TalkTalk Telecom Group PLC Notice of AGM (3599C)

TIDMTALK

RNS Number : 3599C

TalkTalk Telecom Group PLC

14 June 2019

RNS Announcement

14 June 2019

For Immediate Release

TalkTalk Telecom Group PLC (the "Company")

Publication of Annual Report 2019 & Notice of Annual General Meeting

The following documents have been made available to shareholders:

   --     Annual Report 2019 
   --     Notice of 2019 Annual General Meeting 
   --     Form of Proxy for the 2019 Annual General Meeting 

In accordance with Listing Rule 9.6.1 a copy of each of these documents has been uploaded to the National Storage Mechanism and will be available for viewing shortly at: http://www.morningstar.co.uk/uk/NSM

These documents are also available to view and download from the Company's website at: http://www.talktalkgroup.com

Copies of the Annual Report 2019 and Notice of the 2019 Annual General Meeting may also be obtained from:

Company Secretary

11 Evesham Street

London

W11 4AR

Extracts from the Annual Report 2019 in compliance with the Disclosure and Transparency Rule 6.3.5 ("DTR 6.3.5")

The information below, which is extracted from the Annual Report 2019, is included solely for the purpose of complying with DTR 6.3.5. It should be read in conjunction with the Company's Full Year results announcement for the 12 months to 31 March 2019 issued on 23 May 2019 (at: https://www.talktalkgroup.com/articles/talktalkgroup/2019/FY19-Preliminary-Results-presentation- )

Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full Annual Report 2019. All page numbers and cross-references in the extracted information below refer to page numbers in the Annual Report 2019.

For further information please contact:

   Tim Morris, Company Secretary                 [phone] 

Directors' Responsibilities

The Directors' responsibility statement below has been prepared in conjunction with the Annual Report 2019, whereas this dissemination document contains extracts from the Annual Report 2019 to comply with DTR 6.3.5.

Sir Charles Dunstone - Executive Chairman

Tristia Harrison - Chief Executive Officer

Kate Ferry - Chief Financial Officer

John Gildersleeve - Deputy Chairman

Ian West - Senior Independent Director

John Allwood - Non-Executive Director

Cath Keers - Non-Executive Director

Sir Howard Stringer - Non-Executive Director

Roger Taylor - Non-Executive Director

Nigel Langstaff - Non-Executive Director

Phil Jordan - Non-Executive Director

We confirm to the best of our knowledge:

1. The financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

2. The management report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Principal risks and uncertainties

Effectively managing risks

The Board has identified the following principal risks and uncertainties to the Group, which the Group seeks to proactively manage and monitor on an ongoing basis. The details of these principal risks, and the controls in place for mitigating them, are outlined below in no particular order of severity. The principal risks have been identified and assessed on a gross risk basis with consideration to the impact on the Group's ability to deliver its strategy and therefore its mission. In addition, a directional arrow has been included alongside each risk to reflect the movements in gross risk from the prior year.

The Group's risk management framework facilitates continuous and ongoing discussion of risks and associated risk appetite to ensure that appropriate focus is placed on mitigating principal risks and significant net risks are included in the Group Risk Register for review at each Board meeting. The Board will continue to assess the principal risks and uncertainties faced by the Group and will update the risks and mitigation plans accordingly.

Management have reviewed the potential impact of Brexit and have concluded the impact will be limited. In addition, management have considered a soft/no Brexit on the Going Concern and viability assessments, together with any other impact on the Group's financial statements.

