TIDM75GL
RNS Number : 4046K
Cable & Wireless Limited
14 July 2011
Annual financial report Announcement
14 July 2011
CABLE & WIRELESS LIMITED
Annual financial report Announcement FOR THE year ENDED 31 march
2011
Cable & Wireless Limited (formerly Cable and Wireless plc)
(the Company) has submitted copies of the Annual Report and
Accounts for the year ended 31 March 2011 to the UK Listing
Authority.
This document has been submitted to the National Storage
Mechanism and will shortly be available for inspection at
www.hemscott.com/nsm.do
The Company's Annual Report and Accounts are also available on
the following website: www.cwc.com. To view the Annual Report and
Accounts, please paste the following URL into the address bar of
your browser:
http://www.cwc.com/live/investor-relations/financial-information/cable-w
ireless-limited.html
This announcement should be read in conjunction with the Annual
Report and Accounts for the year ended 31 March 2011. This
announcement constitutes the material required by DTR 6.3.5 to be
communicated to the media in unedited full text through a
Regulatory Information Service. This material is not a substitute
for reading the full Cable & Wireless Limited 2010/11 Annual
Report and Accounts.
The financial information included within this annual financial
report announcement has been extracted from the audited financial
statements of Cable & Wireless Limited for the year ended 31
March 2011 (which will shortly be delivered to the Registrar of
Companies) but does not constitute the Company's statutory
financial statements for 2010/11 or 2009/10 under Section 434 of
the Companies Act 2006.
Those accounts are prepared in accordance with accounting
standards applicable under generally accepted accounting principles
in the United Kingdom (UK GAAP) and the provisions of the Companies
Act 2006. They have been reported on by the Company's auditors,
whose audit report (i) was unqualified, (ii) did not include a
reference to any matters by way of emphasis without qualifying
their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The financial information in this annual financial report
announcement has been prepared in accordance with UK GAAP, with the
exception of the disclosure requirements.
EXTRACTS FROM THE CABLE & WIRELESS LIMITED 2010/11 ANNUAL
REPORT AND ACCOUNTS
The information below has been extracted from the Cable &
Wireless Limited 2010/11 Annual Report and Accounts and is included
solely for the purpose of complying with DTR 6.3.5 and the
requirements it imposes on issuers as to how to make public annual
financial reports.
Profit and loss account
For the year ended 31 March 2011
2010/11 2009/10
------------------------------------ ------------------------------------
Pre-exceptional Exceptional Pre-exceptional Exceptional
items items Total items items Total
Note US$m US$m US$m US$m US$m US$m
---------------- ------ --------------- ----------- ------ --------------- ----------- ------
Other operating
income 3 - - - 60 - 60
Administrative
expenses 4,5,6 (28) (140) (168) (63) (48) (111)
Operating loss (28) (140) (168) (3) (48) (51)
Income from
shares in
Group
undertakings
and joint
ventures 7 1 - 1 27 - 27
Other
non-operating
income 8,11 65 12 77 54 66 120
Other
non-operating
expenses 8,11 (5) - (5) (33) (281) (314)
Interest
receivable and
similar
income 9 22 - 22 8 - 8
Interest
payable and
similar
charges 10 (116) - (116) (129) - (129)
Loss on
ordinary
activities
before income
tax (61) (128) (189) (76) (263) (339)
Tax credit
/(expense) on
loss on
ordinary
activities 12 5 - 5 (5) - (5)
---------------- ------ --------------- ----------- ------ --------------- ----------- ------
Loss for the
financial
year (56) (128) (184) (81) (263) (344)
---------------- ------ --------------- ----------- ------ --------------- ----------- ------
Statement of total recognised gains and losses
For the year ended 31 March 2011
Restated
2010/11 2009/10
US$m US$m
-------------------------------------------- -------- ---------
Loss for the financial year (184) (344)
Actuarial losses on pension schemes (1) -
Cash received in respect of employee share
schemes 1 6
Share-based payment costs - 9
Fair value gains on assets held-for-sale 2 -
Exchange differences - 202
-------------------------------------------- -------- ---------
Total recognised gains and losses for the
financial year (182) (127)
-------------------------------------------- -------- ---------
The Company has changed its accounting policy on Investments in
Group undertakings. Please refer to note 32 for further details.
Balance sheet
As at 31 March 2011
2011 2010
Note US$m US$m
------------------------------------------ ----- --------- ---------
Fixed assets investments
Shares in Group undertakings 14 12,413 12,370
Shares in joint ventures 14 6 6
Investments
Held to maturity investments 15 85 79
Available-for-sale investments 15 31 30
12,535 12,485
Current assets
Debtors: amounts falling due within
one year 16 4,041 3,860
Available-for-sale investments 15 - 364
Cash at bank and in hand 7 3
Financial assets at fair value through
profit or loss 15 65 104
------------------------------------------ ----- --------- ---------
4,113 4,331
Current liabilities
Creditors: amounts falling due within
one year 17 (10,306) (10,072)
Liabilities at fair value through profit
or loss 18 - (30)
(10,306) (10,102)
------------------------------------------ ----- --------- ---------
Net current liabilities (6,193) (5,771)
------------------------------------------ ----- --------- ---------
Total assets less current liabilities 6,342 6,714
------------------------------------------ ----- --------- ---------
Creditors: amounts falling due after
one year 19 (316) (333)
Provisions for liabilities and charges 20 (11) (55)
Pensions and similar obligations 21 (38) (34)
------------------------------------------ ----- --------- ---------
Net assets 5,977 6,292
------------------------------------------ ----- --------- ---------
Capital and reserves
Called-up share capital 22 976 976
Share premium account 23 374 374
Profit and loss account 23 2,217 2,534
Other reserves 23 2,410 2,408
------------------------------------------ ----- --------- ---------
Shareholder's funds 5,977 6,292
------------------------------------------ ----- --------- ---------
Reconciliation of movements in shareholders' funds
For the year ended 31 March 2011
2011 2010
Note US$m US$m
-------------------------------------- ----- ------ ------
Loss for the financial year (184) (344)
Dividends (130) (355)
Actuarial losses on pension schemes (1) -
Cash received in respect of employee
share schemes 1 6
Shares allotted under share option
schemes (3) 19
Shares allotted under scrip dividend
scheme - 87
Own shares purchased - (2)
Share-based payment costs - 9
Equity component of convertible bond
acquired - 36
Equity component of convertible bond
disposed of - (34)
Reclassification of ESOP shares - 59
Fair value gains on assets held for
sale 2 -
Exchange difference on translation - 202
-------------------------------------- ----- ------ ------
Decrease in shareholders' funds (315) (317)
Prior year adjustment 32 - (129)
Opening shareholders' funds 6,292 6,738
-------------------------------------- ----- ------ ------
Closing shareholders' funds 5,977 6,292
-------------------------------------- ----- ------ ------
The Company has changed its accounting policy on Investments in
Group undertakings. Please refer to note 32 for further
details.
1 Statement of accounting policies
1.1 Accounting Policies
No amendments to standards have been adopted in these financial
statements for the first time.
The Company has changed its accounting policy on Investments in
Group undertakings. Please refer to note 32 for further
details.
1.2 Basis of preparation
The Company's financial statements have been prepared in
accordance with accounting standards applicable under generally
accepted accounting principles in the United Kingdom and the
provisions of the Companies Act 2006. They have been prepared on
the historical cost basis where appropriate.
The Company is exempt by virtue of s400 of the Companies Act
2006 from the requirement to prepare group financial statements.
These financial statements present information about the Company as
an individual undertaking and not about its group.
Under FRS1 (revised 1996), the Company is exempt from the
requirement to prepare a cash flow statement on the grounds that it
is a wholly owned subsidiary undertaking. A consolidated cash flow
statement is included in the financial statements of Cable &
Wireless Communications Plc in which the Company is consolidated
and which are publicly available from the address in note 26. The
following accounting policies have been applied consistently in
dealing with items which are considered material in relation to the
Company's financial statements.
As a result of the Group reorganisation, the functional currency
of the new ultimate Parent Company, CWC Plc, and the majority of
trading and financing companies of the Group, of which the Company
is a member, changed to US dollars in the prior year. In respect of
the Company, the Directors consider the US dollar to be the
functional currency reflecting the economic effects of the
underlying transactions, events and conditions for the Company. The
Company has therefore presented its financial statements in US
Dollars. The principal exchange rates used in preparing the Group
financial statements are as follows:
Year ended Year ended
31 March 31 March
2011 2010
----------- ----------- -----------
US$ : GBP
Average 1.5465 1.5904
Year end 1.6012 1.4884
----------- ----------- -----------
The financial statements have been prepared on a going concern
basis. The Directors have reviewed the financial position of the
Company, including the arrangements with Group undertakings, and
believe that it remains appropriate to prepare the financial
statements on a going concern basis. The financial statements do
not include any adjustments that would result from the going
concern basis of preparation being inappropriate.
