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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 \"LIGHT\".
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, 2023, 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 27, 2024, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 14, 2024. 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 presentation 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 if
there is new information/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, non-current income tax payables, revenue recognition, impairments,
provisions, insurance cover asset recoverability, employee benefit obligations, inventory
valuation and obsolescence provision, 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 matters
The impact of climate change generates opportunities as well as challenges for Signify\u2019s existing
and future lighting products and solutions portfolio. Sustainability is an integral part of Signify's 5
Frontiers strategy. Its pillar, Growth for Sustainability, aims to address global challenges by
focusing on sustainable growth areas, based on low-carbon technological innovation: Climate
action, Circular economy, Food availability, Safety & security, and Health & well-being. Through
its global leadership in energy-efficient lighting, Signify's portfolio is uniquely positioned to
mitigate risks and capture 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 lamps market is expected to continue to decline in the coming years due to
the ongoing adoption of LED lighting technologies and regulatory changes. While the overall
conventional market continues to decline, Conventional Products\u2019 focus is on further increasing
its leading market share in key segments and markets. The specialty lighting products see a
much slower conversion rate to LED. 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 2023 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. In addition, Property, Plant
and Equipment of Conventional Products were reviewed for impairment triggering events.
Where applicable, assets were impaired to their recoverable amounts, and useful lives were
adjusted accordingly.
Macroeconomic environment
The current macro economic environment poses risks and uncertainties which are closely
monitored by Signify. Such risks, uncertainties and other important factors include but are not
limited to: adverse economic and political developments, in particular the impacts of the Russia-
Ukraine conflict, the conflict in the Middle East, the energy crisis in Europe, the recovery
trajectory of the Chinese economy, component availability and cost inflation.
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. 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 material impairment was identified based on the 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, 2023, 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 material
derecognition as a result of this assessment was recorded.
New operating model
On December 1, 2023, Signify announced its new operating model. The operating model and
revised segments are expected to be effective in the course of 2024 and are therefore not
reflected in the Consolidated financial statements as at December 31, 2023.
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, 2023:
\u2022 Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single
transaction;
\u2022 Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies;
\u2022 Amendments to IAS 8: Definition of Accounting estimates;
\u2022 Amendments to IAS 12: International tax reform \u2013 Pillar two model rules.
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 that are mandatory for reporting
periods commencing on or after January 1, 2024, have been published. 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:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-404": { "value": "
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 \"LIGHT\".
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, 2023, 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 27, 2024, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 14, 2024. 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 presentation 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-405": { "value": "Signify N.V.", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-406": { "value": "public company with limited liability", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-407": { "value": "the Netherlands", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-408": { "value": "the Netherlands", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-410": { "value": "
Basis of preparation
The Consolidated financial statements as at December 31, 2023, 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 27, 2024, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 14, 2024. The Consolidated financial
statements have been prepared on a going concern basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-409": { "value": "
Basis of preparation
The Consolidated financial statements as at December 31, 2023, 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 27, 2024, and will be submitted for adoption to
the Annual General Meeting of Shareholders on May 14, 2024. The Consolidated financial
statements have been prepared on a going concern basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-411": { "value": "
Basis of preparation
The Consolidated financial statements as at December 31, 2023, 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.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-412": { "value": "
Functional and presentation 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-415": { "value": "
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 if
there is new information/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, non-current income tax payables, revenue recognition, impairments,
provisions, insurance cover asset recoverability, employee benefit obligations, inventory
valuation and obsolescence provision, 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 matters
Conventional Products
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 2023 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. In addition, Property, Plant
and Equipment of Conventional Products were reviewed for impairment triggering events.
Where applicable, assets were impaired to their recoverable amounts, and useful lives were
adjusted accordingly.
Revenue recognition
Transaction 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. 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:
\u2022 Restructuring 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 Signify's 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 it will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it;
\u2022 Environmental 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;
\u2022 Product warranty - A provision for product warranty is recognized 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;
\u2022 Litigation provisions \u2013 Liabilities and expected insurance recoveries, if any, are recorded
separately. Balances are transferred to Other liabilities when 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;
\u2022 Onerous 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.
Intangible assets other than goodwill
The fair value of other intangible assets, which mainly consist of 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 values.
The expected useful lives in years of intangible assets excluding goodwill are as follows:
Product development
from 2 to 5
Software
from 3 to 10
Technology
from 2 to 20
Customer relations
from 5 to 20
Brand names
from 5 to 20
Other
from 2 to 10
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 taxes
Tax risks
Tax 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.
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 57 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.
15Intangible assets
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 2024 to 2026. 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 2023 and 2022 were based on the key
assumptions included in the table below:
Key assumptions in %
Compound sales growth rate 1
Extra polation
period
Used to
calculate
terminal value
Pre-tax
discount rates
Digital Solutions 2023
2.4%
0.5%
11.8%
Digital Solutions 2022
2.8%
0.3%
11.6%
1 Compound sales growth rate is the annualized steady growth rate over the forecast period.
The company has taken into account the current macroeconomic environment and assumed a
lower growth expectation in the 2023 impairment test. In addition, Signify performed a
sensitivity analysis and noted that a reasonably possible change in key assumptions will not
result in an impairment.
24Provisions
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 and claims relating
to various matters including commercial transactions, alleged intellectual property infringement
and product liability claims for property damage and personal injury, alleged to have been
caused by failure or malfunction of Signify products. 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 a provision if payment with respect to a particular matter
is probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years. Releases from legal provisions were mainly related to the
legal case as described below.
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 the customer's employee was
injured when struck by a pallet of Signify products that was pushed off a storage rack by a
temporary worker operating a forklift at the warehouse.
In Q1 2023, Signify filed post-trial motions with the trial court challenging the jury award. On
April 26, 2023,the trial judge, issued an order reducing the jury's award to approximately USD 42
million. Signify has comprehensive global liability insurance and has confirmation that the case is
fully covered without reservations of rights, including interest and other cost. Both the legal
provision and the insurance cover asset have been adjusted in the balance sheet as per year
end without any net P&L impact. Signify continues to exercise all its rights to appeal the verdict
issued in this case. To that effect, Signify has filed its notice of appeal with the appropriate
Connecticut Appellate court to contest its liability this claim.
25Post-employment benefits
Assumptions
The mortality tables used for Signify\u2019s major schemes are:
\u2022 US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022 Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2023, were as follows:
2022
2023
Discount rate
4.8%
4.7%
Pension cost increases
0.5%
0.5%
Healthcare cost increases
0.5%
0.5%
Wage increases
1.1%
1.1%
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 7.6
years and 7.1 years. The average discount rates for the plans in these countries are respectively
4.77% and 3.24%. 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.
2022
2023
Increase
Discount rate (1% movement)
(52)
(51)
Wage change (1% movement)
5
2
Pension indexation change (1% movement)
10
9
Longevity (see explanation)
20
23
Healthcare cost change (1% movement)
5
5
Decrease
Discount rate (1% movement)
65
59
Wage change (1% movement)
(3)
(5)
Pension indexation change (1% movement)
(8)
(8)
Longevity (see explanation)
(28)
(23)
Healthcare cost change (1% movement)
(4)
(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.
28Financial risk management
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. For further
details, refer to note 2, Material accounting policies.
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 inflows or outflows
discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26
million gain) 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, 2023, with all other variables held
constant, the annualized net interest expense would decrease by EUR 6 million. This impact was
based on the outstanding net floating debt position as of December 31, 2023.
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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 if
there is new information/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, non-current income tax payables, revenue recognition, impairments,
provisions, insurance cover asset recoverability, employee benefit obligations, inventory
valuation and obsolescence provision, 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 matters
The impact of climate change generates opportunities as well as challenges for Signify\u2019s existing
and future lighting products and solutions portfolio. Sustainability is an integral part of Signify's 5
Frontiers strategy. Its pillar, Growth for Sustainability, aims to address global challenges by
focusing on sustainable growth areas, based on low-carbon technological innovation: Climate
action, Circular economy, Food availability, Safety & security, and Health & well-being. Through
its global leadership in energy-efficient lighting, Signify's portfolio is uniquely positioned to
mitigate risks and capture 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 lamps market is expected to continue to decline in the coming years due to
the ongoing adoption of LED lighting technologies and regulatory changes. While the overall
conventional market continues to decline, Conventional Products\u2019 focus is on further increasing
its leading market share in key segments and markets. The specialty lighting products see a
much slower conversion rate to LED. 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 2023 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. In addition, Property, Plant
and Equipment of Conventional Products were reviewed for impairment triggering events.
Where applicable, assets were impaired to their recoverable amounts, and useful lives were
adjusted accordingly.
Macroeconomic environment
The current macro economic environment poses risks and uncertainties which are closely
monitored by Signify. Such risks, uncertainties and other important factors include but are not
limited to: adverse economic and political developments, in particular the impacts of the Russia-
Ukraine conflict, the conflict in the Middle East, the energy crisis in Europe, the recovery
trajectory of the Chinese economy, component availability and cost inflation.
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. 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 material impairment was identified based on the 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, 2023, 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 material
derecognition as a result of this assessment was recorded.
Revenue recognition
Transaction 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. 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.
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:
\u2022 Restructuring 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 Signify's 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 it will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it;
\u2022 Environmental 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;
\u2022 Product warranty - A provision for product warranty is recognized 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;
\u2022 Litigation provisions \u2013 Liabilities and expected insurance recoveries, if any, are recorded
separately. Balances are transferred to Other liabilities when 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;
\u2022 Onerous 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, which mainly consist of 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 values.
The expected useful lives in years of intangible assets excluding goodwill are as follows:
Product development
from 2 to 5
Software
from 3 to 10
Technology
from 2 to 20
Customer relations
from 5 to 20
Brand names
from 5 to 20
Other
from 2 to 10
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 property, plant and equipment and finite-lived intangible
assets
Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the 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 taxes
Global tax developments - Pillar Two
The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive
Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to
address the tax challenges arising from the digitalization of the global economy. The
Pillar Two model rules aim to ensure that large multinational enterprises pay a minimum level of
tax on the income arising in each jurisdiction where they operate.These Pillar Two model rules
have been transposed into Pillar Two legislation that has been enacted or substantively enacted
as at December 31, 2023, in certain jurisdictions in which Signify operates.
The IASB issued amendments to IAS 12 clarifying that IAS 12 applies to income taxes arising from
tax law enacted or substantively enacted to implement the OECD/G20 BEPS Pillar Two model
rules. Signify applied the mandatory temporary exception to the requirements of IAS 12, under
which a company does not recognize or disclose information about deferred tax assets and
liabilities related to the OECD/G20 BEPS Pillar Two model rules at 31 December 2023.
The Pillar Two legislation will be effective for Signify's financial year beginning 1 January 2024.
Signify is in scope of the legislation and has performed an assessment of Signify\u2019s potential
exposure to Pillar Two income taxes. The assessment of the potential exposure to Pillar Two
income taxes is based on prior year country-by-country reporting and IFRS financial data for the
constituent entities included in the IFRS financial statements of Signify. Based on the
assessment, Signify can apply a transitional safe harbor in most of the jurisdictions it operates.
However, there are a limited number of jurisdictions where the transitional safe harbor relief
may not apply. Signify does not expect a material exposure to Pillar Two income taxes in future
years based on the assessment performed.
Tax risks
Tax 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.
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 57 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.
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 2024 to 2026. 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 2023 and 2022 were based on the key
assumptions included in the table below:
Key assumptions in %
Compound sales growth rate 1
Extra polation
period
Used to
calculate
terminal value
Pre-tax
discount rates
Digital Solutions 2023
2.4%
0.5%
11.8%
Digital Solutions 2022
2.8%
0.3%
11.6%
1 Compound sales growth rate is the annualized steady growth rate over the forecast period.
The company has taken into account the current macroeconomic environment and assumed a
lower growth expectation in the 2023 impairment test. In addition, 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 and claims relating
to various matters including commercial transactions, alleged intellectual property infringement
and product liability claims for property damage and personal injury, alleged to have been
caused by failure or malfunction of Signify products. 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 a provision if payment with respect to a particular matter
is probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years. Releases from legal provisions were mainly related to the
legal case as described below.
