The directors present the strategic report for the 18 month period ended 31 December 2024.
The revenue of the Group is generated through the sale of services including telephone, broadband/fibre and ethernet, within the telecommunications B2B market. The costs incurred by the Group are primarily network access costs, directly incurred in generating its revenue and people costs.
Revenue for the 18 month period was £123,879k (year to June 2023: £82,227k), representing a marginal increase on a like-for-like basis. Fibre products continue to grow however, in line with the rest of the industry, there is a reduction in demand for voice products. This, in conjunction with a competition in the market leading to some reduction in revenue between those customers churning and those customers joining or re-contracting.
The Group made a loss before taxation of £53,872k in the period (June 2023: £16,457k). Included within the loss for the period is a £25.5m impairment of goodwill.
The Group are in a net current asset position as at 31 December 2024 of £2,590k (2023: net current liability £148,903k) and net liability position of £11,860k (2023: £22,411k).
The Group’s Directors believe that there are no non-financial key performance indicators (in addition to the business review above).
The main financial risks the Directors consider relevant to the Group are credit risk, liquidity risk and interest rate risk. Credit risk is mitigated by the Group's credit control policies and the Group regularly monitors interest rate risk. Liquidity risk is monitored through regularly assessing the Group's short-term working capital and long-term funding requirements. The Group does not trade or speculate in any derivative financial instruments.
The Group’s interest rate risk arises primarily from cash, cash equivalents and borrowings, all of which are at either fixed or fixed plus floating rates of interest which exposes the Group to cash flow interest rate risk. These floating rates are linked to SONIA. Future cash flows arising from these financial instruments depend on interest rates and periods for each loan or rollover. Interest rates are monitored closely throughout the year.
High inflation and cost of living pressures may result in financial risks to revenue and an increasing cost base. In addition to financial risk, there are other risks and uncertainties affecting the entity which are managed by the Group. The key risks have been outlined as follows:
Risk and impact | Mitigation |
Regulatory compliance Failure to comply with regulatory obligations may result in negative customer impact and/or significant regulatory fines. |
The Board has continued to convene throughout the year to monitor the mitigation of operational risks which could give rise to customer complaints and regulatory breaches.
|
Data and cyber security Security of customer, commercial and colleague data poses increasing reputational and financial risk to all businesses and the gross risk remains high. |
The Group has continued to focus on actively implementing a programme to build its security capability, including to address the increasing risks around vulnerabilities and third-party vendors.
|
Resilience and business continuity The Group is reliant on key third party suppliers and partners in order to deliver quality products and services to its customers. Network, system or third-party failure could result in significant disruption to services or business processes, which may have a negative impact on customers and therefore damage customer loyalty or result in complaints. |
The Group’s network provider has Business Continuity, Crisis Management and Disaster Recovery Plans in place for key sites. Network resilience is assessed and monitored on a regular basis. Continuous monitoring of network availability is also in place to ensure any issues are identified in a timely manner and resilience testing takes place. Where an incident does occur, a robust incident response process is in place and exercised to ensure effective response, followed by a problem management review that is linked to service improvement. |
The telecommunications industry is undergoing a once in a generation shift as its infrastructure and its customers transition to Full Fibre. The Group is focused on positioning itself to take full advantage of the opportunities this creates and to provide the best outcomes for its customers. The Directors will continue to monitor both the Group’s key performance indicators, principal risks and uncertainties and develop the Company as opportunities arise.
The revenue of the Group is generated through the sale of services including telephone, broadband/fibre and ethernet, within the telecommunications B2B market. The costs incurred by the Group are primarily network access costs, directly incurred in generating its revenue and people costs.
The Group’s Directors believe that the financial key performance indicators of the business are outlined below:
| 18 months ended 31 December 2024 | Year ended 30 June 2023 |
Revenue (£’000) | 123,879 | 82,227 |
Gross profit (%) | 36 | 37 |
Profit/(Loss) before taxation (£’000) | (53,872) | (16,457) |
The success of our business is dependent on the support of all our stakeholders. As part of the Board’s decision-making process, in line with their duties under Section 172 (‘s172’) of the Companies Act 2006, the Board considers the potential impact of decisions on relevant stakeholders and the likely consequences of these decisions in the long term.
Illustrations of how a number of s172 factors have been considered and applied by the Board can be found below.