The Company is exempt under FRS 29 Financial Instruments:
Disclosures from the requirement to provide its own financial
instruments disclosures on the grounds that they are included in
publicly available consolidated financial statements which include
disclosures that comply with the IFRS equivalent standard.
1.3 Use of estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
FRS 18 Accounting Policies requires that a description of the
impact of any change in estimation techniques should be provided
where the change has a material impact on the reported results for
the period.
1.4 Investments in Group undertakings and joint ventures
Investments in Group undertakings are included in the balance
sheet at historic cost less amounts written off in respect of any
impairment. Investments in joint ventures are included in the
balance sheet at cost.
The Company has changed its accounting policy on Investments in
Group undertakings. Please refer to note 32 for further
details.
1.5 Financial instruments
The Company classifies its financial assets into the following
categories: financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments and
available-for-sale financial assets. The classification depends on
the purpose for which the assets are held. The basis of determining
fair values is set out in note 1.6.
Management determines the classification of its financial assets
at initial recognition in accordance with FRS 26 Financial
Instruments: Recognition and Measurement and re-evaluates this
designation at every reporting date for financial assets other than
those held at fair value through profit or loss.
Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for
trading and those designated at fair value through profit or loss
at inception. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short-term
or if so designated by management. Derivatives are also categorised
as held for trading. Assets in this category are classified as
current assets if they are either held for trading or are expected
to be realised within a year of the balance sheet date.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial
assets that are either designated in this category or not
classified in any of the other categories. They are included in
non-current assets unless management intends to dispose of the
financial asset within 12 months of the reporting date. Purchases
and sales of financial assets are recognised on trade-date (the
date on which the Company commits to purchase or sell the
asset).
Receivables
Receivables are non-derivative financial assets with fixed or
determinable receipts that are not quoted in an active market. They
arise when the Company provides money, goods or services directly
to a third party or Group undertakings with no intention of trading
the receivable. They are included in current assets, except for
those with maturities greater than one year after the balance sheet
date (these are classified as non-current assets).
Receivables are recognised initially at fair value and
subsequently measured at amortised cost. Amortised cost is
determined using the effective interest method less allowance for
impairment. An allowance for impairment of receivables is
established when there is objective evidence that the Company will
not be able to collect all amounts due according to the original
terms of the receivables. The amount of the allowance is the
difference between the asset's carrying amount and the present
value of estimated future cash flows (discounted at the original
effective interest rate). The amount of the allowance is recognised
in the profit and loss account.
Recognition and measurement
Available-for-sale financial assets are recognised and are
subsequently carried at fair value. Receivables are carried at
amortised cost using the effective interest method. Financial
assets not carried at fair value through profit or loss are
initially recognised at fair value plus directly attributable
transaction costs.
Financial assets are derecognised when the rights to receive
cash flows from the assets have expired or have been transferred
and the Company has transferred substantially all risks and rewards
of ownership.
Unrealised gains and losses arising from changes in the fair
value of non-monetary securities classified as available-for-sale
are recognised in equity. When securities classified as
available-for-sale are sold or impaired, the accumulated fair value
adjustments are included in the profit and loss account.
The Company assesses at each reporting date whether there is
objective evidence that an investment or a group of investments is
impaired. In the case of equity securities classified as
available-for-sale, a significant or prolonged decline in the fair
value of the security below its cost is considered in determining
whether it is impaired. If any such evidence exists for
available-for-sale investments, the cumulative loss is removed from
equity and recognised in the profit and loss account. This loss is
measured as the difference between the acquisition cost and the
current fair value, less any impairment loss on that investment
previously recognised in the profit and loss account. Impairment
losses recognised on these instruments are not reversed through the
profit and loss account if the fair value of the instrument
increases in a later period.
Loans
Loans are recognised initially at fair value net of directly
attributable transaction costs incurred. Loans are subsequently
measured at amortised cost. Any difference between the proceeds
(net of transaction costs) and the redemption value is recognised
in the profit and loss account over the period of the loans using
the effective interest method.
Convertible bonds issued by the Company were initially
recognised at fair value. The bond was separated into a liability
and equity component. The liability component was recognised at
amortised cost. The equity component represented the residual of
the fair value of the bond less the liability component. The
liability component was subsequently measured on an amortised cost
basis.
Loans are classified as current liabilities unless the Company
has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting date.
1.6 Fair value estimation
The fair value of financial instruments traded in active markets
(such as available-for-sale securities) is based on quoted market
prices at the reporting date. The quoted market price used for
investments held by the Company is the current bid price. The
appropriate quoted market price for financial liabilities is the
current ask price.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Company uses a variety of methods and makes assumptions that are
based on market conditions existing at each reporting date.
The nominal value (less estimated impairments) of debtors and
payables are assumed to approximate their fair values. The fair
value of financial liabilities is estimated by discounting the
future contractual cash flows at the current market interest rate
that is available to the Company for similar financial instruments.
Discounted cash flows are used to determine the fair value for the
majority of remaining financial instruments.
1.7 Pensions
The Company is a member of the Group's defined benefit pension
scheme ("the Scheme") but is unable to identify its share of the
underlying assets and liabilities of the Scheme on a consistent and
reasonable basis and therefore, as required by FRS 17 Retirement
Benefits, accounts for the scheme as if it were a defined
contribution scheme. As a result, the amount charged to the
Company's profit and loss account represents the contributions
payable to the Scheme in respect of the accounting period.
The Company also operates an unfunded pension plan to cover the
costs of former Directors' and other senior employees' pension
entitlements. Provision is made in accordance with FRS 17
Retirement Benefits in the Company's financial statements for the
expected costs of meeting the associated liabilities. These costs
are recorded in administrative expenses.
Costs in respect of the Company's defined contribution pension
schemes are charged to the profit and loss account on an accruals
basis as contributions become payable.
1.8 Tax
The charge or credit for tax is based on the result for the year
and takes into account tax deferred due to timing differences
between the treatment of certain items for tax and accounting
purposes.
Deferred tax assets are recognised to the extent that they are
regarded as recoverable. Deferred tax assets are regarded as
recoverable to the extent that on the basis of all available
evidence, it can be regarded as more likely than not that there
will be suitable taxable profits from which the future reversal of
the underlying timing differences can be deducted.
Except where otherwise required by accounting standards, full
provision without discounting is made for all timing differences
that have arisen but not reversed at the balance sheet date.
1.9 Share-based compensation
The Company operates various equity-settled, share-based
compensation plans. The fair value of the employee services
received in exchange for the grant of the options is recognised as
an expense over the vesting period. The total amount to be expensed
over the vesting period is determined by reference to the fair
value of the options granted, which excludes the impact of any
non-market vesting conditions (for example, service, profitability
and sales growth targets). Non-market vesting conditions are
included in estimates about the number of options that are expected
to vest. At each balance sheet date, the Company revises its
estimates of the number of options that are expected to vest. It
recognises the impact of the revision of original non-market
estimates, if any, in the profit and loss account, and a
corresponding adjustment to shareholder's funds over the remaining
vesting period. The expense recognised by the Company relates only
to the Company's employees.
Share-based expenses relating to grants of the Company's equity
made to employees of subsidiary companies are recognised in the
profit and loss account of the subsidiary. The Company recognised
these as increases in the investment in the Group undertaking with
a corresponding increase recognised in reserves.
Where new shares are issued, the proceeds received net of any
directly attributable transaction costs are credited to share
capital and share premium when the options are exercised.
Where continuing employees withdraw from share-based
compensation plans the remaining charge is recognised
immediately.
1.10 The Cable & Wireless Communications Share Ownership
Trust (ESOP) and purchase of own shares by the Company
The financial statements of the Company include the assets and
related liabilities of The Cable & Wireless Communications
Share Ownership Trust, formerly the Cable and Wireless Employee
Share Ownership Plan Trust (ESOP).
The ESOP holds shares in both Cable & Wireless
Communications Plc and Cable & Wireless Worldwide plc. As the
shares are not those of the Company, these have not been treated as
treasury shares. Instead, the assets and liabilities have been
recognised on balance sheet and recorded at fair value.
