Annual Financial Report

Annual financialreport Announcement

13 June 2014

CABLE & WIRELESS COMMUNICATIONS PLC

Annual financial report AnnouncementFOR THE year ENDED 31 march 2014

Cable & Wireless Communications Plc (the Company) has submitted copies of the following documents to the UK Listing Authority:

- Letter from the Chairman and Notice of Annual General Meeting (AGM);

- Proxy Form;

- Letter of Availability; and

- Annual Report and Accounts for the year ended 31 March 2014.

These documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM

The Annual Report and Accounts together with the letter from the Chairman and Notice of AGM or the Letter of Availability, together with a Proxy Form are being posted to shareholders today, 13 June 2014. Copies of these documents (with the exception of the Proxy Form and Letter of Availability) and links to the relevant services will shortly be available on the Company's website (www.cwc.com) and from the Company Secretary, 3rd Floor, 26 Red Lion Square, London WC1R 4HQ.

This announcement should be read in conjunction with the Company's announcement issued on 21 May 2014. Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full Cable & Wireless Communications Plc 2013/14 Annual Report and Accounts.

The financial information included within this annual financial report announcement has been extracted from the audited consolidated financial statements of Cable & Wireless Communications Plc for the year ended 31 March 2014 (which will shortly be delivered to the Registrar of Companies) but does not constitute the Company's statutory financial statements for 2013/14 or 2012/13 under Section 434 of the Companies Act 2006.

Those accounts are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. They have been reported on by the Group'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.

Whilst the financial information included in this announcement has been prepared in accordance with IFRS adopted by the EU, this announcement does not itself contain sufficient information to comply with IFRS.

EXTRACTS FROM THE CABLE & WIRELESS COMMUNICATIONS PLC 2013/14 ANNUAL REPORT AND ACCOUNTS

The information below has been extracted from the Cable & Wireless Communications 2013/14 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.

Consolidated income statement

*For information on IAS 19 Employee benefits restatement see note 14

1 Further detail on exceptional items is set out in note 5.

2 Includes discontinued operations (note 8)

Consolidated statement of comprehensive income for the year ended 31 March 2014

*For information on IAS 19 Employee benefits restatement see note 14

Consolidated statement of financial position

Consolidated statement of changes in equity

*For information on IAS 19 Employee benefits restatement see note 14

Consolidated statement of cash flows

for the year ended 31 March 2014

Consolidated statement of cash flows

for the year ended 31 March 2014

The reconciliation of loss for the year to net cash generated was as follows:

*For information on IAS 19 Employee benefits restatement see note 14

1 General information

Cable & Wireless Communications Plc (the Company or the Parent Company) and its subsidiaries (together Cable & Wireless Communications Group or the Group) is an international telecommunications company incorporated and domiciled in the United Kingdom. Following the agreement to dispose of interests in Macau and the sale of its Islands businesses, the Group operates through three business units being the Caribbean, Panama and Monaco.

2 Basis of preparation

The consolidated financial statements of the Cable & Wireless Communications Group have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union (EU) as they apply to the financial statements of the Group for the year ended 31 March 2014.

These consolidated financial statements are presented in US dollars (US$) and rounded to the nearest million. They have been prepared on the historical cost basis except for certain financial instruments held at fair value. Non-current assets and disposal groups are stated at the lower of their carrying amount and fair value less costs to sell.

The Directors have prepared the accounts on a going concern basis.

The preparation of financial statements in accordance with IFRS as adopted by the EU requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are considered to be reasonable under the circumstances. They form the basis of judgements about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on a continuing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future periods affected.

The accounting policies have been applied consistently by Group entities.

3 Application of recently issued International Financial Reporting Standards (IFRS)

The Group considered the implications of the following amendments to IFRS during the year ended 31 March 2014:

· Amendments to IAS 1 Financial statement presentation. The presentation of 'other comprehensive income' now groups items on the basis of whether they will be potentially reclassified to profit or loss;

· Revision of IAS 19 Employee benefits. The interest cost on plan liabilities and expected return on plan assets have been replaced with a net interest amount on the net defined benefit liability using the discount rate;

· Amendments to IFRS 7 Financial instruments: disclosures - Offsetting financial assets and financial liabilities;

· IFRS 13 Fair value measurement - Establishes a single framework for measuring fair value and related disclosures; and

· Amendments to IAS 36 Impairment of assets - Removes certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the adoption of IFRS 13. The amendment is not mandatory for accounting periods starting before 1 January 2014, but has been early adopted by the Group for 2013/14.

