Annual Financial Report

Annual financialreport Announcement

20 June 2013

CABLE & WIRELESS COMMUNICATIONS PLC

Annual financial report AnnouncementFOR THE year ENDED 31 march 2013

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;

- Annual Report and Accounts for the year ended 31 March 2013; and

- Annual Review and summary financial statement for the year ended 31 March 2013.

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 or Annual Review 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, 20 June 2013. 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 22 May 2013. 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 2012/13 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 2013 (which will shortly be delivered to the Registrar of Companies) but does not constitute the Company's statutory financial statements for 2012/13 or 2011/12 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 2012/13 ANNUAL REPORT AND ACCOUNTS

The information below has been extracted from the Cable & Wireless Communications 2012/13 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

\* The results of Islands sub-group and Macau has been presented in discontinued operations (note 8)

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

Consolidated statement of comprehensive income

for the year ended 31 March 2013

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

for the year ended 31 March 2013

Consolidated statement of cash flows

for the year ended 31 March 2013

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

\* The results of Islands sub-group and Macau has been presented in discontinued operations (note 8)

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 2013.

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 2013:

- Amendments to IFRS 7 Financial Instruments: Disclosures

- Amendment to IFRS 1 First Time Adoption

- Amendment to IAS12 Income Taxes

The above were first effective for the Group in the year beginning 1 April 2012 and have been adopted by the Group for 2012/13. They did not have a material impact on the Group.

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. During the year ended 31 March 2013, the Group announced that agreements had been reached for the sale of the Monaco & Islands and the Macau segments. The Islands sub-group and Macau segment have been classified as discontinued operations. Monaco does not meet the criteria for discontinued operations and remains an operating segment of the Group.

The Group also has a London 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 a portfolio manager and operational support provider for the reportable segments.

The operating segment result from continuing operations for the two years ended 31 March 2013 are presented below and the prior year results have been re-presented for the Islands sub-group and Macau disposals. The non-operating London 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 London 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 (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 losses totalled US$136 million comprising restructuring costs and asset impairment charges in the Caribbean (2011/12 - US$310 million).

Exceptional items within operating costs before depreciation and amortisation are disclosed below while further information in respect of exceptional impairment charges can be found in note 9.

In 2012/13, exceptional staff costs of US$50 million comprise redundancy and restructuring costs in the Caribbean. In 2011/12, exceptional staff costs of US$66 million include US$9 million in relation to a restructuring programme in Panama and US$57 million in the Caribbean which predominantly relates to the post acquisition restructuring plan in the Bahamas Telecommunications Company (BTC).

6 Earnings per share

Basic earnings per ordinary share is based on the profit/(loss) for the year attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding.

7 Dividends declared and paid

During the year ended 31 March 2013, the Group declared and paid a final dividend of US5.33 cents per share in respect of the year ended 31 March 2012 (2011/12 - US5.33 cents per share in respect of the year ended 31 March 2011). The Group declared and paid an interim dividend of US1.33 cents per share in respect of the year ended 31 March 2013 (2011/12 - US2.67 cents per share in respect of the year ended 31 March 2012).

In respect of the year ended 31 March 2013, the Directors have proposed a final dividend of US2.67 cents per share (US$67 million) (2011/12 - US5.33 cents per share), for approval by shareholders at the AGM to be held on 25 July 2013. 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 2014.

8 Discontinued operations

Year ended 31 March 2013

i) Monaco & Islands

At a General Meeting on 9 January 2013, shareholders of the Group approved the sale of the Monaco & Islands operating 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 the Maldives, the Channel Islands and Isle of Man, South Atlantic, Diego Garcia and the Seychelles), for US$580 million on a cash and debt free basis. The sale of the Islands sub-group, with the exception of Seychelles for which regulatory approval has not yet been obtained, was completed post year end on 3 April 2013;

- 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 have 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; and

- On 3 April 2013 we issued Batelco with a put option over the 25% of CMC shares (the CMC put option). The CMC put option enables Batelco to require the Group to repurchase the 25% CMC shareholding for US$100 million in the event that the regulatory approval from the Principality of Monaco is not granted within 12 months of 3 April 2013. Batelco can exercise this put option between 18 and 19 months from 3 April 2013.

The approval required from the Principality of Monaco means that Monaco does not meet the definition of a disposal group held for sale and does not meet the criteria to be classified as a discontinued operation as at 31 March 2013. The results of Monaco Telecom are now disclosed separately in their own operating segment.

