interim results 2005

Slide1: 

"This announcement contains forward-looking statements that involve inherent risks and uncertainties.  We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements.  See those that appear, or are referred to, in the cautionary statement included at the beginning of the company's most recent Annual Report filed on Form 20-F."

Cable and Wireless plcInterim Results8 November 2005: 

Richard Lapthorne Chairman Cable and Wireless plc Interim Results 8 November 2005

Cable and Wireless plcInterim Results8 November 2005: 

Cable and Wireless plc Interim Results 8 November 2005 Charles Herlinger Chief Financial Officer

Financial overviewGroup H1 2005/6: 

Financial overview Group H1 2005/6 Group operating profit, PBT and EPS increased year on year, before investment in Bulldog Increased National Telco profitability driven by mobile and broadband UK profitability adversely impacted by revenue mix and delay in cost reduction plans as previously reported Increased half year dividend to 1.4 pence per share Share repurchase programme resumed

Financial highlightsContinuing businesses1: 

Financial highlights Continuing businesses1 (£ million) 1 2005/6 excludes Sakhalin and C&W Spain; 2004/5 additionally excludes C&W Japan 2 Excludes JVs & associates and amortisation of acquired intangibles All figures shown are before exceptional items 4% Operating profit Revenue 5% (31)% 1% 1% 2 Reported change Constant currency change (30)% Reported change Constant currency change 139 1,469 130 90 1,481 H1 2005/6 H1 2004/5 H1 2005/6 H1 2005/6 excluding Bulldog 134 H1 2004/5 H1 2004/5 excluding Bulldog

Financial highlightsContinuing businesses1: 

Cash capex Free cash flow Financial highlights Continuing businesses1 (42)% (42)% (100)+% 81% 83% (100)+% 1 2005/6 excludes Sakhalin and C&W Spain; 2004/5 additionally excludes C&W Japan 2 Free cash flow is operating profit plus “depreciation and amortisation” less cash capital expenditure All figures shown are before exceptional items (£ million) Reported change Constant currency change Reported change Constant currency change 2 116 108 67 210 (9) 116 H1 2005/6 H1 2004/5 H1 2005/6 H1 2005/6 excluding Bulldog H1 2004/5 H1 2004/5 excluding Bulldog

Summary profit & lossContinuing businesses1: 

Summary profit & loss Continuing businesses1 Revenue Operating costs Depreciation and amortisation Operating profit 2 Excluding Bulldog Amortisation of acquired intangibles JVs and Associates Net finance income Non trading income Profit before tax 3 Excluding Bulldog H2 £m 1,469 (1,245) 1 2005/6 excludes Sakhalin and C&W Spain; 2004/5 additionally excludes C&W Japan 2 Excludes exceptional items, JVs & associates and amortisation of acquired intangibles 3 Excludes exceptional items 2005/6 H1 £m H1 £m 2004/5 (94) 17 175 5 130 25 (2) 1,479 (1,279) (91) 17 151 5 109 23 (3) 1,481 (1,280) (111) 14 134 6 90 27 (3) 134 135 139 179 178 185

Summary profit & loss Continuing businesses1: 

Summary profit & loss Continuing businesses1 Profit before tax 2 Exceptional items (net of tax) Tax 2 Profit after tax Attributable to minorities Attributable to equity holders Underlying EPS 3 Underlying EPS 3 (excluding Bulldog) Dividend per share 175 (32) 3 146 1.16p 4.9p 151 (32) 46 2.64p 3.9p 134 (20) (8) 106 1.40p 3.7p 33 31 32 73 15 114 (73) 5.9p 5.1p 5.0p H2 £m 2005/6 H1 £m H1 £m 2004/5 1 2005/6 excludes Sakhalin and C&W Spain; 2004/5 additionally excludes C&W Japan 2 Excludes exceptional items 3 Excludes exceptional items and amortisation of acquired intangibles

Cash capex Continuing businesses1: 

