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Total shares in treasury at year-end | | |
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chapter 15, Signify N.V. financial statements.
23Debt
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Cash and cash equivalents | | |
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Net debt and total equity | | |
Net debt divided by net debt and total equity (in %) | | |
Total equity divided by net debt and total equity (in %) | | |
Movements of debt were as follows:
| | | | | | |
| | | | | | |
Balance as at January 1, 2021 | | | | | | |
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Balance as at December 31, 2021 | | | | | | |
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Balance as at January 1, 2022 | | | | | | |
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Balance as at December 31, 2022 | | | | | | |
1Other movements include additions of leases which are non-cash transactions.
Term loan structure and a revolving credit facility
As of December 31, 2022, the Company had outstanding long-term loans amounting to EUR 280
million maturing in November 2024 and USD 225 million maturing in January 2025. In addition, the
undrawn revolving credit facility (RCF) of EUR 500 million is maturing in January 2027.
The EUR term loan bears interest at a variable rate based on the relevant applicable EURIBOR
plus a fixed margin of 0.15%. The USD term loan bears interest at a variable rate based on the
relevant applicable USD LIBOR with zero floor plus a margin. As of December 31, 2022, the
margin on the USD term loan was 0.75% and is subject to change, depending on the public credit
rating of Signify assigned by rating agencies.
The term loans and RCF agreement include a financial covenant providing that Signify maintains a
net leverage ratio of no greater than 3.5x. The net leverage ratio may temporarily increase to
4.0x within 12 months of the closing of material acquisitions. The covenant does not apply if
Signify has at least one investment grade rating, which is currently the case, as Signify has two
investment grade ratings.
Eurobonds
As of December 31, 2022, Signify had outstanding EUR 675 million of fixed rate notes due in May
2024 with an annual coupon of 2.000% and EUR 600 million of fixed rate notes due in May 2027
with an annual coupon of 2.375%.
Other debt
Other debt includes short term borrowings which Signify repays ultimately within one year.
Borrowings which are\u00a0drawn and\u00a0repaid within the\u00a0same\u00a0quarter, with a maturity of less than
three months, are reported on a net basis\u00a0in the movement of other debt. These borrowings
were taken to manage intra month and intra quarter working capital requirements.
24Provisions
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Balance as at January 1, 2021 | | | | | | |
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| | | | | | |
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Translation differences and other movements | | | | | | |
Balance as at December 31, 2021 | | | | | | |
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Balance as at January 1, 2022 | | | | | | |
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Translation differences and other movements | | | | | | |
Balance as at December 31, 2022 | | | | | | |
| | | | | | |
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Restructuring
During the year ended December 31, 2022, additions to restructuring provisions were mainly
related to programs in Conventional Products and Digital Solutions. As at December 31, 2022,
the provision includes the restructuring of the central organization, programs of Conventional
Products in Belgium and other restructuring programs. Signify expects the provision will be
utilized mainly within the next year.
Environmental provision
Signify is exposed to environment risks, mainly because it has been in the business of
manufacturing products for more than a century. During that period, Signify has opened,
discontinued and acquired many manufacturing plants and sites. Some of these plants and sites
have been used for industrial purposes for decades and as such, there is a latent risk that these
premises may have environmental conditions that require corrective actions as a result of such
use. The environmental provisions include accrued costs recorded with respect to
environmental remediation in various countries. Provisions for environmental remediation can
change significantly due to the emergence of additional information regarding the extent or
nature of the contamination, the need to utilize alternative technologies, actions by regulatory
authorities as well as changes in judgments and discount rates. The environmental provision is
expected to be utilized mainly within the next five years.
Product warranty
Manufacturing of Signify\u2019s products involves complex processes and defects might occur. In
addition, it is possible that some of Signify\u2019s products may not perform as expected (for
example, in terms of estimated life span and projected energy savings). These defects or
shortfalls may cause Signify to incur significant warranty, support and replacement costs. The
provision for product warranty reflects the estimated costs of replacement and free-of-charge
services that will be incurred by Signify with respect to products sold. Signify expects the
provision will be mainly utilized within the next two years.
Legal
Signify and certain of its group companies are involved in legal proceedings relating to such
matters as product liability and claims for property damage and personal injury, alleged to have
been caused by failure or malfunction of its products as well as commercial transactions, and
intellectual property infringements (among others). The outcome of asserted claims and
proceedings, or the impact of any claims that may be asserted in the future, cannot be
predicted with certainty. Signify makes provisions if payments with respect to such matters are
probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years.
On October 5, 2022, a jury in trial court in Connecticut awarded compensation of USD 90 million
in a lawsuit against Signify relating to a workplace accident that occurred in September 2017 in a
warehouse leased and operated by a Signify customer, where a pallet of Signify products were
pushed off a rack by a worker, operating a forklift at the warehouse, onto one of the customer's
employees. Signify categorically disagrees with the jury\u2019s findings, which it believes are not
supported by either the facts or the law. There has been no judgment issued by the trial court
confirming this verdict and Signify will exercise all its rights to contest any improper verdict
issued in this case.
Signify has a comprehensive global liability insurance and has received confirmation that the
case is fully covered without reservation of rights, including interest and other costs. As a
result, both the amount awarded and insurance cover were recognized without any net profit
and loss impact. Since there was no net impact to profit and loss,this addition to legal provision
and the corresponding movement in non-current financial assets were not presented as
adjustments in the consolidated statement of cash flows. In the table above the liability for the
amount awarded by the jury, (although not yet confirmed by the court) has been included as an
addition to the legal provision. The insurance cover asset has been recognized as part of non-
current financial assets.
Other
Other provisions mainly comprise of provisions for self-insurance, decommissioning and
provision for employee jubilee funds. Other provisions are expected to be utilized mainly within
the next five years.
25Post-employment benefits
Post-employment benefits covered in this note relate to defined-benefit pension and other
post-retirement benefit plans, including defined-benefit retiree medical plans. The benefits
provided by these plans are based on employees\u2019 years of service and compensation levels.
Employee post-employment defined-benefit plans have been established in several countries in
accordance with the legal requirements, customs and local practice.
Net defined-benefit liabilities per country
United States
The defined-benefit Hourly & Salaried Pension Plan in the US covers certain hourly workers and
salaried workers hired before January 1, 2005 and has a net liability of EUR 47 million. The plan is
closed for new entrants and since 2016 no further benefit accruals are taking place. Employees
only accrue benefits in a defined-contribution plan. Signify pays the administration cost and
contributions to cover the funding deficit of the Hourly & Salaried Pension Plan. The plan assets
are governed by an Investment Committee. Signify also has an unfunded pension plan in place for
higher salaried employees with a net liability of EUR 16 million and a post-retirement welfare plan
with a net liability of EUR 45 million.
Signify reviewed the funding level of the Hourly & Salaried Pension Plan and decided that it would
not make a contribution in 2022. Signify expects cash outflows of EUR 8 million in 2023 for the
unfunded plans.
For the funding of the deficit of the US Hourly & Salaried Pension Plan, Signify adheres to the
minimum funding requirements of the US Pension Protection Act.
Germany
For employees with a salary above a certain salary threshold, there is a funded defined-benefit
pension plan which has a deficit of EUR 3 million. This plan has been closed for new entrants
since January 1, 2018. Since 2016, Signify no longer makes any contributions to this plan but
funds the liabilities when these are paid out to retirees. New employees accrue pension benefits
through a defined-contribution plan. For other closed defined-benefit plans, Signify had an
unfunded liability of EUR 153 million as at December 31, 2022. Signify expects cash outflows of
EUR 17 million in 2023 for the pension plans.
Cash outflows for the defined-benefit plans in countries other than the USA and Germany are
expected to total EUR 12 million in 2023.
Risks related to defined-benefit plans
The defined-benefit plans expose Signify to various demographic and economic risks, such as
longevity, investment, currency and interest rate risks and, in some cases, inflation risk. The
latter plays a role in the assumed wage increase and in some\u00a0 plans with pension indexation.
The larger plans are governed by either independent boards, committees or trustees who have
a legal obligation to evenly balance the interests of all stakeholders and operate under the local
regulatory frameworks. These bodies are responsible for and have full discretion over the
investment strategy of the plan assets, in general they manage pension fund risks by diversifying
the investments of plan assets and by (partially) matching interest rate risk of liabilities.
Signify has an active de-risking strategy in which it constantly looks for opportunities to reduce
the risks associated with its defined-benefit plans.
Movements of net defined-benefit liability
| | | | | | |
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(Negative) past service cost | | | | | | |
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| | | | | | |
Recognized in employee benefit expenses | | | | | | |
| | | | | | |
Included in Statements of Income | | | | | | |
Actuarial gains / (losses) | | | | | | |
\u2022 Demographic assumptions | | | | | | |
\u2022 Financial assumptions | | | | | | |
\u2022 Experience adjustment | | | | | | |
Exchange rate differences | | | | | | |
Included in Statements of comprehensive income | | | | | | |
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| | | | | | |
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\u2022 Benefits paid directly by employer | | | | | | |
\u2022 Benefits paid from plan assets | | | | | | |
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Balance as at December 31 | | | | | | |
During 2022, worldwide interest rates increased significantly and this has been reflected in
higher discount rates. As such, most defined benefit plans experienced large gains on the
financial assumptions. In the US, this was offset by losses on plan assets which are
predominantly invested in corporate and government bonds and in Germany by losses due to
pension increases largely resulting from price inflation.
Plan assets allocation
The asset allocation in Signify\u2019s pension plans at December 31 was as follows:
The assets in 2022 contained 15% unquoted assets. Plan assets in 2022 do not include property
occupied by or financial instruments issued by Signify.
Some 85% of the total plan assets of the Signify pension plan are in the US and are invested in a
well-diversified portfolio. The interest rate sensitivity of the fixed income portfolio of the US
qualified pension plan is closely aligned to that of the plan\u2019s pension liabilities. The remaining 15%
of the total plan assets is mainly the market value of insured pension benefits.
Assumptions
The mortality tables used for Signify\u2019s major schemes are:
\u2022US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2022 were as follows:
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Healthcare cost increases | | |
| | |
The average duration of the defined-benefit obligation of the defined-benefit plans is 7.7 years.
For the defined-benefit plans in the US and Germany, the average duration is respectively 7.7
years and 7.4 years. The average discount rates for the plans in these countries are respectively
4.96% and 3.75%. The pension cost increase rate assumption for the German defined-benefit
plans is 2.25%.
Sensitivity analysis
The table below illustrates the approximate impact on the defined-benefit obligation if Signify
were to change key assumptions. The defined-benefit obligation was recalculated using a
change of 1% in the respective assumptions which overall is considered a reasonably possible
change. The impact on the defined-benefit obligation of changes in discount rate is for funded
plans normally accompanied by offsetting movements in plan assets, especially when using
matching strategies.
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Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
Longevity also impacts the post-employment defined-benefit obligation which is illustrated in
the above sensitivity table for the impact of a 10% increase and a 10% decrease in the assumed
rates of mortality for Signify\u2019s major schemes. A 10% decrease in assumed mortality rates equals
improvement of life expectancy by six months to a year. Vice versa, an increase in the assumed
mortality rates equals reduction of life expectancy.
26Related party transactions
Signify considers the Board of Management and the Supervisory Board to be key management
personnel as defined in IAS 24 \u2018Related parties\u2019. For remuneration details of Key Management,
see note 28, Information on remuneration.
27Share-based compensation
The total share-based compensation costs for the period ended December 31, 2022 amounted
to EUR 24 million (period ended December 31, 2021: EUR 31 million)
Long-term Incentive Plan
Under the Signify Long-term Incentive Plan (LTI Plan), which is equity settled, eligible employees
are granted both conditional and performance shares. Conditional shares have a three-year cliff
vesting period and will vest if a grantee is still employed with Signify at the vesting date.
Vesting of performance shares is conditional on the achievement of performance conditions
measured over a period of three years. The performance condition measurement is based on
four measures, each one of them with an equal weight of 25% of the shares:
\u2022Total shareholder return.
\u2022Free cash flow.
\u2022Sustainability.
\u2022Return on capital employed.
For the Board of Management and certain members of senior management, the LTI Plan consists
of performance shares only. Shares are conditionally granted annually.
In addition to shares awarded under the Signify LTI Plan, Signify may in individual cases, such as in
the hiring process of members of (senior-) management, also grant restricted shares.
Restricted shares have either three-year cliff vesting period or vest gradually over the vesting
period of one, two or three years.
Under the terms of the employee stock purchase plan (ESPP), employees are eligible to
purchase a limited number of Signify shares at discounted prices through payroll withholdings.
Performance shares
The fair value of shares granted with the market performance condition of relative TSR is
measured based on Monte Carlo simulation. The closing share price at grant date is adjusted for
the present value of expected dividends during the vesting period, as participants are not
compensated for Signify dividend payouts. Monte Carlo simulation takes into account market
conditions expected to impact relative Total Shareholders\u2019 Return performance in relation to
selected peers and the following weighted-average assumptions:
| |
Assumptions used in Monte-Carlo simulation for valuation in % | |
| |
| |
Expected share price volatility | |
The performance adjustment originates from updates in the number of shares which are
expected to vest in relation to the mentioned non-market performance conditions.
On December 31, 2022, estimated unrecognized costs related to non-vested performance
shares amounted to EUR 19 million. These costs are expected to be recognized over a weighted-
average period of 1.8 years.
Conditional shares
Fair value of conditional shares is determined by subtracting the present value of expected
dividends from the closing share price on the grant date as participants are not compensated
for Signify dividend payouts.
A summary of Signify conditional shares movements and outstanding balance is presented below.
| | | | |
Signify conditional shares | | | | |
| | |
| | Weighted average grant-date fair value | | Weighted average grant-date fair value |
| | | | |
| | | | |
| | | | |
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Balance as at December 31 | | | | |
On December 31, 2022, estimated unrecognized costs related to non-vested conditional shares
amounted to EUR 9 million. These costs are expected to be recognized over a weighted-average
period of 1.8 years.
Restricted shares
Fair value of restricted shares is determined by subtracting the present value of expected
dividends from the closing share price on the grant date as participants are not compensated
for Signify dividend payouts.
In 2022, Signify granted 51,108 restricted shares with weighted average grant date fair value of
EUR 31.15.
On December 31, 2022, estimated unrecognized costs related to non-vested restricted shares
amounted to EUR 1 million. These costs are expected to be recognized over a weighted-average
period of 1.1 years.
28Information on remuneration
In 2022, the total remuneration costs relating to the members of Key Management amounted to
EUR 5,141,832 (2021: EUR 7,112,736).
Remuneration of the Board of Management
In 2022, the total remuneration costs relating to the members of the Board of Management
amounted to EUR 4,379,057 (2021: EUR 6,428,236).
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Remuneration costs of Key Management - the Board of Management |
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Long Term Equity-based Incentive 2 | | |
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1Related to the performance in the year reported which are paid out in the subsequent year.
2Costs of performance shares and restricted shares are based on accounting standards (IFRS) and do not reflect the value of
the shares at the vesting/release date.
3Comparatives for 2021 were revised to exclude the employee pension premium of EUR 1,941 for each of the Board of
Management members.
4Mainly concern (part of) allowances to members of the Board of Management that can be considered as remuneration. In a
situation where such a part of an allowance can be considered as (indirect) remuneration (for example, private use of the
company car), then such part is both valued and accounted for here. The method employed by the fiscal authorities in the
Netherlands is the starting point for the value stated. Net allowances are not included.
For further information on remuneration costs, see chapter 9, Remuneration report.
Remuneration of the Supervisory Board
The remuneration of the members of the Supervisory Board amounted to EUR 762,775 (2021:
EUR 684,500).
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Remuneration of Key Management - the Supervisory Board in EUR |
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1Relates to the allowance for (inter-)continental travel.
29Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of\u00a0business: interest rate risk, liquidity risk, currency risk, commodity price risk, credit risk and country risk.
This note comprises the disclosures on Signify's financial risk management objectives, policies and procedures to monitor and manage these risks.
The summary of all financial assets and liabilities, including their classification and measurement and fair value hierarchy is presented below:
| | | | | | |
| | Gross amount recognized on the balance sheet | Amounts not offset on the balance sheet, but are subject to master netting arrangements | | Fair value hierarchy level | |
Balance as at December 31, 2021 | | | | | | |
Non-current financial assets 1 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Balance as at December 31, 2022 | | | | | | |
Non-current financial assets 1, 2 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
1In view of the nature, maturity or the magnitude of the amounts, Signify considers that the fair value of non-current financial assets, trade and other receivables, debt (excluding Eurobonds), trade and other payables are not materially different from their
carrying value.
2Mainly includes the insurance cover asset as referred to in the legal section, in note 24, Provisions.
The estimated fair value of financial instruments has been determined by Signify using available
market information and appropriate valuation methods. The estimates presented are not
necessarily indicative of the amounts that will ultimately be realized by Signify upon maturity or
disposal. The use of market assumptions and/or estimation methods may have a material effect
on the estimated fair value amounts.
The following hierarchy is applied to classify the financial assets and liabilities:
Level 1
Instruments included in Level 1 are comprised primarily of listed Eurobonds classified as financial
liabilities at amortized cost. The fair value of financial instruments traded in active markets is
based on quoted market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm\u2019s length basis.
Level 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
Interest rate risk
Interest rate risk is the risk of the fair value or future cash flows of a financial instrument
fluctuating because of changes in the market interest rates. Financial instruments included in
the debt position create an inherent interest rate risk. Failure to effectively hedge this risk
could negatively impact financial results.
Signify monitors interest rate coverage, short-term and long-term interest rate developments
and has the flexibility to opt for different short-term interest periods for the variable debt
instruments at roll-over dates and/or could enter into derivative financial instruments to fix
interest rates for a certain period of time. As of December 31, 2022, Signify had a ratio of fixed-
rate debt to total outstanding debt of approximately 75% (2021: 75%).
A sensitivity analysis conducted at reporting date shows that if interest rates were to increase
instantaneously by 1% from their level of December 31, 2022, with all other variables held
constant, the annualized net interest expense would decrease by EUR 3 million. This impact was
based on the outstanding net floating debt position as of December 31, 2022.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated
with financial liabilities.
Liquidity risk for Signify is monitored through the Treasury Risk Committee which tracks the
development of the actual cash flow position and uses input from a number of sources in order
to forecast the overall liquidity position.
The table below analyzes Signify's financial liabilities into relevant maturity groupings based on
their contractual maturities. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances as the
impact of discounting is not significant. Interest on Long-term debt is based on floating rate
adjustments according to market expectations.
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Debt, including bank overdrafts | | | | |
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Off-balance sheet commitments | | | | |
| | | | |
Contractual cash obligations | | | | |
Revolving credit facility (RCF) | | | | |
Signify invests surplus cash primarily in money market deposits with investment graded financial
institutions, and with maturities up to three months, to ensure sufficient liquidity is available to
meet liabilities when due.
Signify has various sources to mitigate liquidity risk. Signify pools cash from subsidiaries to the
extent legally and economically feasible; cash not pooled remains available for operational or
investment needs. The table below shows details of cash and cash equivalents and bank
overdrafts as of the reporting date:
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Cash at banks and in hand | | |
| | |
| | |
Cash and cash equivalents | | |
| | |
Cash and cash equivalents and bank overdrafts | | |
Signify has a EUR 500 million revolving credit facility that can be used for general purposes. As of
December 31, 2022, Signify did not have any amounts drawn under this facility.
Currency risk
Currency risk is the risk that reported financial performance, or the fair value or future cash
flows of a financial instrument, will fluctuate because of changes in foreign exchange rates.
Signify operates in many countries and currencies and therefore currency fluctuations may
inevitably impact its financial results. Signify is exposed to currency risk in the following areas:
\u2022Transaction exposures related to anticipated sales and purchases and on-balance-sheet
receivables/payables resulting from such transactions.
\u2022Financing exposure arising from foreign currency intercompany and external debt and
deposits.
\u2022Translation exposure of net income in foreign entities.
\u2022Translation exposure of foreign currency denominated equity invested in consolidated
companies.
\u2022Translation exposure to equity interests in non-functional-currency investments in associates
and financial assets at fair value.
It is Signify\u2019s policy to reduce the volatility caused by foreign currency movements on its net
earnings by hedging the anticipated net exposure of foreign currencies resulting from foreign
currency sales and purchases. In general, net anticipated exposures are hedged during a period
of 15 months in layers of 20% up to a hedge ratio of 80%, using derivatives.
Signify\u2019s policy requires significant committed foreign currency exposures to be fully hedged,
generally using forwards. However, not every foreign currency can or shall be hedged as there
may be regulatory barriers or prohibitive hedging cost preventing Signify from effectively and/or
efficiently hedging its currency exposures. As a result, hedging activities cannot and will not
eliminate all currency risks for anticipated and committed transaction exposures.
The following table outlines the estimated nominal value in millions of EUR for transaction
exposures and related hedges for Signify\u2019s most significant currency exposures:
| | | | | |
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| | | | | |
Balance as at December 31 | | | | | |
| | | | | |
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1\u00a0 \u00a0 \u00a0 EUR exposures in non EUR denominated functional currencies.
As of December 31, 2022, a loss of EUR 27 million was deferred in equity as a result of these
hedges (2021: loss of EUR 3 million). The result deferred in equity will be released to earnings
mostly during 2023 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2022, EUR nil million (2021: EUR nil million) was recorded within cost
of goods sold in the Consolidated statement of income as a result of ineffectiveness on certain
anticipated cash flow hedges.
The total net fair value of hedges related to transaction exposure as of December 31, 2022, was
an unrealized liability of EUR 14 million (2021: asset EUR 2 million). An instantaneous 10% increase
in the value of euro against all currencies, with all other variables held constant, would lead to
no substantial change in the value of the derivatives. The above sensitivity analysis includes a
loss of EUR 4 million that would impact the income statement, which would largely offset the
opposite revaluation effect on the underlying accounts receivable and payable, and the
remaining gain of EUR 4 million would be recognized in equity to the extent that the cash flow
hedges were effective.
Foreign exchange exposure also arises from intercompany loans and deposits. Where Signify
enters into such arrangements the financing is generally provided in the functional currency of
the subsidiary. The currency of Signify\u2019s external funding and liquid assets is matched with the
required financing of subsidiaries either directly through external foreign currency loans and
deposits or synthetically by using foreign exchange derivatives. In certain cases, where Signify
subsidiaries may also have external foreign currency debt or liquid assets, these exposures are
also hedged using foreign exchange derivatives. As of December 31, 2022, the fair value of
these hedges was an unrealized asset of EUR 6 million (2021: asset EUR 8 million). An
instantaneous 10% increase in the value of euro against all currencies, with all other variables
held constant, would lead to a decrease of EUR 22 million in the value of the derivatives.\u00a0 \u00a0
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
During 2022, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 150 million matured. These hedges partially mitigated foreign currency
translation risk arising from the net assets of USD functional currency subsidiaries. These
hedges were fully effective, as such there was no ineffectiveness recognized in profit and loss in
2022. As at 31 December 2022, no net investment hedges were outstanding (2021: asset EUR 4
million). Signify may enter into further net investment hedges to partially offset these risks in the
future.
Commodity price risk
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in commodity prices.
Signify is a purchaser of certain base metals, precious metals and energy. Signify could hedge
certain commodity price risks using derivative instruments to minimize significant, unanticipated
earnings fluctuations caused by commodity price volatility. As of December 31, 2022, Signify had
EUR 44 million of commodity derivatives recognized in the Statement of financial position (2021:
EUR 17 million). Change of the commodity price by 10% will lead to the commodity derivatives
value change of EUR 9 million (2021: EUR 7 million).
Credit risk
Credit risk represents the loss that would be recognized at the reporting date, if counterparties
failed completely to perform their payment obligations as contracted. Credit risk is present
within Signify trade and other receivables and contract assets. To have better insights into the
credit exposures, Signify performs ongoing evaluations of the financial and non-financial
condition of its customers and adjusts credit limits when appropriate. In instances where the
creditworthiness of a customer is determined not to be sufficient to grant the credit limit
required, there are a number of mitigation tools that can be utilized to close the gap, including
reducing payment terms, cash on delivery, prepayments and pledges on assets.
Signify invests available cash and cash equivalents and enters into financial derivative
instruments with various financial institutions and is exposed to credit risk with these
counterparties. Signify does not enter into any financial derivative instruments to protect
against default by financial institutions.
Where possible, Signify requires all financial institutions to complete legally enforceable netting
agreements under an International Swap Dealers Association master agreement or otherwise
prior to trading, and whenever possible, to have a solid credit rating from generally accepted
rating agencies. Signify also regularly monitors the development of the credit risk of its financial
counterparties.
Signify minimizes this risk by limiting the deposits made with any single bank and by making
deposits, the majority of which is with banks that have strong credit ratings.
Maximum credit risk exposure for Signify equals carrying amounts of all financial assets
recognized in the Statement of financial position plus off-balance sheet guarantees provided.
Country risk
Country risk is the risk that political, legal, or economic developments in a single country could
adversely impact our performance. The country risk per country is defined as the sum of the
equity of all subsidiaries and associated companies in country cross-border transactions, such
as intercompany loans, accounts receivable from third parties and intercompany accounts
receivable.
As of December 31, 2022, Signify had country risk exposure of EUR 2.9 billion in the United
States, EUR 1.1 billion in the Netherlands and EUR 531 million in China including Hong Kong.
Countries where the risk exceeds EUR 200 million but was less than EUR 500 million are Belgium
(EUR 493 million), Poland (EUR 422 million), France (EUR 241 million) and Saudi Arabia (EUR 205
million). Countries where the risk exceeded EUR 50 million but was less than EUR 200 million are
Mexico, Spain, Canada, United Kingdom, Australia, India and Germany. The degree of risk of a
country is taken into account when new investments are considered. Signify does not, however,
use financial derivative instruments to hedge country risk, except for the net investment hedge
as described in the currency risk.
30Events after the balance sheet date
In January 2023, Signify notified Koninklijke Philips N.V. our desire to extend the duration of the
Trade Mark License Agreement (TMLA) for the second term commencing from February 1, 2026,
to January 31, 2031. Under the TMLA, Signify is obliged to pay a royalty on the net turnover of all
licensed products and services. The applicable royalty percentages for the extended term is 1%
and the minimum annual guaranteed royalty payment is EUR 20 million.
No other subsequent events occurred that are material to Signify.
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1Basis of preparation
Signify N.V. is a public company with limited liability incorporated under the laws of the
Netherlands and listed on Euronext Amsterdam under the symbol \u2018LIGHT\u2019.
As used herein, the term Signify is used for Signify N.V. (\u2018the Company\u2019) and its subsidiaries within
the meaning of Section 2:24b of the Dutch Civil Code.
Basis of preparation
The Consolidated financial statements as at December 31, 2022, have been prepared in
accordance with the International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code.
The Consolidated financial statements are prepared by the Board of Management of the
Company and authorized for issue on February 28, 2023, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 16, 2023. The Consolidated financial
statements have been prepared on a going concern basis.
Basis of measurement
The Consolidated financial statements have been prepared on a historical cost basis, except for
certain financial instruments, including derivatives (measured at fair value), assets held for sale
(measured at the lower of carrying amount and its fair value less costs to sell), and defined-
benefit pension plans (plan assets are measured at fair value).
Functional and presentational currency
The Consolidated financial statements are presented in euros (EUR), which is the functional and
presentation currency of Signify N.V. All amounts are presented in EUR million and have been
rounded to the nearest EUR million, unless otherwise stated. Due to rounding, amounts may not
add up to totals provided.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of the Consolidated financial statements requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. These estimates inherently contain
a degree of uncertainty. Actual results may differ from these estimates.
These estimates and judgments are evaluated on an ongoing basis and are based on historical
experience, current and expected future outcomes, third-party evaluations and various other
assumptions that are considered reasonable under the circumstances. The results of these
estimates form the basis for making judgments about the carrying values of assets and liabilities,
as well as identifying and assessing the accounting treatment with respect to commitments and
contingencies. Signify revises material estimates if changes occur in the circumstances or there
is new information or experience on which an estimate was or can be based.
The areas where the most significant judgments and estimates are made are goodwill, deferred
tax asset recoverability, revenue recognition, impairments, provisions, insurance cover asset
recoverability, employee benefit obligations, inventory valuation and obsolescence provision,
estimation of loss allowance for expected credit losses, leases, fair value of derivatives, other
financial instruments and assets and liabilities in business combinations. For further discussion
on these significant judgments and estimates, reference is made to the respective accounting
policies and notes within these Consolidated financial statements that relate to the above
topics.
Russia-Ukraine war
The outbreak of the war in Ukraine impacted Signify's business in Russia and Ukraine. As a result
of the war, Signify reported EUR 20 million of charges in the consolidated statement of income.
The most significant items are further described as follows:
Inventories
Signify reviewed the impact that the war has on its ability to control and sell inventories in the
region. The analysis resulted in a write-down of inventories of EUR 3 million for the year.
Trade receivables
Signify reviewed the collectability of its trade accounts receivables and recorded EUR 7 million of
impairment. The impairment was mainly due to the increased risk of uncollectible receivables.
Climate-related matters
The impact of climate change generates opportunities as well as challenges for Signify\u2019s existing
and future lighting products and solutions portfolio. As the world leader in lighting, and an
industry front runner in sustainability, Signify has fully integrated sustainability into its 5
Frontiers strategy, driving five growth areas to help address the world\u2019s greatest sustainability
challenges: climate action, circular economy, food availability, safety & security, and health &
well-being. As a result, Signify's portfolio is well-positioned to anticipate risks and opportunities
related to climate change.
Digital Solutions and Digital Products
Digital Solutions and Digital Products benefit from the phasing out of conventional lighting and
the move to more energy-efficient LED and connected lighting. Stimulus packages, such as the
EU Green Deal and the US stimulus package, are pushing for the use of more sustainable
technologies. This creates a multi-year opportunity for Signify, as its product portfolio is well-
positioned to capture growth from this drive for sustainability.
Conventional Products
The conventional market is expected to continue to decline in the coming years due to the
ongoing adoption of LED lighting technologies and legislation banning certain technologies.
While the overall conventional market continues to decline, Conventional Products\u2019 focus is on
winning market share in key segments and markets to remain market leader. This position
supports the company's drive to lead the transition to connected LED products. The division
continues to proactively manage its manufacturing footprint and reduce operational costs to
optimize free cash flow.
Developments on climate-related matters for the Division were considered in preparing the
consolidated financial statements. Specifically, the key assumptions used in the annual goodwill
impairment test for Conventional Products have taken into account external market
assumptions, including potential phase out of products due to market conditions and legislation
likely to be ratified. In the 2022 annual goodwill test, the estimated recoverable amount of
Conventional Products exceeded its carrying value, therefore no impairment loss was
recognized. For further details, refer to note 15, Intangible assets.
Macroeconomic environment
The current macro economic environment poses challenges which are closely monitored by
Signify. Key challenges include: supply chain disruptions, increase of interest rates, business
climate uncertainties and COVID-19 related lockdowns. The key areas impacted by these
challenges are further described below.
Supply chain disruptions
In response to the global supply chain disruptions, Signify has been implementing several
mitigating actions. As a result of these actions, the availability of components has improved.
However, the supply chain was still affected by longer supplier lead times, which in turn
impacted Signify's inventory levels. For further details on Signify's inventories, refer to note 17,
Inventories.
Goodwill
The annual impairment test performed in the fourth quarter did not result in an impairment loss
being recognized. The key assumptions of the goodwill impairment test include sales growth
rates, EBITA and the rates used for discounting the projected cash flows. All key assumptions
were updated to reflect management\u2019s current best estimates, including the recovery of the
global lighting market from the COVID-19 pandemic and supply chain disruptions. For further
details, refer to note 15, Intangible assets.
Intangible assets, other than goodwill
Signify monitors changes in the economic environment which could indicate that the carrying
amount of the asset may not be recoverable, and performs an impairment test when an
impairment trigger is identified. No impairment was identified based on procedures performed.
Assumptions for post-employment benefits
Macroeconomic developments impacted underlying assumptions of post-employment liabilities
such as the interest rates and investment performance. Signify performed an updated
quantification of the net defined benefit liability as at December 31, 2022, based on the most
recent assumptions. Details of the underlying assumptions used can be found in note 25, Post-
employment benefits.
Deferred taxes
In the context of macroeconomic developments, Signify has also assessed whether it is still
probable that deferred tax assets recognized on the balance sheet will be realized. No
derecognition as a result of this assessment was recorded.
Changes in accounting policy
New and amended standards adopted
Signify has applied the following amendments for the first time to its annual reporting period
commencing January 1, 2022:
\u2022Amendments to IFRS 3 - Reference to the Conceptual Framework.
\u2022Amendments to IAS 37 - Onerous Contracts \u2013 Costs of Fulfilling a Contract.
\u2022Annual improvements to IFRS 2018-2020.
Signify changed its accounting policies in accordance with the amendments listed above. The
changes did not have any significant impact on the amounts recognized in the prior period and
current period.
New and amended standards not yet adopted
Several new standards or amendments to existing standards have been published that are
mandatory for reporting periods commencing on or after January 1, 2023. These standards have
not been adopted early by Signify. The new standards or amendments are not expected to have
a material impact on Signify in the current or future reporting periods and on foreseeable future
transactions.
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1Basis of preparation
Signify N.V. is a public company with limited liability incorporated under the laws of the
Netherlands and listed on Euronext Amsterdam under the symbol \u2018LIGHT\u2019.
