TIDM75GL
RNS Number : 6021Q
Cable & Wireless Limited
05 August 2010
Annual financial
report Announcement
5 AUGUST 2010
CABLE & WIRELESS LIMITED
Annual financial report Announcement
FOR THE year ENDED 31 march 2010
Cable & Wireless Limited (formerly Cable and Wireless plc) (the Company) has
submitted copies of the Annual Report and Accounts for the year ended 31 March
2010 to the UK Listing Authority.
This document will shortly be available for inspection at the UK Listing
Authority's Document Viewing Facility which is situated at:
Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14
5HS
Tel: 020 7066 1000
The Company's Annual Report and Accounts are also available on the following
website: www.cwc.com. To view the Annual Report and Accounts, please paste the
following URL into the address bar of your browser:
http://www.cwc.com/live/investor-relations/financial-information/cable-wireless
limited.html
This announcement should be read in conjunction with the Annual Report and
Accounts for the year ended 31 March 2010. This announcement constitutes 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 Cable & Wireless Limited 2009/10 Annual Report and
Accounts.
The financial information included within this annual financial report
announcement has been extracted from the audited financial statements of Cable &
Wireless Limited for the year ended 31 March 2010 (which will shortly be
delivered to the Registrar of Companies) but does not constitute the Company's
statutory financial statements for 2009/10 or 2008/09 under Section 434 of the
Companies Act 2006.
Those accounts are prepared in accordance with accounting standards applicable
under generally accepted accounting principles in the United Kingdom (UK GAAP)
and the provisions of the Companies Act 2006. They have been reported on by the
Company's auditors, whose audit report (i) was unqualified, (ii) did not include
a reference to any matters by way of emphasis without qualifying their report,
and (iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The financial information in this annual financial report announcement has been
prepared in accordance with UK GAAP, with the exception of the disclosure
requirements.
EXTRACTS FROM THE CABLE & WIRELESS LIMITED 2009/10 ANNUAL REPORT AND ACCOUNTS
The information below has been extracted from the Cable & Wireless Limited
2009/10 Annual Report and Accounts and is included solely for the purpose of
complying with DTR 6.3.5 and the requirements it imposes on issuers as to how to
make public annual financial reports.
Profit and loss account
For the year ended 31 March 2010
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| | | 2009/10 | 2008/09 |
+----------------------+-------+----------------------------------------+---------------------------------------+
| | | Pre-exceptional | Exceptional | | Pre-exceptional | Exceptional | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| | | items | items | Total | items | items | Total |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| | Note | US$m | US$m | US$m | US$m | US$m | US$m |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Other operating | 3 | 60 | - | 60 | 58 | - | 58 |
| income | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Administrative | 4,5,6 | (63) | (48) | (111) | (55) | (23) | (78) |
| expenses | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Operating loss | | (3) | (48) | (51) | 3 | (23) | (20) |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Income from shares | 7 | 27 | - | 27 | 5 | - | 5 |
| in group | | | | | | | |
| undertakings and | | | | | | | |
| joint ventures | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Profit on disposal | | - | - | - | 2 | - | 2 |
| of group undertaking | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Other non-operating | 8,11 | 54 | 66 | 120 | - | 19 | 19 |
| income | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Other non-operating | 8,11 | (33) | (281) | (314) | (5) | (98) | (103) |
| expenses | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Interest receivable | 9 | 8 | - | 8 | 28 | - | 28 |
| and similar income | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Interest payable and | 10 | (129) | - | (129) | (76) | - | (76) |
| similar charges | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Loss on ordinary | | (76) | (263) | (339) | (43) | (102) | (145) |
| activities before | | | | | | | |
| income tax | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Tax (expense) / | 12 | (5) | - | (5) | 12 | - | 12 |
| credit on loss on | | | | | | | |
| ordinary activities | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
| Loss for the | | (81) | (263) | (344) | (31) | (102) | (133) |
| financial year | | | | | | | |
+----------------------+-------+-----------------+-------------+--------+-----------------+-------------+-------+
Statement of total recognised gains and losses
For the year ended 31 March 2010
+---------------------------------------------+-----+----------+----------+
| | | 2009/10 | 2008/09 |
+---------------------------------------------+-----+----------+----------+
| | | US$m | US$m |
+---------------------------------------------+-----+----------+----------+
| Loss for the financial year | | (344) | (133) |
+---------------------------------------------+-----+----------+----------+
| Cash received in respect of employee share | | 6 | 4 |
| schemes | | | |
+---------------------------------------------+-----+----------+----------+
| Share-based payment costs | | 9 | 21 |
+---------------------------------------------+-----+----------+----------+
| Revaluation | | (129) | - |
+---------------------------------------------+-----+----------+----------+
| Exchange differences on translation | | 202 | (2,605) |
+---------------------------------------------+-----+----------+----------+
| Total recognised gains and losses for the | | (256) | (2,713) |
| financial year | | | |
+---------------------------------------------+-----+----------+----------+
Balance sheet
As at 31 March 2010
+----------------------------------------+--+------+----------+----------+
| | | | 31 | 31 |
| | | | March | March |
+----------------------------------------+--+------+----------+----------+
| | | | 2010 | 2009 |
+----------------------------------------+--+------+----------+----------+
| | | Note | US$m | US$m |
+----------------------------------------+--+------+----------+----------+
| Fixed assets investments | | | | |
+----------------------------------------+--+------+----------+----------+
| Shares in group undertakings | | 14 | 12,370 | 28,868 |
+----------------------------------------+--+------+----------+----------+
| Shares in joint ventures | | 14 | 6 | 6 |
+----------------------------------------+--+------+----------+----------+
| | | | | |
+----------------------------------------+--+------+----------+----------+
| Investments | | | | |
+----------------------------------------+--+------+----------+----------+
| Held to maturity investments | | 15 | 79 | 77 |
+----------------------------------------+--+------+----------+----------+
| Available-for-sale investments | | 15 | 30 | 39 |
+----------------------------------------+--+------+----------+----------+
| | | | 12,485 | 28,990 |
+----------------------------------------+--+------+----------+----------+
| Current assets | | | | |
+----------------------------------------+--+------+----------+----------+
| Debtors: amounts falling due within | | 16 | 3,860 | 49 |
| one year | | | | |
+----------------------------------------+--+------+----------+----------+
| Available-for-sale investments | | 15 | 364 | 413 |
+----------------------------------------+--+------+----------+----------+
| Cash at bank and in hand | | | 3 | 7 |
+----------------------------------------+--+------+----------+----------+
| Financial assets at fair value through | | 15 | 104 | - |
| the profit and loss | | | | |
+----------------------------------------+--+------+----------+----------+
| | | | 4,331 | 469 |
+----------------------------------------+--+------+----------+----------+
| Current liabilities | | | | |
+----------------------------------------+--+------+----------+----------+
| Creditors: amounts falling due within | | 17 | (10,072) | (22,302) |
| one year | | | | |
+----------------------------------------+--+------+----------+----------+
| Liabilities at fair value through the | | 18 | (30) | (36) |
| profit and loss | | | | |
+----------------------------------------+--+------+----------+----------+
| | | | (10,102) | (22,338) |
+----------------------------------------+--+------+----------+----------+
| | | | | |
+----------------------------------------+--+------+----------+----------+
| Net current liabilities | | | (5,771) | (21,869) |
+----------------------------------------+--+------+----------+----------+
| Total assets less current liabilities | | | 6,714 | 7,121 |
+----------------------------------------+--+------+----------+----------+
| | | | | |
+----------------------------------------+--+------+----------+----------+
| Creditors: amounts falling due after one | 19 | (333) | (325) |
| year | | | |
+-------------------------------------------+------+----------+----------+
| Provisions for liabilities and charges | | 20 | (55) | (30) |
| | | | | |
+----------------------------------------+--+------+----------+----------+
| Pensions and similar obligations | | 21 | (34) | (28) |
+----------------------------------------+--+------+----------+----------+
| | | | | |
+----------------------------------------+--+------+----------+----------+
| Net assets | | | 6,292 | 6,738 |
+----------------------------------------+--+------+----------+----------+
| | | | | |
+----------------------------------------+--+------+----------+----------+
| Capital and reserves | | | | |
+----------------------------------------+--+------+----------+----------+
| Called-up share capital | | 22 | 976 | 955 |
+----------------------------------------+--+------+----------+----------+
| Share premium account | | 23 | 374 | 289 |
+----------------------------------------+--+------+----------+----------+
| Profit and loss account | | 23 | 2,534 | 2,926 |
+----------------------------------------+--+------+----------+----------+
| Other reserves | | 23 | 2,408 | 2,568 |
+----------------------------------------+--+------+----------+----------+
| Shareholders' funds | | | 6,292 | 6,738 |
+----------------------------------------+--+------+----------+----------+
The accompanying notes on pages 10 to 33 are an integral part of the financial
statements of the Company.
The financial statements of the Company were approved by the directors on 5
August 2010 and signed on its behalf by:
Clare Underwood Director
Reconciliation of movements in shareholders' funds
For the year ended 31 March 2010
+----------------------------------------+----+----+---------+---------+
| | | | 2009/10 | 2008/09 |
| | | | | |
+----------------------------------------+----+----+---------+---------+
| | | | US$m | US$m |
+----------------------------------------+----+----+---------+---------+
| Loss for the financial year | | | (344) | (133) |
+----------------------------------------+----+----+---------+---------+
| Dividends - interim in respect of | | | (128) | (125) |
| the current year | | | | |
+----------------------------------------+----+----+---------+---------+
| - final in respect | | | (227) | (216) |
| of the prior year | | | | |
+----------------------------------------+----+----+---------+---------+
| Cash received in respect of employee | | | 6 | 4 |
| share schemes | | | | |
+----------------------------------------+----+----+---------+---------+
| Shares allotted under share option | | | 19 | 5 |
| schemes | | | | |
+----------------------------------------+----+----+---------+---------+
| Shares allotted under scrip dividend | | | 87 | 83 |
| scheme | | | | |
+----------------------------------------+----+----+---------+---------+
| Own shares purchased | | | (2) | (4) |
+----------------------------------------+----+----+---------+---------+
| Share-based payment costs | | | 9 | 21 |
+----------------------------------------+----+----+---------+---------+
| Equity component of convertible bond | | | 36 | - |
| acquired | | | | |
+----------------------------------------+----+----+---------+---------+
| Equity component of convertible bond | | | (34) | - |
| disposed of | | | | |
+----------------------------------------+----+----+---------+---------+
| Other recognised losses relating to | | | - | (2) |
| the year | | | | |
+----------------------------------------+----+----+---------+---------+
| Reclassification of treasury shares | | | 59 | - |
+----------------------------------------+----+----+---------+---------+
| Revaluation of investments | | | (129) | - |
+----------------------------------------+----+----+---------+---------+
| Exchange difference on translation | | | 202 | (2,605) |
+----------------------------------------+----+----+---------+---------+
| Decrease in shareholders' funds | | | (446) | (2,972) |
+----------------------------------------+----+----+---------+---------+
| Opening shareholders' funds | | | 6,738 | 9,710 |
+----------------------------------------+----+----+---------+---------+
| Closing shareholders' funds | | | 6,292 | 6,738 |
+----------------------------------------+----+----+---------+---------+
The accompanying notes are an integral part of the financial statements of the
Company.
1 Statement of accounting policies
1.1 Accounting Policies
The following amendments to standards have been adopted in these financial
statements for the first time:
The amendment to FRS 8 Related Party Disclosures (mandatory for periods
beginning on/after 6 April 2008). The amendment has the effect that
wholly-owned subsidiaries are no longer exempt from disclosure of intra-group
transactions with companies that are not 100% owned within the Group and there
is no longer a disclosure exemption available in parent company's own financial
statements. The amendment did not have a material effect on the Company. The
Company presents disclosures in line with the amendment to FRS 8 in note 26 of
the financial statements.
