications
talktalk telecom limited england and wales telecommunications
cpw network services limited england and wales telecommunications
 directly held by the company
b acquisitions and disposals
i acquisitions
on 14 may 2013 the group acquired the remaining 75 of the issued share capital of future office communications limited foc note 22 
there were no acquisitions in the prior year
ii disposals 
there were no disposals in the year 
in the prior year the group disposed of its investment in southern communications networks limited for cash consideration of £2m associated 
goodwill of £1m was written off resulting in a £1m profit on disposal there was no associated acquisition intangible in respect of this business 
14 interest in joint venture
accounting policy
interests in joint ventures are accounted for using the equity method the group income statement includes the group’s share of the posttax 
profits or losses of the joint ventures based on their financial statements for the year 
in the group balance sheet the group’s interest in joint ventures are shown as a noncurrent asset representing the group’s investment in the 
share capital of the joint ventures as adjusted for postacquisition changes in the group’s share of the net assets or liabilities less provision for 
any impairment 
in addition to the carrying amount of the investment the group’s interest in joint ventures includes where applicable any long term interests in 
the venture that in substance form part of the group’s net investment in the joint venture an item for which settlement is neither planned nor 
likely to occur in the foreseeable future is in substance an extension of the group’s interest in that joint venture 
any loans advanced to a joint venture that in substance do not form part of the group’s net investment are shown separately in the balance 
sheet as a receivable to the group losses recognised using the equity method in excess of the group’s investment in ordinary shares are 
applied to the other components of the group’s interest in the joint venture in the reverse order of their seniority ie priority in liquidation
the group holds 143 of the ordinary share capital of youview tv limited a joint venture with the british broadcasting corporation 
itv broadcasting limited british telecom plc channel four television corporation arqiva limited and channel 5 broadcasting limited 
the joint venture was set up in order to develop a freetoair internetconnected tv service to uk homes the table below sets out the 
net additions in the year
2014
£m
2013
£m
opening balance at 1 april 9 7
additions 5 6
share of results 7 4
closing balance at 31 march 7 9
the group has reviewed the carrying value of youview and has concluded that there is no indication of impairment  strategic report overview strategic report strategy strategic report performance governance financial statements other information
69
talktalk telecom group plc annual report 2014
14 interest in joint venture continued
accounting policy continued
the group’s share of the results assets and liabilities of its joint ventures are as follows
group share of results of joint ventures
2014
£m
2013
£m
expenses 7 4
loss before taxation 7 4
taxation – –
loss after taxation 7 4
group share of net assets of joint ventures
2014
£m
2013
£m
non‑current assets 7 9
net assets 7 9
during the year the group paid the remaining commitment outstanding of £5m on the initial agreement with youview tv limited during march 2014 
the group signed heads of terms with the other existing shareholders of youview tv limited committing the group to pay approximately £2m 
up to 30 june 2014 it is anticipated that a long term agreement for a further five year term to 31 march 2019 will be signed by 30 june 2014 
during the year ended 31 march 2014 the group alongside british sky broadcasting limited british telecom plc and virgin media limited 
established an equal membership joint venture internet matters limited it is a notforprofit company incorporated as a company limited 
by guarantee it has been set up as an industryled body to promote and educate parents about internet safety for children the group is 
committed to pay £2m over the period to 31 march 2017 
15 inventories
accounting policy
inventories are stated at the lower of cost and net realisable value valued on a fifo basis and consists primarily of set top boxes handsets 
and routers net realisable value is based on estimated selling price less costs expected to be incurred a provision is made for obsolete 
items where appropriate
2014
£m
2013
£m
goods for resale 24 23
16 trade and other receivables
critical judgements in applying the group’s accounting policy
judgement is required in order to evaluate the likelihood of collection of customer debt after revenue has been recognised and hence the 
value of the bad and doubtful debt these provisions are based on historical trends in the percentage of debts which are not recovered
trade and other receivables comprise
2014
£m
2013
£m
current – trade and other receivables
trade receivables – gross 169 156
less provision for impairment 34 33
trade receivables – net 135 123
other receivables 63 41
prepayments and accrued income 62 62
trade and other receivables 260 226
the directors estimate that the carrying amount of trade receivables approximates to their fair value
the average credit period taken on trade receivables calculated by reference to the amount owed at the year end as a proportion of total 
revenue in the year was 30 days 2013 28 days
the group’s trade receivables are denominated in the following currencies
2014
£m
2013
£m
uk sterling 146 123
other 23 33
169 156 70
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
16 trade and other receivables continued
critical judgements in applying the group’s accounting policy continued
the ageing of gross trade receivables is as follows
2014
£m
restated
2013
£m
not yet due 74 71
0 to 2 months 14 20
2 to 4 months 17 15
over 4 months 64 50
169 156
 the prior year amounts have been restated to correct ageing profile
the ageing of the provision for impairment of trade receivables is as follows
2014
£m
2013
£m
not yet due 2 3
0 to 2 months 2 3
2 to 4 months 4 7
over 4 months 26 20
34 33
movements in the provisions for impairment of trade receivables are as follows
2014
£m
2013
£m
opening balance 33 29
charged to the income statement 52 33
receivables written off as irrecoverable 51 29
34 33
trade receivables of £63m 2013 £55m were past due but not impaired these balances primarily relate to consumer and corporate fixed 
line customers the group has made provisions based on historical rates of recoverability and all unprovided amounts are considered to be 
recoverable the ageing analysis of these trade receivables is as follows
2014
£m
restated
2013
£m
0 to 2 months 12 17
2 to 4 months 13 8
over 4 months 38 30
63 55
 the prior year amounts have been restated to correct ageing profile
17 trade and other payables
2014
£m
2013
£m
trade payables 208 210
other taxes and social security costs 15 10
other payables 17 21
accruals and deferred income 216 190
456 431
the group has commercially agreed longer credit terms with certain suppliers excluding these suppliers the underlying average credit period 
taken on trade payables was 32 days 2013 39 days including these suppliers the average credit period taken was 42 days 2013 48 days
the directors consider that the carrying amount of trade and other payables approximates to their fair value strategic report overview strategic report strategy strategic report performance governance financial statements other information
71
talktalk telecom group plc annual report 2014
18 cash and cash equivalents loans and other borrowings
a cash and cash equivalents are as follows
2014
£m
2013
£m
cash at bank and in hand – 7
the effective interest rate on bank deposits and money market funds was 07 2013 07
b loans and other borrowings comprise
2014
£m
2013
£m
current 
bank overdrafts 7 –
term loan 30 25
37 25
maturity
2014 
£m
2013
£m
noncurrent
term loan 2015 75 50
bilateral loan 2015 – 30
£560m revolving credit facility 2015 385 295
460 375
details of the current and noncurrent borrowing facilities of the group for the year are set out below
bank overdrafts
overdraft facilities are used to assist in short term cash management these uncommitted facilities bear interest at a margin over the 
bank of england base rate
£75m term loan
the group has a committed term loan of £75m 2013 £75m which matures in november 2015 the interest rate payable in respect of 
drawings under this facility is at a margin over libor for the relevant currency and for the appropriate period the actual margin applicable 
to any drawing depends on the ratio of net debt to ebitda calculated in respect of the most recent accounting period covenants included 
in this facility restrict the ratio of net debt to ebitda and require minimum levels of interest cover and fixed charges interest and operating 
lease expenditure cover 
£560m revolving credit facility rcf and £30m bilateral agreement
the group has a £560m rcf which matures in november 2015 the interest rate payable in respect of drawings under this facility is at a margin 
over libor and for the appropriate period the actual margin applicable to any drawing depends on the ratio of net debt to ebitda calculated 
in respect of the most recent accounting period covenants included in this facility restrict the ratio of net debt to ebitda and require minimum 
levels of interest cover and fixed charges interest and operating lease expenditure cover in addition to the rcf the group also has £30m of 
bilateral agreements which mature in march 2015 
the group’s facilities total £665m the group was in compliance with its covenants throughout the current and prior year
borrowing facilities
the group had undrawn committed borrowing facilities at the end of the year in respect of which all conditions precedent had been met 
as follows
maturity
2014 
£m
2013
£m
undrawn available committed facilities 2015 175 265
the book value and fair value of the group’s loans and other borrowings all of which are in sterling are as follows
2014
£m
2013
£m
less than 1 year 37 25
1 to 2 years 460 80
2 to 3 years – 295
497 400
securities and guarantees
committed borrowings are guaranteed by group companies which make up 75 ebitda and 75 of gross assets excluding internal transactions  72
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
19 financial risk management and derivative financial instruments
the book value and fair value of the group’s financial assets liabilities and derivative financial instruments excluding the group’s loans and 
other borrowings shown in note 18 are as follows
2014
£m
2013
£m
current assets
cash and cash equivalents – 7
trade and other receivables 260 226
noncurrent assets
non‑current investments and investment in joint venture 7 9
current liabilities
bank overdrafts 7 –
trade and other payables

