Half Yearly Report

ANNOUNCEMENT

6 november 2014

CABLE & WIRELESS COMMUNICATIONS PLC

RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014

Early signs of modest revenue growth, as investment-led strategy mobilises

Financial Highlights

§ Group revenue up 1% (2% at constant currency); mobile revenue up 3% with mobile data up 10%

§ Group operating costs 2% lower; on-track to achieve US$100 million cost reduction plan

§ Group EBITDA up 5%; EBITDA margin increased by 1 ppt to 33%

§ Project Marlin underway with capital expenditure of US$190 million in the period (up 81%)

§ Significant growth in earnings per share to US1.9 cents as interest expense and exceptional charges fell by US$94 million

§ Interim dividend per share of US1.33 cents

Commenting on the Group results, Phil Bentley, Chief Executive of Cable & Wireless Communications Plc, said:

"Although it is early days, it was pleasing to see revenue growth across the Group for the first time as mobile subscribers and data uptake grew. There is no doubt that our networks are faster, and more reliable than ever before - and our customers are beginning to notice a difference. As momentum builds in our investment-led strategy, I would expect growth to accelerate in the second half of the year."

Summary of First Half Performance

In our retail markets, high speed 4G mobile services are now available in Panama, Bahamas and all our LIME markets, with the exception of Montserrat, as we completed our roll-outs in Anguilla, Antigua, Barbados, BVI, Dominica, Grenada, St Kitts, St Lucia, St Vincent and Turks and Caicos. In Jamaica, mobile subscribers grew by 125,000 (20%) in the period, as we improved coverage, capacity, speed and reliability. This drove a 73% increase in mobile data traffic and resulted in LIME being ranked highest in customer satisfaction amongst all utility providers in Jamaica.

We are making progress with our roll-out of fixed fibre networks in Barbados and have now passed 52,000 homes; the project is due to be completed in November with 73,000 homes passed. We have also mobilised fibre roll-outs in Anguilla, Antigua, BVI, Cayman, Grenada, Jamaica, St Kitts, St Lucia, St Vincent, and Turks and Caicos enabling us to deliver ultra-high-speed broadband and TV services, when completed.

Our new Business Solutions unit made good progress in the first half as we bring greater focus to the high value and high growth B2B and B2G segments through increased investment, and additional capabilities. In Panama, we acquired Grupo Sonitel in September. Sonitel's IT engineering skills provide a significant capability boost to meet business customers' integrated and hosted solution needs and deliver managed services, backed up by our existing connectivity and data centre assets. The addition of Sonitel's Peru, Nicaragua, and El Salvador sales teams as well as more than 350 IT software and telecoms service engineers provides the Group with further growth opportunities.

We continue to be focused on cost efficiencies and are on track to achieve our target US$100 million of run-rate savings by 31 March 2015. Together with the gross margin benefit of reduced international carrier rates, we improved our EBITDA margin by 1 ppt to 33% and we anticipate further improvements this year.

Reported EBITDA of US$277 million grew by 5% compared to the prior year and our lower interest expense (following a reduction in debt) and no exceptional charges in the period significantly boosted earnings per share to US1.9 cents.

Group results overview

Annual results presentation

Cable & Wireless Communications will hold its 2014/15 interim results presentation for analysts and institutional investors at 9:30am GMT on Thursday 6 November 2014. The presentation will be webcast live on the Cable & Wireless Communications website www.cwc.com. An on-demand version will be available later in the day.

Contacts

Chief Executive's Review

2014/15 First Half Performance

Our financial results in the first half of the 2014/15 fiscal year have shown early signs of our turnaround.

Group revenue was up 1% at US$848 million as we saw growth in all revenue segments with the exception of fixed voice.

The US$14 million growth in mobile revenue (up 3% in the period) and 20% growth in customers with data subscriptions since 31 March 2014 indicates our customers' increasing demand for data and their desire to access the internet anywhere, anytime and on any device. However, at the same time, fixed voice revenue fell by US$12 million (6%); therefore growth in broadband and TV is vital for our future and we saw progress in the first half with revenue up 4% (despite pressure on ARPL from competition) with subscribers growing 4% and 14% respectively.

