C&W buckles under £4bn blow
THE AXE was out at beleaguered telecoms giant Cable & Wireless as it posted an £8bn swing from profit to loss. The group wrote off more than £4bn on the value of acquisitions made at the height of the telecoms boom. Its shares fell 13 1/3p to 193p.
Chairman Sir Ralph Robins, 69, will leave at the end of this year to be replaced by David Nash, 61, who as a former finance director of both Cadbury and GrandMet is seen as a tough-minded numbers man. Finance director Robert Lerwill, 50, is stepping aside to run the group's regional phones business and the new finance director will be David Prince, 50, who held that role at former subsidiary Hongkong Telecom for many years.
Following three profits warnings over the last year chief executive Graham Wallace said: 'These full-year results are either in line with or better than the guidance we gave in our trading update in February'.
He also predicted that the group's largest and lossmaking division, C&W Global, now primarily a web-hosting business, would become cashflow positive in two years, or the final quarter of the 2003-04 financial year. A shake-up of the US business will cut around 1,000 of the 5,000 jobs there.
Wallace said C&W would halve capital expenditure in the current financial year, from £1.9bn to £950m. But he offered shareholders no immediate hope of getting their hands on any more of its £2.6bn cash pile.
C&W took a total exceptional charge of £4.2bn, thanks to non-cash write-downs, ranging from a write-off of its investment in cable group NTL to massive goodwill hits on acquisitions in the boom years. The charge was after a £1bn one-off gain on the sale of Australian business Optus.
The company sustained a £4.72bn loss for the year ended March, from a pre-tax profit of £3.63bn last time. Earnings before interest, tax, depreciation and amortisation fell to £822m from £1.78bn, before one-offs, in line with City forecasts. Turnover fell to £5.9bn from £8bn.
Shareholders have collected 16.5p a share in dividends this year but that includes 11.5p of special payments as C&W returned some of its cash to them. From earnings of 104p a share last year it has swung to reported losses of 187p a share or on an underlying basis, before all exceptional charges, losses of 5.7p a share.
Wallace said the group expected its Global division to show nil to 10% growth in the six months to next September and its Regional business to grow by 0-5%.
