SES FDR

Annual Report (ESEF) • Feb 28, 2023

Untitled ANNUAL REPORT 2022 SES ANNUAL REPORT 20222 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION CONTENT 1 2 4 5 6 3 OPERATIONAL & STRATEGIC REPORT 4 Our company 5 Our equity story 6 Our business model & priorities 7 Our business segments 8 Business highlights 9 Financial highlights 10 Letter from the Chairman 11 Letter from the Chief Executive 13 Key satellite industry trends 15 Our global network 19 SES | Networks 20 SES | Video 21 Financial review & outlook ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 24 Our Horizon Strategy 27 Sustainable Space 29 Climate Action 33 Diversity and Inclusion (D&I) 39 Critical Human Needs 41 Operating our Business 50 Reporting Standards Appendix CONSOLIDATED FINANCIAL STATEMENTS 86 Audit Report 90 Consolidated income statement 91 Consolidated statement of comprehensive income 92 Consolidated statement of financial position 93 Consolidated statement of cash flows 94 Consolidated statement of changes in shareholders’ equity 96 Notes to the consolidated financial statements SES S.A. ANNUAL ACCOUNTS 155 Audit report 158 Balance sheet 159 Profit and loss account 160 Statement of changes in shareholders’ equity 161 Notes to the annual accounts ADDITIONAL INFORMATION 177 Financial Calendar 178 Imprint CORPORATE GOVERNANCE & REMUNERATION CORPORATE GOVERNANCE 53 Shareholder structure 54 Chairperson’s report on Corporate Governance 56 Board of Directors & Committees 63 Senior Leadership Team (SLT) 66 Internal control procedures 71 Principal risks REMUNERATION POLICY & REPORT 74 Remuneration policy 79 Remuneration report 1 4 Our company 5 Our equity story 6 Our business model & priorities 7 Our business segments 8 Business highlights 9 Financial highlights 10 Letter from the Chairman 11 Letter from the Chief Executive 13 Key satellite industry trends 15 Our global network 19 SES | Networks 20 SES | Video 21 Financial review & outlook OPERATIONAL & STRATEGIC REPORT TRUSTED partner to major businesses, governments, and institutions around the world ATTRACTIVE customer proposition of high-performance connectivity and global reach ONLY business delivering services across proven Geostationary and Medium Earth Orbits EXPANDING our unique satellite-based network infrastructure with SES-17 & O3b mPOWER SES ANNUAL REPORT 20224 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OUR COMPANY EMPOWERING BILLIONS OF STORIES CREATING CHANGE WITH YOU SES is more than a ‘satellite operator’. We are a leader in global content connectivity solutions We deliver amazing experiences on everywhere on Earth and solutions that matter DOING THE EXTRAORDINARY IN SPACE REAL INNOVATION FOR REAL PROGRESS Our unique and seamlessly integrated multi-orbit network covers 99% of the world’s population Our next-generation constellation and differentiated offerings will enable a truly connected world SES ANNUAL REPORT 20225 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OUR EQUITY STORY €1.1B~€5B+9% 2022 Adjusted EBITDA with robust margins contract backlog reflects our trusted customer value proposition expected annual industry revenue growth (2021-2031) 1 1 Average of Euroconsult and Northern Sky Research (2022) for Networks and Video, including broadband access revenue (not a relevant market for SES) ATTRACTIVE CASH FLOWS AND TOTAL RETURN FUNDAMENTALS Disciplined financial policy with focus on profitable, sustainable investments and execution Balance sheet metrics consistent with investment grade credit rating (Moody’s: Baa2; Fitch: BBB) Stable to progressive dividend policy (dividend of €0.50 per A-share proposed for 2022) >$4B pre-tax of monetisation from US C-band by end-2023 with >$1B pre-tax already realised Satellite offers communication without limits and need for substantial, expense terrestrial infrastructure High-performance connectivity solutions (from 10s of Mbps to 10s of Gbps with low latency) Video neighbourhoods with critical audience reach and reliability (369M TV homes served) Incorporating a bold ESG agenda and targets (supporting 11 of the 17 UN SDGs) ~€2B annual revenue with expanding demand for connectivity on land, at sea, and in the air Important growth investments to expand our unique multi-orbit satellite-based network >35 years of success serving the world’s major businesses, governments, and institutions Track record of sustainable innovation and being ‘the first’ in our industry DIFFERENTIATED PRODUCTS AND SOLUTIONS TO MAKE A DIFFERENCE INDUSTRY LEADER WITH PROFITABLE LONG-TERM GROWTH OUTLOOK SES ANNUAL REPORT 20226 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OUR BUSINESS MODEL& PRIORITIES BOLD PURPOSE COMPELLING CAPABILITIES CLEAR STRATEGY VALUE CREATION We do the EXTRAORDINARY in space to deliver AMAZING experiences EVERYWHERE on Earth. We benefit from two compelling businesses and strong common fundamental capabilities. We aim to deliver a profitable and growing business that makes a positive contribution to all. We aim to deliver compelling value for all stakeholders and make a difference on Earth. WE SEE SIGNIFICANT DEMAND for content connectivity solutions around the world, where the satellite - and SES - will play a major role. WE WANT TO HARNESS THE POWER OF SPACE to help connect more people in more places with content that educates and entertains, protects populations, drives businesses forward, enriches lives, and empowers personal stories. WE AIM TO ENABLE OUR CUSTOMERS to solve critical connectivity challenges and deliver media experiences using our unique, global, space-based infrastructure. UNIQUE MULTI-ORBIT NETWORK offering compelling scale, flexibility, and performance. UNPARALLELED REACH underpinning large, profitable, and resilient Video neighbourhoods. ACCESS TO GLOBAL SPECTRUM, with priority access to equatorial MEO spectrum. OPEN INNOVATION APPROACH with partners to drive productivity, flexibility, and reduce cost. DISCIPLINED FINANCIAL POLICY built on strong balance sheet metrics and cash flow generation. DIVERSE AND TALENTED ORGANISATION with people who are experts in their fields. LEVERAGE AND SCALE OUR UNIQUE SATELLITE-BASED INFRASTRUCTURE to expand in key, fast-growing networks segments and reinforce the long-term value of our video business. DELIVER PRODUCTS AND SOLUTIONS THAT DRIVE CUSTOMERS’ SUCCESS by being a leader in high performance connectivity and offering unparalleled audience reach and reliability. PROFITABLE AND SUSTAINABLE EXECUTION TO MAXIMISE VALUE through disciplined financial approach, constant innovation, and pursuit of a bold ESG agenda and set of targets. CUSTOMERS & PARTNERS: are part of our family and their success is also our success. EMPLOYEES: we want to unleash the full potential and passion of the entire SES family, making SES a great place to work. SHAREHOLDERS: we strive to deliver an attractive combination of sustained capital growth and income return for shareholders. SOCIETY: we want to raise up the human experience, ensure that everyone is connected to the world’s content, and use our business to make a difference. 1 2 3 4 SES ANNUAL REPORT 20227 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OUR BUSINESS SEGMENTS ~50% of revenue 1 ~50% of revenue 1 1 % of revenue pro forma including DRS Global Enterprise Solutions (DRS GES), acquired 1 August 2022. LINEAR TV a key driver for our customers’ global revenue and long-term success RAPIDLY EXPANDING commercial demand for reliable and high- performance connectivity PARTNER to the world’s leading broadcasters, platform operators, and content owners PARTNERSHIPS with major governments, telcos, MNOs, cloud companies, and cruise lines UNPARALLELED REACH, quality, reliability, and economics of satellite for premium content UNIQUE NETWORK providing high through- put, high flexibility, and low latency solutions €3B BACKLOG, 5-10 years typical contract lengths €2B BACKLOG, 3-5 years typical contract length VIDEO NETWORKS G o v e r n m e n t M o b i l i t y F i x e d d a t a V i d e o 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SES ANNUAL REPORT 20228 2022 BUSINESS HIGHLIGHTS ANOTHER YEAR OF STRONG EXECUTION EXPANDED OFFERING FOR U.S. GOVERN- MENT CLIENTS PROGRESSING STRATEGIC GROWTH INITIATIVES CREATING VALUE FROM US C-BAND CLEARING 2022 Revenue and Adjusted EBITDA were delivered fully in line with our financial outlook In 2022, we completed the acquisition of DRS Global Enterprise Solutions, a best- in-class solutions provider to numerous US agencies The year marked the entry into commercial service of SES-17 and the launch of thefirst of our O3b mPOWER satellites We successfully de-risked the project, with Phase II clearing on track, while capturing additional value from our agreement with Verizon 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SES ANNUAL REPORT 20229 2022 FINANCIAL HIGHLIGHTS €1,944M Group revenue 2021: €1,782M €1,105M 3.5 TIMES Adjusted EBITDA €189M 2021: €1,091M Adjusted Net Profit Ratio of Adjusted Net Debt to Adjusted EBITDA 2021: 2.9 times 2021: €323M SES ANNUAL REPORT 202210 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Our Networks business returned to growth in 2022, after a period of robust performance during the COVID-19 global pandemic, reflecting our customer proposition in delivering high performance connectivity anywhere on land, at sea, and in the air. 2022 was also a year in which the foundations of sustained and profitable growth were laid. First with SES-17 becoming operational and serving customers, second with the acquisition of DRS Global Enterprise Solutions and, lastly, with the successful launch of the first of our next-generation O3b mPOWER satellites. Notwithstanding the evolving viewing habits of consumers, our Video business continues to deliver value for customers and robust cash generation fundamentals. Through decades of experience and execution, we have built video neighbourhoods which enable broad- casters and content owners to access an audience reach of 369 mil- lion households and over 1 billion people every day. Our purpose - to do the extraordinary in space to deliver amazing experiences every on Earth - not only covers an ambition of driving our customers’ success, but also in making a meaningful contri bution to the lives of people and communities around the globe. In last year’s Annual Report, I was delighted to unveil our Environmen- tal, Social, and Governance (ESG) agenda and, one year in, am pleased with the start SES has made. The most notable achievements include our improved Carbon Disclosure Project score, underlining the commit- ment to transparency and managing our environmental footprint; our Luxembourg Inspiring More Sustainability award in recognition of our ESG strategy and engagement; and, finally, the new partnerships formed in each of our four ESG pillars as we work to drive collective impact and make a difference. Furthermore, and in recognition of the Board’s com- mitment to this agenda, the Renumeration Committee has now intro- duced ESG-related elements into the bonus and long-term equity com- ponents of our senior leadership team’s annual remuneration. For 2022, the Board is proposing a dividend of €0.50 per A-share and €0.20 per B-share to be approved at our Annual General Meeting on 6 April 2023, consistent with the policy of maintaining a stable to progressive dividend and the Board’s confidence in the cash gener- ation profile and outlook of SES. At the same time, the Board has decided to adopt a more prudent leverage level going forward with the intent for Adjusted Net Debt to Adjusted EBITDA to remain below 3 times from 2024. Looking forward, our company continues to be well positioned to prof- itably grow, create shareholder value, and make a difference. With 2022 now behind us, we can look forward to further success in 2023 and beyond. Finally, I would like to take this opportunity to thank Béatrice de Cler- mont-Tonnerre, who left the Board in October 2022, for her contri- bution to SES and welcome Dr. Jennifer Byrne and Carlo Fassbinder, who both joined last April, as well as Fabienne Bozet, who joined in February 2023. Frank Esser Chairman of the SES Board of Directors Frank Esser Chairman of the SES Board of Directors 2022 reflects strong business execution, solid financial performance, value-creative investment, and important strategic progress towards ensuring our company’s profitable long-term growth and financial position. On behalf of the SES Board of Directors, I would like to thank everyone at SES for their continued commitment, perseverance, and dedication. Group revenue and Adjusted EBITDA were in line with expectations while our balance sheet metrics deliver an important source of value creation. With virtually all debt fixed at low interest rates, no signif- icant near-term senior debt maturities, and SES on track to earn $3 billion in pre-tax payments from US C-band spectrum clearing at the end of 2023, our financial position will support the on-going commercial successes of our multi-orbit Networks offerings and important Video neighbourhoods. LETTER FROM THE CHAIRMAN SES ANNUAL REPORT 202211 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Our Fixed Data business also delivered solid revenues on the back of new wins. In the year, we concluded deals with ARSAT, AXESS Net- works, Claro Brazil, Digicel Pacific, Marlink, Microsoft, SSi Canada, Vodafone Cook Islands, and others to deploy high performance con- nectivity services across the globe. SES-17, brought into service in June, came to the fore with 17 new contracts signed on the platform with the majority supporting rural connectivity programmes across Latin America. Market conditions dictated that we saw limited new business from the US Government in 2022 but we were successful in securing impor- tant renewals and recompetes with customers such as US Army TRO- JAN and the follow-on US Navy CSSC-II programme with our partner, Inmarsat. An exception, in terms of new business, was the innovative agreement signed with NASA to showcase multi-orbit (MEO-LEO) data relay solutions to support near-Earth communication, a new application for SES. We also furthered our multi-orbit credentials with the European Commission, European Space Agency, Luxembourg Government, and over 20 other European agencies in announcing our first Low Earth Orbit satellite - EAGLE-1 - aimed at demonstrating innovative Quantum Key Distribution security technologies to be launched in 2024. 2022 was another busy and successful year and I am proud of the entire SES community for their contribution across so many fronts. We delivered a solid set of financial results on the back of strong exe- cution, secured over €1 billion in customer deals, completed the capa- bility-enhancing and value-accretive acquisition of DRS GES, brought SES-17 into service above the Americas, launched the first O3b mPOWER satellites, secured $170 million in incremental C-band clear- ing payments from Verizon, and launched the satellites needed for SES to complete the FCC-mandated US C-Band clearing and earn $3 billion by the end of 2023. For the year ended 31 December 2022, we generated over €1.9 billion of revenue and over €1.1 billion of Adjusted EBITDA, both outturns being consistent with the expectations we had laid out at the start of the year. Our Video business continues to be the bedrock on which we build our global business and, in 2022, our focus was driving value from our core neighbourhoods, supporting our premium direct-to-home and free-to-air platform customers, and flattening the curve in terms of revenue trajectory. The long-term attraction of SES is demonstrated by the reach of our network, serving 369 million TV homes, and this reach facilitated the signing of contracts valued at €450 million dur- ing the year. The most notable deals included a €84 million renewal with Sky which followed on after a €90 million agreement in 2021, as well as important wins with Discovery Deutschland, ZDF, QVC, ProS- ieben, and the addition of several FAST (Free Ad-Supported TV) chan- nels to our core neighbourhood in Germany. Our Networks business now accounts for approximately 50% of total revenue and grew by 2% year-on-year. Cruise and Aviation were the standout performers, with both industries rebounding post-COVID. Most notably, we signed our fifth major cruise operator and expanded services with MSC’s Explora Journeys brand, underscoring the strong customer appeal of our value proposition in this market, while we have transitioned Thales InFlyt Experience aviation network to SES-17 to support Spirit Airlines across the US. Steve Collar Chief Executive Officer LETTER FROM THE CHIEF EXECUTIVE SES ANNUAL REPORT 202212 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Most significantly, as it relates to our government portfolio, was the acquisition of DRS Global Enterprise Solutions for almost $450 mil- lion. This was a business we had proactively selected as a key target, trusted provider of networks and solutions for the US Government, and strong fit with the infrastructure we are building, notably O3b mPOWER. The DRS GES team had forged a reputation for delivering solutions to meet and exceed the needs of some of the most demand- ing US government customers and in some of the hardest places on Earth to deploy services. Having announced the acquisition in April, we closed quickly and have already combined DRS GES with our own successful US Government business under the new banner SES Space & Defense, a best-in-class US government end-to-end system inte- grator and solutions provider, operating under a single, combined management team. This acquisition not only doubled our revenue base in the valuable US government segment at a time when the stra- tegic importance of space and satellite to governments is growing but will also allow us to capture $25 million of annualised run rate synergies. Looking ahead to the potential for strong growth in our Networks segments driven by our investments in SES-17 and O3b mPOWER, both of which have progressed well this year. Having launched SES- 17 in late 2021, we introduced our latest high-throughput, state-of- the-art satellite to the market in June 2022 and it is already contrib- uting to revenues in Fixed Data and Mobility. We have had to be more patient than we would like with the delivery of our next generation MEO constellation, O3b mPOWER, but the launch of the first two sat- ellites at the end of the year, the readiness of the ground technology, and deployment of gateways around the world underscores our com- mitment to launching commercial services on O3b mPOWER towards the end Q3 2023 while demand for the system continues to build. We have now signed agreements totaling $1 billion in gross backlog across SES-17 and O3b mPOWER, including a landmark partnership in India with Reliance Jio, and have a strong pipeline, particularly in Government, that I expect us to close over the course of 2023. Lastly, 2022 was an important year for our US C-band programme. We started the year receiving the balance of the $977 million accelerated relocation payment, earned from delivering the first phase of C-band clearing linked to the FCC’s 5 December 2021 deadline. We then con- cluded an agreement with Verizon for additional clearing over and above that mandated by the FCC and completed that work all within the calendar year to earn a further $170 million of cash payments. The focus now is delivering on full clearing of 300 Mhz of C-Band, while protecting our broadcast customers’ services, in time for the FCC’s 5 December 2023 deadline. With that deadline now less 10 months away, we have made critical progress with the launch of three new C-band satellites that were built in record time and are now fully operational. There is much work to do to complete the filtering and network con- figurations needed, but the project is meaningfully de-risked at this point with clear line of sight to achieving the milestone and triggering the second accelerated relocation payment of $3 billion. To sum up, we have continued to execute strongly across the core of business, added valuable new capabilities to serve government cus- tomers through disciplined investment, achieved important mile- stones towards realising our vision of an intelligent and differentiated multi-orbit network with assets already in orbit, and put ourselves in position to capture substantial value from US C-band clearing. With 2023 shaping up to be more exciting than 2022, I look forward to detailing more successes in next year’s Annual Report as SES con- tinues the journey of doing the extraordinary in space, delivering amazing experiences everywhere on Earth, and positioning itself for sustained, profitable growth and value creation. Steve Collar Chief Executive Officer SES ANNUAL REPORT 202213 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION KEY SATELLITE INDUSTRY TRENDS Satellite offers communication without limits. From space, satel- lite-based services can provide connections almost immediately and virtually anywhere – on land, at sea, and in the air – without the need for substantial and highly costly terrestrial infrastructure. The satel- lite industry revenue is typically divided between the two main seg- ments of Networks (or Data) and Video (or Broadcast). According to Euroconsult (September 2022) annual global wholesale capacity revenue for the satellite industry is expected to more than double from $10 billion in 2021 to over $22 billion by 2031, represent- ing an average annual increase of 8% over that period. This is com- parable with Northern Sky Research (July 2022), who predict an aver- age annual growth rate of 10% over the same period. Annual Satellite Industry Capacity Revenue IN $BILLION Source: Euroconsult (September 2022). Includes Broadband Access (not a relevant market for SES) NETWORKS Networks refers to connectivity (fixed and/or mobile) and data trans- mission services for enterprise networks, cellular backhaul and trunk- ing, maritime markets, in-flight connectivity, government applications, and direct-to-consumer broadband. Exponentially growing demand for reliable, high-performance data and connectivity solutions anywhere on land, at sea, and in the air is expected to drive substantial industry growth as satellite becomes a meaningful part of the mainstream network ecosystem. Upgrades and expansions of telecom and mobile networks is accelerating as operators are looking to satellite to extend their net- work reach by rolling out 3G, 4G, and 5G cellular backhaul, as well as community WiFi, services. Governments are expected to spend more on commercial satel- lite communications for additional information gathering and anal- ysis (both defence and civilian agencies), government personnel (notably military) welfare, as well as expanding universal broadband access or rural digital inclusion initiatives. Significant demand for satellite-based connectivity in the avia- tion and maritime segments is not only being driven by more demanding passenger expectations when travelling by air or sea, but also from airlines and ship operators seeking to improve overall oper- ational and business efficiency. 2031 2021 22 10 2031 2021 22 10 SES ANNUAL REPORT 202214 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Adoption of global cloud computing brings multiple commercial benefits for all these demand areas which are expected to rely more and more on satellite-based connectivity to power applications to support improved productivity and efficiency, reduce operational costs, and create new business opportunities. Increasing subscribers for residential, or direct-to-consumer, broadband services is expected to support growth in Broadband Access revenues (this segment is not a relevant market for SES) which will benefit from the introduction of lower cost, higher data rate offerings, notably from Non-Geostationary Earth Orbit (NGSO) constellations. Recent technology innovations enable the production of more capable and cost-effective space-based infrastructure, enabling operators to offer an improved customer value proposition with more value for money, higher data rates, better performance, greater flex- ibility, and scalability to quickly expand into previously unconnected markets and geographies. In turn, delivering profitable growth and attractive return on investment prospects for our industry. Competition from new entrants and new satellite-based offer- ings is increasing at the same time to capture the substantial growth opportunities. New High Throughput Satellite (HTS) offerings are not only expected to come in GEO, but from our own MEO constellation, O3b mPOWER, as well as from Low Earth Orbit (LEO) systems – each with different capabilities, value propositions, and strategic focus across a variety of target markets and applications. VIDEO Video refers to the distribution of TV channels by satellite over Direct- to-Home (DTH) and other platforms, as well as professional exchanges of video content on a full time or occasional use basis. Over decades, satellite has established a proven track record as the most reliable and cost-effective platform for linear TV con- tent which represents a significant source of income for the world’s broadcasters, free-to-air/pay-TV platforms, and content owners. Satellite’s ability to overcome the lack of ubiquitous broadband coverage or uneven distribution is a source of strategic importance to customers seeking to cater to consumer demand for shared viewing experiences, as well as the need for public and independent pro gramming. Adoption of new compression technologies and changing consumer viewing habits has led to lower demand for satellite capacity in mature markets as broadcasters and platform operators seek to re-balance their offerings to deliver hybrid linear and on- demand experiences. Satellite is well placed in emerging markets where favourable eco- nomics and efficient compression technologies, position operators well to capture opportunities from content-hungry consumers with increasing spending power. Increased penetration of High Definition (HD) and Ultra HD TV sets is expected to fuel consumer demand for additional content in higher quality formats with Standard Definition (SD) TV channels being gradually replaced by HD as the dominant proportion of over- all TV channels carried over satellite by the end of this decade. Lower replacement investment requirements for satellite operators going forward enable them to compensate for lower revenue by reducing capital expenditures, thus maintaining high profitability and cash generation in the medium to long-term. 20x O3b satellites 11x O3b mPOWER satellites Complete GEO Coverage Complete GEO Coverage 50°N 50°S MEO Standard Service ( s ) ±50° Latitude 50°N 50°S MEO Standard Service ( s ) ±50° Latitude AMC-6 139°W AMC-18 83°W AMC-11 131°W AMC-1 SES-21 SES-15 Ciel-2 129°W AMC-21 125°W AMC-15 SES-11 105°W NSS-11 176°E NSS-9 177°W SES-1 101°W SES-2 87°W NSS-6 169.5°W QuetzSat-1 77°W AMC-3 72°W SES-14 47.5°W SES-6 40.5°W NSS-10 37.5°W SES-4 22°W NSS-7 20°W ASTRA 1KR ASTRA 1N ASTRA 1P ASTRA 1Q ASTRA 1M ASTRA 1L 19.2°E ASTRA 4A SES-5 5°E GovSat-1 21.5°E ASTRA 3B 23.5°E ASTRA 5B 31.5°E SES-12 SES-8 95°E SES-9 SES-7 108.2°E ASTRA 2E ASTRA 2G ASTRA 2F 28.2°E 28.5°E MonacoSAT YahSat 1A 52°E 52.5°E SES-3 103°W SES-20 SES-10 67°W 67.1°W SES-17 NSS-12 57°E SES-26 AMC-8 135°W AMC-4 SES-22 To Los Angeles To Sydney Frankfurt Betzdorf Munich Riga London Emek Tel Aviv Fujairah Ras Al Khaimah Los Angeles Bogotá Chalfont LA South Mountain LA Steele Valley London, ON Winnipeg Kuala Lumpur Merredin Dubbo Stockholm Karachi Santiago Lima Longovilo St John’s Hong Kong Perth Sydney Bucharest Skarfia São Paulo Mexico City Brewster Kyiv Zurich Hong Kong, Stanley Singapore Hawley New York Hortolândia Stockley Park Gnangara Goonhilly Hawaii Sunset Beach Hawaii Kapolei Nemea Madrid Sintra Bucharest Dallas Phoenix Vernon WDC Manassas Port St Lucie WDC Woodbine Paris Dakar Adelaide WDC Miami Frankfurt Betzdorf Munich Riga London Emek Tel Aviv Fujairah Ras Al Khaimah Los Angeles Bogotá Chalfont LA South Mountain LA Steele Valley London, ON Winnipeg Kuala Lumpur Merredin Dubbo Stockholm Karachi Santiago Lima Longovilo St John’s Hong Kong Perth Sydney Bucharest Skarfia São Paulo Mexico City Brewster Kyiv Zurich Hong Kong, Stanley Singapore Hawley New York Hortolândia Stockley Park Gnangara Goonhilly Nemea Madrid Sintra Bucharest Dallas Phoenix Vernon WDC Manassas Port St Lucie WDC Woodbine Paris Dakar Adelaide WDC Miami G G G G G G G G G G P P P P P M mP P P G mP M M G P G P G P P G M mP mP M G mP G G G G G G P P P P mP M G G P M G G G G G GM mP P G G mP M P G P SES Ground Network AS OF DECEMBER 2022 SES ANNUAL REPORT 202215 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OUR GLOBAL NETWORK UNIQUE MULTI-ORBIT SATELLITE-BASED NETWORK As the leader in global content connectivity solutions, we leverage a vast and intelligent network that spans satellite and ground infra- structure, connecting more people in more places. Our fleet operates within Geostationary Earth Orbit (GEO) and Medium Earth Orbit (MEO), providing a unique combination of global coverage and high throughput, low latency capabilities. The SES GEO fleet comprises over 50 satellites operating with a com- bination of C-, Ku-, Ka-, and X-band frequencies. The majority have ‘wide beam’ payloads where a small number of beams are used to cover a large geographic area. Three of our satellites (SES-12, SES-14, and SES-15) have a hybrid combination of wide beam and high throughput payloads which carry many smaller beams capable of deploying more bandwidth and throughput to a defined area. Additionally, SES-17 (in service since June 2022) has a Ka-band high throughput payload and began deliv- ering services for customers in the Americas, the Caribbean and over the Atlantic Ocean in June 2022. SES operates O3b, a constellation of 20 high throughput Ka band sat- ellites in MEO equatorial orbit. The key advantages of O3b are the capability to scale capacity globally by simply adding more satellites into the MEO orbit, and the ability to serve applications that require low latency which cannot be served by GEO. Additionally, we have five satellites flying secondary missions: ASTRA 1G, ASTRA 2A, ASTRA 2C, ASTRA 2D, ASTRA 3A MEO satellites orbit at 8000km above the Earth’s surface; they rotate faster than the Earth and, therefore, hand-off their service as they orbit. Fleet configuration is based on current planning and is subject to change. SES holds a 70% interest in Ciel Satellite Limited Partnership and a 100% ownership interest in QuetzSat. Yahsat 1A’s Ku-band payload is owned by YahLive, where SES holds a 35% ownership interest. MonacoSAT is a partner satellite with transponders onboard TurkmenAlem at 52°E. * Procured by LuxGovSat ** SES-9 at 108.2E vicinity SES satellite fleet SES network in orbit In orbit HTS satellite (High-throughput satellite) Future satellite Future HTS satellite (High-throughput satellite) Inclined In orbit SES SATELLITE FLEET SES NETWORK Future HTS satellite (High-throughput satellite) Future satellite In orbit HTS satellite (High-throughput satellite) Inclined Additionally, we have five satellites flying secondary missions: ASTRA 1G, ASTRA 2A, ASTRA 2C, ASTRA 2D, ASTRA 3A MEO satellites orbit at 8000km above the Earth's surface; they rotate faster than the Earth and, therefore, hand-o their service as they orbit. Fleet configuration is based on current planning and is subject to change. SES holds a 70% interest in Ciel Satellite Limited Partnership and a 100% ownership interest in QuetzSat. Yahsat 1A’s Ku-band payload is owned by YahLive, where SES holds a 35% ownership interest. MonacoSAT is a partner satellite with transponders onboard TurkmenAlem at 52°E. * Procured by LuxGovSat ** SES-9 at 108.2E vicinity M G M G mP MEO Gateway GEO Gateway GEO/MEO Gateway O3b mPOWER Gateway G mP M mP P GM mP GEO/O3b mPOWER Gateway GEO/MEO/O3b mPOWER Gateway MEO/O3b mPOWER Gateway PoP (Point of Presence) SES ANNUAL REPORT 202216 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION GLOBAL GROUND NETWORK FOOTPRINT Our ground infrastructure ensures that customers can gain access to our satellite fleet and capacity from anywhere in the world. To do this, SES combines global network with local presence. This is done by either 30 SES owned or partner teleports, a com- prehensive fibre-based terrestrial network, and numerous points of presence (POP). We bring satellite connectivity to the customer by providing seamless access to the satellite fleet and the extensive fibre-based network transports content from any city in the world to any other place in the world via one of SES owned or partner teleports and the six main SES POPs. Controlling satellites is not a fully automated effort. Our Satellite Oper- ations Centres (SOCs) receive up to 25,000 telemetry parameters per satellite in real time, including the necessary data to determine each spacecraft’s position. Our Network Operation Centres (NOCs) monitor and control all trans- missions on the SES network, ensuring that they all perform within tight specifications to maximise the quality and availability of our customers’ services. FUTURE SATELLITE LAUNCHES Future Satellite Launches Satellite Region Application Launch 1 SES-18 & SES-19 North America Video (US C-band clearing) Q1 2023 O3b mPOWER (satellites 3-4) Global Networks Q2 2023 O3b mPOWER (satellites 5-6) Global Networks Q2 2023 O3b mPOWER (satellites 7-8) Global Networks H2 2023 O3b mPOWER (satellites 9-11) Global Networks 2024 ASTRA 1P Europe Video 2024 ASTRA 1Q Europe Video, Networks 2024 SES-26 Africa, Asia, Europe, Middle East Video, Networks 2024 EAGLE-1 Europe Networks 2024 1 Final launch dates are subject to confirmation by launch providers O3B MPOWER: SCALING OUR UNIQUE MEDIUM EARTH ORBIT CONSTELLATION Building on the proven commercial success of our first-generation MEO constellation, O3b mPOWER provides unprecedented flexibility, performance, and scale to extend new, bandwidth-intensive network services and applications. O3b mPOWER will enable high performance services that scale to multiple gigabits per second per connection virtually anywhere. O3b mPOWER delivers flexible service models by dynamically con- trolling power levels, throughput, and frequency allocation to reliably meet robust service level agreements. The constellation has been engineered with end-user performance requirements as the leading driver and can support a wide range of latency-sensitive services and cloud-based business applications. In combination with SES-17, O3b mPOWER will form the bedrock of our Network of Future – a vision of a seamless, intelligent, and cloud-enabled satellite-based infrastructure. REALISING OUR VISION OF A SEAMLESS AND INTEROPERABLE MULIT-ORBIT NETWORK Both SES-17 and the O3b mPOWER constellation will leverage our Adaptive Resource Controller (ARC), a software solution that serves as the brain for the network, which will enable dynamic and automatic traffic allocation in real-time, as well as orbit switching for complete and seamless interoperability between MEO and GEO. We are also working with various technology partners to roll out next-generation terminals to optimise bandwidth efficiently and dynamically across the two orbits. This network will strengthen our unique capabilities to deliver flexible and reliable, high performance connectivity solutions anywhere on land, at sea, and in the air. SES ANNUAL REPORT 202217 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION TWO STATE-OF-THE-ART SATELLITES FOR OUR PRIME TV NEIGHBOURHOOD SES has ordered two GEO Ku-band satellites for its prime orbital slot at 19.2° East to maintain the premium services it provides to its European video customers and to capture new opportunities. These two replacement satellites (ASTRA 1P and ASTRA 1Q) are expected to launch in 2024 to replace the four satellites (ASTRA 1KR, ASTRA 1L, ASTRA 1M, and ASTRA 1N) that are currently serving customers at this orbital location. ASTRA 1P, a classic wide-beam satellite, will support our prime TV neighbourhood and enable content owners, private and public broad- casters across Germany, France, and Spain to broadcast TV channels in the highest quality and most cost-efficient manner. ASTRA 1Q, a next-generation digital satellite with both wide beams and high throughput spot beams, will not only be able to support direct-to-home operations but will also be customisable on orbit and could be deployed easily to other orbital positions to serve the dynamic needs of both video and data customers into the future. EXTENDING SERVICES ACROSS EUROPE, AFRICA, AND ASIA In March 2022, SES ordered a fully software-defined GEO satellite, SES-26, from Thales Alenia Space. The digital satellite, with both Ku-band and C-band frequencies, will replace SES’s NSS-12 satellite at 57° East. From this key location at the crossroads of Europe, the Middle East, Africa and Asia, SES will continue to deliver content and connectivity solutions to some of the world’s fastest-growing markets. In addition to supporting government communications solutions in the region, the position is home to a diverse free-to-air video neigh- bourhood with 10 million TV households across Ethiopia. EAGLE-1 An SES-led consortium of 20 European companies, with the European Space Agency (ESA) and European Commission support, will design, develop, launch, and operate the EAGLE-1 satellite-based system for secure Quantum Key Distribution (QKD), enabling in-orbit validation and demonstration of next-generation cyber-security across Europe. The EAGLE-1 satellite is due to launch in 2024 and complete three years of in-orbit mission. CREATING VALUE US C-BAND SPECTRUM CLEARING The US Federal Communications Commission (FCC) has developed a plan to clear 280 MHz of C-band spectrum (plus a 20-MHz guard band) for 5G mobile services in the contiguous United States. The C-band is currently used by satellite operators serving US broad- casters and programmers to provide TV and radio to nearly 120 mil- lion homes, plus other critical data transmission services. The FCC’s balanced approach ensures that C-band spectrum is available quickly without disrupting critical video and audio services. To deliver on the two clearing milestones (of 5 December 2021 and 5 December 2023), we have committed to an investment of approxi- mately $1.6 billion for new satellite capacity, filtering of tens of thou- sands of earth station antennas throughout the US, and other related costs. Of this amount, approximately $1.5 billion is expected to be reimbursed to SES. The US C-Band transition is on track SEAMLESS CONTINUATION AND PROTECTION OF EXISTING TV AND RADIO SERVICES delivered via C-band to nearly 120 million homes PREPARATION P LANNING ONGOING ACTIVITY S ATELLITES File plan with FCC Partnering with industry groups to understand their questions and share best practices Outreach to ensure all Incumbent Earth Stations accessing SES satellites have been accounted for File updated Phase I plans with the FCC Manufacture the satellites Launch the satellites Complete testing SES will establish the platform necessary to transition services— including TV and radio distribution and data network ecosystems— safely and seamlessly. Per the Report & Order and customer discussions, SES will ensure the relevant customers’ ground stations are correctly pointed and tuned, have upgraded tech- nology where required, and have filters installed to protect customers against interference from new 5G services. SES will finalize the plans to transition approximately 200 services from 500 to 200 MHz of C-band spectrum and work directly with the clearinghouse and relocation coordinator throughout the process. SES will launch five new satellites to guarantee suicient capacity for current customers and ensure the continuity and quality of existing services. ROLLOUT OF 5G in 46 top U.S. markets in January 2022 and to all Americans in continental U.S. by December 2023 Set up a database to ensure eicient roll-out and accurate accounting Hire U.S. companies to launch satellites Hire U.S. companies to build Gateway and TT&C Systems Hire U.S. companies to build satellites necessary to transition customers Hire U.S. companies to help install/retune ground equipment Install antennas and satellite ground control equipment at TT&C locations to ensure continued safe satellite operations Consolidate Phase II gateway services to allow ongoing receipt of international video content and to support valuable data services Consolidate Phase I gateway services to allow ongoing receipt of international video content and to support valuable data services Establish a Help Desk for Earth station concerns Deploy teams to Phase II Incumbent Earth Stations to install antenna equipment and filters Deploy teams to Phase I Incumbent Earth Stations to install antenna equipment and filters Raise the satellites to their testing orbital locations Outreach to Phase I Incumbent Earth Station operators to schedule equipment Outreach to Phase II Incumbent Earth Station operators to schedule equipment installation by SES-hired team Move the satellites to their planned orbital locations and initiate service on the satellites Conduct Phase I customer migrations Conduct Phase II customer migrations ON-THE-GROUND SES ANNUAL REPORT 202218 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION PHASE I – CLEARING COMPLETED With the help of partners across the US, we completed all necessary Phase I clearing and relocation activities relating to the 5 December 2021 deadline and, accordingly, received the Phase I accelerated relo- cation payment of $977 million (pre-tax) as set out by the FCC. These activities included relocating all its existing services that are received by Incumbent Earth Stations (IES) out of the 3,700-3,820 MHz band exclusively in the contiguous United States and making necessary equipment changes on all associated IES locations. PHASE II – CLEARING ON TRACK With the completion of Phase I, we are now fully focused on complet- ing our Phase II transition activities in advance of the clearing dead- line of 5 December 2023 which would allow us to become eligible for a further accelerated relocation payment of almost $3 billion (pre-tax). In 2022, we successfully launched and brought into service SES-20, SES-21, and SES-22. This will be complemented by the launch of SES- 18 and SES-19 in 2023. These satellites will carry services that must be transitioned to clear the lower 300 MHz of C-band spectrum and mitigate the risk of an in-orbit failure. We have completed more than 70% of the Phase II satellite transitions, which include broadcast TV, cable network services, and other ser- vices received in the 3,820-4,000 MHz range. Our installers have completed the installation of blue bandpass filters at more than 65% of the IES locations associated with SES satellites and installed nearly 100% of the antennas associated with our Phase II transition schedule. All SES-associated IES locations designated to receive compression equipment have received their equipment, including those receiving services between 3,820-4,000 MHz. All compressed services were already transitioned by October 2021. ADDITIONAL CLEARING FOR VERIZON In March 2022, SES secured an agreement to expand access for Ver- izon Communications to the 3,700-3,800 MHz C-band block in cer- tain US markets beyond those cleared in Phase I and earlier than the deadline for Phase II clearing. This additional clearing was completed during Q4 2022, and, in return, SES earned payments of $170 million (pre-tax), of which $155 million was received in December 2022, with the balance received in early 2023. SES ANNUAL REPORT 202219 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SES | NETWORKS HIGH PERFORMANCE CONNECTIVITY Our Networks business operates a unique multi-orbit (MEO-GEO) constellation of satellites with the combination of global coverage and high performance, and low latency MEO system. By leveraging a vast and intelligent, cloud-enabled network, we provide managed connectivity and data service solutions to support a wide range of fixed and mobile applications which allow major Government, Fixed Data (Telco, MNO, and cloud) and Mobility (Aeronautical and Maritime) customers to extend their network reach across the entire world. SES has been certified with the Metro Ethernet Forum (MEF) 2.0 industry standard, used to rate the performance of terrestrial net- works. By adopting telco- and cloud-inspired practices, we are mak- ing it easier for customers to integrate satellite-based networks into the global ecosystem. Our Networks products and services are focused on delivering secure, reliable, and high performing connectivity to customers across high value Government, Fixed Data, and Mobility segments. We deliver: • A range of Aero-ISR, Naval connectivity, fixed enterprise, and communications on the move services, catering to a wide range of civilian and defence-related Government connectivity needs. • Trunking, mobile backhaul, and enterprise services for telecommu- nications companies (telcos), internet service providers (ISPs), sat- ellite service providers, mobile network operators (MNOs), and enterprises. • Energy and mining solutions for service providers that support off- shore exploration, offshore support vessels, and large production facilities in developing countries. • Services to connect cruise lines, commercial aviation partners, busi- ness jets, and telecom service providers with commercial maritime operations. In addition, we offer connectivity to major cloud service providers. 2022 PERFORMANCE For the year ended 31 December 2022, Networks generated total revenue of €923 million. On an underlying basis (excluding periodic revenue and the contribution from the acquisition of DRS Global Enterprise Solutions), this represented a growth of 1.7% year-on-year (at constant FX). 2022 Networks Revenue 1 1 Includes contribution (of €95 million) from the acquisition of DRS Global Enterprise Solutions from 1 August 2022 to 31 December 2022 Our Government business was comprised approximately 70% for mul- tiple defence and civilian US Government agencies while approxi- mately 30% of revenue was generated from a range of global govern- ment and institutional clients. In 2022, the cancellation of services during Q3 2021 resulting from the US withdrawal from Afghanistan offset the positive contribution from new MEO- and GEO-enabled network and institutional solutions for both the US and Global customers, leading to a year-on-year revenue decline of 4.6% (at constant FX). In August 2022, SES completed the acquisition of DRS Global Enter- prise Solutions (DRS GES) for $443 million. The DRS GES business has been combined with SES Government Solutions, creating a scaled solutions provider serving the multi-orbit satellite communications needs of the US Government and supporting missions anywhere on land, at sea, or in the air. From 1 August 2022 to 31 December 2022, the DRS GES business contributed revenue of €95 million. Our Fixed Data revenue is distributed across all key markets includ- ing the Americas (nearly 40%), Asia-Pacific region (approximately 20%), Africa and the Middle East (approximately 20%), with the balance from European, Energy, and Cloud customers. Underlying Fixed Data revenue decreased in 2022 by 0.8% (at con- stant FX) compared with the prior year driven by new business signed with telecom and mobile network operators in Asia-Pacific, Latin America, and North America, as well as new revenue in the global cloud segment, which largely offset lower revenue in Africa. Approximately 50% of Mobility revenue comes from Aeronautical cus- tomers (mainly global service providers) with around 50% of revenue generated from the combination of major cruise lines and commercial maritime customers. The Mobility business grew by 13.4% year-on-year (at constant FX) in 2022 reflecting double-digit growth in cruise segment where SES is now serving five of the top six cruise lines, strong growth in commer- cial aviation, and new revenue from commercial shipping customers. 40% Government 28% Mobility 32% Fixed Data SES ANNUAL REPORT 202220 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SES | VIDEO UNPARELLED AUDIENCE REACH Video business has an unparalleled reach of 369 million households, serving over 1 billion people worldwide with high quality viewing expe- riences, and delivers managed media services for both linear and non-linear content. With over 30 years of broadcasting experience, we are experts in designing systems to grow audiences, reduce costs, and maximise operational efficiency. Our managed services cover the entire media supply chain both on premise and in the cloud. All with a single point of contact. We are a trusted partner to the world’s leading broadcasters, platform operators and content owners. We deliver: • Linear video aggregation and distribution capabilities to hundreds of millions of direct-to-home (DTH), direct-to-cable (DTC), and Internet Protocol TV (IPTV) households around the world. • Hybrid video platform solutions which extend online video platform capabilities by combining DTH and over-the-top (OTT) into one seamless user experience and bringing targeted advertisement and audience measurement capabilities to DTH platforms which were so far only possible in the OTT area. • Channel management solutions, including playout, which combine several products to predefined end-to-end solutions capable of fitting different use cases. • A range of occasional use services from providing extra capacity, processing content for live feeds, and multiple redundancy features, working with some of the world’s large live sports and events organ- isations. At 31 December 2022, the SES distributed more than 8,000 total TV channels to audiences around the globe. This includes some 3,200 TV channels in High Definition. In addition, SES operates HD+, a direct-to-consumer offering in Germany which enables viewers to access 26 private High Definition TV channels and 3 private Ultra High Definition TV channels, as well as 50 free High Definition TV channels, via a paid subscription. 2022 PERFORMANCE For the year ended 31 December 2022, Video generated total revenue of €1,020 million which was 5.5% lower (at constant FX) than the pre- vious year. On an underlying basis (excluding periodic revenue of €10 million), revenue declined by 6.4% year-on-year including the planned impact of lower US wholesale revenue following at contract expiry at the end of 2021. Excluding this item, underlying revenue in Video was 4.4% lower as compared with 2021. 2022 Video Revenue The impact from customers ‘right-sizing’ volumes in mature European and US markets was the main contributor to the overall year-on-year revenue reduction, albeit at a slower pace as compared with recent years. At 31 December 2022, HD+ is serving 2 million paying subscribers in Germany and delivered a solid year-on-year revenue performance in the year. In addition, the business completed the launch of two addi- tional products with HD+ ToGo enabling viewers to enjoy content on their mobile devices and HD+ IP extending the HD+ in-home offering to non-satellite households across Germany. Serving nearly 140 million TV households, our International business has established strong positions and customer relationships in all key regions from Latin America across to Asia-Pacific, and in between. In 2022, these markets delivered a robust year-on-year revenue perfor- mance. Our Sports & Events delivered a double-digit year-on-year revenue growth in 2022, reflecting the benefit of new events and customers secured, while also seeing a recovery in sports leagues and events which had still been impacted by delay or cancellation in 2021 due to the COVID-19 global pandemic. 3% Sports & Events 13% HD+ 57% Europe 8% North America 19% International SES ANNUAL REPORT 202221 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION FINANCIAL REVIEW & OUTLOOK Adjusted EBITDA excludes a net gain from US C-band repurposing of €154 million including €173 million of accelerated clearing proceeds from Verizon (2021: €779 million gain which included an amount of €839 million from the recognition of the first accelerated relocation payment related to the successful completion of Phase I clearing in advance of the 5 December 2021 deadline) and other significant special items of €17 million (2021: €8 million). Depreciation and Amortisation (D&A) expense of €705 million (2021: €670 million) included the start of depreciation of SES-17 which was brought into service in June 2022. Net financing costs of €88 million (2021: €71 million) included higher FX gains of €45 million (2021: €37 million) and a fair value loss of €15 million (2021: gain of €13 million). Excluding these items, net inter- est expense (including capitalised interest) of €118 million was in line with the prior year (2021: €121 million). Adjusted Net Profit of €189 million reduced year-on-year primarily due to higher income tax expense of €124 million (2021: €34 million expense), while positive non-controlling interests of €1 million (2021: positive €7 million) reflects an improvement in profitability of LuxGovSat S.A., an entity jointly held by SES and the Luxembourg Government serving government and institutional customers. Adjusted Net Profit excludes the US C-band net income and other significant special operating expenses, as well as a non-cash impair- ment expense of €397 million (2021: €724 million) which mainly reflects the impact of higher discount rates on the net book value of the group’s intangibles and GEO satellites, and related tax benefits of these combined significant special items of €37 million (2021: €83 million). CASH FLOW STATEMENT Free cash flow before equity distributions and treasury activities (FCF) was a net outflow of €442 million (2021: outflow of €876 mil- lion) as an exceptionally high level of net cash absorbed by investing activities including US C-band clearing and the acquisition of DRS GES of €1,798 million (2021: €283 million) offset the combination of higher net cash generated by operating activities of €1,476 million (2021: €1,294 million) and lower cash interest paid on borrowings of €103 million (2021: €121 million). FCF also included lease payments of €17 million (2021: €14 million). FINANCIAL POSITION At 31 December 2022, Adjusted Net Debt (including 50% of the now €1.175 billion of hybrid bonds as debt, per the rating agency methodology) stood at €3,889 million (31 December 2021: €3,120 mil- lion) and represented an Adjusted Net Debt to Adjusted EBITDA ratio of 3.5 times (2021: 2.9 times) including the acquisition of DRS GES (for $443 million), higher year-on-year investing activities associated with SES-17 (now in service) and O3b mPOWER, and spend on US C-band clearing in advance of reimbursements and second acceler- ated relocation payment of $2,991 million (pre-tax) linked to the 5 December 2023 clearing milestone. At 31 December 2022, the weighted average cost of debt (including 50% of the hybrids) was 3.1% (2021: 2.9%) and the weighted average senior debt maturity was 6.6 years (2021: 7.5 years). SES regularly uses Alternative Performance Measures (APM) to pres- ent the performance of the Group and believes that these APMs are relevant to enhance understanding of the financial performance and financial position. Further information regarding these APMs is pro- vided in >> Note 35 of the Consolidated Financial Statements. INCOME STATEMENT Group revenue of €1,944 million was 9.1% higher than the prior year including the positive impact of the stronger Euro to US Dollar foreign exchange (FX) rate which accounted for €118 million of the year - on-year variance and the first contribution (of €95 million) from the acquisition of DRS Global Enterprise Solutions (DRS GES) from 1 August 2022 to 31 December 2022. Group revenue included €15 mil- lion of periodic and other revenue (2021: €2 million). Adjusted EBITDA (excluding the financial impact of US C-band repur- posing and other significant special items) stood at €1,105 million (2021: €1,091 million) including €11 million from DRS GES and repre- sented a margin of 56.9% (2021: 61.2%). This included recurring operating expenses of €839 million which were €148 million higher than the prior year, mainly due to the impact of the stronger Euro to US Dollar FX rate and acquisition of DRS GES. At constant FX and excluding DRS GES, recurring operating expenses were €21 million, or 2.9%, higher year-on-year reflecting increases in staff costs. SES ANNUAL REPORT 202222 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION In June 2022, SES launched and priced a bond offering of €750 mil- lion senior unsecured fixed rate notes due in 2029 with a coupon of 3.5% and, because of the transaction, SES now has no significant near- term senior debt maturities to be refinanced. Senior debt maturity profile 1 Revolving Credit Facility & European Investment Bank loan Other Debt Cash & cash equivalents Senior Bonds 1 Pro forma assuming the $750 million US Dollar Bond, maturing April 2023, was settled with Cash & cash equivalents on 31 December 2022 FINANCIAL POLICY SES is focused on driving sustained, profitable growth and value cre- ation. In tandem with clear strategic priorities, strong focus on exe- cution, and financial discipline, we aim to maintain a disciplined finan- cial policy which is based on four main priorities: • Disciplined investment to sustain the profitable portfolio of busi- ness and support value-accretive growth investment opportunities, as reflected by our internal rate of return hurdle of more than 10% (post-tax) over the investment horizon. • Maintaining a strong balance sheet consistent with investment grade ratios, allowing access to a wide range of funding sources and keeping a low cost of funding. • Delivering a cash return to shareholders by maintaining a min- imum annual base dividend of €0.50 per A-share and €0.20 per B-share with a stable to progressive policy. • Utilising any excess cash in the most optimal way for the benefit of shareholders. For the year ended 2022, the SES Board of Directors has proposed a dividend of €0.50 per A-share and €0.20 per B-share, consistent with the Board’s commitment to maintain a stable to progressive dividend policy. The dividend, which is subject to shareholder approval at the Annual General Meeting on 6 April 2023, will be paid to shareholders on 20 April 2022. 2022 was also another milestone year for our US C-band initiative with three satellites successfully put in operation and the additional clearing for Verizon which earned $170 million. 2023 will see the cul- mination of years of hard work and execution with SES well on track to completing the second and final phase of the clearing, triggering an additional payment of $3 billion in late 2023. The SES Board of Directors has elected to adopt, from 2024, of a more prudent long-term target of Adjusted Net Debt to Adjusted EBITDA of below 3 times. FINANCIAL OUTLOOK The financial outlook is based on an average €/$ FX rate of €1: $1.09, nominal satellite health, and nominal launch schedule. For the year ended 31 December 2023, revenue is expected to be between €1,950 million and €2,000 million. This reflects an expecta- tion of mid-single digit year-on-year percentage decline (at constant FX) in Video and between low-single and mid-single digit year-on- year percentage growth (at constant FX) in Networks. Adjusted EBITDA for the same period is expected to be between €1,010 million and €1,050million with an implied year-on-year increase (at constant FX) in operating expenses due additional anticipated investment in Networks associated with the bringing into service of O3b mPOWER and additional equipment in advance of recurring capacity revenue being generated on the constellation. Capital expenditure (defined as net cash absorbed by investing activ- ities excluding acquisitions, financial investments, and US C-band repurposing) is expected to be around €550 million in 2023, followed by an average annual capital expenditure of around €385 million for the period between 2024 and 2027. >20302029202820272026202520242023 Weighted average senior debt maturity of 6.6 years 1,500 344 150 250 640 400 750 703 16 16 16 16 650 16 50 2 24 Our Horizon Strategy 27 Sustainable Space 29 Climate Action 33 Diversity and Inclusion (D&I) 39 Critical Human Needs 41 Operating our Business 50 Reporting Standards Appendix ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT SES Horizon Strategy – Responibilities and Opportunities SES ANNUAL REPORT 202224 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OUR HORIZON STRATEGY Developed in 2021 following extensive stakeholder outreach, the SES ESG strategy outlines our commitment to advancing sustainable development, aligned with the goals of the United Nations, by har- nessing the power of space to address the most pressing challenges on Earth. Along with our customers, partners, and governments, we aim to accelerate progress towards a more sustainable, secure, and equitable future for all. ESG for SES is transforming the way we think about business and the role we play in society. Our goal is to incor- porate an ESG agenda into our policies, procedures, and responsibil- ities to our stakeholders to create a positive long-term impact and value for all aspect of our operations. SES HORIZON STRATEGY Our strategy is built around four key pillars which are aligned with issues material to our business strategy and approach: SUSTAINABLE SPACE CLIMATE ACTION DIVERSITY & INCLUSION CRITICAL HUMAN NEEDS Lead, collaborate, and innovate for sus- tainable space. Take bold climate action by setting tar- gets and innovating for the planet. Make the space in- dustry more diverse and inclusive, start- ing with SES. Empower commu- nities to thrive with services to support critical human needs. OUR RESPONSIBILITY Innovate to reduce our foot- print from launch to decom- missioning. OUR OPPORTUNITY Advocate best practice ap- proaches to ensuring indus- try-wide responsible use of space. OUR RESPONSIBILITY Build a more diverse and inclusive workforce across all levels of our business. OUR OPPORTUNITY Increase diversity and inclu- sion in the space industry through targeted actions and investments. OUR RESPONSIBILITY Develop partnerships and innovate to increase access to education, health, and information services. OUR OPPORTUNITY Expand reliable access to content and connectivity to build sustainable communities. OUR RESPONSIBILITY Reduce Green House Gas emissions across operations and our supply chain. OUR OPPORTUNITY Provide solutions to combat environmental challenges through satellite connec- tivity. SUPPORTING 11 OF THE 17 Progress on our ESG Journey SES ANNUAL REPORT 202225 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OUR TARGETS As our ESG journey is progressing, we are building a stronger under- standing of the key areas of focus and what we want to accomplish. We have started to develop additional targets to continue our aspi- ration to drive purpose and impact in everything we do. This will also ensure our ability to measure our progress, as well as bringing more accountability and transparency into our programme and actions. NEW TARGETS SET IN 2022 Space sustainability • Complete 1 Lifecycle assessment in 2023 and integrate findings into our ESG strategy and roadmaps • By the end of 2023, develop and publish our Space Sustainability roadmap to drive a path to sustainable operations and space envi- ronment Climate Action • Integrate findings of the lifecycle assessments in our climate action roadmap to define areas for additional partnership and reduction plans to reduce our negative impact on the planet Critical Human Needs • Drive SES connectivity in developing nations and measure the num- ber of connected sites year over year in alignment with SDG 9 tar- get 9.c • Continue to support communities in crisis with mission critical dis- aster response capabilities including capacity building in disaster prone countries By 2030, complete lifecycle assessments on SES products and Services to fully un- derstand the impact of our services on earth and in space Explore partnerships to develop new solutions for space sustainability By 2024, become certified by the World Economic Forum Space Sustainability Rating OUR TARGETS Increase gender diversity of people managers by 50% in5 years In 2022, SES will develop a plan to further expand our impact through STEM and ICT programmes to underrepresented groups By 2025, develop and implement a supplier and customer sus- tainability rating and diversity programme to empower a diverse pool of sustainable suppliers OUR TARGETS Conduct stakeholder outreach to under- stand where our prod- ucts and services can best impact critical human needs OUR TARGETS By no later than 2050, SES will reach NetZero emissions SES will develop tar- gets for submission by SBTi for validation by 2024 OUR TARGETS On target Completed Off track SUSTAINABLE SPACE CLIMATE ACTION DIVERSITY & INCLUSION CRITICAL HUMAN NEEDS Lead, collaborate, and innovate for sus- tainable space. Take bold climate action by setting tar- gets and innovating for the planet. Make the space in- dustry more diverse and inclusive, start- ing with SES. Empower commu- nities to thrive with services to support critical human needs. SES ANNUAL REPORT 202226 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION MATERIALITY As an industry leader, SES is committed to the creation of a more robust, resilient, inclusive, sustainable, and well-connected society and created its ESG strategy with this awareness. We believe that companies operate as a key member of society and therefore have a responsibility to all stakeholders to acknowledge and report on their impact to society and the environment. In 2021, SES engaged, with the help of outside consultancy, in multi-stakeholder dia- logues to better understand external and internal needs and expectations. We defined the most pressing issues to our stake- holders which resulted in an in-depth materiality analysis on these issues. After external interviews with industry experts, customers, NGO part - ners, civil society, and government representatives as well as internal input through workshops, surveys, and ESG investor rating analysis, SES developed the following materiality matrix. SES groups material issues under different tiers based on the issue’s impact to the business and to the society. Most critical, thus priority material issues are listed under Tier 1 category. These issues include SES’ engagement with the digital society, Diversity and Inclusion, operational carbon footprint, energy use, and interaction with the space and waste minimisation. Tier 1, 2, and 3 issues are listed below: Materiality Matrix Tier 1 Tier 2 Tier 3 • Emergency response / disaster manage- ment • Satellite / ground infrastructure end of life • Climate adaptation and resilience • Employee and worker rights, wellbeing and safety • Space policy and advocacy • Use and recovery of toxics, precious materials and conflict minerals • Biodiversity and Land Use • Water footprint • Cybersecurity and data privacy • Anti-bribery & corruption • Environmental impact of satellite launches • Responsible use of technology • Customer environmental benefits • Diversity in STEM education • Employee recruitment, development & engagement • Operational waste • Transparent supply chain management • Digital access to basic services • Employee diversity, equity & inclusion • Space waste & congestion • Digital reach & inclusion • Ethical & transparent business practices • GHG emissions (Scope 1, 2, 3) • Renewables & energy use • Local community impact IMPORTANCE TO SOCIETY BUSINESS IMPACT SES ANNUAL REPORT 202227 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SUSTAINABLE SPACE Space has become inextricably embedded into our daily lives and many critical services rely heavily on space infrastructure/activities, such as communications, air and maritime transport, financial ser- vices, Global Positioning Systems (GPS), weather monitoring, and many others. Moreover, space applications have the potential to tackle many of the major social and environmental challenges facing the world today – from monitoring climate change and improving early-warning systems to delivering much-needed connectivity used to bring education and health services to rural areas or refugee camps. Space companies, old and new, are providing critical infrastructure to the planet. To provide these critical services, a safe access to space must be ensured. If orbital resources are not protected and space actors are not held to a high standard of responsibility, these critical services are endangered. Access to space is a business-critical topic for SES and, for this reason, we consider Space Sustainability as a core pillar of our ESG strategy. Our main targets in this pillar are anchored in our commitment to undertake Life Cycle Assessments (LCA’s) of our products and services in the next coming years to understand and quantify the impacts of our operation allowing us to make informed decisions to reduce our footprint and develop new eco-design for our products. Nevertheless, this should not be the limit to SES’ sustainable space ambitions. As a leader in the industry, we must advance the respon- sible use of space by advocating and collaborating for best practice approaches and innovative solutions so that space continues to be a resource for delivering solutions to address the challenges on Earth. TARGETS As part of the targets associated with Space Sustainability, SES has committed to: By 2030, complete life cycle assessments on all SES prod- ucts and services together with technology partners to fully understand the impact our product and services have on the planet Our lifecycle assessments are a cornerstone project in the SES ESG journey. Through this process, we are pioneering a new way for our industry to evaluate our impact on Earth and in space. In 2022, SES developed our methodology and roadmap for complet- ing the LCAs. Given that lifecycle assessments are not done in a widespread way in the industry, the identification of the parame- ters, segments and factors required coordination across internal and external stakeholders. In the continuation of this target, SES is committed to completing one lifecycle assessment in 2023 and identifying areas to incorporate for further reductions on our impact. In addition, we aim to conduct life cycle assessments across five constellations in 2023, achieved by working across our value chain through key partnerships developed throughout 2022. Explore Space sustainability partnerships to develop new technologies and solutions for space sustainability In 2022, SES has stepped out to drive the space sustainability con- versation and joined international efforts to align the industry on sus- tainability commitments. Lead, collaborate, and innovate with the industry to ensure secure and sustainable use of space. Innovate ways to repurpose equipment and reduce footprint from launch to decommissioning. Lead the way as an advocate and collaborator to develop best practice approaches for the responsible use of space. SUSTAINABLE SPACE SES ANNUAL REPORT 202228 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NETZERO SPACE INITIATIVE SES has joined the Net Zero Space initiative in association with the Paris Peace Forum to continue to collaborate with the space community to achieve sustainable use of outer space for the benefit of all humankind by 2030. This consists of five commitments listed below: 1. continue abiding by international guidelines and norms relating to space sustainability and safety 2. collaborate with space agencies and regulatory authorities to develop policies and regulations that will foster a safe and sus- tainable space environment 3. continue sharing, and encourage others to share, operational data critical for the safety and integrity of the space environment through trusted third parties 4. form public and private partnerships to advance innovation in space sustainability and safety 5. exercise best practices and encourage responsible behaviour by all satellite operators so as to preserve the integrity and safety of the space environment JOINT STATEMENT FOR THE RESPONSIBLE SPACE SECTOR As proud contributors to the European Space industry, SES signed the European Space Agency’s Joint Statement for a Responsible Space Sector. This statement underscores our responsibility to take care of planet and that depends on and extends to our action in space. This statement aligns the signatories to 5 principles to underpin space activity. These five principles seek to answer the question who and what is space for: • Fair and responsible governance of space • Space for the benefit of all of society • Fair access to outer space, its preservation and peaceful exploration • For the preservation of our natural environment on Earth and reme- diation of damages caused to our planet • For a fair society and improved well being of all PARTNERSHIP WITH NORTHSTAR In 2022, SES underwent a partnership aligned with our space sustain - ability goals by working with Northstar to launch, develop and evolve space situational awareness tools. Northstar is planning to launch a commercial service monitoring space from space delivering unique space situational awareness services to safely manage fleets and minimise collision risks. SES has partnered with Northstar in our com- mitment to develop and enhance technologies for space sustainability. Northstar has successfully demonstrated the capability to track and maintain custody of objects, regardless of pre-existing knowledge, that may pose threats to SES fleet. SES has invested in this initiative through the Luxembourg Space Sector Development Fund. By 2024, become certified by the Space Sustainability Rating being developed by the World Economic Forum To encourage collective action and endorsement of best practices in space, SES in 2022, has submitted our application for O3b mPOWER to be processed by the Space Sustainability Rating developed by the World Economic Forum. We feel confident in our current operations and management of our fleet and believe that pursuing this rating can ensure that confidence to all our stakeholders. The Space Sus- tainability