The amendment to FRS 20 (IFRS 2) Share-based Payment - Vesting Conditions and
Cancellations (mandatory for periods starting on/after 1 January 2009). The
amendment clarifies the definition of vesting conditions, introduces the concept
of non-vesting conditions, requires non-vesting conditions to be reflected in
grant-date fair value and amends the accounting for cancellations and
settlements by parties other then the entity. The amendment did not have a
material effect on the Company.
The amendment to FRS 21 Events after the Balance Sheet Date (mandatory for
periods starting on/after 1 January 2009) confirmed no obligation exists at the
balance sheet date for dividends declared after that date. The amendment did not
have an effect on the Company.
1.2 Basis of preparation
The Company's financial statements have been prepared in accordance with
accounting standards applicable under generally accepted accounting principles
in the United Kingdom and the provisions of the Companies Act 2006. They have
been prepared on the historical cost basis where appropriate.
The Company is exempt by virtue of s400 of the Companies Act 2006 from the
requirement to prepare group financial statements.
These financial statements set out the position of the Company and not the Group
which it headed until the Group reorganisation on 19 March 2010. The following
accounting policies have been applied consistently in dealing with items which
are considered material in relation to the Company's financial statements.
As a result of the Group reorganisation, the functional currency of the new
ultimate parent company, CWC Plc, and the majority of trading and financing
companies of the Group, of which the Company is a member, changed to US Dollars.
In respect of the Company, the directors consider the US dollar to be the
functional currency reflecting the economic effects of the underlying
transactions, events and conditions for the Company. For these financial
statements, the Company has changed its presentation currency to US dollars.
The principal exchange rates used in preparing the Group financial statements
are as follows:
+------------------------------+----+----+----+------+--------+---------+
| | | | | | Year | Year |
| | | | | | ended | ended |
+------------------------------+----+----+----+------+--------+---------+
| | | | | | 31 | 31 |
| | | | | | March | March |
+------------------------------+----+----+----+------+--------+---------+
| | | | | | 2010 | 2009 |
+------------------------------+----+----+----+------+--------+---------+
| US$ : GBP | | | | | | |
+------------------------------+----+----+----+------+--------+---------+
| Average | | | | | 1.5904 | 1.7581 |
+------------------------------+----+----+----+------+--------+---------+
| Year end | | | | | 1.4884 | 1.4498 |
+------------------------------+----+----+----+------+--------+---------+
The financial statements have been prepared on a going concern basis. The
directors have reviewed the financial position of the Company, including the
arrangements with group undertakings, and believe that it remains appropriate to
prepare the financial statements on a going concern basis. The financial
statements do not include any adjustments that would result from the going
concern basis of preparation being inappropriate.
The Company is exempt under FRS 29 Financial Instruments: Disclosures from the
requirement to provide its own financial instruments disclosures on the grounds
that they are included in publicly available consolidated financial statements
which include disclosures that comply with the IFRS equivalent standard.
1.3 Use of estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
FRS 18 Accounting Policies requires that a description of the impact of any
change in estimation techniques should be provided where the change has a
material impact on the reported results for the period.
1.4 Investments in group undertakings and joint ventures
Investments in group undertakings are included in the balance sheet at
valuation. This valuation has been performed using a discounted cash flow based
valuation on a triennial basis. The directors believe this method is the most
appropriate method of valuation for these assets. Investments in joint ventures
are included in the balance sheet at cost.
1.5 Financial instruments
The Company classifies its financial assets into the following categories:
financial assets at fair value through the profit and loss, loans and
receivables, held-to-maturity investments and available-for-sale financial
assets. The classification depends on the purpose for which the assets are held.
The basis of determining fair values is set out in note 1.6.
Management determines the classification of its financial assets at initial
recognition in accordance with FRS 26 Financial Instruments: Recognition and
Measurement and re-evaluates this designation at every reporting date for
financial assets other than those held at fair value through the profit and
loss.
Financial assets at fair value through the profit and loss
This category has two sub-categories: financial assets held for trading and
those designated at fair value through the profit and loss at inception. A
financial asset is classified in this category if acquired principally for the
purpose of selling in the short-term or if so designated by management.
Derivatives are also categorised as held for trading. Assets in this category
are classified as current assets if they are either held for trading or are
expected to be realised within a year of the balance sheet date.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are
either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless management intends to
dispose of the financial asset within 12 months of the reporting date. Purchases
and sales of financial assets are recognised on trade-date (the date on which
the Company commits to purchase or sell the asset).
Receivables
Receivables are non-derivative financial assets with fixed or determinable
receipts that are not quoted in an active market. They arise when the Company
provides money, goods or services directly to a third party or group
undertakings with no intention of trading the receivable. They are included in
current assets, except for those with maturities greater than one year after the
balance sheet date (these are classified as non-current assets).
Receivables are recognised initially at fair value and subsequently measured at
amortised cost. Amortised cost is determined using the effective interest method
less allowance for impairment. An allowance for impairment of receivables is
established when there is objective evidence that the Company will not be able
to collect all amounts due according to the original terms of the receivables.
The amount of the allowance is the difference between the asset's carrying
amount and the present value of estimated future cash flows (discounted at the
original effective interest rate). The amount of the allowance is recognised in
the profit and loss.
Recognition and measurement
Available-for-sale financial assets are recognised and are subsequently carried
at fair value. Receivables are carried at amortised cost using the effective
interest method. Financial assets not carried at fair value through the profit
and loss are initially recognised at fair value plus directly attributable
transaction costs.
Financial assets are derecognised when the rights to receive cash flows from the
assets have expired or have been transferred and the Company has transferred
substantially all risks and rewards of ownership.
Unrealised gains and losses arising from changes in the fair value of
non-monetary securities classified as available-for-sale are recognised in
equity. When securities classified as available-for-sale are sold or impaired,
the accumulated fair value adjustments are included in the profit and loss.
The Company assesses at each reporting date whether there is objective evidence
that an investment or a group of investments is impaired. In the case of equity
securities classified as available-for-sale, a significant or prolonged decline
in the fair value of the security below its cost is considered in determining
whether it is impaired. If any such evidence exists for available-for-sale
investments, the cumulative loss is removed from equity and recognised in the
profit and loss. This loss is measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that investment
previously recognised in the profit and loss. Impairment losses recognised on
these instruments are not reversed through the profit and loss if the fair value
of the instrument increases in a later period.
Loans
Loans are recognised initially at fair value net of directly attributable
transaction costs incurred. Loans are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the profit and loss over the period of the
loans using the effective interest method.
Convertible bonds issued by the Company were initially recognised at fair value.
The bond was separated into a liability and equity component. The liability
component was recognised at amortised cost. The equity component represented the
residual of the fair value of the bond less the liability component. The
liability component was subsequently measured on an amortised cost basis.
Loans are classified as current liabilities unless the Company has an
unconditional right to defer settlement of the liability for at least 12 months
after the reporting date.
1.6 Fair value estimation
The fair value of financial instruments traded in active markets (such as
available-for-sale securities) is based on quoted market prices at the reporting
date. The quoted market price used for investments held by the Company is the
current bid price. The appropriate quoted market price for financial liabilities
is the current ask price.
The fair value of financial instruments that are not traded in an active market
is determined by using valuation techniques. The Company uses a variety of
methods and makes assumptions that are based on market conditions existing at
each reporting date.
The nominal value (less estimated impairments) of debtors and payables are
assumed to approximate their fair values. The fair value of financial
liabilities is estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the Company for similar
financial instruments. Discounted cash flows are used to determine the fair
value for the majority of remaining financial instruments.
1.7 Pensions
The Company is a member of the Group's defined benefit pension scheme ("the
Scheme") but is unable to identify its share of the underlying assets and
liabilities of the Scheme on a consistent and reasonable basis and therefore, as
required by FRS 17 Retirement Benefits, accounts for the scheme as if it were a
defined contribution scheme. As a result, the amount charged to the Company's
profit and loss represents the contributions payable to the Scheme in respect of
the accounting period.
The Company also operates an unfunded pension plan to cover the costs of former
directors' and other senior employees' pension entitlements. Provision is made
in accordance with FRS 17 Retirement Benefits in the Company's financial
statements for the expected costs of meeting the associated liabilities. These
costs are recorded in administrative expenses.
Costs in respect of the Company's defined contribution pension schemes are
charged to the profit and loss on an accruals basis as contributions become
payable.
1.8 Tax
The charge or credit for tax is based on the result for the year and takes into
account tax deferred due to timing differences between the treatment of certain
items for tax and accounting purposes.
Deferred tax assets are recognised to the extent that they are regarded as
recoverable. Deferred tax assets are regarded as recoverable to the extent that
on the basis of all available evidence, it can be regarded as more likely than
not that there will be suitable taxable profits from which the future reversal
of the underlying timing differences can be deducted.
Except where otherwise required by accounting standards, full provision without
discounting is made for all timing differences that have arisen but not reversed
at the balance sheet date.
1.9 Share-based compensation
The Company operates various equity-settled, share-based compensation plans. The
fair value of the employee services received in exchange for the grant of the
options is recognised as an expense over the vesting period. The total amount to
be expensed over the vesting period is determined by reference to the fair value
of the options granted, which excludes the impact of any non-market vesting
conditions (for example, service, profitability and sales growth targets).
Non-market vesting conditions are included in estimates about the number of
options that are expected to vest. At each balance sheet date, the Company
revises its estimates of the number of options that are expected to vest. It
recognises the impact of the revision of original non-market estimates, if any,
in the profit and loss, and a corresponding adjustment to shareholders funds
over the remaining vesting period. The expense recognised by the Company relates
only to the Company employees.
Share-based expenses relating to grants of the Company's equity made to
employees of subsidiary companies are recognised in the profit and loss of the
subsidiary. The Company recognised these as increases in the investment in the
group undertaking with a corresponding increase recognised in reserves.
Where new shares are issued, the proceeds received net of any directly
attributable transaction costs are credited to share capital and share premium
when the options are exercised.
Where continuing employees withdraw from share-based compensation plans the
remaining charge is recognised immediately.
1.10 Cable & Wireless Employee Share Ownership Plan (ESOP) and purchase of own
shares by the Company
The financial statements of the Company include the assets and related
liabilities of the Cable & Wireless Employee Share Ownership Plan Trust (the
Trust), which holds shares for the Group's ESOP. Under the requirements of UITF
38 Accounting for ESOP trusts, the shares held by the Trust are stated at cost
and deducted from shareholders' funds.
Shares purchased by the Company are held as treasury shares at cost and deducted
from shareholders' funds until they are cancelled, sold for cash or transferred
out of treasury pursuant to an employees' share scheme. Treasury shares do not
carry voting rights and no dividends will be paid on these shares.
1.11 Foreign currency translation
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transaction. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies
are recognised in the profit and loss account.
2 Company's cash flow statement
Under FRS 1 (Revised), the Company is exempt from the requirement to prepare a
cash flow statement on the grounds that it is a wholly owned subsidiary
undertaking. A consolidated cash flow statement is included in the financial
statements of Cable & Wireless Communications Plc in which the Company is
consolidated and which are publicly available from the address in note 26.
3 Other operating income
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 2009/10 | 2008/09 |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | US$m | US$m |
+----------------------------------+------+------+------+------+---------+---------+
| Management fees | | | | | 60 | 58 |
+----------------------------------+------+------+------+------+---------+---------+
Other operating income relates to management fees payable by subsidiaries of the
Company, for management of intercompany loans and for the provision of
management and support services and branding fees.
4 Remuneration of directors
+----------------------------------------------------+------------+---------+
| | 2009/10 | 2008/09 |
+----------------------------------------------------+------------+---------+
| | US$m | US$m |
+----------------------------------------------------+------------+---------+
| Directors' remuneration | 5 | 7 |
+----------------------------------------------------+------------+---------+
| Amounts paid or payable under long-term incentive | 6 | 14 |
| schemes | | |
+----------------------------------------------------+------------+---------+
| Other pension costs | 1 | 1 |
+----------------------------------------------------+------------+---------+
| | 12 | 22 |
+----------------------------------------------------+------------+---------+
Directors remuneration includes benefits in kind. Benefits in kind includes
Company provided life assurance, professional advice, chauffeur travel and the
reimbursement of costs associated with accommodation and relocation.