Shareholders and investors
We operate as a private business and our ongoing intention is to behave responsibly towards all shareholders and investors and treat them fairly and equally, so that they too may benefit from the successful delivery of strategic objectives.
How the Board engages
Executive Director meetings with Investors to discuss the Group’s strategy.
The Board members are shareholder appointed nominees.
Annual Report and investor relations mailbox.
Customers
The demand for faster, more reliable connectivity has never been greater so it is vital that we engage with our customers to ensure we continue to provide great products and services that meet their changing needs.
How the Board engages
Reviews strategy and monitors performance during the year with the aim of meeting customers’ needs more effectively;
Receives regular competitor updates to understand the Group’s competitive performance and its strengths and weaknesses as regards meeting customer needs;
The Executive Chairman sits in monthly review meetings covering the commercial and connectivity performance of the business and is highly engaged with customer metrics;
Benchmarks the Group’s performance in relation to customers using research including CSAT and NPS scores; and
Executive Chairman and CEO meet regularly with key B2B customers to help maintain good relations and to understand and address their views, needs and concerns.
Suppliers
Our suppliers are fundamental to the quality of our products and services. Engagement with suppliers and maintaining good relationships is therefore critical to ensuring that as a business we meet the high standards we set ourselves;
How the Board engages
Board approval of Modern Slavery Statement;
CEO and Executive Chairman meet with biggest suppliers regularly;
Certain key suppliers are regularly discussed at Board meetings.
Communities
The Group values its communities and is committed to doing business the right way. Our success depends on strong, active and confident communities, who want to engage with our products and services and trust the Group to respond to their needs and concerns. We are proud to be based in Salford and are committed to supporting the local community in our city to prosper.
How the Board engages
The Board actively supports our major charity partnerships;
The Board receives regular updates on internet safety and regulation landscape; and
The Board has endorsed a culture of volunteering and giving back.
Government
Government bodies have a key role in setting our operating environment and it is imperative that we listen, understand and respond to relevant Government actions. As a broadband provider, the Government’s ambitions for gigabit-capable coverage, engaged consumers and a safer online experience have shaped our business strategy and operations.
How the Board engages
The Board receives regular updates on the political and Government environment and engages with policy makers as appropriate.
Regulators
Ofcom has a high degree of influence over the Group’s commercial and operational environment. It determines many of the prices which we pay, the quality of their wholesale products and requirements around customer service. Regulation is therefore the single most important driver of our cost to serve customers.
The ICO (Information Commissioner’s Office) regulates compliance with the Data Protection Act, UK GDPR, the Privacy and Electronic Communications Regulations and the Investigatory Powers Act. Other relevant regulators include:
The FCA (Financial Conduct Authority) regulates some aspects of our billing processes; and
The CMA (Competition & Markets Authority) monitors firms’ compliance with competition law and considers the consumer interest. TalkTalk complies with all relevant regulations.
How the Board engages
The primary Board engagement with Ofcom is via the Company’s CEO and on some issues the Executive Chairman. Other than that, members of the Board are informed of developments at Board meetings, whilst having no systematic contacts with Ofcom.
Primary Board engagement with the ICO is via the Company’s General Counsel and Company Secretary. In addition to this, the Board is regularly updated on any developments.
Employees
The directors acknowledge that the long-term success of the Group is intrinsically linked to our ability to attract, develop, and retain talented individuals. We understand that our employees are the cornerstone of our business, and their interests are paramount in our decision-making processes. Whether it involves the workforce as a whole or individual team members, promoting and safeguarding their well-being is a primary consideration. We are committed to fostering a supportive and inclusive work environment that encourages growth, innovation, and collaboration.
On behalf of the board
The directors present their annual report and financial statements for the 18 month period ended 31 December 2024.
TFP Telecoms Limited was incorporated on 30 June 2023. Merger accounting has been adopted for consolidation purposes, whereby the results and cash flows of the combining entities are brought into the accounts of the combined entity from the beginning of the financial year in which the combination occurred, and comparative information restated.
The results for the 18 month period are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the 18 month period and up to the date of signature of the financial statements were as follows:
The directors are working with an environmental consultancy to advise on the Group’s environmental impact reporting in accordance with the 2019 HM Government Environment Reporting Guidelines, the 2020 HM Government’s conversion factors for company reporting and the Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard.