In Panama, we maintained our mobile market share above 50%, delivering a 5% rise in mobile revenue, underpinned by data growth. Broadband and TV revenue showed growth of 10%, up US$3 million, as we continue to invest in our high speed networks. However this was more than offset by declining fixed voice revenue which was US$4 million lower. Managed services and other revenue grew 27% following the acquisition of Grupo Sonitel in September which contributed US$6 million in the period.

In BTC, we continued to prepare for the introduction of a new competitor and this led to a 2% decline in mobile revenue as prices and roaming rates were reduced. Broadband revenue at US$8 million represents a potential growth driver for the business and we made progress in the half with revenue up 14% as a result of the increased uptake in fibre based products following network investments. This was more than offset by a fall in fixed voice and managed services where we saw a reduction in off-island capacity sales.

In our LIME Caribbean businesses, mobile revenue grew 6% on a reported basis, 8% at constant currency, with Jamaica up 24% and continuing to gain market share (5 ppts) as we invest to deliver improved services for our growing customer base. Broadband and TV revenue was flat against the prior year. Our target here is for growth in broadband and TV to offset declining fixed voice revenue which was down 7% or US$7 million in the period. To achieve this we are investing in fibre networks in Anguilla, Antigua, Barbados, BVI, Cayman, Grenada, Jamaica, St Kitts, St Lucia, St Vincent, and Turks and Caicos. Managed services declined US$3 million or 6% in the period due to installation and completion delays following changes to the scope of a number of projects.

At the beginning of 2013/14 we announced a cost reduction programme targeted to reduce our run-rate core operating costs by US$100 million by the end of 2014/15. We have made good progress with operating costs down 2% against the prior year. The improvement was driven by an 8% reduction (US$22 million) in the Caribbean as we increased efficiency in our operations though headcount rationalisation, exiting non-core property assets and procurement savings, partly offset by increased advertising spend promoting our network upgrades across the Group, higher professional fees related to the mobilisation of our strategy, and increased network maintenance whilst legacy infrastructure is parallel-run during the deployment of Project Marlin.

Overall Group EBITDA, at US$277 million, was 5% ahead of the prior year.

Reported net profit after tax for the year increased to US$103 million (H1 2013/14: US$(8) million) due to higher headline profitability, no exceptional charges and lower interest costs ($39m) following a reduction in gross debt. Earnings per share were US1.9 cents (H1 2013/14: US(2.0) cents).

Capital expenditure, at US$190 million, was 81% higher than the prior year, as we made investments to ensure high-speed 4G mobile and fibre networks were in place across our businesses. 84% of the total spend was focused on supporting our front line operations as we target improved reliability in our networks and enhanced customer experience.

Following a strategic review of the opportunities, and discussions with the Government, the Seychelles business has returned to continuing operations as we no longer believe it is in shareholders' best interest to sell the business in the near term.

As at 30 September 2014 we had made significant progress in establishing our operational hub with 204 employees based in Miami; the majority working in Technology and IT departments to support our operating companies.

Progress on Strategy

To deliver our growth ambitions we are focusing on four strategic imperatives:

1. Mobile leadership

The mobile handset is the entry point to the telecommunications market and mobile revenue currently accounts for more than 50% of Group sales. The majority of our markets are seeing a shift to mobile data and the mobile internet. Data consumption grew in our markets as smartphone penetration increased by 220,000 customers to represent 33% of the Group's subscriber base from 30% at 31 March 2014. We see this growth continuing as penetration is still low by international benchmarks.

Progress

To ensure we have superior networks, investment has been focused on additional 4G cell sites, where we upgraded 480 sites in the half, to secure a standard which fulfils the data demands of our customers. This was underpinned by investment in even faster LTE networks, with 40 additional sites in the period, to secure network leadership where returns are greatest. We have introduced LTE services in Cayman and The Bahamas and intend to launch in Antigua by the end of the year and Panama by March 2015. Our ambition is to deliver 4G capabilities across all of our businesses by November 2015 and where we have upgraded networks we have seen improved Net Promoter Score (NPS). We have made significant investment in Jamaica to improve coverage, capacity, speed and reliability as our market share increases. We have also introduced a second carrier to increase speeds for our customers up to 42Mbits per second and begun network modernisation in The Bahamas and Panama where we have seen a 12% increase in postpaid and 32% increase in prepaid subscribers.