456 428
derivative financial instruments

– 3
196 189
  deferred income has been included within the financial liabilities above so as to give completeness over the group’s contractual commitments on future cash outflows
 derivative financial instruments are included with other payables in note 17 
a financial instruments
the group’s activities exposed it to a variety of financial risks including market risk such as currency risk and interest rate risk credit risk and 
liquidity risk the group treasury function used certain financial instruments to mitigate potential adverse effects on the group’s financial 
performance from these risks these financial instruments primarily consisted of bank loans and interest rate swaps other products such 
as currency options can also be used depending on the risks to be covered but have not been used in the current or preceding financial year 
the group does not trade or speculate in any financial instruments
the group has cash flow hedges in place that swap the interest rate risk on the revolving credit facility rcf from floating to fixed these 
hedges have been fully effective from inception the fair value measurement is classified as level 2 derived from other observable market 
data this means that their fair value is based upon the mark to market valuation at the balance sheet date fair value measurement at level 2 
gives consideration to interest rates yield curves and foreign exchange rates at commonly quoted intervals for relevant currencies the group 
has also assessed the credit risk within its financial instruments the fair value of these instruments at 31 march 2014 is £nil 2013 £3m a gain 
of £3m 2013 loss of £2m has been recognised in other comprehensive income in the year ended 31 march 2014 as the hedges were fully 
effective there has been no income statement impact 
b embedded derivatives
no contracts with embedded derivatives have been identified and accordingly no such derivatives have been accounted for separately strategic report overview strategic report strategy strategic report performance governance financial statements other information
73
talktalk telecom group plc annual report 2014
19 financial risk management and derivative financial instruments continued
c foreign exchange risk
the group uses spot and forward foreign exchange trading to hedge transactional exposures which arise mainly through cost of sales and 
operating expenses and are primarily denominated in euro and us dollar at 31 march 2014 the fair value of outstanding currency contracts 
was £7m 2013 £17m 
borrowings and foreign exchange contracts are sensitive to movements in foreign exchange rates this sensitivity can be analysed in comparison 
to year end rates adjusted for funding to related parties and assuming all other variables remain constant there was no material impact of a 
10 movement in the uk sterlingeuro exchange rate on either the income statement or other equity the effect of foreign exchange derivatives 
on borrowings at the year end was as follows
uk sterling
£m
euro
£m
other
£m
total
£m
2014
borrowings before derivatives 497 – – 497
derivatives 7 10 3 –
490 10 3 497
uk sterling
£m
euro
£m
other
£m
total
£m
2013
borrowings before derivatives 400 – – 400
derivatives 17 19 2 –
 383 19 2 400
during the year the group used derivatives for management of foreign currency cash balances held by overseas subsidiaries which were 
inherited from cpw on demerger and foreign currency trading balances
d interest rate risk
the group’s interest rate risk arises primarily from cash cash equivalents and borrowings all of which are at floating rates of interest and thus 
expose the group to cash flow interest rate risk these floating rates are linked to libor and other interest rate bases as appropriate to the 
instrument and currency future cash flows arising from these financial instruments depend on interest rates and periods for each loan or 
rollover as detailed in section a the group has cash flow hedges in place to mitigate its interest rate risk on its borrowings 
cash and borrowings as well as some foreign exchange products are sensitive to movements in interest rates and such movements have been 
analysed in the table below by calculating the effect on the income statement and equity of one percentage point movement in the interest 
rate for the currencies in which most group cash and borrowings are denominated funding to related parties has been offset against gross 
borrowings in calculating these sensitivities this annualised analysis has been prepared on the assumption that the year end positions prevail 
throughout the year and therefore may not be representative of fluctuations in levels of borrowings
2014
£m
2013
£m
1 movement in the uk sterling interest rate
income statement movement 3 2
other equity movement – – 74
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements continued
19 financial risk management and derivative financial instruments continued
e liquidity risk
the group manages its exposure to liquidity risk by regularly reviewing the long and short term cash flow projections for the business against 
facilities and other resources available to it headroom is assessed based on historical experience as well as by assessing current business 
risks including foreign exchange movements existing facilities do not expire until march 2015 and november 2015 it is group policy to refinance 
debt maturities significantly ahead of maturity dates
the table below analyses the group’s financial liabilities into relevant maturity groupings the amounts disclosed in the table are the contractual 
undiscounted cash flows assuming year end interest rates remain constant and that borrowings are paid in full in the year of maturity
less than 
1 year
£m
1 to 2 years
£m
2 to 3 years
£m
3 to 4 years
£m
4 to 5 years
£m
more than 
5 years
£m
total
£m
2014
loans and other borrowings 37 460 – – – – 497
derivative financial instruments – 
payable 7 – – – – – 7
derivative financial instruments – 
receivable 7 – – – – – 7
trade and other payables 456 – – – – – 456
493 460 – – – – 953
less than 