Gross risk

Gross risk has increased

Gross risk has decreased

Gross risk remains broadly the same as the prior year

Strategic objectives

1 - A happy, stable, profitable Consumer base

2 - Business data provider of choice

3 - Leveraging our network

4 - Driving cost efficiencies

5 - One TalkTalk team

6 - Investing in Britain's Full Fibre future

 
Risk and Impact                                   Mitigation 
---------------------------------------------     --------------------------------------------------- 
1 Customer trust and brand reputation 
 Gross risk remains broadly the same as the prior year 
 1 2 3 4 
-------------------------------------------------------------------------------------------------- 
Customer confidence and trust                     TalkTalk remains confident of the role 
 are critical to TalkTalk's business               for a well-regarded value operator in 
 and the Company's operating approach              the market and is committed to improving 
 always seeks to do what is right                  the end-to-end customer experience. 
 for the customer. However, as                     TalkTalk introduced its FLPP in October 
 a value for money connectivity                    2016 which continue to resonate strongly 
 provider in the market, there                     with customers and, combined with the 
 is a risk that TalkTalk is perceived              ongoing transformation of customer services, 
 as a 'budget' provider, associated                the Company has managed to maintain growth 
 with price rather than quality                    in the core business in FY19 which is 
 and service.                                      expected to continue into FY20. The organisation 
 Business and industry challenges                  also continues to invest in network and 
 including cyber threats, scam                     systems to support the provision of reliable 
 calls or poor customer experience                 products to customers as well as ongoing 
 also present a risk to brand                      investment in and focus on security (see 
 reputation and trust.                             Data and cyber security risk). These 
 Failure to maintain trust, improve                factors have contributed to a stable 
 brand reputation and offer a                      risk landscape with steady customer confidence 
 positive customer experience                      and improving customer satisfaction. 
 may result in negative impact                     In addition, TalkTalk continues to support 
 to customer satisfaction, increased               customers in dealing with the industry-wide 
 churn, performance decline or                     issue of scam calls. Initiatives such 
 loss of investor confidence.                      as the 'Beat the Scammers' campaign and 
                                                   Call Safe are designed to help customers 
                                                   protect themselves from the threat of 
                                                   scams. 
                                                   TalkTalk will continue to focus on existing 
                                                   as well as new customers, guided by the 
                                                   four key principles we believe are critical 
                                                   to being a value for money connectivity 
                                                   provider - simplicity, affordability, 
                                                   reliability and fairness. 
---------------------------------------------     --------------------------------------------------- 
2 People capability 
 Gross risk has increased 
 3 4 5 
-------------------------------------------------------------------------------------------------- 
TalkTalk recognises employees                     TalkTalk has established values which 
 as a key asset and aspires to                     act as a cultural framework and are embedded 
 be a 'Great Place to Work' for                    through the business in recruitment and 
 all colleagues. We understand                     performance management processes. 
 the increasing challenges and                     Structured talent forecasting and assessment 
 importance in the market of defining              processes are in place to ensure required 
 an effective operating model                      talent is proactively understood and 
 and attracting and retaining                      actions plans are in place to actively 
 the right talent to deliver organisational        manage attrition risks and succession. 
 performance and future growth                     These processes also ensure a proactive 
 aspirations.                                      review of the senior management level 
 Failure to attract and retain                     to ensure the right leadership is in 
 required talent and competencies                  place for motivating, inspiring and leading 
 within an effective organisational                the workforce to deliver on the corporate 
 environment may negatively impact                 objectives. 
 our ability to deliver on performance             A people scorecard is also in place for 
 targets and strategic objectives.                 ongoing monitoring and oversight of people 