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 the customer's employee was
injured when struck by a pallet of Signify products that was pushed off a storage rack by a
temporary worker operating a forklift at the warehouse.
In Q1 2023, Signify filed post-trial motions with the trial court challenging the jury award. On
April 26, 2023,the trial judge, issued an order reducing the jury's award to approximately USD 42
million. Signify has comprehensive global liability insurance and has confirmation that the case is
fully covered without reservations of rights, including interest and other cost. Both the legal
provision and the insurance cover asset have been adjusted in the balance sheet as per year
end without any net P&L impact. Signify continues to exercise all its rights to appeal the verdict
issued in this case. To that effect, Signify has filed its notice of appeal with the appropriate
Connecticut Appellate court to contest its liability this claim.
25Post-employment benefits
Assumptions
The mortality tables used for Signify\u2019s major schemes are:
\u2022 US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022 Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2023, were as follows:
2022
2023
Discount rate
4.8%
4.7%
Pension cost increases
0.5%
0.5%
Healthcare cost increases
0.5%
0.5%
Wage increases
1.1%
1.1%
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 7.6
years and 7.1 years. The average discount rates for the plans in these countries are respectively
4.77% and 3.24%. 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.
2022
2023
Increase
Discount rate (1% movement)
(52)
(51)
Wage change (1% movement)
5
2
Pension indexation change (1% movement)
10
9
Longevity (see explanation)
20
23
Healthcare cost change (1% movement)
5
5
Decrease
Discount rate (1% movement)
65
59
Wage change (1% movement)
(3)
(5)
Pension indexation change (1% movement)
(8)
(8)
Longevity (see explanation)
(28)
(23)
Healthcare cost change (1% movement)
(4)
(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.
28Financial risk management
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. For further
details, refer to note 2, Material accounting policies.
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 inflows or outflows
discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26
million gain) 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, 2023, with all other variables held
constant, the annualized net interest expense would decrease by EUR 6 million. This impact was
based on the outstanding net floating debt position as of December 31, 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-414": { "value": "Critical accounting judgments and key sources of estimation uncertaintyThe 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 if there is new information/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, non-current income tax payables, revenue recognition, impairments, provisions, insurance cover asset recoverability, employee benefit obligations, inventory valuation and obsolescence provision, 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 2023 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. In addition, Property, Plant and Equipment of Conventional Products were reviewed for impairment triggering events. Where applicable, assets were impaired to their recoverable amounts, and useful lives were adjusted accordingly.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. 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:\u2022 Restructuring 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 Signify's 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 it will carry out the restructuring by starting to implement the plan, or by announcing the plan's main features to those affected by it;\u2022 Environmental 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;\u2022 Product warranty - A provision for product warranty is recognized 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;\u2022 Litigation provisions \u2013 Liabilities and expected insurance recoveries, if any, are recorded separately. Balances are transferred to Other liabilities when 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;\u2022 Onerous 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.Intangible assets other than goodwillThe fair value of other intangible assets, which mainly consist of 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 values.The expected useful lives in years of intangible assets excluding goodwill are as follows:Product development from 2 to 5 Software from 3 to 10 Technology from 2 to 20 Customer relations from 5 to 20 Brand names from 5 to 20 Other from 2 to 10 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 taxes Tax risksTax 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.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 57 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.15Intangible assets GoodwillKey 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 2024 to 2026. 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 2023 and 2022 were based on the key assumptions included in the table below:Key assumptions in % Compound sales growth rate 1Extra polation period Used to calculate terminal valuePre-tax discount ratesDigital Solutions 2023 2.4%0.5%11.8%Digital Solutions 2022 2.8%0.3%11.6%1 Compound sales growth rate is the annualized steady growth rate over the forecast period.The company has taken into account the current macroeconomic environment and assumed a lower growth expectation in the 2023 impairment test. In addition, Signify performed a sensitivity analysis and noted that a reasonably possible change in key assumptions will not result in an impairment.24Provisions Environmental 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 and claims relating to various matters including commercial transactions, alleged intellectual property infringement and product liability claims for property damage and personal injury, alleged to have been caused by failure or malfunction of Signify products. 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 a provision if payment with respect to a particular matter is probable and the amount can be estimated reliably. Signify expects the provision will be mainly utilized within the next three years. Releases from legal provisions were mainly related to the legal case as described below.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 the customer's employee was injured when struck by a pallet of Signify products that was pushed off a storage rack by a temporary worker operating a forklift at the warehouse.In Q1 2023, Signify filed post-trial motions with the trial court challenging the jury award. On April 26, 2023,the trial judge, issued an order reducing the jury's award to approximately USD 42 million. Signify has comprehensive global liability insurance and has confirmation that the case is fully covered without reservations of rights, including interest and other cost. Both the legal provision and the insurance cover asset have been adjusted in the balance sheet as per year end without any net P&L impact. Signify continues to exercise all its rights to appeal the verdict issued in this case. To that effect, Signify has filed its notice of appeal with the appropriate Connecticut Appellate court to contest its liability this claim.25Post-employment benefits AssumptionsThe mortality tables used for Signify\u2019s major schemes are:\u2022 US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality improvements according to Scale MP-2021.\u2022 Germany: Richttafeln 2018 G K. Heubeck.The weighted averages of the assumptions used to calculate the defined-benefit obligation as of December 31, 2023, were as follows:2022 2023 Discount rate 4.8%4.7%Pension cost increases 0.5%0.5%Healthcare cost increases 0.5%0.5%Wage increases 1.1%1.1%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 7.6 years and 7.1 years. The average discount rates for the plans in these countries are respectively 4.77% and 3.24%. 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.2022 2023 Increase Discount rate (1% movement) (52)(51)Wage change (1% movement) 52Pension indexation change (1% movement) 109Longevity (see explanation) 2023Healthcare cost change (1% movement) 55Decrease Discount rate (1% movement) 6559Wage change (1% movement) (3)(5)Pension indexation change (1% movement) (8)(8)Longevity (see explanation) (28)(23)Healthcare cost change (1% movement) (4)(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.28Financial risk management Level 2The 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. For further details, refer to note 2, Material accounting policies.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 inflows or outflows discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26 million gain) 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 riskA sensitivity analysis conducted at reporting date shows that if interest rates were to increase instantaneously by 1% from their level of December 31, 2023, with all other variables held constant, the annualized net interest expense would decrease by EUR 6 million. This impact was based on the outstanding net floating debt position as of December 31, 2023.", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-416": { "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. 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 material impairment was identified based on the 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:
\u2022 The fair value of the consideration transferred; plus
\u2022 The recognized amount of any non-controlling interest in the acquiree; plus
\u2022 If the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree; less
\u2022 The 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 the Business combinations
accounting policy 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, which mainly consist of 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 values.
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 when Signify can demonstrate that: the product or process is technically and
commercially feasible, the costs can be reliably measured, Signify has sufficient resources and
the intention to complete the 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:
Product development
from 2 to 5
Software
from 3 to 10
Technology
from 2 to 20
Customer relations
from 5 to 20
Brand names
from 5 to 20
Other
from 2 to 10
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 property, plant and equipment and finite-lived intangible
assets
Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the 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:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-418": { "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, 2023:
\u2022 Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single
transaction;
\u2022 Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies;
\u2022 Amendments to IAS 8: Definition of Accounting estimates;
\u2022 Amendments to IAS 12: International tax reform \u2013 Pillar two model rules.
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 that are mandatory for reporting
periods commencing on or after January 1, 2024, have been published. 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:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-417": { "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, 2023:
\u2022 Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single
transaction;
\u2022 Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies;
\u2022 Amendments to IAS 8: Definition of Accounting estimates;
\u2022 Amendments to IAS 12: International tax reform \u2013 Pillar two model rules.
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 that are mandatory for reporting
periods commencing on or after January 1, 2024, have been published. 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-419": { "value": "
2Material 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:
\u2022 The fair value of the consideration transferred; plus
\u2022 The recognized amount of any non-controlling interest in the acquiree; plus
\u2022 If the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree; less
\u2022 The 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.
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 functional
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 expenses, 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. 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, recorded under Other current liabilities and Other non-current liabilities,
consist of customer payments received in advance, for which Signify still needs to satisfy (part
of) the performance obligations. Contract liabilities mainly consist of recurring services
performance obligations, such as extended warranties, life-cycle services and cloud-enabled
services as well as advances for projects.
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 a 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:
\u2022 Financial 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;
\u2022 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;
\u2022 Financial 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;
\u2022 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:
\u2022 The rights to receive cash flows from the asset have expired; or
\u2022 Signify 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
\"pass-through\" 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.
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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The 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:
\u2022 Restructuring 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 Signify's 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 it will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it;
\u2022 Environmental 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;
\u2022 Product warranty - A provision for product warranty is recognized 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;
\u2022 Litigation provisions \u2013 Liabilities and expected insurance recoveries, if any, are recorded
separately. Balances are transferred to Other liabilities when 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;
\u2022 Onerous 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.
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:
Building
from 5 to 50
Machinery and installations
from 3 to 20
Other equipment
from 2 to 10
Right-of-use assets
from 2 to 20
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 an 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 the Business combinations
accounting policy 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, which mainly consist of 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 values.
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 when Signify can demonstrate that: the product or process is technically and
commercially feasible, the costs can be reliably measured, Signify has sufficient resources and
the intention to complete the 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:
Product development
from 2 to 5
Software
from 3 to 10
Technology
from 2 to 20
Customer relations
from 5 to 20
Brand names
from 5 to 20
Other
from 2 to 10
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 property, plant and equipment and finite-lived intangible
assets
Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the 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.
Pension costs in respect of defined benefit post employment plans primarily represent the
increase of the actuarial present value of the obligation for post employment benefits based on
employee service during the year. 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
Signify classifies a non-current asset (or disposal group) as held for sale if the carrying amount
is expected to be recovered primarily through sale rather than through continuing use. The
asset or disposal group should be available for immediate sale in its present condition, and the
sale should be highly probable, evidenced by Signify's commitment to sell the asset or disposal
group within one year from classification date. Signify's actions to complete the sale should
demonstrate that withdrawal from the plan is unlikely. The assessment of the held for sale
criteria requires judgment. 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.
Share-based compensation expenses
The cost of equity-settled transactions is determined by the fair value at the grant date using an
appropriate valuation model.
The grant-date fair value of equity-settled share-based payment awards granted to employees
is recognized as personnel expense, with a corresponding increase in equity, over the vesting
period of the award. The cumulative expense recognized for equity-settled transactions at each
reporting date reflects the extent to which the vesting period has expired and Signify\u2019s best
estimate of the number of equity instruments that will ultimately vest. The expense or credit in
the statement of profit or loss for a period represents the movement in cumulative expense
recognized as at the beginning and end of that period.
Service and non-market performance conditions are not considered when determining the
grant date fair value of awards, but the likelihood of the conditions being met is assessed as part
of Signify\u2019s best estimate of the number of equity instruments that will ultimately vest. Market
performance conditions are reflected within the grant date fair value.
No expense is recognized for awards that do not ultimately vest because non-market
performance and/or service conditions have not been met. Where awards include a market or
non-vesting condition, the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
Consolidated statement of cash flows
The Consolidated statement of cash flows is prepared using the indirect method. Cash flows
from derivative instruments that are accounted for as cash flow hedges are classified in the
same category as the cash flows from the hedged items. Cash flows from other derivative
instruments are classified consistent with the nature of the instrument. Cash flows in foreign
currencies have been translated into euros using the exchange rate at the date of the cash
flow. Borrowings which are repaid within the quarter, with a maturity of less than three months,
are reported on a net basis in cash flows from financing activities.
Earnings per share
Signify presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic
EPS is calculated by dividing the Net income (loss) attributable to shareholders of Signify N.V. by
the weighted average number of ordinary shares outstanding during the period, adjusted for
own shares held. Diluted EPS is determined by adjusting the Net income (loss) attributable to
shareholders and the weighted average number of ordinary shares outstanding during the
period, adjusted for own shares held, for the effects of all dilutive potential ordinary shares,
which comprises of restricted shares, conditional shares and performance shares granted to
employees.
