CORPORATE GOVERNANCE

32 SES Annual Report 2017 33 SES SHAREHOLDERS1

Number % Voting % Economic SES Shareholders1 of shares shareholding participation

A Shares Sofina Group 10,000,000 1.74% 2.17% Nouvelle Santander Telecommunications S.A. 8,000,000 1.39% 1.74% Luxempart Invest S.à.r.l. 5,000,000 0.87% 1.09% Other shareholders 5,059,982 0.88% 1.10% FDRs (free float) 355,397,618 61.79% 77.24% Total A Shares 383,457,600 66.67%3 83.33%3

B Shares BCEE 62,572,893 10.88% 5.44% SNCI 62,565,085 10.88% 5.44% Etat du Grand-Duché de Luxembourg 66,590,822 11.58% 5.79% Total B Shares2 191,728,800 33.33%3 16.67%

Total Shares (Actual) 575,186,400

Total Shares (Economic) 460,149,120

1 Significant shareholdings as of 31 December 2017. 2 A B-share carrries 40% of the economic rights of A-share. 3 All figures have been rounded up to the second decimal, which may result in a rounding difference of the total percentage for A and B-shares.

34 CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL PROCEDURES

INTRODUCTION main governance documents, including two indirect interests, both of 10.88%, through the articles of incorporation, the corporate two State owned banks, Banque et Caisse SES has been listed on the Luxembourg governance charter (including the charters d’Epargne de l’Etat and Société Nationale Stock Exchange since 1998 and on Euronext of the various committees set up by the de Crédit et d’Investissement. These shares Paris since 2004. The company follows the Board) and the separate sections on the constitute the company’s B-shares. ‘Ten Principles of Corporate Governance’ composition and the mission of the Board, adopted by the Luxembourg Stock Exchange the Board’s committees and the Executive Although they constitute separate classes of (its home market), as revised in 2013, a copy Committee. This section also contains the shares, A- and B-shares have the same rights of which can be found at www.bourse.lu/ SES Code of Conduct and Ethics, the SES except that the B-shares entitle their holders corporate-governance. SES also complies Dealing Code, the financial calendar and any to only 40% of the dividend, or, in case the with the governance rules for companies other information that may be of interest to company is dissolved, to 40% of the net listed in Paris, where the majority of the company’s shareholders. liquidation proceeds paid to A-shareholders. the trading in SES FDRs takes place. In B-shares are not freely traded. Each share, the instance of conflicting compliance ORGANISATION PRINCIPLES whether A- or B-share, is entitled to one vote. requirements, for example concerning the In accordance with the company’s articles of publication of the individual remuneration of Created on 16 March 2001 under the name incorporation, no A-shareholder may hold, the members of its Executive Committee and of SES GLOBAL, SES is incorporated in directly or indirectly, more than 20%, 33% or its Board members, SES follows the rules of Luxembourg. On 9 November 2001, SES 50% of the company’s shares unless it has the home market by reporting the aggregate became the parent company of SES ASTRA, obtained prior approval from a meeting of amount of the remuneration of the members originally created in 1985. A copy of SES’s the shareholders. Such limit is calculated by of the Executive Committee, with the fixed articles of incorporation, in its latest version, taking into account the shares of all classes and the variable components of the benefits is available in the corporate governance held by an A-shareholder. being separately identified. section of the company’s website. A shareholder or a potential shareholder SES meets all the recommendations made THE ANNUAL GENERAL MEETING OF who plans to acquire by whatever means, by the ‘Ten Principles’ except with regard SHAREHOLDERS directly or indirectly, more than 20%, 33% to Recommendation 3.9, which states that or 50% of the shares of the company must the committees created by the Board Under Luxembourg company law, the inform the Chairman of the Board of such should only have advisory powers. The SES company’s Annual and/or Extraordinary intention. The Chairman will then inform the Board has delegated some decision-making General Meetings represent the entire government of Luxembourg of the planned powers to the Remuneration Committee. body of shareholders of the company. They acquisition, which may only be opposed For the full details of these powers, see the have the widest powers, and resolutions by the government within three months of charter of the Remuneration Committee on passed at such meetings are binding upon receiving such information, should it determine the SES website (www.ses.com). After each all shareholders, whether absent, abstaining that such an acquisition is against the general meeting of the Remuneration Committee, from voting or voting against the resolutions. public interest. its Chairman reports to the Board about the latest Remuneration Committee discussions The meetings are presided over by the In case of no opposition from the government and decisions. Chairman of the Board or, in his absence, of Luxembourg, the Board shall convene an by one of the Vice Chairmen of the Board extraordinary meeting of shareholders, which The company is continuously increasing or, in their absence, by any other person may decide at a majority as provided for in the flow of information to its shareholders appointed by the meeting. Any shareholder article 67-1 of the law of 10 August 1915, as via the corporate governance section who is recorded in the company’s shareholder amended, regarding commercial companies, of its website, and communicates with register 14 business days before the meeting to authorise the shareholder or potential its shareholders through the dedicated is authorised to attend and to vote at the shareholder to acquire more than 20%, 33% e-mail address: [email protected]. In meeting. A shareholder may act at any or 50% of the shares. line with Luxembourg law, the company meeting by appointing a proxy (who does allows shareholders to receive all corporate not need to be a shareholder). In accordance with article 8 of the documentation, including the documents for Luxembourg law of January 11, 2008, as shareholder meetings, in electronic format. The company has issued two classes of subsequently amended, any shareholder shares: A-shares and B-shares. or FDR holder acquiring or disposing In this context, the SES website contains of shares or FDRs, respectively, is a regularly updated stream of information, The State of Luxembourg holds a direct required to inform the company and the such as the latest version of the company’s 11.58% voting interest in the company and Commission de Surveillance du Secteur

SES Annual Report 2017 35 Financier within four business days of the reached, the meeting will be reconvened in of the company and the appropriation of proportion of voting rights held as a result accordance with the form prescribed by the results, the group’s medium-term business of such acquisition or disposal where that articles of incorporation. It may then validly plan, the consolidated annual budget of the proportion reaches, exceeds or falls below deliberate without consideration of the company and the management report to be the thresholds of 5%, 10%, 15%, 20%, 25%, number of represented shares. submitted to the meeting of shareholders. 33.33%, 50% or 66.66%. It also approves major investments and The proceedings are mostly held in French, is responsible vis-à-vis shareholders and The annual general meeting is held on the but an English translation is provided by third parties for the management of the first Thursday in April. Each registered the company. Interventions in English will company, which it delegates to the Executive shareholder will receive written notice of be translated into French. A French version Committee in accordance with the company’s the annual general meeting, including the of the AGM minutes and the results of the internal regulations. time of the meeting and the agenda, at shareholders’ votes will be published on the least 30 days prior to the meeting. Holders SES website within 15 days after the annual COMPOSITION of the company’s FDRs will be represented general meeting. At the end of December 2017, the at the meeting by Banque et Caisse Board of SES was composed of 17 non- d’Epargne de l’Etat acting as fiduciary. With the exception of the procedure executive directors, four of them female. Each FDR will represent one A-share. If a described above regarding whenever a In accordance with the company’s articles holder of FDRs wishes to attend the annual shareholder intends to hold more than 20%, of association, two-thirds of the Board general meeting of shareholders in person, 33% or 50%, all the resolutions of the meeting members represent holders of A-shares that shareholder will need to convert at are adopted by a simple majority vote except and one-third of the Board members least one FDR into an A share. In order to if otherwise provided for by Luxembourg represent holders of B-shares. The facilitate the attendance of the meeting company law. The annual general meeting mandates of the current directors will by FDR holders, the company will pay the held on 6 April 2017 was attended by 98.86% expire at the annual general meeting of applicable charge for a conversion of up to of the company’s shareholders, not including shareholders in April 2018, 2019 and 2020, 10,000 FDRs for a short period prior to the the 6,189,148 FDRs held by the company. respectively. Mr Romain Bausch, President annual general meeting. and CEO until 3 April 2014, is the Chairman During the 2017 annual general meeting, of the Board of Directors. He is assisted by Notice of the meeting and of the proposed the shareholders used for the first time an two Vice Chairmen, Messrs François Tesch agenda will also be published in the electronic voting system. They approved and Jean-Paul Zens, each one elected international press. The fiduciary will the 2016 financial results and the allocation on the basis of proposals submitted by circulate the draft resolutions to both of the 2016 profits, granted discharge to directors representing A-shareholders international clearing systems, Clearstream the external auditor and to the directors, and B-shareholders, respectively. Their and Euroclear, allowing FDR holders to give re-elected PwC as the company’s external mandates as Chairman and Vice Chairman their voting instructions to the fiduciary in auditor for another year, granted an are annual mandates. time for the meeting. At the same time, the authorisation to SES to buy back its own draft resolutions will be made available on shares and approved the new equity In the event of a vacancy on the Board, the the company’s website. Unless the fiduciary based compensation plan principles. The remaining directors may, upon a proposal from has received specific instructions from the shareholders also approved the directors’ the Nomination Committee and on a temporary FDR holder, the fiduciary will vote in favour fees, which remained unchanged in basis, fill such a vacancy by a majority vote. of the proposals submitted by the Board. comparison to 2016. Finally, shareholders In this case, the next annual general meeting One or more shareholders owning together elected six Directors for a term of three years of shareholders will definitively elect the new at least 5% of the shares of SES have the with a majority of at least 96.964% director, who will complete the term of the right to add items on the agenda of the AGM director whose seat became vacant. and may deposit draft resolutions regarding All of the Board’s other proposals were carried items listed in the agenda or proposed to be by a majority of at least 84.791% of the votes In accordance with internal regulations added to the agenda. This request will need cast. In accordance with article 67-1 of the adopted by the Board, at least one- to be made in writing (via mail or e-mail) and Luxembourg company law, abstentions are third of the Board members must be received no later than the twenty-second not considered when determining whether independent directors. A Board member is day preceding the AGM and will need to a resolution has been passed or not. The considered independent if he or she has no include a justification or draft resolution to detailed results of the shareholders’ votes are relationship of any kind with the company be adopted at the AGM. The written request available in the corporate governance section or management that may impact his or her must include a contact address to which the of the company’s website. judgment. company can confirm receipt within 48 hours from the receipt of the request. THE BOARD OF DIRECTORS AND ITS Independence for these purposes is defined as: COMMITTEES No later than fifteen days preceding the AGM, (i) not having been a director for more than the company will then publish a revised agenda. MISSION 12 years; The Board of Directors is responsible for (ii) not having been an employee or officer of The meeting may deliberate validly only defining the company’s strategic objectives as the company over the previous five years; if at least half of the A-shares and at least well as its overall corporate plan. The Board (iii) not having had a material business half of the B-shares are represented. In approves, upon proposal from the Executive relationship with the company over the the event that the required quorum is not Committee, the annual consolidated accounts last three years and