 Also, in November 2018 TalkTalk                   risk and, where required, actions to 
 announced that the vast majority                  further mitigate risk exposures are identified 
 of its London roles will be moved                 and implemented. In addition, Group-wide 
 to a single main campus in the                    activities are carried out to assess 
 current Salford site by January                   the level of employee engagement and 
 2020 to reduce operational complexity             insight gained is used to develop action 
 and deliver a more efficient                      plans to ensure a highly engaged and 
 focused business. This will lead                  motivated workforce is maintained. 
 to further challenges in attracting               The move of roles from the London site 
 and retaining talent as roles                     to the Salford main campus is being governed 
 are moved from the London office                  through a cross-functional programme 
 to Salford.                                       with close oversight from the Executive 
                                                   Committee and Board. 
---------------------------------------------     --------------------------------------------------- 
3 Competitive landscape 
 Gross risk remains broadly the same as the prior year 
 1 2 3 4 6 
-------------------------------------------------------------------------------------------------- 
TalkTalk is established as a                      A clear pricing strategy is in place 
 value for money connectivity                      with ongoing monitoring of pricing position 
 provider in the growing quad                      and value proposition. The strategy is 
 play market. The value proposition                reviewed to ensure it remains competitive 
 is a key part of the business                     and continues to support our position 
 model and to date has provided                    as a value for money provider against 
 competitor differentiation. Over                  the changing competitor activity landscape. 
 the last year significant competitor              TalkTalk FLPP continue to see strong 
 activity has continued with similar               customer take-up. FLPP offers both new 
 intensity to the prior year.                      and existing customers the opportunity 
 The competitive landscape therefore               to lock in their price for the term of 
 remains largely unchanged with                    their contract guaranteeing no mid-contract 
 varying degrees of activity in                    price rises. The introduction of FLPP, 
 most product channels. The risk                   along with the focus on continuous improvement 
 that this competitive backdrop                    in connectivity, has seen a return to 
 makes it difficult for TalkTalk                   growth across both residential and Business 
 to maintain its value credentials                 customer bases. The introduction of the 
 remains consistent with the prior                 new industry leading Wi-Fi Hub in FY19 
 year.                                             is driving great improvements in customer 
                                                   experience and the Great Connection Guarantee 
                                                   gives new customers confidence in switching 
                                                   to TalkTalk as they can leave within 
                                                   30 days if they are not happy with their 
                                                   new Fibre connection. 
                                                   In addition, competitor pricing activity 
                                                   continues to be monitored to understand 
                                                   customer and market impact and plans 
                                                   are revisited accordingly if necessary. 
                                                   TalkTalk uses customer communications 
                                                   to promote its simple, affordable, reliable 
                                                   and fair messages and is committed to 
                                                   helping customers understand the best 
                                                   positioned package to meet their needs. 
---------------------------------------------     --------------------------------------------------- 
4 Changing market structure 
 Gross risk remains broadly the same as the prior year 
 1 2 4 6 
-------------------------------------------------------------------------------------------------- 
The Government and Ofcom are                      TalkTalk continues to be a vocal advocate 
 committed to promoting investment                 of competition and is well placed to 
 in Full Fibre networks through                    benefit from an increasing trend towards 
 infrastructure competition in                     a more pro-competition regulatory framework. 
 the UK telecommunications market.                 This poses a significant risk to incumbent 
 BT Group agreed to the legal                      players in the market, whilst presenting 
 separation of Openreach in March                  potentially valuable opportunities 
 2017 and implementation is in                     for challengers. The business is actively 
 progress under close scrutiny                     engaging with the necessary external 
 by Ofcom. Uncertainty remains                     stakeholders, particularly Ofcom and 
 about the extent to which this                    the Government, to share views and 
 will drive network investment                     attempt to deliver the best market 
 and service quality.                              and customer outcomes, as well as to 
 Ofcom's Wholesale Local Access                    proactively understand and respond 
 Market Review (WLAMR) has led                     to the opportunities and challenges 
 to:                                               presented by structural market changes. 
 -- requirements for Openreach                     TalkTalk is well placed to benefit 
 to make it cheaper and simpler                    from the transition to Full Fibre networks. 
 for competitors to use its existing               We are actively engaged with Openreach 
 infrastructure when building                      on product and service developments, 
 networks;                                         including FTTP roll-out plans, in order 
 -- caps on wholesale broadband                    to pursue favourable outcomes for TalkTalk. 
 prices, including a reduction                     Through the creation of FibreNation, 
 in superfast broadband prices;                    we also continue to make good progress 
 and                                               on our strategy to invest in an independent 
 -- higher service standards                       network that reaches three million 
 for Openreach installations                       homes and businesses. 
 and repairs. 
 The Government has also sought 
 to incentivise network competition, 
 through the FTIR, which included 
 a range of measures designed 
 to make it quicker, simpler 
 and cheaper for a range of companies 
 to build Full Fibre networks. 
 The FTIR complemented existing 
 Government policy, including 
 the Local Full Fibre Networks 
 Programme and the work of the 
 Government's Barrier Busting 
 Unit. 
 Ofcom is currently concluding 
 the BCMR and beginning the Access 
 Review. Together these reviews 
 will govern the future regulatory 
 landscape, including how regulation 
 will evolve as greater network 
 competition emerges. 
-------------------------------------------  ---  ------------------------------------------------ 
5 Regulatory compliance 
 Gross risk has increased 
 1 2 
-------------------------------------------------------------------------------------------------- 
The telecommunications sector                     The Group's Regulatory Compliance Committee, 
 is highly regulated, with compliance              a subcommittee of the Board, has continued 
 over key customer-focused regulations             to convene throughout the year to monitor 
 monitored by the governing body,                  the mitigation of operational risks 
 Ofcom. Another of the key governing               which could give rise to customer complaints 
 bodies relevant to the Company                    and regulatory breaches. The Group 
 is the Information Commissioner's                 Legal Counsel and Company Secretary 
 Office (ICO). The regulations                     has chaired weekly compliance meetings 
 and laws that TalkTalk must                       throughout the year, attended by senior 
 comply with, including Ofcom                      management. 
 General Conditions and data                       There are clear lines of accountability 
 legislation, are designed to                      both in first-line operations and in 
 support customers.                                our second-line assurance function 
 Recent changes to the regulatory                  and there has been continued focus 
 landscape have increased the                      on embedding processes and controls 
 obligations on the business.                      to maintain compliance to industry 
 Changes include the General                       regulations including focus on delivering 
 Data Protection Regulation (GDPR),                improvements in our complaint handling 
 revisions to Ofcom's General                      processes and reducing complaint volumes. 
 Conditions, an amended broadband                  Plans are also in place to deliver 
 speed code and the implementation                 the significant volume of regulatory 
 of a system of automatic compensation.            changes which come into force over 
 Failure to comply with regulatory                 the next twelve months. 

