Fluxys Belgium SA

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Validation was carried out according to the ‘International Standard on Assurance Engagements (ISAE) 3000 (Revised)’, a model developed for the certification of non-financial data. The certified indicators are indicated throughout the report with a . Contents Looking to the future ................................................ 4 Our profile: a purpose-driven company .............. 11 Our purpose and strategy ................................................ 12 Value creation: a continuous process .......................... 14 Our context ............................................................................ 16 Our services for speeding up ......................................... 18 the energy transition How we are developing our infrastructure into ........ 21 the multi-molecule hub Our structure and governance ...................................... 22 Our reporting ....................................................................... 28 Materiality analysis ............................................................. 32 Our risk management ....................................................... 34 Legal and regulatory framework ................................... 38 Our performance in terms of financial ................. 44 resilience and digitalisation Financial resilience ............................................................ 48 Digitalisation ......................................................................... 56 Our ESG performance ............................................ 60 Environment ....................................................................... 62 Climate change – Transporting molecules ............... 64 for a carbon-neutral future Climate change – Systematically reducing ................ 74 our own climate impact Climate change – Management of natural capital ... 82 Climate change – EU taxonomy for .............................. 86 sustainable economic activities Social ..................................................................................... 94 Safe and reliable infrastructure .................................... 96 Good neighbourly relations ........................................... 104 Management of human capital ..................................... 106 Employee safety, health and well-being ................... 112 Social dialogue .................................................................... 117 Diversity ................................................................................ 118 Customer care ................................................................... 120 Human rights ...................................................................... 122 Governance ....................................................................... 124 Ethics and integrity – efforts ........................................ 126 to combat corruption Data security and privacy ............................................... 128 Corporate Governance Declaration .................. 130 Annex ....................................................................... 148 Methodology for calculating greenhouse ............... 149 gas emissions Health, Safety and Environment Policy ...................... 150 GRI index ............................................................................... 151 Independent auditor’s assurance report ................... 153 Financial situation .................................................. 157 Statutory auditor’s report and ............................ xxx declaration by responsible persons Glossary ................................................................... xxx Shareholder’s guide .............................................. xxx Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Looking to the future Looking to the future 5 # OneteamOnetarget Looking # OneteamOnetarget to the future Acceleration is key and we’re fully into our double mission. Creating solutions for large-scale decarbonisation through hydrogen and CO 2 infrastructure. As well as ensuring security of energy supply. That’s how we provide continuity while speeding up towards a sustainable future, both for society and for our company. 6 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Looking to the future # OneteamOnetarget The essential infrastructure partner for speeding up the energy transition Pascal De Buck Managing Director and CEO Daniël Termont Chairman of the Board of Directors 7 # OneteamOnetarget 2022 was an eventful year. What implications does it have for the future? Pascal De Buck It was a terrible year for the Ukrainian population, and in terms of the violence and suﬀ ering that people are enduring. We can only very much hope that this suﬀ ering will come to an end as soon as possible. The geopolitical situation has also turned the energy market upside down. The challenge is twofold: both to provide solutions for the security of supply of natural gas for Europe and to resolutely move towards large-scale decarbonisation. What does the way forward look like? Daniël Termont The message is to speed things up. We have honed our strategy accordingly. As a company, we have both the strength and the Milestones mission to be the essential infrastructure partner for speeding up the energy transition. We are developing infrastructure for hydrogen and CO 2 to ensure a rapid scale-up of decarbonisation solutions. At the same time, we will continue to help society with its natural gas supply for as long as that is necessary. Pascal De Buck Together with industry and our partners, we have put our foot on the accelerator. The preparation of the hydrogen and CO 2 infrastructure in the industrial clusters has moved forward in double quick time. Cross-border connections with France, the Netherlands and Germany for hydrogen are already being worked on. We are all set to develop the hydrogen and CO 2 infrastructure for the Belgian and North-West European economy. Supporting security of supply 24/7 The geopolitical situation has profoundly changed the dynamics of gas markets and the direction of ﬂ ows in Europe. Throughout the year, our teams across the country left no stone unturned to ensure security of supply in North-West Europe – with impressive results. As well as supplying Belgium via the Belgian network, suppliers managed to get unprecedented quantities of natural gas to the Netherlands and Germany. Flows to Germany soared to 256 TWh (from 20 TWh in 2021) and those to the Netherlands increased to 145 TWh (from 68 TWh in 2021). At the same time, the Loenhout storage facility was fi lled to record levels before the winter period started. The Belgian network has thus once again confi rmed its role as an energy hub for Europe, with the Zeebrugge area as an important gateway for both natural gas via pipelines and LNG via ship. Multi-molecule system takes shape Achieving climate neutrality will require ﬂ ows of hydrogen and CO 2 . Together with industry, our partners and neighbouring operators, we have accelerated our pursuit of this objective. Intensive preparations are under way on hydrogen and CO 2 pipeline and terminalling projects across Belgium’s wide range of industrial clusters. Fluxys Hydrogen & CO 2 network 8 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Looking to the future Why is a multi-molecule system important? Pascal De Buck The robustness of a market stands or falls with its diversification. We can see that in the current geopolitical context, as we did during the pandemic. Our strength today lies in the fact that our infrastructure opens up a wide range of natural gas resources. That is something we will maintain into the future. We will do this by using hydrogen infrastructure that gives consumers access to all the options available: production locally, from our neighbouring countries, or from overseas imports. The same applies to the CO 2 infrastructure: we are focusing on various strategies that industry needs, with transmission for reuse and various export possibilities. Daniël Termont Optimal diversification also means looking ahead by adopting a future-oriented and integrated approach to the energy system. Electricity from renewable sources, carbon-neutral molecules such as hydrogen, and carbon capture and CO 2 reuse or export must dovetail seamlessly together. If we make our gas and electricity systems Together with industry and our partners, we have put our foot on the accelerator. We are all set to develop the hydrogen and CO 2 infrastructure for the Belgian and North-West European economy. Pascal De Buck Managing Director and CEO Desteldonk-Opwijk pipeline: natural gas today, and ready for hydrogen Given the new supply situation in Europe, speed and adaptability are the watchwords for new infrastructure as well. We prepared thoroughly for the first phase in the construction of the Zeebrugge-Opwijk pipeline, comprising the section between Desteldonk and Opwijk. This will boost our capacity to carry natural gas inland from Zeebrugge. At the same time, the pipeline is an initial step towards speeding up the energy transition as it will be immediately available for hydrogen transport as soon as the market is ready. We will commission the Desteldonk- Opwijk section in late 2023. Connect & move Taking part in sporting activities with colleagues at lunchtime or after work is not only a pleasant thing to do – it also fosters team spirit and boosts motivation levels. That is why we set up Connect & Move, encouraging colleagues to exercise together, put together teams and throw themselves into sporting events. As a result, 120 colleagues went for it at 16 events across Belgium! ! 9 # OneteamOnetarget holders in an ESG approach. That is the perspective we are starting out from. This is the last annual report which you, as Chairman of the Board of Directors, will present to the Annual General Meeting. Looking back, how do you view your time as Chairman? Daniël Termont I have had the privilege of chairing our Board meetings for the last 14 years. It has been an honour to take part in developing and implement- ing our strategy throughout that period. I have seen Fluxys Belgium develop into the core of our parent group Fluxys, which, through its expansion, has given additional impetus to Fluxys Belgium's business. This is the kind of development we can rightly be proud of. Although I am stepping down as chairman, I will remain a member of our governing bodies for a while. With my experience I hope to be able to continue contributing to the exciting period in which our com- pany fi nds itself. I would like to extend my heartfelt thanks to all those with whom I have worked over the past years, especially CEOs Walter Peeraer and Pascal De Buck for their pleasant and fruitful colla- boration. And I would like to take this opportunity to wish my successor every success. In the years ahead, we plan to further develop our process of value creation by involving our stakeholders in an ESG approach. That is the perspective we are starting out from. Daniël Termont Chairman of the Board of Directors How will you change the world? Keeping up the good work and tapping into our innovative side to help build a climate-neutral society. That is the message of our multimedia campaign in which we enthusiastically pursued our search for talent. The results of this speak for themselves, with no fewer than 81 new colleagues joining our team. Settling in quickly makes all the diﬀ erence. That’s why we provide a warm welcome as part of an innovative induction programme. Cooperation Belgium- Germany stepped up further At the Belgian-German energy summit in Zeebrugge in early 2023, the two countries agreed to further increase energy cooperation. Key element in that cooperation is to ensure a pipeline corridor to facilitate hydrogen transport between Belgium and Germany. Progress towards achieving our own climate neutrality Our commitment: to be a climate-neutral company by 2035. The fi rst milestone is to halve our greenhouse-gas emissions by 2025, compared with 2017. In 2022, we reached that milestone for methane emissions in our transmission and storage businesses. In our LNG business, three additional open-rack vaporisers currently under construction will reduce the Zeebrugge terminal’s emissions. Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile # OneTeamOneTarget 11 Our profi le: a purpose-driven company # OneteamOnetarget a purpose-driven company Everyone and everything needs energy to grow and fl ourish. People can rely on us to make that energy fl ow. Day and night, we’re there to ensure security of energy supply. And in the meantime, we’re getting our infrastructure ready for the years to come. Today, we transport natural gas, tomorrow we’ll also be transporting hydrogen and CO 2 . That’s how we keep people, society and the planet moving. 12 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile We are committed to continuing to build a greener energy future for the generations to come. People, industry and societies all need energy to thrive and pro- gress. Fluxys Belgium accommodates this need: we put energy in motion through our infrastructure. We move natural gas while paving the way for the transmission of hydrogen, biomethane or any other carbon-neutral energy carrier as well as CO 2 , supporting carbon cap- ture, reuse and storage. Shaping together a bright energy future The energy ecosystem is complex and the demand for energy as a driver of human progress combined with a global need to make energy more sustainable is a challenge that requires everyone to get involved. Redesigning the energy system will not be easy, yet it can be done if we work together. Together refers to all our stakeholders: our employees, shareholders, industrial partners, customers, the general public and all actors in the energy system. At Fluxys, we truly believe that cooperation is the key to our success. together Bright: With optimism we dare to say that our infrastructure, with its capacity for CO2 and for green gases such as hydrogen and biomethane, will play a substantial role in the transition to a carbon-neutral energy future for everyone. bright The word future encapsulates a responsibility. With our unique assets as an infrastructure company, we owe it to ourselves to contribute to a greener energy future for the generations to come. future Our purpose and strategy the essential infrastructure partner for speeding up the energy transition connect create low-carbon energy value chains through partnerships expand develop, scale-up and operate multi-molecule infrastructure secure contribute to a sustainable and secure energy supply green transition 30 X 30 X 30 13 # OneteamOnetarget Our strategy by 2030, we aim to oﬀ er our customers transport capacity for 30 TWh of hydrogen and 30 million tonnes of CO 2 per year our ambition 14 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Value creation: a continuous process Our purpose Shaping together a bright energy future reflects our ambition to be an all-encompassing value creator. What this means in practice is becoming clearer year by year. Whereas in previous years Fluxys Belgium created value based on the 3Ps, People, Planet and Prosperity, since 2022 it has resolutely adopted an Environment Social Governance approach. Moreover, Fluxys Belgium’s value creation as an essen- tial infrastructure company in the energy transition was the subject of even greater focus in 2022. Thus, the strategic ambition to speed up the energy transition was anchored more firmly in the business model. During a transitional phase, our multi-faceted ambition is to support society with its energy needs, develop a multi-molecule infrastructure with cross-bor- der connections, and explore new green energy chains. Value creation is embedded in our purpose, and ESG is the new lens we are using to make the process behind that tangible. To meet this ambition, Fluxys Belgium deploys a wide range of resources to create value that goes beyond the financial. The company is taking additional steps based on this integrated, purpose-driven vision of being the essential infrastructure company. For example, a Transformation and Sustainability Director was appointed in 2022 to support the ESG process, among other things. Moreo- ver, this integrated annual report represents the start of a transition to ESG reporting. secure expand connect € 105.5 m investments in infrastructure 909 employees 153 women 756 men On average 5.64 days of training per full-time equivalent Research in the field of accelerating the energy transition 0 complaints about fraud or reports of unethical conduct Ethical business conduct 0 interruptions or reductions in capacity Security of supply 81 new employees 58 employees taking on a new role within the company Valuing talent 10 proposals for open-access hydrogen and CO₂ infrastructure in Belgium's industrial clusters 4 market consultations completed in the first phase Decarbonisation solutions for the economy € 480 m contribution to prosperity Prosperity Greenhouse gas intensity – LNG-terminalling +56% Reducing our own climate impact Greenhouse gas intensity – transmission and storage -48% 15 # OneteamOnetarget Together with our stakeholders, we are taking the opportunity to look holistically at our value creation. That is the perspective we are starting out from. 16 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Our context 17 # OneteamOnetarget Market dynamics In 2022, the European natural gas market was hit by the effects of the gradual reduction in pipeline supplies of Russian gas. During the year, a new balance emerged between supply and demand: on the one hand, lique- fied natural gas (LNG) imports increased considerably; on the other hand, demand fell significantly, mainly due to a substantial rise in prices. The Belgian network is a major crossroads for the Euro- pean gas market. The decline of Russian pipeline gas mainly affected Germany, leading to the need for new transit configurations. As a result, we have seen in the Belgian network very substantial flows from the west, including imports from Norway, France and the UK, for transit to Germany and the Netherlands. Climate and Energy Transition policy In 2022, in response to the natural gas supply issues, Europe took measures to boost short-term security of supply, for example by requiring that a given level of gas was in storage before the winter, and also to speed up the energy transition. Various legislative initiatives arising from the European Green Deal have now been approved, but the hydrogen and decarbonised gas market package has not yet been finalised. This package is expected to propose a European legal and regulatory framework for carbon-neutral molecules, such as hydrogen, biomethane and synthetic methane, alongside renewable electricity, in the energy system of tomorrow. Carbon capture, reuse or storage is also set to be recognised as one of the many solutions that can be brought together to achieve the objective of climate neutrality. A number of European countries, including Belgium, France, Germany and the Netherlands, have adopt- ed ambitious hydrogen strategies or updated such a strategy, sometimes incorporating specific targets for the production of green hydrogen and/or developing support mechanisms to encourage this production. In early 2023, Belgium’s federal government proposed a regulatory framework for hydrogen which is under dis- cussion in the Federal Parliament (see the “Legal and regulatory framework” section, page 38). Innovation To shape the energy transition, innovative technologies will have to be deployed on a large scale as quickly as possible, in a number of areas spanning both the pro- duction of renewable and low-carbon energy sources and the methods of transport and storage. For example, the industry is fully committed to the expansion and development of innovative hydro- gen-production technologies. This hydrogen can then be used directly or serve as a basic component for other by-products such as synthetic methane and syn- thetic methanol. These synthetic energy carriers can also be produced using CO 2 captured from industry, introducing innovative and circular production pro- cesses with a carbon-neutral or even carbon-negative footprint. Molecules for a carbon-neutral future will need to be transported and stored. Fluxys Belgium is therefore doing everything it can to make this possible, drawing on a plan for the reuse of existing infrastructure and for new infrastructure as tools of the energy transition. 18 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile We will transport natural gas for as long as necessary. We provide open-access infrastructure connected to as many sources as possible to support security of supply. In this way we help society make the transition to carbon-neutral energy and raw materials. We are already able to transport large volumes of carbon-neutral biomethane. Transmission Storage Terminalling Natural gas & bio- methane services Our services for speeding up the energy transition The connection to various sources and neighbouring markets, the flexibility of the service offering and the availability of the sales team all make the difference in these turbulent times and this difficult market situation. We get low-carbon hydrogen to customers in the form of energy and raw material. We provide open-access infrastructure connected to as many sources as possible to support security of supply. In this way we help decarbonise industry, power generation and the transport sector. Transmission Terminalling Hydrogen services With low-carbon hydrogen we can get our company’s emissions to net zero. We transport CO 2 to sites where it can be reused or exported to permanent storage. We provide open-access infra- structure that offers as many takeaway options as possible. In this way we help decarbonise industry that engages in carbon capture. CO 2 services We’re pleased to be working with Fluxys on CO 2 transmission. It means we can now speed up deployment of our carbon capture technology and move towards net-zero emissions. Transmission Terminalling For commercial reasons, the customers quoted here preferred to remain anonymous. Our ambition: By 2030, offer the capacity to transport 30 TWh of hydrogen and 30 million tonnes of CO 2 19 # OneteamOnetarget Our infrastructure today The Fluxys Belgium network is excellently connected to all natural gas sources available to the European market. The gas enters via pipelines or by ship (in liquid form, LNG) and flows via our network to consumers in Belgium and to all neighbouring countries. In the service of a carbon-neutral economy, we want to develop our grid into a hydrogen and CO 2 hub in the same way. 20 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profi le How we are developing our infrastructure into the multi-molecule hub First transmission infrastructure in 2026 We develop local hydrogen and CO 2 networks in line with the needs of companies in the industrial clusters We plan connections between the networks in the industrial clusters and with neighbouring countries to turn the hydrogen and CO 2 infrastructure into cross-border backbones We develop terminals for hydrogen import and CO 2 export In this way we are making sure that we are all set to develop the necessary hydrogen and CO 2 infrastructure for the Belgian and North-West European economy. For more details about our approach to transporting molecules for a carbon-neutral future, see page 64 Hydrogen and CO 2 networks in Belgium Zeebrugge as a multi-molecule hub • Importing hydrogen or derivatives and sending these products into the hydrogen network for transmission within Belgium and to neighbouring countries • Receiving CO 2 from the CO 2 network with two export options: – liquefaction, intermediate storage and loading onto ships to be taken to permanent offshore storage sites; – transshipment to an offshore pipeline for transmission to permanent offshore storage sites. • Status: preliminary studies Ghent Carbon Hub • Multimodal terminal for receiving, liquefying and temporarily storing CO 2 and loading it onto ships to be taken to permanent oﬀ shore storage sites • Status: feasibility study 21 # OneteamOnetarget Hydrogen pipeline CO 2 pipeline H 2 /NH 3 + CO 2 -terminal CO 2 terminal Interconnection hub Hydrogen shipping CO 2 shipping Intermodal Antwerp@C CO 2 Export Hub • Terminal for receiving, liquefying and temporarily storing CO 2 and loading it onto ships to be taken to permanent oﬀ shore storage sites • Status: engineering & design Import terminal for green liquid ammonia in Antwerp • Multimodal terminal for import and transshipment of green liquid ammonia and its conversion into green hydrogen for transmission in the hydrogen network • Status: feasibility study 22 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Our structure and governance We are a Fluxys group company 23 # OneteamOnetarget Fluxys Belgium is a public limited company and is part of the Fluxys group. Fluxys Belgium’s capital is held by the following entities: • Fluxys, a public limited liability company under Belgian law, holds a capital interest of 90%. This stake is divided between class B shares (83.29%) and class D shares (6.71%). • The public holds 10% of the shares in Fluxys Belgium (class D). • The Belgian State holds one share (the “golden share”). The total number of shares is 70,263,501. All shares are entitled to dividends. The shares are issued in the following classes: B, D and the “golden share”. • Class B shares are and will remain registered shares. • Class D shares are registered or dematerialised at the discretion of the shareholder who will bear any conversion charges. • Class B shares are automatically converted into class D shares when they are transferred to a third party. • 16.71% of the shares are listed on Euronext, 6.71% of them are held by Fluxys and the remaining 10% are held by the public. • The golden share held by the Belgian State gives the federal government special rights should Fluxys Belgium consider selling strategic infrastructure whose sale would, in the competent minister’s opinion, compromise the country’s energy interests. The Belgian State is represented by the federal Minister of Energy. For more details about the rights attached to the Belgian State’s “golden share”, please refer to the Corporate Governance Declaration, “Voting rights and special powers”. On 21 February 2023, CDPQ relinquished its entire stake in the parent company Fluxys, meaning that its share- holder structure at the time of writing is as follows: • Publigas manages the interests of Belgian municipalities in Fluxys. • Energy Infrastructure Partners (EIP) is a Switzerland-based asset manager focusing on long-term investments in high-quality large-scale renewable energy projects and in system-critical energy infrastructure. • AG Insurance is a Belgian insurance company that is part of the international insurance group Ageas. • Ethias is a Belgian insurance group whose main shareholders are the Belgian Federal State, the Walloon Region, the Flemish Region and the cooperative society EthiasCo. • The Federal Holding and Investment Company is a federal Belgian holding company set up to manage, on behalf of the Belgian State, shareholdings in public and private companies of strategic economic importance to Belgium. • Since 2012, Fluxys group employees and management have had multiple opportunities to become Fluxys shareholders. Aandeelhouderschap op 29 maart 2023 Our shareholders 15,24% 77,41% 3,44% 1,98% 1,32% 0,61% Energy Infrastructure Partners Publigas Federal Holding and Investment Company AG Insurance Ethias Personnel and management Fluxys 90,00% Listed shares (Euronext) Fluxys Belgium Golden share Belgian State 10,00% 24 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile 99,99% 50%100% Fluxys LNG BalansysFlux Re Our subsidiaries Fluxys LNG (consolidated subsidiary – Fluxys Belgium holds a 99.99% stake and Flux Re a 0.01% stake). Fluxys LNG is the owner and operator of the Zeebrugge LNG terminal and sells terminalling capacity and associated services. Flux Re (consolidated subsidiary – wholly owned by Fluxys Belgium). Flux Re is a reinsurance company under Luxembourg law. Balansys (stake consolidated using the equity method – Fluxys Belgium holds a 50% stake). As part of the 2015 integration of the Belgian and Luxembourg gas market, Fluxys Belgium and Creos Luxembourg (the Luxembourg transmission system operator) set up the company Balansys, a joint venture in which Fluxys Bel- gium and Creos Luxembourg each have a 50% stake. Balansys has been the operator responsible for balanc- ing activities for the integrated Belgian-Luxembourg gas market since 2020. Fluxys Belgium Our governance Commitment to sustainability Integral part of the business strategy. Fluxys Belgium’s commitment to sustainability is an integral part of its business strategy. The company’s purpose and busi- ness strategy guide the way in which we create sus- tainable value for society, within the ESG framework. The Board of Directors, as the company’s most senior management body, is responsible for the strategy and its review. Fleshed out in corporate objectives. Fluxys Belgium fleshes out its strategy and commitment to sustainabil- ity through corporate objectives in the ESG domains, which are translated every year into personal objec- tives in the performance management cycle. The performance-related remuneration of the Manag- ing Director and CEO and of the Management Team BE is based on the extent to which these objectives are achieved. This is evaluated by the Board of Directors based on advice from the Appointment and Remuner- ation Committee. The achievement of objectives also determines the performance-related remuneration paid to Fluxys Belgium employees. Collective bargaining agreement CAO/CCT 90, which applies to employees, also includes incentives aimed at reducing Fluxys Bel- gium’s greenhouse gas emissions, for instance. Governance structure A number of advisory bodies have been established within the Board of Directors to assist the Board in its tasks: the Audit and Risk Committee, the Corporate Governance Committee, and the Appointment and Remuneration Committee. The Board of Directors has delegated the daily man- agement of Fluxys Belgium and has granted special powers to one of its members, who is named the Man- aging Director and is also the company’s Chief Execu- tive Officer (CEO). The Managing Director is authorised to entrust certain aspects of the daily management or their specific powers to a Management Team BE. More information about corporate governance at Fluxys Belgium can be found in the Corporate Governance Declaration (see page. 131). 25 # OneteamOnetarget From left to right: Jan Van de Vyver, Christian Leclercq, Peter Verhaeghe, Damien Adriaens, Leen Vanhamme, Nicolas Daubies, Pascal De Buck, Erik Vennekens, Rafaël Van Elst, Anne Vander Schueren, Arno Büx, Raphaël De Winter 26 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Our Board of Directors as at 29 March 2023 Board of Directors • Daniël Termont, Chairman of the Board of Directors • Claude Grégoire, Vice-Chairman of the Board of Directors • Pascal De Buck, Managing Director and CEO • Abdellah Achaoui • Sabine Colson, Chairman of the Corporate Governance Committee • Laurent Coppens • Valentine Delwart • Leen Dierick • Cécile Flandre • Sandra Gobert • Andries Gryffroy • Gianni Infanti • Ludo Kelchtermans, Chairman of the Audit and Risk Committee • Roberte Kesteman • Anne Leclercq • Josly Piette • Koen Van den Heuvel, Chairman of the Appointment and Remuneration Committee • Wim Vermeir • Geert Versnick • Sandra Wauters • Tom Vanden Borre, federal government representative acting in an advisory capacity • Maxime Saliez, federal government representative acting in an advisory capacity Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Board of Directors. * Independent director within the meaning of the Gas Act and as per the Belgian Code on Corporate Governance. Audit and Risk Committee • Ludo Kelchtermans, Chairman • Sabine Colson • Laurent Coppens • Cécile Flandre • Anne Leclercq • Wim Vermeir • Sandra Wauters • Pascal De Buck, Managing Director and CEO, invited in an advisory capacity Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Audit and Risk Committee. Corporate Governance Committee • Sabine Colson, Chairman • Laurent Coppens • Valentine Delwart • Sandra Gobert • Roberte Kesteman • Anne Leclercq • Josly Piette • Pascal De Buck, Managing Director and CEO, invited in an advisory capacity Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Corpo- rate Governance Committee. 27 # OneteamOnetarget Appointment and Remuneration Committee • Koen Van den Heuvel, Chairman • Valentine Delwart • Cécile Flandre • Sandra Gobert • Gianni Infanti • Roberte Kesteman • Geert Versnick • Pascal De Buck, Managing Director and CEO, invited in an advisory capacity Anne Vander Schueren, HR Director, acts as secretary to the Appointment and Remuneration Committee. Managing Director and CEO and Management Team BE Managing Director and CEO • Pascal De Buck Management Team BE • Arno Büx, member of the Management Team BE and Chief Commercial Officer • Christian Leclercq, member of the Management Team BE and Chief Financial Officer • Peter Verhaeghe, member of the Management Team BE and Chief Technical Officer Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Manage- ment Team BE. The Management Team BE is assisted by an Executive Committee composed as follows: • Damien Adriaens, Dpt. Director Commercial Regulated • Nicolas Daubies, Dpt. Director Group General Counsel § Company Secretary • Raphaël De Winter, Director Fluxys nextgrid • Jan Van de Vyver, Dpt. Director Installations § Grid • Rafaël Van Elst, Director Construction, Engineering & Gas Flow • Anne Vander Schueren, Director Human Resources • Leen Vanhamme, Director Transformation & Sustainability • Erik Vennekens, Director Digital 28 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Our reporting 29 # OneteamOnetarget 1. The Global Reporting Initiative (GRI) provides a generally accepted system for sustainability reporting. This includes principles and indicators that organisations can use to uniformly and transparently report on their economic, environmental and social performance. In line with GRI standards The reporting in this sustainability report integrates non-financial information in line with Global Reporting Initiative (GRI) Standards – Core 1 and thus provides an explanation of the topics that are material to Fluxys Belgium's activities, taking into account the context and value chain within which the company operates and the interests of the company's stakeholders. Our stakeholders The guiding principle in mapping our stakeholders is the extent to which there is a mutual interaction between Fluxys Belgium’s activities and those of poten- tial in-scope stakeholders. Given Fluxys Belgium’s role in the energy transition, non-governmental organisations were included as stakeholders in the most recent stakeholder analysis (in 2020). Some stakeholders have also seen their role change. For example, a number of stakeholders with whom Fluxys Belgium has had long-standing commer- cial relations in the context of the supply of natural gas are now partners in projects to transport carbon-neutral energy carriers and CO 2 in Belgium. 30 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Stakeholder Interaction Expectations Employees • Constant provision of information via the intranet and a wide range of training courses and opportunities for development • Continuous contact through daily management • Regular consultation within platforms such as the works council or Committee for Prevention and Protection at Work • (In)formal chats about psychosocial risks • Good employer • Safe, healthy working environment • Fluxys Belgium's active role in the energy transition Local residents • Owners and operators of land on which, or near to which, our facilities are located or will be built • Agricultural, forestry and hunting organisations • Permit authorities, local authorities and emergency services of the towns, cities and municipalities where our infrastructure is located or where we carry out work • Contact in connection with daily operations and the construction of infrastructure • Information campaigns • Awareness-raising campaigns • Drills with emergency services • Information • Safety • Limitation of disruption Shareholders • Regular consultation in the company's various bodies with shareholders' representatives on matters including strategy, financial performance, risk management, and the safety and reliability of natural gas transmission • Fluxys Belgium plays an active, positive role in the energy transition thanks to its sound financial situation and reliable infrastructure Customers • The users of the transmission system, the Loenhout storage facility and the Zeebrugge LNG terminal: gas producers, wholesalers, traders and suppliers who buy capacity in the company's infrastructure to get their gas to its intended destination • Distribution system operators connected to Fluxys Belgium's network to supply gas to homes and SMEs • Consumers directly connected to the transmission system, such as industrial companies and natural- gas-fired power plants; they mostly do not purchase capacity from Fluxys Belgium but there is an operational link due to their physical connection to the transmission system • Permanent contact through our commercial team • Annual events enabling to address towards each customer group the topics that regularly come up in day-to-day contact with the commercial team • When changing existing services, developing new services, proposing new tariffs or suggesting amendments to contractual documents, Fluxys Belgium conducts a market consultation in accordance with the regulatory framework • Optimum availability of infrastructure capacity • Competitive tariffs • Innovative services • Customers, who take account of total emissions generated by their supply chain, have high expectations with regard to their suppliers' climate impact 31 # OneteamOnetarget Stakeholder Interaction Expectations Suppliers • Regular contact with the business units and the central procurement office with regard to the execution of contracts • A number of suppliers are initially in close contact with Fluxys Belgium with regard to the qualification procedure to be completed by suppliers in order to be able to supply products and services • Some suppliers receive a questionnaire about their environmental, health and safety practices • In terms of sustainability, the suppliers' objectives and the approach adopted by Fluxys must align with each other Authorities and regulators • The Belgian and European authorities and energy regulators • Financial regulators such as the Financial Services and Markets Authority (FSMA) • Consultation and information exchange with Belgium's federal energy regulator, the Federal Public Service (FPS) Economy, regional authorities and the European energy regulator • Periodic regulated information for the FSMA via publications, reports and notifications • Effectively functioning energy market • Safe and reliable transmission infrastructure • Initiatives regarding the energy transition Financial institutions • Periodic regulated information via publications, reports and notifications • Transparent information about Fluxys Belgium's financial situation and sustainability policy Non-governmental organisations • Non-governmental organisations active specifically in the fields of the energy transition, climate change and environmental issues such as biodiversity and water and waste management • Consultation and exchange of views • Transparent information and clear commitments 32 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Materiality analysis Consultation In 2020, Fluxys Belgium consulted its stakeholders to gather their views on the significance of Fluxys Belgium’s role and impact in the 17 relevant sustainability areas. The company’s Management Team was also consulted. The materiality matrix shows the consolidated result of both consultations. Materiality matrix Planet Prosperity People Importance for Fluxys Operational reliability Safety of employees Financial resilience Climate change Transporting the molecules for a carbon-neutral future Building and operating a safe infrastructure Digitalisation Customer care Health and well-being of employees Data security & privacy Social dialogue Diversity and inclusion Human rights Natural capital management Good neighbourly relations Ethics and integrity Importance for stakeholders 2 3 4 2 3 4 Human Capital Management 33 # OneteamOnetarget Transition to ESG framework The material domains that emerged from the stake- holder consultation in 2020 were brought together in a Planet/Prosperity/People framework. In 2022, Fluxys Belgium decided to switch to an Environmental/Social/ Governance approach. Therefore, in this report, the materiality domains are presented from that perspective. Performance in terms of financial resilience and digitalisation page 44. ESG performance Environment page 62. Social page 94. Governance page 124. • Financial resilience • Go Digital • Climate change – Transporting molecules for a carbon-neutral future • Climate change – Systematically reducing our own climate impact • Climate change – Management of natural capital • Climate change – EU taxonomy for sustainable economic activities • Safe and reliable infrastructure • Good neighbourly relations • Management of human capital • Employee safety, health and well-being • Social dialogue • Diversity and inclusion • Customer care • Human rights • Ethics and integrity – efforts to combat corruption • Data protection and privacy 34 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Our risk management 35 # OneteamOnetarget Fluxys Belgium’s Enterprise Risk Management (ERM) system identifies the risks that could have a short-, medium- and long-term impact on the company, people and the environment. The risk management system is based on ISO 31000. Risk management is integrated into the company’s strategy, business decisions and activities. The risk management system looks at the impact that risks can have from various angles: we not only assess the impact of risks on Fluxys’ value creation, operational performance and reputation – we also consider the impact on people and the environment. Risk assess- ments are done in the short, medium and long term, which also makes it possible to carefully manage the risks associated with climate change. The risks and associated measures are explained in this integrated annual report for each domain in the materiality analysis (see the “Our reporting” section, page 28) Enterprise Risk Management Risk Management organises the risk management sys- tem and reports annually to the Audit and Risk Commit- tee. All our departments identify, analyse and evaluate their risks and report on how risks are managed. They work with management to map out the main risks, the controls and the mitigating measures. The Audit and Risk Committee examines the risk management system and all the main risks, controls and mitigating measures each year. Actors in the process 36 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Fluxys Belgium assesses the likelihood of the main risks connected to its activities and estimates the potential financial impact thereof. Depending on the possibilities and the market conditions, the group mainly covers these risks via the insurance market. In some cases, risks are partially reinsured by Flux Re, a wholly-owned subsidiary of Fluxys Belgium, or are partially self-re- tained, for example by applying appropriate deducti- bles. Flux Re reinsures general and environmental lia- bility, property risks, material damage risks and financial risks (not life or health risks). The fact that Flux Re is fully consolidated in the group’s accounts means that the cost of damages covered by the group’s reinsurance policy are booked to the consolidated result. Flux Re also reinsures certain risks facing other companies in the Fluxys group. Where appropriate, compensation paid in the event of dam- ages involving these parties will impact the Fluxys Bel- gium group’s IFRS consolidated result. Insurance The comprehensive cover is in line with European best practices in the field and includes the different areas in which risks may materialise: • protection of facilities against various types of material damage; in specific cases, facilities also have additional cover for loss of earnings as a result of unavailability due to damage; • protection against third-party liability by means of comprehensive, multi-level cover; • staff programme: mandatory insurance cover (occupational accidents) and staff healthcare programme; • protection of the vehicle fleet by means of appropriate insurance. First line Second line Third line • The first line of defence: the departments themselves, • which are responsible for their risks and ensure effective controls and measures. • The second line of defence: the Risk and Compliance teams as well as, in certain cases, the Finance, Health, Safety and Environment, and ICT Security departments. • They guide those in the first line in risk management, compliance with regulations, guidelines and internal rules, budget monitoring and the security of staff, facilities, ICT systems and information. • The independent third line of defence: Internal Audit, which is responsible for monitoring business processes. • Internal Audit performs risk-based audits to monitor the effectiveness and efficiency of the internal control system and processes. The department also performs compliance audits to ensure that guidelines and processes are consistently applied. The three lines of defence model is the internal control model used to manage our risks and carry out controls. Internal control process 37 # OneteamOnetarget Since the outbreak of war in Ukraine, various sanctions have been taken against Russia and Belarus, as well as Russian and Belarusian companies. In this context, Fluxys Belgium Group is not active on the Russian market nor does it have any investments in Russian companies. Fluxys Belgium group sees no evidence of impairment. In its activities, Fluxys Belgium group does business with Russian companies in accordance with European and national gas regulations and we operate in full compliance with the sanctions regime. Fluxys LNG is the company with the largest exposure to Russian gas flows through long-term contracts. To date, however, there have been no changes to regular flows or payments. The possible termination of long-term contracts could lead to a temporary reduction in the company’s economic contribution to the Fluxys Belgium Consequences of the war in Ukraine group. However, the regulatory framework is such that it allows authorised revenue to be maintained and the cancellation of long-term contracts would also free up capacity in a market with high demand. Based on the current situation and given the regulat- ed nature of its activities, the Fluxys Belgium group’s net result is generally very little affected by volume decreases. Depending on the evolution of the war and on the duration and extent of the sanctions, the Fluxys Belgium group could temporarily face adverse effects on cash income if customers were to default on pay- ment for booked capacity. 38 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Legal and regulatory framework 39 # OneteamOnetarget Europe Since 3 March 2011, the European natural gas market has been regulated by the EU’s third energy package: • Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (the Third Gas Directive); • Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005 (the Second Gas Regulation); • Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators (the ACER Regulation). In late 2021, the European Commission published its Proposal for a Directive of the European Parliament and of the Council on common rules for the internal markets in natural and renewable gases and in hydrogen, as well as its Proposal for a Regulation of the European Parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen. These legislative texts are expected to be finalised and adopted by the end of 2023. It is anticipated that they will introduce a regulated framework for the European markets in renewable gas and hydrogen, along the lines of the existing framework for natural gas. Belgium Within the current legal and regulatory framework, a regulated system is applied to transmission (both domestic and border-to-border), natural gas storage and LNG terminalling. As required by EU legislation, the Belgian market is supervised and overseen by inde- pendent regulators. The supervisory authority for the regulated activities of the Fluxys Belgium group is the federal regulator, the Commission for Electricity and Gas Regulation (CREG). A bill concerning the transmission of hydrogen by pipe- line was introduced in the Federal Parliament by the Belgian government in January 2023. This legislation is expected to lay down the framework for: • granting hydrogen transmission licences; • the appointment and certification of a hydrogen transmission system operator; • the unbundling of hydrogen transmission from production or supply of hydrogen, natural gas, biogas, biomethane, other forms of synthetic methane or electricity; • existing hydrogen networks. It is anticipated that this legislation will determine the tasks of the hydrogen transmission system operator, including: • compiling a network development plan; • providing non-discriminatory regulated access: • communicating transparent and objective information to market players; • confidentially handling commercially sensitive information of users of the hydrogen transmission system; • compiling quality standards for the transported hydrogen. This legislation is expected to lay down the missions and powers of the regulator (CREG). 40 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile Legislation The Belgian Gas Act forms the general basis of the reg- ulatory framework and incorporates the main principles that apply to the activities of Fluxys Belgium and Fluxys LNG as operators of the transmission system, natural gas storage facilities and LNG terminalling facilities. The third package of legislative measures, in particular the Directive of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas, was transposed into Belgian legislation (Act of 8 January 2012 amending the Gas Act adopted as of 21 January 2012): • The legislation provides for a procedure for certifying operators of transmission systems, natural gas storage facilities and LNG terminalling facilities. The aim of this certification is to verify compliance with the requirements that operators be unbundled from energy suppliers or producers (ownership unbundling). On 27 September 2012, CREG certified Fluxys Belgium as a transmission system operator that works entirely separately from natural gas suppliers and producers. In early 2023, CREG confirmed that Energy Infrastructure Partners becoming a shareholder in the parent company Fluxys did not give rise to a recertification procedure. • In addition to the certification procedure, the procedure for appointing operators of the transmission system, natural gas storage facilities and LNG terminalling facilities by Ministerial Decree remains unchanged. As a result, on 23 February 2010 Fluxys Belgium was appointed operator of the natural gas transmission system and of the natural gas storage facility, and Fluxys LNG was appointed operator of the LNG facility, each for a renewable 20-year term. • CREG is also responsible for developing the methodology for transmission, storage and LNG terminalling tariffs after having undertaken a public consultation on the subject. Operators’ tariff proposals must be approved by CREG. New EU regulations adopted in 2022 against the backdrop of the European energy crisis that hit in the course of the year Against the backdrop of the gas market in 2022, a num- ber of legislative texts were adopted at European Union level to ensure security of supply for the EU and its Member States: • Regulation (EU) 2022/1032 of the European Parliament and of the Council of 29 June 2022 amending Regulations (EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage; in this connection, it is worth pointing that in late 2022, Fluxys Belgium was certified as a storage facility operator in accordance with Article 2 of that Regulation; • Council Regulation (EU) 2022/2576 of 19 December 2022 enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders; • Council Regulation (EU) 2022/2578 of 22 December 2022 establishing a market correction mechanism to protect Union citizens and the economy against excessively high prices. One of the aims of these various EU regulations is to optimise the use of natural gas infrastructure with a view to contributing to the security of the natural gas supply. The Fluxys Belgium group supports this objec- tive and has made the appropriate adjustments to the regulated contracts in order to transpose the various measures provided for by these regulations. 41 # OneteamOnetarget Setting tariffs General remarks The decisions laying down the tariff methodology for the period 2020-2023 for the natural gas transmission network, the natural gas storage facility and the LNG facility were adopted by CREG on 28 June 2018. This methodology includes the rules which network opera- tors must comply with when preparing, calculating and submitting tariffs and which the regulator itself will use for processing these tariff proposals. The 2020-2023 tariff proposal for transmission servic- es, submitted by Fluxys Belgium on 21 December 2018 and based on that methodology and the network code for tariffs (TAR-NC) 2 , was reviewed, and the reviewed version was finally approved by CREG on 7 May 2019. The approved tariffs are valid for a period of four years, subject to a revision due to the regulatory assets and liabilities not developing in the way forecast in the tariff proposal. In this connection, tariffs were reduced by 10% as from 1 July 2022. The 2020-2023 tariff proposal for storage was approved by CREG on 20 December 2019. An amend- ed tariff proposal providing for a tariff reduction was approved on 1 July 2021. The latest updated tariff proposal for terminalling servic- es was approved by CREG on 2 December 2021. This tariff proposal resulted in the introduction of a regulated tariff for the new BioLNG liquefaction services, and the confirmation of the tariff for the virtual liquefaction service, renamed the backhaul liquefaction service. The decisions laying down the tariff methodology for the period 2024-2027 for the natural gas transmission system, the natural gas storage facility and the LNG facility were adopted by CREG on 30 June 2022. Fluxys Belgium held a consultation on the tariff propos- al for transmission services for 2024-2027, running from 6 October to 6 December 2022. The tariff proposal for these services was submitted to CREG in late Decem- ber 2022. 2. On 16 March 2017, a network code for tariffs (TAR-NC) was adopted by European Commission Regulation (EU) No 2017/460. This aims to achieve a harmonised transmission tariff methodology for gas transmission in Europe and lays down a range of requirements regarding publication of data and consultation on tariffs. Principles The tariffs must cover the estimated authorised costs necessary to be able to efficiently provide the regulat- ed services. The basis for this calculation is account- ing according to the Belgian accounting rules (Belgian GAAP). The estimated authorised costs include the operating costs, financial expenditure and regulated return. Operating costs. Operating costs are divided into: • manageable costs, for which efficiency gains or losses are distributed proportionately between Fluxys Belgium (rise or fall in authorised profits) and regulatory assets or liabilities (increase or decrease in future tariffs), based on a decreasing scale; • non-manageable costs, for which deviations from the estimated value are fully allocated to the regulatory assets or liabilities. This encourages Fluxys Belgium to perform its activities in the most efficient way possible. Every saving vis-à-vis the estimated and authorised budget for manageable costs has a positive impact on pre-tax gross profits. On the other hand, exceeding budgets negatively affects the profit for the period. The following are considered non-manageable costs: depreciation, costs relating to other regulated activities, subsidies, taxes, duties and expenses relating to the purchase of commodity products for the operation of the network. Personnel expenses, business expenses and miscella- neous goods and services are considered to be man- ageable costs. Financial expenditure. Financial expenditure relates to net financial costs, i.e. after deduction of financial reve- nue. Therefore, all actual and reasonable encountered financial costs relating to debt financing for regulated activities are included in the tariffs. Regulated return. The regulated return is the return on equity invested as authorised by the regulatory provi- sions governing the return on capital investment. This is calculated using a remuneration rate applied to the average annual value of the regulated assets (average Regulatory Asset Base, or RAB). This RAB, based on the calculations under Belgian accounting standards, varies from year to year, taking into account new investments, decommissioning, authorised depreciation and chang- es in operating capital. 