The aggregate of emoluments and amounts receivable under long-term incentive
schemes of the highest paid director was US$2,601,606 (2008/09 - US$15,551,928),
and no Company pension contributions were made to a money purchase scheme on his
behalf. During the year, the highest paid director received shares under a long
term incentive scheme and exercised share options.
+----------------------------------------------------+----------+------------+---------+
| | Number of directors |
+---------------------------------------------------------------+----------------------+
| | 2009/10 | 2008/09 |
+----------------------------------------------------+-----------------------+---------+
| The number of directors who exercised share options was: | 3 | - |
+---------------------------------------------------------------+------------+---------+
| The number of directors in respect of whose services shares | | |
| were received or receivable under long-term incentive schemes | 6 | 5 |
| was: | | |
+---------------------------------------------------------------+------------+---------+
| | | | |
+----------------------------------------------------+----------+------------+---------+
Directors' rights to subscribe for shares in or debentures of the company
and its subsidiaries are indicated below:
+--------------------------------------------+-----------+---------+----------+
| | Number of options |
+--------------------------------------------+--------------------------------+
| | | | Exercise |
| | At | At end | price |
| | start | of year | (pence) |
| | of year | | |
+--------------------------------------------+-----------+---------+----------+
| GW Battersby | 642,068 | - | 108.00 |
+--------------------------------------------+-----------+---------+----------+
| GW Battersby | 301,843 | - | 153.90 |
+--------------------------------------------+-----------+---------+----------+
| GW Battersby | 4,148,148 | - | 101.25 |
+--------------------------------------------+-----------+---------+----------+
| NI Cooper | 28,929 | - | 103.70 |
+--------------------------------------------+-----------+---------+----------+
| NI Cooper | 405,015 | - | 102.20 |
+--------------------------------------------+-----------+---------+----------+
| NI Cooper | 1,975,308 | - | 101.25 |
+--------------------------------------------+-----------+---------+----------+
| J Pluthero | 1,163,873 | - | 107.40 |
+--------------------------------------------+-----------+---------+----------+
| WA Rice | 5,452,067 | - | 110.50 |
+--------------------------------------------+-----------+---------+----------+
Due to the Group reorganisation, from 19 March 2010 the directors' share options
are over a stapled unit of one Cable & Wireless Communications Plc share and one
Cable & Wireless Worldwide plc share. See note 13 for further information.
Directors benefited from qualifying third party indemnity provisions in place
during the financial year. It is the Company's intention that indemnity
provisions be provided for all directors going forward.
There were no directors' advances, credits and guarantees during the financial
year or at the date of this report.
5 Information regarding employees and auditors
The average number of persons employed by the Company (including directors)
during the year was:
+------------------------------------------+----------+----+---------+---------+
| | | | 2009/10 | 2008/09 |
+------------------------------------------+----------+----+---------+---------+
| Average number of persons employed by | | | 66 | 76 |
| the Company | | | | |
+------------------------------------------+----------+----+---------+---------+
The costs for the year were:
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 2009/10 | 2008/09 |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | US$m | US$m |
+----------------------------------+------+------+------+------+---------+---------+
| Wages and salaries | | | | | 16 | 21 |
+----------------------------------+------+------+------+------+---------+---------+
| Equity-settled share-based | | | | | 9 | 9 |
| payments | | | | | | |
+----------------------------------+------+------+------+------+---------+---------+
| Social security costs | | | | | 2 | 2 |
+----------------------------------+------+------+------+------+---------+---------+
| Other pension costs | | | | | 9 | 4 |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 36 | 36 |
+----------------------------------+------+------+------+------+---------+---------+
Auditor's remuneration for audit and other services was US$0.1 million (2008/09
- US$0.1 million), in respect of these financial statements. Amounts paid to
the Company's auditors in respect of services to the Company, other than in the
course of the audit of the Company's financial statements have not been
disclosed as the information is required instead to be disclosed on a
consolidated basis in the accounts of the ultimate parent company, Cable &
Wireless Communications Plc.
6 Exceptional administrative expenses
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 2009/10 | 2008/09 |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | US$m | US$m |
+----------------------------------+------+------+------+------+---------+---------+
| Property | | | | | - | 13 |
+----------------------------------+------+------+------+------+---------+---------+
| Other administration expenses | | | | | 17 | 10 |
+----------------------------------+------+------+------+------+---------+---------+
| Redundancy and other demerger | | | | | 31 | - |
| costs | | | | | | |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 48 | 23 |
+----------------------------------+------+------+------+------+---------+---------+
Redundancy and other demerger costs included staff costs of US$6 million
and legal fees of US$25 million relating to the demerger. Other administration
expenses related to costs of defending the Digicel legal claim and other
insurance and property costs. In the prior year, exceptional expenses related
to provisions for vacant property and other restructuring costs.
7 Income from shares in group undertakings and joint ventures
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 2009/10 | 2008/09 |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | US$m | US$m |
+----------------------------------+------+------+------+------+---------+---------+
| Dividends from group | | | | | 25 | - |
| undertakings | | | | | | |
+----------------------------------+------+------+------+------+---------+---------+
| Dividends from joint ventures | | | | | 2 | 5 |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 27 | 5 |
+----------------------------------+------+------+------+------+---------+---------+
8 Other non-operating income / (expenses)
The following transactions arise in the normal course of the Company's
operations as an investment holding company (see note 14).
+----------------------------------------------+------+------+---------+---------+
| | | | 2009/10 | 2008/09 |
| | | | | |
+----------------------------------------------+------+------+---------+---------+
| | | | US$m | US$m |
+----------------------------------------------+------+------+---------+---------+
| Provisions against loans | | | (33) | (5) |
+----------------------------------------------+------+------+---------+---------+
| Reversal of provision against loans | | | 54 | - |
+----------------------------------------------+------+------+---------+---------+
| | | | 21 | (5) |
+----------------------------------------------+------+------+---------+---------+
9 Interest receivable and similar income
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 2009/10 | 2008/09 |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | US$m | US$m |
+----------------------------------+------+------+------+------+---------+---------+
| Amounts owed by group | | | | | 2 | 4 |
| undertakings | | | | | | |
+----------------------------------+------+------+------+------+---------+---------+
| Deposits and short-term loan | | | | | 6 | 24 |
| interest | | | | | | |
+----------------------------------+------+------+------+------+---------+---------+
| | | | | | 8 | 28 |
+----------------------------------+------+------+------+------+---------+---------+
10 Interest payable and similar charges
+----------------------------------------------+------+------+---------+---------+
| | | | 2009/10 | 2008/09 |
+----------------------------------------------+------+------+---------+---------+
| | | | US$m | US$m |
+----------------------------------------------+------+------+---------+---------+
| Amounts owed to group undertakings | | | 47 | 39 |
+----------------------------------------------+------+------+---------+---------+
| Bank loans and overdrafts | | | 2 | 9 |
+----------------------------------------------+------+------+---------+---------+
| Other medium term loans with third parties | | | 40 | 28 |
+----------------------------------------------+------+------+---------+---------+
| Exchange losses on translation of foreign | | | 40 | - |
| currency denominated loans | | | | |
+----------------------------------------------+------+------+---------+---------+
| | | | 129 | 76 |
+----------------------------------------------+------+------+---------+---------+
11 Exceptional non-operating income / (expense)
+----------------------------------------+------+------+------+---------+---------+
| | | | | 2009/10 | 2008/09 |
| | | | | | |
+----------------------------------------+------+------+------+---------+---------+
| | | | | US$m | US$m |
+----------------------------------------+------+------+------+---------+---------+
| Gains / (losses) on derivatives | | | | 19 | (98) |
+----------------------------------------+------+------+------+---------+---------+
| Releases relating to previously | | | | 3 | 7 |
| discontinued businesses | | | | | |
+----------------------------------------+------+------+------+---------+---------+
| Releases relating to transaction risks | | | | - | 12 |
+----------------------------------------+------+------+------+---------+---------+
| Gain on disposal of investment | | | | 44 | - |
+----------------------------------------+------+------+------+---------+---------+
| Revaluation of investments | | | | (281) | - |
+----------------------------------------+------+------+------+---------+---------+
| | | | | (215) | (79) |
+----------------------------------------+------+------+------+---------+---------+
As described in note 14, during the year the Company was affected by the
demerger of the Cable & Wireless Worldwide business and restructured its
investments in its subsidiaries.
The Company holds forward exchange contracts hedging US dollar exposures and
future Sterling obligations regarding the 2012 bond. The Company did not apply
hedge accounting to these contracts and as such they were revalued to fair value
through the profit and loss. See note 18 for further information.
12 Income tax
Tax on loss on ordinary activities
+------------------------------------------------------+---------+----------+
| | 2009/10 | 2008/09 |
| | | |
+------------------------------------------------------+---------+----------+
| | US$m | US$m |
+------------------------------------------------------+---------+----------+
| UK corporation tax at 28% (2009 - 28%) | 2 | 2 |
+------------------------------------------------------+---------+----------+
| Double taxation relief | (2) | (2) |
+------------------------------------------------------+---------+----------+
| | - | - |
+------------------------------------------------------+---------+----------+
| | | |
+------------------------------------------------------+---------+----------+
| Overseas taxation | 2 | 2 |
+------------------------------------------------------+---------+----------+
| Adjustment in respect of prior years | 3 | (14) |
+------------------------------------------------------+---------+----------+
| | | |
+------------------------------------------------------+---------+----------+
| Tax expense/(credit) on loss on ordinary activities | 5 | (12) |
+------------------------------------------------------+---------+----------+
Factors affecting the current tax charge
The current tax charge for the year is US$5 million (2008/09 - US$12 million
credit). The tax provision was higher than the standard rate of corporation tax
in the UK of 28% (2009: 28%). The differences are explained below:
+--------------------------------------------------------+---------+----------+
| | 2009/10 | 2008/09 |
| | | |
+--------------------------------------------------------+---------+----------+
| | US$m | US$m |
| | | |
+--------------------------------------------------------+---------+----------+
| Loss before taxation | (339) | (145) |
+--------------------------------------------------------+---------+----------+
| | | |
+--------------------------------------------------------+---------+----------+
| Tax at UK statutory rate | (95) | (41) |
+--------------------------------------------------------+---------+----------+
| Group dividends receivable | (7) | - |
+--------------------------------------------------------+---------+----------+
| Expenditure not deductible for tax purposes | 100 | 328 |
+--------------------------------------------------------+---------+----------+
| Capital allowances for the period in excess of | - | (2) |
| depreciation | | |
+--------------------------------------------------------+---------+----------+
| Other timing differences | 10 | - |
+--------------------------------------------------------+---------+----------+
| Group relief claimed | (6) | (283) |
+--------------------------------------------------------+---------+----------+
| | 2 | 2 |
+--------------------------------------------------------+---------+----------+
| | | |
+--------------------------------------------------------+---------+----------+
| Adjustment in respect of prior periods | 3 | (14) |
+--------------------------------------------------------+---------+----------+
| | | |
+--------------------------------------------------------+---------+----------+
| Current tax charge / (credit) | 5 | (12) |
+--------------------------------------------------------+---------+----------+
13 Employee share schemes
Subsequent to the Scheme of Arrangement and demerger, the majority of the
Group's participants' outstanding Cable and Wireless plc share and option awards
rolled over into Cable & Wireless Communications Plc equivalent awards. A
limited number of participants obtained an entitlement to one Cable & Wireless
Communications Plc share and one Cable & Wireless Worldwide plc (an unrelated
company) share in lieu of each Cable and Wireless plc share. The quantity of
shares under awards were converted in accordance with plan rules to adjust for
the demerger of the Cable & Wireless Worldwide business.
Option and share prices granted during the year are disclosed in Sterling
reflecting the currency in which the ordinary shares of Cable and Wireless plc
were quoted.