2. Fixed-mobile convergence

Owning fixed and mobile assets is a major cost advantage in the long term, and are a necessity to delivering the "always on" connectivity and Wi-Fi offloads that customers increasingly demand.

Progress

We have introduced enhanced switching capabilities to enable our fixed and mobile networks to operate in a more integrated way in Barbados, Cayman, The Bahamas, Jamaica and a number of other territories. This will provide seamless connectivity across a range of delivery mechanisms through investments such as the introduction of Wi-Fi hotspots in Panama and Cayman. Certain fixed networks also require investment to upgrade from copper to fibre so that we can provide faster and more reliable services, such as in Barbados. Through our fibre roll-out plans we are establishing core infrastructure that enables improved services for our customers. In H1 we started the deployment to bring fibre access points closer to our customers, with 588 kilometres rolled-out in Anguilla, BVI, Dominica, Grenada, St Lucia and Turks and Caicos delivering improved speeds in excess of 30Mb, and up to 80Mb in homes close to the fibre distribution point; and we are targeting to have launched similar services in all markets by March 2015. In the first half, we saw broadband subscribers grow 4% with 24,000 new fibre connections.

3. Reinforce our TV offering

The choice of TV provider is a key "moment of truth" where customers express a clear preference for their entertainment platform. Increasingly, home broadband is sold as a package with TV.

Progress

In Panama we are expanding our fibre coaxial network, which now passes 258,000 homes, in urban areas and are targeting rural areas through deployment of direct-to-home (DTH) satellite services. We launched DTH services in Q2 and currently have over 2,300 subscribers. Across the Caribbean we deployed IPTV service capabilities focusing initially on Cayman and Barbados and now in St Lucia. With our fibre roll-out plans progressing well, we expect to have the capability to launch TV services in seven markets in the next seven months. Our TV subscriber base grew by 14% and this should also enable greater leverage with content providers.

4. Grow our Business services

The business services segment provides an attractive opportunity for the Group with customers that have more sophisticated connectivity and data needs. They are also our highest volume customers. We have extensive on-island MPLS networks and access to 42,000 kilometres of subsea cable through our Columbus joint venture, and an expanding sales force and engineering design capability.

Progress

In H1 we expanded our MPLS networks in BVI, Grenada, Jamaica, St Lucia, St Kitts, St Vincent and Turks and Caicos increasing resilience and reliability and, through acquisition, built on our infrastructure assets to deliver bespoke, data-centric solutions for our customers. The acquisition of Grupo Sonitel in Panama has significantly improved our IT services capabilities as we aim to deliver more integrated, value added services to our many corporate and government customers. The acquisition also provides growth opportunities in the adjacent Latin American markets of El Salvador, Nicaragua and Peru. In H1, we continued our investment (US$9 million) in the PCCS submarine cable linking the West Coast of South America to Florida.

Our new Business Solutions team has been successful in winning a number of contracts in the period across the hospitality, financial and government sectors. Notable wins include the Baha Mar resort in The Bahamas and provision of CCTV for a leading security agency. With our increased focus on business customers, we saw the Group's B2B NPS increase by 9 points in the first half.

Outlook and prospects

Economic growth in our markets will remain variable, ranging from c.6% GDP growth in Panama to 0% in Barbados. However, we continue to believe that the increasing penetration of products such as smart phones, broadband and TV offers good growth opportunities. Notwithstanding this, the markets we operate in are competitive and we face the additional challenge of a second mobile operator in 2015 in The Bahamas, our second largest market.