42 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our profile This remuneration rate for the period 2020-2023 is made up of two components determined by the equity/ RAB ratio (= factor S). 1. For the part of the equity up to and including 40% of the RAB, the following applies: average RAB in year n x S 3 x [(OLO n)+(ß x risk premium)] x (1+α) The remuneration rate (in %) as established by CREG for year n is equal to the sum of the risk-free interest rate (based on 10-year Belgian linear bonds (OLO)) and a premium for the risk of the shares market, weighted with the applicable beta factor. The reference financial ratio of 40% is applied to the average value of the Regulatory Asset Base (RAB) to calculate the reference equity. The parameters for the tariff period 2020-2023 are as follows: – OLO n = for year n, the risk-free interest rate of 2.4%, based on 10-year OLO; – ß (system operator risk vis-à-vis global market risk) = 0.65 for transmission; 0.78 for storage and terminalling; – risk premium = 3.5%; – α (illiquidity premium) = 20% for transmission, storage and terminalling. 2. For the part of the equity that exceeds 40%, the following applies: average RAB in year n x (S - 40%) x (OLO n + 70 basis points). CREG encourages a ratio between equity and regulated asset base that is as close as possible to 40%. As a result, the part of the reference equity that exceeds 40% of the regulated asset base is remunerated at a lower rate: the risk-free interest rate, set at 2.4%, for the regulatory period 2020-2023, based on 10-year Belgian linear bonds (OLO) and a premium of 70 basis points. The methodology also provides for a specific level of authorised margin for new facilities or extensions to facilities to promote security of supply, or for new facilities or extensions to storage or LNG facilities. The remuneration of the LNG facilities combines a RAB x WACC formula for the initial and replacement investments of the terminal with an IRR (Internal Rate of Return) formula for extension investments under- taken since 2004. CREG establishes a maximum IRR per investment, which Fluxys LNG may not exceed to ensure the attractiveness and competitiveness of the LNG terminal. The principles of the IRR model for the extension invest- ments by Fluxys LNG were approved by CREG and confirmed in its subsequent decisions. Finally, in addition to the incentive relating to controlling manageable costs, incentives for the tariff period 2020- 2023 may be granted to the system operator to encour- age it to: • support market integration and security of supply; • enhance its performance; • carry out vital research and development activities; • play an active role in the energy transition; • boost the quality of its services and stimulate additional sales of capacity. 3. Capped at 40%. 43 # OneteamOnetarget Annual settlement Every year, a settlement is made which compares the estimated amounts with the actual ones. These differ- ences, excluding incentives in favour of or against the margin, are recognised as a regulatory asset or liability in the year in which they occur. This settlement applies to the various aspects of the tariff calculation, namely: • the estimated sales volumes used to determine the unit tariff; • operating costs; • financial expenditure; • the regulated return. This results in a regulatory liability (if for example the actual volumes exceed the estimates or if the oper- ating costs, financial expenditure or regulated return are lower than expected) or a regulatory asset (in the opposite case). This regulatory liability or asset is taken into account in accordance with the tariff methodology to set the tariffs for the next regulatory periods. When devising the 2020-2023 tariff proposal, the nat- ural gas transmission system operator identified the expected development in the adjustment account for the relevant regulatory period. This includes an expect- ed decrease in the adjustment account of up to €100 million by the end of 2023. If the actual development varies considerably from what was expected, whether positively or negatively, this deviation will result in an automatic correction of the tariffs for the gas transmission network. A specific regulatory liability for auction premiums has been created. This regulatory liability is allocated in accordance with the Network Code. Code of conduct The code of conduct determines the terms and condi- tions of access to the natural gas infrastructure. These terms and conditions constitute a set of operational and commercial rules that form the framework within which Fluxys Belgium and Fluxys LNG enter into con- tracts with users of the transmission, storage and LNG infrastructure. An initial code of conduct was established by the Royal Decree of 4 April 2003. From 2006 onwards, several market consultations on the evolution of this code were organised by CREG. The Royal Decree of 23 December 2010 on a code of conduct, which came into effect on 15 January 2011, was replaced by the code of conduct adopted by CREG in 2022. Specifically, following a public consultation, CREG adopted, by decision of 31 August 2022, a new natural gas code of conduct which came into force in 2022. That code of conduct states that operators (for trans- mission, storage and LNG terminalling) must draw up a range of documents which are subject to CREG’s approval: the access code, the services programme, the standard agreements and the connection agree- ments. When drawing up these documents, the net- work users concerned are consulted to ensure that the services offered are aligned as closely as possible with market needs. Only after this consultation can the documents be submitted to CREG for approval. Compliance officer A compliance officer was appointed at Fluxys Belgium and Fluxys LNG in the framework of the commitments regarding non-discriminatory access to the network. A compliance programme was drawn up with the spe- cific details of the rules of conduct that members of staff must comply with regarding non-discrimination, transparency and handling of confidential information. Fluxys Belgium’s Board of Directors and management approved the compliance programme. Every year, a report on compliance with the programme is drawn up for both Fluxys Belgium and Fluxys LNG, and the results are published on the website: https:// www.fluxys.com/en/company/fluxys-belgium/investors. Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of financial resilience and digitalisation 45 # OneteamOnetarget Our performance in terms of fi nancial resilience and digitalisation # OneteamOnetarget and digitalisation We move quickly, even when the market is weathering a storm. Ready for our clients, ready to bring energy wherever it's needed. With our digital transformation boosting our agility to deliver on the green transition, today and tomorrow. That’s how we work, day after day, on future-proof value. 46 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of financial resilience and digitalisation Our performance in terms of financial resilience and digitalisation 47 # OneteamOnetarget * Subject to the decision of the Annual General Meeting convened to decide on the appropriation of the profit for the year. Our focus in 2022 Offering our customers as much capacity as possible in the interests of security of supply Controlling our operating costs and efficiency efforts to achieve regulatory targets for optimal fair shareholder compensation Driven digitalisation to increase the agility of our organisation, strengthen the foundations in our energy transition acceleration path, improve services for our customers and develop new opportunities € 480.3 million Prosperity contribution (2021: €438.9 million) €1.40 Proposed gross dividend per share (2021: €1.38) 48 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of financial resilience and digitalisation Financial resilience 49 # OneteamOnetarget Policy Within the limits of the regulatory framework applicable to our activities, we respond to the expectations and needs of our customers in the best possible way to maximise revenues from the sale of our services. Max- imising sales of capacity also means supporting the competitiveness of our tariffs, which we also underpin by keeping operating costs under control and retain- Risks and measures Risk Measures The risk that market events or developments will impact Fluxys Belgium's revenues and/or assets • Market monitoring by continuously adapting existing services and/or developing new services needed by the market at competitive prices • Financial monitoring of counterparties by monitoring claims and analysing their credit, liquidity, solvency and reputation • Warranties from suppliers and customers ing a healthy financial structure. Our financing policy enables us to finance investments on attractive terms. Our activities contribute hugely to the prosperity of society, the economy, our employees and our share- holders. Our activities also substantially help the ener- gy transition forward. This is how we future-proof our contribution to prosperity. 50 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of financial resilience and digitalisation As much capacity as possible to maximise security of supply Throughout 2022, our sales team left no stone unturned to offer customers as much capacity as possible in the interests of security of supply. After all, the geopolit- ical situation in Ukraine has profoundly changed the dynamics of gas markets and the direction of flows in Europe. Previously, supplies largely came from the east. To ensure security of supply, additional flows from the west are now needed to compensate for the lost volumes from the east. Transmission: unprecedented volumes to the Netherlands and Germany Together with the neighbouring transmission system operators, we found ways to maximise the capacity that was physically available for cross-border flows. Moreover, together with our customers we looked at how they could make optimal use of their package of services. The result was that they could carry unprece- dented large volumes of natural gas to the Netherlands and Germany. Flows to Germany soared to 256 TWh (from 20 TWh in 2021) and those to the Netherlands increased to 145 TWh (from 68 TWh in 2021). Additional unloading slots at the Zeebrugge LNG terminal Together with the long-term customers at the Zeebrug- ge LNG terminal, we examined how the schedule for their shipping traffic could be adjusted so that more ships could dock there – and this worked, as this meant that the terminal managed to support security of supply. Storage facility filled to maximum level Thanks to the special flexibility offered by the new stor- age services, customers booked maximum capacity at the Loenhout storage facility for winter 2022-2023. They have also already booked 60% of the capacity for the subsequent years. With its storage facilities filled to the maximum level, Belgium easily exceeded the requirements set by the European Union in 2022 for security of supply for win- ter 2022-2023, namely that storage facilities should be filled to at least 80% of full capacity by 1 November. 51 # OneteamOnetarget Tariff reduction In line with the tariff methodology, Fluxys Belgium, in consultation with the market and the federal energy regulator CREG, reduced tariffs for transmission services by 10% from 1 July 2022 onwards. The tariff reduction had no impact on Fluxys Belgium’s results. The reduction corresponds to a total of €45 million being returned over the course of 2022 and 2023. This is in line with Fluxys Belgium and CREG’s desire to support consumers against the backdrop of high natural gas prices. Financial monitoring and guarantees Fluxys Belgium systematically assesses its main coun- terparties' financial capacity and, in accordance with the regulatory framework, closely monitors its receivables. Our policy regarding counterparty risks requires our major customers and suppliers to undergo a financial analysis (liquidity, solvency, profitability, reputation and risks) in advance and subsequently on a regular basis. Fluxys Belgium uses internal and external information sources to this end, such as official analyses performed by specialist rating agencies. These rating agencies assess entities on the basis of risk and award them a credit rating. Various internal assessments are carried out and are covered by a full cross-cutting review by Sales, Finance and Legal. Fluxys Belgium also asks most of its customers and certain categories of suppliers to provide a financial guarantee, thereby reducing the group's exposure to credit risk both in terms of default and concentration of customers. The potential negative impact of parties that remain in default is handled in accordance with the regulatory framework. Fluxys Belgium's cash surpluses are deposited with parent company Fluxys within the framework of cash pooling agreements. Fluxys invests these surpluses in various ways, namely: • in prominent financial institutions; • in the form of financial instruments issued by companies with a high credit rating; • in financial instruments issued by companies in which a creditworthy authority is the majority shareholder or which are underwritten by a creditworthy EU Member State; • in loans to Fluxys subsidiaries at market conditions. By monitoring its subsidiaries, Fluxys reduces and manages counterparty risks for these subsidiaries as well. 52 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of financial resilience and digitalisation Income statement (in thousands of €) 31.12.2022 31.12.2021 Operating revenue 912.559 573.191 EBITDA 323.167 318.905 EBIT 147.305 137.821 Net profit 83.728 75.521 Balance sheet (in thousands of €) 31.12.2022 31.12.2021 Investments in property, plant and equipment for the period 105.525 50.647 Total property, plant and equipment 1.855.375 1.902.037 Equity 643.617 639.674 Net financial debt 493.800 846.046 Total consolidated balance sheet 3.406.570 2.634.514 Financial situation: consolidated key financial data Increase in consolidated turnover and net profit Fluxys Belgium’s infrastructure was used particularly intensively throughout the year by our customers to support security of supply in Germany and the Nether- lands. The extra revenues from that additional capac- ity that was sold do not benefit the company’s share- holders. As stipulated by regulatory provisions, these extra revenues are deposited in the buffer account provided for this purpose (the ’adjustment account’). The amounts in the adjustment account are reallocated under the supervision of the regulator, CREG. As part of the October budget consultations, the federal government decided to collect an special solidarity contribution of €300 million from Fluxys Belgium. This contribution represents additional support for Belgium’s population during the energy crisis. The Fluxys Belgium group generated turnover of €912.6 million in 2022. This represents an increase of €339.4 mil- lion compared with 2021, when turnover stood at €573.2 million. The increase in regulated revenue is in line with tariff methodology and mainly stems from accounting for the special solidarity contribution of €300 million. Consolidated net profit rose from €75.5 million in 2021 to €83.7 million in 2022, an increase of €8.2 million. The rise in net profit is in line with the tariff proposal, in accordance with the tariff methodology for 2020-2023, and is therefore not due to the increase in sold capacity or in energy prices. The 2020-2023 tariff methodology (set by the regulator, CREG) applies the principle that all reasonable costs including interest and fair remuneration are covered by regulated revenues. In addition, there are a number of incentives aimed at controlling costs and to direct and monitor some of the company’s performance. By con- trolling its operating costs and making efficiency efforts, the Fluxys Belgium group succeeded in achieving the regulatory targets and incentives. €105.5 million in investment In 2022, investments in property, plant and equipment amounted to €105.5 million as opposed to €50.6 mil- lion in 2021. Of this amount, €67.7 million was dedicated to LNG infrastructure projects and €36.8 million to transmission projects. Creating greater prosperity Fluxys Belgium creates prosperity by contributing to the economic growth of the society and environment in which it operates. This contribution is measured as added value that the company generates and distrib- utes among its stakeholders. In 2022, the added value generated by continuing operations amounted to €480,3 million, up €41,4 million on 2021. * See glossary on page 54. 53 # OneteamOnetarget Outlook for 2023 Under the 2020-2023 tariff methodology, the net profit from Belgian regulated activities is determined based on various regulatory parameters, including equity invested, financial structure and incentives. More infor- mation about the 2020-2023 tariff methodology can be found in the ‘Legal and regulatory framework’ section (see page 38). Based on the information available at the time of this report, it is extremely difficult to anticipate the econom- ic impact of the war in Ukraine. In light of the current understanding of the situation, the essential nature of the company’s activities and its regulatory framework, at present we do not anticipate the war and the current resulting measures and market developments having any significant negative impact on the consolidated result of the Fluxys Belgium group in 2023 (see section ‘Our risk management' - ‘Consequences of the war in Ukraine’, page 37). Subsidiary activities and statutory profits Fluxys LNG Fluxys LNG (a consolidated subsidiary in which Fluxys Belgium holds a 99.9% stake and Flux Re a 0.01% stake) is the owner and operator of the Zeebrugge LNG ter- minal and sells terminalling capacity and associated services. Fluxys LNG’s equity totalled €141.7 million as at 31 December 2022, as opposed to €149.5 million the previous year. Net profit for the 2022 financial year totalled €32.1 million (€31.1 million in 2021). Flux Re FFlux Re (consolidated subsidiary – wholly owned by Fluxys Belgium) is a reinsurance company under Luxembourg law and was established in October 2007. Flux Re's statutory equity, before appropriation, fell from €12.7 million as at 31 December 2021 to €10.5 million as at 31 December 2022. Net profit for the 2022 financial year totalled €2.8 million (€2.3 million in 2021). Balansys Balansys (stake consolidated using the equity method – Fluxys Belgium holds a 50% stake). On 7 May 2015, as part of the integration of the Belgian and Luxembourg gas markets, Fluxys Belgium and the Luxembourg trans- mission system operator Creos Luxembourg set up the company Balansys, a joint venture in which Fluxys Belgium and Creos Luxembourg each have a 50% stake. Balansys is in charge of the commercial balanc- ing activities of the integrated Belgian-Luxembourg gas market. Fluxys Belgium – 2022 results (according to Belgian standards): proposed allocation of profit Fluxys Belgium's net profits totalled €84.0 million, com- pared with €71.7 million in 2021. At the Annual General Meeting on 9 May 2023, Fluxys Belgium will propose a gross dividend of €1.40 per share. Taking into account a profit of €79.3 million carried over from the previous financial year and a withdrawal of €28.2 million from the reserves, the Board of Directors will propose to the Annual General Meeting that the profits be allocated as follows: • €98.4 million as a dividend payout; • €93.1 million as profit to be carried forward. If that profit allocation proposal is adopted, the total gross dividend for the 2022 financial year will be €1,40 per share. This amount will be payable from 17 May 2023 onwards. 54 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of financial resilience and digitalisation Indicators Welvaartsbijdrage (in miljoen euro) 2022 2021 2020 2019 Added value from continuing operations 480.3 438.9 427.1 423.2 Personnel 132.9 112.5 110.5 107.5 Shareholders (dividend) 97.0 96.3 91.3 88.5 Society (taxes) 37.2 36.9 37.2 48.2 Suppliers 174.7 155.6 149.3 143.4 Financial institutions (interest) 38.5 36.3 38.8 35.5 Financial ratios 2022 2021 2020 2019 Solvency Ratio of (i) net financial debt and (ii) the sum of equity and net financial debt 43% 57% 58% 58% Interest coverage Ratio of (i) the sum of FFO and interest expenses and (ii) interest expenses 21.39 6.75 5.61 6.58 Net financial debt/extended RAB Ratio of (i) net financial debt and (ii) extended RAB 17% 28% 28% 29% FFO/net financial debt Ratio of (i) FFO and (ii) net financial debt 144% 25% 20% 22% RCF/net financial debt Ratio of (i) RCF and (ii) net financial debt 125% 13% 10% 12% Verklarende woordenlijst EBIT: Earnings Before Interest and Taxes or operating profit/loss, plus income from equity affiliates and divi- dends received from unconsolidated entities. EBIT is used as a reference to monitor the operational perfor- mance of the group over time. EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortisation or operating profit/loss, before depre- ciation, amortisation, impairment and provisions, plus income from equity affiliates and dividends received from unconsolidated entities. EBITDA is used as a ref- erence to monitor the operational performance of the group over time, without taking non-cash costs into account. Net financial debt: interest-bearing liabilities (including lease debts), less regulatory assets, cash linked to early refinancing transactions and 75% of the balance of cash, cash equivalents and short- and long-term cash investments (the remaining 25% is considered a buffer reserve for operational purposes (working capital) and is therefore deemed unavailable for investments). This indicator gives an idea of the amount of interest-bearing liabilities that would remain if all available cash were used to repay loans. To show a more faithful picture of reality, the exceptional solidarity contribution of €300 million has been removed from the cash position when calculating the net financial debt. This is because that debt was recorded on 31 December while the payment was made in January 2023, significantly affecting the calculation. Solvency: the ratio between net financial debt and the sum of equity and net financial debt, indicating the strength of the Fluxys Belgium group’s financial structure. Interest coverage: the ratio between FFO before inter- est expenses and interest expenses, representing the group's capacity to cover its interest expenses via its operating activities. 55 # OneteamOnetarget Net financial debt (in millions of €) 2022 2021 2020 2019 Net financial debt 493.8 846.0 873.1 903.3 Breakdown Debt capital market 700.0 699.1 692.7 698.2 Bank loans 262.3 286.8 310.6 327.8 Related parties 210.3 233.6 257.0 263.3 75% of cash and other financial assets -678.2 -373.5 -393.1 -386.0 Weighted average maturity as at 31 December 8.1 9.2 10.2 11.3 RAB and WACC 2022 2021 2020 2019 RAB (in millions of €) Transmission 2,059.1 2,047.5 2,086.9 2,125.3 Storage 228.0 228.8 235.6 239.7 LNG terminalling 305.7 303.0 302.7 314.4 Other property, plant and equipment excluding RAB (in millions of €) 417.7 410.4 420.3 413.4 Extended RAB 3,010.6 2,989.7 3,045.4 3,092.8 WACC before tax (in %) Transmission 4.88 4.92 4.88 3.87 Storage 5.06 5.09 5.04 3.57 LNG terminalling 4.83 4.99 5.14 2.85 Net financial debt/Extended RAB: ratio expressing the share of the extended RAB financed by external debt. FFO/Net financial debt: ratio used to determine the group's capacity to pay off its debts based on cash gen- erated by its operating activities. RCF/Net financial debt: ratio used to determine the group's capacity to pay off its debts based on cash generated by its operating activities after payment of dividends. FFO: Funds from Operations or profit/loss from con- tinuing operations, excluding changes in regulatory assets and liabilities, before depreciation, amortisation, impairment and provisions, plus dividends received from equity affiliates and unconsolidated entities, minus net financial expenses and tax payables. This indicator reflects the cash generated by operating activities and therefore the group's capacity to repay its debts, make investments and pay dividends to investors. RCF: Retained Cash Flow or FFO, less dividends paid. This indicator reflects the cash generated by operating activities, but after payment of dividends, and thus reflects the group's net capacity to repay its debts and to make investments. RAB: average Regulated Asset Base for the year. The RAB is a regulatory concept that corresponds to the basis of regulated assets on which the regulatory return is allocated, as regulated by CREG. Other investments in property, plant and equipment excluding the RAB: the average of the cumulative investments in the Zeebrugge LNG terminal expansions and in the non-regulated activities. Extended RAB: total RAB and other investments in plant, property and equipment excluding the RAB. WACC: Weighted Average Cost of Capital, reflecting the return allowed by the regulation on the RAB. 56 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of financial resilience and digitalisation Digitalisation 57 # OneteamOnetarget Policy Fluxys Belgium is strengthening its position with its mix of extensive digitalisation and enthusiasm for new ideas, as part of a cross-cutting approach. With this approach, we are making our organisation more agile, consolidating the foundations of our drive to speed up the energy transition, improving services for our cus- tomers and developing new opportunities. Risks and measures Risk Measures Inability to maintain optimal customer service and improve internal operations due to lack of digital advancement • Digital transformation programme • Innovation and strengthening ICT foundations Digital transformation: acceleration and expansion We are pursuing our work on rolling out large-scale digitalisation through the Digital Transformation pro- gramme, which aims to both accelerate and expand this process. Digital Lounge Is our innovation lab approach to quickly and flexibly developing digital solutions for our customers, employ- ees and other stakeholders. We work, as the need arises, with ad hoc cross-cutting Digital Lounge teams on devising a learning process. Here, the design and priorities may change based on what we learn In 2022, we came up with four digital solutions to enhance internal processes, the offering for our cus- tomers and the development of digital talent. Digital Workplace is our approach to creating a working environment that supports digital transformation, hybrid collabora- tion and connectivity between employees wherever possible. At the same time, our employees are con- solidating their digital skills under the guidance of the Digital Coaches. The survey we conducted among employees in 2022 revealed an overall feeling of contentment, with 80% of respondents giving satisfaction scores of 7 or more out of 10. In 2023, we will be shifting our focus to improving the digital dexterity of our employees so that they can make even better use of existing and emerging tech- nological solutions. 58 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our performance in terms of fi nancial resilience and digitalisation Innovation and consolidation of our ICT foundations The Digital Transformation programme focuses on both innovation and consolidating the ICT foundations of Fluxys Belgium. Cloud: deploying the Cloud architecture for business applications. The initial commercial modules have been developed, and we are continuing this approach for other applications where it has added value. Smart Data Factory: bringing together, for internal use, data from various systems along with the associated visualisation tools to provide a quicker and clearer insight into all the available data. Internet of Things (IoT): using IoT capabilities to optimise the operational management and maintenance of the pipeline network. GSmart: various new modules for our in-house system for gas transport, used by various infrastruc- ture companies. SAP: preparing for the migration to a new SAP environment for all Enterprise Resource Planning. This will be rolled out in 2023. At the same time, the tools for our technical staff in the fi eld will be upgraded. Digital Twin: developing a digital twin of our transmission system which could, for example, simulate the fl ow of new gases through the network. Cybersecurity: see the Extra focus on ICT systems and cyber security section (page 102). 59 # OneteamOnetarget Launch of the Emix app Drawing on the Digital Lounge approach, we launched the Emix Beta app in 2022. This is a fully digital platform where suppliers and buyers of standard LNG or bio-LNG can fi nd each other and then get in touch. In this way they can decide whether there is enough of a match between them to make a deal. The result is a transparent, user-friendly and time- saving solution for our customers! Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance 61 # OneteamOnetarget Our ESG performance Our # OneteamOnetarget ESG performance Having a positive impact on the world is what drives us. Care is our key. Taking care of the climate, with the solutions we provide for decarbonisation and by making our own carbon footprint progressively smaller. Serving society by taking care of our essential infrastructure. And seeing to a good working environment with meaningful work. This is how, together, we create balance and perspective for tomorrow. 62 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Environment Climate change – Transporting molecules for a carbon-neutral future p. 64 Climate change – Systematically reducing our own climate impact p. 74 Climate change – Management of natural capital p. 82 Climate change – EU taxonomy for sustainable economic development p. 86 63 # OneteamOnetarget 10 Proposals for open- access hydrogen and CO 2 infrastructure in Belgium's industrial clusters 4 Market consultations completed in first phase regarding the proposals for open-access hydrogen and CO 2 infrastructure in Belgium’s industrial clusters 2 Proposals for cross-border hydrogen infrastructure (Belgium-Netherlands and Belgium-France) Our focus in 2022 In partnership with industry, preparing the hydrogen and CO 2 transmission infrastructure to be a powerful tool for both reducing large-scale CO 2 emissions and sustainably safeguarding economic activity and employment Together with partners, developing terminals for hydrogen import and CO 2 export Making investments and developing initiatives to further reduce methane emissions in our transmission and storage businesses Building three additional open-rack vaporisers to reduce the Zeebrugge LNG terminal's emissions +56% Greenhouse gas intensity LNG terminalling (compared with 2021) p. 77 (+60% compared with 2017) -48% Greenhouse gas intensity Transmission and storage (compared with 2021) p. 77 (-51% compared with 2017) 64 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Climate change – Transporting molecules for a carbon-neutral future 65 # OneteamOnetarget Policy Our commitment to the climate targets forms an integral part of our business strategy with a focus on our key role as an infrastructure company in speeding up the energy transition. In that connection, this commitment is also a core pillar of our Health, Safety and Environ- ment Policy. Our approach to molecule transmission for a car- bon-neutral future is fully in line with the European Commission's decarbonisation package and hydrogen strategy, the Belgian federal government’s hydrogen strategy, and the climate approach of Belgium's regions. Risks and measures Risk Measures Drop in demand for natural gas due to the energy transition: the risk that part of Fluxys Belgium's infrastructure can no longer be used Investment programme with projects to achieve decarbonisation goals while gradually reconfi guring the existing network as part of a carbon-neutral energy system Opportunity Actions • Developing new activities to speed up the energy transition • Combining new infrastructure with, wherever possible, the reuse of existing natural gas infrastructure is a cost-effi cient solution to transport molecules for a carbon-neutral future • Investment programme with projects to achieve decarbonisation goals while gradually reconfi guring the existing network as part of a carbon-neutral energy system • Creation of the Fluxys nextgrid business unit, focusing 100% on infrastructure and hydrogen and CO 2 services Given the developments in the legal and regulatory framework, and in line with industrial demand, we are thoroughly preparing to convert our network into a multi-molecule system which we will use to transport not only natural gas and biomethane but also hydrogen and other carbon-neutral molecules and CO 2 . This will enable us to off er industry powerful tools for reducing large-scale CO 2 emissions and thus sustainably safe- guarding economic activity and employment. We will gradually reuse existing infrastructure as much as possible to create hydrogen and CO 2 networks. This is cheaper than starting from scratch and it also saves time. In a densely populated country like Belgium, it also means using up a lot less space. Declarations of interest companies Further consultations bilaterally and by group Unify Supply & Demand Info Memo & Proposal Binding Commitment Info session 01/2021 Request for information (RFI) Collect & aggregate Feedback to Market We are here 66 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Complete focus on energy transition projects with the Fluxys nextgrid business unit In 2022, we established within Fluxys Belgium the Flux- ys nextgrid business unit to optimally reinforce our strategy’s central focus on the energy transition. This business unit will serve as the driving force behind the energy transition projects in Belgium and projects directly related to the Belgian energy ecosystem. First transmission infrastructure for hydrogen/ CO 2 in 2026 Our approach to providing Belgium with the necessary hydrogen and CO 2 infrastructure is shaped in cooper- ation with our customers, the authorities, neighbouring operators, distribution system operators and other stake- holders. In line with market needs, we aim to have the fi rst hydrogen and/or CO 2 pipelines in Belgium ready for Progress in the preparation of hydrogen and CO 2 networks use by mid-2026. Every eff ort is being made to make the necessary investment decisions to achieve this. We develop the infrastructure in industrial clusters and establish connections between them and neighbouring countries. This will allow us to develop the appropriate backbone infrastructure and lay the foundations for sus- tainably cementing Belgium’s role as an energy cross- roads by making the country a hydrogen and CO 2 hub for the economy both in Belgium and North-West Europe. 10 infrastructure proposals In 2022, we produced additional, updated practical proposals for open-access hydrogen and CO 2 transmis- sion infrastructure for various industrial clusters. We are focusing on the market with a total of 10 infrastructure proposals. 4 market consultations completed in the fi rst phase Each infrastructure proposal is accompanied by a mar- ket consultation during which customers can express their interest. 4 market consultations have been com- pleted in the fi rst phase: the market consultations for 67 # OneteamOnetarget hydrogen infrastructure in Antwerp, Mons and Ghent respectively, and the market consultation for CO 2 infra- structure in Antwerp. This means that now feasibility studies are looking into tariff s for the use of this infra- structure. 2 cross-border clusters In this phase, the hydrogen clusters in Ghent and Mons are both already cross-border clusters. • In the case of the Ghent cluster, Fluxys Belgium, the port authority and the Dutch transmission system operator Gasunie are joining forces to connect the Dutch and Belgian hydrogen networks in the cross-border North Sea Port. • For the Mons cluster, Fluxys Belgium and the French transmission system operator GRTgaz identifi ed the wider Mons area, which extends to La Louvière and Feluy in Belgium together with the Valenciennes region in France, as a cross-border cluster for the development of hydrogen infrastructure. Terminalling projects for hydrogen and CO 2 Antwerp@C CO 2 Export Hub Within the Antwerp CO 2 cluster, Fluxys Belgium, togeth- er with Air Liquide, is developing an open-access ter- minal for receiving, liquefying and temporarily storing CO 2 and loading it onto ships to be taken to permanent off shore storage. Antwerp@C CO 2 Export Hub is the fi rst phase of Ant- werp@C, an initiative of Air Liquide, BASF, Borealis, ExxonMobil, INEOS, TotalEnergies, Fluxys and Port of Antwerp-Bruges aiming to halve the CO 2 emissions on the Antwerp port platform by 2030. In 2022, Fluxys Belgium, Air Liquide and Port of Ant- werp-Bruges were awarded an EU subsidy of €144.6 million by the Connecting Europe Facility. The funding is intended for the construction of the common CO 2 trans- port and export facilities on the Antwerp port platform. Being awarded this subsidy is a key step towards the fi nal investment decision, which is expected in 2023. Import terminal for green ammonia in Antwerp In 2022, Fluxys Belgium, Advario Stolthaven Antwerp and Advario Gas Terminal joined forces to develop an open-access green ammonia import terminal at Port of Antwerp-Bruges. Ammonia is an effi cient molecule for the long-distance transmission of green hydrogen generated by wind and solar energy The aim is to make green ammonia available from the terminal as a carbon-neutral raw material and fuel. The green ammonia can also be converted into green hydrogen for transmission in the hydrogen network. Ghent Carbon hub Within the Ghent CO 2 cluster, Fluxys Belgium, together with ArcelorMittal Belgium and the cross-border North Sea Port, is developing an open-access multimodal terminal for receiving, liquefying and temporarily storing CO 2 and loading it onto ships to be taken to permanent off shore storage. In 2022, Fluxys Belgium, ArcelorMittal Belgium and North Sea Port were awarded an EU subsidy of €9.6 million by the Connecting Europe Facility. This funding is intended for research in connection with the Ghent Carbon Hub, combined with a CO 2 pipeline between Ghent and Mons. Zeebrugge as a multi-molecule hub Fluxys Belgium is conducting various studies to devel- op the Zeebrugge LNG terminal into a multi-molecule hub for LNG, bio-LNG, hydrogen and CO 2 . • For hydrogen and derivatives, we are researching the facilities for large-scale imports from countries with an abundance of wind and solar energy. From the terminal, hydrogen would then reach the industrial clusters in Belgium and neighbouring countries through the hydrogen network. • For CO 2 we are aiming for large-scale export facilities. The captured CO 2 from industry in Belgium and neighbouring countries would fl ow via the CO 2 network to Zeebrugge, with this becoming the connection to two export options for permanent off shore storage: ship or an off shore pipeline. 68 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Ensuring availability of enough hydrogen More green hydrogen from wind To be viable, the hydrogen economy requires enough renewable electricity to be generated to produce green hydrogen. The Esbjerg Declaration at the North Sea Summit bringing together Belgium, Denmark, Germa- ny and the Netherlands in May 2022 was vital in this regard. The four countries are joining forces to quad- ruple their combined offshore wind capacity to 65 GW by 2030 and to further increase it to at least 150 GW by 2050, thereby making the North Sea the largest sustainable energy plant in Europe. Quickly achieving large volumes with blue hydrogen Belgium and Western Europe still have only limited potential to quickly scale up the generation of renew- able electricity as a source of green hydrogen. “Blue hydrogen” is one alternative. This is low-carbon hydro- gen produced from natural gas, where the released CO 2 is captured and reused or stored. Using available technologies, up to 98% of the released CO 2 can be captured. ENGIE and Equinor are developing their H2BE project in Ghent for the large-scale production of blue hydro- gen. The project is an important link in getting large volumes of low-carbon hydrogen to market in Belgium quickly in a stable way. Fluxys Belgium is working with ENGIE and Equinor to connect the project to the hydro- gen and CO 2 networks in the Ghent cluster. Overseas imports of green hydrogen Overseas imports of carbon-neutral hydrogen are a third pillar to ensure the availability of enough green hydrogen. For this purpose, particularly windy and sun- ny areas where large quantities of green hydrogen can be produced from green electricity are being looked at. Green hydrogen can then be exported by ship to import terminals in Europe, for example in the form of green ammonia. With this in mind, parent company Fluxys is joining forc- es with DEME, ENGIE, EXMAR, Port of Antwerp-Bruges and WaterstofNet in the Hydrogen Import Coalition. The federal government has already signed agree- ments with Oman and Namibia relating to imports of green hydrogen. For other import routes, partner coun- tries are still being identified. Port of Antwerp-Bruges has signed a similar agreement with Chile, which is a country with huge solar-energy potential. P aris P a l ermo Ba r ce l ona Almeria Almeria Almeria Bilbao Bo r d e a ux ux ux gh Stockholm Riga Vilnius Gdansk Warsaw Krakow Bratislava Budapest Ljubljana Vienna Prague Leipzig Berlin Munich Frankfurt Cologne Rotterdam London Paris Lyon Milan Venice Marseille Rome Palermo Barcelona Valencia Göteborg Copenhagen Hamburg Bucharest Soﬁa Athens Hambu 69 # OneteamOnetarget Embedded in Europe’s hydrogen backbone Other transmission system operators in neighbouring countries are also in the process of developing hydro- gen infrastructure. In light of this, we see Belgium’s hydrogen infrastructure becoming part of a European backbone and, from an international perspective, laying the foundations for consolidating and shoring up our role as the energy crossroads at the heart of North- West Europe for many years to come. To this end, since 2020 we have been working with other infrastructure companies within the European Hydrogen Backbone initiative. The initiative has since grown into a joint approach to developing dedicated hydrogen infrastructure in 28 European countries. In 2022, the initiative expanded its aims, namely to create a 53,000-km pipeline network by 2040, a substantial share of which consists of reused infrastructure that currently serves to transport natural gas. European Hydrogen Backbone initiative 2022, supported by Guidehouse 70 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Overview of hydrogen and CO 2 networks in Belgium First transmission infrastructure in 2026 Approximately 40% of Belgium’s CO 2 emissions are generated by industrial energy consumption or process emissions. The development of infrastructure for the transmission and terminalling of hydrogen and CO 2 is key for industry to meet the relevant decarbonisation goals. Belgium: breakdown of CO 2 emissions (in million tonnes, source: klimaat.be) Industrie Transport Residential heating Power generation Other Process emissions Energy use Hydrogen and CO 2 infrastructure: a dual solution Industrial processes for which hydrogen is the best solution. For many companies, hydrogen is the right choice when weighing up the best balance between security of supply, climate impact and cost. A range of industrial processes also requires high temperatures for which (renewable) electricity is not an option. Connecting these industries to a hydrogen supply gives them a chance to switch to the best carbon-neutral alternative. The same goes for industries that use carbon-intensive feedstock. Industrial processes that produce CO 2 . Carbon capture, use or storage is considered a key technology for reducing CO 2 emissions and creating clusters for the circular reuse of CO 2 in the produc- tion of, for example, carbon-neutral biofuels. This tech- nology is vital to safeguard sectors that are diffi cult to decarbonise and involve industrial processes that produce CO2. The availability of infrastructure for the transmission of captured CO 2 to destinations for reuse or storage is a cornerstone of this solution. Hydrogen pipeline CO 2 pipeline H 2 /NH 3 + CO 2 -terminal CO 2 terminal Interconnection hub Hydrogen shipping CO 2 shipping Intermodal 39.1 4.7 8.5 22.1 26.0 16 84 71 # OneteamOnetarget Zeebrugge multi-molecule hub • Open-access terminal • Importing hydrogen or derivatives for transshipment to the hydrogen network and then transmission within Belgium and to neighbouring countries • Receiving captured CO 2 from the CO 2 network with two export options: – liquefaction, intermediate storage and loading onto ships to be taken to permanent off shore storage; – transshipment to an off shore pipeline for transmission to permanent off shore storage. • Status: preliminary studies O ff s h o r e C O 2 pipeline (North Sea) • Open-access pipeline • Project of parent company Fluxys and Equinor • c. 1,000-km pipeline for CO 2 exports from Zeebrugge to permanent storage in the North Sea • Capacity: 20-40 million tonnes of CO 2 per year • Status: feasibility study • Proposed timing: commissioning before 2030 Antwerp@C CO 2 Export Hub • Open-access terminal • Fluxys Belgium project with Air Liquide • Multimodal terminal for receiving, liquefying and temporarily storing CO 2 and loading it onto ships to be taken to permanent off shore storage • Capacity of up to 10 million tonnes of CO 2 per year • Status: engineering & design • Proposed timing: commissioning in 2026 Ghent Carbon hub • Open-access terminal • Fluxys Belgium project with ArcelorMittal Belgium and North Sea Port • Multimodal terminal for receiving, liquefying and temporarily storing CO 2 and loading it onto ships to be taken to permanent off shore storage • Capacity of up to 6 million tonnes of CO 2 per year • Status: feasibility study • Proposed timing: commissioning in 2028 Import terminal for green ammonia in Antwerp • Open-access terminal • Fluxys Belgium project with Advario Stolthaven Antwerp and Advario Gas Terminal • Import terminal for green ammonia: use of green ammonia as a carbon-neutral feedstock and fuel and possibly also its conversion into green hydrogen for transmission in the hydrogen network • Status: feasibility study • Proposed timing: commissioning in 2027 72 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Research into speeding up the energy transition Together with various partners and academic institu- tions, Fluxys Belgium conducts research into hydrogen and CO 2 infrastructure and the practicalities of reusing our existing infrastructure for hydrogen and CO 2 . FutureGrid tests hydrogen in real conditions Fluxys Belgium is working with its British counterpart National Gas and with Northern Gas Networks, the distribution system operator for the North of England, to develop a hydrogen test facility. Such a facility would test the transmission of hydrogen in real conditions in various domains, Over the past year, a 'mini-network' of natural gas infra- structure was built that is separate from the existing net- work. The tests will start in 2023 and are an important addition to our own research into the reuse of existing hydrogen infrastructure. Expert group DNV and the Universities of Durham and Edinburgh are also involved in the test facility. HyFit and Hysource These two university projects study the infl uence of hydrogen on pipeline steels and welding. The results of the HyFit laboratory tests have been presented to the FPS Economy. PIPELHYNE This research with GRTgaz, National Gas, Engie and Transitgas/Swissgas aims to test diff erent types of steel for their sensitivity to hydrogen. Underground storage We are looking into the practicalities of hydrogen stor- age at our Loenhout underground storage site. Exten- sive technical preparations have been made for the injection of hydrogen into the underground storage facility, and we expect to be able to carry out the fi rst tests in 2023 after completing the permit procedures. Hydrogen panels Researchers from KU Leuven have developed game-changing hydrogen panels that are a highly effi - cient means of producing green hydrogen from sunlight as well as water vapour in the air. Fluxys is supporting the innovative project with its wide-ranging expertise in the analysis of molecules. H2GridLab H2GridLab is an initiative to establish a participatory laboratory on the Anderlecht site of distribution system operator Sibelga to carry out tests, roll out pilot projects and amass knowledge of green hydrogen and its local storage, injection into networks and role in the decar- bonisation of public distribution. H2GridLab has been supported by Belgium's federal Energy Transition Fund. Semi-industrial installations such as gas turbines and fuel cells will be set up and tested in 2023. Interaction between energy networks University research is being conducted into the interac- tions between diff erent energy networks. This research is developing a simulation model for the Belgian energy system that integrates electricity, hydrogen, natural gas and CO 2 . 73 # OneteamOnetarget Helping to develop the biomethane market Getting started The production of biomethane in Belgium is getting off the ground and gathering momentum. Six biomethane units are currently operational: three in Flanders and three in Wallonia. Construction of an additional unit is expected in 2023. Up to now, the biomethane units in Belgium have all been connected to the distribution systems. Large- scale facilities can be linked up to Fluxys Belgium's high-pressure network. In 2022, we signed an agree- ment to connect the Green Logix Biogas facilities in Lommel to our network, with this scheduled to happen in late 2024/early 2025. Signifi cant potential Valbiom was commissioned by the Belgian gas fed- eration gas.be to carry out a study into the potential contribution of locally produced biogas in Belgium, concluding that biogas could cover around one fi fth of household gas consumption by 2030. In addition, biom- ethane can also be imported from neighbouring coun- tries in the future, using certifi cates and guarantees of origin. Cross-border exchanges of biomethane should be encouraged by developing an international system of guarantees of origin and sustainability certifi cates. Supporting the market for LNG and bio-LNG in heavy goods transport and shipping Switching to LNG-powered ships and trucks would help to quickly cut greenhouse gas emissions and limit air pollution, which is why Fluxys Belgium is investing in infrastructure and services to open up LNG for these segments. The advantage of small-scale LNG infrastruc- ture and the fl eet of LNG-powered ships and trucks is that no additional investments are needed to switch to carbon-neutral bio-LNG as it becomes available. Four additional truck loading stations at LNG terminal At the Zeebrugge LNG terminal, trailers are loaded with LNG to supply LNG-powered ships and fi lling sta- tions for trucks running on LNG. In order to be able to continue meeting increasing demand effi ciently, four additional truck loading stations are under construction at the terminal. They will be commissioned in late 2023/ early 2024. LNG terminal makes bio-LNG available Since 2020, the Zeebrugge LNG terminal has been certifi ed as a European approved process plant to make bio-LNG available as a fuel for transport. Switching ships and trucks to bio-LNG can help the sector make the transition to full decarbonisation. 74 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Climate change – Systematically reducing our own climate impact 75 # OneteamOnetarget Policy Our commitment to systematically reducing our own cli- mate impact is an integral part of our business strategy. In that connection, this commitment is also a core pillar of our Health, Safety and Environment Policy. In 2018, we launched the Go for Net 0 project with a view to halving the greenhouse gas emissions of our own operations by 2025 compared with 2017 levels. In 2021, we reinforced that ambition by setting the goal of making our own activities carbon-neutral by 2035. Risks and measures Risk Measures • Greenhouse gas emissions from Fluxys Belgium's activities do not decrease as set out in the climate targets • Greenhouse gas emissions may have a financial impact • Go for Net 0 project to lower Fluxys Belgium's greenhouse gas emissions to net zero by 2035, including methane emissions from our activities and maintenance/repair work • Building additional open-rack vaporisers to reduce the Zeebrugge LNG terminal's emissions Opportunity Actions Improving the energy efficiency of our activities Efficiently deployed renewable energy technology improving energy efficiency and reducing greenhouse gas emissions 76 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Tackling methane emissions Total methane losses on the Fluxys Belgium network account for around 0.02% of the total transported vol- ume. The Go for Net 0 project sets out four tracks for tackling the sources of methane emissions. Cut emissions from equipment Modify equipment generating emissions or replace it with equipment controlled by electricity or compressed air. Reduce fugitive methane emissions Periodic Leak Detection And Repair (LDAR) campaigns enable us to detect fugitive emission sources and repair or optimise them. Limit emissions during maintenance/ repairs on the network Natural gas often has to be removed from a pipeline section during maintenance or repair work. In doing so, we prevent natural gas from being released into the air in various ways. An exception to this may be made for urgent maintenance or repair work. Other tracks Various studies are currently exploring other ways to reduce methane emissions. For example, methane emis- sions can be recovered by starting and stopping facilities. Tackling CO 2 emissions Minimising compression When balancing the network or controlling gas flows, Fluxys Belgium endeavours to use its compressor facil- ities as little as possible. Regasification using the heat from seawater he Zeebrugge LNG terminal has been using an open- rack vaporiser since 2013. Using the heat from seawater to regasify LNG will significantly reduce the terminal’s energy consumption and emissions. Three additional open-rack vaporisers are being built. In 2022, we launched a number of studies for additional measures to further reduce the terminal’s CO 2 emissions: • Possibilities for constructing extra open-rack vaporisers • Deploying technology for carbon capture and using hydrogen or a mixture of hydrogen and natural gas as an energy source for the conventional regasification facilities at the terminal. Green gas Fluxys Belgium buys green gas certificates from biom- ethane producer IOK Beerse to heat its head office and Anderlecht site. We are looking into expanding the use of green gas certificates for our activities. Green electricity The electricity used by Fluxys Belgium has been entire- ly renewable since 2021. As a result, we are completely eliminating the indirect impact of our electrical facilities. Fluxys Belgium is busy exploring options for gener- ating green electricity for its own use. This is already being done with solar panels on some of our industrial buildings, and the expansion of the solar fleet is under consideration. 