"During 2012 the Board has taken steps to implement the Board Composition Guidelines. We believe it is important to take time to find the right candidates for NED succession planning purposes. We are mindful of the importance of Board balance and gender diversity and our priority is to select the best candidates for Colt. We will continue to work to maintain and improve Board effectiveness and governance at Colt."
The UK Corporate Governance Code ('the Code') is published by the UK Financial Reporting Council and is available on their website www.frc.org.uk. As a company with a premium listing of shares on the London Stock Exchange, we are required to explain how we apply the main principles and how far we complied with the provisions set out in the Code. Throughout the year ended 31 December 2012 the Company complied with the provisions of Section 1 of the Code in all respects.
Two of our Independent Non-Executive Directors have served on the Board for more than nine years, Andreas Barth and Vincenzo Damiani. All Directors serving for more than six years are subject to a rigorous annual review and the Board is satisfied that they remain independent and make an outstanding contribution to the Board. All Directors are subject to annual re election. Colt's Board Composition Guidelines include a principle that Independent Non-Executive Directors should not serve for more than nine years and a planned refresh timetable is in place. In line with Colt's plans for progressive refresh of the Board, it is not anticipated that Messrs Barth or Damiani will stand for re election at the 2014 AGM, subject to Colt successfully progressing its Non-Executive Director recruitment plans. These plans are in progress, with role profiles agreed and an independent search firm specialising in NED recruitment, MWM, duly instructed.
It has been Colt's practice to have a period of overlap between incoming new Non-Executive Directors and retiring Non-Executive Directors to preserve continuity and stability. We have found that this mindful, phased approach has worked well to optimise the effectiveness of the Board. The overriding priority is to maintain a world class Board to serve our shareholders. We believe this approach is aligned with the UK Corporate Governance Code principles and contributes to the objective of good governance.
Board Composition as
at 31 December 2012
Division of responsibility
There is a clear division of responsibility between the Chairman, Tim Hilton, and the Chief Executive Officer, Rakesh Bhasin, with neither having unfettered powers of decision with respect to substantial matters. The Chairman is responsible for leading the Board and setting its agenda including major decisions on strategic direction and financial transactions and for ensuring that the Board functions effectively. His commitments other than to the Group are set in the Board of Directors. They were disclosed to the Board prior to his appointment and have not changed during the year. The Chief Executive Officer is responsible for executing strategy and executive management, operation and development of the Group's business.
The Non-Executive Directors have the opportunity to discuss Colt strategy and Board business individually with the Chairman and the CEO regularly throughout the year.
2012 Board and Committee membership
|Andreas Barth||Independent Non-Executive Director|
|Rakesh Bhasin||CEO, Executive Director|
|Vincenzo Damiani||Independent Non-Executive Director||Chairman|
|Mark Ferrari||CFO, Executive Director|
|Gene Gabbard||Independent Non-Executive Director|
|Sergio Giacoletto||Senior Independent Director|
|Simon Haslam||Non-Executive Director|
|Tim Hilton||Chairman, Non-Executive Director||Chairman|
|Anthony Rabin||Independent Non-Executive Director||Chairman|
|Michael Wilens||Non-Executive Director|
Senior Independent Director
Sergio Giacoletto was appointed as the Senior Independent Director (SID) following Hans Eggerstedt's planned retirement at the AGM in 2012. Mr Giacoletto has previous experience as a SID for a UK listed company.
The role of the SID is to act as an alternative conduit to the Board for the communication of shareholder concerns, to act as chairman of meetings of the Independent Non-Executive Directors which are not attended by the Chairman and to lead the annual performance evaluation of the Chairman.
The SID reports the discussions of any meetings with shareholder representatives to the Board. At the end of every Board meeting Executive Directors, management and Fidelity related Directors withdraw and the SID chairs a meeting of the Independent Non-Executive Directors to provide a forum for any issues to be raised.
In 2012 there were no absences from Board meetings. In the event that a Director was to be unable to attend all meetings of the Board or Board Committees of which they are members, the Director would be invited to confirm that they remain committed to the role and has the requisite time available to perform the role.
In 2012 the Board held five scheduled meetings and interim telephone meetings as required.
Operation of the Board
The attendance of each of the Directors at the scheduled Board meetings held in 2012 while a Director was:
|Average % attendance||100%|
The Board is scheduled to meet five times in 2013. Additional meetings will be held as required.
The Board is primarily responsible for decisions on Group strategy, including the approval of strategic plans, annual budgets, interim and full year financial statements and reports, accounting policies and all material capital projects, investments and disposals. There is a schedule of matters reserved for approval by the Board.
Each Director is provided with monthly reports which include financial information and updates on the business. When there is a Board meeting, this information is circulated to the Directors in advance of the meeting, together with details of all other business items to be considered at the meeting. Directors receive regular articles on industry news and analysts' and press reports on Colt. The Directors are encouraged to supplement this information through direct contact with the Group's senior management and the Company Secretary facilitates regular informal meetings throughout the year. Direct access to senior management is encouraged. Other members of the senior management team regularly attend Board and Committee meetings.
Calendar of Activities for the Board
Board meetings are held in Luxembourg or elsewhere by exception. The articles prohibit any decisions being made in the UK. The annual programme, which is set three years in advance, involves four meetings timed to review the quarterly results and a shorter meeting principally to approve the budget. Meetings are held over a two or three-day period, to include site visits, formal and informal meetings with local management and Committee meetings. Occasional single purpose interim meetings are held by conference telephone to deal with out of cycle requests.
How the Board spent its time in 2012
Board Meeting 2012 Activities
The Board approved the 2011 financial statements and the 2011 Annual Report together with the 2012 Annual General Meeting and Extraordinary General Meeting notices and received the results of those shareholder meetings.
During 2012, the Board devoted time to defining and monitoring implementation of the overall growth strategy for Colt and for each of the Business Units. The Board reviewed periodic reports on the business and monitored the progress of the business during the year. The Board also reviewed investment strategy and opportunities both in Europe and Asia. Mobile strategy was discussed and developed. The Board received training on Colt's technology architecture and products and services. Candidates for new Board appointments were reviewed. Additionally, the Board approved the presentations for the Capital Markets Day held in May when senior management presented the Colt story to equity research analysts and investors. Other activities included reviewing the governance around a major BSS/OSS programme and funding arrangements for Colt.
The Board also approved each of the 2012 Q1 and Q3 Interim Management Statements and the H1 financial results and associated announcements. The 2013 budget was approved.
At each meeting the Board received reports from each Chairman of the Audit Committee, Remuneration Committee and Nomination Committee on the business conducted by those Committees.
Induction, information and ongoing development
Induction is tailored to individual Director's requirements depending on their background and role. On appointment, Directors are offered a comprehensive induction process in accordance with ICSA best practice. This is designed to develop their knowledge and understanding of the Group's business through visits to various key sites including data centres and offices, presentations on relevant technology, products and services, one-to-one meetings with Executive Directors and senior management and a familiarisation with investor and analysts' perceptions of the Group. As appropriate, meetings are arranged with representatives of significant shareholders and key advisors including lawyers, brokers and auditors.
New Directors receive a Director's Manual, containing information on the Company and key policies and documents, and tutorials on its corporate governance framework, organisation, corporate structure, operations, insurance, Code of Business Conduct, share dealing and other corporate policies and procedures, together with recent Board materials and presentations as appropriate.
The Directors' knowledge and understanding of the Group's business is refreshed throughout the year, with briefings as necessary on corporate governance and regulatory compliance. The training needs of the Directors are periodically reviewed. Presentations by key members of the relevant teams are supplemented by reading materials. Ad hoc informal training on issues relevant to Colt such as new technologies and network development is regularly provided by management upon request during the year. Additionally, as part of ongoing training and development, Directors receive fortnightly summaries of Colt specific and industry news.
The 2012 Board evaluation was performed internally. It is intended that Colt will use external consultants to conduct the evaluation every three years, in compliance with the Code.
The last external evaluation was in 2011 when Colt retained the services of Dr Tracy Long of Boardroom Review to undertake an independent evaluation of the effectiveness of the Board. Boardroom Review is an independent third party supplier and provides no other services to Colt.
The review process took the form of confidential interviews between the Chairman and each Director. The interviews focused on areas for development recommended from the previous year's evaluation and centred on Board composition and gender diversity, competitive data and benchmarking and management development and succession planning. Findings from the evaluation were considered by the Board. The Board agreed a follow-up action plan. The evaluation of the Chairman was conducted by the Senior Independent Director, then presented to the Chairman.
In summary, the conclusion was that the Board and Committees and each of the Chairmen are performing effectively, with the right skill sets and a culture which enables openness and high quality debate.