Looking ahead, we expect to continue making good progress in reducing our cost base, particularly in the Caribbean. Through Project Marlin, with its associated uplift in capital expenditure, we expect to capture the growth opportunity offered by mobile data, broadband and TV, reversing the historical decline in revenue. Where investments have been made, traffic carried on our networks has increased; 71% in Panama, 34% in The Bahamas and Jamaica, 82% in Grenada and 160% in St Vincent. However our offers to customers must remain competitive if we are to capture the necessary returns from these investments in network reliability and speed.

We remain focused on Net Promoter Score (NPS) as a measure to gauge network quality and customer perception of our service. In Jamaica we have seen strong mobile NPS results since the start of the year with a significant positive gap of 59 points between ourselves and the competitor. Where network upgrades have been completed, the NPS gap to our competitors is closing; however there is much work to do. In Panama, for example, we are behind our competitors in NPS (by 15 points), although we anticipate improved results once our network upgrade is complete in March 2015. We are also focused on improving our network quality in The Bahamas where a major outage in March impacted our mobile NPS.

With momentum building, we expect our performance in the second half to be stronger than the first half and to be in line with market expectations.

REVIEW OF CWC OPERATIONS

Income statement - continuing operations

Panama

· Total revenue up 5%; mobile revenue up 5%

· Data traffic up 71% with 25% growth in mobile data revenue

· 10% growth in broadband and TV sales following network improvements

· Acquisition of Grupo Sonitel to give additional capability and geographic reach in managed services

Revenue at US$302 million was 5% higher than the prior year as mobile, broadband and TV, and managed services growth offset the continued decline in fixed voice as we continue to see fixed to mobile substitution.

Mobile revenue at US$176 million was up 5% against the prior year. Subscribers increased by 570,000, driven by a 32% increase in prepaid customers and a 12% increase in postpaid customers as we launched more affordable smart devices and value propositions such as M-Wallet. Data revenue was up 25% on the prior year, more than offsetting voice revenue decline of 7%. Data penetration of our customer base increased by 2 percentage points to 35% following a 38% increase in data subscribers as a wider range of data plans stimulated both prepaid and postpaid usage. Mobile ARPU was lower than the prior year due to reduced inbound roaming revenue and lower voice rates and usage due to competitive pressures.

Broadband and TV revenue of US$34 million was 10% higher than the prior year. Broadband subscribers were up 2% to 132,100 and TV subscribers rose by 12% to 46,600 following the launch of an improved TV product and a prepaid DTH service. Bundling of products was an effective retention tool with 83% of pay TV and 80% of broadband subscribers taking more than one service.

Fixed voice revenue of US$54 million was down 7% against the prior year due to lower domestic call revenue. Subscriber numbers continued to decline as customers substituted to other products, but the rate of decline slowed by 1 percentage point due to the impact of triple play offerings.

Managed services revenue of US$38 million grew by 27% primarily as a result of the acquisition of Grupo Sonitel which was completed in September 2014. There were delays in the award of Government contracts following elections in May, but we expect improved performance in the second half as government departments mobilise and the Sonitel acquisition delivers synergies through cross- and up-selling.

Gross margin at US$202 million was up 4% on the prior year. As a percentage of revenue, gross margin was 67%.

Operating costs were 6% higher than the prior year due to increased advertising spend as we launched improved broadband services and a revamped TV offering, prepared for unification of branding within our consumer businesses and responded to an increase in the minimum wage of up to 27%. This resulted in EBITDA of US$118 million, which was 2% better than last year. The EBITDA margin for the period was 39%.

Capital expenditure of US$58 million was 66% higher than the prior year as we focused our investments on the mobile segment (60% of total spend) through expansion of our 3G/4G network, whilst also increasing our broadband and TV capacity to deliver a better customer experience.

CWC's proportionate ownership of Panama EBITDA for the six months ended 30 September 2014 was 49%.

LIME

· EBITDA up 28% to US$100 million; margin improved by 6 percentage points to 29%

· Total revenue 2% higher at constant currency and 1% lower on a reported basis

· Mobile revenue rose 6%; subscriber growth of 13%

· Jamaica mobile service revenue up 38% at constant currency

· Cost reduction on track - LIME outsourcing progressing, headcount down across the region

The LIME brand encompasses our operations in Anguilla, Antigua, Barbados, British Virgin Islands, Cayman, Dominica, Grenada, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and Turks and Caicos. LIME's reported revenue of US$344 million was 1% down on the prior year. At constant currency revenue would have been up US$6 million or 2% higher.