As used herein, the term Signify is used for Signify N.V. (\u2018the Company\u2019) and its subsidiaries within
the meaning of Section 2:24b of the Dutch Civil Code.
Basis of preparation
The Consolidated financial statements as at December 31, 2022, have been prepared in
accordance with the International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code.
The Consolidated financial statements are prepared by the Board of Management of the
Company and authorized for issue on February 28, 2023, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 16, 2023. The Consolidated financial
statements have been prepared on a going concern basis.
Basis of measurement
The Consolidated financial statements have been prepared on a historical cost basis, except for
certain financial instruments, including derivatives (measured at fair value), assets held for sale
(measured at the lower of carrying amount and its fair value less costs to sell), and defined-
benefit pension plans (plan assets are measured at fair value).
Functional and presentational currency
The Consolidated financial statements are presented in euros (EUR), which is the functional and
presentation currency of Signify N.V. All amounts are presented in EUR million and have been
rounded to the nearest EUR million, unless otherwise stated. Due to rounding, amounts may not
add up to totals provided.
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Basis of preparation
The Consolidated financial statements as at December 31, 2022, have been prepared in
accordance with the International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code.
The Consolidated financial statements are prepared by the Board of Management of the
Company and authorized for issue on February 28, 2023, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 16, 2023. The Consolidated financial
statements have been prepared on a going concern basis.
",
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Basis of preparation
The Consolidated financial statements as at December 31, 2022, have been prepared in
accordance with the International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code.
The Consolidated financial statements are prepared by the Board of Management of the
Company and authorized for issue on February 28, 2023, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 16, 2023. The Consolidated financial
statements have been prepared on a going concern basis.
",
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Basis of preparation
The Consolidated financial statements as at December 31, 2022, have been prepared in
accordance with the International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code.",
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Functional and presentational currency
The Consolidated financial statements are presented in euros (EUR), which is the functional and
presentation currency of Signify N.V. All amounts are presented in EUR million and have been
rounded to the nearest EUR million, unless otherwise stated. Due to rounding, amounts may not
add up to totals provided.
",
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Critical accounting judgments and key sources of estimation uncertainty
The preparation of the Consolidated financial statements requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. These estimates inherently contain
a degree of uncertainty. Actual results may differ from these estimates.
These estimates and judgments are evaluated on an ongoing basis and are based on historical
experience, current and expected future outcomes, third-party evaluations and various other
assumptions that are considered reasonable under the circumstances. The results of these
estimates form the basis for making judgments about the carrying values of assets and liabilities,
as well as identifying and assessing the accounting treatment with respect to commitments and
contingencies. Signify revises material estimates if changes occur in the circumstances or there
is new information or experience on which an estimate was or can be based.
The areas where the most significant judgments and estimates are made are goodwill, deferred
tax asset recoverability, revenue recognition, impairments, provisions, insurance cover asset
recoverability, employee benefit obligations, inventory valuation and obsolescence provision,
estimation of loss allowance for expected credit losses, leases, fair value of derivatives, other
financial instruments and assets and liabilities in business combinations. For further discussion
on these significant judgments and estimates, reference is made to the respective accounting
policies and notes within these Consolidated financial statements that relate to the above
topics.
Russia-Ukraine war
The outbreak of the war in Ukraine impacted Signify's business in Russia and Ukraine. As a result
of the war, Signify reported EUR 20 million of charges in the consolidated statement of income.
The most significant items are further described as follows:
Inventories
Signify reviewed the impact that the war has on its ability to control and sell inventories in the
region. The analysis resulted in a write-down of inventories of EUR 3 million for the year.
Trade receivables
Signify reviewed the collectability of its trade accounts receivables and recorded EUR 7 million of
impairment. The impairment was mainly due to the increased risk of uncollectible receivables.
Climate-related matters
The impact of climate change generates opportunities as well as challenges for Signify\u2019s existing
and future lighting products and solutions portfolio. As the world leader in lighting, and an
industry front runner in sustainability, Signify has fully integrated sustainability into its 5
Frontiers strategy, driving five growth areas to help address the world\u2019s greatest sustainability
challenges: climate action, circular economy, food availability, safety & security, and health &
well-being. As a result, Signify's portfolio is well-positioned to anticipate risks and opportunities
related to climate change.
Digital Solutions and Digital Products
Digital Solutions and Digital Products benefit from the phasing out of conventional lighting and
the move to more energy-efficient LED and connected lighting. Stimulus packages, such as the
EU Green Deal and the US stimulus package, are pushing for the use of more sustainable
technologies. This creates a multi-year opportunity for Signify, as its product portfolio is well-
positioned to capture growth from this drive for sustainability.
Conventional Products
The conventional market is expected to continue to decline in the coming years due to the
ongoing adoption of LED lighting technologies and legislation banning certain technologies.
While the overall conventional market continues to decline, Conventional Products\u2019 focus is on
winning market share in key segments and markets to remain market leader. This position
supports the company's drive to lead the transition to connected LED products. The division
continues to proactively manage its manufacturing footprint and reduce operational costs to
optimize free cash flow.
Developments on climate-related matters for the Division were considered in preparing the
consolidated financial statements. Specifically, the key assumptions used in the annual goodwill
impairment test for Conventional Products have taken into account external market
assumptions, including potential phase out of products due to market conditions and legislation
likely to be ratified. In the 2022 annual goodwill test, the estimated recoverable amount of
Conventional Products exceeded its carrying value, therefore no impairment loss was
recognized. For further details, refer to note 15, Intangible assets.
Macroeconomic environment
The current macro economic environment poses challenges which are closely monitored by
Signify. Key challenges include: supply chain disruptions, increase of interest rates, business
climate uncertainties and COVID-19 related lockdowns. The key areas impacted by these
challenges are further described below.
Supply chain disruptions
In response to the global supply chain disruptions, Signify has been implementing several
mitigating actions. As a result of these actions, the availability of components has improved.
However, the supply chain was still affected by longer supplier lead times, which in turn
impacted Signify's inventory levels. For further details on Signify's inventories, refer to note 17,
Inventories.
Goodwill
The annual impairment test performed in the fourth quarter did not result in an impairment loss
being recognized. The key assumptions of the goodwill impairment test include sales growth
rates, EBITA and the rates used for discounting the projected cash flows. All key assumptions
were updated to reflect management\u2019s current best estimates, including the recovery of the
global lighting market from the COVID-19 pandemic and supply chain disruptions. For further
details, refer to note 15, Intangible assets.
Intangible assets, other than goodwill
Signify monitors changes in the economic environment which could indicate that the carrying
amount of the asset may not be recoverable, and performs an impairment test when an
impairment trigger is identified. No impairment was identified based on procedures performed.
Assumptions for post-employment benefits
Macroeconomic developments impacted underlying assumptions of post-employment liabilities
such as the interest rates and investment performance. Signify performed an updated
quantification of the net defined benefit liability as at December 31, 2022, based on the most
recent assumptions. Details of the underlying assumptions used can be found in note 25, Post-
employment benefits.
Deferred taxes
In the context of macroeconomic developments, Signify has also assessed whether it is still
probable that deferred tax assets recognized on the balance sheet will be realized. No
derecognition as a result of this assessment was recorded.
Revenue recognitionTransaction price
For contracts with multiple performance obligations, the total consideration of the contract is
allocated to all distinct performance obligations in the contract based on their stand-alone
selling prices. Stand-alone selling prices are determined based on other stand-alone sales
transactions that are directly observable, when possible. However, observable prices are not
available for all performance obligations. If no direct observable prices are available, the stand-
alone selling price is normally based on the expected cost plus a margin approach.
The transaction price may be variable due to discounts, rebates or similar arrangements.
Revenue is only recognized for the part of the consideration for which it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. Judgment is
required in determining the probability and level of discounts and rebates that will be granted.
The estimate is updated throughout the term of the contract.
Inventories
Inventories are stated at the lower of cost and net realizable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. The costs of conversion of inventories
include direct labor and fixed and variable production overheads, considering the stage of
completion and the normal capacity of production facilities. Costs of idle facility and abnormal
waste are expensed. The cost of inventories is determined using the first-in, first-out (FIFO)
method. Due to price erosion and technological developments, inventory valuation requires
forward-looking estimates on future sales levels, future price erosion and related expected
gross margin percentages. On each reporting date, management performs an analysis of net
realizable values and determines the lower of cost and net realizable value to measure its
inventories. The write-down is included in Cost of sales.
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
As soon as individual trade accounts receivable can no longer be collected in a normal course of
business and are expected to result in a loss, they are designated as doubtful trade accounts
receivable and valued at the expected collectible amounts. They are written off when they are
deemed to be uncollectable because of bankruptcy or other form of receivership at the
debtors. Any previously recognized expected loss is offset against the carrying amount of such
trade receivable and the difference is taken as a loss accounted for within Selling, general and
administrative expenses.
Impairment of other financial assets
Signify assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortized cost. Signify determines impairment amount based on the
three stages of credit risk deterioration. The criteria to pass on to the next stage of the credit
deterioration is established for individual financial assets or group of financial assets with similar
characteristics, considering credit risk profile of the counterparty, historical default data and
macroeconomic factors
Deferred tax assets
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against
which they can be utilized. The evaluation of the recoverability of deferred tax assets requires
judgment about the future taxable profitability of the legal entity holding the tax loss carry
forward. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in the countries where the deferred tax assets originated and during the
periods when the deferred tax assets become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. A lack of future taxable profits or taxable profits below the
level of current estimates, may cause deferred tax assets to be impaired.
The ultimate tax effects of transactions may be uncertain for a considerable period of time,
requiring management to estimate the related current and deferred tax treatments. In
assessing the uncertainty, Signify considers whether it is probable that a taxation authority will
accept or revise the uncertain tax treatment. Income tax payable include liabilities for uncertain
tax positions which are recognized when it is probable that tax will be due. To the extent
uncertain tax positions relate to deferred tax assets these are offset against each other. Actual
tax assessments in relation to these uncertain tax positions may significantly deviate from
estimates.
In determining the amount of current and deferred income tax, Signify takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. This
assessment relies on estimates and assumptions and may involve a series of judgments about
future events. New information may become available that causes Signify to change its judgment
regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the
income tax expense in the period that such a determination is made.
Provisions
Provisions are recognized if, as a result of a past event, Signify has a present legal or
constructive obligation, it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax discount rate that reflects current market assessments of
time value of money. The increase in the provision due to passage of time is recognized as
interest expense. Significant judgment is required in determining the amount and probability of
resources outflow and discount rates used to calculate the present value of this outflow. A
liability is recognized if timing and amount of the settlement can be reliably estimated.
The accounting and presentation for some of Signify\u2019s provisions is as follows:
\u2022Restructuring related provisions - The provision for restructuring relates to the estimated
costs of programs that are planned and controlled by management that materially change the
scope of our business or the manner in which it is conducted. A provision is recognized when
Signify has a detailed formal plan for the restructuring and has raised a valid expectation that
Signify will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it.
\u2022Environmental provisions - Measurement of liabilities associated with environmental
obligations is based on current legal and constructive requirements. Liabilities and expected
insurance recoveries, if any, are recorded separately. The carrying amount of environmental
provisions is regularly reviewed and adjusted for new facts and changes in law.
\u2022Product warranty - A provision for product warranty is made at the time of revenue
recognition and reflects the estimated costs of replacement and free-of-charge services
that will be incurred by Signify with respect to the products. The provision is based on
historical warranty data and a weighing of possible outcomes against their associated
probabilities.
\u2022Litigation provisions \u2013 In relation to legal claim provisions and settlements, the relevant
balances are transferred to Other liabilities at the point the amount and timing of cash flows
are no longer uncertain. Settlements which are agreed for amounts in excess of existing
provisions are reflected as payables.
\u2022Onerous contract provisions - Provisions are recognized for a contract if it is onerous. The
present obligation under the contract is measured and recognized as a provision. An onerous
contract is a contract under which the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received under it.
Significant judgment in determining the lease term of contracts with renewal options
Signify determines the lease term as the non-cancellable term of the lease, together with any
periods covered by an option to extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is reasonably certain not to be
exercised. When determining the lease term, Signify considers all relevant facts and
circumstances that create an economic incentive to exercise an extension option, or not to
exercise a termination option. These circumstances include Signify\u2019s strategic plans, the
industrial footprint of Signify and divisions and the importance of the site to Signify\u2019s operations
Intangible assets other than goodwill
The fair value of other intangible assets, mainly customer relations, brand names and technology
based intangibles acquired through business combinations is determined using a valuation
technique that estimates the fair value of an asset based on market participants' expectations
of the cash flows associated with that asset over its remaining useful life. Acquired finite-lived
intangible assets are amortized using the straight-line method over their estimated useful life.
The useful lives are evaluated annually. Intangible assets are initially capitalized at cost, with the
exception of intangible assets acquired as part of a business combination that are capitalized at
their acquisition-date fair value.
The expected useful lives in years of intangible assets excluding goodwill are as follows:
Impairment of goodwill and intangible assets not yet ready for use
Goodwill and intangible assets not yet ready for use are not amortized but tested for impairment
annually and whenever impairment indicators require impairment testing. Signify performed and
completed annual impairment tests in the last quarter of the financial year. Judgment is required
when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for
use. These analyses are based on the estimation of the recoverable amount. The review for
impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to the
extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable
amount, which is the greater of its value in use and fair value less costs of disposal. Value in use
or fair value less costs of disposal is measured as the present value of future cash flows
expected to be generated by the asset via its use or sale with deduction of costs directly
associated with its use or sale.
Impairment of non-financial assets other than goodwill, intangible assets not
yet ready for use, inventories and deferred tax assets
Non-financial assets other than goodwill, intangible assets not yet ready for use, inventories and
deferred tax assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is assessed by a comparison of the carrying amount of an asset with the
greater of its value in use and fair value less costs of disposal. Value in use is measured as the
present value of future cash flows expected to be generated by the asset. If the carrying
amount of an asset is deemed not recoverable, an impairment charge is recognized in the
amount by which the carrying amount of the asset exceeds the recoverable amount. The review
for impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
Pension and other employee benefits
Defined-benefit plans
Signify\u2019s retirement benefit obligation is calculated by an independent actuary, using the
projected unit credit method. This calculation is performed separately for each plan by
estimating the amount of the benefit that employees have earned in relation to their past
services. The measurement date for all defined benefit plans is December 31. For plans with a
relatively low defined-benefit obligation, Signify may decide to calculate the defined-benefit
obligation with a lower frequency. The liability recognized in the Consolidated statement of
financial position is the present value of these benefits at the end of the reporting period
(defined-benefit obligation) less the fair value of plan assets. The defined-benefit obligation is
determined by discounting the estimated future cash flows using a discount yield curve of high-
quality corporate bonds with durations matching the terms of the benefits.
9Income taxesTax risksTax uncertainties due to permanent establishments
Assessing the amount of tax liabilities for these tax uncertainties is highly judgmental and the
timing of possible outflows, if any, is uncertain. Signify has considered the merits of its filing
position in its overall evaluation of potential tax liabilities and believes it has adequate tax
liabilities recorded in its consolidated financial statements for exposures on these matters.
Based on its evaluation of the potential tax liabilities and the merits of Signify's filing positions, it
is unlikely that potential tax exposures over the amounts currently recorded as liabilities in its
Consolidated financial statements will be material to its financial condition or future results of
operations.
With regard to the uncertainties, an income tax payable is recognized when it is probable that
additional taxes will be due. In addition, related to similar uncertainties, an indemnification liability
to Koninklijke Philips N.V. of EUR 16 million (2021: EUR 52 million) and an indemnification
receivable of EUR 5 million (2021: EUR 10 million) is recorded. The total net indemnification
liability decreased in 2022 by EUR 31 million mainly due to settlements and expirations.
Tax uncertainties also include exposures with a risk assessment which are deemed lower than
probable, but possible. The best estimate of the maximum amount in connection with these
uncertainties is EUR 77 million. Signify believes that in connection with these uncertainties it is
probable that no additional taxes will be due. Therefore, no income tax payable is recognized.
11Acquisitions and divestmentsAcquisition of Fluence
The fair value of assets and liabilities at acquisition date is provisional subject to final purchase
price adjustments and closing settlement procedures, which will be finalized in early Q2, 2023.
The opening balance positions subject to change are mainly related to the valuation of certain
liabilities and goodwill where accounting of the fair value assumed is still preliminary.\u00a0
Receivables and other current assets are assumed to be valued against their fair value. Other
intangible assets acquired of EUR 20 million relate mainly to Brand names.
Goodwill
Key assumptions used in the impairment tests for the units were sales growth rates, EBITA and
the rates used for discounting the projected cash flows. These cash flow projections cover an
initial period with specific estimates from 2023 to 2025. Projections were extrapolated with
declining growth rates for a period of five years, after which a terminal value was calculated. The
sales growth rates and EBITA used to estimate cash flows are based on past performance,
external market growth assumptions, taking into account current market conditions, and
industry long-term growth averages. The applied discount rates are determined based on the
weighted average cost of capital which reflects the risks relevant to the cash-generating units.
Cash flow projections for the impairment tests in 2022 and 2021 were based on the key
assumptions included in the table below:
| | | |
| | | |
| Compound sales growth rate 1 |
| | Used to calculate terminal value | |
| | | |
| | | |
1Compound sales growth rate is the annualized steady growth rate over the forecast period.
Given the weaker external environment, the impairment test of Q4 2022 assumes a lower
growth expectation in 2023 compared to previous year, with a gradual recovery in 2024. Signify
performed a sensitivity analysis and noted that a reasonably possible change in key assumptions
will not result in an impairment.
Environmental provision
Signify is exposed to environment risks, mainly because it has been in the business of
manufacturing products for more than a century. During that period, Signify has opened,
discontinued and acquired many manufacturing plants and sites. Some of these plants and sites
have been used for industrial purposes for decades and as such, there is a latent risk that these
premises may have environmental conditions that require corrective actions as a result of such
use. The environmental provisions include accrued costs recorded with respect to
environmental remediation in various countries. Provisions for environmental remediation can
change significantly due to the emergence of additional information regarding the extent or
nature of the contamination, the need to utilize alternative technologies, actions by regulatory
authorities as well as changes in judgments and discount rates. The environmental provision is
expected to be utilized mainly within the next five years.
Product warranty
Manufacturing of Signify\u2019s products involves complex processes and defects might occur. In
addition, it is possible that some of Signify\u2019s products may not perform as expected (for
example, in terms of estimated life span and projected energy savings). These defects or
shortfalls may cause Signify to incur significant warranty, support and replacement costs. The
provision for product warranty reflects the estimated costs of replacement and free-of-charge
services that will be incurred by Signify with respect to products sold. Signify expects the
provision will be mainly utilized within the next two years.
Legal
Signify and certain of its group companies are involved in legal proceedings relating to such
matters as product liability and claims for property damage and personal injury, alleged to have
been caused by failure or malfunction of its products as well as commercial transactions, and
intellectual property infringements (among others). The outcome of asserted claims and
proceedings, or the impact of any claims that may be asserted in the future, cannot be
predicted with certainty. Signify makes provisions if payments with respect to such matters are
probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years.
On October 5, 2022, a jury in trial court in Connecticut awarded compensation of USD 90 million
in a lawsuit against Signify relating to a workplace accident that occurred in September 2017 in a
warehouse leased and operated by a Signify customer, where a pallet of Signify products were
pushed off a rack by a worker, operating a forklift at the warehouse, onto one of the customer's
employees. Signify categorically disagrees with the jury\u2019s findings, which it believes are not
supported by either the facts or the law. There has been no judgment issued by the trial court
confirming this verdict and Signify will exercise all its rights to contest any improper verdict
issued in this case.
Signify has a comprehensive global liability insurance and has received confirmation that the
case is fully covered without reservation of rights, including interest and other costs. As a
result, both the amount awarded and insurance cover were recognized without any net profit
and loss impact. Since there was no net impact to profit and loss,this addition to legal provision
and the corresponding movement in non-current financial assets were not presented as
adjustments in the consolidated statement of cash flows. In the table above the liability for the
amount awarded by the jury, (although not yet confirmed by the court) has been included as an
addition to the legal provision. The insurance cover asset has been recognized as part of non-
current financial assets.
25Post-employment benefitsAssumptions
The mortality tables used for Signify\u2019s major schemes are:
\u2022US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2022 were as follows:
| | |
| | |
| | |
| | |
| | |
Healthcare cost increases | | |
| | |
The average duration of the defined-benefit obligation of the defined-benefit plans is 7.7 years.
For the defined-benefit plans in the US and Germany, the average duration is respectively 7.7
years and 7.4 years. The average discount rates for the plans in these countries are respectively
4.96% and 3.75%. The pension cost increase rate assumption for the German defined-benefit
plans is 2.25%.
Sensitivity analysis
The table below illustrates the approximate impact on the defined-benefit obligation if Signify
were to change key assumptions. The defined-benefit obligation was recalculated using a
change of 1% in the respective assumptions which overall is considered a reasonably possible
change. The impact on the defined-benefit obligation of changes in discount rate is for funded
plans normally accompanied by offsetting movements in plan assets, especially when using
matching strategies.
| | |
| | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
Longevity also impacts the post-employment defined-benefit obligation which is illustrated in
the above sensitivity table for the impact of a 10% increase and a 10% decrease in the assumed
rates of mortality for Signify\u2019s major schemes. A 10% decrease in assumed mortality rates equals
improvement of life expectancy by six months to a year. Vice versa, an increase in the assumed
mortality rates equals reduction of life expectancy.
29Financial risk managementLevel 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
Interest rate risk
A sensitivity analysis conducted at reporting date shows that if interest rates were to increase
instantaneously by 1% from their level of December 31, 2022, with all other variables held
constant, the annualized net interest expense would decrease by EUR 3 million. This impact was
based on the outstanding net floating debt position as of December 31, 2022.
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"value": "Critical accounting judgments and key sources of estimation uncertaintyThe areas where the most significant judgments and estimates are made are goodwill, deferred tax asset recoverability, revenue recognition, impairments, provisions, insurance cover asset recoverability, employee benefit obligations, inventory valuation and obsolescence provision, estimation of loss allowance for expected credit losses, leases, fair value of derivatives, other financial instruments and assets and liabilities in business combinations. For further discussion on these significant judgments and estimates, reference is made to the respective accounting policies and notes within these Consolidated financial statements that relate to the above topics.Climate-related mattersConventional ProductsDevelopments on climate-related matters for the Division were considered in preparing the consolidated financial statements. Specifically, the key assumptions used in the annual goodwill impairment test for Conventional Products have taken into account external market assumptions, including potential phase out of products due to market conditions and legislation likely to be ratified. In the 2022 annual goodwill test, the estimated recoverable amount of Conventional Products exceeded its carrying value, therefore no impairment loss was recognized. For further details, refer to note 15, Intangible assets.Revenue recognitionTransaction priceFor contracts with multiple performance obligations, the total consideration of the contract is allocated to all distinct performance obligations in the contract based on their stand-alone selling prices. Stand-alone selling prices are determined based on other stand-alone sales transactions that are directly observable, when possible. However, observable prices are not available for all performance obligations. If no direct observable prices are available, the stand-alone selling price is normally based on the expected cost plus a margin approach.The transaction price may be variable due to discounts, rebates or similar arrangements. Revenue is only recognized for the part of the consideration for which it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Judgment is required in determining the probability and level of discounts and rebates that will be granted. The estimate is updated throughout the term of the contract.InventoriesInventories are stated at the lower of cost and net realizable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The costs of conversion of inventories include direct labor and fixed and variable production overheads, considering the stage of completion and the normal capacity of production facilities. Costs of idle facility and abnormal waste are expensed. The cost of inventories is determined using the first-in, first-out (FIFO) method. Due to price erosion and technological developments, inventory valuation requires forward-looking estimates on future sales levels, future price erosion and related expected gross margin percentages. On each reporting date, management performs an analysis of net realizable values and determines the lower of cost and net realizable value to measure its inventories. The write-down is included in Cost of sales.Impairment of trade receivables and contract assetsSignify estimates lifetime expected loss allowance for all Trade receivables and Contract assets via calculating the expected credit losses. Trade receivables and contract assets are grouped based on shared credit risk characteristics and the days past due whereby the lifetime expected credit loss on the Trade receivables is recognized based on a matrix model calculated per country, which utilizes historical recoverability data and default probability per country.Deferred tax assetsA deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. The evaluation of the recoverability of deferred tax assets requires judgment about the future taxable profitability of the legal entity holding the tax loss carry forward. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the countries where the deferred tax assets originated and during the periods when the deferred tax assets become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. A lack of future taxable profits or taxable profits below the level of current estimates, may cause deferred tax assets to be impaired.The ultimate tax effects of transactions may be uncertain for a considerable period of time, requiring management to estimate the related current and deferred tax treatments. In assessing the uncertainty, Signify considers whether it is probable that a taxation authority will accept or revise the uncertain tax treatment. Income tax payable include liabilities for uncertain tax positions which are recognized when it is probable that tax will be due. To the extent uncertain tax positions relate to deferred tax assets these are offset against each other. Actual tax assessments in relation to these uncertain tax positions may significantly deviate from estimates.In determining the amount of current and deferred income tax, Signify takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes Signify to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the income tax expense in the period that such a determination is made.ProvisionsProvisions are recognized if, as a result of a past event, Signify has a present legal or constructive obligation, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of time value of money. The increase in the provision due to passage of time is recognized as interest expense. Significant judgment is required in determining the amount and probability of resources outflow and discount rates used to calculate the present value of this outflow. A liability is recognized if timing and amount of the settlement can be reliably estimated.The accounting and presentation for some of Signify\u2019s provisions is as follows:\u2022Restructuring related provisions - The provision for restructuring relates to the estimated costs of programs that are planned and controlled by management that materially change the scope of our business or the manner in which it is conducted. A provision is recognized when Signify has a detailed formal plan for the restructuring and has raised a valid expectation that Signify will carry out the restructuring by starting to implement the plan, or by announcing the plan's main features to those affected by it.\u2022Environmental provisions - Measurement of liabilities associated with environmental obligations is based on current legal and constructive requirements. Liabilities and expected insurance recoveries, if any, are recorded separately. The carrying amount of environmental provisions is regularly reviewed and adjusted for new facts and changes in law.\u2022Product warranty - A provision for product warranty is made at the time of revenue recognition and reflects the estimated costs of replacement and free-of-charge services that will be incurred by Signify with respect to the products. The provision is based on historical warranty data and a weighing of possible outcomes against their associated probabilities.\u2022Litigation provisions \u2013 In relation to legal claim provisions and settlements, the relevant balances are transferred to Other liabilities at the point the amount and timing of cash flows are no longer uncertain. Settlements which are agreed for amounts in excess of existing provisions are reflected as payables.\u2022Onerous contract provisions - Provisions are recognized for a contract if it is onerous. The present obligation under the contract is measured and recognized as a provision. An onerous contract is a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.Impairment of goodwill and intangible assets not yet ready for useGoodwill and intangible assets not yet ready for use are not amortized but tested for impairment annually and whenever impairment indicators require impairment testing. Signify performed and completed annual impairment tests in the last quarter of the financial year. Judgment is required when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for use. These analyses are based on the estimation of the recoverable amount. The review for impairment is carried out at the level where cash flows occur that are independent of other cash flows.An impairment loss is recognized in the Consolidated statement of income whenever and to the extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable amount, which is the greater of its value in use and fair value less costs of disposal. Value in use or fair value less costs of disposal is measured as the present value of future cash flows expected to be generated by the asset via its use or sale with deduction of costs directly associated with its use or sale.Pension and other employee benefitsDefined-benefit plansSignify\u2019s retirement benefit obligation is calculated by an independent actuary, using the projected unit credit method. This calculation is performed separately for each plan by estimating the amount of the benefit that employees have earned in relation to their past services. The measurement date for all defined benefit plans is December 31. For plans with a relatively low defined-benefit obligation, Signify may decide to calculate the defined-benefit obligation with a lower frequency. The liability recognized in the Consolidated statement of financial position is the present value of these benefits at the end of the reporting period (defined-benefit obligation) less the fair value of plan assets. The defined-benefit obligation is determined by discounting the estimated future cash flows using a discount yield curve of high-quality corporate bonds with durations matching the terms of the benefits.9Income taxesTax uncertainties due to permanent establishmentsAssessing the amount of tax liabilities for these tax uncertainties is highly judgmental and the timing of possible outflows, if any, is uncertain. Signify has considered the merits of its filing position in its overall evaluation of potential tax liabilities and believes it has adequate tax liabilities recorded in its consolidated financial statements for exposures on these matters. Based on its evaluation of the potential tax liabilities and the merits of Signify's filing positions, it is unlikely that potential tax exposures over the amounts currently recorded as liabilities in its Consolidated financial statements will be material to its financial condition or future results of operations.With regard to the uncertainties, an income tax payable is recognized when it is probable that additional taxes will be due. In addition, related to similar uncertainties, an indemnification liability to Koninklijke Philips N.V. of EUR 16 million (2021: EUR 52 million) and an indemnification receivable of EUR 5 million (2021: EUR 10 million) is recorded. The total net indemnification liability decreased in 2022 by EUR 31 million mainly due to settlements and expirations.Tax uncertainties also include exposures with a risk assessment which are deemed lower than probable, but possible. The best estimate of the maximum amount in connection with these uncertainties is EUR 77 million. Signify believes that in connection with these uncertainties it is probable that no additional taxes will be due. Therefore, no income tax payable is recognized.11Acquisitions and divestmentsAcquisition of FluenceThe fair value of assets and liabilities at acquisition date is provisional subject to final purchase price adjustments and closing settlement procedures, which will be finalized in early Q2, 2023. The opening balance positions subject to change are mainly related to the valuation of certain liabilities and goodwill where accounting of the fair value assumed is still preliminary.\u00a0 Receivables and other current assets are assumed to be valued against their fair value. Other intangible assets acquired of EUR 20 million relate mainly to Brand names.15Intangible assetsGoodwillKey assumptions used in the impairment tests for the units were sales growth rates, EBITA and the rates used for discounting the projected cash flows. These cash flow projections cover an initial period with specific estimates from 2023 to 2025. Projections were extrapolated with declining growth rates for a period of five years, after which a terminal value was calculated. The sales growth rates and EBITA used to estimate cash flows are based on past performance, external market growth assumptions, taking into account current market conditions, and industry long-term growth averages. The applied discount rates are determined based on the weighted average cost of capital which reflects the risks relevant to the cash-generating units.Cash flow projections for the impairment tests in 2022 and 2021 were based on the key assumptions included in the table below:Key assumptions in %Compound sales growth rate 1Extra polation periodUsed to calculate terminal valuePre-tax discount ratesDigital Solutions 20222.80.311.6Digital Solutions 20212.60.311.01Compound sales growth rate is the annualized steady growth rate over the forecast period.Given the weaker external environment, the impairment test of Q4 2022 assumes a lower growth expectation in 2023 compared to previous year, with a gradual recovery in 2024. Signify performed a sensitivity analysis and noted that a reasonably possible change in key assumptions will not result in an impairment.24ProvisionsEnvironmental provisionSignify is exposed to environment risks, mainly because it has been in the business of manufacturing products for more than a century. During that period, Signify has opened, discontinued and acquired many manufacturing plants and sites. Some of these plants and sites have been used for industrial purposes for decades and as such, there is a latent risk that these premises may have environmental conditions that require corrective actions as a result of such use. The environmental provisions include accrued costs recorded with respect to environmental remediation in various countries. Provisions for environmental remediation can change significantly due to the emergence of additional information regarding the extent or nature of the contamination, the need to utilize alternative technologies, actions by regulatory authorities as well as changes in judgments and discount rates. The environmental provision is expected to be utilized mainly within the next five years.Product warrantyManufacturing of Signify\u2019s products involves complex processes and defects might occur. In addition, it is possible that some of Signify\u2019s products may not perform as expected (for example, in terms of estimated life span and projected energy savings). These defects or shortfalls may cause Signify to incur significant warranty, support and replacement costs. The provision for product warranty reflects the estimated costs of replacement and free-of-charge services that will be incurred by Signify with respect to products sold. Signify expects the provision will be mainly utilized within the next two years.LegalSignify and certain of its group companies are involved in legal proceedings relating to such matters as product liability and claims for property damage and personal injury, alleged to have been caused by failure or malfunction of its products as well as commercial transactions, and intellectual property infringements (among others). The outcome of asserted claims and proceedings, or the impact of any claims that may be asserted in the future, cannot be predicted with certainty. Signify makes provisions if payments with respect to such matters are probable and the amount can be estimated reliably. Signify expects the provision will be mainly utilized within the next three years.On October 5, 2022, a jury in trial court in Connecticut awarded compensation of USD 90 million in a lawsuit against Signify relating to a workplace accident that occurred in September 2017 in a warehouse leased and operated by a Signify customer, where a pallet of Signify products were pushed off a rack by a worker, operating a forklift at the warehouse, onto one of the customer's employees. Signify categorically disagrees with the jury\u2019s findings, which it believes are not supported by either the facts or the law. There has been no judgment issued by the trial court confirming this verdict and Signify will exercise all its rights to contest any improper verdict issued in this case.Signify has a comprehensive global liability insurance and has received confirmation that the case is fully covered without reservation of rights, including interest and other costs. As a result, both the amount awarded and insurance cover were recognized without any net profit and loss impact. Since there was no net impact to profit and loss,this addition to legal provision and the corresponding movement in non-current financial assets were not presented as adjustments in the consolidated statement of cash flows. In the table above the liability for the amount awarded by the jury, (although not yet confirmed by the court) has been included as an addition to the legal provision. The insurance cover asset has been recognized as part of non-current financial assets.25Post-employment benefitsAssumptionsThe mortality tables used for Signify\u2019s major schemes are:\u2022US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality improvements according to Scale MP-2021.\u2022Germany: Richttafeln 2018 G K. Heubeck.The weighted averages of the assumptions used to calculate the defined-benefit obligation as of December 31, 2022 were as follows:In %20212022Discount rate2.34.8Pension cost increases0.40.5Healthcare cost increases0.50.5Wage increases0.41.1The average duration of the defined-benefit obligation of the defined-benefit plans is 7.7 years. For the defined-benefit plans in the US and Germany, the average duration is respectively 7.7 years and 7.4 years. The average discount rates for the plans in these countries are respectively 4.96% and 3.75%. The pension cost increase rate assumption for the German defined-benefit plans is 2.25%.Sensitivity analysisThe table below illustrates the approximate impact on the defined-benefit obligation if Signify were to change key assumptions. The defined-benefit obligation was recalculated using a change of 1% in the respective assumptions which overall is considered a reasonably possible change. The impact on the defined-benefit obligation of changes in discount rate is for funded plans normally accompanied by offsetting movements in plan assets, especially when using matching strategies.20212022IncreaseDiscount rate (1% movement)(80)(52)Wage change (1% movement)115Pension indexation change (1% movement)1910Longevity (see explanation)4020Healthcare cost change (1% movement)65Decrease\u00a0 Discount rate (1% movement)9165Wage change (1% movement)(9)(3)Pension indexation change (1% movement)(21)(8)Longevity (see explanation)(33)(28)Healthcare cost change (1% movement)(6)(4)Longevity also impacts the post-employment defined-benefit obligation which is illustrated in the above sensitivity table for the impact of a 10% increase and a 10% decrease in the assumed rates of mortality for Signify\u2019s major schemes. A 10% decrease in assumed mortality rates equals improvement of life expectancy by six months to a year. Vice versa, an increase in the assumed mortality rates equals reduction of life expectancy.29Financial risk managementLevel 3If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.This applies for Derivative financial assets not designated as hedging instruments, which mainly relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator, on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR 16 million) is recorded in financial income or expense (note 8). Unobservable input data is the volume of generated wind power and the price curves of the respective electricity market.",
"dimensions": {
"concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "Critical accounting judgments and key sources of estimation uncertainty
The areas where the most significant judgments and estimates are made are goodwill, deferred
tax asset recoverability, revenue recognition, impairments, provisions, insurance cover asset
recoverability, employee benefit obligations, inventory valuation and obsolescence provision,
estimation of loss allowance for expected credit losses, leases, fair value of derivatives, other
financial instruments and assets and liabilities in business combinations. For further discussion
on these significant judgments and estimates, reference is made to the respective accounting
policies and notes within these Consolidated financial statements that relate to the above
topics.