Rating (SSR) is an ongoing process to create transparency in participating organisations’ space debris mitigation policies. Upon establishment, SSR will provide a sustainability score for companies on their debris mitigation strategies and their alignment with the inter- national guidelines. In 2022, SES developed and prepared our data for submission by the SSR and is on track to submit for a rating in 2023. By the end of 2023, develop the Space Sustainability strategy THE SPACE SUSTAINABILITY STRATEGY AND CHARTER SES has developed the relationships both internally and externally in 2022 and have attended numerous events to understand the industry and SES priorities for space sustainability. In addition, SES has devel- oped our own Space Sustainability charter which outlines the various aspects of Space sustainability and how SES manages its operations in a sustainable and best practice approach. The charter details our approach to space debris mitigation, situational awareness, space traf- fic management, space surveillance and tracking, space safety and industry collaboration. The charter outlines the critical nature of space sustainability to industry and the importance of space to life on earth. It gives details on our plans for continuing to lead on this topic and therefore, in 2023, SES will finalise the space sustainability strategy which will include a vision and milestones for the upcoming decade, alongside our charter. SES ANNUAL REPORT 202229 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION CLIMATE ACTION In 2022, SES saw made progress in our commitment to Climate Action through our company governance, target setting and partnerships. Climate action is the responsibility of every person on the planet and companies have a crucial role to play to drive sustainable change. TARGETS SES has committed to NetZero by no later than 2050 and to the submission of SBTi targets for validation no later than 2024 These targets have ignited several significant steps within the com- pany to drive towards a Net Zero pathway. In 2022, SES has: • Increased our disclosure transparency and improved our govern- ance related to climate in our CDP report increasing our score from a D to a B • Evaluated our climate risks and developed an SES climate risk report aligned with the TCFD framework • SES has added GHG emissions targets to our SES Senior Leader- ship renumeration package • SES has developed an Environmental, Health and Safety Charter • We have amended our supplier code of conduct to include stand- ards related to climate and environmental expectations • Amended SES’ General Terms and Conditions (GTCs) for Purchase of Goods and Services, adding clauses on REACH compliance and aligning with our ESG objectives • Partnered with an external ESG platform and solution provider, to start assessing our suppliers, with the goal to empower a diverse pool of sustainable suppliers In 2023, we plan to continue on a NetZero journey with: • Increased evaluation of renewable options in our major operations • The completion of 1 lifecycle assessment to help us address reduc- tions in our Scope 3 emissions • Continued engagement with our stakeholders including customers, suppliers, and employees • Continued work on our climate risks and opportunities in alignment with TCFD to do full climate scenario monitoring OPERATIONAL FOOTPRINT AND AREAS OF FOCUS EMISSIONS – CDP REPORT RESULTS GRI 305 This report is inclusive of our CDP report results from the 2021 oper- ating year given our CDP reporting cycle. SES expanded the bound- aries of our Scope 3 reporting this year, has made significant changes to the governance of the company related to climate and set Net Zero targets. The combination of these improvements has taken our CDP score from a D to a B. SES is aware of its role of spearheading emissions reduction in the telecommunication and space industries. The company does not operate any manufacturing sites which minimise the company’s total environmental impact. To further minimise risks across the business and to better align with the company’s objectives to reduce CO 2 emis- sions, SES uses its Risk and Internal Control System. Upon identifying risks through COSO and ISO31000 principles, SES collects emissions data on its direct, energy indirect, and other indirect operations (Scope 1, 2 & 3). The company constructs its methodology in line with the Greenhouse Gas Protocol (GHG): A Corporate Accounting and Reporting Standard (Revised Edition); Defra Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guid- ance, 2021; the International Energy Agency’s (IEA) CO 2 Emissions Take bold climate action by setting targets and innovating for the planet. Reduce our carbon footprint across operations and our supply chain. Provide solutions to overcome climate and environmental challenges through satellite connectivitiy. CLIMATE ACTION SES ANNUAL REPORT 202230 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION from Fuel Combustion; and The Greenhouse Gas Protocol: Scope 2 Guidance. Since 2008, SES officially reports the CO2 emissions of its operations through participation in the Carbon Disclosure Project (CDP), which collects the data of all SES’ business activities and locations. The data collection for CDP covers three scopes: • Scope 1: Direct Combustibles (gas and fuel consumption, refriger- ant leakage, car fleet) • Scope 2: Indirect Energy consumption (purchased electricity, heat, and steam) • Scope 3: Other Emissions (business travel, commuting, waste, water consumption) In 2021, SES for the first time, expanded the boundaries of our Scope 3 reporting to include • Cat 1 – Purchased goods and services • Cat 2 – Capital Goods • Cat 4 – Upstream transportation This resulted in an increase in our Scope 3 emissions (88% of our overall footprint). The manufacturing and launch of our satellites is realised in Cat 2 of our scope 3 emissions and is a large contributor to our overall GHG footprint. The fluctuation of our GHG emissions in this category will be depend on the number of satellites we have launched, and we will specifically pull out the emissions related to this as a separate item in how we report these numbers going forward. In 2021, SES launched SES-17 and the carbon emissions related to that launch can be found in Cat. 2. Emissions from Scope 2, electricity consumption, SES has invested in energy reductions in our sites with the upgrading of equipment to energy efficient alternatives. We have also invested in green energy tariffs in 2 of our highest energy sites, Luxembourg and Munich result- ing in a decrease in our market-based Scope 2 emissions. To better interpret Scope 2 emissions data, it is important to note that Scope 2 location-based emissions factors were chosen in line with the GHG Protocol recommendations. For low occupancy sites, assumptions were made based on average electricity, gas, and travel data at the main office sites. A data collection questionnaire was cir- culated to all 31 main SES global sites and to collect activity data. A large sample of low occupancy and unmanned SES sites were included in the data collection exercise. To calculate GHG emissions, when electrical power consumption was not precisely measured, it was esti- mated. In the context of the legal framework in Europe with the goal to save energy, SES started to analyse the energy efficiency of the main facilities in accordance with EN 16247. This exercise has been performed at SES’ sites in Munich, Germany, and Betzdorf, Luxem- SES Group CO 2 emissions YEAR 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Scope 1 (t CO2e) 1.813 2.510 2.177 2.524 2.517 2.418 5.455 6.546 6.621 6.959 6.464 12.397 17.317 14.432 Scope 2 (t CO2e) 24.039 25.848 29.604 30.821 26.980 24.701 24.395 17.080 17.391 20.475 27.758 26.846 35.280 26.507 Scope 3 (t CO2e) 169.776 4.248 16.017 17.178 17.386 13.737 12.486 11.460 14.756 5.873 4.937 2.309 Total emissions (t CO 2 ) 195.629 32.606 47.797 50.523 46.883 40.856 42.336 35.087 38.768 33.307 39.159 41.553 52.597 40.939 Change to previous year 500% -32% -5% 8% 15% -3% 21% -9% 16% -15% -6% -21% 28% SES ANNUAL REPORT 202231 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION bourg. Through these and other initiatives, we have implemented a substantial and ongoing carbon reduction plan in our sites across the world. During the second half of 2022, we implemented an electrically pow- ered shuttle service to connect our headquarters in Betzdorf with the main local bus and train stations. This service has so far been used by about 25% of the local employees, a quota that we expect to grow during 2023 as we have increased the capacity of the vehicle and made its timetable more in line with the needs of an increasing num- ber of employees. This service, which is increasingly used and has received numerous positive feedback, is also aimed at reducing our employee commuting emissions. In this regard, we are working on a study to quantify the impact on our emissions, which we are confident we will be able to share in our next report. WASTE MANAGEMENT GRI 306 SES intends to systematically reduce waste across its direct footprint. The company ensures that it has a comprehensive waste policy in place that targets avoiding and reducing waste as well as increasing disposal and recycling in the areas of “Batteries, hydraulic fluids and electrical/electronic devices, building-site waste, glass, plastics, met- als, organic waste (food residues, garden refuse, wood), paper/card- board, and problematic items (e.g. chemicals/environmentally hazard- ous substances, oil/grease, flammable products, etc)” in line with international standards (ISO 140 42). SES currently collects informa- tion for the SES Headquarters in Luxembourg and annually reports to the Luxembourgish government. For its remarkable environmen- tally friendly waste handling, SES has been awarded with the Luxem- bourg SuperDrecksKescht (SDK) ecolabel 20 years in a row. ENERGY GRI 302 SES is aware of its responsibility to improve and transform the man- agement of sustainable energy as an industry leader and is commit- ted to gradually increase the share of renewables in its energy mix. The company has already achieved 52% improvement in its energy efficiency index between 2014 and 2020 in its Luxembourg headquar- ters and plans to achieve further improvements on global level within the next 5 years. SES is transparent in data collection and data shar- ing and annually reports to the Carbon Disclosure Project. The com- pany pledges to comply with the international regulatory standards, align with energy saving programmes, and co-operate with the intra- and inter-industry actors to generate positive value throughout its value chain on energy production, consumption, supply, and distribution. In Luxembourg, SES currently participates in the new Voluntary Agreement between the Luxembourgish Government, My Energy GIE and FEDIL, which started in 2021 and runs until the end of 2023. This programme sets a general energy efficiency improvement target of 4.5% until the end of 2023 compared to the reference years 2018/2019. To achieve this goal, SES undertakes initiatives to improve the energy efficiency of its technical facilities such as HVAC, UPS, lighting sys- tems, etc, and engages in the implementation of ISO50001 energy management system. CLIMATE RISK In 2022, SES began analysing our risks and opportunities related to climate in partnership with third party consultants. We understand that climate change presents challenges for all businesses and we are committed to understanding and mitigating our risks. In alignment with the TCFD framework we have developed a climate risk report detailing our identified risks, the impact on the business and our stra- tegic response and mitigation. COMMITMENT TO ENVIRONMENTAL PROTECTION In 2022, SES formalised our commitment to environmental protection in many of our policies effecting our value chain. We drafted an instated a formal Environmental, Health and Safety Charter as well as enhanced the language in our supplier code of conduct to align our expectations of environmental protection across our supply chain. SES ANNUAL REPORT 202232 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION ANTARCTICA In 2022, SES proudly partnered with the 2041 Foundation and explorer Robert Swan in support of an expedition to Antarctica with the main goal of raising awareness of climate change, evoking action for all of us and saving Antarctic for future generations as an intact reserve for science and wildlife. The expedition comprised a group of 150 participants from all walks of life. The group of students, education profes- sionals, scientists and entrepreneurs departed in March 2022 on board Ocean Victory and through SES connectiv- ity and our partner, Speedcast, was able to provide reg- ular updates and stream live throughout the voyage. Leading passenger ship and fleet management com- pany Cruise Management International provided technical and operations solutions to Ocean Vic- tory, utilising Speedcast for the managed con- nectivity services onboard. SES leveraged a C-band beam on SES-6 to provide connectivity, with speeds reaching up to 50 Mbps. The con - Gez Draycott, an SES employee was aboard the expedition and continued his activism of the mission by walking with Robert Swan to the South Pole in December of 2022. nectivity provided an opportunity for Robert Swan to share his mes- sage of urgent climate action live with audiences around the globe including schools, businesses, and family and friends of those on board. “This is a complete first in our history, where we are planning to be actively communicating live from our ship, and which was made possible thanks to SES and Speedcast. This will allow us to get our message back to the rest of the world – on what we are doing, why we are doing it, but also to challenge people and encourage them act to make a difference,” said Robert Swan. “Helping Antarctica means helping the current and future generations, and we should jointly make a change already now, before it is too late.” SES ANNUAL REPORT 202233 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION DIVERSITY AND INCLUSION (D&I) GRI 405 SES recognises that within our workforce, we need to strive for more diver- sity & inclusion across the business. We have put in place several pro- grammes to increase awareness around Diversity and Inclusion such as trainings and education initiatives (we have several D&I sessions through- out the year), a Mentorship Programme, Diversity calendar, Equality and Inclusion working groups and we have launched an Allyship Programme as we committed last year. Looking to tackle the diversity at the level of our people managers and executives, starting with gender. BUILDING A DIVERSE AND INCLUSIVE WORKFORCE SES is committed to increasing the number of employees from under- represented groups and nurturing an inclusive company culture to create a fair, innovative and supporting working environment. SES puts diversity and equal opportunity at the centre of its employment strategy and is a signatory of the Diversity charter in Luxembourg. Supportive practices, such as implementing a D&I dashboard to mon- itor their progression and our mentorship programme are systemat- ically applied to support female talent and we are fully focused on increasing the percentage of women within the SES workforce, both overall and at managerial / executive levels. We believe that the meas- ures we continue to take to support women help not only women but lead to creating an environment in which all SESers feel included, regardless of gender, gender identity, sexual orientation, ethnicity, religion, etc. Make the space industry more diverse, equitable, and inclusive, starting with SES. Build a more diverse, equitable, and inclusive workforce across all levels of our business. Increase the diversity, equity, and inclusion of the space industry through targeted actions and investments. As a company dedicated to connecting more people with more con- tent across the globe, we believe our story should reflect those of the millions we serve. We are committed to increasing the number of employees from underrepresented groups and nurturing an inclusive company culture to create a fair, innovative, and supportive working environment where people can flourish – empowering all employees, or “SESers”, to write their stories and to contribute to the collective success of a truly global team. It’s not about quota, it’s about forging a future that is equitable. In SES, we have placed a greater focus on D&I over the last two years and we are seeing a positive difference in our organisation through engagement with our employees. Through engagement with internal and external stakeholders, it also became clear that more ambitious targets in this area must be set to drive change and transparency, not only in our workforce, but also as a leader in our industry when it comes to a more inclusive and diverse work environment. At SES, Diversity & Inclusion is about creating an environment where any person is welcome to work with SES regard- less of gender, gender identity, age, background, ethnicity, ability, stage in life, sexual orientation, etc. We recognise that, at this moment, we are limited in measuring diversity at a global level mainly through the gender dimension TARGETS SES has committed to: Increase gender diversity of people managers by 50% in 5 years DIVERSITY & INCLUSION SES ANNUAL REPORT 202234 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION WOMEN IN LEADERSHIP & PEOPLE MANAGERS POSITIONS SES understands that valued employees are more likely to be satis- fied with their career prospects, be productive and achieve their long- term career goals. Engaged employees lead to a reduced chance of employee turnover for companies. To achieve high skilled workforce and increase productivity, SES puts a special emphasis on its secur- ing and retaining talent policies. When it comes to retention, engagement, and development of women, we are tracking the participation of women in key programmes and initiatives. When it comes to promotions in 2022, 26% of promoted employees were women (slightly lower compared to 28% in 2021 but consistently higher when comparing the female promotion rate to their overall representation in the SES population). With a focus on increasing the representation of women in manage- rial and executive roles, 15% of employees at the executive level are women (compared to 15% in 2021 and 13% in 2020). When looking at the people managers population, we have been observing a consist- ent increase in the proportion of female people managers over the last few years. Evolution of the proportion of women amongst People Managers 30% of all employees who became people managers in 2022 are women compared to 22% of all new people managers in 2021. In 2022, we noticed an acceleration in voluntary turnover with a resig- nation rate of 9% at the end of the year in line with the worldwide “Great Resignation” phenomenon. This follows two years with resig- nation rates at 7% in 2021 and 5% in 2020. With these unusually low rates, higher resignation rates were expected in 2022. We also con- tinue to observe higher resignation rates amongst women compared to male employees. We acknowledge that this is a global trend reported by many, such as in the 2021 McKinsey report titled “Women in the Workplace”: “One in three women says they have considered downshifting their careers or leaving the workforce this year, compared to 1 in 4 who said this a few months into the pandemic. Additionally, 4 in 10 women have considered leaving their company or switching jobs—and high employee turnover in recent months suggests that many of them are following through.” As a company, we adapt to the new way of working by creating a hybrid model that provides more flexibility than before. We are also in constant collaboration with our people managers to create safe spaces and team charters that take every team member’s needs into consideration. DRIVING DIVERSITY SES evaluates the diversity of the employee population from several perspectives. We have an extremely diverse population when looking at nationalities and a healthy age distribution in the company. Employee Distribution by Functional Area 2022202120202019 20% 18% 17% 16% 53% Services and Engineering 35% Sales and Product 12% Corporate Functions SES ANNUAL REPORT 202235 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION When focused on gender at SES, currently 25% of SES’ workforce are women, a figure that has been stable over the last years, but SES aims to increase this number as part of its diversity strategy. Women are most present in the Corporate Functions (59%) but considerably less in Services & Engineering (15% in Technology & 18% in Global Services). DIVERSITY AND INCLUSION TRAININGS With Diversity and Inclusion strongly embedded as one of the 4 key pillars of SES’ ESG strategy we are supporting everyone in making steps towards a more inclusive future for SES. This future begins with greater awareness within the company, which is why SES strongly encourages all employees to complete a short online Unconscious Bias course, designed by Microsoft. To move the needle on Diversity & Inclusion, the Unconscious Bias training course is open to all employees and mandatory for all people managers within the company – without exception. At the time of publication of this report, more than 850 employees have completed the Unconscious Bias training and, in so doing, have demonstrated their commitment towards a more inclusive SES. DIVERSITY AND INCLUSION EVENTS SES has a Diversity calendar according to which we organise events around the year. Black History Month, International Women’s Day and Pride Month are just a few of the events we organise. What is unique to SES is Diversity Month. In 2022, our Diversity Day live event ses- sion was focused on Neurodiversity with speakers external to SES and internal to SES. We also hosted an initiative called “Pot of Colours’ organised by our Ethnicity Equality and Inclusion Working group. We also found it useful to run a workshop on LGBTQIA+ as well as a workshop specific to our People Managers on Safety and Discomfort. As of end-December 2022, SES employees from 85 nationalities across 32 offices which is a strong indication of the company’s diverse workforce target. The most represented nationalities are: United States, Germany, France, Romania, Great Britain, Israel, Belgium, Lux- embourg, The Netherlands, India and Italy. Employee Nationalities We have an overall healthy age distribution with an average age of 43 years old. Age Pyramid of SES employees #IAMREMARKABLE Feedback from SES employees has clearly shown the value of #IamRe- markable, the global Google initiative that strives to empower everyone, particularly women but also other underrepresented groups, to celebrate their achievements in the workplace and beyond. At the heart of the #IamRemarkable initiative is a 90-minute workshop that helps partici- pants learn the importance of self-promotion in their personal and pro- fessional life, equipping them with tools to develop this skill set, and invite them to challenge the social perceptions surrounding self-promotion. This workshop has contributed to the way people approach their Perfor- mance conversations and more people actively encourage others to speak up more openly about their achievements. EQUALITY AND INCLUSION WORKING GROUPS At SES, we greatly value employee ideas and we believe that increas- ing employee engagement and representation of the workforce are crucial elements to drive Diversity and Inclusion and boost innovation. Across our operations, we implement different sets of programmatic Over 60 51 to 60 41 to 50 31 to 40 30 and below 4% 22% 30% 31% 13% 2% Africa 52% Europe 28% North America 7% Middle East 8% APAC, India 3% Latin America SES ANNUAL REPORT 202236 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION initiatives, from training and development programmes to a more diverse and inclusive employment policy. For the past two years, mem- bers of the SES E&I groups have been sharing experiences, exchang- ing ideas and developing policy and strategic proposals for the organ- ization to adopt real change in order to drive greater workforce diversity. In 2020, we launched our award-winning Equality & Inclusion working groups. These groups, open to all employees and consisting of vol- unteers, meet to develop proposals focused on Diversity and Inclu- sion. The final proposals are later presented to senior management. The E&I groups comprise one of the most important and valuable Diversity and Inclusion initiatives for SES, with stakeholders ranging from all internal employee groups, Senior Leadership Members, Human Capital Team (Learning and Development, Recruitment, Tal- ent Management, Compensation and Benefits), to Internal and Exter- nal Communications, Brand and Marketing. All departments are involved in the facilitation and implementation of the proposals, aimed at enhancing impact for all employees. Our working groups focus on the following: • The Gender working group focused on achieving increased opportunities for all women or any person identifying as a woman inside and outside SES. They developed an allyship for the gender minority programme to implement in 2022. • The Ethnicity working group focused on stiving for better rep- resentation and opportunities of ethnical minorities at all levels within and outside SES. For their 2021 proposal, they tackled miti- gating bias in recruitment and in 2022 are challenging the organi- zation to implement KPIs, apply blind screening and carry out inter- viewer surveys. • The “general” working group has flexibility to tackle other topics and can choose a focus area. In 2021 the group focused on creat- ing an inclusive LGBTQIA+ culture within SES. Filled Positions by Region In addition to the 2021 achievements, in 2022, we launched 3 new impactful initiatives: • The Gender group has launched an Allyship programme for all. • The general group launched a network within SES called “Defini- tions Not Applicable” (DNA) to create a safe space for people that belong in the community as well as Allies to discuss current topics and areas of improvement. • The Ethnicity group has launched the initiative “Pot of Colours” where we discuss cultural history through food. 2023 FOCUS: FEMALES IN LEADERSHIP In 2023 SES will have a stronger focus on Women in Leadership. Fol- lowing the targets, we set in 2022, we aim to create a programme for Females in Leadership and to make sure we enable them to exist in the pipeline. We are looking to utilise our Allyship programme and measure more systematically the progress we are making in 1. Females in People Management positions; and 2. Females in Executive positions. In 2023 we are introducing a new commitment from our Senior Lead- ership team which is a target of 24% females by 2026 in People Man- ager positions connected to their annual compensation. TALENT ACQUISITION Diversity by the numbers In 2022 we hired 367 people (2021: 255) of which 67% in Europe (2021: 62%) and 22% in North America (2021: 30%). More than one third of all 2022 external recruits are women, compared to 25% in 2021. Our Talent Acquisition team focused on Diversity and Inclusion dur- ing career and job fairs. SES joins events such as Jobinars for Top Women Tech to attract more women from STEM. Additionally, we attended the Aerospace Diversity Day (DELFT), all to attract more females and showcase our commitment to D&I. INDUSTRY COLLABORATION COMMITMENTS Industry collaboration on enhanced Diversity and Inclusion policies are keys to achieve more representative, inclusive, and dynamic workforces. More diverse and inclusive industries not only push underperforming companies to take more ambitious steps on their policies but also create collective action platforms to better align intra-industry targets to achieve enhanced Diversity and Inclusion. SES spearheads their policies in the space and telecommunication industries through its industry collaboration commitments and works for collective impact. WOMEN IN AEROSPACE Women in Aerospace (WIA) is an international organisation founded in 1985 dedicated to increasing the leadership capabilities and visi- bility of women in the aerospace and STEM community. WIA acknowl- edges and promotes innovative individuals who strive to advance the 9 24 2 6 79 247 SES ANNUAL REPORT 202237 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION aerospace industry. SES is a corporate member and sponsor of WIA Europe, and 2 employees currently run the Luxembourg local group. SES’s participation in the WIA is to create a community in Luxembourg for Women within the aerospace/STEM sector through regular meet- ings (fun networking sessions, webinars, feedback sessions). SES aims to enable women in the aerospace industry to have their voices heard and have a strong network of women in STEM. In 2022, SES will develop a plan to build on our STEM and ICT outreach to expand our impact on students from underrepresented groups STEM EDUCATION INITIATIVES To secure best in class employees and to sustain innovative capabil- ities, SES believes that it must inspire the new generation towards Science, Technology, Engineering and Mathematics (STEM). There- fore, we engage in global activities in this field also using it as oppor- tunity to support and increase diversity. In 2022, we have developed a plan to focus our efforts in STEM and ICT initiatives to support women in our field and across the industry. Some of the initiatives we have pursued this year include: Space & Satellite Professionals International (SSPI) We collaborate with SSPI including one female employee on the board actively participating in events and projects to increase women across the industry. In 2022, SES had a female employee included in the “20 under 35” leaders cohort honouring young pro- fessionals contributing to the industry and representing the best of what is to come. Scholarships Launched in 2018, The SES Space Scholarship offers a unique oppor- tunity for 17–18-year-old students who have completed their General Certificate of Secondary Education (GCSEs) and are interested in the space industry and astronomy to be involved in a wide range of career opportunities in the space industry. SES encourages people from all background to apply and particularly welcomes applications from underrepresented groups. International Space University SES is a proud partner of the International Space University (ISU) in developing future leaders of the world space community. We work with the University in developing talent through guest lectures or workshops from SES subject matter experts, professional visits, internship opportunities and even scholarships to cover partial or full tuition fees. We awarded scholarships in 2022, to two female engi- neers for more than 70% of the total masters fees for each student. We are tremendously proud to be able to create possibilities for more accessible space industry education and help young talents achieve their dreams. Luxembourg Science Centre In 2022, we have committed to partnering with the Luxembourg Sci- ence Centre to provide educational content, workshops, visits, and tours with a focus on encouraging access to STEM and the space industry. Brooke Owens Fellowship Programme The Brooke Owens Fellowship is designed to serve both as an inspi- ration and as a career boost to capable young women and other gen- der minorities who, like Brooke, aspire to explore our sky and stars, to shake up the aerospace industry, and to help their fellow people here on planet Earth. This is completed by matching up to forty students per year with purpose-driven, paid internships at leading aerospace companies and organisations and with senior and executive level mentors. SES encourages having a platform for women in STEM to share their ideas, discuss issues and eventually implement change within the industry and promote women in STEM for the future gen- erations. In August 2022, SES was selected to be a Host Organization for Summer 2023. We have been matched with an international stu- dent studying Aeronautics at Purdue University. America On Tech America on Tech (AOT) is an award-winning, early pipeline tech tal- ent accelerator on a mission to decrease the racial wealth gap by cre- ating pathways for underestimated students to thrive in technology and innovation. AOT is committed to creating employment pathways by developing, mentoring and providing support to young people of color between the ages of 16-24. 85% of AOT students identify as African American and/or Latinx and 56% identify as women or gender non-confirming. For Summer 2023, SES has agreed to sponsor two interns from AOT in addition to sponsoring the 2023 Innovators and Disruptors Awards. Lastly, SES will allocate two guest speakers to deliver relevant content regarding satellite telecommunications. Florida International University We are building relationships with targeted schools who prioritise diversity and inclusion in their values. Last year we worked with Flor- ida International University (FIU) due to their proximity to our Mira- mar office. FIU is the #1 university in graduating women in Computer Science and the #1 university in graduating minorities within the state SES ANNUAL REPORT 202238 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION of Florida. SES was lucky to place two interns in Miramar to support Maritime Analytics and will continue to develop this relationship in years to come. The interns both come from first generation LatinX families which was great visibility for SES and FIU. ESERO ESA (European Space Agency) is taking action against the negative trend of STEM (Science, Technology, Engineering, and Mathematics) studies and careers through the ESERO (European Space Education Resource Office) project, which is addressing primary and secondary education in Europe. ESERO uses space as a theme of inspiration, an opportunity to enhance pupils’ literacy and competence in STEM-re- lated subjects, which makes the space sector less distant and perhaps more attractive. ESERO is already established in some ESA member states and is supported by local experts in partnership with national education institutions. In 2022, SES signed an innovative partnership with the LSC (Luxem- bourg Science Center), the host of ESERO Luxembourg. This part- nership dovetails with the company’s ESG goals, aiming at making the space industry more diverse and inclusive by supporting activities that promote STEM, highlighting the opportunities in satellite and terrestrial telecommunication networks, raising awareness of STEM studies and careers, and driving talent towards such industries. In the context of ESERO Luxembourg, SESers were involved in the “Space goes to School” programme and the “ISS – In-flight Call” event organ- ised by the LSC. Concerning “Space goes to School”, the programme ran between April and July 2022 and 5 SES employees volunteered and contributed to its success. Space experts from the Betzdorf office visited 14 schools all over Luxembourg, reaching more than 400 students aged 10 to 17. The SES team delivered 16 sessions of space activities around satel- lites, the solar system, space sustainability, Earth observation, space-related professions, space-inspired arts, and many more in 3 different languages! The topics discussed sparked the interest of the youngsters, who showed high levels of engagement. Additionally, SES supported the “ISS – In-flight Call” event, which took place in June 2022, within the framework of the “Marvel of Micrograv- ity” series, co-organised by ESERO Luxembourg, Italy, and Portugal. During this event, a crowd of 150 people, mainly consisting of pupils, teachers, and university students, attended presentations by local experts and had the unique chance to participate in a video call with the Italian ESA astronaut, Samantha Cristoforetti, right from the ISS (International Space Station), see her performing live experiments in microgravity conditions and ask her questions. SES participated in the event with an interactive presentation entitled “Satellites at peo- ple’s service”, delivered by a colleague from the Betzdorf office and in total, 7 colleagues were present and represented the company. The involvement of SES in ESERO Luxembourg for 2023 is already confirmed and SESers cannot wait to bring more space to the Lux- embourgish schools! ENGINEERING TRAINEE DAYS Engineering Trainee Days project aims to promote engineering and scientific professions to secondary students, age 16+ years, by offer- ing them valuable insights into the daily work environment of a STEM professional. This experience differs from a simple company visit, as the students follow and assist engineers and scientists in their daily tasks and duties for two days. This allows students to gain an under- standing of professional, linguistic, and interpersonal industry require- ments. This project is an initiative of the Association of Engineers, Architects, Scientists Industrials Luxembourg (da Vinci) and Jonk Entrepreneuren Luxembourg with the support of the Ministry of Edu- cation. By 2025, We aim to develop and implement a supplier and customer sustainability rating and diversity programme to empower a diverse pool of sustainable suppliers. The first step in our supplier sustainability programme was to increase visibility into our supply chain so that we can focus on the suppliers and areas where we are at the highest risk. To accomplish that we have contracted a third party supply chain ESG assessment tool to better understand the risks in our supply chain and identify the areas where we need to focus and engage our suppliers. We have additionally updated supplier facing policies. Both our Gen- eral Terms and Conditions of our supplier contracts and well as our Supplier Code of Conduct now reflect our ESG values and align with our ambition to drive a diverse pool of sustainable suppliers. Through the supply chain sustainability programme we will be building addi- tional outreach measures to ensure compliance of our supply chain to these critical issues. SES ANNUAL REPORT 202239 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION CRITICAL HUMAN NEEDS Reliable, high-speed connectivity and access to content is key to harness the potential of digitisation, to boost countries’ economies, and to present opportunities for people. SES’ superpower is reach bring access to information and learning, improving digital inclusion through reliable and flexible bandwidth anywhere on earth. SES progresses its initiatives across geographical barriers, brings infra- structure to fragile economies and isolated communities, and aids humanitarian efforts in disaster-hit areas. Each country has unique challenges and opportunities around the move towards digital and SES is at the forefront of this transformation. TARGETS Conduct stakeholder outreach to understand the areas where SES’ products and services can advance the sus- tainable development goals. SES strives to drive positive impact in all that we do, and this includes the products and services that we provide to the world. As part of the critical human needs pillar, we not only wanted to measure social outcomes aligned with where we contributed to the Sustainable Development Goals but we wanted to measure and set targets for indicators where our business can contribute meaningfully doing what we do best. During 2022, we spoke with stakeholders from the NGO community, civil society, customers, partners, and employees to help us understand where our efforts should be focused on critical human needs. We have focused on • Drive SES connectivity in developing nations and measure the number of connected sites year over year in alignment with SDG 9 target 9.c • Continue to support communities in crisis with mission critical disaster response and critical infrastructure capabilities. Assist communities with training and development for a more resilient response capability. ADDRESSING THE DIGITAL DIVIDE Access to broadband services is a well-known indicator of a thriving community as it provides for critical human needs of a population including emergency aide, health, financial and educational access. SES works alongside governments, telecommunications providers, and non-governmental organisations in communities around the globe to close the digital divide and build out infrastructure to connect the unconnected. This is a core part of our fixed networks and government business units and provides maximum impact in our product and services portfolio. As part of our service portfolio, we offer a Managed backhaul solution to our customers, providing satellite capacity for mobile base stations to connect additional subscribers in remote and isolated places. We work closely with our telecommunications customers to expand their networks to expand connectivity to more people and close the digital divide. In 2023, we will start to measure how many sites we are bringing online in developing countries. COOK ISLANDS Customers of Vodafone Cook Islands will be able to experience 4G+ networks and high-performance internet connectivity across the outer islands with the use of the O3b mPower service enhancing ser- vices that increase access to online services in health, education, banking, and commerce for the residents. PAPAU NEW GUINEA With over 86% of its population residing in rural areas, much of Papau New Guinea is underserved when it comes to connectivity. In 2022, SES expanded services in the country by partnering with a new provider of mobile broadband services. Empower communities to thrive with services that help meet critical needs, save lives, & create inclusive and equitable opportunities. Direct our innovation & partnerships to expand access to educational, health, & informational services. Expand reliable access to content & connectivity in remote & isolated places by leading partnerships in our industry and beyond. CRITICAL HUMAN NEEDS SES ANNUAL REPORT 202240 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION BRAZIL’S AMAZON REGION Utlising SES’s O3b mPower network to extend mobile backhaul services to Claro Brasil through Embratel, SES will be serving more than 260,000 inhabitants of 8 cities in the Amazon region with con- nectivity services in the most isolated villages and cities in the region. ANDEAN REGION SES partners with Andesat in the Andean region to provide connec- tivity via the SES-14 satellite. In 2022, the service will boost voice and broadband connectivity access to 280 sites by the end of 2022. PHILIPPINES EDUCATION CONTENT SES is working with ComClark Network and Technology Corporation to empower thousands of Philippine educators with high-speed connectivity to deliver content to 2,000 remote schools across the country. The content is delivered via SES’s SES-9 satellite. INNOVATING FOR HUMANITARIAN RESPONSE Conflicts, natural disasters, and the climate change impacts are increasingly highlighting the importance of critical infrastructure to community resilience. SES has been at the forefront of disaster response and supporting countries around the world with connec- tivity, preparedness and support. EMERGENCY.LU UPDATE There are two vital requirements in emergency situations: response time to cover the communications needs in the immediate aftermath of a disaster, and control or management capability allowing quick and efficient sharing of information about the situation on site. The emergency.lu platform was designed to quickly re-establish communications in remote areas isolated by natural disasters or other emergency situations. The platform is based on a public-private partnership between Luxembourg’s Ministry of Foreign Affairs, SES, HITEC Luxembourg and the Luxembourg Air Ambulance, and is supported by a number of operational and technical partners. The emergency.lu platform is based on a global hub infrastructure and satellite capacity, both provided by SES. In 2021, emergency.lu project was renewed with SES for a period of 6 years. SES has moved the programme to a flexible service catalogue approach, offering additional services and enhancements as options for deployments and to better serve the needs of the customers on the ground. Changes to satellite capacity, equipment, networking options and enhanced options for services to affected communities has been developed or implemented. SES Supporting disaster and humanitarian crisis situations remains a top priority of our ESG strategy. First deployed in 2012 in South Sudan, the has since then been deployed in more than 26 different countries around the world. In 2022, emergency.lu was supporting the humanitarian response in Ukraine. Operations in Tonga that were deployed in 2021 were extended, following the volcanic eruption that disrupted undersea fiber links. Additional longer-term deployments continuing in Niger, Nigeria, Venezuela, Syria, Chad and Central African Republic in support of WFP, UNHCR and UNICEF. SATMED SES has been operating the Luxembourg Government’s satellite- enabled SATMED e-health platform, working in close partnership with non-governmental organisations and governments alike. The solution enables real-time situational assessment and data exchange for healthcare professional sin locations like Bangladesh, Sierra Leone, and others. The SATMED platform was consolidated onto the Azure hosting environment to offer a seamless cloud-based system. NETHOPE AND INTERNET SOCIETY PARTNERSHIP FOR DISASTER PREPAREDNESS SES has partnered with Nethope and the Internet Society to train first responders in the most disaster-prone countries in an effort to build local knowledge to respond to the next disaster. In 2022, SES provided satellite training to 100 responders in Ghana with representatives from local responding agencies, industry, and local government. In 2023, we will continue with trainings in Guatemala and the Philippines. TAIWAN DISASTER RECOVERY Supporting the rapid restoration of cloud services in a disaster sce- nario, SES is supporting Microsoft and Pegatron to create a private 5G network hosted on the Azure Stack Edge Compute platform. The platform is deployed on a mobile truck alongside networking func- tions such as routers and GPS devices as well as an SES O3b MEO terminal to provide the Taiwanese government with “on the pause” services during a disruption of terrestrial connectivity. HURRICANE IAN SES Government division rapidly deployed MEO satellite services and terminals to restore broadband connectivity for local communities and first responders in Lee County, Florida who were impacted by Hurricane Ian in partnership with AWS Disaster Response and Sim- baCom. The services provided connectivity for the Florida Depart- ment of Financial services who was processing insurance claims; Dis- tribution centers supporting family services and the Fuel relief fund, a distribution site providing fuel for first responders and evacuees across Lee County. SES ANNUAL REPORT 202241 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OPERATING OUR BUSINESS Along with setting a clear strategy and targets related to ESG for our business, we also know that the foundation of our business needs to be set on strong operating procedures and business ethics. Attention to our customer feedback, employee matters, social matters, IT secu- rity process, Human rights considerations and Anti-bribery and cor- ruption are all additional areas where SES considers our impact. Our commitment to excellence as a company has earned us recogni- tion as a leader. Notably, in 2022, the SES ESG team was recognised by IMS Luxem- bourg with the Sustainability Team award for the stakeholder approach we took in the development of our ESG strategy. CUSTOMER CENTRICITY SES’ mission is to do the extraordinary in space to deliver amazing experiences everywhere on earth. Delivering such experiences requires focusing on customer engagement, on the people SES impacts as a top priority on its business agenda. To make sure SES understands its customers’ goals and needs, the company runs a cus- tomer experience programme capturing the ‘voice of the customer’ through its Net Promoter System and annual Perception Study. The Net Promoter System is a quantitative study measuring Customer Satisfaction (CSAT), Customer Effort (CES) and Customer Loyalty (NPS). The results of the NPS are coupled to the Perception study’s qualitative insights to create a granular picture for the organisation to understand how and what to improve to better serve its customers. A companywide Customer Advisory Board has been launched in 2022 with the purpose of bringing SES’ most strategic customers together to discuss the future of our industry, collect first hand feedback on the relevance of SES’ strategy to its customers and establish a net- work of thought leaders. Our 2022 Net Promoter Score (measured on a scale of -100 to +100) was +39, representing an improvement from +34 in 2021. Net Promoter Score 2022 Among the areas of improvement and focus for 2023 is the customer journey and improving the way we execute on the delivery of our services. EMPLOYEE MATTERS We are passionate about employee experience and employee success. We aim to treat employees as we want them to treat our customers; empower them to take ownership of their careers; and create a community where it is fun to work. We strive to be future proof, powered by a strong, healthy culture. This depends on learning and teaching, a diverse workplace where everyone feels included and having a growth mindset. We drive business success within SES by anticipating and meeting the needs of the business through world-class human capital practices. ATTRACTIVE AND FAIR COMPENSATION AND BENEFITS Our compensation philosophy aims to stay ahead of the market and to contribute to the company’s organisational goal to attract, develop and retain talent and to treat all employees in a fair and equitable manner. Key Principles We benchmark our total compensation against local practices of other global organisations with the ICT industry as a reference point. Our total rewards include annual base pay, bonus linked to individual, departmental and group financial targets, benefits aligned with local practices as well as long-term incentives to position the Company as a global employer of choice. Being fair and consistent is at the heart of all our compensation & benefits related decisions, whether it is on job grading, salary 39 -100 100 SES ANNUAL REPORT 202242 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION increases, promotions or benefits. We undergo a global gender pay gap analysis on an annual basis. Our Employee Rewards & Recognition Programme celebrates achieve- ments through either: • CEO Award – recognition on a company level for special efforts related to key projects. • Management spot awards – monetary bonuses as recognition for great work. • Peer recognition through “Thank You letters” and “Dinner on us” Modern working conditions Working conditions are being increasingly influenced by working hours, workplaces, the work environment, the level of employee empowerment and a state-of-the-art, growth driven management culture. The length of our employees’ workweek is generally regulated by the company or by a collective bargaining agreement. Today’s living and working conditions require working times to be flexibly organised in accordance with individual needs. We help employees reconcile their professional and personal responsibilities and boost their flexibility and self-determination by giving them the opportunity for mobile working. With COVID-19 forcing most of us to work from home, we adapted conditions and flexible working to accommodate the safety and needs of our employees. We success- fully deployed IT solutions to accommodate the increased work from home demand and gave regular updates to our employee offices on the local COVID-19 situation and company regulations. Further options for flexible working today include job sharing, part- time work, phased return from leave and reduction in work time. HEALTH AND SAFETY GRI 403 SES commits its support to its employees’ well-being and safety in and outside of the workplace. SES ensures health and safety through risk identification, assessment, and monitoring; health and safety trainings; on-site and off-site regulation and supervision; and health and well-being initiatives. Since 2021, SES instituted a role dedicated to ensuring a fully coordinated and structured approach across the organisation. The Global Health and Safety officer is responsible for devising a global Occupational Health and Safety strategy based on international standards and for managing its consistent implementa- tion worldwide. The company complies with the ISO45001 principles. This is reflected in a Global Occupational Health and Safety Policy (integrated with ESG principles), covering all aspects of SES’ business and showing the SES Leadership Team commitment towards health and safety for all interested parties involved in its activities. Regulatory watch and legal compliance are monitored and defined based on the different sites. All personnel working at SES is covered by this framework. SES proudly reports that the company did not report any major work-related injury or ill-health thanks to its com- prehensive and preventive health and safety policies. In 2022 SES has continued to develop his health and safety system focusing on employees’ competences and trainings. These were iden- tified as outcome of the different risk assessments based on the local regulations of its sites. SES ANNUAL REPORT 202243 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION TRAINING AND EDUCATION GRI 404 We are convinced that work can and should provide a great opportu- nity to learn and grow, as well as to contribute to our societies at large. SES offers relevant training and development to all its employees and aims to provide learning that is easily accessible as a natural part of an employee’s job. The mission of the Learning & Engagement func- tion in any organisation could be described as ensuring the availabil- ity of relevant learning solutions to all its members. Our vision for Learning & Engagment goes much further and is currently defined as follows: to create an environment where fully remote state-of-the-art learning is easily accessible to all employees, where learning anytime/ anywhere is a natural part of everyone’s job, and where developing skills is recognized as a shared responsibility. Our employee popula- tion is spread out across over 25 locations globally, translating into having either an e-learning solution or a remote-delivery videocon- ference version available as an alternative to any training offered in a classroom. This allowed us to create more of a level-playing field between employees located in the major offices and those in smaller locations. The Covid shutdowns accelerated these efforts and quickly moved our complete active training offering to remote delivery for- mats, which has continued into 2022. With people returning to the office more regularly in 2022 we are beginning to see a “new normal” that allowed us to offer on-site and in-person learning events again, in addition to the existing online and live remote learning offerings. Our Leadership Development Pro- gramme is just one of many examples where it has been important to be able to bring participants together in 2022 for multi-day in-person events. Going forward we expect the mix of different learning formats (e.g. live in-person, live remote, online self-study) to be more widely accepted. This allows us to create a learning environment that is effi- cient and robust in times of change and disruption, thus helping to maintain a sense of community and belonging for employees even in case of future lockdowns. 2022 Total training by the numbers Our priorities in Learning & Engagement for 2022 included: • Promote 4 Essential Roles of Leadership as the official SES lead- ership model: equip and encourage leaders at all levels of the organ- isation to build trust, create a vision for their team, support their team in getting things done, and coach and develop individuals • Promote Wellbeing: sessions on wellbeing, promote relevant tools such as Unmind and WellBeats • Company-wide push on Code of Conduct and other compliance trainings: improve the way these trainings are assigned and tracked, send systematic reminders, clarify roles and responsibilities, link to annual review • Redesign Leadership Development Programme: redesign the high potential programme as an integrated “series of experiences”, com- bining live online / offline / in-person learning • Support Strategic Initiatives: create / roll-out relevant learning in areas linked to company mission • Organize tailored learning for teams on demand: topic-based or pure teambuilding, sponsored by people managers • Provide weekly 90-minute Live Remote Learning sessions: offering relevant topics based on employee needs, internal delivery, “come as you are” Specifically related to ESG topics, for 2022 there are three key areas to highlight within Learning & Engagement The first is our continuing commitment to work with leaders at all levels to ensure employees throughout SES feel that they are valued members of a winning team, doing meaningful work in an environment of trust. This impacts many aspects of our learning activities, from the welcoming sessions (Induc- tion Days) we organise for all new hires to the way we train, evaluate and promote managers and leaders. The second area is the extensive redesign of the way compliance trainings, such as Code of Conduct or Anti-Harassment, are assigned, delivered and tracked. Our Learn- ing Management System has been upgraded to simplify and stream- line the process (see details below in the section on compliance train- ing). The third area is employee wellbeing, where 2022 has seen a broader adaptation of two online tools: Unmind to support employee mental health and Wellbeats as a fitness training App for all employ- ees. In addition, activities and initiatives related to employee well- being have been organized at a local level, especially in the US. SES had designed an SDG-ESG training workshop in 2022, SES imple- mented and trained employees on the UN SDGs and ESG principles with a targeted and focused training developed in-house to increase employee awareness regarding UN SDGs and ESG principles. The 29,819 Total participation 14 Trainings per person 28 Hours per person 57,999 Total Hours SES ANNUAL REPORT 202244 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION workshop explains why and how SES is incorporating ESG in the organisation with the aim to increase employee engagement in this area. These sessions were held on a bi-weekly basis during the first half of 2022. In total, more than 140 employees participated in the training and around 50 received a certification. Traditionally, trainings at SES are managed through a Learning Man- agement System (LMS) which enables employees to search and sign up for relevant courses, and to complete all hosted e-learnings. The LMS also serves for tracking attendance and maintaining training records. Over the past few years and especially since March 2020, SES has used a number of new formats for delivering learning expe- riences to employees in an easily accessible way, including some that do not allow easy integration with our LMS (e.g. videoconference ses- sions in TEAMS and company-wide videoconferences on our internal platform). The result of our decision to favor ease-of-access over detailed reporting capability has been that a large part of the learn- ing now happens outside the LMS, and while we are able to track and trace the participant numbers as well as the learning hours, this puts a limit on our ability to produce a full detailed report on the learning activities for different employee categories. The following numbers therefore only capture the part of the learning tracked in the LMS. Additionally, these numbers reflect only internal employees, and exclude any employee who left SES in 2022. Breakdown of learning activity by gender and age groups (Disclosure 404-1 Average hours of training per year per employee category) Learning activity by Gender By Hours By Participations % of employee population Women 28% 25% 25% Male 72% 75% 75% According to the data we have, participation in trainings is perfectly in line with the gender composition of our workforce. In terms of train- ing hours, women are slightly ahead of men. Learning activity by Age groups By Hours By Participations % of employee population Under 30 15% 15% 12% 30–50 64% 64% 62% Over 50 21% 21% 26% According to the data we have, the percentage distribution across the three age groups by hours is identical to that by participations. The under 30 group consumes slightly more on average, the over 50 a bit less, compared to their % of the employee population. Functional and technical training (GRI Disclosure 404-2 Programmes for upgrading employee skills and transition) Learning activities regarding employee skills at SES can be triggered either top-down (launched by management) or bottom-up (requested or initiated by the employee). Our key principles for managing these efforts and allocating the budget are as follows: • Everyone in the company has access to the SES&Me Learning page, as we are running L&E as a shared service. • Everyone in the company can in principle sign up for course in the SES learning calendar – classroom, remote, internal e-learning, or MOOC (external e-learnings). • Everything in the Learning calendar is paid for from the central L&E budget, no back-charging is done to the participants department or cost center. • Any manager can assign any training in the catalogue to someone in their team via the SES&Me Learning page. • Before attending external trainings, employees submit an “external request” in the SES&Me Learning page, approval is required from line manager and from L&E to allocate the budget. • External trainings and events organized for a specific department or team are charged to that area’s functional training budget. • Tuition assistance for graduate or post-graduate studies is availa- ble under certain conditions, but NOT a pre-approved entitlement. MAJOR REDESIGN OF COMPLIANCE TRAINING PROCESS IN 2022 All-SES employees are required to complete four mandatory trainings: General Data Protection Regulation (GDPR), Code of Conduct, Har- assment Prevention, IT Security Awareness Foundations. There are four additional mandatory trainings assigned based on an employee’s department/function: Sanctions, Anti-Bribery, and Export Compliance, and Antritrust. Because of the relevance of these topics for ESG, we are providing a brief description of each of them below. Major improvements in this area in 2022 include: 1. Automatic email reminders on overdue mandatory training 2. Compliance matrix to better align mandatory training with employee responsibilities 3. Automatic assignment of compliance training based on compli- ance matrix 4. Email notice to People Managers reminding them of their respon- sibilities re direct reports taking training 5. Mandatory performance objective (managers and employees) to complete training by the end of the year 6. Automatic on-boarding for external contractors into Learning Management System 7. PowerBI reporting on completion status of all compliance training These changes resulted in high compliance training completion num- bers for the employees in scope. While each course has a different completion rate, on average over 85% of the employee population is trained on all the courses with the highest completion rate for IT Security Awareness and GDPR at over 90% completion. SES ANNUAL REPORT 202245 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION GDPR In light of the General Data Protection Regulation (GDPR) across Europe, all SES employees are required to take an internal GDPR e-learning course to ensure colleagues are aware of, and compliant with, this important new data protection legislation. CODE OF CONDUCT The Code of Conduct e-learning is designed to create a thorough understanding of the key principles of our Code and also outline the process for reporting and potential violation of it. Adherence to our Code of Conduct and Ethics is vital for preserving the good reputa- tion of our company, which is one of SES’s most valuable assets. A major effort has been made to “translate” the code into language that resonates with our employees. HARASSMENT PREVENTION Our organisation’s commitment to Diversity & Inclusion means that every employee must understand the policies, procedures, and guide- lines as outlined in the Fair Employment Practices of the SES Code of Conduct. To deliver on this, The Harassment Prevention e-Learn- ing course is mandatory. IT SECURITY AWARENESS FOUNDATIONS For the effective protection of the company and its assets, it is imper- ative that all SES employees are aware of existing IT Security Aware- ness risks and threats, allowing them to sustain the highest level of vigilance at all times. SANCTIONS SES complies with all applicable sanction regulations. The SES Legal Department maintains an internal chart of sanctioned countries and employees need to be familiar with the relevant sanctions for every country, reaching out for advice from the Legal Department before engaging in any business that touches a sanctioned country, entity or person. In order to familiarise the employees with these respective rules, the Sanctions e-learning are mandatory for all SES employees. ANTI-BRIBERY To ensure that all SES employees comply with anti-bribery laws, it is mandatory for all employees to complete the Anti-Bribery e-learning. EXPORT COMPLIANCE Employees at SES must be able to recognise when they are dealing with hardware, software, technology/technical data or services sub- ject to export controls. Understanding what obligations they have when receiving, storing or transferring export-controlled hardware, software or technology/technical data is mandatory for all employees and covered in the Export Compliance training. ANTITRUST SES employees must be familiar with the anti-trust/competition laws that apply to SES’s business and the policies and procedures SES has implemented to help all employees comply. Employees learn to iden- tify red flags to look out for in interactions with competitors, vendors and customers and the steps they should take to avoid violating the law in this training. PERFORMANCE MANAGEMENT GRI DISCLOSURE 404-3 SES uses an Annual Performance Review (APR) process to manage and support employee performance, enabling managers to make more accurate decisions on promotion, succession, compensation, and employee evaluation. SES aims to drive employee development and engagement, align employee’s work with business objectives and hold employees accountable through continuous monitoring and feedback loops. Upon employee performance evaluation, SES sets critical areas of improvement and structures its learning and development initia- tives accordingly, targeting both hard skills that are required by ICT and space and telecommunications industries as well as soft skills that enhance employee personal development. SOCIAL MATTERS GIVING BACK TO OUR COMMUNITIES GRI 413 SES know that “making a difference” includes not only the work our company does through our products and services but also includes all the ways the company and our employees give back to our com- munities. From fundraising through the Global Giving Initiative to increasing employee engagement through the Giving Back Days, SES ensures that local community engagement and giving are embedded in its company culture. SES provides multiple routes for giving, some of which are corporate led initiatives and others are led and organised by our employees. SES ANNUAL REPORT 202246 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION CORPORATE LED INITIATIVES Ukraine The crisis in Ukraine touched SES in many ways. While our products delivered key content and connectivity to the country, we also felt effects of our employee base who worked there and wanted to give back to help. SES contributed to keeping Ukraine Connected through the Global NOG Alliance and donated 100,000 Euro to support the procurement of key hardware for providers in the country. Global Giving SES helps local communities by leveraging its Global community of giving. SES’ individual offices can nominate organisations or community opportunities that the entire SES population can support through fundraising. The aim is to mobilise the SES community to give donations or time for a local charity rather than to define projects for giving “in kind” or other corporate initiatives. SES choses the target organisation based on feasibility, overall impact, geographical dispersion, and levels of involvement offered (donations, volunteer- ing, fundraising, skills based virtual event, etc). Charitable Impact Gamers INC, SES Partnered with Charitable Impact Gamers, a nonprofit associa- tion that sponsors fundraising in support of their local community through gaming sessions streaming. This year they collected funds to support the Veteran Outreach Center (VOC). Our employees had the chance not only to assist the streaming sessions and donate but also to participate in a live session together with the volunteers of the association. Earth Day Through the entirety of Earth Month, we invited our colleagues to participate in 100 sustainable challenges ranging from household management to work habits, from supporting local charities to pro- moting environmental projects. The participants who earned the most points were invited to join our ESG Champion programme. Movember During the month of November, we encouraged our colleagues not only to raise funds for the cause of men’s mental and physical health, but to do so through a variety of sports, leisure and discussion activ- ities with colleagues. Employee Matching SES matches every donation of its employees on dollar-for-dollar basis (up to €1,000 per employee per year) and for the charities approved in the beginning of each year. SOCIAL FUND The Social Fund is intended to provide financial support to staff mem- bers and direct members of their families in case of unexpected social emergency situations, for which staff members or members of their families cannot be held responsible, which result in incommensurate financial costs not covered by social security or third-party coverage, and which lead to an unstable work or family situation. The purpose of the Social Fund is to provide a financial security net. SES has pro- vided an initial contribution of €50,000 to the fund in 2021. EMPLOYEE LED INITIATIVES Giving Back Days SES grants its employees two days per year paid leave to ‘give back’ to a cause that is important to them. Around 200 employees took advantage of at least one of the two giving back days made available by the company to enable them to participate in activities with a pos- itive social or environmental impact. The spirit of this initiative has been embraced by our employees to such an extent that they use these opportunities as team building activities such as clean-up, vol- unteering for animal shelters and helping organising local donation center warehouses. We also gave the most support possible to the activities carried out individually by our employees, encouraging their promotion in our internal communication channels. These initiatives ranged from solidarity rides in support of medical-scientific research to expeditions in support of local communities in remote areas of developing countries. Our approach was to support these projects as financially as possible, to promote internal outreach, and to encour- age all employees to get involved in those projects that were close to their colleagues’ hearts. SHARITY SHARITY is an employee led charity designed to support small scale local development projects globally, (examples include but not lim- ited to funding a local village school or medical centre). Employees fund projects by donations and SES matches up to $1,000 per pro- SES ANNUAL REPORT 202247 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION ject. SES chooses the projects to support based on projects’ ties to SES employees or locations in which SES has offices; charities favour- ing education & health, protection of children, protection of minori- ties, women’s rights; environmental and sustainable development causes; strict political and religious independence; traceability of the donated funds; geographical diversity (local and global); and mini- mum management fees of the elected charities and projects. During 2022 Sharity supported a project in Ukraine and Zambia. The first donation collection we launched in March 2022 supported Ukranian refugees while the second, in December, was aimed to support edu- cational projects in Zambia. We collected a total of 3,382 EUR that were matched by SES. ETHICS Integrity, compliance, and legal responsibility are the cornerstones of our sustainable governance and serve as the basis for all our actions. Our governance objectives and their management are part of our cor- porate governance system and are represented in the targets and remuneration of our Directors and Executives. SES is committed to conducting its business in compliance with all applicable laws and regulations observing the highest standards of business ethics. CODE OF CONDUCT GRI 103-204 We define compliance as trust-based, reliable, and sustainable corporate governance derived from ethical values. The Board of Direc- tors is responsible for compliance with the law and the company’s policies and seeks the same level of compliance from all SES sub- sidiaries and employees. To manage and address compliance risk, we have implemented a Compliance Committee and a Code of Conduct which defines our everyday business conduct, offers employees advice, and helps them make the right decisions even in difficult business situations. SES’ Code of Conduct explains that unethical behaviours are not accept- able at SES and the potential sanctions for such behaviours. It includes our stance on: Information and Cyber Security policies, Bribery and Facilitation, Political Activities, Sanctions, Export Controls, Competi- tion/Antitrust, Anti-Money Laundering, Intellectual Privacy, Antiboy- cott, Insider Trading, Conflicts of Interest, Fair Employment, Harass- ment, Contractors and Agents, Data Protection, Fundamental Rights, Environment, Health and Safety, Social Media, it is binding and applies to all employees without discrimination. Our Compliance Committee, composed of designated Compliance Officers in each main corporate location, is tasked with raising the staff’s awareness of the Code of Conduct. The Committee meets reg- ularly to discuss important topics or issues. Reflecting the company’s expansion into developing markets, the composition of the Commit- tee includes representatives from SES’ offices in Asia, the Middle East, and Latin America. SES has implemented a mandatory compliance training programme for staff as detailed in the training section of this report. WHISTLE BLOWING SYSTEM SES has implemented a whistleblowing hotline, managed by a third- party provider, which allows our staff to file any compliance complaints in full confidence. In addition to its internal ethical mechanism, SES demands high ethical standards from its business partners and sup- pliers to ensure trust with the external stakeholders including cus- tomers, governments, and investors. HUMAN RIGHTS Respect for human rights is a natural prerequisite for responsible business management at SES and we are committed to acting in accordance with international initiatives and standards such as the Fundamental Conventions of the International Labour Organisation, the UN Universal Declaration of Human Rights and the UN Guiding Principles on Business and Human Rights. We expect all employees to be proactive in protecting human rights so that violations can be ruled out entirely when it comes to our company’s business activities. All forms of modern slavery, forced child labour, exploitation and dis- crimination are explicitly prohibited by SES. SES will not do business with any person or entity that engages in any form of modern slavery. This is a value that is highlighted in our Code of Conduct and inserted into legal documents with suppliers, partners, and customers. We do not see any elevated risk of child or forced labour at any of our SES locations or in our activities. SES was also not aware of any cases of human rights violations within the scope of its own business activities during the reporting period. STATEMENT ON SLAVERY AND HUMAN TRAFFICKING All forms of modern slavery, forced child labour, exploitation and dis- crimination are explicitly prohibited by SES. SES will not do business with any person or entity that engages in any form of modern slavery. This is a value that is highlighted in our Code of Conduct and inserted into legal documents with suppliers, partners and customers. We do not see any elevated risk of child or forced labour at any of our SES locations or in our activities. SES was also not aware of any cases of SES ANNUAL REPORT 202248 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION human rights violations within the scope of its own business activities during the reporting period. SES is committed to ensuring that there is no modern slavery or human trafficking in its supply chains or in any part of its business and adheres to international initiatives and standards such as the Fundamental Conventions of the International Labour Organisation, the UN Universal Declaration of Human Rights, and the UN Guiding Principles on Business and Human Rights. SES will not support or deal with any business knowingly involved in slavery or human trafficking. The nature of SES’ business means that the majority of SES’ suppli- ers are large international companies providing complex technical services relating to the space industry through highly skilled profes- sional employees. Our 50 largest suppliers account for approximately 80% of procurement spending. SES does not procure a material amount of goods or services in sec- tors that are considered high risk for human trafficking or slavery (such as agriculture or horticulture, construction, textiles, catering and restaurants, domestic work, and entertainment). SES Code of Conduct for Suppliers clearly outlines SES’ stance towards slavery and human trafficking. SES also includes in its con- tracts with suppliers a clause requiring the supplier to comply with all laws applicable to the provision of the goods or service. SES’ con- tracts with its suppliers also contain a provision stating its suppliers cannot novate or subcontract any right or obligations to any third party without the written consent of SES. This statement is made pursuant to Section 54 of the Modern Slavery Act 2015 of the UK and sets out the steps SES has taken to ensure that slavery and human trafficking is not taking place in our supply chains or in any part of our business. Please find the full document on the ESG Governance section of the SES website. ANTI-CORRUPTION/BRIBERY GRI 204 SES takes a zero-tolerance approach to bribery and corruption in all forms and will uphold all laws relevant to countering bribery and corruption in all the jurisdictions in which it operates. SES employee must never offer, attempt to offer, authorise or promise any pay- ment or any kind of other service to anyone for any purpose, which cannot find adequate justification in the context of the contractual relationship established with them. Neither SES employee must solicit or accept a bribe, kickback, or any offer, promise, gift, pres- ent or benefit whatsoever that could be perceived as such. SES also expect the same from our suppliers, business partners and third parties we retain or that perform services or deliver business on our behalf. Bribery and corruption will never be accepted in any form. This prohibition includes offering or paying of facilitation payments to public officials to speed up or obtain routine public actions. SES is committed to respecting the highest ethical and legal stand- ards, set out in our Code of Conduct, on which all our employees are trained. We have identified bribery and corruption as one of the risks that SES is facing by doing business in most countries around the world, including with governments. As part of compliance training, the most exposed staff members were given anti-bribery training. We are also conducting external due dili- gence on our third-party agents upon their appointment. The level of this due diligence depends on the risk assessment, which itself is based on several elements, including the country of operation and the type of business. We also reduce the risk of bribery through a clear process for gifts and entertainment. The relevant policy, which like all compliance pol- icies is available on a dedicated intranet page, contains a dedicated e-mail address that can be used to obtain guidance prior to providing or accepting a gift or entertainment. CYBERSECURITY GRI 418 The robust management of data protection and data security is essential, in our opinion, to secure the long-term confidence of our stakeholders. To ensure compliance with data protection laws and regulations, SES appointed a Data Protection Officer. SES has implemented a variety of measures, has reviewed, updated, and enacted relevant procedures and processes, and continuously strives to comply with the General Data Protection Regulation (GDPR). SES has implemented technical and organisational security measures to protect networks and systems from cyber-attacks. As part of con- tinual organisational improvement and in line with its commitment to strengthening cyber security, management has introduced a security SES ANNUAL REPORT 202249 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION framework in accordance with the leading industry standard ISO 27001 in key areas. This framework is continually adapted to new threats considering global organisational changes, security controls and practices within the group to reduce the risks of cyber-attacks. Employee training and education is an important piece to maintain security on our networks. SES provides Information Security training over a 2-year cycle and has 90% staff completion rate for users in scope 2022. In addition, SES performed complementary communica- tions and activities during 2022 to raise staff awareness on cyber security threats and foster good reflexes to protect SES and it’s ser- vices from cyber security threats. Activities performed during 2022 comprise simulated phishing emails, security quiz and an organisa- tion-wide presentation on cloud security. As COVID-19 brought new ways of working, our operations team evolved to ensure that our customers can continue to rely on us for critical content delivery and connectivity services, we have imple- mented and maintained a business continuity management system in accordance with the ISO 22301-2019 international standard as well as best practice guidelines from the International Organisation for Standardisation and approved by the European Committee for Stand- ardisation. We operate fully redundant and geographically agnostic Satellite Operations and Networks Operations Centre systems to ensure the seamless operations of our customer services and satellite fleets. Our fully tested operational continuity plans ensure we have 100% confi- dence that our teams can operate the satellites and support opera- tions remotely should the need arise. SUPPLY CHAIN MANAGEMENT The purchasing functions within SES are carefully managed by a ded- icated Vendor Management and Procurement team. SES places great emphasis on the design of its procurement processes, keeping in mind the obligations to applicable laws as well as our responsibility for sus- tainable practices. Our suppliers adhere to a Supplier Code of Con- duct and Supplier General Terms and Conditions (GTCs) which out- lines SES’ expectations with regards to insider trading, conflicts of interest, bribery, sanctions, export compliance, competition, money laundering, child labour and slavery and human trafficking. In 2022, SES updated our General Terms and Conditions as well as our supplier code of conduct to reflect ESG values and algin with our goals for positive impact across our value chain. SES utilises a third party Corporate Responsibility Supply Chain assessment tool to gain additional visibility into the risks and vulner- abilities of our supply chain. Through the Supply chain sustainability programme we will be building additional outreach measures to ensure compliance of the supply chain on these critical issues. SES ANNUAL REPORT 202250 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION REPORTING STANDARDS APPENDIX not have adequate insight into their network. We provide an ena- bling technology. Additionally, even though it does not specifically mention our NACE code, we investigated taxonomy category “Programming and broad- casting activities contribution to climate adaptation” as that descrip- tion specifically mentions that the broadcasting can be done “via satellite”. After looking at this description we concluded that we do not create content and are not the distributor of the content. Our customers are responsible for that piece of the value chain. We do not have insight into the % of turnover for our customers related to climate adaptation and any reporting of a figure would be estimated with a wide margin of error. UN GLOBAL COMMUNICATIONS ON PROGRESS SES is proud to have joined the UN Global Compact in 2021. We have our full Communication of Progress for 2022 on our ESG reporting page. EU TAXONOMY SES has undertaken an initial evaluation of its associated economic activities against those identified by the EU Taxonomy as required by the Delegated Act of Article 8 of the Taxonomy Regulation. SES analysed the relevance of Article 8 of the EU taxonomy regulation to our business and our need to report. We evaluated the taxonomy based on NACE code. According to our NACE code of J61.300 satellite telecommunications is not specifically listed. However, the broader NACE code J61 Telecommunications is mentioned. We investigated the areas where NACE code J61 was applicable on the taxonomy compass and found it in activity: “Data Driven solution for GHG emissions reductions”. The description lays out that this applies to “ICT solutions that are aimed at collecting, transmitting, sorting data and its modelling and use where those activities are predominantly aimed at the provision of data and analytics enabling GHG emission reductions”. We do transmit data in our services but the aim is not at the provision of data and analytics enabling GHG emission reductions. Our customers might be doing this but we do SES provides details on its ESG performance and impact through quantitative and qualitative data provision to different sustainability reporting initiatives. These reporting initiatives include Global Report- ing Initiative, Sustainability Accounting Standards Board, United Nations Global Compact – Communication on Progress, and Non- Financial Reporting Directive. Through these initiatives, SES can pro- vide an in-depth and transparent data to external stakeholders and breakdown several aspects of its ESG policies that the Annual ESG Report does not fully capture. GRI INDEX SES has structured this report in line with the GRI reporting stand- ard. For a full index of disclosures, please follow this link to the reporting section of our website. We are continuously improving our reporting and are looking forward to expanding our disclosures in future years. SASB DISCLOSURES SES has provided SASB disclosures on the reporting section of our website. We have disclosed according to the “telecommunications sector” and are evaluating if additional disclosures should be consid- ered in the following years. SES ANNUAL REPORT 202251 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NON-FINANCIAL STATEMENT The following information is provided in compliance with the Non- Financial Reporting Directive requirements. The table below sets out where the relevant information can be found in this Annual Report. Non-financial Statement Disclosures in the relevant Chapters of the Report Reporting Requirement Policies/Information Relevant Information GRI Index cross reference Business Model • Business Model ›› page 6 • Strategic Priorities ›› page 6 GRI 101, 102, 103, 401, 405 Environmental Matters • Environmental Policy • Fleet Management and Lifecycle Management • Carbon disclosure Project • Waste Management Policy • Corporate Responsibility ›› page 66 • Ambitions and Purpose ›› page 24 • Climate Action ›› page 29 • Space Sustainability ›› page 27 GRI 102, 103, 302, 305, 306 Social Matters • Procurement Policy • Giving back initiatives • Disaster relief programmes • Customer Heartbeat (satisfaction, voice) and perception studies • Critical Human Needs ›› page 39 • Ambitions and Purpose ›› page 45 • Governance section ›› pages 53-71 • Social Matters ›› pages 45-47 GRI 102, 103, 413 Employee Matters • Health and Safety Policy • Flexible working policy • Social Fund Policy • Training and development • Diversity • Diversity and Inclusion ›› page 33 • Ambitions and Purpose ›› page 41 • Employee Matters ›› page 41 GRI 102, 103, 401, 403, 404, 405 Human Rights • Vendor policy / supply chain policy • Code of conduct • Human Rights policy • Ambitions and Purpose ›› page 47 • Governance section ›› pages 53-71 • Corporate Governance / Chairman Report ›› page 53 • Ethics ›› page 47 GRI 102, 103 Anti-corruption and Bribery • Supplier Code of Conduct • Group Wide Code of Conduct • Whistleblowing Hotline • Compliance Guidelines • Ambitions and Purpose ›› page 48 • Corporate Governance ›› page 53 • Ethics ›› page 69 GRI 102, 103, 205 Principal Risks and impact from Business Operations • Shift in consumer trends • Customer dissatisfaction • Liquidity risks • Regulatory risks • Principal Risks and Uncertainties ›› pages 71-73 • Governance section on Managing Risks ›› page 71 • ESG ›› pages 24-50 Non-financial Key Performance Indicators • Employee turnover, diversity ratio • Employee training • Technical reach and TV channel count • Net Promotor Score • Service availability • CO 2 emission • Employee Matters ›› pages 41-45 • Operational and Strategic report ›› pages 4-22 • Operating our Business ›› page 41 • Climate Action ›› page 29 Corporate Governance 53 Shareholder structure 54 Chairperson’s report on Corporate Governance 56 Board of Directors & Committees 63 Senior Leadership Team (SLT) 66 Internal control procedures 71 Principal risks Remuneration Policy & Report 74 Remuneration policy 79 Remuneration report CORPORATE GOVERNANCE & REMUNERATION 3 SES ANNUAL REPORT 202253 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION CORPORATE GOVERNANCE SHAREHOLDER STRUCTURE SES has been listed on the Luxembourg Stock Exchange since 1998 and on the Euronext Paris Stock Exchange since 2004. Shareholder Structure as of 31 December 2022 SES Shareholders Number of Shares Voting participation Economic Participation Registered shares 3,633,881 0.65% 0.82% FDRs (free float) 361,258,166 66.015% 81.04% FDRs held by SES 6,565,553 0.00% 1.68% 1 Total A Shares 371,457,600 66.67% 83.33% BCEE 60,614,724 10.88% 5.44% SNCI 60,607,161 10.88% 5.44% Etat du Luxembourg 64,506,915 11.58% 5.79% Total B Shares 185,728,800 33.33% 16.67% Total shares (actual) 2 557,186,400 100.00% 100.00% Total shares (economic) 2 445,749,120 1 At 31 December 2022, SES held 6,565,553 FDRs for the purpose of its employee option programme. SES does not exercise voting rights. 2 On 28 September 2022, SES proceeded to a reduction of the share capital by voiding 12,000,000 Class A shares/FDRs and 6,000,000 Class B Shares. The Company has issued two classes of shares: A-shares and B-shares. Each share is entitled to one vote. One B-share carries 40% of the economic rights of an A-share. The ratio of A-shares to B-shares must be maintained at 2:1 as required by the Articles of Incorporation. A-SHARES A-shares are held by private and institutional investors. The listed security is the Fiduciary Depositary Receipt (“FDR”), listed on the Luxembourg and Euronext Paris Stock Exchanges. Each of these is backed by one A-share and has all the rights attached to that share, except the right of attending the general meetings of share- holders. In order to attend a general meeting, at least one registered share must be held. Voting rights may be exercised by notifying the Fiduciary (Banque et Caisse d’Epargne de l’Etat) of the voting intention. B-SHARES The State of Luxembourg holds a direct 11.58% voting interest in the company. Banque et Caisse d’Epargne de l’Etat and Société Nationale de Crédit et d’Investissement each hold a direct 10.88% voting inter- est in the Company. These shares constitute the Company’s B-shares. A B-share has 40% of the economic rights of an A-share or, in case the Company is dissolved, is entitled to 40% of the net liquidation proceeds paid to A-shareholders. The B-shares are not listed on any exchange and do not back a tradable security. SES ANNUAL REPORT 202254 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION CHAIRPERSON’S REPORT ON CORPORATE GOVERNANCE The Company follows the ‘Ten Principles of Corporate Governance’ adopted by the Luxembourg Stock Exchange (its home market), as last revised in December 2017. SES meets all the recommendations made by the ‘Ten Principles’. SES also complies with the governance rules for companies listed in Paris, where the majority of the trading in SES FDRs takes place. In the instance of conflicting compliance requirements, SES follows the rules of the home market. ORGANISATION PRINCIPLES Created on 16 March 2001 under the name of SES GLOBAL, SES was incorporated in Luxembourg. On 9 November 2001, SES became the parent company of SES ASTRA, originally created in 1985. A copy of SES’ articles of incorporation, in its latest version, is available in the corporate governance section of the Company’s website. THE ANNUAL GENERAL MEETING OF SHARE- HOLDERS Under Luxembourg company law, the Company’s annual and / or extraordinary general meetings represent the entire body of share- holders of the Company. They have the widest powers, and resolutions passed at such meetings are binding upon all shareholders, whether absent, abstaining from voting or voting against the resolutions. The meetings are presided over by the Chairperson of the Board or, in his absence, by one of the Vice Chairpersons of the Board or, in their absence, by any other person appointed by the meeting. Any RESTRICTIONS ON OWNERSHIP No A-shareholder may hold, directly or indirectly, more than 20%, 33% or 50% of the Company’s shares unless he has obtained prior approval from the meeting of shareholders in accordance with the procedure described here below. Such limit shall be calculated by taking into account all the shares held by the A-shareholder. A shareholder or a potential shareholder who envisages to acquire by whatever means, directly or indirectly, more than 20%, 33% or 50% of the shares of the Company (a ‘demanding party’) must inform the Chairperson of the Board of the Company of such intention. The Chairperson of the Board will inform the government of Luxem- bourg of the envisaged acquisition. The government may oppose the acquisition within three months from such information if it determines that such acquisition would be against the general public interest. In case of no opposition from the government of Luxembourg, the Board shall convene an extraordinary meeting of shareholders which may decide at a majority provided for in article 450-3 of the law of 10 August 1915, as amended, regarding commercial companies, to authorise the demanding party to acquire more than 20%, 33% or 50% of the shares. If the demanding party is a shareholder of the Company, it may attend the general meeting and will be included in the count for the quorum but may not take part in the vote. INFORMATION EXCHANGE IN REGARD TO CORPORATE GOVERNANCE The Company communicates transparently with its shareholders via the corporate governance section of its website and through the dedicated e-mail address shareholders@ses.com. In line with Luxem- bourg law, the Company allows shareholders to receive all corporate documentation, including the documents for shareholder meetings, in electronic format. In this context, the SES website contains a regularly updated stream of information, such as the latest version of the Company’s main governance documents, including the articles of incorporation, the corporate govern- ance charter (including the charters of the various committees set up by the Board) and the separate sections on the composition and the mission of the Board, the Board’s committees and the Executive Committee 1 . The SES website also contains the SES Code of Conduct and Ethics, the SES Dealing Code, the financial calendar and any other informa- tion that may be of interest to the company’s shareholders. INVESTOR RELATIONS SES’ dedicated Investor Relations function reports to the Chief Finan- cial Officer and works closely with the CEO. Its purpose is to develop and coordinate the group’s external financial communications and interactions with equity and debt investors, investment analysts, credit rating agencies, financial journalists and other external audiences, to monitor stock market developments, and to provide feedback and recommendations to the SES SLT. The Head of Investor Relations is responsible for the definition and execution of SES’ active Investor Relations programme and partici- pation in investor conferences and similar events. Investor Relations also works closely with the Chief Legal Officer to ensure that the group’s external communications are compliant with all applicable legal and regulatory requirements. The SES Investor Relations team will be pleased to assist existing or potential shareholders with any questions they may have in relation to SES. Further, the SES IR Website contains information on all recent financials, analyst coverage, financial calendar and Company news, and is updated on a regular basis. 1 The Executive Committee is internally called the Senior Leadership Team (SLT). Therefore, going forward the term SLT will be used instead of Executive Committee. SES ANNUAL REPORT 202255 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION shareholder who is recorded in the company’s shareholder register 14 days before the meeting is authorised to attend and to vote at the meeting. An A-shareholder may act at any meeting by appointing a proxy (who does not need to be an A-shareholder). The annual general meeting (‘AGM’) is held on the first Thursday in April at 10:30 am CET. Each registered shareholder receives written notice of the AGM, including the time of the meeting and the agenda, at least 30 days prior to the meeting. Holders of the company’s FDRs are represented at the meeting by Banque et Caisse d’Epargne de l’Etat acting as fiduciary. Each FDR represents one A-share. If a holder of FDRs wishes to attend the AGM of shareholders in person, that shareholder needs to convert at least one FDR into an A-share prior to the AGM. Notice of the meeting and of the proposed agenda is also published in the international press. The fiduciary circulates the draft resolu- tions to both international clearing systems, Clearstream and Euroclear, allowing FDR holders to give their voting instructions to the fiduciary in time for the meeting. At the same time, the draft resolutions are made available on the Company’s and on the fiduciary’s website. Unless the fiduciary has received specific instructions from the FDR holder, the fiduciary votes in favour of the proposals submit- ted by the Board. One or more shareholders owning together at least 5% of the shares of SES have the right to add items on the agenda of the AGM and may deposit draft resolutions regarding items listed in the agenda or proposed to be added to the agenda. This request needs to be made in writing (via mail or e-mail) and received no later than the twenty-second day preceding the AGM and needs to include a justification or draft resolution to be adopted at the AGM. The writ- ten request must include a contact address to which the Company can confirm receipt within 48 hours from the receipt of the request. No later than fifteen days preceding the AGM, the Company then publishes a revised agenda. The meeting may deliberate validly only if at least half of the A-shares and at least half of the B-shares are represented. In the event that the required quorum is not reached, the meeting will be reconvened in accordance with the form prescribed by the articles of incorpora- tion. It may then validly deliberate without consideration of the number of represented shares. The proceedings are mostly held in English, but a French translation is provided by the Company. Interventions in English retranslated into French. An English and a French version of the AGM minutes and the results of the shareholders’ votes published on the SES website within 15 days after the AGM. With the exception of the procedure described above regarding when- ever an A-shareholder intends to hold more than 20%, 33% or 50%, all the resolutions of the meeting are adopted by a simple majority vote except if otherwise provided for by Luxembourg company law. In 2022, the AGM was held on 7 April. Still taking a prudent approach and following the recommendations from the government in the context of the COVID-19 pandemic, shareholders who had expressed an interest to attend the meeting were asked to give a proxy to the Chairperson of the Board and/or the Company’s outside legal counsel, and to vote on the resolutions ahead of the meeting. The AGM itself was transmitted via Webex. Shareholders were further invited to send their questions ahead of the meeting, although additional questions were asked during the meeting. The AGM was attended by 95.34% of the Company’s shareholders, excluding the 7,281,652 FDRs held by SES as well as the 12,000,000 FDRs and the 6,000,000 Class B Shares held by SES Astra on behalf of SES. All resolutions submitted to the shareholders were approved by comfortable majority votes. The detailed results of the shareholders’ votes are available on the SES website Shareholder information. In 2022, an EGM was also held on 7 April 2022, immediately following the AGM with the purpose to authorise a share capital reduction and voidance of the 12,000,000 FDRs and 6,000,000 Class B Shares held by SES Astra on behalf of SES. The EGM was attended by 95.27% of the company’s shareholders, excluding the 7,281,652 FDRs held by SES as well as the 12,000,000 FDRs and the 6,000,000 Class B Shares held by SES Astra on behalf of SES. All resolutions submitted to the shareholders were approved by comfortable majority votes. The detailed results of the shareholders’ votes are available on the SES website Shareholder Information. SES ANNUAL REPORT 202256 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION BOARD OF DIRECTORS & COMMITTEES AS OF 31 DECEMBER 2022 FRANK ESSER Chair of the Board JACQUES THILL Director DR JENNIFER BYRNE Director CARLO FASSBINDER Director PETER VAN BOMMEL Chair of the Audit and Risk Committee & Vice-Chair of the Board RAMU POTARAZU Director FRANÇOISE THOMA Chair of the Remuneration Committee ANNECATHERINE RIES Chair of the Nomination Committee & Vice-Chair of the Board KAJERIK RELANDER Director KATRIN WEHRSEITER Director SES ANNUAL REPORT 202257 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION BOARD OF DIRECTORS & COMMITTEES The Board of Directors is responsible for: • Defining the Company’s strategic objectives as well as its overall corporate plan; • Approval, upon proposal from the Senior Leadership Team of the annual consolidated accounts of the Company and the appropriation of results, the group’s medium-term business plan, the consolidated annual budget of the Company and the management report to be submitted to the meeting of shareholders; approval of major invest- ments and responsible vis-à-vis shareholders approval third parties for the management of the Company, management which it delegates to the SLT in accordance with the company’s internal regulations. • As of 31 December 2022, the Board is comprised of 10 members of which 6 are considered independent. 1 MEMBERS OF THE BOARD AS OF 31 DECEMBER 2022 Frank Esser Chair of the Board • Frank Esser became a director on 11 February 2020. He was elected as Chair of the Board for the first time on 2 April 2020. • He is the former Chair and CEO of SFR, the leading private French Telecom Operator. In this function he also served as Board Member of Vivendi Group. Prior to joining SFR, Mr Esser held several managerial positions with Mannesmann group. He also serves as Vice-Chair of Swisscom. • He is a member of the Nomination Committee and of the Remu- neration Committee of SES. • Mr Esser holds a PhD in Managerial Economics and an MS in Economics both from the University of Cologne. • Mr Esser is a German national. He is an independent director. Anne-Catherine Ries Vice-Chair of the Board Chair of the Nomination Committee • Mrs Ries became a director on 1 January 2015 and was elected as Vice-Chair of the Board for the first time on 4 April 2019. • Mrs Ries is currently First Government Advisor to the Prime Minister and Minister for Media and Telecommunications in Luxembourg, in charge of media, telecom and digital policy. Prior to this appoint- ment in 2019, her focus over the last two decades has consistently been on developing the tech and digital innovation ecosystem in Luxembourg, i.a. through the launch of the “Digital Luxembourg” initiative in 2014. She joined the Luxembourg civil service after starting her professional career at an American law firm in Paris. • Mrs Ries holds a law degree from the University of Paris II and the University of Oxford, and a postgraduate LL.M degree from the London School of Economics. • Mrs Ries is the Chair of the Nomination Committee and a member of the Remuneration Committee of SES. • Mrs Ries is a Luxembourg and French national. She is not an independent director because she represents an important share- holder. Peter van Bommel Vice-Chair of the Board Chair of the Audit and Risk Committee • Mr van Bommel became a director on 2 April 2020 and was elected as Vice-Chair of the Board for the first time on 7 April 2022. • Mr van Bommel was Chief Financial Officer and member of the Board of Management of ASM International from August 2010 until May 2021. • He has more than twenty years of experience in the electronics and semiconductor industry. He spent most of his career at Philips, which he joined in 1979. • He sits on the Board of Aalberts, Nedap, Bernhoven Foundation and the Amsterdam Business School, where he is the Chair of the EMFC Curatorium. In the past he was also a Director of several other listed companies a.o. KPN in the Netherlands. • Mr van Bommel holds an MSc in Economics from Erasmus University in Rotterdam. • Mr van Bommel is the Chair of the Audit and Risk Committee, and a member of the Remuneration Committee of SES. • Mr van Bommel is a Dutch national. He is an independent director. Dr Jennifer Byrne • Dr Jennifer Byrne became a director on 7 April 2022. • Dr Byrne enjoyed a successful 25-year career at Lockheed Martin from 1993 to 2018. In her final role with Lockheed Martin as VP, Space and Missile Systems, she managed a team of 8,000 people. She had responsibility for leading the design, development, operation and sustainment of Civil Space, Military Space, Commer- cial Space, Strategic Missile Defence and Special Programs platforms. Dr Jennifer Byrne moved to London in 2018 to take up her current role as COO of G-Research, which is a quantitative research and technology business. • She has a B.S. in Mathematics and Biochemistry from the Univer- sity of Dallas, an M.S.E. in Computer Applications in Systems Engineering from Temple University and holds a Ph.D. in Systems Engineering from George Washington University. • Dr Byrne is a member of the Nomination Committee of SES. • Dr Jennifer Byrne is a US national. She is an independent director. 1 Serge Allegrezza and Tsega Gebreyes were Board members up to the AGM on 7 April 2022, Béatrice de Clermont-Tonnere was a Board member until 24 October 2022. SES ANNUAL REPORT 202258 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Carlo Fassbinder • Mr. Carlo Fassbinder became a director on 7 April 2022. Mr Fass- binder has 25 years of experience in the field of taxation, finance and accounting and is Director of tax at the Ministry of Finance since 2017. He advises the finance minister on tax policies and tax treaties, and assists in the preparation of the Council meeting (ECOFIN). From 1997 to 2017 he worked in the tax department of BGL BNP Paribas where he was Head of Tax Retail & Corporate Banking since 2011. Mr. Fassbinder is also a board member of Société Electrique de l’Our. He holds a Maîtrise en droit des affaires from Robert Schuman University in Strasbourg and a Magister Legum (LL.M.) in tax law from Ludwig Maximilians University in Munich. • Mr Fassbinder is a member of the Audit and Risk Committee of SES. • Mr. Fassbinder is a Luxembourg national. He is not an independent director because he represents an important shareholder. Ramu Potarazu • Mr Potarazu became a director on 20 February 2014. • He was the CEO of Binary Fountain. He is the Founder and former CEO of Vubiquity. • Prior to founding Vubiquity, Mr Potarazu spent 15 years in various positions at Intelsat (1991–2006). He became Intelsat’s Vice President of Operations and CIO in 1996 and its Vice President, Commercial Restructuring in 2000. In 2001 Mr Potarazu became President of Intelsat Global Service Corporation and from 2002 to 2006 he was President and Chief Operating Officer of Intelsat Ltd. Prior to joining Intelsat, Mr Potarazu held several engineering positions. • Mr Potarazu graduated with a BS in Computer Science and in Mathematics from the Oklahoma Christian University. He also holds an MSc in Electrical Engineering from the John Hopkins University and was a member of the Stanford Executive Program. • He is a member of the Remuneration Committee of SES. • Mr Potarazu is a US national. He is an independent director. Kaj-Erik Relander • Mr Relander became a director on 6 April 2017. • Mr Relander worked for the Finnish National Fund for Research and Development prior to joining Sonera Corporation where he held several management positions, including the position of CEO. He left Sonera in 2001 to join Accel Partners, a private equity and venture capital group before joining the Emirates Investment Authority in 2009 where he was a member of its Investment and Management Committee. Since 2014, he has been a private investor and board director. • Mr Relander graduated from the Helsinki School of Economics with an MSC in Economics. He also holds an MBA from the Helsinki School of Economics having completed part of it at the Wharton School, University of Pennsylvania (USA), and studied also for a PhD at the Wharton School and the Aalto University, Helsinki. • Mr Relander is a board member of the sovereign wealth fund of ADQ and ADGM, Abu Dhabi Global Markets, Louis Dreyfuss Com- pany and Acino. He is Chair of the Investment Committee at the private equity fund Apis.pe and a board director of Starzplay Ara- bia. • He is a member of the Audit and Risk Committee and of the Nomination Committee of SES. • Mr Relander is a Finnish national. He is an independent director. Jacques Thill • Mr Thill became a director on 2 December 2021. • Mr Thill currently serves as First Government Advisor to the Prime Minister and Coordinator at the Luxembourg Prime Minister’s Office. Since 2018 he is also the Government Delegate to the State Intelligence Service. Mr Thill joined the Luxembourg diplomatic service in 2004 and has represented Luxembourg in numerous bi- and multi-lateral negotiations. His diplomatic career includes postings to the Luxembourg Permanent Representation to the United Nations in New York and to the Luxembourg Embassy in Moscow, as well as to the EU High Representative for the Common Foreign and Security Policy at the Council of the European Union in Brussels. From 2009 to 2013, Mr Thill served as diplomatic advisor to the Prime Minister. In 2013, he was appointed Deputy Secretary General of the Luxembourg Government, before becoming Secretary General of the Luxembourg Government until June 2020. From 2015 until 2021, Mr. Thill served as member of the Board of Directors of LUXGOVSAT S.A. • Mr Thill holds a Master in European and International Law from the Paris 1 Panthéon-Sorbonne University and an MA in European Political and Administrative Studies from the College of Europe in Bruges where he specialised in European Competition Law and European Foreign Policy. • Mr Thill is a member of the Nomination Committeeof SES. • Mr Thill is a Luxembourg national. He is not an independent director because he represents an important shareholder. SES ANNUAL REPORT 202259 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Françoise Thoma Chair of the Remuneration Committee • Ms Thoma became a director on 16 June 2016. • Ms Thoma is President and Chief Executive Officer of Banque et Caisse d’Epargne de l’Etat, and a member of the Boards of Directors of Cargolux International Airlines S.A., Luxair S.A., the Luxembourg Stock Exchange and of Enovos Luxembourg S.A. • She was a member of the Luxembourg Council of State from 2000– 2015 and holds a PhD in Law from the Université de Paris II Panthéon-Assas and an LL.M. from Harvard Law School. • Ms Thoma is the Chair of the Remuneration Committee and a mem- ber of the Audit and Risk Committee of SES. • Ms Thoma is a Luxembourg national. She is not an independent director because she represents an important shareholder. Katrin Wehr-Seiter • Mrs Wehr-Seiter became a director on 1 January 2015. • She is a Managing Director of BIP Investment Partners SA and a Managing Director/Partner of BIP Capital Partners. • Prior to joining BIP, she served as a Principal at global investment firm Permira and worked also as an independent strategy consultant as well as a Senior Advisor to international private equity group Bridgepoint. She started her professional career at Siemens AG where she held various positions in strategy consulting and engineering. She serves as a director of Bellevue Group, Meyer Burger Technology and several non-listed corporations. • Mrs Wehr-Seiter holds an MBA from INSEAD and an MSc in Mechanical Engineering from the Technical University of Chemnitz. • Mrs Wehr-Seiter is a member of the Audit and Risk Committee and of the Remuneration Committee of SES. • Mrs Wehr-Seiter is a German national. She is an independent director. MISSION AND COMPOSITION As of 31 December 2022, the Board of SES is composed of 10 non-ex- ecutive directors, four of them female. In accordance with the Company’s articles of association, two-thirds of the board members represent the holders of A-shares and one-third of the board members represent the holders of B-shares. The mandates of the current directors will expire at the AGM of share- holders in April 2023, 2024 and 2025 respectively. In the event of a vacancy on the Board, the remaining directors may, upon a proposal from the Nomination Committee and on a temporary basis, fill such a vacancy by a majority vote. In this case, the next AGM of shareholders will definitively elect the new director, who will complete the term of the director whose seat became vacant. In accordance with internal regulations adopted by the Board, at least one-third of the board members must be independent directors. A board member is considered independent if he or she has no relationship of any kind with the company or management that may impact his or her judgment. Independence for these purposes is defined as: 1. not having been an employee or officer of the company over the previous five years; 2. not having had a material business relationship with the company over the last three years; and 3. not representing a significant shareholder holding more than 5% of the voting shares directly or indirectly. As of 31 December 2022, six of the board members are considered independent: Jennifer Byrne, Katrin Wehr-Seiter, Frank Esser, Ramu Potarazu, Kaj-Erik Relander and Peter van Bommel. The four current directors proposed by the B-shareholders are not considered independent as they represent a significant shareholder owning more than 5% of the company’s shares. Thai Rubin, Chief Legal Officer, is the Board Secretary. He is supported by Mathis Prost, Senior Manager, Legal Services Corporate and Finance, as Assistant Secretary to the Board of Directors. In the context of the Board composition, the SES Nomination Com- mittee will consider a diverse Board as adding value to the Company, not limiting diversity to gender diversity, but also considering, as far as possible, professional background, experience and age diversity. RULES OF GOVERNANCE The Board of Directors meets when required by the Company’s busi- ness, and at least once per quarter. It can only validly deliberate if a majority of the directors are present or represented. The resolutions of the Board are passed by a simple majority of the votes of the voting directors present or represented, not considering abstentions. The Chairperson does not have a casting vote. Any material contract that is proposed to be signed by the Company or any of its wholly controlled operating subsidiaries with a share- holder owning at least 5% of the shares of the Company, directly or indirectly, is subject to a prior authorisation by the Board. In 2022, there were no transactions between the Company and a shareholder owning at least 5% of the company’s shares, nor were there any other transactions involving a conflict of interest for any of the directors. SES ANNUAL REPORT 202260 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION ACTIVITIES OF THE BOARD OF DIRECTORS IN 2022 The Board of Directors held six physical meetings and four extraor- dinary Board calls in 2022, with an attendance rate of more than 95%. In accordance with the sanitary measures related to the COVID-19 pandemic, meetings were held under relevant sanitary control meas- ures, allowing virtual attendance for Board members unable to attend in person. After endorsement by the Audit and Risk Committee, the Board approved the 2021 audited accounts, the dividend and the financial results for the first half of 2022. The Board approved the final version of the 2023 Budget and the 2023–2027 Business Plan. It also reviewed the Strategic Plan and held a detailed Strategic Session in June 2022. On that occasion and throughout the year, Management briefed the Board on the latest industry trends and the resulting strategic implications for SES. The Board approved the investment in a replacement satellite on orbital position 57 degrees East thus ensuring continuity of service on an important position for SES. The Board also approved the acqui- sition of DRS Global Enterprise Services, a leading provider of inte- grated satcom solutions for the US Government, followed by the com- bination with the existing and SES Government Solutions business resulting in a best-in-class and scaled solutions provider to the US Government. With regard to the Company’s corporate governance, the Board dissolved the Strategic Committee, of which only one meeting was held in 2022. A Strategic Taskforce is set up each year on a tempo- rary basis, composed of several board and management members, in order to assist with the preparation of the Board’s yearly strategy discussion day. During 2022, the Board also decided to enter into a new liquidity agreement with a service provider to be implemented in 2023 and executed on the Euronext Paris based on the decision taken during the AGM of shareholder on 7 April 2022. The Board was regularly updated on the development of the major projects and it noted updates on the company’s risk management report. The Senior Leadership Team (SLT) regularly informed the Board about the group’s activities and financial situation. The Board noted updates on: (i) the execution of the Strategic Plan; (ii) the 2022 Business Objectives; (iii) the impact of COVID-19 on the Company’s business as well as its staff; and (iv) the Company’s continued corporate simplification program which resulted in an important further reduction of the corporate footprint in 2022. At each meeting, directors receive a report on ongoing matters and the Chairpersons of the committees set up by the Board present a report on the latest developments discussed in these respective com- mittees. In addition, a business report is distributed to the members of the Board on a regular basis. As a result of the last Board evaluation exercise and in-keeping with best practice, each Board meeting concludes with a restricted session, without the presence of Management. BOARD GOVERNANCE STRUCTURE & COMMITTEES The Board agenda is prepared in close cooperation between the Chairperson, the Vice-Chairpersons and the CEO. The committees consist of five to six members, at least a third of whom are independ- ent board members in line with SES’ internal regulations. The Audit and Risk Committee assists the Board in carrying out its oversight responsibilities in relation to corporate policies, risk manage- ment, internal control, internal and external audit and financial and regulatory reporting practices. It further proceeds to the evaluation of potential deals, including financial due diligence, risk assessment and financing options before submission to the Board. It has an oversight function and provides a link between the internal and external auditors and the Board. It determines the ESG Targets of the Company and monitors progress towards the accomplishment of the ESG Targets. The Remuneration Committee assists the Board on the determination of the remuneration of the members of the Senior Leadership Team (SLT) and advises on the overall remuneration policies applied throughout the Company. It acts as administrator of the Company’s long-term equity plans. The Nomination Committee identifies and proposes suitable candi- dates for the Board of Directors, for election by the AGM of sharehold- ers. Proposals are based on submissions from shareholders for a num- ber of candidates at least equal to the number of posts to be filled for each class of shareholders. It also identifies and proposes suitable candidates for the SLT. SES ANNUAL REPORT 202261 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SECRETARY OF THE BOARD OF DIRECTORS NOMINATION COMMITTEE REMUNERATION COMMITTEE AUDIT AND RISK COMMITTEE • Chair: Peter van Bommel • Carlo Fassbinder • Kaj-Erik Relander • Françoise Thoma • Katrin Wehr-Seiter • Chair: Françoise Thoma • Anne-Catherine Ries • Peter van Bommel • Frank Esser • Ramu Potarazu • Katrin Wehr-Seiter • Chair: Anne-Catherine Ries • Jennifer Byrne • Frank Esser • Kaj-Erik Relander • Jacques Thill • Thai Rubin CHAIR OF THE BOARD: FRANK ESSER VICECHAIRS OF THE BOARD: PETER VAN BOMMEL, ANNECATHERINE RIES MEETINGS AND ATTENDANCE RATE IN % 4 meetings 90% 3 meetings and 3 calls 94% 4 meetings and 2 calls 91% COMMITTEES OF THE BOARD as of 31 December 2022 SES ANNUAL REPORT 202262 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION THE AUDIT AND RISK COMMITTEE • Reviewed the 2021 financial results before their submission to the Board and their subsequent approval by the shareholders at the statutory AGM. • Reviewed the H1 2022 financial results of the Company. • Reviewed the Company’s statement on internal control systems prior to its inclusion in the annual report, approved the Internal Audit plan, and received bi-annual updates on the Internal Audit activities and on the follow-up of the major recommenda- tions. It also reviewed the 2021 PwC Management letter. • Proposed to the Board and to the shareholders to appoint PwC as external auditor for 2022 including its proposed com- pensation. • Received quarterly updates on risk management from the SES risk management committee and was briefed on ongoing compliance matters. • Reviewed WACC parameters for remuneration purposes, cus- tomer credit risk and collection and of the Treasury Roadmap. • After each meeting, the Board is briefed in writing about the work of the Audit and Risk Committee. • Received updates on ESG targets and implementation plan. • Reviewed the Company’s Budget and Business Plan • Evaluated the DRS Global Enterprise Services acquisition project, including financial due diligence, risk assessment and financing options. THE REMUNERATION COMMITTEE • Matters addressed related to the determination of the bonuses and the vesting of performance shares allocated to the members of the SLT for their performance in 2021. • Adoption of the 2022 corporate business objectives, which are used as one element in the determination of 2022 bonuses for SLT members. • Review and proposal of the remuneration packages for new SLT members. • Review and proposal of the 2022 long term equity grants for SLT members. • Inclusion of ESG targets as a metric to determine vesting of Performance Shares for SLT members. • Proposed to review and adjust the Remuneration Policy. The proposal has been approved by the Board and by the Ordinary Shareholder Meeting. • After each meeting, the Board is briefed in writing about the work of the Remuneration Committee. THE NOMINATION COMMITTEE • Discussed the size and the composition of the Board. • It also discussed the renewal of existing directors and the appointment of new directors, conducted interviews and proposed to the Board a list of candidates for election by the shareholders in April 2022. • Discussed the future structure of the Executive Committee and was involved in its implementation in close cooperation with the CEO. • Instigated a deep dive on Talent Management and reviewed Executive Committee Succession Planning. • After each meeting, the Board is briefed in writing about the work of the Nomination Committee. ACTIVITIES OF THE COMMITTEES IN 2022 SES ANNUAL REPORT 202263 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SENIOR LEADERSHIP TEAM (SLT) STEVE COLLAR Chief Executive Officer, Chair of the SLT JOHN BAUGHN Chief Services Officer JOHNPAUL HEMINGWAY Chief Strategy and Product Officer SANDEEP JALAN Chief Financial Officer CHRISTOPHE DE HAUWER Chief Development Officer RUY PINTO Chief Technology Officer THAI RUBIN Chief Legal Officer PANOREA MACDONALD Chief People Officer SES ANNUAL REPORT 202264 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SENIOR LEADERSHIP TEAM (SLT) The SES Executive Committee is known as the Senior Leadership Team (SLT): • It is in charge of the daily management of the group. • It functions as a collegial body. • It is mandated to prepare and plan the overall policies and strate- gies of the company for approval by the Board. • It may approve intra-group transactions, irrespective of the amount, provided that they are consistent with the consolidated annual budget of the company, as well as specific transactions with third parties provided that the cost to SES does not exceed €10 million per transaction. • It informs the Board at its next meeting of each such transaction, it being understood that the aggregate amount for all such trans- actions can at no time be higher than €30 million. Members of the SLT are appointed by the Board of Directors upon a proposal from the Nomination Committee. Steve Collar Chief Executive Officer, Chair of the SLT • Appointed in April 2018. • From 2017 to 2018 he was CEO of SES Networks. • Prior to SES, he was CEO of O3b Networks, and has profound expe- rience in a variety of commercial, business development and tech- nical roles at SES WORLD SKIES, New Skies Satellites, Astrium and Matra Marconi Space (now Airbus). • Holds a degree in Mechanical Engineering from Brunel University in London. • Mr Collar is a British national. Sandeep Jalan Chief Financial Officer • Appointed in May 2020. • He has 30 years of experience in financial and operational leader- ship roles across Asia and Europe. He was until most recently the CFO of Aperam, a global leader in the stainless, electrical and spe- cialty steel industry, a role he held since 2014. Previously, he worked for the ArcelorMittal Group since 1999 where he held various roles including the CFO of ArcelorMittal Long Carbon Europe and was part of the M&A team responsible for numerous acquisitions in both steel and mining. He was also the CFO & Company Secretary for Ispat Alloys Ltd from 1993 to 1999. • He is a Commerce Graduate from Banaras Hindu University (BHU), Chartered Accountant (equivalent to CPA) and Company Secretary from the respective Institutes in India. He has also completed an Executive Education Programme on Leadership at the London Busi- ness School and an Executive Education program on Strategic Finance at IMD, Lausanne. • Mr Jalan is an Indian national. Panorea Macdonald Chief People Officer • Appointed in July 2022. • Prior to SES, she worked in senior HR leadership roles for technol- ogy companies such as Sun Microsystems, Hewitt, Motorola and GE in the US, Canada, UK, Africa, Dubai, Saudi Arabia, Grece and Singapore. • Holds an MBA from York University in Canada, numerous HR and coaching qualifications. • Mrs Macdonald is a Greek and Canadian national. John-Paul Hemingway Chief Strategy and Product Officer • Appointed on 1st January 2022 as Chief Strategy and Product Officer. • Prior to that he served as CEO of SES Networks and prior to that, he served as the Executive Vice President, Product, Marketing and Strategy of SES Networks where he led Product Management, Marketing, Business Development and Corporate Strategy. • Before SES acquired O3b and formed SES Networks, he was Chief Marketing Officer for O3b Networks. • Prior to that, he held a variety of senior management roles in the networking industry within Ciena, Corning Cables, and Netscient. • Holds a PhD in Optical Communications and a BSc (Hons) from Manchester Metropolitan University, UK. • Mr Hemingway is a British national. SES ANNUAL REPORT 202265 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Christophe De Hauwer Chief Development Officer • Appointed as Chief Development Officer on 1st January 2022. • Prior to that he served as Chief Strategy and Development Officer. • Member of the Board of SES ASTRA. • Having joined SES in 2003, he held several positions of responsi- bility in the areas of Strategic Marketing, Strategic and Business Planning and Corporate Development, as well as Fleet Development and Yield Management. • Prior to joining SES, he worked in the Strategy Consulting practice of the European Telecommunication and Media Industry with Arthur Andersen. • Holds an Engineering and a PhD Degree from the Université Libre de Bruxelles. • Mr De Hauwer is a Belgian national. Ruy Pinto Chief Technology Officer • Appointed in January 2019. • Since 2017, he had been the Deputy Technology Officer and took on the additional role of Chief Information Officer (CIO) at SES in 2018. • Between 1990 to 2016 he was working for Inmarsat where he covered various technical and managerial roles, such as CTO and Group Chief Operations Officer (COO). • Prior to that he was Chair of UKSpace, and Director and VP of Space for the Association of Defence, Security and Aerospace Companies (ADS) and Non-Executive Director of the Space Application Catapult. • Holds a degree in Electronics Engineering and completed post-graduate studies in Digital Telecommunications Systems, both from the Rio de Janeiro Catholic University (PUC-RJ). • Mr Pinto is a dual British and Brazilian national. John Baughn Chief Services Officer • Appointed in January 2019. • Since 2017, he had been Executive Vice President, Global Services at SES Networks. • He joined SES Networks from O3b Networks, where he led the Global Services team, driving service strategy. • Between 2008 and 2015, he was VP Global Services at Ciena, and has a vast Telco experience included leadership roles in Motorola. • Holds an MBA from the University of Warwick. • Mr Baughn is a British national. Thai Rubin Chief Legal Officer • Appointed in July 2020. • Prior to that, he was the General Counsel of O3b Networks where he was as a key member of the leadership team, guiding the com- pany to its successful commercialisation before it was acquired by SES in 2016. • In addition to holding multiple senior leadership roles within SES, he served as General Counsel at New Skies Satellites, guiding it to a public listing on the NYSE in 2005 and its acquisition by SES in 2006. • Before joining SES, Mr Rubin worked at PanAmSat Corporation. • Holds a Bachelor of Science degree from the University of Wiscon- sin, Madison and a Juris Doctor from Howard University School of Law in Washington, D.C. • Mr Rubin is a US national. RESPONSIBILITIES OF THE SENIOR LEADERSHIP TEAM • The SLT may approve any external credit facilities or external guar- antees, pledges, mortgages and any other encumbrances of the Company, or any wholly-owned affiliate, for as long as the Company will not lose its investment grade rating as a result of such facility or guarantee. • It may approve increases of up to 5% in the capital expenditure budget for a satellite procurement already approved by the Board, it being understood that the Internal Rate of Return will need to comply with certain specific thresholds defined by the Board. The SLT informs the Board at its next meeting of each such increase. • The SLT submits those measures to the Board that it deems nec- essary to be taken in order to meet the purposes of the Company. Prior to the beginning of each fiscal year, the SLT submits to the Board a consolidated budget for approval. • The SLT is in charge of implementing all decisions taken by the Board and by the committees specially mandated by the Board. The SLT may, in the interests of the Company, sub-delegate part of its powers and duties to its members acting individually or jointly. • The CEO organises the work of the SLT and coordinates the activ- ities of its members, who report directly to him. In order to facilitate the implementation by the Board of its overall duty to supervise the affairs of the Company, the CEO informs the Chair of the Board on a regular basis of the Company’s activities. The latter receives the minutes of all meetings of the SLT in due time. SES ANNUAL REPORT 202266 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION INTERNAL CONTROL PROCEDURES OBJECTIVES AND PRINCIPLES The Board of Directors has the overall responsibility for ensuring that SES maintains a sound system of internal controls, including financial, operational and compliance controls. Such a system is an integral part of the corporate governance strategy of SES S.A. (‘the Company’) together with its subsidiaries and affiliates (‘the Group’). Internal control procedures help to ensure the proper management of risks and provide reasonable assurance that the business objectives of the Company can be achieved. The internal control procedures are defined and implemented by the Company to ensure the following objectives in the table below: Internal Control Objectives Compliance of actions and decisions with applicable laws, regulations, standards, internal rules, and contracts Safeguarding efficiency and effectiveness of operations and the optimal use of the Company’s resources Correct implementation of the Company’s internal processes, notably those to ensure the safeguarding of assets Integrity and reliability of financial and operational information, both for internal and external use Ensuring that management’s instructions and directions are properly applied Ensuring that material risks are properly identified, assessed, mitigated, and reported OBJECTIVES Like all control systems, internal controls cannot provide an absolute guarantee that all risks have been totally mitigated or eliminated. CONTROL ENVIRONMENT SES has adopted a robust internal control framework based on a set of guidelines prepared by the Committee of Sponsoring Organisations of the Treadway Commission (‘COSO’). This framework applies to both the Group’s regular satellite business activities as well as to the specific and dedicated C-band spectrum clearing activities taking place in connection with the FCC Report & Order dated 3 March 2020. The framework provides reasonable assurance that the internal con- trol objectives are being achieved; it is also consistent with the refer- ence framework proposed by the French securities regulator, the Autorité des Marchés Financiers (‘AMF’). The Board has delegated the design, implementation, and mainte- nance of a rigorous and effective system of internal controls to the Company’s Senior Leadership Team, which in turn works closely with the other levels of management in establishing control policies and procedures. SES has implemented an organisational structure with defined responsibilities, competencies and reporting lines that provide the framework in which internal controls are being executed and controlled to meet the Company’s objectives. Policies and procedures are regularly reviewed and are updated when required. These policies and procedures apply to all employees and officers of the Group, and where appropriate, to its directors as well as to other groups. A Delegation of Authority Policy is in place, and is regularly updated, providing the rules for the internal approvals and external execution that are required to authorise any external commitment of the Company. The main SES functions and processes are electronically documented using a centralised Business Process Management software to ensure information is designed collaboratively and shared across the company. To improve operations, SES is standardising its process mapping using an end-to-end business process framework. This framework is designed to ensure control and strategic alignment across the business, while capitalising on the standards of the telecom industry. The internal control procedures described here are complemented by information concerning employee matters, mandatory trainings and ethics provided in the ESG Report. SES ANNUAL REPORT 202267 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION RISK MANAGEMENT SES adopted a risk management framework based on principles proposed by COSO and ISO31000. A Risk Management Group is in place representing SES key functions which is responsible for the adequate reporting of the Company’s risks and the implementation of the risk management policy and procedures. Risk Management Structure Delegation / Monitoring Risk Report Designated Risk Representatives of key SES functions A dedicated Risk Management Team facilitates and coordinates the reporting process and assists the Risk Management Group with the assessment of risks. The Risk Management Group reports to the Senior Leadership Team which in turn reports to the Board, which has the ultimate responsibility for oversight of the Company’s risks and for ensuring that an effective risk management system is in place. The risk management policy is regularly reviewed and updated by the Risk Management Team. Each reported risk is categorised, assessed by the risk owners, and reviewed by the Risk Management Group. Key risk developments are periodically reported to the Senior Leadership Team, the Audit and Risk Committee and the Board. INTERNAL CONTROL ACTIVITIES Satellite operations • The operational procedures for satellite control and payload management cover manoeuvres and configuration changes required in nominal situations as well as in the case of technical emergencies. The controllers are trained and certified in the execution of such procedures which are periodically reviewed and updated. Satellite control software is being used and fully validated electronic procedures for station-keeping and other regular operations are being applied across the entire SES fleet. • SES has designed satellite contingency and emergency response process, crisis management systems, supporting infrastructure and tools to address satellite in-orbit anomaly situations at an appropriate management level. SES applies industry-standard incident management, escalation, and reporting processes to provide effective and timely support to customers. • SES has adequate satellite control primary and backup capabilities utilising the European and US-based Satellite Operations Centres (‘SOCs’). SOCs can take over the operations of the other in an emergency with the fail-over procedure being tested regularly. SOCs can also be controlled remotely from any other dedicated location via secure internet connection if the situation would require it. • A corporate policy dealing with satellite insurance is in place and regularly updated reflecting the SES Board approved insurance structure and approval framework. Most of the launch and in-orbit insurance activities of the group are managed through SES’ insur- ance and reinsurance captive companies based in Luxembourg. Both companies are regulated and managed in accordance with the European Solvency II directive and are therefore subject to strict supervision and governance rules detailed in the companies’ RISK MANAGEMENT GROUP OVERALL IMPLEMENTATION OF THE RM POLICY & PROCEDURES BOARD OF DIRECTORS (BOD) OVERALL RESPONSIBILITY FOR RM SENIOR LEADERSHIP TEAM (SLT) RESPONSIBLE FOR THE RM AT THE MANAGEMENT LEVEL AUDIT AND RISK COMMITTEE (ARC) OVERSIGHT OF RM PROCESS STRATEGY & DEVELOPMENT GLOBAL SERVICES SES NETWORKS SES VIDEO FINANCE TECHNOLOGY HUMAN CAPITAL LEGAL & REGULATORY RISK MANAGEMENT TEAM INCL. RISK MANAGEMENT COORDINATOR SES ANNUAL REPORT 202268 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION governance manuals. ‘In-orbit Third Party Liability’ insurance is placed directly to the market, i.e., not using the captives. Such insurance covers all SES in-orbit satellites in compliance with licencing and other regulatory requirements in the various jurisdic- tions where SES operates. • For SES infrastructure redundancy, adequate backup capabilities are implemented. Global services operations • Global Services is responsible for the operation and management of the customer-facing network, video services and content operations including the maintenance and oversight of systems and network components supporting SES customer traffic and video services. • The monitoring and operational procedures address static state as well as anomalous states of network operations. All engineers are trained in the execution of such procedures which are periodically reviewed and updated. SES uses multiple tools and software to manage and monitor the network and these tools have redundancy enabled in the event of a systemic anomaly. • Network operations and payload management is performed in Network Operations Centres (‘NOCs’) mainly located in US and Europe. Video operations centres are in Israel and Europe. SES has instituted disaster recovery procedures and handover to other sites is possible and regularly tested. • SES applies industry-standard incident management, escalation, and reporting processes to provide effective and timely support to customers. Commercial operations • A Master Service Agreement (‘MSA’) forms the basis for the contractual relationship with our customers. Deal specifications and commercial terms and conditions are outlined in a Service Order (‘SO’) which will be subject to the general terms and conditions of the underlying MSA. • Most SES customer contracts follow this MSA-SO structure for which standard templates exist. Any negotiation of the terms and conditions of the MSA or SO are subject to commercial legal review. • Customer contract and order management follows predefined workflows which are embedded in a customer relationship management (‘CRM’) tool. Appropriate segregation of duties is ensured while individual workflow steps and tasks are subject to approval from the various sales, finance, legal operations, and service representatives. • Deal pricing for satellite capacity as well as for Network and Video products generally bases on approved rate cards which are linked to the product catalogue and solution configuration tool of CRM. Pricing deviations from approved rate card are governed by an approval matrix with internal hierarchy. • The Group’s Credit & Collections policy defines the rules and principles related to customer credit risk management and cash collection and related revenue recognition as well as deposit and payments terms for a deal. Procurement operations • SES’ Technology Space Programmes department is responsible for the Space Infrastructure procurement including satellites and launch vehicles. • A Space Infrastructure procurement process, strategy and policy are in place to govern appropriate procedures such as the creation of Requests for Information and Requests for Proposal generation, satellite manufacturer selection, technical and commercial evalua- tions as well as legal review. • Detailed business plans are refined based on RFP responses and the endorsement of the SLT is required before the procurement proposal is presented to the Board for approval. • Procurement of Space Infrastructure (satellites and launch vehicles) is approved by the Board as a significant investment activity, and contracts are signed in accordance with delegation of authority. • Payments are made on the complete fulfilment of milestone require- ments in accordance with the Milestone Payment Plan defined in the contract Terms and Conditions. • The Vendor Management & Procurement (‘VMP’) function supports the business for non-satellite procurement, governed by a dedicated policy that sets the framework for an appropriate level of internal controls over purchasing. SAP is used to support the purchasing process with appropriate workflow rules for approvals and the segregation of duties. Contracting with a vendor can be done either by a Purchase Order (“PO”) incorporating SES’s General Purchas- ing Terms and Conditions or a separate contract which is subject to legal review prior to the issuance of a PO. Each PO needs workflow approval in line with SES’ Delegation of Authority Policy. The requester must ensure that the purchase is within the approved budget. Certain types of purchases – such as capital expenditure and major cost of sales projects – require dedicated budget controls to ensure that sufficient budget is allocated and available before finalising the purchase. • The supply chain function within VMP optimises and streamlines the exchange of goods or services covering demand planning, logistics and warehouse management. Controls are in place to ensure effective workflows, an efficient use of resources, and compliance with regulatory obligations such as shipment and customs documentation. Financial operations and reporting • Appropriate accounting and financial reporting policies and procedures are in place, regularly reviewed and updated for business developments and regulatory changes. • Staff involved in the Group’s accounting, consolidation and report- ing are appropriately qualified, trained and are kept up to date with relevant changes in both national requirements and in International Financial Reporting Standards (‘IFRS’). • Controls have been established in the processing of accounting transactions to ensure appropriate authorisations, an effective segregation of duties, and the complete, timely and accurate recording of financial information. This control framework continues to be enhanced through the implementation of additional work- flow-based controls and validations. Risk-based monitoring controls are implemented for key SAP control configurations and transac- SES ANNUAL REPORT 202269 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION tions. Specific controls are in place, such as monthly reviews and data validation procedures, to ensure the correct and timely recognition of revenues. • Treasury activities are centrally managed within a framework approved by the Board, and which reflects the Group’s current Treasury Policy. Appropriate segregation of duties, including the assignment of bank mandates between members of SES manage- ment, Treasury, and accounting departments, is in place. Specialist software helps ensure the efficiency and control of foreign