77 # OneteamOnetarget Results Greenhouse gases: transmission and storage In 2022, the greenhouse gas (GHG) intensity of the transmission and storage businesses was halved com- pared to the reference year 2017. • The initiatives and investments for cutting methane emissions reduced methane emissions by 23% compared with the previous year. This means that methane emissions have now dropped to half of 2017 levels (reference year). • CO 2 emissions decreased by 14% compared with the previous year, thereby falling below 2017 levels (reference year). Change in greenhouse gas intensity 0,5 0,45 0,4 0,35 0,3 0,25 0,2 0,15 0,1 0,05 0 Kilotonne of CO 2 equivalent per TWh of natural gas transported 2018 2020 2021 2022 2019 Greenhouse gases: LNG terminalling In 2022, the Zeebrugge LNG terminal regasified almost three times as much LNG as in 2021 due to the very high demand to support security of supply on the North-West European natural gas market. As a result, considerable use had to be made of emissions-gen- erating conventional regasification facilities to supple- ment the open-rack vaporiser. Due to the high levels of activity, GHG intensity increased by more than half compared with 2021 and CO 2 emissions from the facility were more than four times as high. However, maximising use of the open- rack vaporiser with seawater in 2022 prevented 72,250 tonnes of CO 2 emissions. Three additional open-rack vaporisers are being built at the LNG terminal, with a view to reducing its GHG intensity. In 2022, various studies were launched into additional investments in further reducing the GHG intensity of the facilities (see page 76). Change in greenhouse gas intensity 2 1,8 1,6 1,4 1,2 1 0,8 0,6 0,4 0,2 0 Kilotonne of CO 2 equivalent per TWh of LNG regasified 2018 2020 2021 2022 2019 78 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance additional open-rack vaporisers with seawater 3 In 2021, we started building three additional open-rack vaporisers at the Zeebrugge LNG terminal. The commissioning of the facilities from 2024 onwards will mark a milestone in terms of further reducing energy consumption and also emissions at the terminal. 79 # OneteamOnetarget Energy efficiency Two key solutions for reducing greenhouse gas emis- sions (namely minimising the deployment of compres- sor stations and maximising the use of the open-rack vaporiser at the LNG terminal) primarily improve energy efficiency. The less fossil energy we use, the more we manage to reduce greenhouse gas emissions. In addition, we take various other measures for our operations. For example, we conclude operational agreements with operators in neighbouring countries to ensure the energy-efficient use of networks. For the best possible energy efficiency, we also make maximum use of the operational flexibility in the pipelines and optimise settings in the pressure-reducing stations. In recent years, various installations at the LNG terminal have been renovated and adapted to boost the ener- gy efficiency of the infrastructure. The construction of three additional open-rack vaporisers is the latest example of our efforts to boost energy efficiency. 80 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Indicators The quality and accuracy of the figures used for CO 2 -equivalent emissions in this report have been validated by an external auditor, pursuant to the Inter- national Standard on Assurance Engagements (ISAE) 3000 (Revised), a model developed for the attesta- tion of non-financial data. The attested indicators are marked with a ( ) – see page 155 (Independent audi- tor's review report). Fluxys Belgium has CO 2 emission rights for each of its five sites that are subject to the EU Emissions Trading Directive. Internal audits are organised for these sites every year and the annual emissions report for each site undergoes an external audit. The results in this report include both direct and indirect emission sources: • Direct emissions of carbon dioxide (CO 2 ) and methane (CH 4 ) from the operation of gas infrastructure, including employee use of motorised vehicles. • The company’s electricity consumption is a source of indirect emissions. As Fluxys Belgium has been only buying green electricity since 2021, this impact is zero. 81 # OneteamOnetarget Systematically reducing our own climate impact 2022 2021 2020 2019 2018 2017 Greenhouse gas emissions: transmission and storage Greenhouse gas emissions in kilotonnes of CO 2 equivalent 127 157 160 195.82 197.06 209.29 Methane (CH 4 ) 70 91 103 127 126 142 CO 2 57 65 52.76 64.39 66.3 59.83 Electricity 0 0 4.40 4.44 4.52 7.47 Volume of transported natural gas (TWh) 612.03 391.92 398.52 441.00 456.37 485.70 Greenhouse gas intensity (kilotonnes of CO 2 equivalent/TWh of transported natural gas) 0.21 0.40 0.40 0.44 0.43 0.43 Greenhouse gas emissions: LNG terminalling Greenhouse gas emissions in kilotonnes of CO 2 equivalent 225.35 52.52 83.35 42.74 13.86 13.86 Methane (CH4) 0.35 0.07 0.03 0.05 0.02 0.01 CO 2 225 52.45 71.63 107.43 35.07 5.17 Electricity 0 0 11.69 11.74 7.65 8.68 Volume of regasified LNG (TWh) 121.19 44.03 50.87 73.27 26.89 11.95 Greenhouse gas intensity (kilotonnes of CO 2 equivalent/TWh of regasified LNG) 1.86 1.19 1.64 1.63 1.59 1.16 Total greenhouse gas emissions in kilotonnes of CO 2 equivalent 352.69 209.52 243.35 315.04 239.8 223.15 More information about the methodology for calculating greenhouse gas emissions can be found on page 151. Energy efficiency: transmission and storage Energy consumed (MWh) 523,883 337,554 281,109 311,549 329,431 305,121 Diesel and petrol 9,876 8,954 8,921 9,991 11,013 11.386 Electricity 250,483 24,565 25,968 26,146 26,262 33.086 Natural gas 263,524 304,044 248,149 275,412 292,156 260.649 Volume of transported natural gas (TWh) 612.19 391.92 398.52 441.00 456.37 485.70 Energy intensity (MWh of energy consumed/MWh of transported natural gas) 0.00086 0.00086 0.00070 0.00071 0.00072 0.00063 Energy efficiency: LNG terminalling Energy consumed (MWh) 1,232,773 320,125 426,640 622,491 242,007 85,867 Diesel and petrol 204 348 374 383 398 558 Electricity 105,750 58,017 69,052 69,040 44,471 38.458 Natural gas 1,126,819 261,760 357,214 553,068 197,138 46.851 Volume of regasified LNG (TWh) 121.19 44.03 50.87 73.27 26.89 11.95 Energy intensity (MWh of energy consumed/MWh of regasified LNG) 0.01012 0.00727 0.00837 0.00853 0.00896 0.00716 * 2.5 MWh of primary energy is needed for every 1 MWh of electricity. Fluxys only buys green electricity. ** Including buildings and vehicles. 82 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Climate change – Management of natural capital 83 # OneteamOnetarget Policy Fluxys Belgium’s efforts to manage natural capital stem from our Health, Safety and Environment policy. Our environmental management system provides the framework for management, monitoring and improve- ment measures. Risks and measures Risk Measures Fluxys Belgium’s activities may damage ecosystems and biodiversity Environmental management system with associated internal and external audits, environmental impact assessments including preventive and mitigating measures, a monitoring approach and complaints management Environmental management system Fluxys Belgium’s environmental management system provides the framework for management, monitoring and improvement measures for environmental coordi- nators. The environmental management system also includes action programmes for reducing greenhouse gas emissions (see Climate change – Systematically reducing our own climate impact, page 74). • Encouraging continuous improvement: Our environmental coordinators provide advice on minimising the environmental impact of Fluxys activities, right from the design phase. Our follow- up on external environmental complaints also leads to measures to improve the situation. • Internal audits: These are conducted periodically by Internal Audit. • External audits: The two Seveso facilities (the Loenhout gas storage facility and the Zeebrugge LNG terminal) are required by law to undergo an environmental audit every three years. The environmental audit is externally validated and submitted to the competent authorities. The most recent audit was held in December 2022. • Monitoring: This covers greenhouse gas and air emission measurements, noise measurements, soil investigations, wastewater analyses, etc. 84 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Environmental impact assessments Fluxys Belgium’s priority is to minimise the impact on the environment and local residents, not only during the design and installation/construction phases, but also during the operation of its infrastructure. All permit applications for the construction and opera- tion of new facilities or for the renewal of the permit for existing facilities include assessments of their impact on the environment. These environmental studies gauge a project’s potential impact in various areas, including air, water and soil pollution, ambient noise, the production of waste, spatial integration, mobility, and the impact on biodiversity. Preventive or mitigating measures are taken wherever necessary. In 2022, Fluxys Belgium conducted 32 environmental studies as part of its permit applications. Biodiversity Fluxys Belgium takes great care to ensure the con- servation of ecosystems in those areas where its infrastructure is built and/or operated. Environmental impact assessments gauge our infrastructure’s impact on ecosystems (see above). When laying new pipelines, Fluxys Belgium always takes care to ensure that the works cause as little disruption to the environment as possible. We also see to it that nature can fully recover after pipelines have been laid or we invest in measures to offset the impact on nature, preferably involving local species. In late 2022, an outside company conducted a thor- ough assessment of the biodiversity at and around the Loenhout gas storage facility’s above-ground installa- tions. Based on the assessment report, we are devel- oping initiatives to promote biodiversity in the vicinity of these installations. 85 # OneteamOnetarget Reducing noise pollution Fluxys Belgium uses a range of techniques to limit the noise generated by its pressure-reducing stations, com- pressor stations and other facilities. When building new infrastructure, a lot of attention is paid to potential noise pollution from the design phase onward. Wastewater treatment All larger stations house a separate drain system and wastewater treatment plant (or reed bed filtration system). Handling of complaints The environmental coordinator received 19 external environmental complaints in 2022, including a notice issued by the public authorities. Complainants con- tacted us to express dissatisfaction about noise, report that they could smell gas and/or flag up instances of possible contamination. All the complaints have been resolved. 86 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Climate change – EU taxonomy for sustainable economic activities 87 # OneteamOnetarget 75% of investment programme focused on sustainable economic activities In 2022, Fluxys Belgium approved its indicative invest- ment programme for the period 2023-2032. The pro- gramme as a whole encompasses investments totalling over €2.8 billion. The estimated investments in the development of the hydrogen and CO 2 infrastructure, the reduction of our own greenhouse gas emissions and other investments in sustainable economic activi- ties amount to around 75% of that total. Background to the taxonomy of sustainable economic activities The European Commission has rolled out a sustaina- ble finance action plan. This regulation or “taxonomy” requires listed companies such as Fluxys Belgium to give a rundown of their environmentally sustainable activities. From 2023 onwards, companies must report which part of their activities meet six environmental objectives laid down by the Commission, two of which (climate change mitigation and climate change adaptation) already took effect in 2021. As the other four objectives (on water and marine resources, pollution, biodiversity and eco- systems, and the circular economy) will only come into force at a later date, they fall outside the scope of the financial year 2022. An economic activity that pursues climate change mit- igation should contribute substantially to the stabilisa- tion of greenhouse gas emissions by avoiding or reduc- ing them or by enhancing greenhouse gas removals. Meanwhile, an economic activity that pursues climate change adaptation should contribute substantially to reducing or preventing the adverse impact of the current or projected future climate, or the risk of this impact, whether on that activity itself or on people, nature or assets. The economic activities must “do no significant harm (DNSH)” to the objectives for water and marine resourc- es, pollution, and biodiversity and ecosystems. The circular economy criteria do not apply to our activities. Facilitating green gas in the natural gas network Hydrogen infrastructure Other investments CO 2 -infrastructure Reducing our own greenhouse gas emissions Economic activities that make a substantial contribution to climate change mitigation For the financial year 2022, Fluxys Belgium examined its economic activities and assessed whether they were eligible for the EU taxonomy and whether they were sustainable (i.e. aligned), in accordance with Annexes I and II to the relevant Delegated Regulation. For 2022, Fluxys Belgium identified the following eco- nomic activity as an eligible activity: 4.14. Transmission and distribution networks for renewable and low-car- bon gases. The following Fluxys activities fall into this category of eligible economic activity: • retrofit of the transmission network that enables the integration of hydrogen and other low-carbon gases in the network; • leak detection and repairs of existing pipelines and stations to reduce methane emissions; • research, development and innovation. Environmentally sustainable taxonomy-aligned activities: • Technical screening criteria: The economic activity complies with the technical screening criteria because within these activities we take the appropriate actions to transform the existing network, expand it into a transmission and distribution network for renewable and low-carbon gases and perform leak detection. We see the activities related to greening existing activities as an essential part of the eligible economic activity. • Do no significant harm (DNSH): The economic activity was also assessed to ensure that it does no significant harm to the following four criteria: climate change adaptation, sustainable use of water, pollution prevention, and protection of biodiversity. The circular economy criteria do not apply to our activities. In this regard, we relied on the procedures that already exist within the company today. 88 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance • Minimum guarantees: With a series of company- internal control mechanisms, Fluxys Belgium ensures that appropriate limitations are placed on risks related to corruption, non-respect for human rights, unfair competition and tax fraud. Fluxys Belgium was not found guilty of any failures pertaining to any of these risks in 2022. From the above, it can be concluded that the activities mentioned above can be regarded as environmentally sustainable. Substantial contribution criteria DNSH criteria (“Does not significant harm”) Economic Activities Code(s) Absolute Turnover Proportion of Turnover Climate change mitigation Climate change adaptation Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards Taxonomy- aligned proportion of Turnover, year N Taxonomy- aligned proportion of Turnover, year N-1 Category (enabling activity or) Category (transitional activity) m€ % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Transmission and distribution networks for renewable and low-carbon gases 4.14 0 m€ 0% 0% N/A N/A Y Y N/A Y Y Y 0% N/A N/A N/A Turnover of environmentally sustainable activities (A.1) 0 m€ 0% 0% N/A N/A 0% N/A N/A N/A A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Turnover of taxonomy-eligible but not environmentally sustainable activities (A.2) 0 m€ 0% Total (A.1 + A.2) 0 m€ 0% 0% B. TAXONOMY NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities (B) 928 m€ 100% TOTAL (A+B) 928 m€ 100% Turnover and expenditure Turnover In 2022, no revenue was generated from the sale of transmission capacity for renewable or low-carbon molecules. 89 # OneteamOnetarget Substantial contribution criteria DNSH criteria (“Does not significant harm”) Economic Activities Code(s) Absolute Turnover Proportion of Turnover Climate change mitigation Climate change adaptation Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards Taxonomy- aligned proportion of Turnover, year N Taxonomy- aligned proportion of Turnover, year N-1 Category (enabling activity or) Category (transitional activity) m€ % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Transmission and distribution networks for renewable and low-carbon gases 4.14 0 m€ 0% 0% N/A N/A Y Y N/A Y Y Y 0% N/A N/A N/A Turnover of environmentally sustainable activities (A.1) 0 m€ 0% 0% N/A N/A 0% N/A N/A N/A A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Turnover of taxonomy-eligible but not environmentally sustainable activities (A.2) 0 m€ 0% Total (A.1 + A.2) 0 m€ 0% 0% B. TAXONOMY NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities (B) 928 m€ 100% TOTAL (A+B) 928 m€ 100% 90 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Substantial contribution criteria DNSH criteria (“Does not significant harm”) Economic Activities Code(s) Absolute CapEx Proportion of CapEx Climate change mitigation Climate change adaptation Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards Taxonomy- aligned proportion of CapEx, year N Taxonomy- aligned proportion of CapEx, year N-1 Category (enabling activity or) Category (transitional activity) m€ % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Transmission and distribution networks for renewable and low-carbon gases 4.14 6,9 m€ 5,91% 100% N/A N/A Y Y N/A Y Y Y 5,91% N/A N/A N/A CapEx of environmentally sustainable activities (A.1) 6,9 m€ 5,91% 100% N/A N/A N/A N/A N/A A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) CapExof taxonomy-eligible but not environmentally sustainable activities (A.2) 0 m€ 0% Total (A.1 + A.2) 6,9 m€ 5,91% 5,91% B. TAXONOMY NON-ELIGIBLE ACTIVITIES CapExof Taxonomy-non-eligible activities (B) 110 m€ 94,09% TOTAL (A+B) 116,9m€ 100% Capital expenditure Capital expenditure covers investments, mainly in con- nection with the Go For Net 0 project to reduce our company’s climate impact. 91 # OneteamOnetarget Substantial contribution criteria DNSH criteria (“Does not significant harm”) Economic Activities Code(s) Absolute CapEx Proportion of CapEx Climate change mitigation Climate change adaptation Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards Taxonomy- aligned proportion of CapEx, year N Taxonomy- aligned proportion of CapEx, year N-1 Category (enabling activity or) Category (transitional activity) m€ % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Transmission and distribution networks for renewable and low-carbon gases 4.14 6,9 m€ 5,91% 100% N/A N/A Y Y N/A Y Y Y 5,91% N/A N/A N/A CapEx of environmentally sustainable activities (A.1) 6,9 m€ 5,91% 100% N/A N/A N/A N/A N/A A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) CapExof taxonomy-eligible but not environmentally sustainable activities (A.2) 0 m€ 0% Total (A.1 + A.2) 6,9 m€ 5,91% 5,91% B. TAXONOMY NON-ELIGIBLE ACTIVITIES CapExof Taxonomy-non-eligible activities (B) 110 m€ 94,09% TOTAL (A+B) 116,9m€ 100% 92 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Substantial contribution criteria DNSH criteria (“Does not significant harm”) Economic Activities Code(s) Absolute OpEx Proportion of OpEx Climate change mitigatio Climate change adaptation Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards Taxonomy- aligned proportion of OpEx, year N Taxonomy- aligned proportion of OpEx, year N-1 Category (enabling activity or) Category (transitional activity) m€ % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Transmission and distribution networks for renewable and low-carbon gases 4.14 7,6 m€ 15,05% 100% N/A N/A Y Y N/A Y Y Y 15,05% N/A N/A N/A Transmission and distribution networks for renewable and low-carbon gases 7,6 m€ 15,05% 100% N/A N/A N/A N/A N/A A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) OpEx of taxonomy-eligible but not environmentally sustainable activities (A.2) 0 m€ 0% Total (A.1 + A.2) 7,6 m€ 15,05% 15,05% B. TAXONOMY NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-non-eligible activities (B) 42,8 m€ 84,95% TOTAL (A+B) 50,4 m€ 100% Operating expenses • We work with industrial partners, higher education establishments and public authorities on projects addressing carbon neutrality and on the Go for Net 0 project to reduce our company's climate impact. • The operating costs include personnel expenses relating to maintenance and leak detection and repair, including pipeline pigging, special helicopter flights and particular costs of the study phase. 93 # OneteamOnetarget Substantial contribution criteria DNSH criteria (“Does not significant harm”) Economic Activities Code(s) Absolute OpEx Proportion of OpEx Climate change mitigatio Climate change adaptation Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards Taxonomy- aligned proportion of OpEx, year N Taxonomy- aligned proportion of OpEx, year N-1 Category (enabling activity or) Category (transitional activity) m€ % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Transmission and distribution networks for renewable and low-carbon gases 4.14 7,6 m€ 15,05% 100% N/A N/A Y Y N/A Y Y Y 15,05% N/A N/A N/A Transmission and distribution networks for renewable and low-carbon gases 7,6 m€ 15,05% 100% N/A N/A N/A N/A N/A A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) OpEx of taxonomy-eligible but not environmentally sustainable activities (A.2) 0 m€ 0% Total (A.1 + A.2) 7,6 m€ 15,05% 15,05% B. TAXONOMY NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-non-eligible activities (B) 42,8 m€ 84,95% TOTAL (A+B) 50,4 m€ 100% 94 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Social Safe and reliable infrastructure p. 96 Good neighbourly relations p. 104 Management of human capital p. 106 Employee safety, health and well-being p. 112 Social dialogue p. 117 Diversity and inclusion p. 119 Customer care p. 120 Human rights p. 122 95 # OneteamOnetarget Giving the best of ourselves in the field to fully leverage our infrastructure 24/7 in the interests of security of supply Preparing for the construction of the first phase of the Zeebrugge-Opwijk pipeline: essential infrastructure for security of supply (for natural gas currently, for hydrogen in the future) Implementing a future-oriented recruitment approach with a shorter hiring process and an innovative integration programme to ensure the effective onboarding of new colleagues Broadly focusing on well-being, involvement and connection Enhancing learning solutions tailored to hybrid working and digital opportunities Our focus in 2022 0 Interruptions or reductions in capacity (2021: 0) 0 Damage to infrastructure caused by third parties, resulting in a gas leak (2021: 0) 0 Complaints about violations of human rights (2021: 0) 81 / 62 Talent Incoming / outgoing (2021: 63) / (2021: 62) 5.64 Development Average number of training days per full-time equivalent (FTE) (2021: 3,75) 58 7.2 / 0.12 Safety Frequency / Severity (2021: 7.8) / (2021: 0.22) 909 Employees (2021: 884) 17 / 83 Diversity Female / male (2021: 18) / (2021: 82) Development Number of employees taking on a new role within the company (2021: 71) 96 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Safe and reliable infrastructure 97 # OneteamOnetarget Policy As a socially responsible operator, Fluxys Belgium builds safe infrastructure and operates it safely. Together with distribution system operators and the users of our infra- structure, we guarantee optimum continuity of gas flows to end users in Belgium and the wider Western Europe- an market for which we serve as a crossroads. Our approach to safeguarding the integrity and reliabil- ity of our facilities forms an integral part of our business strategy, with our key role in security of supply serving as a driving force in speeding up the energy transition. In that connection, this approach is also a core pillar of our Health, Safety and Environment Policy. Risks and measures Risk Measures Industrial incidents and some cyber incidents can damage Fluxys Belgium’s infrastructure, endanger people’s safety, cause unavailability impacting service continuity, and result in financial loss • An audited safety management system • Preventive measures in the design, construction and operation of infrastructure • Detection measures included in monitoring and inspection programmes for infrastructure and construction sites • Reactive measures in connection with emergency planning • The security of the critical systems is monitored pursuant to the EU’s NIS Directive on cyber security. Programmes are also being rolled out to raise employees’ awareness and train them in cyber security, alongside a range of technical measures and tests to practise responding to cyber attacks 98 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Audited safety management system Fluxys Belgium keeps an eye on public safety, the envi- ronment and the well-being of its employees during the design, construction, commissioning, operation, maintenance and dismantling of its facilities. We work with a comprehensive safety management system in our transmission business to provide for a safe and reliable transmission network, preserve its integrity and limit the impact of any incidents. The safe- ty management system is continually updated to take account of the latest developments and is also subject to periodic internal and external audits. The management system for our storage and LNG businesses is covered by the Seveso legislation. The Federal Public Service Employment, Labour and Social Dialogue conducts specific inspections at both Seve- so sites in conjunction with the Flemish government’s Environment Department. Within the safety management system, risk assess- ments are the instrument that is used to identify and evaluate the safety aspects pertaining to the integrity of the infrastructure and to define the safety-critical controls. The safety management system also integrates internal training aspects relating to maintenance, prevention of damage and work by third parties and the raising of awareness among stakeholders such as municipalities, the fire brigade, landowners, architects, contractors and excavator operators. In 2022, in light of geopolitical events and the damage to the Nord Stream pipelines in the Baltic Sea, Fluxys Belgium switched to a regime of refined precautionary measures. Careful construction and dismantling For any construction project, Fluxys Belgium only works with qualified and certified contractors. Moreover, the company’s entities involved in construction projects are SCC-certified. SCC certification entails a checklist covering health, safety and the environment. Before any facility is commissioned, a series of tests is carried out under the supervision of an authorised inspection agency. The condition of the pipes will then be regularly checked as part of an inspection programme. The pipes are also fitted with a cathodic protection system to prevent corrosion. Any infrastructure that will stop having a transmission function in the future is taken out of service safely. In some cases, all or part of the infrastructure is kept underground, and technical precautions are taken to prevent any impact on people or the environment. Detailed maintenance and inspection Pipelines are patrolled in different ways (by car, by hel- icopter and on foot) and at different intervals. Patrols also monitor whether unreported works are being carried out in the vicinity of our pipelines. In order to detect such works preventively, our main pipes are fitted out with an acoustic detection system. Maintenance programmes specific to each type of facility ensure that the infrastructure remains safe and reliable throughout its life cycle. All maintenance activ- ities are carried out by competent internal or external staff. Where possible, pipelines are periodically inspect- ed internally, and a special helicopter checks the gas network for leaks every year. Storage Netherlands United Kingdom LNG Storage Loenhout In Out Consumption Belgium Norway France Germany 161 TWh (2021: 190 TWh) 256 TWh (2021: 20 TWh) 145 TWh (2021: 68 TWh) Total transit to surrounding countries 440 TWh (2021: 195 TWh) 99 # OneteamOnetarget Giving our all to ensure security of supply The geopolitical situation in Ukraine has profoundly changed the dynamics on the gas markets and the direction of flows in Europe. To support security of supply, additional flows from the west are needed to compensate for the lost volumes from the east. Our teams in the field gave the best of themselves throughout 2022 to fully leverage our infrastructure 24/7 with a view to ensuring and enhancing security of supply. Accordingly, the Belgian network once again confirmed its role as an energy crossroads for Europe, with the Zeebrugge area acting as an important gateway for both natural gas (via pipelines) and LNG (via ship). In 2022, Fluxys Belgium worked intensively in the task force, together with the Minister of Energy, the Federal Public Service Economy and the federal energy regulator, the Commission for Electricity and Gas Regulation (CREG), to coordinate the various aspects of security of supply and discuss how Belgium could provide as much support as possible to its neighbours. Belgium high flexibility Operationally, Fluxys Belgium posted a solid result thanks to the ongoing efforts of our teams and cooperation with operators in neighbouring countries. As well as supplying Belgium via the Belgian network, suppliers managed to get unprecedented large quantities of natural gas to the Netherlands and Germany. At the same time, the Loenhout storage facility was filled to record levels before the winter period started. 100 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Policy on works in the vicinity of our infrastructure Closely following up on reports of works Serious pipeline incidents are often the result of dam- age caused by work carried out by third parties. To avoid such damage, anyone planning or wanting to carry out work in the vicinity of natural gas transmission infrastructure has a legal obligation to notify Fluxys Belgium in advance. Fluxys Belgium then confirms whether or not any natu- ral gas transmission infrastructure is located in the vicin- ity of the planned work. If this is the case, the applicant is sent all the relevant information and details of further procedures to be followed to carry out the work safely. Our employees attend preparatory meetings on a daily basis relating to sites where third parties plan to work in the vicinity of our infrastructure. During these meetings, they explain the measures that need to be taken and document the safety arrangements in writing before any work can actually begin. Damage can also occur when Fluxys Belgium commis- sions or repairs infrastructure. All incidents or near-in- cidents are investigated thoroughly and action is taken immediately to prevent them from recurring. Fluxys Belgium takes care of providing notification to the competent administration(s) of incidents and breaches during work in the vicinity of our infrastruc- ture. Providing information and raising awareness Fluxys Belgium runs a range of initiatives to provide information and raise awareness about how to work safely in the vicinity of its infrastructure. The initiatives focus on everyone involved in such works, such as architects, developers, designers, contractors, owners and operators, municipalities, notaries and emergency services. • Regular reminders sent out to all owners and operators of land holding Fluxys infrastructure • An information session for municipalities, as well as police forces and emergency services, at least once every municipal council term • Highlighting working safely in the vicinity of underground infrastructure in trade journals and in various working groups and federations in which Fluxys Belgium is involved • Providing training for excavator operators and for coating steel pipes • Holding annual information session for industrial users with gas facilities directly connected to our network 101 # OneteamOnetarget Another large-scale L/H conversion As low-calorific natural gas (L gas) exports from the Netherlands decline, Fluxys Belgium and the transmission system operators in France and Germany are modifying their networks to enable a gradual switch from L gas to high-calorific natural gas (H gas) from other sources and so ensure the continuity of the natural gas supply. In 2022, working with distribution system operators Sibelga, Fluvius and Ores, we converted an impressive 255,000 connections from L-gas to H-gas in the Brussels-Capital Region, thus completing the conversion process there. This will be followed by the full conversion of Antwerp in 2023 and then the conversion of other areas in Flanders and Wallonia in 2023-2024. After that, L-gas from the Netherlands will only flow southwards through our network towards France, where conversion will probably continue until 2029. Desteldonk-Opwijk pipeline: for natural gas currently, and ready for hydrogen Given the new supply situation in Europe, speed and adaptability are the watchwords for new infrastructure as well. We prepared thoroughly for the first phase in the construction of the Zeebrugge-Opwijk pipeline: the section between Desteldonk and Opwijk. Which will boost our capacity to carry natural gas inland from Zeebrugge. At the same time, the pipeline is an initial step towards speeding up the energy transition as it will be immediately available for hydrogen transport as soon as the market is ready. We will commission the Desteldonk-Opwijk section in late 2023. The new pipeline will run parallel to the existing natural gas pipeline between Desteldonk and Opwijk, a total length of 44 kilometres. Doubling the pipeline in this way will increase offtake capacity from Zeebrugge by 15 GWh/h, equivalent to the energy generated by 15 nuclear reactors. With this project, Fluxys is anticipating the growth in LNG regasification capacity at the Zeebrugge terminal to avoid creating a bottleneck further down the network. 102 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Extra focus on ICT systems and cyber security The availability of ICT systems and industrial control systems is vital to the safe and reliable operation of our infrastructure. These systems can malfunction for var- ious reasons. With this in mind, Fluxys Belgium imple- ments technical and organisational measures to ensure the availability of IT systems. Cyber Security programme Fluxys Belgium uses an information security manage- ment system (ISMS) to take care of structured cyber-se- curity management. The functioning and maturity of the management aspects of the ISMS are scrutinised at least annually by Internal Audit, using external specialists to this end. In addition, each year we carry out various vulnerability scans of internal systems and the external perimeter. For attack and penetration testing, we call on the ser- vices of external ethical hackers. In 2022, the external audit of the ISMS was launched with a view to its certification according to ISO 27001. Back-up facilities For several systems such as those used to manage natural gas flows on the network, back-up facilities are in place and can be activated as soon as a malfunction occurs, thus ensuring continued operation. These con- tingencies are periodically tested by means of disaster recovery plan drills. Cyber threats Our ICT approach also pays special attention to ever-growing cyber threats (attacks, malware, phish- ing, etc.). The ICT teams take technical measures to act as a barrier against the wide variety of cyber risks. In this context, they call on the external expertise of, for instance, the Centre for Cyber Security Belgium and software suppliers to identify and close new loopholes in the cyber net. Operational monitoring and continuity Operational monitoring and detection of data leaks or attacks are performed by, among others, security information and event management (SIEM) and end- point detection and response (EDR) solutions, which are monitored 24/7 by a security operations centre (SOC). If something does go wrong, our ICT approach focuses on ensuring continuity of service. This is done using scenarios that are practised regularly by the ICT teams. Training and awareness raising Fluxys Belgium also focuses on training and awareness raising. In 2022, we ran a wide range of initiatives to teach employees how to deal with phishing emails efficiently and effectively. In addition, there were train- ing courses on detecting and responding to cyber incidents. 103 # OneteamOnetarget Indicators 2022 2021 2020 2019 Safe and reliable infrastructure Reduction or interruption of firm transmission capacity 0 0 0 0 Reduction or interruption of interruptible transmission capacity 0 0 0 0 Damage to infrastructure caused by third parties, resulting in a gas leak or interruption of capacity 0 0 0 0 Emergency planning With a view to limiting the impact of any incidents, Fluxys Belgium works with a crisis organisation and emergency plans and procedures for its operational and ICT activities. The central dispatching office also plays a coordinating role in the event of an incident or accident, or if someone reports that they can smell gas. Emergency numbers are available 24/7 for reporting incidents involving, or in the vicinity of, our natural gas transmission infrastructure. Fluxys Belgium’s general emergency plan documents the overarching response method for incidents, and there are also specific emergency plans with the crisis response for the various sites and operational risks. In the event of an incident, all contacts with internal and external stakeholders are fully documented and, for each stakeholder group, are assigned to specific roles within the crisis organisation. Emergency planning is covered by Fluxys Belgium’s HSE Policy. The members of the crisis organisation receive special training, and we regularly organise emergency-plan drills to ensure that the organisation is responsive. 104 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Good neighbourly relations 105 # OneteamOnetarget Policy At Fluxys Belgium, we provide almost a third of the energy used by Belgium’s households and businesses. We do this with infrastructure in almost 400 towns, cit- ies and municipalities, and so it is only natural that we want to establish good neighbourly relations. Through open dialogue, we aim to foster good relations with all those affected by the construction and opera- tion of our facilities. The company also ensures that the construction and operation of its infrastructure cause minimal disruption. Community engagement Personal point of contact Owners and operators of land have a designated per- sonal point of contact at Fluxys Belgium, from a pro- ject’s preliminary phase through to the restoration of a site following construction or operation. This allows them to consult with someone familiar with their con- cerns and the features of their land from the outset. These points of contact are members of a special team tasked with understanding the interests of landowners and operators and defending those interests in their dealings with Fluxys Belgium. Securing consensus with our neighbours Transparent communication from the project phase onwards. For new infrastructure projects, Fluxys Bel- gium aims to transparently provide information and communicate with the relevant administrations, the municipal authorities, local residents and other parties involved from the planning phase onwards. Information sessions. As regards permit applications for major infrastructure projects, Fluxys Belgium contacts municipalities to suggest that we hold an information session for local residents before the permit proce- dures get under way. This not only gives residents a chance to talk to us about the project and its impact – it also means that we can take on board any feedback right from the start of the project. During the public consultation stage of permitting pro- cesses, we also contact municipal authorities to sug- gest organising an information session so that local residents can again ask any questions they might have about the project. At the consultation sessions that are part of the permitting processes, complaints and comments about the project are noted and dealt with. Initiatives to promote long-term good neighbourly relations Fluxys Belgium operates on the basis of a rolling programme of local-stakeholder identification: this involves us, in rolling five-year cycles, making a visit to all owners of land having a pipeline running through the subsoil or in the immediate vicinity. During each municipal council term, we organise an information meeting in every municipality with Fluxys pipelines, for the mayor, the relevant aldermen and representatives of the police and fire brigade. Fluxys Belgium builds the vast majority of its facili- ties (pipelines and surface stations) in areas used for agriculture, horticulture or forest management. With long-term good neighbourly relations in mind, we have signed (for agriculture) agreements with the country’s three largest agricultural organisations (Boerenbond, Algemeen Boerensyndicaat (ABS) and Fédération Wal- lonne de l’Agriculture) and for forestry agreements with Hubertus (the Flemish hunting association), Landelijk Vlaanderen and Nature, Terres et Forêts (NTF). These agreements set out the compensation due to those in the agriculture, horticulture or forestry sectors who experience disruption or are temporarily unable to use their land during the construction of a facility. If com- plaints are made after work is complete, we deal with the reported issues on a case-by-case basis. Farm- ers have a special Fluxys Belgium point of contact to report damage to agricultural land. Risks and measures Risk Measures Poor relations with local residents, municipal authorities and other local stakeholders can have a negative impact on the operation and further development of infrastructure • Policy of community engagement • Initiatives to promote long-term good neighbourly relations 106 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Management of human capital 107 # OneteamOnetarget Policy Our results and success are based on the commitment and talents of our employees. However, we need to future-proof our organisation and employees against the backdrop of a changing industry. With a view to meeting this challenge, we are committed to strategies that allow employees to adapt to the new way of work- ing and make our transformation a success. We are evolving into an open, self-learning commu- nity of interconnected teams with a common, shared goal: to successfully implement our strategy of being the essential infrastructure partner in speeding up the energy transition. All teams work together to transform future challenges into new opportunities. Continuous advancement of development and training policy Our development and training policy focuses on active learning to ensure that employees have the knowledge and skills they require. The training on offer is constant- ly evolving to keep pace with the company’s needs and includes a varied mix of learning/training resources: • learning assignments (whether forming part of the role or not); • internal or external coaching or training; • digital learning solutions (collective and individual learning); • a team of Digital Coaches to further develop our employees’ digital skills. Fluxys Belgium applies the bottom-up principle: employ- ees are expected to take charge of their own develop- ment and career, with the support of their managers. In 2022, employees completed almost 37,000 hours of training, a total which is almost back to pre-COVID levels. More than half of the courses provided training in (gas) technology or safety or job-specific training. The other courses mainly focused on soft and digital skills. Related risks Risk Measures The inability to attract, retain and future- proof talent in a changing landscape • Continuous advancement of development and training policy • Alignment of competency development with business strategy • Workforce planning to map out future needs • A future-oriented approach to recruitment 108 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Lunch & learn We are pressing ahead with the energy transition. We have plenty of ambitious projects for hydrogen and CO 2 infrastructure. To let our employees know more about these, we organise inspiring, interactive lunch sessions for all our staff. Internal experts update them on innovative projects and answer their questions, and anyone who cannot be there in person, can use technology to participate remotely. Training in VR Virtual reality (VR) makes training more efficient, safer and more motivational. Wearing VR glasses, you train technical skills in an extremely realistic-looking, lifelike and immersive virtual environment, and learn immediately from mistakes without facing any of the risks. Our pilot training sessions in VR were a success! 109 # OneteamOnetarget Alignment of competency development with business strategy Through our performance management, development paths and an annual talent review, we want to align the competencies of our employees with what the company needs to grow, innovate and successfully deploy its strategy for the energy transition. In the same vein, we encourage internal job mobility and prioritise in-house candidates when seeking to fill vacancies or new positions. The international development of our parent company Fluxys also provides opportunities for further career development. Annual performance-management cycle Through the performance-management cycle, con- structive consultations take place each year at the var- ious levels within the company so that we can translate the corporate goals into personal goals. In the course of the year, these goals are the subject of regular dialogue between employees and their managers. A culture of open feedback is the foundation underlying this dia- logue, which is formally supplemented by performance reviews and assessment interviews. Workforce planning: the annual talent review Based on its corporate goals, Fluxys Belgium uses an annual talent review to assess its future staffing needs so that we can see in our workforce planning which competencies are required now and in the future. Involvement in business strategy As an attractive employer, Fluxys Belgium sets great store by ensuring that employees are familiar with the company context and the challenges that Fluxys Bel- gium faces, as this fosters personal commitment to the company’s vision, strategy and goals. Fluxys Belgium makes special efforts, using a variety of means, to give members of staff a better understanding of the rapid changes going on in the energy sector, how the compa- ny is adjusting its goals and strategy to address these developments, and what these goals mean for each individual employee. 110 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance A future-oriented approach to recruitment We want what we offer as an employer to be meaning- ful to employees in exchange for their drive, expertise and competencies. Our purpose shows what we stand for as a company so that the perfect match is found between us and prospective employees. To ensure the effective onboarding of new colleagues, we launched a shorter recruitment process and an inno- vative integration programme in 2022, including a new onboarding app and Meet & Greet sessions to promote involvement and interaction as much as possible. 2022 2021 2020 2019 Members of staff 909 884 876 868 Women 153 157 155 154 Men 756 727 721 714 Ratio of women/men 17/83 18/82 18/82 18/82 Full-time 784 773 754 746 Part-time 125 111 122 122 Ratio of full-time/part-time staff members 86/14 87/13 86/14 86/14 Open-ended contract 894 866 857 844 Fixed-term contract 15 18 19 24 Ratio of open-ended/fixed-term contracts 98/2 98/2 98/2 97/3 Internal mobility 58 71 69 70 Incoming employees 81 63 59 63 Outgoing employees (including those leaving due to their contract coming to an end or due to retirement) 62 62 58 56 Ratio of outgoing employees 5,0% 3,2% 3,3% 3,7% Average number of training days per full-time equivalent (FTE) 5.64 3.72 3.42 6 The staff data are based on the active workforce of Fluxys Belgium and Fluxys LNG and do not include non-active employees (e.g. those on long-term sick leave). Unless otherwise stated, the statistics refer to the number of employees and not the number of FTEs. Indicators * The number of training days in 2020 and 2021 was affected by COVID- restrictions. 111 # OneteamOnetarget Meet & Greet! A warm welcome makes all the difference. That is why we want new employees to feel at home as soon as possible, get to know their colleagues and immediately sense an affinity with the company. To that end, we launched the Meet & Greet: a day-long event where new employees can learn more about the company and get to know each other in a laid-back atmosphere. Looking forward to the next one! Developing soft skills Creativity, resilience, effective communication, emotional intelligence – all of these are soft skills that keep employees agile and help build a culture where everyone feels at home. We are going all in on these. A single click of the mouse takes members of staff to our online library, with e-books and podcasts about communication, mindfulness, creativity and adaptability, allowing them to engage in learning, listening and reading wherever and whenever they want. 112 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Employee safety, health and well-being 113 # OneteamOnetarget Policy Healthy and involved employees who find pleasure and satisfaction in their work are the driving force that makes the company speed up and stand out. That is why we invest in supporting the safety, health and well-being of our employees. This approach is a central pillar of our Health, Safety and Environment Policy. Consultation within various consultation bodies Fluxys Belgium is home to various bodies that dis- cuss and promote the health, safety and well-being of employees and contractors. Internal Service for Prevention and Protection at Work (IDPBW/SIPPT) The IDPBW/SIPPT organises the policy on well-being and prevention and collaborates with the employer on ensuring a healthy and safe working environment. It monitors the proper implementation of well-being legislation, the health and safety policy and the legal obligations regarding personal safety. Committee for Prevention and Protection at Work (CPPW) Meeting every month, the CPPW is a consultation body between employees, the employer and management where they can discuss issues and problems relating to employee well-being. The committee makes proposals concerning, among other aspects, the policy for pre- venting accidents, incidents and occupational illnesses, the Global Prevention Plan and the annual action plan. Furthermore, the CPPW regularly inspects Fluxys Bel- gium’s staffed facilities and takes part in analyses of serious accidents and incidents. Within the CPPW, ad hoc working groups examine specific topics, such as work clothing. Local Joint Consultation Committee The Local Joint Consultation Committee is a body for consultation between trade union and employer repre- sentatives. It keeps an eye on events at local level and proposes solutions that do not fall within the exclusive remit of other consultation bodies. Collective bargaining agreement CAO/CCT 90 Collective bargaining agreement CAO/CCT 90 pro- vides financial incentives for employees to achieve specific collective health and well-being objectives and to cut Fluxys Belgium’s greenhouse-gas emissions, for example. Risks and measures Risk Measures Circumstances and events that may harm employees. These may include illness or other health problems, mental health issues or physical injury • An active Health, Safety and Environment Policy • Consultation within various consultation bodies • Global Prevention Plan • Absenteeism policy • External support available • Specific training • Broadly focusing on well-being and involvement 114 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Global Prevention Plan The 2022-2026 Global Prevention Plan (GPP) focus- es on occupational and process safety as well as the prevention of psychosocial risks and on well-being, health, travel and traffic safety. One of the pillars of the plan is to further strengthen the safety culture across the organisation and a multi-year action plan will be launched in 2023 to this end. The GPP also pays particular attention to involvement in the new, hybrid way of working. In addition, the com- pany is committed to lifelong learning, especially with regard to using our infrastructure to transport other molecules, such as hydrogen and CO 2 . Absenteeism policy Measuring and following up on absenteeism gives us an objective view of employees’ general health. The level of absenteeism increased in 2022 partly due to the flu epidemic at the end of the year but is still below the market average for Belgium. 36% of employees did not take sick leave in 2022. As part of our absenteeism policy, we actively endeav- our to support employees during their illness, in the run- up to their return and after they resume work. Employ- ees have access to personal guidance and support in this regard. The support is based on regular contact and cooperation between the employee involved, their manager, Human Resources and the internal and exter- nal services for prevention and protection at work. In 2022, special attention was paid to communication about returning after a long period of illness, including testimonials from colleagues and an e-learning module developed to ensure a successful return to work. Work@Fluxys The new ways of working, involving working from home and all kinds of hybrid collaboration, are giving the office a new function, as not only a workplace but also a meeting place. With our Work@Fluxys initiative, we give working in the office a new dimension. A real process of change is under way, with the head office in Brussels being refurbished. The main thrust of the message conveyed by this is that we are one big team and together we make Fluxys the essential infrastructure partner in speeding up the energy transition. This image is part of the design phase. It is indicative. 115 # OneteamOnetarget Training in health, safety and well-being In 2022, (gas-related) technical, safety and job-specific training accounted for more than half of the total num- ber of hours of training completed. Fluxys Belgium uses various e-learning platforms to peri- odically remind its own and contractors’ employees about the general and specific safety rules. Every employee of a contractor scheduled to work at a Fluxys project site or facility must complete a training module and demonstrate that they are familiar with our safety rules. In 2022, special attention was also paid to ergonomics for screen work, with targeted information on ways to make workspace adjustments in the office or at home. Ergonomists from Attentia, our external provider of workplace prevention and protection services, pro- vided around 40 theory-based group sessions. They also gave individual tips and advice on screen work to around 130 employees. Indicators 2022 2021 2020 2019 Incapacity for work among staff Occupational accidents resulting in more than one day’s incapacity for work 10 11 9 15 Frequency (number of occupational accidents x 1,000,000 divided by the total number of hours worked) 7.2 7.8 6.4 11 Severity (number of days’ absence x 1,000 divided by the total number of hours worked) 0.12 0.22 0.15 0.12 Fatal occupational accidents 0 0 0 0 Incapacity for work among contractors Occupational accidents resulting in more than one day’s incapacity for work 5 6 6 10 Broadly focusing on well-being and involvement In late 2021, we conducted a company-wide survey about the involvement, well-being and work experience of our employees. 