Cable & Wireless Guernsey Published Separated Regulatory Accounts. For the year ended 31 March 2012

Transcription

1 Cable & Wireless Guernsey Published Separated Regulatory Accounts For the year ended 31 March 2012

2 Contents Introduction Basis of preparation of the Published Separated Regulatory Accounts Reference Offer Based Costs Applicable Rate of Return MAR Adjustment Statement of responsibility Report of the Auditors i ii iii iii iv v Local Access Network Business Profit & Loss Account 1 Statement of Mean Capital employed 2 Core Network Business Profit & Loss Account 3 Statement of Mean Capital employed 4 Summary Statement of Costs - Total Conveyance 5 Statement of costs of network services - Usage factors 6 Statement of costs of network services - Average cost per minute 7 Retail Business Profit & Loss Account 8 Statement of Mean Capital employed 9 Mobile Business Profit & Loss Account 10 Statement of Mean Capital employed 11 Other Activities Business Profit & Loss Account 12 Statement of Mean Capital employed 13 Retail Business Activities Retail - Exchange line rental & connection Profit & Loss Account 14 Statement of Mean Capital employed 15 Retail Local calls Profit & Loss Account 16 Statement of Mean Capital employed 17 Retail Local internet calls Profit & Loss Account 18 Statement of Mean Capital employed 19 Retail - Jersey calls Profit & Loss Account 20 Statement of Mean Capital employed 21 Retail - National calls Profit & Loss Account 22 Statement of Mean Capital employed 23

3 Retail International calls Profit & Loss Account 24 Statement of Mean Capital employed 25 Retail - Calls to Guernsey Mobiles Profit & Loss Account 26 Statement of Mean Capital employed 27 Retail - Non geographic calls free to calling customer Profit & Loss Account 28 Statement of Mean Capital employed 29 Retail - Non geographic calls charged at local rate Profit & Loss Account 30 Statement of Mean Capital employed 31 Retail - Non geographic calls charged at national rate Profit & Loss Account 32 Statement of Mean Capital employed 33 Retail - Non geographic calls charged at premium rate Profit & Loss Account 34 Statement of Mean Capital employed 35 Retail - Internet Profit & Loss Account 36 Statement of Mean Capital employed 37 Retail - Directory Enquiry Profit & Loss Account 38 Statement of Mean Capital employed 39 Retail - Public Payphones Profit & Loss Account 40 Statement of Mean Capital employed 41 Retail - Leased Lines Profit & Loss Account 42 Statement of Mean Capital employed 43 Retail - Remaining Activities Profit & Loss Account 44 Statement of Mean Capital employed 45 Reconciliation of Retail Businesses 46 Transfer Charge Statement 47 Inter Business Costs Summary 48 Reconciliation Statement for Profit and Loss Account 49 Reconciliation Statement for the Balance Sheet 50 Reference Offer rate assumptions 51

4 Introduction Cable and Wireless Guernsey Limited ( C&WG ), also trading as Sure, has prepared its Published Separated Regulatory Accounts for the financial year ended 31 st March 2012, for the following Business Areas: Local Access Network Core Network Retail Mobile Other Activities Definitions of the Business Areas are contained in the Accounting Separation: Regulatory Accounting Guidelines to Cable and Wireless Guernsey Limited, (document no. 04/25) (the Guidelines ), issued by the Guernsey Competition and Regulatory Authority ( the GCRA ), previously known as the Office of Utility Regulation ( the OUR ). A summary is included in C&WG s Accounting Documents. The Guidelines, published in 2004, set out the framework under which the Published Separated Regulatory Accounts for the year ended 31 st March 2012 are to be prepared. They have subsequently been amended and further defined by related correspondence between C&WG and the GCRA, particularly in relation to current cost accounting. Basis of preparation of the Published Separated Regulatory Accounts The structure of the businesses defined by the GCRA does not correspond to the way in which C&WG is organised for management and accounting purposes. The Published Separated Regulatory Accounts are therefore produced, to the extent reasonably practicable in all circumstances, by overlaying the requirements set out by the GCRA in the Guidelines, on the management structure and accounting records of C&WG. The Published Separated Regulatory Accounts are prepared by attributing the balances in C&WG s general ledgers and other accounting records to the Business areas. As far as is reasonably possible in the circumstances revenues, costs, assets and liabilities are directly associated with a Business, activity or component using information held within C&WG s accounting records and are directly attributed to that item. Where no such direct association is possible, the remaining revenues, costs assets and liabilities are apportioned between two or more Businesses, activities or components using a fully allocated costing system and employing apportionment bases that reflect the causality of the revenue, cost, asset or liability. The cost allocation methods used are outlined in C&WG s Accounting Documents. In selecting appropriate cost allocation methods and appropriate non-financial data for use within the accounting separation model, C&WG has had to make certain estimates and exercise reasonable judgement, having regard to the regulatory principles, including cost causality and objectivity, in order to comply with the requirements of the Guidelines. C&WG will continue to review and update the cost allocation methods used on an ongoing basis and where deemed appropriate, will make necessary improvements. The Accounting Policies are detailed in C&WG s Accounting Documents. i