36 (iv) not representing a significant shareholder plan for the period 2017- 2022, which served As at 31 December 2017, the 17 members holding directly or indirectly more than as the basis for the 2018 budget as approved of the Board of Directors were: 5% of the voting shares. by the Board in December. Seven of the current Board members are MR ROMAIN BAUSCH considered independent: Ms Tsega Gebreyes The Board also used its informal pre-Board Chairman of the Board and Katrin Wehr-Seiter, Messrs Marc Beuls, sessions to develop its knowledge about Born on 3 July 1953, Mr Bausch became a Victor Casier, Conny Kullman, Ramu Potarazu the industry and its perception by outside director on 4 April 2013. Following a career and Kaj-Erik Relander. investors through several presentations. in the Luxembourg civil service (Ministry of The Board visited SpaceX and Boeing at the Finance) where he occupied key positions in Of the ten directors who are not considered occasion of its June Board meeting that was the banking, media and telecommunications independent, five represent a significant held in Los Angeles. sectors including a five-year term as a Director shareholder owning more than 5% of the and Vice Chairman of SES. Mr Bausch has company’s shares, four have been a director During 2017, the Board also decided to been President and CEO of the Company for more than 12 years and one has had a launch a new share buyback programme, from May 1995 to April 2014. Mr Bausch recent employment relationship with the which was implemented on Euronext Paris is the Chairman of the Board of Directors company. through the filing of a ‘notice d’information’ of SES and a Director of SES ASTRA. He is on 7 April 2017. The 2017 programme was also a member of the Boards of Directors Mr Pierre Margue, Vice President Legal and limited to the following two objectives: of Aperam, Banque Raiffeisen Société Corporate Affairs, acts as secretary of the Coopérative, Compagnie Financière La Board of Directors. (i) to operate under the framework of a Luxembourgeoise and the Luxembourg liquidity contract signed with Rothschild, Future Fund, as well as a member of the RULES OF GOVERNANCE and CNFP (Conseil National des Finances (ii) to meet the company’s obligations under Publiques) of Luxembourg. He graduated The Board of Directors meets when required its executive share ownership and stock with a degree in economics (specialisation by the company’s business, and at least once option plans. in business administration) from the per quarter. It can only validly deliberate if University of Nancy. He holds an honorary a majority of the directors are present or Under this programme, the company is doctorate from the Sacred Heart University represented. The resolutions of the Board are authorised to buy back up to 18.5 million in Luxembourg. He is a member of the passed by a simple majority of the votes of A-shares and 9.25 million B-shares at prices Company’s Remuneration Committee and the voting directors present or represented, between EUR 15 and 35 per A-share and of its Nomination Committee. not considering abstentions. The Chairman EUR 6 and 14 per B-share. does not have a casting vote. Any material Mr Bausch is a Luxembourg national. He is contract that is proposed to be signed by Finally, the Board approved the investment in not an independent director because of his the company or any of its wholly controlled O3b mPOWER as well as the launch vehicle past employment relationship with SES. operating subsidiaries with a shareholder for O3b satellites 17-20. In the context of the owning, directly or indirectly, at least 5% of new operating model, the Board extended MR FRANÇOIS TESCH the shares of the company is subject to a the composition of the Executive Committee. Vice Chairman of the Board prior authorisation by the Board. In 2017, It approved updated corporate governance Born on 16 January 1951, Mr Tesch became there were no transactions between the documents as well as changes to the satellite a director on 15 April 1999. He is Executive company and a shareholder owning directly insurance policy. The Board noted updates Chairman of Luxempart S.A. He graduated or indirectly at least 5% of the company’s on the IRRs of recent organic and inorganic with a degree in economics from the Faculté shares. investments as well as to the company’s d’Aix en Provence and holds an M.B.A. from risk management report. The Executive INSEAD (Institut Européen d’Administration ACTIVITIES OF THE BOARD OF Committee regularly informed the Board about des Affaires). He is also Chairman of the DIRECTORS IN 2017 the group’s activities and financial situation, Board of Foyer S.A., of Wealins S.A. and of as well as about the new operating model, Financière de Tubize S.A., and Vice-Chairman The Board of Directors held seven meetings including an assessment of the Executive of CapitalatWork Foyer Group. Mr. Tesch is a in 2017, with an average attendance rate Committee’s performance. It noted updates Vice Chairman of the Board of Directors and a of more than 97%. After endorsement by on: (i) 2017 Business Objectives; (ii) financial member of the Nomination Committee of SES. the Audit and Risk Committee, the Board framework; (iii) corporate social responsibility; approved the 2016 audited accounts, (iv) regulatory management strategy; (v) tax Mr Tesch is a Luxembourg national. He is including the proposed dividend, as well framework; (vi) IT operating model; (vii) cyber not an independent director because he has as the results for the first half of 2017. security; and (viii) investor relations matters. been a director for more than 12 years. During the year, the Board approved the updated strategic plan. In this context, the At each meeting, directors receive a report MR JEAN-PAUL ZENS Board reviewed the evolution of the market on on-going matters and the Chairmen of Vice Chairman of the Board and Chairman dynamics and their impact on the two newly the three committees set up by the Board of the Nomination Committee created NBUs (Video and Networks) and present a report on the latest developments Born on 8 January 1953, Mr Zens became a discussed how differentiated products and discussed in these respective committees. In director on 7 May 2002. He was elected as solutions can be developed and go-to-market addition, a business report is distributed to a Vice Chairman on the same date. Mr Zens channels will be enhanced through the two the members of the Board on a monthly basis, is also a member of the Board of Directors NBUs. The Board also approved the business as well as a monthly Investor Relations report. of SES ASTRA and POST Luxembourg.

SES Annual Report 2017 37 He is currently Director of the Media and Mr Beuls is a Belgian national. He is an MRS TSEGA GEBREYES Communications department of the Ministry independent director. Born on 14 December 1969, Mrs Tsega of State in Luxembourg. He holds a law Gebreyes became a director on 4 April degree and a degree in psychology and MR MARCUS BICKNELL 2013. She is the Founding Director of Satya communications sciences from the University Born on 28 February 1948, Mr Bicknell Capital Limited. She served as Chief Business of Strasbourg. Mr Zens is the Chairman of the became a director on 6 May 2005. Development and Strategy Officer of Celtel Company’s Nomination Committee and Mr Bicknell is a director of New Media International BV and Senior Advisor to a member of its Remuneration Committee. Foundry Ltd. and of Langstaff-Ellis Ltd., Zain. She was also Founding Partner of the both non-listed companies in the United New Africa Opportunity Fund, LLP and has Mr Zens is a Luxembourg national. He is Kingdom. He is a Patron of the Royal worked with McKinsey and Citicorp. not an independent director because he Academy of Dramatic Art and winner of the Mrs Gebreyes is a director of Ison Growth, represents an important shareholder. 2017 Parmurelu d’Oru for services to cultural Satya Capital Limited and Sonae. She is a heritage in Bordighera, Italy. From 1986 to Senior Advisor to TPG Growth. She has a MR SERGE ALLEGREZZA 1990, he was Commercial Director of Société double major in Economics and International Born on 25 October 1959, Mr Allegrezza Européenne des Satellites (now called SES Studies from Rhodes College and holds an became a director on 11 February 2010. He ASTRA). Mr Bicknell holds an M.A. Honours M.B.A. from Harvard Business School. is currently the Director General of Statec, Degree in physical anthropology from the Luxembourg Institute for Statistics Cambridge University. Mrs Gebreyes is an Ethiopian national. She and Economic Studies, a post he has held is an independent director and a member since April 2003. He was Conseiller de Mr Bicknell is a British national. He is not an of the Remuneration Committee and of the Gouvernement 1ère classe at the Ministry of independent director because he has been Nomination Committee of SES. Economics, responsible for internal market a director for more than 12 years. policy, and is the Chairman of the Observatory MR CONNY KULLMAN for Competitiveness. He is also the MR VICTOR CASIER Chairman of the Remuneration Committee Chairman of the Board of Directors of POST Born on 7 May 1974, Mr Casier became a Born on 5 July 1950, Mr Kullman became Luxembourg and of the Board of LuxTrust director on 7 April 2016. Mr Victor Casier is a director on 5 April 2012. He was a former i.n.c and a member of the Conseil Economique a member of the Executive Committee of Director General, CEO and Chairman of et Social. Mr Allegrezza, was a part-time Sofina S.A. and a board member of various Intelsat. After working as a Systems Engineer lecturer at the IAE/University of Nancy 2, has companies within Sofina’s portfolio, including for Saab-Ericsson Space AB in Sweden a Master in economics and a PhD. in applied Vente-Privée.com, Global Lifting Partners and until 1983, he joined Intelsat in Washington economics. Mr Allegrezza is a member of the Spanish investment fund, QMC II. Prior DC, where he held several positions before Audit and Risk Committee of SES. to joining Sofina, Mr Casier worked for Roland becoming the company’s Director General Berger Strategy Consultants, Transwide and CEO in 1998. Mr Kullman became Mr Allegrezza is a Luxembourg national. Limited and Banco Urquijo. Mr Casier holds the CEO of Intelsat, Ltd. in 2001, and in He is not an independent director because an MBA from the University in Chicago, a 2005, Chairman of Intelsat, Ltd., and CEO he represents an important shareholder. Master in Business Engineering (Ingénieur and President of Intelsat (Bermuda), Ltd., de Gestion) from the Université Catholique positions from which he retired in 2006. MR MARC BEULS de Louvain and a certificate from the INSEAD Mr Kullman graduated with a Master of Science Chairman of the Audit and Risk Committee International Directors Programme (IDP). in Electronic Engineering from the Chalmers Born on 15 September 1956, Mr Beuls became Mr Casier is a member of the Audit and Risk University of Technology in Gothenburg a director on 7 April 2011. He serves as a Committee of SES. in 1974. Mr Kullman is the Chairman of the Member of the Board of Directors at Maris Remuneration Committee and a member of the Ltd, a Mauritian holding company investing in Mr Casier is a Belgian national. He is an Nomination Committee of SES. frontier markets in Africa, Qaelum NV, Belgium, independent director. providing software solutions for quality control Mr Kullman is a Swedish national. He is an of medical imaging and WindGen Power USA MR HADELIN DE LIEDEKERKE BEAUFORT independent director. Inc., building and operating smart micro grids Born on 29 April 1955, Mr de Liedekerke in Africa. He is the Chairman of American Beaufort became a director on 17 April Prepaid Value VAS LLC, USA, developing 2000. He is currently a director of Santander MR RAMU POTARAZU value added services for the wireless prepaid Telecommunications, a privately held company, Born on 10 August 1961, Mr Potarazu became market. He is the former President and CEO as well as a director of other private companies a director on 20 February 2014. He is the CEO of Millicom International Cellular S.A., with interests in various fields such as financial, of Binary Fountain. He is the Founder and a position he held from 1998 to 2009. Prior communication and real estate developments. former CEO of Vubiquity. Prior to founding to joining Millicom in 1992 as Senior Vice Mr de Liedekerke Beaufort graduated from the Vubiquity, Mr Potarazu spent 15 years in President in charge of finance and treasury, Ecole Hôtelière de Lausanne. Mr de Liedekerke various positions at Intelsat (1991-2006). Mr Beuls worked for Generale Bank in Belgium, Beaufort is a member of the Remuneration He became Intelsat’s Vice President of specialising in project and trade financing Committee of SES. Operations and CIO in 1996 and its Vice in emerging markets. Mr Beuls graduated President, Commercial Restructuring in from the Limburg Business School, holding a Mr de Liedekerke Beaufort is a French 2000. In 2001, Mr Potarazu became President degree in economics with a major in finance. national. He is not an independent director of Intelsat Global Service Corporation and Mr Beuls is Chairman of the Audit and Risk because he has been a director for more than from 2002 to 2006 he was President and Committee of SES. 12 years. Chief Operating Officer of Intelsat Ltd.

38 Prior to joining Intelsat, Mr Potarazu held to the EU in Brussels in 2000. Upon her MS FRANÇOISE THOMA several engineering positions. Mr Potarazu return to Luxembourg and over the last Born on 25 August 1969, Ms Thoma became graduated with a BS in Computer Science decade, her focus has been on attracting a director on 16 June 2016. Ms Thoma is and in Mathematics from the Oklahoma tech companies to establish and develop President and Chief Executive Officer of Christian University. He also holds an MSc in in Luxembourg. She sits on the Board of Banque et Caisse d’Epargne de l’Etat, and Electrical Engineering from the John Hopkins Directors of POST Luxembourg. a member of the Boards of Directors of University and was a member of the Stanford Mrs Anne-Catherine Ries is member of the Cargolux International Airlines S.A., Luxair Executive Program. Nomination Committee of the Company. S.A., the Luxembourg Stock Exchange and Enovos Luxembourg S.A. She was a member Mr Potarazu is a US national. He is an Mrs Ries is a Luxembourg and French of the Luxembourg Council of State from independent director. national. She is not an independent director 2000-2015 and holds a PhD in Law from the because she represents an important Université de Paris II Panthéon-Assas and an MR KAJ-ERIK RELANDER shareholder. LL.M. from Harvard Law School. Ms Thoma Born on 21 June 1962, Mr Relander is a member of the Remuneration Committee became a director on 6 April 2017. He is MR JEAN-PAUL SENNINGER and of the Audit and Risk Committee of SES. Senior Independent Advisor of Mubadala Born on 3 December 1959, Mr Senninger Development Company. Mr Relander became a director on 7 April 2016. Ms Thoma is a Luxembourg national. She worked for the Finnish National Fund for Mr Senninger has been the general secretary is not an independent director because she Research and Development prior to joining of the Council of Ministers of the Luxembourg represents an important shareholder. Sonera Corporation where he held several Government from December 2013. management positions, including the Mr Senninger joined the Ministry of Foreign MRS KATRIN WEHR-SEITER position of CEO. He left Sonera in 2001 to Affairs in 1999 as Premier Conseiller de Born on 27 January 1970, Mrs Wehr-Seiter join Accel Partners, a private equity and Gouvernement. He was Luxembourg became a director on 1 January 2015. She venture capital group before joining the Ambassador to Spain (2004-2008) and to is a Managing Director of BIP Investment Emirates Investment Authority in 2009 the United States of America, Canada and Partners S.A. and a Managing Director/ where he was a member of its Investment Mexico (2008-2012). From 2012-December Partner of BIP Capital Partners S.A. Prior and Management Committees. Mr Relander 2013, he was the Secretary General of the to joining BIP, she served as a Principal at graduated from the Helsinki School of Ministry of Foreign Affairs. Mr Senninger also global investment firm, Permira, and worked Economics with an MSC in Economics. worked as attaché in the Office of the Mayor also as an independent strategy consultant He also holds an MBA from the Helsinki of Luxembourg City and as Senior Officer as well as a Senior Advisor to international School of Economics having completed and Head of Unit at the European Investment private equity group, Bridgepoint. She started part of it at the Wharton School, University Bank. Mr Senninger holds a BA her professional career at Siemens AG of Pennsylvania (USA), and studied also in Political Science and a BA in Literature where she held various positions in strategy for a PhD at the Wharton School and the from the Friedrich Wilhelms Universität in consulting and engineering. She serves as a Aalto University, Helsinki. He is Chairman Freiburg and a Master in European Studies director of Sky plc and of several non-listed of the Investment Committee at the private from the College of Europe in Bruges. corporations. Mrs Wehr-Seiter holds an MBA equity fund, Apis.pe, and a board director of from INSEAD and an MSc in Mechanical Starzplay Arabia in Dubai. Mr Senninger is a Luxembourg national. Engineering from the Technical University of He is not an independent director because Chemnitz. Mr Relander is a Finnish national. He is an he represents an important shareholder. independent director. Mrs Wehr-Seiter is a member of the Audit and Risk Committee of the Company. MRS ANNE-CATHERINE RIES MR MARC SPEECKAERT Mrs Wehr-Seiter is a German national. She Born on 1 April 1973, Mrs Ries became Born on 23 May 1951, Mr Speeckaert became is an independent director. a director on 1 January 2015. Mrs Ries a director on 6 May 2005. He was the is Senior Policy Advisor to the Prime Managing director of Sofina S.A. until June Minister and Minister for Media and 2016 and is a director of several non-listed Communications in Luxembourg with corporations, as well as of Rapala (which a focus on telecom and digital strategy. is listed on the Helsinki Stock Exchange). Her responsibilities include coordinating Mr Speeckaert graduated with a degree the government’s ‘Digital Luxembourg’ in applied economics and holds a Master priority. Anne-Catherine Ries graduated in Business and Administration from the with a law degree from the Université Université Catholique de Louvain (UCL) de Paris II and the University of Oxford. in Belgium. He also participated in an She holds a postgraduate LL.M degree Advanced Management Program from with honours from the London School Wharton, University of Pennsylvania (USA). of Economics, where she specialised Mr Speeckaert was the Chairman of the Audit in Telecommunications, Information and Risk Committee of SES until April 2017. Technology and European Competition Law. After starting her professional career Mr Speeckaert is a Belgian national. He is in a law firm in Paris, she joined the not an independent director because he has Permanent Representation of Luxembourg been a director for more than 12 years.