exchange transactions, interest and liquidity management, and the implemen- tation of SES’ hedging strategy for interest rate and foreign currency fluctuations. Furthermore, to ensure enhanced security and efficiency of the bank payments process, the Company uses a banking payments system which ensures secure authorisation and transfer of payment instructions from SAP to banks. • The main principles of SES’ tax risk management are laid down in the SES Tax Charter. Tax positions are analysed based on the most appropriate authoritative interpretations and reported in internal tax technical memos or tax opinions from external tax consultancy firms. Current and deferred tax liabilities are recorded in the Group’s accounts based on a key control framework that ensures full transparency and understanding of all underlying data and recon- ciliation between the important sources of information within the Tax and Accounting departments. A detailed tax accounting policy is in place. Transfer pricing documentation is continuously updated and improved including a master file, local files, and annual country-by-country reporting. Compliance operations • The Legal & Regulatory function provides legal support to all SES operational areas and is an integral part of corporate governance and supports all customer contracting activities and processes, procurement and vendor management activities as herein before mentioned. • The Legal & Regulatory function is also responsible for maintaining and improving SES’s compliance program. A Group-wide ‘Code of Conduct and Ethics’ (‘Code of Conduct’) was implemented to enable all employees, officers, and directors as well as other groups to take a consistent approach to integrity issues and to make sure that the Group conducts its business in compliance with all applicable laws and regulations and observes the highest stand- ards of business ethics. • SES implemented a Sales Agent Policy and developed a com- prehensive process and dedicated controls for ensuring SES representatives act with integrity. A dedicated team within the Legal Department conducts due diligence into and approves agent appointments. A Gift and Entertainment Policy is in place to provide rules and guidance for giving and receiving gifts and enter - tainment. • SES is committed to full compliance with competition laws. An Antitrust Compliance Policy and Guidelines have been implemented to inform employees of the scope of competition laws and how to do the best work for SES whilst complying with the law. • Regulatory leads the export control and sanctions compliance with laws, regulations, and policies. Controls and workflows have been established to interface with commercial and technical teams to ensure continued compliance with the growing needs associated with new products and services. • Dedicated training programmes are mandatory for employees (depending on the nature of their work) to ensure an appropriate understanding and awareness of compliance related matters. Information Technology • Management is committed to ensuring that SES’ data, infrastruc- ture, and information technology systems in the cloud and on SES premises are as secure as is reasonably and commercially practicable. Security controls, policies and procedures are in place to prevent unauthorised access to premises, computer systems, networks, and data. Policies and procedures are continuously being reviewed and updated. • SES applies an Information Security Management System (‘ISMS’) in line with the ISO 27001 standard which is subject to regular ISO 27001:2013 certification for the scope of data services deliv - ered through high-throughput GEO satellites. • The SES Azure Cloud Platform has been put in place with an adequately designed control environment, leading to an improved level of standardisation and harmonisation of the SES IT landscape. The Cloud Centre of Excellence programme with Microsoft has been completed and is fully operational and is facilitating standards setting and development of new products and platforms in the Cloud. The Cloud solution provides state-of-the-art backup facilities to ensure enhanced continuity of all Cloud-based systems. • All SES’ main trading operations operate on a centrally managed, Cloud-based SAP ERP platform, applying consistent processes, controls, and backup. A comprehensive SAP security policy has been defined and implemented. Appropriate SAP access manage- ment is in place and is continually monitored and enhanced. Segregation of duty principles and approval limits are defined and embedded in SAP workflows. • SES has disaster recovery plans for its business-critical infrastruc- ture. The regular testing of these activities confirms that SES is in a good position to recover all mission critical back-office applica- tions within its recovery time objectives. Electronic information is regularly backed up and tested. • A digital workflow process for managing information technology incidents and service requests is in place on a ServiceNow platform further enhancing the level of automation. Relevant key performance indicators are regularly reviewed. Information technology projects are managed and executed using agile methodology based on features and capabilities of Azure Development Operations. • SES ensures adequate and secure VPN connectivity and redun- dancy to cater for users working remotely. More applications continue to be progressively added onto our MS Multi-Factor authentication to protect against unauthorised access due to password theft or password guessing attacks. SES ANNUAL REPORT 202270 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION • A dedicated cybersecurity team is in place to help and guide SES management and business stakeholders to adequately secure SES systems, information assets and customer services. The cyberse- curity team follows a holistic approach towards cybersecurity by implementing a wide range of security control mechanisms and practices based on industry-leading standards, as well as cultivating a culture of awareness and caution throughout our organisation. INFORMATION AND MONITORING ACTIVITIES • The SES Internal Communication function ensures the effective circulation of information across the organisation and supports the implementation of internal control and risk management by communicating business and functional objectives, instructions and information pertinent to SES’s business activities. Timely and transparent information flow across all levels and functions of SES is managed via a wide array of internal communications channels ensuring that SES employees around the world have access to all information required to do their job most effectively and to take informed business decisions that are aligned with SES’s business priorities and strategic direction as well as with our identity and aspirational culture. • The Company relies on a comprehensive system of financial information and oversight. Strategic plans, business plans, budgets and the interim and full-year consolidated accounts of the Group are drawn up and brought to the Board for approval. • The Board also approves all significant investments and receives monthly financial reports setting out the Group’s financial perfor- mance in comparison to the approved budget and prior year figures. • In accordance with IFRS requirements, SES discloses detailed information on the market, credit, and foreign exchange risks to which it is exposed, as well as its strategy for managing those risks. • The Audit and Risk Committee (‘ARC’) is regularly updated on significant accounting and financial reporting, treasury, tax, and legal issues. • The complete and timely recording of financial information is ensured through regular reviews, the monitoring of specific key performance indicators, validation procedures by functional leaders and, as an additional check, the process of internal and external audit. • The external auditor performs a limited review of the Group’s interim condensed consolidated financial statements and a full audit of the annual consolidated financial statements. • SES’ Internal Audit function performs specific analyses of the relevance of, and compliance with, Company policies and internal control procedures in accordance with general accepted Internal Audit Standards issued by the Institute of Internal Audit (‘IIA’). The activities of the Internal Audit function are executed in accordance with an annual audit plan, which is reviewed and approved by the ARC. This plan is prepared in close cooperation with the company’s Risk Management Team to dynamically link it to risks and exposures that may affect the organisation and its operations. • Any material weaknesses in the system of internal controls identified by either internal or external auditors are promptly and fully addressed. Regular reports are provided to the Senior Leadership Team and to the ARC summarising conclusions regarding internal control effectiveness and compliance. • The proxy structure of the SES Government Solutions Inc. entity (a wholly-owned indirect subsidiary of SES S.A.) and its subsidiaries and affiliates (together, ‘the SES Government Solutions group’), in line with common practice for businesses serving certain segments of the US Government, imposes various restrictions on the SES Group Board and executive management in directly supervising the maintenance of an internal control system and imposing an internal audit structure. Hence the Group’s own Internal Audit function does not perform direct internal control reviews of the SES Government Solutions group, but rather has an agreement with the SES Government Solutions group’s management as to required levels of risk management and internal control. In recent years these procedures have been subject to evaluation and compliance testing by a third-party audit services provider, although this activity will likely be suspended for a period to allow the full integration of business operations of the original SES Government Services business and the DRS Global Enterprise Solutions business acquired on 1st August 2022. The Group’s external auditor is also engaged for the audit of the financial information provided by the SES Government Solutions group in the framework of the audit of the SES Group’s consolidated financial statements. SES ANNUAL REPORT 202271 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION PRINCIPAL RISKS SES identified the following potential risks, which could have a material and adverse effect on its business, financial condition and results of operation. This section does not purport to be exhaustive, but rather contains a summary of the main risks that SES may face during the normal course of its business. Where mitigations are mentioned in this STRATEGIC RISKS Competition The satellite communications business is increasingly competitive. SES competes with national, regional and international geostationary (GEO), non-geostationary (NGSO) and fixed and wireless terrestrial operators. The competition from NGSO systems is potentially the most disruptive trend facing SES. With strong financial backing, vertical integration and technological advancements, such competitors are planning to enter multiple markets targeted by SES. In addition, the trend towards horizontal and vertical consolidation poses the risk of leaving SES behind with a smaller, less powerful relative market position towards customers as well as suppliers. SES regularly evaluates potential partner or merger targets that fit with its strategy. Technology The satellite communications industry is subject to rapid technological change. As a result, the technology used by SES could become less suitable for customer requirements leading to a reduced service demand and a negative revenue impact. SES monitors such changes and regularly evaluates opportunities to invest into new technologies. Emerging Markets SES’ targets new geographical areas and emerging markets and is developing commercial arrangements with local communications, media and other businesses in these areas. SES may be exposed to political and other risks associated with such business. SES regularly evaluates and monitors conditions for conducting business in such areas and markets to ensure that such risks are identified and mitigated. Investment SES’ desired strategic investments may not yield expected benefits due to a number of factors including uncertain or changing market conditions, financing costs and legal and regulatory issues. ESG We recognise the effect ESG matters have on the company’s everyday activities and the importance of having a sound risk management approach around those matters. SES is committed to conduct its business in accordance with highest standard governance processes and in a sustainable and environmentally friendly way. Failure to do so may have an adverse effect on the company’s operation, financial results and reputation. SES is in a process of identifying and evaluating relevant ESG related risks and opportunities (including those related to climate) in order to ensure that necessary mitigating actions are in place. In view of complexity, and developing nature, of ESG related issues to be considered by the company, the above process includes engaging all relevant stakeholders and consulting external professional advisors. A number of such risks are closely linked to other areas covered in this section and are already being mitigated, for example, risks relating to in-orbit failures and cybersecurity. Details of company’s >> ESG strategy are provided in the Annual Report. OPERATIONAL RISKS Dependency on key supplier(s) Dependency on a small number of satellite manufacturers may reduce SES’ negotiating power and access to advanced technologies and result in increased satellite procurement risk (e.g., due to technical difficulties and design problems with a particular model of satellite). SES mitigates these risks by maintaining a full level physical presence and oversight at manufacturer facilities throughout the spacecraft design, construction and acceptance. SES monitors manufacturers’ supplier base and procurement sources and develops relationships with new suppliers where possible. SES is dependent on a limited number of launch service providers. As such, delays may be incurred in launching satellites in the event of a prolonged unavailability of service from a launch service provider. SES monitors developments on the launcher market, including those in respect to new launch service providers and new launch vehicles. section, there is no guarantee that such mitigations will be effective (in whole or in part) to remove or reduce the effect of a risk. SES defines risk as the possibility of a potential event, condition, action or inaction occuring and adversely affecting SES’ ability to achieve its business objectives.. SES ANNUAL REPORT 202272 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Launch delay(s) and launch failure(s) Launch delays are a possibility. Satellite launch and in-orbit insurance policies do not compensate for lost revenues and other consequential losses. SES attempts to mitigate the risk of delays by ensuring adequate margins in satellite procurement schedules. There is always a small but inherent risk of launch or early-orbit failure, resulting in a reduced satellite lifetime and/or functionality or the total loss of a satellite. SES mitigates such risks in several ways, including by technical risk management of each launch vehicle programme and asset insurance for each launch. In-orbit failure(s) A satellite may suffer in-orbit failures ranging from a partial impairment of its commercial capabilities to a total loss of the asset. Such failure may result in SES not being able to continue to provide service to some of its customers. SES attempts to mitigate this risk by careful vendor selection and high quality in-orbit opera- tions. For some services, SES is able to offer an in-orbit backup strategy in which customers using an impaired satellite may be transferred to another satellite. In addition, in respect of its GEO satellites, SES has restoration agreements with other satellite operators whereby customers on an impaired GEO satellite may be transferred to a GEO satellite of another operator in order to protect continuity of service. Cybersecurity SES’ operations may be subject to hacking, malware and other forms of cyber-attack. Due to the high sophistication of certain attackers and an increasing number of cyber-attacks, it may not always be possible to prevent every such event. SES has protections in place to help protect its systems and networks and continues to work to implement additional protective measures intended to limit the risks associated with such attacks. Space insurance coverage and availability SES maintains pre-launch, launch and initial in-orbit insurances, in-orbit insurance, and third-party liability insurance. These policies generally contain customary market exclusions and are subject to limitations. The insurance market has been seeing a reduced availability and significantly increased rates. This results in increased insurance premiums for SES. In order to mitigate these risks and optimise the coverage and premiums, SES maintains a policy of limited self-insurance through its captive entities. Personnel SES is competing for talent with satellite operators as well as large and well-known companies. In the context of low unemployment rates and a shortage of qualified candidates, SES may have difficulties in hiring competent talent. If SES is unable to source and retain key talent this could have a negative impact on SES’ ability to deliver its business objectives. To mitigate this risk SES uses a dedicated Talent Acquisition function to source high-quality candidates. Global Pandemic or other health emergency SES is subject to the risk of a global pandemic or other health emergency such as COVID-19. A material health emergency could affect availability of our employees and impact various areas of SES’ business including procurement and launch of satellites, entry into service of new satellites, procurement of ground infrastructure and provision of services to customers. SES has procedures and measures in place to respond to health risks and to secure business continuity during such situations. REGULATORY RISKS Legal and Regulatory SES’ operations and business are subject to compliance with the laws, regulations (e.g., communications, export control, sanctions, competition) and political will of the governmental authorities of the countries in which SES operates, uses radio spectrum, offers satellite capacity and services. Violations of any of the applicable laws and regulations could expose SES to penalties and other enforcement actions and may negatively affect commercial operations. SES may need to obtain and maintain approvals from authorities or other entities to operate its satellites and to offer satellite capacity and services. Failure to obtain the necessary approvals could lead to loss of revenues and compliance actions against SES. SES works to ensure that adequate compliance staff is in place and that all teams have the necessary technical and human resources to enable the company to comply with applicable laws and regulations. Spectrum The International Telecommunication Union (‘ITU’) and national administrations may reallocate satellite spectrum to other uses. In addition, national administrations are increasingly charging for access to spectrum through the use of fees and auctions. This may affect SES’ access to orbital locations and frequencies required for it to develop and maintain its satellite fleet and services. In addition, SES must coordinate the operation of its satellites with other satellite operators so as to prevent or reduce interference. As a result of such coordination, SES may be required to modify the proposed coverage areas or satellite design or transmission plans which may materially restrict satellite use. Similarly, the performance of SES’ satellites in some areas could be adversely affected by harmful interference caused by other operators to SES’ satellites. Operational issues such as satellite launch failure, launch delay or in-orbit failure might compromise access to the spectrum or orbital locations. SES’ large fleet may enable the relocation of in-orbit satellites to satisfy regulatory and spectrum requirements. SES ANNUAL REPORT 202273 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION RESPONSIBILITY STATEMENT The Board of Directors and the Executive Committee of the company reaffirm their responsibility to ensure the maintenance of proper accounting records disclosing the financial position of the group with reasonable accuracy at any time and ensure that an appropriate system of internal controls is in place to ensure the group’s business operations are carried out efficiently and transparently. In accordance with Article 3 of the Luxembourg law of 11 January 2008, as subsequently amended, on transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, we declare that, to the best of our knowledge, the annual statutory accounts as of and for the year ended 31 Decem- ber 2022, prepared in accordance with Luxembourg legal and regu- latory requirements, and the consolidated financial statements as of end for the year ended 31 December 2022, prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the year of SES taken individually, and of SES and its consolidated subsidiaries taken as a whole, respectively. In addition, the management report includes a fair review of the devel- opment and performance of the business and the position of SES taken individually, and of SES and its consolidated subsidiaries taken as a whole, together with a description of the principal risks and uncer- tainties that they face. 24 February 2023 Frank Esser Steve Collar Chair of the Board of Directors CEO FINANCE RISKS Credit rating SES’ credit rating can be affected by a number of factors, including a change in its financial policy, a deterioration of its financial credit metrics, a downgrade in the rating agencies’ assessment of the business risk profile or a change in rating methodology. A change in SES’ credit rating could affect the cost and terms of its newly issued debt, as well as its ability to raise financing. SES’ policy is to attain and retain a stable investment grade rating with two of the international reputable credit rating agencies (currently Fitch and Moody’s). Tax SES is subject to taxation in multiple jurisdictions and may become subject to unforeseen material tax claims, including late payment interest and / or penalties, and in some cases retroactive tax assessments. SES has implemented a tax risk mitigation charter based on, among other things, a framework of tax opinions for the financially material positions taken, transfer pricing policies, and procedures for accurate tax compliance in all jurisdictions. Asset impairment SES’ intangible assets, satellites and ground segment assets are valued at historic cost less amortisation, depreciation and accumulated impairment charges. The resulting carrying values are validated each year through impairment testing procedures where they are compared to the discounted present value of the future cash flows expected to be derived from the asset. Where future assumptions for a specific asset, as set out in the approved Business Plan, become less favourable, or the discount rates – or perpetual growth rate assumptions – applied to the future cash flows change, then this may result in the need for material asset impairment charges. Foreign exchange SES’ reported financial performance can be impacted by movements in the Euro / U.S. dollar exchange rate, as SES has significant operations, cash flows, assets and liabilities that are denominated in the U.S. dollar whereby the Group’s reporting currency is the Euro. To mitigate this exposure, SES may enter into forward foreign exchange or similar derivative contracts to hedge underlying foreign exchange exposures. Further details are provided in >> Note 19 to the consolidated financial statements. Interest rate SES’ exposure to the risk of changes in market interest rates relates primarily to SES’ floating rate borrowings as well as the renewal of its fixed rate borrowings. SES carefully monitors and adjusts the mix between fixed and floating rate debt from time to time, responding to market conditions. Interest rate derivatives may be used to manage the interest rate risk. Further details are provided in >> Note 19 to the consolidated financial statements. Key customer loss Bankruptcy and customer consolidation, amongst other reasons, can potentially result in loss of customers, non-renewals or reduction in the demand for services. SES aims for long contract terms with key customers based on strong relationships. Customer credit Failure by customers to fulfil payment obligations is a possibility. Credit risk may increase as SES and / or its customers increase dependency on revenues in emerging markets where credit risk may be higher. This risk is mitigated through a customer credit policy including credit checks, deposits or other forms of security, payment monitoring and credit insurance where possible. Further details are provided in >> Note 19 to the consolidated financial statements. SES ANNUAL REPORT 202274 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION REMUNERATION POLICY & REPORT PURPOSE AND SCOPE OF THE REMUNERATION POLICY The purpose of the present Policy is to describe the remuneration paid by the Company to the Directors and to the members of its Executive Committee (SLT members). It describes: • How it contributes to the Company’s objectives relating to its business strategy and long-term interests and sustainability; • The different components of remuneration, including all bonuses and other benefits in whatever form, if any, awarded to Directors and SLT members and indicates their relative proportion; • The duration of the contracts or arrangements with the Directors and SLT members, the applicable notice periods, the main charac- teristics of supplementary pension or early retirement schemes and the terms of, and payments linked to, termination; and • The decision-making process followed for the determination, review and implementation of the Policy, including measures to avoid or manage conflicts of interests and, where applicable, the role of the Remuneration Committee and the Board; • The procedural conditions under which any derogation from the Policy can be applied as well as the elements of the Policy from which a derogation is possible. THE REMUNERATION POLICY The Company must attract suitable Directors and SLT members to continue its success and remuneration is one of the enablers to fulfil this goal. Remuneration must reflect the degree of required qualifications and experience of the Directors and SLT members, the risks that they take personally, and honour the dedication and efforts that the Directors and SLT members put into the Company. The Remuneration must also be consistent when compared to remunerations for similar roles in other companies and be relative to the pay and employment conditions of the employees of the Company. REMUNERATION OF THE DIRECTORS The remuneration granted to Directors consists of a fixed annual fee, and a fee per Board or committee meeting attended as described below. All these fees are net of any Luxembourgish withholding taxes on directors’ fees. Board members do not receive any stock options, nor do they receive any bonus. Fixed remuneration per year The fixed component of the remuneration amounts to €40,000 per year whereas the Vice Chairpersons each receive an annual fixed fee of €48,000 and the Chairperson receives a fee of €100,000 per year. Any Director chairing one of the committees set up by the Board (if not the Chairperson of the Board) receives an annual fee of €8,000. The Chair of the Audit and Risk Committee (if not the Chairperson of the Board) receives an annual fee of €9,600. Remuneration per meeting Directors receive €1,600 for each Board meeting or Board committee meeting they attend, except for the Audit and Risk Committee for which a fee of €1,920 per meeting is paid. The terms of the Directors In general, the Company’s directors are elected for terms of three years. If a Director leaves the Board during his/her term, the Company may co-opt a Director to finish that mandate. A Director can be revoked at any moment by the shareholders. There is no notice period for a Director. The maximum tenure on the Board is limited to 12 years (generally four terms of 3 years each). The age limit of the Directors is set at 72 years. Any Director who reaches this age during his/her mandate will resign at the Annual General Assembly (AGM) following this date. REMUNERATION OF SLT MEMBERS The remuneration of SLT members comprises the following two major components: • The compensation package which consists of a Yearly base salary (“YBS”), Annual bonus (“AB”), and Long-term equity (“LTE”); and • The benefits including, but not limited to, company car or car allowance, pension and health care plans, and death and disability insurance. In line with the Charter of the Remuneration Committee of the Company, remuneration matters of the SLT members are decided by the Board after review and recommendations from the Remuneration Committee. Yearly Base Salary (“YBS”) The base salary of the CEO as well as of other SLT members is reviewed by the Remuneration Committee in its first ordinary meeting of the year. The Board has the sole authority, besides the legally required cost of living adjustments (i.e. Luxemburg index), to adjust the YBS of the CEO and other SLT members. SES ANNUAL REPORT 202275 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION For all new nominations as SLT member, remunerations are validated by the SES Board, on recommendations from the Remuneration Committee. They are made on the basis of external benchmarks provided by compensation consultants while also considering degree of qualification and experience required as well as employment conditions of employees at the time of the offer. Annual Bonus (“AB”) The main objective of the bonus plan for the CEO and other SLT members is to create a performance reward scheme, that links annual variable compensation to the Company’s financial results and its performance against specific business objectives established by the Board for each performance year. Through this plan, the Company ensures alignment and focus on the company’s core objectives. The AB of SLT members is based on the annual performance during the relevant calendar year, is assessed by the Remuneration Commit- tee and validated by the Board in February and paid in March of the following year. AB achievements (financial results and performance against business objectives) are reported in the annual Remuneration Report. The AB target for SLT members ranges from 80% of the YBS to 100% of the YBS for the CEO. The minimum pay-out can be as low as 0% of the AB (in other words no bonus payment), with a maximum pay-out capped at 150% of the bonus target. The AB of each SLT member is composed of two parts: • Financial performance (70% of the AB); and • Business objectives (30% of the AB). The financial performance measures the actual achievement compared with budget for the following set of metrics with their respective weights: Revenue (40%), EBITDA (40%) and net operating cash flow (20%). The budget targets for those measures are set during the annual budget process and finally approved by the Board. The financial performance pay-out is capped at 150% of the bonus target (for a 107% target achievement and for each of the three metrics separately) and with a performance threshold, below which no compensation is paid, set at 88% achievement and as shown below: Finance performance pay-out table The business objectives are set annually by the SES Board at the beginning of each year and are related to the strategic roadmap of the company. Achievement is measured at the end of each performance year by the Board, based on recommendations provided by the Remuneration Committee. The pay-out for business objectives can be as low as 0% and is capped at 150% of the bonus target. For confidentiality purposes, the details of the annual targets will be reported at the end of each performance year in the annual Remu- neration Report. Long-Term Equity (“LTE”) The LTE is regulated by the Equity Based Compensation Plan (EBCP). The objective of the EBCP is to enhance the competitiveness of the Company and its affiliates in attracting and retaining the best global leadership talent, and to position the Company as a global employer of choice. Moreover, the EBCP is designed to ensure that SLT members become shareholders of the Company, feel a sense of ownership, and benefit from their contribution to increasing shareholder value. To this end, the EBCP provides a framework for the grant or award of equity-based incentive compensation in the form of: • Restricted shares, representing one sixth of the LTE grant, • Performance shares, representing one half of the LTE grant and with a vesting which is subject to financial and ESG criteria and • Stock options, representing one third of the total LTE grant. The annual grant is approved by the Board in its April meeting based on a recommendation from the Remuneration Committee. For SLT members, the annual LTE grant value ranges from 58% of their YBS to 105% of the YBS for the CEO. Restricted Shares The restricted shares are FDRs granted with the sole condition that at the day the restricted shares vest, the SLT member is employed by the Company. The restricted shares vest on 1 June of the third year following the year of the grant. The number of restricted shares granted is determined by multiplying the relevant YBS with the applicable percentage and divided by an average of 15 days closing prices of the Company’s FDRs at the Paris stock exchange, which is reviewed by the Remuneration Committee for each grant year 0% 40% 80% 90% 100% 110% 120% 20% 60% 80% 100% 120% 140% 160% Payout factor Target achievement SES ANNUAL REPORT 202276 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Performance Shares Performance shares are FDRs granted to SLT members with vesting subject to achievement of financial and ESG criteria. The performance shares vest on 1 June of the third year following the year of the grant. The number of performance shares granted is determined by multi- plying the relevant YBS with the applicable percentage and divided by the average 15 days measured share price. Total Shareholder Return (“TSR”) is the metric retained to assess financial performance. It is measured on a relative basis to the median TSR performance of a panel of comparable companies during the vesting period with: • Share price at the end to be based on the average share price in the 3-month period February – April preceding the vesting date i.e., from 1 February 2026 to 30 April 2026 for 2023 grant, and retaining dealing days only • With share price at the beginning to be based on the average share price during a 3-month period February – April of the grant year i.e., from 1 February 2023 to 30 April 2023 for 2023 grant and retaining dealing days only • Measurement is based on Volume Weighted Average Price • Outcome will be reviewed by the Remuneration Committee prior to the Share Vesting Date The comparator group is reviewed on an annual basis by the Remu- neration Committee and is determined based on multiple factors such as company size, business mix, geographic mix and TSR correlation. Starting with 2022 grant, the TSR comparator group consists of 16 companies, well balanced across Satellite, Media and European Telecom operators as well as other adjacent businesses: TSR Comparator Group Eutelsat Telenet Group ViaSat Orange Telesat Britsh Telecom EchoStar Communications Proximus ProSiebenSat.1 Media Millicom Internatiional Cellular Telefonica Royal Caribbean ITV Gilat RTL Group Carnival Starting with 2023 grant, ESG will be included as a possible negative modifier to TSR ranging from 0 to -20% pending achievement of targeted reductions in CO 2 emissions and increase in the representa- tion of women in people manager roles. Outcome of TSR and ESG will be reported in the annual Remunera- tion Report. Unless otherwise specified by the Remuneration Committee, the Performance Shares will vest on the Share Vesting Date, subject to the Participant’s continued employment with the Company or an Affiliate and to the following ratchet table which will apply to determine the proportion of Performance Shares that will vest: Performance Shares ratchet table Starting with 2023 equity grant, the payout range for vesting of performance shares is increased from 50-150% to 0-200%, thus removing the payout threshold and increasing the range between threshold and maximum performance for better alignment with market practices. 0% 75%50%25% 100% 125% 150% Proportion of Performance Shares that vest TSR Achievement Threshold Target 75% TSR Achievement ≥150% TSR Achievement Maximum 0% 50% 100% 150% 200% SES ANNUAL REPORT 202277 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Stock Options The stock option is a standard call option with a maturity of 10 years from the date of the option grant. The final strike price corresponds to the average of 15 days closing prices of the Company’s FDRs at the Paris stock exchange after the allocation of options by the Board. The grant value is determined by the multiplication of the YBS with the applicable percentage. The number of stock option units is derived directly by dividing the grant value by the value of the stock option which is computed by an external and independent valuation firm and using a Binomial or Black-Scholes valuation. The final stock option valuation of each grant is then approved by the Board. The stock options must vest before they can be exercised. The vesting period of stock options is a three-year cliff vesting schedule. As an example, if 100 stock options are granted in 2023, all units vest and can be exercised as of 1 June 2026. The SLT members must, when exercising their vested stock options and their vested shares, do this in accordance with the regulations of the French stock market authorities AMF and the SES Code of deal- ing securities (i.e. require the prior authorisation from the Deputy Corporate Secretary and/or Chief Financial Officer, outside closed periods). As for the members of the Board, the exercises by the SLT members are reported on the Company’s website under About Us > ESG > Corporate Governance > Management Disclosures. Benefits The following key benefits are provided to SLT members, the amount of which is aligned with local practices: • Pensions and health care plans: in Luxembourg, pension contribu- tions of 7% up to the Social Security Ceiling (SSC) and 19% for the portion of salary above the SSC. The complementary pension scheme is a defined contribution scheme. In the US, restoration plans are in place to provide retirement benefits that supplement the tax-qualified, defined-contribution pension account defined in subsection 401(k) of the United States Internal Revenue Code; in the Netherlands, pension contributions are age-related and employer contribution is capped at 20.2% of the maximum pension- able salary; • Health check-up; • Death and disability insurances; and • Company car or car allowances. In addition to the above, several SLT members benefit from tax support and reimbursement of education fees for dependent children Employment, Resignation and Termination SLT members are hired on a permanent basis and employment contracts are drafted according to local regulations: • One SLT member has an employment contract with an American subsidiary of the Company. • One SLT member has an employment contract with a Dutch subsidiary of the Company. • All other SLT members have employment contracts with the Com- pany or a Luxembourg subsidiary of the Company. In case of resignation or termination, any unvested portion of out- standing stock options, restricted and performance shares is imme- diately forfeited. This excludes members leaving the Company due to disability or for retirement, benefitting from an immediate vesting of all unvested equity. The Company and the SLT member can terminate the employment contract respecting the legal notice period. For the SLT member with an employment contract with an American subsidiary of the Company the employment contract stipulates a notice period of 30 days in case of termination or resignation. With exception of one member, all members of the SLT are entitled to two years of YBS in case of termination without cause. The indem- nity includes statutory severance payment, if any. SES ANNUAL REPORT 202278 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION SLT SHARE OWNERSHIP PROGRAM This programme aims at assuring that SLT members become share- holders of the Company, feel a sense of ownership, and focus on cre- ating shareholder value. The SLT members have an obligation to invest in the Company’s equity under the form of registered shares and/or FDR’s. Over a period of five years (with equal yearly investment), the SLT members have to hold in total one time their YBS and the CEO two times his YBS. SHAREHOLDER VOTE The present Policy will be submitted to a shareholder vote at the next Annual General Meeting. The policy will be submitted to the share- holders at a minimum every three years or sooner in case of material changes. While the vote by the shareholders at the general meeting is advisory only, the Company will pay its Directors and SLT members only in accordance with a remuneration policy that has been submitted to a vote at the general meeting. If the general meeting rejects the proposed remuneration policy, the Company will submit a revised policy to a vote at the following general meeting. DISCLOSURE After the vote of the shareholders this Policy together with the date and the results of the vote shall be made available on the website of the Company where it will remain publicly available, free of charge, as long as it will be applicable. PERIODIC REVIEW This Policy shall be reviewed on a regular basis, but at least every three years. The Remuneration Committee shall be responsible for advising the Board on any concrete amendment suggestions to this Policy. The final version that will be submitted to the shareholders will be approved by the Board. In line with the Shareholder Rights Law of 1 August 2019, the SES Board adopted a Remuneration Policy that was formally submitted to the shareholders at the annual general meeting on 7 April 2022. An updated Remuneration Policy will be submitted to the Board on 24 February 2023 prior to its submission to the shareholders at the annual general meeting on 6 April 2023. The remuneration report here below describes the remuneration of the Board of Directors, the CEO, the CFO and of the other SLT members. It has been drafted in accordance with the above -mentioned Remuneration Policy and will also be submitted to the shareholders at the same meeting. SES ANNUAL REPORT 202279 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION REMUNERATION REPORT DIRECTORS REMUNERATION In 2022, the Annual General Meeting of shareholders has approved the remuneration of the Members of the Board of Directors through approving a resolution that has been submitted by the Board of Directors. The shareholders decided to maintain the fees paid to the directors at the previous year’s level with a majority of 99.97%. The fees paid to the Board have not been increased since 2008, except for the fees paid to the Chair and the members of the Audit and Risk Committee which have been increased in 2015 in line with best practices. Directors each received a fixed fee of €40,000 per year, whereas each of the Vice Chairs received an annual fixed fee of €48,000 and the Chair received a fee of €100,000 per year. The directors chairing one of the committees set up by the Board, if not the Chair of the Board of Directors, received an additional remu- neration of €8,000 per year. The director chairing the Audit and Risk Committee received an additional remuneration of €9,600 per year. Attendance fees for each Board or Board Committee meeting amounted to €1,600, except for the meetings of the Audit and Risk Committee for which directors received €1,920 per meeting. A director participating in more than one committee meeting on the same day received the attendance fee for one meeting only. All fees are net of any Luxembourg withholding taxes. The total net remuneration fees expensed for the year 2022 to the members of the Board of Directors (net of the Luxembourg withholding tax) amounted to €823,761 of which €531,601 represented the fixed part of the Board fees, with the remaining €292,160 being variable fees. The gross overall figure (including withholding taxes) for the year 2022 was €1,029,701. This compares to a gross remuneration of €1,131,067 in 2021. The 2022 remunerations cover the fees paid for ten Board meetings, the meetings of the Board Committees described in the table below as well as two meetings of the Strategic Taskforce. The amounts relate to the Board fees expensed during the year 2022. During 2022, the Board and the Committees of the Board were composed as follows: • Frank Esser, Chair • Tsega Gebreyes, Vice-Chair (until 7 April 2022) • Anne-Catherine Ries, Vice-Chair • Peter van Bommel, Vice-Chair • Serge Allegrezza (until 7 April 2022) • Béatrice de Clermont Tonnerre (until 24 October 2022) • Ramu Potarazu • Kaj-Erik Relander • Françoise Thoma • Katrin Wehr-Seiter • Jacques Thill • Jennifer Byrne (as of 7 April 2022) • Carlo Fassbinder (as of 7 April 2022) The composition of the committees, chairs and members is provided as follows: Committee Membership NOMINATION COMMITTEE Anne-Catherine Ries Jennifer Byrne Frank Esser Kaj-Erik Relander Jacques Thill AUDIT AND RISK COMMITTEE Peter van Bommel Carlo Fassbinder Françoise Thoma Kaj-Erik Relander Katrin Wehr-Seiter REMUNERATION COMMITTEE Françoise Thoma Anne-Catherine Ries Peter van Bommel Frank Esser Ramu Potarazu Katrin Wehr-Seiter Chair Members SES ANNUAL REPORT 202280 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The detailed overview of the individual remunerations expensed in 2022 and 2021 to each Director is provided as follows. Directors Remuneration 2022 (for Meetings Q1 2022 to Q4 2022) 2021 (for Meetings Q1 2021 to Q4 2021) IN € Directors Remu - ner ation Attendance Fees Taxes Total Directors Remu- ne ration Attendance Fees Taxes Total Serge Allegrezza 10,667 11,840 5,627 28,133 40,000 31,680 17,920 89,600 Peter van Bommel 55,600 30,080 21,420 107,100 47,200 44,480 22,920 114,600 Jennifer Byrne 29,334 14,400 10,934 54,668 Beatrice de Clermont-Tonnerre 30,000 22,400 13,100 65,500 40,000 33,600 18,400 92,000 Frank Esser 100,000 28,800 32,200 161,000 100,000 36,800 34,200 171,000 Carlo Fassbinder 29,333 13,120 10,613 53,067 Tsega Gebreyes 12,667 8,000 5,167 25,833 54,000 27,520 20,380 101,900 Paul Konsbruck – – – – 40,000 32,000 18,000 90,000 Ramu Potarazu 40,000 25,600 16,400 82,000 40,000 35,200 18,800 94,000 Kaj-Erik Relander 40,000 23,360 15,840 79,200 40,000 30,080 17,520 87,600 Anne-Catherine Ries 56,000 25,600 20,400 102,000 56,000 20,800 19,200 96,000 Françoise Thoma 48,000 28,480 19,120 95,600 48,000 28,480 19,120 95,600 Katrin Wehr-Seiter 40,000 30,080 17,520 87,600 42,400 31,680 18,520 92,600 Jacques Thill 40,000 30,400 17,600 88,000 3,333 1,600 1,233 6,167 Total 531,601 292,160 205,940 1,029,701 550,933 353,920 226,213 1,131,067 REMUNERATION OF THE MEMBERS OF THE SLT The remuneration of the members of the SLT is determined by the Board and is based on recommendations from the Remuneration Committee. The remuneration of the SLT members comprises two major compo- nents: • Compensation package composed of the yearly base salary; an annual bonus; and long-term equity (LTE); and • Benefits package which is aligned with local and market practices The average to highest compensation ratio (comprising annual base salary, bonus and equity at target) for all employees at the level of SES S.A. is at 1 to 15 which remains below market benchmarks and ratios which can be observed in CAC 40 or FTSE 100 companies. The following members were active in the SLT in the year 2022: • Chief Executive Officer, Steve Collar • Chief Financial Officer, Sandeep Jalan • Chief Technology Officer, Ruy Pinto • Chief Services Officer, John Baughn • Chief Strategy and Product Officer, John-Paul Hemingway • Chief Development Officer, Christophe De Hauwer • Chief Human Resources Officer, Evie Roos (until 30 June 2022) • Chief People Officer, Pan Macdonald (from 1 July 2022) • Chief Legal Officer, Thai Rubin SES ANNUAL REPORT 202281 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The total remuneration of the CEO, CFO and other SLT members follows the principles set out in the Remuneration policy and is provided in the tables below: 2022 Remunerations IN € Annual Base Salary 1 Annual Bonus Long Term Equity 2 Pension Expenses Other Benefits and Payments 3 Total Average to highest compensation ratio at the level of SES SA 4 Chief Executive Officer 735,438 760,001 705,265 125,027 54,778 2,380,508 15x Chief Financial Officer 439,616 365,669 319,463 66,561 22,833 1,214,143 8x Other SLT Members 2,204,143 1,689,753 1,497,444 211,088 415,503 6,017,931 6x Total 2022 3,379,197 2,815,423 2,522,172 402,676 493,114 9,612,582 – 2021 Remunerations IN € Annual Base Salary Annual Bonus Long Term Equity 3 Pension Expenses Other Benefits and Payments 4 Total Chief Executive Officer 735,438 1,038,732 655,129 125,428 53,114 2,607,840 Chief Financial Officer 423,631 487,589 244,547 64,938 22,857 1,243,562 Other SLT Members 2,096,982 2,103,941 1,223,323 221,478 344,516 5,990,240 Total 2021 3,256,051 3,630,262 2,122,998 411,844 420,488 9,841,642 1 Annual base salary of other (than CEO and CFO) SLT Members ranges from 323,067 EUR to 414,227 EUR with an average at 373,450 EUR 2 Amortisation of Long Term Equity grants 3 Other benefits and payments include health care plans, death and disability insurance, company cars or car allowances and other payments 4 Average to highest compensation ratio (comprising annual base salary, bonus and equity at target) for all employees at the level of SES S.A. Yearly Base Salary The yearly base salary is reviewed annually by the Remuneration Committee. For new nominations, base salaries are set based on external bench- marks while also considering the degree of qualification and experi- ence required as well as the employment conditions at the time of the offer. Except for the Chief Executive Officer, yearly base salaries of SLT members based in Luxembourg were adjusted in April 2022 following the legally required cost of living adjustment (Luxembourg Index). Annual Bonus The annual bonus of SLT members is composed of two parts: (i) the financial performance of the company; and (ii) the performance against business objectives, accounting for 70% and 30% of the bonus respectively. The financial performance measures group actual achievement vs. budget for three elements, revenue (accounting for 40%), EBITDA (accounting for 40%), complemented by net operating cash flow (accounting for 20%). The Board of Directors sets annual targets during the annual budget process and confirms annual achievement level. In 2022, the Group financial performance payout was confirmed at 108% based on the weighted results for the three metrics. SES ANNUAL REPORT 202282 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Financial Performance Component of Annual Bonus Annual Bonus Metric 1 Target in MEUR Actuals in MEUR Achievement in % Pay-out per Metric Weighting Pay-out Financial Performance (70%) Revenue 1,890 1,857 98.3% 91.5% 40% 108.2%Adjusted EBITDA 2 1,085 1,094 100.8% 104.0% 40% Net operating cash flow 859 1,037 120.8% 150.0% 20% 1 Based on an average €/$ FX rate of €1 = $1.055 and excluding the acquisition of DRS Global Enterprise Solutions (completed on 1 August 2022) 2 Adjusted EBITDA excludes material exceptional items, such as US C-band clearing The business objectives are set annually by the Board at the start of each performance year and relate to the strategic roadmap of the Company. The SES Board confirmed an achievement for 2022 at 92% which applies equally to each SLT member including the CEO. For confidentiality purposes, achievement of business objectives is reported in aggregate with weighting per objective provided as follows: Business Objectives Component of Annual Bonus Annual Bonus Objective Weighting Pay-out Business Objectives (30%) Strategic and Business Execution 40% 92% Deliver O3b mPOWER 20% Socially Responsible and outwardly impactful 20% Internal Transformation and Operational Excellence 20% The main achievements in 2022, contributing to the 92% overall pay-out were as follows: Strategic and Business Execution: • SES-17 was successfully brought into commercial service in June 2022 • Completed value-accretive acquisition of DRS Global Enterprise Solutions for $443 million on 1 August 2022 • Three satellites were launched and are now operational supporting our US C-band clearing initiative and resulting in Phase II clearing on track to be completed on time • $170 million of incremental value created from completing additional US C-band clearing for Verizon, ahead of expectations Deliver O3b mPOWER • The first two O3b mPOWER satellites were launched in December 2022 • TT&C system and ground deployed and operational including cus- tomer gateways and ARC • 10 O3b mPOWER products launched and operational in the market • More than $100m of new gross backlog was added in 2022, including a landmark partnership with Reliance Jio in India, as well as new business with Explora Journeys (part of MSC), Microsoft, Marlink, and others Socially Responsible and outwardly impactful • Delivered the SES ESG Horizon strategy and targets • ESG targets adopted in remuneration across the organisation Internal transformation and operational efficiency • Net Promoter Score improved from +34 to +39 • Achieved cost savings of more than €10 million above target, con- tributing to an Adjusted EBITDA outturn which exceeded target • Positive employee Net Promoter Score at +4 The 2022 annual bonus relates to the 2022 performance year and will be paid in March 2023. SES ANNUAL REPORT 202283 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The overview of the 2022 annual bonus of the CEO, CFO and other SLT members is provided in the table below: Bonus SLT expense IN € Bonus at target (Abs.) Bonus at target (% of Base Salary) Maximum award limit (150%) Percentage achievement Bonus Amount Chief Executive Officer – Annual Bonus 2022 performance year 735,438 100% 1,103,156 103.3% 760,001 - Financial Performance (70%) 514,806 772,209 108.2% 557,020 - Busines Objectives (30%) 220,631 330,947 92.0% 202,981 Chief Financial Officer – Annual Bonus 2022 performance year 353,851 80% 530,776 103.3% 365,669 - Financial Performance (70%) 247,695 371,543 108.2% 268,006 - Busines Objectives (30%) 106,155 159,233 92.0% 97,663 Other SLT Members – Annual Bonus 2022 performance year 1,635,139 [50–80]% 2,452,709 103.3% 1,689,753 - Financial Performance (70%) 1,144,597 1,716,896 108.2% 1,238,454 - Busines Objectives (30%) 490,542 735,813 92.0% 451,298 Long Term Equity Incentives The third element of the compensation package relates to the long-term equity granted by the Company. The plan, administered by the Remuneration Committee, permits the grant of three equity types: (i) stock options; (ii) restricted shares; and (iii) performance shares. The 2022 total grant value was divided into one-third of stock options, one-sixth of restricted shares, and one half of performance shares. Stock option grants prior to year 2021 have a vesting period of four years with a yearly vesting of 25% on 1 January of each year following the grant. For closer alignment with market practices, stock option grants from year 2021 on have a three-year cliff vesting of 100% on 1 June of the third year following the grant year. The Restricted Shares are FDRs granted with the sole condition that, at vesting, the SLT member must be employed by SES. The Restricted Shares vest on 1 June of the third year following the year of their grant. Performance Shares are FDRs granted to SLT members and vest on 1 June of the third year following the year of their grant. Performance shares granted prior to year 2021 are subject to the outcome of the compounded three years adjusted Economic Value Added (EVA). From grant 2021 onwards, vesting is subject to outcome of Total Shareholder Return (TSR), measured on a relative basis to the median TSR performance of a panel of comparable companies during a three-year period. For the 2022 vesting of performance shares, the EVA calculated over the period 2019 to 2021 was positive at €193 million and thus triggered 100% vesting of the performance shares granted in 2019. During 2022, the members of the SLT were awarded a combined total of 1,111,357 options to acquire company FDRs at an exercise price of €8,40 as well as 66,142 restricted shares as part of the company’s long-term incentive plan and 198,426 performance shares. The CEO was awarded 302,827 stock options, 18,023 restricted shares and 54,069 performance shares. The detailed overview of the 2022 equity grant and vesting as well as current shareholding for the CEO, CFO and other SLT members is provided as follows: SES ANNUAL REPORT 202284 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Long Term Equity 2022 Long Term Equity Plan – 2022 Grant Equity Vesting in 2022 Registered shares and FDR’s – 31 December 2022IN € Components Grant Year Vesting Year 1 Units granted Grant Year Units vested Chief Executive Officer Stock Options 2022 2025 302,827 2018 to 2020 271,509 193,132 Performance Shares 2022 2025 54,069 2019 24,399 Restricted Shares 2022 2025 18,023 2019 8,133 Chief Financial Officer Stock Options 2022 2025 138,765 2020 58,434 15,000 Performance Shares 2022 2025 24,777 2020 23,694 Restricted Shares 2022 2025 8,259 2020 7,898 Other SLT Members Stock Options 2022 2025 669,765 2018 to 2020 307,751 198,003 Performance Shares 2022 2025 119,580 2019 44,604 Restricted Shares 2022 2025 39,860 2019 14,868 1 Stock Options: for grants prior to 2021, vesting period over four years with a yearly vesting of 25% on 1 January of each year following the grant. Cliff vesting of three years from 2021 grant year onward. 1 Performance and Restricted Shares: vesting on 1 June of the third year following the year of the grant. Long Term Equity 2021 Long Term Equity Plan – 2021 Grant Equity Vesting in 2021 IN € Components Grant Year Vesting Year 1 Units granted Grant Year Units vested Chief Executive Officer Stock Options 2021 2024 269,375 2017 to 2020 294,454 Performance Shares 2021 2024 51,162 2018 13,788 Restricted Shares 2021 2024 17,054 2018 9,192 Chief Financial Officer Stock Options 2021 2024 120,426 2020 58,434 Performance Shares 2021 2024 22,872 N/A N/A Restricted Shares 2021 2024 7,624 N/A N/A Other SLT Members Stock Options 2021 2024 563,797 2017 to 2020 414,206 Performance Shares 2021 2024 107,082 2018 40,335 Restricted Shares 2021 2024 35,694 2018 26,890 1 Stock Options: for grants prior to 2021, vesting period over four years with a yearly vesting of 25% on 1 January of each year following the grant. Cliff vesting of three years from 2021 grant year onward. 1 Performance and Restricted Shares: vesting on 1 June of the third year following the year of the grant. When exercising their vested stock options and their vested shares, the SLT members must do this in accordance with the SES Dealing Code (including requiring the prior authorisation from the Deputy Corporate Secretary and/or Chief Financial Officer and provide selling orders outside of a closed period). During 2022, Christophe De Hauwer and Sandeep Jalan have sold all performance and restricted shares that vested on 1 June 2022. Evie Roos, Thai Rubin and Ruy Pinto sold some of the restricted and performance shares that vested on 1 June 2022. Steve Collar, John Baughn and John-Paul Hemingway kept all their restricted and performance shares that vested on 1 June 2022. Steve Collar has sold 120,000 and purchased 30,000 stock options from 2020 Stock option grant at the price of 5,973 per share. Sandeep Jalan, Evie Roos and John Baughn have sold some stock options from their 2020 stock option grant. As for the members of the Board, all transactions are reported on the SES website, Management Disclosures. Benefits package As for the benefits provided to members of the SLT, they are aligned with local and market practices and include pensions, health care plans, death and disability insurances, company cars or car allowances and other payments. 86 Audit Report 90 Consolidated income statement 91 Consolidated statement of comprehensive income 92 Consolidated statement of financial position 93 Consolidated statement of cash flows 94 Consolidated statement of changes in shareholders’ equity 96 Notes to the consolidated financial statements CONSOLIDATED FINANCIAL STATEMENTS 4 SES ANNUAL REPORT 202286 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION AUDIT REPORT To the Shareholders of SES S.A. REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS OUR OPINION In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of SES S.A. (the “Company”) and its subsidiaries (the “Group”) as at 31 December 2022, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Our opinion is consistent with our additional report to the Audit and Risk Committee. What we have audited The Group’s consolidated financial statements comprise: • the consolidated statement of financial position as at 31 Decem- ber 2022; • the consolidated income statement for the year then ended; • the consolidated statement of comprehensive income for the year then ended; • the consolidated statement of cash flows for the year then ended; • the consolidated statement of changes in shareholders’ equity for the year then ended; and • the notes to the consolidated financial statements, which include a summary of significant accounting policies. BASIS FOR OPINION We conducted our audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our responsibilities under the EU Regu- lation No 537/2014, the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the “Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the consolidated financial statements” section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements. We have fulfilled our other ethical responsibilities under those ethical requirements. To the best of our knowledge and belief, we declare that we have not provided non-audit services that are prohibited under Article 5(1) of the EU Regulation No 537/2014. The non-audit services that we have provided to the Company and its controlled undertakings, if applicable, for the year then ended, are disclosed in >> Note 6 to the consolidated financial statements. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judg- ment, were of most significance in our audit of the consolidated finan- cial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Business combination – acquisition of DRS Global Enter- prise Solutions, Inc. (‘GES’) On 1 August 2022, the Group completed the acquisition of the entire issued and outstanding share capital of DRS Global Enterprise Solutions, Inc. (“GES”) for a total consideration of 435 million EUR. During the financial year, the Group completed the purchase price allocation (“PPA”) arising from the acquisition of GES and recognised final goodwill of 201 million EUR. We focused on this area because of the quantitative impact of the acquisition on the consolidated financial statements and because the PPA exercise, which involves the identification of the acquired assets and liabilities and their respective fair values, requires the use of significant management judgment and estimates. Management has engaged an external valuation expert to assist them with the PPA exercise for the acquisition of GES. PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg, T : +352 494848 1, F : +352 494848 2900, www.pwc.lu Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256) R.C.S. Luxembourg B 65 477 – TVA LU25482518 SES ANNUAL REPORT 202287 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION How our audit addressed the key audit matter • We reviewed the sale purchase agreement and other legal docu- mentation related to the acquisition to obtain an understanding of the transaction and to confirm the acquisition date and the con- sideration transferred; • We assessed the completeness and accuracy of the accounting treatment in accordance with IFRS 3 Business Combinations; • We assessed the competence, objectivity and capabilities of the external valuation expert engaged by the Group to allocate pur- chase price to identifiable assets acquired and liabilities assumed; • We also involved our internal valuation specialists to assist us in evaluating the reasonableness of the key assumptions used in the valuation, the appropriateness of the valuation methods, and the completeness of the identifiable assets acquired and liabilities assumed; • We considered the appropriateness of the disclosures in >> Note 3 to the consolidated financial statements. Impairment of goodwill and orbital slot license rights (indefinite life) Management performed the annual impairment test based on the value in use determined on the basis of a discounted cash flows model for each of the cash-generating units. The Group has goodwill of 1,738 million EUR and orbital rights with indefinite useful lives of 2,054 million EUR. An impairment expense of 77 million EUR was recognised in relation to the goodwill at the level of the GEO North America CGU for the year ended 31 December 2022 (see Note 15). An impairment expense of 117 million EUR was recognised in relation to the orbital slot license rights at the level of the GEO North America CGU and of 9 million EUR at the level of the GEO International CGU for the year ended 31 December 2022 (see >> Note 15). We focused on this area due to the high level of judgment in relation with the assumptions used in the calculation of the recoverable amounts (forecasted cash flows, long-term growth rates, discount rates, etc.). How our audit addressed the key audit matter • We evaluated the design and implementation of relevant internal controls; • We evaluated Management’s determination of the cash generating units as well as the method and model used for the determination of the value in use, considering the requirements of IAS 36; • We involved valuation specialists and independently recalculated the weighted average cost of capital based on the use of market data and verified the long-term growth rate to market data; • We agreed the forecasted cash flows used for the calculation of the value in use to the 2023 Business Plan as approved by the Board of Directors; • We evaluated the forecasted revenue and costs assumptions, considering our expectations in terms of significant developments during the forecast period (significant new contracts or loss thereof) and corroborated these with market data in respect of demand for satellite capacity and pricing; • We evaluated the capital expenditure assumptions, considering our expectations in terms of significant developments during the forecast period (capital expenditure programs, replacement of satellites) and the expected capital expenditure level in terminal period in order to maintain the current assets base; • We performed sensitivity analysis of the models to changes in the key assumptions; • We considered the appropriateness of the disclosures in >> Note 15 to the consolidated financial statements. Impairment of satellites The Group has a space segment assets balance, representing primarily satellites, of 3,250 million EUR as at 31 December 2022. An impairment expense of 194 million EUR was recognised for the year ended 31 December 2022 in relation to several satellites, due to the change in their forecasted future revenue (see >> Note 13). The valuation of the satellites might be impacted by events that may or may not be under Management’s control (e.g. solar array issues) or by a decrease in revenue due to unfavorable market developments. Moreover, there is a risk of impairment of the satellites due to obso- lescence in the context of rapid evolution of technology. How our audit addressed the key audit matter • We evaluated the design and implementation of relevant internal controls; • We discussed with Management, and in particular the engineering team about any satellite health issues and evaluated their impact on the satellites’ capability to generate future cash inflows, and implicitly on the recoverable amount of the satellites; • We evaluated the forecasted revenue and cost assumptions, considering our expectations in terms of significant developments during the forecast period (significant new contracts or loss thereof) and corroborated these with market data in respect of demand for satellite capacity and pricing; • We involved valuation specialists and validated the method used to derive the value in use of satellites presenting a risk of impair- ment. We independently recalculated the weighted average cost of capital based on the use of market data; • We performed sensitivity analysis of the models to changes in the key assumptions; • We considered the disclosures in >> Note 13 to the consolidated financial statements and assessed their appropriateness. SES ANNUAL REPORT 202288 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION OTHER INFORMATION The Board of Directors is responsible for the other information. The other information comprises the information stated in the consolidated management report and the Corporate Governance Statement but does not include the consolidated financial statements and our audit report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial state- ments, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other infor- mation, we are required to report that fact. We have nothing to report in this regard. RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS The Board of Directors is responsible for the preparation and fair pres- entation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal con- trol as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. The Board of Directors is responsible for presenting and marking up the consolidated financial statements in compliance with the require- ments set out in the Delegated Regulation 2019/815 on European Sin- gle Electronic Format (“ESEF Regulation”). RESPONSIBILITIES OF THE “RÉVISEUR D’ENTREPRISES AGRÉÉ” FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit con- ducted in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstate- ments can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain profes- sional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the con- solidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrep- resentations, or the override of internal control; • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control; • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors; • conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to mod- ify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However, future events or conditions may cause the Group to cease to continue as a going concern; • evaluate the overall presentation, structure and content of the con- solidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation; obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the consolidated finan- cial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. SES ANNUAL REPORT 202289 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our audit report unless law or regulation precludes public disclosure about the matter. We assess whether the consolidated financial statements have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS The consolidated management report is consistent with the con- solidated financial statements and has been prepared in accordance with applicable legal requirements. The Corporate Governance Statement is included in the consolidated management report. The information required by Article 68ter Para- graph (1) Letters c) and d) of the Law of 19 December 2002 on the commercial and companies register and on the accounting records and annual accounts of undertakings, as amended, is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements. We have been appointed as “Réviseur d’Entreprises Agréé” by the General Meeting of the Shareholders on 7 April 2022 and the duration of our uninterrupted engagement, including previous renewals and reappointments, is 10 years. We have checked the compliance of the consolidated financial state- ments of the Group as at 31 December 2022 with relevant statutory requirements set out in the ESEF Regulation that are applicable to consolidated financial statements. For the Group it relates to the requirement that: • the consolidated financial statements are prepared in a valid XHTML format; • the XBRL markup of the consolidated financial statements uses the core taxonomy and the common rules on markups specified in the ESEF Regulation. In our opinion, the consolidated financial statements of the Group as at 31 December 2022, identified as “SES 2022 Annual report”, have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. PricewaterhouseCoopers, Société coopérative Represented by François Mousel Luxembourg, 27 February 2023 SES ANNUAL REPORT 202290 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Consolidated Income Statement €MILLION 2022 2021 Revenue >> Note 4 1,944 1,782 C-band repurposing income >> Note 33 184 901 Cost of sales >> Note 5 (351) (319) Staff costs >> Note 5 (330) (304) Other operating expenses >> Note 5 (205) (198) Operating expenses >> Note 5 (886) (821) EBITDA >> Note 35 1,242 1,862 Depreciation expense >> Note 13 (642) (575) Property, plant and equipment impairment >> Note 13 (194) (51) Amortisation expense >> Note 15 (63) (95) Intangible assets impairment >> Note 15 (203) (673) Operating profit >> Note 4 140 468 Net financing costs >> Note 7 (88) (71) Profit before tax 52 397 Consolidated Income Statement €MILLION 2022 2021 Income tax (expense)/benefit >> Note 8 (87) 49 (Loss)/profit after tax (35) 446 (Loss)/profit for the year (35) 446 Attributable to: Owners of the parent (34) 453 Non-controlling interests (1) (7) (35) 446 Basic and diluted (loss)/earnings per share (in euro) Class A shares >> Note 11 (0.16) 0.92 Class B shares >> Note 11 (0.06) 0.37 The notes are an integral part of the consolidated financial statements. CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2022 SES ANNUAL REPORT 202291 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Consolidated Statement of Comprehensive Income €MILLION 2022 2021 (Loss)/profit for the year (35) 446 Other comprehensive income Items that will not be reclassified to profit or loss Remeasurements of post-employment benefit obligation 3 3 Income tax effect (1) (1) Remeasurements of post-employment benefit obligation, net of tax 2 2 Income tax relating to treasury shares impairment expense or reversal 2 1 Total items that will not be reclassified to profit or loss 4 3 Items that may be reclassified subsequently to profit or loss Impact of currency translation >> Note 10 295 471 Income tax effect >> Note 10 (31) (36) Total impact of currency translation, net of tax 264 435 Consolidated Statement of Comprehensive Income €MILLION 2022 2021 Net investment hedge >> Note 19 (88) (102) Income tax effect >> Note 19 24 26 Total net investment hedge, net of tax (64) (76) Total items that may be reclassified subsequently to profit or loss 200 359 Total other comprehensive income for the year, net of tax 204 362 Total comprehensive income for the year, net of tax 169 808 Attributable to: Owners of the parent 168 815 Non-controlling interests 1 (7) 169 808 The notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2022 SES ANNUAL REPORT 202292 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Consolidated Statement of Financial Position €MILLION 2022 2021 Non-current assets Property, plant and equipment >> Note 13 3,630 3,773 Assets in the course of construction >> Note 14 1,859 1,788 Total property, plant and equipment 5,489 5,561 Intangible assets >> Note 15 4,291 3,790 Other financial assets 20 26 Trade and other receivables >> Note 17 111 121 1 Deferred customer contract costs 7 9 Deferred tax assets >> Note 9 499 568 Total non-current assets 10,417 10,075 1 Current assets Inventories 34 23 Trade and other receivables >> Note 17 1,033 1,727 1 Deferred customer contract costs 4 3 Prepayments 47 48 Income tax receivable 25 13 Cash and cash equivalents >> Note 20 1,047 1,049 Total current assets 2,190 2,863 1 Total assets 12,607 12,938 1 Consolidated Statement of Financial Position €MILLION 2022 2021 Equity Attributable to the owners of the parent >> Note 21 5,596 5,670 Non-controlling interests >> Note 22 62 63 Total equity 5,658 5,733 Non-current liabilities Borrowings >> Note 24 3,629 3,524 Provisions >> Note 25 7 6 Deferred income >> Note 16 359 388 1 Deferred tax liabilities >> Note 9 434 399 Other long-term liabilities >> Note 27 107 83 Lease liabilities >> Note 30 30 22 Fixed assets suppliers >> Note 28 740 472 Total non-current liabilities 5,306 4,894 1 Current liabilities Borrowings >> Note 24 719 57 Provisions >> Note 25 67 56 Deferred income >> Note 16 189 187 1 Trade and other payables >> Note 26 367 292 Lease liabilities >> Note 30 15 11 Fixed assets suppliers >> Note 28 264 1,554 Income tax liabilities 22 154 Total current liabilities 1,643 2,311 1 Total liabilities 6,949 7,205 1 Total equity and liabilities 12,607 12,938 1 1 Restated in order to reflect the netting of unbilled accrued revenue and deferred income as disclosed in >> Note 16. The notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2022 SES ANNUAL REPORT 202293 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Consolidated Statement of Cash Flows €MILLION 2022 2021 Profit before tax 52 397 Taxes paid during the year (186) (31) Interest expense on borrowings >> Note 7 102 95 Depreciation, amortisation and impairment >> Notes 13, 15 1,102 1,394 Amortisation of client upfront payments (69) (65) Other non-cash items in the consolidated income statement 27 (40) Consolidated operating profit adjusted for non-cash items and tax pay- ments and before working capital changes 1,028 1,750 Changes in working capital (Increase)/decrease in inventories (6) 4 Decrease/(Increase) in trade and other receivables 441 (492) Decrease in prepayments 4 15 Decrease/(increase) in trade and other payables 8 (25) Increase in upfront payments 1 42 Changes in working capital 448 (456) Net cash generated by operating activities 1,476 1,294 Cash flow from investing activities Payments for acquisition of subsidiary, net of cash acquired (435) – Payments for purchases of intangible assets (42) (37) Payments for purchases of tangible assets (1,312) (243) Other investing activities (9) (3) Net cash absorbed by investing activities (1,798) (283) Consolidated Statement of Cash Flows €MILLION 2022 2021 Cash flow from financing activities Proceeds from borrowings >> Notes 31, 24 744 159 Repayment of borrowings >> Notes 31, 24 (57) (614) Proceeds from Perpetual bond, net of transaction costs >> Note 21 – 617 Redemption of Perpetual bond, net of transaction costs >> Note 21 – (768) Coupon paid on perpetual bond >> Note 21 (49) (85) Dividends paid on ordinary shares 1 >> Note 12 (219) (181) Dividends paid to non-controlling interest – (2) Interest paid on borrowings (103) (121) Payments for acquisition of treasury shares – (119) Proceeds from treasury shares sold and exercise of stock options 4 1 Lease payments >> Note 30 (17) (14) Payment in respect of changes in ownership interest in subsidiaries 2 – Net cash generated by / (absorbed by) financing activities 305 (1,127) Net foreign exchange movements 15 3 Net increase in cash (2) (113) Cash and cash equivalents at beginning of the year >> Note 20 1,049 1,162 Cash and cash equivalents at end of the year >> Note 20 1,047 1,049 1 Dividends are presented net of dividends received on treasury shares of EUR 11 million (2021: EUR 2 million) The notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2022 SES ANNUAL REPORT 202294 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Consolidated Statement of Changes in Shareholders’ Equity Attributable to owners of the parent €MILLION Issued capital Share premium Treasury shares Perpetual bond Other reserves 2 Retained earnings Foreign currency translation reserve Total Non- controlling interest Total equity At 1 January 2022 719 1,636 (189) 1,175 2,227 453 (351) 5,670 63 5,733 Result for the year – – – – – (34) – (34) (1) (35) Other comprehensive income – – – – 4 – 198 202 (2) 204 Total comprehensive income for the year – – – – 4 (34) 198 168 1 169 Allocation of 2021 result – – – – 453 (453) – – – – Cancellation of shares (>> Note 21) (23) (72) 95 – – – – – – – Coupon on perpetual bond (>> Note 21) – – – – (49) – – (49) – (49) Tax on perpetual bond coupon (>> Note 21) – – – – 14 – – 14 – 14 Dividends provided for or paid 1 – – – – (219) – – (219) – (219) Share-based compensation expense (>> Note 23) – – – – 9 – – 9 – 9 Exercise of share-based compensation – – 14 – (11) – – 3 – 3 Transactions with non-controlling interest – – – – – – – – 2 2 At 31 December 2022 696 1,564 (80) 1,175 2,428 (34) (153) 5,596 62 5,658 1 Dividends are presented net of dividends received on treasury shares of EUR 11 million. 