Annual Financial Report

Annual financialreport Announcement

20 June 2012

CABLE & WIRELESS COMMUNICATIONS Plc

Annual financial report AnnouncementFOR THE year ENDED 31 march 2012

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 Forms;

·; Letter of Availability;

·; Annual Report and Accounts for the year ended 31 March 2012; and

·; Annual Review and summary financial statements for the year ended 31 March 2012.

These documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do

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 2012. Copies of these documents (with the exception of the Proxy Forms and Letter of Availability) or 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 24 May 2012. 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 2011/12 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 2012 (which will shortly be delivered to the Registrar of Companies) but does not constitute the Company's statutory financial statements for 2011/12 or 2010/11 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 2011/12 ANNUAL REPORT AND ACCOUNTS

The information below has been extracted from the Cable & Wireless Communications 2011/12 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

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

Consolidated statement of comprehensive income

for the year ended 31 March 2012

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

for the year ended 31 March 2012

Consolidated statement of cash flows

for the year ended 31 March 2012

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

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. It operates through four business units being the Caribbean, Panama, Macau and Monaco & Islands.

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 2012.

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.

Group reorganisation and demerger in the year ended 31 March 2010

During 2009/10, the Cable & Wireless Group effected a Group reorganisation whereby Cable & Wireless Communications Plc was inserted as the new holding company, replacing Cable and Wireless plc (now Cable & Wireless Ltd). The Group was renamed the Cable & Wireless Communications Group. Subsequently the Cable & Wireless Worldwide business was demerged from the Cable & Wireless Communications Group (demerger).

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 2012:

·; Revised IAS 24 Related Party Disclosures

·; Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement

·; Improvements to IFRS 2010

·; IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

The above were first effective for the Group in the year beginning 1 April 2011 and have been adopted by the Group for 2011/12. 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 and fixed line and enterprise services to residential and business customers. It has four principal operations which have been identified as the Group's reportable segments, being the Caribbean, Panama, Macau and Monaco & Islands.

The Group also has a London corporate centre (London) 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 results are presented below. 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.

The Bahamas Telecommunications Company, following its acquisition in April 2011 (note 15), is included within the Caribbean reportable segment.

1 'Other and eliminations' includes London 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 & Islands).

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).

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$310 million comprising restructuring costs, asset impairment and accelerated depreciation charges in the Caribbean and asset impairment charges relating to the Afinis business within Monaco & Islands.

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 8.

The exceptional accelerated depreciation charge of US$30 million was recorded in respect of a change in equipment vendor and the re-evaluation of the useful lives of legacy 2G mobile assets as part of the on-going roll out of 4G/HSPA+ networks in a number of Caribbean islands.

i) In 2011/12, exceptional staff costs 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). In 2010/11, exceptional staff costs of US$5 million arose from restructuring of the Group's Caribbean operations.

ii) In 2010/11, exceptional other costs included US$4 million professional fees as a result of the demerger, and US$2 million relating to the restructuring of our Afinis business within Monaco & Islands. In addition, US$17 million of exceptional income arose after successfully defending claims brought by a Caribbean competitor.

6 Earnings per share

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

Share buy-back

On 21 July 2010, the Group's shareholders approved a resolution at the AGM for the Group to purchase up to 262 million ordinary shares. This authority to buy-back these shares expired at the conclusion of the Company's AGM on 22 July 2011. Under the resolution, during the year ended 31 March 2012, the Company purchased 94,726,873 ordinary shares (2010/11 - 42,762,000 ordinary shares) at an average price of 43 pence per share (US70 cents per share) (2010/11 - 49 pence per share (US80 cents per share)), with a nominal value of US$5 million (2010/11 - US$2 million), for consideration of US$66 million (2010/11 - US$34 million). Consideration included stamp duty and commission of US$0.4 million (2010/11 - US$0.2 million).

7 Dividends declared and paid

During the year ended 31 March 2012, the Group declared and paid a final dividend of US5.33 cents per share in respect of the year ended 31 March 2011 (2010/11 - 3.34 pence per share (US4.97 cents per share) in respect of the year ended 31 March 2010). Beginning with the interim dividend in respect of 2010/11, the Group declares dividends in cents per share. The Group declared and paid an interim dividend of US2.67 cents per share in respect of the year ended 31 March 2012 (2010/11 - US2.67 cents per share in respect of the year ended 31 March 2011).

