Report of the Board of Directors

The Directors submit their report and audited consolidated financial statements for the year ended 31 December 2012. For the purposes of this report, 'Company' means Colt Group S.A. and 'Group' or 'Colt' means the Company and its subsidiary undertakings.

Principal activity

The Company is the holding company for the Group and is domiciled in Luxembourg. The principal activity of the Group is the provision of business communications and IT solutions and services within Europe. The Company has a premium listing on the London Stock Exchange.

Business review

This Report of the Board of Directors sets out an overview of the development and performance of the business, a description of the principal risks and uncertainties facing Colt and an indication of likely future developments.

Group strategy

Our overall Group strategy is to grow our business by helping our customers to succeed by providing comprehensive integrated computing and networking services that are managed seamlessly and transparently across all our markets. With the customer at the centre of everything we do, we are focusing our resources on the key growth opportunities and markets that are relevant to our customers and we continue to strive to simplify how we buy, sell and contract our business, including appropriate automation of our service and delivery model.

Culture

Where previously we have referred to strategic priorities, we have now put in place four key values, and a behavioural framework that sits behind these, which provide all our stakeholders with clarity about what they can expect from Colt, and all our employees. These values should permeate everything Colt does, they should drive our employee's performance, our reward and recognition programmes and all other initiatives. Our values are:

Customer: We aim to deliver an exceptional customer experience every time.

Ownership: We take ownership and personal responsibility for our actions and our company's commitments.

Leadership: We aim to demonstrate leadership, always striving to be the best at whatever we do.

Teamwork: We put teamwork at the heart of our business, working with others to achieve success.

Organisation development and business model

We believe we have created a business model which will create and deliver value for our shareholders. We have three market serving Business Units (see below and CES at a glance and DCS at a glance) focused on the needs of their customers, each mandated to shape their business to best meet those needs and to identify and take advantage of growth opportunities. These Business Units are supported by the internal service units: Infrastructure Services Unit (see ISU at a glance) and our Business Services Unit (see Regulatory environment). In December 2012 we announced a programme to accelerate the transformation of our business; investing in skills for future growth while aligning cost structures for our legacy business. We are on track to deliver related net recurring annual efficiency savings of approximately €27.0m.