5 The Published Separated Regulatory Accounts are based on C&WG s accounting separation model for 2011/12. This model uses the statutory accounts (the Statutory Financial Statements ) for the 12-month period, 1 April 2011 to 31 March 2012 as the basis for the calculations. A reconciliation statement detailing adjustments made between the Statutory Financial Statements and the figures used in the accounting separation model is included. Other than the elimination of Inter-Business turnover and costs, the main adjustments are shown below: Interest receivable and taxation - these are not included within the accounting separation model so as to be consistent with the calculation of cost of capital, which is pre interest and pre tax. Interconnect revenue relating to usage of submarine cables - treated as a reduction in submarine cable cost and fed through the model in line with other submarine cable costs. C&WG s own use of fixed and mobile telecoms services are treated as a cost and allocated appropriately to the businesses. Exclusion of profit and loss on disposal of assets. Current cost accounting supplementary depreciation and holding gains/losses. Customer equipment subsidies - treated as a reduction of income in the Statutory Accounts, but as a cost in the Regulatory Accounts. Reference Offer Based Costs The Reference Offer Statements where the results of C&WG s non-network businesses are shown on the basis of costs that would have incurred had C&WG s published Reference Offer rates been applied. These rates can be found within the Wholesale Portal of C&W Guernsey s website ( It should be noted that the Reference Offer rates used were not those calculated by C&WG, but are those stipulated by the GCRA. These published rates were in place throughout the relevant accounting period. In each case, where adjustment was required, the calculated cost applied in the cost based statements (not published) was replaced with data based on the following: The total number of call minutes of each type for each Business For each call type the underlying published Reference Offer rate The multiplication of call minutes of each type by the Reference Offer rate The addition of all relevant interconnects charges For a description of the other network transfer charge processes please refer to Section 4 of C&WG s Accounting Documents. ii

6 Applicable Rate Of Return A pre tax nominal Weighted Average Cost of Capital (WACC) of 11.6% has been applied in both financial years. MAR Adjustment As required by the GCRA in its document 05/19 a MAR adjustment has been made to exchange line rental and the Public Payphones Business. The basis for the calculation is referred to in section of the Accounting Documents. iii

7 Statement of responsibility Cable and Wireless Guernsey Limited ( C&WG ), also trading as Sure, is required under Condition 27 of its Fixed Telecommunications licence, dated 1 st October 2001 and Condition 25 of its Mobile Telecommunications Licence, dated 1 st September 2011, granted by the Guernsey Competition and Regulatory Authority ( GCRA ), previously known as the Office of Utility Regulation ( OUR ), to maintain accounting records in a form which enables the activities of any business unit specified in any direction given by the GCRA to be separately identifiable, and which the Director General considers to be sufficient to show and explain the transactions of each of these business units. The Published Separated Regulatory Accounts for the year ended 31 March 2012 comprise: For each Business Area: i) a profit and loss account; ii) a statement of mean capital employed They also include: iii) Statement of costs of network service for the Core Network Business; iv) Reconciliation between the aggregate turnover, operating profit and capital employed of all the businesses and the turnover, operating profit and capital employed of C&WG, as disclosed in its statutory accounts; v) Transfer charge statement; vi) Inter Business Costs Summary; and vii) Reference Offer rate assumptions. The directors are responsible for keeping proper accounting records for each of the separate businesses that disclose, with reasonable accuracy, at any time, the financial position of each separate business to enable them to ensure that the regulatory accounts comply with the Licence. C&WG confirms that the Published Separated Regulatory Accounts for the year ended 31 March 2012 have been reconciled to the relevant Statutory Accounts and to the best of its knowledge have been prepared in accordance with the requirements of the relevant Conditions of its Fixed and Mobile Telecommunications Licences. Sean Cassidy Chief Financial Officer 26 September 2012 iv

8 Report of the Auditor Report of the Independent Auditors, KPMG Limited, to Cable & Wireless Guernsey Limited We have examined the Published Separated Regulatory Accounts on pages 1 to 51, for the year ended 31 st March 2012, which have been prepared by the Directors of Cable & Wireless Guernsey Limited ( the Company ), under the current cost convention and under the Company s costing methodologies which are included in the accounting documents dated 26 September 2012 (the Accounting Documents ) published with the Published Separated Regulatory Accounts. As explained on page (iii) of the Accounting Documents, these are not the statutory accounts of the Company. The Published Separated Regulatory Accounts comprise separate current cost accounts for the year ended 31 March 2012 for each of the Businesses listed on page 2 of the Accounting Documents ( the Businesses ), and in so far as each Business has been disaggregated in terms of activities of that Business, each of the disaggregated activities listed on page 2 of the Accounting Documents ( the Activities ). Respective responsibilities of Directors and KPMG Limited As described on page (iv) of the Published Separated Regulatory Accounts, the Directors of the Company are responsible for the preparation of the Published Separated Regulatory Accounts in accordance with the basis of preparation set out on page (iii) of the Accounting Documents. Our responsibilities, as independent auditors, are established by the Auditing Practices Board, by our profession s ethical guidance and by the terms of our engagement letter dated 24 July Under the terms of engagement we are required to report to you our opinion as to whether the Published Separated Regulatory Accounts of each of the Businesses and each of the Activities have been properly prepared in accordance with the Accounting Documents. We also report to you if, in our opinion, the Introduction by the Company, setting out the basis upon which the Published Separated Regulatory Accounts have been prepared, is not consistent with the Published Separated Regulatory Accounts, if the Company has not kept proper accounting records or if we have not received all of the information and explanations we require for our examination. We read the definitions of the Businesses on pages 2 to 4 of the Accounting Documents and consider the implications for our opinion if we become aware of any apparent misstatements or material inconsistencies with the Published Separated Regulatory Accounts. Our opinion is given for the Company solely in connection with our engagement. It has been released to the Company on the basis that our opinion shall not be copied, referred to or disclosed, in whole (save for the Company s own internal purposes) or in part, without our prior written consent. We consent to its release to the GCRA to enable the GCRA to verify that the Published Separated Regulatory Accounts have been independently examined. v