Cash capex Continuing businesses1 By type By division £m £210m £205m £116m £210m £205m £116m 29 76 67 32 46 51 29 41 29 26 42 63 0 40 80 120 160 180 240 H1 2004/5 H2 2004/5 H1 2005/6 IT/Other Mobile Service delivery/product portfolio Network build 49 95 100 42 44 44 21 43 34 Other National Telcos 2 Caribbean UK, Europe, CWAO, Asia, Other H1 2004/5 H2 2004/5 H1 2005/6 Bulldog 4 23 32 1 2005/6 excludes Sakhalin and C&W Spain; 2004/5 additionally excludes C&W Japan 2 Macau, Panama, Monaco and Rest of World £m 0 40 80 120 160 180 240

Net cash flow before financing Group: 

Net cash flow before financing Group Group operating profit 1 Free cash flow 2 Excluding Bulldog Working capital Exceptionals Other Sub total Dividends (Acquisitions)/disposals Group net cash flow before financing Excluding Bulldog Gross cash 3 Net cash 3 Net cash excluding minority share 3 (64) (24) (88) (70) 128 30 78 49 11 (125) 1 Excludes exceptional items, JVs & associates and amortisation of acquired intangibles 2 Free cash flow is operating profit plus “depreciation and amortisation” less cash capital expenditure 3 Includes short-term investments 1,277 1,208 2,101 1,980 (54) (48) (45) 59 (66) 1,332 2,183 109 90 130 (5) (9) 108 (38) (101) (86) (79) (54) 65 1,235 1,185 1,313 58 (49) (58) H2 £m 2005/6 H1 £m H1 £m 2004/5 42 67 116

Total National Telcos Continuing businesses1: 

1 2005/6 excludes Sakhalin 2 Excludes exceptional items, JVs & associates and amortisation of acquired intangibles 3 H2 2004/5 includes impact of hurricane Ivan 4 Free cash flow is operating profit plus “depreciation and amortisation” less cash capital expenditure All figures shown are before exceptional items Total National Telcos Continuing businesses1 3 (2) (26) Caribbean Panama Macau Monaco RoW Revenue Operating profit 2 Operating margin % 3 Capex Free cash flow 4 279 129 (78) 274 104 (87) 276 133 (63) - 21 12 11 595 582 542 - 5 134 128 129 2 15 65 60 57 6 100+ 65 70 30 (7) 5 52 50 50 3 9 145 131 135 9 24.4 22.5 24.9 H2 £m 2005/6 H1 £m H1 £m 2004/5 National Telcos1 H2 % H1 % Constant currency change vs. 2004/5

Caribbean Review of performance: 

1 Excludes exceptional items and JVs & associates 2 2004/5 includes Hurricane Ivan impact 3 Free cash flow is operating profit plus “depreciation and amortisation” less cash capital expenditure All figures shown are before exceptional items Caribbean Review of performance 3 (1) 2 10 6 (7) (33) Revenue Operating costs Depreciation & amort'n Operating profit 1 Operating margin % 2 JVs & Associates Capex Free cash flow 3 279 (184) (30) 65 51 (44) 6 23.3 274 (199) (27) 48 31 (44) 5 17.5 276 (185) (31) 60 49 (42) 9 21.7 Caribbean - 9 (8) 32 59 2 16 H2 £m 2005/6 H1 £m H1 £m 2004/5 H2 % H1 % Constant currency change vs. 2004/5

National Telcos (excl Caribbean) Review of performance: 

National Telcos (excl Caribbean) Review of performance 1 Macau, Panama, Rest of World and Monaco Telecom 2 Excludes exceptional items, JVs & associates and amortisation of acquired intangibles 3 Free cash flow is operating profit plus “depreciation and amortisation” less cash capital expenditure All figures shown are before exceptional items 25.3 78 316 80 (32) 26.9 73 308 83 (33) 28.2 84 266 75 (30) National Telcos1 (excl Caribbean) 5 1 (5) 5 20 (7) 7 (8) (204) (192) (161) (5) (28) 23 24 18 (6) 29 (34) (43) (21) 22 (64) Revenue Operating costs Depreciation & amort'n Operating profit 2 Operating margin % 3 JVs & Associates Capex Free cash flow 4 H2 £m 2005/6 H1 £m H1 £m 2004/5 H2 % H1 % Constant currency change vs. 2004/5

UK Review of performance: 