1 year
£m
1 to 2 years
£m
2 to 3 years
£m
3 to 4 years
£m
4 to 5 years
£m
more than 
5 years
£m
total
£m
2013
loans and other borrowings 25 80 295 – – – 400
derivative financial instruments – 
payable 17 – – – – – 17
derivative financial instruments – 
receivable 17 – – – – – 17
trade and other payables 431 – – – – – 431
456 80 295 – – – 831
f credit risk
the group’s exposure to credit risk is regularly monitored debt investments foreign exchange and derivative transactions are all spread 
amongst a number of banks all of which have short or long term credit ratings appropriate to the group’s exposures trade receivables primarily 
comprise balances due from consumer and talktalk business fixed line customers and provision is made for any receivables 
that are considered to be irrecoverable strategic report overview strategic report strategy strategic report performance governance financial statements other information
75
talktalk telecom group plc annual report 2014
19 financial risk management and derivative financial instruments continued
g capital risk management
the group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return 
to stakeholders through the optimisation of the debt and equity balance further detail is provided in the chief financial officer’s statement 
on page 14
the capital structure of the group consists of debt which includes the borrowings disclosed in note 18 cash and cash equivalents and equity 
attributable to equity holders of the parent comprising issued capital reserves and retained earnings as disclosed in notes 21 to 22
the group’s board reviews the capital structure on an annual basis as part of this review the board considers the cost of capital and the risks 
associated with each class of capital the group has a medium term target gearing ratio of 75 to 100 determined as a proportion of net debt 
to equity the gearing ratio at 31 march 2014 is 143 2013 89 driven primarily by the company’s continued investment in tv combined with 
an increased dividend payout the board is confident that the gearing ratio will return to its target gearing ratio of 75 to 100 in the medium term 
the gearing ratio at the year end is as follows
2014
£m
2013
£m
debt 490 400
cash and cash equivalents – 7
bank overdraft 7 –
net debt 497 393
equity 347 442
net debt to equity ratio 143 89
20 provisions
accounting policy
provisions are recognised when a legal or constructive obligation exists as a result of past events and it is probable that an outflow of resources 
will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation provisions are discounted where 
the time value of money is considered to be material
provisions are categorised as follows
operating efficiencies
operating efficiencies provisions relate principally to redundancy costs and are only recognised where plans are demonstrably committed 
and where appropriate communication to those affected has been undertaken at the balance sheet date these provisions are expected 
to be utilised over the next twelve months 
one company integration
these provisions relate principally to reorganisation costs and are only recognised where plans are demonstrably committed and where appropriate 
communication to those affected has been undertaken at the balance sheet date these provisions are expected to be utilised over the next 
twelve months 
property
property provisions relate to dilapidations and similar property costs and costs associated with onerous property contracts all such provisions 
are assessed by reference to the terms and conditions of the contract and market conditions at the balance sheet date onerous property 
contracts are expected to be utilised over the next seven years dilapidation provisions are expected to be utilised as and when properties 
are exited 76
talktalk telecom group plc annual report 2014
notes to the consolidated financial statements  continued
20 provisions continued
accounting policy continued
contract and other
contract and other provisions relate to onerous contracts and contracts with unfavourable terms arising on the acquisition of businesses and 
anticipated costs of unresolved legal disputes all such provisions are assessed by reference to the best available information at the balance 
sheet date
the below tables analyse the group’s provisions
2014
£m
2013
£m
current 2 5
non‑current 7 8
9 13
operating 
efficiencies 
£m
one company
 integration
£m
property
£m
contract 
and other
£m
total
£m
2014
opening balance 2 2 9 – 13
charged to income statement 2 – 1 – 3
utilised in the year 3 1 3 – 7
1 1 7 – 9
operating 
efficiencies 
£m
one company
 integration
£m
property
£m
contract 
and other
£m
total
£m
2013
opening balance 1 2 9 6 18
charged to income statement 2 – 1 – 3
utilised in the year 1 1 1 6 9
unwinding of discount – 1 – – 1
2 2 9 – 13
21 share capital
2014 
million
2013 
million
2014 
£m
2013 
£m
allotted calledup and fully paid
ordinary shares of 01p each 955 931 1 1
on 20 november 2013 the company issued a further 23722791 ordinary shares of 01 pence each to settle the ves schemes note 5 strategic report overview strategic report strategy strategic report performance governance financial statements other information
77
talktalk telecom group plc annual report 2014
22 reserves 
 notes
share 
capital 
£m
share 
premium
£m
translation 
reserve 
£m
demerger 
reserve 
£m
retained 
earnings and 
other reserves 
£m
total 
£m
at 1 april 2013 1 618 64 513 400 442
total comprehensive income for the year – – – – 31 31
issues of own shares

– 66 – – 78 12
taxation of items recognised directly in reserves – – – – 2 2
purchase of own shares – – – – 24 24
settlement of group esot – – – – 6 6
adjustment arising from change 
in non‑controlling interest

 – – – – 3 3
share‑based payments reserve credit 5 – – – – 4 4
equity dividends 8 – – – – 99 99
at 31 march 2014 1 684 64 513 239 347
 notes
share 
capital 
£m
share 
premium
£m
translation 
reserve 
£m
demerger 
reserve 
£m
retained 
earnings and 
other reserves 
£m
total 
£m
at 1 april 2012 1 586 65 513 435 444
total comprehensive income for the year – – 1 – 98 99
issues of own shares