9 Our opinion was designed to meet the agreed requirements of the Company determined by the Company s needs at the time. Our opinion should not therefore be regarded as suitable to be used or relied on by any party wishing to acquire rights against us other than the Company for any purpose or in any context. Any party other than the Company who obtains access to our opinion or a copy and chooses to rely on our opinion (or any part of it) will do so at its own risk. To the fullest extent permitted by law, KPMG Limited will accept no responsibility or liability in respect of our opinion to any other person or organisation. Basis of opinion As explained in the Basis of Preparation of Regulatory Statements on page (iii) of the Accounting Documents, the Company has prepared the Published Separated Regulatory Accounts by disaggregating balances recorded in the general ledgers and other accounting records of the Company maintained in accordance with the Companies (Guernsey) Law, 2008, and used, in accordance with that Law, for the preparation of the Company s statutory financial statements for the year ended 31 March 2012 (the Statutory Financial Statements ). An unqualified audit opinion was expressed for the Statutory Financial Statements. In performing the audit of the Statutory Financial Statements, such tests were carried out, of the transactions and balances recorded in the general ledgers and other accounting records of the Company as considered necessary to enable to express that opinion. This included examination and evaluation of the Company s principal accounting and control systems, analytical review of key balances, assessment of accuracy of the coding of transactions and balances, enquiries of directors and managers of the Company and substantive tests of balances and transactions recorded in the Company s general ledger. The statutory audit work concluded upon signature of the audit opinion on the Statutory Financial Statements. In conducting our subsequent examination of the Published Separated Regulatory Accounts, and in providing the opinion below, we have not performed any additional tests of the transactions and balances recorded in the general ledger and other accounting records beyond those already performed for the purpose of our audit of the Statutory Financial Statements. Having regard to the above:- (i) (ii) We conducted our audit in accordance with relevant International Standards on Auditing issued by the Auditing Practices Board. Our work included examination, on a test basis, of evidence relevant to the amounts and disclosures in the Published Separated Regulatory Accounts. It also included an assessment of the significant estimates and judgements made by the Directors in the preparation of the Published Separated Regulatory Accounts. We planned and performed our examination so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Published Separated Regulatory Accounts have been properly prepared in accordance with the Accounting Documents and, on that basis, are free from material error, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the Published Separated Regulatory Accounts. vi

10 Many of the Company s revenues, costs, assets and liabilities are not directly identifiable with individual activities and the preparation of the Published Separated Regulatory Accounts requires a significant number of attributions. As explained in Section 3 of the Accounting Documents, in selecting appropriate attribution methods and appropriate nonfinancial data for use within the attribution models employed in the production of the Published Separated Regulatory Accounts, the Company has had to make certain estimates and exercise its judgement, having regard to the regulatory principles specified in the Accounting Documents, including cost causality and objectivity, in order to comply with the requirements of the Accounting Documents. The Company has decided that attribution methods and non-financial data sources will be subject to ongoing review and, where deemed appropriate, improved. Opinion In our opinion the Published Separated Regulatory Accounts of each of the Businesses and each of the Activities for the year ended 31 March 2012 have been properly prepared in accordance with the Accounting Documents dated 26 September Yours faithfully, KPMG Limited Chartered Accountants 26 September 2012 vii

11 Local Access - Network Business Profit and Loss Account Turnover Transfer charges to Core Network 413,617 52,512 Transfer charges to Retail 4,339,877 1,068,041 Total turnover 4,753,494 1,120,553 Operating costs Operating costs 2,626,658 2,874,347 CCA adjustments 416,441 (3,241,223) Total operating costs 3,043,099 (366,876) Return 1,710,395 1,487,429 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. Return on Capital Employed Return 1,710,395 1,487,429 Capital employed 14,744,783 12,822,664 Return on mean capital employed 11.6% 11.6% Return on turnover 36% 133% General Note: Minor rounding differences may exist in this document. 1