Government grants
Grants from the government are recognized at their fair value where there is a reasonable
assurance that the grant will be received, and Signify will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in the Consolidated
statement of income over the period necessary to match them with the costs that they are
intended to compensate.
3Information by segment and main country
Operating segments are components of Signify\u2019s business activities about which separate
financial information is available that is evaluated regularly by the chief operating decision maker
(the Board of Management of Signify). The operating segments are Digital Solutions, Digital
Products and Conventional Products. The segments are organized based on the nature of the
products and services. \"Other\" represents amounts not allocated to the operating segments
and includes certain costs related to central R&D activities to drive innovation as well as group
enabling functions.
9Income taxes
The IASB issued amendments to IAS 12 clarifying that IAS 12 applies to income taxes arising from
tax law enacted or substantively enacted to implement the OECD/G20 BEPS Pillar Two model
rules. Signify applied the mandatory temporary exception to the requirements of IAS 12, under
which a company does not recognize or disclose information about deferred tax assets and
liabilities related to the OECD/G20 BEPS Pillar Two model rules at 31 December 2023.
28Financial risk management
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. For further
details, refer to note 2, Material accounting policies.
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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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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-420": { "value": "
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-423": { "value": "
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:
\u2022 The fair value of the consideration transferred; plus
\u2022 The recognized amount of any non-controlling interest in the acquiree; plus
\u2022 If the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree; less
\u2022 The 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.
Goodwill
The measurement of goodwill at initial recognition is described under the Business combinations
accounting policy 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.
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-422": { "value": "
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:
\u2022 The fair value of the consideration transferred; plus
\u2022 The recognized amount of any non-controlling interest in the acquiree; plus
\u2022 If the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree; less
\u2022 The 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-424": { "value": "
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:
\u2022 The fair value of the consideration transferred; plus
\u2022 The recognized amount of any non-controlling interest in the acquiree; plus
\u2022 If the business combination is achieved in stages, the fair value of the existing equity interest
in the acquiree; less
\u2022 The 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 the Business combinations
accounting policy 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.
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.
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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 functional
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 expenses, 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. 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, recorded under Other current liabilities and Other non-current liabilities,
consist of customer payments received in advance, for which Signify still needs to satisfy (part
of) the performance obligations. Contract liabilities mainly consist of recurring services
performance obligations, such as extended warranties, life-cycle services and cloud-enabled
services as well as advances for projects.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-427": { "value": "
Revenue recognition
Transaction price
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscountsAndRebatesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-428": { "value": "
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-429": { "value": "
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 a 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:
\u2022 Financial 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;
\u2022 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;
\u2022 Financial 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;
\u2022 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:
\u2022 The rights to receive cash flows from the asset have expired; or
\u2022 Signify 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
\"pass-through\" 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.
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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-434": { "value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes a 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:
\u2022 Financial 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;
\u2022 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;
\u2022 Financial 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:
\u2022 The rights to receive cash flows from the asset have expired; or
\u2022 Signify 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
\"pass-through\" 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.
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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-430": { "value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes a 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:
\u2022 Financial 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-433": { "value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes a 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:
\u2022 The rights to receive cash flows from the asset have expired; or
\u2022 Signify 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
\"pass-through\" 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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The right applies on a bilateral basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-432": { "value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes a 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:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-431": { "value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes a 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.
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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The right applies on a bilateral basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-436": { "value": "
Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes a 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.
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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-437": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-438": { "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:
\u2022 The rights to receive cash flows from the asset have expired; or
\u2022 Signify 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
\"pass-through\" 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-440": { "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 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 property, plant and equipment and finite-lived intangible
assets
Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-439": { "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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-444": { "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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The right applies on a bilateral basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-443": { "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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The right applies on a bilateral basis", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-442": { "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 risk management purposes. A
prospective effectiveness test is performed to prove that the hedge is effective.
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 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 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:
\u2022 The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;
\u2022 The right applies on a bilateral basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-441": { "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, which mainly consist of 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 values.
28Financial risk management
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. For further
details, refer to note 2, Material accounting policies.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument
is included in Level 3.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-445": { "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.
9Income taxes
The IASB issued amendments to IAS 12 clarifying that IAS 12 applies to income taxes arising from
tax law enacted or substantively enacted to implement the OECD/G20 BEPS Pillar Two model
rules. Signify applied the mandatory temporary exception to the requirements of IAS 12, under
which a company does not recognize or disclose information about deferred tax assets and
liabilities related to the OECD/G20 BEPS Pillar Two model rules at 31 December 2023.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-446": { "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.
9Income taxes
The IASB issued amendments to IAS 12 clarifying that IAS 12 applies to income taxes arising from
tax law enacted or substantively enacted to implement the OECD/G20 BEPS Pillar Two model
rules. Signify applied the mandatory temporary exception to the requirements of IAS 12, under
which a company does not recognize or disclose information about deferred tax assets and
liabilities related to the OECD/G20 BEPS Pillar Two model rules at 31 December 2023.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-447": { "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:
\u2022 Restructuring 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 Signify's 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 it will carry out the restructuring by starting to implement the plan, or by announcing the
plan's main features to those affected by it;
\u2022 Environmental 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;
\u2022 Product warranty - A provision for product warranty is recognized 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;
\u2022 Litigation provisions \u2013 Liabilities and expected insurance recoveries, if any, are recorded
separately. Balances are transferred to Other liabilities when 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;
\u2022 Onerous 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.
Pension costs in respect of defined benefit post employment plans primarily represent the
increase of the actuarial present value of the obligation for post employment benefits based on
employee service during the year. 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": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-448": { "value": "
Provisions
Environmental 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;
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDecommissioningRestorationAndRehabilitationProvisionsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-449": { "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": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-451": { "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:
Building
from 5 to 50
Machinery and installations
from 3 to 20
Other equipment
from 2 to 10
Right-of-use assets
from 2 to 20
Impairment of property, plant and equipment and finite-lived intangible
assets
Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the 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:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-450": { "value": "
Property, plant and equipment
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:
Building
from 5 to 50
Machinery and installations
from 3 to 20
Other equipment
from 2 to 10
Right-of-use assets
from 2 to 20
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-452": { "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 an 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": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-453": { "value": "
Intangible assets other than goodwill
The fair value of other intangible assets, which mainly consist of 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 values.
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 when Signify can demonstrate that: the product or process is technically and
commercially feasible, the costs can be reliably measured, Signify has sufficient resources and
the intention to complete the 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:
Product development
from 2 to 5
Software
from 3 to 10
Technology
from 2 to 20
Customer relations
from 5 to 20
Brand names
from 5 to 20
Other
from 2 to 10
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 property, plant and equipment and finite-lived intangible
assets
Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-454": { "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 when Signify can demonstrate that: the product or process is technically and
commercially feasible, the costs can be reliably measured, Signify has sufficient resources and
the intention to complete the 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-455": { "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 property, plant and equipment and finite-lived intangible
assets
Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-456": { "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.
Pension costs in respect of defined benefit post employment plans primarily represent the
increase of the actuarial present value of the obligation for post employment benefits based on
employee service during the year. 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.
Share-based compensation expenses
The cost of equity-settled transactions is determined by the fair value at the grant date using an
appropriate valuation model.
The grant-date fair value of equity-settled share-based payment awards granted to employees
is recognized as personnel expense, with a corresponding increase in equity, over the vesting
period of the award. The cumulative expense recognized for equity-settled transactions at each
reporting date reflects the extent to which the vesting period has expired and Signify\u2019s best
estimate of the number of equity instruments that will ultimately vest. The expense or credit in
the statement of profit or loss for a period represents the movement in cumulative expense
recognized as at the beginning and end of that period.
Service and non-market performance conditions are not considered when determining the
grant date fair value of awards, but the likelihood of the conditions being met is assessed as part
of Signify\u2019s best estimate of the number of equity instruments that will ultimately vest. Market
performance conditions are reflected within the grant date fair value.
No expense is recognized for awards that do not ultimately vest because non-market
performance and/or service conditions have not been met. Where awards include a market or
non-vesting condition, the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-457": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-458": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-460": { "value": "
Assets held for sale
Signify classifies a non-current asset (or disposal group) as held for sale if the carrying amount
is expected to be recovered primarily through sale rather than through continuing use. The
asset or disposal group should be available for immediate sale in its present condition, and the
sale should be highly probable, evidenced by Signify's commitment to sell the asset or disposal
group within one year from classification date. Signify's actions to complete the sale should
demonstrate that withdrawal from the plan is unlikely. The assessment of the held for sale
criteria requires judgment. 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-459": { "value": "
Assets held for sale
Signify classifies a non-current asset (or disposal group) as held for sale if the carrying amount
is expected to be recovered primarily through sale rather than through continuing use. The
asset or disposal group should be available for immediate sale in its present condition, and the
sale should be highly probable, evidenced by Signify's commitment to sell the asset or disposal
group within one year from classification date. Signify's actions to complete the sale should
demonstrate that withdrawal from the plan is unlikely. The assessment of the held for sale
criteria requires judgment. 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-461": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-462": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-463": { "value": "
Share-based compensation expenses
The cost of equity-settled transactions is determined by the fair value at the grant date using an
appropriate valuation model.
The grant-date fair value of equity-settled share-based payment awards granted to employees
is recognized as personnel expense, with a corresponding increase in equity, over the vesting
period of the award. The cumulative expense recognized for equity-settled transactions at each
reporting date reflects the extent to which the vesting period has expired and Signify\u2019s best
estimate of the number of equity instruments that will ultimately vest. The expense or credit in
the statement of profit or loss for a period represents the movement in cumulative expense
recognized as at the beginning and end of that period.
Service and non-market performance conditions are not considered when determining the
grant date fair value of awards, but the likelihood of the conditions being met is assessed as part
of Signify\u2019s best estimate of the number of equity instruments that will ultimately vest. Market
performance conditions are reflected within the grant date fair value.
No expense is recognized for awards that do not ultimately vest because non-market
performance and/or service conditions have not been met. Where awards include a market or
non-vesting condition, the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-464": { "value": "
Consolidated statement of cash flows
The Consolidated statement of cash flows is prepared using the indirect method. Cash flows
from derivative instruments that are accounted for as cash flow hedges are classified in the
same category as the cash flows from the hedged items. Cash flows from other derivative
instruments are classified consistent with the nature of the instrument. Cash flows in foreign
currencies have been translated into euros using the exchange rate at the date of the cash
flow. Borrowings which are repaid within the quarter, with a maturity of less than three months,
are reported on a net basis in cash flows from financing activities.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-465": { "value": "
Earnings per share
Signify presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic
EPS is calculated by dividing the Net income (loss) attributable to shareholders of Signify N.V. by
the weighted average number of ordinary shares outstanding during the period, adjusted for
own shares held. Diluted EPS is determined by adjusting the Net income (loss) attributable to
shareholders and the weighted average number of ordinary shares outstanding during the
period, adjusted for own shares held, for the effects of all dilutive potential ordinary shares,
which comprises of restricted shares, conditional shares and performance shares granted to
employees.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-466": { "value": "
Government grants
Grants from the government are recognized at their fair value where there is a reasonable
assurance that the grant will be received, and Signify will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in the Consolidated
statement of income over the period necessary to match them with the costs that they are
intended to compensate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-469": { "value": "
3Information by segment and main country
Operating segments are components of Signify\u2019s business activities about which separate
financial information is available that is evaluated regularly by the chief operating decision maker
(the Board of Management of Signify). The operating segments are Digital Solutions, Digital
Products and Conventional Products. The segments are organized based on the nature of the
products and services. \"Other\" represents amounts not allocated to the operating segments
and includes certain costs related to central R&D activities to drive innovation as well as group
enabling functions.