 obligations may result in negative                TalkTalk has established structured 
 customer impact and/or significant                programmes to deliver changes resulting 
 regulatory fines.                                 from Ofcom's end-to-end review of its 
                                                   General Conditions. The progress of 
                                                   this activity will be governed by the 
                                                   existing Compliance Committee and meetings 
                                                   to ensure effective delivery. 
-------------------------------------------  ---  ------------------------------------------------ 
6 Data and cyber security 
 Gross risk remains broadly the same as the prior year 
 1 2 3 
-------------------------------------------------------------------------------------------------- 
Security of customer, commercial                  In FY19 TalkTalk has continued to invest 
 and colleague data poses increasing               in and focus on actively implementing 
 reputational and financial risk                   an ongoing programme to build security 
 to all businesses and the gross                   capability. Investment is also planned 
 risk remains high. In particular,                 to continue in FY20 and beyond. TalkTalk's 
 emerging developments in cyber                    security strategy is centred around 
 and data related threats and                      four strategic themes: 
 crime consistent with prior                       -- Secure by Design; 
 years present a significant                       -- Secure in Operations; 
 challenge in terms of securing                    -- Secure Third Parties; and 
 data and systems against attack.                  -- Secure Culture. 
 TalkTalk receives most of its                     The strategy is underpinned by the 
 revenue through card transactions                 NIST Cyber Security Framework and is 
 and like many businesses utilises                 positioned to continuously improve 
 third parties as part of doing                    the security maturity of the organisation, 
 business. TalkTalk recognises                     as well as maintaining and updating 
 that failure to successfully                      ongoing activities (such as monitoring 
 secure data and systems against                   activities, vulnerability scanning, 
 attack may have a material impact                 penetration testing and the data loss 
 on brand reputation and financial                 prevention solution) to ensure they 
 performance. Other associated                     remain fit for purpose. 
 costs may also be incurred,                       Over the last three years significant 
 including potential regulatory                    investment has been made in building 
 fines.                                            out a bigger security function and 
                                                   capability including successfully establishing 
                                                   an in-house Security Operations Centre 
                                                   (SOC), which launched late 2017. During 
                                                   2018, further projects were delivered 
                                                   to improve and mature our security 
                                                   control environment and security capabilities. 
                                                   These activities and investments are 
                                                   supporting the management of security 
                                                   risks and evolving security threats. 
                                                   In addition, a robust governance structure 
                                                   remains in place with a PLC Security 
                                                   Committee meeting every two months. 
                                                   This is a subcommittee of the Board, 
                                                   chaired by a Non-Executive Board member, 
                                                   with the CEO and other senior executive 
                                                   representation. Furthermore, there 
                                                   is a monthly Security Committee that 
                                                   is made up of senior management across 
                                                   all of key areas of the business to 
                                                   discuss the latest security threats 
                                                   and risks, approve changes and manage 
                                                   exceptions to security policies, and 
                                                   ensure that security projects are managed 
                                                   effectively. 
-------------------------------------------  ---  ------------------------------------------------ 
7 Resilience and business continuity 
 Gross risk remains broadly the same as the prior year 
 1 2 3 5 6 
-------------------------------------------------------------------------------------------------- 
TalkTalk is reliant on its infrastructure         Network resilience is assessed and 
 as well as key third party suppliers              monitored on a regular basis and again, 
 and partners in order to deliver                  over the last year, TalkTalk has continued 
 quality products and services                     to deliver network analysis, improvements 
 to its customers. Network, system                 and simplification at pace supporting 
 or third party failure could                      greater resilience. Continuous monitoring 
 result in significant disruption                  of network availability is also in 
 to services or business processes,                place to ensure any issues are identified 
 which may have a negative impact                  in a timely manner and resilience testing 
 on customers and therefore damage                 takes place. Where an incident does 
 customer loyalty or result in                     occur, a robust incident response process 
 complaints. It is therefore                       is in place and exercised to ensure 
 important to establish resilience                 effective response, followed by a problem 
 in the network and systems and                    management review that is linked to 
 also to require resilience from                   service improvement. The Group recognises 
 our third parties and partners.                   that network resilience is also reliant 
 The approach adopted for supporting               on the dependency on Openreach for 
 infrastructure and associated                     the last mile and as such Ofcom focus 
 resilience, including use of                      on Openreach processes, systems and 
 third parties, is regularly                       controls should help mitigate the risk. 
 reviewed to ensure an optimal                     Other prioritised critical processes, 
 model is maintained which drives                  systems and third parties are identified, 
 resilience and efficiency. There                  and business owners are assigned accountability 
 is a risk that changes to approach                for assessing resilience and implementing 
 may not be delivered effectively                  business continuity plans to enable 
 resulting in negative impact                      continuity of operations in the event 
 to operations.                                    of an incident. TalkTalk also continues 
 It is also noted that in the                      to invest in supporting appropriate 
 event of an incident, TalkTalk                    resilience on critical systems which 
 must be able to respond in an                     will be a key focus for FY20 on a risk-based 
 efficient and effective manner                    approach. For third parties, the relationship 
 in order to minimise impact                       owners are assigned accountability 
 on customers and performance.                     for requiring critical third parties 
                                                   to have adequate business continuity 
                                                   plans in place and obtaining third 
                                                   party assurance where appropriate that 
                                                   their plans have been reviewed and 
                                                   tested on a regular basis. 
-------------------------------------------  ---  ------------------------------------------------ 
8 Financial 
 Gross risk has increased 
 1 2 3 4 5 6 
-------------------------------------------------------------------------------------------------- 
As with many organisations,                       The Group Treasury function is responsible 
 TalkTalk must actively manage                     for managing the Group's liquid resources 
 liquidity risk. Other key financial               and managing compliance with the terms 
 risks include the availability                    of funding agreements. Policies and 
 of long term funding, the ability                 operating procedures are in place and 
 to comply with covenants and                      these are regularly reviewed to ensure 
 other terms of funding arrangements,              they remain appropriate for the business. 
 and foreign exchange and interest                 In addition, the Executive Committee 
 rate risk.                                        and the Board oversee the liquidity, 
 In addition, there are a number                   funding position and covenant compliance 
 of new accounting standards                       of the Group on a regular basis and 