87% of staff took part. The survey revealed that 76% of respondents feel involved or very involved and 90% enjoy their work. However, workload appears to be an area of concern. In 2022, all our teams joined forces with the social part- ners to work on these findings, resulting in the rollout of various actions in three areas: • Work pressure, workload and stress: enabling all employees to engage with the new way of working, including options for working from home; • Communication: placing an emphasis on informing, involving and inspiring and, post-pandemic, the return of plenty of in-person meetings; • Connection and cohesion: initiatives to boost informal relations and spontaneous contact after work. Despite all measures and an open safety culture, there remains a residual risk of incomplete accident reporting, depending on the information provided by an employee involved in a workplace accident. 116 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Connect & Move Taking part in sporting activities with colleagues at lunchtime or after work is not only a pleasant thing to do – it also fosters team spirit and boosts motivation. That is why we launched Connect & Move, an initiative encouraging colleagues to exercise together, put together teams and take part in sporting events. This has reaped rewards, with 120 colleagues going for it at 16 events across Belgium! Bright summer event On 2 June, the time had come. After so many months of the Covid pandemic, we could all physically get together again for the first time. Looking back together, looking forward together and, above all, having that nice corporeal group feeling again under the summer sun! 117 # OneteamOnetarget Social dialogue Policy Good industrial relations are vital for company cohe- sion and business development, which is why Fluxys Belgium engages in transparent, constructive social dialogue with all employees, members of the works council, the Committee for Prevention and Protection at Work, the trade union delegation and executive rep- resentatives. Risks and measures Risk Measures Risk of insufficient social dialogue and consultation that may lead to social conflicts • Social consultation: works council, committee for prevention and protection at work, local joint consultation • Collective agreements • Freedom of association 100% collective agreements Wage and working conditions are regulated for all staff by collective agreement through consultation and negotiation. • 65% of Fluxys Belgium’s staff are baremised employees. Their wage and working conditions are partly negotiated at sectoral level through Collective Labour Agreements; in addition, certain wage and working conditions are also determined at company level and negotiated with local employee representatives. • 35% of staff members are executives. Their wage and working conditions are negotiated at company level between Fluxys Belgium and the representation of the executives in an Annual Framework Agreement. Labour regulations adapted In 2022, Fluxys Belgium, working with the various part- ners around the table, embarked on and successfully completed an update of the work regulations, which met with unanimous approval. 118 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Encouraging diversity in recruitment Fluxys Belgium uses its Employer Branding communi- cations to target diverse, complementary profiles so that candidates with different backgrounds, views or preferences feel welcome. As regards diversity on the Fluxys Belgium Manage- ment Board, the Gas Act (Article 8/3) stipulates that at least one third of those on the Board of Directors must not be the same sex as the other members. Diversity in experience Fluxys Belgium devotes considerable attention to diver- sity in terms of experience. This approach translates, for example, into the continuous recruitment of young people with no or very limited work experience (job starters). We welcomed 81 new employees in 2022, 13 of whom had limited work experience or faced a lack of oppor- tunities on the labour market. The same criteria for everyone The criteria used for employee remuneration, evalua- tion, career development, training and the work-life bal- ance are identical for men and women. The difference in the average basic salary between men and women is due to the fact that the composition of both catego- ries differs with regard to seniority, type of role and the division between old and new salary conditions. Diversity and inclusion Policy Fluxys Belgium encourages diversity without using positive discrimination quotas. Our HR policy is based on individual competencies. Openness to other reali- ties, other people’s ideas and individual differences is a basic requirement expected of every employee and screened as a standard part of the selection process. Risks and measures Risk Controls and measures A lack of diversity in the workforce can lead to a business organisation that lacks the necessary skills, talents and experience • Equal opportunities policies that encourage diversity by promoting fairness, merit, personal development, work-life balance and shared responsibility 119 # OneteamOnetarget Indicators 2021 2020 2019 2018 Total 909 884 876 868 Incoming employees < 30 years 42% 54% 49% 40% 30-50 years 53% 41% 44% 51% > 50 years 5% 5% 7% 9% Men 74% 75% 69% 68% Women 26% 25% 31% 32% Outgoing employees (not including planned outflows from end-of-contracts and retirements) < 30 years 35% 32% 28% 28% 30-50 years 56% 61% 62% 56% > 50 years 9% 7% 10% 16% Men 60% 79% 83% 69% Women 40% 21% 17% 31% Executives < 30 years 11% 10% 9% 6% 30-50 years 58% 55% 57% 63% > 50 years 31% 35% 34% 31% Men 86% 85% 87% 86% Women 14% 15% 13% 14% Salaried staff members < 30 years 7% 8% 6% 7% 30-50 years 48% 46% 49% 52% > 50 years 45% 46% 45% 41% Men 82% 81% 80% 81% Women 18% 19% 20% 19% Management < 30 years 0% 0% 0% 0% 30-50 years 39% 25% 39% 50% > 50 years 61% 75% 61% 50% Men 90% 89% 89% 89% Women 10% 11% 11% 11% Board of Directors < 30 years 0% 0% 0% 0% 30-50 years 29% 25% 18% 18% > 50 years 71% 75% 82% 82% Men 62% 65% 68% 68% Women 38% 35% 32% 32% Average basic salary ratio (based on full-time equivalents) Men 100% 100% 100% 100% Women 92% 91% 93% 91% The staff data are based on the active workforce of Fluxys Belgium and Fluxys LNG and do not include non-active employees (e.g. those on long-term sick leave). Unless otherwise stated, the statistics refer to the number of employees and not the number of FTEs. 120 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Customer care Policy For us, our customers are central. Our transmission, storage and LNG terminalling services are regulated, and we open up our infrastructure to all market play- ers on a level playing field. We treat all customers on an equal footing, and our policy, operating within the parameters of the regulatory framework for our activi- ties, aims to develop long-term relationships with cus- tomers and respond as effectively as possible to their needs and expectations. Risks and measures Risks Measures Discriminatory treatment of customers, lack of transparency in information sharing can lead to market abuse and claims • Commercial contact point • Complaints point of contact • Development of services within a strict regulatory framework • Information and market consultation • Monitoring by the regulator Transparent and user-friendly services In line with the regulatory framework, Fluxys Belgium’s service offering is completely transparent. Existing and potential customers can find our range of services, rates and all related information and documentation, such as the relevant standard contracts, on our web- site. At the same time, we are constantly working on improvements to make booking capacity as simple and user-friendly as possible. Sales team as a point of contact Our sales team is the point of contact for customers and prospects. They are on hand to help you make the best possible use of our services and book capacity. At the same time, they keep a close eye on customer expec- tations for new services or updates to the offering. Maximum security of supply The geopolitical situation in Ukraine has profoundly changed the dynamics on the gas markets and the direction of flows in Europe. Throughout 2022, the members of our sales team left no stone unturned in their efforts to offer customers as much capacity as possible in the interests of security of supply (see the As much capacity as possible to maximise security of supply section, page 50). 121 # OneteamOnetarget Market consultations and information sessions When adapting existing services, developing new services, new tariff proposals or proposals to amend contractual documents, Fluxys Belgium always con- ducts a market consultation in accordance with the regulatory framework. Only after this consultation can the documents be submitted to the regulator, CREG, for approval. Fluxys Belgium holds annual information moments for each customer group to addressing topics that regularly come up in day-to-day contact with the sales team. Monitoring by the regulator CREG and the compliance officer The supervisory authority for Fluxys Belgium’s regulat- ed activities is the federal regulator, the Commission for Electricity and Gas Regulation (CREG). In line with the regulatory framework, Fluxys Belgium has appointed a compliance officer in the framework of its commitments regarding non-dis- criminatory access to the network. A compliance programme has been set up with the specific details of the rules of conduct that members of staff must comply with in terms of non-discrimination, transparency and handling of confidential information. The Board of Directors and management approved the compliance programme. The annual Compliance Report, covering how we have done in meeting our obligations under the compliance programme, can be found on the Fluxys Belgium website. More information about the legal and regulatory frame- work and the code of conduct is given in the Legal and regulatory framework section (page 38). Point of contact for complaints Customers and other market players who want to com- plain about our services can contact our key account managers, the Fluxys Belgium compliance officer or the regulator CREG. 122 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Human rights Policy Fluxys Belgium operates in Belgium and therefore our approach to human rights violations is enshrined in the company’s policy on business ethics, diversity, and health, safety and well-being at work. Our approach also focuses on the supply chain. Risks and measures Risk Measures Violation of human rights having a negative impact on the company's business reputation and/or financial results • Staff: provisions in our Ethical Code, work regulations, collective bargaining agreements and specific procedures • Suppliers: human rights provisions included in the terms and conditions of purchase Approach incorporated into other domains Given the Belgian scope of our activities, our initiatives on respecting human rights are for the most part set out in our approach in three other domains. The Health, Safety and Well-being at Work domain covers the following human rights: • the right to decent work and well-being; • the right to rest and free time; • protection of the work-life balance; • the right to protection from risks at work, including stress, violence, bullying and harassment; • the right to freedom of assembly and association. A wide range of training courses on these topics was offered to employees in 2022 (see page 123). The right to equal opportunities and zero tolerance for discrimination fall within the Diversity and inclusion domain (see page 118). The Ethical Code (see page 127) covers both the pro- tection of human rights in the workplace and human rights in the local communities where we operate. Focus on human rights in the supply chain Fluxys Belgium’s General Terms and Conditions of Purchase for suppliers impose various human rights obligations on contractors, including: • the obligation to insure personnel against occupational accidents; • the obligation to comply with the legal obligations regarding safety and well-being at work, minimum-wage requirements for employees, the payment of wages and respect for the environment and environmental protection; • the requirement to refrain from employing foreign workers who are illegally resident in Belgium. 123 # OneteamOnetarget Indicators 2022 2021 2020 2019 Complaints about violations of human rights 0 0 0 0 Number of training courses on human rights completed Number of training hours completed 1,328 459 554 * Share in the total number of training hours completed 3.6% 1.9% 2.4% * * Not registered ** All training initiatives (trainings, coaching, e-learnings) that contribute to increasing the well-being of employees indirectly contribute to human rights. Indeed, those initiatives ensure that the importance of treating people with respect is propagated as a basis within the company. We saw a significant increase in the number of coaching hours in 2022 after Corona, including through the new summer coaching for a wider target audience, and a substantial increase in the number of team tracks. 124 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Governance Ethics and integrity – Efforts to combat corruption p. 126 Data protection and privacy p. 128 125 # OneteamOnetarget Our focus in 2022 Further developing the formal procedures for whistleblowing and protecting whistleblowers Updating our internal guidelines on the use of social media to ensure that the social interactions there are as beneficial as possible 0 Complaints about fraud or reports of unethical conduct (2021: 0) 0 Legal proceedings concerning anti-competitive behaviour or failure to comply with competition law (2021: 0) 126 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Ethics and integrity – efforts to combat corruption 127 # OneteamOnetarget Policy Fluxys Belgium’s anti-corruption policy is set out in the company’s Ethical Code, which ensures that we offer employees a safe and respectful work environment, maintain high standards in terms of human rights and make a commitment to conducting business ethically by being responsible in dealings with our business partners. Ethical Code The new Ethical Code came into force in 2021 and was widely distributed in-house and externally. The Code covers a wide range of areas: a safe and respectful working environment, responsible interactions with business partners, human rights, anti-bribery and gen- eral principles on how the company competes. The Code also expects customers, suppliers and other partners to comply with equivalent standards. As part of the Ethical Code, various workshops were organised for staff in 2022. Reporting unethical conduct Our employees can contact their manager or the Ethics & Compliance team for advice on problematic situations or to report a (potential) breach of the ethical rules. Employees, customers, suppliers and partners can also email [email protected] to report a (potential) breach in complete confidentiality. In accordance with its Ethical Code and the relevant EU directive, Fluxys Belgium further developed the formal procedures for whistleblowing and protecting whistle- blowers. The procedure will be rolled out in 2023. Focus on ethical conduct in the supply chain Fluxys Belgium’s General Terms and Conditions of Purchase for suppliers impose various anti-corruption obligations on contractors, including: • Not being allowed to engage in or tolerate practices such as private or public corruption. • Being required to demonstrate integrity to their employees Risks and measures Risk Measures Corruption having a negative impact on the company's business reputation and/or financial results • Fluxys staff must comply with our Ethical Code, work regulations, collective bargaining agree- ments and specific procedures • Suppliers are subject to the terms and conditions of purchase with specific provisions on corruption • Control process to ensure that customers, suppliers, agents, consultants, etc. adhere to anti-bribery rules • Specific internal checks followed up at least every two years by internal audit Indicators 2022 2021 2020 2019 Efforts to combat corruption Complaints about fraud or reports of unethical conduct 0 0 0 0 Number of instances of legal proceedings concerning anti- competitive behaviour or failure to comply with competition law 0 0 0 0 128 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Our ESG performance Data security and privacy 129 # OneteamOnetarget Policy The responsible, secure handling of data is of vital importance to the company and its employees and everyone has a role to play in this regard. As such, Fluxys Belgium works with a circumstantial framework on data protection, including the requirements of the EU’s General Data Protection Regulation (GDPR) and general privacy regulations. Risks and measures Risk Measures Financial impact and loss of reputation due to lack of protection of personal data and non-compliance with data protection regulations • Data Protection Officer appointed as point of contact for privacy-related queries and incidents • Data security according to ISO 27001 standard • Information Governance Policy (BIS) and related procedures also applicable to suppliers • Training (example phishing exercises) • Internal audits Approach contained in cybersecurity management Our approach to data security and privacy is contained in our cybersecurity management: see “Additional focus on cybersecurity and ICT systems”, page 102 Social media guidelines updated In 2022, Fluxys Belgium updated the guidelines for staff on the use of social media and communicated them extensively within the company. With the updated guidelines, we are seeking a balance between every employee’s freedom of speech and right to privacy, the added value provided by interacting on social media and the protection of the company from illegal or inap- propriate social-media use. Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration 131 # OneteamOnetarget Corporate Governance Declaration Corporate # OneteamOnetarget Good governance is paramount. We make a fundamental contribution to the energy and climate solutions society needs. With infrastructure that serves around the clock as an essential link in the ecosystem. We tackle this as one team: in the fi eld, in the offi ce, in the board room. Reliable, in all transparency and every one of us with its own expertise. 132 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration Fluxys Belgium has adopted the 2020 Belgian Code on Corporate Governance (the 2020 Code) as its bench- mark code of conduct. The main principles are set out in its Articles of Association and its Corporate Governance Charter. Fluxys Belgium is also subject to legislation on corporate governance contained in the Act of 12 April 1965 on the transmission of gaseous and other products via pipeline, as subsequently amended (the Gas Act), and European Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (the Directive). Details of the leg- islation applied by Fluxys Belgium can be found online: • The 2020 Code: https://www.corporategovernancecommittee.be/en • The Gas Act: www.just.fgov.be (in French and Dutch) • The Directive: www.eur-lex.europa.eu In line with the principle of transparency, Fluxys Belgium indicates in this section of its annual report the parts of the 2020 Code with which the company does not com- ply and the justified reasons for this: • The company does not apply the 2020 Code rules on the term of directorships. Members of the Board of Directors are appointed for a period of six years rather than the four years advocated by Principle 5.6 of the 2020 Code. This term is justified in light of the technical, financial and legal particularity and complexity of the tasks and responsibilities entrusted to the natural gas system operator. A six-year mandate allows directors to deepen their expertise and to bring real added value to the debate over a longer period of time. This is also in line with the long- term nature of infrastructure operators’ activities. • The company also deviates from recommendations 7.6 and 7.9 of the 2020 Code for the reasons set out in the remuneration report. Please see that report for more details. Changes in the composition of the Board of Directors in 2022 At the Annual General Meeting on 10 May 2022, Abdel- lah Achaoui, who was co-opted by the Board of Directors on 30 March 2022, was permanently appointed as a director for a term of office expiring at the end of the 2027 Annual General Meeting. The same Annual General Meeting also decided to per- manently appoint Cécile Flandre, who was co-opted by the Board of Directors on 30 March 2022, as an inde- pendent director to replace Laurence Bovy following her resignation. This term of office will expire at the end of the 2025 Annual General Meeting. Finally, the Annal General Meeting appointed Leen Dier- ick and Gianni Infanti as directors, replacing Jos Ansoms and Renaud Moens respectively, for a six-year term of office that will expire at the end of the 2028 Annual General Meeting. Wim Vermeir was co-opted by the Board of Directors with effect from 21 February 2023 to replace Patrick Côté, following his resignation on that same date, for a term of office expiring at the end of the 2028 Annual General Meeting. The next Annual General Meeting will have to decide on his permanent appointment. The procedure for new appointments by the Appoint- ment and Remuneration Committee and the Corporate Governance Committee was complied with. Changes to the Articles of Association and Corporate Governance Charter in 2022 Fluxys Belgium’s Articles of Association and Corporate Governance Charter were amended on 10 May 2022 to remove the Strategic Advice Committee as a gov- erning body. Rules governing the appointment and replacement of members of the Board of Directors and amendments to the Articles of Association Appointment and replacement of directors Directors are appointed by the General Meeting for no more than six years and can be dismissed by this body. Article 10 of the Articles of Association stipulates that the company shall be managed by a Board of Direc- tors comprising non-executive directors (except for the director charged with the day-to-day management of the company), who are appointed for a maximum term of six years and may be dismissed by the General Meet- ing. The directorships of outgoing directors who have not been re-elected shall expire immediately after the Annual General Meeting. In the event that one or more directorships fall vacant, the remaining directors may, by a simple majority of votes, temporarily fill the vacancy. In such cases, the General Meeting shall make the per- manent appointment or appointments at its first meeting thereafter. If a directorship becomes vacant before the end of the term, the replacement director appointed shall serve out the rest of the term in question. 133 # OneteamOnetarget Amendments to the Articles of Association The company’s Articles of Association may be amend- ed by the Annual General Meeting; any amendments made must be published in the Belgian Official Gazette. Deliberation and decisions regarding amendments to the Articles of Association are only valid if at least half of the group’s share capital is represented at the General Meeting. No amendment shall be permitted unless it is passed by three quarters of the votes. Board of Directors Composition of the Board of Directors Article 10 of the company’s Articles of Association stip- ulates that the Board of Directors shall comprise no fewer than three and no more than 24 non-executive directors, excluding one or more federal government representatives. Principle 3.2 of the 2020 Code recommends that the Board should be small enough for efficient deci- sion-making. It should also be large enough for its Board members to contribute experience and knowl- edge from their different fields and for changes to the Board’s composition to be managed without undue disruption. The size of the Fluxys Belgium Board of Directors is justified in light of the technical, financial and legal particularity and complexity of the tasks and responsibilities entrusted to the natural gas system operator and the diversity of interests involved. In order to comply with the provisions of the Gas Act, at least one third of directors must be independent within the meaning of the Gas Act. They are chosen partly on the basis of their financial management skills and partly for their useful technical knowledge and in par- ticular their relevant knowledge of the energy sector. Independent directors within the meaning of the Gas Act must meet, among other things, the independence criteria of the 2020 Belgian Code on Corporate Gov- ernance. One third of directors must be of a different gender from the other two thirds. At least half of the directors must be fluent in French and half in Dutch. In addition, the golden share grants the federal Energy Minister the right to appoint two representatives of the federal government to the Board of Directors. Directors of the company may not simultaneously be members of the supervisory board, board of directors or bodies legally representing the undertaking, of an under- taking active in the production or supply of natural gas and may not exercise any rights over such an undertaking. Directors Daniël Termont, Director, Chairman of the Board of Directors Daniël Termont is a member of the Board of Directors of Publigas. He was appointed as director in May 1998 following his nomination by Publigas and his current term of office will expire at the Annual General Meeting in May 2027. Claude Grégoire, Director, Vice-Chairman of the Board of Directors Claude Grégoire is a qualified civil engineer. He was appointed as director in October 1994 following his nomination by Publigas and tendered his resignation with effect from 9 May 2023. Pascal De Buck, Managing Director and CEO Pascal De Buck studied law, specialising in economic law, before completing several management training courses, including at the Flemish School of Higher Education in Economics (VLEKHO) and EHSAL Man- agement School (EMS) in Brussels and the IESE Busi- ness School’s international Global CEO Program. After joining Fluxys as a Legal Counsel in 1995, he became head of the Legal and Commercial departments before taking on the role of Commercial Director, where he was responsible for business development and strat- egy. Pascal was appointed CEO and Chairman of the Executive Board of Fluxys Belgium on 1 January 2015. He became Managing Director of Fluxys Belgium in May 2020 and his term of office as director will expire at the Annual General Meeting in May 2026. Abdellah Achaoui, Director (since 30 March 2022) Abdellah Achaoui speaks several languages and has a degree in finance. He is management manager at VIVAQUA. He is on political leave and serving as an alderman in the Brussels municipality of Molenbeek. He is Chairman of the Board of Directors of Interfin and a member of the Boards of Directors of Sibelga and Publigas. He has held financial positions in various sectors, both private and public. He was co-opted as director by the Board of Directors with effect from 30 March 2022 following his nomination by Publigas and his current term of office will expire at the Annual Gen- eral Meeting in May 2027. Jos Ansoms, Director (until 10 May 2022) Jos Ansoms holds a degree in political and social sciences from KU Leuven. He has been Chairman of Intermixt, Iveka and IGEAN and Vice-Chairman of Ean- dis, among other roles. For 23 years he was a member of the lower house of the Belgian federal parliament, the House of Representatives, during which time he for example chaired the Business and Energy Committee. He was appointed as director in May 2016 following his 134 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration nomination by Publigas, and his term of office expired after the Annual General Meeting in May 2022. Laurent Coppens, Director Laurent Coppens holds a Master of Business Adminis- tration from the University of Liège and completed spe- cialised courses in Management Accounting & Control at Maastricht University before working as an assistant and researcher in finance. He is CFO of Sibelga and Interfin and Financial Officer at Publigas and Publi-T. He was appointed as director with effect from 1 July 2021 following his nomination by Publigas and his current term of office will expire at the Annual General Meeting in May 2027. Patrick Côté, Director (until 21 February 2023) Patrick Côté is Managing Director, Infrastructure at Caisse de dépôt et placement du Québec (CDPQ). He has 15 years’ experience in the infrastructure sec- tor, having joined CDPQ in 2006. Before that, he held various corporate finance positions in large compa- nies, including Ivanhoé Cambridge, CDPQ’s real estate subsidiary. He also sits on the Board of Directors of Velto Renewables and Akiem. Patrick graduated from HEC Montréal with a business degree, specialising in finance, and a qualification as a Chartered Profession- al Accountant (CPA). He was co-opted as director by the Board of Directors with effect from 1 January 2017 following his nomination by CDPQ. He tendered his resignation with effect from 21 February 2023. Leen Dierick, Director (since 10 May 2022) Leen Dierick studied business administration, marketing and logistics at EHSAL in Brussels and has subsequently held various positions at DOMO NV. She has served as a Dendermonde municipal councillor since 2001 and as a Member of the Federal Parliament for CD&V since 2007. In the Chamber she is a permanent member of both the Parliamentary Committees for Economy & Energy and the subcommittee for Nuclear Safety. She was appoint- ed as director in May 2022 following her nomination by Publigas and her current term of office will expire at the Annual General Meeting in May 2028. Andries Gryffroy, Director Andries Gryffroy is a qualified industrial electromechan- ical engineer and holds a Master’s degree in marketing. He took a number of additional training courses in the energy sector and worked in a range of positions in that sector. He is a consultant in technology and energy. He is also the Chairman of Publigas, a member of the Flemish Parliament and a federated entity senator. He was appointed as director in May 2015 following his nomination by Publigas and his current term of office will expire at the Annual General Meeting in May 2027. Gianni Infanti, Director (since 10 May 2022) Gianni Infanti holds a Master’s degree in management sciences at UCL Mons. He is an adviser to the office of Minister Christie Morreale. He was appointed director in May 2022 following his nomination by Publigas and his current term of office will expire at the Annual General Meeting in May 2028. Ludo Kelchtermans, Director, Chairman of the Audit and Risk Committee Ludo Kelchtermans holds a degree in economics and is CEO of Nutsbedrijven Houdstermaatschappij (Nuhma). He is a director at several companies and chairman of Aspiravi’s audit committee. He was appointed as direc- tor in June 2012 following his nomination by Publigas and his current term of office will expire at the Annual General Meeting in May 2026. Renaud Moens, Director and Chairman of the Appoint- ment and Remuneration Committee (until 10 May 2022) Renaud Moens has a degree in business from ULB’s Solvay Business School. He is the General Manager of the intermunicipal company IGRETEC and a director at Publigas, Sambrinvest, Sonaca and SOCOFE. He was co-opted as director by the Board of Directors with effect from 24 September 2014 following his nomination by Publigas and his term of office expired at the Annual General Meeting in May 2022. Josly Piette, Director Josly Piette holds degrees in industrial sociology and economic and social sciences. He is Honorary General Secretary of the Confédération des Syndicats Chrétiens (Confederation of Christian Trade Unions) and a director at SOCOFE and Publigas. He was appointed as direc- tor in June 2009 following his nomination by Publigas and his current term of office will expire at the Annual General Meeting in May 2026. Koen Van den Heuvel, Director Koen Van den Heuvel holds a degree in economics and political science. As a member of Puurs Municipal Council since 1989, for five years he served as the Alderman for Youth, Culture and Finance. In 1997, he became Mayor of Puurs, and since 2019 he has been the mayor of the merged municipality of Puurs-Sint-Amands. Since 2004, he has been a member of the Flemish Parliament, leading his parliamentary group there from 2012 to 2019. In 2019, he was the Flemish Minister for the Environment, Nature and Agriculture. He was co-opted as director by the Board of Directors with effect from 1 December 2019 following his nomination by Publigas and his current term of office will expire at the Annual General Meeting in May 2025. Wim Vermeir, Director (since 21 February 2023) Wim Vermeir has a degree in engineering physics from 135 # OneteamOnetarget Ghent University and holds an MBA from Vlerick School of Management. He started his career at Ghent Univer- sity and Vlerick School of Management as a research assistant in corporate finance. Between 1995 and 2006, he held various positions at Dexia Asset Management and in 2006 he was appointed Chief Investment Officer for Traditional Investments and member of the Execu- tive Board of Dexia Asset Management. He has been Chief Investment Officer of AG Insurance since April 2011 and also Group Head of Investments for Ageas since June 2012. He was co-opted as director by the Board of Directors with effect from 21 February 2023 following his nomination by AG Insurance. The Annual General Meeting of 9 May 2023 will have to decide on his permanent appointment. Geert Versnick, Director Geert Versnick has a law degree from Ghent University. He has also participated in study programmes from GUBERNA, the International Institute for Management Development (IMD) and INSEAD. He was a lawyer at the Ghent Bar from 1980 until 2000 and active in politics from 1989 to 2017. He holds a number of directorships in both the private and public sectors. He was appoint- ed as director in May 2018, with effect from 3 October 2018, following his nomination by Publigas, and his current term of office will expire at the Annual General Meeting in May 2024. Independent directors under the provisions of the Gas Act Sabine Colson, independent director, Chairman of the Corporate Governance Committee Sabine Colson has a degree in business and finance from HEC Liège. She completed a GUBERNA Certified Director course and holds a university certificate in inno- vation management from UCLouvain. She coordinates the BU WE Transmission at Wallonie Entreprendre. She was co-opted as independent director with effect from 1 October 2018 on proposal of the Board of Directors and following the recommendation of the relevant advisory committees, and her current term of office will expire at the Annual General Meeting in May 2024. Valentine Delwart, independent director Valentine Delwart holds a degree in law and a Mas- ter’s degree in European law. She is Alderwoman for Finance in Uccle and has been General Secretary of the French-speaking liberal party Mouvement Réformateur since March 2011. She was appointed as independent director in May 2013 on proposal of the Board of Direc- tors and following the recommendation of the relevant advisory committees, and her current term of office will expire at the Annual General Meeting in May 2025. Cécile Flandre, independent director (since 30 March 2022) Cécile Flandre holds a degree in mathematics and actuarial science from the Université Libre de Bruxelles (ULB). For nine years she served as CFO and executive director at two insurance companies, Belfius Insurance and later Ethias. She has many years of experience in the insurance sector, including its supervision, and in financial matters. She is a director of Elia Transmission Belgium, Elia Asset and Elia Group and an independent director of MS Amlin Insurance S.E., where she chairs the Audit Committee. She has been a member or chair of the boards of directors and audit committees of sev- eral companies. She was co-opted as independent director with effect from 30 March 2022 on proposal of the Board of Directors and following the recommen- dation of the relevant advisory committees, and her current term of office will expire at the Annual General Meeting in May 2025. Sandra Gobert, independent director Sandra Gobert obtained a Master’s degree in law from the Vrije Universiteit Brussel (VUB). She has been a lawyer at the Brussels Bar since 1992 and is a partner at Sub Rosa Legal. After a specialisation and internship in tax law, she built up her expertise in corporate law and corporate governance. She has been a GUBERNA Certified Director since 2010 and has held director- ships in various sectors (distribution and retail, legal, real estate and energy). She completed the Chapter Zero “Director Climate Journey” in 2021. In early 2019, she was appointed Executive Director of GUBERNA (Institute of Directors), where she has been a member of the Board of Directors since 2016. She is a member of the Belgian Corporate Governance Committee, a member of the Board of Directors of ecoDa (European Confederation of Directors’ Associations) and chair of the ecoDa Working Group on Sustainability and of the Remuneration and Nomination Committee. She is a member of the ESG Exchange Advisory Committee. She was appointed as independent director in May 2019 on proposal of the Board of Directors and fol- lowing the recommendation of the relevant advisory committees, and her current term of office will expire at the Annual General Meeting in May 2025. Roberte Kesteman, independent director Roberte Kesteman holds a Master’s degree in Applied Economics from VLEKHO. She also studied Interna- tional Corporate Finance at INSEAD in France. She is Senior Advisor at First Sentier Investors International, an independent director at Elia Transmission Belgium, Elia Asset and Elia Group, as well as a member of the Audit Committee, Remuneration Committee and Corpo- 136 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration rate Governance Committee. Since 4 May 2022, she is independent director, member of the Audit Committee and member of the Remuneration, Nomination and Corporate Governance Committee at Aperam SA. She was co-opted as independent director with effect from 1 July 2019 on proposal of the Board of Directors and following the recommendation of the relevant advisory committees, and her current term of office will expire at the Annual General Meeting in May 2023. Anne Leclercq, independent director Anne Leclercq holds a Master’s degree in law and an MBA from Vlerick Business School. Many years working in both the banking sector and as Director of Treas- ury and Capital Markets at the Belgian Debt Agency (the agency in charge of the operational management of the debt of the Belgian federal government) have provided her with a wealth of financial expertise and management experience. Until mid-2019, Anne chaired a sub-committee of the European Union’s Economic and Financial Committee comprising debt managers from the various EU Member States. She is a director at BNP Paribas Fortis, where she also chairs the Risk Committee, WDP (Warehouses De Pauw) and Sint-Ma- ria Halle General Hospital. Until the end of December 2022, she was a director and chair of the Audit Com- mittee of KULeuven/UZ Leuven. She was appointed as independent director in May 2018 on proposal of the Board of Directors and following the recommendation of the relevant advisory committees, and her current term of office will expire at the Annual General Meeting in May 2024. Sandra Wauters, independent director Sandra Wauters holds a PhD in chemical engineering from Ghent University. She is Carbon Management Programme Manager at BASF Antwerp, where she is responsible for business development and coordina- tion on climate-neutral growth. She was appointed as independent director in May 2013 on proposal of the Board of Directors and following the recommendation of the relevant advisory committees, and her current term of office will expire at the Annual General Meeting in May 2025. Federal government representatives Maxime Saliez and Tom Vanden Borre Messrs Maxime Saliez and Tom Vanden Borre were appointed as per the Royal Decree of 31 January 2021 as representatives of the federal government in an advi- sory capacity for the French- and Dutch-speaking roles respectively. This Royal Decree entered into force on the date of its publication in the Belgian Official Gazette, namely 8 February 2021. 4 Maxime Saliez has a degree in civil and electromechani- cal engineering and is an adviser to the Federal Minister of Energy. Tom Vanden Borre holds a PhD in law and serves as Head of the Private Office of the Federal Min- ister of Energy. Federal government representatives have special pow- ers as stipulated in the Acts of 26 June 2002 and 29 April 1999 and the Royal Decrees of 16 June 1994 and 5 December 2000, as set out in Article 12 of the Articles of Association and in the Corporate Governance Charter. They attend meetings of the Board of Directors in an advisory capacity. Secretariat Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Board of Directors. Activity report Issues examined The members of the Board of Directors seek to adopt decisions by consensus. The Board mainly addressed the following issues: • The strategy of Fluxys Belgium; • The 2022 budget; • The 10-year investment programme (2023-2032); • The medium-term financial plan; • The HSEQ policy; • Risk management; • The preparation of the company’s annual and half-yearly accounts and those of its subsidiaries, as well as associated press releases; • The drafting of the annual financial report for the financial year 2021 and the half-yearly financial report as at 30 June 2022; • The tariff methodology 2024-2027; • Evolution and use of the regularization account and the exceptional solidarity contribution received by the Federal Government of Belgium; • Projects and research into projects related to the continuing development of the group’s activities in Belgium, including: – market integration projects; – projects linked to the energy transition, especially those involving biomethane and the transmission of hydrogen and CO 2 , including 4. Royal Decree of 31 January 2021 on the dismissal and appointment of federal government auditors to the Boards of Directors of the relevant operators, as provided for in Article 8/3(1/3) of the Act of 12 April 1965 concerning the transmission of gaseous and other products by pipeline (published in the Belgian Official Gazette on 8 February 2021). 137 # OneteamOnetarget the framework of the economic recovery plan (also covered in a separate expert session); – L-gas to H-gas conversion; – upgrading of the Zeebrugge-Opwijk pipeline route: investment decision phase 1 Desteldonk-Opwijk and progress reporting; – progress of the LNG capacity expansion and truck-loading projects; • Changes in the legal and regulatory framework; • Progress of disputes and legal action brought in order to safeguard the company’s interests; • The energy mix, the European Green Deal, developing a long-term vision for a low-carbon energy system by 2050 and the European Commission’s Fit for 55 programme; • The consequences of the war in Ukraine; • Security of supply; • The role of natural gas in Belgium’s future energy system and in the energy transition; • Commercial activities and the operation of the network and the LNG terminal (including demand for additional regasification capacity at the LNG terminal); • IT security; • The safety culture within the company; • The design of the new intervention centre; • The abolition of the Strategic Advice Committee and the resulting amendment to the Articles of Association; • Convening the Annual General Meeting and Extraordinary General Meeting; • Changes in the composition of the Board of Directors and the advisory committees; • Examination of reports by the Strategic Advice Committee, the Audit and Risk Committee, the Appointment and Remuneration Committee and the Corporate Governance Committee; • Examination of the report of the Board of Directors of Fluxys LNG; • The measures taken by the company with regard to the COVID-19 pandemic. Operation The Board of Directors may only deliberate and adopt decisions when at least half of the directors are either present or represented. Decisions made by the Board of Directors are taken by a simple majority of votes cast by directors present or represented. In 2022, the Board of Directors took all of its decisions by unanimous vote of the directors present or represented. Frequency of meetings and attendance levels The Board of Directors met 9 times in ordinary meetings in 2022 and made one decision by unanimous written agreement of the directors, in accordance with its Arti- cles of Association. The director attendance at Board of Directors’ meetings in 2022 was as follows: Attendance Daniël Termont 9 out of 9 meetings Claude Grégoire 7 out of 9 meetings Pascal De Buck 9 out of 9 meetings Abdellah Achaoui 6 out of 7 meetings Jos Ansoms 4 out of 4 meetings Sabine Colson 9 out of 9 meetings Laurent Coppens 8 out of 9 meetings Patrick Côté 9 out of 9 meetings Valentine Delwart 9 out of 9 meetings Leen Dierick 5 out of 5 meetings Cécile Flandre 6 out of 7 meetings Sandra Gobert 9 out of 9 meetings Andries Gryffroy 8 out of 9 meetings Gianni Infanti 5 out of 5 meetings Ludo Kelchtermans 9 out of 9 meetings Roberte Kesteman 9 out of 9 meetings Anne Leclercq 8 out of 9 meetings Renaud Moens 3 out of 4 meetings Josly Piette 9 out of 9 meetings Koen Van den Heuvel 9 out of 9 meetings Geert Versnick 7 out of 9 meetings Sandra Wauters 9 out of 9 meetings Committees formed by the Board of Directors Strategic Advice Committee (until 10 May 2022) Following the introduction of the 2020 Belgian Code on Corporate Governance, Fluxys Belgium reviewed the operation of its Board of Directors’ advisory committees and of the Strategic Advice Committee in particular. As a result, the Board decided to abolish the Strategic Advice Committee and schedule more time in Board of director meetings to examine certain topics in more depth. The Extraordinary General Meeting of 10 May 2022 therefore approved an amendment to the company’s Articles of Association to this effect. 138 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration Audit and Risk Committee Composition of the Audit and Risk Committee The Audit and Risk Committee comprises seven non-executive directors, of whom at least one third must be independent within the meaning of the Gas Act and the 2020 Belgian Code on Corporate Gov- ernance. The Audit and Risk Committee has collective expertise in the company’s area of activity and at least one independent director has the required expertise in accounting and auditing. Chairman Ludo Kelchtermans Members • Sabine Colson • Laurent Coppens • Patrick Côté (until 21 February 2023) • Cécile Flandre (since 30 March 2022) • Anne Leclercq • Wim Vermeir (since 21 February 2023) • Sandra Wauters Invited in an advisory capacity Pascal De Buck, Managing Director and CEO.. Secretariat Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Audit and Risk Committee. Accounting and auditing expertise of the independent directors on the Audit and Risk Committee Cécile Flandre • She holds a degree in mathematics and actuarial science. • She has extensive experience on boards of directors and audit committees. • She has held the position of Chief Financial Officer, executive board member and executive director, with particular responsibility for investments, accounting, financial planning and control, and corporate finance. Sabine Colson • She holds a degree in business and finance from HEC Liège and has been an audit manager at PwC. • She has experience of audit committees and appointment and remuneration committees. • She is a director of various companies, primarily in the environmental sector. Anne Leclercq • She holds a Master’s degree in law and an MBA from Vlerick Business School. Attendance Claude Grégoire 3 out of 3 meetings Daniël Termont 2 out of 3 meetings Jos Ansoms 3 out of 3 meetings Patrick Côté 3 out of 3 meetings Valentine Delwart 3 out of 3 meetings Andries Gryffroy 3 out of 3 meetings Anne Leclercq 2 out of 3 meetings Koen Van den Heuvel 3 out of 3 meetings Sandra Wauters 2 out of 3 meetings * Independent directors under the provisions of the Gas Act Issues examined The Strategic Advice Committee was set up within the Board of Directors in accordance with Article 15.1 of the Articles of Association, which has now been deleted. It had no decision-making powers but was responsible for providing an opinion on the items to be submitted to the Board of Directors for approval, in accordance with the applicable legal and regulatory provisions and the Articles of Association. Within this framework, the committee also monitored implementation of the Board of Directors’ decisions. The members of the Strategic Advice Committee sought to adopt decisions by consensus. In 2022, the Strategic Advice Committee addressed the following issues, among others: • The consequences of the war in Ukraine; • Security of supply; • IT security; • Changes in the legal and regulatory framework; • Progress of disputes and legal action brought in order to safeguard the company’s interests; • The energy mix, the European Green Deal, developing a long-term vision for a low-carbon energy system by 2050 and the European Commission’s Fit for 55 programme; • The role of natural gas in Belgium’s future energy system and in the energy transition; • Upgrading of the Zeebrugge-Opwijk pipeline route; • Commercial activities and the operation of the network and the LNG terminal (including demand for additional regasification capacity at the LNG terminal. Operation The advice put forward by the Strategic Advice Com- mittee was adopted by a simple majority of votes cast by those members present or represented, in line with their assigned powers. Frequency of meetings and attendance levels The Strategic Advice Committee met 3 times in 2022. Director attendance at Strategic Advice Committee meetings in 2022 was as follows: 139 # OneteamOnetarget • Many years working in the financial sector have provided her with a wealth of financial expertise and management experience. • She has extensive market knowledge and insight into the key drivers of change in financial markets, such as changes in regulations and economic factors. • Until 31 July 2019, she was Director of Treasury and Capital Markets at the Belgian Debt Agency. Sandra Wauters • She has a PhD in chemical engineering. • In her operations role at BASF Antwerp, she has acquired experience in HAZOP studies and technical risk assessments. Issues examined The Audit and Risk Committee was set up within the Board of Directors to assist this body. It has the powers assigned to an audit and risk committee by law as well as any other powers that may be assigned to it by the Board of Directors. The members of the Audit and Risk Committee seek to adopt decisions by consensus. In 2022, the Audit and Risk Committee mainly addressed the following issues: • The company’s accounts as at 31 December 2021 and 30 June 2022 as well as the as- sociated press releases (financial part); • The annual financial report for the 2021 financial year and the half-yearly report as at 30 June 2022; • The principles governing the closing of accounts; • Examination of the auditor’s work and schedule; • The renewal of the statutory auditor’s mandate; • Examination of the internal control and risk management system; • Goals, schedule and activities of the internal audit in 2022; • The internal audit schedule for 2023; • Follow-up on the recommendations made in the wake of the internal audit in 2021; • Risk management; • The change in the valuation rule for ’Unrealised foreign exchange results’ in Belgian GAAP; • Confirmation to the Audit and Risk Committee of the independence of the internal audit; • The evaluation of the person in charge of the internal audit. Operation Decisions by the Audit and Risk Committee are adopted by a simple majority of votes cast by those members present or represented, in line with their assigned powers. For detailed information on how the Audit and Risk Committee works, please consult Annex II of the Corporate Governance Charter – Audit and Risk Committee Rules of Internal Procedure (https://www. fluxys.com/en/company/fluxys-belgium/management- governance). Frequency of meetings and attendance levels The Audit and Risk Committee met 4 times in 2022. Director attendance at Audit and Risk Committee meet- ings in 2022 was as follows: Attendance Ludo Kelchtermans 3 out of 4 meetings Sabine Colson 3 out of 4 meetings Laurent Coppens 4 out of 4 meetings Patrick Côté 3 out of 4 meetings Cécile Flandre 3 out of 3 meetings Anne Leclercq 4 out of 4 meetings Sandra Wauters 3 out of 4 meetings Appointment and Remuneration Committee Composition of the Appointment and Remuneration Committee The Appointment and Remuneration Committee com- prises seven non-executive directors, the majority of whom must be independent within the meaning of the Gas Act and the 2020 Belgian Code on Corporate Governance. The committee has the required expertise in remuneration policy. Chairman Renaud Moens (until 10 May 2022) Koen Van den Heuvel (since 10 May 2022) Members • Valentine Delwart • Cécile Flandre (since 30 March 2022) • Sandra Gobert • Gianni Infanti (since 10 May 2022) • Roberte Kesteman • Koen Van den Heuvel (until 10 May 2022) • Geert Versnick Invited in an advisory capacity Pascal De Buck, Managing Director and CEO. Secretariat Anne Vander Schueren, HR Director, acts as secretary to the Appointment and Remuneration Committee. Issues examined The Appointment and Remuneration Committee was set up within the Board of Directors to assist it in all matters concerning the appointment and remuneration of direc- tors and members of the Management Team BE. It has * Independent directors under the provisions of the Gas Act 140 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration the powers assigned to a remuneration committee by law as well as any other powers that may be assigned to it by the Board of Directors. In 2022, the Appointment and Remuneration Committee mainly addressed the following issues: • The compilation of the draft remuneration report; • The compilation of opinions for the Board of Directors concerning the appointments of directors and of an independent director; • The preparation of the objectives for the Managing Director and the members of the Management Team BE; • The preparation of the evaluation of the Managing Director and the members of the Management Team BE; • The compilation of recommendations on the remuneration of the Managing Director (fixed and variable remuneration and long-term incentives); • The compilation of recommendations on the remuneration of the members of the Management Team BE (fixed and variable remuneration and long-term incentives) following a proposal by the Managing Director; • The state of progress regarding the company targets for 2022; • Monitoring of the remuneration policy. Operation Decisions by the Appointment and Remuneration Com- mittee are adopted by a simple majority of votes cast by those members present or represented, in line with their assigned powers. The members of the Appoint- ment and Remuneration Committee seek to adopt deci- sions by consensus. In 2022, the Appointment and Remuneration Committee approved all the decisions submitted to it. For detailed information on how the Appointment and Remuneration Committee works, please consult Annex III of the Corporate Governance Charter – Appointment and Remuneration Committee Rules of Internal Procedure (https://www.fluxys.com/en/ company/fluxys-belgium/management-governance). Frequency of meetings and attendance levels The Appointment and Remuneration Committee met 6 times in 2022. Director attendance at Appointment and Remuneration Committee meetings in 2022 was as follows: Attendance Renaud Moens 4 out of 4 meetings Koen Van den Heuvel 6 out of 6 meetings Valentine Delwart 5 out of 6 meetings Cécile Flandre 1 out of 2 meetings Corporate Governance Committee Composition of the Corporate Governance Committee The Corporate Governance Committee comprises sev- en non-executive directors, of whom at least two thirds must be independent under the provisions of the Gas Act. Chairman Sabine Colson Members • Laurent Coppens • Valentine Delwart • Sandra Gobert • Roberte Kesteman • Anne Leclercq • Josly Piette Invited in an advisory capacity Pascal De Buck, Managing Director and CEO. Secretariat Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Corpo- rate Governance Committee. Issues examined The Corporate Governance Committee was set up within the Board of Directors in order to carry out the tasks conferred upon it by the Gas Act. The members of the Corporate Governance Committee seek to adopt deci- sions by consensus. In 2022, the Corporate Governance Committee mainly addressed the following issues: • Preparation of the 2021 annual report by the Corporate Governance Committee, drafted on the basis of Article 8/3 section 5(3) of the Gas Act; • The compilation of the opinion for the Board of Directors concerning the appointment of an independent director. Operation Decisions by the Corporate Governance Committee are adopted by a simple majority of votes cast by those mem- bers present or represented, in line with their assigned powers. For detailed information on how the Corporate Governance Committee works, please consult Annex I of the Corporate Governance Charter – Corporate * Independent directors under the provisions of the Gas Act. Attendance Sandra Gobert 5 out of 6 meetings Gianni Infanti 2 out of 2 meetings Roberte Kesteman 5 out of 6 meetings Geert Versnick 6 out of 6 meetings 141 # OneteamOnetarget Governance Committee Rules of Internal Procedure (https://www.fluxys.com/en/company/fluxys-belgium/ management-governance). Frequency of meetings and attendance levels The Corporate Governance Committee met 1 time in 2022. Director attendance at Corporate Governance Committee meetings in 2022 was as follows: Attendance Sabine Colson 1 out of 1 meeting Laurent Coppens 0 out of 1 meeting Valentine Delwart 1 out of 1 meeting Sandra Gobert 1 out of 1 meeting Roberte Kesteman 1 out of 1 meeting Anne Leclercq 0 out of 1 meeting Josly Piette 1 out of 1 meeting Managing Director and CEO and Management Team BE in 2022 Composition Pascal De Buck is the Managing Director of Fluxys Bel- gium. He is also the company’s Chief Executive Officer. The Managing Director can delegate some of his pow- ers to a ‘Management Team BE’ that is composed as follows: • Arno Büx, member of the Management Team BE and Chief Commercial Officer • Christian Leclercq, member of the Management Team BE and Chief Financial Officer • Peter Verhaeghe, member of the Management Team BE and Chief Technical Officer Nicolas Daubies, Dpt. Director Group General Counsel & Company Secretary, acts as secretary to the Manage- ment Team BE. Deliberations The Management Team BE assists the Managing Director in the tasks assigned to him. It meets as often as it deems necessary and in any case weekly, unless hindered in some way. The Managing Director convenes the members and any guests and sets the agenda. The Management Team BE is assisted in its decision- making by an Executive Committee composed as follows: • Damien Adriaens, Dpt. Director Commercial Regulated • Nicolas Daubies, Dpt. Director Group General Counsel &Company Secretary * Independent directors under the provisions of the Gas Act. • Raphaël De Winter, Director Fluxys nextgrid • Jan Van de Vyver, Dpt. Director Installations § Grid • Rafaël Van Elst, Director Construction, Engineering & Gas Flow • Anne Vander Schueren, Director Human Resources • Leen Vanhamme, Director Transformation & Sustainability • Erik Vennekens, Director Digital 142 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration Remuneration report Introduction The Fluxys Belgium remuneration policy is submitted to the Annual General Meeting in accordance with the Belgian Code on Companies and Associations. The policy will then be published on the company website at https://www.fluxys.com/en/company/fluxys-belgium/ management-governance. The purpose of this report is to provide information on the implementation of this policy over the past financial year. By way of introduction, it should be emphasised that the remuneration policy aims to contribute to the compa- ny’s mission and purpose, namely to be the designated operator of the Belgian natural gas transmission grid, the Loenhout storage facility and the Zeebrugge LNG terminal, and to be an important actor in a sustaina- ble energy future and to bring reliable and affordable energy flows to market. Moreover, the company’s new objective is to be the essential infrastructure partner for accelerating the energy transition. The remuneration policy applicable to the Managing Director and CEO and of the Management Team BE was developed in accordance with the company’s remuner- ation policy. This policy is based on an objective and transparent classification system with a view to: • Ensuring that the compensation package complies with that of the market in order to attract and retain staff with the required expertise; • Developing performance-driven pay, which varies according to each person’s responsibilities and contribution to Fluxys Belgium’s objectives. The amount of the incentive payment received is based on the extent to which company, transversal and individual targets have been achieved; • Promoting professional and committed behaviour, as well as a consistent, transversal and sustainable approach, with respect for and in full support of the company’s values. Remuneration for non-executive members of the Board of Directors is based on market practice and takes into account their role, the specific duties they perform, the resulting responsibilities and the time they devote to their duties. The remuneration awarded in 2022 is in line with the company’s remuneration policy and with the company’s performance, which also remained strong during this year, and with its short- and long-term ambitions. Among other things, the company was able to continue ensuring the continuity of its business activities and a maximum contribution to the supply of North-West Europe despite the pandemic and the particularly complex supply chal- lenge resulting from the impact of the conflict in Ukraine. The company continues to take major steps forward in the transition to a sustainable energy future. We note that contrary to recommendations 7 § (6) and (9) of the 2020 Corporate Governance Code, the direc- tors and members of the executive management do not receive any part of their remuneration in the form of shares of Fluxys Belgium. This deviation is justified by the regulated nature of the company’s activity, which is characterised by different mechanisms to ensure long- term value creation and a highly relative relationship between performance and share price. Remuneration for non-executive directors During the previous financial year, Fluxys Belgium set the non-executive directors’ remuneration at the same level as the previous financial year in line with the prin- ciples outlined in the Articles of Association, the Corpo- rate Governance Charter and the remuneration policy. The remuneration consists of a total fixed amount, deter- mined by the Annual General Meeting, that the Board of Directors distributes to non-executive directors on the basis of the workload their individual roles require within the company of no more than € 360,000 per annum as of 1 July 2007 (subject to indexation), or €499,840.50 as of 31 December 2022. Non-executive directors and government representatives also receive an attendance fee of €250 for each Board or committee meeting. Non-executive directors receive neither performance-re- lated remuneration, such as bonuses or long-term, share-related incentive schemes, nor benefits in kind or pension-plan benefits. Remuneration for non-executive directors consists exclusively of a fixed part. At the end of the first six-month period, directors are paid an advance on their remuneration and attendance fees. This advance is calculated on the basis of the index-linked basic remuneration and in proportion to the duration of the directorship over the six-month period. A settlement is made in December of the year in question. Fees for non-executive directors For their work on Fluxys Belgium’s Board of Directors and its various committees, the non-executive directors received the following gross remuneration and attend- ance fees in 2022: Directors and government representative Gross total (in €) Daniël Termont 26,927.98 Claude Grégoire 17,533.26 143 # OneteamOnetarget Directors and government representative Gross total (in €) Abdellah Achaoui 9,929.58 Jos Ansoms 7,638.53 Sabine Colson (1) 25,465.13 Laurent Coppens (2) 25,215.13 Patrick Côté (3) 22,374.19 Valentine Delwart 28,677.97 Leen Dierick 8,431.88 Cécile Flandre 19,359.15 Sandra Gobert 25,965.13 Andries Gryffroy 15,820.41 Gianni Infanti 12,522.82 Ludo Kelchtermans (4) 19,661.35 Roberte Kesteman (5) 25,965.13 Anne Leclercq 27,677.97 Renaud Moens (6) 7,638.53 Josly Piette (7) 19,161.35 Koen Van den Heuvel 23,124.20 Geert Versnick 19,911.35 Sandra Wauters 22,124.19 Maxime Saliez 16,070.41 Tom Vanden Borre 15,070.41 Total 442,266.07 The total amount of €442,266.07 is made up of €376,516.07 in directors’ fees and €65,750.00 in attendance fees. At their request, notification is hereby given that some directors have retroceded their remuneration and attendance fees: (1) This director retroceded her remuneration and attendance fees to SRIW Environnement. (2) This director retroceded his remuneration and attendance fees to Interfin. (3) This director retroceded his remuneration and attendance fees to Caisse de dépôt et placement du Québec. (4) This director retroceded his remuneration and attendance fees to Nuhma. (5) This director retroceded her remuneration and attendance fees to Symvouli. (6) This director retroceded his remuneration and attendance fees to IGRETEC. (7) This director retroceded his remuneration and attendance fees to SOCOFE. The non-executive directors of Fluxys Belgium held no paid directorships in any other Fluxys group companies. On 8 February 2021 Mr Tom Vanden Borre and Mr Maxime Saliez were appointed as representatives of the federal government for the Dutch-speaking and French-speaking roles respectively 5 . Remuneration for the Managing Director and CEO and the members of Management Team BE Total remuneration Remuneration for the Managing Director and CEO and the members of Management Team BE in accordance with the remuneration policy consists of the following components: • a base salary: fixed amount; • performance-related remuneration: depending on the degree to which the objectives set each year have been achieved (company and individual objectives); • performance-related remuneration for long-term objectives: depending on the realisation of the objectives set for each regulatory period (four years) with a possible payment every two years; • a defined-contribution pension plan administered in accordance with the rules applicable to companies in the gas and electricity sector; • other components: expenses to cover insurances, company car, gas and electricity sector benefits. Setting of remuneration The Managing Director and CEO of Fluxys Belgium was evaluated for the year in question by the Board of Directors, following the opinion of the Appointment and Remuneration Committee, based on the extent to which the objectives were achieved. The Appointment and Remuneration Committee was also given an expla- nation by the Managing Director and CEO of Fluxys Belgium regarding the extent to which the stipulated objectives were achieved and the evaluation of the members of Management Team BE in 2022. The Board of Directors met to decide on the remuneration for the Managing Director and CEO and the members of Management Team BE. The Board of Directors: • approved the performance and activities of Fluxys Belgium for 2022; • defined the amount of the 2022 variable remuneration of the Managing Director and CEO of Fluxys Belgium in 2022, pursuant to a proposal by the Appointment and Remuneration Committee, and defined the total amount of the variable remuneration in 2022 of the members of Management Team BE of Fluxys Belgium, pursuant to a proposal by the Managing Director and CEO. The allocation of performance-related remuneration is based on an assessment of the following criteria: 5. Royal Decree of 31 January 2021 on the dismissal and appointment of federal government auditors to the Boards of Directors of the relevant operators, as provided for in Article 8/3(1/3) of the Act of 12 April 1965 concerning the transmission of gaseous and other products by pipeline (published in the Belgian Official Gazette on 8 February 2021). 144 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration Short-term variable remuneration Cycle Per year Performance/payment link Performance Payment Minimum Bonus 80% or less No minimum %, depending on circumstances. Target Bonus 100% 40% Maximum Bonus 120% or more 70% Objectives Description Weighting Company Key company targets 50% Personal Individual and transversal 35% Style & values Leadership & link to company values 15% Long-term variable remuneration Cycle Per 4 years / payment possible every 2 years Performance/payment link Performance Payment Maximum Bonus 100% or more 13%/year Objectives Description Weighting Company Key long-term company targets 100% As an exception, the first cycle will cover three years (2021 to 2023), with a first possible payout in 2023, for the results of 2022- 2023. The CEO waived this long-term variable remuneration for the year 2021. For the Managing Director and CEO For the members of the Management Team BE Short-term variable remuneration Cycle Per year Performance/payment link Performance Payment Minimum Bonus 80% or less No minimum %, depending on circumstances. Target Bonus 100% 30% Maximum Bonus 120% or more 45% Objectives Description Weighting Company Key company targets 40% Personal Individual and transversal 30% Style & Values Leadership & link to company values 30% Long-term variable remuneration Cycle Per 4 years / payment possible every 2 years Performance/payment link Performance Payment Maximum Bonus 100% or more 7%/year Objectives Description Weighting Company Key long-term company targets 100% As an exception, the first cycle will cover three years (2021 to 2023, inclusive), with a first payout in 2021, for the 2021 results, and a second possible payout in 2023, for the 2022-2023 results. For 2022, the key corporate targets can be summarised as follows: • Financial performance: keep OPEX under control and hit Fluxys Belgium’s financial targets; • Energy transition and profitable and sustainable growth to become the transporter of future energy carriers; • Implement the investment plan, focusing in particular on the energy transition; • Safe and reliable operation, continuity of gas flows and satisfaction of the users of the facilities and attention paid to security of supply (SOS) in the current market situation; Fluxys Belgium implements its strategy and sustainability commitment in company objectives that cover the key areas of Planet, Prosperity and People, which are trans- lated into personal objectives every year. For example, our focus on our role in the transition to a sustainable 145 # OneteamOnetarget energy future is a critical factor in the variable compen- sation framework, as is our Go4Net0 project targeting a greenhouse gas emission-free company. We also actively support technologies and market models that strengthen the position of natural gas and carbon-neutral gas in the context of the energy transition. In addition, sustainability, safety, good community relations and the well-being of our employees were included as important pillars in the short-term and long-term compensation plans. The company objectives, both short and long term, and the respective personal objectives, together form the framework within which the performance of the Managing Director and CEO as well as the members of Management Team BE is evaluated and their corresponding variable remuneration awarded. The company targets were exceeded in 2022, in particu- lar in terms of financial performance, implementation of the investment plan and the energy transition. In Novem- ber, a new business unit was created, nextgrid, which is fully dedicated to developing projects related to new molecules in Belgium. Nextgrid aims to make the com- pany the essential infrastructure partner for the energy transition in Belgium. For the Managing Director and CEO, the personal targets were exceeded and the targets related to leadership and the propagation of the company’s values were also positively assessed. The short-term variable remuneration for the Managing Director and CEO is mainly paid in cash, with the remainder paid into the group insurance policy, plus the option to have part of the bonus paid in OTC (over-the-counter) options. The CEO waived his variable remuneration for long-term objectives for the year 2021 and will therefore only receive performance-related remu- neration for long-term objectives as of 2022, with the first possible payout after two years, in 2023. Remuneration for long-term goals is paid out in cash. For the members of Management Team BE, too, the per- sonal targets were exceeded and the targets related to leadership and the propagation of the company’s values were also positively assessed. The short-term variable remuneration is paid entirely in cash, with the option to have part of the bonus paid out in OTC options. With regard to the long-term objectives of the members of Management Team BE, the next payment is possible after two years, with respect to 2022 and 2023. Remuneration for long-term goals is paid out in cash Remuneration awarded to the Managing Director and CEO and the members of Management Team BE in 2022 Components Managing Director and CEO (individual) Members of Management Team BE (together) Base salary 322,656.60 539,425.20 Variable remuneration 204,887.00 205,714.00 Long-term variable remuneration 0 0 Pension 123,393.88 263,703.01* Other components 19,035.28 48,774.63 Total 669,972.76 1,057,616.84 Fixed/variable ratio 69% 80% 31% 20% * In accordance with the established long-term compensation rules, the next payout will take place in 2023. ** Including special bonus for 25 years of service for one member of Management Team BE. *** The one-off special bonus for 25 years of service for one member of Management Team BE has not been included in the calculation of the fixed/ variable ratio. As regards the variable remuneration for 2022, Fluxys Belgium is covered by the legal derogation from the requirement to spread payment over multiple years, because the on-target variable remuneration for the Managing Director and CEO and the members of Man- agement Team BE is no more than 25% of the total annual remuneration. Share-related remuneration The Managing Director and CEO and the members of Management Team BE receive neither shares nor share options in the company as part of their base salary or performance-related remuneration. Severance pay The company did not award any severance pay during the year in question. Clawback rights The Managing Director and CEO, in this capacity, and the members of Management Team BE have employee sta- tus. Fluxys Belgium applies the relevant legal provisions of the law on employment contracts. 146 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration Change by year 2018 2019 2020 2021 2022 Non-executive directors Total 437,103 462,051 464,687 469,910 442,266 Chairman of the Executive Board and CEO/Managing Director and CEO Total 470,938 516,941 619,288 609,811 669,973 Members of the Executive Board/Management Team BE Total 915,034 893,778 977,242 1,022,346 1,057,617 Performance of Fluxys Belgium Group (consolidated annual accounts – in thousands of €) Operating revenue 503,246 530,995 560,590 573,191 912,559 EBITDA 278,382 297,337 313,623 318,905 323,167 EBIT 120,601 134,841 133,482 137,821 147,305 Net profit 54,469 69,498 73,237 75,521 83,728 Average remuneration for other employees (in full-time equivalents) Total 88,498 88,689 89,292 91,112 99,140 Changes in company remuneration and performance *The number of members may vary from year to year. Total of the remuneration section for all employee categories, namely executives and employees and including a frozen population of employees who are still paid according to the so-called 'old employment conditions' in accordance with the provisions of Joint Committee 326. This ‘remuneration’ section includes all gross remuneration components, including fixed annual wages, as well as all variable components, including compensation for on-call duty, shift work, overtime, etc. The other remuneration components (employer contributions to the group insurance policy, personnel insurance and the cost of certain job-related benefits) are not included. The ratio between the highest remuneration for management (the Managing Director and CEO) and the lowest remuneration in full-time equivalent for employees was 1:14 for 2022. If it transpires that a deliberate error has resulted in inac- curate financial data being used as the basis for the var- iable remuneration, the error will be taken into account in the evaluation process of the individual concerned in the year in which the error is detected. The company did not make use of this option during the year in question. Deviations from the remuneration policy There were no deviations from the remuneration policy in 2022. 147 # OneteamOnetarget Voting rights and special powers The shareholders’ meeting represents all shareholders irrespective of their share category. The valid decisions it makes, based on the required majority, shall be bind- ing on all shareholders, even those who are not present or who do not agree with said decisions. Each share entitles the holder to one vote. In compli- ance with the Royal Decree of 16 June 1994, and with the Articles of Association within which these statu- tory provisions are incorporated, special rights shall be allocated to the golden share held by the Belgian State in Fluxys Belgium in addition to the ordinary rights attached to all other shares. Said special rights are exercised by the federal Energy Minister and, in brief, comprise the following: • the right to oppose any transfer, assignment as a guarantee, or change in the purpose of Fluxys Belgium’s strategic assets (a list of which is appended to the aforementioned Royal Decree dated 16 June 1994) if the federal Energy Minister considers that such an operation would adversely affect national interests in the field of energy; • the right to appoint two representatives of the federal government in an advisory capacity to Fluxys Belgium’s Board of Directors; • the right of representatives of the federal government to appeal to the federal Energy Minister within four working days, on the basis of objective, non-discriminatory and transparent criteria (as defined in the Royal Decree of 5 December 2000), against any decision of Fluxys Belgium’s Board of Directors (including the investment and activity plan and the associated budget) which in their view breaches national energy policy guidelines, including the government’s national energy supply objectives – such an appeal shall be suspensive; if the federal Energy Minister has not annulled the decision concerned within eight working days after this appeal, the decision shall become definitive; • a special voting right in the event of deadlock at the General Meeting concerning an issue affecting the objectives of federal energy policy. The special rights attached to the golden share held by the Belgian State are listed in Articles 5, 7, 10, 12 and 18 of Fluxys Belgium’s Articles of Association. These rights remain attached to the golden share for as long as it is held by the Belgian State and Articles 3 to 5 of the Royal Decree of 16 June 1994 granting the State a golden share in Fluxys Belgium or replacement provi- sions remain in force. In addition to these statutory special rights, the golden share also confers on its holder the right to receive a portion 100 times greater than that associated with each category-B and category-D share of all dividend payments and all other payments which the company makes to its shareholders. Limitations on share transfers set by law or the Articles of Association There are no limitations on the following share transfers: • transfers of shares, subscription rights, ex-rights or independent rights enabling the purchase of shares (hereafter jointly referred to as “securities”) between a shareholder and companies associated with that shareholder within the meaning of the Code on Companies and Associations; • all transfers of category-D shares. In all other cases, any shareholder planning to transfer securities to another shareholder or a third party, in any manner whatsoever, shall give all other shareholders, except holders of category-D shares and the golden share, the option of a priority purchase (on a pro rata basis of their shareholding) of the securities relating to the planned transfer, as per the procedures detailed below. A shareholder planning to transfer shares must inform the company in writing, requesting acknowledgement of receipt, a) of the number of shares they plan to sell, b) of the name of the prospective assignee(s) deemed to be of good faith and the price irrevocably offered by said assignee, and c) that the shares in question are being offered to shareholders for priority purchase under the same conditions. The Board of Directors shall inform the other shareholders of this offer in the same manner within two weeks. Every shareholder shall then have 60 days as from receipt of the aforesaid written notification to inform the transferring shareholder and the company, in writing requesting acknowledgement of receipt, whether or not they shall submit a bid and, if so, of the number of shares they wish to acquire. If requests exceed the number of shares offered for sale, the Board of Directors shall distribute the shares between the applicants on a pro rata basis of the num- ber of shares held by said applicants and up to the maximum number of shares stated in their request. If, upon the expiry of the aforementioned period of 60 days, no shareholders have indicated their intention to acquire the shares offered, or where the number of shares requested by the shareholders is less than the 148 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration approval) where the total amount of the individual transaction or accumulated transactions over a three-month period is in excess of €25,000. • If a member of the Management Team BE has, directly or indirectly, an interest of a financial nature which conflicts with a decision or a transaction falling within the remit of the Management Team BE, they must notify the other members of this before the Team deliberates. The member concerned may not participate in the deliberations of the Management Team BE on that decision or transaction or in the vote. The Board of Directors was not required to implement the above procedure during the 2022 financial year. Issue or buy-back of shares Fluxys Belgium’s Articles of Association authorise the General Meeting to acquire the company’s own shares in accordance with legal provisions. No such decision was taken at the 2022 Annual General Meeting. How- ever, when the company acquires its own shares with a view to distributing them to its staff, no decision by the General Meeting is required. In the case of a capital increase, the shares for sub- scription in cash must be preferentially offered to share- holders, in proportion to the portion of the company’s capital their shares represent. However, the General Meeting may, in the interests of the company, limit or eliminate this pre-emptive right in compliance with legal provisions. Auditor The Annual General Meeting decided, based on a pro- posal by the Board of Directors and advice from the Audit and Risk Committee, to renew the mandate of EY Bedrijfsrevisoren BV, represented by Wim Van Gasse BV, permanently represented by Mr Wim Van Gasse, for a period of three years. This mandate will expire at the end of the 2025 Annual General Meeting and will be subject to an indexed fee of €118,779/year. In 2022, EY received remuneration totalling €217,379 for its work as the Fluxys Belgium group’s auditor. This remuneration is broken down as follows: • Audit services as auditor for the group: €159,595; • Audit services as auditor for the group’s foreign subsidiaries: €19,384. • The auditor provided additional services during the year for a total of €38,400. number of shares offered, the shareholder who indicat- ed their intention to transfer shares in accordance with the provisions of this article shall be able to complete the planned transfer to the third party indicated in their notification and under the conditions indicated therein. Transactions and other contractual relations Directors and members of the Management Team BE must take care to comply with all legal and ethical obli- gations incumbent upon them, in particular with respect to conflicts of interest as per Article 7:96 of the Code on Companies and Associations. The group’s Corporate Governance Charter lays down a procedure for transactions and other contractual relations between directors or members of the Man- agement Team BE and the company or its subsidiaries and which do not fall within the scope of the aforemen- tioned Article 7:96. This procedure is as follows: • Directors and members of the Management Team BE must take care to comply with all legal and ethical obligations incumbent upon them. They must organise their private and business affairs in such a way as to avoid as far as possible any situation in which a personal conflict of interest may arise between themselves and the company or its subsidiaries. • In the event of any doubt on the part of a director as to whether there is such a conflict of interest, they must notify the Chairman of the Corporate Governance Committee accordingly. Members of the Management Team BE should express their doubts to the Managing Director. • Where there is a personal conflict of interest, the director concerned must, without being asked, withdraw from the Board of Directors’ meeting while the matter in question is being discussed and must not take part in the voting, including by proxy, on said matter. Reasons for this abstention must be stated in accordance with the terms of the Code on Companies and Associations. • Where there is deemed to be a conflict of interest, the purpose and conditions of the transaction or other contractual relationship must be communicated for information purposes to the Board of Directors by its Chairman. The Board of Directors is also required to approve said purpose and conditions (or refer them to the Board of Directors of the subsidiary concerned for 149 # OneteamOnetarget Subsidiaries The Board of Directors checks on the progress of the activities of the subsidiaries Fluxys Re and Fluxys LNG at least twice a year when it examines their consoli- dated accounts (annual and half-yearly). The Board of Directors is also informed, as and when appropriate, of major events and important developments involving subsidiaries. Disclosure of major holdings The periodic disclosure pursuant to Article 74(8) of the Act of 1 April 2007 was sent out on 13 December 2017. As of the date of disclosure, Fluxys held 63,237,240 shares with voting rights in Fluxys Belgium. Publigas held no shares with voting rights in Fluxys Belgium. Publigas confirmed at that time that it had not acquired or transferred any shares with voting rights in Fluxys Belgium. No transfer of shares with voting rights took place in 2022. 150 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration Annex Methodology for calculating greenhouse gas emissions p. 151 Health, Safety and Environment Policy p. 152 GRI index p. 153 Independent auditor's assurance report p. 155 151 # OneteamOnetarget Methodology for calculating greenhouse gas emissions Scope and sites • Emissions from scopes 1 and 2 • All relevant sources of emissions in our activities Definitions Scope 1 1. Sources of CO 2 CO 2 emissions from gas consumption: • Stationary combustion: gas turbines, gas engines, boilers and heaters in Fluxys Belgium’s facilities • Consumption of office buildings (headquarters and regional operating centres) • Flaring during work • Fleet (CNG vehicles) CO 2 emissions relating to diesel and gasoline consumption: • Fleet • Emergency generators 2. Sources of CH 4 • Pneumatic emissions: emissions from pneumatic control systems • Fugitive emissions: emissions due to problems with seals on some equipment (flanges, pipe equipment, valves, joints, seals) • Operational emissions: emissions due to machinery starting and stopping and incomplete combustion • Interventions: volume vented for interventions • Incidents: vented volume due to emergency breakdowns/shutdowns or due to pipeline damage caused by third parties For the purpose of our calculation, we assume that 1 kg of methane contributes 25 times as much to climate change as 1 kg of CO 2 (GWP 100 = 25, according to the fourth IPCC report). Scope 2 The carbon footprint of the generation of the purchased electricity. As defined in the GHG protocol (ghgproto- col.org), scope 2 emissions physically occur at the site where the electricity is generated. Our green electricity contract came into force on 1 January 2021. Scope 2 emissions are equal to zero. 152 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration Health, Safety and Environment Policy Health, safety and the environment (HSE) is a res- ponsibility and commitment for both Fluxys and its employees. Transparency and trust are key to realising our HSE policy. . Well-being at work • Fluxys is committed to investing in occupational health and safety and incident prevention. • Employees and contractors have the individual responsibility to live up to that commitment in their actions. • We continuously improve to further enhance our safety culture. Integrity of our assets • We ensure safe, reliable and sustainable operations for our stakeholders. • We actively manage risk through a Quality & Safety Management System. • We report incidents and learn from experience. Commitment to the climate targets • We are committed to accommodating the energy carriers of the future. • We invest in reducing our greenhouse gas emissions. • We improve our ecological footprint. 153 # OneteamOnetarget GRI index In line with GRI standards The reporting in this sustain- ability report integrates non-financial information in line with Global Reporting Initiative 6 (GRI Standards - Core) and thus provides an explanation of the topics that are material to Fluxys Belgium’s activities, taking into account the context and value chain within which the company operates and the interests of the company’s stakeholders. 6. The Global Reporting Initiative (GRI) provides a generally accepted system for sustainability reporting. This includes principles and indicators that organisations can use to uniformly and transparently report on their economic, environmental and social performance. Statement of use Fluxys has reported the information cited in this GRI content index for the period 01/01/2022- 01/01/2023 with reference to the GRI Standards. GRI 1 used GRI 1: Foundation 2021 GRI Standard Disclosure Location GRI 2: General Disclosures 2021 2-1 Organisation details 12-29 2-2 Entities included in the organization’s sustainability reporting 24 2-3 Reporting period, frequency and contact point 153; 288 2-5 External assurance 156; 279 2-6 Activities, value chain and other business relationships 18-24 2-7 Employees 110; 119 2-8 Workers who are not employees 110 2-9 Governance structure and composition 22-27 2-12 Role of the highest governance body in overseeing the management of impacts 23; 26-27 2-13 Delegation of responsibility for managing impacts 24-27 2-15 Conflicts of interest 148 2-22 Statement on sustainable development strategy 24 2-23 Policy commitments 17; 49; 57; 65; 75; 83; 97; 100; 105; 107; 113; 114; 117; 118; 120; 122; 127; 129; 141; 152; 249 2-24 Embedding policy commitments 49-53; 57-59; 65-73; 75-81; 83-93; 97-99; 101-103; 105; 107-111; 113-115; 118-123; 127; 129; 141-142 2-25 Processes to remediate negative impacts 49-53; 57-59; 65-73; 75-81; 83-93; 97-99; 101-103; 105; 107-111; 113-115; 118-123; 127; 129; 141-142 2-26 Mechanisms for seeking advice and raising concerns 127 2-27 Compliance with laws and regulations 34-37; 127 2-29 Approach to stakeholder engagement 28-31 GRI 3: Material Topics 2021 3-1 Process to determine material topics 32-33 3-2 List of material topics 32 3-3 Management of material topics 32-33 154 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration GRI Standard Disclosure Location GRI 201: Thematische norm: Economisch 2016 201-1 Direct economic value generated and distributed 52-55 201-2 Financial implications and other risks and opportunities due to climate change 49 201-3 Defined benefit plan obligations and other retirement plans 185; 237-239 201-4 Financial assistance received from government 154 Financial assistance received from government: in 2022, Fluxys Belgium and Fluxys LNG received a reduction in withholding tax of €1,235,191.95 and €501,657.08 respectively. The partial exemption from paying withholding tax consists of the structural exemption for all employee categories, for shift, night and continuous work, for a certain number of overtime hours, and for R&D (certain qualifications). In 2020, Fluxys Belgium also received an advance ruling on the innovation income deduction for financial years 2019, 2020 and 2021. This regime, which replaced the patent income deduction, provides for a deduction calculated on net income from intellectual property limited in proportion to the share of the company's own R&D expenditure or the share outsourced to non-affiliated companies in the total R&D expenditure relating to this intellectual property. The deduction for financial year 2021 (return submitted in 2022) was €8,575,624.87, i.e. a net tax gain of €2,143,906.22. GRI 203: Indirect Economic Impacts 2016 203-1 Infrastructure investments and services supported 20-21; 52 GRI 205: Anti-Corruption 2016 205-1 Operations assessed for risks related to corruption 88; 127 205-2 Communication and training about anti-corruption policies and procedures 127 205-3 Confirmed incidents of corruption and actions taken 127 GRI 206: Anti-competitive Behavior 2016 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices 88; 127 GRI 302: Energy 2016 302-1 Energy consumption within the organization 78-81 302-3 Energy intensity 81 302-4 Reduction of energy consumption 76-77; 81 GRI 305: Emissies 2016 305-1 Direct (Scope 1) GHG emissions 81 305-2 Energy indirect (Scope 2) GHG emissions 81 305-4 GHG emissions intensity 81 305-5 Reduction of GHG emissions 76-77; 81 GRI 401: Employment 2016 401-1 Nieuwe werknemers en personeelsverloop 110 GRI 403: Occupational Health and Safety 2018 403-1 Occupational health and safety management system 112-114 403-2 Hazard identification, risk assessment, and incident investigation 112-115 403-3 Occupational health services 112-115; 152 403-4 Worker participation, consultation, and communication on occupational health and safety 115 403-5 Worker training on occupational health and safety 114-115 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 114-115 403-9 Work-related injuries 36; 113-116 GRI 404: Training and Education 2016 404-2 Programs for upgrading employee skills and transition assistance programs 106-109; 111 GRI 405: Diversity and Equal Opportunity 2016 405-1 Diversity of governance bodies and employees 118-119 405-2 Ratio of basic salary and remuneration of women to men 119 GRI 415: Public Policy 2016 415-1 Political contributions Fluxys Belgium does not make political contributions 155 # OneteamOnetarget Scope We have been engaged by Fluxys Belgium NV to perform a ‘limited assurance engagement,’ hereafter referred to as “the Engagement”, to report on certain sustainability indicators of Fluxys Belgium NV’s (the “Company”) as included in Appendix 1 (the “Subject Matter”) of the annual report 2022 (the “Report”) for the period from 1 January 2022 to 31 December 2022. Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform assurance procedures on the remaining sustainability indicators included in the Report, and accordingly, we do not express a conclusion on this information. Criteria applied by Fluxys In preparing the sustainability indicators as listed in Annex 1 and included in the Report, Fluxys applied the reporting standards of the Global Reporting Initiative (“GRI”) and the Greenhouse Gas Protocol, as well as a set of own reporting criteria as disclosed in the Report (the “Criteria”). Fluxys’ responsibilities Fluxys’ management is responsible for selecting the Criteria, and for presenting the Subject Matter in accordance with that Criteria, in all material respects . This responsibility includes establishing and maintain- ing internal controls, maintaining adequate records and making estimates that are relevant to the preparation of the Subject Matter, such that it is free from material misstatement, whether due to fraud or error. EY’s responsibilities Our responsibility is to express a conclusion on the Subject Matter based on our procedures and the evi- dence we have obtained. We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information” (ISAE 3000), published by the International Auditing and Assurance Standards Board. This standard requires that we plan and perform our Engagement to obtain limited assurance about whether, in all material respects, the Subject Matter is presented in accordance with the Criteria, and to issue a report. The nature, timing, and extent of the procedures select- ed depend on our judgment, including an assessment of the risk of material misstatement, whether due to fraud or error. We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion. Our Independence and Quality Control We have maintained our independence and confirm that we have met the requirements of the Code of Eth- ics for Professional Accountants issued by the Inter- national Ethics Standards Board for Accountants, and have the required competencies and experience to conduct this assurance engagement. EY also applies International Standard on Quality Con- trol 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regard- ing compliance with ethical requirements, professional standards and applicable legal and regulatory require- ments. Description of procedures performed Procedures performed in a limited assurance engage- ment vary in nature and timing from, and are less in extent than for a reasonable assurance engagement. Consequently the level of assurance obtained in a lim- ited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Our procedures were designed to obtain a limited level of assurance on which to base our conclusion and do not provide all the evidence that would be required to provide a reasonable level of assurance. Although we considered the effectiveness of manage- ment’s internal controls when determining the nature and extent of our procedures, our assurance engage- Independent auditor’s assurance report 156 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Corporate Governance Declaration ment was not designed to provide assurance on inter- nal controls. Our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems. A limited assurance engagement consists of making enquiries, primarily of persons responsible for prepar- ing the sustainability KPIs and related information, and applying analytical and other appropriate procedures. Our procedures included: • Obtaining an understanding of the reporting processes for the Subject Matter; • Evaluating the consistent application of the Criteria; • Interviewing relevant staff at Fluxys Belgium responsible for data collection, reporting and calculation of the Subject Matter; • Interviewing relevant staff responsible for reporting the Subject Matter in the Report; • Obtaining internal and external documentation that reconcile with the Subject Matter; • Performing an analytical review of the data and trends in the Subject Matter at consolidated level as well as at the level of the sites; • Evaluating the overall presentation of the Subject Matter in the Report. Conclusion Based on our review, nothing has come to our attention that make us to believe that the Subject matter as listed in Appendix 1, of Fluxys Belgium NV included in the Report for the period from 1 January 2022 to 31 Decem- ber 2022, was not prepared, in all material respects, in accordance with the Criteria. Diegem, 16 March 2023 EY Bedrijfsrevisoren BV Represented by Wim Van Gasse 7 Partner 7. Acting on behalf of a SRL. 157 # OneteamOnetarget Appendix 1 Environmental KPI’s: ✓ Total GHG emissions (transmission & storage) ✓ Methane (Kt CO 2 e) ✓ CO 2 (Kt CO 2 e) ✓ Electricity (Kt CO 2 e) ✓ Volume of gas transmitted (TWh) ✓ GHG intensity (Kt CO 2 e/TWh) ✓ Total GHG emissions (LNG terminalling) ✓ Methane (Kt CO 2 e) ✓ CO 2 (Kt CO 2 e) ✓ Electricity (Kt CO 2 e) ✓ Volume of regasified LNG (TWh) ✓ GHG intensity (Kt CO 2 e/TWh) ✓ Total GHG emissions (Kt CO 2 e) ✓ Realized CH 4 reduction (%) ✓ CH 4 (tons) Safety KPI’s: ✓ Incapacity for work among staff • Occupational accident resulting in more than one day’s incapacity for work (#) • Frequency (number of occupational accidents divided by the number of hours worked) (#) • Severity (number of days of abscence divided by the number of hours worked) (#) ✓ Incapacity for work among contractors • Occupational accident resulting in more than one day’s incapacity for work (#) HR KPI’s: ✓ Number of training hours completed on subjects related to human rights (hours) ✓ Share of training hours completed on subjects related to human rights in the total number of training hours (%) ✓ Average number of training days per full-time equivalent (days) ✓ Incoming employees (#) • < 30 years (%) • 30-50 years (%) • > 50 years (%) • Men (%) • Women (%) ✓ Outgoing employees (including those leaving due to their contract coming to an end or due to retirement) (#) • < 30 years (%) • 30-50 years (%) • > 50 years (%) • Men (%) • Women (%) ✓ Ratio average salary • Men (%) • Women (%) Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 159 # OneteamOnetarget Financial situation Financial # OneteamOnetarget We’re there, day after day, ensuring security of energy supply and accelerating the green transition. This is how we bring prosperity to society, the economy and to our shareholders. And how we make sure to extend our contribution to welfare sustainably into the long-term future. 160 Consolidated financial statements under IFRS_ 163 General information on the company ______ 163 Corporate name and registered office _______ 163 Group activities _________ 163 Consolidated financial statements of the Fluxys Belgium group under IFRS __ 164 A. Consolidated balance sheet _______ 164 B. Consolidated income statement______ 166 C. Consolidated statement of comprehensive income _____ 167 D. Consolidated statement of changes in equity ____ 168 E. Consolidated statement of cash flows_____ 169 Notes ____________ 172 Note 1a. Statement of compliance with IFRS ______ 172 Note 1b. Judgement and use of estimates_____ 172 Note 1c. Date of authorisation for issue _______ 173 Note 1d. Standards, amendments and interpretations applicable on 1 January 2022 _ 173 Note 1e. Standards, amendments and interpretations applicable from 1 January 2023 and later __________ 173 Note 2. Accounting principles and policies ______ 174 Note 2.1. General principles _______ 174 Note 2.2. Balance sheet date _______ 174 Note 2.3. Events after the balance sheet date _____ 174 Note 2.4. Basis of consolidation _______ 174 Note 2.5. Intangible assets ________ 175 Note 2.6. Property, plant and equipment ______ 177 Note 2.7. Leases _________ 178 Note 2.8. Financial instruments _______ 180 Note 2.9. Inventories________ 183 Note 2.10. Borrowing costs ________ 184 Note 2.11. Provisions________ 184 Note 2.12. Revenue recognition________ 186 Note 2.13. Income taxes________ 190 Note 3. Acquisitions, disposals and restructuring _____ 190 Note 4. Income statement and operating segments_____ 193 Note 4.1. Operating revenue ________ 196 Note 4.2. Operating expenses _______ 197 Note 4.3. Financial income _________ 202 Note 4.4. Finance costs ________ 203 Note 4.5. Income tax expenses _______ 204 160 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 161 Note 4.6. Net profit/loss for the period ______ 207 Note 4.7. Earnings per share _______ 208 Note 5. Segment balance sheet _______ 210 Note 5.1. Property, plant and equipment ______ 212 Note 5.2. Intangible assets ________ 218 Note 5.3. Right of use assets_________ 221 Note 5.4. Other financial assets _______ 222 Note 5.5. Other non-current assets ________ 222 Note 5.6. Inventories_________ 223 Note 5.7. Trade and other receivables______ 224 Note 5.8. Short-term investments, cash and cash equivalents ___ 225 Note 5.9. Other current assets________ 226 Note 5.10. Equity __________ 227 Note 5.11. Interest-bearing liabilities ______ 228 Note 5.12. Regulatory liabilities _______ 231 Note 5.13. Provisions__________ 233 Note 5.14. Provisions for employee benefits _____ 236 Note 5.15. Deferred tax assets and liabilities_____ 247 Note 5.16. Trade and other payables _______ 248 Note 6. Financial instruments_______ 249 Note 7. Contingent assets and liabilities – rights and liabilities of the group __ 254 Note 7.1. Litigation _________ 254 Note 7.2. Assets and items held for third parties, in their name, but at the risk and for the benefit of entities included in the consolidation scope_____ 254 Note 7.3. Guarantees received _______ 254 Note 7.4. Guarantees provided by third parties on behalf of the entity__ 254 Note 7.5. Commitments with regard to the Interconnector Zeebrugge Terminal (IZT) __ 254 Note 7.6. Commitments under terminalling service contracts___ 255 Note 7.7. Other commitments________ 255 Note 8. Related parties ________ 256 Note 9. Directors’ and senior executives’ remuneration ____ 259 Note 10. Events after the balance sheet date _____ 259 Statutory accounts of Fluxys Belgium SA according to Belgian GAAP ___ 260 Balance sheet _________ 261 Income statement _________ 263 Profit/loss appropriation ________ 264 Capital at the end of the period _______ 265 Income taxes __________ 266 Workforce ___________ 267 161 # OneteamOnetarget 162 Statutory auditor’s report and declaration by responsible persons _______ 271 Statutory auditor’s report to the General Meeting of Fluxys Belgium NV for the financial year ended 31 December 2022 _______ 271 Report on the audit of the Consolidated Financial Statements ___ 272 Report on other legal and regulatory requirements_____ 277 Declaration by responsible persons ______ 280 Declaration regarding the financial year ended 31 December 2022__ 280 Glossary ______ 281 Pertinence of published financial ratios (see ‘Financial situation: key statistics, p. 48) _ 281 Definition of indicators_________ 282 Other property, plant and equipment investments outside the RAB__ 282 Net finance costs __________ 282 Interest expenses_________ 282 EBIT ___________ 282 EBITDA ___________ 282 Net financial debt_________ 282 FFO ___________ 282 RAB ___________ 283 Extended RAB _________ 283 RCF ___________ 283 WACC ___________ 283 Shareholder’s guide ____ 287 Shareholder’s calendar________ 287 Payment of dividend __________ 287 162 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation Consolidated financial statements under IFRS General information on the company Corporate name and registered office The registered office of the parent entity Fluxys Belgium SA is Avenue des Arts 31, B - 1040 Brussels, Belgium. Group activities The main activities of the Fluxys Belgium group are transmission and storage of natural gas as well as terminalling services for liquefied natural gas (LNG) in Belgium. The Fluxys Belgium group also provides complementary services related to these main activities. Transmission, storage and terminalling services in Belgium are subject to the Gas Act 1 . Please refer to the specific chapters in the directors’ report for further information on the activities of Fluxys Belgium group. 1 Act of 12 April 1965 concerning the transmission of gaseous and other products by pipelines as later amended. 