Share option schemes
The Company does not currently have any outstanding share option awards over its
own shares (2008/09 - 24,394,000). There are 14,130,773 outstanding share option
awards relating to options granted by the Company to senior employees (2008/09 -
31,833,674 outstanding options of which 25,708,841 related to Cable & Wireless
Communications employees). These options were originally issued over the
Company's shares at exercise prices between 100-149 pence (12,789,356 options)
and 150-199 pence (1,341,417 options). All options have vested in full.
Subsequent to the Scheme of Arrangement, these options have been redesignated as
an option over a stapled unit of one share in Cable & Wireless Communications
Plc and one share in Cable & Wireless Worldwide plc.
The liability for these stapled unit options and the Cable & Wireless Worldwide
plc shares due to Group employees is classified as an other creditor and amounts
to US$18 million.
Other equity instrument awards
Performance Share Plan (PSP)
Under the PSP, executive directors and other senior executives can receive
awards of performance shares at nil cost.
Prior to the Scheme of Arrangement and demerger, PSP awards by the Company were
subject to relative TSR performance of Cable and Wireless plc. Subsequent to the
Scheme of Arrangement and demerger, these have been adjusted to be an award over
Cable & Wireless Communications Plc ordinary shares of an equivalent value. The
vesting of performance shares is subject to absolute Cable & Wireless
Communications Plc TSR performance conditions above a minimum threshold.
Awards will have a three year performance period.
TSR is the main performance measure used in share plans where performance
conditions apply as it provides an objective external measure of financial
performance. The CWC Plc Remuneration Committee will also consider the
underlying financial performance of the Company at the end of the performance
period.
Restricted share plan (RSP)
The RSP provides for awards of restricted shares to executive directors and
selected employees, primarily as a retention or a recruitment tool. Generally,
restricted shares awarded under this plan vest over periods of one to three
years.
Prior to the Scheme of Arrangement and demerger, RSP awards made to Cable &
Wireless Communications employees were made in respect of shares in the Company.
Subsequent to the Scheme of Arrangement and demerger, these awards have been
adjusted to be an award over Cable & Wireless Communications Plc ordinary shares
of an equivalent value.
Stock appreciation rights plan (SARs)
The SARs plan is used to replicate exactly the plans described above, but
rewards are delivered as a cash equivalent. It is used in exceptional cases for
countries in which tax or legal issues preclude the use of real shares or share
options.
Cable & Wireless Communications Share purchase plan (SPP)
Prior to the scheme of arrangement and demerger, the Company offered its
employees, who are chargeable to income tax under Section 15 Income Tax
(Earnings and Pensions) Act 2003, the Cable & Wireless Communications share
purchase plan which is an HMRC approved share incentive plan. Under the SPP,
employees can contribute up to a value of GBP1,500 or 10% of salary each tax
year (whichever is the lower), to buy partnership shares and the Company offered
a match of one share for each partnership share purchased. Subsequent to the
scheme of arrangement and demerger the SPP has been adjusted to provide
partnership shares in CWC Plc.
The Cable & Wireless Employee Share Ownership Plan (ESOP) Trust)
The Cable & Wireless ESOP Trust is a discretionary trust, which was funded by
loans from the Company to acquire shares in the Company. Subsequent to the
Scheme of Arrangement and demerger, the Cable & Wireless ESOP Trust continues to
be used to satisfy existing options and awards under incentive plans.
On 24 June 2009, the Company transferred 3,000,000 treasury shares to the ESOP
Trust. On 10 March 2010, the Company transferred 28,259,496 treasury shares to
the ESOP Trust.
At 31 March 2010 the Trust held 43,010,495 shares in Cable & Wireless
Communications Plc and 43,010,495 shares in Cable & Wireless Worldwide plc
(2008/09 - 28,322,351 shares in the Company) with an aggregate cost of US$96
million (2008/09 - US$85 million) and a market value of US$94 million (2008/09 -
US$57 million). Refer to note 15 for further information.
Other equity instrument awards
The Company equity instrument awards operating prior to the Scheme of
Arrangement (as at 19 March 2010) or outstanding as at this date, are as
follows:
+----------------+------------+----------+--------------+-----------+----------+--------------+
| | Awards of Company shares | |
| | granted between 1 April | Awards of Company shares |
| | 2009 and 19 March 2010 | granted during 2008/09 |
+----------------+--------------------------------------+-------------------------------------+
| | Shares | Weighted | Features | Shares | Weighted | Features |
| | | average | incorporated | | average | incorporated |
| | | fair | in scheme | | fair | in scheme |
| | | value | | | value | |
| | | (pence / | | | (pence / | |
| | | share) | | | share) | |
+----------------+------------+----------+--------------+-----------+----------+--------------+
| RSP | 717,236 | 130 | - | 4,534,692 | 132 | - |
+----------------+------------+----------+--------------+-----------+----------+--------------+
| SARs | 589,039 | 142 | - | 5,030,930 | 136 | - |
+----------------+------------+----------+--------------+-----------+----------+--------------+
| SPP scheme | 1,801,989 | 140 | - | 1,386,389 | 156 | - |
+----------------+------------+----------+--------------+-----------+----------+--------------+
| PSP | 17,596,285 | 71 | TSR | 1,187,295 | 71 | TSR |
| | | | conditions | | | conditions |
+----------------+------------+----------+--------------+-----------+----------+--------------+
The PSP grants made during 2009/10 and 2008/09 have performance criteria
attached. The remaining awards had no performance conditions attached.
A fair value exercise was completed at 31 March 2010 for grants made during
2009/10 using the Monte Carlo method. The Monte Carlo pricing model assumptions
used in the pricing of the performance share plan grants in 2009/10 and 2008/09
were:
+------------------------------+-----+--------+-------+---------+---------+
| | | | | 2009/10 | 2008/09 |
+------------------------------+-----+--------+-------+---------+---------+
| Weighted average share price | | | | 140 | 142 |
| (pence) | | | | | |
+------------------------------+-----+--------+-------+---------+---------+
| Dividend yield | | | | 6.2% | 5.5% |
+------------------------------+-----+--------+-------+---------+---------+
| Expected volatility | | | | 33.2% | 31.0% |
+------------------------------+-----+--------+-------+---------+---------+
| Risk-free interest rate | | | | 1.8% | 3.0% |
+------------------------------+-----+--------+-------+---------+---------+
| Expected life in years | | | | 2.9 | 3 |
| | | | | years | years |
+------------------------------+-----+--------+-------+---------+---------+
The cost of such options and awards is borne by participating businesses and the
Company has borne its charge as set out in notes 4 and 5. Movements in the
number of share options outstanding and their related weighted average exercise
prices are presented below:
+---------------------------+---------------+----------+---------------+-----------+
| | 31 March 2010 | 31 March 2009 |
+---------------------------+--------------------------+---------------------------+
| | Weighted | | Weighted | |
| | | | | |
+---------------------------+---------------+----------+---------------+-----------+
| | average | Number | average | Number |
| | | of | | of |
+---------------------------+---------------+----------+---------------+-----------+
| | exercise | options | exercise | options |
| | price | | price | |
+---------------------------+---------------+----------+---------------+-----------+
| | (pence/share) | (000) | (pence/share) | (000) |
| | | | | |
+---------------------------+---------------+----------+---------------+-----------+
| Outstanding at 1 April | 110 | 24,394 | 110 | 25,396 |
+---------------------------+---------------+----------+---------------+-----------+
| Forfeited in the period | - | - | - | - |
+---------------------------+---------------+----------+---------------+-----------+
| Exercised in the period | 102 | (8,948) | 112 | (996) |
+---------------------------+---------------+----------+---------------+-----------+
| Lapsed in the period | 150 | (2,098) | 705 | (6) |
+---------------------------+---------------+----------+---------------+-----------+
| Converted to stapled | (112) | (13,348) | - | - |
| options over CWC Plc and | | | | |
| CWW plc shares during | | | | |
| demerger | | | | |
+---------------------------+---------------+----------+---------------+-----------+
| Outstanding at 31 March | - | - | 110 | 24,394 |
+---------------------------+---------------+----------+---------------+-----------+
| Exercisable at 31 March | - | - | 118 | 11,888 |
+---------------------------+---------------+----------+---------------+-----------+
Subsequent to 19 March 2010, these options have been redesignated as an option
over a stapled unit of one share in Cable & Wireless Communications Plc and one
share in Cable & Wireless Worldwide plc. The liability for these stapled unit
options is classified as an other creditor and amounts to US$18 million.
The Company has applied the requirement of FRS 20 Share-based Payment - Vesting
Conditions and Cancellations and has elected to adopt the exemption to apply FRS
20 only to awards made after 7 November 2002.
14 Fixed asset investments
+--------------------------------------+----+-----------+---------------+----------+
| | | Joint | Group | |
+--------------------------------------+----+-----------+---------------+----------+
| | | ventures | undertakings | Total |
+--------------------------------------+----+-----------+---------------+----------+
| | | US$m | US$m | US$m |
+--------------------------------------+----+-----------+---------------+----------+
| Cost/valuation | | | | |
+--------------------------------------+----+-----------+---------------+----------+
| At 1 April 2009 | | 12 | 25,984 | 25,996 |
+--------------------------------------+----+-----------+---------------+----------+
| Additions | | - | 26,294 | 26,294 |
+--------------------------------------+----+-----------+---------------+----------+
| Revaluation | | - | (410) | (410) |
+--------------------------------------+----+-----------+---------------+----------+
| Disposals | | - | (26,413) | (26,413) |
+--------------------------------------+----+-----------+---------------+----------+
| Transfer of provisions | | - | (13,811) | (13,811) |
+--------------------------------------+----+-----------+---------------+----------+
| Exchange differences on translation | | - | 701 | 701 |
+--------------------------------------+----+-----------+---------------+----------+
| At 31 March 2010 | | 12 | 12,345 | 12,357 |
+--------------------------------------+----+-----------+---------------+----------+
| | | | | |
+--------------------------------------+----+-----------+---------------+----------+
| Loans | | | | |
+--------------------------------------+----+-----------+---------------+----------+
| At 1 April 2009 | | - | 16,464 | 16,464 |
+--------------------------------------+----+-----------+---------------+----------+
| Additions | | - | 33 | 33 |
+--------------------------------------+----+-----------+---------------+----------+
| Loans repaid and transferred | | - | (18,034) | (18,034) |
+--------------------------------------+----+-----------+---------------+----------+
| Exchange differences on translation | | - | 1,594 | 1,594 |
+--------------------------------------+----+-----------+---------------+----------+
| At 31 March 2010 | | - | 57 | 57 |
+--------------------------------------+----+-----------+---------------+----------+
| | | | | |
+--------------------------------------+----+-----------+---------------+----------+
| Provisions and amounts written off | | | | |
+--------------------------------------+----+-----------+---------------+----------+
| At 1 April 2009 | | (6) | (13,580) | (13,586) |
+--------------------------------------+----+-----------+---------------+----------+
| Additions | | - | (33) | (33) |
+--------------------------------------+----+-----------+---------------+----------+
| Releases | | - | 54 | 54 |
+--------------------------------------+----+-----------+---------------+----------+
| Disposals | | - | 79 | 79 |
+--------------------------------------+----+-----------+---------------+----------+
| Transfer of provisions | | - | 13,811 | 13,811 |
+--------------------------------------+----+-----------+---------------+----------+
| Exchange differences on translation | | - | (363) | (363) |
+--------------------------------------+----+-----------+---------------+----------+
| At 31 March 2010 | | (6) | (32) | (38) |
+--------------------------------------+----+-----------+---------------+----------+
| | | | | |
+--------------------------------------+----+-----------+---------------+----------+
| Net book value | | | | |
+--------------------------------------+----+-----------+---------------+----------+
| At 31 March 2010 | | 6 | 12,370 | 12,376 |
+--------------------------------------+----+-----------+---------------+----------+
| At 31 March 2009 | | 6 | 28,868 | 28,874 |
+--------------------------------------+----+-----------+---------------+----------+
The Company's investment in joint ventures comprised US$6 million of unlisted
shares (2008/09 - US$6 million of unlisted shares).