The Islands sub-group has been classified as a disposal group held for sale and also as a discontinued operation as at 31 March 2013, as it represents a separate major geographical area of operations. The comparative consolidated income statement and cash flow statement have been restated. The results of the Islands sub-group were previously recorded in the Monaco & Islands operating segment.

ii) Macau

At a General Meeting on 28 February 2013, shareholders of the Group approved the sale of the Macau operating segment for US$750 million to CITIC Telecom International Holdings Limited. This sale is expected to take place following receipt of the necessary legal and regulatory approvals.

The Macau operating segment has been classified as a disposal group held for sale and also as a discontinued operation as at 31 March 2013, as it represents a separate major geographical area of operations. The comparative consolidated income statement and cash flow statement have been restated. The results of Macau were previously recorded in the Macau operating segment.

The results of all discontinued operations are shown below:

9 Impairment review

Goodwill

A review of the carrying value of goodwill has been performed as at 31 March 2013 and 31 March 2012. 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 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.

3 Afinis:

The Group's interests in Afinis were disposed during 2012/13. One relevant CGU was identified for the purpose of assessing the carrying value of the business. At 31 March 2012, the goodwill was fully impaired resulting in a charge of US$9 million. This was due to a decrease in the value in use, triggered by a change in the strategic direction of the 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 discount rate. Whilst 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$22 million per year or the discount rate increased by more than 8% above the pre-tax discount rate.

- The Bahamas Telecommunications Company - net cash flows decreased by more than US$31 million per year or the discount rate increased by more than 9% above the pre-tax discount rate.

Property, plant and equipment and other intangibles

Following a difficult year of trading and in the midst of challenging economic conditions, the Directors considered the performance of a number of our smaller island markets in the Eastern Caribbean region and the impact on the carrying value of property, plant and equipment. As a result of the review an impairment charge of US$86 million has been recorded across the islands noted below. Included within the charge of US$86 million was a further charge in respect of the Group's business in Turks & Caicos as the performance of this business did not improve as anticipated.

The recoverable amount was assessed based upon value in use which was determined by discounting future cash flows (based on the approved five year business plan at a pre-tax discount rate). The calculation is sensitive to changes in the discount rate, terminal growth rate and underlying trading.

Other

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

10 Intangible assets

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

1 Reporting segment: Caribbean.

2 Reporting segment: Monaco.

3 Reporting segment: Discontinued operations.

11 Property, plant and equipment

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 2013 was US$nil (31 March 2012 - net release of US$2 million).

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. 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.

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 2013 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 and post-retirement medical plans operated by the Group were as follows:

15 Commitments and guarantees

The aggregate future minimum lease payments under operating leases are:

The aggregate future minimum lease payments under operating leases at 31 March 2012 contained US$49 million in respect of discontinued operations.

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

At 31 March 2011, two Directors held bonds issued by Cable & Wireless Limited and Cable and Wireless International Finance B.V. with a nominal value of US$4,211,156 (£2,630,000) (purchased in prior periods). Both Directors sold their entire holding during the year ended 31 March 2012. The interest earned on these bonds prior to disposal during the year ended 31 March 2012 was US$55,426 which was fully settled. A profit of US$790,719 was realised upon the sale of the bonds.

A Director's spouse held bonds issued by Cable and Wireless International Finance BV. These bonds had a nominal value at 31 March 2013 of US$731,472 (£480,000) (31 March 2012 - US$766,416 (£480,000)). The interest earned on those bonds during the year was US$65,404 of which US$1,037 remained unpaid at 31 March 2013 (2011/12 - US$66,132 of which US$903 remained unpaid at 31 March 2012).

A Director's spouse held bonds issued by Cable & Wireless Limited. The Director retired during the year. These bonds had a nominal value at 31 March 2012 of US$15,967 (£10,000). The interest earned on those bonds during the year until retirement was US$344 which has been paid in full (2011/12 - US$1,398 of which US$901 remained unpaid at 31 March 2012).

During the prior year, two children of a Director purchased bonds issued by Cable and Wireless International Finance BV. These bonds had a nominal value at 31 March 2013 of US$761,950 (£500,000) (31 March 2012 - US$798,350 (£500,000)). The interest earned on those bonds during the year was US$68,128 of which US$1,080 remained unpaid at 31 March 2013 (2011/12 - US$25,410 of which US$940 remained unpaid at 31 March 2012).

During the year a Director purchased a car from the Company for market value.

17 Reconciliation of non-GAAP measures

Reconciliation of operating profit to EBITDA