163 # OneteamOnetarget Consolidated financial statements of the Fluxys Belgium group under IFRS A. Consolidated balance sheet Consolidated Balance Sheet In thousands of € Notes 31-12-2022 31-12-2021 I. Non-current assets 2,061,085 2,074,508 Property, plant and equipment 5.1 1,855,375 1,902,037 Intangible assets 5.2 22,864 23,891 Right of use assets 5.3 30,020 33,527 Investments accounted for using the equity method 50 50 Other financial assets 5.4/6 111,171 88,642 Finance lease receivables 6 0 2,094 Other receivables 6 15,144 9,144 Other non-current assets 5.5 26,461 15,123 II. Current assets 1,345,485 560,006 Inventories 5.6 62,656 39,042 Finance lease receivables 6 2,094 601 Current tax receivables 2,429 1,473 Trade and other receivables 5.7/6 164,299 90,446 Cash investments 5.8/6 26,113 45,740 Cash and cash equivalents 5.8/6 1,070,708 366,931 Other current assets 5.9 17,186 15,773 Total assets 3,406,570 2,634,514 164 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 165 Consolidated Balance Sheet In thousands of € Notes 31-12-2022 31-12-2021 I. Equity 5.10 643,617 639,674 Equity attributable to the parent company’s shareholders 643,617 639,674 Share capital and share premiums 60,310 60,310 Retained earnings and other reserves 583,307 579,364 Non-controlling interests 0 0 II. Non-current liabilities 2,061,275 1,775,473 Interest-bearing liabilities 5.11/6 1,115,772 1,162,091 Regulatory liabilities 5.12 746,809 397,877 Provisions 5.13 4,127 4,246 Provisions for employee benefits 5.14 47,444 60,517 Other non-current financial liabilities 6 3,575 3,254 Deferred tax liabilities 5.14 143,548 147,488 III. Current liabilities 701,678 219,367 Interest-bearing liabilities 5.11/6 56,269 57,432 Regulatory liabilities 5.12 188,485 75,963 Provisions 5.13 0 3,069 Provisions for employee benefits 5.13 3,543 4,201 Current tax payables 1,020 2,148 Trade and other payables 5.16/6 444,533 73,307 Other current liabilities 7,828 3,247 Total liabilities and equity 3,406,570 2,634,514 165 # OneteamOnetarget B. Consolidated income statement Consolidated income statement In thousands of € Notes 31-12-2022 31-12-2021 Operating revenue 4.1 912,559 573,191 Sales of gas related to balancing operations and operational needs 278,566 32,378 Other operating income 16,212 13,107 Consumables, merchandise and supplies used 4.2.1 -5,582 - 3,422 Purchase of gas related to balancing of operations and operational needs -275,178 - 32,378 Miscellaneous goods and services 4.2.2 -465,521 -146,348 Employee expenses 4.2.3 -132,931 - 112,549 Other operating expenses 4.2.4 -4,958 - 5,074 Depreciations 4.2.5 -168,051 -173,993 Provisions 4.2.6 6,993 4.2.6 - 7,070 Impairment losses -14,804 - 21 Operational profit/loss 147,305 137,821 Change in the fair value of financial instruments -1,298 - 114 Financial income 4.3 4,589 1,142 Finance costs 4.4 -40,805 - 38,375 Profit/loss before taxes 109,791 100,474 Income tax expenses 4.5 -26,063 - 24,953 Net profit/loss for the period 4.6 83,728 75,521 Fluxys Belgium share 83,728 75,521 Non-controlling interests 0 0 Basic earnings per share attributable to the parent company's shareholders in € 4.7 1.1916 1.0748 Diluted earnings per share attributable to the parent company’s shareholders in € 4.7 1.1916 1.0748 166 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation C. Consolidated statement of comprehensive income Consolidated statement of comprehensive income In thousands of € Notes 31-12-2022 31-12-2021 Net profit/loss for the period 4.6 83,728 75,521 Items that will not be reclassified subsequently to profit or loss Remeasurements of employee benefits 5.12 22,905 28,503 Income tax expense on these variances -5,726 - 7,126 Other comprehensive income 17,179 21,377 Comprehensive income for the period 100,907 96,898 Fluxys Belgium share 100,907 96,898 Non-controlling interests 0 0 167 # OneteamOnetarget 168 D. Consolidated statement of changes in equity Consolidated statement of changes in equity In thousands of € Share capital Share pre- mium Reserves not available for distri- bution Retained earnings Reserves for employee benefits Other compre- hensive income Equity attributable to the parent company’s share- holders Non- control- ling interests Total equity I. BALANCE AS AT 31- 12-2020 60,272 38 54,072 542,537 - 17,881 0 639,038 0 639,038 1. Comprehensive income for the period 75,521 21,377 96,898 96,898 2. Dividends paid -96,262 - 96,262 - 96,262 II. CLOSING BALANCE AS AT 31-12-2021 60,272 38 54,072 521,796 3,496 0 639,674 0 639,674 1. Comprehensive income for the Period 83,728 17,179 100,907 100,907 2. Dividends paid -96,964 - 96,964 - 96,964 III. CLOSING BALANCE AS AT 31-12-2022 60,272 38 54,072 508,560 20,675 0 643,617 0 643,617 168 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 169 E. Consolidated statement of cash flows Consolidated statement of cash flows (indirect method) In thousands of € Notes 31-12-2022 31-12-2021 I. Cash and cash equivalents, opening balance A. 366,931 377,359 II. Net cash flows from operating activities 1,008,653 214,328 1. Cash flows from operating activities 1,041,092 248,206 1.1. Profit/loss from continuing operations B. 147,305 137,821 1.2. Non cash adjustments 631,460 144,620 1.2.1. Depreciations B. 168,051 173,993 1.2.2. Provisions B. -6,993 7,070 1.2.3. Impairment losses B. 14,804 21 1.2.4. Translation adjustments 0 0 1.2.5. Other noncash adjustments - 626 - 369 1.2.6. Increase (decrease) of the regulatory liabilities 5.12 456,224 - 36,095 1.3. Changes in working capital 262,327 - 34,235 1.3.1. Decrease (increase) of inventories -38,433 - 12,663 1.3.2. Decrease (increase) of tax receivables A. -956 3,635 1.3.3. Decrease (increase) of trade and other receivables A. -73,838 - 19,468 1.3.4. Decrease (increase) of other current assets -153 - 564 1.3.5. Increase (decrease) of tax payables -126 - 4,355 1.3.6. Increase (decrease) of trade and other payables A. 371,252 - 1,273 1.3.7. Increase (decrease) of other current liabilities A. 4,581 453 1.3.8. Other changes in working capital 0 0 2. Cash flows relating to other operating activities -32,439 - 33,878 2.1. Current tax paid -36,732 - 34,780 2.2. Interests from investments, cash and cash equivalents 4.3 4,053 957 2.3. Other inflows (outflows) relating to other operating activities 4.3/4.4 240 - 55 III. Net cash flows relating to investment activities -124,784 - 43,950 1. Acquisitions -145,118 - 61,546 1.1. Payments to acquire property, plant and equipment, and intangible assets 5.1/5.2 -116,916 - 56,546 1.2. Payments to acquire subsidiaries, joint arrangements or associates A. 0 0 1.3. Payments to acquire other financial assets -28,202 - 5,000 169 # OneteamOnetarget 170 Consolidated statement of cash flows (indirect method) In thousands of € Notes 31-12-2022 31-12-2021 2. Disposals 707 23,365 2.1. Proceeds from disposal of property, plant and equipment, and intangible assets 707 1,307 2.2. Proceeds from disposal of subsidiaries, joint arrangements or associates 0 0 2.3. Proceeds from disposal of other financial assets 5.4 0 22,058 3. Dividends received classified as investment activities 0 0 4. Subsidies received 5.1 0 513 5. Increase (-)/ Decrease (+) of cash investments A. 19,627 - 6,282 IV. Net cash flows relating to financing activities -180,092 -180,806 1. Proceeds from cash flows from financing 601 603 1.1. Proceeds from issuance of equity instruments D. 0 0 1.2. Proceeds from issuance of treasury shares D. 0 0 1.3. Proceeds from finance leases A. 601 603 1.4. Proceeds from other non-current assets 0 0 1.5. Proceeds from issuance of compound financial instruments 0 0 1.6. Proceeds from issuance of other financial liabilities 5.11 0 0 2. Repayments relating to cash flows from financing -48,455 - 48,288 2.1. Repurchase of equity instruments subsequently cancelled 0 0 2.2. Repayment of capital to non-controlling shareholders 0 0 2.3. Repayment of finance lease liabilities 5.11 -5,060 -4,955 2.4. Redemption of compound financial instruments 0 0 2.5. Repayment of other financial liabilities 5.11 -43,395 -43,333 3. Interests -35,274 -36,859 3.1. Interest paid classified as financing -35,330 -36,919 3.2. Interest received classified as financing 56 60 4. Dividends paid D. -96,964 -96,262 V. Net change in cash and cash equivalents 703,777 -10,429 VI. Cash and cash equivalents, closing balance A. 1,070,708 366,931 170 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 171 171 # OneteamOnetarget 172 Notes Note 1a. Statement of compliance with IFRS The consolidated financial statements of the Fluxys Belgium group for the financial year ended 31 December 2022 have been prepared in accordance with the International Financial Reporting Standards, as approved by the European Union and applicable on the balance sheet date. All amounts are stated in thousands of euro. Note 1b. Judgement and use of estimates The preparation of financial statements requires the use of estimates and assumptions to determine the value of assets and liabilities, and to assess the positive and negative consequences of unforeseen situations and events at the balance sheet date, as well as revenues and expenses of the financial year. Significant estimates made by the group in the preparation of the financial statements relate mainly to the valuation of the recoverable amount of property, plant and equipment, and intangible assets (see Notes 5.1 and 5.2), the valuation of rights of use and lease obligations under leases (see Notes 5.3 and 5.11), the valuation of any provisions and assets/liabilities (see Notes 5.13 and 7) and in particular the provisions for litigation and pension and related liabilities (see Note 5.14). Due to the uncertainties inherent in all valuation processes, the group revises its estimates on the basis of regularly updated information. Future results may differ from these estimates. Other than the use of estimates, group management also uses judgement in defining the accounting treatment for certain operations and transactions not addressed under the IFRS standards and interpretations currently in force. Therefore, in the balance sheet, the group records the regulatory liabilities corresponding to the excess of regulated revenue received according to the real costs to be covered by the authorized regulated tariffs. This difference is transferred from the income statement to the balance sheet in the regulatory liabilities (non-current and current - See Note 5.12). Where required, the regulatory assets are accounted for in the balance sheet on the line for ‘regulatory assets’ when the regulated revenue received is lower than the real costs to be covered by the authorised regulated tariffs. These latter are recognised in as much as the group considers their recovery highly likely. This accounting method (see Note 2.12) has been determined by the group, as no definitive guidance on ‘rate-regulated activities’ has been published to date. 172 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 173 Note 1c. Date of authorisation for issue The Board of Directors of Fluxys Belgium SA authorised these IFRS financial statements for issue on 29 March 2023. Note 1d. Standards, amendments and interpretations applicable on 1 January 2022 The following standards and interpretations are applicable for the annual period starting from 1 January 2022 • Amendments to IFRS 3 - Reference to the Conceptual Framework • Amendments to IAS 16 - Property, Plant and Equipment: Proceeds before Intended Use • Amendments to IAS 37 - Onerous Contracts - Costs of Fulfilling a Contract • IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter • IFRS 9 Financial Instruments - Fees in the ’10 per cent’ test for derecognition of financial liabilities • IAS 41 Agriculture - Taxation in fair value measurements The application of these amendments has not had a significant impact on the financial statements of the group. Note 1e. Standards, amendments and interpretations applicable from 1 January 2023 and later At the date of authorization of these financial statements, the standards and interpretations listed below have been issued but are not yet mandatory: • Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (effective for annual periods beginning on or after 1 January 2024, but not yet adopted at European level) • Amendments to IAS 1 Presentation of Financial Statements and the IFRS 2 Practice Statement 2: Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January 2023) • Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023) • Amendments to IAS 12 Income taxes: Deferred tax related to assets and liabilities arising from a single transaction (effective for annual periods beginning on or after 1 January 2023) • Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective for annual periods beginning on or after 1 January 2024) • Amendments to IFRS 17 Insurance Contracts: Initial application of IFRS 17 and IFRS 9 Financial Instruments • IFRS 17 Insurance Contracts (effective for annual periods beginning on or after 1 January 2023) These standards, amendments and interpretations have not been adopted early. The application of these standards, amendments and interpretations will have no significant impact on the financial statements of the group. 173 # OneteamOnetarget 174 Note 2. Accounting principles and policies The accounting principles and policies set out below were approved at the Fluxys Belgium Board of Directors meeting of 29 March 2023. Changes or additions compared with the previous financial year are underlined. Note 2.1. General principles The financial statements fairly present Fluxys Belgium group’s financial position, results of operations and cash flows. The group’s financial statements have been prepared on the accrual basis of accounting, except for the cash flow statement. Assets and liabilities have not been offset against each other, except when required or allowed by an international accounting standard. Current and non-current assets and liabilities have been presented separately in the balance sheet of the Fluxys Belgium group. The accounting policies have been applied in a coherent manner. Note 2.2. Balance sheet date The consolidated financial statements are prepared as of 31 December, i.e. the parent entity’s balance sheet date. Note 2.3. Events after the balance sheet date The book value of assets and liabilities at the balance sheet date is adjusted when events after the balance sheet date provide evidence of conditions that existed at the balance sheet date. Adjustments can be made until the date of authorisation for issue of the financial statements by the Board of Directors. Other events relating to circumstances arising after balance sheet date are disclosed in the notes to the consolidated financial statements, if significant. Note 2.4. Basis of consolidation The Fluxys Belgium group's consolidated financial statements have been prepared in accordance with IFRS and in particular with IFRS 3 (Business Combinations), IFRS 10 (Consolidated Financial Statements), IFRS 11 (Joint Arrangements) and IAS 28 (Investments in Associates and Joint Ventures). 174 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 175 Subsidiaries The Fluxys group’s consolidated financial statements include the financial statements of the parent entity and the financial statements of the entities it controls and its subsidiaries. The investor controls an investee when he is exposed—or has rights—to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The investor has power over the investee when he holds existing rights that give the current ability to direct the relevant activities, i.e. the activities of the investee that significantly affect the investee's returns, even he does not hold the majority of the voting rights in the investee concerned. The parent entity must consolidate the subsidiary as of the date it obtains the control over it and must cease to consolidate when it loses control over it. In this way revenues and charges of a subsidiary acquired or transferred in the course of the financial year are included in the consolidated income statement and in the consolidated statement of comprehensive income as from the date on which the parent entity acquired the control over the subsidiary and up to the date on which it ceased to control the latter. Investments in joint ventures A joint venture is a joint arrangement in which the parties exercising joint control over the undertaking have rights to the net assets of the undertaking. Joint control means contractually agreed sharing of the control exercised over an undertaking, which only exists in the cases where the decisions on the relevant activities require the unanimous consent of the parties sharing the control. The results and assets and liabilities of associates or joint ventures are accounted for in the present consolidated financial statements in accordance with the equity method, unless the investment, or a part thereof, is classified as an asset held for sale in accordance with IFRS 5. An investment in an associate or joint venture is initially accounted for at cost. It then integrates the share of the group in the net results and the other elements of the comprehensive result of the undertaking accounted for under the equity method. Finally, dividends distributed by this entity decrease the value of the investment. Note 2.5. Intangible assets An intangible asset is recognised as an asset if it is probable that future economic benefits attributable to the asset will flow to the entity and if the cost of the asset can be measured reliably. Intangible assets are recognised at cost in the balance sheet (cost method), less any accumulated depreciation and any accumulated impairment losses. Intangible assets with a limited useful life are depreciated over their useful life. Computer software is depreciated at 20% per annum. 175 # OneteamOnetarget 176 Subsequent expenditure is capitalised if it generates economic benefits exceeding the initial standard of performance. Intangible assets are reviewed at each balance sheet date to identify indications of potential impairment that may have arisen during the financial year. In case such indications are noted, an estimate of the recoverable amount of the related intangible assets is made. The recoverable amount is defined as the higher of the fair value less costs to sell of an asset and its value in use. The value in use is calculated by discounting future cash inflows and outflows generated by the continuous use of the asset and its final disposal at an appropriate discount rate. Intangible assets are impaired when their book value exceeds the amount that can be recovered, as a result of obsolescence of these assets or due to economic or technological circumstances. Intangible assets with an indefinite useful life are subject to an annual impairment test, and an impairment loss is recognised when their book value exceeds their recoverable amount. The useful life, the depreciation method, as well as the potential residual value of intangible assets are reassessed at each balance sheet date and revised prospectively, if applicable. Emission rights for greenhouse gases Emission rights for greenhouse gases acquired at fair value are recognised as intangible assets at their acquisition cost. Rights granted free of charge are recognised as intangible assets at a nil book value. The cost associated with emission of greenhouse gases in the atmosphere is recognised as an operating expense, the counterpart being a liability for the obligation to deliver allowances covering the effective emission over the period concerned (other debts). This expense is measured by reference to the weighted average cost of the acquired or granted allowances. This liability is derecognised on the delivery of allowances to the government by withdrawing emission rights from intangible assets. In case the allowances are insufficient to cover the emission of greenhouse gases during the financial year, the group accounts for a provision. This provision is measured by reference to the market value at the balance sheet date of the allowances yet to be purchased. The excess emission rights not sold on the market are valued at the balance sheet date by reference to the weighted average cost of the acquired or granted allowances, or at market value if lower than the weighted average cost. 176 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 177 Note 2.6. Property, plant and equipment Property, plant and equipment (PPE) is recognised as an asset if it is probable that future economic benefits attributable to the asset will flow to the entity and if the cost of the asset can be measured reliably. PPE is recognised at cost in the balance sheet (cost method), less any accumulated depreciation and any accumulated impairment losses. Subsequent expenditure is capitalised if it generates economic benefits exceeding the initial standard of performance. PPE is reviewed at each balance sheet date to identify indications of potential impairment that may have arisen during the financial year. In case such indications are noted, an estimate of the recoverable amount of the PPE in question is established. The recoverable amount is defined as the higher of the fair value less costs to sell of an asset and its value in use. The value in use is calculated by discounting future cash inflows and outflows generated by the continuous use of the asset and its final disposal at an appropriate discount rate. Subsidies Subsidies related to property, plant and equipment as well as contributions by third parties in the funding of such assets are deducted from the acquisition cost of these assets. Depreciation methods PPE is depreciated over its useful life. Each significant component of PPE is recognised separately and depreciated over its useful life. The depreciation method reflects the rate at which the group expects to consume the future economic benefits related to the asset, taking into account the time during which the assets may generate regulated revenue. The regulated investments intended to increase the security of supply in Europe are depreciated under a diminishing balance method, which more accurately reflects the rate at which the group expects to consume the future economic benefits of these assets. This is a specific list of regulated infrastructure investments, which are essential for gas transmission in Europe and form an integral part of the RAB. The methods and durations of depreciation used are as follows: Straight-line method: • 50 years for transmission pipelines in Belgium, terminalling facilities and tanks; In line with the new tariff method applied since 01.01.2020, all investments (new and existing) in gas transmission pipelines are fully depreciated by December 2049 at the latest. • 50 years for administrative buildings, staff housing and facilities; • 40 years for storage facilities; 177 # OneteamOnetarget 178 • 33 years for industrial buildings; • 20 years for investments related to the extensions of the Zeebrugge LNG terminal; • 10 years for equipment and furniture; • 5 years for vehicles and site machinery; • 4 years for computer hardware; • 3 years for prototypes; Declining-balance method: • This method only applies for investments made to ensure security of supply: declining- balance. The useful life, the depreciation method, as well as the potential residual value of property, plant and equipment are reassessed at each balance sheet date and revised prospectively, if applicable. Note 2.7. Leases Definition of ‘lease’ A contract is or contains a lease if it conveys a right to control the use of an identified asset for a period of time in exchange for a consideration. To determine whether a lease confers the right to control use of a determined asset for a determined period of time, the entity must appreciate whether, throughout the period of use, it has the right to: • obtain substantially all of the economic benefits from the use of the asset; and • direct the use of the asset. To determine the duration of the lease, any options for renewal or termination are considered, as required under IFRS 16, taking into account the probability of exercising the option as well as whether it is under the control of the lessee. The group as a lessee At the start of the lease, the lessee recognises a right-of-use asset and a lease obligation. Right-of-use assets The group recognises right-of-use assets on the date of the start of the contract, i.e. the date on which the asset becomes available for use. These assets are valued at the initial cost of the lease obligation minus amortisation and any depreciation, adjusted to take into account any revaluations of the lease obligation. The initial cost of the right-of-use assets includes the present value of the lease obligation, the initial costs incurred by the lessee, rent payments made on the start date or before that date, minus any incentives obtained by the lessee. These assets are depreciated over the estimated lifetime of the underlying asset or over the duration of the contract if this period is shorter, unless the group is sufficiently certain of obtaining ownership of the asset at the end of the contract. Right-of-use assets are presented separately from other assets as a different entry under non-current assets. 178 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 179 Lease obligations The lease obligation is valued at the present value of the rent payments that have not yet been paid. The present value of the rent payments must be calculated using the interest rate implicit in the lease if it is possible to determine that rate. If not, the lessee must use its incremental borrowing rate. The incremental borrowing rate is the interest rate that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment. Over the duration of the contract, the lessee values the lease obligation as follows: • by increasing the book value to reflect the interest on the lease obligation; • by reducing the book value to reflect the rent payments made; • by revaluing the book value to reflect the new appreciation of the lease obligation or amendments to the lease. The services included in leases do not form part of the lease debt. Lease obligations are presented in a separate entry under current and non-current interest-bearing liabilities (see note 5.11). Short-term leases and low-value leases For short-term leases (duration of 12 months or less), the Fluxys Belgium group registers a lease expense. To determine the criteria for a low-value lease, a threshold has been determined, except for vehicles, which are included in the group of vehicles leased for more than one year without applying the value criteria. For short-term leases, and low-value leases, the effect on profit/loss is not significant. 179 # OneteamOnetarget 180 Presentation In the consolidated income statement, the interest charge on the lease obligation is presented separately from the depreciation charge that applies to the right-of-use asset. In the cash flow statement, the cash flows will be presented as follows: • cash outflows relating to the principal of the lease obligation and the interest paid, in the financing activities; • rent payments for short-term leases, low-value leases and variable rent payments that have not been taken into account in the valuation of the lease obligations, in the operating activities. The group as a lessor The group leases out some facilities under finance lease as a lessor. Assets under finance lease are assets for which the group substantially transfers risks and rewards related to the economic ownership to the lessee. Assets leased under such contracts are recognised on the balance sheet as receivables in an amount equal to the net investment in the lease contract in question. Lease payments received are apportioned between financial income and repayments of the lease receivable so as to achieve a constant rate of return on the net investment by the group in the finance lease contract. When the classification of contracts under finance lease is based on the present value of the minimum lease payments, the most pertinent criteria adopted is the following: a contract is considered a finance lease if the present value of the minimum lease payments amounts to at least 90% of the fair value of the leased asset at the inception of the lease contract. No residual value is assumed for gas transmission assets in Belgium, due to the specific nature of the activities concerned. Note 2.8. Financial instruments Recognition and derecognition of financial assets and liabilities Recognition Financial assets and liabilities are recognised when the group becomes party to the instrument’s contractual terms. Derecognition of financial assets The group has to derecognise a financial asset if and only if the contractual rights on the cash flows of the financial asset expire, or where it transfers almost all the risks and advantages inherent to the ownership of the financial asset to a third party. If the group neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset, and retains control of the transferred asset, the group continues to recognise the financial asset to the extent of its continuing involvement and recognises a related liability for the amount received. If the group keeps almost all the risks and advantages inherent to the ownership of the financial asset, it continues to recognise the whole financial asset and recognises a financial liability for the consideration received. 180 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 181 When a financial asset measured at amortised cost is derecognised, the difference between the amortised cost and the sum of the considerations received is transferred to the income statement. When an investment in equity instruments until now measured at fair value with changes to other comprehensive income are derecognised, the accumulated profit/loss recognised previously in other comprehensive income is not reclassified to net income. Derecognition of financial liabilities The entity derecognises a financial liability only if this liability is extinguished, i.e. once the obligation is fulfilled, cancelled or it expires. The difference between the book value of an extinguished financial liability and the consideration paid, including, where applicable, the assets (non-cash) transferred and the liabilities acquired must be recognised in the income statement. Unconsolidated equity instruments (such as shares and equity rights) The Fluxys Belgium group values the unconsolidated equity instruments at fair value with changes to other comprehensive income. However, given the materiality of certain instruments and the unavailability of recent market values, certain equity instruments are accounted for at the initial cost. The dividends received for these equity instruments are recognised in financial income under the item ‘Dividends from unconsolidated entities’. 181 # OneteamOnetarget 182 Short-term investments, cash and cash equivalents Cash investments in the form of bonds or commercial paper, having a maturity date exceeding three months, are reported as financial assets measured at amortised cost. These are shown in the balance sheet under non-current ‘other financial assets’ and under current ‘investments’. Cash and cash equivalents include short-term investments, short-term bank deposits and deposits readily convertible to a known cash amount and which are subject to an insignificant risk of changes in value (maximum of three months). Cash and cash equivalents held are reported as financial assets measured at amortised cost. The economic model used by the Fluxys Belgium group to manage financial assets aims to hold them in order to obtain contractual cash flows. The sales of financial assets are rare, and the group does not expect to proceed with such sales in the future, except in the case of an increased credit risk for the assets over and above the policy advocated by the group. A sale may also be motivated by an unexpected financing need. Where the conditions required to be qualified as financial assets valued at amortised cost are not met, these financial assets concerned are valued at fair value with changes to net profit/loss. Trade and other receivables Trade and other receivables are stated at their face value reduced by any amounts deemed unrecoverable. When the time value of money is significant, trade and other receivables are discounted. Impairment losses are recognised when the book value of these items at balance sheet date exceeds their recoverable amount. Expected credit losses and write-downs Expected credit losses on financial assets accounted for at amortised cost are calculated using an individual approach, based on the credit quality of the counterparty and the maturity of the financial asset. Expected credit losses are calculated using a probability of default over 12 months where the credit risk is low. A financial asset is impaired where one or more events have occurred with a negative effect on the future estimated cash flows of this financial asset. The indications of the impairment of a financial asset encompass data that may be observed on the following events: • defaults in payments for more than 90 days, • significant financial difficulty of the issuer or debtor and • increasing probability of bankruptcy or financial restructuring of the lender. If the economic forecast (for example gross domestic product) deteriorates over the course of next year, which could lead to an increase in the number of defaults, the historical default rates are adjusted. At each balance sheet date, the historical default rates observed are updated and the changes in the forecast estimates are analysed. 182 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 183 Interest-bearing liabilities Interest-bearing liabilities are recognised at the net amount received. Following initial recognition, interest-bearing liabilities are recorded at amortised cost. The difference between the amortised cost and the redemption value is recognised in the income statement under the effective interest rate method over the term of the liabilities. Trade payables Trade payables are stated at face value. When the time value of money is significant, trade payables are discounted. Note 2.9. Inventories Valuation Inventories are valued at the lower of cost and net realisable value. Inventories are written down to account for: • a reduction in net realisable value, or • impairment losses due to unforeseen circumstances related to the nature or use of the assets. This impairment on inventories is recognised in the income statement in the period in which they arise. Gas inventory Gas inventory changes are valued under the weighted average cost method. Supplies and consumables Supplies and consumables are valued under the weighted average cost method. Work in progress Work in progress for third parties is valued at cost, including indirectly attributable costs. When the outcome of a contract can be reliably estimated, contract revenue and expenses are recognised as revenue and expenses respectively by reference to the stage of completion of the contract at balance sheet date. Any expected loss is recognised immediately as an expense in the income statement. 183 # OneteamOnetarget 184 Note 2.10. Borrowing costs Borrowing costs directly attributable to the acquisition, building or production of assets requiring a substantial period of time to get ready for their intended use (property, plant and equipment, investment property, etc.) are added to the costs of the assets concerned until they are ready for use or sale. The amount of the borrowing costs to be capitalised is the actual cost incurred in borrowing the funds, as reduced by income from any temporary investment of these funds. Note 2.11. Provisions Provisions are recognised as a liability in the balance sheet when they meet the following criteria: • the group has a present (legal or constructive) obligation arising from a past event; • it is probable (i.e. more likely than not) that the settlement of this obligation will lead to an outflow of resources embodying economic benefits; • the amount of the obligation can be reliably estimated. No provision is recognised if the above conditions are not met. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the balance sheet date, in other words the amount the entity reasonably expects to have to pay to discharge the obligation at balance sheet date, or to transfer it to a third party at the same date. This estimation is based either on a request from a third party or on estimates or detailed calculations. For all provisions recognised, management considers that the probability of an outflow of resources exceeds 50%. When the time value of money is significant, provisions are discounted. The discount rate used is a rate before tax reflecting current market estimates of the time value of money and taking into account any risks associated with the type of liability in question. All risks incurred by the group that do not comply with the above-mentioned criteria are disclosed as contingent liabilities in the Notes. Employee benefits Some companies in the Fluxys group have established supplementary ‘defined benefit’ or ‘defined contribution’ pension plans. Benefits provided under these plans are based on the number of years of service and the employee’s salary. ‘Defined benefit’ pension plans enable employees to benefit from a capital sum calculated on the basis of a formula which takes account of their annual salary at the end of their career and their seniority when they retire. ‘Defined contribution’ pension plans provide employees with a capital sum accumulated from personal and employer contributions, based on the salary. In Belgium, the law requires that the employer guarantee a minimum return for defined contribution, which varies based on the market rates. The accounting method used by the group to value these ‘defined contribution pension plans, with a guaranteed minimum return’, is identical to the method used for ‘defined benefit’ plans. 184 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 185 In case of death before retirement, these plans provide a capital sum for the surviving spouse, as well as allowances for orphans. Other employee benefits Certain group companies offer their employees post-employment benefits such as the reimbursement of medical costs and price subsidies, and other long-term benefits (seniority bonuses). Valuation These liabilities are valued annually by a qualified actuary. Regular payments made in relation to the supplementary pension plans are recognised as expenses at the time they are incurred. ‘Defined benefit’ pension plans Provisions for pensions and other collective agreements are reported in the balance sheet in accordance with IAS 19 (Employee Benefits), using the projected unit credit method (PUCM). The current value of post-employment benefits is determined at each balance sheet date based on the projected salary estimated at the end of the employee’s career, the rate of inflation, life expectancy, staff turnover and the expected age of retirement. The present value of defined benefit obligations is determined using a discount rate based on high-quality bonds with maturity dates close to the weighted average maturity of the plans concerned and which are denominated in the currency in which the benefits are to be paid. The amount accounted for in respect of post-employment liabilities corresponds to the difference between the current value of future obligations and the fair value of assets in the plan destined to cover them. Any deficit resulting from this valuation is subject to the recognition of a provision to cover this risk. In the opposite case, an asset is recognised in line with the surplus of the defined benefit pension plan, capped at the current value of any future reimbursement from the plan or any reduction in future contributions to the plan. The remeasurements of the liabilities or assets in the balance sheet comprise: • the actuarial gains or losses on the defined benefit liabilities resulting from adjustments relating to experience and/or changes in actuarial assumptions (including the effect of the change in the discount rate); • the return on plan assets (excluding amounts included in net interest) and changes in the effect of the asset ceiling (excluding amounts included in net interest). These remeasurements are directly recognised in equity through the other items in comprehensive income. 185 # OneteamOnetarget 186 ‘Defined contribution’ pension plans The liabilities of the group with regard to ‘defined contribution’ plans are limited to the employer contributions paid recorded in the results. Actuarial gains and losses relating to other long-term employee benefits The other long-term benefits are accounted for in the same way as the post-employment benefits, but revaluations are fully accounted for in the financial results in the financial year in which they occur. Note 2.12. Revenue recognition The group accounts for operating revenue as it meets a service obligation by supplying the customer with the promised good or service and as this latter obtains control thereof. The Fluxys Belgium group uses a five-stage approach to determine whether a contract entered into with a customer may be accounted for and the way in which revenue should be recognised: 1. identification of the contract, 2. identification of the service obligations, 3. determination of the transaction price, 4. distribution of the transaction price between the service obligations and 5. recognition of operating revenue where the service obligations are met or where the control of the goods or services is transferred to the customer. Group revenues mainly come from standard regulated contracts for which both the services to be provided and the price of the service are clearly identified. Fluxys Belgium and its subsidiaries transfer the control of their regulated services progressively and in doing so meet their service obligation and account for operating revenue progressively. It should be noted that the revenue from regulated activity is recognised based on reserved capacities. Furthermore, the Fluxys Belgium group makes sales of gas that are necessary for balancing operations and its operational needs. These services, fulfilled at a specific time, are recognised in operating revenue at the time of their fulfilment. From 1 June 2020, these balancing operations are conducted by the joint venture with Balansys. Regulated income received by the group may generate a gain or a loss compared with the target rate of return on the capital invested. Gains are reported and recognised as regulatory liabilities, whereas losses are included in operating revenue to offset the accounting of regulatory assets. The Group has no regulatory assets in the published periods. The regulatory framework is explained in further detail in the chapter on ‘Regulatory and legal framework’ of the annual report. 186 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 187 In note 4 - Segment income statement, the distinction is shown between the revenue invoiced and the revenue recognised. The latter includes the revenue invoiced, but also the movements in regulatory assets and liabilities. The following table provides more detailed information on the Group’s services (performance obligations), types of contract, pricing, and the way in which operating revenue is recognised. Most of this revenue is regulated. 187 # OneteamOnetarget 188 Legal entity Revenue stream Performance obligation: nature, customer and timing of satisfaction Contract type and pricing Fluxys Belgium Transmission services Nature of performance obligation: sale of capacity and related services in the pipeline infrastructure to its customers to transmit natural gas to distribution system operators, power stations and major industrial end-users in Belgium or to transport natural gas to a border point for transmission to other end-user markets in Europe. Customers: gas shippers reserve capacity slots (short + long term contracts) Revenue recognition: the performance obligation consists in making these capacities available for the customers for use at the customers’ discretion (cf. IFRS 15.26 (e)). Basically, the contracts between Fluxys Belgium and their customers determine that the latter reserve a certain capacity that can be used over a certain period, at the choice of the customer. Thus, Fluxys Belgium will transfer to the customer a series of services that are substantially the same and that have the same pattern of transfer to the customer (IFRS 15.22 (b)). Each service in the series provided by Fluxys Belgium is a performance obligation satisfied over time, as described by IFRS 15.35a (the customer simultaneously receives and consumes the benefits provided by Fluxys’ performance as Fluxys performs). Therefore, the reserved capacities are invoiced and recognised monthly over the period covered by the contract related to the capacities reserved (in accordance with IFRS 15.39 and IFRS 15.B15), i.e. over time recognition. Regulated Standard Transmission Agreement. Regulated tariffs are expressed in €/kWh/h/year Fluxys Belgium Storage capacity service Nature of performance obligation: storage services enabling customers to use buffer capacity flexibly according to their needs. The gas is stored in the underground facilities in Loenhout, Belgium. Most of the revenues are generated by the sale of standard bundled packages, composed of injection, storage and withdrawing capacity throughout the storage season in fixed proportion. Such contracts can be both long term and short term. Customers: As for transmission, the revenues are based on the reserved capacities. Regulated Standard Storage Agreement (in combination with a regulated Standard Transmission Agreement to enable injecting into and withdrawing from the gas grid – see above). Regulated tariffs for storage capacity are expressed in €/stan- dard bundled unit per year. Tariffs for separately purchased 188 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 189 Revenue recognition: revenue is recognised over time as these services are performed continuously throughout the contractual term storage capacity are expressed in €/GWh/year. Injection or withdrawal capacity is expressed in €/m³(n)/h/year. Fluxys LNG Terminalling services Nature of performance obligations: Unloading services (time slots are sold in advance, the so-called ‘berthing rights’), possibly combined with related services such as storage, regasification or sending out (i.e. transform the liquid gas into gas that can be injected in the grid). Loading services Transhipment services, that occur in 2 forms: Ship-To-Ship: unloading of LNG from one LNG ship directly to another. Ship-Storage-Ship: LNG is unloaded from an LNG ship, then stored in a tank at the terminal. It can be loaded a few days later by another LNG ship. Customers: Customers reserve berthing rights in advance, these can be both long term and short term contracts. Revenue recognition: revenue of these berthing rights is recognised over time based on the reserved capacity, independently of whether the slots are used or not. For some additional services, such as storage, revenue is recognised over time as well, in accordance with IFRS 15.35(a). For other additional services, such as regasification, revenue is recognised at a point in time. Standard regulated LNG Terminalling Agreement, mostly combined with a separate standard regulated LNG Service Agreement for ancillary services such as storage and sending out capacity, etc. Tariffs for (un)loading are expressed in €/berthing right for the capacity reservations. For storage and for regasification and sending out services, tariffs are expressed in €/MWh/day. Regulated standard LNG Transhipment Service Agreement. Tariffs are expressed in €/berthing right for the transhipment services. For additional storage services, the tariff is expressed in €/MWh/day. 189 # OneteamOnetarget 190 Note 2.13. Income taxes Current tax is determined in accordance with local tax regulations and calculated on the income of the parent entity, subsidiaries and joint operations. Deferred tax liabilities and assets reflect the future taxable and deductible temporary differences, respectively, between the book base and the tax base of assets and liabilities. Deferred tax liabilities and assets are measured at the enacted or substantially enacted new income tax rate applicable to the financial year in which the underlying asset is expected to be realised or the underlying liability is expected to be settled. Any later change in rates requires a change to the deferred taxes. This is accounted for via the other items of the global profit/loss for the part concerning operations that are usually accounted for in these items. The balance of the change in deferred taxes is accounted for in the net profit/loss for the period. Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the future deductible temporary differences can be offset. Note 3. Acquisitions, disposals and restructuring Consolidation scope The consolidation scope and percentage of interests in consolidated entities remained identical to those of 31 December 2021. Information on investments Fully consolidated entities Name of the subsidiary Registered office Entity number % owner - ship Core business Currency Balance sheet date Fluxys LNG SA Rue Guimard 4 B - 1040 Brussels 0426 047 853 100.00% LNG terminalling € 31 December Flux Re SA Rue de Merl 74 L - 2146 Luxembourg - 100.00% Reinsurance entity € 31 December Entities accounted for using the equity method Name of the subsidiary Registered office Entity number % owner- ship Core business Currency Balance sheet date Balansys SA Rue de Bouillon 59-61 L - 1248 Luxembourg - 50.00% Balancing operator € 31 December 190 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 191 Nature and scope of the restrictions related to the assets and liabilities of the group Special rights are attached to the special share of the Belgian State in Fluxys Belgium, other than the normal rights attached to all other shares. These special rights are exercised by the Federal Minister in charge of Energy and can be summarised as follows: • the right to oppose to all transfers, any assignment as security or change of the destination of strategic assets of Fluxys Belgium of which the list is set out in an annex to the royal decree of 16 June 1994, if the Federal Minister in charge of Energy considers that this operation prejudices the national interests in the area of energy; • the right to appoint two representatives of the federal government with a consultative vote in the Board of Directors and the Strategic Committee of Fluxys Belgium; • the right of the representatives of the federal government, within four business days, to appeal to the Federal Minister in charge of Energy on the basis of objective, non- discriminatory and transparent criteria, as defined in the Royal Decree of 5 December 2000, against any decision of the Board of Directors or any advice of the strategic Committee of Fluxys Belgium (including the investment and business plan and related budget) which they regard as contrary to the guidelines of the country’s energy policy, including the government's objectives concerning the country's energy supply. The appeal is suspensive. If the Federal Minister in charge of Energy has not cancelled the decision concerned within eight business days after this appeal, it becomes final; • a special voting right in case of deadlock in the General meeting on a matter concerning the objectives of the federal energy policy. There are no other significant restrictions that may limit the ability of the group to access or use its assets and discharge its liabilities. However, it must be noted that the assets of Flux Re are destined to cover the risk of the company in the scope of its reinsurance activities. The total assets in the balance sheet of Flux Re came to €164.1 million as at 31- 12-2022 compared to €173.2 million as at 2021 year-end. Balansys SA is a company governed by Luxembourg law in which 50% of shares are held by Fluxys Belgium SA and 50% by Creos Luxembourg SA. The objective of this company is to integrate the Belgian and Luxembourg natural gas markets. As part of this objective, an agreement has been signed between the shareholders that stipulates that Balansys SA shares may not be encumbered with any guarantees or transferred, unless for the benefit of another transmission network operator and with the agreement of the other shareholder. The key figures of Balansys are shown in the table below: 191 # OneteamOnetarget 192 Entity accounted for using the equity method 31-12-202 2 In thousands of € () 31-12-202 1 In thousands of € () Non-current assets 0 0 Current assets 100,112 66,040 Equity 100 100 Non-current liabilities 30,060 18,061 Current liabilities 69,9 52 48,879 Operating revenue 461,307 168,837 Operating expenses 460,282 - 168,546 Net financial result - 989 - 280 Income tax expenses -3 7 - 11 Net profit/loss for the period 0 0 Entities accounted for by the equity method 50 50 Result of entities accounted for by the equity method 0 0 () Figures before intercompany eliminations, on a 100% basis and subject to approval of the accounts by the governing bodies and the general assembly of the entity. 192 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 193 Note 4. Income statement and operating segments Operating segments Fluxys Belgium group carries out activities in the following operating segments: transmission, storage, LNG terminalling activities in Belgium and other activities. The segment information is based on a classification into these operating segments. Transmission activities comprise all operations subject to the Gas Act related to transmission of gas in Belgium. Storage activities comprise all operations subject to the Gas Act related to storage of gas at Loenhout in Belgium. Terminalling activities comprise all activities subject to the Gas Act related to the LNG terminal at Zeebrugge in Belgium. The three aforementioned activities are regulated and strictly separated. Offsetting balances between these activities is not authorised. The segment 'other activities' comprises other services rendered by Fluxys Belgium group such as the operational support of the IZT and ZPT terminals 2 in Belgium and work for third parties. The Fluxys Belgium group operates mainly in Belgium and does not therefore publish information by geographical sector. The Chief Operating Decision Maker (CODM) is the CEO. Basis of accounting relating to transactions between operating segments Transactions between operating segments mainly relate to capacity reservations by one segment subject to the Gas Act with another. These transactions are charged at the same regulatory tariffs as for external clients. Information relating to the main customers The group’s main customers are users of transmission and storage services and of the Zeebrugge LNG Terminal. 2 Interconnector Zeebrugge Terminal (IZT): Fluxys Belgium rents part of its installations to IZT under a finance lease and also provides operational support and maintenance. The cooperation with IZT is based on contracts (no participation by Fluxys Belgium). Zeepipe Terminal (ZPT): Fluxys Belgium contributes to the operations of ZPT on a contractual basis (no participation). 193 # OneteamOnetarget 194 Segment income statement at 31-12-2022 In thousands of € Trans- mission Storage Terminal- ling Other Elimination between segments Total Operating revenue 710,702 34,817 157,292 20,666 - 10,918 912,559 Sales and services to external customers 866,993 15,882 297,722 21,033 0 1,201,630 Transactions with other segments 1,312 8,473 1,500 - 367 - 10,918 0 Changes in regulatory assets and liabilities - 157,603 10,462 - 141,930 0 0 - 289,071 Sales of gas related to balancing operations and operational needs 138,655 10,327 129,584 0 0 278,566 Sales of gas related to balancing of operations and operational needs 273,348 8,673 163,699 0 0 445,720 Changes in regulatory liabilities - 134,693 1,654 - 34,115 0 0 - 167,154 Other operating income 5,426 129 4,736 5,999 - 78 16,212 Consumables, merchandise and supplies used - 1,144 1 - 34 - 4,405 0 - 5,582 Purchase of gas related to balancing of operations and operational needs - 139,057 - 9,924 - 126,197 0 0 - 275,178 Miscellaneous goods and services - 419,316 - 9,600 - 40,577 - 6,946 10,918 - 465,521 Employee expenses - 96,731 - 7,216 - 23,360 - 5,702 78 - 132,931 Other operating expenses - 3,944 - 588 - 374 - 52 0 - 4,958 Depreciations - 111,009 - 8,361 - 47,656 - 1,025 0 - 168,051 Provisions for risks and charges 3,970 - 15 99 2,938 1 6,993 Impairment losses - 14,173 0 - 647 16 0 - 14,804 Profit/loss from continuing operations 73,379 9,570 52,866 11,489 1 147,305 Change in the fair value of financial instruments 0 0 0 - 1,298 0 - 1,298 Financial income 2,759 306 567 957 0 4,589 Finance costs - 26,131 - 2,894 - 9,788 - 1,992 0 - 40,805 Profit/loss before taxes 50,007 6,982 43,645 9,156 1 109,791 Income tax expenses - 26,063 Net profit/loss for the period 83,728 194 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 195 Segment income statement at 31-12-2021 In thousands of € Trans- mission Storage Terminal- ling Others Elimination between segments Total Operating revenue 384,346 33,536 145,680 26,343 -16,714 573,191 Sales and services to external customers 286,969 32,791 137,826 20,135 0 477,721 Transactions with other segments 892 8,137 1,477 6,208 -16,714 0 Changes in regulatory assets and liabilities 96,485 - 7,392 6,377 0 0 95,470 Sales of gas related to balancing operations and operational needs 20,038 2,948 9,392 0 0 32,378 Sales of gas related to balancing of operations and operational needs 65,830 2,948 22,975 0 0 91,753 Changes in regulatory liabilities - 45,792 0 - 13,583 0 0 - 59,375 Other operating income 4,256 115 2,467 6,327 -58 13,107 Consumables, merchandise and supplies used - 991 - 5 - 27 - 2,399 0 - 3,422 Purchase of gas related to balancing of operations and operational needs - 20,038 - 2,948 - 9,392 0 0 - 32,378 Miscellaneous goods and services - 117,044 - 7,838 - 26,379 - 11,800 16,713 - 146,348 Employee expenses - 80,839 - 6,510 - 20,409 - 4,850 59 - 112,549 Other operating expenses - 3,841 - 523 - 462 - 248 0 - 5,074 Depreciations - 116,067 - 9,568 - 47,520 - 838 0 - 173,993 Provisions for risks and charges - 2,117 28 - 121 - 4,861 1 - 7,070 Impairment losses 1 0 0 - 22 0 - 21 Profit/loss from continuing operations 67,704 9,235 53,229 7,652 1 137,821 Change in the fair value of financial instruments 0 0 0 - 114 0 - 114 Financial income 125 14 32 971 0 1,142 Finance costs - 24,251 - 2,711 - 10,011 - 1,402 0 - 38,375 Profit/loss before taxes 43,578 6,538 43,250 7,107 1 100,474 Income tax expenses - 24,953 Net profit/loss for the period 75,521 195 # OneteamOnetarget 196 Note 4.1. Operating revenue Analysis of operating revenue by business segment: Operating revenue In thousands of € Notes 31-12-2022 31-12-202 1 Change Transmission in Belgium 4.1.1 709,390 383,454 325,936 Storage in Belgium 4.1.1 26,344 25,399 945 Terminalling in Belgium 4.1.1 155,792 144,203 11,589 Other operating income 4.1.2 21,033 20,135 898 Total 912,559 573,191 339,368 Operating revenue in the 2022 financial year amounted to €912,559 thousand, which represents an increase of €339,368 thousand as compared with the previous financial year. 4.1.1 Transmission, storage and terminalling services in Belgium are subject to the Gas Act. Revenue from these services aims to ensure an authorised return on capital invested and to cover the operating expenses related to these services, while integrating the productivity efforts to be accomplished by the network operator, as well as permitted depreciation. The bulk of the increase in sales and regulated services relates to transmission services (€325,936 thousand). This increase is mainly due to the accounting settlement of the exceptional solidarity contribution of €300 million. The regulatory nature of this contribution makes the impact on the result neutral. Charged revenues increased significantly in 2022, as the infrastructure was largely used to support the security of supply of surrounding countries. These additional revenues, including auction premiums, do not benefit shareholders but are offset by a higher allocation to regulatory liabilities. Revenue from storage services is slightly up compared to 2021. Sales are down in 2022, but this decrease is offset by the use of regulatory liabilities in accordance with the tariff proposal. With regard to terminalling revenue, this is up €11,589 thousand, largely following spot slot auction sales. Almost all of these sales are allocated to regulatory liabilities. 