Our SECR disclosure presents our carbon footprint across scopes 1 and 2, together with appropriate intensity metrics.
The general methodology used is the Greenhouse Gas Protocol – Corporate Accounting and Reporting Standard (GHG Protocol, 2011).
The figures presented to 31 December 2024 represent an 18 month period, where the figures to 30 June 2023 represent a 12 month period.
Specifically:
Carbon Emissions conversions factors – Using the DESNZ 2024 GHG conversion factors found here: https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2024
Fuel combustion: stationary (Natural Gas) – Gas usage is devised based on overall gas usage in the building and divided by square foot floor space which TalkTalk Business Direct occupy. The conversion factor is Gaseous Fuels > Natural Gas > kwh (Gross CV).
Fuel combustion: mobile – TalkTalk Business Direct do not lease or own any fleet; all data is from expensed car mileage using GHG Conversion factors.
Purchased electricity - Electricity is devised based on overall electricity usage in the building and divided by square floor space which TalkTalk Business Direct occupy. This figure includes both electricity consumption (captured in table 3 scope 2) and upstream electricity usage (T&D electricity, captured in table 3 scope 3).
Energy efficiency measures – the Group has taken steps to reduce energy usage through behavioural campaigns – encouraging employees to conserve energy in the office. The TalkTalk Business Direct office building also is powered by renewable energy and is installing more electric vehicle charging points.
Intensity target is to reduce scope 1 and 2 emissions per square foot in the building by 4.2% per annum.
We have audited the financial statements of TFP Telecoms Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the 18 month period ended 31 December 2024 which comprise the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK adopted international accounting standards. 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, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial 18 month period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud.
The company did not inform us of any known, suspected or alleged fraud;
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: IFRS, Companies Act 2006, along with those referred to in the strategic report;
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which presents a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual;
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied;
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates in particular in relation to the consideration of impairment of intangible assets, including goodwill, the recognition of incremental cost of obtaining a contract inline with IFRS 15 and the subsequent basis for amortisation, and the timing of recognition of revenue inline with the satisfaction of performance obligations;
Assessing the extent of compliance, or lack of, with the relevant laws and regulations;
Testing key revenue lines, in particular cut-off, for evidence of management bias;
Obtaining third-party confirmation of material bank and loan balances;
Documenting and verifying all significant related party balances and transactions;
Testing material consolidation adjustments.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters which we are required to address
The comparative consolidated figures presented for the period ended 30 June 2023, as explained in note 1.4 of the financial statements, were not audited.
Use of our report
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.
The notes on pages 17 to 45 form part of these group financial statements.
The notes on pages 17 to 45 form part of these group financial statements.
The notes on pages 17 to 45 form part of these group financial statements.
The notes on pages 17 to 45 form part of these group financial statements.
The financial statements of TFP Telecoms Limited (“the Group”) for the period ended 31 December 2024 were authorised for issue by the Board of Directors on 9 July 2025 and the balance sheet was signed on the Board’s behalf by Steven Scott. The Company is incorporated and domiciled in England and Wales under the Companies Act 2006.
The registered office of the Company is 146 Freston Road, London, England, United Kingdom, W10 6TR. The principal activities of the Company are the provision of telecommunication services to Business customers.
These financial statements have been prepared in accordance with UK-adopted international accounting standards. The financial statements comply with the Companies Act 2006.
The group consists of TFP Telecoms Limited and its subsidiary.
The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £'000.
During the period, the reporting period was lengthened to 31 December 2024, in order to be inline with the group. The reporting period is the period from 1 July 2023 to 31 December 2024 and therefore the comparatives for the year ended 30 June 2023 are not entirely comparable.
On 29 September 2023, TFP Telecoms Limited became the parent company of TalkTalk Business Direct Limited following a group restructure. The group accounts have been prepared in accordance with the merger accounting principles as permitted due to the shareholders of TalkTalk Business Direct Limited being the same as the previous parent, TalkTalk Communications Limited, and their rights, relative to each other, remain unchanged. The other reserve arising as a result of the merger in the consolidated accounts has arisen as a result of the difference between the share capital and share premium of the previous parent, TalkTalk Communications Limited, and new parent, TFP Telecoms Limited.