2 The non-distributable items included in other reserves are described in >> Note 21. The notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the year ended 31 December 2022 SES ANNUAL REPORT 202295 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Consolidated Statement of Changes in Shareholders’ Equity Attributable to owners of the parent €MILLION Issued capital Share premium Treasury shares Perpetual bond Other reserves 2 Retained earnings Foreign currency translation reserve Total Non- controlling interest Total equity At 1 January 2021 719 1,636 (76) 1,300 2,583 (86) (710) 5,366 72 5,438 Result for the year – – – – – 453 – 453 (7) 446 Other comprehensive income – – – – 3 – 359 362 – 362 Total comprehensive income for the year – – – – 3 453 359 815 (7) 808 Allocation of 2020 result – – – – (86) 86 – – – – Issue of new Perpetual bond, net of transaction costs – – – 625 (8) – – 617 – 617 Redemption of Perpetual bond, net of transaction costs – – – (750) (18) – – (768) – (768) Coupon on perpetual bond (>> Note 21) – – – – (85) – – (85) – (85) Tax on perpetual bond coupon (>> Note 21) – – – – 20 – – 20 – 20 Dividends provided for or paid 1 – – – – (181) – – (181) (2) (183) Acquisition of treasury shares – – (119) – – – – (119) – (119) Share-based compensation expense (>> Note 23) – – – – 5 – – 5 – 5 Exercise of share-based compensation – – 6 – (6) – – – – – At 31 December 2021 719 1,636 (189) 1,175 2,227 453 (351) 5,670 63 5,733 1 Dividends are presented net of dividends received on treasury shares of EUR 2 million. 2 The non-distributable items included in other reserves are described in >> Note 21. The notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the year ended 31 December 2021 SES ANNUAL REPORT 202296 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022 The consolidated financial statements have been prepared on a his- torical cost basis, except where fair value is required by IFRS. The consolidated financial statements are presented in euro (EUR). Unless otherwise stated, all amounts are rounded to the nearest mil- lion, except share and earnings per share data and audit and non-au- dit fee disclosures. CHANGES IN ACCOUNTING POLICIES The accounting policies adopted are consistent with those of the pre- vious financial year, except for the following new and amended IFRS standards, effective from 1 January 2022 and adopted by the Group. Any new IFRS amendments, effective from 1 January 2022 and not mentioned below are not applicable to the Group. Amendments to IFRS 3, IAS 16, IAS 37 and annual improvements to IFRS 1, IFRS 9, IAS 41 and IFRS 16 Amendments to IFRS 3, “Business combinations” update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting with- out changing the accounting requirements for business combinations. Amendments to IAS 16, “Property, plant and equipment” prohibit a company from deducting from the cost of property, plant and equip- ment amounts received from selling items produced while the com- pany is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. Amendments to IAS 37, “Provisions, contingent liabilities and contin- gent assets” specify which costs a company includes when assessing whether a contract will be loss-making. Annual improvements resulted in minor amendments to IFRS 1, “First-time adoption of IFRS”, IFRS 9. “Financial instruments”, IAS 41. “Agriculture” and the illustrative examples accompanying IFRS 16, ‘Leases’. The amendments were endorsed by the EU and are effective for annual reporting periods beginning on or after 1 January 2022. The adoption of these amendments did not have any impact on the Group’s consolidated financial statements. BASIS OF CONSOLIDATION The consolidated financial statements comprise the financial state- ments of the Company and its controlled subsidiaries, after the elim- ination of all inter-company transactions. Subsidiaries are fully con- solidated from the date the Company obtains control until such time as control ceases. The financial statements of subsidiaries are gen- erally prepared for the same reporting period as the Company, using consistent accounting policies. If required, adjustments are made to align any dissimilar accounting policies that may exist. For details regarding the subsidiaries included in the consolidated financial state- ments see >> Note 36. Total comprehensive income or loss incurred by a subsidiary is attrib- uted to the non-controlling interest even if that results in a deficit balance. Should a change in the ownership interest in a subsidiary occur, without a loss of control, this is accounted for as an equity transaction. NOTE 1 – CORPORATE INFORMATION SES S.A. (‘SES’ or ‘the Company’) was incorporated on 16 March 2001 as a limited liability company (Société Anonyme) under Luxembourg Law. References to ‘the Group’ in the following notes are to the Com- pany and its subsidiaries. SES trades under ‘SESG’ on the Luxembourg Stock Exchange and Euronext, Paris. The registered office of the Com- pany is at: Château de Betzdorf, L-6815 Betzdorf, Luxembourg. SES is a leader in global content connectivity solutions, leveraging a vast and intelligent network spanning satellite and ground infrastructure to create, deliver and manage video and data solutions enabling custom- ers to connect more people in more places with content that enriches their personal stories with knowledge, entertainment and opportunity. The consolidated financial statements of SES as at, and for the year ended, 31 December 2022 were authorised for issue in accordance with a resolution of the Board of Directors on 24 February 2023. Under Luxembourg Law, the consolidated financial statements are approved by the shareholders at their Annual General Meeting. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION The consolidated financial statements have been prepared in com- pliance with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’) and endorsed by the European Union (‘IFRS’), as at 31 December 2022. SES ANNUAL REPORT 202297 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Should the Group cease to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purpose of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. Non-controlling interests in the results and equity of subsidiaries are presented separately in the consolidated income statement, state- ment of comprehensive income, statement of changes in equity and statement of financial position respectively. INVESTMENTS IN JOINT ARRANGEMENTS Under IFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Joint ventures are accounted for using the equity method whereby the interest is initially recog- nised at cost and is then adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture (including any long-term interest which, in substance, forms part of the Group’s net investment in the joint venture), the Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the joint venture. Unrealised gains on transactions between the Group and a joint ven- ture are eliminated to the extent of the Group’s interest in the joint venture. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Financial statements of joint ventures are prepared for the same reporting year as the Group with adjustments made as necessary to bring the accounting policies used into line with those of the Group. The Group assesses investments in joint ventures for impairment whenever events or changes in circumstances indicate that the car- rying value may not be recoverable. If any such indication of impair- ment exists, the carrying amount of the investment is compared with its recoverable amount, being the higher of its fair value less costs to sell and value in use. Where the carrying amount exceeds the recov- erable amount, the investment is written down to its recoverable amount. The Group ceases to use the equity method of accounting on the date from which it no longer has joint control over the joint venture or when the investment is classified as held for sale. INVESTMENTS IN ASSOCIATES An associate is an entity in which the Group has significant influence but not control or joint control. The Group accounts for investments in associates using the equity method of accounting as described above. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount within ‘Share of associates’ result’ in the consolidated income statement. The Group’s share of post-acquisition profit or loss is recognised in the consolidated income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the car- rying amount of the investment. When the Group’s share of losses in an associate equals, or exceeds, its interest in the associate, including any other unsecured receivables, the Group does not recognise fur- ther losses unless it has incurred legal or constructive obligations or made payments on behalf of the associate. In general, the financial statements of associates are prepared for the same reporting year as the parent company, using consistent accounting policies. If required, adjustments are made to align any dissimilar accounting policies that may exist. For details regarding the associates included in the consol- idated financial statements see >> Note 36. Profits and losses resulting from upstream and downstream trans- actions between the Group and an associates are recognised in the Group’s consolidated financial statements only to the extent of unre- lated investors’ interests in the associate. Dilution gains and losses arising in investments in associates are recognised in the consolidated income statement. The Group ceases to use the equity method of accounting on the date from which it no longer has significant influence over the associate, or when the interest becomes classified as an asset held for sale. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES 1) Judgments In the process of applying the Group’s accounting policies, man- agement has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: SES ANNUAL REPORT 202298 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION (i) Treatment of orbital slot licence rights The Group’s operating companies have obtained rights to oper- ate satellites at certain orbital locations and using certain fre- quency bands. These licences are obtained through applications to the relevant national and international regulatory authorities and are generally made available for a defined period. Where the Group has obtained such rights through the acquisition of sub- sidiaries, the rights have been identified as an asset acquired and recorded at the fair value attributed to the asset at the time of the acquisition as a result of purchase accounting procedure. In the cases when, on the expiry of such rights, management believes it will be able to successfully re-apply for their usage at insignificant incremental cost, then such rights are deemed to have an indefinite life. Hence these assets are not amortised, but rather are subject to regular impairment reviews to confirm that the carrying value in the Group’s financial statements is still appropriate. More details are given in >> Note 15. (ii) Taxation The Group operates in numerous tax jurisdictions and manage- ment is required to assess tax issues and exposures across its entire operations and to accrue for potential liabilities based on its interpretation of country-specific tax law and best estimates. In conducting this review management assesses the magnitude of the issue and the likelihood, based on experience and special- ist advice, as to whether it will result in a liability for the Group. If this is deemed to be the case, then a provision is recognised for the potential taxation charges. More details are given in >> Note 8 and >> Note 25. One significant area of management judgement is around trans- fer pricing. Whilst the Group employs dedicated members of staff to establish and maintain appropriate transfer pricing structures and documentation, judgement still needs to be applied and hence potential tax exposures can be identified in the different jurisdictions where the Group operates. The Group, as part of its overall assessment of liabilities for taxation, reviews in detail the transfer pricing structures in place and records provisions where this seems appropriate on a case-by-case basis. (iii) The impact of rising inflation and interest rates The Group has considered the potential impact of rising inflation and interest rates during the period on its financial statements particularly in its estimations of future cash flows and assump- tions about financing costs. The main effect observed in 2022 has been a mechanical increase in discount rates used to reflect the time value of money and adjustments to cash flows to account for the effect of gen- eral inflation principally impacting the valuation of assets. Please refer to note 15 (‘Intangible assets’) for further details. (iv) Consolidation of entities in which the Group holds 50% or less The Group consolidates a subsidiary where it has: power over the subsidiary; exposure, or rights, to variable returns from that subsidiary; and, the ability to use its power over the subsidiary to affect the amount of the Group’s returns. • Al Maisan Satellite Communication LLC (trading as ‘Yahlive’) Management has concluded that the Group controls Yahlive even though it holds a 35% economic interest in the company since it has the majority of the voting rights on Yahlive’s Board of Directors and there are no voting rights at the shareholder level which could affect SES’ control. SES has effective control over the relevant activities of Yahlive, such as budget approval, appointment and removal of the Chief Executive Officer and senior management team members as well as the effective control over the appointment or removal of the majority of the members of the Board of Directors. The entity is therefore consolidated with a 65% non-controlling interest (see >> Note 22). • LuxGovSat S.A. (‘LuxGovSat’) SES and the Luxembourg government jointly incorporated LuxGovSat subscribing equally in the equity of the company. Management has concluded that the Group controls LuxGov- Sat since it has effective control over the relevant activities of the entity. It is therefore consolidated with a 50% non-con- trolling interest (see >> Note 22). • West Africa Platform Services Ltd, Ghana (‘WAPS’) Management has concluded that the Group controls WAPS even though it holds a 49% economic interest in the company since it has has the majority of the voting rights on the com- pany’s board of directors and there are no voting rights at the shareholder level which could affect SES’ control. Through control over the selection of key management positions and oversight of the company’s day-to-day operations, the Com- pany has the requisite powers to control and consolidate the company with a 51% non-controlling interest. (v) SES Space & Defense, Inc. (‘SES SD’ – formerly SES Government Solutions, Inc.) SES SD and its 100% subsidiary Global Enterprise Solutions Inc. acquired on 1 August 2022, are subject to specific governance rules and are managed through a Proxy Agreement agreed with the Defense Security Service (‘DSS’) department of the US Department of Defense (‘DOD’). The DSS is a governmental authority responsible for the protection of information deemed classified or sensitive with respect to the national security of the United States of America. A proxy agreement is an instrument intended to mitigate the risk of foreign ownership, control or influence when a foreign person acquires or merges with a US entity that has a facility security clearance. A proxy agreement conveys a foreign owner’s voting rights to proxy holders, com- prising the proxy board. Proxy holders are cleared US citizens approved by the DSS. SES ANNUAL REPORT 202299 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The DSS requires that SES SD enter into a proxy agreement because it is indirectly owned by SES and SES SD has contracts with the DOD which contain classified information. The Proxy Agreement enables SES SD to participate in such contracts with the US Government despite being owned by a non-US corporation. As a result of the Proxy Agreement, certain limitations are placed on the information which may be shared, and the interaction which may occur, between SES SD and other Group companies. The Proxy Holders, besides acting as directors of SES SD, are entitled to vote in the context of a trust relationship with SES on which basis their activity is performed in the interest of SES’s shareholders and of US national security. SES’s assessment of the effective control over the relevant activities of SES SD encompassed the activities of operating and capital decision making, the appointment and remuneration of key management, and the exposure to the variability of financial returns based on the financial performance of SES SD. Based on this assessment, SES concluded that, from an IFRS 10 perspective, SES has, and is able to exercise, power over the rel- evant activities of SES SD and has an exposure to variable returns from its involvement in SES SD – and therefore controls the entity. 2) Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carry- ing amounts of assets and liabilities within the next financial year(s), are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the con- trol of the Group. Such changes are reflected in revisions to the assumptions when they occur. (i) Impairment testing for goodwill and other indefinite-life intangible assets The Group determines whether goodwill and other indefinite-life intangible assets are impaired at least on an annual basis. This requires an estimation of the value in use of the cash generating units (‘CGUs’) to which the goodwill and other indefinite-life intangible assets are allocated. Establishing the value in use requires the Group to make an estimate of the expected future pre-tax cash flows from the CGU and to choose a suitable pre-tax discount rate and terminal growth rate to calculate the present value of those cash flows. More details are given in >> Note 15. (ii) Impairment testing for space segment assets The Group assesses at each reporting date whether there is any indicator that an asset may be impaired. If any such indication exists, the Group determines an estimate of the recoverable amount, as the higher of: (1) the fair value less cost of disposal and, (2) its value in use, to determine whether the recoverable amount exceeds the carrying amount included in the consoli- dated financial statements. For the Group’s satellites, the esti- mation of the value in use requires estimations of the future commercial revenues to be generated by each satellite, particu- larly related to new markets or services, and also the impact of past in-orbit anomalies and their potential impact on the satel- lite’s ability to provide its expected commercial service >> Note 13. (iii) Recoverability of deferred tax assets The Group recognises deferred tax assets primarily in connec- tion with the carry-forward of unused tax losses and tax credits. The Group reviews the tax position in the different jurisdictions in which it operates to assess the need to recognise such assets based mainly on projections of taxable profits to be generated in each of those jurisdictions. The carrying amount of each deferred tax asset is reviewed at each reporting date and reduced to the extent that current projections indicate that it is no longer probable that sufficient taxable profits will be available to enable all, or part, of the asset to be recovered. (iv) Expected credit losses on trade receivables and unbilled accrued revenue The Group estimates expected credit losses on trade receivables and unbilled accrued revenues using a provision matrix based on loss expectancy rates and forward-looking information. The Group records additional losses if circumstances or forward-look- ing information cause the Group to believe that an additional collectability risk exists which is not reflected in the loss expec- tancy rates >> Note 17. BUSINESS COMBINATIONS Business combinations are accounted for using the acquisition method. The consideration transferred for the acquisition of the sub- sidiary is measured as the aggregate of the: • fair value of the assets transferred; • liabilities incurred to the former owners of the acquired business; • equity interests issued by the Group; • fair value of any asset or liability resulting from a contingent con- sideration agreement; and • fair value of any pre-existing equity interest in the subsidiary. For each business combination, SES measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in other operating expenses. When the Group acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic cir- cumstances and pertinent conditions as at the acquisition date. Assets acquired, and liabilities assumed, are recognised at fair value. The excess of the: • consideration transferred; • amount of any non-controlling interest in the acquired entity; and SES ANNUAL REPORT 2022100 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION • acquisition-date fair value of any previous equity interest in the acquired entity; over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recog- nised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. If the business combination is achieved in stages, the acquisition date carrying value of the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by SES will be recognised at fair value at the acqui- sition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset, or a liability, will be recognised in profit or loss. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is initially recorded at historical cost, representing either the acquisition or manufacturing cost. Satellite cost includes the launcher and launch insurance, less depreciation and impairment charges. The financial impact of changes resulting from a revision of manage- ment’s estimate of the cost of property, plant and equipment is rec- ognised in the consolidated income statement in the period con- cerned. Right-of-use assets are measured at cost comprising the following: • the amount of the initial measurement of the corresponding lease liability; • any payments made at or before the commencement date of the lease, less any lease incentives received; • any initial direct costs; and • restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture. Costs for the repair and maintenance of these assets are recorded as an expense. Property, plant and equipment is depreciated using the straight-line method, generally based on the following useful lives: Asset lives Buildings 25 years Space segment assets 10 to 18 years Ground segment assets 3 to 15 years Other fixtures, fittings, tools and equipment 3 to 15 years Right-of-use assets 6 to 12 years An item of property, plant and equipment is derecognised upon dis- posal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on the derecognition of an asset is included in the consolidated income statement in the period the asset is derecognised. The residual values, remaining useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted where necessary. For reimbursable capitalised costs related to the procurement of sat- ellites, launches, and upgraded ground facilities as part of the U.S. C-band repurposing project, the Group applies government grant accounting. The Group records credits to the recorded book values of the related asset when the costs have been incurred and the Group has obtained reasonable assurance that the costs will be reimbursed and that it will comply with the requirements attached to the reim- bursement. See additional information in >> Note 33. ASSETS IN THE COURSE OF CONSTRUCTION This caption includes primarily satellites under construction. Costs directly attributable to the purchase of a satellite and bringing it to the condition and location to be used as intended by management, such as launch costs and other related expenses like ground equip- ment and borrowing costs, are capitalised as part of the cost of the asset. The cost of satellite construction may include an element of deferred consideration to satellite manufacturers referred to as satellite performance incentives. SES is contractually obligated to make these payments over the lives of the satellites, provided the satellites continue to operate in accordance with contractual specifications. Therefore, SES accounts for these payments as deferred financing, capitalising the present value of the payments as part of the cost of the satellites and recording a corresponding liability to the satellite manufacturers. An interest expense is recognised on the deferred financing and the liability is accreted based on the passage of time and reduced as the payments are made. Once the asset is satellite enters operational service, the costs are transferred to assets in use and depreciation commences. BORROWING COSTS Borrowing costs directly attributable to the construction or production of a qualifying asset are capitalised during the construction period as part of the cost of the asset. All other borrowing costs are recognised as an expense in the period in which they are incurred. INTANGIBLE ASSETS 1) Goodwill Goodwill is measured as described in the accounting policy for business combinations set out in >> Note 2. SES ANNUAL REPORT 2022101 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For impairment testing, goodwill from the acquisition date is allocated to each of the Group’s CGUs that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units. The carrying value of acquisition goodwill is not amortised, but rather is tested for impairment annually, or more frequently if required to establish whether the value is still recoverable. The recoverable amount is defined as the higher of: (1) fair value less costs to sell and, (2) value in use. Impairment expenses are recorded in the consolidated income statement. Impairment losses relating to goodwill cannot be reversed in future periods. The Group estimates value in use based on the estimated dis- counted cash flows to be generated by a CGU, generally using the five-year business plans approved by the Board of Directors. Beyond a five-year period, cash flows are usually estimated on the basis of stable rates of growth or decline, although longer periods may be considered where relevant to accurately calcu- late the value in use. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, then the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on its disposal. Goodwill disposed of in this situation is measured based on the relative values of the operation disposed of and the portion of the CGU unit retained. 2) Other intangibles (i) Orbital rights Intangible assets consist principally of rights of usage of orbital frequencies. The Group is authorised by governments to operate satellites at certain orbital locations. Governments acquire rights to these orbital locations through filings made with the Inter- national Telecommunication Union (‘ITU’), a sub-organisation of the United Nations. The Group will continue to have rights to operate at its orbital locations so long as it maintains its authorisations to do so. Those rights are reviewed at acquisition to establish whether they represent assets with a definite or indefinite life. Those assessed as being definite life assets are amortised on a straight-line basis over their estimated useful life not exceeding 30 years. Indefinite-life intangible assets are held at cost and are subject to impairment testing in line with the treatment outlined for goodwill above. Assets with indefinite lives are reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. Orbital rights acquired for a non-cash consideration are initially meas- ured at the fair value of the consideration given. (ii) Software and development costs Costs associated with maintaining computer software are rec- ognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met: • it is technically feasible to complete the software product so that it will be available for use; • management intends to complete the software product and use or sell it; • there is an ability to use or sell the software product; • it can be demonstrated how the software product will gener- ate probable future economic benefits; • adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and • the expenditure attributable to the software product during its development can be reliably measured. Directly attributable costs that are capitalised as part of the soft- ware product include the software development employee costs and an appropriate portion of relevant overheads. Other devel- opment expenditures that do not meet these criteria are recog- nised as an expense as incurred. Software development costs recognised as assets are amortised over their estimated useful life, not exceeding seven years. IMPAIRMENT OF OTHER INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT The Group assesses at each reporting date whether there is an indi- cation that the carrying amount of the assets may not be recoverable. If such an indication exists then the recoverable amount of the asset or CGU is reviewed to determine the amount of the impairment, if any. Impairments can arise from complete or partial failure of a satellite as well as other changes in expected discounted future cash flows. Such impairment tests are based on a recoverable value determined using estimated future cash flows and an appropriate discount rate. The estimated cash flows are based on the most recent business plans. If an impairment is identified, the carrying value will be written down to its recoverable amount. INVESTMENTS AND OTHER FINANCIAL ASSETS The Group classifies its financial assets in the following measurement categories: • those to be measured subsequently at fair value through profit or loss; and • those to be measured at amortised cost. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not remeasured to fair value through the consolidated income statement, transaction costs directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value and revalued through the con- SES ANNUAL REPORT 2022102 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION solidated income statement are expensed in the period when they were incurred. All regular purchases and sales of financial assets are recognised on the date that the Group is committed to the purchase or sale of the asset. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely pay- ment of principal and interest. Equity investments Unless SES has significant influence, the Group measures all equity investments at fair value. Changes in the fair value of financial assets are recognised in the consolidated income statement. DEFERRED CUSTOMER CONTRACT COSTS Deferred customer contract costs include the cost of equipment pro- vided to customers under the terms of their service agreements, when the equipment and services are not deemed to be distinct and are expensed over the term of those contracts. INVENTORIES Inventories primarily consist of equipment held for re-sale, work-in- progress, related accessories and network equipment spares and are stated at the lower of cost and net realisable value, with cost deter- mined on a weighted average-cost method. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. TRADE RECEIVABLES Trade receivables are recognised initially at fair value and sub- sequently measured at amortised cost using the effective interest method, less provision for impairment. For impairment of trade receiv- ables, the Group estimates expected lifetime credit losses that would typically be carried for each receivable based on the credit risk class upon the initial recognition of the receivables. Expected lifetime credit losses are estimated based on historical financial information as well as forward-looking data. Additional provisions are recognised when specific circumstances or forward-looking information lead the Group to believe that additional collectability risk exists with respect to customers that are not adequately reflected in loss expectancy rates. The Group writes off trade receivables when it has no reasonable expectation of recovery. The Group evaluates the credit risk of its customers on an ongoing basis. TRADE AND OTHER PAYABLES Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. PREPAYMENTS Prepayments represent expenditures paid during the financial year but relating to a subsequent financial year. The prepaid expenses comprise mainly insurance, rental of third-party satellite capacity, advertising expenses as well as loan origination costs related to loan facilities which have not been drawn. TREASURY SHARES Treasury shares are mostly acquired by the Group in connection with share-based compensation plans and are presented as a set off to equity in the consolidated statement of financial position. Gains and losses on the purchase, sale, issue or cancellation of treasury shares are not recognised in the consolidated income statement, but rather in the equity. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash at banks and on hand, deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash on hand and in banks and short-term deposits which are held to maturity are carried at fair value. REVENUE RECOGNITION Revenues are generated predominantly from customer service agree- ments for the provision of satellite capacity over contractually agreed periods, including short-term occasional use capacity, with the asso- ciated uplinking and downlinking services as appropriate. Other rev- enue-generating activities mainly include sale of customer equipment; platform services; subscription revenue; income received in connec- tion with satellite interim missions; installation and other engineering services and proceeds from the sale of transponders if the revenue recognition criteria for the transaction are met. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when or as it transfers control of a good or service to a cus- tomer. Contract modifications are accounted for either as a separate contract or as part of the existing contract, depending on the nature of the modification. The Group accounts for a modification as a separate contract if: • the scope of the contract increases because of the addition of distinct goods or services, and • the price of the contract increases by an amount of consideration that reflects the stand-alone selling prices of the additional goods or services. SES ANNUAL REPORT 2022103 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION A modification that does not meet the above criteria to be accounted for as a separate contract is accounted for as an adjustment to the existing contract, either prospectively or through a cumulative catch-up adjustment. The determination depends on whether the remaining goods or services to be provided to the customer under the modified contract are distinct from those already provided, in which case the modification results in a prospective adjustment to revenue recognition. For contracts in which the Group sells multiple goods and services, the Group evaluates at contract inception whether the goods and services represent separate performance obligations. When they rep- resent separate performance obligations, the Group allocates consid- eration to the goods and services based on relative standalone selling prices using either an expected cost plus a margin approach or an adjusted market assessment approach. When they do not represent separate performance obligations, the Group records revenue related to the single performance obligation over the contract period. Where a contract contains elements of variable consideration, the Group estimates the amount of variable consideration to which it will be entitled under the contract. Variable consideration can arise, for example, as a result of variable prices, incentives or other similar items. Variable consideration is only included in the transaction price if, and to the extent that, it is highly probable that its inclusion will not result in a significant revenue reversal in the future when the uncertainty has been subsequently resolved. The Group occasionally receives non-cash consideration as part of a revenue transaction. The Group measures non-cash consideration at fair value unless it is unable to reasonably estimate fair value, in which case the Group measures the consideration indirectly based on the standalone selling price of the goods or services promised to the cus- tomer. Revenue from provision of satellite capacity, communi- cations infrastructure services, and related services For the Group’s contracts to provide satellite capacity, communi- cations infrastructure services, and related services, the Group makes the services available to customers in a series of time periods that are distinct and have the same pattern of transfer to the customer. Revenue from customers under service agreements for these services is generally recognised on a straight-line basis over the duration of the respective contracts, including any free-of-charge periods. Using a straight-line measure of progress most faithfully depicts the Group’s performance because the Group makes available a consistent level of capacity over each distinct time period. For certain performance obligations, we use a cost-based input method to recognize revenue if we determine that a basis reflecting the costs incurred to date relative to the total costs expected to be incurred better reflects the pattern of transfer of control of the services to the customer. Revenue will cease to be recognised if there is an indication of a significant deterioration in a customer’s ability to pay for the remain- ing goods or services. Revenue from the sale of equipment The Group recognises revenue for the sale of equipment when it transfers control of the equipment to the customer, which is typically when the Group transfers title, physical possession, and the signifi- cant risks and rewards of the equipment to the customer. The Group’s equipment contracts do not typically contain a right of return. For equipment sales requiring the Group to perform significant integration, modification, or customisation of equipment, the Group recognises revenue over time if the equipment does not have an alter- native use and the Group has an enforceable right to payment for performance completed to date. For these projects, the Group recog- nises revenue over time on a basis reflecting the costs incurred to date relative to the total costs expected to be incurred because costs incurred best reflect the pattern of transfer of control of the asset to the customer. The Group may offer warranties on equipment. For warranties that are separately priced or offered as extended warranties, the Group recognises revenue on a straight-line basis over the duration of the warranty period. Using a straight-line measure of progress most faith- fully depicts the Group’s performance due to the nature of the Group’s stand ready obligation during the warranty period. The Group also offers standard warranties with contract durations which are typically one year and represent assurance-type warranties. Standard warran- ties do not represent performance obligations separate from the related equipment, and revenue related to standard warranties is recognised at the same time as the related equipment. Subscription revenue The subscription revenue related to HD Plus services is recorded on a linear basis over the term of the subscription agreement. Revenue generated by engineering services For engineering services, the Group recognises revenue over time on a basis reflecting the costs incurred to date relative to the total costs expected to be incurred since this best reflects the pattern of trans- fer of control of the services to the customer. LEASE INCOME Lease income from operating leases where the Group is lessor is rec- ognised on a straight-line basis over the lease term. The respective right-of-use assets are included in the consolidated statement of financial position together with other assets of the same category. C-BAND REPURPOSING INCOME Income from successfully meeting the separate Phase 1 and Phase 2 C-band Accelerated Relocation Payment deadlines is recognised when the Group has successfully completed Phase 1 and Phase 2 Accelerated Relocations, respectively, and has received validation of the respective relocation certification from the U.S. Federal Commu- nications Commission’s (“FCC”) Wireless Telecommunications Bureau. SES ANNUAL REPORT 2022104 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Income arising from settlements from the Relocation Payment Clear- inghouse (‘the Clearinghouse’) are recognised when the expenses have been incurred and the Group has obtained reasonable assurance that the costs will be reimbursed and that it will comply with the requirements attached to the reimbursement. The Group believes it obtains such reasonable assurance either when the Clearinghouse specifically validates the costs as being reimbursable, or where the costs fall within applicable cost ranges published by the Clearing- house in its cost catalogue. More details are given in >> Note 33. OTHER INCOME Other income arising from settlements under insurance claims and decreases in provisions for in-orbit incentives are recognised when they are virtually certain of being realised. Other income is presented as part of revenue due to its relative insignificance. CONTRACT ASSETS AND CONTRACT LIABILITIES Assets and liabilities related to contracts with customers include trade receivables, unbilled accrued revenue, deferred customer contract costs, and deferred income. Customer payments received in advance of the provision of service are recorded as contract liabilities and presented as ‘deferred income’ in the statement of financial position, and for significant advance pay- ments, interest is accrued on the amount received at the effective interest rate at the time of receipt. Our contracts at times contain prepayment terms that range from one month in advance to one year in advance of providing the service. Since the period of time between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service is one year or less, the Group does not make an adjustment to the transaction price for the effects of a significant financing component. The unbilled portion of recognised revenues is recorded as a contract asset and presented as ‘unbilled accrued revenue’ within ‘Trade and other receivables’, allocated between current and non-current as appropriate. Customer payments are generally due in advance or by the end of the month of capacity service. DIVIDENDS The Company declares dividends after the consolidated financial state- ments for the year have been approved. Accordingly, dividends are recorded in the subsequent year’s consolidated financial statements. PROVISIONS Provisions are recognised when the Group has a present legal or con- structive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. BORROWINGS Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income state- ment over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as origination costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. CURRENT TAXES Current tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from, or paid to, the tax authorities. The tax rates and laws used to compute these amounts are those enacted, or substantively enacted, at the report- ing date. DEFERRED TAXES Deferred tax is determined using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differ- ences, except: • where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a busi- ness combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • in respect of taxable temporary differences associated with invest- ments in subsidiaries where the timing of the reversal of the tem- porary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be avail - able against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except: • where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and SES ANNUAL REPORT 2022105 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION • in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each report- ing date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws which have been enacted, or substantively enacted, at the reporting date. Deferred taxes are classified according to the classification of the underlying temporary difference either as income or as an expense included in profit or loss, or in other comprehensive income or directly in equity. Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circum- stances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss. Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. TRANSLATION OF FOREIGN CURRENCIES The consolidated financial statements are presented in euro (EUR), which is the Company’s functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the entity’s functional currency at the exchange rate prevailing at the date of the transaction. The cost of non-monetary assets is translated at the rate applicable at the date of the transaction. All other assets and liabili- ties are translated at closing rates of the period. During the year, expenses and income expressed in foreign currencies are recorded at exchange rates which approximate the rate prevailing on the date they occur or accrue. All exchange differences resulting from the application of these principles are included in the consolidated income statement. The Group considers that monetary long-term receivables or loans with a subsidiary that is a foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future is, in sub- stance, a part of the entity’s net investment in that foreign operation. The related foreign exchange differences and income tax effect of the foreign exchange differences are included in the foreign currency translation reserve within equity. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that foreign operation is reclassified to the consolidated income statement. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The assets and liabilities of consolidated foreign operations are trans- lated into euro at the year-end exchange rates, while the income and expense items of these foreign operations are translated at the aver- age exchange rate of the year. The related foreign exchange differ- ences are included in the foreign currency translation reserve within equity. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that foreign operation is reclassified to the consolidated income statement as part of the gain or loss on disposal. The US dollar exchange rates used by the Group during the year were as follows: USD Exchange Rate Average rate for 2022 Closing rate for 2022 Average rate for 2021 Closing rate for 2021 USD 1.0555 1.0666 1.1894 1.1326 BASIC EARNINGS PER SHARE The Company’s capital structure consists of Class A and Class B shares, entitled to the payment of annual dividends as approved by the shareholders at their annual meetings. Holders of Class B shares participate in earnings and are entitled to 40% of the dividends payable per Class A share. Basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders, adjusted by deducting the assumed coupon, net of tax, on the perpetual bonds, by the weighted average number of common shares outstanding during the period as adjusted to reflect the economic rights of each class of shares. DILUTED EARNINGS PER SHARE Diluted earnings per share adjusts the figures used in the determina- tion of basic earnings per share to reflect the weighted average num- ber of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. SES ANNUAL REPORT 2022106 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION HEDGE OF A NET INVESTMENT IN A FOREIGN OPERATION Changes in the fair value of a derivative or non-derivative instrument that is designated as a hedge of a net investment are recorded in the foreign currency translation reserve within equity to the extent that it is deemed to be an effective hedge. The ineffective portion is recognised in the consolidated income statement as a financial income or expense. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, the hedge no longer qualifies for hedge accounting, or the Group revokes the designation. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is trans- ferred to net profit or loss for the period. The Group formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objec- tive and strategy for undertaking various hedge transactions. This process includes allocating all derivatives that are designated as net investment hedges to specific assets and liabilities in the consolidated statement of financial position. The Group also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedged item. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, the Group will discontinue hedge accounting prospectively. The ineffective portion of hedge is recognised in profit or loss. DERECOGNITION OF FINANCIAL ASSETS AND LIABILITIES 1) Financial assets A financial asset is derecognised where: • the right to receive cash flows from the asset has expired; • the Group retains the right to receive cash flows from the asset but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; • the Group has transferred its rights to receive cash flows from the asset and either: a) has transferred substantially all the risks and rewards of the asset; or b) has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of that asset. 2) Financial liabilities A financial liability is derecognised when the obligation under the lia- bility is discharged, cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecog- nition of the original liability and the recognition of a new liability, and the difference in the respective carrying amount is recognised in profit or loss. Offsetting financial instruments Financial assets and liabilities are offset, and the net amount reported in the consolidated statement of financial position, when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bank- ruptcy of the Company or the counterparty. ACCOUNTING FOR PENSION OBLIGATIONS The Company and certain subsidiaries operate defined contribution pension plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions to a third-party financial institution. The Group has no legal or constructive obligation to pay further contri- butions if the financial institution’s pension fund does not hold suffi- cient assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the Group pays contributions to pub- licly or privately administered pension insurance plans on a manda- tory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Pre- paid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. SHARE-BASED PAYMENTS 1) Equity-settled share-based compensation plans Employees (including senior executives) of the Group receive remu- neration in the form of share-based compensation transactions, whereby employees render services as consideration for equity instru- ments (‘equity-settled transactions’). The cost of equity-settled trans- actions is measured by reference to the fair value at the date on which they are granted. The fair value is determined by an external valuer using a binomial model for the Stock Appreciation Rights Plan (‘STAR Plan’) and Equity Based Compensation Plan comprising options (‘EBCP Option Plan’), and a Black Scholes Model for the Equity Based Compensation Plan comprising performance shares (‘EBCP PS’) and restricted shares (‘EBCP RS’). Further details are given in >> Note 23. In valuing equity-settled transactions, no account is taken of any non-market performance conditions, the valuation being linked only to the price of the Company’s shares, if applicable. SES ANNUAL REPORT 2022107 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting date). The cumulative expense recognised for equity- settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The consolidated income statement charge or credit for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (see >> Note 11). 2) Cash-settled share-based compensation plans A liability is recognised for the fair value of cash-settled transactions. The fair value is measured initially at each reporting date up to and including the settlement date, with changes in fair value recognised in employee benefits expense. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability. Further details are given in >> Note 23. DEEPLY SUBORDINATED FIXED RATE RESETTABLE SECURITIES (“PERPETUAL BOND”) The deeply subordinated fixed rate securities issued by the Company are classified as equity since the Company has no contractual obli- gation to redeem the securities, and coupon payments may be deferred under certain circumstances (more details are given in >> Note 21) and recorded at fair value. Subsequent changes in fair value are not recognised in equity. Coupons become payable when- ever the Company makes dividend payments. Coupon accruals are considered in the determination of earnings for calculating earnings per share (see >> Note 11). LEASES The determination as to whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, primarily whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consid- eration. Control is conveyed where the Group as lessee has both the right to direct the identified asset’s use and to obtain substantially all the economic benefits from that use. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • fixed payments (including in-substance fixed payments), less any lease incentives receivable; • variable lease payments that are based on an index or a rate; • amounts expected to be payable by the lessee under residual value guarantees; • the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and • payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. Lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group’s incremental bor- rowing rate. At the commencement of a lease the Group recognises a lease asset and a lease liability. The lease liability is initially meas- ured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease. Lease pay - ments are apportioned between the finance charges and reduction of the lease liability to achieve a constant rate of interest on the remaining balance of the liability. Finance costs are charged directly to expense. In its accounting policies the Group applies the following practical expedients: • using a single discount rate for a portfolio of leases with similar characteristics; and • not accounting for leases ending within 12 months of the date of the initial application for low value assets. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED A number of new standards and amendments to standards and inter- pretations are relevant for the Group and effective for annual periods beginning on or after 1 January 2023, and have not been early adopted in preparing these consolidated financial statements: 1) Amendments to IAS 1 on classification of liabilities as current or non-current On 23 January 2020, the IASB issued “Classification of Liabili- ties as Current or Non-Current (Amendments to IAS 1)”. The amendment will affect the presentation of liabilities in the con- solidated statement of financial position. The amendment clar- ifies that the classification of a liability as current or non-current should be based on rights in existence at the end of the report- ing period to defer settlement of a liability by at least 12 months. The amendment also clarifies that the classification of a liability should be unaffected by the entity’s expectations regarding whether it will exercise its rights to defer payment. The amend- ment is effective for annual reporting periods beginning on or after 1 January 2024. The amendment was not yet endorsed by the EU. The Group does not expect any significant impact of these amendments on its consolidated financial statements. 2) Amendments to IAS 1 and IAS 8 On 12 February 2021, the IASB issued amendments to IAS 1 “Pres- entation of Financial Statements” regarding the disclosure of accounting policies and as well amendments to IAS 8 “Account- ing policies, changes in accounting estimates and errors” on the definition of accounting estimates. Both amendments aim to improve accounting policy disclosure and to help users of the SES ANNUAL REPORT 2022108 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION financial statements to distinguish between changes in account- ing estimates and changes in accounting policies. The amend- ments were endorsed by the EU and are effective for annual periods beginning on or after 1 January 2023. The Group does not expect any significant impact of these amendments on its consolidated financial statements. 3) Amendments to IAS 12 deferred tax related to assets and liabilities arising from a single transaction On 6 May 2021, the IASB published the amendments to IAS 12 “Income taxes” regarding the deferred tax related to assets and liabilities arising from a single transaction, that clarifies how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments were endorsed by the EU and are effective for annual periods begin- ning on or after 1 January 2023. The Group does not expect any significant impact of these amendments on its consolidated financial statements. 4) Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and IAS 28 The IASB has made limited scope amendments to IFRS 10 (‘Con- solidated Financial Statements’) and IAS 28 (‘Investments in Associates and Joint Ventures’) which clarify the accounting treatment for sales or contribution of assets between an inves- tor and their associates or joint ventures. They confirm that the accounting treatment depends on whether the nonmonetary assets sold or contributed to an associate or joint venture con- stitute a ‘business’ (as defined in IFRS 3 Business Combinations). Where the non-monetary assets constitute a business, the inves- tor will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the definition of a business, the gain or loss is recognised by the investor only to the extent of the other investor’s interests in the associate or joint venture. The amendments apply prospectively. The IASB decided to defer the application date of this amend- ment until such time as the IASB has finalised its research pro- ject on the equity method. NOTE 3 – BUSINESS COMBINATIONS ACQUISITION OF DRS GLOBAL ENTERPRISE SOLU- TIONS, INC. (‘GES’) On 22 March 2022, SES announced its intention to acquire all the issued and outstanding share capital of GES, a US-based subsidiary of Leonardo DRS Inc. for USD 450 million via its subsidiary SES Space & Defense Inc. (‘SES SD’ – formerly SES Government Solutions, Inc.). The transaction closed on 1 August 2022. SES SD provides multi-orbit, multi-band managed satellite commu- nication services to the US Department of Defense and other govern- mental agencies, operating in a similar arena to the larger GES busi- ness. The combination of the two units, with their established relationships with key governmental customers positions the extended SES SD, and the wider SES Group, as a provider of scalable solutions serving the multi-orbit satellite communications needs of the US Gov- ernment and supporting missions anywhere on land, at sea, or in the air. Details of the purchase consideration, net assets acquired, and good- will arising are as follows: Purchase consideration €MILLION 2022 Cash paid 435 Total consideration 435 The fair values of the assets and liabilities recognised as a result of the acquisition are as follows: €MILLION 2022 Property, plant and equipment (>> Notes 13, 14) 12 Intangible asset: Customer relationships (>> Note 15) 292 Current assets 29 Non-current assets 2 Deferred tax liabilities (>> Note 9) (65) Current liabilities (26) Deferred income (10) Net identifiable assets acquired 234 Add: Goodwill (>> Note 15) 201 Net assets acquired 435 * Non-deductible for tax purpose. Goodwill mostly represents expected synergies resulting reduction of costs by combining the operations of GES with those of other SES companies, particularly SES Space & Defense, Inc., including the opportunity to migrate some of the GES services on to the Group’s own satellite fleet. The fair value of the acquired trade and other receivables and pre- payments with aggregated gross contractual amount of EUR 24 mil- lion was assumed to equal their book value. The best estimate at the acquisition date of the contractual cash flows not expected to be collected was EUR 1 million. SES ANNUAL REPORT 2022109 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Purchase consideration – cash outflow €MILLION 2022 Cash paid 435 Less Balance acquired: Cash and cash equivalents – Net outflow of cash – investing activities 435 Transaction-related costs of EUR 3 million were recognised directly in other operating expenses. The amounts of post-acquisition GES revenue and net loss included in the consolidated income statement were EUR 95 million and EUR 3 million respectively. The Group’s 2022 revenue and loss for the year if the acquisition had taken effect on 1 January 2022 would have been EUR 2,045 million and EUR 34 million respectively, instead of SES Group reported revenue and loss for the year of EUR 1,944 million and EUR 35 million respectively. NOTE 4 – SEGMENT INFORMATION The Group does business in one operating segment, namely the pro- vision of satellite-based data transmission capacity, and ancillary ser- vices, to customers around the world. The Senior Leadership Team (‘SLT’), which is the chief operating deci- sion-making committee in the Group’s corporate governance struc- ture, reviews the Group’s financial reporting and generates those pro- posals for the allocation of the Group’s resources which are submitted for validation to the Board of Directors. The main sources of financial information used by the SLT in assessing the Group’s performance and allocating resources are: • analyses of the Group’s revenues from its business units SES Video and SES Networks (comprising the sales verticals Fixed Data, Mobility and Government); • cost and overall Group profitability development; • internal and external analyses of expected future developments in the markets into which capacity is being delivered and of the com- mercial landscape applying to those markets. When analysing the performance of the operating segment against the prior period figures, these are presented both as reported and at ‘constant FX’, whereby they are recomputed using the prevailing exchange rates for each corresponding month of the current period. The segment’s financial results for 2022 are set out below: Operating Profit Reported €MILLION 2022 2021 Change Favourable +/- Adverse Revenue 1,944 1,782 9.1% C-band repurposing income 184 901 -79.5% Operating expenses (886) (821) -8.1% EBITDA 1,242 1,862 -33.3% EBITDA margin (%) 58.3% 69.4% -11.1% pts Depreciation and impairment (836) (626) -33.3% Amortisation and impairment (266) (768) 65.3% Operating profit 140 468 -70.1% Adjusted EBITDA 1,105 1,091 1.3% Adjusted EBITDA margin 56.9% 61.2% -4.3% pts C-band repurposing income 184 901 -79.5% C-band operating expenses (30) (122) 75.3% Other significant special items (17) (8) N/m EBITDA 1,242 1,862 33.3% Operating Profit at Constant FX €MILLION 2022 Constant FX 2021 Change Favourable +/- Adverse Revenue 1,944 1,900 2.3% C-band repurposing income 184 1,055 -82.5% Operating expenses (886) (885) -0.3% EBITDA 1,242 2,070 -40.0% EBITDA margin (%) 58.3% 70.1% -11.8% pts Depreciation and impairment (836) (665) -25.7% Amortisation and impairment (266) (834) 68.1% Operating profit 140 571 -75.5% Adjusted EBITDA 1,105 1,158 -4.6% Adjusted EBITDA margin 56.9% 61.0% -4.1% pts C-band repurposing other income 184 1,055 -82.5% C-band operating expenses (30) (135) 77.6% Other significant special items (17) (8) N/m EBITDA 1,242 2,070 -40.0% SES ANNUAL REPORT 2022110 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION REVENUE BY BUSINESS UNIT As reported and at constant FX, the revenue allocated to the relevant business units developed as follows: Revenue by Business Unit 2022 and 2021 €MILLION 2022 2021 Constant FX 2021 Change Favourable +/- Adverse Change Favourable +/- Adverse (constant FX) SES Video 1,020 1,046 1,079 -2.5% -5.5% Under- lying 1 1,010 1,046 1,079 -3.4% -6.4% Periodic 2 10 – – N/m N/m SES Net- works 923 735 819 25.7% 12.7% Under- lying 1 919 734 818 25.3% 12.4% Periodic 2 4 1 1 N/m N/m Sub-total 1,943 1,781 1,898 9.1% 2.4% Under- lying 1 1,929 1,780 1,897 8.4% 1.7% Periodic 2 14 1 1 N/m N/m Other 3 1 1 2 N/m N/m Group Total 1,944 1,782 1,900 9.1% 2.3% Revenue by Business Unit 2021 and 2020 €MILLION 2021 2020 Constant FX 2020 Change Favourable +/- Adverse Change Favourable +/- Adverse (constant FX) SES Video 1,046 1,108 1,097 -5.6% -4.6% Under- lying 1 1,046 1,108 1,097 -5.6% -4.6% Periodic 2 – – – N/m N/m SES Net- works 735 767 737 -4.2% -0.4% Under- lying 1 734 759 730 -3.3% 0.5% Periodic 2 1 8 7 -86.3% -85.0% Sub-total 1,781 1,875 1,834 -5.0% -2.9% Under- lying 1 1,780 1,867 1,827 -4.7% -2.6% Periodic 2 1 8 7 -86.3% -85.0% Other 3 1 1 1 N/m N/m Group Total 1,782 1,876 1,835 -5.0% -2.9% REVENUE BY CATEGORY The Group’s revenue analysis from the point of view of category and timing can be found below: Revenue by Category 2022 €MILLION Revenue recognised at a point in time Revenue recognised over time Total Revenue from contracts with customers 49 1,895 1,944 Lease income – – – Total 49 1,895 1,944 Revenue by Category 2021 €MILLION Revenue recognised at a point in time Revenue recognised over time Total Revenue from contracts with customers 28 1,722 1,750 Lease income – 32 32 Total 28 1,754 1,782 Revenue from contracts with customers recognised at a point in time is related to sales of equipment and amounts to EUR 49 million in 2022 (2021: EUR 28 million). 1 “Underlying” revenue represents the core business of capacity sales, as well as associated services and equipment. This revenue may be impacted by changes in launch schedule and satellite health status. 2. “Periodic” revenue separates revenues that are not directly related to or would distort the underlying business trends. Periodic revenue includes: the outright sale of transponders or transponder equivalents; accelerated revenue from hosted payloads during the course of construction; termination fees; insurance proceeds; certain interim satellite missions and other such items when material 3 Other includes revenue not directly applicable to SES Video or SES Networks SES ANNUAL REPORT 2022111 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION REMAINING PERFORMANCE OBLIGATIONS Our remaining performance obligations, which the Group refers to as revenue “backlog”, represent our expected future revenues under existing customer contracts and include both cancellable and non-cancellable contracts. The backlog was EUR 5.9 billion as of December 31, 2022 (2021: EUR 5.8 billion), EUR 4.8 billion (2021: EUR 5.2 billion) of which related to ‘protected’ backlog and EUR 1.1 billion (2021: EUR 0.6 billion) of which related to ‘unprotected’ backlog. Approximately 26% of the backlog is expected to be recognised as revenue in 2023, approximately 22% in 2024, and approximately 16% in 2025, with the remaining thereafter. Protected backlog includes non-cancellable contracts and cancella- ble contracts with substantive termination fees. For contracts with termination options that do not have substantive termination fees, protected backlog also includes contract periods up to the first optional termination date. Unprotected backlog includes revenue from contracts that are cancellable and not subject to substantive termi- nation fees. REVENUE BY COUNTRY The Group’s revenue from external customers analysed by country using the customer’s billing address is as follows: Revenue by Country €MILLION 2022 2021 Luxembourg (SES country of domicile) 49 54 United States of America 660 554 Germany 345 355 United Kingdom 227 212 France 81 78 Others – Europe 193 203 Others 389 326 Total 1,944 1,782 No single customer accounted for 10%, or more, of total revenue in 2022, or 2021. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS BY LOCATION The Group’s property, plant and equipment and intangible assets are located as set out in the following table. Note that satellites are allo- cated to the country where the legal owner of the asset is incorporated. Property, Plant and Equipment and Intangible Assets by Location €MILLION 2022 2021 Luxembourg (SES country of domicile) 5,985 5,767 United States of America 2,303 2,036 The Netherlands 1,155 1,206 Sweden 122 145 Germany 43 45 Israel 24 27 Others 148 125 Total 9,780 9,351 NOTE 5 – OPERATING EXPENSES The operating expense categories disclosed include the following types of expenditure: 1) Cost of sales, which excludes staff costs and depreciation, rep- resents expenditures which generally vary directly with revenue. They are incurred in delivering services to customers and include a variety of expenses such as rental of third-party satellite capac- ity, third-party teleports, connectivity, equipment and equipment rental, customer support costs such as hosting, monitoring, implementation, engineering work as well as commissions. Other cost of sales detailed below include an amount of EUR 3 million (2021: EUR 51 million) for C-band repurposing related expenses (>> Note 33). Cost of Sales €MILLION 2022 2021 Rental of third-party satellite capacity (94) (68) Customer support costs (100) (72) Other cost of sales (157) (179) Total cost of sales (351) (319) 2) Staff costs of EUR 330 million (2021: EUR 304 million) include gross salaries and employer’s social security payments, pay- ments into pension schemes for employees, charges arising under share-based payment schemes, as well as staff-related restructuring charges of EUR 9 million (2021: EUR 8 million) and C-band repurposing related expenses of EUR 12 million (2021: EUR 36 million). At the year-end the total full-time equivalent number of members of staff was 2,298 (2021: 2,037). 3) Other operating expenses of EUR 205 million (2021: EUR 198 million) are, by their nature, less variable to revenue development. Such costs include office-related and technical facility costs, in-orbit insurance costs, marketing expenses, general and administrative expenditure, consulting charges, travel-related expenditure and movements in provisions for debtors. Other operating expenses also include an amount of EUR 15 million (2021: EUR 35 million) C-band repurposing related expenses (>> Note 33), EUR 3 million (2021: nil) costs associated with the acquisition and integration of GES acquisition (>> Note 3), as well as EUR 5 million one-off regulatory charges arising outside on- going operations. SES ANNUAL REPORT 2022112 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 6 – AUDIT AND NON-AUDIT FEES For 2022 and 2021 the Group recorded charges, billed and accrued, from its independent auditors, and affiliated companies thereof, as set out below: Audit and Non-Audit Fees €MILLION 2022 2021 Fees for statutory audit of annual and consolidated accounts 2.5 2.1 Fees charged for other assurance services 0.1 0.1 Fees charged for other non–audit services – – Total audit and non–audit fees 2.6 2.2 ‘Other assurance services’ represent primarily comfort letters issued in connection with treasury funding operations and interim dividend reviews. NOTE 7 – FINANCE INCOME AND COSTS Finance Income and Costs €MILLION 2022 2021 Finance income Interest income 6 – Net foreign exchange gains 1 45 37 Fair value increases on financial assets 2 – 13 Total 51 50 Finance costs Interest expense on borrowings (excluding amounts capitalised) (102) (95) Loan fees and origination costs and other (22) (26) Fair value losses on financial assets 2 (15) – Total (139) (121) 1 Net foreign exchange gains are mostly related to revaluation of bank accounts, deposits and other monetary items denominated in US dollars. 2 Represents fair value increases/ losses on assets included as part of ‘Other financial assets’ in the consolidated statement of financial position and required to be meas- ured at fair value following recent third-party transactions. NOTE 8 – INCOME TAXES Taxes on income comprise the taxes paid or owed in the individual countries, as well as deferred taxes. Current and deferred taxes can be analysed as follows: Income Taxes €MILLION 2022 2021 Current income tax Current income tax charge on result of the year (65) (163) Adjustments in respect of prior periods 6 9 Foreign withholding taxes (5) (7) Total current income tax (64) (161) Deferred income tax Relating to origination and reversal of temporary differences 121 (23) Relating to tax losses carried forward (31) 251 Changes in tax rate 3 6 Adjustment of prior years (116) (24) Total deferred income tax (23) 210 Income tax benefit per consolidated income statement (87) 49 Consolidated statement of changes in equity Current and Deferred Income tax related to items (charged) or credited directly in equity Post-employment benefit obligation (1) (1) Impact of currency translation (31) (36) Net investment hedge – current tax 24 26 Tax impact of the treasury shares impairment recorded in the stand-alone financial statements 2 1 Tax impact on perpetual bond 14 20 Current and deferred income taxes reported in equity 8 10 A reconciliation between the income tax benefit / (expense) and the profit before tax of the Group multiplied by a theoretical tax rate of 27.19% (2021: 25.69%) which corresponds to the Luxembourg domes- tic tax rate for the year ended 31 December 2022 is as follows: Income Tax Reported in the Consolidated Income Statement €MILLION 2022 2021 Profit/(loss) before tax from continuing opera- tions 52 397 Multiplied by theoretical tax rate 14 102 Effect of different foreign tax rates 4 14 Investment tax credits (61) (44) Non-deductible expenditures (8) 2 Taxes related to prior years (3) 3 Effect of changes in tax rate – (5) Other changes in group tax provision not included in separate lines 10 (3) Impairment on investments in subsidiaries and other assets – (107) Impact of deferred taxes 89 (23) Foreign withholding taxes 5 7 Translation impact on investments in subsidiaries 33 – Other 4 5 Income tax reported in the consolidated income statement 87 (49) SES ANNUAL REPORT 2022113 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION FOREIGN WITHHOLDING TAX The foreign withholding tax of EUR 5 million includes EUR 2 million of Indian withholding tax retained by customers and paid to the Indian tax authorities. A final decision on Indian withholding taxes is still pending at the level of the Supreme Court. The remaining EUR 3 million relates to withholding tax retained by customers in other jurisdictions. INVESTMENT TAX CREDITS (‘ITCS’) In 2022, the continuing investment in the O3b mPOWER and 19.2° East replacement satellites triggered the recognition of deferred tax assets for ITCs of EUR 27 million (2021: EUR 19 million) and EUR 31 million (2021: EUR 9 million) respectively. The remaining EUR 3 million of deferred tax assets for ITCs was recognised in connection with other investments by Group companies in Luxembourg. According to Luxembourg tax law, unused ITCs can be carried forward for a maximum of ten years. SES believes that it is probable that suf- ficient taxable profits will be available in the Luxembourg fiscal unity in the next 10 years to use the ITCs recognised in 2022 despite the fact that a partial valuation adjustment is recorded for prior year ITCs. IMPACT OF DEFERRED TAXES GovSat-1 was launched in January 2018 and entered into operational service in March 2018. A deferred tax asset for investment tax credits of EUR 26 million was recognised by its owner LuxGovSat S.A. in the same year. LuxGovSat S.A. is not part of the Luxembourg fiscal unity. As a result of management’s analysis of the recoverability of this deferred tax asset, an additional valuation adjustment of EUR 1 mil- lion was recorded in 2022 (2021: EUR 11 million). Considering the estimated future taxable income based on the most recent business plan information the Company has concluded that the ITCs recognised in 2018, 2019 and 2020 cannot be fully used due to the 10-year carry forward limitation rule. Therefore, a valuation adjustment of EUR 110 million (2021: EUR 0 million) on deferred tax assets for prior year ITCs for Luxembourg fiscal unity was recorded in 2022. An additional deferred tax asset of EUR 17 million (2021: EUR 0 mil- lion) for tax losses and interest carried forward was recognised for HD Plus GmbH, as management believes that it is probable that suf- ficient taxable profits will be available in that company in the future to utilise those losses. IMPAIRMENT ON SUBSIDIARIES AND OTHER ASSETS The aggregate impact of EUR 0 million mainly comprises the following: • The net impairment charge of EUR 142 million (2021: EUR 903 mil- lion) recorded on the carrying value of subsidiary investments and other assets held by entities in Luxembourg resulting in an income tax benefit of EUR 38 million (2021: EUR 232 million). • The reversal of impairment charges of EUR 62 million (2021: EUR 0 million) taken on the carrying value of intercompany receivables held by entities in Luxembourg resulting in an income tax expense of EUR 17 million. • The impairment charge of EUR 77 million (2021: EUR 673 million) recorded in connection with the goodwill attributed to the GEO North America cash-generating unit (see >> Note 15) resulting in a negative ETR impact of EUR 16 million (2021: EUR 141 million). TRANSLATION IMPACT ON INVESTMENTS IN SUBSIDIARIES The elimination of the tax effect on the translation impact resulting from intercompany restructurings resulted in an income tax expense of EUR 33 million (2021: EUR 0 million). NOTE 9 – DEFERRED TAX BALANCES The deferred tax positions included in the consolidated financial statements can be analysed as follows: Deferred Tax Balances €MILLION Deferred tax assets 2022 Deferred tax assets 2021 Deferred tax liabilities 2022 Deferred tax liabilities 2021 Losses carried forward 296 301 – – Tax credits 206 259 – – Intangible assets 20 23 (335) (239) Tangible assets – – (99) (160) Trade and other receivables 15 19 – – Other 5 5 (43) (39) Total deferred tax assets/(liabilities) 542 607 (477) (438) Offset of deferred taxes (43) (39) 43 39 Net deferred tax assets/(liabilities) 499 568 (434) (399) Deferred tax assets have been offset against deferred tax liabilities where they relate to the same tax authority and the entity concerned has a legally enforceable right to set off current tax assets against current tax liabilities. SES ANNUAL REPORT 2022114 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION In 2022 the Group reversed deferred tax assets for tax losses carried forward in Luxembourg for EUR 25 million (2021: recognition of DTA of EUR 247 million). Tax losses can be carried forward in Luxembourg for 17 years. Using the estimated future taxable income based on the most recent business plan information approved by the Board of Directors, the Company has concluded that the deferred tax assets for the remaining tax losses carried forward are recoverable (EUR 301 million). In addition to the recoverable tax losses for which the Group has recognised deferred tax assets, the Group has further tax losses of EUR 346 million as at 31 December 2022 (31 December 2021: EUR 488 million) which are available for offset against future taxable profits of the companies in which the losses arose. EUR 181 million (31 Decem- ber 2021: 329 million) of these tax losses were generated in the US. EUR 94 (31 December 2021: EUR 82 million) of these tax losses were generated in Israel. Deferred tax assets have not been recognised in respect of these losses as they cannot be used to offset taxable prof- its elsewhere in the Group and they have arisen in subsidiaries which are not expected to generate taxable profits against which they could be offset in the foreseeable future. Considering the total tax losses carried forward and future taxable income based on the most recent business plan information for Luxembourg entities, the Company has concluded that prior year ITCs cannot be fully used due to a 10 year carry forward limitation rule. Therefore, a valuation allowance of EUR 110 million (2021: EUR 0 mil- lion) on a deferred tax asset for ITCs for the Luxembourg fiscal unity was recorded in 2022. Considering the valuation allowance and new deferred tax assets recognised for the 2022 investments, the total DTA for ITCs amounts to EUR 206 million (2021: EUR 259 million). No deferred income tax liabilities have been recognised for with- holding tax and other taxes which would be payable on the unremit- ted earnings of certain subsidiaries. Such amounts are permanently reinvested or not subject to taxation. The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances, is as follows: Movement in deferred Income Tax Assets DEFERRED TAX ASSETS Losses carried forward Tax credits Intangible assets Trade and other receivables Other Total At 1 January 2021 72 228 26 13 10 349 (Charged)/credited to the income statement 227 31 (3) 5 (5) 255 Exchange difference 1 2 – – 1 – 3 At 31 December 2021 301 259 23 19 5 607 (Charged)/credited to the income statement (7) (53) (4) (5) – (69) Exchange difference 1 2 – 1 1 – 4 At 31 December 2022 296 206 20 15 5 542 Movement in deferred Income Tax Liabilities DEFERRED TAX LIABILITIES Intangible assets Tangible assets Other Total At 1 January 2021 219 123 27 369 (Charged)/credited to the income statement 2 31 12 45 Exchange difference 1 18 6 – 24 At 31 December 2021 239 160 39 438 Additions through business combinations (>> Note 3) 65 – – 65 Charged/(credited) to the income statement 20 (70) 4 (46) Exchange difference 1 11 9 – 20 At 31 December 2022 335 99 43 477 1 A foreign exchange impact arises due to the translation of Group’s operations with a different functional currency than euro. This amounts to EUR 4 million as at 31 December 2022 (2021: EUR 21 million) SES ANNUAL REPORT 2022115 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 10 – COMPONENTS OF OTHER COMPREHENSIVE INCOME Components of Other Comprehensive Income €MILLION 2022 2021 Impact of currency translation 295 471 Income tax effect (31) (36) Total impact of currency translation, net of tax 264 435 The impact of currency translation in other comprehensive income relates to exchange gains or losses arising on the translation of the net assets of foreign operations from their functional currency to the euro, which is the Company’s functional and presentation currency. The unrealised gain in 2022 of EUR 295 million (2021: unrealised loss of EUR 471 million) reflects the impact on the valuation of SES’s net US dollar assets due to the strengthening of the US dollar against the euro from USD 1.1326 to USD 1.0666 (2021: the strength- ening of the US dollar against the euro from USD 1.2271 to USD 1.1326). This effect is partially offset by the impact of the net invest- ment hedge (>> Note 19). NOTE 11 – EARNINGS PER SHARE Earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders of each class of shares by the weighted average number of shares outstanding during the year as adjusted to reflect the economic rights of each class of share. The net profit or loss for the year attributable to ordinary shareholders has been adjusted to include an assumed coupon, net of tax, on the Perpetual Bonds. For 2022, a basic loss per share of EUR (0.16) per Class A share (2021: basic earnings per share of EUR 0.92), and EUR (0.06) per Class B share (2021: basic earnings per share of EUR 0.37) have been calculated as follows: (Loss)/profit attributable to the owners of the parent for calculating basic earnings per share: Profit Attributable to Owners €MILLION 2022 2021 (Loss)/profit attributable to owners of the parent (34) 453 Assumed coupon on perpetual bond (net of tax) (36) (41) Total (70) 412 Assumed coupon accruals of EUR 36 million (net of tax) for the year ended 31 December 2022 (2021: EUR 41 million) related to the Per- petual Bonds in issue have been considered for the calculation of the basic and diluted earnings available for distribution. The weighted average number of shares based on the capital struc- ture of the Company as described in >> Note 21, net of own shares held, for calculating basic earnings per share was as follows: Weighted Average Number of Shares 2022 2021 Class A shares (in million) 364.1 369.7 Class B shares (in million) 185.8 189.2 Total 549.9 558.9 Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares which are primarily related to the share-based compensation plans. A calculation is done to deter- mine the number of shares that could have been acquired at fair value based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options and the difference, if it results in a dilutive effect, is considered to adjust the weighted aver- age number of shares. For 2022, a diluted loss per Class A share of EUR (0.16) (2021: diluted earnings of EUR 0.92), and EUR (0.06) per Class B share (2021: diluted earnings of EUR 0.37) have been calculated as follows: Diluted Earnings per Share €MILLION 2022 2021 (Loss)/profit attributable to owners of the parent (34) 453 Assumed coupon on perpetual bond (net of tax) (36) (41) Total (70) 412 The weighted average number of shares, net of own shares held, for calculating diluted earnings per share was as follows: Weighted Average Number of Shares 2022 2021 Class A shares (in million) 368.8 372.9 Class B shares (in million) 185.7 189.2 Total 554.5 562.1 SES ANNUAL REPORT 2022116 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 12 – DIVIDENDS PAID AND PROPOSED Dividends declared are paid net of any withholding tax (2022: EUR 24 million, 2021: EUR 20 million). Gross dividends declared and paid during the year: Dividends Declared and Paid €MILLION 2022 2021 Class A dividend for 2021: EUR 0.50 (2020: EUR 0.40) 192 153 Class B dividend for 2021: EUR 0.20 (2020: EUR 0.16) 38 31 Total 230 184 Dividends proposed for approval at the annual general meeting to be held on 1 April 2023, which are not recognised as a liability as at 31 December 2022: Dividend Proposed €MILLION 2023 Class A dividend for 2022: EUR 0.50 (2021: EUR 0.50) 192 Class B dividend for 2022: EUR 0.20(2020: EUR 0.20) 38 Total 230 NOTE 13 – PROPERTY, PLANT AND EQUIPMENT Property, Plant and Equipment 2022 €MILLION Land and buildings Space segment Ground segment Other fixtures and fittings, tools and equipment Total Cost As at 1 January 2022 289 10,709 872 277 12,147 Additions 15 1 10 2 28 Additions through business combinations (>> Note 3) 5 – – 5 10 Disposals (4) – (3) – (7) Retirements 1 (7) (163) (34) (9) (213) Transfers from assets in course of construction (>> Note 14) 2 1 490 44 18 553 Transfers between categories (7) 5 (17) 14 (5) Impact of currency translation 8 326 30 5 369 As at 31 December 2022 300 11,368 902 312 12,882 Depreciation As at 1 January 2022 (201) (7,332) (640) (201) (8,374) Depreciation (21) (523) (59) (39) (642) Impairment expense – (194) – – (194) Disposals 2 – 2 – 4 Retirements 1 7 163 34 9 213 Transfers between categories 2 – 8 (10) – Impact of currency translation (4) (232) (20) (3) (259) As at 31 December 2022 (215) (8,118) (675) (244) (9,252) Net book value as at 31 December 2022 85 3,250 227 68 3,630 1 Satellites Astra 3A and AMC-8 were retired in 2022 2 SES-17, SES-20, SES-21 and SES-22 became operational during 2022 SES ANNUAL REPORT 2022117 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Property, Plant and Equipment 2021 €MILLION Land and buildings Space segment Ground segment Other fixtures and fittings, tools and equipment Total Cost As at 1 January 2021 278 11,091 811 229 12,409 Additions 6 – 7 3 16 Disposals (3) (1) (1) (5) Retirements 1 (6) (850) (3) (1) (860) Transfers from assets in course of construction (>> Note 14) 3 – 17 41 61 Transfers from intangible assets (>> Note 15) – – 3 – 3 Impact of currency translation 11 468 38 6 523 As at 31 December 2021 289 10,709 872 277 12,147 Depreciation As at 1 January 2021 (186) (7,321) (562) (170) (8,239) Depreciation (15) (478) (53) (29) (575) Impairment expense – (73) – – (73) Impairment reversal – 22 – – 22 Disposals – – 1 1 2 Retirements 1 6 850 3 1 860 Impact of currency translation (6) (332) (29) (4) (371) As at 31 December 2021 (201) (7,332) (640) (201) (8,374) Net book value as at 31 December 2021 88 3,377 232 76 3,773 1 Satellites ASTRA 2B, ASTRA 1D, AMC-2, AMC-16, NSS-806 and NSS-5 were retired in 2021 SES ANNUAL REPORT 2022118 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The Group’s policy in setting the useful economic life of its satellites is to initially use the satellite design life and then, once sufficient time has passed to allow for initial anomalies to be investigated and future fuel projections to be stabilised, to adjust the depreciation life to take into account factors such as the technical condition of the satellite, its projected remaining fuel life, and replacement or redeployment plans. The review in 2022 resulted in revisions to the remaining useful economic lives of MEO Block 1-2, 3A, 3B and three GEO Satellites resulting in a net increase in the depreciation expense for 2022 of EUR 4 million. The corresponding review in 2021 resulted in revisions to the remaining useful economic lives of three GEO satellites resulting in a net decrease in the depreciation expense for 2021 of EUR 9 mil- lion. As at 31 December 2022, the amount of the property, plant and equip- ment pledged in relation to the Group’s liabilities is nil (2021: nil). For further information related to right-of-use assets, see >> Note 30. IMPAIRMENT OF SPACE SEGMENT ASSETS In 2022, the net impairment expense recorded for space segment assets was EUR 194 million (2021: EUR 51 million). There were no impairment reversals in 2022 (2021: EUR 22 million). The charges and reversals are the aggregation of impairment testing procedures on specific satellites, or combinations of co-located satellites, in the Group’s geostationary fleet. The following table discloses the applicable amounts and discount rates used in the impairment test for those geostationary satellites subject to impairment expenses or reversals during the year. €MILLION Carrying value Value in use Discount rate Impairment expense 2022 – Expense 1,084 890 7.5% - 11.1% 194 2021 – Expense 333 260 4.9% - 8.9% 73 2021 – Reversal 66 114 4.9% - 8.9% (22) 2021 – Net impact 51 The impairment expenses and reversals recorded reflect updated business assumptions for the satellites through to the end of their useful economic lives. In general, these updated assumptions reflect a combination of revised commercial developments and expectations, updated assessments of the regulatory environment impacting certain assets (and hence the Group’s ability to achieve the forecast commercial exploitation), changes in the competitive environment in which the Group operates, and certain changes in the operation of the satellites (for example the decision to place a particular satellite into inclined orbit, or changes to the timing thereof) or associated ground segment infrastructure. Specific developments, largely in the second half of 2022, in these areas contributed to the weakening of cash flow projections for certain satellites and contributed to the recording of the impairment expenses noted above. As part of standard impairment testing procedures, the Group assesses the impact of changes in the discount rates and reductions in EBITDA. Discount rates are simulated up to 1% below and above the CGU’s specific rate used in the base valuation and EBITDA pro- jections are simulated up to 5% below and above the base valuation. In this way a matrix of valuations is generated, which reveals the potential exposure to impairment expenses based on movements in the valuation parameters which are within the range of outcomes foreseeable at the valuation date. The most recent testing showed that for this category of geostationary space segment assets, then under the least favourable combination of the circumstances above (namely a 1% higher discount rate in conjunction with a 5% lower EBITDA projection) an incremental impairment of EUR 111 million would be recorded. A 1% increase in the discount rate at a constant EBITDA level would increase satellite impairments by EUR 38 million. Taken separately, a 5% decrease in EBITDA would increase satellite impairments by EUR 50 million. SES ANNUAL REPORT 2022119 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 14 – ASSETS IN THE COURSE OF CONSTRUCTION Assets in the Course of Construction 2022 €MILLION Land and Buildings Space segment Ground segment Fixtures, tools & equipment Total Cost and net book value as at 1 January 2022 7 1,664 107 10 1,788 Movements in 2022 Additions 1 2 428 105 18 553 Additions through business combinations (>> Note 3) – – 2 – 2 Transfers to assets in use (>> Note 13) (1) (490) (44) (18) (553) Transfer between categories – 7 (17) 6 (4) Impact of currency translation – 66 6 1 73 Cost and net book value as at 31 December 2022 8 1,675 159 17 1,859 1 Additions related to C-band, O3b mPOWER, SES-17, Astra 19.2E (including EUR 37 million non-cash transactions), partly offset by C-band reimbursable space segment (EUR 311 million) and ground cost (EUR 13 million) Assets in the Course of Construction 2021 €MILLION Land and Buildings Space segment Ground segment Fixtures, tools & equipment Total Cost and net book value as at 1 January 2021 1 1,529 90 31 1,651 Movements in 2021 Additions 1 7 360 63 9 439 Transfers to assets in use >> (>> Note 14) (3) – (17) (41) (61) Transfer to intangible assets (>> Note 15) – – (10) – (10) Transfer between categories 2 – (12) 10 – C-band repurposing (>> Note 33) 2 – (305) (8) – (313) Impact of currency translation – 80 1 1 82 Cost and net book value as at 31 December 2021 7 1,664 107 10 1,788 1 Additions related to O3b mPOWER, SES-17, Astra 19.2E (including EUR 237 million non-cash transactions) 2 C-band reimbursable space segment and ground cost (non-cash) Borrowing costs of EUR 16 million (2021: EUR 6 million) arising from financing specifically relating to satellite procurements were capital- ised during the year and are included in additions to ‘Space segment’ in the above table. A weighted average effective rate of 2.97% (2021: 2.92%) was used, representing the Group’s average weighted cost of borrowing. Exclud- ing the impact of the loan origination costs and commitment fees the average weighted interest rate was 2.87% (2021: 2.76%). In connection with space segment additions in 2022, the Group recognised EUR 315 million (EUR 309 million) in respect of C-band satellites, partly offset by EUR 311 million C-band reimbursements (>> Note 33), EUR 218 million (2021: EUR 164 million) in respect of the O3b mPOWER arrangement described in >> Note 28, EUR 207 million (2021: EUR 56 million) in respect of procurement of satellites in connection with replacements of Astra 19.2°E and NSS-12 at 57°E and EUR 1 million (2021: EUR 140 million) associated with SES-17. Due to the nature of the arrangements, these transactions are included in the Group’s assets in the course of construction space segment and included in ‘Payments for purchases of tangible assets’ within the consolidated statement of cash flows only to the extent that payments were made to the suppliers. SES ANNUAL REPORT 2022120 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 15 – INTANGIBLE ASSETS Intangible Assets 2022 €MILLION Orbital slot licence rights (indefinite- life) Goodwill Orbital slot licence rights (definite life) Customer relation- ships Other definite life intangibles Internally generated develop- ment costs Total Cost As at 1 January 2022 2,081 2,376 213 – 469 46 5,185 Additions – – 20 3 31 54 Additions through business combinations (>> Note 3) – 201 – 292 292 – 493 Retirement – – – – (8) – (8) Transfers from assets in course of construction – – – – 32 (32) – Transfers between categories – – – – 4 5 9 Impact of currency translation 112 163 1 – 7 1 284 As at 31 December 2022 2,193 2,740 234 292 507 51 6,017 Amortisation As at 1 January 2022 (16) (856) (101) – (422) – (1,395) Amortisation – – (12) (8) (43) – (63) Impairment (126) (77) – – – – (203) Retirement – – – – 8 – 8 Impact of currency translation 3 (69) – – (7) – (73) As at 31 December 2022 (139) (1,002) (113) (8) (464) – (1,726) Net book value as at 31 December 2022 284 1,738 121 284 43 51 4,291 Intangible Assets 2021 €MILLION Orbital slot licence rights (indefinite- life) Goodwill Orbital slot licence rights (definite life) Other definite life intangibles Internally generated develop- ment costs Total Cost As at 1 January 2021 1,930 2,173 771 470 58 5,402 Additions – – 9 – 37 46 Retirement – – (567) 1 (70) – (637) Transfers from assets in course of construction – – – 49 (49) – Transfers between categories 4 – – (4) – – Transfers to property, plant and equipment (>> Note 13) – – – (3) – (3) Transfers from assets under constructions, property, plant and equipment (>> Note 14) – – – 10 – 10 Impact of currency translation 147 203 – 17 – 367 As at 31 December 2021 2,081 2,376 213 469 46 5,185 Amortisation As at 1 January 2021 (14) (147) (630) (419) – (1,210) Amortisation – – (38) (57) – (95) Impairment – (673) – – – (673) Retirement – – 567 1 70 – 637 Impact of currency translation (2) (36) – (16) – (54) As at 31 December 2021 (16) (856) (101) (422) – (1,395) Net book value as at 31 December 2021 2,065 1,520 112 47 46 3,790 1 Concession agreement with Luxembourg government 2001 to 2021 SES ANNUAL REPORT 2022121 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION INDEFINITE-LIFE INTANGIBLE ASSETS The Group’s indefinite-life intangible assets comprise goodwill and orbital slot licence rights. See >> Note 2, Significant accounting judg- ments and estimates, for the Group’s policy on determining the useful lives of intangible assets. Impairment testing procedures are performed annually, or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The annual impairment tests are performed as of 31 October each year. The recoverable amounts are determined based on a value in use calculation (>> Note 2) using the most recent business plan information approved by the Board of Directors, which covers a period of five years. The calculations of value in use are most sensitive to: 1) Movements in the underlying business plan assumptions Business plans are drawn up annually and provide an assessment of the expected developments for a five-year period beyond the end of the year when the plan is drawn up. These business plans reflect both the most up-to-date assumptions concerning the CGU’s markets and also developments and trends in the busi- ness of the CGU. For the provision of satellite capacity these will particularly take into account the following factors: • the expected developments in transponder fill rates, including the impact of replacement capacity; • any changes in the expected capital expenditure cycle, for example due to the technical degradation of a satellite or the need for replacement capacities; and • any changes in satellite procurement, launch or cost assump- tions, including launch schedule. 2) Changes in discount rates Discount rates reflect management’s estimate of the risks spe- cific to each CGU. Management uses a pre-tax weighted average cost of capital as discount rate for each CGU. This reflects mar- ket interest rates of twenty-year bonds in the market concerned, the capital structure of businesses in the Group’s business sec- tor, and other factors, as necessary, applied specifically to the CGU concerned. 3) Changes in perpetuity growth rates assumptions Growth rate assumptions used to extrapolate cash flows beyond the business planning period are based on the commercial expe- rience relating to the CGUs concerned and the expectations for developments in the markets which they serve. DEFINITION OF CASH-GENERATING UNITS FOR INTANGIBLE ASSETS The gross goodwill as at 31 December 2022 of EUR 2,740 million (2021: EUR 2,376 million) derives primarily from the acquisition of two significant GEO businesses: GE Americom in 2001 and New Skies Satellites in 2006. Management has identified three regional GEO CGUs based report- ing and monitoring of goodwill. These three regions (‘GEO Europe’, ‘GEO North America’ and ‘GEO International’) have been defined for impairment testing procedures for both goodwill and orbital slot rights. This reflects the developments in the business environment of the Group, triggered by the increasing demand from market participants in various business areas (primarily telecommunications companies) for bandwidth to support the provision of data connec- tivity services. These developments mean that there are increasingly two economic paths available to the Group in commercialising the valuable portfolio of orbital slot rights it has generated over many years, including through the two GEO business acquisitions noted above: • utilising these rights in the provision of services on its own satellite fleet; and • generating economic value through entering into transactions with third parties to make these rights available to them in return for an appropriate financial compensation. A specific example is the ongoing C-band repurposing project in the U.S. following the adoption by the Federal Communications Commission of its Report and Order and Order of Proposed Modifi- cation to clear a 300 MHz band of C-band downlink spectrum between 3,700 and 4,000 MHz by December 2025 (see >> Note 33). Since the opportunities, and hence potential cash flows, arising from this expanding area of commercialisation of orbital slot rights other than through conventional on-fleet operations, are by their nature arrangements with regional regulatory authorities and market partici- pants, and since the linkage to the orbital slot rights is so strong, it seems appropriate to management to re-align the approach to impair- ment testing by looking at both areas using on a regional basis and disaggregating the cash-generating units again for the purpose of goodwill testing. The goodwill has been allocated between the three cash-generating units (as defined above) based on the assets acquired in the above acquisitions, with materially all the assets acquired in the GE Americom acquisition being allocated to ‘GEO North America’ and materially all the assets acquired in the New Skies Satellites acquisition being allo- cated to ‘GEO International’. Additionally, the net assets from the SES SD acquisition have been allocated between the four CGUs (including MEO) based on the expected value creation. See the goodwill table below for the allocation of goodwill to the new CGUs. SES ANNUAL REPORT 2022122 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION In the case of ‘North America’ this aggregation reflects the current inter-operability of spacecraft and orbital locations which can be used to serve customers in the U.S., Canada and Mexico, as well as the increasing interdependency of the contractual arrangements for sig- nificant customers in those markets which mean that the associated cash flows can no longer be seen as largely independent of each other. Concerning ‘International’ then this aggregation again reflects the increasing interdependency of cash flows between regions with an increasing use of Brazilian spectrum by assets such as SES-10 and SES-17 which are also serving ‘International’ customers, and the fact that the Group is now also serving the Brazilian market from orbital slots other than those allocated to the unit. Management identifies the Group’s MEO assets as a separate CGU. As the Group extends its global connectivity offering integrating both GEO and MEO capacity, the level of interdependency of cash flows between the GEO International and MEO is expected to increase. The Group’s business plan is approved by the Board of Directors based on consolidated data. The consolidated data is based on sep- arate data prepared for each legal entity of the Group (see >> Note 36). To prepare business plans for the regional CGUs, the following assumptions are made: • GEO revenue from satellites is allocated to the GEO region primar- ily covered by the satellite. Non-satellite revenue is included in each CGU based on the legal entity expected to generate the revenue. MEO revenue, including GEO revenue expected to be used servic- ing primarily MEO contracts, is included in MEO. • Operating expenses are allocated based on the underlying legal entity expected to incur the expense. Reallocations were performed when costs in one CGU clearly support the business of a different CGU. • Intercompany transactions between CGUs included in the business plans of the individual legal entities were included, except where the above allocation methodologies made them no longer relevant. • The Accelerated Relocation Payments related to the C-band repur- posing (see >> Note 33) were allocated between the GEO North America and GEO International CGUs based on the Group’s internal allocation of the proceeds, and considering the likely allocation agreed with the relevant regulatory authorities. DISCOUNT RATES APPLIED The pre-tax discount rates for each CGU are presented below: Pre-Tax discount Rates for CGU 2022 2021 GEO Europe 9.02% 6.40% GEO North America 12.62% 10.18% GEO International 12.12% 8.14% MEO 10.38% 8.04% These discount rates were computed using market interest rates and commercial spreads, the capital structure of businesses in the Group’s business sector, and the specific risk profile of the businesses concerned. Generally, the higher discount rates are caused by higher risk-free rates in the markets the Group operates in, as well as a global increase in market risk premiums. PERPETUAL GROWTH RATE (‘PGR’) ASSUMPTIONS Separate GEO terminal growth rates by region were calculated. The terminal growth rate used in the valuations is -2.2% for GEO Europe (2021: -0.4%), -2.7% for GEO North America (2021: -4.5%), and +2.5% for GEO International (2021: +3.0%). For MEO, management has applied a ‘fading growth model’, or H-model. Under this model, following the five-year business plan period, cash flows are expected to continue to grow at a higher rate for a time, which then reduces for a period until the terminal growth rate is reached. Management believes this is a valid assumption as the MEO fleet, specifically the mPOWER fleet that is in the middle of its launch campaign, will not reach its maximum utilisation projection until after the business plan period. In line with growth projections at the end of the business plan period, management selected 10% as the higher growth rate, which reduces on a straight-line basis over ten years until the terminal growth rate is reached. The terminal growth rate used for MEO was +3.0% (2021: +3.0%). These rates reflect the most recent long-term planning assumptions approved by the Board of Directors and can be supported by refer- ence to the trading performance over a longer period and incorporate also projected growth rates for wide-beam and high-throughput sat- ellites markets from external data sources. IMPAIRMENT CHARGES RECORDED FOR 2022 1) Goodwill As a result of the impairment tests conducted as of 31 December 2022, an impairment expense of EUR 77 million (2021: EUR 673 mil- lion) was recorded on GEO North America. The impairment was mainly driven by the higher discount rates as noted above. Whilst values in use have developed during the year reflecting the higher discount rates, changed perpetual growth rate projections and updated business assumptions more generally, no impairment charge was recorded against the carrying values of goodwill for the GEO Europe, GEO International, and MEO CGUs. • For GEO Europe, no impairment charge was recorded reflecting the limited goodwill in this CGU given that the business was developed organically rather than through acquisition. • For GEO International, no impairment was necessary. This CGU encompasses most of the Group’s GEO high-throughput satellites, which are expected to contribute to future revenue growth, although part of the value in use is also attributable to future pro- ceeds receivable in the framework of the FCC Order as set out in more detail in >> Note 33 below. SES ANNUAL REPORT 2022123 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION • For MEO, the valuation has mainly decreased due to the higher dis- count rates noted above but the value in use still exceeds the CGU’s net assets. Arising from the impairment reviews above, the Group’s remaining goodwill has a net book value as at 31 December 2022 and 2021 by CGU as presented below: Goodwill: Net Book Value €MILLION 2022 2021 GEO Europe 51 19 GEO North America 1,157 1,120 GEO International 305 224 MEO 225 152 Other – 5 Total 1,738 1,520 The increase in goodwill is the effect of the SES SD acquisition and stronger USD, partially offset by the impairment in GEO North Amer- ica. Management has integrated SES GS and GES (now combined under a common management team and branded as SES Space & Defense [“S&D”]) into the existing impairment model. To integrate S&D into the existing CGUs, management estimated the proportion of S&D’s value-in-use and net assets attributable to those CGUs. Management analysed the projected 2027 revenues for S&D as well as the current regional usage of GES’s network. The result of this analysis is that 16% is allocated to GEO Europe, 21% to GEO North America, 33% to GEO International, and 30% to MEO. This reflects the global nature of the S&D business, as well as the increasing impact of MEO, more specifically the mPOWER constellation, which is expected to be a major growth driver for S&D in the future. As part of standard impairment testing procedures, the Group assesses the impact of changes in the discount rates and growth assumptions of the valuation surplus, or deficit as the case may be. Both discount rates and terminal values are simulated up to 1% below and above the specific rate used in the base valuation. In this way, a matrix of valuations is generated which reveals the potential exposure to impairment expenses for each CGU based on movements in the valuation parameters which are within the range of outcomes fore- seeable at the valuation date. The most recent testing showed that: • For GEO Europe, there would not be an impairment applying the most adverse combination of developments (a 1% increase in discount rates and 1% decrease in the perpetual growth rate). • For GEO North America, the recorded impairment would increase by EUR 6 million in the case of a 1% decrease in the perpetual growth rate, by EUR 30 million in the case of a 1% increase in the discount rate, and by EUR 35 million in the case of both a 1% decrease in the perpetual growth rate and a 1% increase in the dis- count rate. • For GEO International, while individually a 1% decrease in the per- petuity growth rate of a 1% increase in the discount rate would not require an impairment charge, a combination of these develop- ments would require an impairment charge of EUR 65 million. • For MEO, a 1% decrease in the perpetual growth rates (both the higher rate under the H-model and the terminal growth rate), would require an impairment of EUR 295 million. A 1% increase in the discount rate would require an impairment of EUR 439 million. An impairment of EUR 721 million would be required were there to be a combination of a 1% higher discount rate and a 1% lower perpetual growth rate. Taken separately from changes in discount and perpetuity growth rates, a 5% reduction in EBITDA would not lead to an impairment expense in the GEO Europe or GEO International CGUs. The recorded impairment in GEO North America would increase by EUR 9 million. For MEO, a 5% reduction in EBITDA would require an impairment charge of EUR 125 million. 2) Orbital slot licence rights The rights conveyed by orbital slot licences in different jurisdictions can have varying characteristics that make them separate and dis- tinct from the orbital slot licence rights in other jurisdictions. The MEO orbital rights are not separable and do not generate separate cash flows, and thus are considered a single CGU, which is tested for impair- ment together with the related corresponding goodwill and the MEO satellites constellation. The pre-tax discount rates for each CGU are presented below: Orbital Slots Licence Rights: Pre-Tax discount Rates for CGU 2022 2021 GEO Europe 10.02% 7.40% GEO North America 13.62% 11.18% GEO International 13.12% 9.14% MEO 10.38% 8.04% Similar to the pre-tax discount rates used for goodwill testing, these rates were selected to reflect market interest rates and commercial spreads; the capital structure of businesses in the Group’s business sector; and the specific risk profile of the businesses concerned. The terminal growth rates used in the valuations are identical to those used in goodwill testing. The Group recorded EUR of 126 million of impairment expense related to orbital slot licence rights for the year ending 31 December 2022 (2021: nil). Of the total impairment expense, EUR 117 million relates to GEO North America and EUR 9 million relates to GEO International. SES ANNUAL REPORT 2022124 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The orbital slot licence rights have a net book value as at 31 Decem- ber 2022 and 2021 by CGU as presented below: Orbital Slot Licence Rights: Net Book Value €MILLION 2022 2021 GEO Europe 162 168 GEO North America 233 325 GEO International 465 447 MEO 1,194 1,125 Total 2,054 2,065 As part of standard impairment testing procedures, as with goodwill, the Group assesses the impact of changes in the discount rates and growth assumptions of the valuation surplus, or deficit as the case may be. Both discount rates and terminal values are simulated up to 1% below and above the CGU’s specific rate used in the base valua- tion. In this way a matrix of valuations is generated which reveals the potential exposure to impairment expenses for each CGU based on movements in the valuation parameters which are within the range of outcomes foreseeable at the valuation date. The most recent testing showed that: • For GEO Europe, the least favourable case – a combination of lower terminal growth rates and higher discount rates – would not lead to any impairment expense. • For GEO North America, a 1% decrease in the perpetuity growth rate would increase the impairment charge by EUR 20 million and a 1% increase in the discount rate would increase the impairment charge by EUR 3 million; the combination of these two factors would increase the impairment charge by EUR 22 million. • For GEO International, a 1% decrease in the perpetuity growth rate would increase the impairment charge by EUR 41 million and a 1% increase in the discount rate would increase the impairment charge by EUR 10 million; the combination of these two factors would increase the impairment charge by EUR 50 million. DEFINITE-LIFE INTANGIBLE ASSETS The definite-life intangible assets as at 31 December 2022 have a net book value by country as presented below: Definite Life Intangible Assets 2022 €MILLION Orbital slot licence rights Customer relation- ships Other United States of America – 284 4 Luxembourg 105 – 30 Brazil 9 – 1 Netherlands 7 – 1 Germany – – 5 Other – – 2 Total 121 284 43 The definite-life intangible assets as at 31 December 2021 have a net book value by country as presented below: Definite Life Intangible Assets 2021 €MILLION Orbital slot licence rights Other Luxembourg 105 25 Israel – 2 Brazil 7 – Other – 20 Total 112 47 Until 2021, the Group’s primary definite life intangible asset was the agreement concluded by SES ASTRA with the Luxembourg govern- ment in relation to the usage of Luxembourg frequencies in the orbital positions of the geostationary arc from 45˚ West to 50˚ East for the period from 1 January 2001 to 31 December 2021. Given the finite nature of this agreement, these usage rights – valued at EUR 550 million at the date of acquisition – were amortised on a straight-line basis over the 21-year term of the agreement and were retired as of 31 December 2021. In November 2019, SES and the Luxembourg government reached an agreement to renew SES’s concession to operate satellites operating under Luxembourg’s jurisdiction for 20 years, effective from January 2022 when the current concession expires, with an annual fee of EUR 1 million payable from 2025 onwards. Under the agreement, and starting from 2022, SES is contributing a maximum of EUR 7 million per year into a space sector fund. The GES acquisition added EUR 292 million of definite-life intangibles with a useful life of 15 years, primarily relating due to the value of the acquired customer relationships. The Group also holds orbital slot licence rights in Brazil, which were awarded to a Group subsidiary at auction in 2014 for a 15-year term. These rights are being amortised over a 30-year period, reflecting the Group’s ability to renew the rights once in 2029 at a minimal cost, assuming they are being utilised. As at 31 December 2022, the amount of the intangible assets pledged in relation to the Group’s liabilities is nil (2021: nil). SES ANNUAL REPORT 2022125 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 16 – ASSETS AND LIABILITIES RELATED TO CONTRACTS WITH CUSTOMERS The Group has recognised the following assets and liabilities related to contracts with customers: Assets and Liabilities Related to Contracts With Customers €MILLION 2022 2021 Current contract assets Trade receivables 433 357 Provision for trade receivables (100) (93) Trade receivables, net of provisions 333 264 Unbilled accrued revenue 160 119 1 Provision for unbilled accrued revenue (6) (4) Unbilled accrued revenue, net of provisions 154 115 1 Deferred customer contract costs 4 3 491 382 1 Non-current contract assets Unbilled accrued revenue 119 130 1 Provision for unbilled accrued revenue (8) (9) Unbilled accrued revenue, net of provisions 111 121 1 Deferred customer contract costs 7 9 118 130 Current contract liabilities Deferred income 189 187 1 Non-current contract liabilities Deferred income 359 388 1 The following table shows the movement in deferred income recog- nised by the Group: Movement in Deferred Income 2022 €MILLION Non-current Current As at 1 January 2022 388 187 Revenue recognised during the year – (1,583) New billings – 1,484 Additions through business combinations (>> Note 3) – 11 Other movements (38) 80 Impact of currency translation 9 10 As at 31 December 2022 359 189 * Other movements include reclassifications (between current and non-current, upfront and deferred, as well as against trade receivables) Movement in Deferred Income 2021 €MILLION Non-current Current As at 1 January 2021 296 454 Revenue recognised during the year – (1,132) New billings – 1,092 Other movements 82 1 (237) 1 Impact of currency translation 10 10 As at 31 December 2021 388 187 * Other movements include reclassifications (between current and non-current, upfront and deferred, as well as against trade receivables) 1 Comparatives have been restated in order to reflect the netting of unbilled accrued revenue and deferred revenue positions at con- tract level, in line with IFRS requirements. In prior year consolidated financial statements, the Group has presented contract assets and liabilities that arise on a single contract with a customer separately as gross positions on the Group’s consolidated statement of financial position. €MILLION As presented As restated Difference Current trade and other receivables 1,746 1,727 (19) Current deferred income 404 187 (217) Non-current trade and other receivables 245 121 (124) Non-current deferred income 314 388 74 SES ANNUAL REPORT 2022126 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 17 – TRADE AND OTHER RECEIVABLES Trade and Other Receivables €MILLION 2022 2021 Trade receivables, net of provisions 333 264 Unbilled accrued revenue, net of provisions 265 236 1 Other receivables 546 1,348 Total trade and other receivables 1,144 1,848 1 Of which: Non-current 111 121 1 Current 1,033 1,727 1 1 Restated in order to reflect the netting of unbilled accrued revenue and deferred income as disclosed in >> Note 16 Unbilled accrued revenue represents revenue recognised, but not billed, under long-term customer contracts. Billing will occur based on the terms of the contracts. The non-current balance represents entirely unbilled accrued revenue. Other receivables include EUR 480 million (2021: EUR 1,273 million) to be received as part of the C-band repurposing project (>> Note 33). An amount of EUR 21 million (2021: EUR 27 million) was expensed in 2022 reflecting an increase in the impairment of trade and other receivables. This amount is recorded in ‘Other operating expenses’. As at 31 December 2022, trade and other receivables with a nominal amount of EUR 114 million (2021: EUR 106 million) were impaired. Movements in the provision for the impairment of trade and other receivables were as follows: Movement in the Provision for the Impairment of Trade and other Receivables €MILLION 2022 2021 As at 1 January 106 102 Increase in provision 41 43 Reversals of provision (20) (16) Utilised (20) (32) Other movements 1 3 Impact of currency translation 6 6 As at 31 December 114 106 NOTE 18 – FINANCIAL INSTRUMENTS FAIR VALUE ESTIMATION AND HIERARCHY The Group uses the following hierarchy levels for determining the fair value of financial instruments by valuation technique: • Level 1 – Quoted prices in active markets for identical assets or lia- bilities; • Level 2 – Other techniques for which all inputs which have a sig- nificant effect on the recorded fair value are observable either directly or indirectly; • Level 3 – Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the reporting date. For investments where there is no active market, fair value is determined using valu- ation techniques. Such techniques include using recent arm’s-length market transactions; reference to the current market value of another instrument, which is substantially the same; discounted cash flow analysis and option pricing models. The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. In line with 2021, as at 31 December 2022, the Group does not have any financial derivatives outstanding. FAIR VALUES The fair value of borrowings has been calculated with the quoted market prices except for the LuxGovSat Fixed Term Loan Facility and the floating tranche of the Schuldschein Loan for which the dis- counted expected future cash flows at prevailing interest rates has been used. The fair value of foreign currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. All borrowings are measured at amortised cost. Financial assets and other financial liabilities measured at amor- tised cost, have a fair value that approximates their carrying amount. SES ANNUAL REPORT 2022127 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Set out below is a comparison by category of carrying amounts and fair values of all the Group’s financial instruments that are carried in the financial statements. As at 31 December 2022 – Fair Values Carried at amortised cost Total €MILLION Fair value hierarchy Carrying amount Fair value Carried at fair value Balance Sheet As at 31 December 2022 Financial assets Non-current financial assets: Other financial assets 2 1 1 17 18 Trade and other receivables 111 111 – 111 Total non-current financial assets 112 112 17 129 Current financial assets: Trade and other receivables 1,033 1,033 – 1,033 Cash and cash equivalents 1,047 1,047 – 1,047 Total current financial assets 2,080 2,080 – 2,080 Financial liabilities Borrowings: At floating rates: Syndicated loan 2019 1 2 – – – – German Bond 2024 (EUR 150 million), non-listed 2 150 152 – 150 At fixed rates: US Bond 2023 (USD 750 million) 1 703 700 – 703 German Bond 2025 (EUR 250 million), non-listed 2 250 229 – 250 Eurobond 2026 (EUR 650 million) 1 653 594 – 653 As at 31 December 2022 – Fair Values Carried at amortised cost Total €MILLION Fair value hierarchy Carrying amount Fair value Carried at fair value Balance Sheet Euro Private Placement 2027 (EUR 140 million) under EMTN 1 140 132 – 140 Eurobond 2027 (EUR 500 million) 1 498 415 – 498 Eurobond 2028 (EUR 400 million) 1 396 338 – 396 Eurobond 2029 (EUR 750 million) 1 745 676 – 745 Fixed Term Loan Facility (LuxGovSat) 2 81 81 81 German Bond 2032 (EUR 50 million), non-listed 2 50 43 – 50 US Bond 2043 (USD 250 million) 1 228 173 – 228 US Bond 2044 (USD 500 million) 1 454 344 – 454 Total borrowings 4,348 3,877 4,348 Non-current financial liabilities: 4,506 4,038 – 4,506 Non-current borrowings 3,629 3,161 – 3,629 Lease liabilities 30 30 – 30 Fixed assets suppliers 740 740 – 740 Other long-term liabilities 107 107 – 107 Current financial liabilities: 1,348 1,345 – 1,348 Current borrowings 719 716 – 719 Lease liabilities 15 15 – 15 Fixed assets suppliers 264 264 – 264 Trade and other payables 350 350 – 350 1 As at 31 December 2022 no amount has been drawn down under this facility. As a consequence, the remaining balance of loan origination cost of the Syndicated Loan has been disclosed under prepaid expenses for an amount of EUR 1.7 million (2021: EUR 2.2 million). SES ANNUAL REPORT 2022128 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION As at 31 December 2021 – Fair Values Carried at amortised cost Total €MILLION Fair value hierarchy Carrying amount Fair value Carried at fair value Balance Sheet As at 31 December 2021 Financial assets Non-current financial assets: Other financial assets 2 1 1 25 26 Trade and other receivables 121 1 121 1 – 121 1 Total non-current financial assets 122 1 122 1 25 147 1 Current financial assets: Trade and other receivables 1,727 1 1,727 1 – 1,727 1 Cash and cash equivalents 1,049 1,049 – 1,049 Total current financial assets 2,776 1 2,776 1 – 2,776 1 Financial liabilities Borrowings: At floating rates: Syndicated loan 2019 2 2 – – – – COFACE 2 40 40 – 40 German Bond 2024 (EUR 150 million), non-listed 2 150 152 – 150 At fixed rates: US Bond 2023 (USD 750 million) 1 662 682 – 662 German Bond 2025 (EUR 250 million), non-listed 2 250 260 – 250 Eurobond 2026 (EUR 650 million) 1 654 680 – 654 As at 31 December 2021 – Fair Values Carried at amortised cost Total €MILLION Fair value hierarchy Carrying amount Fair value Carried at fair value Balance Sheet Euro Private Placement 2027 (EUR 140 million) under EMTN 1 140 160 – 140 Eurobond 2027 (EUR 500 million) 1 497 500 – 497 Eurobond 2028 (EUR 400 million) 1 395 417 – 395 Fixed Term Loan Facility (LuxGovSat) 2 99 115 99 German Bond 2032 (EUR 50 million), non-listed 2 50 60 – 50 US Bond 2043 (USD 250 million) 1 214 246 – 214 US Bond 2044 (USD 500 million) 1 430 493 – 430 Total borrowings 3,581 3,805 3,581 Non-current financial liabilities: 4,101 4,323 – 4,101 Non-current borrowings 3,524 3,746 – 3,524 Lease liabilities 22 22 – 22 Fixed assets suppliers 472 472 – 472 Other long-term liabilities 83 83 – 83 Current financial liabilities: 1,894 1,896 – 1,894 Current borrowings 57 59 – 57 Lease liabilities 11 11 – 11 Fixed assets suppliers 1,554 1,554 – 1,554 Trade and other payables 272 272 – 272 1 Restated in order to reflect the netting of unbilled accrued revenue and deferred income as disclosed in >> Note 16 2 As at 31 December 2021 no amount has been drawn down under this facility. As a consequence, the remaining balance of loan origination cost of the Syndicated Loan has been disclosed under prepaid expenses for an amount of EUR 2.2 million. SES ANNUAL REPORT 2022129 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 19 – FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s financial instruments comprise: a syndicated loan, Eurobonds, US dollar bonds (144A), a Euro-dominated Private Place- ment, German Bonds (‘Schuldschein’), committed credit facilities for specified satellites and projects, cash and short-term deposits. The main purpose of the debt instruments is to raise funds to finance the Group’s day-to-day operations, as well as for other general busi- ness purposes. The Group has various other financial assets and lia- bilities such as trade receivables and trade payables, which arise directly from its operations. The main risks arising from the Group’s financial instruments are liquidity risks, foreign currency risks, interest rate risks and credit risks. The general policies are periodically reviewed and approved by the board. LIQUIDITY RISK The Group’s objective is to efficiently use cash generated to maintain borrowings at an appropriate level. In case of liquidity needs, the Group can call on uncommitted loans, commercial paper programs and a committed syndicated loan. In addition, if deemed appropriate based on prevailing market conditions, the Group can access addi- tional funds through the European Medium-Term Note programme. The Group’s debt maturity profile is tailored to allow the Company and its subsidiaries to cover repayment obligations as they fall due. The Group operates a centralised treasury function which manages, amongst others, the liquidity of the Group to optimise the funding costs. This is supported by a daily cash pooling mechanism. Liquidity is monitored regularly through a review of cash balances, the drawn and issued amounts and the availability of additional fund- ing under committed credit lines, the two commercial paper pro- grammes and the EMTN Programme (EUR 4,560 million as at 31 December 2022 and EUR 5,010 million as at 31 December 2021 – more details in >> Note 24). The table below summarises the projected contractual undiscounted cash flows of the non-derivative financial liabilities based on the matu- rity profile as at 31 December 2022 and 2021. Projected Contractual Undiscounted Cash Flows based on Maturity Profile as at 31 December 2022 €MILLION Within 1 year Between 1 and 5 years After 5 years Total As at 31 December 2022: Borrowings 719 1,756 1,903 4,378 Future interest commitments 107 381 673 1,161 Trade and other payables 350 – – 350 Other long-term liabilities – 107 – 107 Lease liabilities 15 24 12 51 Fixed assets suppliers 264 740 – 1,004 Total maturity profile 1,455 3,008 2,588 7,051 As at 31 December 2021: Borrowings 57 1,778 1,768 3,603 Future interest commitments 98 295 641 1,034 Trade and other payables 272 – – 272 Other long-term liabilities – 83 – 83 Lease liabilities 12 19 8 39 Fixed assets suppliers 1,554 472 – 2,026 Total maturity profile 1,993 2,647 2,417 7,057 SES ANNUAL REPORT 2022130 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION FOREIGN CURRENCY RISK SES is active in markets outside the Eurozone, with business opera- tions in many locations throughout the world. Consequently, SES uses certain financial instruments to manage its foreign currency exposure. Derivative financial instruments are used mainly to reduce the Group’s exposure to market risks resulting from fluctuations in foreign exchange rates by creating offsetting exposures. SES is not a party to leveraged derivatives and, as a matter of policy, does not use deriv- ative financial instruments for speculative purposes. The Group has significant foreign operations whose functional cur- rency is not the euro. The primary currency exposure in terms of for- eign operations is the US dollar and the Group has designated certain US dollar-denominated debt as net investment hedges of these oper- ations. The Group has a corresponding exposure in the consolidated income statement, excluding the impacts of C-band repurposing, of EUR 1,1 million or 57.0% (2021: EUR 905 million or 50.8%) of the Group’s revenue and EUR 393 million or 45.8% (2021: EUR 366 million or 52.5%) of its operating expenses being denominated in US dollars. The Group does not enter into derivative instruments to hedge these currency exposures. The Group may enter into forward currency contracts to eliminate or reduce the currency exposure arising from individual capital expend- iture projects, such as satellite procurements, tailoring the maturities to each milestone payment to maximise effectiveness. Depending on the functional currency of the entity with the capital expenditure com- mitment, the foreign currency risk might be in euro or in the US dollar. The forward contracts are in the same currency as the hedged item and can cover up to 100% of the total value of the contract. It is the Group’s policy not to enter into forward contracts until a firm com- mitment is in place. Hedge of net investment in foreign operations As at 31 December 2022 and 2021, certain borrowings denominated in US dollars were designated as hedges of the net investments in SES Global Americas Inc. and its subsidiaries (‘SES Americas’), SES Holdings (Netherlands) BV and its subsidiaries (‘SES Netherlands’), SES Satellite Leasing Limited and MX1 Ltd to hedge the Group’s expo- sure to foreign exchange risk on these investments. As at 31 December 2022, all designated net investment hedges were assessed to be highly effective and a total loss of EUR 64 million, stated net of tax of EUR 24 million is included as part of other com- prehensive income for the period (2021: loss of EUR 76 million, stated net of tax of EUR 26 million). The following table sets out the hedged portion of USD statement of financial position exposure as at 31 December: Hedged Portions of USD Statement of Financial Position Exposure USD 2022 2021 USD statement of financial position exposure: SES Americas 1,652 2,359 SES Netherlands 4,575 4,617 SES Satellite Leasing Limited, Isle of Man – – MX1 Ltd, Israel 38 37 Total 6,265 7,013 Hedged with: US Bonds 1,500 1,500 Total 1,500 1,500 Hedged proportion 24% 21% The following table demonstrates the sensitivity to a +/- 20% change in the US dollar exchange rate on the nominal amount of the Group’s US dollar net investment, with all other variables held constant. All value changes are eligible to be recorded in other comprehensive income with no impact on profit and loss. 2022 was marked with wide EURUSD fluctuation, breaking the parity. The macro-outlook and global uncertainties along with worries regarding high energy prices and inflation suggest to keep the wide range of sensitivity. Sensitivity to a +/– 20% change in US Dollar Exchange Rate 2022 31 December 2022 Amount in USD million Amount in EUR million at closing rate of 1.0666 Amount in EUR million at rate of 1.28 Amount in EUR million at rate of 0.85 USD statement of financial position exposure: SES Americas 1,652 1,549 1,291 1,943 SES Netherlands 4,575 4,290 3,575 5,383 SES Satellite Leasing Limited – – – – MX1 Ltd, Israel 38 35 29 44 Total 6,265 5,874 4,895 7,370 Hedged with: US Bonds 1,500 1,406 1,172 1,765 Other external borrowings – – – – Total 1,500 1,406 1,172 1,765 Hedged proportion 24% Absolute difference without hedging (979) 1,497 Absolute difference with hedging (745) 1,139 SES ANNUAL REPORT 2022131 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Sensitivity to a +/– 20% change in US Dollar Exchange Rate 2021 31 December 2021 Amount in USD million Amount in EUR million at closing rate of 1.1326 Amount in EUR million at rate of 1.36 Amount in EUR million at rate of 0.91 USD statement of financial position exposure: SES Americas 2,359 2,083 1,735 2,592 SES Netherlands 4,617 4,076 3,395 5,074 SES Satellite Leasing Limited – – – – MX1 Ltd, Israel 37 33 27 41 Total 7,013 6,192 5,157 7,707 Hedged with: US Bonds 1,500 1,324 1,103 1,648 Other external borrowings – – – – Total 1,500 1,324 1,103 1,648 Hedged proportion 21% Absolute difference without hedging (1,035) 1,515 Absolute difference with hedging (814) 1,191 INTEREST RATE RISK The Group’s exposure to market interest rate risk relates primarily to the Group’s debt portion at floating rates. In order to mitigate this risk, the Group is generally seeking to contract as much as possible of its debt outstanding at fixed interest rates, and is carefully monitoring the evolution of market conditions, adjusting the mix between fixed and floating rate debt if necessary. To mitigate the Group’s interest rate risk in connection with near-term debt refinancing needs, the Group may from time to time enter into interest rate hedges through forward contracts denominated in EUR and USD. As per 31 December 2022 and 31 December 2021, the Group had no interest rate hedges outstanding. The table below summarises the split of the carrying amount of the Group’s debt between fixed and floating rate. Split of the Nominal Amount of the Group’s Debt between Fixed and Floating Rate €MILLION At fixed rates At floating rates Total Borrowings at 31 December 2022 4,198 150 4,348 Borrowings at 31 December 2021 3,391 190 3,581 In 2022, the Group repaid EUR 40.2 million related to Coface instal- ments and EUR 16 million of the LuxGovSat Facility. The following table demonstrates the sensitivity of the Group’s pre- tax income to reasonably possible changes in interest rates affecting the interest charged on the floating rate borrowings. All other varia- bles are held constant. The Group believes that a reasonably possible development in the Eurozone interest rates would be an increase of 125-136 basis points (2021: an increase of nil basis points or an increase of 12 basis points). Euro interest rates €MILLION Floating rate borrowings Increase in rates Pre-tax impact Decrease in rates Pre-tax impact Borrowings at 31 December 2022 150 0.7 – Borrowings at 31 December 2021 190 0.4 – CREDIT RISK Risk management The Group has the following types of financial assets that are subject to the expected credit loss model: trade receivables, unbilled accrued revenue, and C-band repurposing receivables. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. To measure expected credit losses on trade receivables and unbilled accrued revenue, they are grouped based on shared credit risk characteristics, country and days past due. The unbilled accrued revenues have sub- stantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approx- imation of the loss rates for the unbilled accrued revenue. The credit verification procedures in relation to trade receivables and unbilled accrued revenue include the assessment of the creditwor- thiness of the customer by using sources of quality information such as external specialist reports, audited annual reports, press articles or rating agencies. Should the customer be a governmental entity, the official debt rating of the respective country is a key driver in deter- mining the appropriate credit risk category. Following this credit analysis, the customer is classified into a credit risk category which can be as follows: ‘Prime’ (typically publicly rated and listed entities), ‘Market’ (usually higher growth companies with higher leverage), ‘Sub-prime’ (customers for which viability is depend- ent on continued growth with higher leverage), or Government (gov- ernments or governmental institutions, subject to the corresponding country meeting minimum credit rating criteria). The credit profile is updated at least once a year for all key customers with an ongoing contractual relationship. SES ANNUAL REPORT 2022132 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Impairment of trade receivables and unbilled accrued revenue The Group applies the IFRS 9 simplified approach to measuring expected credit losses for trade receivables and unbilled accrued revenue by measuring the loss allowance at an amount equal to life- time expected credit losses. To measure the expected credit losses, trade receivables and unbilled accrued revenue have been grouped in portfolios based on shared credit risk characteristics (credit risk profile: Prime, Market, Sub-prime, and Government), country and the days past due. In order to compute the provision, the gross trade receivables balance is reduced for any portion representing deferred revenue and any securities held. Trade receivables are written off when there is no rea- sonable expectation of recovery. The Group’s largest customers are large media companies and government agencies, and hence the credit risk associated with these contracts is assessed as low. The Company calculates loss expectancy rates based on the history of losses and forward-looking information to create a provision matrix. On that basis, the provision as at 31 December 2022 and 31 Decem- ber 2021 is as follows: Impairment of Trade Receivables 2022 €MILLION Current Less than 1 month Between 1 and 3 months More than 3 months Total 31 December 2022 Average expected loss rate (by portfolio) 3.5% 4.7% 7.7% 11.8% Gross carrying amount – trade receivables 196 50 21 166 433 Provision – – 1 10 11 Impairment of Trade Receivables 2021 €MILLION Current Less than 1 month Between 1 and 3 months More than 3 months Total 31 December 2021 Average expected loss rate (by portfolio) 3.8% 4.9% 6.6% 10.9% Gross carrying amount – trade receivables 131 24 32 170 357 Provision – – 1 6 7 The provision in respect of unbilled accrued revenue as at 31 Decem- ber 2022 amounts to EUR 14 million and the corresponding expected credit loss is 5.0% (31 December 2021: EUR 13 million and the corre- sponding expected credit loss is 5.2% 1 ). An amount of EUR 5 million (2021: EUR 0.5 million) was expensed in 2022 reflecting an increase in the IFRS 9 related provision for trade and other receivables. Additional provisions are recorded for trade receivables balances if specific circumstances or forward-looking information lead the Group to believe that additional collectability risk exists with respect to cus- tomers that are not reflected in the loss expectancy rates. A cumula- tive provision for trade receivables of EUR 89 million has been recorded as of 31 December 2022 (31 December 2021: EUR 86 million). The movement in provisions for trade receivables and unbilled accrued revenue as at 31 December 2022 and 2021 are as follows: Movement in Provisions for Trade Receivables and Unbilled Accrued Revenue Provisions for trade receivables Provisions for unbilled accrued revenue €MILLION 2022 2021 2022 2021 At 1 January 93 93 13 9 Increase in provision recognised in profit or loss during the year 38 39 3 4 Receivables written off during the year as uncollectible (20) (32) – – Unused amount reversed (16) (13) (4) (3) Other movements – – 1 3 Impact of currency translation 5 6 1 – At 31 December 100 93 14 13 1 Comparatives have been restated in order to reflect the netting of unbilled accrued revenue and deferred revenue positions at contract level, in line with IFRS require- ments. In prior year consolidated financial statements, the Group has presented con- tract assets and liabilities that arise on a single contract with a customer separately as gross positions on the Group’s consolidated statement of financial position. Refer to >> Note 16 for the detailed restatement. SES ANNUAL REPORT 2022133 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION C-band repurposing receivables The Group recorded C-band repurposing receivables upon receiving validation that the Group successfully met the Phase 1 Accelerated Relocation deadline and for costs incurred related to C-band spec- trum clearing for which the Group expects to be reimbursed. The Group considered the credit risk related to the C-band repurposing receivables at the end of 2022 and 2021 and concluded that an esti- mate of zero expected credit losses is appropriate. The U.S. government, through the FCC, developed the rules of the C-band auction to ensure incumbent satellite operators such as the Group are paid in full even if one or more individual overlay license winners fails to pay the Group its assigned portion of the Group’s relo- cation costs. An independent third-party Relocation Payment Clear- inghouse is administering the C-band transition and related payments with FCC oversight. If an auction winner defaults on an obligation to pay the Group, the FCC could require a license to be re-auctioned with the same payment condition, or the FCC could require the other auction winners to collectively pay the Group for the shortfall as a condition for them to maintain their licenses. Therefore, as it expects the U.S. government to regulate and ensure the auction winners’ compliance with their payment obligations to the Group, the Group has estimated zero expected credit losses on the C-band repurposing receivables. Additional disclosure on the C-band clearing project is included in >> Note 33. FINANCIAL CREDIT RISK With respect to the credit risk relating to financial assets, this ex- posure relates to the potential default of the counterparty, with the maximum exposure being equal to the carrying amount of these instruments. The counterparty risk from a cash management per- spective is reduced by the implementation of several cash pools, accounts and related paying platforms with different counterparties. To mitigate the counterparty risk, the Group only deals with recog- nised financial institutions with an appropriate credit rating – gener- ally ‘A’ and above – and in adherence of a maximum trade limit for each counterparty which has been approved for each type of trans- actions. All counterparties are financial institutions which are regu- lated and controlled by the national financial supervisory authorities of the associated countries. The counterparty risk portfolio is analysed on a quarterly basis. Moreover, to reduce this counterparty risk the portfolio is diversified as regards the main counterparties ensuring a well-balanced relation for all categories of products (derivatives as well as deposits). CAPITAL MANAGEMENT The Group aims to have a balanced mix of equity and debt capital. In addition, it is the Group’s policy is to attain and retain an investment grade rating from at least two reputable rating agencies. These invest- ment grade ratings serve to maintain investor, creditor, and market confidence. Within this framework, the Group manages its capital structure and liquidity in order to reflect changes in economic con- ditions to keep its cost of debt low, maintain the confidence of debt investors at a high level and to create added value for the shareholder. The Group’s dividend policy takes into account the financial perfor- mance of the year, business plan cash flow requirements and other factors such as yield and pay-out ratio. As per Rating Agencies meth- odology, when reporting on the Group’s Net Debt to EBITDA leverage ratio, the Deeply Subordinated Fixed Rate Resettable Securities issued by SES (EUR 1,175,000,000 in total) are treated like 50% equity capital and 50% as debt (EUR 587,500,000 respectively). NOTE 20 – CASH AND CASH EQUIVALENTS Cash and cash equivalents €MILLION 2022 2021 Cash at bank and in hand 388 872 Short-term deposits 659 177 Total cash and cash equivalents 1,047 1,049 Cash at banks is subject to interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods between one day and three months – depending on the immediate cash requirements of the Group – and earn interest at the respective short-term deposit rates. Short-term deposits and cash at bank and in hand are held at various financial institutions meeting the credit rating criteria set out in >> Note 19 above. See also >> Note 33 in con- nection with the receipt of C-band Accelerated Relocation Payments around the year end. As at 31 December 2022, there were no investments in money market funds, consistent with the year-end 2021 position. SES ANNUAL REPORT 2022134 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 21 – SHAREHOLDERS’ EQUITY ISSUED CAPITAL SES has a subscribed capital of EUR 696 million (2021: EUR 719 mil- lion), represented by 371,457,600 class A shares (2021: 383,457,600 class A shares) and 185,728,800 class B shares (2021: 191,728,800 class B shares) with no par value. The movement between the opening and closing number of shares issued per class of share can be summarised as follows: Issued Capital Class A shares Class B shares Total shares As at 1 January 2022 383,457,600 191,728,800 575,186,400 Shares issued during the year – – – Shares cancelled during the year (12,000,000) (6,000,000) (18,000,000) As at 31 December 2022 371,457,600 185,728,800 557,186,400 Class A shares Class B shares Total shares As at 1 January 2021 383,457,600 191,728,800 575,186,400 Shares issued during the year – – – As at 31 December 2021 383,457,600 191,728,800 575,186,400 Fiduciary Deposit Receipts (‘FDRs’) with respect to Class A shares are listed on the Luxembourg Stock Exchange and on Euronext Paris. They can be traded freely and are convertible into Class A shares at any time and at no cost at the option of the holder under the condi- tions applicable in the Company’s articles of association and in accordance with the terms of the FDRs. All Class B shares are currently held by the State of Luxembourg, or by Luxembourg public institutions. Dividends paid for one share of Class B equal 40% of the dividend for one share of Class A. A shareholder, or a potential shareholder, who seeks to acquire, directly or indirectly, more than 20% of the shares of the Company must inform the Chairman of the Board of Directors of the Company of such intention. The Chairman of the Board of Directors of the Com- pany shall forthwith inform the government of the Grand Duchy of Luxembourg of the envisaged acquisition which may be opposed by the government within three months from such information should the government determine that such acquisition would be against the general public interest. In case of no opposition from the government, the Board shall convene an extraordinary meeting of shareholders which may decide at a majority provided for in article 450-3 of the law of 10 August 1915, as amended, regarding commercial companies, to authorise the shareholder, or potential shareholder, to acquire more than 20% of the shares. If it is an existing shareholder of the Company, it may attend the general meeting and will be included in the count for the quorum but may not take part in the vote. SHARE BUYBACK PROGRAMME On 6 May 2021 the Company announced a share buyback programme to be executed by 31 December 2021 under the authorisation given by the Annual General Meeting of shareholders held on 1 April 2021. During the year the Group acquired 12 million Class A shares at a weighted average price of EUR 6.56 per A-share and 6 million Class B shares at a price of EUR 2.62 per B-share, resulting in a total cost of the programme of EUR 95 million. On 27 September 2022 the shares acquired under the programme were cancelled in order to reduce the total number of voting and economic shares in issue, for a total con- sideration of EUR 80 million. Subject to the agreement of the shareholders, the Company pur- chases FDRs in respect of ‘Class A’ shares in connection with execu- tives’ and employees’ share-based payment plans. At the year-end, the Company held FDRs relating to the above schemes as set out below. These FDRs are disclosed as treasury shares in the consoli- dated statement of financial position and are carried at acquisition cost as a deduction from equity. Buy-Back of Treasury Shares 2022 2021 FDRs held as at 31 December 6,565,553 19,748,429 Carrying value of FDRs held (€million) 81 174 Class B shares held as at 31 December – 6,000,000 Carrying value of Class B shares held (€million) – 15 EUR 625,000,000 DEEPLY SUBORDINATED FIXED RATE RESETTABLE SECURITIES On 20 May 2021 the Company announced the successful launch and pricing of new Deeply Subordinated Fixed Rate Resettable Securities for a total amount of EUR 625 million, with a first reset date on 27 August 2026. The securities bear a coupon of 2.875% per annum and were priced at 99.409% of their nominal value. The proceeds of the new issuance were received on 27 May 2021. Tender premium and transaction costs for these transactions amounted to EUR 26 million and have been deducted from “Other reserves”. SES ANNUAL REPORT 2022135 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION EUR 550,000,000 DEEPLY SUBORDINATED FIXED RATE RESETTABLE SECURITIES In 2016 SES issued a second perpetual bond of EUR 550,000,000 (the ‘EUR 550 million perpetual bond’) at a coupon of 5.625 percent to the first call date, a price of 99.304 and a yield of 5.75 percent. Trans action costs related to this transaction amounted to EUR 8 million and have been deducted from ‘Other reserves’. This brought the aggregate per- petual bond issued by the Group to EUR 1,300 million. SES is entitled to call the EUR 550 million perpetual bond on 29 January 2024 and on subsequent coupon payment dates. As the Company has no obligation to redeem either of the bonds, and the coupon payments are discretionary, it classified the net proceeds from the issuance of the securities (together EUR 1,121 million net of transaction costs and tax) as equity. The perpetual bonds are guar- anteed on a subordinated basis by SES Global Americas Holdings GP. SES used the net proceeds from the offerings for the repayment of O3b debt, the repayment of certain existing indebtedness of the Group, as well as for general corporate purposes. Coupon payments in respect of the perpetual bonds occurred on 31 January 2022 (EUR 31 million), 29 August 2022 (EUR 18 million) and have been deducted from ‘Other reserves’. The corresponding payments in 2021 were on 4 January 2021 (EUR 35 million) and 29 January 2021 (EUR 31 million), 27 May 2021 (EUR 11 million), 21 June 2021 (EUR 3 million) and 27 August 2021 (EUR 5 million) and were also deducted from ‘Other reserves’. Tax on the perpetual bond coupon accrual of EUR 14 million (2021: EUR 20 million) has been credited to ‘Other reserves”. OTHER RESERVES In accordance with Luxembourg legal requirements, a minimum of 5% of the yearly statutory net profit of the Company is transferred to a legal reserve which is non-distributable. This requirement is satisfied when the reserve reaches 10% of the issued share capital. As at 31 December 2022 a legal reserve of EUR 72 million (2021: EUR 72 mil- lion) is included within other reserves. Other reserves include a non-distributable amount of EUR 80 million (2021: EUR 189 million) linked to treasury shares, and an amount of EUR 142 million (2021: EUR 181 million) representing the net worth tax reserve for 2017-2019, for which the distribution would result in the payment of net worth tax at a rate of up to 20% of the distributed reserve in accordance with Luxembourg law requirement. NOTE 22 – NON-CONTROLLING INTERESTS Set out below is the summarised financial information for each sub- sidiary that has non-controlling interests (NCI) that are material to the Group. The amounts disclosed for each subsidiary are before inter-company eliminations. Summarised Financial Information for each subsidiary that has Non-Controlling Interests, material to the Group: Balance Sheet €MILLION LuxGovSat S.A. (50% NCI) 1 Al Maisan Satellite Communications LLC, UAE (65% NCI) 1 Summarised balance sheet 2022 2021 2022 2021 Current assets 11 18 11 14 Current liabilities (20) (18) (3) (3) Current net (liabilities)/assets (9) – 8 11 Non-current assets 150 159 26 27 Non-current liabilities (67) (83) – – Non-current net assets 83 76 26 27 Net assets 74 76 34 38 Accumulated NCI 37 38 22 25 Transactions with non-controlling inter- ests – – – – 1 Refer to >> Note 2 SES ANNUAL REPORT 2022136 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Summarised Financial Information for each subsidiary that has Non-Controlling Interests, material to the Group: Statement of Comprehensive Income €MILLION LuxGovSat S.A. (50% NCI) Al Maisan Satellite Communications LLC, UAE (65% NCI) Summarised statement of com- prehensive income 2022 2021 2022 2021 Revenue 27 23 9 9 Operating expenses (15) (15) (5) (4) Profit/(loss) for the period (2) (15) 0 1 Other comprehensive income – – – – Total comprehensive income (2) (15) 0 1 Profit/(loss) allocated to NCI (1) (7) 0 1 Dividend paid to NCI – – – – Summarised Financial Information for each subsidiary that has Non-Controlling Interests, material to the Group: Cash Flows €MILLION LuxGovSat S.A. (50% NCI) Al Maisan Satellite Communications LLC, UAE (65% NCI) Summarised cash flows 2022 2021 2022 2021 Cash flows from/ (absorbed by) operat- ing activities 10 6 6 4 Cash flows from/ (absorbed by) invest- ing activities (0) (1) – (3) Cash flows from/ (absorbed by) financ- ing activities (10) (38) (7) – Net foreign exchange movements – – – – Net increase/ (decrease) in cash and cash equivalents (0) (33) (1) 1 NOTE 23 – SHARE-BASED COMPENSATION PLANS The Group has four share-based compensation plans which are detailed below. In the case of the Stock Appreciation Rights Plan and Equity Incentive Compensation Plan the relevant strike price is defined as the average of the market price of the underlying shares over a period of 15 trading days before the date of the grant. 1) The Stock Appreciation Rights Plan (‘STAR Plan’) The STAR Plan is an equity-settled plan available to non-executive staff of Group subsidiaries, where share options are granted. In January 2011, the STAR Plan was amended and, for all options granted 2011 onwards, a third of the share options vest and can be exercised each year. After being fully vested, the share options have a four-year exercise period. Stock Appreciation Rights Plan 2022 2021 Outstanding options at the end of the year 372,942 700,553 Weighted average exercise price in euro 24.37 27.61 All of the 372,942 outstanding options as at 31 December 2022 (2021: 700,553), are fully vested and exercisable. No options were exercised in 2022 or in 2021. SES ANNUAL REPORT 2022137 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Movements in the number of share options outstanding and their related weighted average exercise prices in euro are as follows: Stock Appreciation Rights Plan: Movements in the Number of Share Options Outstanding and their Related Weighted Average Exercise Price 2022 2021 Average exercise price per share option Number of options Average exercise price per share option Number of options As at 1 January 27.61 700,553 27.31 1,134,170 Forfeited 31.31 (327,611) 26.81 (433,617) Exercised – – – – At 31 December 24.37 372,942 27.61 700,553 Share options outstanding at the end of the year have the following expiry date and exercise prices in euro: Stock Appreciation Rights Plan: Share Options Outstanding at the End of The Year Grant Expiry date Exercise price per share options Number of options 2022 2021 2016 2023 24.39 372,942 428,639 2015 2022 32.73 – 271,914 372,942 700,553 2) Simulated Restricted Share Units (‘SRSU’) In 2017 the Group introduced a new compensation plan which is pro- gressively replacing the STAR Plan. SRSU are cash-settled awards delivered on 1 June following a three-year vesting period. The liability for the cash-settled awards is measured initially and at the end of each reporting period until settled, at the fair value of the share appre- ciation rights, taking into account the terms and conditions on which the stock appreciation rights were granted and recognised to the extent to which the employees have rendered services to date. During 2022, 940,222 SRSU have been granted (2021: 850,783). During the same period, 230,131 SRSUs have been forfeited (2021: 153,050) and 245,995 SRSU have been vested (2021: 307,754). A liability of EUR 6,886,104 has been recognised in the consolidated statement of finan- cial position as of 31 December 2022 (31 December 2021: EUR 5,453,399) based on the 2,257,531 outstanding SRSUs (31 December 2021: 1,793,435) measured at the Group’s share price at the end of the year on a pro-rata basis over 3 years vesting period. 3) Equity Based Compensation Plan comprising options (‘EBCP Option’) The EBCP Option is available to Group executives. Under the plan, the “date of Option Grant” means the first business day that follows fifteen (15) market trading days for Shares after the Allocation Period during which the Fair Market Value is fixed. Generally, one-quarter of the entitlement vests on each 1 January of the four years following the Date of Option Grant, but for one grant, one fifth of the entitle- ment vests on each 1 June of the five years following the Date of Option Grant. Once vested, the options can be exercised until the tenth anniversary of the original grant. For 2022 EBCP Option Plan grants, one third of the options vest on each 1 June of the following three years. 2022 2021 Outstanding options at the end of the year 20,348,470 18,767,922 Weighted average exercise price in euro 12.09 13.17 Out of 20,348,470 outstanding options as of the end of 2022 (2021: 18,767,922), 10,456,400 options are exercisable (2021: 9,800,000). In 2022 715,431 treasury shares were delivered at a weighted average price of EUR 5.97 each (2021: 134,836 treasury shares, weighted aver- age price of EUR 5.97 each). On average, in 2022, the related weighted average share price at the time of exercise was EUR 7.83 per share. Movements in the number of share options outstanding and their related weighted average exercise prices in euro are as follows: Movements in the Number of Share Options Outstanding and their Related Weighted Average Exercise Prices 2022 2021 Average exercise price per share option Number of options Average exercise price per share option Number of options At 1 January 13.17 18,767,922 15.29 18,364,300 Granted 8.26 4,286,464 6.40 3,418,751 Forfeited 16.25 (1,990,485) 19.00 (2,880,293) Exercised 5.97 (715,431) 5.97 (134,836) At 31 December 12.09 20,348,470 13.17 18,767,922 SES ANNUAL REPORT 2022138 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Share options outstanding at the end of the year have the following expiry date and exercise prices in euro: Expiry Date and Exercise Prices Grant Expiry date Exercise price per share options Number of options 2022 2021 2022 2032 8.40 3,925,594 – 2022 2032 6.00 247,307 – 2021 2031 6.40 3,183,714 3,328,751 2020 2030 5.97 3,657,372 4,589,286 2019 2029 15.01 1,755,453 1,953,847 2018 2028 18.23 407,000 407,000 2018 2028 12.67 3,253,658 3,657,848 2017 2027 21.15 1,757,123 2,000,274 2016 2026 24.39 1,181,646 1,407,479 2015 2025 32.73 447,665 546,735 2014 2024 26.5 347,511 432,030 2013 2023 23.51 184,427 230,955 2012 2022 18.1 – 213,717 20,348,470 18,767,922 4) Equity Based Compensation Plan (‘EBCP’) The EBCP is also a programme for executives, and senior executives, of the Group, comprising performance shares (‘EBCP PS’) and restricted shares (‘EBCP RS’). Under the plan, restricted shares are allocated to executives at the beginning of May each year and these vest on the 1 June following the third anniversary of the grant. Senior executives also have the possibility to be allocated performance shares whose granting is dependent on the achievement of defined performance criteria which are a) individual objectives and b) the economic value added (‘EVA’) target established by the Board from time to time. These shares also vest on the 1 June following the third anniversary of the original grant. For 2022 EBCP grants, EVA was replaced by the total shareholder return (‘TSR’) as the financial per- formance criteria for vesting of performance shares. 2022 2021 Restricted and performance shares outstanding at the end of the year 3,473,504 2,252,136 Weighted average fair value in euro 6.07 6.58 During 2022, 1,041,237 restricted shares (2021: 332,257) and 763,102 (2021: 632,226) performance shares were granted; 48,270 restricted shares (2021: 33,175) and 67,256 performance shares (2021: 262,959) were forfeited; and 313,357 performance shares (2021: 268,442) and 144,736 restricted shares (2021: 173,918) were exercised. The fair value of equity-settled shares (restricted and performance shares) granted is estimated as at the date of grant using a binomial model for STARs and EBCP Option and a Black & Scholes model for EBCP, taking into account the terms and conditions upon which the options (restricted and performance shares) were granted. The following table lists the average value of inputs to the model used for the years ended 31 December 2022 and 31 December 2021. Average Value of Inputs to the Model used for 2022 2022 EBCP Option EBCP PS and EBCP RS Dividend yield (%) 6.40%-10.18% 6.29%-9.71% Expected volatility (%) 32.33%-33.19% 33.54%-34.04% Risk-free interest rate (%) 0.66%-1.71% 0.42%-1.54% Expected life of options (years) 10-9.66 3-2.66 Share price at inception (EUR) 8.59-5.86 8.59-5.86 Fair value per option/share (EUR) 1.376-0.645 7.1-4.41 Total expected cost for each plan (€million) 4.72-0.1 8.95-2.54 Average Value of Inputs to the Model used for 2021 2021 EBCP Option EBCP PS and EBCP RS Dividend yield (%) 7.43% 7.09% Expected volatility (%) 32.85% 35.53% Risk-free interest rate (%) -0.58% -0.68% Expected life of options (years) 10 3 Share price at inception (EUR) 6.22 6.22 Fair value per option/share (EUR) 0.78 5.00 Total expected cost for each plan (€million) 2.25 6.01 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatil- ity is indicative of future trends, which may or may not necessarily be the actual outcome. The total charge for the year for share-based compensation amounted to EUR 12 million (2021: EUR 8 million), out of which equity-settled EUR 9 million (2021: EUR 5 million) and cash-settled EUR 3 million (2021: EUR 3 million). SES ANNUAL REPORT 2022139 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 24 – BORROWINGS As at 31 December 2022 and 2021, the Group’s interest-bearing borrowings were: Interest-Bearing Borrowings 2022 €MILLION Effective interest rate Maturity Amounts out- standing 2022, carried at amortised cost Non-current German bond (EUR 150 million), non-listed EURIBOR 6M + 0.80% June 2024 150 German bond (EUR 250 million), non-listed 1.71% December 2025 250 Eurobond 2026 (EUR 650 million) 1.625% March 2026 653 Euro Private Placement 2027 (EUR 140 million under EMTN) 4.00% May 2027 140 Eurobond 2027 (EUR 500 million) 0.875% November 2027 498 Eurobond 2028 (EUR 400 million) 2.00% July 2028 396 Eurobond 2029 (EUR 750 million) 3.50% January 2029 745 Fixed Term Loan (LuxGovSat) 3.30% December 2027 65 German bond (EUR 50 million), non-listed 4.00% November 2032 50 US Bond (USD 250 million) 5.30% April 2043 228 US Bond (USD 500 million) 5.30% March 2044 454 Total non-current 3,629 Current US Bond (USD 750 million) 3.60% April 2023 703 Fixed Term Loan (LuxGovSat) 3.30% December 2027 16 Total current 719 Interest-Bearing Borrowings 2021 €MILLION Effective interest rate Maturity Amounts out- standing 2021, carried at amortised cost Non-current US Bond (USD 750 million) 3.60% April 2023 662 German bond (EUR 150 million), non-listed EURIBOR 6M + 0.80% June 2024 150 German bond (EUR 250 million), non-listed 1.71% December 2025 250 Eurobond 2026 (EUR 650 million) 1.625% March 2026 654 Euro Private Placement 2027 (EUR 140 million under EMTN) 4.00% May 2027 140 Eurobond 2027 (EUR 500 million) 0.875% November 2027 497 Eurobond 2028 (EUR 400 million) 2.00% July 2028 395 Fixed Term Loan (LuxGovSat) 3.30% December 2027 82 German bond (EUR 50 million), non-listed 4.00% November 2032 50 US Bond (USD 250 million) 5.30% April 2043 214 US Bond (USD 500 million) 5.30% March 2044 430 Total non-current 3,524 Current Coface EURIBOR 6M + 1.70% Various in 2021 40 Fixed Term Loan (LuxGovSat) 3.30% December 2027 17 Total current 57 SES ANNUAL REPORT 2022140 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION European Medium-Term Note Programme (‘EMTN’) SES has an EMTN Programme enabling SES, or SES Global Americas Holdings GP, to issue as and when required notes up to a maximum aggregate amount of EUR 4,000 million. As at 31 December 2022, SES had issued EUR 2,440 million (2021: EUR 1,690 million) under the EMTN Programme with maturities ranging from 2026 to 2028. German bond issue of EUR 400 million (2024/2025) In 2018 the Group closed the issuance of an aggregated amount of EUR 400 million in the German bond (‘Schuldschein’) market. The transaction consists of two individual tranches – a EUR 150 million tranche with a floating interest rate of a six-month EURIBOR plus a margin of 0.8% and a final maturity date on 18 June 2024 as well as a EUR 250 million tranche with a fixed interest rate of 1.71% and a final maturity date on 18 December 2025. EUR 650 million Eurobond (2026) In 2018 SES issued a EUR 500 million 8-year bond under the Compa- ny’s European Medium-Term Note Programme. On the 22 June 2021 SES announced the successful launch and pricing of a tap of its 1.625% Notes in which it has agreed to sell incremental senior unsecured fixed rate notes for a total amount of EUR 150 million. The new notes were priced at 106.665% of their nominal value. The bond bears interest at a fixed rate of 1.625% and has a final maturity date on 22 March 2026. EUR 500 million Eurobond (2027) On 4 November 2019, SES issued a EUR 500 million bond under the Company’s European Medium-Term Note Programme. The bond has an 8-year maturity and bears interest at a fixed rate of 0.875% and has a final maturity date on 4 November 2027. EUR 140 million Private Placement (2027) In 2012 SES issued three individual tranches of a total EUR 140 mil- lion Private Placement under the Company’s European Medium-Term Note Programme with ING Bank N.V. The Private Placement has a 15-year maturity, beginning 31 May 2012, and bears interest at a fixed rate of 4.00%. EUR 400 million Eurobond (2028) In July 2020, SES issued a EUR 400 million bond under the Compa- ny’s European Medium-Term Note Programme. The bond has an 8-year maturity and bears interest at a fixed rate of 2.00% and has a final maturity date on 2 July 2028. EUR 750 million Eurobond (2029) On 14 June 2022, SES issued a EUR 750 million bond under the Com- pany’s European Medium-Term Note Programme. The bond has a 7-year maturity, bears interest at a fixed rate of 3.50%, and has a final maturity date on 14 January 2029. German bond issue of EUR 50 million (2032) In 2012 the Group signed an agreement to issue EUR 50 million in the German bond (‘Schuldschein’) market. The German bond bears a fixed interest rate of 4.00% and matures on 12 November 2032. 144A Bond USD 750 million (2023) In 2013 SES completed a 144A offering in the US market issuing USD 750 million 10-year bond with a coupon of 3.60% and a final maturity date on 4 April 2023. 144A Bond USD 250 million (2043) In 2013 SES completed a 144A offering in the US market issuing USD 250 million 30-year bond with a coupon of 5.30% and a final maturity date on 4 April 2043. 144A Bond USD 500 million (2044) In 2014 SES completed a 144A offering in the US market issuing USD 500 million 30-year bond with a coupon of 5.30% and a final maturity date of 25 March 2044. Syndicated loan 2019 The facility is being provided by 19 banks and has been structured as a 5-year multi-currency revolving credit facility. In 2021 the Com- pany extended the Termination date from 26 June 2025 to 26 June 2026. The facility is for EUR 1,200 million and the interest payable is linked to a ratings grid. At the current SES credit rating of BBB/ Baa2, the interest rate is 40 basis points over EURIBOR/LIBOR. As at 31 December 2022 and 2021, no amount has been drawn under this facility. European Investment Bank (EIB) Financing Facility EUR 300 million (2029) On 16 December 2022 SES signed the seven-year contract with the EIB which will support the funding of SES’s three fully digital satellites serving Western Europe, Africa and the Middle East. The facility is available for disbursement at fixed or floating rates linked to a ratings grid. At the current SES credit rating of BBB/ Baa2 this equates to 0.34% per annum over EURIBOR (in case of a floating rate) or over a base rate as determined by the EIB (in the case of a fixed rate). As at 31 December 2022 no amount has been drawn under this facility. EUR 523 million Coface facility In 2009 SES signed a financing agreement with Compagnie Française d’Assurance pour le Commerce Extérieur (‘Coface’) in respect of the investment in four geostationary satellites (ASTRA 2E, ASTRA 2F, ASTRA 2G, ASTRA 5B). The facility is divided into five loans. The drawings under the facility are based on invoices from the supplier of the satellites. The first drawing was done on 23 April 2010 and all loan tranches became fully drawn in November 2014. Each Coface tranche is repayable in 17 equal semi-annual instalments where Coface A had a final maturity date of 1 August 2022, Coface F matured on 21 May 2021. SES opted to execute voluntary prepayment clauses pursuant to the Agreement and repaid the remaining outstanding amount of Coface tranche B as per 21 November 2017 and remaining balance of Coface C and D as per 27 April 2022 (ini - tially scheduled for to mature on 3 October 2022). The entire facility born the interest at a floating rate of six-month EURIBOR plus a margin of 1.7%. EUR 115 million Credit Facility (LuxGovSat) In 2015 LuxGovSat S.A. signed a financing agreement with BGL BNP Paribas for EUR 115 million at a fixed rate coupon of 3.30%. The facility is repayable in 14 semi-annual instalments and has a final maturity date SES ANNUAL REPORT 2022141 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION of 1 December 2027. As at 31 December 2022, total borrowings of EUR 81 million were outstanding under the fixed term facility and the com- pany is in compliance with the covenants specified in the facility. Negotiable European Commercial Paper “NEU CP” (formerly French Commercial paper programme) In 2005 SES put in place a EUR 500 million ‘NEU CP’ programme in accordance with articles L213-1 to L213-4 of the French Monetary and Financial Code and article 6 of the order of 30 May 2016 and subse- quent amendments. The maximum outstanding amount of ‘NEU CP’ issuable under the programme is EUR 500 million or its counter value at the date of issue in any other authorised currency. On 15 June 2022, this programme was extended for one further year. As at 31 Decem- ber 2022 and 2021, no borrowings were outstanding under this pro- gramme. European Commercial paper programme In 2012 SES signed the documentation for the inception of a joint EUR 1,000 million guaranteed European commercial paper programme of SES S.A. and SES Global Americas Holdings GP. Issuances under the programme represent senior unsecured obligations of the issuer and any issuance under the programme is guaranteed by the non-issuing entity. The programme is rated by Moody’s Investors Services and Fitch Ratings and is compliant with the standards set out in the STEP Market Convention. On 9 July 2021, this programme was updated and extended. As at 31 December 2022 and 2021, no borrowings were out- standing under this programme. LIBOR Reform Certain benchmark rates used in financing agreements and financial derivatives are currently being modified and either have been termi- nated (GBP LIBOR or CHF LIBOR) or are planned to be terminated on 30 June 2023 (USD LIBOR). The Group has financing arrange- ments which are based on USD LIBOR as benchmark rate. These changes have been reviewed and do not have any material impact on the Group’s consolidated financial statements and future funding capabilities. NOTE 25 – PROVISIONS Provisions €MILLION 2022 2021 Non-current 7 6 Current 67 56 Total 74 62 Movements in each class of provision during the financial year are set out below: Movements in Each Class of Provision €MILLION Group tax provision Restructuring provision Other provisions Total As at 1 January 2022 44 16 2 62 Additional provisions recognised 15 9 – 24 Unused amounts reversed – – – – Used during the year – (13) – (13) Reclassification to income tax payable 1 – – 1 Impact of currency translation (2) 2 – – As at 31 December 2022 58 14 2 74 Non-current 5 – 2 7 Current 53 14 – 67 As at 1 January 2021 46 23 3 72 Additional provisions recognised 2 8 – 10 Unused amounts reversed (7) – – (7) Used during the year – (15) (1) (16) Reclassification to income tax payable – – – – Impact of currency translation 3 – – 3 As at 31 December 2021 44 16 2 62 Non-current 4 – 2 6 Current 40 16 – 56 SES ANNUAL REPORT 2022142 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION GROUP TAX PROVISION Group tax provision mainly relates to Indian withholding taxes and potential associated interest charges. The increase in the Group tax provision was mainly due to a refund of withholding taxes under liti- gation and higher associated interest charges. RESTRUCTURING PROVISION Expenses of the year include an amount of EUR 9 million (2021: EUR 8 million) of staff-related restructuring expenses (>> Note 5). The consolidated statement of financial position includes a provision of EUR 14 million (2021: EUR 16 million). No new initiatives are expected under the current restructuring programme which would result in additional charges in the following years. NOTE 26 – TRADE AND OTHER PAYABLES Trade and Other Payables €MILLION 2022 2021 Trade creditors 81 91 Payments received in advance (please also see >> Note 27) 25 34 Interest on borrowings 47 31 Personnel-related liabilities 69 75 Tax liabilities other than for income tax 17 20 Other liabilities 128 41 Total 367 292 Tax liabilities mainly relate to VAT payables in the amount of EUR 11 mil- lion as of 31 December 2022 (2021: EUR 14 million). NOTE 27 – OTHER LONG-TERM LIABILITIES Other Long-Term Liabilities €MILLION 2022 2021 Employee benefits obligations 15 17 Payments received in advance 70 48 Other long-term liabilities 22 18 Total 107 83 EMPLOYEE BENEFITS OBLIGATIONS In the Group’s US operations certain employees benefit from an exter- nally insured post-retirement health benefit plan. As at 31 December 2022, accrued premiums of EUR 7 million (2021: EUR 9 million) are included in this position. There were no contributions made in 2022 to Group pension schemes (2021: EUR 2 million). In addition, certain employees of the US operations benefit from defined contribution pension plans. A liability of EUR 11 million has been recognised as at 31 December 2022 (2021: EUR 10 million) in this respect, out of which EUR 3 million is included under ‘Trade and other payables’ (2021: EUR 3 million). PAYMENTS RECEIVED IN ADVANCE In the framework of receivables securitisation transactions completed in June 2018 and June 2019 the Group received a net cash amount of EUR 88 million and EUR 59 million, respectively, from a financial institution as advance settlement of future receivables arising until 2022 under contracts with a specific customer. From the outstanding balance of EUR 82 million as at 31 December 2021, EUR 34 million was repaid to the financial institution in January 2022. In June 2022, the Company received a net cash amount of EUR 47 million from the financial institution as advance settlement of future receivables arising between 2024 and 2025 under contracts with a specific customer. A corresponding aggregate liability of EUR 95 million (2021: EUR 82 million), representing SES’s obligation towards the financial institution to continue to provide services to the customer in accordance with the terms of the customer contract, is recorded in the consolidated statement of financial position as at 31 December 2022 under ‘Other long-term liabilities’ for EUR 70 million (2021: EUR 48 million) and under ‘Trade and other payables’ for EUR 25 million (2021: EUR 34 million). OTHER LONG-TERM LIABILITIES The other long-term liabilities include customer collateral deposits amounting to EUR 22 million (2021: EUR 18 million). SES ANNUAL REPORT 2022143 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 28 – FIXED ASSETS SUPPLIERS Fixed Assets Suppliers €MILLION 2022 2021 Non-current 740 472 Current 264 1,554 Fixed assets suppliers represent liabilities for assets being either acquired directly through procurement contracts with asset manu- facturers, or in the framework of agreements whereby the asset is being acquired by an intermediary but where in substance SES bears the risks and rewards of the procurement. In the latter case the Company accrues for construction-related lia- bilities on the basis of pre-determined milestones agreed between the manufacturer and the relevant parties, see also >> Note 29. Non-current fixed assets suppliers are initially recognized at fair value and subsequently measured at amortised cost using the effective interest method. The main procurements under this caption are: • The O3b mPOWER medium-Earth orbit constellation: EUR 545 mil- lion (2021: EUR 1,046 million); • The SES-17 satellite programme: EUR 157 million (2021: EUR 248 million); • Six satellites being procured in connection with the C-band repur- posing activities: EUR nil million (2021: EUR 655 million) refer to >> Note 33; • Two satellites for the replacement of Astra 19.2°E satellites: EUR 226 million (2021: 56 million EUR) • One satellite for the replacement of NSS-12 at 57°E: EUR 36 million (2021: nil million EUR) Acquisition of the SES O3b mPOWER medium-Earth orbit constellation and launchers On 11 September 2017, the Company, jointly with its subsidiary O3b Networks Limited, entered as Procurement Agents into a Master Pro- curement Agency and Option Agreement with a financial institution in connection with the procurement by that financial institution of seven medium-Earth orbit satellites from a satellite manufacturer. The satellites were divided into 2 sub-blocks (sub-Block 1A consisting of four satellites and sub-block 1B consisting of three satellites) cur- rently under construction. At the end of the satellite construction period the Group will have the right to acquire, or lease, the satellites from the financial institution or to direct their sale to a third-party. In August 2020 the Company exercised the option under the Purchase and Sale agreement to procure four additional O3b mPOWER satel- lites. The Company, jointly with its subsidiary O3b Networks Limited, entered as Procurement Agent into a second Master Procurement Agency and Option Agreement with a financial institution in connec- tion with the procurement by that financial institution of the additional satellites. At the end of the satellite construction period, foreseen in 2023, the Group will have the right to acquire, or lease, the satellites from the financial institution or to direct their sale to a third-party. Since the underlying Satellite Purchase and Sale Agreements are directly between the financial institutions and the satellite manufac- turer, there is no contractual obligation on the side of the Procure- ment Agents during the satellite construction process. However, SES management takes the view that there is a constructive obligation arising over the procurement period and hence the Group is accruing for the costs of this programme. SES has the right to nominate shortly before the end of the construction period the entity within the Group which will acquire or lease those assets. SES management expects that the satellites will be acquired or leased in due course by the com- pany SES mPOWER S.à r.l. in Luxembourg. NOTE 29 – COMMITMENTS AND CONTINGENCIES CAPITAL EXPENDITURE COMMITMENTS The Group had outstanding commitments in respect of contracted cap- ital expenditure totalling EUR 404 million as at 31 December 2022 (2021: EUR 712 million). These commitments largely reflect the procurement of satellites and satellite launchers and are stated net of liabilities under these programmes which are already disclosed under “Fixed assets suppliers”, see >> Note 28. The commitments as at 31 December 2022 also include EUR 68 million (2021: EUR 87 million) in connection with the renewal of the agreement with Luxembourg government in respect of SES’s concession to operate satellites under Luxembourg’s jurisdic- tion, as disclosed in >> Note 15 – “Intangible assets”. The capital expenditure commitments arising under these agree- ments as at 31 December are as follows: Capital Expenditure Commitments €MILLION 2022 2021 Within one year 252 512 After one year but not more than five years 103 147 After more than five years 49 53 Total 404 712 OTHER COMMITMENTS The Group’s other commitments mainly comprise transponder service agreements for the purchase of satellite capacity from third parties under contracts with a maximum life of eight years, as well as EUR 68 million (2021: EUR 70 million) capital contribution into a Luxembourg space sector fund in connection with the renewal of the agreement with Luxembourg government in respect of SES’s concession to oper- ate satellites under Luxembourg’s jurisdiction. SES ANNUAL REPORT 2022144 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Other Commitments €MILLION 2022 2021 Within one year 126 68 After one year but not more than five years 162 126 After more than five years 51 75 Total 339 269 The total expense recognised for transponder service agreements in 2022 was EUR 94 million (2021: EUR 68 million). LITIGATION There were no significant litigation claims against the Group as at 31 December 2022, or as at 31 December 2021. GUARANTEES On 31 December 2022 the Group had outstanding bank guarantees of EUR 72 million (2021: EUR 67 million) with respect to performance and warranty guarantees for services of satellite operations. NOTE 30 – LEASES 1) LESSOR During 2022 the Group did not recognise any leasing income (2021: EUR 32 million) related to customer lease contract. The lease matured in November 2021, so there is no related carrying amount of property, plant and equipment leased as at 31 December 2022 (31 December 2021: EUR nil). 2) LESSEE The Group has recognised right-of-use assets, and associated liabil- ities, in relation to contracts previously classified as “operating leases” under the provision of IFRS 16. These assets and liabilities were meas- ured at the present value of the remaining lease payments, discounted using the Group’s weighted average incremental borrowing rate of 2.87% as at 31 December 2022 (2.76% as at 31 December 2021). The difference between the operating lease commitments and the right- of-use assets recognised represents impact of discounting over the outstanding lease term. i) Amounts recognised in the consolidated statement of financial position The Group leases office buildings, ground segment assets and other fixtures and fittings, tools and equipment, information about which is presented below. Group leases of Offices, Ground Segment, Assets and other Fixtures, Tools and Equipment, Information 2022 €MILLION Buildings Transponders (included within Space Segment) Ground segment Other fixtures and fittings, tools and equipment 31 December 2022 Right-of-use assets Cost 51 5 13 2 71 Accumulated depreciation (23) (4) (3) (1) (31) Total 28 1 10 1 40 Group leases of Offices, Ground Segment, Assets and other Fixtures, Tools and Equipment, Information 2021 €MILLION Buildings Ground segment Other fixtures and fittings, tools and equipment 31 December 2021 Right-of-use assets Cost 42 15 3 60 Accumulated depreciation (19) (9) (2) (30) Total 23 6 1 30 There were no material additions to the right-of-use assets during 2022, depreciation charge for the year was EUR 19 million (2021: EUR 11 million). SES ANNUAL REPORT 2022145 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Lease liabilities are presented below as at 31 December: Lease Liabilities €MILLION 2022 2021 Maturity analysis – contractual undiscounted cash flows Within one year 15 12 After one year but not more than five years 24 19 More than five years 12 8 Total 51 39 Lease liabilities included in the statement of financial position at 31 December Current 15 11 Non-current 30 22 Total 45 33 The leases of office buildings typically run for a period of 2-10 years and leases of ground segment assets for 5 years. Some leases include an option to renew the lease for an additional period after the end of the contract term. The Group assesses at lease commencement whether it is reasonably certain to exercise the extension option. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circum- stances within its control. ii) Amounts recognised in the consolidated income statement Depreciation charge of right-of-use assets: Depreciation Charge of Right-of-Use Assets €MILLION 2022 2021 Buildings 10 7 Transponders (included within Space Segment) 4 – Ground segment 4 3 Other fixtures and fittings, tools and equipment 1 1 Total 19 11 Finance cost: Finance Cost €MILLION 2022 2021 Interest expense 2 1 Total 2 1 The total cash outflow for leases in 2022 was EUR 17 million (2021: EUR 14 million). NOTE 31 – CASH FLOW INFORMATION NON-CASH INVESTING ACTIVITIES Purchases of property, plant and equipment or intangible assets not included as a cash outflow in the consolidated statement of cash flows are disclosed in >> Notes 13, 14 and 15. NET DEBT RECONCILIATION This section sets out an analysis of net debt and the movements in net debt for 2022 and 2021. Net debt 2022 and 2021 €MILLION 2022 2021 Cash and cash equivalents 1,047 1,049 Borrowings – repayable within one year (719) (57) Borrowings – repayable after one year (3,629) (3,524) Net debt 1 (3,301) (2,532) Cash and cash equivalents 1,047 1,049 Borrowings – floating rates (150) (190) Borrowings – fixed interest rates (4,198) (3,391) Net debt 1 (3,301) (2,532) 1 Net debt excludes current and non-current lease liabilities. Including these, net debt as at 31 December 2022 was EUR 3,346 million (2021: EUR 2,565 million) SES ANNUAL REPORT 2022146 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Movements in Net Debt for 2022 and 2021 €MILLION Cash and cash equivalents Borrowings repayable within one year Borrowings repayable after one year Total Net debt as at 1 January 2022 1,049 (57) (3,524) (2,532) Cash flows (net) (17) 57 (744) (704) Foreign exchange adjustments 15 _ (90) (75) Transfers – (719) 719 – Other non-cash movements – – 10 10 Net debt as at 31 December 2022 1,047 (719) (3,629) (3,301) Net debt as at 1 January 2021 1,162 (613) (3,317) (2,768) Cash flows (net) (116) 614 (159) 339 Foreign exchange adjustments 3 – (101) (98) Transfers – (57) 57 – Other non-cash movements – (1) (4) (5) Net debt as at 31 December 2021 1,049 (57) (3,524) (2,532) * related to loan origination costs During 2022 the Group issued European Commercial Paper for EUR nil (2021: EUR 275 million) and reimbursed EUR nil (2021: EUR 275 million). These have been presented net in the consolidated state- ment of cash flows. NOTE 32 – RELATED PARTIES The state of Luxembourg holds a direct 11.58% voting interest in the Company and two indirect interests, both of 10.88% each, through two state owned banks, Banque et Caisse d’Epargne de l’Etat and Société Nationale de Crédit et d’Investissement. These shares constitute the Company’s Class B shares, as described in >> Note 21. The total remuneration to directors for attendance at board and com- mittee meetings in 2022 amounted to EUR 1.0 million (2021: EUR 1.1 million). These amounts are computed on a fixed and variable basis, the variable part being based upon attendance at board and commit- tee meetings. The key management of the Group, defined as the Senior Leadership Team, received compensation as follows: Group Management Compensation €MILLION 2022 2021 Remuneration including bonuses and other benefits 7 7 Pension benefits – 1 Share-based compensation plans 3 2 Total 10 10 The total outstanding amount in respect of share-based payment instruments allocated to key management as at 31 December 2022 were 5,455,577 (2021: 4,916,470). SES ANNUAL REPORT 2022147 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 33 – C-BAND REPURPOSING At its Open Commission Meeting held on 28 February 2020, the Fed- eral Communications Commission (‘FCC’) adopted a Report and Order and Order of Proposed Modification (‘the FCC Order’) in connection with the clearing of a 300 MHz band of C-band downlink spectrum between 3,700 and 4,000 MHz by December 2025 to support the rapid deployment of terrestrial 5G services in the contiguous United States (‘CONUS’). On 26 May 2020, SES officially committed to an accelerated version of the C-band clearing programme proposed in the FCC Order, which aims at ensuring a faster deployment of 5G capabilities in the United States. On 1 June 2020, the FCC’s Wireless Telecommunications Bureau confirmed that a sufficient number of eligible space station operators had filed similar accelerated relocation elections, triggering the adoption of the accelerated programme pursuant to the schedule set out below: • Phase I: By 5 December 2021, SES will relocate all of its commercial services out of the 3,700-3,820 MHz band over the CONUS. This will require making equipment changes on all associated incum- bent earth stations located in 46 of the top 50 Partial Economic Areas, supplementing telemetry, tracking and control (“TT&C”) operations to enhance two earth stations located in Hawley (Penn- sylvania, U.S.A.) and Brewster (Washington, U.S.A.) and beginning the consolidation of gateway services currently located at other SES locations, as well as any customer or user gateway services, to Hawley and / or Brewster. • Phase II: By 5 December 2023, SES will relocate all its CONUS com- mercial services out of the full 3,700-4,000 MHz band, making nec- essary equipment changes on all associated incumbent earth sta- tions located in all CONUS Partial Economic Areas, completing its gateway consolidation to the Hawley and Brewster sites and com- pleting TT&C upgrades across SES teleports. SES filed its Phase I Certification of Accelerated Relocation with the FCC on 1 October 2021 and an amended certificate on 26 October 2021. The FCC validated the amended certificate on 24 November 2021, at which time the EUR 839 million (USD 977 million) of Accel- erated Relocation Payments were fully earned. SES received the Accelerated Relocation Payments on 29 December 2021 and 3 Jan- uary 2022. The Group will receive a further USD 2,991 million (EUR 2,641 million) for Phase II if it successfully completes the clearing of the spectrum as described above. In the case of delays in achieving the Phase II spectrum clearing milestone, then the Accelerated Relocation Pay- ments will decrease on a sliding scale to zero over the six-month period beginning 5 December 2023. The FCC held a public auction for the repurposed spectrum which began on 8 December 2020 with the winning bidders being announced on 24 February 2021. To facilitate the clearing of the spectrum SES is procuring six C-band satellites and launch vehicles and is consolidating and upgrading its ground facilities to comply with the provisions of the FCC Order. In parallel, customers and affiliated earth stations are being equipped with special filters, new antennae and/or other technology capabili- ties so that they can be migrated to work with services operating in the remaining 200 MHz of spectrum (between 4,000 MHz and 4,200 MHz) available to satellite operators. The SES Board of Directors approved an investment envelope of EUR 1.4 billion (USD 1.6 billion) for the implementation of the accelerated clearing programme including the procurement and launch of the new satellites and other equipment and services described above. SES expects these spectrum clearing costs to be reimbursed by the Clear- inghouse which is administering the transition and related payments with FCC oversight. The C-band spectrum clearing operational activities are headed by a member of the Group’s Senior Leadership Team supported by a team of dedicated functional managers and full-time and part-time resources. The financial impact of these operations is monitored as part of the ongoing financial reporting to the Group’s management and Board. The C-band repurposing project is not the result of a contract with a customer and therefore proceeds from the contract are not accounted for as revenue under IFRS 15 – ‘Revenue from contracts with custom- ers’, but rather as C-band repurposing income. The FCC is a U.S. gov- ernmental agency that developed the rules of the auction, including requiring the Group to clear the lower 300 MHz of C-band spectrum and requiring overlay license auction winners to reimburse the Group for reasonable relocation costs and pay the Group accelerated relo- cation payments if earned in accordance with the FCC Order. In con- sideration of the substance of the FCC’s rulemaking, the Group believes the payments the FCC requires auction winners to make to the Group are akin to a government grant. Accordingly, the Group is applying the requirements of IAS 20 (‘Accounting for Government Grants and Disclosure of Government Assistance’) to account for the C-band repurposing income related to reimbursements of reasonable relocation costs and accelerated relocation payments. For capitalised costs related to the procurement of the C-band sat- ellites, launches, and upgraded ground facilities, the Group records credits to the recorded book values of the related asset when the costs have been incurred and the Group has obtained reasonable assurance that the costs will be reimbursed and that it will comply with the requirements attached to the reimbursement. The costs and expected reimbursements recorded in the consolidated statement of financial position under “Assets in the course of construction” (>> Note 14) are presented in the following table: SES ANNUAL REPORT 2022148 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Assets in the course of construction 2022 €MILLION Space segment Ground segment Total Cost as at 1 January 2022 668 37 705 Additions 315 14 329 Impact of currency translation 39 2 41 Cost as at 31 December 2022 1,022 53 1,075 Expected reimbursements as at 1 January 2022 (668) (37) (705) Additions (311) (13) (324) Repayments 679 1 680 Impact of currency translation (45) (2) (47) Expected reimbursements as at 31 December 2022 (345) (51) (396) Assets in the course of construction 2021 €MILLION Space segment Ground segment Total Cost as at 1 January 2021 316 8 324 Additions 309 28 337 Impact of currency translation 43 1 44 Cost as at 31 December 2021 668 37 705 Expected reimbursements as at 1 January 2021 (11) – (11) Additions (642) (36) (678) Impact of currency translation (15) (1) (16) Expected reimbursements as at 31 December 2021 (668) (37) (705) In 2022 the Group expended EUR 329 million (2021: EUR 337 million) of capital expenditures which have been partially offset by expected reimbursements as per the above, amounting to EUR 322 million (2021: EUR 678 million), reclassified from assets under construction to other receivables. The Group records operating expenses as incurred for both equip- ment transferred to customers and affiliated earth stations to facili- tate their migration to the upper 200 MHz of the C-band and other associated spectrum clearing costs. The Group records C-band repur- posing reimbursement income related to these expenses when the expenses have been incurred and the Group has obtained reasonable assurance that the costs will be reimbursed and that it will comply with the requirements attached to the reimbursement. In both cases, the Group believes it obtains such reasonable assur- ance when either the Clearinghouse validates the costs as being reim- bursable or the costs fall within cost ranges for the applicable costs as published by the FCC in a cost catalogue. In 2022 the Group recorded C-band repurposing income of EUR 184 million (2021: EUR 901 million) including EUR 173 million of Verizon accelerated clearing proceeds (2021: EUR 839 million of accelerated relocation payments recognised pursuant to the FCC’s confirmation of Phase 1 completion). C-band-related expenses of EUR 30 million (2021: EUR 122 million) represent cost of sales of EUR 3 million (2021: EUR 51 million), accumulated staff costs of EUR 12 million (2021: EUR 36 million) and other operating expenses (including travel and con- sulting charges) of EUR 15 million (2021: EUR 35 million). As at 31 December 2022, in connection with the accelerated reloca- tion payments, operating expenses, and capital expenditures above, the Group has other receivables of EUR 480 million (2021: EUR 1,273 million) related to the C-band repurposing project (see >> Note 17). Once the accelerated clearing programme had been confirmed, the Group began the amortisation of the remaining balance of deferred charges in connection with the C-band repurposing of EUR 5 million (31 December 2021: EUR 10 million). These deferred charges, which are presented under ‘Prepayments’ in the Statement of Financial Posi- tion are to be amortised on a straight-line basis through to the com- pletion of Phase II in December 2023. In 2020 SES entered into procurement agreements with three satel- lite manufacturers to acquire the six satellites needed to facilitate the repurposing of the C-band spectrum representing an aggregate com- mitment of EUR 755 million. As at 31 December 2022, SES has a nil balance (2021: EUR 655 million) presented under non-current ‘Fixed assets suppliers’ in the consolidated statement of financial position (refer to >> Note 28 as well). As at 31 December 2022, SES’s other commitments for C-band repur- posing expenditures represent EUR 22 million (2021: EUR 8 million). NOTE 34 – SUBSEQUENT EVENTS There have been no material events occurring between the reporting date and the date when the consolidated financial statements were authorised by the Board of Directors. SES ANNUAL REPORT 2022149 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 35 – ALTERNATIVE PERFORMANCE MEASURES SES regularly uses alternative performance measures to present the performance of the Group. These measures may not be comparable to similarly titled measures used by other companies and are not measurements under IFRS or any other body of generally accepted accounting principles, and thus should not be considered substitutes for the information contained in the Group’s financial statements. 1) Net debt Net debt is defined as current and non-current borrowings less cash and cash equivalents, all as disclosed on the consolidated statement of financial position. The Group believes that net debt is relevant to investors, since it gives an indication of the absolute level of non-eq- uity funding of the business. This can be compared to the income and cash flows generated by the business, and available undrawn facilities. The following table reconciles net debt to the relevant balance sheet line items: Net Debt €MILLION 2022 2021 Borrowings – non-current 3,629 3,524 Borrowings – current 719 57 Borrowings, less 4,348 3,581 Cash and equivalents 1,047 1,049 Net debt 3,301 2,532 2) EBITDA and EBITDA margin EBITDA is defined as profit for the period before the impact of depre- ciation, amortisation, net financing cost and income tax. EBITDA Mar- gin is defined as EBITDA divided by the sum of revenue and C-band repurposing income. The Group believes that EBITDA and EBITDA margin are useful supplemental indicators that may be used to assist in evaluating a Company’s operating performance. The following table reconciles EBITDA to the consolidated income statement line items from which it is derived: EBITDA €MILLION 2022 2021 Profit before tax 52 397 Add: Depreciation and impairment expense 836 626 Add: Amortisation and impairment expense 266 768 Add: Net financing costs 88 71 EBITDA 1,242 1,862 The following table provides a reconciliation of EBITDA margin: EBITDA Margin €MILLION 2022 2021 Revenue 1,944 1,782 C-band repurposing income 184 901 EBITDA 1,242 1,862 EBITDA Margin (%) 58.3% 69.4% 3) Adjusted EBITDA and Adjusted EBITDA margin Adjusted EBITDA is defined as EBITDA adjusted to exclude signifi- cant special items. Significant special items exceeding the threshold of EUR 5 million at first recognition need to be approved by manage- ment and primarily consist of restructuring charges announced in the framework of the Group’s ‘Simplify and Amplify’ programme, and other special factors or distortions linked to the C-band repurposing. Adjusted EBITDA €MILLION 2022 2021 EBITDA 1,242 1,862 Deduct: C-Band repurposing income (>> Note 33) (184) (901) Add: C-Band repurposing expenses (>> Note 33) 30 122 Add: Other significant special items (>> Note 4) 17 8 Adjusted EBITDA 1,105 1,091 Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. The following table provides a reconciliation of the Adjusted EBITDA Margin: Adjusted EBITDA Margin €MILLION 2022 2021 Revenue 1,944 1,782 Adjusted EBITDA 1,105 1,091 Adjusted EBITDA Margin (%) 56.9% 61.2% SES ANNUAL REPORT 2022150 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION 4) Operating profit and operating profit margin Operating profit is defined as profit for the year before the impact of net financing charges, income tax, the Group’s share of the results of associates and includes any extraordinary line item between revenue and profit before tax in the Group’s consolidated income statement. The Group uses operating profit to monitor its financial return after both operating expenses and a charge representing the cost of usage of both its property, plant and equipment and definite-life intangible assets. The following table reconciles operating profit to the income state- ment line items from which it is derived: Operating Profit €MILLION 2022 2021 Profit before tax 52 397 Add: Net financing costs 88 71 Operating profit 140 468 Operating profit margin is defined as operating profit as a percentage of revenue. SES believes that operating profit margin is a useful meas - ure to demonstrate the proportion of revenue that has been realised as operating profit, and therefore an indicator of profitability. The following table provides a reconciliation of the operating profit margin: Operating Profit Margin €MILLION 2022 2021 Revenue 1,944 1,782 Operating profit 140 468 Operating profit margin 7.2% 26.3% 5) Adjusted Net Debt Adjusted Net Debt is defined as current and non-current borrowings less cash and cash equivalents, all as disclosed on the consolidated financial position and also includes 50% of the Group’s EUR 1.2 billion of the perpetual bonds (consistent with rating agencies’ methodology). The Group believes that Adjusted Net Debt is relevant to investors, since it gives an indication of the absolute level of non-equity fund- ing of the business. This can be compared to the income and cash flows generated by the business, and available undrawn facilities. The following table reconciles Adjusted Net Debt to the relevant line items on the statement of financial position from which it is derived: Adjusted Net Debt €MILLION 2022 2021 Borrowings – non-current 3,629 3,524 Borrowings – current 719 57 Total borrowings 4,348 3,581 50% of the Group’s EUR 1.2 billion (2021: EUR 1.2 billion) of perpetual bonds 588 588 Less: Cash and cash equivalents 1,047 1,049 Adjusted Net Debt 3,889 3,120 6) Adjusted Net Debt to Adjusted EBITDA ratio The Adjusted Net Debt to Adjusted EBITDA ratio is defined as Adjusted Net Debt divided by Adjusted EBITDA. The Group believes that the Adjusted Net Debt to Adjusted EBITDA ratio is a useful meas- ure to demonstrate to investors its ability to generate the recurring income needed to be able to settle its loans and borrowings as they fall due. Adjusted Net Debt to Adjusted EBITDA ratio €MILLION 2022 2021 Adjusted Net Debt 3,889 3,120 Adjusted EBITDA 1,105 1,091 Adjusted Net debt to Adjusted EBITDA ratio 3.52 times 2.86 times 7) Adjusted Net Profit and Adjusted Earnings per Share Adjusted Net Profit is defined as profit or loss of the period attribut- able to shareholders of the group adjusted to exclude the after-tax impact of significant special items. Significant special items exceed- ing the threshold of EUR 5 million on first recognition, need to be approved by management and primarily consist of restructuring charges announced in the framework of the Group’s ‘Simplify and Amplify’ programme, and other special factors or distortions linked to the C-band repurposing, as well as the impairment expenses, includ- ing the tax impact of impairment charges on shareholdings arising at SES S.A. or at the subsidiary level. SES ANNUAL REPORT 2022151 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The tax rate applied to the pre-tax impact of the C-band operating expenses is the US tax rate and the tax rate applied to the restruc- turing expenses and impairment expenses represents the computed weighted average tax rate of the jurisdictions where the expenses occurred: Adjusted Net Profit €MILLION 2022 2021 Profit of the group attributable to shareholders of the parent (34) 453 C-band net of income / operating expenses (154) (779) Other significant special items 17 8 Impairment expenses 397 724 Add/(Less): Total significant special items 260 (47) Tax on C-band operating expenses (net of income), at 18.3% (2021: 21%) 28 164 Tax on other significant special items, at 25% (2021: nil) (3) (2) Tax on impairment expenses, at 19.3% (2021: 1.8%) (77) (13) Add/(Less): Tax on significant special items (52) 149 Add/(Less): Tax expense/(benefit) in respect of impairment expenses on the carrying value of subsidiary investments and other assets eliminated at consolidation level 15 (232) Adjusted Net Profit 189 323 Adjusted Earnings per Share is the reported earnings share adjusted for the after-tax impact of significant special items as described above. For the year 2022, Adjusted Earnings per Share of EUR 0.35 per Class A share (2021: EUR 0.63), and EUR 0.14 per Class B share (2021: EUR 0.25) have been calculated on the following basis: Adjusted Earnings for Computation of Adjusted Earnings per Share €MILLION 2022 2021 Adjusted Net Profit 189 323 Assumed coupon on perpetual bond (net of tax) (36) (41) Total 153 282 The weighted average number of shares, net of own shares held, for calculating Adjusted Earnings per Share – unchanged from the num- bers of shares applied in the calculation of basic earnings per share: Weighted Average Number of Shares 2022 2021 Class A shares (in million) 364.1 369.7 Class B shares (in million) 185.8 189.2 Total 549.9 558.9 Adjusted Earnings per Share 2022 2021 Class A shares 0.35 0.63 Class B shares 0.14 0.25 8) Free cash flow before dividend and treasury activities Free cash flow before financing activities is defined as net cash gen- erated by operating activities, adjusted for the net cash absorbed by investing activities. In addition, free cash flow before dividend and treasury activities considers the effect of the coupon paid on per- petual bond, interest paid on borrowings and lease payments on the computed free cash flow before financing activities. The Group believes that the free cash flow before dividend and treasury activi- ties is relevant to the investors, since it gives an indication of the Group’s ability to generate cash after payment taxes and other com- mitted financing charges. Free Cash Flow €MILLION 2022 2021 Net cash generated by operating activities 1,476 1,294 Net cash absorbed by investing activities (1,798) (283) Free cash flow before financing activities (322) 1,011 Interest paid on borrowings (103) (121) Lease payments (17) (14) Free cash flow before equity distributions and treasury activities (442) 876 SES ANNUAL REPORT 2022152 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 36 – CONSOLIDATED SUBSIDIARIES, ASSOCIATES The consolidated financial statements include the financial statements of the Group’s subsidiaries and associates listed below: Group’s Subsidiaries and Associates Economic interest (%) Method of consolidation 2022 2021 2022 2021 SES Astra S.A., Luxembourg 100 100 Full Full SES Global-Americas Inc., U.S.A. 100 100 Full Full SES Global Americas Holdings Inc., U.S.A. 3 100 100 Full Full SES Participations S.A., Luxembourg 100 100 Full Full SES Finance S.à r.l., Luxembourg 100 100 Full Full SES Holdings (Netherlands) B.V., Netherlands 100 100 Full Full SES Astra Services Europe S.à r.l., Luxembourg 100 100 Full Full SES Latin America S.à r.l., Luxembourg 100 100 Full Full SES Insurance International (Luxembourg) S.A., Luxembourg 100 100 Full Full SES Insurance International Re (Luxembourg) S.A., Luxembourg 100 100 Full Full SES Networks Lux S.à r.l., Luxembourg 100 100 Full Full Northern Americas Satellite Ventures, Inc., Canada 100 100 Full Full SES Techcom S.A., Luxembourg 100 100 Full Full Redu Operations Services S.A., Belgium 48 48 Equity Equity Redu Space Services S.A., Belgium 52 52 Full Full HD Plus GmbH, Germany 100 100 Full Full SES Germany GmbH, Germany 100 100 Full Full SES Media Solutions GmbH, Germany 100 100 Full Full MX1 (Thailand) Ltd, Thailand 2 – 100 – Full PT MX1 Smartcast Indonesia, Indonesia 100 100 Full Full ASTRA Deutschland GmbH, Germany 2 100 100 Full Full ASTRA France S.A., France 100 100 Full Full ASTRA (GB) Limited, United Kingdom 100 100 Full Full ASTRA CEE Sp. z o.o, Poland 2 – 100 – Full SES ASTRA (Romania) S.r.l., Romania 2 – 100 – Full SES HD Plus Ghana Limited Company), Ghana 84.7 84.7 Full Full Group’s Subsidiaries and Associates Economic interest (%) Method of consolidation 2022 2021 2022 2021 SES Engineering (Luxembourg) S.à r.l., Luxembourg 100 100 Full Full SES Astra AB, Sweden 100 100 Full Full Sirius Satellite Services SIA, Latvia 100 100 Full Full SES SIRIUS Ukraina, Ukraine 100 100 Full Full SES-10 S.à r.l., Luxembourg 100 100 Full Full LuxGovSat S.A., Luxembourg 6 50 50 Full Full SES Satellite Leasing Ltd, Isle of Man 100 100 Full Full Al Maisan Satellite Communications Company LLC, United Arab Emirates 6 35 35 Full Full Satellites Ventures (Bermuda) Ltd, Bermuda 50 50 Full Full SES ASTRA Africa Proprietary Limited, South Africa 100 100 Full Full SES Americom Inc., U.S.A. 100 100 Full Full SES Telecomunicações do Brasil Ltda., Brazil 100 100 Full Full SES Space & Defense, Inc., U.S.A. 5, 6 100 100 Full Full SES Mexico, S. de R.L. de C.V., Mexico 4 100 100 Full Full SES Telecommunicaciones de Mexico S. de R.L. de C.V., Mexico 2 – 100 – Full SES Satellites International, LLC, U.S.A. 100 100 Full Full SES Satellites (Gibraltar) Ltd., Gibraltar 100 100 Full Full SES Americom (Asia 1A) LLC, U.S.A. 100 100 Full Full Americom Asia Pacific LLC, U.S.A. 100 100 Full Full QuetzSat Directo S. de R.L. de C.V., Mexico 2 100 100 Full Full SES Engineering (US) Inc., U.S.A. 2 100 100 Full Full QuetzSat S. de R.L. de C.V., Mexico 100 100 Full Full Satelites Globales S. de R.L. de C.V., Mexico 2 100 100 Full Full SES Satelites Directo Ltda, Brazil 100 100 Full Full SES DTH do Brasil Ltda, Brazil 100 100 Full Full SES ANNUAL REPORT 2022153 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Group’s Subsidiaries and Associates Economic interest (%) Method of consolidation 2022 2021 2022 2021 SES Satélites Ibérica, S.L., Spain 100 100 Full Full New Skies Satellites B.V., The Netherlands 100 100 Full Full SES Engineering (Netherlands) B.V., The Netherlands 100 100 Full Full New Skies Satellites, LLC, U.S.A. 2 – 100 – Full New Skies Satellites Mar B.V., The Netherlands 100 100 Full Full New Skies Satellites Ltda, Brazil 100 100 Full Full SES New Skies Marketing B.V., The Netherlands 100 100 Full Full New Skies Satellites Argentina B.V., The Netherlands 100 100 Full Full New Skies Satellites Australia Pty Ltd, Australia 100 100 Full Full New Skies Satellites Licensee B.V., The Netherlands 100 100 Full Full SES Asia S.à r.l., Luxembourg 100 100 Full Full SES Finance Services AG, Switzerland 100 100 Full Full SES World Skies Singapore Pte Ltd, Singapore 100 100 Full Full O3b Networks Limited, Jersey, Channel Islands 100 100 Full Full O3b Limited, Jersey, Channel Islands 100 100 Full Full O3b Africa Limited, Mauritius 2 – 100 – Full O3b Sales B.V., The Netherlands 2 100 100 Full Full O3b Networks USA LLC, U.S.A. 100 100 Full Full O3b Teleport Services (Australia) Pty Limited, Australia 100 100 Full Full O3b Teleport Serviços (Brasil) Ltda, Brasil 2 – 100 – Full O3b Networks (Brasil) Ltda, Brasil 2 – 100 – Full O3b Services (Portugal) Ltda, Portugal 100 100 Full Full O3b Teleport Services (Peru) SAC, Peru 100 100 Full Full SES mPOWER S.à r.l., Luxembourg 100 100 Full Full SES Networks Satellites S.à r.l., Luxembourg 100 100 Full Full West Africa Platform Services Ltd, Ghana 6 49 49 Full Full MX1 Ltd, Israel 100 100 Full Full MX1 LLC, U.S.A. 2 100 100 Full Full GSN GoSat Distribution Network Ltd, Cyprus 2 100 100 Full Full EMP Media Port Ltd, Cyprus 2 – 100 – Full SES Services Romania S.R.L., Romania 100 100 Full Full Group’s Subsidiaries and Associates Economic interest (%) Method of consolidation 2022 2021 2022 2021 SES-17 S.