1.11 Foreign currency translation
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies
are recognised in the profit and loss account.
2 Company's cash flow statement
Under FRS 1 (Revised), the Company is exempt from the
requirement to prepare a cash flow statement on the grounds that it
is a wholly owned subsidiary undertaking. A consolidated cash flow
statement is included in the financial statements of Cable &
Wireless Communications Plc in which the Company is consolidated
and which are publicly available from the address in note 26.
3 Other operating income
2010/11 2009/10
US$m US$m
---------------- ------- -------
Management fees - 60
---------------- ------- -------
Other operating income relates to management fees payable by
subsidiaries of the Company, for management of intercompany loans
and for the provision of management and support services and
branding fees.
4 Remuneration of Directors
No remuneration was paid by the Company to its Directors. The
amounts paid by the Group in respect of the Company's Directors are
shown below:
2010/11 2009/10
US$m US$m
-------------------------------------------------- ------- -------
Directors' remuneration 2 5
Amounts paid or payable under long-term incentive
schemes - 6
Other pension costs - 1
Remuneration of Directors 2 12
-------------------------------------------------- ------- -------
Directors' remuneration includes benefits in kind. Benefits in
kind includes Company provided life assurance, professional advice,
chauffeur travel and the reimbursement of costs associated with
accommodation and relocation.
The aggregate of emoluments and amounts receivable under
long-term incentive schemes of the highest paid Director was
US$1,080,244 (2009/10 - US$2,601,606). In addition, the highest
paid Director received an aggregate of US$193,313, paid in respect
of cash allowances and employer's contributions into defined
contribution pension plans. During the year, the highest paid
Director received no shares under long term incentive schemes or
exercised share options.
Number of Directors
2010/11 2009/10
---------------------------------------------------- ------------- -------
The number of Directors who exercised share options
was: - 3
The number of Directors in respect of whose services
shares were received or receivable under long-term
incentive schemes was: - 6
----------------------------------------------------- ------------ -------
Directors benefited from qualifying third party indemnity
provisions in place during the financial year. It is the Company's
intention that indemnity provisions be provided for all Directors
going forward.
There were no Directors' advances, credits and guarantees during
the financial year or at the date of this report.
5 Information regarding employees and auditors
The average number of persons employed by the Company (including
Directors) during the year was:
2010/11 2009/10
-------------------------------------- ------- -------
Average number of persons employed by
the Company 19 66
-------------------------------------- ------- -------
The costs for the year were:
2010/11 2009/10
US$m US$m
------------------------------------ ------- -------
Wages and salaries - 16
Equity-settled share-based payments - 9
Social security costs - 2
Other pension costs - 9
------------------------------------ ------- -------
Employee costs - 36
------------------------------------ ------- -------
All employee costs for persons employed by the Company during
the year were borne by another Group company.
Auditor's remuneration for audit and other services was
US$75,000 (2009/10 - US$100,000), in respect of these financial
statements. Amounts paid to the Company's auditors in respect of
services to the Company, other than in the course of the audit of
the Company's financial statements have not been disclosed as the
information is required instead to be disclosed on a consolidated
basis in the accounts of the ultimate Parent Company, Cable &
Wireless Communications Plc.
6 Exceptional administrative expenses
2010/11 2009/10
US$m US$m
------------------------------------ ------- -------
Pension costs 150 -
Other administration expenses (10) 17
Redundancy and other demerger costs - 31
------------------------------------ ------- -------
Exceptional administrative expenses 140 48
------------------------------------ ------- -------
The Company incurred costs of $150 million in respect of its
one-off contribution to payments made to the Group-wide pension
scheme. See note 21 for further detail on these contributions.
Other administration expenses comprised of a $17 million credit to
the Company in respect of the successful costs judgement made
against Digicel (note 29) and $7 million of costs in relation to
the acquisition by the Cable & Wireless Communications Group of
the Bahamas Telecommunications Company, which was completed on 6
April 2011. No exceptional redundancy and demerger costs were
incurred during the year (2009/10 - staff costs of US$6 million and
legal fees of US$25 million relating to the demerger).
7 Income from shares in Group undertakings and joint
ventures
2010/11 2009/10
US$m US$m
----------------------------------------- ------- -------
Dividends from Group undertakings - 25
Dividends from joint ventures 1 2
----------------------------------------- ------- -------
Income from shares in Group undertakings
and joint ventures 1 27
----------------------------------------- ------- -------
8 Other non-operating income / (expenses)
The following transactions arise in the normal course of the
Company's operations as an investment holding company (see note
14).
2010/11 2009/10
US$m US$m
------------------------------------ ------- -------
Provisions against loans (5) (33)
Reversal of provision against loans 65 54
------------------------------------ ------- -------
Other non-operating income 60 21
------------------------------------ ------- -------
9 Interest receivable and similar income
2010/11 2009/10
US$m US$m
----------------------------------------- ------- -------
Amounts owed by Group undertakings 8 2
Deposits and short-term loan interest 2 6
Exchange gains on translation of foreign
currency denominated loans 12 -
Interest receivable and similar income 22 8
----------------------------------------- ------- -------
10 Interest payable and similar charges
2010/11 2009/10
US$m US$m
------------------------------------------- ------- -------
Amounts owed to Group undertakings 84 47
Bank loans and overdrafts 2 2
Other medium term loans with third parties 30 40
Exchange losses on translation of foreign
currency denominated loans - 40
Interest payable and similar charges 116 129
------------------------------------------- ------- -------
11 Exceptional non-operating income / (expenses)
2010/11 2009/10
US$m US$m
--------------------------------------------- ------- -------
Gains on derivatives 12 19
Releases relating to previously discontinued
businesses - 3
Gain on disposal of investment - 44
Impairment of investments - (281)
Exceptional non-operating expenses 12 (215)
--------------------------------------------- ------- -------
The Company holds forward exchange contracts hedging US dollar
exposures and future sterling obligations regarding the 2012 bond.
The Company did not apply hedge accounting to these contracts and
as such they were revalued to fair value through profit or loss.
See note 15 for further information.
12 Income tax
Tax on loss on ordinary activities
2010/11 2009/10
US$m US$m
----------------------------------------------------- -------- --------
UK corporation tax at 28% (2010 - 28%) - 2
Double taxation relief - (2)
----------------------------------------------------- -------- --------
UK corporation tax after double taxation relief - -
Overseas taxation - 2
Adjustment in respect of prior years (5) 3
-----------------------------------------------------
Tax (credit)/expense on loss on ordinary activities (5) 5
----------------------------------------------------- -------- --------
Factors affecting the current tax charge
The current tax credit for the year is US$5 million (2009/10 -
US$5 million charge). The tax provision was higher than the
standard rate of corporation tax in the UK of 28% (2010: 28%). The
differences are explained below:
2010/11 2009/10
US$m US$m
--------------------------------------------- -------- --------
Loss before taxation (189) (339)
--------------------------------------------- -------- --------
Tax at UK statutory rate (53) (95)
Group dividends receivable - (7)
Expenditure not deductible for tax purposes (11) 100
Other timing differences 8 10
Group relief surrendered/(claimed) 56 (6)
--------------------------------------------- -------- --------
Current tax charge for the current period - 2
Adjustment in respect of prior periods (5) 3
--------------------------------------------- -------- --------
Current tax (credit)/charge (5) 5
--------------------------------------------- -------- --------
The Budget on 23 March 2011 announced a change to the UK
corporation tax rate to 26%. This was substantively enacted on 29
March 2011 and is effective from 1 April 2011.
Further reductions to the UK corporation tax rate were announced
in the March 2011 Budget. The changes, which are expected to be
enacted separately each year, will reduce the rate by 1% per annum,
to 23% by 1 April 2014. The changes had not been substantively
enacted by the balance sheet date and therefore are not recognised
in these financial statements.
13 Employee share schemes
Subsequent to the Scheme of Arrangement and demerger, the
majority of the Group's participants' outstanding Cable and
Wireless plc share and option awards rolled over into Cable &
Wireless Communications Plc equivalent awards. A limited number of
participants obtained an entitlement to one Cable & Wireless
Communications Plc share and one Cable & Wireless Worldwide plc
(an unrelated company) share in lieu of each Cable and Wireless plc
share. The quantity of shares under awards were converted in
accordance with plan rules to adjust for the demerger of the Cable
& Wireless Worldwide business.
Option and share prices granted during the year are disclosed in
sterling reflecting the currency in which the ordinary shares of
Cable and Wireless plc were quoted.