The consolidated group financial statements consist of the financial statements of the parent company TFP Telecoms Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Merger accounting have been adopted for consolidation purposes, whereby the results and cash flows of the combining entities are brought into the accounts of the combined entity from the beginning of the financial year in which the combination occurred. In applying merger accounting, the assets and liabilities of the combining entities are not required to be restated to their fair value, and no goodwill arises.
The comparative information has been restated by including the total comprehensive income for all the combining entries for the previous reporting period and their statement of financial position at the previous reporting date, adjusted as necessary to achieve uniformity of accounting policies.
On this basis, the Directors have a reasonable expectation that the Group has sufficient resources to continue its operations for the foreseeable future, being a period of not less than twelve months from the date of this report, and accordingly they continue to adopt the going concern basis in preparing these financial statements.
The probability of collectability is assessed across the Group and where collectability is identified not to be probable, revenue is recognised only when the cash is received from the customer.
The recognition of revenue results in the recognition of contract assets (e.g., where more revenue has been recognised upfront in relation to hardware compared to actual cash consideration received for the hardware).
Contract assets is unwound over the related contract term.
Accrued income is recognised when revenue has been earned but not yet received or invoiced by the end of the accounting period. This typically includes services rendered, such as phone calls take, for which invoice will be raised in future months. Accrued income is assessed for impairment based on lifetime expected credit losses (ECL), in accordance with IFRS 9.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
Amounts receivable from suppliers (included within trade and other receivables)
Occasionally, the Group enters into agreements with certain suppliers for rebates on the cost of goods purchased. Rebates are recognised in the appropriate financial year to which they relate.
Financial liabilities at amortised cost
Financial liabilities, including borrowings trade payables and other short-term monetary liabilities are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liabilities. They are subsequently measured at amortised cost.
Financial liabilities are derecognised when, and only when, the Group’s contractual obligations are extinguished.
Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.
At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
Contract costs
Contract costs eligible for capitalisation as incremental costs of obtaining a contract comprise sales commissions paid to retail partners and to sales agents which can be directly attributed to an acquired or retained contract. In all other cases subscriber acquisition and retention costs are expensed when incurred. Contract costs are capitalised in the month of service activation if the Group expects to recover those costs.
Costs directly incurred in fulfilling a contract with a customer, which largely comprise the cost of connecting a customer to the Group’s network so that the connectivity services can be provided are recognised as an asset.
Capitalised commission and connection costs are amortised on a systematic basis that is consistent with the transfer to the customer of the services when the related revenues are recognised, being the anticipated customer tenure. The Group has determined that average customer tenure (50–88 months for broadband and up to 120 months for Ethernet) is an appropriate period to amortise cost to obtain and fulfil a contract. This reflects the fact that incremental commissions are typically not paid on customer renewals or extensions. Likewise, connection costs support a customer over their tenure and are not required again because a customer renews or goes beyond their minimum contract term. These costs are accounted for on a portfolio basis, and are reviewed for impairment, taking into account the Group’s customer life-time value analysis.
Contract liabilities
Contract liabilities are recognised where connection revenues received from the customer upfront are deferred over the contract term.
In the current year a number of amendments to IFRS issued by the International Accounting Standards Board ("IASB") and endorsed by the UK Endorsement Board became mandatorily effective for an accounting period that begins on or after 1 January 2023, there are no amendments that have a material effect on the financial statements of the Group:
The following UK-adopted IFRSs have been issued but have not been applied by the Group in these consolidated financial statements. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated: |
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 application of IFRS 15 requires the Group to make certain estimates that affect the determination of the amount and timing of revenue and costs from contracts with customers. These include:
Contract costs and customer life-time value analysis
Contract costs are amortised on a systematic basis, consistent with the pattern of transfer of service to which the assets relates. The Group has determined this to be over the expected duration of the customer tenure. The estimate of the expected average duration of customer tenure is based on customer churn relative to the size of the customer base and is currently determined to be 50–120 months depending on the product and channel. However, such rates are subject to fluctuation and may be impacted by future events such as new product launches, an increase in competition in the market or wider macroeconomic factors. A lower average customer tenure would mean that deferred costs are amortised over a shorter period of time and could result in an impairment of the asset in lower profitability channels. A six-month reduction in customer tenure which is considered a reasonably possible movement would not result in an impairment charge, but deferred costs associated with one channel would then have limited headroom and therefore could be subject to impairment at tenures below this. If there were to be a six month reduction in customer tenure, an impairment would be recognised of £9k.