The following is an overview of Signify revenues and results by segment:
Digital
Solutions 5
Digital
Products
Conventional
Products
Other 4
Inter-
segment
elimination
Signify
2023
Sales to external customers
3,937
2,117
627
23
6,704
Sales including
intersegment
3,942
2,315
631
24
(210)
6,704
Depreciation and
amortization 1
(82)
(29)
(21)
(62)
(193)
EBITA 2
358
176
62
(147)
449
EBITA as a % of sales
9.1%
8.3%
9.9%
6.7%
Amortization 3
(80)
Income from operations
285
170
62
(147)
369
Financial income and
expenses
(102)
Results from investments in
associates
\u2013
Income before taxes
268
2022
Sales to external customers
4,231
2,469
793
22
7,514
Sales including
intersegment
4,236
2,691
796
23
(232)
7,514
Depreciation and
amortization 1
(80)
(31)
(22)
(59)
(192)
EBITA 2
374
272
60
138
844
EBITA as a % of sales
8.8%
11.0%
7.6%
11.2%
Amortization 3
(126)
Income from operations
256
265
60
137
718
Financial income and
expenses
(41)
Results from investments in
associates
\u2013
Income before taxes
678
1 Excluding amortization and impairments of acquisition-related intangible assets and goodwill.
2 Income from operations excluding amortization and impairments of acquisition-related intangible assets and goodwill
(\u201cEBITA\u201d).
3 Amortization and impairments of acquisition-related intangible assets and goodwill.
4 Considering the nature of Other, EBITA as a % of sales for Other is not meaningful.
5 Includes Intelligent Lighting Controls since March 1, 2023, 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 \"arm\u2019s length basis\".
Signify has no external customer that represents 10% or more of total sales.
Sales, tangible and intangible assets by main countries:
Sales 1
Tangible and intangible
assets 1, 2
2022
2023
2022
2023
Netherlands
655
524
604
596
United States
2,522
2,212
2,639
2,490
China
517
450
299
274
Germany
421
386
9
9
Other countries
3,398
3,132
709
660
Total countries
7,514
6,704
4,261
4,029
1 Includes Intelligent Lighting Controls since March 1, 2023, Fluence since May 2, 2022 and Pierlite since April 29, 2022.
2 Includes goodwill.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-468": { "value": "
3Information by segment and main country
Operating segments are components of Signify\u2019s business activities about which separate
financial information is available that is evaluated regularly by the chief operating decision maker
(the Board of Management of Signify). The operating segments are Digital Solutions, Digital
Products and Conventional Products. The segments are organized based on the nature of the
products and services. \"Other\" represents amounts not allocated to the operating segments
and includes certain costs related to central R&D activities to drive innovation as well as group
enabling functions.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-467": { "value": "
3Information by segment and main country
The following is an overview of Signify revenues and results by segment:
Digital
Solutions 5
Digital
Products
Conventional
Products
Other 4
Inter-
segment
elimination
Signify
2023
Sales to external customers
3,937
2,117
627
23
6,704
Sales including
intersegment
3,942
2,315
631
24
(210)
6,704
Depreciation and
amortization 1
(82)
(29)
(21)
(62)
(193)
EBITA 2
358
176
62
(147)
449
EBITA as a % of sales
9.1%
8.3%
9.9%
6.7%
Amortization 3
(80)
Income from operations
285
170
62
(147)
369
Financial income and
expenses
(102)
Results from investments in
associates
\u2013
Income before taxes
268
2022
Sales to external customers
4,231
2,469
793
22
7,514
Sales including
intersegment
4,236
2,691
796
23
(232)
7,514
Depreciation and
amortization 1
(80)
(31)
(22)
(59)
(192)
EBITA 2
374
272
60
138
844
EBITA as a % of sales
8.8%
11.0%
7.6%
11.2%
Amortization 3
(126)
Income from operations
256
265
60
137
718
Financial income and
expenses
(41)
Results from investments in
associates
\u2013
Income before taxes
678
1 Excluding amortization and impairments of acquisition-related intangible assets and goodwill.
2 Income from operations excluding amortization and impairments of acquisition-related intangible assets and goodwill
(\u201cEBITA\u201d).
3 Amortization and impairments of acquisition-related intangible assets and goodwill.
4 Considering the nature of Other, EBITA as a % of sales for Other is not meaningful.
5 Includes Intelligent Lighting Controls since March 1, 2023, 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 \"arm\u2019s length basis\".
Signify has no external customer that represents 10% or more of total sales.
Sales, tangible and intangible assets by main countries:
Sales 1
Tangible and intangible
assets 1, 2
2022
2023
2022
2023
Netherlands
655
524
604
596
United States
2,522
2,212
2,639
2,490
China
517
450
299
274
Germany
421
386
9
9
Other countries
3,398
3,132
709
660
Total countries
7,514
6,704
4,261
4,029
1 Includes Intelligent Lighting Controls since March 1, 2023, Fluence since May 2, 2022 and Pierlite since April 29, 2022.
2 Includes goodwill.
Disaggregated revenue information
Total sales consist primarily of the sales of goods to customers (2023: 97%, 2022: 97%).
Remaining sales include revenue from services, and sales- and usage-based royalties. The
amount of revenue recognized for the year ended 2023, from performance obligations satisfied
(or partially satisfied) in previous periods, amounts to EUR 62 million (2022: EUR 64 million).
Sales by market:
2022
2023
Europe
2,230
2,023
Americas 1
2,978
2,633
Rest of the world 2
1,709
1,522
Global businesses 3
597
526
Total
7,514
6,704
1 Includes Intelligent Lighting Controls since March 1, 2023.
2 Includes Pierlite since April 29, 2022.
3 Includes Fluence since May 2, 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-471": { "value": "
Disaggregated revenue information
Total sales consist primarily of the sales of goods to customers (2023: 97%, 2022: 97%).
Remaining sales include revenue from services, and sales- and usage-based royalties. The
amount of revenue recognized for the year ended 2023, from performance obligations satisfied
(or partially satisfied) in previous periods, amounts to EUR 62 million (2022: EUR 64 million).
Sales by market:
2022
2023
Europe
2,230
2,023
Americas 1
2,978
2,633
Rest of the world 2
1,709
1,522
Global businesses 3
597
526
Total
7,514
6,704
1 Includes Intelligent Lighting Controls since March 1, 2023.
2 Includes Pierlite since April 29, 2022.
3 Includes Fluence since May 2, 2022.
21Other liabilities
2022
2023
Contract liability
215
226
Other tax liabilities
78
88
Other liabilities
61
47
Total
353
360
From which current
194
206
From which non-current
160
154
Out of the total amount of EUR 215 million recognized in contract liabilities at the end of 2022
(2021: EUR 200 million), EUR 64 million has been recognized as revenue for the year ended
December 31, 2023 (2022: EUR 68 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-470": { "value": "
Disaggregated revenue information
Total sales consist primarily of the sales of goods to customers (2023: 97%, 2022: 97%).
Remaining sales include revenue from services, and sales- and usage-based royalties. The
amount of revenue recognized for the year ended 2023, from performance obligations satisfied
(or partially satisfied) in previous periods, amounts to EUR 62 million (2022: EUR 64 million).
Sales by market:
2022
2023
Europe
2,230
2,023
Americas 1
2,978
2,633
Rest of the world 2
1,709
1,522
Global businesses 3
597
526
Total
7,514
6,704
1 Includes Intelligent Lighting Controls since March 1, 2023.
2 Includes Pierlite since April 29, 2022.
3 Includes Fluence since May 2, 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDisaggregationOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-475": { "value": "
4Income from operations
Note
2022
2023
Sales
3
7,514
6,704
Cost of materials used 1
(3,410)
(2,816)
Employee benefit expenses
5
(1,790)
(1,961)
Depreciation and amortization
6
(318)
(274)
Shipping and handling
(460)
(369)
Advertising and promotion
(135)
(122)
Lease related expenses
(29)
(32)
Other operational costs
(861)
(763)
Other business income, net
7
208
1
Income from operations
718
369
1 Cost of materials used includes EUR 51 million (2022: EUR 37 million) of net foreign exchange losses.
Other operational costs contain items which are dissimilar in nature and individually insignificant
in amount to disclose separately. These costs contain, among others, sales related expenses,
outsourcing services, mainly in IT and HR, third-party workers, utilities and repair and
maintenance for fixed assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-474": { "value": "
4Income from operations
Note
2022
2023
Sales
3
7,514
6,704
Cost of materials used 1
(3,410)
(2,816)
Employee benefit expenses
5
(1,790)
(1,961)
Depreciation and amortization
6
(318)
(274)
Shipping and handling
(460)
(369)
Advertising and promotion
(135)
(122)
Lease related expenses
(29)
(32)
Other operational costs
(861)
(763)
Other business income, net
7
208
1
Income from operations
718
369
1 Cost of materials used includes EUR 51 million (2022: EUR 37 million) of net foreign exchange losses.
Other operational costs contain items which are dissimilar in nature and individually insignificant
in amount to disclose separately. These costs contain, among others, sales related expenses,
outsourcing services, mainly in IT and HR, third-party workers, utilities and repair and
maintenance for fixed assets.
5Employee benefit expenses
Personnel expenses by nature as included in the Consolidated statement of income:
Note
2022
2023
Salaries and wages
(1,216)
(1,213)
Social securities
(202)
(217)
Defined contribution plans
(75)
(76)
Cost of termination plans
(30)
(154)
Temporary personnel
(86)
(77)
Share-based compensation
26
(24)
(18)
Other
(156)
(205)
Total
(1,790)
(1,961)
Other personnel expenses mainly relate to travel expenses, incentives and other personnel
related costs. For further details on the cost of termination plans, refer to note 24, Provisions.
The average number of full-time equivalent (FTE) employees is summarized as follows:
In FTEs
2022
2023
Employees
31,693
29,612
Third party workers
3,619
3,478
Total 1
35,312
33,090
1 2,082 FTEs work in the Netherlands (2022: 2,117); the remaining FTEs work abroad.
6Depreciation, amortization and impairment
Note
2022
2023
Property, plant and equipment
13
(167)
(160)
Software
15
(9)
(12)
Other intangible assets
15
(126)
(80)
Product development
15
(17)
(21)
Total
(318)
(274)
7Other business income and expenses
2022
2023
Disposal of businesses
(11)
5
Disposal of fixed assets
193
(11)
Other remaining businesses
26
7
Other business income and expenses
208
1
Total other business income
227
24
Total other business expense
(19)
(23)
In 2023, the result on disposal of fixed assets mainly relates to an expense recognized regarding
a prior year real estate transaction, in \"Other\". In 2022, the result includes EUR 184 million
income from the mentioned real estate transaction which was recognized as Assets classified as
held for sale, as of December 31, 2021.
In 2023, the result on other remaining businesses includes EUR 8 million income (2022: EUR 28
million income) from the movements in the indemnification positions with Koninklijke Philips N.V.
originating from the separation.
24Provisions
Restruc-
turing
Environ-
mental
Product
warranty
Legal
Other
Total
Balance as at January 1,
2022
62
97
66
9
120
355
Acquisitions
\u2013
\u2013
53
\u2013
7
60
Additions
38
17
48
108
31
242
Utilizations
(52)
(24)
(51)
(6)
(22)
(155)
Reclassifications
\u2013
3
\u2013
\u2013
(17)
(14)
Releases
(13)
(6)
(1)
(2)
(7)
(28)
Changes in discount rate
\u2013
4
\u2013
\u2013
(7)
(4)
Accretion
\u2013
\u2013
\u2013
1
\u2013
1
Translation differences and
other movements
\u2013
1
(1)
(6)
\u2013
(6)
Balance as at December 31,
2022
36
92
115
103
105
451
Short-term
30
22
81
3
32
168
Long-term
6
70
34
101
73
283
Balance as at January 1,
2023
36
92
115
103
105
451
Acquisitions
\u2013
\u2013
(5)
\u2013
\u2013
(5)
Additions
158
27
48
5
26
264
Utilizations
(69)
(10)
(49)
(2)
(23)
(153)
Reclassifications
4
\u2013
\u2013
\u2013
(4)
\u2013
Releases
(8)
(5)
(2)
(55)
(10)
(79)
Changes in discount rate
\u2013
(6)
\u2013
\u2013
1
(5)
Accretion
\u2013
2
\u2013
1
1
4
Translation differences and
other movements
\u2013
(1)
(3)
(3)
(1)
(8)
Balance as at December 31,
2023
121
99
103
50
95
470
Short-term
114
26
40
2
24
206
Long-term
7
74
64
48
71
263
Restructuring
During the year ended December 31, 2023, additions to restructuring provision included both
programs in Conventional Products (mainly in Belgium), and the structural cost reduction
program.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-473": { "value": "
4Income from operations
Note
2022
2023
Sales
3
7,514
6,704
Cost of materials used 1
(3,410)
(2,816)
Employee benefit expenses
5
(1,790)
(1,961)
Depreciation and amortization
6
(318)
(274)
Shipping and handling
(460)
(369)
Advertising and promotion
(135)
(122)
Lease related expenses
(29)
(32)
Other operational costs
(861)
(763)
Other business income, net
7
208
1
Income from operations
718
369
1 Cost of materials used includes EUR 51 million (2022: EUR 37 million) of net foreign exchange losses.
Other operational costs contain items which are dissimilar in nature and individually insignificant
in amount to disclose separately. These costs contain, among others, sales related expenses,
outsourcing services, mainly in IT and HR, third-party workers, utilities and repair and
maintenance for fixed assets.
