Cable & Wireless has unveiled its half year results demonstrating progress across the Group. With the International business performing well and to plan and the UK business turnaround ahead of expectations, Group revenue is up 16% to £1.7 billion and Group EBITDA before exceptionals is up 10% to £221 million. 435 UK jobs were lost during the period.
The increase in Group revenue and EBITDA principally reflects the revenue from customer contracts acquired as part of the Energis acquisition on 11 November 2005 – as well as strong revenue performance from the International business, where further growth in mobile and broadband revenue continues to offset the shift away from fixed line voice services. As a result of the progress the Group has made – and its confident outlook – the interim dividend is declared at 1.7 pence, up 21% on last year’s interim dividend. Cash and short term investments totalled £812 million.
Commenting on the performance of the Group, Richard Lapthorne, Chairman, said: “The Group has made good progress in the first half. The International business continues to perform well and the UK is executing its turnaround plan successfully. As a result of the actions we’ve taken over recent months, we expect to see further progress in our performance in the second half.”
The company notes in its report that in the UK the last six months have been a period of rapid change. In that period, the Bulldog consumer customer base was sold to Pipex (along with the brand) – as the division became Cable & Wireless Access, a business concentrating on the provision of wholesale broadband access. The EBITDA loss in this business in the first half of £47 million is broadly consistent with the same period last year and represents a period where the business model was changed to a wholesale play.
At 30 September 2006, the number of unbundled exchanges stood at 685 exchanges, with equipment installed in a further 111. Rollout to the target 800 exchanges will be substantially complete by the end of 2006 – and the capability will be used for wholesaling and for corporate access with SDSL trials starting in December. The full year EBITDA loss for Cable& Wireless Access will be around £85 million. In terms of the UK corporate business, progress is pleasing with EBITDA of £73 million – ahead of expectations – and meaning that guidance for the full year EBITDA is increased to between £145 million and £150 million. Revenues were up by 23% to £1.1 billion – largely reflecting the acquisition of Energis in November 2005 – and the mix of business has improved with Services revenue now accounting for 44% of total revenues compared to 39% a year ago. The total monthly run-rate reduction in operating costs since November 2005 is £7.1 million. This is largely due to the customer strategy – where the target of 18,000 customers at 30 September was exceeded and in fact stands at 14,566; this allows the removal of a substantial amount of cost. The headcount target of 5,200 for September was also surpassed to stand at 5,179 – a reduction of 435 heads since 31 March 2006 .
Commenting on the results for the first half of 2006/07, John Pluthero, Chairman, Cable & Wireless UK said: “We’ve pushed through rapid change in the first half of the year and are pleased with our progress. By delivering on our go to market strategy and operating cost targets – and making inroads with service improvement and the overall customer experience – we’re starting to differentiate ourselves from our competitors.
“As such, we are happy to restate our objective of a business with £2 billion revenues and double digit operating profit.”