1 Excludes exceptional items and JVs & associates 2 Free cash flow is operating profit plus “depreciation and amortisation” less cash capital expenditure All figures shown are before exceptional items Retail Carrier Services Total revenue Operating costs Depreciation & amort'n Operating profit 1 Operating profit margin % Capex Free cash flow 2 792 (716) (30) 46 (91) UK Review of performance (5) 4 (37) (54) (98) 768 (708) (41) 19 (93) (15) (100)+ (33) 810 (739) (30) 41 (47) 24 (3) 1 (37) (59) (2) (100)+ 5.8 2.5 5.1 439 (13) 376 430 (14) 353 3 392 380 11 UK H2 £m 2005/6 H1 £m H1 £m 2004/5 H2 % H1 % Change vs. 2004/5

Bulldog Review of performance: 

1 Includes only three months of consolidated results 2 Excludes amortisation of acquired intangibles 3 Free cash flow is operating profit plus “depreciation and amortisation” less cash capital expenditure All figures shown are before exceptional items Revenue Operating costs Depreciation Operating (loss) 2 Capex Free cash flow 3 7 (31) (2) (26) (23) Bulldog Review of performance 12 (56) (5) (49) (32) (47) (76) 4 (8) - (4) (4) (8) - Bulldog H2 £m 2005/6 H1 £m H1 £m 2004/5 1

Reorganisation (ex-Energis) Cost benefits and headcount reductions: 

Reorganisation (ex-Energis) Cost benefits and headcount reductions Headcount reduction Target Mar. 2006 UK & Corporate Nov.’04 UK Mar.’05 UK & Corporate 1 Europe Nov.’04 780 Achieved by Sept. 2005 578 300 256 1 Initial target £50m March ’06 run rate. £15 million delayed pending integration of Energis as announced on 16 August 2005 300 480 n/a n/a

Financial prioritiesH2 2005/6: 

UK Consolidate Energis from November 2005 and drive integration programme Deliver announced headcount plans Manage cost base whilst migrating to IP Continue to invest in customer service Further strengthen finance and back office support functions Continue to invest in mobile and broadband Manage cash returns by control of cost base Continue focus on cash remittances to plc Bulldog National Telcos Financial priorities H2 2005/6 Manage US de-registration process Resume share repurchase programme Group

Cable and Wireless plcInterim Results8 November 2005: 

Cable and Wireless plc Interim Results 8 November 2005 Francesco Caio Chief Executive Officer

C&W’s strategic priorities guiding the last 18 months : 

C&W’s strategic priorities guiding the last 18 months Mobile and broadband focus in National Telcos Broadband access network through Bulldog investment and rollout Next Generation Network (NGN) investment Relevant UK scale

H1: executing our strategy: 

H1: executing our strategy Note: Numbers quoted are on a year on year basis

National Telcos: 

National Telcos

National Telcos: mobile performance: 

8% 9% 12% National Telcos: mobile performance Subscribers ‘000s Caribbean Panama Macau RoW Monaco Revenue £m Total revenue 138 164 174 Revenue Subscriber growth Number of new subscribers 595K 0 500 1000 1500 2000 2500 3000 H2 2003/4 H1 2004/5 H2 2004/5 H1 2005/6 0 20 40 60 80 100 120 140 160 180 200 H2 2003/4 H1 2004/5 H2 2004/5 H1 2005/6 137 Data presented relates to subsidiary and branch operations and reflects Monaco acquisition in H1 2004/5

National Telcos: mobile initiatives 2005/6Network build and operations: 

National Telcos: mobile initiatives 2005/6 Network build and operations

National Telcos: mobile Service offering and marketing: 

National Telcos: mobile Service offering and marketing Initiatives eTop-up Extended roaming agreements “Closed user groups” for business subscribers New data services (Blackberry) Caribbean Panama Macau Guernsey Launched in H1 Existing services

National Telcos: broadband performance: 

43% Subscribers ‘000s Caribbean Panama Macau RoW Monaco 56% 24% Revenue CAGR 64% 0 50 100 150 200 H2 2003/4 H1 2004/5 H2 2004/5 H1 2005/6 National Telcos: broadband performance

National Telcos: broadbandService offering and marketing: 

National Telcos: broadband Service offering and marketing Launched in Cayman & Jamaica Rollout across Caribbean by Mar. ‘06 Bandwidth upgrades to sustain ARPU Launched ADSL 2+ service in Macau 34 in Macau – to be expanded To be launched in 9 Caribbean markets by Mar. ’06 Extending offer range: Speed VoIP WiFi hotspots