The above were first effective for the Group in the year beginning 1 April 2013 and have been adopted by the Group for 2013/14. The adoption of IAS 19 Employee benefits has reduced profit before tax by US$10 million in 2013/14 and US$8 million in 2012/13. There was no impact on the balance sheet. See note 14 for further information. There was no other material impact on the Group upon adoption of any other standards or amendments, other than increased disclosure.

4 Segment information

Cable & Wireless Communications Group is an international telecommunications service provider. It operates integrated telecommunications companies offering mobile, broadband, TV, fixed line and enterprise services to residential and business customers. It had three principal operations which have been identified as the Group's reportable segments, being the Caribbean, Panama and Monaco. Our business-to-business and business-to-government operations and the results of our sub-sea cable partnership are included in the results of the region to which they relate.

The Group also has a corporate centre that does not meet the definition of an operating segment as it does not earn revenue from its activities. This function primarily acts as an operational support provider for the reportable segments.

The operating segment results from continuing operations for the two years ended 31 March 2014 are presented below and the prior year results have been re-presented for the change in IAS 19 Employee Benefits (note 14). The non-operating corporate centre is also disclosed within 'other and eliminations' in order to reconcile the reportable segment results to the Group results.

The Board (the chief operating decision maker of the Group) considers the performance of each of these operations in assessing the performance of the Group and making decisions about the allocation of resources. Accordingly, these are the operating segments disclosed. There are no other operating segments identified by the Board. The operating segments are reported in a manner consistent with the internal reporting provided to the Board.

1 Other and eliminations' includes corporate centre expenses, eliminations for inter-segment transactions and the results of our joint ventures and associates (with the exception of our joint venture in Afghanistan, which is managed and reported within Monaco).

2 EBITDA is used in management reporting as it is considered by management to be a key financial metric. It is defined as earnings before interest, tax, depreciation and amortisation, net other operating and non-operating income/expense and exceptional items (see note 17).

3 Income taxes paid represents cash tax paid during the year by consolidated subsidiaries.

There are no differences in the measurement of the reportable segments' results and the Group's results.

There is no significant trading between the segments. Transactions between the segments are on commercial terms similar to those offered to external customers.

There are no differences in the measurement of the reportable segments' assets and liabilities and the Group's assets and liabilities. Furthermore, there are no asymmetrical allocations to reportable segments.

5 Exceptional items

Exceptional operating losses totalled US$174 million (2012/13 - US$136 million). These comprised restructuring costs in the Caribbean of US$132 million, Panama restructuring costs of US$3 million and restructuring and legal costs at the corporate centre of US$39 million. In the prior year, exceptional costs of US$136 million related to restructuring and asset impairment charges in the Caribbean. Further information on impairment charges is in note 9.

Restructuring costs in the Caribbean relate to our cost efficiency programme and include redundancies, property rationalisation and costs relating to outsourcing. They are reported net of an exceptional pension curtailment gain of US$8 million resulting from redundancies.

Restructuring costs at the corporate centre primarily relate to the establishment of our Miami operational hub and consequential redundancies, together with lease exit property costs and certain legal costs.

6 Earnings per share

7 Dividends declared and paid

During the year ended 31 March 2014, the Group declared and paid a final dividend of US2.67 cents per share in respect of the year ended 31 March 2013 (2012/13 - US5.33 cents per share in respect of the year ended 31 March 2012). The Group declared and paid an interim dividend of US1.33 cents per share in respect of the year ended 31 March 2014 (2012/13 - US1.33 cents per share in respect of the year ended 31 March 2013).

In respect of the year ended 31 March 2014, the Directors have proposed a final dividend of US2.67 cents per share (US$67 million) (2012/13 - US2.67 cents per share), for approval by shareholders at the AGM to be held on 25 July 2014. These financial statements do not reflect the proposed dividend, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the year ended 31 March 2015.

The Cable & Wireless Communications Share Ownership Trust (the Trust) waived its right to dividends on the shares held in the Trust, with the exception of those shares held for Directors under the deferred annual bonus plan.

