SES Société Anonyme Château de Betzdorf L-6815 Betzdorf RCS Luxembourg B 81267

81 Pages·2017·1.44 MB·French

SES
Société Anonyme
Château de Betzdorf
L-6815 Betzdorf

RCS Luxembourg B 81267

Consolidated financial statements as at and for the year ended
31 December 2018 and
Independent auditor’s report
Contents
Auditor’s report………………………………………………………………………………………………………………………….................3
Consolidated income statement ........................................................................................................................................................ 10
Consolidated statement of comprehensive income ........................................................................................................................... 11
Consolidated statement of financial position ..................................................................................................................................... 12
Consolidated statement of cash flows ............................................................................................................................................... 13
Consolidated statement of changes in shareholders’ equity.............................................................................................................. 14
Consolidated statement of changes in shareholders’ equity.............................................................................................................. 15
Notes to the consolidated financial statements ................................................................................................................................. 16
Note 1 - Corporate information ..................................................................................................................................................... 16
Note 2 - Summary of significant accounting policies .................................................................................................................... 16
Note 3 - Implementation of new International Financial Reporting Standards .............................................................................. 34
Note 4 - Segment information ....................................................................................................................................................... 36
Note 5 - Operating expenses ........................................................................................................................................................ 39
Note 6 - Audit and non-audit fees ................................................................................................................................................. 39
Note 7 - Finance income and costs .............................................................................................................................................. 39
Note 8 - Income taxes................................................................................................................................................................... 40
Note 9 - Deferred income tax ........................................................................................................................................................ 42
Note 10 - Components of other comprehensive income ............................................................................................................... 43
Note 11 - Earnings per share ........................................................................................................................................................ 43
Note 12 - Dividends paid and proposed........................................................................................................................................ 44
Note 13 - Property, plant and equipment ...................................................................................................................................... 45
Note 14 - Assets in the course of construction ............................................................................................................................. 47
Note 15 - Intangible assets ........................................................................................................................................................... 48
Note 16 - Assets and liabilities related to contracts with customers ............................................................................................. 52
Note 17 - Trade and other receivables ......................................................................................................................................... 53
Note 18 - Financial instruments .................................................................................................................................................... 53
Note 19 - Financial risk management objectives and policies ...................................................................................................... 57
Note 20 - Cash and cash equivalents ........................................................................................................................................... 62
Note 21 - Shareholders’ equity ..................................................................................................................................................... 62
Note 22 - Non-controlling interest ................................................................................................................................................. 64
Note 23 - Share-based compensation plans ................................................................................................................................. 65
Note 24 - Interest-bearing borrowings .......................................................................................................................................... 69
Note 25 - Provisions ..................................................................................................................................................................... 72
Note 26 - Trade and other payables ............................................................................................................................................. 72
Note 27 - Other long-term liabilities .............................................................................................................................................. 73
Note 28 - Fixed assets suppliers .................................................................................................................................................. 73
Note 29 - Commitments and contingencies .................................................................................................................................. 74
Note 30 - Leases .......................................................................................................................................................................... 75
Note 31 - Cash flow information ................................................................................................................................................... 76
Note 32 - Related parties .............................................................................................................................................................. 77
Note 33 - Post-Balance Sheet events ........................................................................................................................................... 77
Note 34 - Consolidated subsidiaries, associates .......................................................................................................................... 78

2 | Pa ge
Audit report

To the Shareholders of
SES S.A.

Report on the audit of the consolidated financial statements

Our opinion

In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of SES S.A. (the “Company”) and its subsidiaries (the “Group”) as at
31 December 2018, and of its consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union.

Our opinion is consistent with our additional report to the Audit and Risk Committee.

What we have audited

The Group’s consolidated financial statements comprise:

 the consolidated statement of financial position as at 31 December 2018;

 the consolidated income statement for the year then ended;

 the consolidated statement of comprehensive income for the year then ended;

 the consolidated statement of cash flows for the year then ended;

 the consolidated statement of changes in shareholders' equity for the year then ended; and

 the notes to the consolidated financial statements, which include a summary of significant
accounting policies.

Basis for opinion

We conducted our audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016
on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as
adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our
responsibilities under the EU Regulation No 537/2014, the Law of 23 July 2016 and ISAs as adopted
for Luxembourg by the CSSF are further described in the “Responsibilities of the
“Réviseur d’entreprises agréé” for the audit of the consolidated financial statements” section of our
report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg
T : [phone], F : [phone], www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)
R.C.S. Luxembourg B 65 477 - TVA LU25482518
We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code) as adopted for Luxembourg
by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated
financial statements. We have fulfilled our other ethical responsibilities under those ethical
requirements.

To the best of our knowledge and belief, we declare that we have not provided non-audit services that
are prohibited under Article 5(1) of Regulation (EU) No 537/2014.

The non-audit services that we have provided to the Company and its controlled undertakings, if
applicable, for the year then ended, are disclosed in Note 6 to the consolidated financial statements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period, and include the most
significant assessed risks of material misstatement (whether or not due to fraud). These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How our audit addressed the Key audit matter
Revenue recognition

The application of revenue recognition  We obtained an understanding of the main revenue
accounting standards is complex and streams and evaluated the accounting policy for
involves a number of key judgements and revenue recognition thereof;
estimates in the determination of the  We tested the design and implementation of relevant
appropriate accounting treatment (lease vs. internal controls;
service arrangements, identification of the  We held discussions with Management on IFRS
performance obligations, barter accounting analysis of any non-standard revenue
transactions, principle versus agent contracts, performed testing of significant new
considerations, etc.). revenue contracts and verified that the underlying
revenue transactions were accounted in accordance
We focused on this area due to the inherent with the substance of the commercial agreement and
complexity and judgement in applying the the relevant IFRS standards;
revenue recognition accounting standards  We performed substantive analytical procedures at
and to the significant focus on the revenue year-end on revenue and revenue related accounting
amount (2,010.3 million EUR for the year in order to identify any unusual variances;
ended 31 December 2018) by the users of  We tested certain unusual and/or significant manual
the consolidated financial statements. journal entries made to the revenue accounts, both at
local and group level;
 We evaluated the deferred revenue schedules and
their reconciliation with the accounting;
 We performed substantive testing of a sample of
revenue transactions;
 We considered the disclosures in the consolidated
financial statements and assessed their appropriateness.