Judgement has been applied to determine that the best estimate for the anticipated contract length is based on customer tenure based on churn relative to the size of the customer base, rather than initial contracted term. Initial contracts tend to be between 12-36 months, however, with renewals and contract extensions actual anticipated contract duration is c. 50-120 months. If the costs were to be amortised over the average initial term, the carrying value of the contract costs as at 31 December 2024 would be £2,409k (June 2023: £1,475k) compared to £4,559k (June 2023: £3,030k) reported in the Statement of financial position. The directors do not consider the initial term to be indicative of the period of time over which the Company would be generating future cashflows, and rather the best estimate for the period these costs are expected to be recovered by generating or enhancing the resources of the entity is over the average customer tenure.
The intangible asset relating to customer relationships arising on the acquisition of the trade and assets of the B2B Direct business from TalkTalk Communications Limited is held on the balance sheet and amortised over its useful economic life of 8 years. Indicators of impairment may result in the performance of impairment testing, where the recoverable amount of the customer relationships will be compared to the value in use of the customers. Value in use is based on projected estimated future cash flows, prepared based on budgets and a terminal value. Key assumptions used to determine value in use represent management’s assessment of future trends and are based on a discounted cash flow approach. The recoverable amount is sensitive to the discount rate used for the discounted cash flow (“DCF”) model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. Where a reduction in estimated future economic benefits occurs, or the expected useful economic life falls below 8 years, both of which require a degree of subjectivity on the part of management, or the WACC increases, it could result in a material impairment charge.
The impairment of goodwill is evaluated annually using a detailed estimation process. The basis for these consideration estimates includes:
1. Value in Use Calculation: This involves projecting future cash flows from the business, derived from profit and loss (P&L) forecasts. These projections are discounted to their present value using an appropriate discount rate.
2. Scenario Analysis: To ensure a robust assessment, multiple scenarios are considered:
- Base Case: Reflects the most likely outcome based on current business conditions and forecasts.
- Worst Case: Assumes adverse conditions that could negatively impact the business.
- Best Case: Considers favourable conditions that could enhance business performance.
3. Review of transactions data: The present value calculations were reviewed against the demerger value for a reasonableness check. The transaction price point adopted as the Fair Value which aligns to the Value in Use.
4. Comparison with Carrying Amount: The calculated value in use is compared with the carrying amount of goodwill on the balance sheet. If the carrying amount exceeds the value in use, an impairment loss is recognised.
5. Assumptions and Judgments: Key assumptions and judgments used in the estimation process, such as growth rates, discount rates, and economic conditions, are documented and reviewed to ensure they are reasonable and supportable.
This policy ensures that the carrying amount of goodwill is not overstated and provides a comprehensive view of the business’s financial health. Following applying the judgements and estimates as discussed above, an impairment has been recognised in the period of £25,542k (June 2023: £nil). For further detail please see notes 11 and 22.
In preparing these financial statements, management has made significant judgments in recognising and measuring assets under construction. These judgments include determining the point at which an asset is considered to be in the location and condition necessary for it to be capable of operating as intended. Costs directly attributable to the construction, such as materials, labour, and overheads, have been capitalised. Management has also exercised judgment in identifying and excluding costs that do not contribute to bringing the asset to its intended use. Furthermore, impairment assessments are conducted regularly to ensure that the carrying amount of assets under construction does not exceed their recoverable amount.
All revenue generated by the Company relates to services provided to customers.
Revenue streams are analysed as follows
All revenue arises within the UK.
The average monthly number of persons (including directors) employed by the group during the 18 month period was:
Their aggregate remuneration comprised:
Other interest income of £2,291k (June 2023: £nil) relates to a modification to the loan agreements held with the shareholders. On 9 August 2024, the interest rate was amended to a rate of 10%, compared to the 11.75% plus compounded reference rate. A further amendment was issued writing off a portion of the accrued interest in excess of the interest rate as outlined in the agreement on 29 September 2023 to that outlined in the agreement dated 9 August 2024. The write-off of excess interest was backdated to the date of the original agreement.
The charge for the 18 month period can be reconciled to the loss per the income statement as follows:
The blended rate of UK corporation tax in the prior period of 20.5% is comprised of the standard rate of UK corporation tax of 19% up until 31 March 2023 and the standard rate of UK corporation tax of 25% from 1 April 2023.