– 32 – – 63 31
taxation of items recognised directly in reserves – – – – 11 11
share‑based payments reserve credit 5 – – – – 6 6
equity dividends 8 – – – – 87 87
at 31 march 2013 1 618 64 513 400 442
    on 16 september 2013 the group’s remuneration committee determined that the relevant performance conditions of the ves schemes including the 5 tsr requirement had been 
satisfied meaning the ves participants were entitled to exercise the remaining 40 of their options as set out in note 5 the settlement of the schemes resulted in the recognition of 
share premium of £66m and a £78m movement in retained earnings and other reserves
   on 17 september 2012 the group’s remuneration committee determined that the relevant performance conditions of the ves schemes including the 5 tsr requirement had been 
satisfied meaning the ves participants were entitled to exercise 60 of their options as set out in note 5 the settlement of the schemes resulted in the recognition of share premium 
of £32m and a £63m movement in retained earnings and other reserves
  on 14 may 2013 the group acquired the remaining 75 of the issued share capital of foc the group already held 25 of foc and had control of the business the cash consideration 
paid for the acquisition of £3m has been recognised as a transaction with noncontrolling interest
group esot
the group esot held 34 million shares at 31 march 2014 2013 39 million in the company for the benefit of employees and former cpw employees 
the group esot has waived its rights to receive dividends and none of its shares have been allocated to specific schemes at the year end the 
shares had a market value of £109m 2013 £107m
demerger reserve
the demerger reserve primarily reflects the profits or losses arising on the transfer of investments and net assets of cpw on demerger 
translation reserve
the results of overseas operations are translated at the average foreign exchange rates for the year and their balance sheets are translated 
at the rates prevailing at the balance sheet date exchange differences arising on the translation of opening net assets and results of overseas 
operations are recognised in the translation and hedging reserve all other exchange differences are included in the income statement 78
talktalk telecom group plc annual report 2014
23 analysis of changes in net debt
opening
£m
net 
cash flow
£m
closing
£m
2014
cash and cash equivalents 7 7 –
bank overdrafts – 7 7
7 14 7
current loans and other borrowings 25 5 30
non‑current loans and other borrowings 375 85 460
400 90 490
total net debt 393 104 497
opening
£m
net 
cash flow
£m
closing
£m
2013
cash and cash equivalents 2 5 7
bank overdrafts 1 1 –
1 6 7
current loans and other borrowings 25 – 25
non‑current loans and other borrowings 410 35 375
435 35 400
total net debt 434 41 393
loans to related parties 2 2 –
total net debt including loans to related parties 432 39 393
24 commitments under operating leases
the group leases network infrastructure and offices under noncancellable operating leases the leases have varying terms purchase options 
escalation clauses and renewal rights there were no leases which were individually significant to the group 
the group had outstanding commitments for future minimum payments due as follows
2014
£m
2013
£m
less than 1 year 39 37
2 to 5 years 61 69
greater than 5 years 55 68
155 174
25 capital commitments
the group had entered into the following amount of contractual commitments for the acquisition of property plant and equipment at the year end
2014
£m
2013
£m
expenditure contracted but not provided for in the financial statements 23 21
notes to the consolidated financial statements  continued strategic report overview strategic report strategy strategic report performance governance financial statements other information
79
talktalk telecom group plc annual report 2014
26 related party transactions
the group’s related party transactions are made on terms equivalent to those that prevail in arm’s length transactions 
during the current and prior year the group did not have any disclosable related party transactions
the remuneration of the directors who are some of the key management personnel of the group is set out in the directors’ remuneration 
report on pages 26 to 39 the remuneration of all key management personnel is disclosed in note 4
27 contingent liabilities
in the year ended 31 march 2014 the group received £4m 2013 £29m relating to an ofcom determination that bt had overcharged for certain 
wholesale ethernet services the full amount of £33m has been paid to the group at 31 march 2014 bt has appealed ofcom’s determination in 
the competition appeal tribunal cat however the group and other parties have also appealed the decision arguing that the original ofcom 
determination was too low 
in september 2013 a change to a previously agreed vat treatment in relation to prompt payment discounts was enforced by hmrc with 
immediate effect in december 2013 following discussions with hmrc the group amended the arrangements and has accounted for the 
associated vat benefit in the group’s vat return for the three month period ended 31 march 2014 as at 14 may 2014 no decision has been 
reached by hmrc on the appropriateness of the new arrangements in the march 2014 uk government budget a change in the vat legislation 
with respect to prompt payment discounts was announced the change took effect on 1 may 2014
28 events after the balance sheet date
on 15 april 2014 the group together with sky announced they have joined forces with cityfibre to create a new company that will deliver 
ultrafast broadband services in the city of york the group’s investment in the company will be accounted for as a joint arrangement in 
accordance with ifrs 11 ‘joint arrangements’ 
as part of the agreement the group has committed to spend £5m over three years and will recognise through the income statement 
on an annual basis its share of profit or loss generated by the joint arrangement 80
talktalk telecom group plc annual report 2014
notes
2014
£m 
2013
£m
fixed assets
fixed asset investments 4 1173 1082
1173 1082
current assets
debtors amounts due within one year 5 270 303
270 303
total assets 1443 1385
current liabilities
creditors amounts due within one year 6 49 81
loans 7 30 25
79 106
noncurrent liabilities 
loans 7 460 375
460 375
total liabilities 539 481
net assets 904 904
equity
share capital 8 9 1 1
share premium 9 684 618
retained earnings and other reserves 9 219 285
equity shareholders’ funds 904 904
the accompanying notes are an integral part of this company balance sheet
these financial statements were approved by the board of directors on 14 may 2014 they were signed on its behalf by 
d harding   s makin 
chief executive officer  chief financial officer
14 may 2014   14 may 2014
 
company balance sheet
as at 31 march strategic report overview strategic report strategy strategic report performance governance financial statements other information
81
talktalk telecom group plc annual report 2014
notes
2014
£m
2013
£m
profit for the period 2 28 12
equity dividends 3 99 87
retained loss for the period 71 75
issue of own shares

