Deputy chief executive Gordon Owen kicked off Cable & Wireless Plc’s annual results announcement by commenting that pre-tax profit up 25% to UKP527m on turnover up 51% to UKP2,316m was not a bad result. It was, in fact, more or less what City analysts had been predicting. UK growth was driven by Mercury which reported a trading profit up 172% to UKP49m. As from April 1 Telephone Rentals became part of Mercury and will cease to exist as an independent company. The licences for the Mercury Personal Communications Network will be agreed and signed in the near future and the network will conform to the European Digital Communication Systems standard thereby opening up this wider market for Mercury. Owen was keen to stress Cable’s identity as a world-wide company, a concept underscored by its international fibre optic network – the Bermuda spur goes into service next week, with the Hong Kong to Korea and Hong Kong to Japan cables operational next month and the North Atlantic following by year-end. The group’s financial director Rod Olsen carried on the world-wide theme by pointing out that the UK now counts for 25% of turnover, while the Asia Pacific region contributes less than 50% of total turnover. Furthermore, Hong Kong which provided 75% of profits four years ago, contributed 59% at year end and now accounts for 54% following the latest Citic deal. Over the year the group had a capital expenditure of UKP863m, of which UKP263m went to Mercury, UKP220m to Hong Kong Telecommunications and UKP212m to the Western Hemisphere operations, which include Jamaica. Over the next few years Cable & Wireless expects to spend even higher levels than this across its businesses, but Olsen believes such investment reaps financial benefits. Mercury generated UKP103m in cash and is on target to be cash flow positive in 1992. At year end the group had an ungeared balance sheet, retaining net funds of UKP163m and a full year dividend is recommended, up 25% to 10 pence. The group says it has no immediate plans for Eastern Europe but is looking for deals there and in Mexico, Chile and New Zealand. As for talk that the appointment of Lord Young as Cable & Wireless’ executive chairman from October – as forecast last July (CI No 1,226) – is unethical because of his previous government post, the current chairman and chief executive Lord Sharp said that Mercury’s coveted PCN licence was awarded by Nicholas Ridley on the basis of advice given by Oftel’s Bryan Carlsberg, and that Kenneth Baker and Keith Joseph led the group’s privatisation. Lord Sharp was not going to leave his last results press conference without making a mark – upon being chivvied to make a comment on international call tariffs by the Financial Times’ journalist Hugo Dixon, he replied that Mercury’s tariffs were the lowest in the world and awarded Dixon a B- grade for his series of articles on the topic, adding drily that surplus value is profit.
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