5Employee benefit expenses
Personnel expenses by nature as included in the Consolidated statement of income:
Note
2022
2023
Salaries and wages
(1,216)
(1,213)
Social securities
(202)
(217)
Defined contribution plans
(75)
(76)
Cost of termination plans
(30)
(154)
Temporary personnel
(86)
(77)
Share-based compensation
26
(24)
(18)
Other
(156)
(205)
Total
(1,790)
(1,961)
Other personnel expenses mainly relate to travel expenses, incentives and other personnel
related costs. For further details on the cost of termination plans, refer to note 24, Provisions.
The average number of full-time equivalent (FTE) employees is summarized as follows:
In FTEs
2022
2023
Employees
31,693
29,612
Third party workers
3,619
3,478
Total 1
35,312
33,090
1 2,082 FTEs work in the Netherlands (2022: 2,117); the remaining FTEs work abroad.
6Depreciation, amortization and impairment
Note
2022
2023
Property, plant and equipment
13
(167)
(160)
Software
15
(9)
(12)
Other intangible assets
15
(126)
(80)
Product development
15
(17)
(21)
Total
(318)
(274)
7Other business income and expenses
2022
2023
Disposal of businesses
(11)
5
Disposal of fixed assets
193
(11)
Other remaining businesses
26
7
Other business income and expenses
208
1
Total other business income
227
24
Total other business expense
(19)
(23)
In 2023, the result on disposal of fixed assets mainly relates to an expense recognized regarding
a prior year real estate transaction, in \"Other\". In 2022, the result includes EUR 184 million
income from the mentioned real estate transaction which was recognized as Assets classified as
held for sale, as of December 31, 2021.
In 2023, the result on other remaining businesses includes EUR 8 million income (2022: EUR 28
million income) from the movements in the indemnification positions with Koninklijke Philips N.V.
originating from the separation.
24Provisions
Restruc-
turing
Environ-
mental
Product
warranty
Legal
Other
Total
Balance as at January 1,
2022
62
97
66
9
120
355
Acquisitions
\u2013
\u2013
53
\u2013
7
60
Additions
38
17
48
108
31
242
Utilizations
(52)
(24)
(51)
(6)
(22)
(155)
Reclassifications
\u2013
3
\u2013
\u2013
(17)
(14)
Releases
(13)
(6)
(1)
(2)
(7)
(28)
Changes in discount rate
\u2013
4
\u2013
\u2013
(7)
(4)
Accretion
\u2013
\u2013
\u2013
1
\u2013
1
Translation differences and
other movements
\u2013
1
(1)
(6)
\u2013
(6)
Balance as at December 31,
2022
36
92
115
103
105
451
Short-term
30
22
81
3
32
168
Long-term
6
70
34
101
73
283
Balance as at January 1,
2023
36
92
115
103
105
451
Acquisitions
\u2013
\u2013
(5)
\u2013
\u2013
(5)
Additions
158
27
48
5
26
264
Utilizations
(69)
(10)
(49)
(2)
(23)
(153)
Reclassifications
4
\u2013
\u2013
\u2013
(4)
\u2013
Releases
(8)
(5)
(2)
(55)
(10)
(79)
Changes in discount rate
\u2013
(6)
\u2013
\u2013
1
(5)
Accretion
\u2013
2
\u2013
1
1
4
Translation differences and
other movements
\u2013
(1)
(3)
(3)
(1)
(8)
Balance as at December 31,
2023
121
99
103
50
95
470
Short-term
114
26
40
2
24
206
Long-term
7
74
64
48
71
263
Restructuring
During the year ended December 31, 2023, additions to restructuring provision included both
programs in Conventional Products (mainly in Belgium), and the structural cost reduction
program.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-472": { "value": "
4Income from operations
Note
2022
2023
Sales
3
7,514
6,704
Cost of materials used 1
(3,410)
(2,816)
Employee benefit expenses
5
(1,790)
(1,961)
Depreciation and amortization
6
(318)
(274)
Shipping and handling
(460)
(369)
Advertising and promotion
(135)
(122)
Lease related expenses
(29)
(32)
Other operational costs
(861)
(763)
Other business income, net
7
208
1
Income from operations
718
369
1 Cost of materials used includes EUR 51 million (2022: EUR 37 million) of net foreign exchange losses.
8Financial income and expenses
Note
2022
2023
Interest income
10
24
Change in fair value of financial assets at fair
value through profit or loss
28
36
4
Other financial income
1
4
Financial income
47
32
Interest expense
23
(44)
(58)
Interest on the net defined-benefit obligation
25
(8)
(16)
Interest expense on lease liability
23
(7)
(9)
Change in fair value of financial assets at fair
value through profit or loss
28
(9)
(26)
Net foreign exchange gains (losses)
(5)
(5)
Monetary gains (losses) 1
(5)
(6)
Other financial expenses
23
(9)
(15)
Financial expenses
(88)
(134)
Financial income and expenses
(41)
(102)
1 The monetary loss relates to hyperinflation in Turkey.
13Property, plant and equipment
Land and
buildings
Machinery
and
installations
Other
equipment
Prepayments
and
construction
in progress
Total
Book value as at January 1, 2022
450
167
59
49
724
Of which right-of-use assets
212
\u2013
18
\u2013
229
Change in book value:
Capital expenditure
61
2
15
58
136
Of which right-of-use assets
55
\u2013
10
\u2013
65
Assets available for use
19
24
14
(57)
\u2013
Acquisitions
6
1
1
1
9
Of which right-of-use assets
5
\u2013
\u2013
\u2013
5
Additions
86
27
30
1
145
Sales and disposals
(12)
(2)
(1)
\u2013
(15)
Of which right-of-use assets
(10)
\u2013
\u2013
\u2013
(10)
Divestments and transfers to
assets classified as held for sale
(4)
\u2013
\u2013
\u2013
(4)
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Depreciation
(83)
(38)
(33)
\u2013
(155)
Of which right-of-use assets
(58)
\u2013
(9)
\u2013
(67)
Impairment
(5)
(8)
(1)
\u2013
(14)
Of which right-of-use assets
(2)
\u2013
\u2013
\u2013
(2)
Reversal of impairment
1
1
\u2013
\u2013
2
Of which right-of-use assets
1
\u2013
\u2013
\u2013
1
Translation differences and other
movements
13
(7)
10
1
16
Of which right-of-use assets
8
\u2013
\u2013
\u2013
8
Total changes
(3)
(28)
5
2
(25)
Balance as at December 31, 2022
Cost
1,019
1,100
472
50
2,641
Accumulated depreciation /
impairment
(573)
(961)
(408)
\u2013
(1,942)
Book value
446
139
64
50
699
Of which right-of-use assets
211
\u2013
19
\u2013
230
Land and
buildings
Machinery
and
installations
Other
equipment
Prepayments
and
construction
in progress
Total
Book value as at January 1, 2023
446
139
64
50
699
Of which right-of-use assets
211
\u2013
19
\u2013
230
Change in book value:
Capital expenditure
34
2
22
48
106
Of which right-of-use assets
33
\u2013
18
\u2013
51
Assets available for use
11
26
19
(56)
\u2013
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Additions
45
29
41
(9)
106
Sales and disposals
(4)
\u2013
(1)
\u2013
(5)
Of which right-of-use assets
(4)
\u2013
(1)
\u2013
(4)
Divestments and transfers to
assets classified as held for sale
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Depreciation
(82)
(35)
(32)
\u2013
(148)
Of which right-of-use assets
(56)
\u2013
(10)
\u2013
(66)
Impairment
(3)
(6)
(1)
(1)
(12)
Of which right-of-use assets
(1)
\u2013
\u2013
\u2013
(1)
Reversal of impairment
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Translation differences and other
movements
(2)
(4)
(1)
(1)
(8)
Of which right-of-use assets
3
\u2013
\u2013
\u2013
3
Total changes
(45)
(17)
7
(11)
(66)
Balance as at December 31, 2023
Cost
1,020
1,041
486
39
2,586
Accumulated depreciation /
impairment
(619)
(919)
(415)
\u2013
(1,953)
Book value
401
122
71
39
633
Of which right-of-use assets
186
\u2013
26
\u2013
212
The impairment losses were mainly driven by manufacturing footprint rationalization. Additions of
right-of-use assets 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:
Note
2022
2023
Interest expense on lease liability
8
(7)
(9)
Total cash outflow for leases
4, 8, 23
(107)
(112)
23Debt
Movements of debt were as follows:
Term loans
Eurobonds
Lease
liabilities
Other debt
Bank
overdrafts
Total
Balance as at January 1, 2022
479
1,265
249
11
4
2,007
Acquisitions
\u2013
\u2013
5
\u2013
\u2013
5
Financing cash flows:
\u2022 New borrowings
\u2013
\u2013
\u2013
217
\u2013
217
\u2022 Repayment
\u2013
\u2013
(68)
(208)
\u2013
(276)
Translation difference
12
\u2013
2
\u2013
\u2013
14
Other movements 1
\u2013
3
66
\u2013
(3)
66
Balance as at December 31, 2022
491
1,268
254
19
1
2,033
Balance as at January 1, 2023
491
1,268
254
19
1
2,033
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Financing cash flows:
\u2022 New borrowings
222
\u2013
\u2013
12
\u2013
233
\u2022 Repayment
\u2013
\u2013
(70)
(13)
\u2013
(82)
Translation difference
(8)
\u2013
(2)
\u2013
\u2013
(11)
Other movements 1
(1)
3
55
\u2013
(1)
56
Balance as at December 31, 2023
704
1,271
237
18
\u2013
2,230
1 Other movements include additions of leases which are non-cash transactions.
Liquidity risk
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.
Payments due by period
Total
Less than
1 year
Between
1 and 5
years
Over
5 years
Debt, including bank overdrafts
1,993
972
1,021
\u2013
Interest on debt
108
52
56
\u2013
Trade and other payables
1,539
1,539
\u2013
\u2013
Lease liability
237
66
145
26
Derivative liabilities
17
17
\u2013
\u2013
Off-balance sheet commitments
164
31
93
40
Purchase obligations 1
414
162
252
\u2013
Contractual cash obligations
4,472
2,839
1,567
66
Revolving credit facility (RCF)
500
\u2013
\u2013
\u2013
1 Signify has commitments related to the ordinary course of business which in general relate to contracts and purchase order
commitments for less than 12 months. In the table, only the commitments for multiple years are presented, including their
short-term portion.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-476": { "value": "
5Employee benefit expenses
Personnel expenses by nature as included in the Consolidated statement of income:
Note
2022
2023
Salaries and wages
(1,216)
(1,213)
Social securities
(202)
(217)
Defined contribution plans
(75)
(76)
Cost of termination plans
(30)
(154)
Temporary personnel
(86)
(77)
Share-based compensation
26
(24)
(18)
Other
(156)
(205)
Total
(1,790)
(1,961)
Other personnel expenses mainly relate to travel expenses, incentives and other personnel
related costs. For further details on the cost of termination plans, refer to note 24, Provisions.