Climate-related mattersConventional ProductsDevelopments on climate-related matters for the Division were considered in preparing the
consolidated financial statements. Specifically, the key assumptions used in the annual goodwill
impairment test for Conventional Products have taken into account external market
assumptions, including potential phase out of products due to market conditions and legislation
likely to be ratified. In the 2022 annual goodwill test, the estimated recoverable amount of
Conventional Products exceeded its carrying value, therefore no impairment loss was
recognized. For further details, refer to note 15, Intangible assets.
Revenue recognitionTransaction price
For contracts with multiple performance obligations, the total consideration of the contract is
allocated to all distinct performance obligations in the contract based on their stand-alone
selling prices. Stand-alone selling prices are determined based on other stand-alone sales
transactions that are directly observable, when possible. However, observable prices are not
available for all performance obligations. If no direct observable prices are available, the stand-
alone selling price is normally based on the expected cost plus a margin approach.
The transaction price may be variable due to discounts, rebates or similar arrangements.
Revenue is only recognized for the part of the consideration for which it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. Judgment is
required in determining the probability and level of discounts and rebates that will be granted.
The estimate is updated throughout the term of the contract.
Inventories
Inventories are stated at the lower of cost and net realizable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. The costs of conversion of inventories
include direct labor and fixed and variable production overheads, considering the stage of
completion and the normal capacity of production facilities. Costs of idle facility and abnormal
waste are expensed. The cost of inventories is determined using the first-in, first-out (FIFO)
method. Due to price erosion and technological developments, inventory valuation requires
forward-looking estimates on future sales levels, future price erosion and related expected
gross margin percentages. On each reporting date, management performs an analysis of net
realizable values and determines the lower of cost and net realizable value to measure its
inventories. The write-down is included in Cost of sales.
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
Deferred tax assets
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against
which they can be utilized. The evaluation of the recoverability of deferred tax assets requires
judgment about the future taxable profitability of the legal entity holding the tax loss carry
forward. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in the countries where the deferred tax assets originated and during the
periods when the deferred tax assets become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. A lack of future taxable profits or taxable profits below the
level of current estimates, may cause deferred tax assets to be impaired.
The ultimate tax effects of transactions may be uncertain for a considerable period of time,
requiring management to estimate the related current and deferred tax treatments. In
assessing the uncertainty, Signify considers whether it is probable that a taxation authority will
accept or revise the uncertain tax treatment. Income tax payable include liabilities for uncertain
tax positions which are recognized when it is probable that tax will be due. To the extent
uncertain tax positions relate to deferred tax assets these are offset against each other. Actual
tax assessments in relation to these uncertain tax positions may significantly deviate from
estimates.
In determining the amount of current and deferred income tax, Signify takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. This
assessment relies on estimates and assumptions and may involve a series of judgments about
future events. New information may become available that causes Signify to change its judgment
regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the
income tax expense in the period that such a determination is made.
Provisions
Provisions are recognized if, as a result of a past event, Signify has a present legal or
constructive obligation, it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax discount rate that reflects current market assessments of
time value of money. The increase in the provision due to passage of time is recognized as
interest expense. Significant judgment is required in determining the amount and probability of
resources outflow and discount rates used to calculate the present value of this outflow. A
liability is recognized if timing and amount of the settlement can be reliably estimated.
The accounting and presentation for some of Signify\u2019s provisions is as follows:
\u2022Restructuring related provisions - The provision for restructuring relates to the estimated
costs of programs that are planned and controlled by management that materially change the
scope of our business or the manner in which it is conducted. A provision is recognized when
Signify has a detailed formal plan for the restructuring and has raised a valid expectation that
Signify will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it.
\u2022Environmental provisions - Measurement of liabilities associated with environmental
obligations is based on current legal and constructive requirements. Liabilities and expected
insurance recoveries, if any, are recorded separately. The carrying amount of environmental
provisions is regularly reviewed and adjusted for new facts and changes in law.
\u2022Product warranty - A provision for product warranty is made at the time of revenue
recognition and reflects the estimated costs of replacement and free-of-charge services
that will be incurred by Signify with respect to the products. The provision is based on
historical warranty data and a weighing of possible outcomes against their associated
probabilities.
\u2022Litigation provisions \u2013 In relation to legal claim provisions and settlements, the relevant
balances are transferred to Other liabilities at the point the amount and timing of cash flows
are no longer uncertain. Settlements which are agreed for amounts in excess of existing
provisions are reflected as payables.
\u2022Onerous contract provisions - Provisions are recognized for a contract if it is onerous. The
present obligation under the contract is measured and recognized as a provision. An onerous
contract is a contract under which the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received under it.
Impairment of goodwill and intangible assets not yet ready for use
Goodwill and intangible assets not yet ready for use are not amortized but tested for impairment
annually and whenever impairment indicators require impairment testing. Signify performed and
completed annual impairment tests in the last quarter of the financial year. Judgment is required
when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for
use. These analyses are based on the estimation of the recoverable amount. The review for
impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to the
extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable
amount, which is the greater of its value in use and fair value less costs of disposal. Value in use
or fair value less costs of disposal is measured as the present value of future cash flows
expected to be generated by the asset via its use or sale with deduction of costs directly
associated with its use or sale.
Pension and other employee benefits
Defined-benefit plans
Signify\u2019s retirement benefit obligation is calculated by an independent actuary, using the
projected unit credit method. This calculation is performed separately for each plan by
estimating the amount of the benefit that employees have earned in relation to their past
services. The measurement date for all defined benefit plans is December 31. For plans with a
relatively low defined-benefit obligation, Signify may decide to calculate the defined-benefit
obligation with a lower frequency. The liability recognized in the Consolidated statement of
financial position is the present value of these benefits at the end of the reporting period
(defined-benefit obligation) less the fair value of plan assets. The defined-benefit obligation is
determined by discounting the estimated future cash flows using a discount yield curve of high-
quality corporate bonds with durations matching the terms of the benefits.
9Income taxesTax uncertainties due to permanent establishments
Assessing the amount of tax liabilities for these tax uncertainties is highly judgmental and the
timing of possible outflows, if any, is uncertain. Signify has considered the merits of its filing
position in its overall evaluation of potential tax liabilities and believes it has adequate tax
liabilities recorded in its consolidated financial statements for exposures on these matters.
Based on its evaluation of the potential tax liabilities and the merits of Signify's filing positions, it
is unlikely that potential tax exposures over the amounts currently recorded as liabilities in its
Consolidated financial statements will be material to its financial condition or future results of
operations.
With regard to the uncertainties, an income tax payable is recognized when it is probable that
additional taxes will be due. In addition, related to similar uncertainties, an indemnification liability
to Koninklijke Philips N.V. of EUR 16 million (2021: EUR 52 million) and an indemnification
receivable of EUR 5 million (2021: EUR 10 million) is recorded. The total net indemnification
liability decreased in 2022 by EUR 31 million mainly due to settlements and expirations.
Tax uncertainties also include exposures with a risk assessment which are deemed lower than
probable, but possible. The best estimate of the maximum amount in connection with these
uncertainties is EUR 77 million. Signify believes that in connection with these uncertainties it is
probable that no additional taxes will be due. Therefore, no income tax payable is recognized.
11Acquisitions and divestmentsAcquisition of Fluence
The fair value of assets and liabilities at acquisition date is provisional subject to final purchase
price adjustments and closing settlement procedures, which will be finalized in early Q2, 2023.
The opening balance positions subject to change are mainly related to the valuation of certain
liabilities and goodwill where accounting of the fair value assumed is still preliminary.\u00a0
Receivables and other current assets are assumed to be valued against their fair value. Other
intangible assets acquired of EUR 20 million relate mainly to Brand names.
15Intangible assetsGoodwill
Key assumptions used in the impairment tests for the units were sales growth rates, EBITA and
the rates used for discounting the projected cash flows. These cash flow projections cover an
initial period with specific estimates from 2023 to 2025. Projections were extrapolated with
declining growth rates for a period of five years, after which a terminal value was calculated. The
sales growth rates and EBITA used to estimate cash flows are based on past performance,
external market growth assumptions, taking into account current market conditions, and
industry long-term growth averages. The applied discount rates are determined based on the
weighted average cost of capital which reflects the risks relevant to the cash-generating units.
Cash flow projections for the impairment tests in 2022 and 2021 were based on the key
assumptions included in the table below:
| | | |
| | | |
| Compound sales growth rate 1 |
| | Used to calculate terminal value | |
| | | |
| | | |
1Compound sales growth rate is the annualized steady growth rate over the forecast period.
Given the weaker external environment, the impairment test of Q4 2022 assumes a lower
growth expectation in 2023 compared to previous year, with a gradual recovery in 2024. Signify
performed a sensitivity analysis and noted that a reasonably possible change in key assumptions
will not result in an impairment.
24ProvisionsEnvironmental provision
Signify is exposed to environment risks, mainly because it has been in the business of
manufacturing products for more than a century. During that period, Signify has opened,
discontinued and acquired many manufacturing plants and sites. Some of these plants and sites
have been used for industrial purposes for decades and as such, there is a latent risk that these
premises may have environmental conditions that require corrective actions as a result of such
use. The environmental provisions include accrued costs recorded with respect to
environmental remediation in various countries. Provisions for environmental remediation can
change significantly due to the emergence of additional information regarding the extent or
nature of the contamination, the need to utilize alternative technologies, actions by regulatory
authorities as well as changes in judgments and discount rates. The environmental provision is
expected to be utilized mainly within the next five years.
Product warranty
Manufacturing of Signify\u2019s products involves complex processes and defects might occur. In
addition, it is possible that some of Signify\u2019s products may not perform as expected (for
example, in terms of estimated life span and projected energy savings). These defects or
shortfalls may cause Signify to incur significant warranty, support and replacement costs. The
provision for product warranty reflects the estimated costs of replacement and free-of-charge
services that will be incurred by Signify with respect to products sold. Signify expects the
provision will be mainly utilized within the next two years.
Legal
Signify and certain of its group companies are involved in legal proceedings relating to such
matters as product liability and claims for property damage and personal injury, alleged to have
been caused by failure or malfunction of its products as well as commercial transactions, and
intellectual property infringements (among others). The outcome of asserted claims and
proceedings, or the impact of any claims that may be asserted in the future, cannot be
predicted with certainty. Signify makes provisions if payments with respect to such matters are
probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years.
On October 5, 2022, a jury in trial court in Connecticut awarded compensation of USD 90 million
in a lawsuit against Signify relating to a workplace accident that occurred in September 2017 in a
warehouse leased and operated by a Signify customer, where a pallet of Signify products were
pushed off a rack by a worker, operating a forklift at the warehouse, onto one of the customer's
employees. Signify categorically disagrees with the jury\u2019s findings, which it believes are not
supported by either the facts or the law. There has been no judgment issued by the trial court
confirming this verdict and Signify will exercise all its rights to contest any improper verdict
issued in this case.
Signify has a comprehensive global liability insurance and has received confirmation that the
case is fully covered without reservation of rights, including interest and other costs. As a
result, both the amount awarded and insurance cover were recognized without any net profit
and loss impact. Since there was no net impact to profit and loss,this addition to legal provision
and the corresponding movement in non-current financial assets were not presented as
adjustments in the consolidated statement of cash flows. In the table above the liability for the
amount awarded by the jury, (although not yet confirmed by the court) has been included as an
addition to the legal provision. The insurance cover asset has been recognized as part of non-
current financial assets.
25Post-employment benefitsAssumptions
The mortality tables used for Signify\u2019s major schemes are:
\u2022US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2022 were as follows:
| | |
| | |
| | |
| | |
| | |
Healthcare cost increases | | |
| | |
The average duration of the defined-benefit obligation of the defined-benefit plans is 7.7 years.
For the defined-benefit plans in the US and Germany, the average duration is respectively 7.7
years and 7.4 years. The average discount rates for the plans in these countries are respectively
4.96% and 3.75%. The pension cost increase rate assumption for the German defined-benefit
plans is 2.25%.
Sensitivity analysis
The table below illustrates the approximate impact on the defined-benefit obligation if Signify
were to change key assumptions. The defined-benefit obligation was recalculated using a
change of 1% in the respective assumptions which overall is considered a reasonably possible
change. The impact on the defined-benefit obligation of changes in discount rate is for funded
plans normally accompanied by offsetting movements in plan assets, especially when using
matching strategies.
| | |
| | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
Longevity also impacts the post-employment defined-benefit obligation which is illustrated in
the above sensitivity table for the impact of a 10% increase and a 10% decrease in the assumed
rates of mortality for Signify\u2019s major schemes. A 10% decrease in assumed mortality rates equals
improvement of life expectancy by six months to a year. Vice versa, an increase in the assumed
mortality rates equals reduction of life expectancy.
29Financial risk managementLevel 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
Goodwill
The annual impairment test performed in the fourth quarter did not result in an impairment loss
being recognized. The key assumptions of the goodwill impairment test include sales growth
rates, EBITA and the rates used for discounting the projected cash flows. All key assumptions
were updated to reflect management\u2019s current best estimates, including the recovery of the
global lighting market from the COVID-19 pandemic and supply chain disruptions. For further
details, refer to note 15, Intangible assets.
Intangible assets, other than goodwill
Signify monitors changes in the economic environment which could indicate that the carrying
amount of the asset may not be recoverable, and performs an impairment test when an
impairment trigger is identified. No impairment was identified based on procedures performed.
Business combinations
Business combinations are accounted for using the acquisition method. Under the acquisition
method, the identifiable assets acquired, liabilities assumed and any non-controlling interest in
the acquiree are recognized at the acquisition date, which is the date on which control is
transferred to Signify. Signify measures goodwill at the acquisition date as:
\u2022The fair value of the consideration transferred plus.
\u2022The recognized amount of any non-controlling interest in the acquiree plus.
\u2022If the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree less.
\u2022The net recognized amount (generally fair value) of the identifiable assets acquired and
liabilities assumed.
Goodwill
The measurement of goodwill at initial recognition is described under accounting policy,
Business combinations, above. Goodwill is subsequently measured at cost, less accumulated
impairment losses. In respect of investments in associates, the carrying amount of goodwill is
included in the carrying amount of the investment, and an impairment loss on such investment is
allocated to the investment as a whole.
Intangible assets other than goodwill
The fair value of other intangible assets, mainly customer relations, brand names and technology
based intangibles acquired through business combinations is determined using a valuation
technique that estimates the fair value of an asset based on market participants' expectations
of the cash flows associated with that asset over its remaining useful life. Acquired finite-lived
intangible assets are amortized using the straight-line method over their estimated useful life.
The useful lives are evaluated annually. Intangible assets are initially capitalized at cost, with the
exception of intangible assets acquired as part of a business combination that are capitalized at
their acquisition-date fair value.
Expenditure on development activities, whereby research findings are applied to a plan or design
for the production of new or substantially improved products and processes, is capitalized as an
intangible asset if the product or process is technically and commercially feasible, cost can be
reliably measured, Signify has sufficient resources and the intention to complete development.
The development expenditure capitalized comprises all directly attributable costs (including the
cost of materials and direct labor). Other development expenditures and expenditures on
research activities are recognized in the Consolidated statement of income. Capitalized
development expenditure is stated at cost less accumulated amortization and impairment
losses. Amortization of capitalized development expenditure is charged to the Consolidated
statement of income on a straight- line basis over the estimated useful lives of the intangible
assets in Research and development expenses.
Amortization of other intangible assets is reported in Selling, general and administrative
expenses for brand names and customer relationships and in Cost of sales for technology-
based and other intangible assets.
The expected useful lives in years of intangible assets excluding goodwill are as follows:
Impairment of goodwill and intangible assets not yet ready for use
Goodwill and intangible assets not yet ready for use are not amortized but tested for impairment
annually and whenever impairment indicators require impairment testing. Signify performed and
completed annual impairment tests in the last quarter of the financial year. Judgment is required
when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for
use. These analyses are based on the estimation of the recoverable amount. The review for
impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to the
extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable
amount, which is the greater of its value in use and fair value less costs of disposal. Value in use
or fair value less costs of disposal is measured as the present value of future cash flows
expected to be generated by the asset via its use or sale with deduction of costs directly
associated with its use or sale.
Impairment of non-financial assets other than goodwill, intangible assets not
yet ready for use, inventories and deferred tax assets
Non-financial assets other than goodwill, intangible assets not yet ready for use, inventories and
deferred tax assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is assessed by a comparison of the carrying amount of an asset with the
greater of its value in use and fair value less costs of disposal. Value in use is measured as the
present value of future cash flows expected to be generated by the asset. If the carrying
amount of an asset is deemed not recoverable, an impairment charge is recognized in the
amount by which the carrying amount of the asset exceeds the recoverable amount. The review
for impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
Impairment losses recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if and
to the extent there has been a change in the estimates used to determine the recoverable
amount. The loss is reversed only to the extent that the asset\u2019s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized. Reversals of impairment are recognized
in the Consolidated income statement.
",
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},
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Changes in accounting policy
New and amended standards adopted
Signify has applied the following amendments for the first time to its annual reporting period
commencing January 1, 2022:
\u2022Amendments to IFRS 3 - Reference to the Conceptual Framework.
\u2022Amendments to IAS 37 - Onerous Contracts \u2013 Costs of Fulfilling a Contract.
\u2022Annual improvements to IFRS 2018-2020.
Signify changed its accounting policies in accordance with the amendments listed above. The
changes did not have any significant impact on the amounts recognized in the prior period and
current period.
New and amended standards not yet adopted
Several new standards or amendments to existing standards have been published that are
mandatory for reporting periods commencing on or after January 1, 2023. These standards have
not been adopted early by Signify. The new standards or amendments are not expected to have
a material impact on Signify in the current or future reporting periods and on foreseeable future
transactions.
",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
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"value": "
Changes in accounting policy
New and amended standards adopted
Signify has applied the following amendments for the first time to its annual reporting period
commencing January 1, 2022:
\u2022Amendments to IFRS 3 - Reference to the Conceptual Framework.
\u2022Amendments to IAS 37 - Onerous Contracts \u2013 Costs of Fulfilling a Contract.
\u2022Annual improvements to IFRS 2018-2020.
Signify changed its accounting policies in accordance with the amendments listed above. The
changes did not have any significant impact on the amounts recognized in the prior period and
current period.
New and amended standards not yet adopted
Several new standards or amendments to existing standards have been published that are
mandatory for reporting periods commencing on or after January 1, 2023. These standards have
not been adopted early by Signify. The new standards or amendments are not expected to have
a material impact on Signify in the current or future reporting periods and on foreseeable future
transactions.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
2Significant accounting policies
General
The accounting policies set out below have been consistently applied by Signify to all periods
presented in these Consolidated financial statements.
Basis of consolidation
The Consolidated financial statements comprise the financial statements of Signify N.V. and all
subsidiaries it controls (i.e. when it is exposed or has rights to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over
the investee). The existence and effect of potential voting rights are considered when assessing
whether the Company controls another entity. Subsidiaries are fully consolidated from the date
that control commences until the date that control ceases. All intercompany balances and
transactions have been eliminated in the Consolidated financial statements.
Business combinations
Business combinations are accounted for using the acquisition method. Under the acquisition
method, the identifiable assets acquired, liabilities assumed and any non-controlling interest in
the acquiree are recognized at the acquisition date, which is the date on which control is
transferred to Signify. Signify measures goodwill at the acquisition date as:
\u2022The fair value of the consideration transferred plus.
\u2022The recognized amount of any non-controlling interest in the acquiree plus.
\u2022If the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree less.
\u2022The net recognized amount (generally fair value) of the identifiable assets acquired and
liabilities assumed.
Costs related to the acquisition, other than those associated with the issue of debt or equity
securities, are expensed as incurred. Non-controlling interests are measured at their
proportionate share of the acquiree\u2019s identifiable net assets at the date of acquisition.
Investments in associates
Signify\u2019s investments in associates are accounted for using the equity method and are initially
recognized at cost. Investments in associates are those entities in which Signify has significant
influence, but no control or joint control, over the financial and operating policies.
Foreign currency translation
Items included in the financial statements of each of the Signify entities are measured using the
currency of the primary economic environment in which the entity operates ('the\u00a0functional
currency').
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation when items are re-measured.
Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognized in the Consolidated statement of income, except when
deferred in Other comprehensive income as qualifying cash flow hedges. The exchange
differences are presented as part of Cost of sales, except for tax items and Financial income
and expense, which are recognized in the same line item as they relate to.
Upon consolidation, the assets and liabilities of non-euro entities, including goodwill and fair
value adjustments at the time of the acquisition, are translated into euros at the year-end rates
of exchange. The items of the statement of income of foreign activities are translated at the
rates which are approximating the rates at the dates of transactions. The resulting translation
differences of the net investments in foreign operations are recognized in Other comprehensive
income.
Revenue recognition
Sale of goods
Revenue from the sale of goods is recognized at the point in time when the customer obtains
control over the goods. For standard sale of products, control generally passes to the
customer when the product is delivered and accepted, depending on the delivery conditions and
incoterms. For products for which a right to return exists during a defined period, revenue is
recognized by considering the historical pattern of actual returns. Return policies are typically
based on customary return arrangements in local markets.
Sale of services
Signify accounts for cloud-enabled services, extended warranties and lifecycle services as
separate performance obligations. Control over these services is transferred over time and
revenue is recognized, in most cases, on a straight-line basis over the duration of the service
period.
Transaction price
The transaction price is the amount of consideration to which Signify expects to be entitled to in
exchange for transferring promised goods or services to a customer. The transaction price
excludes amounts collected on behalf of third parties, such as sales taxes.
For contracts with multiple performance obligations, the total consideration of the contract is
allocated to all distinct performance obligations in the contract based on their stand-alone
selling prices. Stand-alone selling prices are determined based on other stand-alone sales
transactions that are directly observable, when possible. However, observable prices are not
available for all performance obligations. If no direct observable prices are available, the stand-
alone selling price is normally based on the expected cost plus a margin approach.
The transaction price may be variable due to discounts, rebates or similar arrangements.
Revenue is only recognized for the part of the consideration for which it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. Judgment is
required in determining the probability and level of discounts and rebates that will be granted.
The estimate is updated throughout the term of the contract.
Signify does not adjust the transaction price for the effects of significant financing component
if, at contract inception, it is expected that the period between customer payment and the
transfer of goods or services is one year or less. This applies to most sales transactions.
Other
Payments made to customers for distinct goods or services are excluded from revenue
recognized and recorded as part of Selling, general and administrative expenses.
Signify may incur costs for obtaining a contract, including payments made to agents that depend
on winning the contract. Signify applies the practical expedient from IFRS 15, allowing the
incremental costs of obtaining a contract to be expensed if the associated amortization period
is 12 months or less. As a result, no amounts of contract costs are recognized in the balance
sheet.
Contract assets and liabilities
Contract assets mostly comprise of unbilled positions, where Signify has, partially or in full,
satisfied performance obligations but not yet billed the customer. These are recorded under
either Other current assets or Other non-current assets. The contract assets are transferred
to receivables when the rights become unconditional, which is mostly when the customer is
billed.
Contract liabilities consist of deferred income and payments received in advance and are
recorded under Other current liabilities and Other non-current liabilities. Deferred income
includes balances related to extended warranty, life-cycle services as well as other services
such as cloud-enabled services. Advances from customers mostly comprises payments received
in advance for projects, for which Signify still needs to satisfy (part of) the performance
obligations.
Income and expenses
Signify applies accrual accounting. This means that expenses are recognized when incurred and
Income is recognized when earned, irrespective of the actual cash flows.
Consideration received from customers for shipping and handling is recognized as Sales.
Shipping and handling expenses related to sales to third parties are generally recorded as
Selling, general and administrative expenses. When shipping and handling are distinct
performance obligations, then the related expenses are recorded as Cost of sales.
Advertising and promotion costs and costs related to the brand license fee are included in
Selling, general and administrative expenses.
Inventories
Inventories are stated at the lower of cost and net realizable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. The costs of conversion of inventories
include direct labor and fixed and variable production overheads, considering the stage of
completion and the normal capacity of production facilities. Costs of idle facility and abnormal
waste are expensed. The cost of inventories is determined using the first-in, first-out (FIFO)
method. Due to price erosion and technological developments, inventory valuation requires
forward-looking estimates on future sales levels, future price erosion and related expected
gross margin percentages. On each reporting date, management performs an analysis of net
realizable values and determines the lower of cost and net realizable value to measure its
inventories. The write-down is included in Cost of sales.
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
\u2022Financial assets at amortized cost: The business model for these instruments is to hold them
to collect contractual cash flows. This financial asset category mainly consists of Trade and
other receivables. After initial recognition these financial assets are measured at amortized
cost using the effective interest method, less loss allowance and net of discounts given or
agreed to, if the offset requirements are met.
\u2022Financial assets at fair value through profit or loss (FVTPL): The business model for these
instruments is to hold them for trading. This financial asset category mainly consists of
Signify's participations in Virtual Power Purchase Agreements and other Derivatives.
\u2022Financial assets at fair value through other comprehensive income (FVOCI): The business
model for these instruments is to hold them to collect contractual cash flows and to sell
them. Fair value gains and losses are subsequently not reclassified to profit or loss following
the derecognition of the investment. This category consists of minor equity investments.
\u2022All financial liabilities except for financial liabilities at fair value through profit and loss are
classified and subsequently measured at amortized cost. This financial liability category
primarily consists of Debt and Trade and other payables. Financial liabilities at fair value
through profit or loss mainly consists of Derivatives and Contingent consideration in a
business acquisition, to which IFRS 3 applies. Contingent consideration is subsequently
measured at fair value with changes recognized in profit or loss.
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized when:
\u2022The rights to receive cash flows from the asset have expired; or
\u2022Signify has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
\u2018pass-through\u2019 arrangement; and either (a) Signify has transferred substantially all the risks
and rewards of the asset, or (b) Signify has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When Signify has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, Signify continues to recognize the transferred
asset to the extent of its continuing involvement. In that case, Signify also recognizes an
associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that Signify has retained.
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
As soon as individual trade accounts receivable can no longer be collected in a normal course of
business and are expected to result in a loss, they are designated as doubtful trade accounts
receivable and valued at the expected collectible amounts. They are written off when they are
deemed to be uncollectable because of bankruptcy or other form of receivership at the
debtors. Any previously recognized expected loss is offset against the carrying amount of such
trade receivable and the difference is taken as a loss accounted for within Selling, general and
administrative expenses.
Impairment of other financial assets
Signify assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortized cost. Signify determines impairment amount based on the
three stages of credit risk deterioration. The criteria to pass on to the next stage of the credit
deterioration is established for individual financial assets or group of financial assets with similar
characteristics, considering credit risk profile of the counterparty, historical default data and
macroeconomic factors.
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis.
Income taxes
Income tax comprises current and deferred tax. Income tax is recognized in the Consolidated
statement of income except to the extent that it relates to items recognized directly within
equity or in Other comprehensive income. Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted or substantially-enacted at the reporting
date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are recognized, using the balance sheet method, for the
expected tax consequences of temporary differences between the carrying amounts of assets
and liabilities and the amounts used for taxation purposes. Deferred tax is not recognized for
the following temporary differences: the initial recognition of goodwill, the initial recognition of
assets and liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries to the
extent that they probably will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantially
enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized
simultaneously.
Deferred tax liabilities for withholding taxes are recognized for subsidiaries in situations where
the income is to be paid out as dividend in the foreseeable future and for undistributed earnings
of unconsolidated companies to the extent that these withholding taxes are not expected to be
refundable or deductible.
Changes in tax rates are reflected in the period when the change has been enacted or
substantially enacted by the reporting date.
Deferred tax assets
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against
which they can be utilized. The evaluation of the recoverability of deferred tax assets requires
judgment about the future taxable profitability of the legal entity holding the tax loss carry
forward. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in the countries where the deferred tax assets originated and during the
periods when the deferred tax assets become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. A lack of future taxable profits or taxable profits below the
level of current estimates, may cause deferred tax assets to be impaired.
The ultimate tax effects of transactions may be uncertain for a considerable period of time,
requiring management to estimate the related current and deferred tax treatments. In
assessing the uncertainty, Signify considers whether it is probable that a taxation authority will
accept or revise the uncertain tax treatment. Income tax payable include liabilities for uncertain
tax positions which are recognized when it is probable that tax will be due. To the extent
uncertain tax positions relate to deferred tax assets these are offset against each other. Actual
tax assessments in relation to these uncertain tax positions may significantly deviate from
estimates.
In determining the amount of current and deferred income tax, Signify takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. This
assessment relies on estimates and assumptions and may involve a series of judgments about
future events. New information may become available that causes Signify to change its judgment
regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the
income tax expense in the period that such a determination is made.
Provisions
Provisions are recognized if, as a result of a past event, Signify has a present legal or
constructive obligation, it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax discount rate that reflects current market assessments of
time value of money. The increase in the provision due to passage of time is recognized as
interest expense. Significant judgment is required in determining the amount and probability of
resources outflow and discount rates used to calculate the present value of this outflow. A
liability is recognized if timing and amount of the settlement can be reliably estimated.
The accounting and presentation for some of Signify\u2019s provisions is as follows:
\u2022Restructuring related provisions - The provision for restructuring relates to the estimated
costs of programs that are planned and controlled by management that materially change the
scope of our business or the manner in which it is conducted. A provision is recognized when
Signify has a detailed formal plan for the restructuring and has raised a valid expectation that
Signify will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it.
\u2022Environmental provisions - Measurement of liabilities associated with environmental
obligations is based on current legal and constructive requirements. Liabilities and expected
insurance recoveries, if any, are recorded separately. The carrying amount of environmental
provisions is regularly reviewed and adjusted for new facts and changes in law.
\u2022Product warranty - A provision for product warranty is made at the time of revenue
recognition and reflects the estimated costs of replacement and free-of-charge services
that will be incurred by Signify with respect to the products. The provision is based on
historical warranty data and a weighing of possible outcomes against their associated
probabilities.
\u2022Litigation provisions \u2013 In relation to legal claim provisions and settlements, the relevant
balances are transferred to Other liabilities at the point the amount and timing of cash flows
are no longer uncertain. Settlements which are agreed for amounts in excess of existing
provisions are reflected as payables.
\u2022Onerous contract provisions - Provisions are recognized for a contract if it is onerous. The
present obligation under the contract is measured and recognized as a provision. An onerous
contract is a contract under which the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received under it.
Guarantees
When the potential cash outflow is possible or remote and the risk covered by a guarantee is
not a financial risk, Signify applies off-balance sheet treatment to such guarantees. For
example, environmental remediation and legal proceedings. When the expectation of the cash
outflow becomes probable such guarantees become provisions, see guidance above.