During the year, the Company entered into a series of restructuring transactions
with its subsidiaries:
On 9 November 2009:
· Sable Holding Limited transferred investments to the Company for a total of
US$23,684 million relating to its investments in Cable & Wireless Hong Kong
Finance (US$15,087 million), Cable & Wireless U.K. Finance (US$2,941 million),
Cable & Wireless U.K. Finance No. 3 (US$1,635 million), Cable & Wireless U.K.
Finance No. 1 (US$1,727 million) and Cable & Wireless Asia and Pacific Limited
(US$2,294 million). The consideration was offset against an amount owed by Sable
Holding Limited and the balance left outstanding as an amount payable at 31
March 2010.
· Following the transfer of the investments the group undertakings returned
their share capital to the Company for the settlement of intercompany debt to
the equivalent value.
· Cable & Wireless UK Finance made a final dividend payment of US$143 million
to the Company, treated as a return of capital.
On 14 December 2009:
· the entire share capital of a Group company, Cable & Wireless International
Finance B.V., was sold to the Company by its subsidiary, Sable Holding Limited,
at market value for US$9 million. The consideration was satisfied by the
assignment of an intercompany creditor due to Sable Holding Limited.
· Cable & Wireless (UK) Group Limited sold the entire share capital of its
subsidiary, Cable & Wireless UK Holdings Limited, to the Company for market
value of US$2,600 million. Consideration was satisfied by an intercompany
creditor assigned to Sable Holding Limited.
On 19 March 2010, as part of the Group reorganisation and demerger, the entire
share capital of Cable & Wireless UK Holdings Limited and the Cable & Wireless
Worldwide Brand were transferred to Cable & Wireless Communications Plc, the
ultimate parent company, for consideration of US$2,644 million. A profit of
US$44 million was made on these disposals and is included in exceptional
non-operating income. Consideration is an intercompany receivable from Cable &
Wireless Communications Plc.
Other transactions between the Company and its subsidiaries during the year
were:
· Pender Insurance Limited repaid part of its share capital of US$64 million.
As a result, the Company reviewed the provision carried against Pender Insurance
Limited loans, which was reduced by US$54 million.
· Cable & Wireless UK Finance No. 5 Limited was liquidated during the year.
The investment of US$79 million had been fully provided for.
· The Company acquired loans from another group undertaking in relation to
Delaware Inc and Petrel Communications SA with a book value of US$33 million.
The loans were fully provided for by the Company during the year.
At 31 March 2010, the Company undertook a valuation of its investments in
subsidiaries. The valuation was determined by discounting future cash flows
based on the approved five year business plan extrapolated at long term growth
rates of between 0.5% and 2.0% at pre-tax discount rates of between 7% and 12%
dependent on the risk adjusted cost of capital of the different investments. The
valuation was supported by independent external broker assessments.
The value of Sable Holding Limited has decreased by US$410 million. This
decrease is due to restructuring transactions associated with the demerger of
the Cable & Wireless Worldwide business, including the reallocation of central
costs into a subsidiary of Sable Holding Limited and the transfer of financing
arrangements with third parties into Sable Holding Limited and its remaining
subsidiaries. The effects on the profit and loss account and revaluation reserve
are described in note 11 and note 23 respectively.
15 Financial assets
Movements in available-for-sale financial assets for the year are as follows:
+------------------+-----------+-------------+------------+--------------+----------+
| | | | UK | | |
+------------------+-----------+-------------+------------+--------------+----------+
| | | Cash | Government | Short-term | |
+------------------+-----------+-------------+------------+--------------+----------+
| | Eurobonds | collateral | gilts | deposits | Total |
+------------------+-----------+-------------+------------+--------------+----------+
| | US$m | US$m | US$m | US$m | US$m |
+------------------+-----------+-------------+------------+--------------+----------+
| At 1 April 2009 | 2 | 14 | 25 | 411 | 452 |
+------------------+-----------+-------------+------------+--------------+----------+
| Additions | - | - | 2 | - | 2 |
+------------------+-----------+-------------+------------+--------------+----------+
| Disposals | - | (14) | - | (65) | (79) |
+------------------+-----------+-------------+------------+--------------+----------+
| Foreign exchange | - | 2 | 1 | 16 | 19 |
+------------------+-----------+-------------+------------+--------------+----------+
| At 31 March 2010 | 2 | 2 | 28 | 362 | 394 |
+------------------+-----------+-------------+------------+--------------+----------+
| Current portion | 2 | - | - | 362 | 364 |
+------------------+-----------+-------------+------------+--------------+----------+
| Non-current | - | 2 | 28 | - | 30 |
| portion | | | | | |
+------------------+-----------+-------------+------------+--------------+----------+
Movements in other financial assets for the year are as follows:
+------------------+-------------------------+---+-------------+---------+--------+
| | Held to maturity | | Fair value through |
| | investments | | profit and loss |
+------------------+-------------------------+---+--------------------------------+
| | | | Derivative | | |
| | | | | | |
+------------------+-------------------------+---+-------------+---------+--------+
| | Listed | | financial | ESOP | |
| | | | | | |
+------------------+-------------------------+---+-------------+---------+--------+
| | bonds | | instruments | shares | Total |
| | | | | | |
+------------------+-------------------------+---+-------------+---------+--------+
| | US$m | | US$m | US$m | US$m |
+------------------+-------------------------+---+-------------+---------+--------+
| At 1 April 2009 | 77 | | - | - | - |
+------------------+-------------------------+---+-------------+---------+--------+
| Additions | - | | 1 | 111 | 112 |
+------------------+-------------------------+---+-------------+---------+--------+
| Foreign exchange | 2 | | - | (8) | (8) |
+------------------+-------------------------+---+-------------+---------+--------+
| At 31 March 2010 | 79 | | 1 | 103 | 104 |
+------------------+-------------------------+---+-------------+---------+--------+
| Current portion | - | | 1 | 103 | 104 |
+------------------+-------------------------+---+-------------+---------+--------+
| Non-current | 79 | | - | - | - |
| portion | | | | | |
+------------------+-------------------------+---+-------------+---------+--------+
On demerger, shares in the Cable & Wireless Employee Share Ownership Plan
Trust (ESOP) were converted from 43 million Cable and Wireless plc shares to 43
million Cable & Wireless Communications Plc shares and 43 million Cable &
Wireless Worldwide plc shares. The Cable & Wireless Communications Plc shares (a
related listed company) and the Cable & Wireless Worldwide plc shares (an
unrelated listed company) have been recognised as investments at fair value
through the profit and loss as they represent shares that are not equity
instruments of the Company. A portion of these shares with a market value of
US$30 million will be delivered to the Cable & Wireless Worldwide Group as part
of the demerger agreement. A corresponding financial liability at fair value has
been recognised for this obligation (see note 18).
At 31 March 2010, the Company held forward exchange contracts with a fair value
of US$1 million asset (2008/09 - US$36 million liability). They have been
classified as financial assets at fair value through profit and loss (see note
18).
During the previous year, the Company acquired US$77 million of listed bonds
from a subsidiary undertaking. The carrying amount of these bonds at 31 March
2010 was US$79 million. They have been classified as held to maturity
investments.
16 Debtors
+------------------------------------+----+----+----+---------+---------+
| | | | | 2009/10 | 2008/09 |
| | | | | | |
+------------------------------------+----+----+----+---------+---------+
| | | | | US$m | US$m |
+------------------------------------+----+----+----+---------+---------+
| Amounts falling due within one | | | | | |
| year | | | | | |
+------------------------------------+----+----+----+---------+---------+
| Amounts owed by parent undertaking | | | | 3,845 | - |
+------------------------------------+----+----+----+---------+---------+
| Amounts owed by subsidiary | | | | 5 | 25 |
| undertakings | | | | | |
+------------------------------------+----+----+----+---------+---------+
| Taxation and social security | | | | 7 | 7 |
+------------------------------------+----+----+----+---------+---------+
| Other debtors | | | | 2 | 9 |
+------------------------------------+----+----+----+---------+---------+
| Prepayments and accrued income | | | | 1 | 8 |
+------------------------------------+----+----+----+---------+---------+
| Total debtors | | | | 3,860 | 49 |
+------------------------------------+----+----+----+---------+---------+
There is no material difference between the carrying value and fair value of
debtors at 31 March 2010.
17 Creditors: due within one year
+------------------------------------+----+----+----+---------+---------+
| | | | | 2009/10 | 2008/09 |
| | | | | | |
+------------------------------------+----+----+----+---------+---------+
| | | | | US$m | US$m |
+------------------------------------+----+----+----+---------+---------+
| Amounts falling due within one | | | | | |
| year | | | | | |
+------------------------------------+----+----+----+---------+---------+
| Trade and other creditors | | | | 25 | 5 |
+------------------------------------+----+----+----+---------+---------+
| Amounts owed to subsidiary | | | | 9,871 | 22,129 |
| undertakings | | | | | |
+------------------------------------+----+----+----+---------+---------+
| Taxation and social security | | | | 140 | 132 |
+------------------------------------+----+----+----+---------+---------+
| Accruals and deferred income | | | | 36 | 36 |
+------------------------------------+----+----+----+---------+---------+
| Total creditors | | | | 10,072 | 22,302 |
+------------------------------------+----+----+----+---------+---------+
There is no material difference between the carrying value and fair value of
creditors at 31 March 2010.
18 Financial liabilities at fair value through the profit and loss
The fair value of the Company's derivative financial liabilities at 31 March
2010 was US$30 million, representing Cable & Wireless Worldwide plc shares which
will be delivered to the Cable & Wireless Worldwide Group as part of the
demerger agreement (see note 15).
At 31 March 2010 the Company held forward exchange contracts to sell US$40
million (2008/09 - US$225 million (GBP155 million)) hedging US dollar exposures
and future Sterling obligations regarding the 2012 bond. At 31 March 2010, the
fair value of these contracts was an asset of US$1 million (see note 15)
(2008/09 - US$36 million liability). The Company did not apply hedge accounting
to these contracts and as such they were revalued to fair value through the
profit and loss.
19 Creditors: due after one year
Non-current creditors are comprised of the following loans:
+------------------------------------+----+----+----+---------+---------+
| | | | | 2009/10 | 2008/09 |
| | | | | | |
+------------------------------------+----+----+----+---------+---------+
| | | | | US$m | US$m |
+------------------------------------+----+----+----+---------+---------+
| Sterling secured loans repayable | | | | 43 | 42 |
| in 2012 | | | | | |
+------------------------------------+----+----+----+---------+---------+
| Sterling unsecured bonds repayable | | | | 290 | 283 |
| in 2012 | | | | | |
+------------------------------------+----+----+----+---------+---------+
| Total non-current loans | | | | 333 | 325 |
+------------------------------------+----+----+----+---------+---------+
a) Sterling secured loans repayable in 2012
A $43 million loan facility due in 2012 is secured by bonds held by the Company
with a carrying amount of US$79 million (see note 15). These bonds were issued
by Cable and Wireless International Finance BV (a subsidiary).
b) Sterling unsecured bonds repayable in 2012
The Sterling bond is a GBP200 million listed bond due in 2012 with a balance at
31 March 2010, net of costs, of US$290 million (2008/09- US$283 million).
Interest is payable at 8.75% per annum.
The fair value of the bond was not materially different from its carrying
amount. Market values obtained from third parties have been used to determine
the fair value of the bond.