National Telcos: cost initiatives 2005/6 Adoption of best practice: 

National Telcos: cost initiatives 2005/6 Adoption of best practice Supply chain Centralised KPIs IT and network standardisation Extending eTop-Up – automated prepaid process Rolling out product self-provisioning Leveraging Group purchasing for mobile equipment Outsourcing mobile outlet supply chain Standardised definition and approach Regular monitoring Standardising architecture Centralising billing platforms Renegotiating network maintenance contracts

National Telcos: summary: 

National Telcos: summary Execution of strategy delivering results Growing broadband and mobile revenue Controlling cost base to drive operating and cash margins *Including Monaco Telecom due to French market activities impacting local mobile market

Building the new C&W in the UK: 

Building the new C&W in the UK

Industry context: 

Industry context Source: Ovum and C&W analysis - CAGRs for period from 2004/5 to 2007/8 Switched voice (6)% Legacy data (11)% Legacy services 68% of market New services 32% of market IP 13% Broadband 23% Demand Technology Regulation

UK: revenue mix Still exposed to legacy: 

UK: revenue mix Still exposed to legacy H1 2004/5 H1 2005/6 Voice 68% Data 22% IP 10% Voice 70% Data 24% IP 6%

UK: H1 Retail revenue drivers: 

UK: H1 Retail revenue drivers Revenue Contract renewal/ pricing pressure Phasing of large contracts revenue H1 2005/6 Migration from FR to IP-VPN/ churn £(29)m £(16)m £(45)m £27m New business/ other £439m £376m H2 2004/5 300 340 380 420 460

UK: H1 Retail: 

UK: H1 Retail Gross margin H2 2004/5 H2 2004/5 H1 2005/6 57% 55% Lower prices Acceleration of contract renewal Frame relay to IP-VPN migration Higher costs New services over legacy platform Parallel circuits at start of IP contracts

UK: H1 Carrier Services: 

UK: H1 Carrier Services Revenue mix stable: Voice 88%; Data/IP 12% Underlying revenue growth of 9% over H1 2004/5 Volumes driven by mobile transit and international voice Supported absolute gross margin through tactical network utilisation/low margin data traffic In the future will focus selectively on higher margin traffic

UK: sales activity: 

UK: sales activity Large retail accounts retained through accelerated contract renewal cycle Trend to IP continues - 19% of Retail revenue mix (11% H1 2004/5) Frame relay now represents only 9% of Retail revenue base Multi-year contracts represent 41% of H1 Retail orders H1 Retail contract wins: Marks & Spencer – IP-VPN BASF – IP-VPN Ventura – offshore managed call centre Learndirect – learning advice service Accelerating IP provisioning

UK: headcount reductions: 

UK: headcount reductions Opex in H2 will benefit from September ‘05 headcount reduction (29)% Mar.’03 Mar.’05 Sep.’05 Sep.’05 Headcount 4,499 4,036 (1,183) (463) 5,682

C&W’s strategic moves to compete in UK : 

C&W’s strategic moves to compete in UK

Energis transaction: rationale: 

Energis transaction: rationale Accelerates strategic transformation of UK Exploits timing opportunities: technology - NGN, broadband customers - demand evolution regulation - Ofcom strategic review, LLU economics Financial and strategic drivers: acceptable return on investment in second full financial year following completion stronger entity to tackle competitive UK market conditions

Energis transaction: update : 

Energis transaction: update H1 Energis:* Retail revenue growth of 18% EBITDA of £55 million Process update: OFT approval 25 Oct. Scheme of arrangement approval 02 Nov. Integration launch 14 Nov. * Source: Energis announcement released 8 Nov. 2005

NGN: benefits and update: 

NGN: benefits and update Lower opex One network with faster provisioning processes, lower cost/higher quality services NGN update Contracts awarded for metro ethernet and IP core H2 2005/6 tender according to plan Reduced Complexity & Cost SDH/DWDM 1000+ nodes PUBLIC IP IP / MPLS Core ATM/FR MPLS VPN VOICE

Unbundling: benefits for UK Retail: 

Unbundling: benefits for UK Retail

Bulldog: 