SES Annual Report 2017 39 THE BOARD OF DIRECTORS AS OF 22 FEBRUARY 2018

From left to right: Hadelin de Liedekerke Beaufort, Ramu Potarazu, Tsega Gebreyes, Marc Speeckaert, Victor Casier, Marcus Bicknell, Anne-Catherine Ries, Romain Bausch, Kaj-Erik Relander Françoise Thoma, Serge Allegrezza, Katrin Wehr-Seiter, Marc Beuls, Conny Kullman, Jean-Paul Zens, François Tesch, Jean-Paul Senninger

40 SES Annual Report 2017 41 OUR GOVERNANCE STRUCTURE

THE CHAIRMAN’S OFFICE The Chairman’s Office prepares the agenda for the Board meetings.

THE REMUNERATION COMMITTEE The Remuneration Committee determines the remuneration of the members of the Executive Committee and advises on the overall remuneration policies applied throughout the company. It acts as administrator of the company’s Long Term Equity Plans.

THE AUDIT AND RISK COMMITTEE The Audit and Risk Committee assists the Board in carrying out its oversight responsibilities in relation to corporate policies, risk management, internal control, internal and external audit and financial and regulatory reporting practices.

THE NOMINATION COMMITTEE The Nomination Committee identifies and nominates suitable candidates for the Board of Directors, for election by the annual general meeting of shareholders. It also identifies and nominates suitable candidates for the Executive Committee.

COMMITTEES OF THE BOARD OF of which are independent Board members the Board regarding the benchmarked DIRECTORS in line with the SES internal regulations. based remuneration of the new Executive As at 31 December 2017, the Remuneration Committee members to facilitate the THE CHAIRMAN’S OFFICE Committee was composed of the following implementation of the new operating The Chairman and the two Vice Chairmen six non-executive directors: model. After each meeting, the Board is are members of the Chairman’s Office. The briefed in writing about the work of the Chairman’s Office prepares the agenda • Mr Conny Kullman (Chairman of the Remuneration Committee. for the Board meetings, allowing the Vice Remuneration Committee, independent) Chairmen to coordinate the preparation of • Mr Romain Bausch The Remuneration Committee also oversees the Board meetings with the directors of their • Mr Hadelin de Liedekerke Beaufort the implementation of the decision under which respective share classes. • Mrs Tsega Gebreyes (independent) the members of the Executive Committee must • Ms Françoise Thoma within five years hold at least the equivalent of At 31 December 2017, the members were: • Mr Jean-Paul Zens an annual salary’s worth of registered shares in the company (with the President and CEO of • Mr Romain Bausch The Remuneration Committee held six SES having to hold shares of at least two years’ • Mr François Tesch meetings, with an attendance rate of close worth of his annual salary). • Mr Jean-Paul Zens to 97%. Matters addressed related to the 2016 bonuses and the determination of the THE AUDIT AND RISK COMMITTEE The Chairman’s Office met eight times during 2017 stock option grant for members of the As part of its overall corporate governance, 2017, with an attendance rate of 100%. Executive Committee. The Remuneration the Board established an Audit and Risk Committee further determined the number Committee, which assists the Board in THE REMUNERATION COMMITTEE of performance shares allocated to the carrying out its oversight responsibilities In accordance with general corporate members of the Executive Committee for in relation to corporate policies, risk governance standards, the company’s Board their performance in 2016, and it adopted management, internal control, internal and established a Remuneration Committee, the 2017 business objectives which are external audit and financial and regulatory which determines the remuneration of the used as one element in the determination reporting practices. The Committee has members of the Executive Committee and of their bonuses for 2017. The an oversight function and provides a which advises on the overall remuneration Remuneration Committee finalised the link between the internal and external policies applied throughout the company. It renewal of the long-term equity plans auditors and the Board. The Audit and Risk reports to the Board at each meeting through of the Company, prior to their approval Committee is comprised of six members, four its Chairman. The Remuneration Committee by the Board and the shareholders. The of whom are independent Board members, in is comprised of six members, at least a third Remuneration Committee supported line with the SES internal regulations.

42 As at 31 December 2017, the Audit and Risk annual general meeting of shareholders. Such other encumbrances of the company, or Committee was composed of the following proposals are based on submissions from any wholly-owned affiliate, for as long as the six non-executive directors: shareholders for a number of candidates company will not lose its investment grade at least equal to the number of posts to rating as a result of such facility or guarantee. • Mr Marc Beuls, Chairman of the Audit and be filled for each class of shareholders. It may approve increases of up to 5% in the Risk Committee (independent) The Nomination Committee also proposes capital expenditure budget for a satellite • Mr Serge Allegrezza candidates for Executive Committee procurement already approved by the Board, • Mr Victor Casier (independent) membership for election by the Board. The it being understood that the Internal Rate • Mr Kaj-Erik Relander (independent) Nomination Committee is composed of six of Return will need to comply with certain • Ms Françoise Thoma non-executive members, at least a third of specific thresholds defined by the Board. The • Mrs Katrin Wehr-Seiter (independent) which are independent Board members in Executive Committee informs the Board at its line with the SES internal regulations. On next meeting of each such increase. The Audit and Risk Committee held four 31 December 2017, they were: meetings, with an attendance rate of more The Executive Committee submits to than 95%. • Mr Jean-Paul Zens (Chairman of the the Board those measures that it deems Nomination Committee) necessary to be taken in order to meet The meetings were dedicated in particular to the • Mr Romain Bausch the purposes of the company. Prior to the review of the 2016 financial results before their • Mrs Tsega Gebreyes (independent) beginning of each fiscal year, the Executive submission to the Board and their subsequent • Mr Conny Kullman (independent) Committee submits to the Board approval by the shareholders at the statutory • Mrs Anne-Catherine Ries a consolidated budget for approval. annual general meeting and to the review of • Mr François Tesch the H1 2017 financial results of the Company. The Executive Committee is in charge of Members of the Board also had the opportunity The Nomination Committee met five implementing all decisions taken by the Board to communicate any comments they had on times with all its members being present. and by the committees specially mandated the company’s quarterly results through the It discussed the Management Succession by the Board. The Executive Committee may, Chairman of the Audit and Risk Committee prior Plan 2017 and prepared the election of in the interests of the company, sub-delegate to the publication of these results. five directors as per the company’s Board part of its powers and duties to its members election process. In the context of the new acting individually or jointly. The Audit and Risk Committee reviewed operating model, the Nomination Committee the company’s statement on internal control proposed the appointment of three additional The Chairman of the Executive Committee systems prior to its inclusion in the annual members to the Executive Committee organises the work of the Executive report, approved the Internal Audit plan, and and reviewed the performance of the new Committee and coordinates the activities received bi-annual updates on the Internal leadership team. of its members, who report directly to him. Audit activities and on the follow-up of the In order to facilitate the implementation by major recommendations. It also reviewed After each meeting, the Board is briefed in the Board of its overall duty to supervise the the 2016 PwC Management letter. The Audit writing about the work of the Nomination affairs of the company, the Chairman of the and Risk Committee proposed to the Board Committee. Executive Committee informs the Chairman and to the shareholders to appoint PwC as of the Board on a regular basis of the external auditor for 2017 and approved its THE EXECUTIVE COMMITTEE company’s activities. The latter receives the compensation. agenda and the minutes of all meetings of MISSION the Executive Committee in due time. The Audit and Risk Committee further The Executive Committee is in charge of the continued to encourage management in its daily management of the group. It functions During 2017, the Executive Committee met efforts to eliminate as many non-operating as a collegial body. The Executive Committee 31 times, with an attendance rate of 95.59%. legal entities as possible. An update on that is mandated to prepare and plan the overall Mr Pierre Margue, Vice President Legal and topic was presented to the Audit and Risk policies and strategies of the company Corporate Affairs, the secretary of the Board Committee. The Audit and Risk Committee for approval by the Board. It may approve of Directors, also acted as secretary to the received bi-annual updates on risk intra-group transactions, irrespective of the Executive Committee. management from the SES risk management amount, provided that they are consistent committee and held a discussion on SES’s with the consolidated annual budget of the COMPOSITION IT security and cybersecurity issues. The company, as well as specific transactions The following eight persons are members of Committee further was briefed on SES’s Tax with third parties provided that the cost to the Executive Committee: Framework. After each meeting, the Board is SES does not exceed EUR 10 million per briefed in writing about the work of the Audit transaction. It informs the Board at its next • the President and CEO (who assumes the and Risk Committee. meeting on each such transaction, it being chairmanship of the Executive Committee) understood that the aggregate amount for all • the CEO SES Networks THE NOMINATION COMMITTEE such transactions can at no time be higher • the CEO SES Video In line with best practice in corporate than EUR 30 million. • the Chief Financial Officer governance, the Board established a • the Chief Human Resources Officer Nomination Committee, whose role is to The Executive Committee may approve • the Chief Legal Officer identify and nominate suitable candidates any external credit facilities or external • the Chief Strategy and Development Officer for the Board of Directors, for election by the guarantees, pledges, mortgages and any • the Chief Technology Officer

SES Annual Report 2017 43 THE EXECUTIVE COMMITTEE From left to right: Ferdinand Kayser, Padraig McCarthy, Christophe De Hauwer, Karim Michel Sabbagh, Evie Roos, Martin Halliwell, Steve Collar, John Purvis

Members of the Executive Committee are appointed by the Board of Directors upon a proposal from the Nomination Committee.

The current members of the Executive Committee are:

MR KARIM MICHEL SABBAGH MR PADRAIG MCCARTHY President and CEO Chief Financial Officer Born on 26 September 1963, Mr Karim Michel Born on 27 September 1960, Mr Padraig Sabbagh joined the SES Executive Committee McCarthy was appointed as Chief Financial in September 2013 and was appointed as Officer on 4 April 2013. He is a member of President and Chief Executive Officer effective the Board of SES ASTRA. Mr McCarthy 3 April 2014. He is Chairman of the Executive joined SES in 1995 from Norton S.A. where Committee and Chairman of the Board of SES he was Financial Director Europe. Previously ASTRA. He also serves on the Board of YahLive. he held positions with KPMG Chartered He is Vice Chairman of FEDIL (Business Accountants, Ireland. After having served Federation of Luxembourg). Mr Sabbagh served as SES’s Controller, Mr McCarthy took the on the Board of SES from 2011 until 2013 and position of Chief Financial Officer of SES was a member of the Audit and Risk Committee ASTRA, then the European subsidiary of SES for the same period. Prior to joining SES, of SES, from 2002-2011. Prior to his he was a Senior Partner and global practice appointment as Chief Financial Officer, he leader for communications, media & technology worked as Senior Vice President Financial at Booz & Company. Mr Sabbagh is a visiting Operations & Business Support at SES professor in technology and innovation since 2011. Mr McCarthy holds a Bachelor management and member of the Academic of Commerce degree from the University Council for École des Ponts Business School College Cork, is a fellow of the Irish in France. He holds an MS in Technology Institute of Chartered Accountants and Management from Columbia University, and followed advanced management executive a DBA (Doctorate) in international business programmes at Babson Business School and management from the International School INSEAD. of Management (Paris). He also holds an MBA and BBA with Distinction from the American Mr McCarthy is an Irish national. University in Beirut.

Mr Sabbagh is a Canadian and Lebanese national.