12 Local Access - Network Business Statement of Mean Capital Employed Fixed assets Tangible fixed assets 14,828,132 13,194,586 Total fixed assets 14,828,132 13,194,586 Current assets Stocks 110, ,467 Debtors 58,345 71,320 Cash at bank and in hand 35,363 31,314 Total current assets 203, ,101 Creditors (287,074) (677,023) Provisions for liabilities and charges - - Mean capital employed 14,744,783 12,822,664 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. 2

13 Core Network Business Profit and Loss Account Turnover From Other Operators 3,567,687 5,114,448 Transfer charges to Mobile 1,723,223 3,116,919 Transfer charges to Retail 7,614,816 8,033,361 Transfer charges to Other Activities 475, ,308 Total turnover 13,381,021 17,002,036 Operating costs Operating costs 9,116,111 12,923,115 CCA adjustments 308,423 (217,204) Transfer charges from Mobile 2,697 1,964 Transfer charges from Local Access Network 413,617 52,512 Total operating costs 9,840,849 12,760,387 Return 3,540,172 4,241,650 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. Return on Capital Employed Return 3,540,172 4,241,650 Capital employed 9,254,463 9,433,313 Return on mean capital employed 38% 45% Return on turnover 26% 25% Up until 2011 interconnect receipts and payments related to the use of C&W Guernsey's network hub by its associated businesses in Jersey, Isle of Man and Bermuda, with relevant costs being apportioned to those businesses. From 2012 only the costs associated with C&W Guernsey are recognised above. The reported profitability of C&WG's Core Network should not be affected as a result of this change. 3

14 Core Network Business Statement of Mean Capital Employed Fixed assets Tangible fixed assets 9,056,072 9,513,092 Total fixed assets 9,056,072 9,513,092 Current assets Stocks 19,689 33,564 Debtors 1,630,666 2,072,877 Cash at bank and in hand 1,011, ,153 Total current assets 2,662,269 2,907,594 Creditors (2,463,878) (2,987,373) Provisions for liabilities and charges - - Mean capital employed 9,254,463 9,433,313 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. 4

15 Core Network Business Summary Statement of Costs Operating CCA Capital Rate of Capital Total Total For the year ended 31 March 2012 Notes Costs adjustments Employed return costs costs call minutes % Concentrator (Switch element) 66,005 1,444 46, % 5,351 72, ,577,296 Fixed Network Switch 590,842 2, , % 34, , ,668,614 Local Transmission Link 69, , % 5,739 75, ,209,580 Local Transmission Length 220,465 18, , % 91, , ,209,580 Outside Bailiwick Transmission 27,829 (1,012) 13, % 1,622 28, ,151,768 Product Management Policy and Planning 157, (6,374) 11.6% (739) 157, ,186,309 Outpayments 1,519,888 - (305,580) 11.6% (35,447) 1,484,440 Leased Lines 1,949,043 16,237 2,607, % 302,515 2,267,795 Internet Backbone 1,089,490 (93,432) 1,411, % 163,688 1,159,746 Other Costs 3,425, ,320 4,353, % 505,016 4,292,745 Total conveyance 9,116, ,423 9,254,463 1,073,518 10,498,052 5

16 Statement of Costs of Network Services For the year ended 31 March 2012 USAGE FACTORS TRAFFIC SENSITIVE TRANSMISSION ADMINISTRATION Concentrator (Switch element) Fixed Network Switch Local Transmission Link Local Transmission Length Outside Bailiwick Transmission Product Management, Policy & Planning Average costs (pence per minute) Total costs 72, ,149 75, ,752 28, ,280 Usage Factors (routing) Retail Services: Local calls Local internet calls Jersey calls National calls International calls Calls to Guernsey mobiles Non-geographic calls free to calling customer Non-geographic calls charged at local rate Non-geographic calls charged at national rate Non-geographic calls charged at premium rate Directory Enquiry Public Payphones Reference Offer (RO) Services: C&W On-Island Termination C&W On-Island Origination C&W On-Island Transit C&W Off-Island Transit C&W On-Island Freephone Origination C&W On-Island Local Call Origination Emergency Services Local Information Services Local Premium Services Time Local Reverse Charge Calls Alarm Calls Calls Via Operator - Jersey Calls Via Operator - UK Calls Via Operator - Irish Republic Local Information Services (Weather Forecast - Guernsey) Local Information Services (Channel Island Shipping Forecast) Local Information Services (Guernsey Met. Office Info Line) Usage factors for some services are calculated after these statements have been published, as a separate requirement of the GCRA. They are used in the provision of C&WG's fixed network Reference Offer (RO) document. Details of C&WG's current RO charges are available to the GCRA and Other Guernsey Licenced Operators. 6

