- Group revenue of £1,481 million – up by 1 percent over prior year at constant currency.
- Operating profit before joint ventures, associates, exceptional items and excluding Bulldog, of £136 million.
- Operating profit before joint ventures, associates, exceptional items, including Bulldog, of £87 million.
Commenting on the performance of the Group, Cable & Wireless Chairman, Richard Lapthorne, said: “The company is continuing to manage its way through a series of steps to create a sustainable future both in its overseas business and in the changing UK environment.
“In June 2003 I reported that, following the Chief Executive’s strategic review, the Board had agreed that the Group should withdraw from the US, improve operations in the UK business and build on our National Telco businesses. I said then that, on the basis of implementing those plans, our expectation was to create a business with a turnover of around £3.5 billion producing double digit operating margins. As a reminder, the results for the year 2002/3 reported an operating loss from continuing businesses of £6 billion on a turnover of £4.2 billion.
“That same year, 2002/3, the UK business reported an operating loss of £303 million from a turnover of £1.7 billion. Since then we have made considerable progress both in designing and executing a strategy to create a sustainable competitive model for the UK business.
“In the UK, the company’s objective in the voice market is to continue to maximise profitable revenue while retaining and developing relationships with customers as they migrate to IP-based telecommunications, and to continue to reduce costs in line with revenue declines and re-shape the organisation to reflect future requirements.
“Our model reflects the needs of our customers, the reality of the competitive landscape and the need to seize the one-time technological opportunity available to us. It also reflects Ofcom’s view that the UK is best served by competition at the deepest level of infrastructure. Thus, our model is built around three pillars: IP – through our next generation network (‘NGN’); access – through our plan to unbundle 800 exchanges reaching half of the UK market; and scale – which has materially increased through the acquisition of Energis, which will further reduce the risk around the UK strategy. We are pleased that clearance from the OFT has now removed any doubts that it would proceed. As a result of the de-risking of the UK strategy we are now able to resume the share buy back programme.
“We do not want to over promise but, from the visibility we have at the moment, we believe that what we are heading for in the UK, post NGN implementation, is a business that will be producing revenue somewhere over £2 billion with an operating margin in double digits. We see the improvement coming from a combination of the lower cost base that we are working on, together with the revenue generated from the new telecoms landscape, which we are now positioning our business to exploit.
“This is an early sight of where we are headed and it is our intention, over time, both to report on progress in achieving this goal and to share our milestones with you as they are more clearly defined. The next step in this process will be when the combined Cable & Wireless and Energis management team shares the details of the integration plan with you in February.
“Our dividend continues to be underpinned by the satisfactory performance of our overseas businesses.
“Our Group strategy is supported by a number of solid initiatives which are already being implemented. The path is clear, although the rapid rate of change in the UK may well lead to some short term volatility in reported profits, which could well be exacerbated by timing decisions and the detail of the Energis integration. Our medium term vision is clear. We will manage the business with a view to delivering the value we believe can be achieved, accepting, in some cases, that this may have an impact on short-term reported profits.”