Bulldog

Bulldog: customer care: 

Bulldog: customer care Delivered improved performance: 42 permanent/183 outsourced customer service staff recruited opened 3 new call centres implemented new billing software enhanced customer communications improved processes and systems Ofcom investigation closed on 19 October 2005

Bulldog: provisioning & net addsLargest LLU operator in UK: 

Bulldog: provisioning & net adds Largest LLU operator in UK Office of Telecoms Adjudicator Industry – Right First Time KPI LLU net adds Connections (000’s) 0 5 10 15 20 25 30 35 Q4 2004/5 Q1 2005/6 Q2 2005/6 % 0 20 40 60 80 100 Oct.'04 Nov.'04 Dec.'04 Jan.'05 Feb.'05 Mar.'05 Apr.'05 May.'05 Jun.'05 Jul.'05 Aug.'05 Sept.'05 Actual Target Connections held back by poor provisioning Net adds accelerated - 55,000 customers now connected

Bulldog: network progressLargest UK LLU broadband access footprint: 

Bulldog: network progress Largest UK LLU broadband access footprint

Bulldog: marketing: 

Bulldog: marketing Additional features PC security suite: antivirus, personal firewall, anti-spam, parental control Bulldog Lounge (entertainment portal) – music downloads, video streaming, games New technologies ADSL 2+ technical trial launched Advertising campaign Launched “Open the Gate” campaign on 1 Nov ’05 Build brand awareness Promote 8meg and Double Play

Bulldog: key metrics: 

Bulldog: key metrics 0 40 80 120 160 200 0-100 101-200 201-300 301-400 401-500 > 500 Number of customers Number of exchanges *Source: Internal C&W management **Excluding middle mile costs which are a part of C&Ws network shared with other revenue streams

C&W UK: transforming the businessCharter for the UK business: 

C&W UK: transforming the business Charter for the UK business Full commercial launch of broadband offering Selective focus on higher value Carrier Services traffic Focus on larger accounts to reduce complexity Realise synergy of integration with Energis Migrate BT access circuits to LLU Further develop SME proposition on SDSL/broadband Migrate processes & services to NGN

C&W UK: drivers of P&L evolution : 

C&W UK: drivers of P&L evolution Revenue Gross margin Opex Capex Retail SME/SoHo/ Consumer Grow market share Focus on top accounts Migrate to IP/broadband Bulldog Carrier Services Selective focus on higher value traffic Tactical use of NGN Streamlined provisioning processes Standardised software based service offerings Competitive front end office/call centre features More efficient deployment of capex Driven by retail customers Growing use of LLU to reduce outpayments Long term shift of mix to Retail and broadband

Summary: 

Summary Satisfactory National Telco performance as mobile and broadband gain traction Now equipped to compete in the UK

Cable and Wireless plcInterim Results8 November 2005: 

Richard Lapthorne Chairman Cable and Wireless plc Interim Results 8 November 2005

Performance commitment – phase 1: 

Performance commitment – phase 1 Initial target Revenue Operating loss Revenue Operating profit margin £3.5 bn c.10% 2002/3 £4.2 bn £(6.0)bn

National Telcos: 

National Telcos Satisfactory performance DCF illustrative values shared in Nov. ’04 have edged up and overall picture remains valid

UK: next step in performance: 

UK: next step in performance 2002/3: revenue £1.7 billion operating loss £(303) million 2005/6: UK is now ready for the next step in performance improvement managing the “late stages” of switched voice while participating in the “early stages” of IP

UK performance: managing the late stages of switched voice: 

UK performance: managing the late stages of switched voice Retain profitable revenue share Win and retain customers as they migrate to IP Cut costs to match revenue declines and re-shape organisation for the future: announced a number of C&W UK initiatives to date in addition further Energis synergies

UK performance: managing the early stages of IP: 

UK performance: managing the early stages of IP Scale IP Access Acquisition of Energis NGN initiated Unbundling 800 BT exchanges

Financial performance: the next step: 

Financial performance: the next step Energis transaction reduces risk in UK strategy share repurchase resumed National Telcos satisfactory performance underpins dividend during UK transition Post NGN implementation - UK new business model: revenue above £2 billion double digit operating profit margin Dividends will continue to signal progress