Mobile revenue was up US$8 million against the prior year at US$143 million with increasing demand for mobile data offset by declining voice revenue. Mobile traffic increased by 34% in Jamaica, 82% in Grenada and by 160% in St Vincent and we expect the shift in mix from voice to data to continue as we invest in high-speed networks. During the period we continued to see strong uptake in Cayman, with ARPU growth of 4%, where we launched LTE services last year. We plan to launch LTE in Antigua shortly. We intend to upgrade all of our operations to at least 4G, and have progressed well in the half. We now have 4G services in all bar one of our LIME markets. Jamaica momentum continued with 20% growth in mobile subscribers resulting in a market share of 26%, up 5 percentage points on last year.

Broadband and TV revenue was broadly in line with the prior year. Broadband subscribers rose 2% with growth in most of our key markets, offset by competitive pricing pressure which drove ARPU lower. We are focusing on delivering high speed fibre access in markets where we can see a clear return. In Barbados we have now passed 52,000 homes with 15,000 connected and are targeting a total of 73,000 homes by December 2014. We have also grown LIME TV subscribers by 18% to 25,600 following the introduction of fibre based services in Barbados and Cayman.

Fixed voice revenue at US$98 million declined by 7% as a 6% fall in ARPU, driven mainly by rate reductions due to competition and bundling as well as by lower termination rates, was compounded by a 1% drop in the subscriber base.

Managed services fell by 6% to US$51 million following installation delays on equipment sales which are expected to be caught up in the second half.

Gross margin at US$271 million was up 2% compared to the prior year reflecting reduced cost of sales following lower international carrier rates for roaming, international voice and data. As a percentage of revenue, gross margin increased by 2 percentage points to 79%.

Operating costs reduced by US$17 million (9%) to US$171 million as we continue to implement our cost reduction plans. We have made good progress in outsourcing our field services teams and have reduced staff costs by US$24 million with headcount 37% lower than the prior year. Following this initial focus on staff efficiency, we are now also working on other projects such as exiting non-core property assets with associated utility cost saving and introducing initiatives to reduce power consumption. Across our LIME business we remain on course to deliver the targeted cost reductions in line with the objectives previously set out.

EBITDA increased by 28% to US$100 million, driven principally by lower operating costs. The EBITDA margin at 29% was 6 percentage points higher than the prior year.

Capital expenditure at US$90 million represented a 131% increase against the prior year with 82% of spend focused on our mobile and fixed segments to enhance our 4G and LTE networks capacity as well as enhancing our fibre networks. Significant investments were also made to optimise infrastructure in order to reduce power costs.

Our proportionate ownership of LIME EBITDA for the six months ended 30 September 2014 was 88%.

· Total revenue was down 2%, with mobile revenue down 2% as preparations made for entry of competition

· 3% growth in mobile data subscribers (47% of total customer base) following investment in 4G and LTE networks in the prior year

· Broadband subscribers up 32%; revenue growth of 14% following investment in high speed fibre networks

· EBITDA of $59m flat on prior year; EBITDA margin improvement of one percentage point following operating cost savings of 6%

Revenue at US$171 million was down 2% on the prior year primarily due to a reduction in mobile revenue.

Mobile revenue was down US$3 million following price reductions ahead of the anticipated entrant of a mobile competitor, reflected in an 8% drop in ARPU. Subscribers did however grow 2% following additional investment in 4G the introduction of LTE services last year driving growth of 34% in mobile traffic in the six month period.

Broadband revenue was up 14%, with subscribers growing 32% following increased uptake in fibre based products as consumers benefited from investments to double broadband speeds to more than 16Mbits per second in the prior year.

Fixed voice revenue at US$24 million declined by 4% as subscribers fell by 11% due to substitution from fixed to mobile. Despite this reduction in customer numbers, ARPU grew 11% as there was upselling of higher tariff products as part of bundled offers. Of the subscriber base, 19% of customers (12,000) have upgraded from their basic packages.