As at 31 December 2024, the Company had unrecognised deferred tax assets of £4,168k in respect of losses (Feb 2024: £1,683k). These have not been recognised as there is insufficient evidence that there will be suitable taxable profits against which these can be recovered.
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
Impairment losses have been recognised within the statement of comprehensive income against goodwill. Goodwill is held in the accounts at cost and reviewed annually for impairment. Following a review of the cash flow forecasts, a thorough analysis of the Weighted Average Cost of Capital (WACC) calculations, including the cost of debt, and an assessment of market trends, it was determined that there is an impairment to goodwill. Impairment has been recognised against goodwill of £25,542k (June 2023: £nil).
More information on impairment movements in the 18 month period is given in note 11.
Revenue has been recognised in the statement of comprehensive income for the period which was included within contract liabilities at the beginning of the period of £49k (June 2023: £233k).
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
On 9 August 2024, the Company entered into a loan agreement with Kartesia with available facilities of £72.5m. The company have drawndown on one of the available facilities as at 31 December 2024, for £51m. Interest is charged on the loan at 5.5% plus the compound reference rate for that day. PIK interest is also payable at margin of 3.5%. The termination date of the loan is 6 years from the date of the agreement, being 8 August 2030. The amount payable at the year end is £49,227k. There are fixed and floating charges over the Group's current and future land and intellectual property owned by the Group, as well as over the undertaking of the Group, in favour of the lenders.
On 29 September 2023, the Group entered into a loan agreement with Ares Management Limited for an amount of £62,176k. The initial term of the loan was to end on 31 July 2024. On 9 August 2024, the loan term was extended for a period of 78 months after this date. Interest is charged on the loan at 11.75% plus the compounded reference rate for that date. The amount payable at the year end is £11,772k, and is included within other loans. Ares hold a call option over the shareholders ordinary shares if the loans are not repaid. The loan is secured by a fixed and floating charge and negative pledge which has been registered by the shareholder of the Group over all the property and undertakings of the Group.
On 9 August 2024, the Group entered into a further loan agreement with Ares for an amount of £2,366k. Interest is charged on the loan at 10%. The termination date of the loan is 78 months from the date of the agreement. The amount payable at the year end is £2,458k, and is included within other loans. The loan is secured by a fixed and floating charge and negative pledge which has been registered by the shareholder of the Group over all the property and undertakings of the Group.
On 29 September 2023, the Group entered into a loan agreement with two of the Group's shareholders, one of whom is a director of the Group, for amounts of £31,500k and £3,500k respectively. Interest was payable at 11.75% plus the compound reference rate for that date. The initial term of the loan was to end on 30 April 2024. On 9 August 2024, the loan term was extended for a period of 78 months after this date. Following on from this amendment, the interest charged on the loan was amended to 10%. A further amendment was issued writing off a portion of the accrued interest in excess of the interest rate as outlined in the agreement on 29 September 2023 to that outlined in the agreement dated 9 August 2024. The write-off of excess interest was backdated to the date of the original agreement. The amount payable at the year end to the shareholder and shareholder/director respectively is £35,906k and £3,990k. The loan is secured by a fixed and floating charge and negative pledge which has been registered by the shareholder of the Group over all the property and undertakings of the Group.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The Company entered into lease agreements in the year in relation to office space.
For details of the Company's right of use assets arising under the lease agreements in place, please see note 13.
Please also see note 33 for summary of the total cash outflows for the leases.
Other leasing information is included in note 27.
The following table details the remaining contractual maturity for the group's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the group may be required to pay.
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, availability and renewal of future facilities.
For further detail on the Group's borrowings, please refer to note 20.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risk. Credit risk is the possibility that the Group may suffer a loss from the failure of one of its counterparties to meet their contractual obligations. The Group's exposure to credit risk is regularly monitored against a reasonable approximation of future changes. Debt is spread amongst banks and shareholder loans, all of which have short- or long-term credit ratings appropriate to TTBD's exposures.
Trade receivables primarily comprise balances due from fixed line customers and expected credit losses are made under IFRS 9 for any receivables that are considered irrecoverable. At 31 December 2024, the Group's maximum exposure to credit risk arises from the carrying amount of the trade receivables as stated in the statement of financial position. The Group has no externally imposed capital requirements. Working capital is managed through careful monitoring of short-term cash flow.