The average number of full-time equivalent (FTE) employees is summarized as follows:
In FTEs
2022
2023
Employees
31,693
29,612
Third party workers
3,619
3,478
Total 1
35,312
33,090
1 2,082 FTEs work in the Netherlands (2022: 2,117); the remaining FTEs work abroad
24Provisions
Restruc-
turing
Environ-
mental
Product
warranty
Legal
Other
Total
Balance as at January 1,
2022
62
97
66
9
120
355
Acquisitions
\u2013
\u2013
53
\u2013
7
60
Additions
38
17
48
108
31
242
Utilizations
(52)
(24)
(51)
(6)
(22)
(155)
Reclassifications
\u2013
3
\u2013
\u2013
(17)
(14)
Releases
(13)
(6)
(1)
(2)
(7)
(28)
Changes in discount rate
\u2013
4
\u2013
\u2013
(7)
(4)
Accretion
\u2013
\u2013
\u2013
1
\u2013
1
Translation differences and
other movements
\u2013
1
(1)
(6)
\u2013
(6)
Balance as at December 31,
2022
36
92
115
103
105
451
Short-term
30
22
81
3
32
168
Long-term
6
70
34
101
73
283
Balance as at January 1,
2023
36
92
115
103
105
451
Acquisitions
\u2013
\u2013
(5)
\u2013
\u2013
(5)
Additions
158
27
48
5
26
264
Utilizations
(69)
(10)
(49)
(2)
(23)
(153)
Reclassifications
4
\u2013
\u2013
\u2013
(4)
\u2013
Releases
(8)
(5)
(2)
(55)
(10)
(79)
Changes in discount rate
\u2013
(6)
\u2013
\u2013
1
(5)
Accretion
\u2013
2
\u2013
1
1
4
Translation differences and
other movements
\u2013
(1)
(3)
(3)
(1)
(8)
Balance as at December 31,
2023
121
99
103
50
95
470
Short-term
114
26
40
2
24
206
Long-term
7
74
64
48
71
263
Restructuring
During the year ended December 31, 2023, additions to restructuring provision included both
programs in Conventional Products (mainly in Belgium), and the structural cost reduction
program.
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
2022
2023
Obligation
Plan
assets
Net
Liability
Obligation
Plan
assets
Net
Liability
Unites States
459
(351)
108
420
(323)
97
Germany
170
(15)
155
169
(15)
154
Other countries
112
(48)
64
116
(45)
71
Total countries
741
(414)
327
705
(383)
322
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 43 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 15 million and a post-retirement welfare plan
with a net liability of EUR 38 million.
Signify reviewed the funding level of the Hourly & Salaried Pension Plan and decided to make a
contribution in 2023 of EUR 5 million. Signify decided to initiate a plan termination with the
intention to settle the plan liabilities in 2024 with an insurance company. This will mean that any
difference between the costs of settling the plan liabilities and the plan assets will need to be
funded by Signify. The financial impact on this transaction will only be known at the end of 2024
when Signify is expected to complete the buy out.
Signify expects cash outflows of EUR 7 million in 2024 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 4 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 150 million as at December 31, 2023. Signify expects cash outflows of
EUR 17 million in 2024 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 2024.
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 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
2022
2023
Obligation
Plan assets
Net Liability
Obligation
Plan assets
Net Liability
Balance as at January 1
905
(541)
363
741
(414)
327
Service cost
9
\u2013
9
10
\u2013
10
(Negative) past service cost
\u2013
\u2013
\u2013
1
\u2013
1
Admin expenses paid
\u2013
1
1
\u2013
1
1
Settlements
(8)
1
(8)
(1)
\u2013
(1)
Plan amendments
(1)
\u2013
(1)
(4)
\u2013
(4)
Recognized in employee benefit expenses
1
2
2
5
1
6
Interest (cost) / income
23
(15)
8
33
(18)
15
Included in Statements of Income
24
(13)
11
38
(18)
21
Actuarial gains / (losses)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2022 Demographic assumptions
(1)
\u2013
(1)
1
\u2013
1
\u2022 Financial assumptions
(165)
129
(36)
12
(7)
5
\u2022 Experience adjustment
22
\u2013
22
9
\u2013
9
Exchange rate differences
44
(33)
11
(15)
13
(2)
Included in Statements of comprehensive income
(101)
96
(5)
6
6
12
Employee contributions
1
(1)
\u2013
1
(1)
\u2013
Employer contributions
\u2013
(7)
(7)
\u2013
(10)
(10)
Benefits paid
\u2022 Benefits paid directly by employer
(34)
\u2013
(34)
(28)
\u2013
(28)
\u2022 Benefits paid from plan assets
(52)
52
\u2013
(53)
53
\u2013
Reclassifications
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Other
(86)
44
(42)
(80)
43
(38)
Balance as at December 31
741
(414)
327
705
(383)
322
During 2023, US interest rates dropped by some 20 bps and this has been reflected in lower
discount rates. For the Eurozone, the interest rates were some 50 bps lower at 31 December
than the year before. As such, the unfunded defined benefit plans in the US and the German
plans experienced the losses on the financial assumptions. For the funded plan in the US, this
was offset by the effect of the interest rate hedge gains.
Plan assets allocation
The asset allocation in Signify\u2019s pension plans at December 31 was as follows:
2022
2023
Debt securities
310
323
Equity securities
38
\u2013
Other
67
60
Total assets
415
383
The assets in 2023 contained 16% unquoted assets. Plan assets in 2023 do not include property
occupied by or financial instruments issued by Signify.
Some 84% of the total plan assets of the Signify pension plan are in the US and are invested in a
well-diversified portfolio. In anticipation of the earlier mentioned intended settlement of the
pension plan, the equity portfolio was sold and all assets at year-end are in the fixed income
portfolio with the interest rate sensitivity of this portfolio closely aligned to that of the plan\u2019s
pension liabilities. The remaining 16% 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:
\u2022 US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022 Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2023, were as follows:
2022
2023
Discount rate
4.8%
4.7%
Pension cost increases
0.5%
0.5%
Healthcare cost increases
0.5%
0.5%
Wage increases
1.1%
1.1%
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 7.6
years and 7.1 years. The average discount rates for the plans in these countries are respectively
4.77% and 3.24%. 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.
2022
2023
Increase
Discount rate (1% movement)
(52)
(51)
Wage change (1% movement)
5
2
Pension indexation change (1% movement)
10
9
Longevity (see explanation)
20
23
Healthcare cost change (1% movement)
5
5
Decrease
Discount rate (1% movement)
65
59
Wage change (1% movement)
(3)
(5)
Pension indexation change (1% movement)
(8)
(8)
Longevity (see explanation)
(28)
(23)
Healthcare cost change (1% movement)
(4)
(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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-477": { "value": "
The average number of full-time equivalent (FTE) employees is summarized as follows:
In FTEs
2022
2023
Employees
31,693
29,612
Third party workers
3,619
3,478
Total 1
35,312
33,090
1 2,082 FTEs work in the Netherlands (2022: 2,117); the remaining FTEs work abroad", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-478": { "value": "
6Depreciation, amortization and impairment
Note
2022
2023
Property, plant and equipment
13
(167)
(160)
Software
15
(9)
(12)
Other intangible assets
15
(126)
(80)
Product development
15
(17)
(21)
Total
(318)
(274)
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-481": { "value": "
7Other business income and expenses
2022
2023
Disposal of businesses
(11)
5
Disposal of fixed assets
193
(11)
Other remaining businesses
26
7
Other business income and expenses
208
1
Total other business income
227
24
Total other business expense
(19)
(23)
In 2023, the result on disposal of fixed assets mainly relates to an expense recognized regarding
a prior year real estate transaction, in \"Other\". In 2022, the result includes EUR 184 million
income from the mentioned real estate transaction which was recognized as Assets classified as
held for sale, as of December 31, 2021.
In 2023, the result on other remaining businesses includes EUR 8 million income (2022: EUR 28
million income) 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-480": { "value": "
7Other business income and expenses
2022
2023
Disposal of businesses
(11)
5
Disposal of fixed assets
193
(11)
Other remaining businesses
26
7
Other business income and expenses
208
1
Total other business income
227
24
Total other business expense
(19)
(23)
In 2023, the result on disposal of fixed assets mainly relates to an expense recognized regarding
a prior year real estate transaction, in \"Other\". In 2022, the result includes EUR 184 million
income from the mentioned real estate transaction which was recognized as Assets classified as
held for sale, as of December 31, 2021.
In 2023, the result on other remaining businesses includes EUR 8 million income (2022: EUR 28
million income) 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-479": { "value": "
7Other business income and expenses
2022
2023
Disposal of businesses
(11)
5
Disposal of fixed assets
193
(11)
Other remaining businesses
26
7
Other business income and expenses
208
1
Total other business income
227
24
Total other business expense
(19)
(23)
In 2023, the result on disposal of fixed assets mainly relates to an expense recognized regarding
a prior year real estate transaction, in \"Other\". In 2022, the result includes EUR 184 million
income from the mentioned real estate transaction which was recognized as Assets classified as
held for sale, as of December 31, 2021.
In 2023, the result on other remaining businesses includes EUR 8 million income (2022: EUR 28
million income) 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-485": { "value": "
8Financial income and expenses
Note
2022
2023
Interest income
10
24
Change in fair value of financial assets at fair
value through profit or loss
28
36
4
Other financial income
1
4
Financial income
47
32
Interest expense
23
(44)
(58)
Interest on the net defined-benefit obligation
25
(8)
(16)
Interest expense on lease liability
23
(7)
(9)
Change in fair value of financial assets at fair
value through profit or loss
28
(9)
(26)
Net foreign exchange gains (losses)
(5)
(5)
Monetary gains (losses) 1
(5)
(6)
Other financial expenses
23
(9)
(15)
Financial expenses
(88)
(134)
Financial income and expenses
(41)
(102)
1 The monetary loss relates to hyperinflation in Turkey.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-484": { "value": "
8Financial income and expenses
Note
2022
2023
Interest income
10
24
Change in fair value of financial assets at fair
value through profit or loss
28
36
4
Other financial income
1
4
Financial income
47
32
Interest expense
23
(44)
(58)
Interest on the net defined-benefit obligation
25
(8)
(16)
Interest expense on lease liability
23
(7)
(9)
Change in fair value of financial assets at fair
value through profit or loss
28
(9)
(26)
Net foreign exchange gains (losses)
(5)
(5)
Monetary gains (losses) 1
(5)
(6)
Other financial expenses
23
(9)
(15)
Financial expenses
(88)
(134)
Financial income and expenses
(41)
(102)
1 The monetary loss relates to hyperinflation in Turkey.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-483": { "value": "
8Financial income and expenses
Note
2022
2023
Interest income
10
24
Change in fair value of financial assets at fair
value through profit or loss
28
36
4
Other financial income
1
4
Financial income
47
32
Interest expense
23
(44)
(58)
Interest on the net defined-benefit obligation
25
(8)
(16)
Interest expense on lease liability
23
(7)
(9)
Change in fair value of financial assets at fair
value through profit or loss
28
(9)
(26)
Net foreign exchange gains (losses)
(5)
(5)
Monetary gains (losses) 1
(5)
(6)
Other financial expenses
23
(9)
(15)
Financial expenses
(88)
(134)
Financial income and expenses
(41)
(102)
1 The monetary loss relates to hyperinflation in Turkey.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-482": { "value": "
8Financial income and expenses
Note
2022
2023
Interest income
10
24
Change in fair value of financial assets at fair
value through profit or loss
28
36
4
Other financial income
1
4
Financial income
47
32
Interest expense
23
(44)
(58)
Interest on the net defined-benefit obligation
25
(8)
(16)
Interest expense on lease liability
23
(7)
(9)
Change in fair value of financial assets at fair
value through profit or loss
28
(9)
(26)
Net foreign exchange gains (losses)
(5)
(5)
Monetary gains (losses) 1
(5)
(6)
Other financial expenses
23
(9)
(15)
Financial expenses
(88)
(134)
Financial income and expenses
(41)
(102)
1 The monetary loss relates to hyperinflation in Turkey.
18Trade and other receivables
2022
2023
Trade receivables
1,037
967
Other receivables
66
46
Total receivables, net of value allowance
1,102
1,012
The aging of trade receivables, representing current and overdue, net of loss allowance, is as
follows:
2022
2023
Current
982
925
Overdue 1-30 days
23
20
Overdue 31-180 days
31
22
Overdue >180 days
\u2013
\u2013
Trade receivables, net
1,037
967
The changes in loss allowance for accounts receivable are as follows:
2022
2023
Balance as at January 1
(76)
(94)
Additions charged to expense
(11)
(4)
Utilizations
\u2013
12
Translation differences and other movements
(7)
4
Balance as at December 31
(94)
(83)
As per December 31, 2023, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 75 million (2022: EUR 85 million).