8 Discontinued operations

i) Monaco & Islands

At a General Meeting on 9 January 2013, shareholders of the Group approved the sale of the Monaco & Islands segment to Batelco

International Group Holding Limited (Batelco). The significant aspects of this transaction are described below:

· We entered into an agreement to sell the Islands sub-group, (including the Group's interests in operations in Maldives, the Channel Islands and Isle of Man, South Atlantic, Diego Garcia and the Seychelles), for US$580 million. The sale of the Islands sub-group, with the exception of the Seychelles, was completed on 3 April 2013. The Group received cash proceeds of US$501 million representing consideration of US$470 million plus US$31 million of proportionate net cash in the businesses attributable to Cable & Wireless Communications;

· Regulatory approval for the sale of the Seychelles was not obtained and hence the proposed disposal to Batelco could not be completed. The Group's strategy of focusing on our operations in the Caribbean and Latin America remains unchanged. We therefore continue to be actively engaged in the disposal of the Seychelles;

· We also agreed to sell a 25% interest in Compagnie Monegasque de Communication SAM (CMC), the holding company of the Group's interests in Monaco Telecom, for US$100 million. The sale was completed on 3 April 2013;

· As part of the transaction we had an option to sell the remaining 75% of CMC shares to Batelco for US$345 million subject to regulatory approval from the Principality of Monaco;

· Also as part of the transaction, we granted to Batelco a put option over the 25% of CMC shares transferred to Batelco (the CMC put option) under which Batelco could require, between 18 and 19 months from 3 April 2013, the Group to repurchase the 25% CMC shareholding for US$100 million in the event that the regulatory approval from the Principality of Monaco was not granted within 12 months of 3 April 2013; and

· The CMC put option was recognised initially as a financial liability. We did not receive regulatory approval for the disposal of the remaining 75% of CMC from the Principality of Monaco. On 30 December 2013 we therefore agreed with Batelco to unwind the CMC put option and repurchase the 25% interest in CMC.

Monaco did not meet the definition of a disposal group held for sale nor the criteria to be classified as discontinued operations as there was insufficient certainty regarding the completion of a sale process as at 31 March 2014. The results of Monaco Telecom are disclosed separately in their own operating segment.

The Islands sub-group has been classified as a discontinued operation. The results of the Islands sub-group were previously recorded in the Monaco & Islands operating segment. The Seychelles continues to be disclosed as a discontinued operation and as a disposal group held for sale in the statement of financial position. We continue to be actively engaged in the disposal.

ii) Macau

At a General Meeting on 28 February 2013, the shareholders of the Group approved the sale of the Macau operating segment for US$750 million to CITIC Telecom International Holdings Limited. This sale took place on 20 June 2013. The Group received cash proceeds of US$807 million comprising consideration of US$750 million plus US$57 million of proportionate net cash in the business attributable to Cable & Wireless Communications.

The Macau operating segment has been classified as discontinued operations. The results of Macau were previously recorded in the Macau operating segment.

iii) Results

The results of all discontinued operations are shown below:

The net assets held at 31 March 2014 were US$47 million and relate wholly to the Seychelles. This included non-current assets of US$50 million, current assets of US$20 million (of which US$3 million was cash and cash equivalents), current liabilities of US$22 million and non-current liabilities of US$1 million.

Assets held for sale in the prior year included cash and cash equivalents of US$145 million in relation to the Islands and Macau.

9 Impairment review

Goodwill

A review of the carrying value of goodwill has been performed as at 31 March 2014 and 31 March 2013. In performing this review, the recoverable amount has been determined by reference to the higher of the fair value less costs to sell and the value in use of related businesses. The key assumptions used by the Group in the calculation of value in use for its goodwill balances are the discount rate, revenue growth, operating cost margin and the level of capital expenditure required to maintain the network at its current level.

The Group's significant goodwill balances which are not impaired are discussed below:

1 Monaco Telecom group:

Three relevant cash generating units (CGUs) were identified for the purpose of assessing the carrying value of Monaco Telecom (domestic including the cable television business; international business and other services).

2 The Bahamas Telecommunications Company - BTC:

One relevant CGU has been identified for the purpose of assessing the carrying value of the BTC business.

The value in use was determined for each CGU by discounting management forecasts of future cash flows (based on the approved five year business plan extrapolated at long-term growth rates) at pre-tax discount rates dependent on the risk-adjusted cost of capital of the different parts of the business. Management forecasts take account of the historical trading experience of the relevant business.

Sensitivity

The value in use is sensitive to a number of input assumptions, in particular relating to net cash flow and the discount rates. While the Group does not consider these scenarios to be reasonably possible, the value in use of the various CGUs in aggregate would not support the carrying value of the goodwill if:

· Monaco Telecom group - net cash flows decreased by more than US$20 million per year or the discount rate increased by more than 9% above the pre-tax discount rate.