44 MR FERDINAND KAYSER MR STEVE COLLAR MR CHRISTOPHE DE HAUWER Chief Executive Officer, SES Video Chief Executive Officer, SES Networks Chief Strategy and Development Officer Born on 4 July 1958, Mr Ferdinand Kayser Born on 21 April 1970, Mr Steve Collar Born on 15 April 1971, Mr Christophe De was appointed Chief Executive Officer, SES was appointed Chief Executive Officer, Hauwer was appointed Chief Development Video in April 2017. Previously, he had been SES Networks in April 2017. Prior to SES Officer of SES as of 1 August 2015. He is a Chief Commercial Officer of SES since 2011. Networks, Mr Collar was CEO of O3b member of the Board of SES ASTRA. Mr De He is a member of the Boards of SES ASTRA Networks from 2011 until it was fully Hauwer joined SES in 2003, holding several and YahLive. Mr Kayser joined SES in 2002 as acquired by SES in 2016. Mr Collar is a positions of responsibility in the areas of President and Chief Executive Officer of SES satellite industry veteran, having previously Strategic Marketing, Strategic and Business ASTRA. He has worked in senior roles in media worked in a variety of commercial, business Planning and Corporate Development, as well companies such as Premiere Medien GmbH development and technical roles at SES as Fleet Development and Yield Management. and Co. KG and CLT Multimedia. Prior to his WORLD SKIES, New Skies Satellites, Astrium Prior to joining SES, Mr De Hauwer worked appointment as Chief Commercial Officer of and Matra Marconi Space (now Airbus). in the Strategy Consulting practice of the SES, he was President and Chief Executive Mr Collar holds a degree in Mechanical European Telecommunication and Media Officer of SES ASTRA. Mr Kayser holds a Engineering from Brunel University in Industry with Arthur Andersen. He holds Master of Economics from the University of London. an Engineering and a PhD Degree from the Paris 1, Panthéon-Sorbonne, and has concluded Université Libre de Bruxelles. specialized university studies in Media Law and Mr. Collar is a British national. Management of Electronic Media. Mr De Hauwer is a Belgian national.

Mr Kayser is a Luxembourg national.

MR MARTIN HALLIWELL MR JOHN PURVIS MRS EVIE ROOS Chief Technology Officer Chief Legal Officer Chief Human Resources Officer Born on 20 April 1959, Mr Martin Halliwell was Born on 15 June 1962, Mr John Purvis was Born on 9 July 1967, Mrs Evie Roos was appointed Chief Technical Officer on 1 May appointed Chief Legal Officer in February appointed Chief Human Resources Officer 2011. He is a member of the Board of SES 2017. He has served as EVP & General in February 2017. Prior to that, Evie held ASTRA. Mr Halliwell joined SES in 1987 after Counsel of SES since 2007. John joined SES the position of Executive Vice-President working for Cable & Wireless and for Mercury in 2001 as part of SES’s acquisition of GE Human Resources of SES. Evie is also Communications. He was previously President Americom. Previously, he had been a lawyer an elected member of the Luxembourg of SES ENGINEERING and Technical Director in GE Lighting and Rowe & Maw, a City law Chamber of Commerce. Before joining SES, of SES Multimedia. Previously, he worked firm in London. John qualified as a solicitor Evie held various management positions at as SES Operation Manager and as General of England & Wales in 1986. He holds a law ArcelorMittal. She holds two degrees in Law Manager of SES’s Global Multimedia Networks. degree from Jesus College, Cambridge. and European Studies from the University of Mr Halliwell holds a Higher National Diploma Leuven in Belgium and the Europa Institut in in Communications and Electronics and a BA Mr Purvis is a British national. Saarbrücken in Germany. specialising in Mechanical Engineering and Mathematics from The Open University, and Mrs Roos is a Belgian, Luxembourg and an MBA in External Environment and Strategic US national. Management from the same university.

Mr Halliwell is a British national.

SES Annual Report 2017 45 On 12 February 2018, the Board of Directors In 2017, the remuneration paid to the SES These three elements are weighted in the announced that they had accepted the Board of Directors was benchmarked against following proportions: 50%; 25%; and 25%, decision of Karim Michel Sabbagh to step companies of similar size and complexity. It respectively. down from his role of President & CEO, was found to be in line with market practices with effect from 5 April 2018. Furthermore, and at market levels. The Financial performance measures Padraig McCarthy, CFO of SES, also both the actual (current year) vs. actual informed the Board of his intention to retire All these fees are net of any Luxembourgish (previous year) performance and the actual during 2018 and it has been agreed that he withholding taxes. The total net remuneration (current year) vs. budget (current year) will also step down from his current role as fees paid for the year 2017 to the members performance. These two achievement of 5 April 2018. of the Board of Directors (net of the percentages are multiplied such that, if the Luxembourgish withholding tax) amounted actual performance of the company is below On the same date, the Board announced to EUR1,078,960, of which EUR 309,760 was a defined threshold, the financial part of the appointment of Steve Collar as the next paid as variable fees, with the remaining EUR the annual bonus will be zero. The metric President and CEO as well as Andrew Browne 769,200 representing the fixed part of the used for the actual vs. actual performance as next CFO with effect from 5 April 2018. Board fees. The gross overall figure for the is the reported Group EBITDA. This metric Both becoming, respectively CEO Designate year 2017 was EUR 1,348,700. measures the profitable growth of the and CFO Designate with immediate effect. business and is also reported to investors. COMPANY STOCK OWNED BY MEMBERS A reduction of more than 5% in the year REMUNERATION OF THE BOARD OF DIRECTORS will lead to the total financial component On 31 December 2017, the members of of the bonus being forfeited. The actual vs. REMUNERATION OF THE MEMBERS OF the Board of Directors and their closely budget performance does take into account THE BOARD OF DIRECTORS associated family members owned a four financial metrics of the SES Group. The annual general meeting of combined total of 768,388 shares and FDRs The following metrics with their respective shareholders determines the remuneration (representing 0.13% of the company’s share weights are measured: revenues (40%), of the members of the Board of Directors capital). Transactions made by members operating expenses (30%), Group profit (10%) for attending Board and committee of the Board of Directors are published on and net operating cash-flow (20%). The meetings. In 2017, the shareholders the company’s website under Management targets for those measures are set during the decided to maintain the fees paid to the Disclosures. In accordance with the annual budget process and approved by the directors at the previous year’s level with company’s dealing code, directors require Board of Directors. a majority of 99.833%. Directors each prior permission before dealing in SES shares receive a fixed fee of EUR 40,000 per year, or FDRs. The individual business objectives are whereas the Vice Chairmen each receive set at the beginning of the year by the an annual fixed fee of EUR 48,000 and the REMUNERATION OF THE MEMBERS OF Remuneration Committee. At year-end, the Chairman receives a fee of EUR 100,000 THE EXECUTIVE COMMITTEE Remuneration Committee assesses in detail per year. A Director, chairing one of the The remuneration of the members of the the performance of the Executive Committee committees set up by the Board, if not Executive Committee is determined by the to determine the target achievement. the Chairman of the Board of Directors, Remuneration Committee. The total gross receives an additional remuneration of remuneration paid to the eight members During 2017, the members of the Executive EUR 8,000 per year. A Director, chairing of the Executive Committee for the year Committee were awarded a combined total the Audit and Risk Committee, if not 2017 amounted to EUR 8,385,889.83. It is of 929,336 options to acquire company the Chairman of the Board of Directors, composed of a fixed part and a variable FDRs at an exercise price of EUR 21.15, the receives an additional remuneration of part. The fixed part (EUR 4,645,632.04) price being based on the average of the EUR 9,600 per year. is composed of the base salaries closing price on Euronext Paris of the first (EUR 3,245,978.13) as well as the company’s 15 trading days following the Remuneration The shareholders also maintained the fees social security contributions, company’s Committee meeting at which the options at EUR 1,600 for each meeting of the Board pension contributions, life and disability were authorised. A quarter of those options or a Committee of the Board attended, insurance, company car and other benefits vested on 1 January 2018, the remaining except for the meetings of the Audit (EUR 1,399,653.90).The variable part quarters vesting on 1 January 2019, 2020 and Risk Committee for which directors (EUR 3,740,257.79) is composed of the 2016 and 2021, respectively. In 2017, members receive EUR 1,920 per meeting. A director bonuses (EUR 2,068,934.14) and the 2017 of the Executive Committee were granted participating in more than one Committee exercised Peformance and Restricted shares 26,804 restricted shares as part of the meeting on the same day will receive the granted in 2014 (EUR 1,671,323.65). In the company’s long-term incentive plan, as well attendance fee for one meeting only. Half year 2017, no stock options were exercised as 80,412 performance shares. These shares of the attendance fee is paid if the director by the Executive Committee. will vest on 1 June 2020. participates in the meeting via telephone or videoconference. The annual bonus is composed of three The Executive long-term equity plans elements: (i) the financial performance of permit the grant of three equity types: The fees paid to the Board have not been the Company; (ii) the individual business (i) stock options; (ii) restricted shares; increased since 2008, except for an increase objectives of the Executive Committee and (iii) performance shares. The total grant paid to the members of the Audit and Risk members; and (iii) a discretionary element value is divided in one third of stock options, Committee approved by the shareholders determined by the Remuneration Committee one sixth of restricted shares, and one half of in 2015. after reviewing the Company’s achievements. performance shares.

46 The stock option is a standard call option COMPANY STOCK OWNED BY MEMBERS with a maturity of 10 years. The final strike OF THE EXECUTIVE COMMITTEE price is determined as the fair market value with an average of 15 days closing prices at On 31 December 2017, the eight members the Paris stock exchange after the numbers of the Executive Committee owned a of options have been determined by the combined total of 271,107 shares and FDRs Remuneration Committee. The vesting (representing 0.05% of the company’s share period is over four years with a yearly capital), 267,608 unvested restricted and vesting of 25% on January 1st of each year performance shares and 2,665,065 options. following the grant. Transactions made by members of the Executive Committee are published on the The Restricted Shares are FDRs granted to company’s website under Management the executives with the sole condition that, Disclosures. Members of the Executive at vesting, the executive has to be employed Committee are required to comply with the by SES. The Restricted Shares vest on 1 June company’s dealing code. of the third year following the year of their grant. Performance Shares are FDRs granted EXTERNAL AUDITOR to the executives with two additional vesting In accordance with the Luxembourg law conditions. Those conditions reflect two on commercial companies, the company’s performance criteria. The following criteria annual and consolidated accounts are have both to be fulfilled: certified by an external auditor appointed by the annual general meeting of shareholders. 1. The compounded three years adjusted On 6 April 2017, and based upon a proposal Economic Value Add (adjusted EVA) has from the Board, the shareholders re-elected to be positive; and PwC as the company’s external auditor for 2. Over the three years vesting period, one year and approved its remuneration, the personal objectives have to be met with a majority of more than 99.774%. The and can only be one year slightly below mandate of PwC will expire at the annual expectations. general meeting on 5 April 2018.

The adjusted EVA used for remuneration BUSINESS RISKS AND THEIR MITIGATION purposes has the Invested Capital reduced This section contains a summary of the main for the assets under construction to risks that SES may face during the normal ensure focus of Management on long-term course of its business. investments. However: The executives must, when exercising • this section does not purport to contain their vested stock options and their vested an exhaustive list of the risks faced by shares, do this in accordance with the SES SES and SES may be significantly affected Dealing Code (including requiring the prior by risks that it has not identified or authorisation from the Corporate Secretary considered not to be material; and/or Chief Financial Officer, and provide • some risks faced by SES, whether they selling orders outside of a closed period). As are mentioned in this section or not, may for the members of the Board, exercises by arise from external factors beyond SES’s members of the Executive Committee are control; and reported on the SES website https://www. • where mitigations are mentioned in this ses.com/investors/shareholder-information/ section, there is no guarantee that such shares/management-disclosures mitigations will be effective (in whole or in part) to remove or reduce the effect of During 2017, Messrs Martin Halliwell, the risk. Ferdinand Kayser, Padraig McCarthy, Karim Michel Sabbagh and Christophe De Hauwer and Mrs Evie Roos sold some or all of the restricted and performance shares which vested on 1 June. Each member of the Executive Committee is entitled to two years of base salary in case his contract is terminated without cause. A member of the Executive Committee who resigns is not entitled to any compensation.