Share option schemes
The Company does not currently have any outstanding share option
awards over its own shares (2009/10 - nil). There are 13,705,773
outstanding share option awards relating to options granted by the
Company to senior employees (2009/10 - 14,130,773). These options
were originally issued over the Company's shares at exercise prices
between 100-149 pence (12,364,356 options) and 150-199 pence
(1,341,417 options). All options have vested in full. Subsequent to
the Scheme of Arrangement, these options have been redesignated as
an option over a stapled unit of one share in Cable & Wireless
Communications Plc and one share in Cable & Wireless Worldwide
plc.
At 31 March 2011, the share prices of the two companies were
such that the liability was nil (2009/10 - US$18 million,
classified as an Other creditor).
Other equity instrument awards
Performance Share Plan (PSP)
Executive Directors and other senior executives can receive
awards of performance shares at nil cost.
Prior to the Scheme of Arrangement and demerger, performance
share awards by Cable and Wireless plc were subject either to
relative or absolute total shareholder return (TSR) performance of
Cable and Wireless plc or the Cable & Wireless Communications
business.
Subsequent to the Scheme of Arrangement and demerger, some
individuals' awards were adjusted into an award over shares in
Cable & Wireless Communications Plc and some individuals
retained their right to an award over one Cable & Wireless
Communications Plc and one Cable & Wireless Worldwide plc share
for every Cable and Wireless plc share they previously held.
TSR is the main performance measure used in share plans where
performance conditions apply as it provides an objective external
measure of financial performance.
Restricted share plan (RSP)
The RSP provides for awards of restricted shares to executive
Directors and selected employees, primarily as a retention or a
recruitment tool. Generally, restricted shares awarded under this
plan vest over periods of one to three years.
Prior to the Scheme of Arrangement and demerger, RSP awards made
to Cable & Wireless Communications employees were made in
respect of shares in the Company. Subsequent to the Scheme of
Arrangement and demerger, these awards have been adjusted to be an
award over Cable & Wireless Communications Plc ordinary shares
of an equivalent value.
Stock appreciation rights
Stock appreciation rights are used to replicate exactly the
types of awards described above, but rewards are delivered as a
cash equivalent. If it is used in exceptional cases for countries
in which tax or legal issues preclude the use of real shares or
share options.
Cable & Wireless Communications Share Purchase Plan
(SPP)
Prior to the scheme of arrangement and demerger, the Company
offered its employees, who are chargeable to income tax under
Section 15 Income Tax (Earnings and Pensions) Act 2003, the Cable
& Wireless Communications share purchase plan which is an HMRC
approved share incentive plan. Under the SPP, employees can
contribute up to a value of GBP1,500 or 10% of salary each tax year
(whichever is the lower), to buy partnership shares and the Company
offered a match of one share for each partnership share purchased.
Subsequent to the scheme of arrangement and demerger the SPP has
been adjusted to provide partnership shares in Cable & Wireless
Communications Plc.
The Cable & Wireless Communications Share Ownership Trust
(ESOP)
The Cable & Wireless Communications Share Ownership Trust,
formerly the Cable and Wireless Employee Share Ownership Plan, is a
discretionary trust which was funded by loans from the Company to
acquire shares in the Company. Subsequent to the Scheme of
Arrangement and demerger, the ESOP continues to be used to satisfy
existing options and awards under incentive plans.
On 24 June 2009, the Company transferred 3,000,000 treasury
shares to the ESOP. On 10 March 2010, the Company transferred
28,259,496 treasury shares to the ESOP.
At 31 March 2011, the Trust held 40,054,310 shares in Cable
& Wireless Communications Plc and 19,798,744 shares in Cable
& Wireless Worldwide plc (2009/10 - 43,010,495 shares in Cable
& Wireless Communications Plc and 43,010,495 shares in Cable
& Wireless Worldwide plc) with a market value of US$46 million
(2009/10 - US$94 million). Refer to note 15 for further
information.
Other equity instrument awards
The Company equity instrument awards operating prior to the
Scheme of Arrangement (as at 19 March 2010) are as follows:
Awards of Company shares granted
between
1 April 2009 and 19 March 2010
Weighted
average fair Features
value (pence incorporated
Shares / share) in scheme
------------ ----------- -------------- ---------------
RSP 717,236 130 -
SARs 589,039 142 -
SPP scheme 1,801,989 140 -
PSP 17,596,285 71 TSR conditions
------------ ----------- -------------- ---------------
The Company made no equity instrument awards during 2010/11.
The PSP grants made during 2009/10 have performance criteria
attached. The remaining awards had no performance conditions
attached.
A fair value exercise was completed at 31 March 2010 for grants
made during 2009/10 using the Monte Carlo method. The Monte Carlo
pricing model assumptions used in the pricing of the performance
share plan grants in 2009/10 were:
2009/10
------------------------------ ----------
Weighted average share price
(pence) 140
Dividend yield 6.2%
Expected volatility 33.2%
Risk-free interest rate 1.8%
Expected life in years 2.9 years
------------------------------ ----------
The cost of such options and awards is borne by participating
businesses and the Company has borne its charge as set out in notes
4 and 5. Movements in the number of share options outstanding and
their related weighted average exercise prices are presented
below:
31 March 2010
---------------------------
Weighted
average Number of
exercise price options
(pence/share) (000)
--------------------------------- --------------- ----------
Outstanding at 1 April 110 24,394
Forfeited in the period - -
Exercised in the period 102 (8,948)
Lapsed in the period 150 (2,098)
Redesignated to stapled options (112) (13,348)
--------------------------------- --------------- ----------
Outstanding at 31 March - -
--------------------------------- --------------- ----------
Exercisable at 31 March - -
--------------------------------- --------------- ----------
Subsequent to 19 March 2010, these options have been
redesignated as an option over a stapled unit of one share in Cable
& Wireless Communications Plc and one share in Cable &
Wireless Worldwide plc. The liability for these stapled unit
options was nil (2009/10 - US$18 million classified as an Other
Creditor).
The Company has applied the requirement of FRS 20 Share-based
Payment - Vesting Conditions and Cancellations and has elected to
adopt the exemption to apply FRS 20 only to awards made after 7
November 2002.
14 Fixed asset investments
Restated Restated
Joint Group
ventures undertakings Total
US$m US$m US$m
------------------------------------ --------- ------------- ---------
Cost
At 1 April 2010 12 12,345 12,357
Prior year adjustment (note 32) - 281 281
Additions - 34 34
Disposals - (34) (34)
Transfer of provisions - 61 61
At 31 March 2011 12 12,687 12,699
------------------------------------ --------- ------------- ---------
Loans
At 1 April 2010 - 57 57
Additions - 3 3
Loans repaid and transferred - (16) (16)
At 31 March 2011 - 44 44
------------------------------------ --------- ------------- ---------
Provisions and amounts written off
At 1 April 2010 (6) (32) (38)
Prior year adjustment (note 32) - (281) (281)
Additions - (5) (5)
Releases - 61 61
Transfer of provisions - (61) (61)
At 31 March 2011 (6) (318) (324)
------------------------------------ --------- ------------- ---------
Net book value
At 31 March 2011 6 12,413 12,419
------------------------------------ --------- ------------- ---------
At 31 March 2010 6 12,370 12,376
------------------------------------ --------- ------------- ---------
The Company's investment in joint ventures comprised US$6
million of unlisted shares (2009/10 - US$6 million of unlisted
shares).
In June 2010, the Company transferred its investment in Cable
& Wireless (Seychelles) Limited to CWIG Limited for US$17
million. CWIG Limited issued an additional share to the Company in
respect of the consideration
In June 2010, the Company transferred its investment in CWIG
Limited to Sable Holding Limited for US$17 million. Sable Holding
Limited issued an additional share to the Company in respect of the
consideration.
During the year, five subsidiaries of the Company being, Cable
& Wireless Asia and Pacific Limited, Cable & Wireless Hong
Kong Finance, Cable & Wireless U.K. Finance, Cable &
Wireless U.K. Finance No. 1 Limited and Cable & Wireless U.K.
Finance No. 3 were liquidated. The total investment had previously
been fully provided for.
During 2009/10, the Company entered into a series of
restructuring transactions with its subsidiaries:
On 9 November 2009:
-- Sable Holding Limited transferred investments to the Company
for a total of US$23,684 million relating to its investments in
Cable & Wireless Hong Kong Finance (US$15,087 million), Cable
& Wireless U.K. Finance (US$2,941 million), Cable &
Wireless U.K. Finance No. 3 (US$1,635 million), Cable &
Wireless U.K. Finance No. 1 (US$1,727 million) and Cable &
Wireless Asia and Pacific Limited (US$2,294 million). The
consideration was offset against an amount owed by Sable Holding
Limited and the balance left outstanding as an amount payable at 31
March 2010.