· The Bahamas Telecommunications Company - net cash flows decreased by more than US$8 million per year or the discount rate increased by more than 2% above the pre-tax discount rate.

Property, plant and equipment and other intangibles

There were no events or changes in circumstances during the year to indicate that the carrying value of property, plant and equipment and other intangible assets that had been impaired.

10 Intangible assets

1 The charge for the year includes US$nil (2012/13 - US$9 million) in relation to discontinued operations. Refer to note 8 for more information.

Goodwill balances are allocated to the following cash-generating units:

1 Reporting segment: Caribbean.

2 Reporting segment: Monaco.

3 Reporting segment: Discontinued operations. This company is based in the Maldives and was sold during the year (note 8).

11 Property, plant and equipment

1 The charge for the year includes US$nil (2012/13 - US$75 million) in relation to discontinued operations. Refer to note 8 for more information.

12 Reconciliation of net funds

Funds are defined as cash at bank and in hand and short-term deposits. Debt is defined as bonds, loans and overdrafts.

Analysis of changes in net funds:

13 Provisions

The net expense recognised through profit or loss from movements in provisions relating to discontinued operations at 31 March 2014 was US$nil (31 March 2013 - US$nil).

Property

Provision has been made for dilapidation costs and 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 sublet. The provision is expected to be used over the shorter of the period to exit and the lease contract life.

Redundancy

Provision has been made for the total employee related costs of redundancies announced prior to the reporting date. Amounts provided for and spent during the periods presented primarily relate to regional transformation activities in the Caribbean together with costs at the corporate centre (note 5). The provision is expected to be used within one year.

Network and asset retirement obligations

Provision has been made for the best estimate of the unavoidable costs associated with redundant leased network capacity. The provision is expected to be used over the shorter of the period to exit and the lease contract life.

Provision has also been made for the best estimate of the asset retirement obligation associated with office sites, technical sites, mobile cell sites, domestic and subsea cabling. This provision is expected to be used at the end of the life of the related asset on which the obligation arises.

Legal and other

Legal and other provisions include amounts relating to specific legal claims against the Group together with amounts in respect of certain employee benefits and sales taxes. The timing of the utilisation of the provision is uncertain and is largely outside the Group's control, for example, where matters are contingent upon litigation.

14 Retirement benefits obligations

IAS 19 Employee Benefits valuation - Cable & Wireless Superannuation Fund (CWSF) and other schemes

The IAS 19 valuations of the major defined benefit pension schemes and medical plans operated by the Group have been updated to 31 March 2014 by qualified independent actuaries. Lane, Clark & Peacock LLP prepared the valuation for the CWSF and the UK unfunded arrangements. Towers Watson Limited reviewed the IAS 19 valuations prepared for all remaining schemes.

The assets and liabilities of the defined benefit pension schemes operated by the Group were as follows:

Restatement for IAS 19 Employee benefits (2011)

The Group adopted IAS 19 Employee benefits (2011) on 1 April 2013 and as required by the standard applied it retrospectively by restating comparative numbers for 2012/13.

The revisions made to IAS 19 Employee benefits (2011) requires net interest expense/income to be calculated as the product of the net defined liability/asset, including any minimum funding liability or asset ceiling, and the discount rate as determined at the beginning of the year. The effect of this is to remove the previous concept of recognising an expected return on plan assets. In addition, actual administration expenses incurred by the plans are recognised through the income statement.

As a result, the Group recorded a net increase in operating expense and a reduction in profit for the year (and EBITDA) for the year ended 31 March 2014 of US$10 million (2012/13 - US$8 million). Corresponding movements in actuarial gains/losses have been recognised in other comprehensive income. There is no impact on total comprehensive income for the year.

This has had a negative impact on continuing EPS of US0.4 cents (2012/13 - US0.4 cents). There is no impact on the balance sheet in either year.

15 Commitments and guarantees

The aggregate future minimum lease payments under operating leases are:

Guarantees at the end of the year for which no provision has been made in the financial statements are as follows:

16 Related party transactions

Transactions with key management personnel

A Director's spouse held bonds issued by Cable and Wireless International Finance BV. The Director resigned during the year. These bonds had a nominal value at 31 March 2013 of US$731,472 (£480,000). The interest earned on those bonds during the year until resignation was US$49,408 which has been paid in full (2012/13 - US$65,404 of which US$1,037 remained unpaid at 31 March 2013).