17 Statement of Costs of Network Services For the year ended 31 March 2012 AVERAGE COST PER MINUTE TRAFFIC SENSITIVE TRANSMISSION ADMINISTRATION Concentrator (Switch element) Fixed Network Switch Local Transmission Link Local Transmission Length Outside Bailiwick Transmission Product Management, Policy & Planning Average costs (pence per minute) Retail Services Local calls Local internet calls Jersey calls National calls International calls Calls to Guernsey mobiles Non-geographic calls free to calling customer Non-geographic calls charged at local rate Non-geographic calls charged at national rate Non-geographic calls charged at premium rate Directory Enquiry Public Payphones Reference Offer (RO) Services: C&W On-Island Termination C&W On-Island Origination C&W On-Island Transit C&W Off-Island Transit C&W On-Island Freephone Origination C&W On-Island Local Call Origination Emergency Services Local Information Services Local Premium Services Time Local Reverse Charge Calls Alarm Calls Calls Via Operator - Jersey Calls Via Operator - UK Calls Via Operator - Irish Republic Local Information Services (Weather Forecast - Guernsey) Local Information Services (Channel Island Shipping Forecast) Local Information Services (Guernsey Met. Office Info Line) Average costs for some services are calculated after these statements have been published, as a separate requirement of the GCRA. They are used in the provision of C&WG's fixed network Reference Offer (RO) document. Details of C&WG's current RO charges are available to the GCRA and Other Guernsey Licenced Operators. 7

18 Retail Business Profit and Loss Account Turnover Connection & rental charges 15,166,760 14,343,126 Call charges 3,828,371 4,667,287 From other operators 17,499 30,755 Transfer charges to other Businesses - - Other 239, ,239 Total turnover 19,252,080 19,297,407 Operating costs Operating costs specific to Retail 3,699,391 3,384,231 CCA adjustments (28,957) (9,794) Transfer charges from Core Network 7,614,816 8,033,361 Transfer charges from Mobile 299, ,447 Transfer charges from Local Access Network 4,339,877 1,068,041 Total operating costs 15,924,699 12,802,287 Return 3,327,381 6,495,120 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. Return on Capital Employed Return 3,327,381 6,495,120 Capital employed 2,068,772 2,093,598 Return on mean capital employed 161% 310% Return on turnover 17% 34% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 8

19 Retail Business Statement of Mean Capital Employed Fixed assets Tangible fixed assets 720, ,936 Total fixed assets 720, ,936 Current assets Stocks 6,115 25,133 Debtors 1,769,209 1,844,263 Cash at bank and in hand 560, ,877 Total current assets 2,336,258 2,284,273 Creditors (988,359) (880,611) Provisions for liabilities and charges - - Mean capital employed 2,068,772 2,093,598 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. 9

20 Mobile Business Profit and Loss Account Turnover From other operators 1,009,256 1,643,414 Connection & rental charges 5,394,063 5,399,220 Usage charges 8,988,535 9,683,162 Transfer charges to other Businesses 302, ,411 Total turnover 15,694,125 17,054,208 Operating costs Operating costs specific to Mobile 14,240,474 13,885,063 CCA adjustments 1,020, ,507 Transfer charges from Core Network 1,723,223 3,116,919 Total operating costs 16,984,143 17,572,489 Return (1,290,018) (518,281) Return on Capital Employed Return (1,290,018) (518,281) Capital employed 7,372,863 7,119,051 Return on mean capital employed (17%) (7%) Return on turnover (8%) (3%) These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. Up until 2011 interconnect receipts and payments related to the use of C&W Guernsey's mobile network hub by its associated businesses in Jersey, Isle of Man and Bermuda, with relevant costs being apportioned to those businesses. From 2012 only the costs associated with C&W Guernsey are recognised above. The reported profitability of C&WG's Mobile Business should not be affected as a result of this change. 10

21 Mobile Business Statement of Mean Capital Employed Fixed assets Tangible fixed assets 6,169,537 6,536,452 Total fixed assets 6,169,537 6,536,452 Current assets Stocks 65,279 78,711 Debtors 5,088,658 4,520,037 Cash at bank and in hand 1,191, ,400 Total current assets 6,345,551 5,478,148 Creditors (5,142,226) (4,895,549) Provisions for liabilities and charges - - Mean capital employed 7,372,863 7,119,051 11

22 Other Activities Business Profit and Loss Account Turnover 18,807,851 19,784,798 Total turnover 18,807,851 19,784,798 Operating costs Operating costs specific to Other Activities 15,906,918 14,731,067 CCA adjustments (1,162,220) (553,420) Transfer charges from Core Network 475, ,308 Total operating costs 15,219,993 14,914,954 Return 3,587,858 4,869,844 Return on Capital Employed Return 3,587,858 4,869,844 Capital employed 9,958,370 10,045,697 Return on mean capital employed 36% 48% Return on turnover 19% 25% 12

23 Other Activities Business Statement of Mean Capital Employed Fixed assets Tangible fixed assets 8,797,322 9,087,064 Total fixed assets 8,797,322 9,087,064 Current assets Stocks 392, ,157 Debtors 860, ,949 Cash at bank and in hand 1,275, ,414 Total current assets 2,529,583 1,864,519 Creditors (1,368,535) (905,886) Provisions for liabilities and charges - - Mean capital employed 9,958,370 10,045,697 13