Managed services revenue fell by 7% to US$13 million due to a reduction in off island capacity sales.

Gross margin at US$138 million was 4% down compared to the prior year reflecting the reduction in revenue and higher subscriber acquisition costs. As a percentage of revenue, gross margin decreased by 1 percentage point to 81%.

Operating costs reduced by US$5 million (6%) to US$79 million as we began to realise the benefits of the on-going cost reduction initiatives. Headcount was 5% lower than last year.

EBITDA of US$59 million was in line with the prior year. The EBITDA margin at 35% was up one percentage point.

Capital expenditure of US$27 million was 17% higher than the previous year with 71% of investment geared towards expanding our 3G, 4G and LTE infrastructure as well as expanding our NGN and high speed DSL network.

Our proportionate ownership of BTC EBITDA for the six months ended 30 September 2014 and 2013 was 49% and 51%, respectively (see page 16 for details).

Following a strategic review of the opportunities, and discussions with the Government, the Seychelles business has returned to continuing operations as we no longer believe it is in shareholders' best interest to sell the business in the near term. We therefore no longer consider the business to be held for sale.

· Revenue up 4%

· EBITDA of $10m flat on prior year, up $1m at constant currency

· Subscriber growth across all service lines, ARPU growth in mobile and broadband

The Seychelles business continues to perform well with revenue of US$27 million, up 4% on the prior year. Subscriber numbers improved for all business lines, and ARPU increased for both mobile and broadband.

EBITDA of US$10 million was in line with the prior year.

We fully owned the Seychelles business for the six months ended 30 September 2014.

Other includes management, royalty and branding fees, the costs of the corporate centre and operating hub, net UK defined benefit pension charge or credit and intercompany eliminations.

EBITDA for the half was US$11 million lower than the prior year at US$(10) million primarily due to dual running costs of both of our London and Miami offices, the addition of central commercial, technology and business solutions capabilities and consulting fees related to the implementation of the Group's strategic initiatives. There was also a release of litigation and claim exposures following a reassessment of associated risks.

Our share of profit after tax from joint ventures and associates was US$11 million, US$11 million higher than the prior period.

CWC's share of TSTT revenue was down 1% in the period as competition intensified in the region. Profits increased by US$11 million to US$9 million as the prior period included a one-off operating cost following an adverse judgement in relation to a former pay dispute. CWC successfully disposed of its holding in Solomon Telecom subsequent to the period end for US$16.5 million.

Our international wholesale capacity joint venture, in which CWC has a 27.5% share, with Columbus Networks has been operating since May 2013.

The combined management team has eliminated duplicated roles and has commenced the consolidation and standardisation of technical facilities and the rationalisation of suppliers.

Construction of the PCCS cable system is progressing well with much of the cable now laid and new landing stations built. Fitting out of the landing stations, installation of the transmission equipment and commissioning of the system will occur in the second half with the system expected to enter into service early in 2015/16.

Depreciation and amortisation at US$123 million was 7% higher following accelerated investment in network infrastructure as part of Project Marlin.

Other Group items

Net other operating expense

The US$2 million net other operating expense for the half comprised a loss on disposal of property, plant and equipment assets. In the prior year the loss of US$8 million principally comprised a foreign exchange translation loss related to the UK pension scheme as the US dollar weakened against sterling.

There were no exceptional expense items in the half. Exceptional items of US$55 million in the prior period included charges for the Group cost reduction initiative, primarily in relation to redundancy payments.

Net finance expense

The US$31 million net finance expense for the Group included finance income of US$3 million (US$3 million in H1 2013/14) and finance expense of US$34 million (US$73 million in H1 2013/14). The decrease in finance expense predominantly related to the early redemption of the secured US$500 million 2017 bond in February 2014.

Income tax expense

The income tax charge for the continuing Group of US$29 million (US$25 million in H1 2013/14) was in respect of overseas taxes. This charge represented an effective tax rate of 22.0% pre-exceptional items. Removing the impact of non-deductible interest charged on the Group's central borrowing facilities this charge represented an effective tax rate of 18% pre-exceptional items.