66 32
share‑based payments reserve credit 4 6
share‑based payments reserve debit

2 3
currency translation and cash flow hedges 3 2
net movement in shareholders’ funds – 42
opening shareholders’ funds 904 946
closing shareholders’ funds 904 904
 these amounts arose as a result of settlement of the group’s ves schemes further detail is set out in note 9 
company reconciliation of movement in shareholders’ funds
for the year ended 31 march 82
talktalk telecom group plc annual report 2014
notes to the company financial statements
1 accounting policies
basis of preparation
the separate financial statements of the company are presented as required by the companies act 2006 they have been prepared under the 
historical cost convention and in accordance with applicable united kingdom accounting standards and law 
the financial statements have been prepared on the going concern basis details of the considerations undertaken by the directors in reaching 
this conclusion are set out on page 14 within the chief financial officer’s statement
accounting policies
the company’s principal accounting policies which relate to the financial statements as a whole are set out below where an accounting policy 
is specific to one note the policy is described in the note to which it relates 
financial liabilities and equity instruments
financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into an equity 
instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities the accounting 
policies adopted for specific financial liabilities and equity instruments are set out below
loans and other borrowings 
loans and other borrowings represent committed and uncommitted bank loans and bank overdrafts 
these are initially measured at fair value which is equal to cost at inception and are subsequently measured at amortised cost using the 
effective interest rate method except where they are identified as a hedged item in a fair value hedge any difference between the proceeds 
net of transaction costs and the settlement or redemption of borrowings is recognised over the term of the borrowing
bank fees and legal costs associated with the securing of external financing are capitalised and amortised over the term of the relevant facility 
all other borrowing costs are recognised in the income statement in the period in which they are incurred
equity instruments
equity instruments issued by the company are recorded at the proceeds received net of direct issuance costs 
sharebased payments
the company issues equitysettled sharebased payments to certain employees sharebased payments issued by the company to its 
subsidiary undertakings are treated as additions to investments based on the fair value of the grant spread over the relevant vesting period 
with a corresponding credit to reserves where the company recharges the cost of sharebased payments to its subsidiary undertaking the 
investment is reduced accordingly 
further details are provided in note 5 to the consolidated financial statements
taxation
current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively 
enacted at the balance sheet date
deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where 
transactions or events that result in an obligation to pay more or a right to pay less tax in the future have occurred at the balance 
sheet date with the following exception
deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable 
profits from which the future reversal of the underlying timing differences can be deducted
deferred tax is measured on a nondiscounted basis with the tax rates that are expected to apply in the periods in which the timing differences 
reverse based on tax rates and laws enacted or substantively enacted at the balance sheet date
the taxation liabilities of certain group companies are reduced wholly or in part by the surrender of losses by fellow group companies 
exemptions
the company has taken advantage of the exemption under frs 8 ‘related party disclosures’ not to provide details of related party transactions 
with other group companies as the company financial statements are presented together with the consolidated financial statements 
the company has applied the exemption under frs 29 ‘financial instruments disclosures’ so as not to disclose details of financial instruments 
held by the company full disclosure of the group’s financial instruments recognised under frs 29 ifrs 7 ‘financial instruments disclosures’ 
and ias 39 ‘financial instruments recognition and measurement’ is provided in note 19 to the group’s consolidated financial statements
2 profit for the year
as permitted by section 408 of the companies act 2006 the company has elected not to present its own profit and loss account for the year 
the company reported a profit of £28m for the year ended 31 march 2014 2013 £12m
the auditor’s remuneration for audit and other services is disclosed in the corporate governance report on page 24 
detailed disclosures of the directors’ remuneration and sharebased payments are given in the audited section of the directors’ remuneration 
report on pages 26 to 39 and should be regarded as an integral part of this note 
in the current and prior year the directors’ remuneration was borne by another group company and not recharged
the company has no employees other than directors strategic report overview strategic report strategy strategic report performance governance financial statements other information
83
talktalk telecom group plc annual report 2014
3 dividends
accounting policy
dividends receivable from the company’s subsidiaries and joint venture investments are recognised only when they are approved or paid 
by shareholders
final dividend distributions to the company’s shareholders are recognised as a liability in the financial statements in the period in which they 
are approved by the company’s shareholders interim dividends are recognised in the period in which they are paid 
2014
£m
2013
£m
final dividend for the year ended 31 march 2012 of 640p per ordinary share – 56
interim dividend for the year ended 31 march 2013 of 345p per ordinary share – 31
final dividend for the year ended 31 march 2013 of 695p per ordinary share 62 –
interim dividend for the year ended 31 march 2014 of 400p per ordinary share 37 –
total ordinary dividends 99 87
the proposed final dividend for the year ended 31 march 2014 of 800p per ordinary share on approximately 921 million ordinary shares £74m 
was approved by the board on 14 may 2014 and has not been included as a liability as at 31 march 2014
the expected cost of this dividend reflects the fact that the group esot has agreed to waive its rights to receive dividends
4 fixed asset investments
accounting policy
fixed asset investments in subsidiaries and joint ventures are recorded at cost being the fair value of consideration acquisition charges 
associated with the investment and capital contributions by way of sharebased payments less any provision for impairment 
2014
£m
2013
£m
subsidiaries 1153 1067
joint venture 20 15
1173 1082
2014
£m
2013
£m
opening net book value 1082 1004
additions 91 78
closing net book value 1173 1082
joint ventures
the company holds 143 of the ordinary share capital of youview tv limited a joint venture with the british broadcasting corporation 
itv broadcasting limited british telecom plc channel four television corporation arqiva limited and channel 5 broadcasting limited 
further details relating to the joint venture are disclosed within note 14 to the consolidated financial statements
principal group investments
the company’s significant investments in subsidiary undertakings are set out within note 13 to the consolidated financial statements 
additions
the additions in the year comprise
 ƥ £83m relating to the settlement of the ves schemes note 9
 ƥ £3m relating to sharebased payment schemes issued by the company and
 ƥ £5m relating to the youview joint venture 84
talktalk telecom group plc annual report 2014
notes to the company financial statements continued
5 debtors amounts due within one year
2014
£m
2013
£m
amounts owed by group undertakings 262 299
other debtors 8 4
270 303
interest on intercompany funding is calculated at the bank of england base rate plus 2 intercompany deposits receive interest at the 
bank of england base rate with no margin interest is either paid or capitalised monthly as appropriate where they exist currency balances 
are calculated at similar rates
interest is not charged on balances arising between group companies as a result of intercompany trading such balances are settled regularly 
in line with agreed terms of trade within 30 to 60 days
6 creditors amounts due within one year
2014
£m
2013
£m
amounts owed to group undertakings 48 78
other creditors 1 3
49 81
interest on intercompany funding is calculated at the bank of england base rate plus 2 intercompany deposits receive interest at the 
bank of england base rate with no margin interest is either paid or capitalised monthly as appropriate where they exist currency balances 
are calculated at similar rates
interest is not charged on balances arising between group companies as a result of intercompany trading such balances are settled regularly 
in line with agreed terms of trade within 30 to 60 days
7 loans
2014
£m
2013
£m
current
loans 30 25
noncurrent
loans 460 375
490 400
the details of the loans are disclosed within note 18 to the consolidated financial statements and should be regarded as an integral part 
of these financial statements
8 share capital
2014 
million
2013 
million
2014 
£m
2013 
£m
allotted calledup and fully paid
ordinary shares of 01p each 955 931 1 1
on 20 november 2013 the company issued a further 23722791 ordinary shares of 01 pence each to settle the ves schemes note 9 strategic report overview strategic report strategy strategic report performance governance financial statements other information
85
talktalk telecom group plc annual report 2014
9 reserves
share 
capital
£m
share 
premium
£m
profit and 
loss and 
other reserves
£m
total
£m
at 1 april 2013 1 618 285 904
profit for the period – – 28 28
issue of own shares