SES Annual Report 2017 47 Dependency on a small number of satellite Several of SES’s satellites have experienced KEY RISK AREAS manufacturers may reduce SES’s negotiating various technical anomalies either before or power and access to advanced technologies during 2017. (which may only be available to certain 1. RISKS RELATING TO PROCUREMENT suppliers). It may also result in a higher Some of the SES satellites experiencing Risk of launch delays and/or launch failures concentration of risk – SES may incur technical anomalies are operating beyond SES is planning to launch one further significant delays in procuring new satellites the end of their design lives. These satellites geostationary satellite and eight O3b satellites in the event of prolonged problems at one have already completed the primary missions (on two launch vehicles, each with four O3b of these satellite manufacturers. Further, the for which they were designed and have been satellites) during the rest of 2018 and 2019. difficulties caused by any technical problems redeployed for secondary missions. Satellites The launch of any of these satellites carries a with the design of a particular model of in secondary missions are used for various risk of delay for a variety of reasons, including satellite may be multiplied if several satellites reasons, such as developing new orbital the late availability of the satellite or co- of that design are purchased. locations, safeguarding spectrum rights and passenger satellite (if there is a co-passenger providing redundant capacity for satellites for a geostationary satellite launch) for In addition, there are a limited number in their primary missions. These satellites’ shipment to the launch site, the late availability of second tier suppliers of certain key technical capabilities do not generally need to of the launch service or last-minute technical components for communication satellites. be fully utilised when operating their secondary problems arising on the satellite, the co- SES may incur significant delays in procuring missions, which potentially mitigates the passenger satellite or the launcher. new satellites in the event of prolonged effects of further technical failures. problems at one of these secondary A launch delay or failure could have a suppliers. In addition, eleven of SES’s Lockheed Martin material negative effect on revenue and A2100 satellites have experienced technical also potentially cause the loss of frequency SES attempts to mitigate these risks relating problems with their solar array circuits. The rights at certain orbital positions. Satellite to procurement by a constant monitoring extent of the problem varies depending launch and in-orbit insurance policies do of its supplier base, maintaining multiple on the satellite, but it may reduce both not compensate for lost revenues due to the procurement sources and developing the operational life of the satellite and the loss of customers or for consequential losses relationships with new suppliers, where number of usable transponders, leading resulting from any launch delay or failure. possible. to a reduction in the revenue generated by the satellite. AMC-11, AMC-10, and SES attempts to mitigate the risk of a launch 2. RISKS RELATING TO SATELLITES AMC-6 experienced further solar array delay interrupting existing services by leaving Risk of in-orbit failure degradation in 2017, which further impaired adequate time margins in procurement One or more of SES’s satellites may suffer power generation. AMC-10 and AMC-16 are schedules for replacement satellites. in-orbit failures, ranging from a partial potentially close to requiring re-orbiting in impairment of its commercial capabilities to the event that they experience further failed There is always an inherent risk of launch failure a total loss of the asset. In the event of such solar circuits. All of the satellites with solar resulting in a reduced satellite lifetime (in case of a failure, SES may not be able to continue array issues are still being used for their incorrect orbit injection), reduced functionality of to provide service to its customers from the primary missions, with the exception of AMC- the satellite or the total loss of a mission. same orbital slot or at all. 4, AMC-6 and NSS-7, which are being used for secondary missions. SES attempts to mitigate the risk of launch SES attempts to mitigate the risk of failure in several ways, including by detailed in-orbit failure by careful vendor selection NSS 12, a satellite built by Space Systems technical risk management of each satellite and high quality in-orbit operations. Loral, has also experienced solar array power and launch vehicle programme, asset SES’s fleet is diversified by manufacturer losses. However, these appear to be less insurance for each launch and a staggered and satellite type, which reduces the severe than the Lockheed Martin A2100 solar fleet deployment scheme (allowing assets to likelihood of widespread technical array issue and SES does not believe a specific be repurposed in the case of single satellite problems. The impacts of such failures on mitigation plan is needed at this point. failure so as to ensure a minimum impact on customer service and related revenues customers and revenues). may be mitigated by an in-orbit backup Several of SES’s satellites (AMC-4, AMC-10, strategy, pursuant to which customers ASTRA 1G, ASTRA 1H, ASTRA 1KR, ASTRA 1M, Risk of dependency on launch service on an impaired satellite may possibly be ASTRA 2B, NSS-7, SES-3, QuetzSat-1 and NSS- providers transferred to another satellite in the fleet. 10) have experienced various other anomalies. SES is largely dependent on Arianespace and In addition, SES has in place a restoration SpaceX to launch its satellites into space. agreement with another satellite operator Technical failures have resulted in a SES may incur significant delays in launching pursuant to which customers on an reduction of available capacity on ASTRA 1G new satellites in the event of a prolonged impaired geostationary satellite may and a reduction in the operational life of unavailability of one of those two systems. possibly be transferred to another satellite ASTRA 1H. There is no risk of a recurrence in that operator’s fleet in order to protect of these issues on these satellites. Risk of dependency on satellite continuity of service. However, there is no manufacturers and secondary suppliers guarantee that these mitigations will be AMC-4, AMC-6 and NSS-7 have completed SES is dependent on six major satellite entirely effective, especially in the event of their primary missions and as a result no manufacturers for the construction of its satellites. the failure of several satellites. mitigation is in place.

48 One gyro on AMC-10 is currently not useable. This would reduce the number of beams or • confiscation by any governmental body; regions served by the constellation unless a • insurrection and similar acts or ASTRA 1M, which is a key asset at the 19.2°E spare satellite could be utilised to replace the governmental action to prevent such acts; prime orbital position, has currently lost failed satellite or beam. Three of the current • nuclear reaction or radiation redundancy on its propulsion subsystem. 12 satellites are used as spares to provide contamination; Further technical problems on the back-up for other satellites in the constellation. • wilful or intentional acts causing the loss propulsion system could result in the loss or failure of satellites; and of the satellite. However, SES believes that The first set of four O3b satellites were • terrorism. such an event is unlikely and the risk is affected by an anomaly with their frequency mitigated by the additional capacity at this generator units. As a consequence, three of The insurance policies do not provide orbital position. those satellites were removed from full-time compensation for business interruption, loss commercial operations. In addition, two O3b of market share, reputational damage, loss QuetzSat-1 has experienced the loss of satellites in operation have been affected by of revenue, incidental and consequential redundancy in its data handling equipment a reaction wheel issue, which has led to those damages and similar losses that might and further technical problems with this wheels being removed from operations and arise from the loss of a satellite during sub-system could result in the loss of the spare units being used. transportation to the launch site or launch satellite. However, SES believes that the site operations, the failure of a satellite possibility of such an event happening is One O3b satellite has experienced telemetry launch, incorrect orbital placement or the unlikely and risks have been mitigated by transmitter malfunctions. Procedures for failure of a satellite to perform according the uploading of a software patch which maintaining operations in the absence to specifications. In addition, SES’s in-orbit allows the partial restoration of the on-board of continuous telemetry have been insurance only covers losses in excess of redundancy. implemented. the risk retention level selected by SES.

NSS-10 (AMC-12) has a failed star tracker, In-orbit insurance constitutes an additional The in-orbit insurance policies may exclude part of the satellite’s flight dynamics systems. financial mitigation against the risk of from coverage failures arising from pre-existing The satellite manufacturer is exploring impairments, subject to the limitations of defects, such as defects in solar array and potential mitigations in the event of a failure such insurance. battery anomalies on some existing satellites. of the second star tracker on the satellite fails In addition, SES will not be fully reimbursed before the sheduled end of life of the satellite Risk of short operational life if the cost of a replacement satellite exceeds in November 2019. The design life of SES’s geostationary the sum insured. As a consequence, the loss, satellites is typically 15 years and the design damage or destruction of any satellites as a NSS-806 suffered a power anomaly in 2017 life of O3b’s current satellites is 10 years. result of any of these events could result in that resulted in 14 C-Band transponders In the event of changes in the expected material increases in costs or reductions in being permanently turned off. fuel life of the satellite, in-orbit anomalies expected revenues or both. or other technical factors, its actual life AMC-18 has experienced anomalies on its may be shorter than this. This could lead SES has reviewed its approach to in-orbit South solar array drive, and further anomalies to the satellite being depreciated faster insurance of its satellites and, in recognition could result in a reduction in its payload than anticipated and the lifetime revenue of the excellent procurement and operating capacity. generated by the satellite being reduced, record, has adopted a policy of limited self- diminishing the overall return on investment insurance in addition to external insurance. AMC-9 suffered an undetermined anomaly in for the asset. SES attempts to mitigate the Premiums relating to its satellite fleet are 2017 resulting in the total loss of the satellite. risk of a reduced operational life by careful paid to wholly-owned subsidiaries, which An insurance claim for USD 44.5 million was vendor selection and high quality in-orbit only assume part of the risks, thus reducing settled with our wholly-owned insurance operations. the amount of insurance premiums paid to subsidiary, with no pay-out from external external insurance companies. insurance companies. The satellite was 3. RISKS RELATING TO INSURANCE successfully placed in grave-yard orbit at the Insurance coverage risk If any event occurs that is covered by the end of 2017. SES’s satellites may be subject to damage or in-orbit insurance, the payment of the sum loss from events that might not be covered insured could result in material increases The O3b satellites operate as a constellation by insurance policies. SES maintains (i) in costs. in a non-geostationary orbit with each pre-launch insurance, (ii) launch and initial satellite covering a service region as it in-orbit insurance, (iii) in-orbit insurance SES has third party liability insurance that orbits the equator. Because the satellites and (iv) third-party liability insurance for its covers damage suffered by third parties are not geosynchronous, each satellite satellites. The insurance policies generally resulting from accidents such as launch provides service to all O3b customers over contain exclusions for losses resulting from: failures and satellite collisions. It is subject each complete orbit around the Earth. to an annual combined single limit of Accordingly, a beam failure could affect • military or similar action; EUR 500 million. all customers using that beam in each • any anti-satellite device; region served by O3b, and could affect all • electromagnetic and radio interference customers and require O3b to remove the (except for physical damage to a satellite satellite or beam from commercial operation. directly resulting from this interference);

SES Annual Report 2017 49 Insurance availability risk The level of customer credit risk may provision of satellite capacity to SES Satellite insurance is a cyclical market increase as SES, and/or its customers, grow Government Solutions for provision to the subject to the laws of supply and demand. revenues in emerging markets because credit U.S. Government are permitted under the The amount of capacity currently available risk tends to be higher in these markets Proxy Agreement. in the market is adequate to cover SES’s (compared to the markets of Europe and satellite programmes. However, events North America). 5. RISKS RELATING TO THE SATELLITE outside of SES’s control – including large COMMUNICATIONS MARKET losses and shifts of insurance capacity This risk is mitigated principally through a Competition risk from space to other lines of business – customer credit policy that includes credit The telecommunications market is fiercely could change this situation. This could checks, credit profiles, deposits or other competitive and SES faces competition from result in increa in the amount of insurance forms of security, monitoring of payment satellite, terrestrial and wireless networks. premiums paid by SES to cover its risks performance and the application of a and affect its ability to obtain the desired provisioning policy. In some cases, customer SES faces competition from international, level of coverage. SES’s self-insurance credit risks are mitigated by credit insurance. national and regional satellite operators. programme improves its flexibility to Some national operators receive tax and accommodate variations in insurance Further details are provided in Note 18 to regulatory advantages in their countries that market conditions. the Financial risk management objectives are not available to SES. The development and policies. of national satellite programmes in some 4. RISKS RELATING TO CUSTOMERS countries may limit or prevent SES’s ability Risk of key customer loss Risks inherent in international business to compete in those countries. SES depends on a number of key customers SES conducts business around the world. whose loss (or non-renewal) would reduce It is exposed to issues such as financial, In addition, SES competes with operators SES’s revenues. SES’s five largest commercial regulatory, geopolitical, tax and trade risks of terrestrial and wireless networks. Any customers represented 24.4% of SES’s in many jurisdictions. Political and financial increase in the technical effectiveness or total revenues in 2017. The total revenue stability in some jurisdictions may impact geographic spread of these terrestrial and generated from contracts with the US SES’s business in that country. In practice, wireless networks could result in a reduction Government (and customers serving the it may be difficult for SES to enforce its legal in demand for SES’s satellites capacity. US Government) represented approximately rights in some jurisdictions. Some terrestrial and wireless operators may 7.6% of SES’s total revenues in 2017. receive state aid and subsidies not available The inherent uncertainties in doing business to SES. If key customers reduce their reliance in certain jurisdictions may have a negative on SES by developing or increasing impact on SES’s results. Competition in the communications market relationships with other satellite operators could result in a reduction in demand for (or moving to other telecommunications Risks inherent in doing business with the US SES’s satellite capacity and/or pricing solutions) and such key customers cannot Government changes resulting in a significant negative be replaced, SES’s revenues may be As a result of U.S. national security laws and impact on SES’s revenues. impacted negatively. regulations, SES Government Solutions, Inc. is subject to a proxy agreement with the Technology risk SES’s main existing satellite capacity U.S. Government (“the Proxy Agreement”). The satellite telecommunications industry agreements for the direct-to-home The proxy structure imposed upon SES is vulnerable to technological change. SES’s business in Europe typically have contract Government Solutions is common for satellites could become obsolete due to durations of ten years, with some contracts businesses contracting with the U.S. unforeseen advances in telecommunications for longer periods. If SES is unsuccessful Government and is similarly imposed on technology, leading to a reduction in demand in obtaining the renewal of its satellite SES’s competitors. for its services and a negative impact on capacity agreements when they come up revenues. for renewal on commercial terms similar to The U.S. Government required SES those currently reflected in its agreements, Government Solutions to enter into The use of new technology to improve signal revenues could be adversely affected for the Proxy Agreement because SES compression rate could lead to a reduction in some time. Government Solutions is indirectly owned demand for SES’s satellites, which could lead by SES, a foreign company, and SES to a negative impact on SES’s results. SES’s customer base is subject to constant Government Solutions has classified change. Bankruptcy of key customers or contracts with the U.S. Government. As 6. RISKS RELATING TO SES’S STRATEGIC customer consolidation resulting from a result of the Proxy Agreement, strict DEVELOPMENT mergers and acquisitions can reduce demand limitations are placed on the information Emerging market risk for SES’s satellites capacity, thereby affecting that may be shared between SES SES’s development strategy includes SES’s revenues. Government Solutions and SES and its targeting new geographical areas and other subsidiaries. The Proxy Agreement emerging markets and developing joint Risks relating to customer credit also imposes restrictions on the control ventures or partnerships with local SES may suffer a financial loss if any of of SES Government Solutions by SES. telecommunications, media and financial its customers fails to fulfil its contractual However, it is important to note that businesses in order to improve market payment obligations. inter-company activities including the access for its services.