Following the disposal of Monaco Telecom, we expect the Group effective tax rate in 2014/15, pre-exceptional items and excluding non-deductible interest charged on the Group's central borrowing facilities, to be around 18%.

In the six months ended 30 September 2014, discontinued operations included Monaco's contribution until its disposal was completed on 20 May 2014. In the prior year, discontinued operations comprised Monaco, Macau and the Islands businesses.

Gains on disposals

During the period we recognised an accounting gain of US$346 million following the completed disposal of our holding in Monaco Telecom in May 2014.

Group cash flow

The Group generated operating cash flow before exceptional items of US$87 million for the six months ended 30 September 2014, 46% lower than the prior year as Project Marlin gathered pace driving increased capital expenditure. Receivables increased following the acquisition of Grupo Sonitel in Panama, a delay in collections of government receivables following the change in Panamanian Government and a seasonal slowdown in LIME collections during the summer period. There was a decrease in payables within LIME as there was continued progress in agreeing outstanding carrier balances with counterparties. These outflows were partly offset by increased liabilities in BTC related to timing of payments, leading to a net outflow in working capital and other provisions. Investment income of US$2 million primarily comprised interest received on cash balances.

Fixed charges

We paid US$21 million relating to income tax in the first half, US$7 million lower than the prior year primarily due to changes in the taxation rate in Panama and lower tax payments in LIME. Interest paid on our external borrowings at US$27 million was US$21 million lower than the prior year following the redemption of the US$500 million secured bonds due 2017, in February 2014. We paid dividends to non-controlling interests of US$48 million in the period, which was US$20 million higher than the prior year due to timing of dividends from BTC and Panama.

Underlying equity free cash flow of US$(41) million was US$57 million lower than the prior year.

Non-recurring and exceptional items

The net cash outflow included US$20 million for exceptional items related to restructuring programmes. We also made a US$52 million cash contribution to the Cable & Wireless Superannuation Fund in the period and do not anticipate any further top-up payments until H1 2015/16 per the existing agreement with the Trustees of the fund. Acquisitions and disposals for the period include proceeds for the sale of Monaco Telecom less cash deconsolidated upon the disposal and a payment of US$39 million for the acquisition of Grupo Sonitel.

Group consolidated cash and debt

Consolidated net debt as at 30 September 2014 was US$464 million with proportionate net debt of US$367 million representing 1.0x proportionate annualised first half EBITDA.

Pensions

In May 2014 the Company reached agreement with the Trustees of the Cable & Wireless Superannuation Fund (CWSF) on the actuarial funding valuation as at 31 March 2013. This showed a funding deficit of £109 million. Cash contributions to the CWSF for 2014 to 2016 will remain in line with the agreement following the March 2010 triennial review. In addition to a payment of £30 million made in July 2014, future payments will be: April 2015 - £31 million and April 2016 - £33 million. Payments in 2017, 2018 and 2019 will be based on the outcome of the triennial valuation as at 31 March 2016 and will be in the range of £0 - £23 million each year as necessary to fund the scheme by April 2019.

As at 30 September 2014, the defined benefit section of the CWSF had an IAS 19 accounting deficit of £83 million (US$138 million), compared to a deficit of £90 million (US$148 million) as at 31 March 2014. This deficit funding agreed as part of the 2013 actuarial funding valuation constitutes a minimum funding agreement and in accordance with accounting standards we are required to account for this within the deficit. The IAS19 deficit recorded at 30 September 2014 therefore represents the present value of the amounts committed under the minimum funding agreement. 

The AA corporate bond rate used in calculating the pension deficit was 3.9% compared with 4.4% at 31 March 2014.

The fund assets at 30 September 2014 were approximately invested 69% in the bulk annuity policy, 18% in equities, and 13% in bonds, property, swaps and cash.

There are other unfunded pension liabilities in the UK of £31 million (£29 million at 31 March 2014). The Group holds investments in gilts of £23 million to partially back the UK unfunded pension liabilities. Other schemes in Cable & Wireless Communications have a net IAS 19 surplus of US$17 million (US$17 million surplus at 31 March 2014).

