Annual report 2019 group All-In-One report including following documents: Consolidated 1. Annual Report 2019 (non-financial information) 2. Consolidated Management Report 2019 3. Consolidated Accounts 2019 4. Report of the Joint Auditors on the Consolidated Accounts 2019 Proximus SA 5. Management Report 2019 6. Annual Accounts 2019 7. Report of the Joint Auditors on the Annual Accounts 2019 Table of content Proximus at a glance 5 Foreword from our CEO & our Chairman 1 8 Who we are & what we do 12 Key financial highlights 16 Key achievements Creating an inclusive, safe, sustainable and prosperous digital Belgium 21 Contributing to society while creating value for our stakeholders 2 23 Enabling a better digital life 32 Caring for our stakeholders 43 Contributing to society 51 Respecting our planet Governance and compliance, safeguarding long-term value 58 Corporate governance statement 75 Regulatory framework 3 79 Risk management report 88 Remuneration report 97 Proximus share Appendix 105 Overview of non-financial information 109 Transparency 4 121 Social figures 125 Environmental figures 128 GRI content index 145 KPI definition Proximus Group I Annual report 2019 2 Proximus at a glance Sustainability Governance and Compliance Appendix Non-financial reporting approach 2019 For the Non-Financial information included in this Annual Report, we followed the indications of the Global Reporting Initiative (GRI) guide (core option). We have detailed our reporting approach in the Transparency section. Proximus answers several questionnaires on Sustainable and Responsible investments such as Sustainalytics, Vigeo Eiris, MSCI, OEKOM ISS and Dow Jones Sustainability Index. Our ambition is to keep improving our performance by comparing it with that of peers. In 2019, we were listed or scored as follows on the different indices: • CDP Supplier Engagement leader board • Constituent company of the FTSE4Good Index Series • OEKOM ISS: C • DJSI: 52 • Sustainalytics: 68 • Vigeo Eiris (not included in indices). In this 2019 report, we show how we create value for our stakeholders and society, structuring the information around four strategic areas: Enabling a better digital life, Caring for our stakeholders, Contributing to society and Respecting our planet. We cover our most material topics, defined through an internal and external process, explained in the Transparency section. In the Governance section, we describe our governance framework, regulatory framework, risk management, remuneration structure and the Proximus share. Throughout the report we provide detailed performance data. Proximus Group I Annual report 2019 3 Proximus at a glance Sustainability Governance and Compliance Appendix Proximus at a glance 5 Foreword from our CEO & our Chairman 8 Who we are & what we do 12 Key financial highlights 16 Key achievements Proximus Group I Annual report 2019 4 Proximus at a glance Sustainability Governance and Compliance Appendix We will make Proximus the reference operator in Europe Dear reader, 2019 was an important turning point for able to continue working on these foundations in Proximus. We successfully built further on order to prepare our future. To answer the fast- our ambition to become a truly digital-centric changing customer needs efficiently and remain organization. At the same time, the market in relevant in the market, we will continue to invest which we operate is changing faster than ever in networks, IT, innovation and content. before. Customer expectations are on the rise in a world of exponential technological The approval of the transformation plan and advances while we face growing competition the last year changes in our executive committee from new players and current market trends create the momentum to set the bar higher and that are very challenging. truly accelerate Proximus’ transformation through an ambitious, purpose-driven future strategy. In the previous years, during the mandate of This strategy will set us up for a successful turn- Dominique Leroy we achieved excellent financial around to make Proximus the reference operator and operational results. Our company has been in Europe. We will set a higher level of ambition: going through a profound transformation along by investing in next-generation networks, we will with the adoption of a new company culture. create long-term value and change the market All these changes were successfully introduced, dynamics fundamentally, while managing the for which we are truly grateful to Dominique short-term and mid-term competitiveness. Leroy. We would also like to express our gratitude towards our CFO Sandrine Dufour for her intense More than ever, the future of the company will be and active role as CEO ad interim during the worked on with positive energy and ambition. This transition period. Now, under the leadership of is a new starting point for our company, customers, the new CEO, Guillaume Boutin, the team will be stakeholders and employees. Proximus Group I Annual report 2019 5 Proximus at a glance Sustainability Governance and Compliance Appendix Guillaume Boutin | CEO Empowering our organization to secure our future With our new brand promise - Think possible - To achieve our future ambitions, we need to empower we want to inspire Belgians by showing them our employees and our organization. The approval of all the possibilities that the latest technologies our transformation plan, at year-end, was an important offer. We want to empower everyone to realize milestone for two reasons: to remain relevant for customers while securing our future. their potential with our products and services. In January 2019, we announced the need to reduce the number of employees over 3 years. We are well aware this period has not been easy for many of our employees. We are sincerely thankful for their continued commitment during this period of uncertainty. We are also grateful that the negotiations with the concerned trade union partners have led to finding solutions to reduce the impact of the plan, in everyone’s interest. We will continue to guide and support all Full-year results in line with our guidance possible”. By embracing the digital revolution, we confidently integrated ICT experience support. To leverage the value people impacted by the transformation plan. We delivered full-year results in line with our guidance through guide our customers through all changes and possibilities of our network, we continued to develop our wholesale a sustained customer growth and continued strong focus on and offer them worry-free experiences. business with already 20 fiber contracts in 2019. The transformation plan also enables us to build the future of our costs. We posted nearly stable Domestic revenue when Proximus by developing the right skills with specific programs excluding terminal sales (-1.2%), and a stable underlying In the residential market, we fully commit ourselves to address Our goal is to embed digital in everything we do. By adding for the reskilling and upskilling of our teams. In 2019 each Group EBITDA (+0.3%). We maintained our high investments the digital needs of all consumers - and create relevant daily new servicing features to MyProximus, the customer tool employee followed an average of 4.7 days of training. In order to pace with EUR 1,027 million (stable vs 2018) invested with a experiences - on content, but also on helping them manage to easily manage products and services, we take customer make our employees even more resilient and digitally savvy, we clear focus on digitalization, networks and overall customer their daily lives. Key to this success is our openness towards experience to a higher level for both residential and aim for an average of 5.5 training days per employee in 2020, experience. We also invested extensively in our IT platforms, innovative partnerships, e.g. with Shadow for cloud gaming and professional customers. Digital is also key to increase internal which amounts to an investment of more than EUR 40 million. the ongoing multi-year modernization of our transport with the newspapers Het Laatste Nieuws and Le Soir for My efficiency in customer operations: the use of automation, In order to remain competitive, we also improve cost network and attractive content for our TV customers. e-Press. Such innovations keep us relevant and attractive for advanced analytics and artificial intelligence enables us to efficiency. Various projects have already been launched customers, as our solid results in Mobile, Internet and TV show. make our operations more efficient and offer better service. — to increase operational efficiency, to manage electricity consumption, to optimize suppliers’ contracts, etc. Towards true customer centricity Although we have a strong position in the enterprise Data consumption continues to grow exponentially, driven 2019 was the year in which we laid the foundation to achieve market, we need to continue to reinvent ourselves to remain by video and gaming. Considerable investments will secure our future ambition: to transform into a truly customer- successful. To unlock the digital potential of our enterprise Proximus leading position in technology. We rolled out fiber Sustainability, a strategic priority centric digital company and to become the reference customers, we launched Proximus Accelerators: a partnership already in 13 cities while also continuing to improve the speed As a company strongly rooted in Belgium, we want to make operator in Europe. We reached multiple milestones that which brings together the