50 SES may be exposed to the inherent demand does not materialise as anticipated, Any reallocation of spectrum from satellite to instability of doing business in those regions. SES’s financial forecasts may not be met. terrestrial or other uses or fees and charges Such inherent instability could have an assessed by national administrations may adverse impact on SES’s revenue. 7. RISKS RELATED TO LEGAL, have a significant adverse effect on SES’s REGULATORY, SPECTRUM, AND current results and future prospects. Please also see ‘Risks inherent in CORPORATE international business’ above. Legal risk Spectrum coordination risk SES cannot always predict the impact of laws, SES is required to coordinate the operation In some emerging markets, customers may regulations and politics on its operations. The of its satellites with other satellite operators be less financially secure and run a higher operation of the business is and will continue through the relevant national administrations risk of insolvency than in more developed to be subject to the laws, regulations and and in accordance with the ITU process so markets. The failure of a customer could have political will of the various governmental as to prevent or reduce interference between an adverse impact on SES’s revenue. authorities of the countries in which SES satellites. SES may also be required to operates, uses radio spectrum or offers coordinate any replacement satellite that has BREXIT risk satellite capacity, as well as to the frequency performance characteristics that differ from On 23 June 2016, the United Kingdom voted to coordination process of the International the satellite it replaces. leave the EU (‘BREXIT’). There is widespread Telecommunication Union (the “ITU”.) Legal, uncertainty and speculation regarding what regulatory and political changes are outside As a result of such coordination, SES may be will occur as a result of BREXIT and it is difficult SES’s direct control. New or modified rules, required to modify the proposed coverage to predict what impact BREXIT will have on regulations, legislation, or decisions by a areas of its satellites, satellite design or SES. As a result, it is difficult to know whether relevant governmental entity or the ITU could transmission plans in order to eliminate or BREXIT will have a significant negative impact materially and adversely affect operations. minimise interference with other satellites or on SES’s revenues, although SES considers this ground-based facilities. Those modifications to be unlikely at this time. The international nature of SES’s business may mean that use of a particular orbital means that it is subject to applicable position is significantly restricted, possibly Investment risk sanctions, export control, competition and to the extent that it may not be economical SES regularly evaluates opportunities to make anti-bribery laws and regulations including to place a new satellite in that location. In strategic investments. These opportunities associated civil and criminal penalties. Risks addition, interference concerns of a country may not yield the expected benefits due to a concerning and violations of applicable may affect the ability of SES’s satellite number of factors, such as antitrust reviews, compliance laws and regulations may network to generate revenues, due to the financing costs and regulatory approvals. negatively affect future operations or subject operational restrictions that the country may If an investment is made, it may adversely SES to criminal or civil enforcement actions. impose. affect SES’s results due to financing costs or the performance of the investment Disputes in relation to SES’s business arise Similarly, the performance of SES’s satellites following acquisition. The success of any such from time to time and can result in legal or in the affected areas could be adversely investment is not guaranteed. arbitration proceedings. The outcome of affected if ITU regulations or other legal these proceedings cannot be predicted. constraints fail to prevent competing satellite SES has a number of strategic investments A negative outcome in a substantial litigation operators from causing harmful interference in businesses that it does not fully control. or arbitration case could have a material impact by the operation of their satellites. As a result, SES is dependent in part on the on SES’s business and financial position. co-operation of other investors and partners Spectrum use risk in protecting and realising the full potential of Spectrum access risk If SES does not occupy unused orbital certain investments. SES may not be able to Access to orbital slots and frequencies is locations by specified deadlines, does not prevent strategic partners from taking actions required for SES to develop and maintain its maintain satellites in the orbital locations that are contrary to SES’s business interests. satellite fleet. it currently uses or does not operate in all the frequency bands for which a licence SES also invests in new and innovative The ITU is responsible for the allocation of has been received then, in accordance with projects, which often feature new technology spectrum for particular uses, and the allocation applicable national and ITU regulations, those or uncertain market demand. If the of orbital locations and associated frequencies. orbital locations or frequency bands may technology is not successful or demand does Use of the spectrum and orbital positions is in become available for use by other satellite not materialise as planned, the value of SES’s accordance with the ITU Radio Regulations. operators. investment may be reduced. SES can only access spectrum through ITU filings made by a national administration. SES has access to a large portfolio of orbital SES has also earmarked certain funds for locations that have been filed at the ITU investment, which includes the replacement Orbital slots, satellite systems and associated through various administrations. For each of existing satellites (often with increased frequencies are a limited resource. The ITU filing, the ITU and the national regulators capacity) and the launching of new may reallocate spectrum from satellite to impose various conditions that must be met satellites. The successful marketing and terrestrial or other uses. In addition, national in order to secure the spectrum. Operational sale of new capacity is dependent on the administrations are increasingly charging for issues such as satellite launch failure, launch underlying demand for satellite capacity access to spectrum by the use of fees and delay or in-orbit failure might compromise in the targeted regional markets. If that auctions. the access to the spectrum or orbital

SES Annual Report 2017 51 locations. SES is committed to the highest Such occurrences could impede construction programmes, in-house back-up solutions, quality satellite and launch procurement and delay the launch of any future satellites, knowledge transfer, succession planning and processes, which helps to reduce this risk. In adversely impacting current and/or future development plans. In recent years, SES has addition, SES’s large fleet of satellites may in revenues. SES must also comply with also invested in improving its recruitment some circumstances permit the relocation of other applicable national export laws and process to engage with new talent. in-orbit satellites in order to meet regulatory regulations. requirements. If SES is unable to retain key employees External threat risk or attract new highly qualified employees, Regulatory risk In common with other satellite operators, it could have a negative impact on SES’s SES may need to obtain and maintain SES is vulnerable to the risk of terrorist acts, business, financial situation and results. approvals from authorities or other entities sabotage, piracy, attack by anti-satellite to operate its satellites and to offer devices, jamming, unintentional interference Unforeseen high impact risk satellite capacity. For example, SES must and natural disaster. Such external threats SES’s operations may be subject obtain licences, authorisations or market may lead to a temporary or permanent to unforeseen events that are both access approvals in certain countries to interruption in service and/or the loss of improbable and have a high impact. Due enable provision of satellite capacity to customers. Any such act could have a to the unforeseen nature of the event, it those countries. The failure to obtain the potentially significant adverse effect on SES’s is difficult to manage the impact of such licences, authorisations or market access results. events or predict the nature or extent of approvals necessary to operate satellites the damage. Such unforeseen events may or to offer satellite capacity could lead to Cyber risk have a significant negative impact on SES’s loss of revenues and compliance actions SES’s operations may be subject to hacking, business, financial situation and results. against SES. malware and other forms of cyber-attack. Due to the fast-moving pace of new hacking 8. RISKS RELATING TO FINANCE Each customer is responsible for obtaining techniques, the high sophistication of certain Economic downturn risk regulatory approval for its operations. attackers and an increasingly hostile cyber- An economic slowdown in the countries As a result, there may be governmental attack environment, it may be difficult to where SES operates may have a negative regulations inapplicable to SES which may detect, determine the scope of, contain and effect on its performance if potential adversely affect customers’ operations. remediate every such event. customers face difficulties funding their SES could lose revenues if customers are business plans. This could, in turn, result unable to obtain any necessary approvals, Any inability to prevent or to detect the in decreased profitability, with significant if customers’ regulatory approvals are occurrence of cyber-attacks in a timely negative consequences for SES’s business, insufficient in the view of the relevant manner could result in a disruption of financial condition and results regulatory authorities, if the necessary services or malfunctions, loss of customers, of operations. approvals are not granted on a timely basis inadvertent violations of data protection, or if any applicable licencing restrictions export control and other relevant laws, Cash flow risk become unduly burdensome. damage to SES’s reputation, or damage SES operates in accordance with a strong to SES’s properties, equipment and data. business model. If, for any reason, SES Export control Furthermore, such event could result in is not successful in implementing its SES must comply with U.S. export large expenditures necessary to repair business model then cash flow and capital control laws in connection with any U.S. or replace such networks or information resources may not be sufficient to repay information, products or materials that it systems or to protect them from similar indebtedness. If SES were unable to meet provides to non-U.S. companies relating events in the future. its debt service obligations or comply to communications satellites, equipment, with covenants, then a default under software and data. SES’s U.S. operations SES has protections in place to help protect debt agreements would occur. To avoid may not be able to maintain normal its networks, and continues to work to a possible default or upon a default, SES business activities and SES’s non-U.S. implement additional protective measures could be forced to reduce or delay the operations may not be able to source intended to limit the risks associated with completion or expansion of the satellite U.S. satellites, hardware, technology and such attacks. fleet, sell assets, obtain additional equity services if: capital or refinance or restructure its debt. Risk of the loss of key employees • export licences are not timely obtained; SES has a number of key employees with Debt rating risk • export licences do not permit transfer of highly specialised skills and extensive A change in SES’s debt rating could affect the all items requested; experience in their fields. If several of these cost and terms of its debt, as well as its ability • satellite launches are not permitted in the employees were to leave, SES may have to raise financing. SES’s policy is to attain, locations that SES prefers; or difficulty replacing all of them immediately. and retain, a stable BBB rating with Standard • the requisite licence, when approved, The risk of the loss of key employees & Poor’s, and a Baa2 rating with Moody’s. If contains conditions or restrictions that may increase as SES continues with SES’s credit rating were downgraded, it may pose significant commercial or technical organisational changes. affect SES’s ability to obtain financing and problems. the terms associated with that financing. SES attempts to mitigate the risk of SES cannot guarantee that it will be able to losing key employees through retention maintain its credit ratings.

52 Tax risk appropriate under the circumstances, and conditions. Interest rate derivatives can SES’s financial results may be materially better reflects the substance of the activities, be used to manage the interest rate risk. adversely affected by unforeseen additional the interdependency of the associated cash The terms of the derivatives are negotiated tax assessments or other tax liabilities. flows and their level of integration. If the to match the terms of the hedged item to carrying value of the relevant investment, maximise the effectiveness of the hedge. SES does business in many different or group of investments, is not substantiated countries and is therefore subject to by value-in-use, and any shortfall is assessed Further details are provided in Note 18 to taxation in multiple jurisdictions. SES makes as being of an other than temporary nature, the Financial risk management objectives provisions in its accounts for current and then this could result in an impairment and policies. deferred tax assets and liabilities based on a charge being recorded to the income continuous assessment of prevailing tax laws statement of the SES S.A. annual accounts Counterparty credit risk in those jurisdictions. in the period concerned. SES’s exposure relates to the potential default of a counterparty holding financial However, SES cannot always be certain of a Liquidity risk assets (cash and cash equivalents held for tax authority’s application and interpretation SES requires liquidity to maintain its trading financial assets, loans, receivables of the tax law. SES may become subject to operations and meet its obligations. Any and derivative instruments). unforeseen material tax claims, including liquidity problems may have a significant late payment interest and/or penalties. impact on SES’s operations and lead to the The counterparty credit risk from a cash Such claims may arise for a number of breach of contractual obligations. In case of management perspective is reduced by reasons, including: the identification of a liquidity needs, SES can call on a number of the implementation of several cash pools, taxable presence of a non-indigenous group committed and uncommitted credit facilities accounts and related paying platforms company in a taxing jurisdiction; transfer with banks. In addition, if deemed appropriate with different counterparties. To mitigate pricing adjustments; application of indirect based on prevailing market conditions, the counterparty risk, SES only deals with taxes on certain business transactions SES can raise funds through its European recognised financial institutions with an after the event; and the disallowance of the Medium-Term Note programme or through appropriate credit rating. All counterparties benefits of a tax treaty. In addition, SES may the issuance of commercial paper. SES’s are financial institutions that are regulated and be subject to retroactive tax assessments debt maturity profile is tailored to allow the controlled by the national financial supervisory based on changes in laws in a particular tax company to cover repayment obligations authorities of the applicable countries. The jurisdiction. SES has implemented a tax risks as they fall due. SES operates a centralised counterparty credit risk portfolio is analysed mitigation charter based on (among others treasury function, which manages the on a quarterly basis. Moreover, to reduce this things) a framework of tax opinions for the liquidity of SES and seeks to optimise the counterparty risk, the portfolio is diversified as financially material positions taken, transfer funding costs. This is supported by a daily regards the main counterparties, ensuring a pricing policies and documentation covering cash pooling mechanism. well-balanced relationship for all categories of the group’s important inter-company products (derivatives as well as deposits). transactions, and procedures for accurate tax Further details are provided in Note 18 to compliance in all jurisdictions. the Financial risk management objectives Further details are provided in Note 18 to and policies. the Financial risk management objectives Asset impairment risk and policies. SES’s non-current intangible and tangible Foreign currency risk assets are valued at historic cost less SES’s reported financial performance can be INTERNAL CONTROL PROCEDURES amortisation, depreciation (where relevant) and impacted by movements in the US dollar/euro accumulated impairment charges. The resulting exchange rate, as SES has significant operations OBJECTIVE net book values are subject to validation each whose functional currency is the US dollar and The Board has overall responsibility for year through impairment testing procedures, liabilities denominated in the US dollar. ensuring that SES maintains a sound system where they are compared to the value-in-use of internal controls, including financial, of the asset, representing the present value of To mitigate this exposure, SES can enter operational and compliance controls. Such the future cash flows expected to be derived into forward foreign exchange or similar a system is an integral part of the corporate from the asset. Where future assumptions for derivatives contracts to hedge the exposure governance strategy of the company. a specific asset, as set out in the approved on the financial debt or on the net assets. Business Plan, become less favourable, or the Further details are provided in Note 18 to Internal control procedures help to ensure discount rates applied to the future cash flows the Financial risk management objectives the proper management of risks and increase, then this may result in the need for and policies. provide reasonable assurance that the material asset impairment charges. business objectives of the company can Interest rate risk be achieved. In the SES S.A. annual accounts, impairment SES’s exposure to the risk of changes in testing – using value-in-use procedures market interest rates relates primarily to similar to those outlined above – is SES’s floating rate borrowings as well as performed on the carrying value of the shares the renewal of its fixed rate borrowings. in affiliate undertakings, or on the carrying SES carefully monitors and adjusts the value of groups of shareholdings where the mix between fixed and floating rate debt Board of Directors believes that it is more from time to time, responding to market