In respect of the year ended 31 March 2012, the Directors have proposed a final dividend of US5.33 cents per share (US$133 million) (2010/11 - US5.33 cents per share), for approval by shareholders at the AGM to be held on 20 July 2012. 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 2013.

8 Impairment review

Goodwill

A review of the carrying value of goodwill has been performed as at 31 March 2012 and 31 March 2011. In performing this review, the recoverable amount of goodwill has been determined by reference to the higher of the fair value less costs to sell and the value in use of the 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.

Monaco Telecom (Monaco & Islands reporting segment)

Goodwill of US$205 million was allocated in aggregate to the Monaco Telecom group of cash generating units (CGUs) at 31 March 2012 (31 March 2011 - US$172 million). Three relevant 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).

The value in use was determined for each CGU by discounting future cash flows (based on the approved five year business plan extrapolated at long-term growth rates of between 0% and 2.5% (2010/11 - 0% and 2%)) at pre-tax discount rates of between 9% and 24% (2010/11 - 9% and 22%) dependent on the risk-adjusted cost of capital of the different parts of the business. The value in use was higher than the fair value less costs to sell and no impairment was required in either period.

Monaco Telecom operates under an exclusive operating agreement in Monaco and management's forecasts were based on historical experience for the business.

The value in use of the three CGUs in aggregate would not support the carrying value of the goodwill if cash flows decreased by more than US$20 million per year or the discount rate increased by more than 7% above the pre-tax discount rate.

The Bahamas Telecommunications Company - BTC (Caribbean reporting segment)

Goodwill of US$63 million was allocated to BTC at 31 March 2012. One relevant CGU has been identified for the purpose of assessing the carrying value of the BTC business. The value in use was determined by discounting future cash flows (based on the approved five year business plan extrapolated at a long-term growth rate of nil) at a pre-tax discount rate of 9.4%. The value in use was higher than the fair value less costs to sell and no impairment was required.

The CGU value in use would not support the carrying value of the goodwill if cash flows decreased by more than US$48 million per year or the discount rate increased by more than 14% above the pre-tax discount rate.

Dhivehi Raajjeyge Gulhun PLC - Dhiraagu (Monaco & Islands reporting segment)

Goodwill of US$21 million was allocated to Dhiraagu at 31 March 2012 (31 March 2011 - US$25 million). One relevant CGU has been identified for the purpose of assessing the carrying value of the Dhiraagu business. The value in use was determined by discounting future cash flows (based on the approved five year business plan extrapolated at a long-term growth rate of 2.5% (2010/11 - 2.5%)) at a pre-tax discount rate of 11.0% (2010/11 - 14.3%). The value in use was higher than the fair value less costs to sell and no impairment was required.

Afinis (Monaco & Islands reporting segment)

Afinis has one relevant CGU that has been identified for the purpose of assessing the carrying value of the business. The recoverable amount was assessed based upon the 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 of 17.1% (2010/11 - 20%).

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.

Property, plant and equipment and other intangibles

Cable & Wireless Jamaica Ltd (Caribbean reporting segment)

As indicated in the previous year's Annual report, there were a number of risks identified for our Jamaica business, including the need for change in the regulatory environment and the importance of business improvement strategies such as our Jamaica 'win back' activity. Progress in these areas has not been as anticipated. In light of this, a review of the carrying value of the fixed assets was conducted at year end.

One relevant CGU has been identified for the purpose of assessing the carrying value of the business. 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 of 11.0% (2010/11 - 11.1%)). The calculation is sensitive to changes in the discount rate, terminal growth rate and underlying trading.

Impairment charges of US$32 million, US$151 million and US$1 million have been applied to land and buildings, plant and equipment and intangible assets respectively.

Other Caribbean (Caribbean reporting segment)

An impairment charge of US$12 million was recorded against the carrying value of plant and equipment in one other Caribbean business in light of the trading performance during the year.