 that either have been adopted                     are required to provide approval on 
 in FY19, being IFRS 9 'Financial                  major and significant funding decisions. 
 Instruments' and IFRS 15 'Revenue                 The Group Treasury function is also 
 from Contracts with Customers',                   responsible for managing foreign exchange 
 or will be adopted in FY20,                       and interest rate risks in line with 
 being IFRS 16 'Leases'.                           the Group's policy. 
                                                   TalkTalk has established projects to 
                                                   deliver the required changes to accounting 
                                                   standards and the status of these projects 
                                                   is tracked as part of the Group's Change 
                                                   Management Framework. 
-------------------------------------------  ---  ------------------------------------------------ 
9 Change delivery and execution 
 Gross risk has increased 
 1 2 3 5 6 
-------------------------------------------------------------------------------------------------- 
Delivery of performance and                       A formal change framework is in place 
 strategic objectives and development              for delivery of change projects which 
 of the business are reliant                       helps ensure appropriate processes 
 on the ability to successfully                    and governance are in place to drive 
 deliver innovation and other                      successful project delivery. The framework 
 operational changes required                      is intended to ensure a desired level 
 to support growth and performance.                of quality is reached throughout the 
 Failure to effectively deliver                    lifecycle of each project and has continued 
 significant change programmes                     to support successful delivery of key 
 and associated benefits critical                  change programmes in FY19. 
 to TalkTalk's strategy would                      The Group Change function remains a 
 result in an inability to deliver                 key effective control for facilitating 
 performance objectives and limit                  prioritisation discussions to ensure 
 TalkTalk's competitive position                   people and financial resources are 
 in the market.                                    appropriately engaged, allocated and 
                                                   focused. Performance measures for key 
                                                   change projects are defined and monitored 
                                                   and regularly reviewed by Group Change. 
                                                   Monitoring and oversight of key change 
                                                   projects occur at both the business 
                                                   unit leadership team level and by the 
                                                   Executive Committee on a regular basis, 
                                                   enabling real time consideration of 
                                                   the potential impact of other operational 
                                                   and strategic activities on change 
                                                   projects. 
                                                   In addition, as part of the organisational 
                                                   reset, TalkTalk has aimed for further 
                                                   simplification by concentrating on 
                                                   fewer, more focused initiatives to 
                                                   support delivery of simplified, clear 
                                                   strategic objectives. This inherently 
                                                   limits delivery and execution risk. 
-------------------------------------------  ---  ------------------------------------------------ 
 
 

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June 14, 2019 08:41 ET (12:41 GMT)