20 Provisions for liabilities and charges
+------------+-------+---------+-----------+----------+---------+-------------+---------+
| | | At 31 | | Unused | Amounts | | At 31 |
| | | March | | amounts | | Exchange | March |
| | | | | | | | |
+------------+-------+---------+-----------+----------+---------+-------------+---------+
| | | 2009 | Additions | reversed | used | differences | 2010 |
| | | | | | | | |
+------------+-------+---------+-----------+----------+---------+-------------+---------+
| | Note | US$m | US$m | US$m | US$m | US$m | US$m |
+------------+-------+---------+-----------+----------+---------+-------------+---------+
| Redundancy | (i) | - | 3 | - | - | - | 3 |
+------------+-------+---------+-----------+----------+---------+-------------+---------+
| Property | (ii) | 10 | - | - | (5) | 1 | 6 |
| | | | | | | | |
+------------+-------+---------+-----------+----------+---------+-------------+---------+
| Other | (iii) | 20 | 35 | (3) | (5) | (1) | 46 |
+------------+-------+---------+-----------+----------+---------+-------------+---------+
| | | 30 | 38 | (3) | (10) | - | 55 |
+------------+-------+---------+-----------+----------+---------+-------------+---------+
i) Redundancy
In the current year, provision was made for the total employee related costs of
redundancies announced prior to the reporting date. The provision is expected to
be used within one year.
ii) Property
Provision has been made for the lower of the best estimate of the unavoidable
lease payments or cost of exit in respect of vacant properties. Unavoidable
lease payments represent the difference between the rentals due and any income
expected to be derived from the vacant properties being sub-let. The provision
is expected to be utilised over the lease contract life.
iii) Other
Other provisions include amounts relating to specific legal claims against the
Company and amounts relating to acquisitions and disposals of Group companies
and investments. The increase in other provisions of US$35 million includes
restructuring and demerger costs. The reversal of US$3 million reflects the
resolution of claims and other risks during the year.
21 Pension and similar obligations
The Company is a member of a Group-wide pension scheme providing benefits based
on final pensionable pay. Because the Company is unable to identify its share of
the scheme assets and liabilities on a consistent and reasonable basis, as
permitted by FRS 17 Retirement Benefits, the scheme has been accounted for in
these financial statements as if the scheme was a defined contribution scheme.
The latest triennial actuarial valuation was performed by Towers Watson and Co.
as at 31 March 2007. The ordinary contribution for the year was US$35 million
(2008/09 - US$18 million). In additional, a contribution of US$40 million was
made on 31 March 2010 to reflect an agreed de-risking of the investment strategy
in view of the change in the scheme's liability profile as a consequence of the
split of membership on demerger. A further contribution of US$16 million was
made in September 2008 as part of the UK pensioner buy-in transaction. In
2007/08, a contribution of US$33 million was made in order to fund the scheme
fully on an actuarial basis based on the March 2007 valuation. It has been
agreed that an employer contribution rate of 28.5% (2007/08 - 28.5%) of
pensionable pay will be made from 1 April 2007. Further details of the Scheme
are set out in note 33 of the consolidated financial statements of the Group.
The Company also operates unfunded pension plans to cover the costs of former
directors' and other senior employees' pension entitlements. Provision is made
in the Company's financial statements for the expected costs of meeting the
associated liabilities and is disclosed as the retirement benefit obligation on
the Company's balance sheet.
The major assumptions used in this valuation at the end of the year were:
+-------------------------------------+------+------+---------+---------+
| | | | 2009/10 | 2008/09 |
| | | | | |
+-------------------------------------+------+------+---------+---------+
| | | | % | % |
+-------------------------------------+------+------+---------+---------+
| Inflation assumption | | | 3.6 | 3.0 |
+-------------------------------------+------+------+---------+---------+
| Rate of increase in salaries | | | 4.1 | 3.5 |
+-------------------------------------+------+------+---------+---------+
| Rate of increase in pensions in payment and | 2.3 to | 2.2 to |
| deferred pensions* | 3.5 | 3.0 |
+---------------------------------------------------+---------+---------+
| Discount rate applied to scheme | | | 5.5 | 6.7 |
| liabilities | | | | |
+-------------------------------------+------+------+---------+---------+
* In excess of any Guaranteed Minimum Pension element.
The assumptions used by the actuary are best estimates chosen from a range
of possible actuarial assumptions which, due to the timescale covered, may not
necessarily be borne out in practice.
Scheme assets and liabilities
The fair value of the Scheme's assets, which are not intended to be realised in
the short-term and may be subject to significant change before they are
realised, and the present value of the Scheme's liabilities, which are derived
from cash flow projections over long periods and are thus inherently uncertain,
were:
+------------------------+----------+---------+---------+----------+---------+---------+
| | At 31 March 2010 | At 31 March 2009 |
+------------------------+------------------------------+------------------------------+
| | Unfunded | Funded | | Unfunded | Funded | |
| | | | | | | |
+------------------------+----------+---------+---------+----------+---------+---------+
| | schemes | schemes | Total | schemes | schemes | Total |
| | | | | | | |
+------------------------+----------+---------+---------+----------+---------+---------+
| | US$m | US$m | US$m | US$m | US$m | US$m |
| | | | | | | |
+------------------------+----------+---------+---------+----------+---------+---------+
| Equities | - | 163 | 163 | - | 752 | 752 |
+------------------------+----------+---------+---------+----------+---------+---------+
| Bonds and gilts | - | 37 | 37 | - | 74 | 74 |
+------------------------+----------+---------+---------+----------+---------+---------+
| Insurance policies | - | 1,000 | 1,000 | - | 1,196 | 1,196 |
+------------------------+----------+---------+---------+----------+---------+---------+
| Property | - | 22 | 22 | - | 110 | 110 |
+------------------------+----------+---------+---------+----------+---------+---------+
| Cash | - | 90 | 90 | - | 275 | 275 |
+------------------------+----------+---------+---------+----------+---------+---------+
| Total fair value of | - | 1,312 | 1,312 | - | 2,407 | 2,407 |
| plan assets | | | | | | |
+------------------------+----------+---------+---------+----------+---------+---------+
| Present value of | (34) | (1,477) | (1,511) | (28) | (2,453) | (2,481) |
| scheme liabilities | | | | | | |
+------------------------+----------+---------+---------+----------+---------+---------+
| Effect of asset | - | - | - | - | - | - |
| ceiling | | | | | | |
+------------------------+----------+---------+---------+----------+---------+---------+
| Net pension liability | (34) | (165) | (199) | (28) | (46) | (74) |
+------------------------+----------+---------+---------+----------+---------+---------+
Long-term rates of return
+-------------------------------------+------+----+----------+----------+
| | | | At 31 | At 31 |
| | | | March | March |
+-------------------------------------+------+----+----------+----------+
| | | | 2010 | 2009 |
+-------------------------------------+------+----+----------+----------+
| | | | % | % |
+-------------------------------------+------+----+----------+----------+
| Equities | | | 8.3 | 8.0 |
+-------------------------------------+------+----+----------+----------+
| Bonds and gilts | | | 5.4 | 5.6 |
+-------------------------------------+------+----+----------+----------+
| Insurance policies | | | 5.5 | 6.7 |
+-------------------------------------+------+----+----------+----------+
| Property | | | 6.8 | 6.5 |
+-------------------------------------+------+----+----------+----------+
| Cash | | | 3.9 | 3.3 |
+-------------------------------------+------+----+----------+----------+
Movements in fair value of plan assets
+-------------------------+----------+---------+---------+------------+----------+---------+
| | At 31 March 2010 | At 31 March 2009 |
+-------------------------+------------------------------+---------------------------------+
| | Unfunded | Funded | | Unfunded | Funded | |
| | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| | schemes | schemes | Total | schemes | schemes | Total |
| | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| | US$m | US$m | US$m | US$m | US$m | US$m |
| | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Fair value of assets as | - | 2,407 | 2,407 | - | 4,229 | 4,229 |
| at 1 April | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Expected return | - | 182 | 182 | - | 239 | 239 |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Actuarial | - | 521 | 521 | - | (946) | (946) |
| gains/(losses) | | | | | | |
| recognised in equity | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Contributions by | 1 | 75 | 76 | 1 | 35 | 36 |
| employer | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Contributions by | - | 3 | 3 | - | 4 | 4 |
| members | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Benefits paid | (1) | (127) | (128) | (1) | (130) | (131) |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Exchange differences on | - | 23 | 23 | - | (1,024) | (1,024) |
| translation | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Fair value of assets as | - | 3,084 | 3,084 | - | 2,407 | 2,407 |
| at 31 March (excluding | | | | | | |
| demerger) | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Amounts attributable to | - | (1,772) | (1,772) | - | - | - |
| the Cable & Wireless | | | | | | |
| Worldwide Group | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Fair value of assets as | - | 1,312 | 1,312 | - | 2,407 | 2,407 |
| at 31 March | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
Movements in present value of defined benefit obligation
+-------------------------+----------+---------+---------+------------+----------+---------+
| | At 31 March 2010 | At 31 March 2009 |
+-------------------------+------------------------------+---------------------------------+
| | Unfunded | Funded | | Unfunded | Funded | |
| | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| | schemes | schemes | Total | schemes | schemes | Total |
| | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| | US$m | US$m | US$m | US$m | US$m | US$m |
| | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Obligation at 1 April | (28) | (2,453) | (2,481) | (39) | (3,479) | (3,518) |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Current service cost | - | (12) | (12) | - | (14) | (14) |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Interest cost | (2) | (177) | (179) | (2) | (204) | (206) |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Actuarial | (8) | (941) | (949) | 2 | 171 | 173 |
| (losses)/gains | | | | | | |
| recognised in equity | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Contributions by | - | (3) | (3) | - | (4) | (4) |
| members | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Curtailments | - | 2 | 2 | - | 4 | 4 |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Benefits paid | 1 | 127 | 128 | 1 | 130 | 131 |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Exchange differences on | - | (3) | (3) | 10 | 943 | 953 |
| translation | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Obligation at 31 March | (37) | (3,460) | (3,497) | (28) | (2,453) | (2,481) |
| (excluding demerger) | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Amounts attributable to | 3 | 1,983 | 1,986 | - | - | - |
| the Cable & Wireless | | | | | | |
| Worldwide Group | | | | | | |
+-------------------------+----------+---------+---------+------------+----------+---------+
| Obligation at 31 March | (34) | (1,477) | (1,511) | (28) | (2,453) | (2,481) |
+-------------------------+----------+---------+---------+------------+----------+---------+
22 Called-up share capital
+--------------------------------------+----+----+----+----------+----------+
| | | | | 31 March | 31 March |
| | | | | | |
+--------------------------------------+----+----+----+----------+----------+
| | | | | 2010 | 2009 |
+--------------------------------------+----+----+----+----------+----------+
| | | | | US$m | US$m |
+--------------------------------------+----+----+----+----------+----------+
| | | | | | |
+--------------------------------------+----+----+----+----------+----------+
| Allotted, called-up and fully paid | | | | | |
+--------------------------------------+----+----+----+----------+----------+
| 2,624,571,985 ordinary shares of 25 | | | | | |
| pence each | | | | | |
+--------------------------------------+----+----+----+----------+----------+
| (2008/09 - 2,571,465,533 ordinary shares of 25 | | 976 | 955 |
| pence each) | | | |
+--------------------------------------+----+----+----+----------+----------+
Purchases and allotments of ordinary shares of 25 pence each were made during
the year in respect of the following:
+--------------------------------+---------+--------+----------+---------------+
| | | | Number | Gross |
| | | | of | |
+--------------------------------+---------+--------+----------+---------------+
| | | | shares | consideration |
| | | | | |
+--------------------------------+---------+--------+----------+---------------+
| | | | allotted | received |
| | | | | |
+--------------------------------+---------+--------+----------+---------------+
| | | | (000) | US$000 |
+--------------------------------+---------+--------+----------+---------------+
| Savings Related Share Option | | | 929 | 814 |
| Scheme | | | | |
+--------------------------------+---------+--------+----------+---------------+
| Global Savings Related Share | | | 118 | 187 |
| Option Scheme | | | | |
+--------------------------------+---------+--------+----------+---------------+
| Share Option Plan - Approved | | | 131 | 213 |
+--------------------------------+---------+--------+----------+---------------+
| Share Option Plan - Unapproved | | | 10,032 | 17,331 |
| | | | | |
+--------------------------------+---------+--------+----------+---------------+
| Scrip dividends1 | | | 41,896 | - |
+--------------------------------+---------+--------+----------+---------------+
| Total | | | 53,106 | 18,545 |
+--------------------------------+---------+--------+----------+---------------+
1 Shares with a cash equivalent value of US$87 million (GBP56 million)
(2008/09 - US$83 million (GBP23 million)) were issued during the year as payment
for dividends by scrip. This represents a non-cash transaction.