When guarantees are covering credit risk or any other financial risk they are accounted for as
financial assets and liabilities.
Leases
Signify entered into contracts that conveys the right to use the identified asset and as such
Signify accounted for these contracts as a lessee.
Right-of-use assets
Signify recognizes right-of-use assets at the commencement date of the lease (i.e., the date
the underlying asset is available for use). Right-of-use assets are initially measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognized, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless Signify is reasonably certain to
obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use
assets are depreciated on a straight-line basis over the shorter of its estimated useful life and
the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, Signify recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include
(in-substance) fixed payments (less any lease incentives), variable lease payments that depend
on an index or a rate, and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option reasonably certain to be
exercised by Signify and payments of penalties for terminating a lease, if the lease term reflects
Signify exercising the option to terminate. In calculating the present value of lease payments,
Signify uses the incremental borrowing rate at the lease commencement date if the interest
rate implicit in the lease is not readily determinable. After the commencement date, the amount
of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the in-substance fixed lease payments or a
change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
Signify applies the short-term lease recognition exemption to its short-term leases for real
estate (i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are considered of low value. Lease
payments on short-term leases and leases of low-value assets are recognized as expense on a
straight-line basis over the lease term.
Significant judgment in determining the lease term of contracts with renewal options
Signify determines the lease term as the non-cancellable term of the lease, together with any
periods covered by an option to extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is reasonably certain not to be
exercised. When determining the lease term, Signify considers all relevant facts and
circumstances that create an economic incentive to exercise an extension option, or not to
exercise a termination option. These circumstances include Signify\u2019s strategic plans, the
industrial footprint of Signify and divisions and the importance of the site to Signify\u2019s operations.
Goodwill
The measurement of goodwill at initial recognition is described under accounting policy,
Business combinations, above. Goodwill is subsequently measured at cost, less accumulated
impairment losses. In respect of investments in associates, the carrying amount of goodwill is
included in the carrying amount of the investment, and an impairment loss on such investment is
allocated to the investment as a whole.
Intangible assets other than goodwill
The fair value of other intangible assets, mainly customer relations, brand names and technology
based intangibles acquired through business combinations is determined using a valuation
technique that estimates the fair value of an asset based on market participants' expectations
of the cash flows associated with that asset over its remaining useful life. Acquired finite-lived
intangible assets are amortized using the straight-line method over their estimated useful life.
The useful lives are evaluated annually. Intangible assets are initially capitalized at cost, with the
exception of intangible assets acquired as part of a business combination that are capitalized at
their acquisition-date fair value.
Expenditure on development activities, whereby research findings are applied to a plan or design
for the production of new or substantially improved products and processes, is capitalized as an
intangible asset if the product or process is technically and commercially feasible, cost can be
reliably measured, Signify has sufficient resources and the intention to complete development.
The development expenditure capitalized comprises all directly attributable costs (including the
cost of materials and direct labor). Other development expenditures and expenditures on
research activities are recognized in the Consolidated statement of income. Capitalized
development expenditure is stated at cost less accumulated amortization and impairment
losses. Amortization of capitalized development expenditure is charged to the Consolidated
statement of income on a straight- line basis over the estimated useful lives of the intangible
assets in Research and development expenses.
Amortization of other intangible assets is reported in Selling, general and administrative
expenses for brand names and customer relationships and in Cost of sales for technology-
based and other intangible assets.
The expected useful lives in years of intangible assets excluding goodwill are as follows:
Impairment of goodwill and intangible assets not yet ready for use
Goodwill and intangible assets not yet ready for use are not amortized but tested for impairment
annually and whenever impairment indicators require impairment testing. Signify performed and
completed annual impairment tests in the last quarter of the financial year. Judgment is required
when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for
use. These analyses are based on the estimation of the recoverable amount. The review for
impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to the
extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable
amount, which is the greater of its value in use and fair value less costs of disposal. Value in use
or fair value less costs of disposal is measured as the present value of future cash flows
expected to be generated by the asset via its use or sale with deduction of costs directly
associated with its use or sale.
Impairment of non-financial assets other than goodwill, intangible assets not
yet ready for use, inventories and deferred tax assets
Non-financial assets other than goodwill, intangible assets not yet ready for use, inventories and
deferred tax assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is assessed by a comparison of the carrying amount of an asset with the
greater of its value in use and fair value less costs of disposal. Value in use is measured as the
present value of future cash flows expected to be generated by the asset. If the carrying
amount of an asset is deemed not recoverable, an impairment charge is recognized in the
amount by which the carrying amount of the asset exceeds the recoverable amount. The review
for impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
Impairment losses recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if and
to the extent there has been a change in the estimates used to determine the recoverable
amount. The loss is reversed only to the extent that the asset\u2019s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized. Reversals of impairment are recognized
in the Consolidated income statement.
Pension and other employee benefits
Defined-benefit plans
Signify\u2019s retirement benefit obligation is calculated by an independent actuary, using the
projected unit credit method. This calculation is performed separately for each plan by
estimating the amount of the benefit that employees have earned in relation to their past
services. The measurement date for all defined benefit plans is December 31. For plans with a
relatively low defined-benefit obligation, Signify may decide to calculate the defined-benefit
obligation with a lower frequency. The liability recognized in the Consolidated statement of
financial position is the present value of these benefits at the end of the reporting period
(defined-benefit obligation) less the fair value of plan assets. The defined-benefit obligation is
determined by discounting the estimated future cash flows using a discount yield curve of high-
quality corporate bonds with durations matching the terms of the benefits.
The increase in the defined-benefit obligation due to the passage of time and the expected
return on plan assets, using the same interest rate as for the defined-benefit obligation, are
included in the pension costs. Interest on the net defined-benefit obligation is recognized in
Financing income and expenses in the Consolidated statement of income.
Past-service costs are recognized immediately in the Personnel costs in the Consolidated
statement of income. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity via other comprehensive
income in the period in which they arise.
When a plan is changed, settled or when a plan is curtailed, the resulting change in the defined-
benefit obligation that relates to past-service or the gain or loss on curtailment is recognized
immediately in the Consolidated statement of income. Signify recognizes gains and losses on the
settlement of a defined-benefit plan when the settlement occurs.
Signify presents all net defined-benefit post-employment obligations on one line within non-
current liabilities on the Consolidated statement of financial position.
Defined-contribution plans
Contributions to defined-contribution plans are recognized in the Consolidated income
statement in Personnel expenses as incurred.
Termination benefits
Termination benefits are payable when employment is terminated by Signify before the normal
retirement date, or whenever an employee accepts voluntary redundancy in exchange for these
benefits. Signify recognizes termination benefits when they are demonstrably committed to a
termination and when they have a detailed formal plan to terminate the employment of current
employees without possibility of withdrawal.
Other employee benefits
Signify\u2019s net obligation in respect of long-term employee benefits is the amount of future
benefit that employees have earned in return for their service in the current and prior periods,
such as jubilee entitlements. That benefit is discounted to determine its present value.
Remeasurements are recognized in the Consolidated statement of income in the period in which
they arise.
Short-term employee benefit obligations are measured on an undiscounted basis. Signify
recognizes a liability and an expense for bonuses and incentives based on a formula that takes
into consideration the profit attributable to Signify\u2019s shareholders after certain adjustments.
Cash and cash equivalents
Cash and cash equivalents include all cash balances and short-term highly liquid investments
with an original maturity of three months or less that are readily convertible into known amounts
of cash. Bank overdrafts form an integral part of Signify\u2019s cash management and often fluctuate
from being positive to overdrawn and are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
Assets held for sale
Non-current assets (disposal groups comprising assets and liabilities) that are expected to be
recovered primarily through sale rather than through continuing use are classified as held for
sale. Non-current assets held for sale are carried at the lower of carrying amount or fair value
less cost to sell. Comparatives in the balance sheet are not changed when a non-current asset
is classified as held-for-sale.
Hyperinflationary economies
When the economy of a country in which Signify operates is deemed hyperinflationary and the
functional currency of a Signify entity is the currency of that hyperinflationary economy, the
financial statements of such entity are adjusted so that they are stated in terms of the
measuring unit current at the end of the reporting period. This involves adjustment of historical
cost in purchasing power caused by inflation from the date of initial recognition to the balance
sheet date. The hyperinflation adjustment is recognized directly in equity. Comparative amounts
are not adjusted.
Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance
of shares are recognized as a deduction from equity. Dividends are recognized as a liability in the
period in which they are declared. The income tax consequences of dividends are recognized
when a liability to pay the dividend is recognized.
Treasury shares that are reacquired are recognized at cost, representing the market price on
the acquisition date, and deducted from equity until the shares are cancelled or reissued. When
reissued, shares are removed from treasury shares on a first-in, first-out (FIFO) basis. When
treasury shares are delivered under Signify\u2019s share plans, the difference between the market
price of the shares delivered and the cost is recorded in retained earnings, the market price is
recorded in share premium. Upon cancellation, treasury shares are deducted from the share
capital at their nominal value of EUR\u00a00.01 per share and retained earnings for the difference.
Costs including dividend withholding tax in connection with Signify\u2019s purchase of treasury shares
for capital reduction purposes are recorded in retained earnings.
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. The useful lives and residual values are evaluated annually. The
costs of property, plant and equipment comprise of all directly attributable costs (including the
cost of materials and direct labor). Government grants for assets are deducted from the cost of
the related asset.
Depreciation of property, plant and equipment, other than freehold land, is calculated using the
straight-line method taking into account the residual values and estimated useful lives and is
primarily included in Cost of sales. Freehold land is not depreciated. Gains and losses on the sale
of property, plant and equipment are included in Other business income. Costs related to repair
and maintenance activities are expensed in the period in which they are incurred unless leading
to an extension of the original lifetime of capacity.
The expected useful lives in years of property, plant and equipment are as follows:
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Machinery and installations | |
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currency').
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation when items are re-measured.
Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognized in the Consolidated statement of income, except when
deferred in Other comprehensive income as qualifying cash flow hedges. The exchange
differences are presented as part of Cost of sales, except for tax items and Financial income
and expense, which are recognized in the same line item as they relate to.
Upon consolidation, the assets and liabilities of non-euro entities, including goodwill and fair
value adjustments at the time of the acquisition, are translated into euros at the year-end rates
of exchange. The items of the statement of income of foreign activities are translated at the
rates which are approximating the rates at the dates of transactions. The resulting translation
differences of the net investments in foreign operations are recognized in Other comprehensive
income.
",
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Revenue recognition
Sale of goods
Revenue from the sale of goods is recognized at the point in time when the customer obtains
control over the goods. For standard sale of products, control generally passes to the
customer when the product is delivered and accepted, depending on the delivery conditions and
incoterms. For products for which a right to return exists during a defined period, revenue is
recognized by considering the historical pattern of actual returns. Return policies are typically
based on customary return arrangements in local markets.
Sale of services
Signify accounts for cloud-enabled services, extended warranties and lifecycle services as
separate performance obligations. Control over these services is transferred over time and
revenue is recognized, in most cases, on a straight-line basis over the duration of the service
period.
Transaction price
The transaction price is the amount of consideration to which Signify expects to be entitled to in
exchange for transferring promised goods or services to a customer. The transaction price
excludes amounts collected on behalf of third parties, such as sales taxes.
For contracts with multiple performance obligations, the total consideration of the contract is
allocated to all distinct performance obligations in the contract based on their stand-alone
selling prices. Stand-alone selling prices are determined based on other stand-alone sales
transactions that are directly observable, when possible. However, observable prices are not
available for all performance obligations. If no direct observable prices are available, the stand-
alone selling price is normally based on the expected cost plus a margin approach.
The transaction price may be variable due to discounts, rebates or similar arrangements.
Revenue is only recognized for the part of the consideration for which it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. Judgment is
required in determining the probability and level of discounts and rebates that will be granted.
The estimate is updated throughout the term of the contract.
Signify does not adjust the transaction price for the effects of significant financing component
if, at contract inception, it is expected that the period between customer payment and the
transfer of goods or services is one year or less. This applies to most sales transactions.
Other
Payments made to customers for distinct goods or services are excluded from revenue
recognized and recorded as part of Selling, general and administrative expenses.
Signify may incur costs for obtaining a contract, including payments made to agents that depend
on winning the contract. Signify applies the practical expedient from IFRS 15, allowing the
incremental costs of obtaining a contract to be expensed if the associated amortization period
is 12 months or less. As a result, no amounts of contract costs are recognized in the balance
sheet.
Contract assets and liabilities
Contract assets mostly comprise of unbilled positions, where Signify has, partially or in full,
satisfied performance obligations but not yet billed the customer. These are recorded under
either Other current assets or Other non-current assets. The contract assets are transferred
to receivables when the rights become unconditional, which is mostly when the customer is
billed.
Contract liabilities consist of deferred income and payments received in advance and are
recorded under Other current liabilities and Other non-current liabilities. Deferred income
includes balances related to extended warranty, life-cycle services as well as other services
such as cloud-enabled services. Advances from customers mostly comprises payments received
in advance for projects, for which Signify still needs to satisfy (part of) the performance
obligations.
",
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The transaction price may be variable due to discounts, rebates or similar arrangements.
Revenue is only recognized for the part of the consideration for which it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. Judgment is
required in determining the probability and level of discounts and rebates that will be granted.
The estimate is updated throughout the term of the contract.
",
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Income and expenses
Signify applies accrual accounting. This means that expenses are recognized when incurred and
Income is recognized when earned, irrespective of the actual cash flows.
Consideration received from customers for shipping and handling is recognized as Sales.
Shipping and handling expenses related to sales to third parties are generally recorded as
Selling, general and administrative expenses. When shipping and handling are distinct
performance obligations, then the related expenses are recorded as Cost of sales.
Advertising and promotion costs and costs related to the brand license fee are included in
Selling, general and administrative expenses.
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Inventories
Inventories are stated at the lower of cost and net realizable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. The costs of conversion of inventories
include direct labor and fixed and variable production overheads, considering the stage of
completion and the normal capacity of production facilities. Costs of idle facility and abnormal
waste are expensed. The cost of inventories is determined using the first-in, first-out (FIFO)
method. Due to price erosion and technological developments, inventory valuation requires
forward-looking estimates on future sales levels, future price erosion and related expected
gross margin percentages. On each reporting date, management performs an analysis of net
realizable values and determines the lower of cost and net realizable value to measure its
inventories. The write-down is included in Cost of sales.
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Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
\u2022Financial assets at amortized cost: The business model for these instruments is to hold them
to collect contractual cash flows. This financial asset category mainly consists of Trade and
other receivables. After initial recognition these financial assets are measured at amortized
cost using the effective interest method, less loss allowance and net of discounts given or
agreed to, if the offset requirements are met.
\u2022Financial assets at fair value through profit or loss (FVTPL): The business model for these
instruments is to hold them for trading. This financial asset category mainly consists of
Signify's participations in Virtual Power Purchase Agreements and other Derivatives.
\u2022Financial assets at fair value through other comprehensive income (FVOCI): The business
model for these instruments is to hold them to collect contractual cash flows and to sell
them. Fair value gains and losses are subsequently not reclassified to profit or loss following
the derecognition of the investment. This category consists of minor equity investments.
\u2022All financial liabilities except for financial liabilities at fair value through profit and loss are
classified and subsequently measured at amortized cost. This financial liability category
primarily consists of Debt and Trade and other payables. Financial liabilities at fair value
through profit or loss mainly consists of Derivatives and Contingent consideration in a
business acquisition, to which IFRS 3 applies. Contingent consideration is subsequently
measured at fair value with changes recognized in profit or loss.
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized when:
\u2022The rights to receive cash flows from the asset have expired; or
\u2022Signify has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
\u2018pass-through\u2019 arrangement; and either (a) Signify has transferred substantially all the risks
and rewards of the asset, or (b) Signify has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When Signify has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, Signify continues to recognize the transferred
asset to the extent of its continuing involvement. In that case, Signify also recognizes an
associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that Signify has retained.
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
As soon as individual trade accounts receivable can no longer be collected in a normal course of
business and are expected to result in a loss, they are designated as doubtful trade accounts
receivable and valued at the expected collectible amounts. They are written off when they are
deemed to be uncollectable because of bankruptcy or other form of receivership at the
debtors. Any previously recognized expected loss is offset against the carrying amount of such
trade receivable and the difference is taken as a loss accounted for within Selling, general and
administrative expenses.
Impairment of other financial assets
Signify assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortized cost. Signify determines impairment amount based on the
three stages of credit risk deterioration. The criteria to pass on to the next stage of the credit
deterioration is established for individual financial assets or group of financial assets with similar
characteristics, considering credit risk profile of the counterparty, historical default data and
macroeconomic factors.
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis.
Cash and cash equivalents
Cash and cash equivalents include all cash balances and short-term highly liquid investments
with an original maturity of three months or less that are readily convertible into known amounts
of cash. Bank overdrafts form an integral part of Signify\u2019s cash management and often fluctuate
from being positive to overdrawn and are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg1OTkxNQ_0f2501ba-01da-4244-a2d0-e6c5d1ac97ef": {
"value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
\u2022Financial assets at amortized cost: The business model for these instruments is to hold them
to collect contractual cash flows. This financial asset category mainly consists of Trade and
other receivables. After initial recognition these financial assets are measured at amortized
cost using the effective interest method, less loss allowance and net of discounts given or
agreed to, if the offset requirements are met.
\u2022Financial assets at fair value through profit or loss (FVTPL): The business model for these
instruments is to hold them for trading. This financial asset category mainly consists of
Signify's participations in Virtual Power Purchase Agreements and other Derivatives.
\u2022Financial assets at fair value through other comprehensive income (FVOCI): The business
model for these instruments is to hold them to collect contractual cash flows and to sell
them. Fair value gains and losses are subsequently not reclassified to profit or loss following
the derecognition of the investment. This category consists of minor equity investments.
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized when:
\u2022The rights to receive cash flows from the asset have expired; or
\u2022Signify has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
\u2018pass-through\u2019 arrangement; and either (a) Signify has transferred substantially all the risks
and rewards of the asset, or (b) Signify has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When Signify has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, Signify continues to recognize the transferred
asset to the extent of its continuing involvement. In that case, Signify also recognizes an
associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that Signify has retained.
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
As soon as individual trade accounts receivable can no longer be collected in a normal course of
business and are expected to result in a loss, they are designated as doubtful trade accounts
receivable and valued at the expected collectible amounts. They are written off when they are
deemed to be uncollectable because of bankruptcy or other form of receivership at the
debtors. Any previously recognized expected loss is offset against the carrying amount of such
trade receivable and the difference is taken as a loss accounted for within Selling, general and
administrative expenses.
Impairment of other financial assets
Signify assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortized cost. Signify determines impairment amount based on the
three stages of credit risk deterioration. The criteria to pass on to the next stage of the credit
deterioration is established for individual financial assets or group of financial assets with similar
characteristics, considering credit risk profile of the counterparty, historical default data and
macroeconomic factors.
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis.
Cash and cash equivalents
Cash and cash equivalents include all cash balances and short-term highly liquid investments
with an original maturity of three months or less that are readily convertible into known amounts
of cash. Bank overdrafts form an integral part of Signify\u2019s cash management and often fluctuate
from being positive to overdrawn and are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA0MA_77a1c064-25a5-46c4-98d6-648165183453": {
"value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
\u2022Financial assets at amortized cost: The business model for these instruments is to hold them
to collect contractual cash flows. This financial asset category mainly consists of Trade and
other receivables. After initial recognition these financial assets are measured at amortized
cost using the effective interest method, less loss allowance and net of discounts given or
agreed to, if the offset requirements are met.
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
As soon as individual trade accounts receivable can no longer be collected in a normal course of
business and are expected to result in a loss, they are designated as doubtful trade accounts
receivable and valued at the expected collectible amounts. They are written off when they are
deemed to be uncollectable because of bankruptcy or other form of receivership at the
debtors. Any previously recognized expected loss is offset against the carrying amount of such
trade receivable and the difference is taken as a loss accounted for within Selling, general and
administrative expenses.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA0MQ_dd620b8b-6d37-4baa-94f6-f71cef56a589": {
"value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
Financial assets at fair value through profit or loss (FVTPL): The business model for these
instruments is to hold them for trading. This financial asset category mainly consists of
Signify's participations in Virtual Power Purchase Agreements and other Derivatives.
All financial liabilities except for financial liabilities at fair value through profit and loss are
classified and subsequently measured at amortized cost. This financial liability category
primarily consists of Debt and Trade and other payables. Financial liabilities at fair value
through profit or loss mainly consists of Derivatives and Contingent consideration in a
business acquisition, to which IFRS 3 applies. Contingent consideration is subsequently
measured at fair value with changes recognized in profit or loss.
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized when:
\u2022The rights to receive cash flows from the asset have expired; or
\u2022Signify has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
\u2018pass-through\u2019 arrangement; and either (a) Signify has transferred substantially all the risks
and rewards of the asset, or (b) Signify has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When Signify has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, Signify continues to recognize the transferred
asset to the extent of its continuing involvement. In that case, Signify also recognizes an
associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that Signify has retained.
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA0MQ_f4a03dbe-caa5-4bf3-9f53-be3164242246": {
"value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
All financial liabilities except for financial liabilities at fair value through profit and loss are
classified and subsequently measured at amortized cost. This financial liability category
primarily consists of Debt and Trade and other payables. Financial liabilities at fair value
through profit or loss mainly consists of Derivatives and Contingent consideration in a
business acquisition, to which IFRS 3 applies. Contingent consideration is subsequently
measured at fair value with changes recognized in profit or loss
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA2Mg_133e51a7-4c5f-4621-bae6-6e610f4742a0": {
"value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
All financial liabilities except for financial liabilities at fair value through profit and loss are
classified and subsequently measured at amortized cost. This financial liability category
primarily consists of Debt and Trade and other payables. Financial liabilities at fair value
through profit or loss mainly consists of Derivatives and Contingent consideration in a
business acquisition, to which IFRS 3 applies. Contingent consideration is subsequently
measured at fair value with changes recognized in profit or loss.
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized when:
\u2022The rights to receive cash flows from the asset have expired; or
\u2022Signify has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
\u2018pass-through\u2019 arrangement; and either (a) Signify has transferred substantially all the risks
and rewards of the asset, or (b) Signify has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When Signify has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, Signify continues to recognize the transferred
asset to the extent of its continuing involvement. In that case, Signify also recognizes an
associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that Signify has retained.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA2Mg_a1c4cddb-088f-477a-a707-b88af61ad164": {
"value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes party to a contract that is a
financial instrument. Regular way purchases and sales of financial instruments are accounted for
at the trade date. Initial measurement of financial assets and liabilities is at fair value. Dividend
income is recognized when declared.
Financial assets arising from insurance contracts are only recognized when it is virtually certain
that reimbursement will be received if Signify settles the obligation. Signify recognizes the
reimbursement as a separate financial asset.
Classification and measurement
The classification and subsequent measurement of financial assets and liabilities depends on
Signify\u2019s business model for managing the financial assets and liabilities, the contractual terms of
the cash flows and the solely payments of principal and interest (SPPI) test. Signify performs the
analysis on an instrument-by-instrument basis. Financial assets and liabilities are classified into
one of the following categories:
All financial liabilities except for financial liabilities at fair value through profit and loss are
classified and subsequently measured at amortized cost. This financial liability category
primarily consists of Debt and Trade and other payables. Financial liabilities at fair value
through profit or loss mainly consists of Derivatives and Contingent consideration in a
business acquisition, to which IFRS 3 applies. Contingent consideration is subsequently
measured at fair value with changes recognized in profit or loss.
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized when:
\u2022The rights to receive cash flows from the asset have expired; or
\u2022Signify has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
\u2018pass-through\u2019 arrangement; and either (a) Signify has transferred substantially all the risks
and rewards of the asset, or (b) Signify has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When Signify has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, Signify continues to recognize the transferred
asset to the extent of its continuing involvement. In that case, Signify also recognizes an
associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that Signify has retained.
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MTI_42cf18c4-1439-466f-baaa-a76929772e58": {
"value": "
Netting of financial assets and liabilities
Signify presents financial assets and financial liabilities on a gross basis as separate line items in
the Consolidated statement of financial position, unless the offset criteria are met.
The offsetting criteria are met if Signify has a legal right to offset financial assets with financial
liabilities and if Signify intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously. To meet the requirement, the right of set-off should be available
today and not contingent on a future event and it should be legally enforceable for all
counterparties in a normal course of business, as well as in the event of default, insolvency or
bankruptcy.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MTM_7eee9ec3-c897-4819-b361-75740bcc0380": {
"value": "
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized when:
\u2022The rights to receive cash flows from the asset have expired; or
\u2022Signify has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
\u2018pass-through\u2019 arrangement; and either (a) Signify has transferred substantially all the risks
and rewards of the asset, or (b) Signify has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When Signify has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, Signify continues to recognize the transferred
asset to the extent of its continuing involvement. In that case, Signify also recognizes an
associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that Signify has retained.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MTQ_3819b92e-5c08-4f93-b8b8-d8a3c6019202": {
"value": "
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
As soon as individual trade accounts receivable can no longer be collected in a normal course of
business and are expected to result in a loss, they are designated as doubtful trade accounts
receivable and valued at the expected collectible amounts. They are written off when they are
deemed to be uncollectable because of bankruptcy or other form of receivership at the
debtors. Any previously recognized expected loss is offset against the carrying amount of such
trade receivable and the difference is taken as a loss accounted for within Selling, general and
administrative expenses.
Impairment of other financial assets
Signify assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortized cost. Signify determines impairment amount based on the
three stages of credit risk deterioration. The criteria to pass on to the next stage of the credit
deterioration is established for individual financial assets or group of financial assets with similar
characteristics, considering credit risk profile of the counterparty, historical default data and
macroeconomic factors.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MTQ_a4e5b2c0-9349-499c-9c00-5933f0267416": {
"value": "
Impairment of trade receivables and contract assets
Signify estimates lifetime expected loss allowance for all Trade receivables and Contract assets
via calculating the expected credit losses. Trade receivables and contract assets are grouped
based on shared credit risk characteristics and the days past due whereby the lifetime expected
credit loss on the Trade receivables is recognized based on a matrix model calculated per
country, which utilizes historical recoverability data and default probability per country.
As soon as individual trade accounts receivable can no longer be collected in a normal course of
business and are expected to result in a loss, they are designated as doubtful trade accounts
receivable and valued at the expected collectible amounts. They are written off when they are
deemed to be uncollectable because of bankruptcy or other form of receivership at the
debtors. Any previously recognized expected loss is offset against the carrying amount of such
trade receivable and the difference is taken as a loss accounted for within Selling, general and
administrative expenses.
Impairment of other financial assets
Signify assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortized cost. Signify determines impairment amount based on the
three stages of credit risk deterioration. The criteria to pass on to the next stage of the credit
deterioration is established for individual financial assets or group of financial assets with similar
characteristics, considering credit risk profile of the counterparty, historical default data and
macroeconomic factors.
Impairment of goodwill and intangible assets not yet ready for use
Goodwill and intangible assets not yet ready for use are not amortized but tested for impairment
annually and whenever impairment indicators require impairment testing. Signify performed and
completed annual impairment tests in the last quarter of the financial year. Judgment is required
when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for
use. These analyses are based on the estimation of the recoverable amount. The review for
impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to the
extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable
amount, which is the greater of its value in use and fair value less costs of disposal. Value in use
or fair value less costs of disposal is measured as the present value of future cash flows
expected to be generated by the asset via its use or sale with deduction of costs directly
associated with its use or sale.
Impairment of non-financial assets other than goodwill, intangible assets not
yet ready for use, inventories and deferred tax assets
Non-financial assets other than goodwill, intangible assets not yet ready for use, inventories and
deferred tax assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is assessed by a comparison of the carrying amount of an asset with the
greater of its value in use and fair value less costs of disposal. Value in use is measured as the
present value of future cash flows expected to be generated by the asset. If the carrying
amount of an asset is deemed not recoverable, an impairment charge is recognized in the
amount by which the carrying amount of the asset exceeds the recoverable amount. The review
for impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
Impairment losses recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if and
to the extent there has been a change in the estimates used to determine the recoverable
amount. The loss is reversed only to the extent that the asset\u2019s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized. Reversals of impairment are recognized
in the Consolidated income statement.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MTU_51250a3d-6d21-4fb2-a718-42354a9dc6cf": {
"value": "
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg2MTEyMg_ead97347-70d0-43d7-8bfa-8292d4cd5562": {
"value": "
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory",
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"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
Derivatives and hedge accounting
At inception of the hedge relationship, Signify documents the economic relationship between
hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. Signify
documents its risk management objective and strategy for undertaking its hedge transactions.
For foreign currency forwards, Signify designates the spot component of the change in fair
value in cash flow hedge relationships. The spot component is determined with reference to the
relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as forward points. It is discounted, where material.
Changes in the fair value related to forward points are continuously recognized in the statement
of profit or loss.
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
Signify designates the full instrument in the hedge relationship. The result of hedging of the
translation risk, using net investment hedges is recognized in the Currency translation
differences within equity, as can be seen in the Consolidated statement of comprehensive
income as long as the hedge is effective.
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Signify monitors that the economic relationship between the hedged item and hedging
instrument and hedge ratio is the same as the one Signify uses for the risk management
purposes. A prospective effectiveness test is performed to prove that the hedge is effective.
For the prospective effectiveness test, Signify utilizes the dollar offset method.
If the hedge ratio for risk management purposes is no longer optimal due to the different timing
or amount of the underlying transaction, but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting, Signify performs re-balancing of the
hedge relationship by adjusting either the volume of the hedging instrument or the volume of
the hedged item, so that the hedge ratio aligns with the ratio used for the risk management
purposes. Gains and losses that were accumulated in equity related to an ineffective portion of
hedge, Signify records immediately in the Consolidated statement of income when such
ineffectiveness occurs.
The derivatives related to transactions are, for hedge accounting purposes, split into hedges of
on-balance-sheet accounts receivable/payable and forecasted sales and purchases. Gains or
losses arising from changes in fair value of derivatives are recognized within the Cost of sales in
the Consolidated statement of income, except for derivatives that are effective and qualify for
cash flow hedge accounting which are recorded in Other comprehensive income until the
Consolidated statement of income is affected by the variability in cash flows of the designated
hedged item. Changes in the fair value of hedges related to intercompany loans and deposits are
recognized within Financial income and expenses in the Consolidated statement of income.
The derivatives used by Signify can be subject to master netting and set-off agreements with
financial counterparties. In case of certain termination events, under the terms of these Master
Agreements, Signify can terminate the outstanding transactions and aggregate their positive
and negative values to arrive at a single net termination sum (or close-out amount). This
contractual right is, among others, subject to the following:
\u2022The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.
\u2022The right applies on a bilateral basis",
"dimensions": {
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA0Mw_a29ca868-6561-49f0-9771-d217c24257d7": {
"value": "Derivatives and hedge accounting
Signify measures all derivative financial instruments at fair value derived from market prices of
the instruments or calculated as the present value of the estimated future cash flows based on
observable interest yield curves, basis spread and foreign exchange rates. These calculations
are tested for reasonableness by comparing the outcome of the internal valuation with the
valuation received from the counterparty.
Intangible assets other than goodwill
The fair value of other intangible assets, mainly customer relations, brand names and technology
based intangibles acquired through business combinations is determined using a valuation
technique that estimates the fair value of an asset based on market participants' expectations
of the cash flows associated with that asset over its remaining useful life. Acquired finite-lived
intangible assets are amortized using the straight-line method over their estimated useful life.
The useful lives are evaluated annually. Intangible assets are initially capitalized at cost, with the
exception of intangible assets acquired as part of a business combination that are capitalized at
their acquisition-date fair value.
29Financial risk managementThe estimated fair value of financial instruments has been determined by Signify using available
market information and appropriate valuation methods. The estimates presented are not
necessarily indicative of the amounts that will ultimately be realized by Signify upon maturity or
disposal. The use of market assumptions and/or estimation methods may have a material effect
on the estimated fair value amounts.
The following hierarchy is applied to classify the financial assets and liabilities:
Level 1
Instruments included in Level 1 are comprised primarily of listed Eurobonds classified as financial
liabilities at amortized cost. The fair value of financial instruments traded in active markets is
based on quoted market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm\u2019s length basis.
Level 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
Income taxes
Income tax comprises current and deferred tax. Income tax is recognized in the Consolidated
statement of income except to the extent that it relates to items recognized directly within
equity or in Other comprehensive income. Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted or substantially-enacted at the reporting
date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are recognized, using the balance sheet method, for the
expected tax consequences of temporary differences between the carrying amounts of assets
and liabilities and the amounts used for taxation purposes. Deferred tax is not recognized for
the following temporary differences: the initial recognition of goodwill, the initial recognition of
assets and liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries to the
extent that they probably will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantially
enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized
simultaneously.
Deferred tax liabilities for withholding taxes are recognized for subsidiaries in situations where
the income is to be paid out as dividend in the foreseeable future and for undistributed earnings
of unconsolidated companies to the extent that these withholding taxes are not expected to be
refundable or deductible.
Changes in tax rates are reflected in the period when the change has been enacted or
substantially enacted by the reporting date.
Deferred tax assets
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against
which they can be utilized. The evaluation of the recoverability of deferred tax assets requires
judgment about the future taxable profitability of the legal entity holding the tax loss carry
forward. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in the countries where the deferred tax assets originated and during the
periods when the deferred tax assets become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. A lack of future taxable profits or taxable profits below the
level of current estimates, may cause deferred tax assets to be impaired.