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Key audit matter How our audit addressed the Key audit matter
Impairment of satellites
 We tested the design and implementation of relevant
The Group has a space segment assets internal controls;
balance, representing primarily satellites, of  We discussed with Management and in particular,
4,648.7 million EUR as at 31 December 2018. the engineering team about any satellite health issues
An impairment charge of 87.6 million EUR and evaluated their impact on the satellites
was recognised for the year ended capability to generate future cash inflows, and
31 December 2018 in relation to four implicitly on the recoverable amount of the satellites;
satellites, due to the decrease of their  We evaluated the forecasted revenue and costs
forecasted future revenue (see Note 13). assumptions, considering our expectations in terms
of significant developments during the forecast
The valuation of the satellites might be period (significant new contracts or loss thereof) and
impacted by events that may or may not be corroborated these with market data in respect of
under Management’s control (e.g., solar demand for satellite capacity and pricing;
array issues) or by decrease in revenue due to  We involved valuation specialists and validated the
unfavourable market developments. method used to derive the value in use of satellites
presenting a risk of impairment. We independently
Moreover, there is a risk of impairment of the recalculated the weighted average cost of capital
satellites due to obsolescence in the context based on the use of market data.
of rapid evolution of technology.  We performed sensitivity analysis of the models to
changes in the key assumptions;
 We considered the disclosures in Note 13 to the
consolidated financial statements.

Impairment of goodwill and
indefinite useful lives intangible
assets

The Group has goodwill of  We tested the design and implementation of relevant
2,284.2 million EUR and orbital rights internal controls;
with indefinite useful lives of  We evaluated Management’s determination of the
2,058.1 million EUR. An impairment cash generating units as well as the method and
charge of 63.3 million EUR was recognised model used for the determination of the value in use,
for the year ended 31 December 2018 in considering the requirements of IAS 36;
relation to the MX1 CGU (see Note 15).  We involved valuation specialists and independently
recalculated the weighted average cost of capital
Management performed the annual based on the use of market data and verified the
impairment test that is based on the value long-term growth rate to market data;
in use determined on the basis of a  We agreed the forecasted cash flows used for the
discounted cash flows model. calculation of the value in use to the 2019 Business
Plan as approved by the Board of Directors;
We focused on this area due to the high  We evaluated the forecasted revenue and costs
level of judgement in relation with the assumptions, considering our expectations in terms
assumptions used in the calculation of the of significant developments during the forecast
recoverable amount (forecasted cash flows, period (significant new contracts or loss thereof) and
growth rate, discount rate, etc.). corroborated these with market data in respect of
demand for satellite capacity and pricing;
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Key audit matter How our audit addressed the Key audit matter
 We evaluated the capital expenditure assumptions,
considering our expectations in terms of significant
developments during the forecast period (capital
expenditure programs, replacement of satellites) and
the expected capital expenditure level in terminal
period in order to maintain the current assets base;
 We performed sensitivity analysis of the models to
changes in the key assumptions;
 We considered the appropriateness of the disclosures
in Note 15 to the consolidated financial statements.
Taxation

The Group operates across a large number  We tested the design and implementation of controls
of jurisdictions and is subject to various tax in respect of tax accounting, including the
legislations and periodic reviews by local determination of the provisions for tax risks;
tax authorities of a range of tax matters  We involved tax specialists in Luxembourg, the
during the normal course of business, Netherlands and the USA, representing the main tax
including transfer pricing. jurisdictions where the Group has exposure, to gain
an understanding of the current tax risks and
Moreover, the current tax structure of the evaluated the current and deferred tax income and
Group evolves to consider the recent expense and related balances;
developments in international taxation.  We held discussions with the Group Tax
Management to understand and evaluate positions
We focused on two specific tax matters taken on uncertain tax risks and assessed Group tax
relating to the provisions for tax risks, and provision;
the recognition and recoverability of the  We discussed with Management the status of the
deferred tax assets, due to the high level of open tax audits and evaluated their impact on the
judgment in the determination of the consolidated financial statements;
current and deferred income tax balances  We analysed the recognition and recoverability of the
and the determination of the level of the deferred tax assets and determined that it is
tax provisions. supported by forecast future tax profits;
 We considered the appropriateness of the disclosures
in Notes 8 and 9 to the consolidated financial
statements.

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Other information

The Board of Directors is responsible for the other information. The other information comprises the
information stated in the annual report including the consolidated Management report and the
Corporate Governance Statement but does not include the consolidated financial statements and our
audit report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors for the consolidated financial statements

The Board of Directors is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with IFRSs as adopted by the European Union, and for such
internal control as the Board of Directors determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either intends
to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the consolidated financial
statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an audit report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the
EU Regulation No 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the
CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.

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As part of an audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 and
with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:

 identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control;

 obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control;

 evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors;

 conclude on the appropriateness of the Board of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
audit report to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our audit report. However, future events or conditions may cause the
Group to cease to continue as a going concern;

 evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation;

 obtain sufficient appropriate audit evidence regarding the financial information of the entities and
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our audit report unless
law or regulation precludes public disclosure about the matter.
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