à r.l., Luxembourg 100 100 Full Full SES Defence UK Ltd, United Kingdom 100 100 Full Full SES Techcom Afrique S.A. S.U., Burkina Faso 2 – 100 – Full SES Satellite Nigeria Limited, Nigeria 100 100 Full Full SES Networks GmbH, Germany 2 100 100 Full Full SES Satellites India Private Limited, India 100 100 Full Full SES 5G Customer Services LLC, U.S.A. 100 100 Full Full SES US Satellite Holdings LLC, U.S.A. 100 100 Full Full SES Telecomunicaciones de Colombia S.A.S., Colombia 100 100 Full Full SES Telecomunicaciones de Colombia Zona Franca S.A.S., Colombia 2 – 100 – Full SES Telecomunicaciones de Chile SpA, Chile 100 100 Full Full SES LU Satellite Holdings S.à r.l., Luxembourg 100 100 Full Full Luxembourg Space Sector Development General Partner S.à r.l, Luxembourg 100 100 Full Full Luxembourg Space Sector Development SCSp, Luxembourg 50 50 Full Full SES LU US Holdings S.à r.l, Luxembourg 100 100 Full Full Global Enterprise Solutions Inc., U.S.A. 1, 6 100 – Full – SES Technologies Verwaltungs GmbH, Germany 1, 6 100 – Full – Global Networks Services LLC, U.S.A. 1, 6 100 – Full – TSI International LLC, U.S.A. 1, 6 100 – Full – Société Européenne des Satellites Telecomunicaciones de Agentina S.A., Argentina 1 100 – Full – Jio Space Technology Limitied, India 7 49 – Equity – SES Marketing India Private Limited, India 1 100 – Full – 1 Entity acquired in 2022 2 Entity sold, merged, liquidated, or merger or liquidation process initiated, in 2022 3 Change in legal form of entity in 2022 from General Partnership into a US corporation (‘Inc.’) 4 Formerly Sistemas Satelitales de Mexico S. de R.L. de C.V. 5 Formerly SES Government Solutions, Inc. 6 See >> Note 2, ‘Significant accounting judgments and estimates’ 7 Joint venture in which the Group invested in 2022 SES S.A. ANNUAL ACCOUNTS 5 155 Audit report 158 Balance sheet 159 Profit and loss account 160 Statement of changes in shareholders’ equity 161 Notes to the annual accounts SES ANNUAL REPORT 2022155 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION AUDIT REPORT To the Shareholders of SES S.A. REPORT ON THE AUDIT OF THE ANNUAL ACCOUNTS OUR OPINION In our opinion, the accompanying annual accounts give a true and fair view of the financial position of SES S.A. (the “Company”) as at 31 December 2022, and of the results of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the annual accounts. Our opinion is consistent with our additional report to the Audit and Risk Committee. What we have audited The Company’s annual accounts comprise: • the balance sheet as at 31 December 2022; • the profit and loss account for the year then ended; • the statement of changes in shareholders’ equity as at 31 Decem- ber 2022; and • the notes to the annual accounts, which include a summary of sig- nificant accounting policies. BASIS FOR OPINION We conducted our audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our responsibilities under the EU Regu- lation No 537/2014, the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the “Responsibili- ties of the “Réviseur d’entreprises agréé” for the audit of the annual accounts” section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Company in accordance with the Inter- national Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the annual accounts. We have fulfilled our other ethical responsibilities under those ethical requirements. To the best of our knowledge and belief, we declare that we have not provided non-audit services that are prohibited under Article 5(1) of the EU Regulation No 537/2014. The non-audit services that we have provided to the Company and its controlled undertakings, if applicable, for the year then ended, are disclosed in >> Note 19 to the annual accounts. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judg- ment, were of most significance in our audit of the annual accounts of the current period. These matters were addressed in the context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Valuation of the shares in affiliated undertakings The Company has investments in shares in affiliated undertakings in net amount of 5,422 million EUR (see >> Note 4), which includes 214 million EUR of value adjustments recorded during the year then ended. Management’s assessment of the recoverable amount of investments in subsidiaries requires significant judgement in the determination of the level at which the investments in affiliated undertakings are tested for impairment taking into account the substance of the business activity, interdependency of the cash flows between the different sub- sidiaries and their level of integration. Moreover, the determination of the recoverable value requires signif- icant estimates as it relates to the estimation of the forecasted cash flows and of the discount rates and long-term growth rates. We focused on this area due to the inherent complexity and judge- ment in the estimate for the recoverable amount of the investments in affiliated undertakings and the materiality of the balance. PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg, T : +352 494848 1, F : +352 494848 2900, www.pwc.lu Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256) R.C.S. Luxembourg B 65 477 - TVA LU25482518 SES ANNUAL REPORT 2022156 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION How our audit addressed the key audit matter • We tested the design and implementation of relevant internal controls; • We evaluated Management’s methodology used to estimate the recoverable amount of the investments in affiliated undertakings. To that effect, we noted that Management has grouped certain undertakings together for the purposes of testing them for impair- ment in order to appropriately reflect the substance of the activity, interdependency of cash flows and the level of integration of their operations; • We evaluated, where Management planned a divestiture/restruc- turing at undertaking level, the impact on the recoverable amount determined at the individual affiliated undertaking level; • When Management has grouped certain undertakings together for the purposes of testing them for impairment, we involved valuation specialists and independently recalculated the weighted average cost of capital based on the use of market date and challenged the long-term growth rate applied based on market data; • We agreed the forecasted cash flows used for the determination of the recoverable value to the 2023 Business Plan as approved by the Board of Directors; • We evaluated the forecasted revenue and costs assumptions, considering our expectations in terms of significant developments during the forecast period (significant new contracts or loss thereof) and corroborated these with market data in respect of demand for satellite capacity and pricing; • We evaluated the capital expenditure assumptions, considering our expectations in terms of significant developments during the fore- cast period (capital expenditure programs, replacement of satel- lites) and the expected capital expenditure level in terminal period in order to maintain the current assets base; • We performed sensitivity analysis of the models to changes in the key assumptions; • When Management has undertaken the testing for impairment at individual affiliated undertaking level, we have obtained the related independent valuation reports and evaluated the related value adjustment calculations where required; • We considered the appropriateness of the disclosures in >> Note 4 to the annual accounts. OTHER INFORMATION The Board of Directors is responsible for the other information. The other information comprises the information stated in the manage- ment report and the Corporate Governance Statement but does not include the annual accounts and our audit report thereon. Our opinion on the annual accounts does not cover the other infor- mation and we do not express any form of assurance conclusion thereon. In connection with our audit of the annual accounts, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the annual accounts or our knowledge obtained in the audit, or other- wise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE ANNUAL ACCOUNTS The Board of Directors is responsible for the preparation and fair presentation of the annual accounts in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the annual accounts, and for such internal control as the Board of Directors determines is necessary to enable the pre- paration of annual accounts that are free from material misstatement, whether due to fraud or error. In preparing the annual accounts, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. The Board of Directors is responsible for presenting the annual accounts in compliance with the requirements set out in the Dele- gated Regulation 2019/815 on European Single Electronic Format (“ESEF Regulation”). SES ANNUAL REPORT 2022157 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION RESPONSIBILITIES OF THE “RÉVISEUR D’ENTRE- PRISES AGRÉÉ” FOR THE AUDIT OF THE ANNUAL ACCOUNTS The objectives of our audit are to obtain reasonable assurance about whether the annual accounts as a whole are free from material mis- statement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accord- ance with the EU Regulation No 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts. As part of an audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain profes- sional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the annual accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control; • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors; • conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evi- dence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Com- pany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the related disclosures in the annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However, future events or conditions may cause the Company to cease to continue as a going concern; • evaluate the overall presentation, structure and content of the annual accounts, including the disclosures, and whether the annual accounts represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding inde- pendence, and communicate to them all relationships and other mat- ters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the annual accounts of the current period and are therefore the key audit matters. We describe these matters in our audit report unless law or regulation precludes public disclosure about the matter. We assess whether the annual accounts have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS The management report is consistent with the annual accounts and has been prepared in accordance with applicable legal requirements. The Corporate Governance Statement is included in the management report. The information required by Article 68ter Paragraph (1) Let- ters c) and d) of the Law of 19 December 2002 on the commercial and companies register and on the accounting records and annual accounts of undertakings, as amended, is consistent with the annual accounts and has been prepared in accordance with applicable legal requirements. We have been appointed as “Réviseur d’Entreprises Agréé” by the General Meeting of the Shareholders on 7 April 2022 and the duration of our uninterrupted engagement, including previous renewals and reappointments, is 10 years. We have checked the compliance of the annual accounts of the Com - pany as at 31 December 2022 with relevant statutory requirements set out in the ESEF Regulation that are applicable to annual accounts. For the Company it relates to the requirement that annual accounts are prepared in a valid XHTML format. In our opinion, the annual accounts of the Company as at 31 Decem- ber 2022, identified as “SES 2022 Annual report”, have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. PricewaterhouseCoopers, Société coopérative Represented by François Mousel Luxembourg, 27 February 2023 SES ANNUAL REPORT 2022158 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION BALANCE SHEET As at 31 December 2022 Liabilities €MILLION Note 2022 2021 Capital and reserves Subscribed capital 7 696.5 719.0 Share premium account 7 1,832.3 1,890.2 Reserves Legal reserve 8 71.9 71.9 Reserve for own shares 9 40.0 54.0 Profit brought forward 2,132.0 2,776.8 Profit for the financial year 646.9 (428.7) 5,419.6 5,083.2 Creditors 2.2.6 Debenture loans – Non-convertible loans 10 becoming due and payable within one year 778.0 65.9 becoming due and payable after more than one year 4,299.4 4,639.4 Amounts owed to credit institutions 10 becoming due and payable within one year – 40.2 becoming due and payable after more than one year – – Trade creditors becoming due and payable within one year 2.0 1.0 Amounts owed to affiliated undertakings 10 becoming due and payable within one year 1,988.9 1,626.8 becoming due and payable after more than one year 188.0 587.3 Other creditors Social security authorities 0.4 0.4 Other creditors 11 becoming due and payable within one year 203.0 711.8 payable after more than one year 259.1 277.6 7,718.8 7 ,950.4 T otal liabilities (Capital, Reserves, Liabilities) 13,138.4 1 3,033.6 The accompanying notes form an integral part of the annual accounts. Assets €MILLION Note 2022 2021 Fixed Assets Int angible assets 0.4 0.4 Payments on account and intangible assets under development 2.2.1 8.3 4.1 Financial assets 2.2.2, 4 Shares in affiliated undertakings 4 a 5,421.7 5,032.0 Loans to affiliated undertakings 4 b 2,805.3 3,252.7 8.235.7 8,289.2 C urrent Assets D ebtors 2.2.3 Amounts owed by affiliated undertakings b ecoming due and payable within one year 5 a 3,646.7 3,416.3 becoming due and payable after one year 5 a 269.7 287.1 O ther debtors b ecoming due and payable within one year 5 b 30.9 16.6 In vestments O wn shares 2.2.4, 6 40.0 54.0 Cash a t bank and cash in hand 890.7 9 35.1 4,878.0 4, 709.1 Pr epayments 2.2.5 24.7 35.3 Total assets 13,138.4 1 3,033.6 The accompanying notes form an integral part of the annual accounts. SES ANNUAL REPORT 2022159 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION PROFIT AND LOSS ACCOUNT For the year ended 31 December 2022 Profit and Loss Account €MILLION Note 2022 2021 Interest payable and similar expenses concerning affiliated undertakings 3, 18 a (54.4) (29.5) other interest and similar expenses 18 b (342.8) (375.0) Tax on profit or loss (1.9) (0.4) Profit or loss for the financial year 646.9 (428.7) The accompanying notes form an integral part of the annual accounts. Profit and Loss Account €MILLION Note 2022 2021 Other operating income 12 17.8 27.3 Raw material and consumables and other external expenses Other external expenses 12 (27.5) (28.8) Staff costs 13 Wages and salaries (16.2) (15.6) Social security costs relating to pensions (1.8) (1.7) other social security costs 0.2 (0.6) Other staff costs (0.1) (0.1) Other operating expenses (3.3) (3.0) Income from participating interest derived from affiliated undertakings 2.2.8, 14 688.0 1,896.8 Income from other investments and loans forming part of fixed assets derived from affiliated undertakings 15 90.8 85.0 Other interest receivable and similar income derived from affiliated undertakings 3, 16 a 235.5 40.5 other interest and similar income 16 b 221.3 228.6 Value adjustment in respect of financial assets and of investments held as current assets 17 (158.7) (2,252.2) SES ANNUAL REPORT 2022160 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY As at 31 December 2022 Statement of Changes in Shareholders’ Equity €MILLION Subscribed capital Share premium Legal reserve Other reserves Result for the year Total At 1 January 2021 719.0 1,890.2 71.9 2,506.1 508.8 5,696.0 Allocation of result – – – 508.8 (508.8) – Distribution of dividends – – – (184.1) – (184.1) Profit for the financial year – – – – (428.7) (428.7) At 31 December 2021 719.0 1,890.2 71.9 2,830.8 (428.7) 5,083.2 At 1 January 2022 719.0 1,890.2 71.9 2,830.8 (428.7) 5,083.2 Allocation of result – – – (428.7) 428.7 – Share Capital reduction (22.5) (57.9) – – – (80.4) Distribution of dividends – – – (230.1) – (230.1) Profit for the financial year – – – – 646.9 646.9 At 31 December 2022 696.5 1,832.3 71.9 2,172.0 646.9 5,419.6 * Including reserves for own shares, other non available reserves and profit brought forward. The accompanying notes form an integral part of the annual accounts. SES ANNUAL REPORT 2022161 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTES TO THE ANNUAL ACCOUNTS As at 31 December 2022 NOTE 1 – GENERAL INFORMATION SES S.A. (hereafter ‘SES’ or ‘the Company’) was incorporated on 16 March 2001 as a limited liability company (Société Anonyme) under the laws of the Grand-Duchy of Luxembourg for an unlimited period. The registered office of the Company is at: Château de Betzdorf, L-6815 Betzdorf, Luxembourg. The purpose of the Company is to take generally any interest what- soever in electronic media and to be active, more particularly, in the communications area via satellites and to invest, directly or indirectly, in other companies that are actively involved in the satellite commu- nication industry. The Company prepares consolidated financial statements for the SES Group which are drawn up in accordance with International Financial Reporting Standards as endorsed by the European Union (‘IFRS’) and are published according to the provisions of the Luxembourg law. The accounting period of the Company is from 1 January to 31 December. Article 65, Paragraph (1) 2º of the Law of 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings (the “Law”) requires the disclosure of the amount of capital and reserves and profit and loss for the last finan- cial year of each affiliated undertaking. In conformity with Art.67 (3) of the Law, these details have been omitted as the Company prepares consolidated financial statements and these consolidated financial statements, and the related management report and auditors’ report thereon, have been lodged with the Luxembourg Trade Registry. The Company’s Fiduciary Deposit Receipts (‘FDRs’) have been listed on the Luxembourg Stock Exchange since 1998 and on Euronext Paris since 2004 under the symbol SESG. FDRs can be traded freely and are convertible into an equal number of Class A shares at any time, and at no cost, at the option of the holder under the conditions appli- cable in the Company’s articles of association, and in accordance with the terms of the FDRs. Until April 2022, the Company had a 99.94% interest in a partnership, SES Global Americas Holdings GP, whose accounts were integrated into those of the Company to the level of its partnership interest. In April 2022 the partnership was converted into a separate legal entity named SES Global Americas Holdings Inc. (refer to >> Note 3). NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND VALUATION RULES 2.1. BASIS OF PREPARATION The annual accounts are prepared in accordance with the Luxem- bourg legal and regulatory requirements under the historical cost convention relating to the preparation and presentation of the annual accounts. Accounting policies and valuation rules are, besides the ones laid down by the amended Law of 19 December 2002, deter- mined and applied by the Board of Directors. The preparation of annual accounts requires the use of certain critical accounting estimates. It also requires the Board of Directors to exer- cise its judgment in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the annual accounts in the period in which the assumptions are changed. Management believes that the underlying assumptions are appro- priate and that the annual accounts therefore present the financial position and results fairly. Management makes estimates and assumptions that may affect the reported amounts of assets and liabilities in the next financial year(s). Estimates and judgments are regularly re-evaluated, and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circum- stances. 2.2. SIGNIFICANT ACCOUNTING POLICIES The main accounting policies and valuation rules applied by the Com- pany are the following: 2.2.1. Intangible assets Amounts related to the development of software and other related expenses, are included in the balance sheet when incurred. Development expenditure is capitalised when its future recoverability can be regarded as assured. The expenditure is transferred to assets in use, and depre- ciation commences, when the resulting asset is put into service. 2.2.2. Financial assets Shares in affiliated undertakings held by the Company are recorded at acquisition cost. In the case of a permanent diminution in the value of a financial fixed asset in the opinion of the Board of Directors, a value adjustment is made such that the investment is valued at the lower figure. Value adjustments are not maintained if the reasons for which they were made have ceased to apply. In some instances, where the Board of Directors believes that it is more appropriate under the circumstances and better reflects the substance of the activity, the interdependency of cash flows between SES subsidiaries, and their level of integration, have been considered in assessing the carrying value of the financial assets. SES ANNUAL REPORT 2022162 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION In those instances, investments in certain undertakings have been grouped together for the purposes of testing them for impairment - similarly to cash generating units (‘CGUs’) as defined in IAS 36 “Impairment of Assets” under IFRS. However, as set out in >> Note 5, where a contractual disposal of an investment included in one of the cash-generating units triggers the recognition of a book loss then this loss is recorded by the Company in the result of the period when the transaction was approved and the magnitude of the loss was ascertained. Loans to affiliated undertakings are valued at their nominal value. Value adjustments are recorded on loans which appear to be partly or wholly irrecoverable. These value adjustments are not maintained if the reasons for which they were made have ceased to apply. 2.2.3. Debtors Debtors are recorded at their nominal value. They are subject to value adjustments where their recovery is uncertain. These value adjust- ments are not continued if the reasons for which they were made have ceased to apply. 2.2.4. Investments – own shares Own shares are recorded at acquisition cost, including expenses incidental thereto. At the balance sheet date, own shares are valued at the lower of acquisition cost and a valuation calculated based on weighted average cost or market value. A value adjustment is recorded where the market value is lower than the acquisition cost. These value adjustments are not maintained if the reasons for which the value adjustments were made have ceased to apply. 2.2.5. Prepayments Prepayments represent expenditures incurred during the financial year but relating to a subsequent financial year. Loan origination costs are recorded at their nominal value, and are presented as prepayments. These costs are amortised over the remaining estimated loan periods based on the Company’s financing strategy. 2.2.6. Creditors Debenture loans and amounts owed to credit institutions are recorded at their reimbursement value. Where the amount repayable is greater than the amount received, then the difference is shown as an asset and is written off on a straight-line basis over the term of the borrowing. 2.2.7. Foreign currency translation The Company maintains its books and records in euro (EUR). Trans- actions expressed in currencies other than the euro are translated into euros at the exchange rates effective at the time of the transac- tion. Except for fixed assets, all assets and liabilities denominated in foreign currencies are converted at the rate of exchange ruling at the balance sheet date. Realised and unrealised gains and losses are recognised in the profit and loss account. Fixed assets denominated in currencies other than euro, except for loans to affiliated undertakings classified as financial fixed assets, are translated into euro at the exchange rate effective at the time of the transaction. At the balance sheet date, these assets remain translated at historical exchange rates. The foreign exchange result for the year has been presented on a net basis. 2.2.8. Dividends paid and received Dividends are declared after the annual accounts for the year have been approved. Accordingly, dividends payable are recorded in the subsequent year’s annual accounts. Dividends receivable on own shares are recorded as income in the year in which the dividend is approved. Dividends receivable from affiliated undertakings are recorded as income in the year in which they are approved by the subsidiary. 2.2.9. Share-based compensation Employees of the Company receive remuneration in the form of share-based compensation, whereby employees render services to the Company as consideration for equity instruments. Four share-based compensation schemes have been established by the Company and are available to members of the Company’s staff, and to employees of the SES Group: Equity settled plans: • The Stock Appreciation Rights Plan (‘STAR Plan’) • Executive Incentive Compensation Plan (‘EICP’) • Long-Term Incentive Programme (‘LTIP’) Cash settled plan: • Simulated Restricted Stock Units plan (‘SRSU Plan’) A charge, representing the difference between the acquisition cost of own shares and exercise price, is recognised in the profit and loss account on the exercising of share option/shares. The SRSU Plan was inaugurated in 2017 and is replacing, over time, the Star Plan. SRSUs are delivered on 1 June following a three-year vesting period. Delivery occurs through a gross cash payment in the June payroll cycle instead of in FDR’s. For the cash-settled plan, a charge corresponding to the number of SRSUs outstanding at the share price on 31 December 2022 is rec- ognised in the profit and loss account on a pro-rata basis over the vesting period and is presented as part of ‘Wages and salaries’ in the profit and loss account. A corresponding liability is recorded and pre- sented in the balance sheet under ‘Other creditors’. SES ANNUAL REPORT 2022163 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 3 – CONVERSION OF SES GLOBAL AMERICAS HOLDINGS GP Until April 2022, the Company had a 99.94% interest in a partnership, SES Global Americas Holdings GP, whose accounts were integrated into those of the Company to the level of its share in the partnership. In April 2022 the partnership was converted into a separate legal entity named SES Global Americas Holdings Inc.. On conversion, all assets and liabilities of the partnership were deemed disposed against a fair market value of 99.94% interest in SES Global Americas Holdings Inc. in the amount of EUR 2,117.2 mil- lion, generating a gain of EUR 135.5 million. The impact of the conversion on the annual accounts of the Company was as follows: The impact of conversion of SES Global Americas Holdings GP €MILLION Shares in affiliated undertakings (831.9) Disposal of 99.94% in SES Global-Americas, Inc. (2,919.2) Disposal of 32.34% in SES Astra A.B. (29.9) Acquisition of 99.94% in SES Global Americas Holdings Inc 2,117.2 Debtors Amounts owed by affiliated undertakings due and payable within one year (284.4) Short term loan to SES Americom Inc. (284.4) Prepayments (11.7) Loan origination costs related to 144A Bond USD 500 million (2044) (11.7) Total Assets (1,128.0) Creditors Debenture loans - Non convertible loans due and payable after one year (476.7) 144A Bond USD 500 million (2044) (476.7) Amounts owed to affiliated undertakings due and payable within one year (217.5) Current accounts (217.5) Amounts owed to affiliated undertakings due and payable after one year (569.3) Long term loan from SES Americom Inc. (569.3) Total Liabilities (1,263.5) Other interest receivable and similar income – derived from affiliated undertakings 50.3 Gain on sale of 144A Bond USD 500 million (2044) 50.3 85.2 Gain on disposal of shares in .SES Global – Americas, Inc. 75.2 Gain on disposal of shares SES Astra A.B. 10.0 Profit for the Financial Year 135.5 The accompanying notes form an integral part of the annual accounts. SES ANNUAL REPORT 2022164 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 4 – FINANCIAL ASSETS A) SHARES IN AFFILIATED UNDERTAKINGS Movement in Shares in Affiliated Undertakings €MILLION 2022 2021 Historic cost: As at 1 January: 7,323.4 7,275.7 Increase 3,933.2 97.0 Decrease (3,929.1) (49.3) Transfer (104.7) – As at 31 December 7,222.8 7,323.4 Accumulated value adjustments As at 1 January (2,291.4) (104.7) Increase (213.5) (2,186.7) Decrease 599.1 – Transfer 104.7 – As at 31 December (1,801,1) (2,291.4) Net book value: As at 1 January 5,032.0 7,171.0 As at 31 December 5,421,7 5,032.0 In April 2022 SES Global Americas Holdings GP was converted from a partnership into a separate legal entity named SES Global Americas Holdings Inc. As a result of the conversion: • the investment in SES Global-Americas, Inc. decreased by EUR 2,919.2 million (representing a decrease in the historic cost of EUR 3,498.1 million net of accumulated value adjustments of EUR 578.9 million), • the investment in SES Astra A.B. decreased by 29.9 million (repre- senting a decrease of cost of EUR 50.1 million net of accumulated value adjustments of EUR 20.2 million), and • the investment in SES Global Americas Holdings Inc. increased by the amount of EUR 2,117.2 million (refer to >> Note 3). The Company then acquired the remaining 0.06% interest in SES Global Americas Holdings Inc from SES Astra S.A. for EUR 1.3 million, and contributed all its shares in SES Global Americas Holdings Inc to SES LU US Holdings S.à r.l. for EUR 2,118.5 million. In September 2022, the Company contributed its loan receivable with SES Americom, Inc. in the amount of EUR 470.6 million into the share premium of SES LU US Holdings S.à r.l., increasing the carrying value of its interest in SES LU US Holdings S.à r.l. by the same amount. In November 2022, the Company contributed its loan receivable with SES mPower S.à r.l. in the amount of EUR 578.3 million into the share premium of SES LU US Holdings S.à r.l., increasing the carrying value of its interest in SES LU US Holdings S.à r.l. by the same amount. In November 2022, the Company made a contribution in cash into the share premium of SES Latin America S.à r.l. of EUR 11.0 million, increas- ing the carrying value of its interest in SES Latin America S.à r.l. by the same amount. In November 2022, SES Finance S.à r.l. reduced its share premium by means of a capital repayment to the Company of EUR 3.5 million, decreasing the carrying value of its interest in SES Finance S.à r.l. by the same amount. In December 2022, SES Holdings (Netherlands) B.V. reduced its share premium by means of a capital repayment to the Company in the amount of EUR 377.4 million, resulting in a reduction in the carrying value of its interest in SES Holdings (Netherlands) B.V. of the same amount. In December 2022, the Company converted a portion of its current account with SES Networks Lux S.à r.l. of EUR 377.4 million into a long- term loan and contributed this loan into the share premium of SES LU US Holdings S.à r.l., increasing the carrying value of its interest in SES LU US Holdings S.à r.l. by the same amount. In December 2022, the Company made a contribution in cash into share premium of SES LU US Holdings S.à r.l. of EUR 377.4 million, increasing the carrying value of its interest in SES LU US Holdings S.à r.l. by the same amount. In 2022, the increase in accumulated value adjustments of EUR 213.5 million represents an impairment of the investment in SES Participa- tions of EUR 18.8 million and an aggregate amount of EUR 194.7 mil- lion recorded in connection with the investments in SES LU US Hold- ings S.à r.l. (EUR 135.6 million), SES Astra S.A. (EUR 47.9 million), SES Holdings (Netherlands) B.V. (EUR 9.8 million) and SES Latin America S.à r.l. (EUR 1.4 million). The 2021 increase in historic cost represented a share premium con- tribution to SES Holdings (Netherlands) B.V. of EUR 76.5 million and a contribution in kind to SES Global-Americas, Inc. of EUR 20.5 million. The decrease represented a share premium reduction in SES Finance S.à r.l (EUR 28.8 million) and in SES Holdings (Netherlands) B.V. (EUR 20.5 million). In 2021, the increase in accumulated value adjustments reflected impairment of investments in SES Global-Americas, Inc. (EUR 578.9 million), SES Finance S.à r.l (EUR 1,502.1 million), SES Participations S.A. (EUR 85.5 million) and SES Astra A.B. (EUR 20.2 million). SES ANNUAL REPORT 2022165 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION As at 31 December 2022, the Company held the following investments: Net book value €MILLION Incorporation in 2022 2021 2022 2021 SES Global-Americas, Inc. United States – 99.94% – 2,919.2 SES Finance S.à r.l. Luxembourg 100% 100% 8.6 12.1 SES Holdings (Netherlands) B.V. 1 Netherlands 100% 100% 491.4 878.6 SES Astra S.A. Luxembourg 100% 100% 998.9 1,046.8 SES Participations S.A. Luxembourg 100% 100% 2.5 21.3 SES Insurance International Re (Luxembourg) S.A. Luxembourg 100% 100% 90.3 90.3 SES Astra A.B. Sweden – 32.34% – 29.9 SES Insurance International (Luxembourg) S.A. Luxembourg 100% 100% 15.2 15.2 SES Latin America S.à r.l. Luxembourg 100% 100% 28.3 18.6 SES LU US Holdings S.à r.l. Luxembourg 100% 100% 3,786.5 – Total 5,421.7 5,032.0 1 SES Holdings (Netherlands) B.V. has a 100% direct ownership of the entity New Skies Satellites B.V. and 100% indirect ownership of the entity O3b Networks Limited. Therefore for impairment testing purposes the investment is allocated between the SES GEO and SES MEO cash generating units. Management identified the following CGUs for the purpose of impair- ment testing: • SES GEO operations (‘SES GEO’) and • SES MEO operations (‘SES MEO’). The following entities not directly connected to a CGU are con- sidered out of scope: SES Participations S.A., SES Insurance Inter- national Re (Luxembourg) S.A. and SES Insurance International (Luxembourg) S.A.. The investment in SES Holdings (Netherlands) B.V. of EUR 270.0 mil- lion (2021: EUR 878.6 million) includes both SES GEO and SES MEO operations and was analysed accordingly for impairment testing pur- poses. In December 2022, the Company contributed a loan to SES Networks Lux S.à r.l. of EUR 377.4 million and cash of EUR 377.4 million into the share premium of SES LU US Holdings S.à r.l.. As both these contri- butions are MEO-related, they were allocated to the SES MEO CGU. Impairment testing for SES GEO Affiliated undertakings listed under “SES GEO” form part of the GEO satellite operations of the SES Group. They are aggregated into one CGU for the purpose of testing their carrying values for impairment, considering the interdependency of their cash flows and their level of integration (see >> Note 2). Loans to and from SES GEO companies are added to the carrying values of the shares concerned for impair- ment testing purposes. The value-in-use of this CGU is determined based on a calculation using the most recent business plan information approved by the Board of Directors which covers a period of five years. This period reflects the long-term contractual base for the satellite business. The pre-tax discount rate varies based on the geographic region covered by the satellites; the rates used ranged from 9.02% to 12.62% and were selected to reflect market interest rates and commercial spreads, the capital structure of businesses in the SES Group’s busi- ness sector, and the specific risk profile of the businesses concerned. Similarly, the terminal growth rates used in the valuation varied from +2.5% to -2.7%, reflecting the most recent long-term planning assump- tions approved by the Board, and are supported by reference to the performance of the SES business concerned over a longer period in the relevant markets. The assessment resulted in EUR 194.7 million impairment being recorded on certain investments. An impairment test performed on each investment taken individually (the “line-by-line method”), would potentially lead to a different con- clusion. However, for the reasons stated above and as described in >> Note 2.2.2., the Board of Directors of the Company does not believe that the “line-by-line method” is appropriate considering the inte- grated nature of the SES GEO operations business and the interde- pendency of its cash flows. SES ANNUAL REPORT 2022166 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION Impairment testing for SES MEO operations SES MEO operations, representing the O3b Networks business acquired in 2016, is considered a separate CGU, as the business cur- rently generates cash inflows that are largely independent from SES GEO operations. Similar to SES GEO, the value-in-use of this CGU is determined based on a calculation using the most recent business plan information approved by the Board of Directors which covers five years. An spe- cific ‘H-model’ was used to estimate the cash flows beyond the business plan period in order to capture the projected growth of the business in connection with the O3b mPOWER constellation which is expected to begin commercial service towards the end of 2023. The post-business plan growth rate (2027 to 2028) began at 10.0% and reduced on a straight-line basis to a terminal growth rate of 3.0% over a period of 10 years. The pre-tax discount rate applied for 2022 was 10.38% (2021: 8.13%) and was selected to reflect market interest rates and commercial spreads; the capital structure of businesses in the CGU’s business sector; and the specific risk profile of the businesses concerned. As noted above, the terminal growth rate used was 3.0% (2021: 3.0%), reflecting current long term inflation assumptions. B) LOANS TO AFFILIATED UNDERTAKINGS Loans to affiliated undertakings as of 31 December 2022 consist of: Loans to Affiliated Undertakings as of 31 December 2022 €MILLION Principal and accrued interest 31 December 2022 Maturity Interest rate Counterparty SES Astra S.A. 700.0 October 2030 0.64% SES-10 S.à r.l. 53.4 January 2032 2.29% SES Networks Lux S.à r.l. 958.2 October 2029 3.33% SES Networks Satellites S.à r.l. 465.0 October 2029 3.33% New Skies Satellites B.V. 5.3 December 2024 3.01% New Skies Satellites B.V. 243.6 December 2032 3.01% SES Holdings (Netherlands) B.V. 180.9 December 2024 3.01% SES Holdings (Netherlands) B.V. 96.1 December 2024 3.01% SES Holdings (Netherlands) B.V. 32.8 December 2024 3.01% HD Plus GmbH 70.0 November 2030 5.60% Total 2,805.3 The Company does not consider any balances on its loans to affiliates as being irrecoverable as at 31 December 2022. Loans to affiliated undertakings as of 31 December 2021 consist of: Loans to Affiliated Undertakings as of 31 December 2021 €MILLION Principal and accrued interest 31 December 2021 Maturity Interest rate Counterparty SES Astra S.A. 800.0 October 2030 0.64% SES-10 S.à r.l. 60.0 January 2032 0.41% SES Networks Lux S.à r.l. 874.9 October 2029 3.33% SES Networks Satellites S.à r.l. 424.6 October 2029 3.33% New Skies Satellites B.V. 199.5 November 2023 3.14% New Skies Satellites B.V. 367.7 November 2023 3.14% New Skies Satellites B.V. 4.9 December 2024 3.14% New Skies Satellites B.V. 229.4 December 2032 3.14% SES Holdings (Netherlands) B.V. 170.3 October 2024 3.14% SES Holdings (Netherlands) B.V. 90.5 December 2024 3.14% SES Holdings (Netherlands) B.V. 30.9 December 2024 3.14% Total 3,252.7 SES ANNUAL REPORT 2022167 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 5 – DEBTORS A) AMOUNTS OWED BY AFFILIATED UNDERTAKINGS The SES Group operates a centralised treasury function at the level of the Company, including a cash-pooling mechanism which manages the Group’s liquidity and optimises its funding costs. Amounts owed by affiliated undertakings as at 31 December consist of: Amounts owed by Affiliated Undertakings €MILLION 2022 2021 Becoming due and payable within one year Intercompany current accounts 2,715.5 2,381.2 Forward Sale Agreement with SES mPower S.à r.l. 197.2 704.2 Short term loan to Luxembourg satellite companies 6.6 6.7 Short term loan to SES Astra S.A. 101.3 101.5 Short term loan to SES Americom – 262.3 Short term loan to SES New Skies Satellites B.V. 615.2 – Short term loan to HD Plus GmbH 10.9 30.2 Short term loan to SES Media Solutions GmbH 218.0 210.0 Value adjustments (218.0) (279.8) Total 3,646.7 3,416.3 Becoming due an payable after one year Forward Sale Agreement with SES mPower S.à r.l. 259.1 277.6 Long term advance to SES DTH do Brasil Ltda 10.6 9.5 Total 269.7 287.1 Intercompany current accounts represent short-term advances bearing interest at market rates. As at 31 December 2022, the Company performed an analysis of the amounts owed by affiliated undertakings and reversed previously recorded value adjustment of EUR 61.8 million (see also >> Note 17) as these amounts are no longer considered to be irrecoverable: • Intercompany current account with MX1 Limited of EUR 40.7 mil- lion • Intercompany current account with SES Media Solutions GmbH of EUR 16.8 million • Intercompany current account with SES Astra Services Europe of EUR 4.3 million As at 31 December 2021 the Company had recorded value adjust- ments of EUR 279.8 million with respect to: • Intercompany current account with MX1 Limited of EUR 40.7 million • Short-term loan to SES Media Solutions GmbH of EUR 210.0 million and intercompany current account with SES Media Solutions GmbH of EUR 24.8 million • Intercompany current account with SES Astra Services Europe of EUR 4.3 million In 2018, SES entered into a forward sale agreement with SES mPower S.à r.l (see >> Note 11) in connection with seven mPower satellites cur- rently under construction. In August 2020 an option to procure four additional satellites was exercised. In September 2022 SES aquired six of the seven initial mPower sat- ellites. As at 31 December 2022, SES had a receivable from SES mPower S.à r.l of EUR 456.3 million (2021: EUR 981.8 million) in con- nection with the procurement of the mPower satellites. B) OTHER DEBTORS Other debtors as at 31 December 2022 consist of: Other debtors €MILLION 2022 2021 Becoming due and payable within one year Trade debtors 0.4 3.1 Receivable related to VAT 16.3 4.2 Other tax receivables 14.2 9.3 Total 30.9 16.6 Other tax receivables The Company is subject to the tax regulations in Luxembourg and, until April 2022, also in the U.S. for the partnership. In accordance with Article 164bis of the Luxembourg income tax law, SES S.A. is the head of the Luxembourg tax unity with its direct and indirect subsidiaries as follows: • SES Finance S.à r.l. • SES Astra S.A. • SES Asia S.A. • SES-10 S.à r.l. • SES Participations S.A. • SES Engineering S.à r.l. • SES Astra Services Europe S.A. • SES Networks Lux S.à r.l. • SES Techcom S.A. • SES Latin America S.A. • SES Insurance International (Luxembourg) S.A. • SES Insurance International Re (Luxembourg) S.A. • SES-17 S.à r.l. • SES mPower S.à r.l. • SES Networks Satellites S.à r.l. • SES LU Satellite Holdings S.à r.l. • Luxembourg Space Sector Development General Partner S.à r.l. • SES LU US Holdings S.à r.l. SES ANNUAL REPORT 2022168 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION The balance sheet tax position represents the net amount payable to, or receivable from, the Luxembourg tax authorities by the Com- pany in its role as head of the tax unity. The net tax receivable of EUR 14.2 million as at 31 December 2022 includes a payable for corporate income tax of nil million (2021:EUR 7.4 million), municipal business tax receivable of EUR 14.2 million (2021: EUR 16.6 million) and a Net Wealth Tax receivable of EUR nil million (2021: liability of EUR 0.1 million). The respective tax charge/income of each subsidiary is computed on a stand-alone basis and it is recorded for the entire Luxembourg tax unity by the Company. NOTE 6 – INVESTMENTS – OWN SHARES ‘Own shares’ refers to holdings of the Company’s own FDRs. All FDRs held are for use in connection with the share-based compensation plans for executives and staff of the SES Group. FDRs are valued at the lower of the weighted average cost and the market price. As at 31 December 2022, the Company owned 6,565,553 FDRs (2021: 7,748,429) representing a carrying value of EUR 40.0 million (2021: EUR 54.0 million). NOTE 7 – SUBSCRIBED CAPITAL AND SHARE PREMIUM ACCOUNT SES has a subscribed capital of EUR 696.5 million (2021: EUR 719.0 mil- lion), represented by 371,457,600 Class A shares (2021: 383,457,600) and 185,728,800 Class B shares (2021: 191,728,800) with no par value. Although they constitute separate classes of shares, Class A and Class B shares have the same rights except that Class B shares, which are held by the State of Luxembourg and by two entities wholly-owned by the State of Luxembourg, entitle their holders to only 40% of the divi- dend, or in case the Company is dissolved, to 40% of the net liquidation proceeds paid to shareholders of Class A. Class B shares are not freely traded. Each share, whether of Class A or Class B, is entitled to one vote. In 2022 SES acquired 12 million class A Shares and 6 million class B shares from SES Astra S.A., purchased under the share buy-back pro- gramme executed between May and August 2021. Following the acquisition, SES proceeded with a cancellation of these shares and a reduction of its share capital by EUR 22.5 million to EUR 696.5 million, represented by a total of 557,186,400 million shares and a reduction of its share premium account by EUR 57.9 million to EUR 1,832.3 mil- lion (2021: EUR 1,890.2 million). The movement between the opening and closing number of shares issued per class of share can be summarised as follows: Movement between the Opening and Closing Number of Shares Class A shares Class B shares Total shares As at 1 January 2022 383,457,600 191,728,800 575,186,400 Reduction of shares during the year (12,000,000) (6,000,000) (18,000,000) As at 31 December 2022 371,457,600 185,728,800 557,186.400 Class A shares Class B shares Total shares As at 1 January 2021 383,457,600 191,728,800 575,186,400 As at 31 December 2021 383,457,600 191,728,800 575,186,400 NOTE 8 – LEGAL RESERVE In accordance with Luxembourg legal requirements, a minimum of 5% of the annual net profit is transferred to a legal reserve. This require- ment is satisfied when the reserve reaches 10% of the issued share capital. This reserve may not be distributed. NOTE 9 – RESERVE FOR OWN SHARES In accordance with the Law, the Company has created a non-distrib- utable “reserve for own shares” of EUR 40.0 million (2021: EUR 54.0 million), corresponding to the balance of the own shares held as of year end. ACQUISITION OF TREASURY SHARES SES has historically, in agreement with its shareholders, purchased FDRs in connection with executives’ and employees’ share-based pay - ments plans, as well as for cancellation. SES ANNUAL REPORT 2022169 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 10 – CREDITORS A) DEBENTURE LOANS – NON CONVERTIBLE LOANS The maturity profile of notes and bonds is as follows as at 31 December 2022. Maturity Profile of Notes and Bonds as at 31 December 2022 €MILLION Interest rate Maturity 2022 Creditors – Financial liabilities a) Debenture loans – Non convertible loans becoming due and payable within one year 778.0 Non-convertible bonds due >1 Y: Accrued interest 74.8 144A Bond USD 750.0 million (2023) 3.60% April-23 703.2 becoming due and payable between 2 and 5 years 1,690.0 German Bond issue of EUR 150.0 million (2024) Floating June-24 150.0 German Bond issue of EUR 250.0 million (2025) 1.71% December-25 250.0 EUR 650 million Eurobond (2026) 1.625% March-26 650.0 EUR 140.0 million Private Placement (2027) 4.00% May-27 140.0 EUR 500 million Eurobond (2027) 0.875% November-27 500.0 becoming due and payable after 5 years 2,609.4 EUR 750 million Eurobond (2029) 3.50 % January-29 750.0 144A Bond USD 250.0 million (2043) 5.30% April-43 234.4 German Bond issue of EUR 50.0 million (2032) 4.00% November-32 50.0 EUR 550 million deeply subordinated fixed rate resettable securities 5.625% N/A 550.0 EUR 625 million deeply subordinated fixed rate resettable securities 2.875% N/A 625.0 EUR 400 million Eurobond (2028) 2.00% July-28 400.0 * First reset date January 2024 ** First reset date August 2026 The maturity profile of notes and bonds is as follows as at 31 December 2021. Maturity Profile of Notes and Bonds as at 31 December 2021 €MILLION Interest rate Maturity 2021 Creditors – Financial liabilities a) Debenture loans – Non convertible loans becoming due and payable within one year 65.9 Non-convertible bonds due >1 Y: Accrued interest 65.9 becoming due and payable between 2 and 5 years 1,712.2 144A Bond USD 750.0 million (2023) 3.60% April-23 662.2 German Bond issue of EUR 150.0 million (2024) Floating June-24 150.0 German Bond issue of EUR 250.0 million (2025) 1.71% December-25 250.0 EUR 650 million Eurobond (2026) 1.625% March-26 650.0 becoming due and payable after 5 years 2,927.2 EUR 140.0 million Private Placement (2027) 4.00% May-27 140.0 144A Bond USD 250.0 million (2043) 5.30% April-43 220.7 144A Bond USD 500.0 million (2044) 5.30% March-44 441.5 German Bond issue of EUR 50.0 million (2032) 4.00% November-32 50.0 EUR 550 million deeply subordinated fixed rate resettable securities 5.625% N/A* 550.0 EUR 625 million deeply subordinated fixed rate resettable securities 2.875% N/A 625.0 EUR 500 million Eurobond (2027) 0.875% November-27 500.0 EUR 400 million Eurobond (2028) 2.00% July-28 400.0 * First reset date January 2024 ** First reset date August 2026 SES ANNUAL REPORT 2022170 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION European Medium-Term Note Programme (‘EMTN Pro- gramme’) SES has an EMTN Programme enabling SES, or SES Global Americas Holdings Inc., to issue as and when required notes up to a maximum aggregate amount of EUR 4,000 million. As at 31 December 2022, SES had issued EUR 2,440 million (2021: EUR 1,690 million) under the pro- gramme with maturities ranging from 2023 to 2029. EUR 750.0 million Deeply Subordinated Fixed Rate Reset- table Securities (2022) In June 2016, SES issued EUR 750.0 million Deeply Subordinated Fixed Rate Resettable Securities (‘perpetual bond’) at a coupon of 4.625% to the first call date, a price of 99.666% and a yield of 4.7%. SES was entitled to call the securities on 2 January 2022 and on subsequent coupon payment dates. In May 2021, SES announced a capped tender offer for its outstand- ing EUR 750 million 4.625% perpetual bond at a fixed purchase yield of -0.10% to refinance the existing perpetual bond callable in January 2022 in advance of the first call date. The tender offer was accepted by the required number of bondholders such that the Company was able to repurchase 84.5% of the existing bonds on 28 May 2021 at a price representing 102.838% of nominal value, and the remaining 15.5% at par, with a settlement date of 30 June 2021. EUR 550.0 million Deeply Subordinated Fixed Rate Reset- table Securities (2024) In November 2016, SES issued a second perpetual bond of EUR 550.0 million at a coupon of 5.625% to the first call date, a price of 99.304% and a yield of 5.75%. SES is entitled to call the second perpetual bond in January 2024 and on subsequent coupon payment dates. EUR 625.0 million Deeply Subordinated Fixed Rate Reset- table Securities In May 2021 the Company issued further Deeply Subordinated Fixed Rate Resettable Securities for an amount of EUR 625 million, with a first reset date on 27 August 2026. The securities bear a coupon of 2.875% per annum and were priced at 99.409% of their nominal value. EUR 650 million Eurobond (2026) In 2018 SES issued a EUR 500 million 8-year bond under the Compa- ny’s EMTN Programme. On the 22 June 2021 SES announced the suc- cessful lunch and pricing of a tap of its 1.625% Notes in which it agreed to sell incremental senior unsecured fixed rate notes for a total amount of EUR 150 million. The new notes were priced at 106.665% of their nominal value. The bond bears interest at a fixed rate of 1.625% and has a final maturity date on 22 March 2026. EUR 500 million Eurobond (2027) In November 2019 SES issued a EUR 500 million bond under the EMTN Programme. The bond has an 8-year maturity and bears inter- est at a fixed rate of 0.875% with final maturity in November 2027. EUR 400 million Eurobond (2028) In July 2020, SES issued a EUR 400 million bond under the Compa- ny’s EMTN Programme. The bond bears interest at a fixed rate of 2.00% and has a final maturity date in July 2028. EUR 750 million Eurobond (2029) In June 2022 SES issued a EUR 750 million bond under the EMTN Programme. The bond bears interest at a fixed rate of 3.50% and has a final maturity date in January 2029. EUR 140 million Private Placement (2027) In 2012 SES issued three individual tranches of a total EUR 140 mil- lion Private Placement under the Company’s EMTN Programme to ING Bank N.V.. The Private Placement has a 15-year term, beginning in May 2012, and bears interest at a fixed rate of 4.00%. German bond issue of EUR 50 million (2032) In 2012 the Company issued EUR 50 million in the German bond (‘Schuldschein’) market. The German bond bears a fixed interest rate of 4.00% and matures in November 2032. German bond issue of EUR 400 million (2024/2025) In 2018 the Company issued a EUR 400 million bond in the German bond (‘Schuldschein’) market. The transaction comprised two tranches: a EUR 150 million tranche with a floating interest rate of a six-month EURIBOR plus a margin of 0.8% and a final maturity date in June 2024; and, a EUR 250 million tranche with a fixed interest rate of 1.71% and a final maturity date in December 2025. 144A Bond USD 750 million (2023) In 2013 SES issued a USD 750 million 10-year bond in the US 144A bond market with a coupon of 3.60% and a final maturity in April 2023. 144A Bond USD 250 million (2043) In 2013 SES issued a USD 250 million 30-year bond in the US 144A bond market with a coupon of 5.30% and a final maturity date in April 2043. 144A Bond USD 500 million (2044) In 2014 SES Global Americas Holdings Inc. completed a 144A offering in the US market issuing for a USD 500 million 30-year bond with a coupon of 5.30% and a final maturity date in March 2044 (see >> Note 3). SES ANNUAL REPORT 2022171 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION B) AMOUNTS OWED TO CREDIT INSTITUTIONS There were no amounts owed to credit institutions as of 31 December 2022. Amounts owed to credit institutions as of 31 December 2021 were: Amounts owed to Credit Institutions as of 31 December 2021 € MILLION Interest rate Maturity 2021 Creditors – Financial liabilities b) amounts owed to credit institutions becoming due and payable within one year 40.2 COFACE facility EURIBOR +1.70% various in 2022 40.2 Syndicated Loan Facility 2019 The facility is provided by 19 banks and is structured as a 5-year multi-currency revolving credit facility. In 2021 the Company extended the Termination date from 26 June 2025 to 26 June 2026. The facility is for EUR 1,200 million and the interest payable is linked to a ratings grid. At the current SES credit rating of BBB/ Baa2, the interest rate is 40 basis points over EURIBOR/LIBOR. As at 31 December 2022 and 2021, nothing was drawn under this facility. European Investment Bank (‘EIB’) Financing Facility EUR 300 million (2029) On 16 December 2022 SES signed a seven-year facility with the EIB to support the funding of three fully-digital satellites serving the Western Europe, Africa and the Middle East. The facility is availa- ble for disbursement at fixed or floating rates linked to a ratings grid. At the current SES credit rating of BBB/ Baa2 this equates to 0.34% per annum over EURIBOR (in the case of a floating rate) or over a base rate as determined by the EIB (in case of fixed rate). As at 31 December 2022 no amount has been drawn under this facility. EUR 522.9 million COFACE facility In 2009 SES signed a financing agreement with the Compagnie Française d’Assurance pour le Commerce Extérieur (‘Coface’) in respect of the investment in four geostationary satellites (ASTRA 2E, ASTRA 2F, ASTRA 2G, ASTRA 5B). The facility is divided into five loans. Drawings under the facility were associated with invoices from the suppliers of the satellites. The first drawing was made in April 2010 and all loan tranches were fully drawn by November 2014. Each Coface tranche is repayable in 17 equal semi-annual instalments where Coface A had a final maturity date of 1 August 2022, Coface F matured on 21 May 2021. SES opted to execute voluntary prepayment clauses pursuant to the Agreement and repaid the remaining outstanding amount of Coface tranche B in November 2017 and of Coface C and D in April 2022 (contractual maturity in October 2022). The entire facility bore interest at a float- ing rate of six-month EURIBOR plus a margin of 1.7%. European commercial paper programme In 2012 SES incepted a joint EUR 1,000.0 million guaranteed European commercial paper programme of SES S.A. and SES Global Americas Holdings Inc.. Issuances under the programme represent senior unse- cured obligations of the issuer and are guaranteed by the non-issuing entity. The programme is rated by Moody’s Investors Services and FitchRatuings and is compliant with the standards set out in the STEP Market Convention. On 9 July 2021, this programme was updated and extended. As at 31 December 2022 and 2021, no borrowings were outstanding under this programme. Negotiable European Commercial Paper “NEU CP” (former French Commercial paper programme) In 2005 SES put in place a EUR 500 million ‘NEU CP’ programme in accordance with articles L.213-1 to L213-4 of the French Monetary and Financial Code and article 6 of the order of 30 May 2016 and subsequent amendments. The maximum outstanding amount of ‘NEU CP’ issuable under the programme is EUR 500 million or its counter value at the date of issue in any other authorised currency. In June 2022 the programme was extended for a further year. As at 31 December 2022 and 2021, no borrowings were outstanding under this programme. C) AMOUNTS OWED TO AFFILIATED UNDERTAKINGS Amounts owed to affiliated undertakings of EUR 2,176.9 million (2021: EUR 2,214.1 million) include the following: Amounts owed to Affiliated Undertakings €MILLION 2022 2021 Current accounts 1,948.4 1,626.8 Long term loans (payable within one year) 40.5 – Long term loans (payable between 2 and 5 years) 188.0 587.3 Long term loans (payable after five years) – – Total 2,176.9 2,214.1 “Current accounts” are linked to the daily cash pooling mechanism and represent short-term debts bearing interest at market rates. The daily cash pooling mechanism supports the liquidity of the Group and the optimisation of its funding costs. Following the conversion of SES Global Americas Holdings GP in April 2022 from a partnership into a separate legal entity, current accounts of EUR 217.5 million and a loan of USD 600.4 million (EUR 569.3 mil- lion) from SES Americom Inc. with a maturity date of March 2024 and bearing interest at a rate of 3.7%, were deemed disposed of by the Company (see >> Note 3). SES ANNUAL REPORT 2022172 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION As at 31 December 2022, long-term loans included: • A loan of SEK 450.3 million (EUR 40.5 million) from SES Astra AB with a maturity date of November 2023 and bearing interest at a rate of 0.72%. • A loan issued in 2022 of USD 200.5 million (EUR 188.0 million) from New Skies Satellites B.V. with a maturity date of December 2027 and bearing interest at a rate of 3.01%. NOTE 11 – OTHER CREDITORS ACQUISITION OF SES MPOWER MEDIUM-EARTH ORBIT (‘MEO’) CONSTELLATION In September 2017, the Company, jointly with O3b Networks Limited, entered as ‘Procurement Agents’ into a Master Procurement Agency and Option Agreement with a financial institution in connection with the procurement by that financial institution of seven MEO satellites from The Boeing Company. Under the satellite Purchase and Sale agreement between the finan- cial institution and The Boeing Company, seven satellites were pro- cured. At the end of the satellite construction period, SES has the right to acquire, or lease, the satellites from the financial institution or to direct their sale to a third-party. SES has the right to nominate the entity within the SES Group which will acquire or lease those assets shortly before the end of the construction period. This entity is currently defined as being SES mPower S.à r.l. in Luxembourg and to this end the Company entered into a forward sale agreement with that entity in May 2018 whereby as the satellite construction process proceeds, and the Procurement Agents confirm that construction milestones are achieved, the underlying asset-under-construction is transferred by the Company to that entity against an intercompany receivable. Since the underlying Satellite Purchase and Sale Agreement is directly between the financial institution and The Boeing Company, there is no contractual obligation on the side of the Procurement Agents dur- ing the satellite construction process. However, SES management has taken the view that there is a constructive obligation arising over the construction period and hence the SES Group is accruing the pro- gramme costs. In August 2020 the Company exercised its option to procure four additional mPower satellites. At the end of the construction period for the four satellites, foreseen in the 2023 – 2024 time frame, the Company will again have the right to acquire, or lease, the satellites from the financial institution or to direct their sale to a third-party. In September 2022, SES acquired the first six mPower satellites from the financial institution. As at 31 December 2022 an amount of EUR 456.3 million (2021: EUR 981.8 million), corresponding to the constructive obligation of the Company towards the financial institution procuring the satellites, was recorded under the caption ‘Other creditors – becoming due and payable within one year’ with a futher EUR 259.1 million presented under the caption ‘Other creditors – becoming due and payable after one year’. The corresponding amounts due to the Company from SES mPower S.à r.l. under the forward purchase agreement were disclosed on the balance sheet under the caption ‘Amounts owed by affiliated under- takings – becoming due and payable within one year’ (EUR 197.2 mil- lion) and ‘Amounts owed by affiliated undertakings – becoming due and payable after one year’ (EUR 259.1 million) – see also >> Note 5. Other Creditors as at 31 December consist of: Other Creditors €MILLION 2022 2021 Becoming due and payable within one year SES mPower acquisition 197.2 704.2 Personnel-related accruals 5.8 7.6 Total 203.0 711.8 Becoming due and payable after one year SES mPower acquisition 259.1 277.6 Total 259.1 277.6 NOTE 12 – OTHER OPERATING INCOME AND OTHER EXTERNAL EXPENSES Other operating income of EUR 17.8 million (2021: EUR 27.3 million) consists mainly of intra-group recharge income from advisory support services rendered to various affiliates. Other external expenses of EUR 27.5 million (2021: EUR 28.8 million) consists mainly of intra-group recharge expenses for advisory support services rendered to the Company by various affiliates. SES ANNUAL REPORT 2022173 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 13 – STAFF COSTS As at 31 December 2022, the number of full-time equivalent employ- ees was 113 (2021: 102) and the average number of employees in the workforce for 2022 was 108 (2021: 101). The average number of employees staff by functional area is as follows: Number of employee staff by functional area €MILLION 2022 2021 Finance 43 40 Strategy and Product 15 7 People and Culture 14 14 Legal 13 12 Global Services 7 5 Corporate Development 7 7 Internal Audit 4 4 General Management 2 8 Technology 2 3 Sales Networks and Video 1 1 Total 108 101 Staff costs can be analysed as follows: Staff Costs €MILLION 2022 2021 Wages and salaries 16.2 15.6 Social security costs relating to pension 1.8 1.7 Other social security costs (0.2) 0.6 Other staff costs 0.1 0.1 Total 17.9 18.0 NOTE 14 – INCOME FROM PARTICIPATING INTERESTS Income from participating interest concerning affiliated undertakings consists of the following: Income from Participating Interests €MILLION 2022 2021 Dividends received SES Finance S.à r.l 4.0 1,887.3 Dividends received SES Astra S.A. 545.0 - Dividends received SES Astra A.B. - 6.4 Dividends received SES Participations S.A. 14.0 - Dividends received SES Holdings Netherland B.V. 96.4 - Dividends received SES Astra Services Europe S.A. 25.0 - Dividends received on own shares 3.6 3.1 Total 688.0 1,896.8 NOTE 15 – INCOME FROM OTHER INVESTMENTS AND LOANS FORMING PART OF FIXED ASSETS Income from other investments and loans forming part of fixed assets comprise the following: Income from Other Investments and Loans €MILLION 2022 2021 Interest income from affiliated undertakings 90.8 85.0 Total 90.8 85.0 NOTE 16 – OTHER INTEREST RECEIVABLE AND SIMILAR INCOME A) DERIVED FROM AFFILIATED UNDERTAKINGS Other interest receivable and similar income derived from affiliated undertakings of EUR 100.0 million (2021: EUR 40.5 million) represents interest income on intercompany current accounts. In 2022, the conversion of SES Global Americas Holdings GP generated a EUR 135.5 million gain on sale of the 144A Bond USD 500 million (2044) (see >> Note 3). B) OTHER INTEREST AND SIMILAR INCOME Other Interest Receivable and Similar Income €MILLION 2022 2021 Interest income on bank accounts 0.7 0.1 Interest income on deposits 3.6 0.0 Foreign exchange gain 215.7 228.1 Gain on disposal on own shares 1.3 0.4 Total 221.3 228.6 SES ANNUAL REPORT 2022174 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 17 – VALUE ADJUSTMENTS IN RESPECT OF FINANCIAL ASSETS AND INVESTMENTS HELD AS CURRENT ASSETS Value adjustments of financial assets and investments held as current assets were recorded in respect of: Value Adjustments of Financial Assets and Investments €MILLION 2022 2021 Shares in affiliated undertakings (>> Note 4) 213.5 2,186.7 Amounts owed by affiliated undertakings (>> Note 5) (61.8) 62.0 Net loss on SES FDRs 7.0 3.5 Total 158.7 2,252.2 As at 31 December 2022 the Company recorded value adjustments in respect of shares in affiliated undertakings of EUR 213.5 million (2021: EUR 2,186.7) (see >> Note 4) and released value adjustments of EUR 61.8 million in respect of amounts owed by affiliated under- takings (2021: value adjustments of EUR 62.0 million) (see >> Note 5). A net loss of EUR 7.0 million (2021: loss of EUR 3.5 million) was recorded on FDRs comprising a loss on disposals of EUR 7.4 million (2021: loss of EUR 3.9 million) and a revaluation gain on FDRs held as at 31 December 2022 of EUR 0.4 million (2021: EUR 0.4 million [loss]) to account for the FDRs at the lower of the weighted average cost and the market price. The price of the SES FDR listed on Euronext in Paris was EUR 6.09 as at 31 December 2022 (2021: EUR 6.97). NOTE 18 – INTEREST PAYABLE AND SIMILAR EXPENSES A) DERIVED FROM AFFILIATED UNDERTAKINGS Interest expense from affiliated undertakings €MILLION 2022 2021 Interest charges on intercompany current accounts 54.4 29.5 Total 54.4 29.5 B) OTHER INTEREST AND SIMILAR EXPENSES Other interest and similar financial expenses include the following: Other Interest Payable and Similar Expenses €MILLION 2022 2021 Interest charges on loans and bank accounts 179.9 186.7 Loan fees and origination costs 4.7 31.0 Foreign exchange loss 158.2 157.3 Total 342.8 375.0 NOTE 19 – AUDIT FEES Art. 65 Paragraph (1) 16º of the Law requires the disclosure of the independent auditor fees. In conformity with the Law these details have been omitted as the Company prepares consolidated accounts in which this information is disclosed, and these consolidated accounts and the related consolidated management report and auditors’ report thereon have been lodged with the Luxembourg Trade Registry. Fees incurred in connection with other assurance and non-audit ser- vices rendered to the Company and its controlled undertakings as defined by the Regulation (EU) N°537/2014 amounted to EUR 34,850 (2021: EUR 88,000) and represented comfort letters issued in con- nection to the Company’s treasury funding operations. NOTE 20 – BOARD OF DIRECTORS’ REMUNERATION Total payments to directors for attendance at board and committee meetings in 2022 amounted to EUR 1.1 million (2021: EUR 1.1 million). These payments are computed on a fixed and variable basis, the variable part being based upon attendance at board and committee meetings. SES ANNUAL REPORT 2022175 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOTE 21 – OFF BALANCE SHEET COMMITMENTS CAPITAL COMMITMENTS On 11 September 2017, SES S.A., jointly with O3b Networks Limited, entered as Procurement Agents into a Master Procurement Agency and Option Agreement with a financial institution in connection with the procurement by that financial institution of seven medium-Earth orbit satellites from The Boeing Company. In August 2020 the com- pany exercised its option to procured an additional four satellites. In September 2022, SES acquired six of the initial seven satellites. The outstanding commitment of the Company in respect of the related contracted capital expenditure as at 31 December 2022 was EUR 21.9 million (2021: EUR 55.0 million). GUARANTEES On 31 December 2022 the Company had outstanding bank guarantees provided for an amount of EUR 71.8 million (2021: EUR 66.8 million) with respect to performance and warranty guarantees for services of satellite operations. PARENTAL GUARANTEES SES S.A. issued a letter of guarantee to three of its subsidiaries to provide sufficient financial support to meet its obligations in full for at least two years after the issuance date of the 31 December 2022 standalone financial statements of the subsidiary. LITIGATION SES S.A. is not currently subject to any material legal proceedings or litigation arising in the normal course of business. NOTE 22 – SUBSEQUENT EVENTS There were no significant events between the balance sheet date and the approval of the annual accounts which would have influenced the results of the Company as at 31 December 2022. 177 Financial Calendar 178 Imprint ADDITIONAL INFORMATION 6 SES ANNUAL REPORT 2022177 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION FINANCIAL CALENDAR 2022 FULL YEAR RESULTS 27 FEBRUARY 2023 ANNUAL GENERAL MEETING 6 APRIL 2023 PAYMENT OF 2022 DIVIDEND 20 APRIL 2023 Q1 2023 RESULTS 4 MAY 2023 2023 HALF YEAR RESULTS 3 AUGUST 2023 Q3 2023 RESULTS 2 NOVEMBER 2023 SES ANNUAL REPORT 2022178 1 OPERATIONAL & STRATEGIC REPORT 2 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT 3 CORPORATE GOVERNANCE & REMUNERATION 4 CONSOLIDATED FINANCIAL STATEMENTS 5 SES S.A. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION IMPRINT CONTACT SES HEADQUARTERS Château de Betzdorf L-6815 Betzdorf Luxembourg www.ses.com The SES Investor Relations team will be pleased to assist you with any questions you may have in relation to SES. Please reach out via ir@ses.com Investors Richard Whiteing E: richard.whiteing@ses.com T: +352 710 725 261 Media (External Communications) Suzanne Ong E: suzanne.ong@ses.com T: +352 710 725 500 CONCEPT AND DESIGN MPM Corporate Communication Solutions Mainz, Germany www.mpm.de PHOTO CREDITS Getty, Luxembourg Directorate for Development Cooperation, SES, SES Employees, Trent Branson, Oliver Wheeldon, SpaceX SES HEADQUARTERS Château de Betzdorf L-6815 Betzdorf Luxembourg 5493008JPA4HYMH1HX512022-01-012022-12-315493008JPA4HYMH1HX512021-01-012021-12-315493008JPA4HYMH1HX512022-12-315493008JPA4HYMH1HX512021-12-315493008JPA4HYMH1HX512020-12-315493008JPA4HYMH1HX512021-12-31ifrs-full:IssuedCapitalMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:IssuedCapitalMember5493008JPA4HYMH1HX512022-12-31ifrs-full:IssuedCapitalMember5493008JPA4HYMH1HX512021-12-31ifrs-full:SharePremiumMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:SharePremiumMember5493008JPA4HYMH1HX512022-12-31ifrs-full:SharePremiumMember5493008JPA4HYMH1HX512021-12-31ifrs-full:TreasurySharesMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:TreasurySharesMember5493008JPA4HYMH1HX512022-12-31ifrs-full:TreasurySharesMember5493008JPA4HYMH1HX512021-12-31SES:PerpetualBondsMember5493008JPA4HYMH1HX512022-01-012022-12-31SES:PerpetualBondsMember5493008JPA4HYMH1HX512022-12-31SES:PerpetualBondsMember5493008JPA4HYMH1HX512021-12-31ifrs-full:OtherReservesMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:OtherReservesMember5493008JPA4HYMH1HX512022-12-31ifrs-full:OtherReservesMember5493008JPA4HYMH1HX512021-12-31ifrs-full:RetainedEarningsMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:RetainedEarningsMember5493008JPA4HYMH1HX512022-12-31ifrs-full:RetainedEarningsMember5493008JPA4HYMH1HX512021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493008JPA4HYMH1HX512022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493008JPA4HYMH1HX512021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493008JPA4HYMH1HX512022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493008JPA4HYMH1HX512021-12-31ifrs-full:NoncontrollingInterestsMember5493008JPA4HYMH1HX512022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember5493008JPA4HYMH1HX512022-12-31ifrs-full:NoncontrollingInterestsMember5493008JPA4HYMH1HX512020-12-31ifrs-full:IssuedCapitalMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:IssuedCapitalMember5493008JPA4HYMH1HX512020-12-31ifrs-full:SharePremiumMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:SharePremiumMember5493008JPA4HYMH1HX512020-12-31ifrs-full:TreasurySharesMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:TreasurySharesMember5493008JPA4HYMH1HX512020-12-31SES:PerpetualBondsMember5493008JPA4HYMH1HX512021-01-012021-12-31SES:PerpetualBondsMember5493008JPA4HYMH1HX512020-12-31ifrs-full:OtherReservesMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:OtherReservesMember5493008JPA4HYMH1HX512020-12-31ifrs-full:RetainedEarningsMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:RetainedEarningsMember5493008JPA4HYMH1HX512020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493008JPA4HYMH1HX512020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493008JPA4HYMH1HX512020-12-31ifrs-full:NoncontrollingInterestsMember5493008JPA4HYMH1HX512021-01-012021-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:EURiso4217:EURxbrli:shares