The ultimate tax effects of transactions may be uncertain for a considerable period of time,
requiring management to estimate the related current and deferred tax treatments. In
assessing the uncertainty, Signify considers whether it is probable that a taxation authority will
accept or revise the uncertain tax treatment. Income tax payable include liabilities for uncertain
tax positions which are recognized when it is probable that tax will be due. To the extent
uncertain tax positions relate to deferred tax assets these are offset against each other. Actual
tax assessments in relation to these uncertain tax positions may significantly deviate from
estimates.
In determining the amount of current and deferred income tax, Signify takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. This
assessment relies on estimates and assumptions and may involve a series of judgments about
future events. New information may become available that causes Signify to change its judgment
regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the
income tax expense in the period that such a determination is made.
",
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}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA3Ng_3af4e4ce-6b28-4b2b-ad38-3b52d7492550": {
"value": "Income taxes
Deferred tax assets and liabilities are recognized, using the balance sheet method, for the
expected tax consequences of temporary differences between the carrying amounts of assets
and liabilities and the amounts used for taxation purposes. Deferred tax is not recognized for
the following temporary differences: the initial recognition of goodwill, the initial recognition of
assets and liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries to the
extent that they probably will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantially
enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized
simultaneously.
Deferred tax liabilities for withholding taxes are recognized for subsidiaries in situations where
the income is to be paid out as dividend in the foreseeable future and for undistributed earnings
of unconsolidated companies to the extent that these withholding taxes are not expected to be
refundable or deductible.
Changes in tax rates are reflected in the period when the change has been enacted or
substantially enacted by the reporting date.
Deferred tax assets
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against
which they can be utilized. The evaluation of the recoverability of deferred tax assets requires
judgment about the future taxable profitability of the legal entity holding the tax loss carry
forward. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in the countries where the deferred tax assets originated and during the
periods when the deferred tax assets become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. A lack of future taxable profits or taxable profits below the
level of current estimates, may cause deferred tax assets to be impaired.
The ultimate tax effects of transactions may be uncertain for a considerable period of time,
requiring management to estimate the related current and deferred tax treatments. In
assessing the uncertainty, Signify considers whether it is probable that a taxation authority will
accept or revise the uncertain tax treatment. Income tax payable include liabilities for uncertain
tax positions which are recognized when it is probable that tax will be due. To the extent
uncertain tax positions relate to deferred tax assets these are offset against each other. Actual
tax assessments in relation to these uncertain tax positions may significantly deviate from
estimates.
In determining the amount of current and deferred income tax, Signify takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. This
assessment relies on estimates and assumptions and may involve a series of judgments about
future events. New information may become available that causes Signify to change its judgment
regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the
income tax expense in the period that such a determination is made.
",
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}
},
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"value": "
Provisions
Provisions are recognized if, as a result of a past event, Signify has a present legal or
constructive obligation, it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax discount rate that reflects current market assessments of
time value of money. The increase in the provision due to passage of time is recognized as
interest expense. Significant judgment is required in determining the amount and probability of
resources outflow and discount rates used to calculate the present value of this outflow. A
liability is recognized if timing and amount of the settlement can be reliably estimated.
The accounting and presentation for some of Signify\u2019s provisions is as follows:
\u2022Restructuring related provisions - The provision for restructuring relates to the estimated
costs of programs that are planned and controlled by management that materially change the
scope of our business or the manner in which it is conducted. A provision is recognized when
Signify has a detailed formal plan for the restructuring and has raised a valid expectation that
Signify will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it.
\u2022Environmental provisions - Measurement of liabilities associated with environmental
obligations is based on current legal and constructive requirements. Liabilities and expected
insurance recoveries, if any, are recorded separately. The carrying amount of environmental
provisions is regularly reviewed and adjusted for new facts and changes in law.
\u2022Product warranty - A provision for product warranty is made at the time of revenue
recognition and reflects the estimated costs of replacement and free-of-charge services
that will be incurred by Signify with respect to the products. The provision is based on
historical warranty data and a weighing of possible outcomes against their associated
probabilities.
\u2022Litigation provisions \u2013 In relation to legal claim provisions and settlements, the relevant
balances are transferred to Other liabilities at the point the amount and timing of cash flows
are no longer uncertain. Settlements which are agreed for amounts in excess of existing
provisions are reflected as payables.
\u2022Onerous contract provisions - Provisions are recognized for a contract if it is onerous. The
present obligation under the contract is measured and recognized as a provision. An onerous
contract is a contract under which the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received under it.
Pension and other employee benefits
Defined-benefit plans
Signify\u2019s retirement benefit obligation is calculated by an independent actuary, using the
projected unit credit method. This calculation is performed separately for each plan by
estimating the amount of the benefit that employees have earned in relation to their past
services. The measurement date for all defined benefit plans is December 31. For plans with a
relatively low defined-benefit obligation, Signify may decide to calculate the defined-benefit
obligation with a lower frequency. The liability recognized in the Consolidated statement of
financial position is the present value of these benefits at the end of the reporting period
(defined-benefit obligation) less the fair value of plan assets. The defined-benefit obligation is
determined by discounting the estimated future cash flows using a discount yield curve of high-
quality corporate bonds with durations matching the terms of the benefits.
The increase in the defined-benefit obligation due to the passage of time and the expected
return on plan assets, using the same interest rate as for the defined-benefit obligation, are
included in the pension costs. Interest on the net defined-benefit obligation is recognized in
Financing income and expenses in the Consolidated statement of income.
Past-service costs are recognized immediately in the Personnel costs in the Consolidated
statement of income. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity via other comprehensive
income in the period in which they arise.
When a plan is changed, settled or when a plan is curtailed, the resulting change in the defined-
benefit obligation that relates to past-service or the gain or loss on curtailment is recognized
immediately in the Consolidated statement of income. Signify recognizes gains and losses on the
settlement of a defined-benefit plan when the settlement occurs.
Signify presents all net defined-benefit post-employment obligations on one line within non-
current liabilities on the Consolidated statement of financial position.
",
"dimensions": {
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"value": "
Guarantees
When the potential cash outflow is possible or remote and the risk covered by a guarantee is
not a financial risk, Signify applies off-balance sheet treatment to such guarantees. For
example, environmental remediation and legal proceedings. When the expectation of the cash
outflow becomes probable such guarantees become provisions, see guidance above.
When guarantees are covering credit risk or any other financial risk they are accounted for as
financial assets and liabilities.
",
"dimensions": {
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"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
Leases
Signify entered into contracts that conveys the right to use the identified asset and as such
Signify accounted for these contracts as a lessee.
Right-of-use assets
Signify recognizes right-of-use assets at the commencement date of the lease (i.e., the date
the underlying asset is available for use). Right-of-use assets are initially measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognized, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless Signify is reasonably certain to
obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use
assets are depreciated on a straight-line basis over the shorter of its estimated useful life and
the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, Signify recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include
(in-substance) fixed payments (less any lease incentives), variable lease payments that depend
on an index or a rate, and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option reasonably certain to be
exercised by Signify and payments of penalties for terminating a lease, if the lease term reflects
Signify exercising the option to terminate. In calculating the present value of lease payments,
Signify uses the incremental borrowing rate at the lease commencement date if the interest
rate implicit in the lease is not readily determinable. After the commencement date, the amount
of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the in-substance fixed lease payments or a
change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
Signify applies the short-term lease recognition exemption to its short-term leases for real
estate (i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are considered of low value. Lease
payments on short-term leases and leases of low-value assets are recognized as expense on a
straight-line basis over the lease term.
Significant judgment in determining the lease term of contracts with renewal options
Signify determines the lease term as the non-cancellable term of the lease, together with any
periods covered by an option to extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is reasonably certain not to be
exercised. When determining the lease term, Signify considers all relevant facts and
circumstances that create an economic incentive to exercise an extension option, or not to
exercise a termination option. These circumstances include Signify\u2019s strategic plans, the
industrial footprint of Signify and divisions and the importance of the site to Signify\u2019s operations.
",
"dimensions": {
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"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MjI_0fcb26ce-e3a8-4eb1-8680-37229fad16a6": {
"value": "
Intangible assets other than goodwill
The fair value of other intangible assets, mainly customer relations, brand names and technology
based intangibles acquired through business combinations is determined using a valuation
technique that estimates the fair value of an asset based on market participants' expectations
of the cash flows associated with that asset over its remaining useful life. Acquired finite-lived
intangible assets are amortized using the straight-line method over their estimated useful life.
The useful lives are evaluated annually. Intangible assets are initially capitalized at cost, with the
exception of intangible assets acquired as part of a business combination that are capitalized at
their acquisition-date fair value.
Expenditure on development activities, whereby research findings are applied to a plan or design
for the production of new or substantially improved products and processes, is capitalized as an
intangible asset if the product or process is technically and commercially feasible, cost can be
reliably measured, Signify has sufficient resources and the intention to complete development.
The development expenditure capitalized comprises all directly attributable costs (including the
cost of materials and direct labor). Other development expenditures and expenditures on
research activities are recognized in the Consolidated statement of income. Capitalized
development expenditure is stated at cost less accumulated amortization and impairment
losses. Amortization of capitalized development expenditure is charged to the Consolidated
statement of income on a straight- line basis over the estimated useful lives of the intangible
assets in Research and development expenses.
Amortization of other intangible assets is reported in Selling, general and administrative
expenses for brand names and customer relationships and in Cost of sales for technology-
based and other intangible assets.
The expected useful lives in years of intangible assets excluding goodwill are as follows:
Impairment of goodwill and intangible assets not yet ready for use
Goodwill and intangible assets not yet ready for use are not amortized but tested for impairment
annually and whenever impairment indicators require impairment testing. Signify performed and
completed annual impairment tests in the last quarter of the financial year. Judgment is required
when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for
use. These analyses are based on the estimation of the recoverable amount. The review for
impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to the
extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable
amount, which is the greater of its value in use and fair value less costs of disposal. Value in use
or fair value less costs of disposal is measured as the present value of future cash flows
expected to be generated by the asset via its use or sale with deduction of costs directly
associated with its use or sale.
Impairment of non-financial assets other than goodwill, intangible assets not
yet ready for use, inventories and deferred tax assets
Non-financial assets other than goodwill, intangible assets not yet ready for use, inventories and
deferred tax assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is assessed by a comparison of the carrying amount of an asset with the
greater of its value in use and fair value less costs of disposal. Value in use is measured as the
present value of future cash flows expected to be generated by the asset. If the carrying
amount of an asset is deemed not recoverable, an impairment charge is recognized in the
amount by which the carrying amount of the asset exceeds the recoverable amount. The review
for impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
Impairment losses recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if and
to the extent there has been a change in the estimates used to determine the recoverable
amount. The loss is reversed only to the extent that the asset\u2019s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized. Reversals of impairment are recognized
in the Consolidated income statement.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA2NA_39b19b20-4c26-4c9f-ad19-2d7e45805541": {
"value": "Intangible assets other than goodwill
Expenditure on development activities, whereby research findings are applied to a plan or design
for the production of new or substantially improved products and processes, is capitalized as an
intangible asset if the product or process is technically and commercially feasible, cost can be
reliably measured, Signify has sufficient resources and the intention to complete development.
The development expenditure capitalized comprises all directly attributable costs (including the
cost of materials and direct labor). Other development expenditures and expenditures on
research activities are recognized in the Consolidated statement of income. Capitalized
development expenditure is stated at cost less accumulated amortization and impairment
losses. Amortization of capitalized development expenditure is charged to the Consolidated
statement of income on a straight- line basis over the estimated useful lives of the intangible
assets in Research and development expenses.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzIxOTkwMjMzMDE1NTY_a31b04c1-7ea7-4bff-a3c6-f0dda6914186": {
"value": "
Impairment of goodwill and intangible assets not yet ready for use
Goodwill and intangible assets not yet ready for use are not amortized but tested for impairment
annually and whenever impairment indicators require impairment testing. Signify performed and
completed annual impairment tests in the last quarter of the financial year. Judgment is required
when analyzing impairments triggers and tests of goodwill and intangible assets not yet ready for
use. These analyses are based on the estimation of the recoverable amount. The review for
impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to the
extent that the carrying amount of a cash-generating unit exceeds the unit\u2019s recoverable
amount, which is the greater of its value in use and fair value less costs of disposal. Value in use
or fair value less costs of disposal is measured as the present value of future cash flows
expected to be generated by the asset via its use or sale with deduction of costs directly
associated with its use or sale.
Impairment of non-financial assets other than goodwill, intangible assets not
yet ready for use, inventories and deferred tax assets
Non-financial assets other than goodwill, intangible assets not yet ready for use, inventories and
deferred tax assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is assessed by a comparison of the carrying amount of an asset with the
greater of its value in use and fair value less costs of disposal. Value in use is measured as the
present value of future cash flows expected to be generated by the asset. If the carrying
amount of an asset is deemed not recoverable, an impairment charge is recognized in the
amount by which the carrying amount of the asset exceeds the recoverable amount. The review
for impairment is carried out at the level where cash flows occur that are independent of other
cash flows.
Impairment losses recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if and
to the extent there has been a change in the estimates used to determine the recoverable
amount. The loss is reversed only to the extent that the asset\u2019s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized. Reversals of impairment are recognized
in the Consolidated income statement",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0Mjc_02ff2de7-4a44-4dea-a9c6-440287856306": {
"value": "
Pension and other employee benefits
Defined-benefit plans
Signify\u2019s retirement benefit obligation is calculated by an independent actuary, using the
projected unit credit method. This calculation is performed separately for each plan by
estimating the amount of the benefit that employees have earned in relation to their past
services. The measurement date for all defined benefit plans is December 31. For plans with a
relatively low defined-benefit obligation, Signify may decide to calculate the defined-benefit
obligation with a lower frequency. The liability recognized in the Consolidated statement of
financial position is the present value of these benefits at the end of the reporting period
(defined-benefit obligation) less the fair value of plan assets. The defined-benefit obligation is
determined by discounting the estimated future cash flows using a discount yield curve of high-
quality corporate bonds with durations matching the terms of the benefits.
The increase in the defined-benefit obligation due to the passage of time and the expected
return on plan assets, using the same interest rate as for the defined-benefit obligation, are
included in the pension costs. Interest on the net defined-benefit obligation is recognized in
Financing income and expenses in the Consolidated statement of income.
Past-service costs are recognized immediately in the Personnel costs in the Consolidated
statement of income. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity via other comprehensive
income in the period in which they arise.
When a plan is changed, settled or when a plan is curtailed, the resulting change in the defined-
benefit obligation that relates to past-service or the gain or loss on curtailment is recognized
immediately in the Consolidated statement of income. Signify recognizes gains and losses on the
settlement of a defined-benefit plan when the settlement occurs.
Signify presents all net defined-benefit post-employment obligations on one line within non-
current liabilities on the Consolidated statement of financial position.
Defined-contribution plans
Contributions to defined-contribution plans are recognized in the Consolidated income
statement in Personnel expenses as incurred.
Termination benefits
Termination benefits are payable when employment is terminated by Signify before the normal
retirement date, or whenever an employee accepts voluntary redundancy in exchange for these
benefits. Signify recognizes termination benefits when they are demonstrably committed to a
termination and when they have a detailed formal plan to terminate the employment of current
employees without possibility of withdrawal.
Other employee benefits
Signify\u2019s net obligation in respect of long-term employee benefits is the amount of future
benefit that employees have earned in return for their service in the current and prior periods,
such as jubilee entitlements. That benefit is discounted to determine its present value.
Remeasurements are recognized in the Consolidated statement of income in the period in which
they arise.
Short-term employee benefit obligations are measured on an undiscounted basis. Signify
recognizes a liability and an expense for bonuses and incentives based on a formula that takes
into consideration the profit attributable to Signify\u2019s shareholders after certain adjustments.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MzM_d5606c28-924b-4a4b-8040-cec0a74ef541": {
"value": "
Termination benefits
Termination benefits are payable when employment is terminated by Signify before the normal
retirement date, or whenever an employee accepts voluntary redundancy in exchange for these
benefits. Signify recognizes termination benefits when they are demonstrably committed to a
termination and when they have a detailed formal plan to terminate the employment of current
employees without possibility of withdrawal.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzIxOTkwMjMzMDE1NTU_ad787cd4-c6d4-484c-9d80-288852498d85": {
"value": "
Cash and cash equivalents
Cash and cash equivalents include all cash balances and short-term highly liquid investments
with an original maturity of three months or less that are readily convertible into known amounts
of cash. Bank overdrafts form an integral part of Signify\u2019s cash management and often fluctuate
from being positive to overdrawn and are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0Mjk_6aa9c5a3-2b5a-4e57-9d96-6067ff1fc349": {
"value": "
Assets held for sale
Non-current assets (disposal groups comprising assets and liabilities) that are expected to be
recovered primarily through sale rather than through continuing use are classified as held for
sale. Non-current assets held for sale are carried at the lower of carrying amount or fair value
less cost to sell. Comparatives in the balance sheet are not changed when a non-current asset
is classified as held-for-sale.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0Mjk_b108ac9d-4859-48a4-90c3-3e7a1534c659": {
"value": "
Assets held for sale
Non-current assets (disposal groups comprising assets and liabilities) that are expected to be
recovered primarily through sale rather than through continuing use are classified as held for
sale. Non-current assets held for sale are carried at the lower of carrying amount or fair value
less cost to sell. Comparatives in the balance sheet are not changed when a non-current asset
is classified as held-for-sale.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MzA_f225a648-8aaa-4810-a89e-a13140612dd2": {
"value": "
Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance
of shares are recognized as a deduction from equity. Dividends are recognized as a liability in the
period in which they are declared. The income tax consequences of dividends are recognized
when a liability to pay the dividend is recognized.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzU0OTc1NTg5NDA1MA_dbe05663-95a1-4ffa-bdb6-8e431ddea02f": {
"value": "Equity
Treasury shares that are reacquired are recognized at cost, representing the market price on
the acquisition date, and deducted from equity until the shares are cancelled or reissued. When
reissued, shares are removed from treasury shares on a first-in, first-out (FIFO) basis. When
treasury shares are delivered under Signify\u2019s share plans, the difference between the market
price of the shares delivered and the cost is recorded in retained earnings, the market price is
recorded in share premium. Upon cancellation, treasury shares are deducted from the share
capital at their nominal value of EUR\u00a00.01 per share and retained earnings for the difference.
Costs including dividend withholding tax in connection with Signify\u2019s purchase of treasury shares
for capital reduction purposes are recorded in retained earnings.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMTgvZnJhZzpjOTlmZDgzMTM0NWE0YjFhOWVkOWMyZjBkN2RkZThkOS90ZXh0cmVnaW9uOmM5OWZkODMxMzQ1YTRiMWE5ZWQ5YzJmMGQ3ZGRlOGQ5XzI3NDg3NzkxMTU0MzQ_70e97c1e-d8f3-489b-9416-90dffb1295e6": {
"value": "
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. The useful lives and residual values are evaluated annually. The
costs of property, plant and equipment comprise of all directly attributable costs (including the
cost of materials and direct labor). Government grants for assets are deducted from the cost of
the related asset.
Depreciation of property, plant and equipment, other than freehold land, is calculated using the
straight-line method taking into account the residual values and estimated useful lives and is
primarily included in Cost of sales. Freehold land is not depreciated. Gains and losses on the sale
of property, plant and equipment are included in Other business income. Costs related to repair
and maintenance activities are expensed in the period in which they are incurred unless leading
to an extension of the original lifetime of capacity.
The expected useful lives in years of property, plant and equipment are as follows:
| |
| |
Machinery and installations | |
| |
| |
1Excluding amortization and impairments of acquisition-related intangible assets and goodwill.
2Income from operations excluding amortization and impairments of acquisition-related intangible assets and goodwill
(\u201cEBITA\u201d).
3Amortization and impairments of acquisition-related intangible assets and goodwill.
4Considering the nature of Other, EBITA as a % of sales for Other is not meaningful.
5Includes Fluence since May 2, 2022 and Pierlite since April 29, 2022.
Sales between the segments mainly relate to the supply of goods. The pricing of such
transactions is determined on an \u2018arm\u2019s length basis\u2019.
Signify has no external customer that represents 10% or more of total sales.
| | | | |
Sales, tangible and intangible assets by main countries: |
| | Tangible and intangible assets 1, 2 |
| | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
1Includes Fluence since May 2, 2022 and Pierlite since April 29, 2022.
2Includes goodwill.
Disaggregated revenue information
Total sales consist primarily of the sales of goods to customers (2022: 97%, 2021: 96%).
Remaining sales include revenue from services, and sales- and usage-based royalties. The
amount of revenue recognized for the year ended December 31, 2022, from performance
obligations satisfied (or partially satisfied) in previous periods, amounts to EUR 64 million (2021:
EUR 47 million).
1Excluding amortization and impairments of acquisition-related intangible assets and goodwill.
2Income from operations excluding amortization and impairments of acquisition-related intangible assets and goodwill
(\u201cEBITA\u201d).
3Amortization and impairments of acquisition-related intangible assets and goodwill.
4Considering the nature of Other, EBITA as a % of sales for Other is not meaningful.
5Includes Fluence since May 2, 2022 and Pierlite since April 29, 2022.
Sales between the segments mainly relate to the supply of goods. The pricing of such
transactions is determined on an \u2018arm\u2019s length basis\u2019.
Signify has no external customer that represents 10% or more of total sales.
| | | | |
Sales, tangible and intangible assets by main countries: |
| | Tangible and intangible assets 1, 2 |
| | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
1Includes Fluence since May 2, 2022 and Pierlite since April 29, 2022.
2Includes goodwill.
Disaggregated revenue information
Total sales consist primarily of the sales of goods to customers (2022: 97%, 2021: 96%).
Remaining sales include revenue from services, and sales- and usage-based royalties. The
amount of revenue recognized for the year ended December 31, 2022, from performance
obligations satisfied (or partially satisfied) in previous periods, amounts to EUR 64 million (2021:
EUR 47 million).
Out of the total amount of EUR 200 million recognized in contract liabilities at the end of 2021
(2020: EUR 162 million), EUR 68 million has been recognized as revenue for the year ended
December 31, 2022 (2021: EUR 53 million). The non-current portion of contract liabilities is
recognized over time over the duration of the contract, generally beyond 1 and up to 15 years.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMjQvZnJhZzpjODVkYTlmNzg3ODU0M2FkYjk4NDRhMGViMWNhNDRiNi90ZXh0cmVnaW9uOmM4NWRhOWY3ODc4NTQzYWRiOTg0NGEwZWIxY2E0NGI2XzI3NDg3NzkwNjk3NzE_5b179c04-5e67-4f94-8d6b-b5b99fa3e4b3": {
"value": "
4Income from operations
| | | |
| | | |
| | | |
| | | |
Employee benefit expenses | | | |
Depreciation and amortization | | | |
| | | |
Advertising and promotion | | | |
| | | |
| | | |
Other business income, net | | | |
| | | |
Other personnel expenses mainly relate to travel expenses, incentives and other personnel
related costs.
The average number of full-time equivalent (FTE) employees is summarized as follows:
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory",
"language": "en",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
4Income from operations
| | | |
| | | |
| | | |
| | | |
Employee benefit expenses | | | |
Depreciation and amortization | | | |
| | | |
Advertising and promotion | | | |
| | | |
| | | |
Other business income, net | | | |
| | | |
13Property, plant and equipment
| | | | | |
| | Machinery and installations | | Prepayments and construction in progress | |
Book value as at January 1, 2021 | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Divestments and transfers to assets classified as held for sale | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Translation differences and other movements | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Balance as at December 31, 2021 | | | | | |
| | | | | |
Accumulated depreciation / impairment | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
| | Machinery and installations | | Prepayments and construction in progress | |
Book value as at January 1, 2022 | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Divestments and transfers to assets classified as held for sale | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Translation differences and other movements | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Balance as at December 31, 2022 | | | | | |
| | | | | |
Accumulated depreciation / impairment | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
The impairment losses were mainly driven by manufacturing footprint rationalization. Additions of
right-of-use assets primarily include new and renewed lease contracts.
14Leases
The carrying amounts, depreciation and additions to right-of-use assets recognized are
disclosed in note 13, Property, plant and equipment. The movements of the related Lease liability
are disclosed in note 23, Debt.
The following are the amounts recognized in profit or loss and cash flow:
| | | |
| | | |
Interest expense on lease liability | | | |
Total cash outflow for leases | | | |
1Other movements include additions of leases which are non-cash transactions.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLeasesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
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},
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"value": "
5Employee benefit expenses
Personnel expenses by nature as included in the Consolidated statement of income:
| | | |
| | | |
| | | |
| | | |
Defined contribution plans | | | |
Cost of termination plans | | | |
| | | |
| | | |
| | | |
| | | |
Other personnel expenses mainly relate to travel expenses, incentives and other personnel
related costs.
The average number of full-time equivalent (FTE) employees is summarized as follows:
United States
The defined-benefit Hourly & Salaried Pension Plan in the US covers certain hourly workers and
salaried workers hired before January 1, 2005 and has a net liability of EUR 47 million. The plan is
closed for new entrants and since 2016 no further benefit accruals are taking place. Employees
only accrue benefits in a defined-contribution plan. Signify pays the administration cost and
contributions to cover the funding deficit of the Hourly & Salaried Pension Plan. The plan assets
are governed by an Investment Committee. Signify also has an unfunded pension plan in place for
higher salaried employees with a net liability of EUR 16 million and a post-retirement welfare plan
with a net liability of EUR 45 million.
Signify reviewed the funding level of the Hourly & Salaried Pension Plan and decided that it would
not make a contribution in 2022. Signify expects cash outflows of EUR 8 million in 2023 for the
unfunded plans.
For the funding of the deficit of the US Hourly & Salaried Pension Plan, Signify adheres to the
minimum funding requirements of the US Pension Protection Act.
Germany
For employees with a salary above a certain salary threshold, there is a funded defined-benefit
pension plan which has a deficit of EUR 3 million. This plan has been closed for new entrants
since January 1, 2018. Since 2016, Signify no longer makes any contributions to this plan but
funds the liabilities when these are paid out to retirees. New employees accrue pension benefits
through a defined-contribution plan. For other closed defined-benefit plans, Signify had an
unfunded liability of EUR 153 million as at December 31, 2022. Signify expects cash outflows of
EUR 17 million in 2023 for the pension plans.
Cash outflows for the defined-benefit plans in countries other than the USA and Germany are
expected to total EUR 12 million in 2023.
Risks related to defined-benefit plans
The defined-benefit plans expose Signify to various demographic and economic risks, such as
longevity, investment, currency and interest rate risks and, in some cases, inflation risk. The
latter plays a role in the assumed wage increase and in some\u00a0 plans with pension indexation.
The larger plans are governed by either independent boards, committees or trustees who have
a legal obligation to evenly balance the interests of all stakeholders and operate under the local
regulatory frameworks. These bodies are responsible for and have full discretion over the
investment strategy of the plan assets, in general they manage pension fund risks by diversifying
the investments of plan assets and by (partially) matching interest rate risk of liabilities.
Signify has an active de-risking strategy in which it constantly looks for opportunities to reduce
the risks associated with its defined-benefit plans.
Movements of net defined-benefit liability
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
(Negative) past service cost | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Recognized in employee benefit expenses | | | | | | |
| | | | | | |
Included in Statements of Income | | | | | | |
Actuarial gains / (losses) | | | | | | |
\u2022 Demographic assumptions | | | | | | |
\u2022 Financial assumptions | | | | | | |
\u2022 Experience adjustment | | | | | | |
Exchange rate differences | | | | | | |
Included in Statements of comprehensive income | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
\u2022 Benefits paid directly by employer | | | | | | |
\u2022 Benefits paid from plan assets | | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31 | | | | | | |
During 2022, worldwide interest rates increased significantly and this has been reflected in
higher discount rates. As such, most defined benefit plans experienced large gains on the
financial assumptions. In the US, this was offset by losses on plan assets which are
predominantly invested in corporate and government bonds and in Germany by losses due to
pension increases largely resulting from price inflation.
Plan assets allocation
The asset allocation in Signify\u2019s pension plans at December 31 was as follows:
The assets in 2022 contained 15% unquoted assets. Plan assets in 2022 do not include property
occupied by or financial instruments issued by Signify.
Some 85% of the total plan assets of the Signify pension plan are in the US and are invested in a
well-diversified portfolio. The interest rate sensitivity of the fixed income portfolio of the US
qualified pension plan is closely aligned to that of the plan\u2019s pension liabilities. The remaining 15%
of the total plan assets is mainly the market value of insured pension benefits.
Assumptions
The mortality tables used for Signify\u2019s major schemes are:
\u2022US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2022 were as follows:
| | |
| | |
| | |
| | |
| | |
Healthcare cost increases | | |
| | |
The average duration of the defined-benefit obligation of the defined-benefit plans is 7.7 years.
For the defined-benefit plans in the US and Germany, the average duration is respectively 7.7
years and 7.4 years. The average discount rates for the plans in these countries are respectively
4.96% and 3.75%. The pension cost increase rate assumption for the German defined-benefit
plans is 2.25%.
Sensitivity analysis
The table below illustrates the approximate impact on the defined-benefit obligation if Signify
were to change key assumptions. The defined-benefit obligation was recalculated using a
change of 1% in the respective assumptions which overall is considered a reasonably possible
change. The impact on the defined-benefit obligation of changes in discount rate is for funded
plans normally accompanied by offsetting movements in plan assets, especially when using
matching strategies.
| | |
| | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
Longevity also impacts the post-employment defined-benefit obligation which is illustrated in
the above sensitivity table for the impact of a 10% increase and a 10% decrease in the assumed
rates of mortality for Signify\u2019s major schemes. A 10% decrease in assumed mortality rates equals
improvement of life expectancy by six months to a year. Vice versa, an increase in the assumed
mortality rates equals reduction of life expectancy.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
The average number of full-time equivalent (FTE) employees is summarized as follows:
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory",
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"entity": "scheme:549300072P3J1X8NZO35",
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},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMzMvZnJhZzo3ZTE3M2ViOWJkNzI0ZGUyYjEzZDJlMzEyNDA4NjY4YS90ZXh0cmVnaW9uOjdlMTczZWI5YmQ3MjRkZTJiMTNkMmUzMTI0MDg2NjhhXzI3NDg3NzkwNjk4NTQ_0ce671aa-08b5-4b9b-b3f5-db3c51c2aca1": {
"value": "
7Other business income and expenses
| | |
| | |
Result on disposal of businesses: | | |
| | |
| | |
Result on disposal of fixed assets: | | |
| | |
| | |
Result on other remaining businesses: | | |
| | |
| | |
Other business income and expenses | | |
Total other business income | | |
Total other business expense | | |
In 2022, the result on disposal of fixed assets includes EUR 184 million income related to a sale of
real estate in 'Other', in France. This real estate was recognized as Assets classified as held for
sale, as of December 31, 2021. In 2021, EUR 10 million income is the result of a sale of real estate
in Conventional Products, in India.
In 2022, the net result on other remaining businesses includes EUR 28 million income (2021: EUR
3 million expense) from the movements in the indemnification positions with Koninklijke Philips
N.V. originating from the separation.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMzMvZnJhZzo3ZTE3M2ViOWJkNzI0ZGUyYjEzZDJlMzEyNDA4NjY4YS90ZXh0cmVnaW9uOjdlMTczZWI5YmQ3MjRkZTJiMTNkMmUzMTI0MDg2NjhhXzU0OTc1NTgxNTU0MA_21e6f1e2-2c18-409a-a813-8e4741b02204": {
"value": "
7Other business income and expenses
| | |
| | |
Result on disposal of businesses: | | |
| | |
| | |
Result on disposal of fixed assets: | | |
| | |
| | |
Result on other remaining businesses: | | |
| | |
| | |
Other business income and expenses | | |
Total other business income | | |
Total other business expense | | |
In 2022, the result on disposal of fixed assets includes EUR 184 million income related to a sale of
real estate in 'Other', in France. This real estate was recognized as Assets classified as held for
sale, as of December 31, 2021. In 2021, EUR 10 million income is the result of a sale of real estate
in Conventional Products, in India.
In 2022, the net result on other remaining businesses includes EUR 28 million income (2021: EUR
3 million expense) from the movements in the indemnification positions with Koninklijke Philips
N.V. originating from the separation.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMzMvZnJhZzo3ZTE3M2ViOWJkNzI0ZGUyYjEzZDJlMzEyNDA4NjY4YS90ZXh0cmVnaW9uOjdlMTczZWI5YmQ3MjRkZTJiMTNkMmUzMTI0MDg2NjhhXzU0OTc1NTgxNTU0MA_c23588e0-4704-4f9c-847e-248127979307": {
"value": "
7Other business income and expenses
| | |
| | |
Result on disposal of businesses: | | |
| | |
| | |
Result on disposal of fixed assets: | | |
| | |
| | |
Result on other remaining businesses: | | |
| | |
| | |
Other business income and expenses | | |
Total other business income | | |
Total other business expense | | |
In 2022, the result on disposal of fixed assets includes EUR 184 million income related to a sale of
real estate in 'Other', in France. This real estate was recognized as Assets classified as held for
sale, as of December 31, 2021. In 2021, EUR 10 million income is the result of a sale of real estate
in Conventional Products, in India.
In 2022, the net result on other remaining businesses includes EUR 28 million income (2021: EUR
3 million expense) from the movements in the indemnification positions with Koninklijke Philips
N.V. originating from the separation.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMzYvZnJhZzpmY2M0OWE0OTQyNmI0NGJiOTMxNGJiYWI4ZjQxNjVjOC90ZXh0cmVnaW9uOmZjYzQ5YTQ5NDI2YjQ0YmI5MzE0YmJhYjhmNDE2NWM4XzI3NDg3NzkwNjk0Nzk_82dcb6ce-ae80-4bea-bb92-61464de931ae": {
"value": "
8Financial income and expenses
| | | |
| | | |
| | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
| | | |
| | | |
| | | |
Interest on the net defined-benefit obligation | | | |
Interest expense on lease liability | | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
Net foreign exchange gains (losses) | | | |
Monetary gains (losses) 1 | | | |
| | | |
| | | |
Financial income and expenses | | | |
1The monetary loss relates to hyperinflation in Turkey.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceCostExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMzYvZnJhZzpmY2M0OWE0OTQyNmI0NGJiOTMxNGJiYWI4ZjQxNjVjOC90ZXh0cmVnaW9uOmZjYzQ5YTQ5NDI2YjQ0YmI5MzE0YmJhYjhmNDE2NWM4XzI3NDg3NzkwNjk0Nzk_e454fb29-b902-49f5-a91a-838d6a7bdcf9": {
"value": "
8Financial income and expenses
| | | |
| | | |
| | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
| | | |
| | | |
| | | |
Interest on the net defined-benefit obligation | | | |
Interest expense on lease liability | | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
Net foreign exchange gains (losses) | | | |
Monetary gains (losses) 1 | | | |
| | | |
| | | |
Financial income and expenses | | | |
1The monetary loss relates to hyperinflation in Turkey.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
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}
},
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"value": "
8Financial income and expenses
| | | |
| | | |
| | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
| | | |
| | | |
| | | |
Interest on the net defined-benefit obligation | | | |
Interest expense on lease liability | | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
Net foreign exchange gains (losses) | | | |
Monetary gains (losses) 1 | | | |
| | | |
| | | |
Financial income and expenses | | | |
1The monetary loss relates to hyperinflation in Turkey.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xMzYvZnJhZzpmY2M0OWE0OTQyNmI0NGJiOTMxNGJiYWI4ZjQxNjVjOC90ZXh0cmVnaW9uOmZjYzQ5YTQ5NDI2YjQ0YmI5MzE0YmJhYjhmNDE2NWM4XzU0OTc1NTgxNDc2Ng_5e8dda7b-0a2f-49cc-9a5f-c290fc7bbebd": {
"value": "
8Financial income and expenses
| | | |
| | | |
| | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
| | | |
| | | |
| | | |
Interest on the net defined-benefit obligation | | | |
Interest expense on lease liability | | | |
Change in fair value of financial assets at fair value through profit or loss | | | |
Net foreign exchange gains (losses) | | | |
Monetary gains (losses) 1 | | | |
| | | |
| | | |
Financial income and expenses | | | |
18Trade and other receivables
| | |
| | |
| | |
| | |
Total receivables, net of value allowance | | |
The changes in loss allowance for accounts receivable are as follows:
| | |
| | |
| | |
Additions charged to expense | | |
| | |
Translation differences and other movements | | |
Balance as at December 31 | | |
As per December 31, 2022, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 85 million (2021: EUR 69 million).
19Trade and other payables
| | |
| | |
| | |
Amounts payable to employees | | |
Customer rebates and refunds related | | |
Marketing and sales related | | |
Materials and fixed assets related | | |
| | |
| | |
Movements of debt were as follows:
| | | | | | |
| | | | | | |
Balance as at January 1, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2021 | | | | | | |
| | | | | | |
Balance as at January 1, 2022 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2022 | | | | | | |
1Other movements include additions of leases which are non-cash transactions.
Term loan structure and a revolving credit facility
As of December 31, 2022, the Company had outstanding long-term loans amounting to EUR 280
million maturing in November 2024 and USD 225 million maturing in January 2025. In addition, the
undrawn revolving credit facility (RCF) of EUR 500 million is maturing in January 2027.
The EUR term loan bears interest at a variable rate based on the relevant applicable EURIBOR
plus a fixed margin of 0.15%. The USD term loan bears interest at a variable rate based on the
relevant applicable USD LIBOR with zero floor plus a margin. As of December 31, 2022, the
margin on the USD term loan was 0.75% and is subject to change, depending on the public credit
rating of Signify assigned by rating agencies.
The term loans and RCF agreement include a financial covenant providing that Signify maintains a
net leverage ratio of no greater than 3.5x. The net leverage ratio may temporarily increase to
4.0x within 12 months of the closing of material acquisitions. The covenant does not apply if
Signify has at least one investment grade rating, which is currently the case, as Signify has two
investment grade ratings.
Eurobonds
As of December 31, 2022, Signify had outstanding EUR 675 million of fixed rate notes due in May
2024 with an annual coupon of 2.000% and EUR 600 million of fixed rate notes due in May 2027
with an annual coupon of 2.375%.
Other debt
Other debt includes short term borrowings which Signify repays ultimately within one year.
Borrowings which are\u00a0drawn and\u00a0repaid within the\u00a0same\u00a0quarter, with a maturity of less than
three months, are reported on a net basis\u00a0in the movement of other debt. These borrowings
were taken to manage intra month and intra quarter working capital requirements.
24ProvisionsLegal
Signify and certain of its group companies are involved in legal proceedings relating to such
matters as product liability and claims for property damage and personal injury, alleged to have
been caused by failure or malfunction of its products as well as commercial transactions, and
intellectual property infringements (among others). The outcome of asserted claims and
proceedings, or the impact of any claims that may be asserted in the future, cannot be
predicted with certainty. Signify makes provisions if payments with respect to such matters are
probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years.
On October 5, 2022, a jury in trial court in Connecticut awarded compensation of USD 90 million
in a lawsuit against Signify relating to a workplace accident that occurred in September 2017 in a
warehouse leased and operated by a Signify customer, where a pallet of Signify products were
pushed off a rack by a worker, operating a forklift at the warehouse, onto one of the customer's
employees. Signify categorically disagrees with the jury\u2019s findings, which it believes are not
supported by either the facts or the law. There has been no judgment issued by the trial court
confirming this verdict and Signify will exercise all its rights to contest any improper verdict
issued in this case.
Signify has a comprehensive global liability insurance and has received confirmation that the
case is fully covered without reservation of rights, including interest and other costs. As a
result, both the amount awarded and insurance cover were recognized without any net profit
and loss impact. Since there was no net impact to profit and loss,this addition to legal provision
and the corresponding movement in non-current financial assets were not presented as
adjustments in the consolidated statement of cash flows. In the table above the liability for the
amount awarded by the jury, (although not yet confirmed by the court) has been included as an
addition to the legal provision. The insurance cover asset has been recognized as part of non-
current financial assets.
29Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of\u00a0business: interest rate risk, liquidity risk, currency risk, commodity price risk, credit risk and country risk.
This note comprises the disclosures on Signify's financial risk management objectives, policies and procedures to monitor and manage these risks.
The summary of all financial assets and liabilities, including their classification and measurement and fair value hierarchy is presented below:
| | | | | | |
| | Gross amount recognized on the balance sheet | Amounts not offset on the balance sheet, but are subject to master netting arrangements | | Fair value hierarchy level | |
Balance as at December 31, 2021 | | | | | | |
Non-current financial assets 1 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Balance as at December 31, 2022 | | | | | | |
Non-current financial assets 1, 2 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
1In view of the nature, maturity or the magnitude of the amounts, Signify considers that the fair value of non-current financial assets, trade and other receivables, debt (excluding Eurobonds), trade and other payables are not materially different from their
carrying value.
2Mainly includes the insurance cover asset as referred to in the legal section, in note 24, Provisions.
The estimated fair value of financial instruments has been determined by Signify using available
market information and appropriate valuation methods. The estimates presented are not
necessarily indicative of the amounts that will ultimately be realized by Signify upon maturity or
disposal. The use of market assumptions and/or estimation methods may have a material effect
on the estimated fair value amounts.
The following hierarchy is applied to classify the financial assets and liabilities:
Level 1
Instruments included in Level 1 are comprised primarily of listed Eurobonds classified as financial
liabilities at amortized cost. The fair value of financial instruments traded in active markets is
based on quoted market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm\u2019s length basis.
Level 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
Interest rate risk
Interest rate risk is the risk of the fair value or future cash flows of a financial instrument
fluctuating because of changes in the market interest rates. Financial instruments included in
the debt position create an inherent interest rate risk. Failure to effectively hedge this risk
could negatively impact financial results.
Signify monitors interest rate coverage, short-term and long-term interest rate developments
and has the flexibility to opt for different short-term interest periods for the variable debt
instruments at roll-over dates and/or could enter into derivative financial instruments to fix
interest rates for a certain period of time. As of December 31, 2022, Signify had a ratio of fixed-
rate debt to total outstanding debt of approximately 75% (2021: 75%).
A sensitivity analysis conducted at reporting date shows that if interest rates were to increase
instantaneously by 1% from their level of December 31, 2022, with all other variables held
constant, the annualized net interest expense would decrease by EUR 3 million. This impact was
based on the outstanding net floating debt position as of December 31, 2022.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated
with financial liabilities.
Liquidity risk for Signify is monitored through the Treasury Risk Committee which tracks the
development of the actual cash flow position and uses input from a number of sources in order
to forecast the overall liquidity position.
The table below analyzes Signify's financial liabilities into relevant maturity groupings based on
their contractual maturities. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances as the
impact of discounting is not significant. Interest on Long-term debt is based on floating rate
adjustments according to market expectations.
| | | | |
| | |
| | | | |
Debt, including bank overdrafts | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Off-balance sheet commitments | | | | |
| | | | |
Contractual cash obligations | | | | |
Revolving credit facility (RCF) | | | | |
Signify invests surplus cash primarily in money market deposits with investment graded financial
institutions, and with maturities up to three months, to ensure sufficient liquidity is available to
meet liabilities when due.
Signify has various sources to mitigate liquidity risk. Signify pools cash from subsidiaries to the
extent legally and economically feasible; cash not pooled remains available for operational or
investment needs. The table below shows details of cash and cash equivalents and bank
overdrafts as of the reporting date:
| | |
| | |
Cash at banks and in hand | | |
| | |
| | |
Cash and cash equivalents | | |
| | |
Cash and cash equivalents and bank overdrafts | | |
Signify has a EUR 500 million revolving credit facility that can be used for general purposes. As of
December 31, 2022, Signify did not have any amounts drawn under this facility.
Currency risk
Currency risk is the risk that reported financial performance, or the fair value or future cash
flows of a financial instrument, will fluctuate because of changes in foreign exchange rates.
Signify operates in many countries and currencies and therefore currency fluctuations may
inevitably impact its financial results. Signify is exposed to currency risk in the following areas:
\u2022Transaction exposures related to anticipated sales and purchases and on-balance-sheet
receivables/payables resulting from such transactions.
\u2022Financing exposure arising from foreign currency intercompany and external debt and
deposits.
\u2022Translation exposure of net income in foreign entities.
\u2022Translation exposure of foreign currency denominated equity invested in consolidated
companies.
\u2022Translation exposure to equity interests in non-functional-currency investments in associates
and financial assets at fair value.
It is Signify\u2019s policy to reduce the volatility caused by foreign currency movements on its net
earnings by hedging the anticipated net exposure of foreign currencies resulting from foreign
currency sales and purchases. In general, net anticipated exposures are hedged during a period
of 15 months in layers of 20% up to a hedge ratio of 80%, using derivatives.
Signify\u2019s policy requires significant committed foreign currency exposures to be fully hedged,
generally using forwards. However, not every foreign currency can or shall be hedged as there
may be regulatory barriers or prohibitive hedging cost preventing Signify from effectively and/or
efficiently hedging its currency exposures. As a result, hedging activities cannot and will not
eliminate all currency risks for anticipated and committed transaction exposures.
The following table outlines the estimated nominal value in millions of EUR for transaction
exposures and related hedges for Signify\u2019s most significant currency exposures:
| | | | | |
| | | |
| | | | | |
Balance as at December 31 | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
1\u00a0 \u00a0 \u00a0 EUR exposures in non EUR denominated functional currencies.
As of December 31, 2022, a loss of EUR 27 million was deferred in equity as a result of these
hedges (2021: loss of EUR 3 million). The result deferred in equity will be released to earnings
mostly during 2023 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2022, EUR nil million (2021: EUR nil million) was recorded within cost
of goods sold in the Consolidated statement of income as a result of ineffectiveness on certain
anticipated cash flow hedges.
The total net fair value of hedges related to transaction exposure as of December 31, 2022, was
an unrealized liability of EUR 14 million (2021: asset EUR 2 million). An instantaneous 10% increase
in the value of euro against all currencies, with all other variables held constant, would lead to
no substantial change in the value of the derivatives. The above sensitivity analysis includes a
loss of EUR 4 million that would impact the income statement, which would largely offset the
opposite revaluation effect on the underlying accounts receivable and payable, and the
remaining gain of EUR 4 million would be recognized in equity to the extent that the cash flow
hedges were effective.
Foreign exchange exposure also arises from intercompany loans and deposits. Where Signify
enters into such arrangements the financing is generally provided in the functional currency of
the subsidiary. The currency of Signify\u2019s external funding and liquid assets is matched with the
required financing of subsidiaries either directly through external foreign currency loans and
deposits or synthetically by using foreign exchange derivatives. In certain cases, where Signify
subsidiaries may also have external foreign currency debt or liquid assets, these exposures are
also hedged using foreign exchange derivatives. As of December 31, 2022, the fair value of
these hedges was an unrealized asset of EUR 6 million (2021: asset EUR 8 million). An
instantaneous 10% increase in the value of euro against all currencies, with all other variables
held constant, would lead to a decrease of EUR 22 million in the value of the derivatives.\u00a0 \u00a0
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
During 2022, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 150 million matured. These hedges partially mitigated foreign currency
translation risk arising from the net assets of USD functional currency subsidiaries. These
hedges were fully effective, as such there was no ineffectiveness recognized in profit and loss in
2022. As at 31 December 2022, no net investment hedges were outstanding (2021: asset EUR 4
million). Signify may enter into further net investment hedges to partially offset these risks in the
future.
Commodity price risk
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in commodity prices.
Signify is a purchaser of certain base metals, precious metals and energy. Signify could hedge
certain commodity price risks using derivative instruments to minimize significant, unanticipated
earnings fluctuations caused by commodity price volatility. As of December 31, 2022, Signify had
EUR 44 million of commodity derivatives recognized in the Statement of financial position (2021:
EUR 17 million). Change of the commodity price by 10% will lead to the commodity derivatives
value change of EUR 9 million (2021: EUR 7 million).
Credit risk
Credit risk represents the loss that would be recognized at the reporting date, if counterparties
failed completely to perform their payment obligations as contracted. Credit risk is present
within Signify trade and other receivables and contract assets. To have better insights into the
credit exposures, Signify performs ongoing evaluations of the financial and non-financial
condition of its customers and adjusts credit limits when appropriate. In instances where the
creditworthiness of a customer is determined not to be sufficient to grant the credit limit
required, there are a number of mitigation tools that can be utilized to close the gap, including
reducing payment terms, cash on delivery, prepayments and pledges on assets.
Signify invests available cash and cash equivalents and enters into financial derivative
instruments with various financial institutions and is exposed to credit risk with these
counterparties. Signify does not enter into any financial derivative instruments to protect
against default by financial institutions.
Where possible, Signify requires all financial institutions to complete legally enforceable netting
agreements under an International Swap Dealers Association master agreement or otherwise
prior to trading, and whenever possible, to have a solid credit rating from generally accepted
rating agencies. Signify also regularly monitors the development of the credit risk of its financial
counterparties.
Signify minimizes this risk by limiting the deposits made with any single bank and by making
deposits, the majority of which is with banks that have strong credit ratings.
Maximum credit risk exposure for Signify equals carrying amounts of all financial assets
recognized in the Statement of financial position plus off-balance sheet guarantees provided.
Country risk
Country risk is the risk that political, legal, or economic developments in a single country could
adversely impact our performance. The country risk per country is defined as the sum of the
equity of all subsidiaries and associated companies in country cross-border transactions, such
as intercompany loans, accounts receivable from third parties and intercompany accounts
receivable.
As of December 31, 2022, Signify had country risk exposure of EUR 2.9 billion in the United
States, EUR 1.1 billion in the Netherlands and EUR 531 million in China including Hong Kong.
Countries where the risk exceeds EUR 200 million but was less than EUR 500 million are Belgium
(EUR 493 million), Poland (EUR 422 million), France (EUR 241 million) and Saudi Arabia (EUR 205
million). Countries where the risk exceeded EUR 50 million but was less than EUR 200 million are
Mexico, Spain, Canada, United Kingdom, Australia, India and Germany. The degree of risk of a
country is taken into account when new investments are considered. Signify does not, however,
use financial derivative instruments to hedge country risk, except for the net investment hedge
as described in the currency risk.
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9Income taxes
The components of income tax expense were as follows:
| | |
| | |
| | |
Prior year benefit (expense) | | |
| | |
Unrecognized tax losses and tax credits
At December 31, 2022, the amount of operating loss and tax credit carryforwards for which no
deferred tax assets have been recognized in the balance sheet was EUR 476 million (2021: EUR
464 million).
Out of EUR 476 million, an amount of EUR 451 million should not be limited in time, EUR 1 million will
expire by 2023, EUR 1 million will expire by 2024, EUR 1 million will expire by 2025, EUR 4 million will
expire by 2026, EUR 1 million will expire by 2027 and EUR 17 million expires after 2027, but
carryforward is limited in time.
Unrecognized deductible temporary differences
At December 31, 2022, the amount of deductible temporary differences for which no deferred
tax asset has been recognized in the balance sheet is EUR 105 million (2021: EUR 106 million).
Classification of the income tax payable and receivable is as follows:
| | |
| | |
Income tax receivable under other current assets | | |
Income tax receivable under other non-current assets | | |
Income tax payable under current liabilities | | |
Income tax payable under non-current liabilities | | |
is unlikely that potential tax exposures over the amounts currently recorded as liabilities in its
Consolidated financial statements will be material to its financial condition or future results of
operations.
With regard to the uncertainties, an income tax payable is recognized when it is probable that
additional taxes will be due. In addition, related to similar uncertainties, an indemnification liability
to Koninklijke Philips N.V. of EUR 16 million (2021: EUR 52 million) and an indemnification
receivable of EUR 5 million (2021: EUR 10 million) is recorded. The total net indemnification
liability decreased in 2022 by EUR 31 million mainly due to settlements and expirations.
Tax uncertainties also include exposures with a risk assessment which are deemed lower than
probable, but possible. The best estimate of the maximum amount in connection with these
uncertainties is EUR 77 million. Signify believes that in connection with these uncertainties it is
probable that no additional taxes will be due. Therefore, no income tax payable is recognized.
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9Income taxesClassification of the income tax payable and receivable is as follows:
| | |
| | |
Income tax receivable under other current assets | | |
Income tax receivable under other non-current assets | | |
Income tax payable under current liabilities | | |
Income tax payable under non-current liabilities | | |
Unrecognized tax losses and tax credits
At December 31, 2022, the amount of operating loss and tax credit carryforwards for which no
deferred tax assets have been recognized in the balance sheet was EUR 476 million (2021: EUR
464 million).
Out of EUR 476 million, an amount of EUR 451 million should not be limited in time, EUR 1 million will
expire by 2023, EUR 1 million will expire by 2024, EUR 1 million will expire by 2025, EUR 4 million will
expire by 2026, EUR 1 million will expire by 2027 and EUR 17 million expires after 2027, but
carryforward is limited in time.
Unrecognized deductible temporary differences
At December 31, 2022, the amount of deductible temporary differences for which no deferred
tax asset has been recognized in the balance sheet is EUR 105 million (2021: EUR 106 million).
Classification of the income tax payable and receivable is as follows:
| | |
| | |
Income tax receivable under other current assets | | |
Income tax receivable under other non-current assets | | |
Income tax payable under current liabilities | | |
Income tax payable under non-current liabilities | | |
is unlikely that potential tax exposures over the amounts currently recorded as liabilities in its
Consolidated financial statements will be material to its financial condition or future results of
operations.
With regard to the uncertainties, an income tax payable is recognized when it is probable that
additional taxes will be due. In addition, related to similar uncertainties, an indemnification liability
to Koninklijke Philips N.V. of EUR 16 million (2021: EUR 52 million) and an indemnification
receivable of EUR 5 million (2021: EUR 10 million) is recorded. The total net indemnification
liability decreased in 2022 by EUR 31 million mainly due to settlements and expirations.
Tax uncertainties also include exposures with a risk assessment which are deemed lower than
probable, but possible. The best estimate of the maximum amount in connection with these
uncertainties is EUR 77 million. Signify believes that in connection with these uncertainties it is
probable that no additional taxes will be due. Therefore, no income tax payable is recognized.
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10Earnings per share
| | |
| | |
Net income attributable to shareholders of Signify N.V. | | |
Weighted average number of ordinary shares outstanding (after deduction of treasury shares) during the year | | |
Plus incremental shares assumed from conversions of: | | |
\u2022 Performance shares | | |
\u2022 Conditional shares | | |
| | |
Diluted weighted average number of ordinary shares outstanding (after deduction of treasury shares) during the year | | |
| | |
| | |
| | |
The fair value of assets and liabilities at acquisition date is provisional subject to final purchase
price adjustments and closing settlement procedures, which will be finalized in early Q2, 2023.
The opening balance positions subject to change are mainly related to the valuation of certain
liabilities and goodwill where accounting of the fair value assumed is still preliminary.\u00a0
Receivables and other current assets are assumed to be valued against their fair value. Other
intangible assets acquired of EUR 20 million relate mainly to Brand names.
Goodwill recognized for the amount of EUR 258 million is primarily attributable to the growth of
both the bio-based and horticulture markets and in addition, the future expansion plans for
Fluence. The expansion plans are mainly driven by the changing regulatory environment in the
United States and Europe. Goodwill is also attributable to the synergies expected to be achieved
from integrating Fluence within Division Digital Solutions. The goodwill recognized is expected to
be deductible for tax purposes.
From the acquisition date, the contribution of Fluence to the sales and net income of the
Company was not material. If the acquisition had taken place on January 1, 2022, sales and net
income for the Company are considered not material for the consolidated financial statements.
Acquisition of Pierlite
On April 29, 2022, Signify completed the acquisition of Pierlite, strengthening its position in the
Australian and New Zealand lighting markets. The acquisition involved a total consideration of
EUR 43 million, resulting in EUR 22 million goodwill and EUR 17 million intangible assets. Pierlite is
consolidated within Division Digital Solutions. The acquisition is considered not material to the
consolidated financial statements.
There were no divestments in 2022.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNDgvZnJhZzpkYWZhZDUyZTU2NTY0NWE3OWUzZGUzMjk1Njc5M2YyZi90ZXh0cmVnaW9uOmRhZmFkNTJlNTY1NjQ1YTc5ZTNkZTMyOTU2NzkzZjJmXzI3NDg3NzkwNzAzNjQ_366068c0-9ac4-4ecc-9bf9-d5195da08b85": {
"value": "
12Interests in entities
Interests in subsidiaries
The Consolidated financial statements comprise the assets and liabilities of approximately 150
legal entities. Set out below is a list of material subsidiaries, in alphabetical order, representing
more than 5% of either the consolidated company sales, income from operations or net income
(before any intra-company eliminations). All the entities are 100% owned.
| |
| Principal country of business |
Cooper Lighting Netherlands B.V. | |
| |
Signify (China) Investment Co., Ltd. | |
| |
| |
| |
| |
Signify North America Corporation | |
Signify Poland Sp. z.o.o. | |
Signify does not have subsidiaries that have non-controlling interests that are material for its
Consolidated financial statements.
Investments in associates
Signify has investments in several associates, none of them are regarded as individually material.
In aggregate, the carrying amount, share of profit and other comprehensive income of the
associates are shown in the Consolidated statement of financial position, Consolidated
statement of income and Consolidated statement of comprehensive income.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNDgvZnJhZzpkYWZhZDUyZTU2NTY0NWE3OWUzZGUzMjk1Njc5M2YyZi90ZXh0cmVnaW9uOmRhZmFkNTJlNTY1NjQ1YTc5ZTNkZTMyOTU2NzkzZjJmXzU0OTc1NTgxNDg1Mg_3c01947e-583f-4dcd-b7d7-ca13e9cb806f": {
"value": "
12Interests in entitiesSignify does not have subsidiaries that have non-controlling interests that are material for its
Consolidated financial statements.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNDgvZnJhZzpkYWZhZDUyZTU2NTY0NWE3OWUzZGUzMjk1Njc5M2YyZi90ZXh0cmVnaW9uOmRhZmFkNTJlNTY1NjQ1YTc5ZTNkZTMyOTU2NzkzZjJmXzI3NDg3NzkwNzAzNjY_e2e9f474-e041-4e8e-94c5-a00bc18bc012": {
"value": "
Interests in subsidiaries
The Consolidated financial statements comprise the assets and liabilities of approximately 150
legal entities. Set out below is a list of material subsidiaries, in alphabetical order, representing
more than 5% of either the consolidated company sales, income from operations or net income
(before any intra-company eliminations). All the entities are 100% owned.
| |
| Principal country of business |
Cooper Lighting Netherlands B.V. | |
| |
Signify (China) Investment Co., Ltd. | |
| |
| |
| |
| |
Signify North America Corporation | |
Signify Poland Sp. z.o.o. | |
Signify does not have subsidiaries that have non-controlling interests that are material for its
Consolidated financial statements.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNDgvZnJhZzpkYWZhZDUyZTU2NTY0NWE3OWUzZGUzMjk1Njc5M2YyZi90ZXh0cmVnaW9uOmRhZmFkNTJlNTY1NjQ1YTc5ZTNkZTMyOTU2NzkzZjJmXzI3NDg3NzkwNzAzNjc_0a699cd4-be67-4d34-abf4-1bea3b88cc02": {
"value": "
Investments in associates
Signify has investments in several associates, none of them are regarded as individually material.
In aggregate, the carrying amount, share of profit and other comprehensive income of the
associates are shown in the Consolidated statement of financial position, Consolidated
statement of income and Consolidated statement of comprehensive income.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNDgvZnJhZzpkYWZhZDUyZTU2NTY0NWE3OWUzZGUzMjk1Njc5M2YyZi90ZXh0cmVnaW9uOmRhZmFkNTJlNTY1NjQ1YTc5ZTNkZTMyOTU2NzkzZjJmXzI3NDg3NzkwNzAzNjc_3a0cfcdc-8185-41f0-b256-905f5a4729b3": {
"value": "
Investments in associates
Signify has investments in several associates, none of them are regarded as individually material.
In aggregate, the carrying amount, share of profit and other comprehensive income of the
associates are shown in the Consolidated statement of financial position, Consolidated
statement of income and Consolidated statement of comprehensive income.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNTEvZnJhZzo5OTI0N2M0Y2MwYzQ0Y2E0YjQ2NmEwOTI1YzBmYmRjMy90ZXh0cmVnaW9uOjk5MjQ3YzRjYzBjNDRjYTRiNDY2YTA5MjVjMGZiZGMzXzI3NDg3NzkwNjk2NjE_1f443cd1-3868-4667-a4b0-f9f9e880a89f": {
"value": "
13Property, plant and equipment
| | | | | |
| | Machinery and installations | | Prepayments and construction in progress | |
Book value as at January 1, 2021 | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Divestments and transfers to assets classified as held for sale | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Translation differences and other movements | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Balance as at December 31, 2021 | | | | | |
| | | | | |
Accumulated depreciation / impairment | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
| | Machinery and installations | | Prepayments and construction in progress | |
Book value as at January 1, 2022 | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Divestments and transfers to assets classified as held for sale | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Translation differences and other movements | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Balance as at December 31, 2022 | | | | | |
| | | | | |
Accumulated depreciation / impairment | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
The impairment losses were mainly driven by manufacturing footprint rationalization. Additions of
right-of-use assets primarily include new and renewed lease contracts.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNTEvZnJhZzo5OTI0N2M0Y2MwYzQ0Y2E0YjQ2NmEwOTI1YzBmYmRjMy90ZXh0cmVnaW9uOjk5MjQ3YzRjYzBjNDRjYTRiNDY2YTA5MjVjMGZiZGMzXzU0OTc1NTgxNDY3Ng_e91c331a-b9eb-4693-b383-ca658f2d30e4": {
"value": "
13Property, plant and equipment
| | | | | |
| | Machinery and installations | | Prepayments and construction in progress | |
Book value as at January 1, 2021 | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Divestments and transfers to assets classified as held for sale | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Translation differences and other movements | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Balance as at December 31, 2021 | | | | | |
| | | | | |
Accumulated depreciation / impairment | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
| | Machinery and installations | | Prepayments and construction in progress | |
Book value as at January 1, 2022 | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Divestments and transfers to assets classified as held for sale | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
Translation differences and other movements | | | | | |
Of which right-of-use assets | | | | | |
| | | | | |
| | | | | |
Balance as at December 31, 2022 | | | | | |
| | | | | |
Accumulated depreciation / impairment | | | | | |
| | | | | |
Of which right-of-use assets | | | | | |
The impairment losses were mainly driven by manufacturing footprint rationalization. Additions of
right-of-use assets primarily include new and renewed lease contracts.
15Intangible assets
| | | | | | | | |
| | Customer\u00a0 relationships | | | | | | |
Balance as at January 1, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated depreciation / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2022 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
1Compound sales growth rate is the annualized steady growth rate over the forecast period.
Given the weaker external environment, the impairment test of Q4 2022 assumes a lower
growth expectation in 2023 compared to previous year, with a gradual recovery in 2024. Signify
performed a sensitivity analysis and noted that a reasonably possible change in key assumptions
will not result in an impairment.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNTcvZnJhZzoxYzY4NjNiNTVmMjc0MGU0ODhjNjkwZGRmMTdhYjY5NS90ZXh0cmVnaW9uOjFjNjg2M2I1NWYyNzQwZTQ4OGM2OTBkZGYxN2FiNjk1XzI3NDg3NzkwNzMxNjQ_20e10cc9-d3ff-4a5a-8f0d-122bd72148ea": {
"value": "
15Intangible assets
| | | | | | | | |
| | Customer\u00a0 relationships | | | | | | |
Balance as at January 1, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated depreciation / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2022 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
1Compound sales growth rate is the annualized steady growth rate over the forecast period.
Given the weaker external environment, the impairment test of Q4 2022 assumes a lower
growth expectation in 2023 compared to previous year, with a gradual recovery in 2024. Signify
performed a sensitivity analysis and noted that a reasonably possible change in key assumptions
will not result in an impairment.
Other intangible assets
The additions for 2022 contain internally generated assets of EUR 37 million for product
development and EUR 16 million for software. In 2022, acquired other intangible assets are
customer relationships of EUR 15 million and brand names of EUR 22 million which relates to
Fluence and Pierlite acquisition in Q2 2022.
The capitalized product development costs and software, for which amortization has not yet
commenced, amounted to EUR 50 million as of December 31, 2022 (December 31, 2021: EUR 27
million).
As of December 31, 2022, the carrying amount of the customer relationships originating from
the Genlyte acquisition in 2007 was EUR 2 million (USD 2 million) with a remaining amortization
period of 0.1 years (2021: EUR 37 million, USD 42 million; 1.1 years). The carrying amount of the
customer relationships originating from the Cooper Lighting acquisition in 2022 was EUR 276
million (USD 294 million) with a remaining amortization period of 17.8 years (2021: EUR 288 million,
USD 326 million; 18.8 years).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNTcvZnJhZzoxYzY4NjNiNTVmMjc0MGU0ODhjNjkwZGRmMTdhYjY5NS90ZXh0cmVnaW9uOjFjNjg2M2I1NWYyNzQwZTQ4OGM2OTBkZGYxN2FiNjk1XzI3NDg3NzkwNzMxNjU_02f448b3-d858-4526-ac3b-0b26c58aa0b4": {
"value": "
15Intangible assets
| | | | | | | | |
| | Customer\u00a0 relationships | | | | | | |
Balance as at January 1, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated depreciation / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2022 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
1Compound sales growth rate is the annualized steady growth rate over the forecast period.
Given the weaker external environment, the impairment test of Q4 2022 assumes a lower
growth expectation in 2023 compared to previous year, with a gradual recovery in 2024. Signify
performed a sensitivity analysis and noted that a reasonably possible change in key assumptions
will not result in an impairment.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNTcvZnJhZzoxYzY4NjNiNTVmMjc0MGU0ODhjNjkwZGRmMTdhYjY5NS90ZXh0cmVnaW9uOjFjNjg2M2I1NWYyNzQwZTQ4OGM2OTBkZGYxN2FiNjk1XzU0OTc1NTgxODQ0NQ_282623a2-c213-4507-83a2-04f05fe9d115": {
"value": "
15Intangible assets
| | | | | | | | |
| | Customer\u00a0 relationships | | | | | | |
Balance as at January 1, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2021 | | | | | | | | |
| | | | | | | | |
Accumulated depreciation / impairment | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Translation differences and other movements | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Balance as at December 31, 2022 | | | | | | | | |
| | | | | | | | |
Accumulated amortization / impairment | | | | | | | | |
| | | | | | | | |
23Debt
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Cash and cash equivalents | | |
| | |
| | |
Net debt and total equity | | |
Net debt divided by net debt and total equity (in %) | | |
Total equity divided by net debt and total equity (in %) | | |
Movements of debt were as follows:
| | | | | | |
| | | | | | |
Balance as at January 1, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2021 | | | | | | |
| | | | | | |
Balance as at January 1, 2022 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2022 | | | | | | |
1Other movements include additions of leases which are non-cash transactions.