-- Following the transfer of the investments the Group
undertakings returned their share capital to the Company for the
settlement of intercompany debt to the equivalent value.
-- Cable & Wireless UK Finance made a final dividend payment
of US$143 million to the Company, treated as a return of
capital.
On 14 December 2009:
-- the entire share capital of a Group company, Cable &
Wireless International Finance B.V., was sold to the Company by its
subsidiary, Sable Holding Limited, at market value for US$9
million. The consideration was satisfied by the assignment of an
intercompany creditor due to Sable Holding Limited.
-- Cable & Wireless (UK) Group Limited sold the entire share
capital of its subsidiary, Cable & Wireless UK Holdings
Limited, to the Company for market value of US$2,600 million.
Consideration was satisfied by an intercompany creditor assigned to
Sable Holding Limited.
On 19 March 2010, as part of the Group reorganisation and
demerger, the entire share capital of Cable & Wireless UK
Holdings Limited and the Cable & Wireless Worldwide Brand were
transferred to Cable & Wireless Communications Plc, the
ultimate Parent Company, for consideration of US$2,644 million. A
profit of US$44 million was made on these disposals and is included
in exceptional non-operating income.
Other transactions between the Company and its subsidiaries
during 2009/10 were:
-- Pender Insurance Limited repaid part of its share capital of
US$64 million. As a result, the Company reviewed the provision
carried against Pender Insurance Limited loans, which was reduced
by US$54 million.
-- Cable & Wireless UK Finance No. 5 Limited was liquidated
during the year. The investment of US$79 million had been fully
provided for.
-- The Company acquired loans from another Group undertaking in
relation to Delaware Inc and Petrel Communications SA with a book
value of US$33 million. The loans were fully provided for by the
Company during the year.
Based on the change in accounting policy (note 32), the Company
has carried out a review to determine whether there has been
impairment in the carrying values of its fixed asset investments in
line with FRS 11 Impairment of fixed assets and goodwill. The
review was based on a combination of discounted cash flow analysis,
using the Group's approved five year business plan, and net asset
values. No impairments were recorded.
In 2009/10, the value of the Company's investment in Sable
Holding Limited decreased by US$281 million. The decrease was due
to restructuring transactions associated with the demerger of the
Cable & Wireless Worldwide business, including the reallocation
of central costs into a subsidiary of Sable Holding Limited and
increased financing arrangements with third parties within
subsidiaries of Sable Holding Limited. The impairment was charged
to the profit and loss account (note 11). The valuation was
determined by discounting future cash flows based on the approved
five year business plan extrapolated at long term growth rates of
between 0.5% and 2.0% at pre-tax discount rates of between 7% and
12% dependent on the risk adjusted cost of capital of the different
investments.
15 Financial assets
Movements in available-for-sale financial assets for the year
are as follows:
UK
Cash Government Short-term
Eurobonds collateral gilts deposits Total
US$m US$m US$m US$m US$m
------------------ ---------- ----------- ----------- ----------- ------
At 1 April 2010 2 2 28 362 394
Fair value gains - - 2 - 2
Disposals (2) (2) - (362) (366)
Foreign exchange - - 1 - 1
------------------ ---------- ----------- ----------- ----------- ------
At 31 March 2011 - - 31 - 31
------------------ ---------- ----------- ----------- ----------- ------
Current - - - - -
------------------ ---------- ----------- ----------- ----------- ------
Non-current - - 31 - 31
------------------ ---------- ----------- ----------- ----------- ------
Movements in other financial assets for the year are as
follows:
Held to maturity Fair value through profit
investments or loss
-------------------------- ------------------------------
Listed Derivative ESOP
bonds instruments shares Total
US$m US$m US$m US$m
------------------ -------------------------- ------------- ------- ------
At 1 April 2010 79 1 103 104
Movements - 12 - 12
Disposals - - (51) (51)
Foreign exchange 6 - - -
------------------ -------------------------- ------------- ------- ------
At 31 March 2011 85 13 52 65
------------------ -------------------------- ------------- ------- ------
Current - 13 52 65
------------------ -------------------------- ------------- ------- ------
Non-current 85 - - -
------------------ -------------------------- ------------- ------- ------
The table below analyses financial instruments carried at fair
value by valuation method. The different levels are defined as
follows:
Level 1 - Fair values measured using quoted prices (unadjusted)
in active markets for identical assets or liabilities.
Level 2 - Fair values measured using inputs, other than quoted
prices included within Level 1, that are observable for the asset
or liability either directly (from prices) or indirectly (derived
from prices).
Level 3 - Fair values measured using inputs for the asset or
liability that are not based on observable market data.
At 31 March 2011
Level Level Level
1 2 3 Total
US$m US$m US$m US$m
----------------------------------- ------ --------- ------ --------
UK Government Gilts 31 - - 31
Cable & Wireless Worldwide plc
shares at fair value through the
profit or loss 20 - - 20
Cable & Wireless Communications
Plc shares at fair value through
the profit or loss 32 - - 32
Derivative instruments - 13 - 13
Total financial assets at fair
value 83 13 - 96
--------------------------------------- ------ --------- ------ --------
On demerger, shares in The Cable & Wireless Communications
Share Ownership Trust, formerly the Cable and Wireless Employee
Share Ownership Plan Trust (ESOP) were converted from 43 million
Cable and Wireless plc shares to 43 million Cable & Wireless
Communications Plc shares and 43 million Cable & Wireless
Worldwide plc shares. The Cable & Wireless Communications Plc
shares (a related listed company) and the Cable & Wireless
Worldwide plc shares (an unrelated listed company) have been
recognised as investments at fair value through profit or loss as
they represent shares that are not equity instruments of the
Company. A portion of these shares with a market value of US$30
million were delivered during the year to the Cable & Wireless
Worldwide Group as part of the demerger agreement.
At 31 March 2011, the Company held forward exchange contracts to
sell US$260 million (2009/10 - US$40 million) hedging US dollar
exposures and future sterling obligations regarding the 2012 bond.
At 31 March 2011, the fair value of these contracts was an asset of
US$13 million (note 15) (2009/10 - US$1 million asset). The Company
did not apply hedge accounting to these contracts and as such they
were revalued to fair value through the profit and loss
account.
16 Debtors
2010/11 2009/10
US$m US$m
----------------------------------------- -------- --------
Amounts falling due within one year
Amounts owed by parent undertaking 4,031 3,845
Amounts owed by subsidiary undertakings 5 5
Taxation and social security - 7
Other debtors 5 2
Prepayments and accrued income - 1
----------------------------------------- -------- --------
Total debtors 4,041 3,860
----------------------------------------- -------- --------
There is no material difference between the carrying value and
fair value of debtors at 31 March 2011.
17 Creditors: due within one year
2010/11 2009/10
US$m US$m
----------------------------------------- -------- --------
Amounts falling due within one year
Trade and other creditors 5 25
Amounts owed to subsidiary undertakings 10,094 9,871
Taxation and social security 133 140
Accruals and deferred income 28 36
Sterling secured loans repayable
in 2012 46 -
----------------------------------------- -------- --------
Total creditors 10,306 10,072
----------------------------------------- -------- --------
There is no material difference between the carrying value and
fair value of creditors at 31 March 2011.
18 Financial liabilities at fair value through profit or
loss
At 31 March 2011, the Company had no derivative financial
liabilities (2009/10 - US$30 million, representing Cable &
Wireless Worldwide plc shares which have now been delivered to the
Cable & Wireless Worldwide Group as part of the demerger
agreement).
19 Creditors: due after one year
Non-current creditors are comprised of the following loans:
2010/11 2009/10
US$m US$m
------------------------------------ -------- --------
Sterling secured loans repayable
in 2012 - 43
Sterling unsecured bonds repayable
in 2012 316 290
Total non-current loans 316 333
------------------------------------ -------- --------
a) Sterling secured loans repayable in 2012
A $46 million loan facility due in 2012 is secured by bonds held
by the Company with a carrying amount of US$85 million (see note
15). These bonds were issued by Cable and Wireless International
Finance BV (a subsidiary).
b) Sterling unsecured bonds repayable in 2012
The sterling bond is a GBP200 million listed bond due in 2012
with a balance at 31 March 2011, net of costs, of US$316 million
(2009/10- US$290 million). Interest is payable at 8.75% per
annum.