23 Reserves
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| | | | | | | | Profit | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| | Share | Share | Special | Revaluation | Other | Fair | and | |
| | | | | | | value | loss | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| | capital | premium | reserve | reserve | reserves | reserve | account | Total |
| | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| | US$m | US$m | US$m | US$m | US$m | US$m | US$m | US$m |
| | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| At 1 April 2009 | 955 | 289 | 2,180 | 126 | 255 | 7 | 2,926 | 6,738 |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Loss for the year | - | - | - | - | - | - | (344) | (344) |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Dividends | - | - | - | - | - | - | (355) | (355) |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Cash received in | - | - | - | - | - | - | 6 | 6 |
| respect of employee | | | | | | | | |
| share schemes | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Shares allotted | 5 | 14 | (19) | - | - | - | 19 | 19 |
| under share option | | | | | | | | |
| schemes | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Share allotted under | 16 | 71 | (87) | - | - | - | 87 | 87 |
| scrip dividend | | | | | | | | |
| schemes | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Own shares purchased | - | - | - | - | - | - | (2) | (2) |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Share-based payment | - | - | - | - | - | - | 9 | 9 |
| costs | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Equity component of | - | - | - | - | - | - | 36 | 36 |
| convertible bond | | | | | | | | |
| acquired | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Equity component of | - | - | - | - | - | - | (34) | (34) |
| convertible bond | | | | | | | | |
| disposed of | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Reclassification of | - | - | - | - | - | - | 59 | 59 |
| treasury shares | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Revaluation of | - | - | - | (129) | - | - | - | (129) |
| investments | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| Exchange differences | - | - | 65 | 3 | 7 | - | 127 | 202 |
| on translation | | | | | | | | |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
| At 31 March 2010 | 976 | 374 | 2,139 | - | 262 | 7 | 2,534 | 6,292 |
+----------------------+---------+---------+---------+--------------+----------+---------+----------+--------+
No treasury shares were cancelled during the periods presented. On 10 March
2010, the Company transferred 28,259,496 treasury shares to the ESOP Trust. In
addition, on 24 June 2009, the Company transferred 3 million treasury shares to
the ESOP Trust. 12 million treasury shares were transferred to the ESOP trust on
13 February 2009.
At 31 March 2010, there were no treasury shares held by the Company. For the
year end 31 March 2010, the aggregate nominal value of shares allotted in the
year was US$21 million (2008/09 - US$16 million). The nominal and market value
of treasury shares at 31 March 2009 were US$22 million and US$125 million
respectively. Included in treasury shares at 31 March 2009 were 28 million
shares acquired by the Cable & Wireless ESOP Trust (the Trust) for consideration
of US$86 million. The nominal value and market value of the Trust's shares held
at 31 March 2009 were US$10 million and US$58 million respectively. All shares
in the Trust were previously held to satisfy the Company's obligation in respect
of share options granted.
The special reserve relates to the cancellation of the share premium account
approved at the 2003 Annual General Meeting and confirmed by the Court in
February 2004. It will be reduced from time to time by the amount of any
increase in the paid-up share capital and share premium account after 20
February 2004 resulting from the issue of new shares for cash or other new
consideration. The special reserve will not be treated as realised profits until
any debt or claim outstanding as at 20 February 2004 has been repaid or
remedied.
Other reserves include a capital redemption reserve of US$156 million (2008/09 -
US$152 million), US$30 million (2008/09 - US$29 million) relating to unrealised
gains on disposal of investments and US$76 million (2008/09 - US$74 million)
relating to rights granted to equity instruments of the Company to the employees
of subsidiaries of the Company.
During the year the company undertook a valuation of its investment in
subsidiaries, and as a result has fully utilised its revaluation reserve. The
effect on fixed asset investments is described in note 14.
24 Deferred taxation
No deferred tax is recognised on the unremitted earnings of overseas
subsidiaries and joint ventures. Due to the availability of losses and other
relief, no tax is expected to be payable on them in the foreseeable future.
As at 31 March 2010, the Company had unrecognised deferred tax assets in the UK
relating to capital allowances of US$3 million (2008/09 - US$3 million) and
other timing differences of US$88 million (2008/09 - US$97 million).
25 Currency analysis
The carrying amounts of the Company's cash and cash equivalents, held to
maturity investments, available-for-sale investments and borrowings are
denominated in the following currencies:
+---------------------------------+-------------+------------+-------------+------------+
| | 31 March 2010 | 31 March 2009 |
+---------------------------------+--------------------------+--------------------------+
| | Financial | | Financial | |
| | | | | |
+---------------------------------+-------------+------------+-------------+------------+
| | investments | Borrowings | investments | Borrowings |
+---------------------------------+-------------+------------+-------------+------------+
| | US$m | US$m | US$m | US$m |
+---------------------------------+-------------+------------+-------------+------------+
| Sterling | 519 | 333 | 524 | 325 |
+---------------------------------+-------------+------------+-------------+------------+
| US dollar | 60 | - | 10 | - |
+---------------------------------+-------------+------------+-------------+------------+
| Euro | 1 | - | 2 | - |
+---------------------------------+-------------+------------+-------------+------------+
| | 580 | 333 | 536 | 325 |
+---------------------------------+-------------+------------+-------------+------------+
26 Related party transactions
The Company's immediate parent and ultimate parent company is Cable & Wireless
Communications Plc, incorporated in England.
The largest and smallest group in which the results of the Company are
consolidated is that headed by Cable & Wireless Communications Plc, incorporated
in England. The consolidated financial statements of these groups are available
to the public and may be obtained from the Secretary, Cable & Wireless
Communications Plc, 3rd Floor, 26 Red Lion Square, London, WC1R 4HQ. No other
group accounts include the results of the Company.
Transactions with companies related by virtue of common control or ownership
Material transactions with group undertakings that are not wholly owned by the
Group are as follows:
+---------------------------------+---------+--------+---------+---------+
| | | | 2009/10 | 2008/09 |
+---------------------------------+---------+--------+---------+---------+
| | | | US$000 | US$000 |
+---------------------------------+---------+--------+---------+---------+
| Management fees | | | 14,716 | 11,969 |
+---------------------------------+---------+--------+---------+---------+
| | | | | |
+---------------------------------+---------+--------+---------+---------+
| | | | At 31 | At 31 |
| | | | March | March |
+---------------------------------+---------+--------+---------+---------+
| | | | 2010 | 2009 |
+---------------------------------+---------+--------+---------+---------+
| | | | US$000 | US$000 |
+---------------------------------+---------+--------+---------+---------+
| Debtors | | | 727 | 1,106 |
+---------------------------------+---------+--------+---------+---------+
| Creditors | | | 146 | 438 |
+---------------------------------+---------+--------+---------+---------+
The companies related by virtue of common control or ownership with which the
Group transacted during the year are as follows:
Cable & Wireless St. Kitts and Nevis Limited, Cable & Wireless Dominica Limited,
Dhivehi Raajjeyge Gulhun Private Limited, Cable & Wireless Grenada Limited,
Cable & Wireless Jamaica Limited, Cable & Wireless Barbados Limited, Cable &
Wireless Panama SA and Monaco Telecom S.A.M
Transactions with joint ventures
All trade transactions with joint ventures arise in the normal course of
business and primarily relate to fees for use of Cable & Wireless' products and
services. There were no material trade transactions with joint ventures during
the year.
The Company received dividends of US$2 million from joint ventures (2008/09 -
US$5 million) for the year ended 31 March 2010.
The companies related by virtue of being joint ventures of the Group with which
the Group transacted during the year are as follows:
Fintel Internet Services Ltd, Telecom Vanuatu Limited and Solomon Telekom
Company Limited.
Transactions with other related parties
During 2008/09, two former directors of Cable & Wireless Limited purchased
unsecured bonds issued by Cable & Wireless Limited and Cable & Wireless
International Finance B.V. These bonds were purchased for US$4,169,670
(GBP2,371,691) on the open market (including US$209,179 (GBP118,980) of accrued
interest) and had a nominal value at 31 March 2010 of US$3,914,492
(GBP2,630,000) (31 March 2009 - US$3,812,974 (GBP2,630,000)). The interest
earned on those bonds during 2009/10 was US$364,082 of which US$143,247 remained
unpaid at 31 March 2010 (2008/09 - US$109,184 of which US$79,163 remained unpaid
at 31 March 2009).
During 2008/09, the spouse of a former director of Cable & Wireless Limited
purchased unsecured bonds issued by Cable & Wireless International Finance B.V.
These bonds were purchased for US$768,602 (GBP437,178) on the open market
(including US$67,124 (GBP38,180) of accrued interest) and had a nominal value at
31 March 2010 of US$714,432 (GBP480,000) (31 March 2009 - US$695,904
(GBP480,000)). The interest earned on those bonds during 2009/10 was US$65,843
of which US$1,013 remained unpaid at 31 March 2010 (2008/09 - US$7,778 of which
US$987 remained unpaid at 31 March 2009). During 2009/10, interest was earned by
the spouse of a former director of Cable & Wireless Limited on unsecured bonds
issued by Cable & Wireless Limited, purchased prior to their appointment as a
director. These bonds had a nominal value at 31 March 2010 of US$14,884
(GBP10,000). The interest earned on those bonds since the former director was
appointed was US$1,045 of which US$846 remained unpaid at 31 March 2010.
27 Group undertakings and joint ventures
The principal operating undertakings of the Group are as follows:
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| | | Issued | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| | | share | Ownership | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| | Local | capital | percentage | Class | Country | Area |
| | | | | of | of | of |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| | currency | (million) | % | shares | incorporation | operation |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Subsidiaries | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Cable & Wireless Jamaica | J$ | 16,817 | 82 | Ordinary | Jamaica | Jamaica |
| Ltd | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Cable & Wireless Panama, SA | Balboa | 316 | 49 | Ordinary | Panama | Panama |
| 1 | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Companhia de | Pataca | 150 | 51 | Ordinary | Macau | Macau |
| Telecomunicacoes de Macau, | | | | | | |
| SARL 2 | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| | | | | | | and |
| | | | | | | China |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Cable & Wireless (Barbados) | B$ | 72 | 81 | Ordinary | Barbados | Barbados |
| Ltd | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Cable and Wireless (West | GBP | 5 | 100 | Ordinary | England | Caribbean |
| Indies) Ltd | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Dhivehi Raajjeyge Gulhun | Rufiya | 190 | 52 | Ordinary | Maldives | Maldives |
| Private Ltd 2 | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Monaco Telecom SAM 3,4 | Euro | 2 | 49 | Ordinary | Monaco | Monaco |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Cable & Wireless | GBP | 1 | 100 | Ordinary | Netherlands | England |
| International Finance BV | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Joint ventures | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Cable & Wireless Trademark | GBP | - | 50 | Ordinary | England | N/A |
| Management Ltd | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Telecommunications Services | T$ | 283 | 49 | Ordinary | Trinidad | Trinidad |
| of Trinidad and | | | | | | |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| Tobago Ltd 3 | | | | | and | and |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
| | | | | | Tobago | Tobago |
+-----------------------------+----------+-----------+------------+----------+---------------+-----------+
1 The Group regards this company as a subsidiary because it controls the
majority of the Board of Directors through a shareholders' agreement.
2 This company has a financial year end of 31 December due to the
requirements of the shareholders' agreement.
3 This company is audited by a firm other than KPMG and its international
member firms.
4 The Group holds an economic interest of 55% in Monaco Telecom SAM via an
agreement.