The recoverable amount was assessed based upon the value in use determined by discounting future cash flows (based on the approved five year business plan at a pre-tax discount rate of 11.4%). The calculation is sensitive to changes in the discount rate, terminal growth rate and underlying trading.

Dhivehi Raajjeyge Gulhun PLC - Dhiraagu (Monaco & Islands reporting segment)

Trade mark assets of US$18 million, with an indefinite useful life, were allocated to Dhiraagu at 31 March 2012 (31 March 2011 - US$18 million). One relevant CGU has been identified for the purpose of assessing the carrying value of the Dhiraagu business and the key assumptions used are disclosed above. No impairment was required.

Afinis (Monaco & Islands reporting segment)

At 31 March 2012, in addition to the goodwill impairment disclosed above, other intangible assets of US$2 million and plant and equipment of US$7 million were impaired.

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.

9 Intangible assets

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

1 Reporting segment: Caribbean

2 Reporting segment: Monaco & Islands

10 Property, plant and equipment

1 Includes accelerated depreciation of US$30 million (2010/11 - US$nil) . Refer to note 5 for further information.

11 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:

12 Provisions

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 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.

Demerger

The provision comprised costs related to the demerger such as professional fees, redundancy costs and closure costs.

13 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 operated by the Group have been updated to 31 March 2012 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:

14 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:

15 Business combinations and acquisitions of non-controlling interests

The Bahamas Telecommunications Company

On 6 April 2011, the Group acquired 51% of the share capital of The Bahamas Telecommunications Company (BTC) from the Government of the Commonwealth of The Bahamas. BTC is the exclusive mobile operator in The Bahamas as well as a leading provider of fixed-line and broadband services. It is complementary to the Group's Caribbean business, LIME, which is the leading full-service telecommunications provider in the region.

The cash consideration paid by the Group was US$204 million. Goodwill of US$63 million was recognised on acquisition. The net cash outflow on acquisition was US$148 million.

The Directors have made an assessment of the fair values of the assets and liabilities as at the acquisition date:

Goodwill arising on the acquisition of BTC included the value of expected synergies resulting from the integration into the existing business and other intangible assets that did not meet the recognition criteria set out in IAS 38 Intangible Assets as they were unable to be separately identified. Acquisition costs related to BTC of US$7 million were recorded in other operating expenses in 2011/12 (2010/11 - US$7 million). A non-controlling interest of US$135 million has been recognised in the 2011/12 accounts as at acquisition date measured at cost.

In 2011/12, from the date of its acquisition on 6 April 2011, BTC contributed US$352 million to Group revenue, US$91 million to Group EBITDA and US$13 million to Group profit after tax. There is no material difference in the results of BTC included in these accounts since acquisition on 6 April 2011 and the results of BTC for the full year from 1 April 2011.

16 Related party transactions

Transactions with key management personnel

At 31 March 2011, two Directors held bonds issued by Cable & Wireless Limited and Cable & 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$55,426 of which US$nil remains unpaid at 31 March 2012 (2010/11 - US$354,033 of which US$154,103 remained unpaid at 31 March 2011). A profit of US$790,719 was realisedupon the sale of the bonds.

Two Directors' spouses hold bonds issued by Cable & Wireless Limited and Cable & Wireless International Finance BV. These bonds had a nominal value at 31 March 2012 of US$782,383 (£490,000) (31 March 2011 - US$784,588 (£490,000)). The interest earned on those bonds during the year was US$67,530 of which US$1,804 remained unpaid at 31 March 2012 (2010/11 - US$65,378 of which US$2,000 remained unpaid at 31 March 2011).

During the year, two children of a Director purchased bonds issued by Cable & Wireless International Finance BV. These bonds had a nominal value at 31 March 2012 of US$798,350 (£500,000). The interest earned on those bonds during the year was US$25,410 of which US$940 remained unpaid at 31 March 2012.

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, LTIP charge, 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 before exceptional items, LTIP charge, transaction costs, gain/(loss) on disposal of businesses and amortisation of acquired intangibles.

Risk overview

Cable & Wireless Communications Plc recognises that there are risks in operating our businesses. The Group has a risk management framework which our business units and the Group utilise to review their risks. Below is a summary of some of the key risks identified which could affect our business. Investors should consider these risks along with other information provided in this Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES