Introduction

2014 was a challenging but significant year for Colt. Strategically, the acquisition of KVH in Asia was a major highlight and provides Colt with scale and complementary capability in key Asian cities. The transaction was in line with Colt's city-based expansion strategy. This was a related party transaction and I would like to pay tribute to our independent Directors for their hard work in acting in the interests of our non-Fidelity shareholders and for making the transaction successful.

Operationally, Colt's transformation continues; during the year, we reorganised Colt into lines of business formed around major product areas and last month the go to market approach was aligned with these new lines of business. This should help to deliver a greater understanding of customer needs, allowing faster decision making and focusing our resources on our assets. We believe this structure will serve our customers better and facilitate more transparent reporting on the different parts of the business. In addition, we announced our intention to withdraw from low margin carrier voice trading in Q2 2014 and this planned exit was responsible for the reduction of around €75m in our 2014 carrier voice revenues.

Our balance sheet position remains solid; however, the Board recognises that we have not made as much progress as we would have liked with regard to growth, in terms of both revenue and EBITDA. Our markets continue to be challenging, particularly in the enterprise space.

Corporate governance

During 2014, we continued to focus on our Board refresh and rotation plans. I am proud to report that we made significant progress with regard to gender diversity and I am satisfied that the Colt Board operates effectively and maintains the right skillsets and level of experience, gained over many years from a wide range of sectors. In 2014 several of our long-serving Non-Executive Directors stepped down from the Board: Andreas Barth, Vincenzo Damiani and Gene Gabbard retired at the 2014 AGM and Tim Hilton retired on 31 December 2014. Colt has benefited hugely from their wisdom and guidance over the years.

We appointed Olivier Baujard to the Board and as a member of the Audit Committee and the Remuneration Committee in April. In November Hugo Eales joined the Board to replace Mark Ferrari as CFO. Jennifer Uhrig joined the Board as a Non-Executive Director on 1 January 2015. As planned, Jennifer and Hugo will be proposed for election by the shareholders for the first time at the 2015 AGM.

On behalf of the Board, I would like to thank Andreas, Vincenzo, Gene, Mark and – especially – Tim for their dedication and hard work and wish them all the best for the future.

The Board complied with the principles of the UK Corporate Governance Code relating to leadership and effectiveness and details of how we have applied the principles of the Code are set out in the corporate governance statement.

CSR

Colt's approach to Corporate Social Responsibility focuses on delivering business results in a responsible way. We believe in applying our technology and expertise to support social and environmental issues. Our CSR activity is concentrated on four key areas: People, Customers and Suppliers, Environment, and Community. In 2014 we made significant progress with our environmental goals including a continued energy efficiency programme and behavioural change in our use of business flights which reduced emissions of CO2 equivalent by over 1,090 tonnes as a result. Colt's energy efficient nodes and data centre estate helped our customers to mitigate the environmental impact of their information and telecommunication services purchased through Colt. We are also proud of our people who volunteered a record 8,200 hours this year, participating in community projects and raising funds for disadvantaged children in the cities where Colt operates, while improving their skills and developing Colt's Teamwork value.

COLT Employees

Focus and simplify

I am grateful to our CEO, Rakesh Bhasin, for his leadership during 2014 and would like to thank him and all our employees for their commitment and hard work.

In the coming year we will continue to execute on our strategy and to keep it under review, maintaining a clear focus on our customers and their needs, the management of our assets and operating in the right markets. Our new operating model has helped improve decision making at Colt and our transformation is well under way.

In terms of the business environment in which we operate, our industry remains subject to strong price pressures and competition. The economic environment in our European markets is predicted to remain challenging. In that context, our acquisition of KVH provides geographic diversification and we believe significant opportunities exist with the two businesses working together. Against this background the Board remains confident that Colt is well placed to deliver future growth and to create value for our shareholders.

We hope you enjoy reading this annual report. We believe that it presents a fair, balanced and understandable assessment of the Group's trading position and prospects.

Finally on behalf of Colt, I would like to thank all our shareholders and customers for your continued trust in Colt.

Simon Haslam

Simon Haslam

Non-Executive Chairman

25 February 2015

Simon Haslam

Simon Haslam

Non-Executive Chairman

2014 was a challenging but significant year for Colt. Strategically, the acquisition of KVH in Asia was a major highlight and provides Colt with scale and complementary capability in key Asian cities.

30%

of the board
is now female