SES Annual Report 2017 53 The internal control procedures are defined The policies and procedures apply to all The Executive Committee in turn reports and implemented by the company to ensure: employees and officers of the SES group, to the Board which has the ultimate and where appropriate to its directors, as the responsibility for oversight of the company’s • the compliance of actions and decisions general framework for their own business risks and for ensuring that an effective risk with applicable laws, regulations, process design. management system is in place. standards, internal rules and contracts; • the efficiency and effectiveness of The policies and procedures take into Common definitions and measures of risk operations and the optimal use of the account specificities of each legal entity management have been established and company’s resources; and business unit and are adapted provided to the various risk owners to ensure • the correct implementation of the where necessary to their activity, size, that the risk management policy is properly company’s internal processes, notably organisation and legal and regulatory implemented. those to ensure the safeguarding of assets; environment. • the integrity and reliability of financial and A risk management co-ordinator has been operational information, both for internal A group-wide ‘Code of Conduct and Ethics’ appointed in order to ensure the adequate and external use; has been in place since 2009. The Code is review of the risks facing SES. • that management’s instructions and designed to enable all employees, officers Each reported risk is categorised, assessed directions are properly applied, and and directors to take a consistent approach by the risk owners and reviewed by the Risk • that material risks are properly identified, to integrity issues and to make sure that Management Committee. assessed, mitigated and reported. SES conducts its business in compliance Key risk developments are periodically with all applicable laws and regulations and reported to the Executive Committee, the Like all control systems, internal controls observes the highest standards of business Audit and Risk Committee and the Board. cannot provide an absolute guarantee that ethics. In 2016, the Code has been reviewed risks of misstatement, losses or human error and refreshed, and also mandatory INTERNAL CONTROL ACTIVITIES have been totally mitigated or eliminated. refresher courses for all SES employees Regarding the internal controls in the area worldwide were continued to reinforce of accounting and financial reporting, the CONTROL ENVIRONMENT awareness and compliance by staff. following should be noted: SES has adopted a robust internal control framework based on a set of guidelines An SES Compliance Committee, composed • Staff involved in the company’s accounting prepared by COSO (Committee of of designated Compliance Officers in and financial reporting are appropriately Sponsoring Organisations of the Treadway each main corporate location, is tasked qualified and are kept up-to-date with Commission). This framework provides with raising the staff’s awareness of the relevant changes in International Financial reasonable assurance that the internal Code and ensures a consistent roll-out Reporting Standards (‘IFRS’). Additionally, control objectives are being achieved; it is and training programme for the Code. The specific training and written guidance also consistent with the reference framework Committee meets regularly to discuss on particular matters is provided where proposed by the French securities regulator, important topics or issues. Reflecting the needed. Written guidance, regularly the ‘Autorité des Marchés Financiers’ (AMF). company’s expansion into developing updated for business developments and markets, the composition of the Compliance regulatory changes, is available to all The control environment is an essential Committee includes representatives from relevant staff members and provides a element of the company’s internal control SES’s offices in Africa, Asia, the Middle East summary of the company’s accounting framework, as it sets the tone for the and Latin America. and financial reporting policies and organisation. This is the foundation of procedures. the other components of internal control, To ensure better compliance with data • Controls have been established in the providing discipline and structure. protection laws and regulations SES appointed processing of accounting transactions The Board has delegated the design, a Group Data Protection Officer in 2014. to ensure appropriate authorisations for implementation and maintenance of a transactions, effective segregation of rigorous and effective system of internal Another key component of the control duties and the complete and accurate controls to the Executive Committee of SES, environment is the co-ordination of risk recording of financial information. which in turn works closely with the other management with internal control. Risk • Completeness and timely recording of levels of management in establishing control management and internal control systems financial information is ensured through policies and procedures. complement each other in controlling the regular reviews, monitoring of specific company’s activities. key performance indicators, validation The descriptions of the main SES functions procedures by functional leaders and as and processes are electronically documented RISK MANAGEMENT an additional check, the process of internal using Business Process Management SES has adopted a risk management and external audit. software, with the support of the Enterprise framework based on principles proposed • In accordance with the requirements of Effectiveness Team. Policies and procedures by COSO and ISO31000. The co-ordination IFRS, SES discloses detailed information are regularly updated, as appropriate. The of the implementation of this policy and on the market, credit and foreign exchange aim is to design and implement a common the development of a risk register is the risks to which it is exposed, as well as its set of policies and procedures that best responsibility of a Risk Management strategy for managing those risks. support the organisation and can be used Committee which reports to the Executive • The company relies on a comprehensive company-wide. Committee of SES. system of financial information and

54 oversight. Strategic plans, business plans, a firm commitment is in place, and to • SES’s Technology Department is budgets and the interim and full-year match the terms of the hedge derivatives responsible for the procurement of consolidated accounts of the company to those of the hedged item to maximise satellites and launch vehicles, the are drawn up and brought to the Board effectiveness. procurement and maintenance of satellite- for approval. The Board also approves • Those treasury activities with a significant related ground infrastructure and the all significant investments. The Board potential risk, such as financial derivative administration, control and operations of receives monthly financial reports setting transactions with external parties and in the satellite fleet. out the company’s financial performance particular the hedging activities engaged • The reporting of the satellite procurement in comparison to the approved budget and during the year, are authorised within the and operations risk management process prior year figures. framework approved by the Board. that is in place to monitor and assess • Any weaknesses in the system of internal • A short treasury report is issued every sources of technical risks and to develop controls identified by either internal or quarter to the Board as part of the qualitative, quantitative and statistical external auditors are promptly and fully financial reporting. methods which allow the mitigation of addressed. • To further strengthen these controls, risk at the satellite fleet level has been • The external auditors perform a limited a treasury policy is regularly updated. integrated into the company’s Risk review of the company’s half-year In addition, a Foreign Exchange Risk Management framework. consolidated financial statements and Management strategy, combined with • The operational procedures for satellite a full audit of the annual consolidated a multiple year funding plan based on control and payload management cover financial statements. SES’s strategic and business plans, is also manoeuvres and configuration changes prepared and presented to the Audit and required in nominal situations as well as Regarding the internal controls in the area Risk Committee. in the case of technical emergencies. The of treasury management, the following controllers are trained and certified in should be noted: Regarding the internal controls in the area the execution of such procedures. These of tax management, the following should be procedures are periodically reviewed • The treasury function uses specific noted: to ensure that they are up-to-date. software that helps to ensure Satellite control software is being used the efficiency and control of the • The main principles of SES’s tax risk and fully validated electronic procedures implementation of SES’s hedging strategy management are laid down in the SES for station-keeping and other regular for interest rate and foreign currency Tax Charter. Tax positions are analysed operations are being applied throughout fluctuations. This software also aims to based on most appropriate authoritative the entire SES fleet. centralise the cash management of SES’s interpretations and reported in internal • SES has designed crisis management affiliates. tax technical memos or tax opinions systems and supporting infrastructure and • In order to ensure enhanced security from external tax consultancy firms. The tools in order to address satellite in-orbit and efficiency of the bank payments tax department seeks, where possible, anomaly situations at an appropriate process, the company is using a banking to achieve upfront tax clearances with management level. An effective ‘trouble payments system that allows for secured relevant local tax authorities with regard tickets’ escalation process is used to authorisation and transfer of payments to the tax ramifications of main business provide effective and timely support to from the SAP accounting system directly ventures, corporate reorganisations and customers. to the bank. financing structures of the company. • The Satellite Contingency and Emergency • A clear segregation of duties and • Current and deferred tax liabilities are Response Process reflects the current assignment of bank mandates between recorded in the SES group accounts company’s organisational structure. members of SES management, treasury on the basis of a 5 step key control • For LuxGovSat, a highly secured Network and accounting departments has been framework that ensures full transparency Operation Center (‘NOC’) was constructed implemented. and understanding of all underlying data on the Betzdorf campus in 2017. • In order to streamline the cash and reconciliation between the important management process, SES has centralised sources of information within tax and SES has adequate satellite control primary the in-house bank into one hub. This in- accounting departments. and backup capabilities utilising the European house banking system is fully integrated • The transfer pricing team is responsible and US-based Satellite Operations Centres and managed in SAP. for continuously updating and improving (‘SOCs’). A SOC is being built in Brazil to • SES predominately uses forward transfer pricing documentation control the SES-14 satellite, along with Betzdorf currency contracts to eliminate or underpinning all significant cross-border also being able to control it. This Brazilian SOC reduce the currency exposure on single inter-company transactions in the is scheduled for operation by mid-2018 in time deals, such as satellite procurements, company through functional and economic for the SES-14 operational date. tailoring the maturities to each milestone analyses including benchmarking studies. payment. Such foreign currency risk SES’s transfer pricing documentation is predominantly in EUR or USD. The includes a master file, local files and a forward contracts are in the same country-by-country report. currency as the hedged item and can cover up to 100% of the total value of Regarding the internal controls in the area the contract. It is the company’s policy of satellite operations, the following should not to enter into forward contracts until be noted:

SES Annual Report 2017 55 For SES Geostationary satellites: commenced in 2017. Full operation • Management is committed to enhancing is anticipated for the end of the first information security through the • Primary satellite operations in Europe quarter in 2018. The work currently established Data Governance and are operated from the technical facility in being undertaken at Manassas is Information Security Committee within Betzdorf and the SOC in Gibraltar. Primary summarised as follows: 1) An additional SES, comprising representatives from satellite operations in North America are new generator with associated fuel tank; various applicable functions, which reviews operated from the SOC in Princeton. 2) Replacement of two (2) UPS systems practices, policies and procedures. • Satellite engineering and Flight Dynamics with new UPS systems; 3) Addition of • SES is rolling out its information and cyber- tools, applications and documentation new switchgear to improve the overall security framework to its newly acquired required to support satellite operations reliability and flexibility of the power businesses in order to align security controls are available in the Betzdorf and Princeton system at the site. and practices within the SES group. Data Centers. – In 2018, SES is evaluating the need to • Electronic information is regularly backed • SES has adequate satellite control backup replace two (2) generators and their up and copies are stored off-site. capability utilising the European and US associated fuel tanks with two (2) newer • SES has disaster recovery plans for its SOCs: models. Additionally, a new 7.3m gateway business applications. The regular testing • In case of a major disaster impacting the antenna is currently being installed in of these activities which took place in primary US SOC, the primary European Hawaii in support of O3b. This will be 2016 has confirmed that SES is in a good SOCs will first take-over satellite the fourth (4th) gateway antenna at the position to recover all mission critical operations, until the backup SOC located site for O3b. At SES’s facility in Gibraltar back-office applications within their set in Woodbine (US) is staffed to take-over SES upgraded its Security System in recovery time objectives. The next testing the operations. conjunction with the new computer is planned to take place in 2018. • In case of a major disaster impacting the room. At SES’s facility in Betzdorf, SES is primary European SOC in Betzdorf, the operating with a state of the art power INFORMATION AND COMMUNICATION Gibraltar SOC and the primary US SOC plant cold water production system, cooling Since January 2015, all SES’s main trading will first take-over satellite operations. systems and power distribution systems. operations are now included and operated Once staffed, the backup European SOC – The Betzdorf physical security has on a common SAP platform, sharing common (located In Redu, Belgium) will take-over been upgraded with the addition of an processes and controls. operations of several satellites to reduce additional external fence around the the workload of the Gibraltar SOC and facility. Furthermore, the companies O3b and MX1, primary (US) SOC. – The TT&C function is currently provided acquired in 2016, and SmartCast, have • Fail-over procedure from Primary to for each satellite via at least two been migrated to SAP as of January 2018 Backup SOC is tested regularly. The independent antenna sites. The sites are to achieve substantial integration of the backup SOCs in Woodbine and Redu are connected via a ground dual-redundant trading and financial operations, leveraging tested twice a year. state-of-the-art network to at least two existing best practices and security controls site diverse SOCs. established within SES. For SES Medium Earth Orbit (‘MEO’) located – The global network that supports TT&C satellites (O3b): deploy a dual-redundant state-of-the- An SAP Security and Authorisation function art Multi-Protocol Label Switching is committed to continually enhancing SAP • Primary satellite operations are performed (‘MPLS’) network connecting all the access management, taking advantage of from the O3b/MEO SOC in Betzdorf and SOCs and TT&C sites worldwide. the implemented SAP Governance Risk and backup satellite operations are performed – Additionally, Aggregation Service Routers Compliance module which focuses on access from the O3b/MEO SOC in Manassas (US). (ASRs) were upgraded in the network in and process controls. response to the new High Throughput For SES payload services: Satellites (HTS) network traffic. To further support this process, the SAP Security and Authorisation function has • Adequate backup capabilities are currently Regarding the internal controls in the area of defined and implemented a comprehensive implemented in the following areas: information and communication technology, SAP security policy. – MX1 has been equipped to be able to the following should be noted: uplink control channels for DTH set-top The operation of the SAP hosting platform boxes for the 19.2° orbital slot when • Management is committed to ensuring continues to mature in various areas Betzdorf is unavailable (not associated that its data, infrastructure and including data privacy, data encryption and with telemetry, tracking and control information technology systems are intrusion detection. A detailed operational (‘TT&C’)). as secure as is reasonably practicable. handbook is maintained to safeguard smooth – At SES’s facilities in the US, additional Security controls, policies and procedures and secure operation of the company’s ERP fuel and Uninterruptible Power are in place to prevent unauthorised platform. In 2017, the hosting company has Supply (‘UPS’) redundant facilities are access to premises, computer systems, commissioned a new state of the art backup maintained to enhance the emergency networks and data. Policies and data centre to ensure enhanced continuity of backup system. procedures have been defined and SAP system operations. – Design work on the upgrade of the implemented in order to address the power system at Manassas in the US more rigorous regulations governing Internal communication ensures the effective has been completed and the installation handling of personally identifiable data. circulation of information and supports