Cable and Wireless Limited does not have any direct investment in any of the
above subsidiaries and joint ventures, with the exception of Cable & Wireless
International Finance B.V. and Cable & Wireless Trademark Management Ltd..
The list above only includes those companies whose results or financial
position, in the opinion of the directors, principally affect the figures shown
in the financial statements.
Full details of all subsidiary undertakings, joint ventures and trade
investments will be attached to the Company's annual return, to be filed with
the Registrar of Companies in England and Wales.
28 Dividends
The aggregate amount of dividends comprises:
+------------------------------------------+------+------+---------+---------+
| | | | 2009/10 | 2008/09 |
+------------------------------------------+------+------+---------+---------+
| | | | US$m | US$m |
+------------------------------------------+------+------+---------+---------+
| | | | | |
+------------------------------------------+------+------+---------+---------+
| Interim dividends paid in respect of the | | | 128 | 125 |
| current year | | | | |
+------------------------------------------+------+------+---------+---------+
| Final dividends paid in respect of prior | | | 227 | 216 |
| year | | | | |
+------------------------------------------+------+------+---------+---------+
| Aggregate amount of dividends paid in | | | 355 | 341 |
| the financial year | | | | |
+------------------------------------------+------+------+---------+---------+
Subsequent to the year end, the directors have declared the payment of a second
interim dividend in respect of 2009/10 of GBP90 million. This will be accounted
for in the year ending 31 March 2011.
29 Legal proceedings
In July 2007, the Company and four Group subsidiaries along with
Telecommunications Services of Trinidad and Tobago Limited (TSTT), in which the
Group holds a 49% interest, were served with proceedings in the English High
Court by a Caribbean competitor, Digicel. The claim alleged that the relevant
Group subsidiaries delayed Digicel's entry into six Caribbean markets (St.
Lucia, St. Vincent & the Grenadines, Grenada, Barbados, the Cayman Islands and
Turks & Caicos) in breach of applicable statutory and contractual obligations
concerning interconnection. A similar allegation was made against TSTT. In
addition, it was alleged that the Company and its four subsidiaries (but not
TSTT) conspired to cause delay to Digicel. Trial in the English High Court began
in May 2009 and closed in November 2009.
On 15 April 2010, the UK High Court dismissed all of the claims in the seven
markets and the overarching conspiracy claim with the exception of a minor
breach of a short letter agreement with Digicel in Turks & Caicos. The Court
ruled that this breach caused no delay to Digicel and thus no loss. The Court
has ordered Digicel to pay the Group's costs incurred in defending the claim on
an enhanced indemnity basis; and to pay 87.5% of TSTT's costs assessed on a
standard basis. Since then Digicel have sought leave to appeal the judgment
insofar as it relates to the claim against TSTT. This application for leave is
currently before the Court of Appeal and no decision has yet been given.
30 Commitments
The Company had no capital commitments at the end of 2009/10 or 2008/09.
31 Guarantees and contingent liabilities
Guarantees given by the Company at the end of the financial year for which no
provision has been made in the financial statements are as follows:
+-------------------------------+------+------+------+------+-------+-------+
| | | | | | 31 | 31 |
| | | | | | March | March |
+-------------------------------+------+------+------+------+-------+-------+
| | | | | | 2010 | 2009 |
+-------------------------------+------+------+------+------+-------+-------+
| | | | | | US$m | US$m |
+-------------------------------+------+------+------+------+-------+-------+
| Trading guarantees | | | | | 41 | 578 |
+-------------------------------+------+------+------+------+-------+-------+
| Other guarantees | | | | | 563 | 581 |
+-------------------------------+------+------+------+------+-------+-------+
| Total guarantees | | | | | 604 | 1,159 |
+-------------------------------+------+------+------+------+-------+-------+
Trading guarantees principally comprise performance bonds for contracts
concluded in the normal course of business, guaranteeing that the Group
companies will meet their obligations to complete projects in accordance with
the contractual terms and conditions. The nature of contracts includes projects,
service level agreements, installation of equipment, surveys, purchase of
equipment and transportation of materials. The guarantees contain a clause that
they will be terminated on final acceptance of work to be done under the
contract.
Other guarantees include guarantees for financial obligations principally in
respect of borrowings, leases and letters of credit. Where the Company enters
into financial guarantee contracts to guarantee the indebtedness of other
companies within the Group, the Company considers these to be insurance
arrangements and accounts for them as such. In this respect the Company treats
the guarantee contract as a contingent liability until such time as it becomes
probable that the Company will be required to make payment under the guarantee.
Total guarantees at 31 March 2010 include US$563 million of other guarantees
(2008/09 - US$581 million of trading and other guarantees) relating to the
demerged Cable & Wireless Worldwide Group. The Company has provided guarantees
to third parties in respect of trading contracts between third parties and the
Cable & Wireless Worldwide Group. The Company has agreed a fee schedule with
Cable & Wireless Communications Group for the benefit of these guarantees. To
date, the Company has not been required to make any payments in respect of its
obligations under these trading guarantees.
Under the Separation Agreement, Cable & Wireless Communications and Cable &
Wireless Worldwide agree to provide each other with certain customary
indemnities on a reciprocal basis in respect of liabilities which the Cable &
Wireless Communications Group may incur but which relate exclusively to the
Cable & Wireless Worldwide Group and vice versa and in respect of an agreed
proportion of liabilities which do not relate exclusively to one Group or the
other.
Whilst Pender, the Group's former insurance operation, ceased to underwrite new
business from April 2003, it has in the past written policies in favour of the
Group and third parties. Potentially significant insurance claims have been made
against Pender under certain of these third party policies, which have also
given rise to uncertainties and potential disputes with reinsurers. Significant
progress has been made in resolving these claims in the year. Detail of these
insurance claims and potential claims are not disclosed as such disclosure may
be prejudicial to the outcome of such claims.
In addition the Company has, as is considered standard practice in such
agreements, given guarantees and indemnities in relation to a number of
disposals of subsidiary undertakings in prior years. Generally, liability has
been capped at no more than the value of the sales proceeds, although some
uncapped indemnities have been given. The Company also gives warranties and
indemnities in relation to certain agreements including facility sharing
agreements and general commercial agreements. Some of these agreements do not
contain liability caps.
Under the terms of the Trust Deed governing the main UK Pension Fund, the
Company guarantees the performance of the obligations of other Group companies
which are participating employers in the Fund.
Whilst the Company ceased participation in the Merchant Navy Officers Pension
Fund, it may be liable for future contributions to fund a portion of any future
funding deficits. Currently, the amount of these potential liabilities cannot be
quantified.
32 Post balance sheet events
Subsequent to the year end, the directors have declared the payment of a second
interim dividend in respect of 2009/10 of GBP90 million. This will be accounted
for in the year ending 31 March 2011.
MANAGEMENT REPORT
Group reorganisation and demerger of the Cable & Wireless Worldwide business
At a general meeting on 25 February 2010, the shareholders of the Company
approved the demerger of the Cable & Wireless Worldwide Group from the Group
("the demerger").
On 19 March 2010, the Cable & Wireless Group (now the Cable & Wireless
Communications Group) ("the Group") effected a group reorganisation whereby
Cable & Wireless Communications Plc ("CWC Plc") was inserted as the new holding
company for the Group via a Scheme of Arrangement ("the Group reorganisation").
CWC Plc therefore replaced Cable and Wireless plc (now Cable & Wireless Limited)
("the Company") as the parent company of the Group as at this date.
On 19 March 2010, the entire ordinary share capital of Cable and Wireless plc
was cancelled and shareholders were given one ordinary share and one B share of
Cable & Wireless Communications Plc for every share of Cable and Wireless plc
held on that date. Upon the cancellation of listing of the ordinary shares of
the Company on the Official List and removal from trading on the London Stock
Exchange, the Company was re-registered as a private company limited by shares
in accordance with the provisions of section 97 of the Companies Act 2006. At
this time, the Cable & Wireless Group was renamed the Cable & Wireless
Communications Group.
As part of the demerger, the Company transferred the entire share capital of a
subsidiary of the Company, Cable & Wireless UK Holdings Limited (the parent
entity of the Worldwide group of companies) and the Cable & Wireless Worldwide
Brand, to CWC Plc, the ultimate parent company.
Demerger of the Cable & Wireless Worldwide pension scheme
In addition, as part of the Group reorganisation and demerger, the Group-wide UK
pension scheme was restructured as follows:
A portion of the scheme assets and pension obligations of the Cable & Wireless
Superannuation Fund (CWSF), a plan operated by the former Cable & Wireless
Group, was to be transferred to the Cable & Wireless Worldwide Retirement Plan
(CWWRP), a new plan operated by the Cable & Wireless Worldwide Group. The
pension obligations transferred to Cable & Wireless Worldwide were determined
based on members' last known employer.
Cable & Wireless Limited continues to operate the CWSF on behalf of the Group
post-demerger.
RISK OVERVIEW
Principal risks and uncertainties
As a holding company, the results of the Company are subject to a number of
risks. The principal risks and uncertainties affecting the Company are as
follows:
Pensions
The Group-wide defined benefit pension scheme, based in the UK, is well managed
and measures have been taken to reduce financial risk exposures. However the
value of the scheme's assets and liabilities are affected by market movements
and the Company may also have to make additional contributions to the scheme if
the scheme's assumptions change. The Company manages this risk by maintaining
regular dialogue with the scheme Trustees who manage the scheme's assets with
appropriate external advice.
Foreign exchange
Given the Group's geographical spread, a portion of the Company's income from
group undertakings originates outside US dollar economies. This income and
associated investments are exposed to exchange rate fluctuations as a result of
the geographical allocation of the Group's income and expenses. The Company is
also exposed to foreign exchange fluctuations on its loans denominated in
foreign currencies. This factor creates a potential risk of adverse financial
impact to the Company. Short-term exchange rate fluctuations are often offset
naturally. We also manage this risk by using foreign exchange hedging contracts
(see note 18 to the financial statements) against forecast US dollar
repatriation and Sterling obligations regarding the 2012 bond.
Interest costs
The Company holds a number of loans with third parties and group undertakings on
which it is exposed to interest rate fluctuations. This risk is actively
managed by the Group Treasury function. In addition, the major part of the
Company's third party debt comprises of fixed coupon bonds (see note 19).
Investments
The Company is exposed to the risk of deterioration in business performance in
its group undertakings which may have an adverse effect on the carrying value of
the Company's investments.
Estimation techniques
When preparing the financial statements we make a number of estimates and
assumptions relating to the reporting of our results and financial position. In
particular, some accounting policies require subjective and complex judgements
about the effect of matters that are often uncertain. We have outlined the
Company's critical accounting policies in note 1 to the financial statements.
Litigation
As with most large organisations, there is a risk of litigation against business
units within the Group. As the former ultimate parent company of the Group, the
Company may be exposed to risks associated with litigation brought against it in
that capacity. When facing litigation, the Company defends its position
vigorously using appropriate legal advice and support.
DIRECTORS' RESPONSIBILITY STATEMENT
The following statement is extracted from page 5 of the Cable & Wireless Limited
2009/10 Annual Report and Accounts and is repeated here for the purposes of
Disclosure and Transparency Rule 6.3.5 to comply with Disclosure and
Transparency Rule 6.3. This statement relates solely to the Cable & Wireless
Limited 2009/10 Annual Report and Accounts and is not connected to the extracted
information set out in this announcement or the annual results announcement.
Directors' statement pursuant to the Disclosure and Transparency Rules
Each of the current Directors, whose names are listed on page 3 of the Cable &
Wireless Limited 2009/10 Annual Report and Accounts, confirm that, to the best
of each person's knowledge and belief:
· The financial statements, prepared in accordance with UK GAAP, give a
true and fair view of the assets, liabilities, financial position and profit or
loss of the Company; and
· The management report contained within the directors' report includes a
fair review of the development and performance and the position of the Company,
together with a description of the principal risks and uncertainties that it
faces.
By order of the Board
Clare Underwood
Company Secretary
5 August 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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