4.1.2 Other operating revenue relates mainly to work and services for third parties and the provision of facilities. 196 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 197 Note 4.2. Operating expenses Operating expenses excluding depreciations, impairment losses and provisions In thousands of € Notes 31-12-2022 31-12-2021 Change Consumables, merchandise and supplies used 4.2.1 - 5,582 - 3,422 - 2,160 Miscellaneous goods and services 4.2.2 - 465,521 - 146,348 - 319,173 Employee expenses 4.2.3 - 132,931 - 112,549 - 20,382 Other operating expenses 4.2.4 - 4,958 - 5,074 116 Total operating expenses - 608,992 - 267,393 - 341,599 4.2.1. Consumables, merchandise and supplies used This item mainly includes costs for transport material taken out of inventory for maintenance and repair projects as well as costs for work carried out on behalf of third parties. 197 # OneteamOnetarget 198 4.2.2. Miscellaneous goods and services Miscellaneous goods and services are mainly composed of: 31-12- 2022 31-12- 2021 Change Purchase of equipment - 6,324 - 8,674 2,350 Rent and rental charges (1) - 7,623 - 5,496 - 2,127 Maintenance and repair expenses - 24,601 - 24,365 - 236 Goods and services supplied to the group - 19,376 - 6,540 - 12,836 Third-party remuneration - 354,502 - 52,496 - 302,006 Royalties and contributions - 40,083 - 37,681 - 2,402 Non-personnel related insurance costs - 6,451 - 6,096 - 355 Other miscellaneous goods and services - 6,561 - 5,000 - 1,561 Total - 465,521 - 146,348 - 319,173 (1)Amounts that relate mainly to services that do not meet the definition of a lease under IFRS 16. The main increase in this item ensues from the exceptional solidarity contribution of €300 million that the Belgian State established for the operator of the natural gas transmission network to support the Belgian population during the energy crisis. Goods and services supplied to the group, and royalties, are also up. This evolution, apart from the solidarity contribution, is in line with the reference framework for the 2020-2023 regulatory period. Third-party remuneration increased by €302,006 thousand. This evolution is largely due to the solidarity contribution of €300 million. Another important cost is related to the study with a view to installing a new electric compressor at our storage facility in Loenhout. The increase in goods and services supplied to the group reflects the high price of electricity, but also the increase of activity in the terminal and the transmission network. The cost of electricity is up €9,272 thousand compared to 2021. As for the €2,402 thousand increase in royalties and contribution compared to 2021, this is largely explained by compensation paid by Flux Re to Fluxys SA (which is offset by using the corresponding provision of 2021). The use of this provision in 2022 compensates the cost of the compensation paid. The increase in rent and rent expense comes from the higher prices of software. 198 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 199 4.2.3. Auditor remuneration Other miscellaneous goods and services (see note 4.2.2.) include the total remuneration paid to the auditor by Fluxys Belgium NV and its consolidated subsidiaries. These fees are presented below. Auditor remuneration In thousands of € 31-12- 2022 31-12- 2021 Change Audit fees - 179 -152 - 27 Other non-audit services - 38 -18 - 20 Total remuneration - 217 -170 - 47 The amount of other (non-audit) services provided by the statutory auditor and persons professionally related to him are in line with article 3:64 and 65 of the Code of companies and associates and approved by the Audit Committee in advance. They mainly relate to ad-hoc and limited assurance attestations. 199 # OneteamOnetarget 200 4.2.4. Employee expenses Employee expenses have increased €20,382 thousand as compared with 2021, among other things as a result of indexation. The average headcount of the Group is slightly up, from 912 in 2021 to 914 in 2022. Expressed in FTE (full-time equivalents), these figures convert to 883.4 in 2022 compared to 881.4 in 2021. Workforce Financial year Preceding financial year Total number of staff Total in FTE Total number of staff Total in FTE Average number of employees 914 883.4 912 881.4 Fluxys Belgium 865 836.1 864 835.3 Executives 308 300.2 295 286.7 Employees 557 535.9 569 548.6 Fluxys LNG 48 46.8 47 45.5 Executives 3 2.9 3 3.1 Employees 45 43.9 43 42.4 Flux Re 1 0.5 1 0.5 Headcount at balance sheet date 939 908.6 918 886.2 Fluxys Belgium 891 862.0 869 839.2 Executives 321 313.1 300 291.3 Employees 570 548.9 569 547.9 Fluxys LNG 47 46.2 48 46.5 Executives 3 2.9 3 2.9 Employees 44 43.3 45 43.6 Flux Re 1 0.5 1 0.5 4.2.5. Other operating expenses Other operating expenses include property taxes, local taxes, and losses on disposals or retirements of property, plant and equipment. 200 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 201 4.2.6. Depreciations Depreciation charges on property, plant and equipment over the period are down by €7,343 thousand as compared with the previous financial year because the depreciation for certain historic assets came to an end in the previous financial year. However, depreciation charges on intangible assets over the period are up by €1,541 thousand as compared with the previous financial year following the higher level of investments in intangible assets over these past few years. Depreciations, impairment losses and provisions In thousands of € Notes 31-12-2022 31-12-202 1 Change Depreciations 4.2.5 - 168,051 - 173,993 5,942 Intangible assets - 12,385 - 10,844 - 1,541 Property, plant and equipment - 150,915 - 158,258 7,343 Right of Use Assets - 4,751 - 4,891 140 Provisions for risks and charges 4.2.6 6,993 - 7,070 14,063 Impairment losses - 14,804 - 21 - 14,783 Inventories - 14,819 1 - 14,820 Trade receivables 15 - 22 37 Total depreciations, impairment losses and provisions - 175,862 - 181,084 5,222 4.2.7. Provisions for risks and charges The significant change in provisions, of €14,063 thousand as compared with the previous financial year can chiefly be explained by the increase in discount rates, which ended up resulting in a reduction of the provision for employee benefits and by the use of a provision relating to a claim established during the previous financial year, the compensation for which was paid in 2022 (see Note 4.2.2.). An impairment loss on gas stocks of €17,714 thousand was recorded in 2022 to reflect the price of gas on 31/12/2022 which was considerably lower than the average price of gas in stock. This was partly offset by a partial reversal of the impairment of the spare parts inventory. 201 # OneteamOnetarget 202 Note 4.3. Financial income Financial income In thousands of € Notes 31-12-202 2 31-12-2021 Change Dividends from unconsolidated entities 0 0 0 Financial income from leasing contracts 4.3.1 56 60 - 4 Interest income on investments and cash equivalents 4.3.2 3,970 927 3,043 Other interest income 4.3.2 83 30 53 Unwinding of discounts on provisions 4.4.2 0 126 - 126 Other financial income 480 125 355 Total 4,589 1,268 3, 321 4.3.1. Financial income from leasing contracts Financial income from leasing contracts relates to the Interconnector Zeebrugge Terminal (IZT) facilities. 4.3.2. Interest on investments and cash equivalents Interest on investments and cash equivalents mainly comes, in 2022, from investments recognised at amortised cost in accordance with IFRS 9. The amount of this interest is up as compared with 2021, following the increase in interest rates. 202 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 203 Note 4.4. Finance costs Finance costs In thousands of € Notes 31-12-202 2 31-12-202 1 Change Borrowing interest costs 4.4.1 - 39,292 - 37,338 - 1,954 Unwinding of discounts on provisions 4.4.2 - 383 0 - 383 Interest charges on leasing contracts - 890 - 983 93 Other finance costs - 240 - 180 - 60 Total - 40,805 -38, 501 -2, 304 4.4.1. Borrowing interest costs Borrowing interest costs primarily include interest on the loans from the European Investment Bank and Fluxys, on bonds and on regulatory liabilities. 4.4.2. Unwinding of discounts on provisions This item almost exclusively concerns employee benefits that are recognised and valued in accordance with IAS 19 and includes, apart from the unwinding of discounts on provisions, returns from associated assets, and actuarial gains and losses recognised in profit/loss. The change is mainly associated with an increase in the discount rates at year- end. 203 # OneteamOnetarget 204 Note 4.5. Income tax expenses Income tax expense is analysed as follows: Income tax expenses In thousands of € Notes 31-12-202 2 31-12-202 1 Change Current tax 4.5.1 - 35,730 - 37,137 1,407 Deferred tax 4.5.2 9,667 12,184 - 2,517 Total 4.5.3 - 26,063 -24,953 - 1,110 Income tax expenses are up €1,110 thousand as compared with the preceding financial year. This change can essentially be explained by the following factors: • an increase in earnings before tax; • a reduction in the amount of the deduction for revenues from innovation (from €10,000 thousand estimated in 2021 to €5,400 thousand estimated in 2022); This increase was partly compensated by the deduction for energy efficiency investments obtained by Fluxys LNG. The amount of this deduction for the year 2022 is estimated at €4,366 thousand. Income tax expenses include both current and deferred taxes, which are detailed separately below. 204 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 205 4.5.1. Current tax In thousands of € 31-12-2022 31-12-202 1 Change Income taxes on the result of the current period -36,052 - 36,465 413 Taxes and withholding taxes due or paid -35,066 - 36,938 1,872 Excess of payment of taxes and withholding taxes (included in assets) -1,213 47 - 1,260 Estimated additional taxes (included in liabilities) 227 426 - 199 Adjustments to previous years’ current taxes 322 - 672 994 Total -35,730 - 37,137 1,407 Current tax decreased by €1,407 thousand in 2022. 4.5.2 Deferred tax In thousands of € 31-12-202 2 31-12-2021 Change Relating to origination or reversal of temporary differences 9,667 12,184 - 2,517 Differences arising from the valuation of property, plant and equipment 11,37 8 12,094 -71 6 Changes in provisions 263 -28 291 Other changes -1,97 4 118 -2,09 2 Relating to tax rate changes or to new taxes 0 0 0 Relating to changes in accounting policies and errors 0 0 0 Relating to changes in fiscal status of entity or shareholders 0 0 0 Total 9,667 12,184 - 2,517 Deferred tax is primarily influenced by the difference between the book value and the tax base of property, plant and equipment. The deferred tax profit decreased by €2,517 thousand compared to 2021. This decrease can primarily be explained by adjustments of the tax base for financial assets. 205 # OneteamOnetarget 206 4.5.3. Reconciliation of expected income tax rate and effective average income tax rate In thousands of € 31-12-202 2 31-12-202 1 Change Income tax as per applicable tax rate – Financial year -27,448 - 25,119 - 2,329 Profit/loss before taxes 109,791 100,474 9,317 Applicable tax rate 25.00% 25.00% 0% Elements that justify transition to the effective average tax rate 1,063 838 225 Income tax rate differences between jurisdictions - 58,0 5 - 63 Changes in tax rates 0 0 0 Tax-exempt income 0 0 0 Non-deductible expenses - 1,396,0 - 1,375 - 21 Taxable dividend income 0 0 0 Deductible notional interest cost 0 0 0 Other (1) 2,517 2,208 309 Income tax as per effective average tax rate – Financial year -26,385,0 - 24,281 - 2,104 Profit/loss before taxes 109,791 100,474 9,317 Average effective tax rate 24.03% 24.17% - 0.14% Taxation of tax-free reserves 0 0 0 Adjustments to previous years’ current taxes (1) 322 - 672 994 Total income tax expense -26,063 - 24,953 - 1,110 (1) In 2022, Fluxys LNG obtained the deduction for energy efficiency investments for the year 2021. This tax advantage is incorporated into the regulated tariffs. The average effective tax rate for 2022 amounted to 24.03% compared with 24.17% the previous year. 206 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 207 Note 4.6. Net profit/loss for the period Net profit/loss for the period In thousands of € 31-12-202 2 31-12-202 1 Change Non-controlling interests 0 0 0 Group share 83,728 75,521 8,207 Total profit/loss for the period 83,728 75,521 8,207 The consolidated net profit for the financial year amounted to €83,728 thousand, an increase of €8,207 thousand compared with 2021. 207 # OneteamOnetarget 208 Note 4.7. Earnings per share In thousands of € 31-12-202 2 31-12-202 1 Net profit/loss from continuing operations attributable to the parent company’s shareholders 83,728 75,521 Net profit/loss 83,728 75,521 Impact of dilutive instruments 0 0 Diluted net profit/loss from continuing operations attributable to the parent company’s shareholders 83,728 75,521 Net profit/loss from discontinued operations attributable to the parent company’s shareholders 0 0 Net profit/loss 0 0 Impact of dilutive instruments 0 0 Diluted net profit/loss from discontinued operations attributable to the parent company’s shareholders 0 0 Net profit/loss attributable to the parent company’s shareholders 83,728 75,521 Net profit/loss 83,728 75,521 Impact of dilutive instruments 0 0 Diluted net profit/loss attributable to the parent company’s shareholders 83,728 75,521 Denominator (in units) 31-12- 2022 31-12- 2021 Average number of outstanding shares 70,263,501 70,263,501 Impact of dilutive instruments 0 0 Diluted average number of outstanding shares 70,263,501 70,263,501 208 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 209 Earnings per share (in euros) 31-12-202 2 31-12-202 1 Basic earnings per share from continuing operations attributable to the parent company’s shareholders 1.1916 1.0748 Diluted basic earnings per share from continuing operations attributable to the parent company’s shareholders 1.1916 1.0748 Basic earnings per share from discontinued operations attributable to the parent company’s shareholders 0.0000 0.0000 Diluted basic earnings per share from discontinued operations attributable to the parent company’s shareholders 0.0000 0.0000 Basic earnings per share attributable to the parent company’s shareholders 1.1916 1.0748 Diluted basic earnings per share attributable to the parent company’s shareholders 1.1916 1.0748 209 # OneteamOnetarget 210 Note 5. Segment balance sheet Segment balance sheet at 31-12-2022 In thousands of € Trans- mission Storage Terminal- ling Other Unallo- cated Total Property, plant and equipment 1,156,981 125,365 572,946 83 0 1,855,375 Intangible assets 22,009 10 845 0 0 22,864 Right of use assets 7,724 318 18,932 3,046 0 30,020 Other financial assets 95 0 0 111,076 0 111,171 Inventories 54,453 3,100 1,211 3,892 0 62,656 Lease receivables 0 0 0 2,094 0 2,094 Net trade receivables 110,249 1,071 6,633 33,852 0 151,805 Other assets 0 0 0 0 1,170,585 1,170,585 3,406,570 Interest-bearing liabilities 368,097 61,020 232,249 510,675 0 1,172,041 Other financial liabilities 0 0 20 3,555 0 3,575 Other liabilities 563,230 41,595 330,468 0 652,044 1,587,337 2,762,953 Equity 643,617 3,406,570 Investments over the period in PP&E 36,814 87 1 67,736 104 0 105,525 Investments over the period in intangible assets 11,294 0 71 0 0 11,365 210 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 211 Segment balance sheet at 31-12-2021 In thousands of € Trans- mission Storage Terminal- ling Other Unallo- cated Total Property, plant and equipment 1,219,055 132,855 550,044 83 0 1,902,037 Intangible assets 22,614 14 1,263 0 0 23,891 Right of use assets 8,999 327 21,505 2,696 0 33,527 Other financial assets 91 0 0 88,551 0 88,642 Inventories 35,078 3,100 589 275 0 39,042 Lease receivables 0 0 0 2,695 0 2,695 Net trade receivables 57,161 2,158 7,017 19,051 0 85,387 Other assets 0 0 0 0 459,293 459,293 2,634,514 Interest-bearing liabilities 632,486 47,153 259,041 280,843 0 1,219,523 Other financial liabilities 0 0 18 3,236 0 3,254 Other liabilities 268,432 53,167 152,241 0 298,223 772,063 1,994,840 Equity 639,674 2,634,514 Investments over the period in PP&E 32,630 564 17,440 14 0 50,648 Investments over the period in intangible assets 6,186 12 329 0 0 6,52 7 211 # OneteamOnetarget 212 Note 5.1. Property, plant and equipment Movements in property, plant and equipment Gross book value Land Buildings Gas transmission Gas storage * At 31-12-2020 48,416 161,231 3,462,837 386,670 Investments 1,060 51 14,882 22 Grants received 0 0 0 0 Disposals and retirements - 75 - 189 - 8,697 0 Internal transfers 0 0 2,300 0 Changes in the consolidation scope and assets held for sale 0 0 0 0 Translation adjustments 0 0 0 0 At 31-12-2021 49,401 161,093 3,471,322 386,692 Investments 186 166 26, 325 312 Grants received 0 0 0 0 Disposals and retirements - 2 0 -6, 725 - 5 Internal transfers 0 0 15, 204 121 Changes in the consolidation scope and assets held for sale 0 0 0 0 Translation adjustments 0 0 0 0 At 31-12-2022 49, 585 161, 259 3,506, 126 387, 120 subject to the Gas Act 212 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 213 In thousands of € LNG Terminal Other facilities and machinery Furniture, equipment & vehicles Assets under construction & instalments paid Total 1,457,308 43,511 62,777 6,719 5,629,469 3,025 0 7,232 24,376 50,648 - 513 0 0 0 - 513 - 18 0 - 11,857 0 - 20,836 0 0 0 - 2,300 0 0 0 0 0 0 0 0 0 0 0 1,459,802 43,511 58,152 28,795 5,658,768 1,880 0 8,450 68,206 105,525 0 0 0 0 0 - 290 0 - 8,240 0 - 15,262 0 0 0 - 15,325 0 0 0 - 0 0 0 0 0 0 0 0 1,461,392 43,511 58,362 81,676 5,749,031 213 # OneteamOnetarget 214 Movements in property, plant and equipment Depreciation and impairment losses Land Buildings Gas transmission Gas storage As at 31-12-2020 0 - 98,618 - 2,289,869 - 251,390 Depreciation 0 -4,0 14 - 96,005 - 9,357 Disposals and retirements 0 175 8,233 0 Internal transfers 0 0 0 0 Changes in the consolidation scope and assets held for sale 0 0 0 0 Translation adjustments 0 0 0 0 As at 31-12-2021 0 - 102,457 - 2,377,641 - 260,747 Depreciation 0 - 3,988 - 89,701 - 8,137 Disposals and retirements 0 0 5,888 1 Internal transfers 0 0 0 0 Changes in the consolidation scope and assets held for sale 0 0 0 0 Translation adjustments 0 0 0 0 As at 31-12-2022 0 - 106,445 - 2,461,454 - 268,883 Net book values as at 31-12-2022 49,585 54,814 1,044,672 118,237 Net book values as at 31-12-2021 49,401 58,636 1,093,681 125,945 subject to the Gas Act 214 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 215 In thousands of € LNG Terminal Other facilities and machinery Furniture, equipment & vehicles Assets under construction & instalments paid Total - 889,570 - 43,259 - 45,554 0 - 3,618,260 - 43,218 - 7 - 5,657 0 - 158,258 2 0 11,377 0 19,787 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - 932,786 - 43,266 - 39,834 0 - 3,756,731 - 43,208 0 - 5,881 0 - 150,915 8 0 8,093 0 13,990 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - 975,986 - 43,266 - 37,622 0 - 3,893,656 485,406 245 20,740 81,676 1,855,375 527,016 245 18,318 28,795 1,902,037 215 # OneteamOnetarget 216 Movements in property, plant and equipment Land Buildings Gas transmission Gas storage Net book values as at 31-12-2022, of which: 49,585 54,814 1,044,672 118,237 At cost 49,585 54,814 1,044,672 118,237 At revaluation 0 0 0 0 Supplementary information 0 0 0 0 Net book value of assets temporarily retired from active use 110 0 0 0 subject to the Gas Act Property, plant and equipment mainly comprises the group’s transmission, storage (Loenhout) and LNG terminalling (Zeebrugge) facilities. In 2022, Fluxys Belgium group made property, plant and equipment investments in infrastructure of €102,527 thousand. Furthermore, Fluxys Belgium group made €2,996 thousand IT investments in the network infrastructure as well as in the computers and devices inventory. €67,736 thousand was allocated to LNG infrastructure projects (mainly for the construction of 3 new Open Rack Vaporizers and 3 new truck loading bays in the Zeebrugge LNG Terminal) and €33,817 thousand to project linked to transmission activity. In 2022 no costs for loans were activated on construction investments. 216 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 217 In thousands of € LNG Terminal Other facilities and machinery Furniture, equipment & vehicles Assets under construction & instalments paid Total 485,406 245 20,740 81,676 1,855,375 485,406 245 20,740 81,676 1,855,375 0 0 0 0 0 0 0 0 0 0 0 0 0 0 110 The depreciation charge for the period amounts to €150,915 thousand and reflects the rhythm at which the group expects to consume the economic benefits linked to those property, plant and equipment. The assets that are used within the regulated market are depreciated over their useful life, as stated in point 6 of the accounting principles (Note 2), without taking into account a residual value, given the specificity of the sector’s activities. Other property, plant and equipment is depreciated over its useful life as estimated by the group, taking into account actual and potential contracts, and considering reasonable market assumptions, based on the principle of matching of revenues and costs. Given the specific nature of the activities concerned, the residual value, if any, of the facilities in question has been ignored. At the balance sheet date, the group does not hold property, plant and equipment assets which have been pledged as security against liabilities. At the end of the financial year, the group has identified no signal or event that would lead any item of property, plant and equipment to be impaired. This assessment takes into account the regulatory framework in which the Group operates and of the present energy transition in which the Group plays an active role. This refers, for example, to the conversion of our low-calorific gas network to high-calorific gas, the transport of molecules other than natural gas, and the efforts required to combat climate change. All the investments and regulated assets of the Group ensue in a right to a regulated authorised rate of return for their lifespan (see also accounting principles in Note 2.6). 217 # OneteamOnetarget 218 Note 5.2. Intangible assets Movements in the book value of intangible assets In thousands of € Gross book value Software ‘Client portfolios’ assets CO 2 Emission rights Total As at 31-12-2020 22, 457 52, 800 0 75, 257 Investments 6, 528 0 0 6, 528 Disposals and retirements -6, 176 0 0 -6, 176 Translation adjustments 0 0 0 0 Changes in the consolidation scope 0 0 0 0 Other 0 0 0 0 As at 31-12-2021 22, 809 52, 800 0 75, 609 Investments 11,365 0 0 11,365 Disposals and retirements - 3,627 0 0 - 3,627 Translation adjustments 0 0 0 0 Changes in the consolidation scope 0 0 0 0 Other 0 0 0 0 As at 31-12-2022 30,547 52,800 0 83,347 218 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 219 Movements in the book value of intangible assets In thousands of € Depreciation and impairment losses Software ‘Client portfolios’ assets CO 2 Emission rights Total As at 31-12-2020 - 13,603 - 33,447 0 - 47,050 Depreciation and impairment losses - 4,394 - 6,450 0 - 10,844 Disposals and retirements 6,176 0 0 6,176 Translation adjustments 0 0 0 0 Changes in the consolidation scope 0 0 0 0 Other 0 0 0 0 As at 31-12-2021 - 11,821 - 39,897 0 - 51,718 Depreciation and impairment losses - 5,934 - 6,451 0 - 12,385 Disposals and retirements 3,619 0 0 3,619 Translation adjustments 0 0 0 0 Changes in the consolidation scope 0 0 0 0 Other 0 0 0 0 As at 31-12-2022 - 14,136 - 46,348 0 - 60,484 219 # OneteamOnetarget 220 Movements in the book value of intangible assets In thousands of € Software ‘Client portfolios’ assets CO 2 Emission rights Total Net book values as at 31-12-2022 16,411 6,453 0 22,864 Net book values as at 31-12-2021 10,988 12,903 0 23,891 Intangible assets include the net book value of software, the portfolio of ‘Hub’ clients and CO 2 emission rights. The software included in intangible assets is investment software developed or purchased by the group. This software is depreciated over 5 years on a straight-line basis. Major investments during the financial year concern software developed in relation to gas flow and asset management and related administrative tools. In 2015, Fluxys Belgium acquired all of Huberator’s business activities for €52.8 million. This intangible asset will be fully depreciated in 2023 (on a straight-line basis). Certain gas transmission facilities in Belgium are included in the scheme for greenhouse gas emission allowance trading. Accordingly, Fluxys Belgium group was given free emission rights for 2022 amounting to 20,752 tonnes of CO 2 for the compression, storage and terminalling activity sites. In accordance with the accounting policies stated in Note 2, the unused emission rights have been recognised at nil value in intangible assets. The group emphasises that no indications existed at the balance sheet date that any item of property, plant and equipment may have been impaired. 220 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 221 Note 5.3. Right of use assets The right of use assets are mainly linked to concession rights for land on which gas transmission and terminalling facilities (Zeebrugge) have been built. These contracts don’t have significant termination or extension options. The rent is not variable, except for some contracts that have a clause for yearly indexation. The impact thereof is not material. Right of use assets In thousands of € Land & Buildings Facilities Cars Total As at 31-12-2020 29,426 3,487 3,554 36,467 Additional rights 0 0 1,968 1,968 Depreciation and impairment losses - 2,405 - 763 - 1,723 - 4,891 Disposals 0 0 -17 - 17 Other changes 0 0 0 0 As at 31-12-2021 27,021 2,724 3,782 33,527 Additional rights 0 0 1,351 1,351 Depreciation and impairment losses - 2,405 - 763 - 1,583 - 4,751 Disposals 0 0 -107 - 107 Other changes 0 0 0 0 As at 31-12-2022 24,616 1,961 3,443 30,020 221 # OneteamOnetarget 222 Note 5.4. Other financial assets Other financial assets In thousands of € Notes 31-12-202 2 31-12- 2021 Shares at cost 24 24 Investment securities at fair value through profit or loss 5.4.1 0 0 Investment securities at amortised cost 5.4.1 53, 481 26,289 Other investments at cost 5.4.1 54, 019 59,009 Financial instruments at fair value through profit or loss 3, 576 3,254 Other financial assets at cost 71 66 Total 111, 171 88,642 5.4.1. These items include cash investments with a maturity longer than one year. They are mainly from Flux Re of which the cash is destined to cover the risk of the entity in the scope of its reinsurance business. The maturity of these investments is between 2023 and 2032. The increase observed in the table above represents the new investments made with maturities of more than one year by Flux Re using the investment funds that matured in 2022. The assets held by Flux Re are significantly higher than the minimum capital requirements under Solvency II (€16.3 million). Note 5.5. Other non-current assets Other non-current assets In thousands of € Notes 31-12-202 2 31-12- 2021 Change Plan asset surpluses ‘IAS 19 Employee benefits’ 5.14 26,461 15,123 11,338 Total 26,461 15,123 11,338 The value of plan assets in the provision for employee benefits increased in 2022 because of a rise in interest rates. 222 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 223 Note 5.6. Inventories Book value of inventories In thousands of € 31-12-202 2 31-12- 2021 Change Supplies 24, 803 20, 250 4, 553 Gross book value 28, 678 27, 019 1, 659 Impairment losses -3, 875 -6, 769 2, 894 Goods held for resale (gas) 36, 981 18, 517 18, 464 Gross book value 54, 695 18, 517 36, 178 Impairment losses -17, 714 0 -17, 714 Work in progress 872 275 597 Gross book value 872 275 597 Impairment losses 0 0 0 Total 62, 656 39, 042 23, 614 Inventories of materials connected to the transmission network are at their normal levels. The considerable increase in the gross book value of goods held for resale can primarily be explained by the strong increase in gas prices during the financial year, partially compensated by impairment losses at the end of the financial year following lower gas prices as at 31 December 2022. Impact of movements on net profit/loss In thousands of € 31-12-202 2 31-12- 2021 Change Inventories – purchased or used 38,433 12,663 25,770 Impairment losses - 14,819 1 - 14,820 Total 23,614 12,664 10,950 The movements of work in progress are included in other operating income in the income statement. The other movements of inventories are included in purchase of gas related to balancing of operations and operational needs. 223 # OneteamOnetarget 224 Note 5.7. Trade and other receivables Trade and other receivables In thousands of € Note 31-12-202 2 31-12- 2021 Change Gross trade receivables 153,377 86,974 66,403 Impairment losses - 1,572 - 1,587 15 Net trade receivables 5.7.1 151,805 85,387 66,418 Other receivables 12,494 5,059 7,435 Total 164,299 90,446 73,853 The increase in trade receivables is in line with the increase in sales and services to external customers. 5.7.1 Fluxys Belgium group reduces its exposure to credit risk, both in terms of default and concentration of risk, by requiring short payment terms from its customers (payment within one month), a strict policy for the follow-up of trade receivables, and a systematic evaluation of its counterparties' financial position. The credit losses expected and accounted for in trade and other receivables are not very material for the Fluxys Belgium group. Trade receivables can be broken down as follows according to their ageing: Net trade receivables according to ageing In thousands of € 31-12-202 2 31-12- 2021 Change Receivables not past due 150, 829 84, 891 65, 938 Receivables < 3 months 885 405 480 Receivables 3 - 6 months 0 0 0 Receivables > 6 months 0 0 0 Receivables in litigation or doubtful 91 91 0 Total 151, 805 85, 387 66, 418 Disputed or doubtful receivables mainly concern grid users. Those deemed irrecoverable have been subject to impairment losses of 100%. 224 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 225 Note 5.8. Short-term investments, cash and cash equivalents Investments relate to investments in the form of bonds, commercial paper and bank deposits over more than three months and maximum one year. Cash and cash equivalents are mainly euro investments in commercial paper that mature within a maximum of three months after the date of acquisition, deposits made with Fluxys (cash pooling), term deposits at credit institutions, current account bank balances and cash in hand. Short-term investments, cash and cash equivalents In thousands of € 31-12-202 2 31-12- 2021 Change Short-term investments 26,113 45,740 - 19,627 Cash and cash equivalents 1,070,708 366,931 703,777 Cash equivalents and cash pooling 1,025,335 320,254 705,081 Short-term deposits 8,108 2,849 5,259 Bank balances 37,246 43,815 - 6,569 Cash in hand 19 13 6 Total 1,096,821 412,671 684,150 In 2022, the average rate of return on short-term investments, cash and cash equivalents was 0.45%. The credit losses expected and accounted for in investments, cash and cash equivalents are not material for the Fluxys Belgium group. The increase in cash equivalents is primarily due to the increase in sales following major gas flows to Germany and the Netherlands. 225 # OneteamOnetarget 226 Note 5.9. Other current assets Other current assets In thousands of € Notes 31-12-202 2 31-12-2021 Change Accrued income 1,213 733 480 Prepaid expenses 13,033 13,360 - 327 Other current assets 5.9.1 2,940 1,680 1,260 Total 17,186 15,773 1,413 Other current assets mainly comprise prepaid expenses amounting to €13,033 thousand (insurance, fees, rent, etc.) as well as various items of accrued income. 5.9.1 Other current assets include the short-term share of the plan asset surpluses compared with the actuarial liability relating to the group's pension liabilities (see Notes 5.5 and 5.14). 226 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 227 Note 5.10. Equity On 31-12-2022, equity amounted to €643,617 thousand. The €3,943 thousand increase since the previous year comes essentially from the comprehensive income for the period (€100,907 thousand),which is largely offset by the dividends paid in 2022 (€96,964 thousand). Note on parent entity shareholding Ordinary shares Preference shares Total I. Movements in number of shares 1. Number of shares, opening balance 70.263.501 0 70.263.501 2. Number of shares issued 3. Number of ordinary shares cancelled or reduced (-) 4. Number of preference shares cancelled or reduced (-) 5. Other increase (decrease) 6. Number of shares, closing balance 70.263.501 0 70.263.501 II. Other information 1. Face value of shares No face value mentioned 2. Number of shares owned by the company 0 0 0 3. Interim dividends during the financial year The share capital of Fluxys Belgium SA is represented by 70,263,501 shares with no face value, divided into two categories, in addition to the specific share. Shares in category B are and remain registered. They are held by long-term shareholders. Category D shares are registered or dematerialised and are mainly held by the general public. The Belgian State owns one specific registered share, namely share no. 1, which does not belong to any of the above categories and shall be referred to hereinafter as the 'specific share'. In accordance with the Fluxys Belgium articles of association, this 'specific share' carries specific rights. These specific rights remain attached to this share in addition to the common rights attached to the ordinary shares of Fluxys Belgium (former “Distrigas”), as long as this share is owned by the Belgian State, as established in Articles 3 to 5 of the Royal Decree of 16 June 1994. These specific rights are exercised by the Federal Minister responsible for energy. In addition to these specific rights this 'specific share' also entitles to receive 100 times the dividend or any other distribution by the entity to its shareholders, than the ones attached to the category B or D shares. 227 # OneteamOnetarget 228 Note 5.11. Interest-bearing liabilities Non-current interest-bearing liabilities In thousands of € Notes 31-12-2022 31-12-2021 Change Leases 5.11.3 25,878 29,260 -3,382 Bonds 5.11.1 696,985 696,558 427 Other borrowings 5.11.2 392,909 436,273 -43,364 Total 1,115,772 1,162,091 -46,319 Of which debts guaranteed by the public authorities or by sureties 0 0 0 Current interest-bearing liabilities In thousands of € Notes 31-12-2022 31-12- 2021 Change Leases 5.11.3 2, 477 2, 804 - 327 Bonds 5.11.1 2, 523 2, 523 0 Other borrowings 5.11.2 51,269 52,105 - 836 Total 56,269 57,432 - 1,163 Of which debts guaranteed by the public authorities or by sureties 0 0 0 5.11.1. In November 2014 and October 2017, Fluxys Belgium issued bonds for a total of €700,000 thousand. These bonds offer a gross annual coupon of 1.75% and 3.25% respectively. They will mature between 2027 and 2034. 5.11.2. Other borrowings include: • A 25-year loan of €400,000 thousand at a fixed rate contracted with the EIB in December 2008 to finance investments in developing the gas transmission network, the balance of which was €226,000 thousand as at 31-12-2022. • A loan of €257,000 thousand at a fixed rate of 3.20% with Fluxys to cover needs relating to investments necessary for the transshipment services at the Zeebrugge LNG Terminal. The balance still due as at 31-12-2022 is €210,273 thousand. • Short-term loans and accrued interest amounting to €7,905 thousand. 5.11.3. Lease liabilities are accounted for in line with IFRS 16 and are limited to the contractual obligations, even if the Group expects certain contracts to be extended in the future, but this option isn’t stated in the current contract. 228 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 229 Changes in liabilities based on financing activities 31.12.2021 Cash flow Other movements 31.12.2022 New lease contracts Reclassifi- cation between non-current and current Variation in accrued interests payable Non-current interest- bearing liabilities 1,162,091 0 1,351 -48,097 0 427 1,115,772 Leases 29,260 0 1,351 -4,733 0 0 25,878 Bonds 696,558 0 0 0 0 427 696,985 Other borrowings 436,273 0 0 -43,364 0 0 392,909 Current interest- bearing liabilities 57,432 -48,455 0 48,097 -805 0 56,269 Leases 2,804 -5,060 0 4,733 0 0 2,477 Bonds 2,523 0 0 0 0 0 2,523 Other borrowings 52,105 -43,395 0 43,364 -805 0 51,269 Total 1,219,523 -48,455 1,351 0 -805 427 1,172,041 Cash flows relating to interest-bearing liabilities are included in points IV.1.6, IV.2.3 and IV.2.5 of the consolidated statement of cash flows. The change in accrued interests payable and the amortisation of issuance costs (in total -€321 thousand) relates to the difference between: - the interests paid, including leases (see point IV.3.1 of the consolidated statement of cash flows: -€35,274 thousand) and - the sum of borrowing interest costs and interests on lease liabilities (see Note 4.4: €40,183 thousand) minus the interest on regulatory liabilities of €5,230 thousand = €34,953 thousand. 229 # OneteamOnetarget 230 Maturity of interest-bearing liabilities at 31-12-2022, non-discounted In thousands of € Up to one year Between one and five years More than five years Total Leases 3, 336 16,033 14, 711 34, 080 Bonds 19, 316 364,769 439, 990 824, 075 Other borrowings 66, 752 219,478 242, 561 528, 791 Total 89, 404 600,280 697, 262 1,386, 946 Maturity of interest-bearing liabilities at 31-12-2021, non-discounted In thousands of € Up to one year Between one and five years More than five years Total Leases 3,747 17,155 17,829 38,732 Bonds 19,316 67,216 753,909 840,441 Other borrowings 69,183 225,858 295,028 590,069 Total 92,246 310,229 1,066,766 1,469,242 230 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 231 Note 5.12. Regulatory liabilities Regulatory liabilities In thousands of € Note 31.12.2022 31.12.2021 Difference Other financing – long term 612,582 83,505 529,077 Other financing – short term 149,863 15,425 134,438 Total of other financing (A) 5.12.1 762,445 98, 930 663,515 Other liabilities – long term 134,227 314,372 - 180,145 Other liabilities – short term 38,622 60,538 - 21,916 Total of other liabilities (B) 5.12.2 172,849 374,910 - 202,061 Total of regulatory liabilities (A+B = C) 935,294 473,840 461,454 Presentation in balance sheet: 0 Non-current regulatory liabilities 746,809 397,877 348,932 Current regulatory liabilities 188,485 75,963 112,522 Total of regulatory liabilities (C) 935,294 473,840 461,454 5.12.1 Other financing corresponds to the specific allocations of regulatory liabilities at the group’s disposal firstly to finance specific investments, notably in the second jetty at Zeebrugge and secondly, the cost associated with the conversion of part of the gas transmission network. These amounts bear interest at a 10-year OLO rate for one part and the remainder at the average 1-year Euribor rate. Auction premiums of € 668.6 million were realised in 2022; this amount was recorded under ‘Other financing – long-term’ for € 523.7 million and under ‘Other financing – short-term’ for € 144.9 million. This presentation is justified by the different regulatory treatment applied to auction premiums in accordance with the European network code. 5.12.2 The other regulatory liabilities included in ‘other liabilities’ include the positive differences between the regulated tariffs invoiced and the regulated tariffs acquired. These amounts bear interest at the average Euribor 1-year rate. The regulatory liabilities are reconciled with the segment reporting and the statement of cash flows as follows: 231 # OneteamOnetarget 232 Movements of the regulatory liabilities In thousands of € Long term + short term Other financing(A) Other liabilities (B) Total Balance as at 01.01.2022 98,929 374,911 473,840 Use -5,002 -4 08,333 - 413,335 Additions 668,519 201 ,041 869,560 Interest 1,512 3,71 8 5,230 Transfer -1,512 1,512 0 Balance as at 31.12.2022 762,445 172,849 935,294 The sum of use and additions amounts to €456,225 thousand and is in line with the sum of the changes in regulatory liabilities in note 4 (segment information - net change in revenue). This net increase in regulatory liabilities also corresponds with the change in regulatory liabilities included in item 1.2.6. of the cash flow table. The €5,230 thousand interest charge on regulatory liabilities was accounted for in the finance costs. 232 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 233 Note 5.13. Provisions 5.13.1 Provisions for employee benefits Provisions for employee benefits In thousands of € Provisions at 31-12-2021 64,718 Additions 10,822 Use - 14,764 Release 0 Unwinding of the discount 2,375 Actuarial gains/losses recognised in the profit/loss (seniority bonuses) - 121 Expected return on plan assets - 1,734 Actuarial gains/losses recognised in equity - 22,905 Reclassification to the assets 12,598 Provisions at 31-12-2022, of which: 50,988 Non-current provisions 47,444 Current provisions 3,543 The provisions for employee benefits (see Note 5.14) are down €13,730 thousand. This fall can primarily be explained by a combination of an increase in the discount rates partially compensated by a negative return on plan assets in 2022. In addition to the reduction in provisions, there is also an increase in the surplus from plan assets (see Note 5.14). 233 # OneteamOnetarget 234 5.13.2. Other provisions Provisions for: In thousands of € Litigation and claims Environment and site restoration Total other provisions Provisions at 31-12-2021 5,630 1,685 7,315 Additions 20 0 20 Use - 3,069 - 2 - 3,071 Release 0 0 0 Unwinding of the discount 0 - 137 - 137 Provisions at 31-12-2022, of which: 2,581 1,546 4,127 Non-current provisions 2,581 1,546 4,127 Current provisions 0 0 0 234 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 235 5.13.3 Movements in the income statement and maturity of provisions Movements in the income statement are detailed as follows: Impact 2022 In thousands of € Additions Use and reversals Total Operating profit (loss) 10,842 - 17,835 - 6,993 Financial profit (loss) 2,238 - 1,855 383 Total 13,080 - 19,690 - 6,610 Maturity of provisions at 31-12-2022 In thousands of € Up to one year Between one and five years More than five years Total Litigation and claims 0 0 2,581 2,581 Environment and site restoration 0 1, 546 0 1,546 Subtotal 0 1,685 2,442 4,127 Employee benefits 3,543 14,172 33,273 50,988 Total 3,543 15,857 35,715 55,115 Maturity of provisions at 31-12-2021 In thousands of € Up to one year Between one and five years More than five years Total Litigation and claims 3,069 2,561 0 5,630 Environment and site restoration 0 1,685 0 1,685 Subtotal 3,069 4,246 0 7,315 Employee benefits 4,201 16,804 43,713 64,718 Total 7,270 21,050 43,713 72,033 235 # OneteamOnetarget 236 Provisions for litigation and claims In 2022, a provision was used to cover the amount of a litigation with third-parties (see also Notes 4.2.6. and 7.1). The other provisions have been established to cover likely litigation payments arising for instance from the construction of the Zeebrugge LNG terminal (1983). The estimation for these provisions is based on the value of claims filed or on the estimated amount of risk incurred. Provisions for the environment and site restoration These provisions essentially cover the costs of safety, clean-up and restoration of sites subject to closure. These provisions are accrued in accordance with the Belgian regional environmental legislation and the Belgian Gas Act. These works require action plans and numerous studies in cooperation with the various public authorities and the institutions established for this purpose. Note 5.14. Provisions for employee benefits Description of the principal retirement schemes and related benefits In Belgium collective agreements regulate the rights of entity employees in the electricity and gas industries. Defined benefit pension plans These agreements cover 'salary scale' personnel recruited before 1 June 2002 and management personnel recruited before 1 May 1999 allowing affiliates to benefit from a capital calculated based on a formula that takes account of their final annual salary and the number of years of service when they retire. These are called ‘defined benefit pension plans’. Obligations under these defined benefit pension plans are funded through a number of pension funds for the electricity and gas industries and through insurance companies. Employees and employers contribute to these pension plans. The employer’s contribution is determined annually on the basis of an actuarial report. This is to ensure that the minimum legal funding requirements have been met and that the long-term funding of the benefits is assured. Description of the main actuarial risks The group is exposed, in connection with its defined benefit pension plans, to risks related to actuarial assumptions concerning investments, interest rates, life expectancy and salary development. The present value of defined benefit obligations is determined using a discount rate based on high-quality bonds. The assumptions concerning salary increases, inflation, personnel movements and expected average retirement age are defined based on historic entity statistics. The mortality tables used are those published by the IABE (Institute of Actuaries in Belgium). At the end of 2022, the defined benefit pension plans have surplus plan assets of €29,401 thousand (2021: €16,803 thousand) compared with the actuarial liability on estimated 236 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 237 liabilities of the group. The amount was therefore transferred to the assets in the balance sheet under 'Other non-current assets' (note 5.5) and 'Other current assets' (note 5.9.1). The financing policy was amended in 2018 to ensure that surpluses are recovered over the duration of the pension plans. In addition, transfers between different pension plans are possible. Defined contribution pension plans with guaranteed minimum return In Belgium, ‘Salary scale’ personnel recruited after 1 June 2002 and management staff recruited after 1 May 1999 as well as the members of the management benefit from defined contribution pension plans. The pension plans are financed by contributions from employees and employers, the latter corresponding to a multiple of the contributions from employees. Obligations under these defined contribution pension plans are funded through a number of pension funds for the electricity and gas industries and through insurance companies. The assets of the pension funds are allocated among the various categories of the following risks: • Low risk: bonds in the euro zone and/or high-quality bonds. • Medium risk: risk diversification between bonds, convertible bonds, real-estate and equity instruments. • High risk: equity instruments, real estate, etc. • Dynamic Asset Allocation: rapid adjustment of the portfolio structure in case of specific events in order to limit losses in periods of stress. Belgian law requires that the employer guarantees a minimum return for defined contribution plans. These minimum returns vary based on the market rates. For the minimum returns guaranteed by the employer, the following elements apply: • For contributions paid up until 31-12-2015, the minimum return of 3.25% for employer contributions and 3.75% for employee contributions applies up to that date. • For contributions paid since 01-01-2016, the minimum return is variable based on OLO rates, with a minimum of 1.75% and a maximum of 3.75%. Given the current rates, this minimum guaranteed return has been set at 1.75%. • The accounting method used by the group to value these ‘defined contribution pension plans, with a guaranteed minimum return’, is identical to the method used for ‘defined benefit plans’ (see Note 2.11). For certain defined contribution plans, the contributions increase depending on the seniority in the Group (referred to as ‘backloaded’). For these plans, the contributions are distributed uniformly over time. 237 # OneteamOnetarget 238 Description of the main risks Defined contribution plans expose the employer to the risk of a minimum return on pension fund assets that do not offer a sufficient guaranteed return. Other long-term employee benefits Fluxys Belgium group also has early pension schemes, other post-employment benefits such as reimbursement of medical expenses and price subsidies, as well as other long- term benefits (seniority bonuses). Not all of these benefits are funded. 238 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 239 Funding status of the employee benefits In thousands of € Pensions * Other ** 2022 2021 2022 2021 Present value of funded obligations - 194,397 - 221,035 -32,840 - 47,941 Fair value of plan assets 205,651 221,062 0 0 Funding status of plans 11,254 27 -32,840 - 47,941 Effect of the asset ceiling 0 0 0 0 Other 0 0 0 0 Net employee benefit liability 11,254 27 -32,840 - 47,941 Of which assets 29,401 16,80 3 0 0 Of which liabilities - 18,147 - 16,777 -32,840 - 47,941 * Pensions also include non-prefinanced early-retirement obligations. They also include, since 2018, contributions paid to cover pension schemes with a profile that takes into account seniority. ** The item ‘Other’ includes seniority bonuses paid over the course of the career as well as other post-employment benefits (reimbursement of medical expenses and price subsidies (discount on energy costs)). 239 # OneteamOnetarget 240 Movements in the present value of obligations In thousands of € Pensions * Other ** 2022 2021 2022 2021 At the start of the period - 221,035 - 234,450 - 47,941 - 51,384 Service costs - 9,239 - 9,310 - 1,289 - 1,305 Early retirement costs - 1,030 -362 0 0 Financial loss (-) / profit (+) - 1,879 -529 - 496 - 223 Participant’s contributions - 807 -796 0 0 Change in demographic assumptions - 777 -969 - 605 - 581 Change in financial assumptions 44,415 11,942 16,144 4,922 Change from experience adjustments - 12,505 35 - 398 - 1,233 Past service costs 0 - 1,671 0 0 Benefits paid 8,460 15,075 1,745 1,863 Reclassifications 0 0 0 0 Other 0 0 0 0 At the end of the period - 194,397 - 221,035 - 32,840 - 47,941 The past service cost is related to the change in plan. 240 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 241 Movements in the fair value of plan assets In thousands of € Pensions * Other ** 2022 2021 2022 2021 At the start of the period 221,062 214,386 0 0 Interest income 1,733 476 0 0 Return on plan assets (excluding net interest income) - 28,296 13,141 0 0 Employer’s contributions 13,756 5,904 1,745 1,863 Participants’ contributions 807 796 0 0 Benefits paid - 8,460 - 15,075 - 1,745 - 1,863 Change in financial assumptions 5,049 1,434 0 0 Other 0 0 0 0 At the end of the period 205,651 221,062 0 0 Actual return on plan assets - 26,563 13,617 0 0 The return on pension plan assets in 2022 is considerably lower than in 2021 following difficult conditions on the financial markets in 2022. 241 # OneteamOnetarget 242 Costs recognised in profit or loss In thousands of € Pensions * Other ** 2022 2021 2022 2021 Cost Service costs - 9,240 - 9,310 - 1,289 - 1,305 Early retirement costs - 1,030 - 362 0 0 Past service costs 0 - 1,671 0 0 Actuarial gains/(losses) on other long-term benefits 121 188 0 0 Net interest on net liabilities/(assets) Interest expense on obligations - 1,879 - 529 - 496 - 223 Interest income on plan assets 1,734 476 0 0 Costs recognised in profit or loss - 10,294 - 11,208 - 1,785 - 1,528 Actuarial losses (gains) recognised in other comprehensive income In thousands of € Pensions * Other 2022 2021 2022 2021 Change in demographic assumptions - 777 - 969 - 605 - 581 Change in financial assumptions 49,343 13,188 16,144 4,922 Change from experience adjustments - 12,505 35 - 398 - 1,233 Effect of the asset ceiling 0 0 0 0 Return on plan assets (excluding net interest income) - 28,296 13,141 0 0 Actuarial losses (gains) recognised in other comprehensive income 7,765 25,395 15,141 3,108 242 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 243 Allocation of obligation by type of participant to the plan In thousands of € 2022 2021 Active plan participants - 186,116 - 220,051 Non-active participants with deferred benefits - 21,413 - 20,620 Retirees and beneficiaries - 19,708 - 28,305 Total - 227,237 - 268,976 Allocation of obligation by type of benefit In thousands of € 2022 2021 Retirement and death benefits - 194,397 -221,035 Other post-employment benefits (medical expenses and price subsidies) -24,065 -37,815 Seniority bonuses -8,775 -10,126 Total - 227,237 -268,976 243 # OneteamOnetarget 244 Main actuarial assumptions used 2022 2021 Discount rate between 10 to 12 years 3.73% 0.61% Discount rate between 13 to 19 years 3.75% 1.07% Discount rate over 19 years 3.73% 1.07% Expected average salary increase 2.04% 2.05% Expected inflation 1.99% 1.75% Expected increase in health expenses 2.99% 2.75% Expected increase of price subsidies 1.99% 1.75% Average assumed retirement age 63(BAR) / 65(CAD) 63(BAR) / 65(CAD) Mortality tables IABE prospective IABE prospective Life expectancy in years: For a person aged 65 at the balance sheet date: - Male 20 20 - Female 24 24 For a person aged 65 in 20 years: - Male 22 22 - Female 26 26 The discount rate of the plans depends on their estimated average duration. 244 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 245 The fair value of plan assets is distributed based on the following major categories 202 2 2021 Listed investments 92. 83% 79.76% Shares - eurozone 13. 91% 15.56% Shares - outside eurozone 14. 86% 19.85% Government bonds - eurozone 0. 62% 2.38% Other bonds - eurozone 28. 68% 27.71% Other bonds - outside eurozone 34. 76% 14.25% Non-listed investments 7. 17% 20.24% Insurance contracts 0. 00% 0.00% Real estate 1. 46% 2.80% Cash and cash equivalents 4. 47% 3.18% Other 1. 25% 14.27% Total (in %) 100. 00% 100.00% Total (in thousands of €) 205. 651 221,062 245 # OneteamOnetarget 246 Sensitivity analysis Impact on obligations In thousands of € Increase (-) / Decrease (+) Increase in discount rate (0.25%) 6, 159 Average salary increase - Excluding inflation (0.1%) -2, 056 Increase in inflation rate (0.25%) -5, 016 Increase in healthcare benefits (0.01%) -44 Increase in price subsidies (0.5%) -1, 465 Increase in life expectancy of retirees (1 year) - 971 Average weighted duration of obligations 2022 2021 Average weighted duration of defined benefit obligations 9 9 Average weighted duration of other post-employment obligations 19 20 Expected contribution to pay for employee benefits relating to extra- statutory pensions In thousands of € Expected contribution for 2022 (for all pension and other obligations, listed above) 13,352 The contributions to be paid are function of the payroll of the population concerned. 246 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 247 Note 5.15. Deferred tax assets and liabilities Recognised deferred tax liabilities In thousands of € 31-12-202 2 31-12-2021 Difference Valuation of assets 105,227 116,605 - 11,378 Accrued income 237 388 - 151 Fair value of financial instruments 2,252 126 2,126 Provisions for employee benefits or provisions not accepted under IFRS 35,832 30,369 5,463 Other normative differences 0 0 0 Total 143,548 147,488 - 3,940 Deferred tax assets and liabilities are offset within each taxable entity. They are all fully recognised. The main source of deferred tax is the difference between the book value and the tax base of property, plant and equipment. This difference arises firstly from the recognition in the opening balance sheet of property, plant and equipment at their fair value corresponding to their deemed cost and, secondly, from the recognition at fair value of the assets and liabilities arising from the SEGEO and Distrigas & C° business combinations in 2008. Provisions accounted for in accordance with IAS 19 (Employee benefits) and provisions recognised under local GAAP but not recognised under IFRS are another major source of deferred tax. 247 # OneteamOnetarget 248 Movement for the period In thousands of € Deferred tax As at 31-12-2021 147,488 Deferred tax expenses – Profit & loss account - 9,666 Deferred tax expenses – other comprehensive income 5,726 As at 31-12-2022 143,548 Note 5.16. Trade and other payables Trade and other liabilities In thousands of € 31-12-202 2 31-12- 2021 Change Trade payables 60,357 36,095 24,262 Payroll and related items 39,517 32,915 6,602 Other payables 344,659 4,297 340,362 Total 444,533 73,307 371,226 The significant increase in other payables is related to the recognition of the exceptional solidarity contribution of €300 million. 