19Trade and other payables
2022
2023
Payables to suppliers
1,242
950
Amounts payable to employees
151
198
Customer rebates and refunds related
220
188
Marketing and sales related
90
67
Materials and fixed assets related
47
50
Other payables
108
87
Trade and other payables
1,859
1,539
Certain Signify suppliers factor their trade receivables from Signify with third parties through
supplier finance arrangements. As of December 31, 2023, approximately EUR 134 million (2022:
EUR 172 million) of the Signify accounts payable were known to have been sold onward under
such arrangement whereby Signify confirms invoices. Signify continues to recognize these
liabilities as trade payables and will settle the liabilities in line with the original payment terms of
the related invoices.
23Debt
2022
2023
Term loan (EUR)
280
501
Term loan (USD)
211
203
Eurobonds
1,268
1,271
Lease liabilities
254
237
Other debt
19
18
Subtotal
2,032
2,229
Bank overdrafts
1
0
Gross debt
2,033
2,230
Cash and cash equivalents
(677)
(1,158)
Net debt (cash)
1,356
1,071
Total equity
3,065
2,947
Net debt and total equity
4,421
4,018
Net debt divided by net debt and total equity (in %)
31%
27%
Total equity divided by net debt and total equity (in %)
69%
73%
Movements of debt were as follows:
Term loans
Eurobonds
Lease
liabilities
Other debt
Bank
overdrafts
Total
Balance as at January 1, 2022
479
1,265
249
11
4
2,007
Acquisitions
\u2013
\u2013
5
\u2013
\u2013
5
Financing cash flows:
\u2022 New borrowings
\u2013
\u2013
\u2013
217
\u2013
217
\u2022 Repayment
\u2013
\u2013
(68)
(208)
\u2013
(276)
Translation difference
12
\u2013
2
\u2013
\u2013
14
Other movements 1
\u2013
3
66
\u2013
(3)
66
Balance as at December 31, 2022
491
1,268
254
19
1
2,033
Balance as at January 1, 2023
491
1,268
254
19
1
2,033
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Financing cash flows:
\u2022 New borrowings
222
\u2013
\u2013
12
\u2013
233
\u2022 Repayment
\u2013
\u2013
(70)
(13)
\u2013
(82)
Translation difference
(8)
\u2013
(2)
\u2013
\u2013
(11)
Other movements 1
(1)
3
55
\u2013
(1)
56
Balance as at December 31, 2023
704
1,271
237
18
\u2013
2,230
1 Other movements include additions of leases which are non-cash transactions.
Term loans and revolving credit facility
During December 2023, the Company entered into a EUR 400 million long-term loan agreement
maturing in December 2026. This agreement bears interest at a variable rate based on the
relevant applicable EURIBOR plus a fixed margin of 1.30%. In December 2023, EUR 222 million
was received, the remainder EUR 178 million was received in January 2024.
In addition, as of December 31, 2023, the Company had outstanding term loans amounting to
EUR 280 million maturing in November 2024 and USD 225 million maturing in January 2025. The
EUR term loans bear 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 Term SOFR plus a margin. As of December 31, 2023, 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.
As of December 31, 2023 the Company had an undrawn revolving credit facility (RCF) of EUR 500
million which is maturing in January 2027.
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, 2023, 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 drawn and repaid within the same quarter, with a maturity of less than
three months, are reported on a net basis in the movement of other debt.
24Provisions
Legal
Signify and certain of its group companies are involved in legal proceedings and claims relating
to various matters including commercial transactions, alleged intellectual property infringement
and product liability claims for property damage and personal injury, alleged to have been
caused by failure or malfunction of Signify products. 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 a provision if payment with respect to a particular matter
is probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years. Releases from legal provisions were mainly related to the
legal case as described below.
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 the customer's employee was
injured when struck by a pallet of Signify products that was pushed off a storage rack by a
temporary worker operating a forklift at the warehouse.
In Q1 2023, Signify filed post-trial motions with the trial court challenging the jury award. On
April 26, 2023,the trial judge, issued an order reducing the jury's award to approximately USD 42
million. Signify has comprehensive global liability insurance and has confirmation that the case is
fully covered without reservations of rights, including interest and other cost. Both the legal
provision and the insurance cover asset have been adjusted in the balance sheet as per year
end without any net P&L impact. Signify continues to exercise all its rights to appeal the verdict
issued in this case. To that effect, Signify has filed its notice of appeal with the appropriate
Connecticut Appellate court to contest its liability this claim.
28Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of business: 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:
Carried at
Gross amount
recognized on the
balance sheet
Amounts not offset
on the balance
sheet, but are
subject to master
netting
arrangements
Net amount
Fair value
hierarchy level
Estimated fair
value 1
Balance as at December 31, 2022
Non-current financial assets 1
amortized cost
117
\u2013
117
\u2013
117
Unquoted equity shares
fair value (FVOCI)
3
\u2013
3
3
3
Trade and other receivables 1
amortized cost
1,102
\u2013
1,102
\u2013
1,102
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
36
(21)
15
2
36
Derivative financial assets not designated as hedging instruments
fair value (FVTPL)
44
\u2013
44
3
50
Cash and cash equivalents
677
\u2013
677
\u2013
677
Debt (Eurobonds)
amortized cost
(1,268)
\u2013
(1,268)
1
(1,220)
Debt (excluding Eurobonds) 1
amortized cost
(765)
\u2013
(765)
2
(765)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(43)
21
(22)
2
(43)
Trade and other payables 1
amortized cost
(1,856)
\u2013
(1,856)
\u2013
(1,856)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
Balance as at December 31, 2023
Non-current financial assets 1, 2
amortized cost
65
\u2013
65
\u2013
65
Unquoted equity shares
fair value (FVOCI)
4
\u2013
4
3
4
Trade and other receivables 1
amortized cost
1,012
\u2013
1,012
\u2013
1,012
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
14
(12)
3
2
14
Current derivative financial assets not designated as hedging instruments
fair value (FVTPL)
2
\u2013
2
1
2
Non-current derivative financial assets not designated as hedging
instruments
fair value (FVTPL)
22
\u2013
22
3
27
Cash and cash equivalents
1,158
\u2013
1,158
\u2013
1,158
Debt (Eurobonds)
amortized cost
(1,271)
\u2013
(1,271)
1
(1,250)
Debt (excluding Eurobonds) 1
amortized cost
(959)
\u2013
(959)
2
(959)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(17)
12
(5)
2
(17)
Trade and other payables 1
amortized cost
(1,537)
\u2013
(1,537)
\u2013
(1,537)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
1 In 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.
2 Mainly 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. For further
details, refer to note 2, Material accounting policies.
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 inflows or outflows
discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26
million gain) 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, 2023, Signify had a ratio of fixed-
rate debt to total outstanding debt of approximately 68% (2022: 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, 2023, with all other variables held
constant, the annualized net interest expense would decrease by EUR 6 million. This impact was
based on the outstanding net floating debt position as of December 31, 2023.
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.
Payments due by period
Total
Less than
1 year
Between
1 and 5
years
Over
5 years
Debt, including bank overdrafts
1,993
972
1,021
\u2013
Interest on debt
108
52
56
\u2013
Trade and other payables
1,539
1,539
\u2013
\u2013
Lease liability
237
66
145
26
Derivative liabilities
17
17
\u2013
\u2013
Off-balance sheet commitments
164
31
93
40
Purchase obligations 1
414
162
252
\u2013
Contractual cash obligations
4,472
2,839
1,567
66
Revolving credit facility (RCF)
500
\u2013
\u2013
\u2013
1 Signify has commitments related to the ordinary course of business which in general relate to contracts and purchase order
commitments for less than 12 months. In the table, only the commitments for multiple years are presented, including their
short-term portion.
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:
2022
2023
Cash at banks and in hand
425
358
Short-term deposits
216
768
Other cash equivalents
35
33
Cash and cash equivalents
677
1,158
Bank overdrafts
(1)
\u2013
Cash and cash equivalents and bank overdrafts
676
1,158
Signify has a EUR 500 million revolving credit facility that can be used for general purposes. As of
December 31, 2023, 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:
\u2022 Transaction exposures related to anticipated sales and purchases and on-balance-sheet
receivables/payables resulting from such transactions;
\u2022 Financing exposure arising from foreign currency intercompany and external debt and
deposits;
\u2022 Translation exposure of net income in foreign entities;
\u2022 Translation exposure of foreign currency denominated equity invested in consolidated
companies;
\u2022 Translation 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 9 months in layers of 25% up to a hedge ratio of 75%, 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 as per the
hedging policy horizon:
Receivables / Sales
Payables / Purchases
Exposure
Hedges
Exposure
Hedges
Balance as at December 31
Exposure currency
CNY
27
(21)
(584)
380
PLN
47
(47)
(146)
104
USD
170
(170)
(79)
79
EUR 1
51
(51)
(31)
31
CAD
74
(45)
\u2013
\u2013
MXN
7
(7)
(24)
24
GBP
11
(11)
\u2013
\u2013
Others
57
(57)
(6)
6
Total 2023
444
(409)
(871)
625
Total 2022 2
1,621
(1,164)
(1,560)
1,098
1 EUR exposures in non-EUR denominated functional currencies.
2 2022 exposures and hedges based on the hedging policy horizon of 15 months.
As of December 31, 2023, a loss of EUR 2 million was deferred in equity as a result of these
hedges (2022: loss of EUR 27 million). The result deferred in equity will be released to earnings
mostly during 2024 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2023, EUR nil million (2022: 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, 2023, was
an unrealized liability of EUR 1 million (2022: liability EUR 14 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 19 million in the value of the derivatives. The above sensitivity analysis
includes a gain of EUR 1 million that would impact the income statement, which would partially
offset the opposite revaluation effect on the underlying accounts receivable and payable, and
the remaining loss of EUR 20 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, 2023, the fair value of
these hedges was an unrealized liability of EUR 2 million (2022: asset EUR 6 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 41 million in the value of the derivatives.