– 66 – 66
share‑based payment credit – – 4 4
share‑based payment debit

– – 2 2
currency translations and cash flow hedges – – 3 3
equity dividends – – 99 99
at 31 march 2014 1 684 219 904
share 
capital
£m
share 
premium
£m
profit and 
loss and 
other reserves
£m
total
£m
at 1 april 2012 1 586 359 946
profit for the period – – 12 12
issue of own shares

– 32 – 32
share‑based payment credit – – 6 6
share‑based payment debit

– – 3 3
currency translations and cash flow hedges – – 2 2
equity dividends – – 87 87
at 31 march 2013 1 618 285 904
   on 16 september 2013 the group’s remuneration committee determined that the relevant performance conditions of the ves schemes including the 5 tsr requirement had been 
satisfied meaning the ves participants were entitled to exercise the remaining 40 of their options as set out in note 5 to the consolidated financial statements the settlement of the 
scheme resulted in a net increase of £83m in investments note 4 the recognition of share premium of £66m and a decrease in the net cost of share based payments previously 
recognised in reserves of £2m 
  on 17 september 2012 the group’s remuneration committee determined that the relevant performance conditions of the ves schemes including the 5 tsr requirement had 
been satisfied meaning the ves participants were entitled to exercise 60 of their options as set out in note 5 to the consolidated financial statements the settlement of the scheme 
resulted in a net increase of £68m in investments note 4 the recognition of share premium of £32m and a decrease in the net cost of sharebased payments previously recognised 
in reserves of £3m
10 audit exemption note
the company is entitled to exemption from audit for its subsidiaries under section 479a of the companies act 2006 for the year ended 
31 march 2014
the directors have applied this exemption for the following subsidiaries
company name company number
executel ltd 05227052
greystone telecom ltd 04066365
green dot property management limited 05705868
tiscali uk limited 03408171
the directors acknowledge their responsibility for complying with the requirements of the companies act 2006 with respect to accounting 
records and the preparation of accounts  86
talktalk telecom group plc annual report 2014
 
2014
£m
2013
£m
2012
£m
2011
£m
2010
£m
headline results
revenue 1727 1670 1687 1765 1686
net profit for the year 61 132 159 122 106
net assets employed
non‑current assets 1039 1046 1102 1137 1204
net current liabilities excluding provisions 223 216 230 281 275
provisions 9 13 18 46 47
non‑current liabilities excluding provisions 460 375 410 395 490
net assets employed 347 442 444 415 392
headline earnings per share
basic 68 149 180 135 118
diluted 66 140 172 128 112
statutory earnings per share
basic 31 113 156 39 03
diluted 30 106 149 37 03
headline earnings represent the group’s income statement stated before the amortisation of acquisition intangibles and exceptional items 
on 26 march 2010 cpw demerged into carphone warehouse group plc and the group the company and carphone warehouse group plc 
were separately listed on the london stock exchange
the consolidated financial information of the group for the year ended 31 march 2010 have been prepared with the objective of presenting the 
results net assets and cash flows of the group in the form that arose on completion of the demerger as if it had been a standalone business 
during those periods
 
five year record unaudited strategic report overview strategic report strategy strategic report performance governance financial statements other information
87
talktalk telecom group plc annual report 2014
adsl asymmetric digital subscriber line technology 
enables data transmission over existing copper 
wiring at data rates several hundred times 
faster than analogue modems providing for 
simultaneous delivery of voice video and data
arpu average revenue per user on a monthly basis
cagr compound annual growth rate
cgu cash generating unit
churn a measure of the number of subscribers 
moving into or out of a product or service 
over a specific period of time
the company talktalk telecom group plc
companies act companies act 2006
cpw the carphone warehouse group plc 
its subsidiary companies joint ventures 
and investments
crm customer relationship management
demerger the demerger of the the carphone 
warehouse group plc into talktalk telecom 
group plc and carphone warehouse group 
plc effective on 26 march 2010
dslam digital subscriber line access multiplexer
ebit earnings before interest and taxation
ebitda earnings before interest taxation depreciation 
and amortisation
efm ethernet in the first mile
eps earnings per share
ethernet ethernet is a protocol that controls data 
transmission over a communications 
network often referred to as a family of 
framebased computers
frc financial reporting council
gbps gigabits per second
gps global positioning system
the group the company its subsidiaries and entities 
which are joint ventures
group esot talktalk telecoms holdings employee share 
option trust
headline 
information
headline information represents the group’s 
income statement stated before the 
amortisation of acquisition intangibles and 
exceptional items that are considered to 
be oneoff nonrecurring in nature and so 
material that the directors believe that they 
require separate disclosure to avoid distortion 
of underlying performance and should be 
separately presented on the face of the 
income statement
hd high definition
ip internet protocol is the packet data protocol 
used for routing and carriage of messages 
across the internet and similar networks 
ip performs the addressing function and 
contains some control information to allow 
packets to be routed through networks
isp internet service provider
llu local loop unbundling
mbitsmbps unit of data transfer rate equal to 1000000 
bits per second
mpf metallic path facility provides both broadband 
and telephony services to customers from 
talktalk group exchange infrastructure
msan multiservice access nodes
mvno mobile virtual network operator
narrowband telecommunication service that carries voice 
information in a narrowband of frequencies
net debt borrowings net of cash held on deposit at 
financial institutions
ngn next generation network
onnet the group’s unbundled network
operating free 
cash flow
cash generated from operations before 
exceptional items interest taxation dividend 
payments and investments
operating profit profit before finance costs and taxation
quad play a customer that takes voice broadband 
tv and mvno services from the group
rcf revolving credit facility
smpf or partial 
unbundling
shared metallic path facility provides 
broadband services to customers from 
talktalk group exchange infrastructure
sme small and medium sized enterprises
triple play a customer that takes voice broadband 
and tv services from the group
uk corporate 
governance code
uk corporate governance code published 
by the frc in may 2011
unbundling process by which bt makes available its 
local network to third party broadband 
service providers
voip voice over internet protocol
waep weighted average exercise price
wifi trademark of the wifi alliance often used as a 
general term for wireless networking technology 
that uses radio waves to provide wireless 
highspeed internet and network connections
glossary 88
talktalk telecom group plc annual report 2014
agm 23 july 2014
exdividend date 2 july 2014
record date 4 july 2014
dividend payment date 1 august 2014
financial calendar about this report
this report was printed in the uk by cpi colour a carbonneutral
®
 