248 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 249 Note 6. Financial instruments Principles for managing financial risks In the course of conducting its activities, the Fluxys Belgium group is exposed to credit and counterparty risks, liquidity and interest rate risks and market risks, all of which affect its assets and liabilities. The group's administrative organisation, controlling and financial reports ensure that these risks are constantly monitored and managed. The group may only use financial instruments for hedging, and not for speculative or trading purposes. All transactions are intended to meet the group's identified financial risks: no transaction may be entered into for the sole purpose of earning a speculative gain. Cash management policy The Fluxys Belgium group's cash is managed as part of a general policy and cash surpluses are invested with Fluxys SA under cash pooling agreements. By way of reminder, Fluxys SA centralises the management of the Fluxys group’s cash funds and financing. The objective of this policy is to optimise the group’s cash positions. These transactions are entered into at market terms and conditions. The group's financial policy stipulates that cash surpluses be maintained at first class financial institutions or invested in financial instruments issued by entities with a high credit rating or in financial instruments of issuers which are covered by a guarantee from a European Member State or whose share capital is predominantly controlled by state- owned entities. Cash surpluses are invested following a competitive bidding award, and in instruments that are sufficiently diversified to limit counterparty risk concentration. These investments are subject to constant monitoring and risk analysis on a case-by-case basis. At 31-12-2022, current and non-current investments, cash and cash equivalents amounted to €1,204,321 thousand compared to €497,969 thousand at the end of 2021. Credit and counterparty risks The group systematically assesses its counterparties' financial capacity and systematically monitors receivables. Group policy regarding counterparty risks requires that the group submits potential customers and suppliers to a detailed preliminary financial analysis (liquidity, solvency, profitability, reputation and risks). The group uses internal and external information, such as official analysis performed by rating agencies (Moody's, Standard & Poor's and Fitch). These rating agencies assess entities in relation to risk and award them a credit score (rating). The group also uses databases containing general, financial and market information to complement its own evaluation of potential customers and suppliers. In addition, for most of its activities the group is allowed to contractually require guarantees (either bank guarantees or cash deposits) from counterparties. The group thereby reduces its exposure to credit risk both in terms of default and concentration of customers. In view of the concentration risk it must be noted that three clients contribute respectively 18%, 12% and 11% of the operating revenue. The breakdown per segment of these latter is €224 million in transmission, €7 million in storage and €83 million in terminalling. 249 # OneteamOnetarget 250 Interest rate risk The group's debt mainly consists of fixed interest rate loans maturing between 2023 and 2034, the balance of which (including lease obligations) as at 31-12-2022 represents €1,172,041 thousand compared to €1,219,523 thousand at the end of 2021. In addition, the group's interest-bearing liabilities include other financing and liabilities to be used within the regulatory framework. As explained in Note 5.11, part of these bear interest at a 10-year OLO rate and the remainder at the average Euribor 1-year rate. The group does not incur any interest rate risks related to this. Therefore, a sensitivity analysis is not representative for the risk inherent in these financial instruments. Consequently, the Fluxys Belgium group’s exposure to interest rate risk is very limited. Liquidity Risk Liquidity risk management is one of Fluxys Belgium group’s main objectives. The amounts invested and the investment period reflect the short- and long-term planning of cash needs as closely as possible, taking into account operational risks. The Fluxys Belgium group can call upon Fluxys SA in case of liquidity needs, under the cash pooling arrangements. By way of reminder, Fluxys centralises the management of the Fluxys group’s cash funds and financing and has credit lines. The maturity of interest-bearing liabilities is reported in Note 5.12. Summary of financial instruments at balance sheet date The group's main financial instruments consist of financial and trade receivables and payables, short-term investments, cash and cash equivalents. The following table gives an overview of financial instruments at 31 December 2022: 250 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 251 Summary of financial instruments at balance sheet date In thousands of € 31-12-2022 Category Book value Fair value Level I. Non-current assets Other financial assets at amortised cost A 107,595 97,804 1 & 2 Other financial assets at fair value through profit or loss B 3,576 3,576 2 Lease receivables A 0 0 2 Other receivables A 15,144 15,144 2 II. Current assets Lease receivables A 2,094 2,094 2 Trade and other receivables A 164,299 164,299 2 Cash investments A 26,113 26,397 2 Cash and cash equivalents A 1,070,708 1,070,600 2 Total financial instruments – assets 1,389,529 1,379,914 I. Non-current liabilities Interest-bearing liabilities A 1,115,772 1,036,002 2 Other financial liabilities B 3,575 3,575 2 II. Current liabilities Interest-bearing liabilities A 56,269 56,269 2 Trade and other payables A 444,533 444,533 2 Total financial instruments - liabilities 1,620,149 1,540,379 The categories correspond to the following financial instruments: A. Financial assets or financial liabilities at amortised cost. B. Assets or liabilities at fair value through profit or loss. 251 # OneteamOnetarget 252 Summary of financial instruments at balance sheet date In thousands of € 31-12-2021 Category Book value Fair value Level I. Non-current assets Other financial assets at amortised cost A 85,388 85,242 1 & 2 Other financial assets at fair value through profit or loss B 3,254 3,254 2 Other financial assets at fair value Lease receivables A 2,094 2,094 2 Other receivables A 9,144 9,144 2 II. Current assets Lease receivables A 601 601 2 Trade and other receivables A 90,446 90,446 2 Cash investments A 45,740 45,740 2 Cash and cash equivalents A 366,931 366,931 2 Total financial instruments – assets 603,598 603,452 I. Non-current liabilities Interest-bearing liabilities A 1,162,091 1,221,689 2 Other financial liabilities B 3,254 3,254 2 II. Current liabilities Interest-bearing liabilities A 57,438 57,438 2 Trade and other payables A 73,307 73,307 2 Total financial instruments - liabilities 1,296,084 1,355,682 All of the group's financial instruments fall within Levels 1 and 2 of the fair value hierarchy. Their fair value is measured on a recurring basis. For the fair value measurement of Level 1, only quoted prices are used (without modification) for identical assets and liabilities in active markets. They mainly include bonds. For the fair value measurement of Level 2, observable prices other than the quoted prices of Level 1 are used. The prices are observable for the asset or liability, either directly or indirectly. 252 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 253 The techniques for measuring the fair value of Level 2 financial instruments are the following: • The items ‘Interest-bearing liabilities’ include the fixed-rate bonds issued by Fluxys Belgium, whose fair value is determined based on active market rates, usually provided by financial institutions. • The fair value of other financial assets and liabilities categorised under level 2 is largely identical to their book value: o because they have a short-term maturity (such as trade receivables and payables), o except for depreciated assets following the increase in interest rates 253 # OneteamOnetarget 254 Note 7. Contingent assets and liabilities – rights and liabilities of the group Note 7.1. Litigation Ghislenghien As announced in 2011, Fluxys Belgium has undertaken, in agreement with insurers and other responsible parties, to proceed with the final compensation of private victims of the accident at Ghislenghien in 2004. All the victims who have presented themselves to date and who were entitled to compensation have been compensated. Compensation claim relating to the 'Open Rack Vaporiser' investment A compensation claim for additional works was introduced by a supplier in the scope of the 'Open Rack Vaporiser' investment made by Fluxys LNG. The latter disputes this claim and an expert was appointed to assess the case. No reliable estimate is available at this stage. No provision has therefore been recognised as at 31-12-2022. Other proceedings Other legal proceedings related to the operation of our facilities are in progress, but their expected impact is immaterial and/or such proceedings are being put on hold Note 7.2. Assets and items held for third parties, in their name, but at the risk and for the benefit of entities included in the consolidation scope In the ordinary course of business, the Fluxys Belgium group holds gas belonging to its customers at its storage sites in Loenhout, in the pipelines and in the tanks at the LNG terminal in Zeebrugge. Note 7.3. Guarantees received Bank securities for the benefit of the group comprise guarantees received from contractors in respect of construction contracts as well as bank guarantees received from customers. At 31 December 2022, the guarantees received amounted to €191,434 thousand. The expected credit losses on guarantees received are not very material for the Fluxys Belgium group. Note 7.4. Guarantees provided by third parties on behalf of the entity Rental guarantees in favour of the owners of assets located in Belgium and leased by the group amounted to €10 thousand as at 31-12-2022. Other guarantees amounted to €183 thousand as at 31-12-2022. Note 7.5. Commitments with regard to the Interconnector Zeebrugge Terminal (IZT) The IZT lease contract includes a purchase option for the lessee that can be exercised on 1 October 2023 for an amount of €1,643 thousand. As part of this transaction, surface rights have been attributed. 254 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 255 Note 7.6. Commitments under terminalling service contracts The Capacity Subscription Agreements (CSA) entered into with the users of the Zeebrugge LNG terminal provide for 110 mooring windows (slots) per contract until 2023 and 88 docking windows per contract until 2027. During the binding window of an Open Season which was held at the end of 2020 for additional regasification capacity at the Zeebrugge LNG terminal, the full 6 million tonnes per year (or c. 10.5 GWh/h) capacity on offer had been subscribed. On this basis, Fluxys LNG has taken the final investment decision to build the additional infrastructure at the Zeebrugge LNG terminal. The additional regasification capacity will be provided in two steps: - as from early 2024, a total additional capacity of 4.7 million tonnes per year will already be offered, - as from early 2026, the full additional capacity of 6 million tonnes per year will be offered. In 2019, in addition to the aforementioned contracts, a new long-term contract was entered into with Qatar Petroleum, subsidiary of Qatar Terminal Limited (QTL), for the remaining unloading slots until 2039 with extension option until 2044. In addition, Yamal Trade (a 100% subsidiary of Yamal LNG) and Fluxys LNG signed a 20- year contract for the transshipment of a maximum of 8 million tonnes of LNG per year at the port of Zeebrugge in Belgium. This contract has entered into effect upon the commissioning of the 5 th storage tank in the Zeebrugge LNG terminal at the end of 2019. Note 7.7. Other commitments Other commitments have been made and received by the Fluxys Belgium group, but their potential impact is immaterial. 255 # OneteamOnetarget 256 Note 8. Related parties Fluxys Belgium and its subsidiaries are controlled by Fluxys, which is itself controlled by Publigas. The consolidated financial statements include transactions performed by Fluxys Belgium and its subsidiaries in the normal course of their activities with unconsolidated related companies or associates. These transactions take place under market conditions and mainly involve transactions realised with Fluxys SA and Fluxys Europe (administrative services, IT and housing services and the management of cash funds and financing), Interconnector (UK) (inspection and repair services), IZT (IZT lease and facilities operation and maintenance services), Dunkerque LNG (IT development and other services), Gaz- Opale (terminalling services), Balansys (balancing operator), Fluxys TENP, FluxSwiss and Flux Re (reinsurance). Other related parties in the following tables concern other entities of the Fluxys group, in which Fluxys Belgium does not hold a stake. 256 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 257 Significant transactions with related parties as at 31.12.2022 (in thousands of €) Parent company Joint arrange- ments Other related parties Total I. Assets with related parties 1,885,715 15,000 2,96 6 1,903,681 1. Other financial assets 0 15,000 0 15,000 Loans 0 15,000 0 15,000 2. Financial lease receivables (current and non-current) 0 0 2,094 2,094 3. Trade and other receivables 860,381 0 871 861,252 Clients 860,381 0 871 861,252 4. Cash and cash equivalents 1,025,334 0 0 1,025,334 5. Other current assets 0 0 0 0 II. Liabilities with related parties 186,900 0 636 187,529 1. Interest-bearing liabilities (current and non-current) 186,812 0 0 186,812 Other borrowings 186,812 0 0 186,812 2. Trade and other payables 79 0 8 79 Suppliers 0 0 0 0 Other payables 79 0 8 79 3. Other current liabilities 9 0 629 638 III. Transactions with related parties - 4,605 1,888 21,334 18,617 1. Services rendered and goods delivered 4,207 1,888 21,513 27,608 2. Services received (-) - 1,806 0 - 179 - 1,985 3. Net financial income - 7,007 0 0 - 7,007 4. Directors’s and senior executives’ remuneration 2,536 2,536 Of which short-term benefits 2,149 2,149 Of which post-employment benefits 387 387 257 # OneteamOnetarget 258 Significant transactions with related parties as at 31.12.2021 (in thousands of €) Parent company Joint arrange- ments Other related parties Total I. Assets with related parties 320.254 9.000 5.311 334.565 1. Other financial assets 0 9.000 0 9.000 Loans 0 9.000 0 9.000 2. Financial lease receivables (current and non-current) 0 0 2.695 2.695 3. Trade and other receivables 0 0 2.602 2.602 Clients 0 0 2.602 2.602 4. Cash and cash equivalents 320.254 0 0 320.254 5. Other current assets 0 0 14 14 II. Liabilities with related parties 239.644 0 693 240.332 1. Interest-bearing liabilities (current and non-current) 239.391 0 0 239.391 Other borrowings 239.391 0 0 239.391 2. Trade and other payables 246 0 96 338 Suppliers 193 0 91 284 Other payables 53 0 4 53 3. Other current liabilities 7 0 597 604 III. Transactions with related parties 1. Services rendered and goods delivered 2.451 1.220 20.057 23.728 2. Services received (-) - 2.172 0 - 94 - 2.266 3. Net financial income - 7.765 0 0 - 7.765 4. Directors’s and senior executives’ remuneration 2.443 2.443 Of which short-term benefits 2.078 2.078 Of which post- employment benefits 365 365 258 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 259 Note 9. Directors’ and senior executives’ remuneration Pursuant to Article 10 of the Articles of Association, the Board of Directors of Fluxys Belgium SA comprises at least three and no more than 24 non-executive directors. Furthermore, the 'special share' grants to the Minister the right to appoint two representatives of the federal government in the Board of Directors. Currently, two representatives of the federal government attend the meetings of the Board of Directors and the Strategic Committee. The ordinary general meeting has decided to set the remuneration of the directors and government representatives to a maximum of €360,000 (value 01-01-2007), to be allocated by the Board of Directors amongst its members, and to grant an attendance fee of €250 per meeting of the Board of Directors and advisory committees. Pursuant to Article 15 of the Articles of Association of Fluxys Belgium, the Board of Directors is authorised to pay a special remuneration to directors who carry out special duties for the entity. The Board also has the right to reimburse travel expenses and costs incurred by the members of the Board of Directors. The Fluxys Belgium group has not granted any loans to directors. In addition, the directors have not entered into unusual or abnormal transactions with the group. No shares or share options have been granted to the directors. For further information, the reader should refer to the Corporate Governance Declaration in the directors' report and to Note 8 'Related parties' for the breakdown of remuneration by category. Note 10. Events after the balance sheet date Based on the information available as of today, it is very difficult to estimate the economic impact of the war in Ukraine. Based on the current situation, the essential nature of the company's activities and its regulatory framework, we do not foresee any significant impact on the consolidated results of the Fluxys Belgium group in 2023. 259 # OneteamOnetarget 260 Statutory accounts of Fluxys Belgium SA according to Belgian GAAP Given the significance of the equity as well as the revenue of the parent entity in the consolidated financial statements, the publication of the detailed version of the annual accounts and the notes to the accounts in this brochure would, in the majority of cases, be redundant given the explanations found in the consolidated accounts. Pursuant to Article 3:17 of the Companies Code, the decision was made to present only an abridged version of the Fluxys Belgium SA statutory annual accounts. The statutory auditor issued an unqualified audit opinion on the annual accounts of Fluxys Belgium SA. The statutory accounts of Fluxys Belgium SA and the audit opinion have been filed with the National Bank of Belgium. They are available on the Fluxys Belgium website (www.fluxys.com/belgium) and can also be obtained free of charge upon request at the following address: Fluxys Belgium SA Communication Department Avenue des Arts 31, 1040 Brussels 260 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 261 Balance sheet Assets In thousands of € 31-12-202 2 31-12-202 1 Formation expenses 1,265 1,423 Fixed assets 1,432,702 1,502,877 Intangible assets 22,019 22,628 Property, plant and equipment 1,325,694 1,395,264 Financial fixed assets 84,989 84,985 Current assets 1,114,083 443,107 Amounts receivable after more than one year 15,144 9,144 Stock and contracts in progress 61,445 38,453 Amounts receivable within one year 156,913 82,058 Cash investments 0 0 Cash at bank and in hand 867,339 300,265 Deferred charges and accrued income 13,242 13,187 Total 2,548,050 1,947,407 261 # OneteamOnetarget 262 Equity and liabilities In thousands of € 31-12-202 2 31-12-202 1 Equity 456,783 475,163 Capital 60,272 60,272 Share premium account 38 38 Revaluation surpluses 258,498 287,049 Reserves 10,927 11,041 Accumulated profits (losses) 93,084 79,252 Capital subsidies 33,964 37,511 Provisions and deferred taxes 15,361 16,872 Provisions for liabilities and charges 3,177 3,468 Deferred tax 12,184 13,404 Amounts payable 2,075,906 1,455,372 Amounts payable after more than one year 921,383 942,106 Amounts payable within one year 560,408 203,391 Accrued charges and deferred income 594,115 309,875 Total 2,548,050 1,947,407 262 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 263 Income statement Income statement In thousands of € 31-12-202 2 31-12-202 1 Operating income 951,458 491,057 Operating charges 864,397 415,933 Operating profit 87,061 75,124 Financial income 50,418 46,661 Finance costs 30,233 28,062 Net financial income 20,185 18,599 Earnings before taxes 107,246 93,723 Transfer from deferred taxes 1,220 1,259 Income tax expenses - 24,546 - 23,417 Net profit/loss for the period 83,920 71,565 Transfer to untaxed reserves 114 114 Profit for the period available for appropriation 84,034 71,679 263 # OneteamOnetarget 264 Profit/loss appropriation Appropriation account In thousands of € 31-12-202 2 31-12-202 1 Profit to be appropriated 163,286 138,449 Profit for the period available for appropriation 84,034 71,679 Profit carried forward from the previous period 79,252 66,770 Transfer from equity 28,167 37,767 From reserves 28,167 37,767 Transfer to equity 0 0 To the legal reserve 0 0 To the other reserves 0 0 Result to be carried forward 93,084 79,252 Profit to be carried forward 93,084 79,252 Profit to be distributed 98,369 96,964 Dividends 98,369 96,964 If the above proposal is accepted and taking tax requirements into account, the annual dividend, net of withholding tax, could be set at: € 0,980 € 0.966 In 2022, no advance on the dividend was paid. The gross unit dividend to be paid out for fiscal year 2022 is €1.40 per share (€0.980 net). It will be payable from 17 May 2023. 264 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 265 Capital at the end of the period Capital at the end of the period 31-12-202 2 Subscribed capital At the end of the previous period 60,272 At the end of the period 60,272 Capital represented by Registered shares 62,351,736 Dematerialised shares 7,911,765 Structure of shareholders Declarant Date of declaration Type Number of voting rights declared % Fluxys 13-12-2017 B/D 63,237,240 90,00 The Belgian State holds one specific share. 265 # OneteamOnetarget 266 Income taxes Income taxes In thousands of € 31-12-202 2 Breakdown of heading 670/3 Income taxes on the result of the current period 24,318 Taxes and withholding taxes due or paid 24,320 Excess of income tax prepayments - 2 Estimated additional taxes 0 Income taxes on previous periods 228 Additional taxes due or paid 228 Additional taxes (estimated or provided for) 0 Reconciliation between profit before taxes and estimated taxable profit Profit before taxes 107,246 Permanent differences: - 9,975 Definitively taxed income - 43,678 Non-deductible expenses and hidden reserves 5,300 Notional interest 0 Taxable reserves 32,675 Depreciation of financial fixed assets 0 Transfer from untaxed reserves 114 Transfer from deferred taxes 1,220 Deductible innovation revenue - 5,400 Provisions non déductibles 0 Hidden reserves - 206 Total 97,271 266 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 267 Workforce ONSS N°: 030012851238 Joint Commission N°: 326 Headcount A. Employees recorded in the personnel register 1a. During the current period Total Men Women Average number of employees Full time 743.9 642.5 101.4 Part-time 121.1 68.8 52.3 Total in full-time equivalents (FTE) 836.0 695.0 141.0 Number of hours actually worked Full time 1,115,586 964,683 150,903 Part-time 137,922 77,155 60,767 Total 1,253,508 1,041,838 211,670 Employee expenses Full time 105,634,555 93,574,622 12,059,933 Part-time 16,238,345 10,017,343 6,221,002 Total 121,872,900 103,591,965 18,280,935 Advantages in addition to wages 1,905,640 1,619,794 285,846 1b. During the previous period Total Men Women Average number of employees (FTE) 835.3 688.2 147.1 Number of hours actually worked 1,274,610 1,047,607 227,003 Employee expenses 109,313,981 92,578,011 16,735,970 Advantages in addition to wages 2,095,665 1,774,819 320,846 267 # OneteamOnetarget 268 2. At the closing of the period Full time Part-time Total FTE a. Employees recorded in the personnel register 767 123 861.0 b. By nature of the employment contract Contract for an indefinite period 752 123 846.0 Contract for a definite period 15 0 15.0 Contract for execution of specifically assigned work 0 0 0.0 Replacement contract 0 0 0.0 c. According to gender and study level Men 663 71 717.5 Primary education 0 0 0.0 Secondary education 267 39 298.0 Higher non-university education 169 11 177.2 University education 227 21 242.3 Women 104 52 143.5 Primary education 0 0 0.0 Secondary education 17 11 25.3 Higher non-university education 41 27 61.8 University education 46 14 56.4 d. By professional category Management 290 31 313.1 Employees 477 92 547.9 Workers 0 0 0.0 Other 0 0 0.0 full-time equivalent 268 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 269 B. Hired temporary staff and personnel placed at the enterprise’s disposal During the current period Hired temporary staff Personnel placed at disposal of the entity Average number of persons employed 6.7 0 Number of hours actually worked 13,222 0 Costs for the enterprise 488,028 0 Table of movements in personnel during the period Full time Part time Total FTE Entries a. Employees recorded in the personnel register 85 1 85.8 b. By nature of the employment contract Contract for an indefinite period 72 1 72.8 Contract for a definite period 13 0 13.0 Contract for execution of specifically assigned work 0 0 0.0 Replacement contract 0 0 0.0 Exits a. Employees whose contract end-date has been recorded in the personnel register in this financial year 60 5 62.8 b. By nature of the employment contract Contract for an indefinite period 46 4 48.2 Contract for a definite period 14 1 14.6 Contract for execution of specifically assigned work 0 0 0.0 Replacement contract 0 0 0.0 c. By reason of termination of contract Retirement 13 2 14.0 Early retirement 0 0 0.0 Dismissal 8 1 8.8 Other reason 39 2 40.0 Of which: the number of persons who continue to render services to the company at least part- time on a self-employed basis 0 0 0.0 full-time equivalent 269 # OneteamOnetarget 270 Information on training provided to employees during the period Men Women Initiatives in formal continued professional development at the expense of the employer Number of employees involved 715 162 Number of actual training hours 20,922 2,920 Net costs for the enterprise 3,461,285 483,320 Of which gross costs directly linked to training 3,461,285 483,320 Of which fees paid and payments to collective funds 0 0 Of which subsidies and other financial advantages received (to deduct) 0 0 Total of initiatives of less formal or informal professional training at the expense of the employer Number of employees involved 580 132 Number of actual training hours 7,304 1,623 Net costs for the enterprise 619,999 124,700 Total of initiatives of initial professional training at the expense of the employer Number of employees involved 0 0 Number of actual training hours 0 0 Net costs for the enterprise 0 0 270 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 271 Statutory auditor’s report and declaration by responsible persons Statutory auditor’s report to the General Meeting of Fluxys Belgium NV for the financial year ended 31 December 2022 In the context of the statutory audit of the Consolidated Financial Statements) of Fluxys Belgium NV (the “Company”) and its subsidiaries (together the “Group”), we report to you as statutory auditor. This report includes our opinion on the consolidated balance sheet as at 31 December 2022, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended 31 December 2022 and the disclosures (all elements together the “Consolidated Financial Statements”) as well as our report on other legal and regulatory requirements. These two reports are considered one report and are inseparable. We have been appointed as statutory auditor by the shareholders’ meeting of 10 May 2022, in accordance with the proposition by the Board of Directors following recommendation of the Audit Committee and following recommendation of the workers’ council. Our mandate expires at the shareholders’ meeting that will deliberate on the Consolidated Financial Statements for the year ending 31 December 2024. We performed the audit of the Consolidated Financial Statements of the Group during 4 consecutive years. 271 # OneteamOnetarget 272 Report on the audit of the Consolidated Financial Statements Unqualified opinion We have audited the Consolidated Financial Statements of Fluxys Belgium NV, that comprise of the consolidated balance sheet on 31 December 2022, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows of the year and the disclosures, which show a consolidated balance sheet total of € 3.406,6 million and of which the consolidated income statement shows a profit for the year of € 83,7 million. In our opinion, the Consolidated Financial Statements give a true and fair view of the consolidated net equity and financial position as at 31 December 2022, and of its consolidated results for the year then ended, prepared in accordance with the International Financial Reporting Standards as adopted by the European Union (“IFRS”) and with applicable legal and regulatory requirements in Belgium. Basis for the unqualified opinion We conducted our audit in accordance with International Standards on Auditing (“ISAs”) applicable in Belgium. In addition, we have applied the ISA's approved by the International Auditing and Assurance Standards Board (“IAASB”) that apply at the current year-end date and have not yet been approved at national level. Our responsibilities under those standards are further described in the “Our responsibilities for the audit of the Consolidated Financial Statements” section of our report. We have complied with all ethical requirements that are relevant to our audit of the Consolidated Financial Statements in Belgium, including those with respect to independence. We have obtained from the Board of Directors and the officials of the Company the explanations and information necessary for the performance of our audit and we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Consolidated Financial Statements of the current reporting 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 consequently we do not provide a separate opinion on these matters. 272 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 273 Calculation of the net profit under the regulatory framework Description As described in chapter ‘Legal and regulatory framework’ of the annual report and note 5.12 of the Consolidated Financial Statements, a regulated tariff mechanism is applied to the transportation of gas (gas flows within Belgium and border-to-border flows), the storage of gas and for LNG terminalling activities. For these activities, the net result is determined by applying calculation methods imposed by the Belgian regulator, the Commission for Electricity and Gas Regulation (the “CREG”) (together the “Tariff Mechanism”). The Tariff Mechanism is based on calculation methods that are complex and that require the use of parameters (the Beta of the regulated activity of the Group, return on equity, ...), and of accounting data of the regulated activities (the Regulated Asset Base, the regulated equity, capital expenditures (“CAPEX”) and subsidies received). In addition, for extension investments on LNG installations performed since 2004, the Tariff Mechanism provides in a specific calculation method whereby the return is determined following an IRR formula (Internal Rate of Return) as determined by the CREG. The Tariff Mechanism makes a distinction between manageable and non-manageable costs. Deviations from the estimated value of non-manageable costs are fully allocated to the regulatory assets or liabilities (future tariffs). The manageable costs are costs over which the Group has control, and whereby deviations are distributed between the shareholders of the Group and future tariffs. Therefore, the calculation methods of the Group’s net result are complex and require judgements from management, more particularly with respect to the use of correct accounting data and parameters as imposed by the regulator. The use of incorrect accounting data, and deviations in assumptions, can have a material impact on the Group’s net result. 273 # OneteamOnetarget 274 How the matter was addressed in our audit Amongst others, we have performed the following procedures: • Assessing the design and implementation of key internal controls relating to the calculation of the net result, including those related to (i) the completeness and accuracy of the underlying data used in the calculation and (ii) management review controls; • Evaluating the adequate and consistent classification of operating costs by nature (manageable and non-manageable) as described in the Tariff Mechanism; • Performing independent recalculations of the net results for the respective regulated activities based on underlying internal documentation and externally available information, and taking into account the formulas as described in the Tariff Mechanism; • Evaluating communication with the CREG, including assessment of the accounting implications of communications and decisions taken by the CREG; • Assessing the adequacy of the disclosures (chapter ‘Legal and regulatory framework’ of the annual report and note 5.12 in the Consolidated Financial Statements). Capitalisation and useful life of property, plant and equipment Description Property, plant and equipment amounts to 54% of the consolidated balance sheet of the Group, with a total capital expenditure (‘CAPEX’) of € 105,5 million in 2022 and a net book value of € 1.855,4 million as at 31 December 2022. Property, plant and equipment form the most important basis for the Regulated Asset Base (“RAB”). Depreciations are classified as non-manageable operating cost and thus have an important impact on the tariffs. The economical useful life, as accepted by the regulator CREG, impacts the depreciations. As a result of the importance of property, plant and equipment on the total balance sheet and on the regulated result, and given its relevance to the users of the Consolidated Financial Statements, this topic is considered a key audit matter. 274 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 275 How the matter was addressed in our audit Amongst others, we have performed the following procedures: • Assessing the design and the implementation of key internal controls, including management assessment over the appropriate authorization of the investment, the compliance of the investment with the capitalization criteria in the accounting policies, and the correct classification of expenditures either as CAPEX or as operating expenses (‘OPEX’). • Performing substantive analytical procedures on CAPEX and OPEX by comparing current year figures with the budgeted figures as approved by the regulator at the level of asset classes and projects; • Testing a selection of additions to property, plant and equipment, assessing whether the expenditure meets the criteria for capitalization under IFRS as adopted by the European Union and under the Group’s accounting policies, recalculation of depreciation charges, analyzing whether the investments are allocated to the correct activity, and reconciling the net book value of property, plant and equipment to the RAB; • Evaluation, based on communication with the regulator, whether there have been changes in the useful life of assets during the period which should be included in the accounts. • Assessing the adequacy of the disclosures in notes 2.6 and 5.1 of the Consolidated Financial Statements. Responsibilities of the Board of Directors for the preparation of the Consolidated Financial Statements The Board of Directors is responsible for the preparation of the Consolidated Financial Statements that give a true and fair view in accordance with IFRS and with applicable legal and regulatory requirements in Belgium and for such internal controls relevant to the preparation of the Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error. As part of the preparation of Consolidated Financial Statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, and provide, if applicable, information on matters impacting going concern, The Board of Directors should prepare the financial statements using the going concern basis of accounting, unless the Board of Directors either intends to liquidate the Company or to cease business operations, or has no realistic alternative but to do so. Our responsibilities for the audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance whether the Consolidated Financial Statements are free from material misstatement, whether due to fraud or error, and to express an opinion on these Consolidated Financial Statements based on our audit. Reasonable assurance is a high level of assurance, but not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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. In performing our audit, we comply with the legal, regulatory and normative framework that applies to the audit of the Consolidated Financial Statements in Belgium. However, a statutory audit does not provide assurance about the future viability of the Company 275 # OneteamOnetarget 276 and the Group, nor about the efficiency or effectiveness with which the board of directors has taken or will undertake the Company's and the Group’s business operations. Our responsibilities with regards to the going concern assumption used by the board of directors are described below. As part of an audit in accordance with ISAs, we exercise professional judgment and we maintain professional skepticism throughout the audit. We also perform the following tasks: • identification and assessment of the risks of material misstatement of the Consolidated Financial Statements, whether due to fraud or error, the planning and execution of audit procedures to respond to these risks and obtain audit evidence which is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting material misstatements resulting from fraud is higher than when such misstatements result from errors, since fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • obtaining insight in the system of internal controls that are relevant for the audit and with the objective 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; • evaluating the selected and applied accounting policies, and evaluating the reasonability of the accounting estimates and related disclosures made by the Board of Directors as well as the underlying information given 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 or not a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s or 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 auditor’s report to the related disclosures in the Consolidated Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going-concern; • evaluating the overall presentation, structure and content of the Consolidated Financial Statements, and evaluating whether the Consolidated Financial Statements reflect a true and fair view of the underlying transactions and events. 276 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 277 We communicate with the Audit Committee within the Board of Directors 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. Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the audits of the subsidiaries. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. We provide the Audit Committee within the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee within the Board of Directors, 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 report, unless the law or regulations prohibit this. Report on other legal and regulatory requirements Responsibilities of the Board of Directors The Board of Directors is responsible for the preparation and the content of the Board of Directors’ report on the Consolidated Financial Statements, the non-financial information attached to the Board of Directors’ report, and other information included in the annual report. Responsibilities of the auditor In the context of our mandate and in accordance with the additional standard to the ISAs applicable in Belgium, it is our responsibility to verify, in all material respects, the Board of Directors’ report on the Consolidated Financial Statements, the non-financial information attached to the Board of Directors’ report, and other information included in the annual report, as well as to report on these matters. 277 # OneteamOnetarget 278 Aspects relating to Board of Directors’ report and other information included in the annual report In our opinion, after carrying out specific procedures on the Board of Directors’ report, the Board of Directors’ report is consistent with the Consolidated Financial Statements and has been prepared in accordance with article 3:32 of the Code of companies and associations. In the context of our audit of the Consolidated Financial Statements, we are also responsible to consider whether, based on the information that we became aware of during the performance of our audit, the Board of Directors’ report and other information included in the annual report, being: • Chapter ‘Legal and regulatory framework’ (page 38) • Financial situation: consolidated key financial data (page 52) contain any material inconsistencies or contains information that is inaccurate or otherwise misleading. In light of the work performed, there are no material inconsistencies to be reported. The non–financial information required by article 3:32, § 2, of the Code of companies and associations has been included in the annual report. The Company has prepared the Group’s non-financial information based on the reporting guidelines of the Global Reporting Initiative standards (“GRI”). However, in accordance with article 3:80 § 1, 5° of the Code of companies and associations, we do not express any opinion on the question whether this non-financial information has been established in accordance with the GRI framework. As requested by the Company, we have issued a separate limited assurance report on a selection of environmental and social Key Performance Indicators (“KPI’s”) in accordance with the International Standard on Assurance Engagements ISAE 3000. We do not express any assurance on the KPI’s not covered by our separate limited assurance report. 278 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 279 Independence matters Our audit firm and our network have not performed any services that are not compatible with the audit of the Consolidated Financial Statements and have remained independent of the Company during the course of our mandate. The fees related to additional services which are compatible with the audit of the Consolidated Financial Statements as referred to in article 3:65 of the Code of companies and associations were duly itemized and valued in the notes to the Consolidated Financial Statements. European single electronic format (“ESEF”) In accordance with the standard on the audit of the conformity of the financial statements with the European single electronic format (hereinafter "ESEF"), we have carried out the audit of the compliance of the ESEF format with the regulatory technical standards set by the European Delegated Regulation No 2019/815 of 17 December 2018 (hereinafter: "Delegated Regulation"). The board of directors is responsible for the preparation, in accordance with the ESEF requirements, of the consolidated financial statements in the form of an electronic file in ESEF format (hereinafter 'the digital consolidated financial statements') included in the annual financial report available on the portal of the FSMA (https://www.fsma.be/en/data-portal). It is our responsibility to obtain sufficient and appropriate supporting evidence to conclude that the format and markup language of the digital consolidated financial statements comply in all material respects with the ESEF requirements under the Delegated Regulation. Based on the work performed by us, we conclude that the format and tagging of information in the digital consolidated financial statements of Fluxys Belgium NV per 31 December 2022 included in the annual financial report available on the portal of the FSMA (https://www.fsma.be/en/data-portal) are, in all material respects, in accordance with the ESEF requirements under the Delegated Regulation. Other communications This report is consistent with our supplementary declaration to the Audit Committee as specified in article 11 of the regulation (EU) nr. 537/2014. Diegem, 30 March 2023 EY Bedrijfsrevisoren BV Statutory auditor Represented by Wim Van Gasse * Partner Acting on behalf of a BV/SRL 23WVG0071 279 # OneteamOnetarget 280 Declaration by responsible persons Declaration regarding the financial year ended 31 December 2022 We hereby attest that to our knowledge: • Fluxys Belgium’ financial statements, drawn up in accordance with the applicable accounting standards, give a true and fair view of the company's assets, liabilities, financial position and profit or loss as well as those of the companies included in the consolidation scope; • the annual report gives a true and fair view of the development and performance of the business and of the position of the company itself and of the companies included in the consolidation scope, together with a description of the principal risks and uncertainties that they face. Brussels, 29 March 2023 Christian Leclercq Pascal De Buck Member of the Executive Board Managing Director Chief Financial Officer Chief Executive Officer 280 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 281 Glossary Pertinence of published financial ratios (see ‘Financial situation: key statistics, p. 48) The Fluxys Belgium group continually evaluates its financial solidity, in particular using the following financial ratios: • Solvency: The ratio between net financial debt and the sum of equity and net financial debt indicates the solidity of the Fluxys group’s financial structure. • Interest coverage: The ratio between the FFO, before interest expenses, and interest expenses represents the group’s capacity to cover its interest expenses thanks to its operating activities. • Net financial debt/extended RAB: This ratio expresses the share of the extended RAB financed by external debt. • FFO/Net financial debt: This ratio is used to determine the group’s capacity to pay off its debts based on cash generated by its operating activities. • RCF/Net financial debt: This ratio is used to determine the group’s capacity to pay off its debts based on cash generated by its operating activities after payment of dividends. 281 # OneteamOnetarget 282 Definition of indicators Other property, plant and equipment investments outside the RAB Average combined investments in property, plant and equipment linked to the extensions to the Zeebrugge LNG terminal and in unregulated activities. Net finance costs Interest charges less financial income from lease contracts, interest on investments and cash equivalents and other interest received, excluding interest on regulatory assets and liabilities. Interest expenses Interest expenses on debts (including interest charges on leasing debts), less interest on regulatory liabilities. EBIT Earnings Before Interests and Taxes or operating profit/loss from continuing operations plus the result of investments accounted for by the equity method and the dividends received from unconsolidated entities. EBIT is used to monitor the operational performance of the group over time. EBITDA Earnings Before Interests, Taxes, Depreciation and Amortisation or operating profit/loss from continuing operations, before depreciation, amortisation, impairment and provisions, plus the result of investments accounted for by the equity method and the dividends received from unconsolidated entities. EBITDA is used to monitor the operational performance of the group over time, without considering non-cash expenses. Net financial debt Interest-bearing liabilities (including leases), less regulatory liabilities, cash linked to early refinancing transactions and 75% of the balance of cash, cash equivalents and short- and long-term cash investments (the other 25% is considered as reserve for operational needs and therefore not available for investments). This indicator gives an idea about the amount of interest bearing debt that would remain if all available cash would be used to reimburse loans. In order to reflect reality more accurately, the exceptional solidarity contribution of €300 million has been removed from the cash position when calculating net financial debt. Indeed, this debt was recognised on 31 December whereas it was paid in January 2023, which has a significant influence on the calculation. FFO Funds from Operations or profit/loss from continuing operations, excluding changes in regulatory assets and liabilities, before depreciation, amortisation, impairment and provisions, to which dividends received from associates and joint ventures and unconsolidated entities are added, and from which net financial expenses and current tax are deducted. This ratio indicates the cash generated by operational activities and 282 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 283 thus the capacity of the group to reimburse its debts and to invest but also to pay dividends. RAB Average Regulatory Asset Base, or average value of the regulated asset base for the year. The RAB is a regulatory concept which contains the assets on which a regulatory return is granted, as regulated by the CREG. Extended RAB Total of the RAB and other property, plant and equipment investments outside the RAB. RCF Retained Cash-Flow or FFO, less dividends paid. This ratio indicates the cash generated by operational activities, but after payment of the dividends. It thus shows the remaining net capacity of the group to reimburse its debts and to invest. WACC Weighted Average Cost of Capital, which reflects the authorised return on RAB under the regulation. 283 # OneteamOnetarget 284 Fluxys Belgium consolidated income statement in thousands of € 31.12.2022 31.12.2021 Notes Operating profit/loss 147,305 137,821 Depreciations 168,051 173,993 Provisions - 6,993 7,070 Impairment losses 14,804 21 Earnings from associates and joint ventures 0 0 Dividends from unconsolidated entities 0 0 EBITDA in thousands of € 323,167 318,905 Fluxys Belgium consolidated income statement in thousands of € 31.12.2022 31.12.2021 Notes Operating profit/loss 147,305 137,821 Earnings from associates and joint ventures 0 0 Dividends from unconsolidated entities 0 0 EBIT in thousands of € 147,305 137,821 Fluxys Belgium consolidated income statement in thousands of € 31.12.2022 31.12.2021 Notes Financial income from lease contracts 56 60 Interest income on investments, cash and cash equivalents 3,970 927 Other interest income 83 30 Borrowing interest costs - 39,292 -37,338 Borrowing interest cost on leasing - 890 -983 Interest on regulatory assets and liabilities 5,230 1,779 Net financial expenses in thousands of € - 30,843 - 35,525 Fluxys Belgium consolidated income statement in thousands of € 31.12.2022 31.12.2021 Notes Borrowing interest costs - 39,292 -37,338 Borrowing interest costs on leasing - 890 -983 Interest on regulatory liabilities 5,230 1,779 Interest expenses in thousands of € - 34,952 -36,542 284 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 285 Fluxys Belgium consolidated income statement in thousands of € 31.12.2022 31.12.2021 Notes Operating profit/loss 147, 305 137,821 Operating revenue - Movements in regulatory assets and liabilities 456, 225 -36,095 Depreciations 168, 051 173,993 Provisions -6, 993 7,070 Impairment losses 14, 804 21 Inflows related to associates and joint ventures 0 0 Dividends from unconsolidated entities 0 0 Net financial expenses -30, 843 -35,525 Current tax -35, 730 -37,137 FFO in thousands of € 712, 819 210,148 Fluxys Belgium consolidated income statement in thousands of € 31.12.2022 31.12.2021 Notes FFO 712,819 210,148 Dividends paid - 96,964 - 96,262 E – consolidated statement of cash flows RCF in thousands of 615,855 113,886 Fluxys Belgium consolidated balance sheet in thousands of € 31.12.2022 31.12.2021 Non-current interest-bearing liabilities 1,115,772 1,162,091 Current interest-bearing liabilities 56,269 57,432 Other financing (current) 0 0 Other financing (non-current) 0 0 Other liabilities (current) 0 0 Other liabilities (non-current) 0 0 Cash investments (75%) - 19,585 - 34,305 Cash and cash equivalents (75%) - 578,031 - 275,198 Other financial assets (75%) - 80,625 - 63,974 Net financial debt in thousands of € 493,800 846,046 285 # OneteamOnetarget 286 From 2021, the regulatory liabilities are presented as a separate line item on the balance sheet (including in the comparative figures). See note 1f of the annual report for further explanations. Fluxys Belgium consolidated balance sheet in millions of € 31.12.2022 31.12.2021 Transmission 2,059,1 2,047.5 Storage 228,0 228.8 LNG terminalling 305,7 303.0 RAB in millions of € 2,592,8 2,579.4 Other tangible investments outside RAB 417,7 410.4 Extended RAB in millions of € 3,010,6 2,989.7 In Belgium, the Regulated Asset Base (RAB) is determined based on the average book value of the fixed assets for the period, plus essentially the accounting amortisations accumulated on the revaluation surpluses. The calculation is in line with the tariff methodology published by the CREG. Welfare contribution in thousands of € 31.12.2022 31.12.2021 Notes Dividends paid 96,264 96,262 D. Consolidated statement of changes in equity Financial income -4,589 -1,142 4.3 Financial expenses 40,805 38,375 4.4 Goods & consumables 5,582 3,422 4.2.1 Services & miscellaneous goods 465,521 146,348 4.2.2 Employee benefits 132,931 112,549 4.2.3 Taxes and duties paid 35,066 36,938 4.5.1 Lease agreements 5,641 5,874 4.2.5 & 4.4 Welfare contribution in thousands of € 777,221 438,626 286 Fluxys Belgium | Regulated information | Integrated Annual Report 2022 | Financial situation 287 Shareholder’s guide Shareholder’s calendar 09.05.2023 General Meeting 17.05.2023 Payment of dividend 28.09.2023 Press release from the Board of Directors on the half-yearly results in accordance with IFRS Payment of dividend The gross dividend per share amounts to €1.40 for the 2022 financial year (€0.980 net), compared to €1.38 (€0.966 net) for 2021. The recurring dividend is primarily determined on the basis of equity invested, the financial structure, the risk-free interest rates. Evolution of Fluxys Belgium share price – BEL 20 (Share price 13-12-2001 = base 100%) 0 50 100 150 200 250 300 350 400 450 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Bel-20 Fluxys Belgium share 287 # OneteamOnetarget FSC TO BE DONE Questions about accounting data Filip De Boeck +32 2 282 79 89 – fi lip.deboeck@fl uxys.com Press contacts +32 471 95 00 – [email protected] Creation and realisation www.chriscom.eu Covers of the report Creation – www.federate.eu Photographer – Christophe Licoppe Photos © Year of publication 2023 – Atomium / Rights SOFAM - Belgium David Samyn, Will Anderson (Badger Productions), Johan Van Droogenbroeck, Wim Robberechts, Dries Van den Brande, Dunkerque LNG – HappyDay, DNV Spadeadam test facility, Titan LNG, Philip Vanoutrive Fluxys Belgium Avenue des Arts 31 – 1040 Brussels +32 2 282 72 11 – www.fl uxys.com/belgium VAT BE 0402.954.628 – RPM Bruxelles D/2023/9484/3 Responsible publisher Leen Vanhamme Avenue des Arts 31 – 1040 Brussels This fi nancial annual report is also available in Dutch and French. Contact our communication service to obtain a copy: communication@fl uxys.com https://be.linkedin.com/company/fl uxys @FluxysBelgiumFR instagram@fl uxys shaping together a bright energy future ... and its CO 2 network # OneteamOnetarget

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