A Director's spouse held bonds issued by Cable & Wireless Limited. The Director resigned during the year ended 31 March 2013. The interest earned on those bonds during the year starting 1 April 2012 until resignation was US$344 which has been paid in full.

Two children of a Director held bonds issued by Cable and Wireless International Finance BV. The Director resigned during the year. These bonds had a nominal value at 31 March 2013 of US$761,950 (£500,000). The interest earned on those bonds during the year until resignation was US$51,466 which has been paid in full (2012/13 - US$68,128 of which US$1,080 remained unpaid at 31 March 2013).

During the year ended 31 March 2013, a Director purchased a car from the Company for market value.

17 Reconciliation of non-GAAP measures

Reconciliation of operating profit to EBITDA

The Group uses EBITDA as a key performance measure as it reflects the underlying operational performance of the businesses. EBITDA is not a measure defined under IFRS. It is calculated as earnings before interest, tax, depreciation and amortisation, net other operating and non-operating income and expense and exceptional items.

Reconciliation of basic earnings per share (EPS) to adjusted EPS

1 Excluding amounts attributable to non-controlling interests

Adjusted EPS is a non-GAAP measure and is used by the Group as it provides a measure of underlying earnings attributable to each share. We exclude one off non-recurring items and also certain non-cash charges such as amortisation of acquired intangibles.

Reconciliation of Return on Invested Capital (ROIC)

1 Average adjusted invested capital for continuing operations is after deducting deferred tax assets; retirement benefit assets; the goodwill balance attributable to the Monaco Telecom put option (less the current portion of the related put option financial liability); interest bearing current assets; total assets and current liabilities for discontinued operations; and adding back interest bearing current liabilities.

The Group uses ROIC to measure the effectiveness of our capital investments.

ROIC is not a measure defined under IFRS. We define ROIC as total operating profit before exceptional items divided by average adjusted invested capital.

ROIC is calculated on the basis of continuing operations.

18 Events after the balance sheet date

Cable & Wireless Superannuation Fund (CWSF) - actuarial funding review

In May 2014 the Company reached agreement with the trustee on the actuarial valuation as at 31 March 2013. This showed a funding deficit of £109 million. Cash contributions to the CWSF for 2014-2016 will remain as agreed following the March 2010 triennial review. Payments in 2017, 2018 and 2019 will be based on the outcome of the actuarial funding valuation as at 31 March 2016 and will be in the range of £0-£23 million each year necessary to fund the scheme by April 2019. No adjustment has been made to these accounts as a result of this post balance sheet event.

Compagnie Monegasque de Communication SAM

On 20 May 2014, the Group completed the disposal of Compagnie Monegasque de Communication SAM (CMC), which was the holding company for the Group's 55% stake in Monaco Telecom SAM. Monaco Telecom owns 36.75% of Telecom Development Company Afghanistan Limited. On completion the Group received consideration of €321,788,000 (US$445 million) on a cash and debt free basis. In addition, the Group received €6.2 million representing the estimated proportionate share of net cash in CMC attributable to the Group and initial working capital adjustments. The Principality's put option was cancelled as a result of the sale. The results of the CMC Group for the year are as disclosed in the Monaco operating segment (note 4). No adjustments have been made to these accounts as a result of the disposal.

Principal risks and uncertainties

We recognise that there are risks in operating our businesses, influenced by both internal and external factors, some of which are outside our control. The Group has a risk management framework which our business units and corporate functions utilise to ensure risks are understood and mitigated wherever possible.

We set out a description of the principal risks and uncertainties that could have a material adverse effect on the Group and how they are managed. These risks have the potential to impact our business, its reputation, cash flow, profits and/or assets. However, there may be other risks that are currently unknown or regarded as immaterial which could turn out to be material. We regularly update the Group risk register on a rolling 12 month basis. Actions to manage and monitor risks are considered on a quarterly basis by the Group's Executive Committee.

Investors should consider these risks along with other information provided in this Annual report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The following statement is extracted from page 81 of the Cable & Wireless Communications 2013/14 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 Communications 2013/14 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 Directors, whose names and functions are listed on pages 36 to 37 of the Cable & Wireless Communications 2013/14 Annual report and accounts, confirm that, to the best of each person's knowledge and belief:

- The Group financial statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

- The Strategic report and Directors' report contained on pages 2 to 33 and pages 38 to 46, respectively, include a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.

A list of current Directors is also maintained on the Cable & Wireless Communications Plc website: www.cwc.com

By order of the Board

Belinda Bradberry

Company Secretary

20 May 2014