The fair value of the bond was not materially different from its
carrying amount. Market values obtained from third parties have
been used to determine the fair value of the bond.
20 Provisions for liabilities and charges
At 31 Unused
March amounts Amounts At 31 March
2010 Additions reversed used 2011
Note US$m US$m US$m US$m US$m
------------ ------- ---------- ---------- --------- ------- -----------
Redundancy (i) 3 - - (3) -
Property (ii) 6 - - - 6
Other (iii) 46 3 (12) (32) 5
Total Provisions 55 3 (12) (35) 11
--------------------- ---------- ---------- --------- ------- -----------
i) Redundancy
In prior years, provision was made for the total employee
related costs of redundancies. The provision was fully utilised
prior to the reporting date.
ii) Property
Provision has been made for the lower of the best estimate of
the unavoidable lease payments or cost of exit in respect of vacant
properties. Unavoidable lease payments represent the difference
between the rentals due and any income expected to be derived from
the vacant properties being sub-let. The provision is expected to
be utilised over the lease contract life.
iii) Other
Other provisions include amounts relating to specific legal
claims against the Company and amounts relating to acquisitions and
disposals of Group companies and investments. The increase in other
provisions of US$3 million includes restructuring and demerger
costs. The reversal of US$12 million reflects the reassessment of
risks on existing claims during the year.
21 Pension and similar obligations
The Company is a member of a Group-wide pension scheme providing
benefits based on final pensionable pay. Because the Company is
unable to identify its share of the scheme assets and liabilities
on a consistent and reasonable basis, as permitted by FRS 17
Retirement Benefits, the scheme has been accounted for, in these
financial statements, as if the scheme was a defined contribution
scheme.
The latest triennial valuation was carried out by Towers Watson
Limited as at 31 March 2010. An agreement was reached between the
Trustees of the Group's pension scheme and the Group to remove the
deficit calculated by this valuation by 2016.
The Group paid a total contribution of $157 million (2009/10 -
GBP98 million) in 2010/11, comprising exceptional deficit funding
of $149 million and normal contributions of $8 million (2009/10 -
$35 million) to meet the cost of future benefit accrual and
expenses, to recover part of the deficit on the scheme funding
basis and to meet the cost of the agreed de-risking of the scheme's
investment strategy. A deficit funding plan was also agreed with
the Trustees of the Group pension scheme which includes additional
payments from 2014 to 2016 totalling $102 million (GBP64 million).
These contributions are based on best estimated investment returns
and are subject to the outcome of the next full valuation due in
March 2013.
The Company is not able to separate the performance of the
Group-wide scheme to give the element that relates solely to the
Company's employees. As an indication, however, the Cable &
Wireless Communications Group-wide scheme had a deficit at 31 March
2011, after the impact of minimum funding requirements in respect
of contributions due from 2014 to 2016, of $81 million, compared
with US$165 million deficit at 31 March 2010.
More details are included in the financial statements of Cable
& Wireless Communications Plc for the year ended 31 March 2011.
These accounts can be obtained from the Company Secretary, Cable
& Wireless Communications Plc, 3rd Floor, 26 Red Lion Square,
London, WC1R 4HQ.
The exceptional pension cost charged for the year represents
contributions payable by the Company to the schemes described in
note 1 to these financial statements. During the year these
contributions amounted to $150 million (2009/10 - $4 million). No
amounts were outstanding at the end of the financial year in
respect of this charge.
The Company also operates unfunded pension plans to cover the
costs of former Directors' and other senior employees' pension
entitlements. Provision is made in the Company's financial
statements for the expected costs of meeting the associated
liabilities and is disclosed as the retirement benefit obligation
on the Company's balance sheet.
The major assumptions used in the valuation of the Group-wide
scheme and unfunded schemes at the end of the year were:
2010/11 2009/10
% %
------------------------------------------------------ -------- --------
Inflation assumption 3.4 3.6
Rate of increase in salaries (1) 3.9 4.1
Rate of increase in pensions in payment and deferred 2.2 to 2.3 to
pensions (2) 3.3 3.5
Discount rate applied to scheme liabilities 5.6 5.5
------------------------------------------------------ -------- --------
(1) Not applicable to unfunded schemes.
(2) In excess of any Guaranteed Minimum Pension element.
The assumptions used by the actuary are best estimates chosen
from a range of possible actuarial assumptions which, due to the
timescale covered, may not necessarily be borne out in
practice.
Movements in present value of defined benefit obligation
Unfunded schemes
31 March 31 March
2011 2010
US$m US$m
--------------------------------------- --------- ---------
Obligation at 1 April (34) (28)
Interest cost (2) (2)
Actuarial losses recognised in equity (1) (8)
Assets divested on demerger - 3
Benefits paid 1 1
Exchange differences on translation (2) -
--------------------------------------- --------- ---------
Obligation at 31 March (38) (34)
--------------------------------------- --------- ---------
22 Called-up share capital
31 March 31 March
2011 2010
US$m US$m
--------------------------------------------- --------- ---------
Allotted, called-up and fully paid
2,624,571,985 ordinary shares of 25
pence each
(2009/10 - 2,624,571,985 ordinary shares of
25 pence each) 976 976
--------------------------------------------- --------- ---------
During 2009/10, shares with a cash equivalent value of US$87
million (GBP56 million) were issued as payment for dividends by
scrip. This represents a non-cash transaction.
23 Reserves
Profit
Fair and
Share Share Special Other value loss
capital premium reserve reserves reserve account Total
US$m US$m US$m US$m US$m US$m US$m
--------------------- -------- -------- -------- --------- -------- -------- -------
At 1 April 2010 976 374 2,139 262 7 2,534 6,292
Loss for the year - - - - - (184) (184)
Actuarial losses
on pension schemes - - - - - (1) (1)
Fair value gains
on assets held for
sale - - - - 2 - 2
Dividends - - - - - (130) (130)
Cash received in
respect of employee
share schemes - - - - - 1 1
Shares allotted
under share option
schemes - - - - - (3) (3)
At 31 March 2011 976 374 2,139 262 9 2,217 5,977
--------------------- -------- -------- -------- --------- -------- -------- -------
No treasury shares were cancelled during the periods presented.
On 10 March 2010, the Company transferred 28 million treasury
shares to the ESOP Trust. In addition, on 24 June 2009, the Company
transferred 3 million treasury shares to the ESOP Trust. 12 million
treasury shares were transferred to the ESOP trust on 13 February
2009.
At 31 March 2011, there were no treasury shares held by the
Company (2009/10 - Nil). For the year ended 31 March 2011, the
aggregate nominal value of shares allotted in the 2009/10 was US$21
million.
The special reserve relates to the cancellation of the share
premium account approved at the 2003 Annual General Meeting and
confirmed by the Court in February 2004. It will be reduced from
time to time by the amount of any increase in the paid-up share
capital and share premium account after 20 February 2004 resulting
from the issue of new shares for cash or other new consideration.
The special reserve will not be treated as realised profits until
any debt or claim outstanding as at 20 February 2004 has been
repaid or remedied.
Other reserves include a capital redemption reserve of US$156
million (2009/10 - US$156 million), US$30 million (2009/10 - US$30
million) relating to unrealised gains on disposal of investments
and US$76 million (2009/10 - US$76 million) relating to rights
granted to equity instruments of the Company to the employees of
subsidiaries of the Company.
24 Deferred taxation
No deferred tax is recognised on the unremitted earnings of
overseas subsidiaries and joint ventures. Due to the availability
of losses and other relief, no tax is expected to be payable on
them in the foreseeable future.
As at 31 March 2011, the Company had unrecognised deferred tax
assets in the UK relating to capital allowances of US$3 million
(2009/10 - US$3 million) and other timing differences of US$67
million (2009/10 - US$88 million).
25 Currency analysis
The carrying amounts of the Company's cash and cash equivalents,
held to maturity investments, available-for-sale investments and
borrowings are denominated in the following currencies:
31 March 2011 31 March 2010
------------------------- -------------------------
Financial Financial
investments Borrowings investments Borrowings
US$m US$m US$m US$m
----------- ------------ ----------- ------------ -----------
Sterling 156 362 519 333
US dollar 32 - 60 -
Euro - - 1 -
----------- ------------ ----------- ------------ -----------
Total 188 362 580 333
----------- ------------ ----------- ------------ -----------
26 Related party transactions
The Company's immediate Parent and ultimate Parent Company is
Cable & Wireless Communications Plc, incorporated in
England.
The largest and smallest Group in which the results of the
Company are consolidated is that headed by Cable & Wireless
Communications Plc, incorporated in England. The consolidated
financial statements of the Group are available to the public and
may be obtained from the Company Secretary, Cable & Wireless
Communications Plc, 3rd Floor, 26 Red Lion Square, London, WC1R
4HQ. No other Group accounts include the results of the
Company.
Transactions with companies related by virtue of common control
or ownership
Material transactions with Group undertakings that are not
wholly owned by the Group are as follows:
2010/11 2009/10
US$000 US$000
----------------- ------------ ------------
Management fees - 14,716
----------------- ------------ ------------
At 31 March At 31 March
2011 2010
US$000 US$000
----------------- ------------ ------------
Debtors 242 727
Creditors - 146
----------------- ------------ ------------
The remaining debtor balance is with Dhivehi Raajjeyge Gulhun
Private Limited. The Company did not have any further transactions
with Group undertakings that are not wholly owned by the Group.
Transactions with joint ventures
All trade transactions with joint ventures arise in the normal
course of business and primarily relate to fees for use of Cable
& Wireless' products and services. There were no material trade
transactions with joint ventures during the year.
The Company received dividends of US$1 million from joint
ventures (2009/10 - US$2 million) for the year ended 31 March
2011.
The companies related by virtue of being joint ventures of the
Group with which the Group transacted during the year are as
follows:
Fintel Internet Services Ltd, Telecom Vanuatu Limited and
Solomon Telekom Company Limited.
Transactions with other related parties
Two former Directors of Cable & Wireless Limited own
unsecured bonds issued by Cable & Wireless Limited and Cable
& Wireless International Finance B.V. These bonds had a nominal
value at 31 March 2011 of US$4,211,156 (GBP2,630,000) (2009/10 -
US$3,914,492 (GBP2,630,000)). The interest earned on those bonds
during 2010/11 was US$354,033 of which US$154,103 remained unpaid
at 31 March 2011 (2009/10 - US$364,082 of which US$143,247 remained
unpaid at 31 March 2010).
Two former Directors' spouses hold bonds issued by Cable &
Wireless Limited and Cable & Wireless International Finance
B.V. These bonds had a nominal value at 31 March 2011 of US$784,588
(GBP490,000) (2009/10 - US$729,316 (GBP490,000)). The interest
earned on those bonds during 2010/11 was US$65,378 of which
US$2,000 remained unpaid at 31 March 2011 (2009/10 - US$66,888 of
which US$1,859 remained unpaid at 31 March 2010).
27 Group undertakings and joint ventures
The principal operating undertakings of the Group are as
follows:
Issued
share Ownership
Class Country Area
capital percentage of of of
(million) % shares incorporation operation Nature of business
-------------------- ---------- ----------- --------- -------------- ---------- -------------------
Subsidiaries
Cable & Wireless
Jamaica Ltd 16,817 82 Ordinary Jamaica Jamaica Telecommunications
Cable & Wireless
Panama, SA (1) 316 49 Ordinary Panama Panama Telecommunications
Companhia de
Telecomunicacoes
de Macau, SARL Macau and
(2) 150 51 Ordinary Macau China Telecommunications
Cable & Wireless
(Barbados) Ltd 72 81 Ordinary Barbados Barbados Telecommunications
Cable and Wireless
(West Indies) Ltd 5 100 Ordinary England Caribbean Holding Company
Dhivehi Raajjeyge
Gulhun Private
Ltd 190 52 Ordinary Maldives Maldives Telecommunications
Monaco Telecom SAM
(3,4) 2 49 Ordinary Monaco Monaco Telecommunications
Sable Holding
Limited 16 100 Ordinary England England Holding Company
Cable & Wireless
International
Finance BV 1 100 Ordinary Netherlands England Finance Company
Joint ventures
Cable & Wireless Owner of the
Trademark Cable & Wireless
Management Ltd - 50 Ordinary England N/A brand
Telecommunications
Services of
Trinidad and 283 49 Ordinary Trinidad Trinidad Telecommunications
Tobago Ltd (3) and and
Tobago Tobago
-------------------- ---------- ----------- --------- -------------- ---------- -------------------
( )
(1) The Group regards this company as a subsidiary because it
controls the majority of the Board of Directors through a
shareholders' agreement.
(2 ) This company has a financial year end of 31 December due to the requirements of the shareholders' agreement.
(3 ) This company is audited by a firm other than KPMG and its international member firms.
(4) The Group holds an economic interest of 55% in Monaco
Telecom SAM via an agreement.
Cable & Wireless Limited does not have any direct investment
in any of the above subsidiaries and joint ventures, with the
exception of Cable & Wireless International Finance B.V. and
Cable & Wireless Trademark Management Ltd.
The list above only includes those companies whose results or
financial position, in the opinion of the Directors, principally
affect the figures shown in the financial statements.
The company has no trade investments.
28 Dividends
The aggregate amount of dividends comprises:
2010/11 2009/10
US$m US$m
--------------- ------- -------
Dividends paid 130 355
--------------- ------- -------
29 Legal proceedings
In July 2007, the Company and four Group subsidiaries along with
Telecommunications Services of Trinidad and Tobago Limited (TSTT),
in which the Group holds a 49% interest, were served with
proceedings in the English High Court by a Caribbean competitor,
Digicel. The claim alleged that the relevant Group subsidiaries
delayed Digicel's entry into six Caribbean markets (St. Lucia, St.
Vincent & the Grenadines, Grenada, Barbados, the Cayman Islands
and Turks & Caicos) in breach of applicable statutory and
contractual obligations concerning interconnection. A similar
allegation was made against TSTT. In addition, it was alleged that
the Company and its four subsidiaries (but not TSTT) conspired to
cause delay to Digicel. Trial in the English High Court began in
May 2009 and closed in November 2009.
On 15 April 2010, the UK High Court dismissed all of the claims
in the seven markets and the overarching conspiracy claim with the
exception of a minor breach of a short letter agreement with
Digicel in Turks & Caicos. The Court ruled that this breach
caused no delay to Digicel and thus no loss. The Court has ordered
Digicel to pay the Group's costs incurred in defending the claim on
an enhanced indemnity basis; and to pay 87.5% of TSTT's costs
assessed on a standard basis. Digicel subsequently sought leave to
appeal the judgment insofar as it related to the claim against
TSTT. This application for leave was rejected by the Court of
Appeal on 18 May 2011. The Company and the Group does not expect
the ultimate resolution of the actions to which it is a party to
have a significant adverse impact on the financial position of the
Company.
30 Commitments
The Company had no capital commitments at the end of 2010/11 or
2009/10.
31 Guarantees and contingent liabilities
Guarantees given by the Company at the end of the financial year
for which no provision has been made in the financial statements
are as follows:
31 March 31 March
2011 2010
US$m US$m
------------------- -------- --------
Trading guarantees 5 41
Other guarantees 1,342 563
Total guarantees 1,347 604
------------------- -------- --------
Trading guarantees principally comprise performance bonds for
contracts concluded in the normal course of business, guaranteeing
that the Group companies will meet their obligations to complete
projects in accordance with the contractual terms and conditions.
The nature of contracts includes projects, service level
agreements, installation of equipment, surveys, purchase of
equipment and transportation of materials. The guarantees contain a
clause that they will be terminated on final acceptance of work to
be done under the contract.
Other guarantees include guarantees for financial obligations
principally in respect of borrowings, leases and letters of credit.
Where the Company enters into financial guarantee contracts to
guarantee the indebtedness of other companies within the Group, the
Company considers these to be insurance arrangements and accounts
for them as such. In this respect the Company treats the guarantee
contract as a contingent liability until such time as it becomes
probable that the Company will be required to make payment under
the guarantee.
Total guarantees at 31 March 2011 include US$17 million of other
guarantees (2009/10 - US$563 million of trading and other
guarantees) relating to the demerged Cable & Wireless Worldwide
Group. The Company has provided guarantees to third parties in
respect of trading contracts between third parties and the Cable
& Wireless Worldwide Group. The Company has agreed a fee
schedule with Cable & Wireless Communications Group for the
benefit of these guarantees. To date, the Company has not been
required to make any payments in respect of its obligations under
these trading guarantees.
Under the Separation Agreement, Cable & Wireless
Communications and Cable & Wireless Worldwide agree to provide
each other with certain customary indemnities on a reciprocal basis
in respect of liabilities which the Cable & Wireless
Communications Group may incur but which relate exclusively to the
Cable & Wireless Worldwide Group and vice versa and in respect
of an agreed proportion of liabilities which do not relate
exclusively to one Group or the other.