24 Retail - Exchange line rental & connection Profit and Loss Account Turnover Connection charges 155, ,473 Rental charges 6,124,796 5,744,656 Transfer charges to all other Businesses 17,261 16,300 Other - Total turnover 6,298,021 5,932,429 Operating costs Operating costs specific to Retail 900, ,603 CCA adjustments Transfer charges from Local Access Network 4,339,877 1,068,041 Transfer charges from Core Network 32,824 16,914 Total operating costs 5,273,747 1,933,062 Return 1,024,274 3,999,367 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. Return on Capital Employed Return 1,024,274 3,999,367 Capital employed 49,407 89,663 Return on mean capital employed 2073% 4460% Return on turnover 16% 67% 14

25 Retail - Exchange line rental* & connection Statement of Mean Capital Employed Fixed assets Tangible fixed assets 70, ,919 Total fixed assets 70, ,919 Current assets Stocks - - Debtors 257, ,223 Cash at bank and in hand 54,720 41,443 Total current assets 312, ,665 Creditors (333,210) (318,922) Provisions for liabilities and charges - - Mean capital employed 49,407 89,663 IMPORTANT NOTE: The reported results of this business represent current costs and revenues in accordance with the CCA methodology as described in Section 5 of the Accounting Documents. As such they are not reflective of the actual costs incurred and revenues received by C&WG during the periods shown. Please refer to Section 6 of the accompanying Accounting Documents to understand the influence that world copper prices have had on the restated 2011 results. * The regulatory asset values of exchange line rental were adjusted in line with the GCRA's Decision Notice 05/19. For more information see the accompanying Accounting Documents or the GCRA's website ( 15

26 Retail - Local calls Profit and Loss Account Turnover Call charges 518, ,246 Total turnover 518, ,246 Operating costs Operating costs specific to Retail 57,056 56,486 CCA adjustments Transfer charges from Core Network 383, ,653 Total operating costs 440, ,164 Return 77, ,082 Return on Capital Employed Return 77, ,082 Capital employed 146, ,945 Return on mean capital employed 53% 73% Return on turnover 15% 20% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 16

27 Retail - Local calls Statement of Mean Capital Employed Fixed assets Tangible fixed assets 4,287 9,978 Total fixed assets 4,287 9,978 Current assets Stocks - - Debtors 137, ,512 Cash at bank and in hand 11,742 10,001 Total current assets 149, ,513 Creditors (6,693) (4,547) Provisions for liabilities and charges - - Mean capital employed 146, ,945 17

28 Retail - Local Internet calls Profit and Loss Account Turnover Call charges 35,504 78,168 Total turnover 35,504 78,168 Operating costs Operating costs specific to Retail 4,668 7,545 CCA adjustments 2 3 Transfer charges from Core Network 9,349 21,983 Total operating costs 14,020 29,532 Return 21,485 48,636 Return on Capital Employed Return 21,485 48,636 Capital employed 11,472 21,776 Return on mean capital employed 187% 223% Return on turnover 61% 62% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 18

29 Retail - Local Internet calls Statement of Mean Capital Employed Fixed assets Tangible fixed assets 338 1,284 Total fixed assets 338 1,284 Current assets Stocks - - Debtors 10,742 19,793 Cash at bank and in hand 929 1,295 Total current assets 11,671 21,088 Creditors (537) (596) Provisions for liabilities and charges - - Mean capital employed 11,472 21,776 19

30 Retail - Jersey calls Profit and Loss Account Turnover Call charges 68, ,436 Total turnover 68, ,436 Operating costs Operating costs specific to Retail 8,836 10,713 CCA adjustments 4 5 Transfer charges from Core Network 18,187 85,320 Transfer charges from Mobile 174 1,123 Total operating costs 27,202 97,161 Return 41,737 19,276 Return on Capital Employed Return 41,737 19,276 Capital employed 21,638 32,424 Return on mean capital employed 193% 59% Return on turnover 61% 17% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 20

31 Retail - Jersey calls Statement of Mean Capital Employed Fixed assets Tangible fixed assets 637 1,903 Total fixed assets 637 1,903 Current assets Stocks - - Debtors 20,261 29,481 Cash at bank and in hand 1,754 1,905 Total current assets 22,015 31,386 Creditors (1,015) (865) Provisions for liabilities and charges - - Mean capital employed 21,638 32,424 21

32 Retail - National calls Profit and Loss Account Turnover Call charges 896,085 1,096,301 Total turnover 896,085 1,096,301 Operating costs Operating costs specific to Retail 113, ,769 CCA adjustments Transfer charges from Core Network 336, ,591 Transfer charges from Mobile Total operating costs 450, ,617 Return 445, ,684 Return on Capital Employed Return 445, ,684 Capital employed 285, ,334 Return on mean capital employed 156% 202% Return on turnover 50% 56% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 22

33 Retail - National calls Statement of Mean Capital Employed Fixed assets Tangible fixed assets 8,365 17,950 Total fixed assets 8,365 17,950 Current assets Stocks - - Debtors 267, ,583 Cash at bank and in hand 22,985 18,025 Total current assets 290, ,608 Creditors (13,209) (8,224) Provisions for liabilities and charges - - Mean capital employed 285, ,334 23