Term loan structure and a revolving credit facility
As of December 31, 2022, the Company had outstanding long-term loans amounting to EUR 280
million maturing in November 2024 and USD 225 million maturing in January 2025. In addition, the
undrawn revolving credit facility (RCF) of EUR 500 million is maturing in January 2027.
The EUR term loan bears interest at a variable rate based on the relevant applicable EURIBOR
plus a fixed margin of 0.15%. The USD term loan bears interest at a variable rate based on the
relevant applicable USD LIBOR with zero floor plus a margin. As of December 31, 2022, the
margin on the USD term loan was 0.75% and is subject to change, depending on the public credit
rating of Signify assigned by rating agencies.
The term loans and RCF agreement include a financial covenant providing that Signify maintains a
net leverage ratio of no greater than 3.5x. The net leverage ratio may temporarily increase to
4.0x within 12 months of the closing of material acquisitions. The covenant does not apply if
Signify has at least one investment grade rating, which is currently the case, as Signify has two
investment grade ratings.
Eurobonds
As of December 31, 2022, Signify had outstanding EUR 675 million of fixed rate notes due in May
2024 with an annual coupon of 2.000% and EUR 600 million of fixed rate notes due in May 2027
with an annual coupon of 2.375%.
Other debt
Other debt includes short term borrowings which Signify repays ultimately within one year.
Borrowings which are\u00a0drawn and\u00a0repaid within the\u00a0same\u00a0quarter, with a maturity of less than
three months, are reported on a net basis\u00a0in the movement of other debt. These borrowings
were taken to manage intra month and intra quarter working capital requirements.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNjMvZnJhZzoxNjQ4ZDBhMTZjMGE0NWMyYWExZDcwOTNhNTQzMDA2Ni90ZXh0cmVnaW9uOjE2NDhkMGExNmMwYTQ1YzJhYTFkNzA5M2E1NDMwMDY2XzI3NDg3NzkwNjk2MDQ_553538be-1bd6-41d1-b1c5-4752096583ab": {
"value": "
17Inventories
| | |
| | |
Raw materials and components | | |
| | |
| | |
The write-down of inventories to net realizable value amounted to EUR 72 million for the year
ended December 31, 2022 (2021: EUR 23 million), which includes EUR 16 million related to
restructuring programs.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInventoriesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNjYvZnJhZzowNWE2Mzc0MjA5OGQ0YTMyYjI1NDNjZTAzNTY3NjYwNi90ZXh0cmVnaW9uOjA1YTYzNzQyMDk4ZDRhMzJiMjU0M2NlMDM1Njc2NjA2XzI3NDg3NzkwNjk4MjQ_e93438d8-1797-4de6-b87d-d580e83d7904": {
"value": "
18Trade and other receivables
| | |
| | |
| | |
| | |
Total receivables, net of value allowance | | |
The changes in loss allowance for accounts receivable are as follows:
| | |
| | |
| | |
Additions charged to expense | | |
| | |
Translation differences and other movements | | |
Balance as at December 31 | | |
As per December 31, 2022, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 85 million (2021: EUR 69 million).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNjYvZnJhZzowNWE2Mzc0MjA5OGQ0YTMyYjI1NDNjZTAzNTY3NjYwNi90ZXh0cmVnaW9uOjA1YTYzNzQyMDk4ZDRhMzJiMjU0M2NlMDM1Njc2NjA2XzU0OTc1NTgxNDMwMw_f1381564-5a0c-400a-abae-d41e1af8fb50": {
"value": "
18Trade and other receivablesThe changes in loss allowance for accounts receivable are as follows:
| | |
| | |
| | |
Additions charged to expense | | |
| | |
Translation differences and other movements | | |
Balance as at December 31 | | |
As per December 31, 2022, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 85 million (2021: EUR 69 million).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNjkvZnJhZzo0YThhZGVlM2ZhYzM0NGE4ODg3Y2Q1MmJlM2RhMzBjYi90ZXh0cmVnaW9uOjRhOGFkZWUzZmFjMzQ0YTg4ODdjZDUyYmUzZGEzMGNiXzI3NDg3NzkwNjk2Mzc_cfadf196-6965-4579-b428-da1573942c4a": {
"value": "
19Trade and other payables
| | |
| | |
| | |
Amounts payable to employees | | |
Customer rebates and refunds related | | |
Marketing and sales related | | |
Materials and fixed assets related | | |
| | |
| | |
Other assets include indemnification balances resulting from the separation from Koninklijke
Philips N.V. of EUR 16 million (2021: EUR 32 million) and other assets.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzIvZnJhZzo5YmE3OGY0MTdlYWE0MDc3YTA1ZTM0ZmVhY2Q4YTlmOS90ZXh0cmVnaW9uOjliYTc4ZjQxN2VhYTQwNzdhMDVlMzRmZWFjZDhhOWY5XzEwOTk1MTE2MjgyMDk_3d8a9a44-05c5-4b87-b249-220d47e3d4d4": {
"value": "
20Other assets
Other assets include indemnification balances resulting from the separation from Koninklijke
Philips N.V. of EUR 16 million (2021: EUR 32 million) and other assets.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzIvZnJhZzo5YmE3OGY0MTdlYWE0MDc3YTA1ZTM0ZmVhY2Q4YTlmOS90ZXh0cmVnaW9uOjliYTc4ZjQxN2VhYTQwNzdhMDVlMzRmZWFjZDhhOWY5XzEwOTk1MTE2MjgyMDk_e5a9730a-7dcb-4eec-9980-6ac530bb4882": {
"value": "
20Other assets
Other assets include indemnification balances resulting from the separation from Koninklijke
Philips N.V. of EUR 16 million (2021: EUR 32 million) and other assets.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzIvZnJhZzo5YmE3OGY0MTdlYWE0MDc3YTA1ZTM0ZmVhY2Q4YTlmOS90ZXh0cmVnaW9uOjliYTc4ZjQxN2VhYTQwNzdhMDVlMzRmZWFjZDhhOWY5XzI3NDg3NzkwNjk4NzI_ef8d4dc3-c626-4d58-99f8-9a62830c3a5d": {
"value": "
20Other assets
Other assets include indemnification balances resulting from the separation from Koninklijke
Philips N.V. of EUR 16 million (2021: EUR 32 million) and other assets.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzUvZnJhZzo3NWJkNmQ5ZTExYTc0ZTA2OTY0ZWJiOTcxNTlmYjY4OC90ZXh0cmVnaW9uOjc1YmQ2ZDllMTFhNzRlMDY5NjRlYmI5NzE1OWZiNjg4XzI3NDg3NzkwNzAzODU_c30445a3-1267-447c-b9c9-199bfa9ae931": {
"value": "
21Other liabilities
Out of the total amount of EUR 200 million recognized in contract liabilities at the end of 2021
(2020: EUR 162 million), EUR 68 million has been recognized as revenue for the year ended
December 31, 2022 (2021: EUR 53 million). The non-current portion of contract liabilities is
recognized over time over the duration of the contract, generally beyond 1 and up to 15 years.
Other liabilities include indemnification payables of EUR 19 million (2021: EUR 52 million) and other
liabilities. The indemnification payables mainly relate to uncertain tax positions indemnified in the
separation from Koninklijke Philips N.V..
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzUvZnJhZzo3NWJkNmQ5ZTExYTc0ZTA2OTY0ZWJiOTcxNTlmYjY4OC90ZXh0cmVnaW9uOjc1YmQ2ZDllMTFhNzRlMDY5NjRlYmI5NzE1OWZiNjg4XzU0OTc1NTgxNDg3NA_22606679-9be2-4cf8-8397-52282d295bbc": {
"value": "
21Other liabilities
Out of the total amount of EUR 200 million recognized in contract liabilities at the end of 2021
(2020: EUR 162 million), EUR 68 million has been recognized as revenue for the year ended
December 31, 2022 (2021: EUR 53 million). The non-current portion of contract liabilities is
recognized over time over the duration of the contract, generally beyond 1 and up to 15 years.
Other liabilities include indemnification payables of EUR 19 million (2021: EUR 52 million) and other
liabilities. The indemnification payables mainly relate to uncertain tax positions indemnified in the
separation from Koninklijke Philips N.V..
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzUvZnJhZzo3NWJkNmQ5ZTExYTc0ZTA2OTY0ZWJiOTcxNTlmYjY4OC90ZXh0cmVnaW9uOjc1YmQ2ZDllMTFhNzRlMDY5NjRlYmI5NzE1OWZiNjg4XzU0OTc1NTgxNDg3NQ_29823f89-8483-4a50-bdee-1f772e474285": {
"value": "
21Other liabilities
Out of the total amount of EUR 200 million recognized in contract liabilities at the end of 2021
(2020: EUR 162 million), EUR 68 million has been recognized as revenue for the year ended
December 31, 2022 (2021: EUR 53 million). The non-current portion of contract liabilities is
recognized over time over the duration of the contract, generally beyond 1 and up to 15 years.
Other liabilities include indemnification payables of EUR 19 million (2021: EUR 52 million) and other
liabilities. The indemnification payables mainly relate to uncertain tax positions indemnified in the
separation from Koninklijke Philips N.V..
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzUvZnJhZzo3NWJkNmQ5ZTExYTc0ZTA2OTY0ZWJiOTcxNTlmYjY4OC90ZXh0cmVnaW9uOjc1YmQ2ZDllMTFhNzRlMDY5NjRlYmI5NzE1OWZiNjg4XzU0OTc1NTgxNDg3Ng_58f93db2-2c68-45b2-8df7-bb031b80ecc4": {
"value": "
21Other liabilities
Out of the total amount of EUR 200 million recognized in contract liabilities at the end of 2021
(2020: EUR 162 million), EUR 68 million has been recognized as revenue for the year ended
December 31, 2022 (2021: EUR 53 million). The non-current portion of contract liabilities is
recognized over time over the duration of the contract, generally beyond 1 and up to 15 years.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xNzgvZnJhZzplMTNmMzBkNWQxZjU0YjY4OGVhYzE4OGI1NmY5MzUwOC90ZXh0cmVnaW9uOmUxM2YzMGQ1ZDFmNTRiNjg4ZWFjMTg4YjU2ZjkzNTA4XzI3NDg3NzkwNzMxMDA_d13ad27f-d6e2-4e28-9089-6af1747a401e": {
"value": "
22Equity
Share capital
The Company has an authorized share capital of EUR 6 million, divided into 300,000,000 ordinary
shares with a nominal value of EUR 0.01 per share and 300,000,000 preference shares with a
nominal value of EUR 0.01 per share.
On December 31, 2022, the issued and fully paid share capital consisted of 128,344,238 ordinary
shares with a nominal value of EUR 0.01 per share (2021: 128,344,238).
As a defense measure, Stichting Continu\u00efteit Signify, a foundation organized under the laws of
the Netherlands, has been granted the right to acquire preference shares in the Company. As of
December 31, 2022, this right had not been exercised therefore no preference shares have
been issued.
Dividend distribution
A proposal will be submitted to the 2023 Annual General meeting of Shareholders to pay a
dividend of EUR 1.50 per ordinary share, in cash, from the 2022 net income.
In May 2022, the Company distributed a dividend of EUR 1.45 per ordinary share, representing a
total value of EUR 182 million including costs.
Treasury shares
The following table shows the movements in the outstanding number of shares over the last two
years:
| | |
| | |
| | |
| | |
Purchase of treasury shares | | |
Delivery of treasury shares | | |
Balance as at December 31 | | |
The following table shows the share transactions to cover obligations arising from share-based
compensation plans (for further details refer to note 27, Share-based compensation):
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Total shares in treasury at year-end | | |
| | |
chapter 15, Signify N.V. financial statements.
DShareholders\u2019 equityThe following table shows the limitations in the distribution of Shareholders' equity and the total
distributable reserves.
| | |
| | |
Shareholders' equity per December 31 | | |
| | |
Currency translation reserve | | |
Restrictions on subsidiaries to transfer funds to parent company | | |
Capitalized development costs reserve | | |
| | |
Reserves required by Articles of Association | | |
Limitations in the distribution of shareholders' equity | | |
Distributable reserves of December 31 | | |
The following table shows the share transactions to cover obligations arising from share-based
compensation plans (for further details refer to note 27, Share-based compensation):
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Total shares in treasury at year-end | | |
| | |
chapter 15, Signify N.V. financial statements.
DShareholders\u2019 equityThe following table shows the limitations in the distribution of Shareholders' equity and the total
distributable reserves.
| | |
| | |
Shareholders' equity per December 31 | | |
| | |
Currency translation reserve | | |
Restrictions on subsidiaries to transfer funds to parent company | | |
Capitalized development costs reserve | | |
| | |
Reserves required by Articles of Association | | |
Limitations in the distribution of shareholders' equity | | |
Distributable reserves of December 31 | | |
Movements of debt were as follows:
| | | | | | |
| | | | | | |
Balance as at January 1, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2021 | | | | | | |
| | | | | | |
Balance as at January 1, 2022 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2022 | | | | | | |
1Other movements include additions of leases which are non-cash transactions.
Term loan structure and a revolving credit facility
As of December 31, 2022, the Company had outstanding long-term loans amounting to EUR 280
million maturing in November 2024 and USD 225 million maturing in January 2025. In addition, the
undrawn revolving credit facility (RCF) of EUR 500 million is maturing in January 2027.
The EUR term loan bears interest at a variable rate based on the relevant applicable EURIBOR
plus a fixed margin of 0.15%. The USD term loan bears interest at a variable rate based on the
relevant applicable USD LIBOR with zero floor plus a margin. As of December 31, 2022, the
margin on the USD term loan was 0.75% and is subject to change, depending on the public credit
rating of Signify assigned by rating agencies.
The term loans and RCF agreement include a financial covenant providing that Signify maintains a
net leverage ratio of no greater than 3.5x. The net leverage ratio may temporarily increase to
4.0x within 12 months of the closing of material acquisitions. The covenant does not apply if
Signify has at least one investment grade rating, which is currently the case, as Signify has two
investment grade ratings.
Eurobonds
As of December 31, 2022, Signify had outstanding EUR 675 million of fixed rate notes due in May
2024 with an annual coupon of 2.000% and EUR 600 million of fixed rate notes due in May 2027
with an annual coupon of 2.375%.
Other debt
Other debt includes short term borrowings which Signify repays ultimately within one year.
Borrowings which are\u00a0drawn and\u00a0repaid within the\u00a0same\u00a0quarter, with a maturity of less than
three months, are reported on a net basis\u00a0in the movement of other debt. These borrowings
were taken to manage intra month and intra quarter working capital requirements.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBorrowingsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xODEvZnJhZzplZGNjZDJlMjc2ZmE0YjY0YjgyYmU3ZDk0MzhkYTNhMi90ZXh0cmVnaW9uOmVkY2NkMmUyNzZmYTRiNjRiODJiZTdkOTQzOGRhM2EyXzI3NDg3NzkwNzEwMzY_983369b2-172d-4ab3-a0fc-22619bfdb32d": {
"value": "
23Debt
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Cash and cash equivalents | | |
| | |
| | |
Net debt and total equity | | |
Net debt divided by net debt and total equity (in %) | | |
Total equity divided by net debt and total equity (in %) | | |
Movements of debt were as follows:
| | | | | | |
| | | | | | |
Balance as at January 1, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2021 | | | | | | |
| | | | | | |
Balance as at January 1, 2022 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31, 2022 | | | | | | |
1Other movements include additions of leases which are non-cash transactions.
Term loan structure and a revolving credit facility
As of December 31, 2022, the Company had outstanding long-term loans amounting to EUR 280
million maturing in November 2024 and USD 225 million maturing in January 2025. In addition, the
undrawn revolving credit facility (RCF) of EUR 500 million is maturing in January 2027.
The EUR term loan bears interest at a variable rate based on the relevant applicable EURIBOR
plus a fixed margin of 0.15%. The USD term loan bears interest at a variable rate based on the
relevant applicable USD LIBOR with zero floor plus a margin. As of December 31, 2022, the
margin on the USD term loan was 0.75% and is subject to change, depending on the public credit
rating of Signify assigned by rating agencies.
The term loans and RCF agreement include a financial covenant providing that Signify maintains a
net leverage ratio of no greater than 3.5x. The net leverage ratio may temporarily increase to
4.0x within 12 months of the closing of material acquisitions. The covenant does not apply if
Signify has at least one investment grade rating, which is currently the case, as Signify has two
investment grade ratings.
Eurobonds
As of December 31, 2022, Signify had outstanding EUR 675 million of fixed rate notes due in May
2024 with an annual coupon of 2.000% and EUR 600 million of fixed rate notes due in May 2027
with an annual coupon of 2.375%.
Other debt
Other debt includes short term borrowings which Signify repays ultimately within one year.
Borrowings which are\u00a0drawn and\u00a0repaid within the\u00a0same\u00a0quarter, with a maturity of less than
three months, are reported on a net basis\u00a0in the movement of other debt. These borrowings
were taken to manage intra month and intra quarter working capital requirements.
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24Provisions
| | | | | | |
| | | | | | |
Balance as at January 1, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Translation differences and other movements | | | | | | |
Balance as at December 31, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at January 1, 2022 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Translation differences and other movements | | | | | | |
Balance as at December 31, 2022 | | | | | | |
| | | | | | |
| | | | | | |
Restructuring
During the year ended December 31, 2022, additions to restructuring provisions were mainly
related to programs in Conventional Products and Digital Solutions. As at December 31, 2022,
the provision includes the restructuring of the central organization, programs of Conventional
Products in Belgium and other restructuring programs. Signify expects the provision will be
utilized mainly within the next year.
Environmental provision
Signify is exposed to environment risks, mainly because it has been in the business of
manufacturing products for more than a century. During that period, Signify has opened,
discontinued and acquired many manufacturing plants and sites. Some of these plants and sites
have been used for industrial purposes for decades and as such, there is a latent risk that these
premises may have environmental conditions that require corrective actions as a result of such
use. The environmental provisions include accrued costs recorded with respect to
environmental remediation in various countries. Provisions for environmental remediation can
change significantly due to the emergence of additional information regarding the extent or
nature of the contamination, the need to utilize alternative technologies, actions by regulatory
authorities as well as changes in judgments and discount rates. The environmental provision is
expected to be utilized mainly within the next five years.
Product warranty
Manufacturing of Signify\u2019s products involves complex processes and defects might occur. In
addition, it is possible that some of Signify\u2019s products may not perform as expected (for
example, in terms of estimated life span and projected energy savings). These defects or
shortfalls may cause Signify to incur significant warranty, support and replacement costs. The
provision for product warranty reflects the estimated costs of replacement and free-of-charge
services that will be incurred by Signify with respect to products sold. Signify expects the
provision will be mainly utilized within the next two years.
Legal
Signify and certain of its group companies are involved in legal proceedings relating to such
matters as product liability and claims for property damage and personal injury, alleged to have
been caused by failure or malfunction of its products as well as commercial transactions, and
intellectual property infringements (among others). The outcome of asserted claims and
proceedings, or the impact of any claims that may be asserted in the future, cannot be
predicted with certainty. Signify makes provisions if payments with respect to such matters are
probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years.
On October 5, 2022, a jury in trial court in Connecticut awarded compensation of USD 90 million
in a lawsuit against Signify relating to a workplace accident that occurred in September 2017 in a
warehouse leased and operated by a Signify customer, where a pallet of Signify products were
pushed off a rack by a worker, operating a forklift at the warehouse, onto one of the customer's
employees. Signify categorically disagrees with the jury\u2019s findings, which it believes are not
supported by either the facts or the law. There has been no judgment issued by the trial court
confirming this verdict and Signify will exercise all its rights to contest any improper verdict
issued in this case.
Signify has a comprehensive global liability insurance and has received confirmation that the
case is fully covered without reservation of rights, including interest and other costs. As a
result, both the amount awarded and insurance cover were recognized without any net profit
and loss impact. Since there was no net impact to profit and loss,this addition to legal provision
and the corresponding movement in non-current financial assets were not presented as
adjustments in the consolidated statement of cash flows. In the table above the liability for the
amount awarded by the jury, (although not yet confirmed by the court) has been included as an
addition to the legal provision. The insurance cover asset has been recognized as part of non-
current financial assets.
Other
Other provisions mainly comprise of provisions for self-insurance, decommissioning and
provision for employee jubilee funds. Other provisions are expected to be utilized mainly within
the next five years.
25Post-employment benefits
Post-employment benefits covered in this note relate to defined-benefit pension and other
post-retirement benefit plans, including defined-benefit retiree medical plans. The benefits
provided by these plans are based on employees\u2019 years of service and compensation levels.
Employee post-employment defined-benefit plans have been established in several countries in
accordance with the legal requirements, customs and local practice.
Net defined-benefit liabilities per country
United States
The defined-benefit Hourly & Salaried Pension Plan in the US covers certain hourly workers and
salaried workers hired before January 1, 2005 and has a net liability of EUR 47 million. The plan is
closed for new entrants and since 2016 no further benefit accruals are taking place. Employees
only accrue benefits in a defined-contribution plan. Signify pays the administration cost and
contributions to cover the funding deficit of the Hourly & Salaried Pension Plan. The plan assets
are governed by an Investment Committee. Signify also has an unfunded pension plan in place for
higher salaried employees with a net liability of EUR 16 million and a post-retirement welfare plan
with a net liability of EUR 45 million.
Signify reviewed the funding level of the Hourly & Salaried Pension Plan and decided that it would
not make a contribution in 2022. Signify expects cash outflows of EUR 8 million in 2023 for the
unfunded plans.
For the funding of the deficit of the US Hourly & Salaried Pension Plan, Signify adheres to the
minimum funding requirements of the US Pension Protection Act.
Germany
For employees with a salary above a certain salary threshold, there is a funded defined-benefit
pension plan which has a deficit of EUR 3 million. This plan has been closed for new entrants
since January 1, 2018. Since 2016, Signify no longer makes any contributions to this plan but
funds the liabilities when these are paid out to retirees. New employees accrue pension benefits
through a defined-contribution plan. For other closed defined-benefit plans, Signify had an
unfunded liability of EUR 153 million as at December 31, 2022. Signify expects cash outflows of
EUR 17 million in 2023 for the pension plans.
Cash outflows for the defined-benefit plans in countries other than the USA and Germany are
expected to total EUR 12 million in 2023.
Risks related to defined-benefit plans
The defined-benefit plans expose Signify to various demographic and economic risks, such as
longevity, investment, currency and interest rate risks and, in some cases, inflation risk. The
latter plays a role in the assumed wage increase and in some\u00a0 plans with pension indexation.
The larger plans are governed by either independent boards, committees or trustees who have
a legal obligation to evenly balance the interests of all stakeholders and operate under the local
regulatory frameworks. These bodies are responsible for and have full discretion over the
investment strategy of the plan assets, in general they manage pension fund risks by diversifying
the investments of plan assets and by (partially) matching interest rate risk of liabilities.
Signify has an active de-risking strategy in which it constantly looks for opportunities to reduce
the risks associated with its defined-benefit plans.
Movements of net defined-benefit liability
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
(Negative) past service cost | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Recognized in employee benefit expenses | | | | | | |
| | | | | | |
Included in Statements of Income | | | | | | |
Actuarial gains / (losses) | | | | | | |
\u2022 Demographic assumptions | | | | | | |
\u2022 Financial assumptions | | | | | | |
\u2022 Experience adjustment | | | | | | |
Exchange rate differences | | | | | | |
Included in Statements of comprehensive income | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
\u2022 Benefits paid directly by employer | | | | | | |
\u2022 Benefits paid from plan assets | | | | | | |
| | | | | | |
| | | | | | |
Balance as at December 31 | | | | | | |
During 2022, worldwide interest rates increased significantly and this has been reflected in
higher discount rates. As such, most defined benefit plans experienced large gains on the
financial assumptions. In the US, this was offset by losses on plan assets which are
predominantly invested in corporate and government bonds and in Germany by losses due to
pension increases largely resulting from price inflation.
Plan assets allocation
The asset allocation in Signify\u2019s pension plans at December 31 was as follows:
The assets in 2022 contained 15% unquoted assets. Plan assets in 2022 do not include property
occupied by or financial instruments issued by Signify.
Some 85% of the total plan assets of the Signify pension plan are in the US and are invested in a
well-diversified portfolio. The interest rate sensitivity of the fixed income portfolio of the US
qualified pension plan is closely aligned to that of the plan\u2019s pension liabilities. The remaining 15%
of the total plan assets is mainly the market value of insured pension benefits.
Assumptions
The mortality tables used for Signify\u2019s major schemes are:
\u2022US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2022 were as follows:
| | |
| | |
| | |
| | |
| | |
Healthcare cost increases | | |
| | |
The average duration of the defined-benefit obligation of the defined-benefit plans is 7.7 years.
For the defined-benefit plans in the US and Germany, the average duration is respectively 7.7
years and 7.4 years. The average discount rates for the plans in these countries are respectively
4.96% and 3.75%. The pension cost increase rate assumption for the German defined-benefit
plans is 2.25%.
Sensitivity analysis
The table below illustrates the approximate impact on the defined-benefit obligation if Signify
were to change key assumptions. The defined-benefit obligation was recalculated using a
change of 1% in the respective assumptions which overall is considered a reasonably possible
change. The impact on the defined-benefit obligation of changes in discount rate is for funded
plans normally accompanied by offsetting movements in plan assets, especially when using
matching strategies.
| | |
| | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
| | |
Discount rate (1% movement) | | |
Wage change (1% movement) | | |
Pension indexation change (1% movement) | | |
Longevity (see explanation) | | |
Healthcare cost change (1% movement) | | |
Longevity also impacts the post-employment defined-benefit obligation which is illustrated in
the above sensitivity table for the impact of a 10% increase and a 10% decrease in the assumed
rates of mortality for Signify\u2019s major schemes. A 10% decrease in assumed mortality rates equals
improvement of life expectancy by six months to a year. Vice versa, an increase in the assumed
mortality rates equals reduction of life expectancy.
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24Provisions
| | | | | | |
| | | | | | |
Balance as at January 1, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Translation differences and other movements | | | | | | |
Balance as at December 31, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Balance as at January 1, 2022 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Translation differences and other movements | | | | | | |
Balance as at December 31, 2022 | | | | | | |
| | | | | | |
| | | | | | |
Restructuring
During the year ended December 31, 2022, additions to restructuring provisions were mainly
related to programs in Conventional Products and Digital Solutions. As at December 31, 2022,
the provision includes the restructuring of the central organization, programs of Conventional
Products in Belgium and other restructuring programs. Signify expects the provision will be
utilized mainly within the next year.
Environmental provision
Signify is exposed to environment risks, mainly because it has been in the business of
manufacturing products for more than a century. During that period, Signify has opened,
discontinued and acquired many manufacturing plants and sites. Some of these plants and sites
have been used for industrial purposes for decades and as such, there is a latent risk that these
premises may have environmental conditions that require corrective actions as a result of such
use. The environmental provisions include accrued costs recorded with respect to
environmental remediation in various countries. Provisions for environmental remediation can
change significantly due to the emergence of additional information regarding the extent or
nature of the contamination, the need to utilize alternative technologies, actions by regulatory
authorities as well as changes in judgments and discount rates. The environmental provision is
expected to be utilized mainly within the next five years.
Product warranty
Manufacturing of Signify\u2019s products involves complex processes and defects might occur. In
addition, it is possible that some of Signify\u2019s products may not perform as expected (for
example, in terms of estimated life span and projected energy savings). These defects or
shortfalls may cause Signify to incur significant warranty, support and replacement costs. The
provision for product warranty reflects the estimated costs of replacement and free-of-charge
services that will be incurred by Signify with respect to products sold. Signify expects the
provision will be mainly utilized within the next two years.
Legal
Signify and certain of its group companies are involved in legal proceedings relating to such
matters as product liability and claims for property damage and personal injury, alleged to have
been caused by failure or malfunction of its products as well as commercial transactions, and
intellectual property infringements (among others). The outcome of asserted claims and
proceedings, or the impact of any claims that may be asserted in the future, cannot be
predicted with certainty. Signify makes provisions if payments with respect to such matters are
probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years.
On October 5, 2022, a jury in trial court in Connecticut awarded compensation of USD 90 million
in a lawsuit against Signify relating to a workplace accident that occurred in September 2017 in a
warehouse leased and operated by a Signify customer, where a pallet of Signify products were
pushed off a rack by a worker, operating a forklift at the warehouse, onto one of the customer's
employees. Signify categorically disagrees with the jury\u2019s findings, which it believes are not
supported by either the facts or the law. There has been no judgment issued by the trial court
confirming this verdict and Signify will exercise all its rights to contest any improper verdict
issued in this case.
Signify has a comprehensive global liability insurance and has received confirmation that the
case is fully covered without reservation of rights, including interest and other costs. As a
result, both the amount awarded and insurance cover were recognized without any net profit
and loss impact. Since there was no net impact to profit and loss,this addition to legal provision
and the corresponding movement in non-current financial assets were not presented as
adjustments in the consolidated statement of cash flows. In the table above the liability for the
amount awarded by the jury, (although not yet confirmed by the court) has been included as an
addition to the legal provision. The insurance cover asset has been recognized as part of non-
current financial assets.
Other
Other provisions mainly comprise of provisions for self-insurance, decommissioning and
provision for employee jubilee funds. Other provisions are expected to be utilized mainly within
the next five years.
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26Related party transactions
Signify considers the Board of Management and the Supervisory Board to be key management
personnel as defined in IAS 24 \u2018Related parties\u2019. For remuneration details of Key Management,
see note 28, Information on remuneration.
28Information on remuneration
In 2022, the total remuneration costs relating to the members of Key Management amounted to
EUR 5,141,832 (2021: EUR 7,112,736).
Remuneration of the Board of Management
In 2022, the total remuneration costs relating to the members of the Board of Management
amounted to EUR 4,379,057 (2021: EUR 6,428,236).
| | |
Remuneration costs of Key Management - the Board of Management |
| | |
| | |
| | |
Long Term Equity-based Incentive 2 | | |
| | |
| | |
| | |
| | |
1Related to the performance in the year reported which are paid out in the subsequent year.
2Costs of performance shares and restricted shares are based on accounting standards (IFRS) and do not reflect the value of
the shares at the vesting/release date.
3Comparatives for 2021 were revised to exclude the employee pension premium of EUR 1,941 for each of the Board of
Management members.
4Mainly concern (part of) allowances to members of the Board of Management that can be considered as remuneration. In a
situation where such a part of an allowance can be considered as (indirect) remuneration (for example, private use of the
company car), then such part is both valued and accounted for here. The method employed by the fiscal authorities in the
Netherlands is the starting point for the value stated. Net allowances are not included.
For further information on remuneration costs, see chapter 9, Remuneration report.
Remuneration of the Supervisory Board
The remuneration of the members of the Supervisory Board amounted to EUR 762,775 (2021:
EUR 684,500).
| | |
Remuneration of Key Management - the Supervisory Board in EUR |
| | |
| | |
| | |
| | |
| | |
1Relates to the allowance for (inter-)continental travel.
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"value": "Related party transactions
Signify considers the Board of Management and the Supervisory Board to be key management
personnel as defined in IAS 24 \u2018Related parties\u2019. For remuneration details of Key Management,
see note 28, Information on remuneration.
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27Share-based compensation
The total share-based compensation costs for the period ended December 31, 2022 amounted
to EUR 24 million (period ended December 31, 2021: EUR 31 million)
Long-term Incentive Plan
Under the Signify Long-term Incentive Plan (LTI Plan), which is equity settled, eligible employees
are granted both conditional and performance shares. Conditional shares have a three-year cliff
vesting period and will vest if a grantee is still employed with Signify at the vesting date.
Vesting of performance shares is conditional on the achievement of performance conditions
measured over a period of three years. The performance condition measurement is based on
four measures, each one of them with an equal weight of 25% of the shares:
\u2022Total shareholder return.
\u2022Free cash flow.
\u2022Sustainability.
\u2022Return on capital employed.
For the Board of Management and certain members of senior management, the LTI Plan consists
of performance shares only. Shares are conditionally granted annually.
In addition to shares awarded under the Signify LTI Plan, Signify may in individual cases, such as in
the hiring process of members of (senior-) management, also grant restricted shares.
Restricted shares have either three-year cliff vesting period or vest gradually over the vesting
period of one, two or three years.
Under the terms of the employee stock purchase plan (ESPP), employees are eligible to
purchase a limited number of Signify shares at discounted prices through payroll withholdings.
Performance shares
The fair value of shares granted with the market performance condition of relative TSR is
measured based on Monte Carlo simulation. The closing share price at grant date is adjusted for
the present value of expected dividends during the vesting period, as participants are not
compensated for Signify dividend payouts. Monte Carlo simulation takes into account market
conditions expected to impact relative Total Shareholders\u2019 Return performance in relation to
selected peers and the following weighted-average assumptions:
| |
Assumptions used in Monte-Carlo simulation for valuation in % | |
| |
| |
Expected share price volatility | |
The performance adjustment originates from updates in the number of shares which are
expected to vest in relation to the mentioned non-market performance conditions.
On December 31, 2022, estimated unrecognized costs related to non-vested performance
shares amounted to EUR 19 million. These costs are expected to be recognized over a weighted-
average period of 1.8 years.