Except as detailed below, the carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the group's maximum exposure to credit risk.
Impairment losses
The movement in the allowance for impairment losses in respect of trade receivables during the year was as follows:
The capital structure of the Group consists of debt, which includes bank facilities and shareholder loans. The Group continues to review its funding and capital structure with the objectives of diversifying sources and managing both the average tenor and interest cost. The Group also assesses the risk profile of its trade receivables based upon past experience and an analysis of the receivables, current financial position, adjusted for specific factors, general economic conditions of the industry in which the receivables operate and assessment of both the current and the forecast direction of conditions at the reporting date. The Group has performed the calculation of expected credit loss and rebutted the assumption under IFRS 9 that all debts over 90 days should have a credit allowance.
The Group had commitments related to short-term leases at the year end of £403k (June 2023: £468k).
As at 31 December 2024 the Group also have short term commitments relating to use of live connection lines on short-term lease. There are no fixed payments but these are based on type of quantity of usage. The expenses in the period relating to this lease was £65,207k (June 2023: £40,537k).
On 30 June 2023, on incorporation, the Company issued 1 Ordinary shares of a nominal value of £1 for aggregate consideration of £1.
On 4 August 2023, the Company issued 99 Ordinary shares of a nominal value of £1 for aggregate consideration of £99.
On 24 January 2024, the Company gave notice to a subdivision of shares. Following the subdivision of shares there were 10,000 shares in issue for nominal value of £0.01 per share.
On 24 January 2024, the Company issued 6,029 Ordinary shares of a nominal value of £0.01 for aggregate consideration of £60.29.
On 29 September 2023, TFP Telecoms Limited acquired TalkTalk Business Direct Limited, following a group restructure, from TalkTalk Communications. On 10 December 2024, TalkTalk Communications irrevocably released amounts of £64,423k owed by the Group to TalkTalk Communications Limited, for issue of special share in TalkTalk Business Direct Limited. On the same date this share was transferred to TFP Telecoms Limited for consideration of £1, therefore amounts of £64,423k reflect the effective movement arising on merger.
The Group procures network services and transitional services from TalkTalk Communications Limited (which is a related party of the Group as they are ultimately owned by the major shareholders of the ultimate parent company of the Group). The amounts relating to services and outstanding amounts owed by the Group at 31 December 2024 are disclosed below:
Loans with shareholders
On 29 September 2023, the Group entered into a loan agreement with two of the Group's shareholders, one of whom is a director of the Group, for amounts of £35,000k (2023: £nil). Interest has been charged over the loans of £4,896k (2023: £nil). The balance payable as at 31 December 2024 is £39,896k (2023: £nil).
The notes on pages 48 to 50 form part of these parent financial statements.
The notes on pages 48 to 50 form part of these parent financial statements.
TFP Telecoms Limited is a private company limited by shares incorporated in England and Wales. The registered office is 146 Freston Road, London, England, W10 6TR. The company's principal activities and nature of its operations are disclosed in the directors' report.
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The company applies accounting policies consistent with those applied by the group. To the extent that an accounting policy is relevant to both group and parent company financial statements, please refer to the group financial statements for disclosure of the relevant accounting policy.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
inclusion of an explicit and unreserved statement of compliance with IFRS;
presentation of a statement of cash flows and related notes;
disclosure of the objectives, policies and processes for managing capital;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
related party disclosures for transactions with the parent or wholly owned members of the group.
The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, as a result of support from the Company's subsidiary undertaking. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
There were no employees employed by the Company during the period.
The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
On 29 September 2023 there was a de-merger of the Company's subsidiary, TalkTalk Business Direct Limited, from their previous parent company. Consideration was paid by the Company of £1. On 10 December 2024, under the terms of the Share Purchase Agreement, the previous parent company would irrevocably release the amount TalkTalk Business Direct owe to them in exchange for issue of special share, after a set period after the sale of TalkTalk Business Direct. On the same date, this share was transferred to the Company. Investments in subsidiary at 31 December 2024 are £2 (2023: £nil).
Investment in subsidiary undertakings
Details of the company's principal operating subsidiaries are included in note 37.
Details of the company's subsidiaries at 31 December 2024 are as follows: