- Trading performance in line with our expectations. Trading cash flow of £99m (2010/11: £116m)
- First phase of performance improvement plan implemented including refinancing, new operating model and additional hosting capacity
- Market conditions expected to remain challenging during 2012/13
- On 23 April the Board recommended a 38p per share cash offer for the Company from Vodafone
- Trading cash inflow1 £99 million (2010/11: £116 million)
- EBITDA2 £378 million (2010/11: £442 million)
- Gross margin £1,020 million (2010/11: £1,065 million), with hosting and applications now accounting for 20% of gross margin (2010/11: 18%)
- Exceptional items - goodwill impairment (£436 million), deferred tax asset write down (£146 million), the write off of obsolete assets (£42 million) and the gain on disposal of a group subsidiary (£18 million) totalling £606 million
- Progress on cost reduction, new operating model in implementation, capital expenditure programme reprioritised to create headroom for investment
- Extra 35% of data centre capacity commissioned, with 4,000 sqft added in the second half of the year
- UK enterprise – contract wins during the year to restart hosting growth utilising this new capacity
- Trusted partner for central government with 15% gross margin growth across the public sector
- New £260 million revolving credit facility agreed with final maturity date of 30 June 20153
- Global network expanded with completion of Europe Indian Gateway (EIG) cable system
Summary and outlook
In the final quarter of 2011/12, we continued to make progress in the execution of the performance improvement plan announced in February. A strong focus on cash has led to improved utilisation of capital expenditure and positive working capital in the second half of the year. The capital expenditure programme has been reprioritised to create headroom for the investments in improved execution, simplification and cash generation outlined in February. Several cost reduction programmes have been commenced delivering benefits in the monthly cost run rate going into 2012/13.The refocusing of the business towards a new target operating model has commenced. The refinancing of our revolving credit facility was completed in February with a final maturity date of 30 June 2015.3
During the year we have continued to win new client mandates and have made the planned progress in building hosting capacity to enable a further increase in the growth of the hosting business in the future. However, trading conditions in 2011/12 continued to be very difficult with enterprise customers continuing to seek keen prices in traditional voice and data services.
Trading conditions in 2012/13 are expected to remain challenging. Whilst the medium term plan assumes market outperformance, we do not expect to outperform market growth assumptions in 2012/13. Initiatives have been identified to mitigate the majority of the increased inflationary cost pressures on our operating cost base. As part of our strategic plan further capital investment will be required over the next few years to reduce complexity, cost and enable growth in the medium-term. The timing of this investment will be managed to keep total capital expenditure in line with recent trends.
On 23 April 2012, the Board recommended a cash offer for the company from Vodafone of 38p per share. The Board had to weigh up the transformative nature of the long term plan and potential upside it could deliver against the risks associated with the plan and the timescale required. Given this the Board believes the Vodafone offer represents an excellent opportunity for shareholders to realise an attractive valuation in cash today.
1 For explanatory notes please see page 9
2 For explanatory notes please see page 2
3 Subject to refinancing of the £230 million convertible bonds by 30 June 2014
Contacts – Cable&Wireless Worldwide
Director, Investor Relations and Corporate Affairs
+44 7822 873039
Investor Relations Manager
+44 7822 820762
Head of Press Relations
+44 7822 803889
An audio conference will be held on 21 May at 14:00 (BST) available for both UK and International on +44 203 059 8125 to provide an overview of the performance. To access this audio conference, you will need to quote confirmation password – "Results".
A replay option will be available on: +44 121 260 4861, code confirmation: 2225394 followed by #
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About Cable&Wireless Worldwide
Cable&Wireless Worldwide (LSE: CW) provides integrated communications and data hosting services to large enterprises and mid-market customers in both the public and private sectors.
With an unrivalled heritage and a globally significant network Cable&Wireless Worldwide can provide robust and resilient connectivity to over 150 countries.
To find out more, visit our website at www.cw.com