Conditional shares
Fair value of conditional shares is determined by subtracting the present value of expected
dividends from the closing share price on the grant date as participants are not compensated
for Signify dividend payouts.
A summary of Signify conditional shares movements and outstanding balance is presented below.
| | | | |
Signify conditional shares | | | | |
| | |
| | Weighted average grant-date fair value | | Weighted average grant-date fair value |
| | | | |
| | | | |
| | | | |
| | | | |
Balance as at December 31 | | | | |
On December 31, 2022, estimated unrecognized costs related to non-vested conditional shares
amounted to EUR 9 million. These costs are expected to be recognized over a weighted-average
period of 1.8 years.
Restricted shares
Fair value of restricted shares is determined by subtracting the present value of expected
dividends from the closing share price on the grant date as participants are not compensated
for Signify dividend payouts.
In 2022, Signify granted 51,108 restricted shares with weighted average grant date fair value of
EUR 31.15.
On December 31, 2022, estimated unrecognized costs related to non-vested restricted shares
amounted to EUR 1 million. These costs are expected to be recognized over a weighted-average
period of 1.1 years.
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"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTYvZnJhZzo0NDY2ZTBkMjBiZGY0NjYxODk5YTcyZTViM2IyNDBkYy90ZXh0cmVnaW9uOjQ0NjZlMGQyMGJkZjQ2NjE4OTlhNzJlNWIzYjI0MGRjXzI3NDg3NzkwNzIxODE_a8dcd85e-acc4-4847-b504-b632a3ab91d8": {
"value": "
28Information on remuneration
In 2022, the total remuneration costs relating to the members of Key Management amounted to
EUR 5,141,832 (2021: EUR 7,112,736).
Remuneration of the Board of Management
In 2022, the total remuneration costs relating to the members of the Board of Management
amounted to EUR 4,379,057 (2021: EUR 6,428,236).
| | |
Remuneration costs of Key Management - the Board of Management |
| | |
| | |
| | |
Long Term Equity-based Incentive 2 | | |
| | |
| | |
| | |
| | |
1Related to the performance in the year reported which are paid out in the subsequent year.
2Costs of performance shares and restricted shares are based on accounting standards (IFRS) and do not reflect the value of
the shares at the vesting/release date.
3Comparatives for 2021 were revised to exclude the employee pension premium of EUR 1,941 for each of the Board of
Management members.
4Mainly concern (part of) allowances to members of the Board of Management that can be considered as remuneration. In a
situation where such a part of an allowance can be considered as (indirect) remuneration (for example, private use of the
company car), then such part is both valued and accounted for here. The method employed by the fiscal authorities in the
Netherlands is the starting point for the value stated. Net allowances are not included.
For further information on remuneration costs, see chapter 9, Remuneration report.
Remuneration of the Supervisory Board
The remuneration of the members of the Supervisory Board amounted to EUR 762,775 (2021:
EUR 684,500).
| | |
Remuneration of Key Management - the Supervisory Board in EUR |
| | |
| | |
| | |
| | |
| | |
1Relates to the allowance for (inter-)continental travel.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory",
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}
},
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"value": "
29Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of\u00a0business: interest rate risk, liquidity risk, currency risk, commodity price risk, credit risk and country risk.
This note comprises the disclosures on Signify's financial risk management objectives, policies and procedures to monitor and manage these risks.
The summary of all financial assets and liabilities, including their classification and measurement and fair value hierarchy is presented below:
| | | | | | |
| | Gross amount recognized on the balance sheet | Amounts not offset on the balance sheet, but are subject to master netting arrangements | | Fair value hierarchy level | |
Balance as at December 31, 2021 | | | | | | |
Non-current financial assets 1 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Balance as at December 31, 2022 | | | | | | |
Non-current financial assets 1, 2 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
1In view of the nature, maturity or the magnitude of the amounts, Signify considers that the fair value of non-current financial assets, trade and other receivables, debt (excluding Eurobonds), trade and other payables are not materially different from their
carrying value.
2Mainly includes the insurance cover asset as referred to in the legal section, in note 24, Provisions.
The estimated fair value of financial instruments has been determined by Signify using available
market information and appropriate valuation methods. The estimates presented are not
necessarily indicative of the amounts that will ultimately be realized by Signify upon maturity or
disposal. The use of market assumptions and/or estimation methods may have a material effect
on the estimated fair value amounts.
The following hierarchy is applied to classify the financial assets and liabilities:
Level 1
Instruments included in Level 1 are comprised primarily of listed Eurobonds classified as financial
liabilities at amortized cost. The fair value of financial instruments traded in active markets is
based on quoted market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm\u2019s length basis.
Level 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
Interest rate risk
Interest rate risk is the risk of the fair value or future cash flows of a financial instrument
fluctuating because of changes in the market interest rates. Financial instruments included in
the debt position create an inherent interest rate risk. Failure to effectively hedge this risk
could negatively impact financial results.
Signify monitors interest rate coverage, short-term and long-term interest rate developments
and has the flexibility to opt for different short-term interest periods for the variable debt
instruments at roll-over dates and/or could enter into derivative financial instruments to fix
interest rates for a certain period of time. As of December 31, 2022, Signify had a ratio of fixed-
rate debt to total outstanding debt of approximately 75% (2021: 75%).
A sensitivity analysis conducted at reporting date shows that if interest rates were to increase
instantaneously by 1% from their level of December 31, 2022, with all other variables held
constant, the annualized net interest expense would decrease by EUR 3 million. This impact was
based on the outstanding net floating debt position as of December 31, 2022.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated
with financial liabilities.
Liquidity risk for Signify is monitored through the Treasury Risk Committee which tracks the
development of the actual cash flow position and uses input from a number of sources in order
to forecast the overall liquidity position.
The table below analyzes Signify's financial liabilities into relevant maturity groupings based on
their contractual maturities. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances as the
impact of discounting is not significant. Interest on Long-term debt is based on floating rate
adjustments according to market expectations.
| | | | |
| | |
| | | | |
Debt, including bank overdrafts | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Off-balance sheet commitments | | | | |
| | | | |
Contractual cash obligations | | | | |
Revolving credit facility (RCF) | | | | |
Signify invests surplus cash primarily in money market deposits with investment graded financial
institutions, and with maturities up to three months, to ensure sufficient liquidity is available to
meet liabilities when due.
Signify has various sources to mitigate liquidity risk. Signify pools cash from subsidiaries to the
extent legally and economically feasible; cash not pooled remains available for operational or
investment needs. The table below shows details of cash and cash equivalents and bank
overdrafts as of the reporting date:
| | |
| | |
Cash at banks and in hand | | |
| | |
| | |
Cash and cash equivalents | | |
| | |
Cash and cash equivalents and bank overdrafts | | |
Signify has a EUR 500 million revolving credit facility that can be used for general purposes. As of
December 31, 2022, Signify did not have any amounts drawn under this facility.
Currency risk
Currency risk is the risk that reported financial performance, or the fair value or future cash
flows of a financial instrument, will fluctuate because of changes in foreign exchange rates.
Signify operates in many countries and currencies and therefore currency fluctuations may
inevitably impact its financial results. Signify is exposed to currency risk in the following areas:
\u2022Transaction exposures related to anticipated sales and purchases and on-balance-sheet
receivables/payables resulting from such transactions.
\u2022Financing exposure arising from foreign currency intercompany and external debt and
deposits.
\u2022Translation exposure of net income in foreign entities.
\u2022Translation exposure of foreign currency denominated equity invested in consolidated
companies.
\u2022Translation exposure to equity interests in non-functional-currency investments in associates
and financial assets at fair value.
It is Signify\u2019s policy to reduce the volatility caused by foreign currency movements on its net
earnings by hedging the anticipated net exposure of foreign currencies resulting from foreign
currency sales and purchases. In general, net anticipated exposures are hedged during a period
of 15 months in layers of 20% up to a hedge ratio of 80%, using derivatives.
Signify\u2019s policy requires significant committed foreign currency exposures to be fully hedged,
generally using forwards. However, not every foreign currency can or shall be hedged as there
may be regulatory barriers or prohibitive hedging cost preventing Signify from effectively and/or
efficiently hedging its currency exposures. As a result, hedging activities cannot and will not
eliminate all currency risks for anticipated and committed transaction exposures.
The following table outlines the estimated nominal value in millions of EUR for transaction
exposures and related hedges for Signify\u2019s most significant currency exposures:
| | | | | |
| | | |
| | | | | |
Balance as at December 31 | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
1\u00a0 \u00a0 \u00a0 EUR exposures in non EUR denominated functional currencies.
As of December 31, 2022, a loss of EUR 27 million was deferred in equity as a result of these
hedges (2021: loss of EUR 3 million). The result deferred in equity will be released to earnings
mostly during 2023 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2022, EUR nil million (2021: EUR nil million) was recorded within cost
of goods sold in the Consolidated statement of income as a result of ineffectiveness on certain
anticipated cash flow hedges.
The total net fair value of hedges related to transaction exposure as of December 31, 2022, was
an unrealized liability of EUR 14 million (2021: asset EUR 2 million). An instantaneous 10% increase
in the value of euro against all currencies, with all other variables held constant, would lead to
no substantial change in the value of the derivatives. The above sensitivity analysis includes a
loss of EUR 4 million that would impact the income statement, which would largely offset the
opposite revaluation effect on the underlying accounts receivable and payable, and the
remaining gain of EUR 4 million would be recognized in equity to the extent that the cash flow
hedges were effective.
Foreign exchange exposure also arises from intercompany loans and deposits. Where Signify
enters into such arrangements the financing is generally provided in the functional currency of
the subsidiary. The currency of Signify\u2019s external funding and liquid assets is matched with the
required financing of subsidiaries either directly through external foreign currency loans and
deposits or synthetically by using foreign exchange derivatives. In certain cases, where Signify
subsidiaries may also have external foreign currency debt or liquid assets, these exposures are
also hedged using foreign exchange derivatives. As of December 31, 2022, the fair value of
these hedges was an unrealized asset of EUR 6 million (2021: asset EUR 8 million). An
instantaneous 10% increase in the value of euro against all currencies, with all other variables
held constant, would lead to a decrease of EUR 22 million in the value of the derivatives.\u00a0 \u00a0
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
During 2022, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 150 million matured. These hedges partially mitigated foreign currency
translation risk arising from the net assets of USD functional currency subsidiaries. These
hedges were fully effective, as such there was no ineffectiveness recognized in profit and loss in
2022. As at 31 December 2022, no net investment hedges were outstanding (2021: asset EUR 4
million). Signify may enter into further net investment hedges to partially offset these risks in the
future.
Commodity price risk
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in commodity prices.
Signify is a purchaser of certain base metals, precious metals and energy. Signify could hedge
certain commodity price risks using derivative instruments to minimize significant, unanticipated
earnings fluctuations caused by commodity price volatility. As of December 31, 2022, Signify had
EUR 44 million of commodity derivatives recognized in the Statement of financial position (2021:
EUR 17 million). Change of the commodity price by 10% will lead to the commodity derivatives
value change of EUR 9 million (2021: EUR 7 million).
Credit risk
Credit risk represents the loss that would be recognized at the reporting date, if counterparties
failed completely to perform their payment obligations as contracted. Credit risk is present
within Signify trade and other receivables and contract assets. To have better insights into the
credit exposures, Signify performs ongoing evaluations of the financial and non-financial
condition of its customers and adjusts credit limits when appropriate. In instances where the
creditworthiness of a customer is determined not to be sufficient to grant the credit limit
required, there are a number of mitigation tools that can be utilized to close the gap, including
reducing payment terms, cash on delivery, prepayments and pledges on assets.
Signify invests available cash and cash equivalents and enters into financial derivative
instruments with various financial institutions and is exposed to credit risk with these
counterparties. Signify does not enter into any financial derivative instruments to protect
against default by financial institutions.
Where possible, Signify requires all financial institutions to complete legally enforceable netting
agreements under an International Swap Dealers Association master agreement or otherwise
prior to trading, and whenever possible, to have a solid credit rating from generally accepted
rating agencies. Signify also regularly monitors the development of the credit risk of its financial
counterparties.
Signify minimizes this risk by limiting the deposits made with any single bank and by making
deposits, the majority of which is with banks that have strong credit ratings.
Maximum credit risk exposure for Signify equals carrying amounts of all financial assets
recognized in the Statement of financial position plus off-balance sheet guarantees provided.
Country risk
Country risk is the risk that political, legal, or economic developments in a single country could
adversely impact our performance. The country risk per country is defined as the sum of the
equity of all subsidiaries and associated companies in country cross-border transactions, such
as intercompany loans, accounts receivable from third parties and intercompany accounts
receivable.
As of December 31, 2022, Signify had country risk exposure of EUR 2.9 billion in the United
States, EUR 1.1 billion in the Netherlands and EUR 531 million in China including Hong Kong.
Countries where the risk exceeds EUR 200 million but was less than EUR 500 million are Belgium
(EUR 493 million), Poland (EUR 422 million), France (EUR 241 million) and Saudi Arabia (EUR 205
million). Countries where the risk exceeded EUR 50 million but was less than EUR 200 million are
Mexico, Spain, Canada, United Kingdom, Australia, India and Germany. The degree of risk of a
country is taken into account when new investments are considered. Signify does not, however,
use financial derivative instruments to hedge country risk, except for the net investment hedge
as described in the currency risk.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory",
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},
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"value": "
29Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of\u00a0business: interest rate risk, liquidity risk, currency risk, commodity price risk, credit risk and country risk.
This note comprises the disclosures on Signify's financial risk management objectives, policies and procedures to monitor and manage these risks.
The summary of all financial assets and liabilities, including their classification and measurement and fair value hierarchy is presented below:
| | | | | | |
| | Gross amount recognized on the balance sheet | Amounts not offset on the balance sheet, but are subject to master netting arrangements | | Fair value hierarchy level | |
Balance as at December 31, 2021 | | | | | | |
Non-current financial assets 1 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Balance as at December 31, 2022 | | | | | | |
Non-current financial assets 1, 2 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
1In view of the nature, maturity or the magnitude of the amounts, Signify considers that the fair value of non-current financial assets, trade and other receivables, debt (excluding Eurobonds), trade and other payables are not materially different from their
carrying value.
2Mainly includes the insurance cover asset as referred to in the legal section, in note 24, Provisions.
The estimated fair value of financial instruments has been determined by Signify using available
market information and appropriate valuation methods. The estimates presented are not
necessarily indicative of the amounts that will ultimately be realized by Signify upon maturity or
disposal. The use of market assumptions and/or estimation methods may have a material effect
on the estimated fair value amounts.
The following hierarchy is applied to classify the financial assets and liabilities:
Level 1
Instruments included in Level 1 are comprised primarily of listed Eurobonds classified as financial
liabilities at amortized cost. The fair value of financial instruments traded in active markets is
based on quoted market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm\u2019s length basis.
Level 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
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},
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"value": "
29Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of\u00a0business: interest rate risk, liquidity risk, currency risk, commodity price risk, credit risk and country risk.
This note comprises the disclosures on Signify's financial risk management objectives, policies and procedures to monitor and manage these risks.
The summary of all financial assets and liabilities, including their classification and measurement and fair value hierarchy is presented below:
| | | | | | |
| | Gross amount recognized on the balance sheet | Amounts not offset on the balance sheet, but are subject to master netting arrangements | | Fair value hierarchy level | |
Balance as at December 31, 2021 | | | | | | |
Non-current financial assets 1 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Balance as at December 31, 2022 | | | | | | |
Non-current financial assets 1, 2 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
1In view of the nature, maturity or the magnitude of the amounts, Signify considers that the fair value of non-current financial assets, trade and other receivables, debt (excluding Eurobonds), trade and other payables are not materially different from their
carrying value.
2Mainly includes the insurance cover asset as referred to in the legal section, in note 24, Provisions.
The estimated fair value of financial instruments has been determined by Signify using available
market information and appropriate valuation methods. The estimates presented are not
necessarily indicative of the amounts that will ultimately be realized by Signify upon maturity or
disposal. The use of market assumptions and/or estimation methods may have a material effect
on the estimated fair value amounts.
The following hierarchy is applied to classify the financial assets and liabilities:
Level 1
Instruments included in Level 1 are comprised primarily of listed Eurobonds classified as financial
liabilities at amortized cost. The fair value of financial instruments traded in active markets is
based on quoted market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm\u2019s length basis.
Level 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory",
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"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTkvZnJhZzpkZDQ1ZmQzZDhjNTQ0NzMyYmNhNGQxNDAyMTVkYTBkNC90ZXh0cmVnaW9uOmRkNDVmZDNkOGM1NDQ3MzJiY2E0ZDE0MDIxNWRhMGQ0XzU0OTc1NTgyOTIwMA_1b89fae5-709b-423f-9a6c-8d0e71c2c87c": {
"value": "
29Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of\u00a0business: interest rate risk, liquidity risk, currency risk, commodity price risk, credit risk and country risk.
This note comprises the disclosures on Signify's financial risk management objectives, policies and procedures to monitor and manage these risks.
The summary of all financial assets and liabilities, including their classification and measurement and fair value hierarchy is presented below:
| | | | | | |
| | Gross amount recognized on the balance sheet | Amounts not offset on the balance sheet, but are subject to master netting arrangements | | Fair value hierarchy level | |
Balance as at December 31, 2021 | | | | | | |
Non-current financial assets 1 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Balance as at December 31, 2022 | | | | | | |
Non-current financial assets 1, 2 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Level 2
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) are determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are based on observable market data, the instrument is included in Level 2.
The fair value of derivatives is calculated as the present value of the estimated future cash flows
based on observable interest yield curves, basis spread and foreign exchange rates. Please
refer to note 2, Significant accounting policies, for further details.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
This applies for Derivative financial assets not designated as hedging instruments, which mainly
relate to Signify\u2019s participations in Virtual Power Purchase Agreements. These contracts are
accounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuator,
on a quarterly basis. The fair value is calculated as the net forecasted cash in- or outflows
discounted to the present value. The unrealized change in fair value of EUR 26 million (2021: EUR
16 million) is recorded in financial income or expense (note 8). Unobservable input data is the
volume of generated wind power and the price curves of the respective electricity market.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTkvZnJhZzpkZDQ1ZmQzZDhjNTQ0NzMyYmNhNGQxNDAyMTVkYTBkNC90ZXh0cmVnaW9uOmRkNDVmZDNkOGM1NDQ3MzJiY2E0ZDE0MDIxNWRhMGQ0XzU0OTc1NTgyOTIwMA_c976f2a0-ff13-44be-9ab6-5a147377a82b": {
"value": "
29Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of\u00a0business: interest rate risk, liquidity risk, currency risk, commodity price risk, credit risk and country risk.
This note comprises the disclosures on Signify's financial risk management objectives, policies and procedures to monitor and manage these risks.
The summary of all financial assets and liabilities, including their classification and measurement and fair value hierarchy is presented below:
| | | | | | |
| | Gross amount recognized on the balance sheet | Amounts not offset on the balance sheet, but are subject to master netting arrangements | | Fair value hierarchy level | |
Balance as at December 31, 2021 | | | | | | |
Non-current financial assets 1 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
Balance as at December 31, 2022 | | | | | | |
Non-current financial assets 1, 2 | | | | | | |
| | | | | | |
Trade and other receivables 1 | | | | | | |
Derivative financial assets designated as hedging instruments | | | | | | |
Derivative financial assets not designated as hedging instruments | | | | | | |
Cash and cash equivalents | | | | | | |
| | | | | | |
Debt (excluding Eurobonds) 1 | | | | | | |
Derivative financial liabilities designated as hedging instruments | | | | | | |
Trade and other payables 1 | | | | | | |
Contingent considerations | | | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTkvZnJhZzpkZDQ1ZmQzZDhjNTQ0NzMyYmNhNGQxNDAyMTVkYTBkNC90ZXh0cmVnaW9uOmRkNDVmZDNkOGM1NDQ3MzJiY2E0ZDE0MDIxNWRhMGQ0XzEwOTk1MTE2ODAwMTI_1f10fdfa-a994-406b-bd10-02ca41e7bbf6": {
"value": "
29Financial risk managementSignify has various sources to mitigate liquidity risk. Signify pools cash from subsidiaries to the
extent legally and economically feasible; cash not pooled remains available for operational or
investment needs. The table below shows details of cash and cash equivalents and bank
overdrafts as of the reporting date:
| | |
| | |
Cash at banks and in hand | | |
| | |
| | |
Cash and cash equivalents | | |
| | |
Cash and cash equivalents and bank overdrafts | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTkvZnJhZzpkZDQ1ZmQzZDhjNTQ0NzMyYmNhNGQxNDAyMTVkYTBkNC90ZXh0cmVnaW9uOmRkNDVmZDNkOGM1NDQ3MzJiY2E0ZDE0MDIxNWRhMGQ0XzU0OTc1NTg2NjgxMA_86b42d53-cd19-476c-a550-03dbb493b7e3": {
"value": "Interest rate risk
Interest rate risk is the risk of the fair value or future cash flows of a financial instrument
fluctuating because of changes in the market interest rates. Financial instruments included in
the debt position create an inherent interest rate risk. Failure to effectively hedge this risk
could negatively impact financial results.
Signify monitors interest rate coverage, short-term and long-term interest rate developments
and has the flexibility to opt for different short-term interest periods for the variable debt
instruments at roll-over dates and/or could enter into derivative financial instruments to fix
interest rates for a certain period of time. As of December 31, 2022, Signify had a ratio of fixed-
rate debt to total outstanding debt of approximately 75% (2021: 75%).
A sensitivity analysis conducted at reporting date shows that if interest rates were to increase
instantaneously by 1% from their level of December 31, 2022, with all other variables held
constant, the annualized net interest expense would decrease by EUR 3 million. This impact was
based on the outstanding net floating debt position as of December 31, 2022.
Currency risk
Currency risk is the risk that reported financial performance, or the fair value or future cash
flows of a financial instrument, will fluctuate because of changes in foreign exchange rates.
Signify operates in many countries and currencies and therefore currency fluctuations may
inevitably impact its financial results. Signify is exposed to currency risk in the following areas:
\u2022Transaction exposures related to anticipated sales and purchases and on-balance-sheet
receivables/payables resulting from such transactions.
\u2022Financing exposure arising from foreign currency intercompany and external debt and
deposits.
\u2022Translation exposure of net income in foreign entities.
\u2022Translation exposure of foreign currency denominated equity invested in consolidated
companies.
\u2022Translation exposure to equity interests in non-functional-currency investments in associates
and financial assets at fair value.
It is Signify\u2019s policy to reduce the volatility caused by foreign currency movements on its net
earnings by hedging the anticipated net exposure of foreign currencies resulting from foreign
currency sales and purchases. In general, net anticipated exposures are hedged during a period
of 15 months in layers of 20% up to a hedge ratio of 80%, using derivatives.
Signify\u2019s policy requires significant committed foreign currency exposures to be fully hedged,
generally using forwards. However, not every foreign currency can or shall be hedged as there
may be regulatory barriers or prohibitive hedging cost preventing Signify from effectively and/or
efficiently hedging its currency exposures. As a result, hedging activities cannot and will not
eliminate all currency risks for anticipated and committed transaction exposures.
The following table outlines the estimated nominal value in millions of EUR for transaction
exposures and related hedges for Signify\u2019s most significant currency exposures:
| | | | | |
| | | |
| | | | | |
Balance as at December 31 | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
1\u00a0 \u00a0 \u00a0 EUR exposures in non EUR denominated functional currencies.
As of December 31, 2022, a loss of EUR 27 million was deferred in equity as a result of these
hedges (2021: loss of EUR 3 million). The result deferred in equity will be released to earnings
mostly during 2023 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2022, EUR nil million (2021: EUR nil million) was recorded within cost
of goods sold in the Consolidated statement of income as a result of ineffectiveness on certain
anticipated cash flow hedges.
The total net fair value of hedges related to transaction exposure as of December 31, 2022, was
an unrealized liability of EUR 14 million (2021: asset EUR 2 million). An instantaneous 10% increase
in the value of euro against all currencies, with all other variables held constant, would lead to
no substantial change in the value of the derivatives. The above sensitivity analysis includes a
loss of EUR 4 million that would impact the income statement, which would largely offset the
opposite revaluation effect on the underlying accounts receivable and payable, and the
remaining gain of EUR 4 million would be recognized in equity to the extent that the cash flow
hedges were effective.
Foreign exchange exposure also arises from intercompany loans and deposits. Where Signify
enters into such arrangements the financing is generally provided in the functional currency of
the subsidiary. The currency of Signify\u2019s external funding and liquid assets is matched with the
required financing of subsidiaries either directly through external foreign currency loans and
deposits or synthetically by using foreign exchange derivatives. In certain cases, where Signify
subsidiaries may also have external foreign currency debt or liquid assets, these exposures are
also hedged using foreign exchange derivatives. As of December 31, 2022, the fair value of
these hedges was an unrealized asset of EUR 6 million (2021: asset EUR 8 million). An
instantaneous 10% increase in the value of euro against all currencies, with all other variables
held constant, would lead to a decrease of EUR 22 million in the value of the derivatives.\u00a0 \u00a0
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
During 2022, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 150 million matured. These hedges partially mitigated foreign currency
translation risk arising from the net assets of USD functional currency subsidiaries. These
hedges were fully effective, as such there was no ineffectiveness recognized in profit and loss in
2022. As at 31 December 2022, no net investment hedges were outstanding (2021: asset EUR 4
million). Signify may enter into further net investment hedges to partially offset these risks in the
future.
Commodity price risk
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in commodity prices.
Signify is a purchaser of certain base metals, precious metals and energy. Signify could hedge
certain commodity price risks using derivative instruments to minimize significant, unanticipated
earnings fluctuations caused by commodity price volatility. As of December 31, 2022, Signify had
EUR 44 million of commodity derivatives recognized in the Statement of financial position (2021:
EUR 17 million). Change of the commodity price by 10% will lead to the commodity derivatives
value change of EUR 9 million (2021: EUR 7 million).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfMarketRiskExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTkvZnJhZzpkZDQ1ZmQzZDhjNTQ0NzMyYmNhNGQxNDAyMTVkYTBkNC90ZXh0cmVnaW9uOmRkNDVmZDNkOGM1NDQ3MzJiY2E0ZDE0MDIxNWRhMGQ0XzI3NDg3NzkwODM0NTA_5595f18b-3a87-4072-b90f-434e5c902701": {
"value": "
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated
with financial liabilities.
Liquidity risk for Signify is monitored through the Treasury Risk Committee which tracks the
development of the actual cash flow position and uses input from a number of sources in order
to forecast the overall liquidity position.
The table below analyzes Signify's financial liabilities into relevant maturity groupings based on
their contractual maturities. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances as the
impact of discounting is not significant. Interest on Long-term debt is based on floating rate
adjustments according to market expectations.
| | | | |
| | |
| | | | |
Debt, including bank overdrafts | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Off-balance sheet commitments | | | | |
| | | | |
Contractual cash obligations | | | | |
Revolving credit facility (RCF) | | | | |
Signify invests surplus cash primarily in money market deposits with investment graded financial
institutions, and with maturities up to three months, to ensure sufficient liquidity is available to
meet liabilities when due.
Signify has various sources to mitigate liquidity risk. Signify pools cash from subsidiaries to the
extent legally and economically feasible; cash not pooled remains available for operational or
investment needs. The table below shows details of cash and cash equivalents and bank
overdrafts as of the reporting date:
| | |
| | |
Cash at banks and in hand | | |
| | |
| | |
Cash and cash equivalents | | |
| | |
Cash and cash equivalents and bank overdrafts | | |
Signify has a EUR 500 million revolving credit facility that can be used for general purposes. As of
December 31, 2022, Signify did not have any amounts drawn under this facility.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTkvZnJhZzpkZDQ1ZmQzZDhjNTQ0NzMyYmNhNGQxNDAyMTVkYTBkNC90ZXh0cmVnaW9uOmRkNDVmZDNkOGM1NDQ3MzJiY2E0ZDE0MDIxNWRhMGQ0XzU0OTc1NTg2Njc5OQ_ad14e0f5-197c-479b-bf06-8f6c63616bec": {
"value": "Currency risk
The following table outlines the estimated nominal value in millions of EUR for transaction
exposures and related hedges for Signify\u2019s most significant currency exposures:
| | | | | |
| | | |
| | | | | |
Balance as at December 31 | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
1\u00a0 \u00a0 \u00a0 EUR exposures in non EUR denominated functional currencies.
As of December 31, 2022, a loss of EUR 27 million was deferred in equity as a result of these
hedges (2021: loss of EUR 3 million). The result deferred in equity will be released to earnings
mostly during 2023 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2022, EUR nil million (2021: EUR nil million) was recorded within cost
of goods sold in the Consolidated statement of income as a result of ineffectiveness on certain
anticipated cash flow hedges.
The total net fair value of hedges related to transaction exposure as of December 31, 2022, was
an unrealized liability of EUR 14 million (2021: asset EUR 2 million). An instantaneous 10% increase
in the value of euro against all currencies, with all other variables held constant, would lead to
no substantial change in the value of the derivatives. The above sensitivity analysis includes a
loss of EUR 4 million that would impact the income statement, which would largely offset the
opposite revaluation effect on the underlying accounts receivable and payable, and the
remaining gain of EUR 4 million would be recognized in equity to the extent that the cash flow
hedges were effective.
Foreign exchange exposure also arises from intercompany loans and deposits. Where Signify
enters into such arrangements the financing is generally provided in the functional currency of
the subsidiary. The currency of Signify\u2019s external funding and liquid assets is matched with the
required financing of subsidiaries either directly through external foreign currency loans and
deposits or synthetically by using foreign exchange derivatives. In certain cases, where Signify
subsidiaries may also have external foreign currency debt or liquid assets, these exposures are
also hedged using foreign exchange derivatives. As of December 31, 2022, the fair value of
these hedges was an unrealized asset of EUR 6 million (2021: asset EUR 8 million). An
instantaneous 10% increase in the value of euro against all currencies, with all other variables
held constant, would lead to a decrease of EUR 22 million in the value of the derivatives.\u00a0 \u00a0
Translation exposure of foreign-currency equity invested in consolidated entities is generally
not hedged. However, if a hedge is entered into, it is accounted for as a net investment hedge.
During 2022, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 150 million matured. These hedges partially mitigated foreign currency
translation risk arising from the net assets of USD functional currency subsidiaries. These
hedges were fully effective, as such there was no ineffectiveness recognized in profit and loss in
2022. As at 31 December 2022, no net investment hedges were outstanding (2021: asset EUR 4
million). Signify may enter into further net investment hedges to partially offset these risks in the
future.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8xOTkvZnJhZzpkZDQ1ZmQzZDhjNTQ0NzMyYmNhNGQxNDAyMTVkYTBkNC90ZXh0cmVnaW9uOmRkNDVmZDNkOGM1NDQ3MzJiY2E0ZDE0MDIxNWRhMGQ0XzI3NDg3NzkwODM0NTE_4b802b76-1a8d-435f-95eb-6549e7434351": {
"value": "
Credit risk
Credit risk represents the loss that would be recognized at the reporting date, if counterparties
failed completely to perform their payment obligations as contracted. Credit risk is present
within Signify trade and other receivables and contract assets. To have better insights into the
credit exposures, Signify performs ongoing evaluations of the financial and non-financial
condition of its customers and adjusts credit limits when appropriate. In instances where the
creditworthiness of a customer is determined not to be sufficient to grant the credit limit
required, there are a number of mitigation tools that can be utilized to close the gap, including
reducing payment terms, cash on delivery, prepayments and pledges on assets.
Signify invests available cash and cash equivalents and enters into financial derivative
instruments with various financial institutions and is exposed to credit risk with these
counterparties. Signify does not enter into any financial derivative instruments to protect
against default by financial institutions.
Where possible, Signify requires all financial institutions to complete legally enforceable netting
agreements under an International Swap Dealers Association master agreement or otherwise
prior to trading, and whenever possible, to have a solid credit rating from generally accepted
rating agencies. Signify also regularly monitors the development of the credit risk of its financial
counterparties.
Signify minimizes this risk by limiting the deposits made with any single bank and by making
deposits, the majority of which is with banks that have strong credit ratings.
Maximum credit risk exposure for Signify equals carrying amounts of all financial assets
recognized in the Statement of financial position plus off-balance sheet guarantees provided.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCreditRiskExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjgxMDc0OWRjZjU2YjRmNzI4MWNiMjk3ZDZjOWZjZTAwL3NlYzo4MTA3NDlkY2Y1NmI0ZjcyODFjYjI5N2Q2YzlmY2UwMF8yMDIvZnJhZzoyZDg2MDVlMWY4ZTQ0NzFiOWNlY2E4MDI4OGQ4MDI5NC90ZXh0cmVnaW9uOjJkODYwNWUxZjhlNDQ3MWI5Y2VjYTgwMjg4ZDgwMjk0XzI3NDg3NzkwNzAwNzQ_91167d3b-55cc-444c-b443-22d163adec13": {
"value": "
30Events after the balance sheet date
In January 2023, Signify notified Koninklijke Philips N.V. our desire to extend the duration of the
Trade Mark License Agreement (TMLA) for the second term commencing from February 1, 2026,
to January 31, 2031. Under the TMLA, Signify is obliged to pay a royalty on the net turnover of all
licensed products and services. The applicable royalty percentages for the extended term is 1%
and the minimum annual guaranteed royalty payment is EUR 20 million.
No other subsequent events occurred that are material to Signify.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory",
"language": "en",
"entity": "scheme:549300072P3J1X8NZO35",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
}
}
}