34 Retail - International calls Profit and Loss Account Turnover Call charges 398, ,618 Total turnover 398, ,618 Operating costs Operating costs specific to Retail 52,729 50,068 CCA adjustments Transfer charges from Core Network 34, ,388 Total operating costs 86, ,477 Return 311, ,140 Return on Capital Employed Return 311, ,140 Capital employed 126, ,726 Return on mean capital employed 246% 170% Return on turnover 78% 47% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 24

35 Retail - International calls Statement of Mean Capital Employed Fixed assets Tangible fixed assets 3,752 8,796 Total fixed assets 3,752 8,796 Current assets Stocks - - Debtors 118, ,124 Cash at bank and in hand 10,338 8,825 Total current assets 129, ,948 Creditors (6,013) (4,019) Provisions for liabilities and charges - - Mean capital employed 126, ,726 25

36 Retail - Calls to Guernsey Mobiles Profit and Loss Account Turnover Call charges 1,251,063 1,348,095 Total turnover 1,251,063 1,348,095 Operating costs Operating costs specific to Retail 191, ,936 CCA adjustments Transfer charges from Core Network 116, ,821 Transfer charges from Mobile 284, ,134 Total operating costs 592, ,955 Return 658, ,140 Return on Capital Employed Return 658, ,140 Capital employed 416, ,859 Return on mean capital employed 158% 185% Return on turnover 53% 54% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 26

37 Retail - Calls to Guernsey Mobiles Statement of Mean Capital Employed Fixed assets Tangible fixed assets 13,011 24,056 Total fixed assets 13,011 24,056 Current assets Stocks - - Debtors 373, ,449 Cash at bank and in hand 51,423 37,759 Total current assets 425, ,208 Creditors (21,459) (12,406) Provisions for liabilities and charges - - Mean capital employed 416, ,859 27

38 Retail - Non-geographic calls free to calling customer Profit and Loss Account Turnover From Other Operators 17,499 30,755 Total turnover 17,499 30,755 Operating costs Operating costs specific to Retail 10,100 43,101 CCA adjustments Transfer charges from Core Network 20,899 22,964 Total operating costs 31,009 66,100 Return (13,510) (35,345) Return on Capital Employed Return (13,510) (35,345) Capital employed 858 5,563 Return on mean capital employed (1575%) (635%) Return on turnover (77%) (115%) These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 28

39 Retail - Non-geographic calls free to calling customer Statement of Mean Capital Employed Fixed assets Tangible fixed assets 1,026 5,263 Total fixed assets 1,026 5,263 Current assets Stocks - - Debtors 300 1,490 Cash at bank and in hand 631 2,151 Total current assets 931 3,641 Creditors (1,098) (3,341) Provisions for liabilities and charges - - Mean capital employed 858 5,563 29

40 Retail - Non-geographic calls charged at local rate Profit and Loss Account Turnover Call charges 302, ,463 Total turnover 302, ,463 Operating costs Operating costs specific to Retail 38,166 30,605 CCA adjustments Transfer charges from Core Network 161,590 69,106 Total operating costs 199,775 99,724 Return 103,218 1,739 Return on Capital Employed Return 103,218 1,739 Capital employed 97,409 95,208 Return on mean capital employed 106% 2% Return on turnover 34% 2% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 30

41 Retail - Non-geographic calls charged at local rate Statement of Mean Capital Employed Fixed assets Tangible fixed assets 2,838 5,545 Total fixed assets 2,838 5,545 Current assets Stocks - - Debtors 91,222 86,556 Cash at bank and in hand 7,804 5,557 Total current assets 99,026 92,113 Creditors (4,455) (2,449) Provisions for liabilities and charges - - Mean capital employed 97,409 95,208 31

42 Retail - Non-geographic calls charged at national rate Profit and Loss Account Turnover Call charges 38,311 50,149 Total turnover 38,311 50,149 Operating costs Operating costs specific to Retail 5,057 4,792 CCA adjustments 2 2 Transfer charges from Core Network 4,382 5,334 Total operating costs 9,442 10,127 Return 28,870 40,022 Return on Capital Employed Return 28,870 40,022 Capital employed 12,333 13,973 Return on mean capital employed 234% 286% Return on turnover 75% 80% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 32

43 Retail - Non-geographic calls charged at national rate Statement of Mean Capital Employed Fixed assets Tangible fixed assets Total fixed assets Current assets Stocks - - Debtors 11,549 12,697 Cash at bank and in hand 1, Total current assets 12,550 13,526 Creditors (580) (372) Provisions for liabilities and charges - - Mean capital employed 12,333 13,973 33

44 Retail - Non-geographic calls charged at premium rate Profit and Loss Account Turnover Call charges 251, ,575 Total turnover 251, ,575 Operating costs Operating costs specific to Retail 98,671 82,636 CCA adjustments Transfer charges from Core Network 160, ,503 Transfer charges from Mobile Business 13,794 14,143 Total operating costs 272, ,340 Return (21,214) 367,235 Return on Capital Employed Return (21,214) 367,235 Capital employed 238, ,770 Return on mean capital employed (9%) 186% Return on turnover (8%) 55% These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 34