56 the implementation of internal control and with the company’s external auditors. risk management by providing business The proxy structure of the SES Government and functional objectives, instructions Solutions entity, in line with common practice and information to all levels of SES. The for businesses serving certain segments corporate intranet portal and collaboration of the US Government, imposes various tools are instrumental to sharing information restrictions on the Board and executive throughout the company. management in directly supervising the maintenance of an internal control system MONITORING ACTIVITIES and imposing an internal audit structure. Monitoring is done in two ways: through The SES Internal Audit function did not ongoing evaluations or separate evaluations. perform any direct internal control review Ongoing evaluations are performed by of this entity during 2017, in line with the management as routine operations, built imposed restrictions. However, these into business processes, and are performed restrictions are mitigated through having on a real-time basis, reacting to changing agreement on a required risk management conditions. and internal control framework for SES Government Solutions which is subject The SES Internal Audit function performs to evaluation and testing by a third-party separate evaluations of the relevance of, internal audit function. An adequate and compliance with, company policies and reporting process of activities of the third- internal control procedures. party audit function to the SES Internal Audit function and the Audit and Risk Committee The mission of the Internal Audit function has been put in place. is to provide independent and objective assurance regarding the effectiveness It should be further noted that PwC, as and efficiency of business operations, external auditor, reviews the financial the reliability of financial and operational statements of SES Government Solutions. reporting, and the company’s compliance with legal and regulatory requirements. In INVESTOR RELATIONS this context, Internal Audit is also tasked to support management with identifying, SES’s dedicated Investor Relations function preventing and minimising risks, as well as reports to the Chief Financial Officer and safeguarding the company’s assets. works closely with the President and CEO. Its purpose is to develop and coordinate the To ensure an appropriate level of group’s external financial communications independence and communication, and interactions with equity and debt the Internal Audit function has a direct investors, investment analysts, credit reporting line into the Audit and Risk rating agencies, financial journalists and Committee and reports functionally to the other external audiences, to monitor stock President and CEO. market developments, and to provide feedback and recommendations to the SES The activities of the Internal Audit function Executive Committee. The SVP, Corporate are executed in accordance with an annual Finance and Investor Relations, along audit plan, which is reviewed and approved with the VP, Head of Investor Relations, by the Audit and Risk Committee. This plan is responsible for the definition and is derived from an annual risk assessment execution of SES’s active Investor Relations based on a risk mapping exercise relying programme and participation in investor on the SES risk register. The annual risk conferences and similar events. Investor assessment responds to the need to Relations also works closely with the Chief dynamically link the audit plan to risks and Legal Officer to ensure that the group’s exposures that may affect the organisation external communications are compliant and its operations. with all applicable legal and regulatory requirements. Internal Audit monitors the implementation of internal control recommendations and regularly reports on effective compliance to the Senior Management of SES and to the Audit and Risk Committee.

Internal Audit also regularly co-ordinates audit planning and exchanges relevant information

SES Annual Report 2017 57 CORPORATE SOCIAL RESPONSIBILITY (CSR)

The concept of Corporate Social Responsibility (CSR) • Scope 2: Indirect Energy consumption (purchased is used to identify how a company’s values and conduct electricity or heat) demonstrate responsibility towards the communities and • Scope 3: Other Emissions (business travel, commuting, societies in which it operates. To get an accurate overview waste, water consumption) of a company’s social responsibility, a variety of factors need to be considered, including environmental and ecological In 2016, the company’s activities related to operating profile, educational contributions, charitable activities, and commercialising the SES’s satellite fleet, as well as diversity as well as corporate strategy. general administration, finance and marketing, generated

approximately 40,856 tons of CO2 emissions worldwide, SES CSR goes beyond compliance with the compulsory legal a decrease of 3 % compared to 2015. Scope 1 emissions elements and includes self-defined targets. SES has made a were approximately 5.9 %, reduced by 3,037 tons. Scope 3, number of commitments in this domain and defined its best business travel including staff commuting, increased by practices. This results in notable recognition by stakeholders, 1,251 tons to 33.6 % overall. This increase was due to the investors, customers and employees, and an excellent growth of the company in number of employees and sites. reputation as a corporate citizen. The methodology used follows as closely as possible the In addition to complying with the existing framework, SES guidelines outlined in the Greenhouse Gas (GHG) Protocol voluntarily discloses supplementary and non-financial Corporate Accounting and Reporting Standard and Defra information - via this current report – beyond that required (UK) Guidance on How to Measure and Report your by the EU directive 2014/95 which will become mandatory Greenhouse Gas Emissions (September 2009) and the 2016 for reporting in 2018. guidelines to DEFRA/DECC’s GHG Conversion Factors for Company Reporting and the International Energy Agency’s 2016 edition of CO emissions from fuel combustion and ENVIRONMENT 2 World energy balances database. SES applies best practices in minimising the environmental impact of its sites across the world. The company also Emissions from Scope 2, electricity consumption, ensures that the amount of radiation emitted from earth represented the largest component of SES’s total emissions stations respects or remains below the maximum levels (approximately 60.5%). Scope 2 location-based emissions defined by the countries of operation. SES’s compliance with factors were chosen in line with the GHG Protocol this is checked through yearly audits that are conducted recommendations. For low occupancy sites, assumptions both by internal and by third-party accredited organisations were made based on average electricity, gas and travel data that specialise in the field of industrial safety. at the main offices sites. A data collection questionnaire was circulated to all 33 main SES global sites in order to collect activity data. 59 low occupancy and unmanned SES sites Since 2008, SES has officially reported the CO2 emissions of its operations through participation in the Carbon (‘co-locations’) were included in the data collection exercise. Disclosure Project (CDP), which collects the data of all SES’s In order to calculate GHG emissions, when electrical power business activities and locations. consumption was not precisely measured, it was estimated.

The data collection for CDP covers three scopes: SES is particularly focused on carbon reduction initiatives in connection with new building constructions and • Scope 1: Direct Combustibles (gas and fuels consumption, infrastructure upgrades as the largest share of the emissions refrigerant leakage, car fleet) was generated from Scope 1 and Scope 2 sources. In fact, at SES, the billions of items of data exchanged by satellite

SES CO2 results

Year 2016 2015 2014 2013 2012 2011 2010 2009 2008

Scope 1 (t CO2e) 2,418 5,455 6,546 6,621 6,959 6,464 12,397 17,317 14,432

Scope 2 (t CO2e) 24,701 24,395 17,080 17,391 20,475 27,758 26,846 32,471 26,507

Scope 3 (t CO2e) 13,737 12,466 11,460 14,756 5,873 4,937 2,309

Total emissions (t CO2e) 40,856 42,336 35,087 38,768 33,307 39,159 41,553 49,788 40,939

58 through teleports are analysed in computer servers located • Jack Welch College of Business at Sacred Heart University, on the Betzdorf site in Luxembourg. These servers emit a lot Luxembourg City, Luxembourg of heat and need to be constantly cooled. Until recently, this • The Lycée Technique d’Esch, Esch-sur-Alzette, need was covered by a Combined Heat and Power (CHP) Luxembourg unit, which reduces the emissions load of the general grid. • Massachusetts Institute of Technology, US These are special machines that can transform the waste • The International Space University, Strasbourg, France heat of the cogeneration plants of the site into over 2 MW • Université Paris-Sud, France of refrigeration. • The University Politechnica, Bucharest, Romania • The Stevens Institute of Technology, New Jersey, US Since January 2010, SES’s headquarters in Betzdorf, • Princeton University, New Jersey, US Luxembourg, have been using electricity sourced from • The African School of Economics (ASE), Abomey-Calavi, hydropower, which can be considered CO2-free. The use Benin of renewable energy has had a significant reduction of the company’s carbon emissions (an estimated 6,000 tonnes). DIVERSITY & INCLUSION However, due to the carbon accounting rules, these emissions gains are not reflected in the official company’s carbon SES seeks to bring the best to its customers, wherever disclosure figures. The same technology was applied to its they are and whatever their needs and challenges. To do operations in Sweden. this, SES is committed to bringing together an SES team of diverse individuals with different life experiences, different In the context of the legal framework in Europe with the goal backgrounds, and from different geographies and cultures. to save energy, SES started to analyse the energy efficiency This approach is paramount to serving its customers today of the main facilities in accordance with EN 16247. This and helping it decipher the world’s communication needs of audit was first performed at the SES’s state-of-the-art site tomorrow. in Munich, Germany, and in 2016 at the headquarter site in Betzdorf, Luxembourg with the goal to identify energy saving By actively nurturing an inclusive company culture, and potential for further optimisation. appreciating why it’s so important to create a fair and supportive work environment for its people, SES seeks Through these and other initiatives, SES has thus to continue attracting and retaining the very best talent. implemented a substantial and ongoing carbon reduction plan in its sites across the world. SES also acknowledges that there is much work still to be done, as indeed there is in the technology sector as a whole. EDUCATION As an industry leader, SES is fully committed to increasing the number of colleagues from underrepresented groups SES’s education initiatives entail collaborations and and to creating a more diverse SES for the future. partnerships across the world. SES partners with universities to foster technological innovation, contribute to the SES has begun by analysing and addressing drivers for development of mission critical technical capabilities, female inclusion, which is an approach that is also be used advance satellite-based business solutions, develop to maximise the commitment of all diverse groups in its engineering talent, and support PhD research. workforce.

SES also recognises that it must inspire the new generation Currently SES’s workforce consists of 23% women, a figure towards Science, Technology, Engineering and Mathematics that has been stable over the last four years but that it (STEM) and so it invests in considerable resources to get expects to grow as part of its diversity strategy. Also, whilst involved in local and global activities in this field. currently 9% of its executives are female, about 26% of its employees below 30 years are female, representing more SES academic partners include: than one third of the executive succession plan and 24% of the participants in SES’s High Potential Program. • Luxembourg Institute of Science and Technology (LIST) • The Center for Security, Reliability and Trust (SnT) at the SES’s goal is to continue to increase number of women University of Luxembourg in areas where they are underrepresented and SES has • The Faculty of Law, Economics and Finance (FDEF) at the committed to increase the number of female executives University of Luxembourg by 2020. In order to achieve this goal it will need to

SES Annual Report 2017 59 introduce systematic and supportive practices in building a female talent pipeline that will sustain long-term gender RESPONSIBILITY inclusion. STATEMENT

As of 31 December 2017, the SES group employed The Board of Directors and the Executive Committee of 2,033 individuals worldwide. This breaks down to 536 in the company reaffirm their responsibility to ensure the its Luxembourg headquarters, 554 in the rest of Europe, maintenance of proper accounting records disclosing the 555 in the US, and 388 in the rest of the world. SES is a financial position of the group with reasonable accuracy at truly international company represented by 68 different any time and ensuring that an appropriate system of internal nationalities. The leadership team consists of 26 different controls is in place to ensure the group’s business operations nationalities at the executive level, with employees from are carried out efficiently and transparently. 24 different nationalities in its high potential programme. The top five nationalities by number of employees are the In accordance with article 3 of the law of 11 January 2008, US (546 employees), Germany (319), Israel (230), the UK as subsequently amended, on transparency requirements (179) and France (113). in relation to information about issuers whose securities are admitted to trading on a regulated market, we declare GIVING BACK that, to the best of our knowledge, the annual statutory accounts as of and for the year ended 31 December SES’s entire team focuses on charitable work, including 2017, prepared in accordance with Luxembourg legal and charitable activities that benefit from its donation-matching regulatory requirements, and the consolidated financial programme, SES social clubs, and charity projects endorsed statements as of end for the year ended 31 December 2017, by its HR Learning and Development team. prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, SES makes annual contributions to charities, one-off give a true and fair view of the assets, liabilities, financial contributions to disaster-stricken areas in the context of the position and profit of the year of SES taken individually, ‘SES Gives Back!’ programme, and a site-based charity run. and of SES and its consolidated subsidiaries taken as a These activities engage and motivate the colleagues, who whole, respectively. In addition, the management report then inspire each other to give back to the community where includes a fair review of the development and performance they work. of the business and the position of SES taken individually, and of SES and its consolidated subsidiaries taken as a In 2017, SES matched employee donations to charitable whole, together with a description of the principal risks and organisations including - the Red Cross, the Red Crescent, uncertainties that they face. Oxfam, Unicef, Médecins San Frontières/Doctors Without Borders, and Télécoms Sans Frontières. 22 February 2018

In addition, SES is proud to see its employees take on independent initiatives to give back to society. In 2017, SES employees’ independent initiatives took a more formal shape with a ‘1 charity per month’ programme. This provides Romain Bausch Karim Michel Sabbagh a platform where employees can join forces in support of Chairman of the Board of President and CEO particular charities and disaster relief activities. Directors

60