Along with other Group companies the Company is a joint and
several guarantor of the obligations of Sable International Finance
Limited in its capacity as borrower under a US$500 million
revolving credit facility.
Along with other Group companies, the Company is a joint and
several guarantor of the obligations of Sable International Finance
limited in its capacity as borrower under a US$100 million term
loan facility.
Along with other Group companies, the Company is a joint and
several guarantor of the obligations of Sable International Finance
Limited in its capacity as issuer under a US$500 million secured
notes issue. The bonds were arranged with a coupon of 7.75% and are
due to be repaid in 2017.
The Company is a guarantor of GBP200 million 8.625% Guaranteed
Bonds issued by Cable & Wireless International Finance B.V. due
2019.
Whilst Pender, the Group's former insurance operation, ceased to
underwrite new business from April 2003, it has in the past written
policies in favour of the Group and third parties. Potentially
significant insurance claims have been made against Pender under
certain of these third party policies, which have also given rise
to uncertainties and potential disputes with reinsurers.
Significant progress has been made in resolving these claims in the
year. Detail of these insurance claims and potential claims are not
disclosed as such disclosure may be prejudicial to the outcome of
such claims.
In addition the Company has, as is considered standard practice
in such agreements, given guarantees and indemnities in relation to
a number of disposals of subsidiary undertakings in prior years.
Generally, liability has been capped at no more than the value of
the sales proceeds, although some uncapped indemnities have been
given. The Company also gives warranties and indemnities in
relation to certain agreements including facility sharing
agreements and general commercial agreements. Some of these
agreements do not contain liability caps.
Under the terms of the Trust Deed governing the main UK Pension
Fund, the Company guarantees the performance of the obligations of
other Group companies which are participating employers in the
Fund.
Whilst the Company ceased participation in the Merchant Navy
Officers Pension Fund, it may be liable for future contributions to
fund a portion of any future funding deficits. Currently, the
amount of these potential liabilities cannot be quantified.
32 Change in accounting policy
The Company has decided to change its accounting policy on
Investments in Group undertakings. Investments in Group
undertakings are now included in the balance sheet at cost less
amounts written off in respect of any impairment. In previous
financial statements, Investments in Group undertakings had been
included at a valuation. The Company believes that the new policy
is more appropriate now that Cable & Wireless Limited is no
longer the ultimate Parent Company of the Cable and Wireless plc
Group. There is no consequential effect on the balance sheet at 31
March 2011 nor the results or other gains or losses in the year
then ended.
No restatement has been necessary to any component of
Shareholders' Funds at 31 March 2010 nor the net book value of
Fixed asset investments as the value of investments in Sable
Holding Limited (the only investment which had been revalued) at 31
March 2010 was below historic cost and the revaluation reserve was
therefore nil at that date. However, the cost and provision
elements have been increased by US$281 million as previous negative
revaluations were recognised within the cost element.
Shareholder's funds at 1 April 2009 have been reduced by US$129
million, due to de-recognition of the revaluation reserve at that
date. The reduction in the revaluation reserve of US$129 previously
recognized during 2009/10 is no longer applicable and both the
Reconciliation of movements in shareholder's funds and the
Statement of total recognised gains and losses have also been
restated in respect of this.
MANAGEMENT REPORT
Group reorganisation and demerger of the Cable & Wireless
Worldwide business
At a general meeting on 25 February 2010, the shareholders of
the Company approved the demerger of the Cable & Wireless
Worldwide Group from the Group ("the demerger").
On 19 March 2010, the Cable & Wireless Group (now the Cable
& Wireless Communications Group) ("the Group") effected a Group
reorganisation whereby Cable & Wireless Communications Plc
("CWC Plc") was inserted as the new holding company for the Group
via a Scheme of Arrangement ("the Group reorganisation"). CWC Plc
therefore replaced Cable and Wireless plc (now Cable & Wireless
Limited) ("the Company") as the Parent Company of the Group as at
this date.
On 19 March 2010, the entire ordinary share capital of Cable and
Wireless plc was cancelled and shareholders were given one ordinary
share and one B share of Cable & Wireless Communications Plc
for every share of Cable and Wireless plc held on that date. Upon
the cancellation of listing of the ordinary shares of the Company
on the Official List and removal from trading on the London Stock
Exchange, the Company was re-registered as a private company
limited by shares in accordance with the provisions of section 97
of the Companies Act 2006. At this time, the Cable & Wireless
Group was renamed the Cable & Wireless Communications
Group.
As part of the demerger, the Company transferred the entire
share capital of a subsidiary of the Company, Cable & Wireless
UK Holdings Limited (the parent entity of the Worldwide group of
companies) and the Cable & Wireless Worldwide Brand, to CWC
Plc, the ultimate Parent Company. Cable & Wireless UK Holdings
Limited was subsequently demerged from the Group and renamed Cable
& Wireless Worldwide plc.
Demerger of the Cable & Wireless Worldwide pension
scheme
In addition, as part of the Group reorganisation and demerger,
the Group-wide UK pension scheme was restructured as follows:
A portion of the scheme assets and pension obligations of the
Cable & Wireless Superannuation Fund (CWSF), a plan operated by
the former Cable & Wireless Group, was to be transferred to the
Cable & Wireless Worldwide Retirement Plan (CWWRP), a new plan
operated by the Cable & Wireless Worldwide Group. The pension
obligations transferred to Cable & Wireless Worldwide were
determined based on members' last known employer.
Cable & Wireless Limited continues to operate the CWSF on
behalf of the Group post-demerger.
RISK OVERVIEW
Principal risks and uncertainties
As a holding company, the results of the Company are subject to
a number of risks. The principal risks and uncertainties affecting
the Company are as follows:
Investments
The Company is exposed to the risk of deterioration in business
performance in its Group undertakings which may have an adverse
effect on the carrying value of the Company's investments.
Foreign exchange
Given the Group's geographical spread, a portion of the
Company's income from Group undertakings originates outside US
dollar economies. This income and associated investments are
exposed to exchange rate fluctuations as a result of the
geographical allocation of the Group's income and expenses. The
Company is also exposed to foreign exchange fluctuations on its
loans denominated in foreign currencies. This factor creates a
potential risk of adverse financial impact to the Company.
Short-term exchange rate fluctuations are often offset naturally.
We also manage this risk by using foreign exchange hedging
contracts (see note 15 to the financial statements) against
forecast US dollar repatriation and sterling obligations regarding
the 2012 bond.
Pensions
The Group-wide defined benefit pension scheme, based in the UK,
is well managed and measures have been taken to reduce financial
risk exposures. However the value of the scheme's assets and
liabilities are affected by market movements and the Company may
also have to make additional contributions to the scheme if the
scheme's assumptions change. The Company manages this risk by
maintaining regular dialogue with the scheme Trustees who manage
the scheme's assets with appropriate external advice.
Interest costs
The Company holds a number of loans with third parties and Group
undertakings on which it is exposed to interest rate fluctuations.
This risk is actively managed by the Group Treasury function. In
addition, the major part of the Company's third party debt
comprises of fixed coupon bonds (see note 19).
Litigation
As with most large organisations, there is a risk of litigation
against business units within the Group. As the former ultimate
Parent Company of the Group, the Company may be exposed to risks
associated with litigation brought against it in that capacity.
When facing litigation, the Company defends its position vigorously
using appropriate legal advice and support.
DIRECTORS' RESPONSIBILITY STATEMENT
The following statement is extracted from page 4 of the Cable
& Wireless Limited 2010/11 Annual Report and Accounts and is
repeated here for the purposes of Disclosure and Transparency Rule
6.3.5 to comply with Disclosure and Transparency Rule 6.3. This
statement relates solely to the Cable & Wireless Limited
2010/11 Annual Report and Accounts and is not connected to the
extracted information set out in this announcement or the annual
results announcement.
Directors' statement pursuant to the Disclosure and Transparency
Rules
Each of the current Directors, whose names are listed on page 3
of the Cable & Wireless Limited 2010/11 Annual Report and
Accounts, confirm that, to the best of each person's knowledge and
belief:
-- The financial statements, prepared in accordance with UK
GAAP, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
-- The management report contained within the Directors' report
includes a fair review of the development and performance and the
position of the Company, together with a description of the
principal risks and uncertainties that it faces.
By order of the Board
Clare Underwood
Company Secretary
14 July 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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