45 Retail - Non-geographic calls charged at premium rate Statement of Mean Capital Employed Fixed assets Tangible fixed assets 157,549 81,857 Total fixed assets 157,549 81,857 Current assets Stocks - - Debtors 71, ,046 Cash at bank and in hand 19,410 12,386 Total current assets 90, ,432 Creditors (9,820) (6,519) Provisions for liabilities and charges - - Mean capital employed 238, ,770 35

46 Retail - Internet Profit and Loss Account Turnover Connection & rental charges 5,024,713 4,674,200 Other 43,980 62,454 Total turnover 5,068,693 4,736,654 Operating costs Operating costs specific to Retail 1,367,815 1,073,370 CCA adjustments (30,639) (11,273) Transfer charges from Core Network 3,695,378 3,582,982 Total operating costs 5,032,554 4,645,078 Return 36,139 91,576 Return on Capital Employed Return 36,139 91,576 Capital employed 581, ,741 Return on mean capital employed 6% 19% Return on turnover 1% 2% 36

47 Retail - Internet Statement of Mean Capital Employed Fixed assets Tangible fixed assets 364, ,613 Total fixed assets 364, ,613 Current assets Stocks 1,393 6,625 Debtors 226, ,249 Cash at bank and in hand 312, ,572 Total current assets 540, ,447 Creditors (322,636) (280,319) Provisions for liabilities and charges - - Mean capital employed 581, ,741 37

48 Retail - Directory Enquiry Profit and Loss Account Turnover Call charges 45,152 31,543 Total turnover 45,152 31,543 Operating costs Operating costs specific to Retail 5,625 2,814 CCA adjustments 3 1 Transfer charges from Core Network 62,767 38,553 Total operating costs 68,395 41,368 Return (23,243) (9,825) Return on Capital Employed Return (23,243) (9,825) Capital employed 14,550 8,784 Return on mean capital employed (160%) (112%) Return on turnover (51%) (31%) These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 38

49 Retail - Directory Enquiry Statement of Mean Capital Employed Fixed assets Tangible fixed assets Total fixed assets Current assets Stocks - - Debtors 13,626 7,986 Cash at bank and in hand 1, Total current assets 14,787 8,498 Creditors (660) (226) Provisions for liabilities and charges - - Mean capital employed 14,550 8,784 39

50 Retail - Public Payphones Profit and Loss Account Turnover Call charges 21,882 25,692 Total turnover 21,882 25,692 Operating costs Operating costs specific to Retail 35,352 66,574 CCA adjustments Transfer charges from Core Network 2,523 3,919 Transfer charges from Mobile Transfer charges from Retail - Exchange Lines 17,261 16,300 Total operating costs 55,798 87,705 Return (33,915) (62,013) Return on Capital Employed Return (33,915) (62,013) Capital employed 20,318 31,319 Return on mean capital employed (167%) (198%) Return on turnover (155%) (241%) These results are based on the GCRA's stipulated treatment of network transfer charges and do not represent the calculated costs of the Separated Regulatory Accounts of Cable & Wireless Guernsey. 40

51 Retail - Public Payphones * Statement of Mean Capital Employed Fixed assets Tangible fixed assets 14,147 10,870 Total fixed assets 14,147 10,870 Current assets Stocks 4,723 18,508 Debtors Cash at bank and in hand 4,235 5,086 Total current assets 9,101 24,036 Creditors (2,930) (3,586) Provisions for liabilities and charges - - Mean capital employed 20,318 31,319 * The regulatory asset values of the Public Payphones Business were adjusted in line with the GCRA's Decision Notice 05/19. For more information see the accompanying Accounting Documents or the GCRA's website ( 41

52 Retail - Leased Lines Profit and Loss Account Turnover Connection & rental charges 3,590,056 3,455,819 Total turnover 3,590,056 3,455,819 Operating costs Operating costs specific to Retail 534, ,837 CCA adjustments Transfer charges from Core Network 2,386,221 2,603,172 Total operating costs 2,920,771 3,169,495 Return 669, ,324 Return on Capital Employed Return 669, ,324 Capital employed 22,953 47,690 Return on mean capital employed 2916% 600% Return on turnover 19% 8% 42

53 Retail - Leased Lines Statement of Mean Capital Employed Fixed assets Tangible fixed assets 45,804 70,958 Total fixed assets 45,804 70,958 Current assets Stocks - - Debtors 146, ,598 Cash at bank and in hand 32,087 27,117 Total current assets 178, ,715 Creditors (201,386) (202,983) Provisions for liabilities and charges - - Mean capital employed 22,953 47,690 43

54 Retail - Remaining activities Profit and Loss Account Turnover Connection & rental charges 271, ,978 Other 195, ,785 Total turnover 466, ,763 Operating costs Operating costs specific to Retail 275, ,384 CCA adjustments Transfer charges from Core Network 190, ,160 Total operating costs 465, ,682 Return 1,327 29,080 Return on Capital Employed Return 1,327 29,080 Capital employed 21,440 45,824 Return on mean capital employed 6% 63% Return on turnover 0% 6% 44