printing company the report was printed using vegetablebased 
inks and produced on one site avoiding the need for transportation 
between processes
the material used in this report is amadeus 100 offset which 
comprises 100 postconsumer waste the paper mill and printer 
are certified to the environmental standard iso 14001 both are 
also forest stewardship council fsc chainofcustody certified
talktalk telecom group plc
registered in england and wales no 7105891 
11 evesham street london w11 4ar talktalk t elecom group plc  annual report 2014


Summary:
 06
talktalk telecom group plc annual report 2014
fy14 business review
summary
our 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 margin of 123 our investment in scaling the tv base 
had its most pronounced effect in h1 with ebitda margins of 90 
on revenue growth of 18 and total subscriber acquisition costs 
of £174m as expected h2 results showed a strong rebound in 
profitability with ebitda margin of 155 on 50 revenue growth 
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 56 year on year accelerating 
significantly from 13 growth in h1 to 99 in h2 the dividend for 
the year of 120p 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 160–170 and dividend 
growth of 15 and are on track 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 uk
accelerating growth in tv– 687000 customers added c25 
of fully unbundled base
we added 687000 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 gradually 
to scale 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 
with a third of tv connections new to talktalk 
the plus tv proposition has continued to prove popular both 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 settop box 
and bundled features free anytime calls and seven sky channels 
we have continued to develop our content proposition through 
fy15 with some significant new additions to our range such as 
sky on demand sky movies sky entertainment sky sports 
picturebox nbc universal – new  subscription video on demand 
svod service and new linear channels such as jstv and kyknet 
thema international sony entertainment tv sony asia tv 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 add a similar number of tv customers 
in fy15 as we did in fy14 which would take penetration to nearly 40 
of our onnet base our primary target market remains the large base 
of freeview households in the uk c18m and we continue to expect 
that in time nearly all of our onnet customers will convert 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 highly
a range of survey and usage data from our tv customers including 
those that have been with us for over a year now consistently point 
to high 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 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 
catchup tv without having to exit 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 programming in the uk viewing data across 
all platforms shows that the vast majority of tv viewing even for 
paytv subscribers is of live and catchup freetoair content 
other features that all our customers rate highly include the ease 
of access to a wide range of flexible nonsubscription pay content 
this 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 being able to select and pay for only 
the precise content they wish to access 
content purchasing behaviour encouraging for future revenue
whilst 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 future incremental revenues with an average 
arpu for payperview movies and boosts combined of c£900 
with over 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£250
with over twelve months of data from our growing base we are pleased 
to report that early purchasing behaviours have proved resilient and 
are consistent with our understanding of what our familyorientated 
valueseeking customers want to watch payperview movie demand 
has grown steadily over the last twelve months with customers 
purchasing on average just over one movie per month generating 
an incremental arpu of c£400 
“ talktalk is all about giving customers consistently the best value 
for money experience in the market”
chief executive officer’s statement strategic report overview strategic report strategy strategic report performance governance financial statements other information
07
talktalk telecom group plc annual report 2014
content boost purchases have also remained resilient although 
as we had expected essentials customers take longer to begin 
their pay content journey and initially tend to buy fewer boosts 
nevertheless the average boost arpu of essentials and plus 
customers at c£1100 is providing good incremental revenue for us 
tv customers’ earlylife churn significantly lower than that of 
broadband customers
very few of our earliest tv customers have reached the end of 
their first contract term so it remains too early to assess their 
outofcontract churn behaviour 
however the high levels of satisfaction with their service that our 
tv customers are reporting and the consistency of their content 
purchasing behaviour has translated into materially lower earlylife 
churn than for their dual play counterparts average monthly churn 
on the tv base through fy14 was approximately half that seen from 
our dual play base 
the lower earlylife churn significantly higher net promoter score and 
lower surveyed propensity to churn give us a great deal of confidence 
that mature triple play customers will also churn at a materially lower 
rate than dual play customers
2 continuing progress in mobile and fibre adding 
incremental value
7 of onnet customers now taking mobile
we added 109000 new customers to our mobile base during the year 
comprising 7 of our onnet base versus 45 of the base a year ago 
mobile customers continue to add incremental value 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 our innovation agenda for delivering long term growth and we see 
real opportunity to drive higher levels of penetration and value creation
5 of onnet customers taking fibre
we added 134000 new customers to our fibre base during the year 
comprising 5 of our onnet base versus 2 of the base a year ago 
bandwidth usage continues to grow 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 
an average of 34gb of content a month during fy14 – 46 more than 
a year ago however at current prices and 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 eg 
where distance from the exchange dictates copper speeds of less 
than 3mbps
3 talktalk business – one of the fastest growing b2b 
telecom businesses in the uk
another year of strong performance 
talktalk business has delivered a strong performance with corporate 
revenues growing by 56 year on year and accelerating significantly 
through the year h1 13 h2 99 high margin data products 
revenues 375 year on year have been a key driver of this 
performance with growth running in excess of the established 
decline in traditional voice revenues our suite of flexible and 
competitive ethernet products based on our market leading 
national ethernet footprint has helped us win significant new 
direct and partner business during the year
revenues from wholesale broadband connectivity products through 
our partner channel also showed strong growth during the year in q3 
we completed the migration of 103000 post office customers onto 
our base with revenues from these customers contributing to growth 
across onnet corporate and offnet
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 this is a powerful testament to the strength of 
talktalk business’s strategy business model and competitive 
positioning in its chosen markets  
a focused strategy to grow revenues and profitability
talktalk business’s strategy is consistent with the group strategy 
of leveraging our network scale and capability to build market 
share in value for money products whilst simplifying its systems 