Dividend

We are declaring an interim dividend of US1.33 cents per share.

The interim dividend of US1.33 cents per share will be paid on 9 January 2015 to ordinary shareholders on the register at the close of business on 21 November 2014. Subject to financial and trading performance in the second half of 2014/15, we expect to recommend a final dividend of US2.67 cents per share, resulting in a full year dividend of US4 cents per share.

A currency option and the dividend reinvestment plan will be offered in respect of the interim dividend. The default currency for payment is sterling. Shareholders wishing to receive their dividend in US dollars or wishing to participate in the dividend reinvestment plan should make an election using CREST Input Message or return a completed Currency Mandate Form or Dividend Reinvestment Plan Mandate Form to: Equiniti Ltd, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA by 9 December 2014. Copies of the mandate forms are available from Equiniti Ltd. UK callers: 0871 384 2104; overseas callers: +44 (0)121 415 7052 or from our website www.cwc.com.

The sterling dividend payment amount per share will be announced on 15 December 2014, and will be based on the prevailing GBP sterling to US dollar exchange rate at 2:00pm GMT on that date.

Transactions

Disposal of Monaco Telecom

On 20 May 2014, CWC completed the disposal of Compagnie Monegasque de Communication SAM (CMC), which was the holding company for CWC's 55% stake in Monaco Telecom S.A.M. (Monaco Telecom). At completion, CWC received consideration of €321,788,000 (US$445 million) on a cash and debt free basis. In addition, CWC received €6.2 million (US$8.6 million) relating to the estimated cash, debt and working capital at completion.

Bahamas Telecommunications Company

On 24 July 2014, CWC completed the transfer of 2% of its 51% holding in BTC to The BTC Foundation, a charitable trust dedicated to investing in projects for the benefit of Bahamians. The 2% shareholding is not entitled to any voting rights and therefore CWC has retained majority voting rights in BTC as well as remaining the largest overall shareholder. CWC will maintain management and Board control of the business.

On 12 September 2014, Cable & Wireless Panama completed the acquisition of Grupo Sonitel for US$36 million plus contingent consideration of up to an additional US$5 million. Grupo Sonitel operates SSA Sistemas, a provider of end-to-end managed IT solutions and telecoms services to business and government customers in Panama, as well as in El Salvador, Nicaragua and Peru; and Sonset, a provider of IT solutions and services to Small and Medium Enterprise (SME) customers in Panama. Logistica, an IT hardware reseller and a small number of other non-core Grupo Sonitel companies, were not included as part of the transaction.

Post balance sheet events

Disposal of Solomon Telekom

On 15 October 2014, CWC announced that it had agreed to divest its 32.577% shareholding in Solomon Telekom Company Limited (Soltel) to the Solomon Islands National Provident Fund Board for total cash proceeds of approximately US$16.5 million. The transaction completed on 24 October 2014.

Appendices

Condensed consolidated interim income statement 18

Condensed consolidated interim statement of comprehensive income 19

Condensed consolidated interim statement of financial position 20

Condensed consolidated interim statement of changes in equity 21

Condensed consolidated interim statement of cash flows 22

Reconciliation of net profit to net cash flow from operating activities 23

Notes to the condensed consolidated interim financial statements 24

Risks to our future success 32

Independent review report by KPMG LLP to Cable & Wireless Communications Plc 34

Responsibility statement 35

Important disclaimer 35

Operating performance information

H1 2014/15 CWC constant currency results detail 36

KPI detail 37

Exchange rates 38

EBITDA by currency 38

Condensed consolidated interim income statement

\* The results have been represented for the classification of Monaco in discontinued operations (note 7) and for Seychelles within continuing operations (note 5).

1 Includes discontinued operations

The notes on pages 24 to 31 are an integral part of these financial statements

Condensed consolidated interim statement of comprehensive income

The notes on pages 24 to 31 are an integral part of these financial statements

Condensed consolidated interim statement of financial position

The notes on pages 24 to 31 are an integral part of these financial statements

Condensed consolidated interim statement of changes in equity