Cable & Wireless Worldwide - which provides a range of voice and data services - is clearing the decks, both on the balance sheet and on the board, with chief executive John Pluthero stepping down to be replaced by Gavin Darby, formerly of Vodafone and Coca-Cola.
The surprise move came with a broad financial tidying-up exercise, which resulted in £624m of exceptional items in the first half - comprising goodwill impairments of £436m, a reduction in deferred tax assets of £146m and a £42m obsolete assets write-off. The half-year dividend was also halved - there will be no further dividends until cash flow comfortably covers any proposed future payments. There will also be a second-half £100m payment into the pension scheme, freeing up previously ringfenced funds of £125m.
Trading in the first half held up fairly well given the tough backdrop, although cash profits were still down 6 per cent in the period to £190m. However, the group has managed to retain existing customers while winning new ones. But management conceded that underlying growth was constrained by a lack of capacity and work is now in place to expand the data centre by early next year.
Investec Securities expects full-year adjusted pre-tax profit of £72.9m, giving EPS of 4.8p (£143m and 7.4p in 2011).
CABLE & WIRELESS WORLDWIDE (CW.) | ||||
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ORD PRICE: | 27p | MARKET VALUE: | £729m | |
TOUCH: | 26-27p | 12-MONTH HIGH: | 79p | LOW: 26p |
DIVIDEND YIELD: | 13.9% | PE RATIO: | na | |
NET ASSET VALUE: | 33p* | NET DEBT: | 11% |
Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2010 | 1.12 | 53.0 | 3.30 | 1.50 |
2011 | 1.07 | -443 | -22.3 | 0.75 |
% change | -4 | - | - | -50 |
Ex-div: 23 Nov Payment: 26 Jan *Includes intangible assets of £476m, or 18p a share |