and processes and launching innovative new products to deliver 
sustained and profitable long term growth 
our network is scaled for peak evening usage by consumers 
allowing talktalk business to use excess daytime capacity for 
business customers this together with our ethernet capability 
over 3000 of our exchanges are ethernet enabled with 95 
country coverage allows talktalk business to offer a wide range 
of competitively priced highmargin allip data connectivity 
products with data revenue growth running faster than the decline 
in legacy lowmargin 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 our competitors 08
talktalk telecom group plc annual report 2014
3 talktalk business – one of the fastest growing b2b 
telecom businesses in the uk continued
maintaining our strong partner relationships
our partner channel has continued to grow through fy14 of particular 
note is the successful migration of post office phone and broadband 
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 terms 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 
for end customers
growing data product penetration in enterprise
we saw strong growth in our direct business with a number of new 
contracts to supply wide area network solutions for medium and 
large businesses including iceland group mpls network covering 
840 sites for a six year term hutchison 3g mpls network covering 
360 sites for a three year term the dx group mpls network covering 
72 sites for a five year term selfridges mpls network covering 
twelve sites for a three year term and fullers mpls network covering 
200 sites for a three year term as a result we ended fy14 with over 
17000 ethernet lines connected c70 more than a year ago
growing market share in small businesses
we simplified our connectivity propositions for small businesses 
during the year launching amongst other things the uk’s most 
competitive business phone and broadband package for just £400 
per month excluding line rental in addition we streamlined our sales 
and service processes for this important and growing segment and 
see significant opportunity to grow market share
4 progress in making talktalk simpler – a £40m 
cost opportunity
we 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 transformation leveraging data and brilliant 
selfservice we commenced a programme to cease provision of 
noncore legacy access methods such as ip stream built a detailed 
roadmap for a groupwide systems upgrade some of which has 
already been implemented in talktalk business improved data 
standards and executive level reporting and launched a service and 
billing app – mytalktalk – on both the ios and android platforms that 
has been adopted by 100000 customers in just two months
these initiatives together with the continuing benefits of some of 
our legacy programmes delivered £145m of savings during fy14
looking forward we expect the four main programmes to drive 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 our offnet ip stream base rebrand our aol base 
and significantly reduce the number of consumer and b2b tariffs 
our systems 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 customer 
journeys to further encourage our customers to selfserve 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 and falling 
costs per add
reducing sac is one of the key drivers 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 
both elements during fy14 
we continued to make significant progress in two of the leading 
indicators of churn during the second half of the year with customer 
call volumes down 173 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 important effect is seen in our triple play 
customers whose earlylife 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 onnet churn which having spiked at 
17 in q2 subsequently fell to 16 in q3 and 15 in q4 
as an illustration reducing churn to 12 the top end of the  
08–12 range that mature triple play operators report over 
the next three years primarily by driving tv penetration across 
the base and further improving customer service would lead 
to a cumulative saving of c£30m over the period through fewer 
gross adds
we have also made significant progress in reducing cpa tv cpa 
fell during the year as planned with the launch of our lower cost 
essentials proposition and growing selfinstallation of the service 
tv cpa across the second half of the year averaged c£130 compared 
to c£170 in the first half similarly broadband cpa fell from c£190 
in the 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 savings in hardware costs and increasing selfservice driving 
a cumulative saving in excess of £70m over the next three years
chief executive officer’s statement continued  strategic report overview strategic report strategy strategic report performance governance financial statements other information
09
talktalk telecom group plc annual report 2014
6 longer term opportunities for delivering 
sustained growth
in april we announced that we have joined forces with sky and cityfibre 
to create a new company that will deliver ultrafast broadband 
services in the city of york the new joint venture company plans to 
build a state of the art citywide pure f ibre to the p remise fttp 
network to deliver broadband speeds of 1 gigabit 1000mbps 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 be the first time that a uk city has been connected with such 
high speeds on a citywide 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 openreach’s infrastructure 
our initial investment in the joint venture which will see us deploying 
to 20000 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 
delivering a significantly lower cost per home passed than for the 
current fttc infrastructure 
we expect to announce the process for selecting the next two 
cities in due course and are excited by the long term potential 
for a national rollout
in conjunction with our plans to build a converged fixedmobile offer 
using our 4g spectrum and femtocells such a national rollout would 
allow us to offer our customers seamless unlimited and low cost 
connectivity in their homes and businesses and significant 
opportunities to drive growth over the longer term 
guidance 
fy15
 ƥ customer numbers
  we expect to deliver modest growth in net adds in fy15 and 
a similar number of tv net additions to fy14
 ƥ revenue overheads and presac ebitda
  we expect fy15 revenues to grow by at least 4 driven by modest 
growth in customer numbers and arpu and growth in talktalk 
business revenues we expect overheads as a percentage of 
revenue to fall below the level reported for fy13 driving presac 
ebitda margins ahead of those reported for fy13
 ƥ 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 driving strong growth in headline ebitda 
with margin in the range of 16–17
 ƥ net debt
  capex is expected to be within our guideline of 6 of revenue 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 items related to making talktalk simpler are 
expected to be £20m–£25m
 ƥ 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
fy15–fy17
in november 2013 we raised our fy14–fy17 revenue cagr target 
from 2 to 4 and set our medium term ebitda margin target of 25 
to be achieved by fy17 we remain confident that we are on track to 
achieve both our revenue and margin targets
we expect revenue growth to be supported by modest growth in total 
customer numbers arpu progress from 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 two other components sac and overhead reduction 
we expect to reduce sac by requiring fewer gross adds to maintain 
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 selfservice 
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 to 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 selfservice model 
these initiatives are expected to deliver further savings in excess 
of £40m by fy17
 
 
dido harding
chief executive officer
14 may 2014