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 2023, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 250 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
2023. As at December 31, 2023, no net investment hedges were outstanding (2022: nil). 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, 2023, Signify had
EUR 22 million of commodity derivatives recognized in the Statement of financial position (2022:
EUR 44 million),which relate to Virtual Power Purchase Agreements. An increase of the energy
prices by 10% will lead to the commodity derivatives value increase by EUR 7 million (2022: EUR 9
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, 2023, Signify had country risk exposure of EUR 2.7 billion in the United States
and EUR 1.3 billion in the Netherlands. Countries where the risk exceeds EUR 200 million but was
less than EUR 500 million are Belgium (EUR 477 million), China including Hong Kong (EUR 446
million), Poland (EUR 388 million) and France (EUR 271 million). Countries where the risk
exceeded EUR 50 million but was less than EUR 200 million are Mexico, Saudi Arabia, Spain,
Canada, United Kingdom, Australia, Germany and India. 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:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-487": { "value": "
9Income taxes
The components of income tax expense were as follows:
2022
2023
Current tax expense
(76)
(51)
Prior year benefit (expense)
3
(2)
Current tax expense
(73)
(53)
2022
2023
Origination and reversal of tax losses, tax credits and
temporary differences
(76)
(2)
Change in tax losses, tax credits and temporary differences
recognized
3
(3)
Tax rate changes
\u2013
\u2013
Prior year benefit (expense)
\u2013
5
Deferred tax benefit (expense)
(72)
\u2013
Signify\u2019s operations are subject to income taxes in various jurisdictions. The statutory income tax
rates vary from 9% to 35%, which results in a difference between the weighted average
statutory income tax rate and the Netherlands\u2019 statutory income tax rate of 25.8% ( 2022:
25.8%). A reconciliation of the weighted average statutory income tax rate to the effective
income tax rate is as follows:
2022
%
2023
%
Income before taxes
678
268
Weighted average statutory income tax rate
(158)
(23)%
(68)
(25)%
Non-deductible expenses
(14)
(2)%
(12)
(5)%
Tax incentives and exempt income
22
3%
20
7%
Deferred tax expense related to (de)recognition of
deferred tax assets - net
3
\u2013%
(3)
(1)%
Changes in the liability for uncertain tax positions
7
1%
17
6%
Prior year tax benefit (expense)
3
\u2013%
3
1%
Changes in tax rates
\u2013
\u2013%
\u2013
\u2013%
Other
(9)
(1)%
(11)
(4)%
Income tax expense recognized in Consolidated
statements of income
(145)
(21)%
(53)
(20)%
The weighted average statutory income tax rate increased by 2% in 2023 compared to 2022.
The effective tax rate was 20% in 2023 (2022: 21%), which is lower than the statutory income
tax rate of 25.8% in the Netherlands. The difference is primarily due to the impact of tax
incentives and exempt income and the effect of changes in the liabilities for uncertain tax
positions, offset by the impact of non-deductible expenses.
Recognized deferred tax assets and liabilities
Assets
Liabilities
Net
2023
Intangible assets
163
(57)
106
Property, plant and equipment
10
(40)
(30)
Inventories
51
(1)
50
Other receivables and assets
28
(12)
16
Post-employment benefits
49
\u2013
49
Provisions
48
\u2013
48
Other liabilities
80
(22)
58
Deferred tax assets on tax attributes 1
85
\u2013
85
Total allocations
514
(132)
382
Set-off of deferred tax
(112)
112
\u2013
Net deferred tax assets
402
(20)
382
2022
Intangible assets
205
(75)
131
Property, plant and equipment
8
(46)
(38)
Inventories
52
(1)
51
Other receivables and assets
26
(14)
12
Post-employment benefits
51
\u2013
51
Provisions
51
(1)
51
Other liabilities
94
(24)
70
Deferred tax assets on tax attributes 1
66
\u2013
66
Total allocations
554
(161)
393
Set-off of deferred tax
(136)
136
\u2013
Net deferred tax assets
418
(25)
393
1 Tax loss carryforwards (including tax credit carryforwards).
The net deferred tax assets of EUR 382 million (2022: EUR 393 million) consist of deferred tax
assets of EUR 402 million (2022: EUR 418 million) in countries with a net deferred tax asset
position and deferred tax liabilities of EUR 20 million (2022: EUR 25 million) in countries with a net
deferred tax liability position. An amount of EUR 114 million of deferred tax assets relates to
several tax jurisdictions in which Signify has suffered a loss in the current or preceding period.
Management\u2019s projections support the assumption that it is probable that the results of future
operations will generate enough taxable income to utilize these deferred tax assets.
Movement in deferred tax balances during 2023 and 2022 were as follows:
Balance
as at
January 1
Recognized
in income
Other
Balance
as at
December 31
2023
Intangible assets
131
(27)
1
106
Property, plant and equipment
(38)
6
2
(30)
Inventories
51
1
(2)
50
Other receivables and assets
12
5
(1)
16
Post-employment benefits
51
(4)
2
49
Provisions
51
(2)
(1)
48
Other liabilities
70
(1)
(10)
58
Tax loss carryforwards (including tax credit
carryforwards)
66
22
(3)
85
Net deferred tax assets
393
\u2013
(11)
382
2022
Intangible assets
169
(31)
(7)
131
Property, plant and equipment
(32)
(11)
5
(38)
Inventories
48
(1)
4
51
Other receivables and assets
15
(3)
1
12
Post-employment benefits
58
(6)
(2)
51
Provisions
47
\u2013
3
51
Other liabilities
75
(13)
8
70
Tax loss carryforwards (including tax credit
carryforwards)
73
(7)
\u2013
66
Net deferred tax assets
454
(72)
12
393
\u201cOther\u201d includes foreign currency translation differences, acquisitions and the impact of the
remeasurement of the deferred tax balances relating to post-employment benefits.
At December 31, 2023, the temporary differences associated with investments, including
potential income tax consequences on dividends for which no deferred tax liabilities are
recognized, aggregate to EUR 270 million (2022: EUR 271 million).
At December 31, 2023, net operating loss carryforwards expire as follows:
Expiry year operating loss carryforwards
Total
2024
2025
2026
2027
2028
After 2028
but not
unlimited
Unlimited
667
1
\u2013
13
1
10
30
612
Unrecognized tax losses and tax credits
At December 31, 2023, the amount of operating loss and tax credit carryforwards for which no
deferred tax assets have been recognized in the balance sheet was EUR 496 million (2022: EUR
476 million).
Out of EUR 496 million, an amount of EUR 469 million should not be limited in time, EUR 1 million
will expire by 2024, EUR 3 million will expire by 2026, EUR 1 million will expire by 2027, EUR 6
million will expire by 2028 and EUR 15 million expires after 2028, but carryforward is limited in
time.
Unrecognized deductible temporary differences
At December 31, 2023, the amount of deductible temporary differences for which no deferred
tax asset has been recognized in the balance sheet is EUR 106 million (2022: EUR 105 million).
Classification of the income tax payable and receivable is as follows:
2022
2023
Income tax receivable under other current assets
56
54
Income tax receivable under other non-current assets
1
1
Income tax payable under current liabilities
(21)
(20)
Income tax payable under non-current liabilities
(111)
(79)
Global tax developments - Pillar Two
The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive
Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to
address the tax challenges arising from the digitalization of the global economy. The
Pillar Two model rules aim to ensure that large multinational enterprises pay a minimum level of
tax on the income arising in each jurisdiction where they operate.These Pillar Two model rules
have been transposed into Pillar Two legislation that has been enacted or substantively enacted
as at December 31, 2023, in certain jurisdictions in which Signify operates.
The IASB issued amendments to IAS 12 clarifying that IAS 12 applies to income taxes arising from
tax law enacted or substantively enacted to implement the OECD/G20 BEPS Pillar Two model
rules. Signify applied the mandatory temporary exception to the requirements of IAS 12, under
which a company does not recognize or disclose information about deferred tax assets and
liabilities related to the OECD/G20 BEPS Pillar Two model rules at 31 December 2023.
The Pillar Two legislation will be effective for Signify's financial year beginning 1 January 2024.
Signify is in scope of the legislation and has performed an assessment of Signify\u2019s potential
exposure to Pillar Two income taxes. The assessment of the potential exposure to Pillar Two
income taxes is based on prior year country-by-country reporting and IFRS financial data for the
constituent entities included in the IFRS financial statements of Signify. Based on the
assessment, Signify can apply a transitional safe harbor in most of the jurisdictions it operates.
However, there are a limited number of jurisdictions where the transitional safe harbor relief
may not apply. Signify does not expect a material exposure to Pillar Two income taxes in future
years based on the assessment performed.
Tax risks
Signify is exposed to tax uncertainties for which, if deemed probable, a liability is recognized in
the income tax payable under non-current liabilities, and when tax uncertainties relate to
deferred tax assets, these are offset against each other. These uncertainties include, among
others, the following:
Transfer pricing uncertainties
Signify has issued transfer pricing directives, which are in accordance with international
guidelines, such as those of the OECD. As transfer pricing has a cross-border effect, potential
adjustments by local tax authorities on implemented transfer pricing procedures in a country
may have an impact on results in another country. In order to reduce the transfer pricing
uncertainties, monitoring procedures are carried out by Group Tax and Internal Audit to
safeguard the correct implementation of the transfer pricing directives.
Tax uncertainties on general and specific service agreements and licensing
agreements
Due to the centralization of certain activities in a limited number of countries (such as research
and development, IT, group functions and head office), costs are also centralized.
Consequently, these costs and/or revenues must be allocated to the beneficiaries, i.e. the
various Signify entities. This could lead to discussions with local tax authorities if they do not
accept these charges. For that purpose, service contracts such as intra-group service
agreements and licensing agreements are signed with Signify group entities. Tax authorities
review these intra-group service and licensing agreements and may reject the implemented
intra-group charges.
Tax uncertainties due to permanent establishments
Signify may encounter tax uncertainties because of potential permanent establishments in
countries where new operations are started or business models are altered. This could happen
when operations in a country involve a foreign Signify organization. There is a risk that tax claims
could arise on these operations in both countries.
When Signify has cross-border operations, there is a risk that tax claims will arise in all relevant
countries.
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.
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 57 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-486": { "value": "
9Income taxes
Classification of the income tax payable and receivable is as follows:
2022
2023
Income tax receivable under other current assets
56
54
Income tax receivable under other non-current assets
1
1
Income tax payable under current liabilities
(21)
(20)
Income tax payable under non-current liabilities
(111)
(79)
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-488": { "value": "Income taxes
2022
2023
Origination and reversal of tax losses, tax credits and
temporary differences
(76)
(2)
Change in tax losses, tax credits and temporary differences
recognized
3
(3)
Tax rate changes
\u2013
\u2013
Prior year benefit (expense)
\u2013
5
Deferred tax benefit (expense)
(72)
\u2013
Recognized deferred tax assets and liabilities
Assets
Liabilities
Net
2023
Intangible assets
163
(57)
106
Property, plant and equipment
10
(40)
(30)
Inventories
51
(1)
50
Other receivables and assets
28
(12)
16
Post-employment benefits
49
\u2013
49
Provisions
48
\u2013
48
Other liabilities
80
(22)
58
Deferred tax assets on tax attributes 1
85
\u2013
85
Total allocations
514
(132)
382
Set-off of deferred tax
(112)
112
\u2013
Net deferred tax assets
402
(20)
382
2022
Intangible assets
205
(75)
131
Property, plant and equipment
8
(46)
(38)
Inventories
52
(1)
51
Other receivables and assets
26
(14)
12
Post-employment benefits
51
\u2013
51
Provisions
51
(1)
51
Other liabilities
94
(24)
70
Deferred tax assets on tax attributes 1
66
\u2013
66
Total allocations
554
(161)
393
Set-off of deferred tax
(136)
136
\u2013
Net deferred tax assets
418
(25)
393
1 Tax loss carryforwards (including tax credit carryforwards).
The net deferred tax assets of EUR 382 million (2022: EUR 393 million) consist of deferred tax
assets of EUR 402 million (2022: EUR 418 million) in countries with a net deferred tax asset
position and deferred tax liabilities of EUR 20 million (2022: EUR 25 million) in countries with a net
deferred tax liability position. An amount of EUR 114 million of deferred tax assets relates to
several tax jurisdictions in which Signify has suffered a loss in the current or preceding period.
Management\u2019s projections support the assumption that it is probable that the results of future
operations will generate enough taxable income to utilize these deferred tax assets.
Movement in deferred tax balances during 2023 and 2022 were as follows:
Balance
as at
January 1
Recognized
in income
Other
Balance
as at
December 31
2023
Intangible assets
131
(27)
1
106
Property, plant and equipment
(38)
6
2
(30)
Inventories
51
1
(2)
50
Other receivables and assets
12
5
(1)
16
Post-employment benefits
51
(4)
2
49
Provisions
51
(2)
(1)
48
Other liabilities
70
(1)
(10)
58
Tax loss carryforwards (including tax credit
carryforwards)
66
22
(3)
85
Net deferred tax assets
393
\u2013
(11)
382
2022
Intangible assets
169
(31)
(7)
131
Property, plant and equipment
(32)
(11)
5
(38)
Inventories
48
(1)
4
51
Other receivables and assets
15
(3)
1
12
Post-employment benefits
58
(6)
(2)
51
Provisions
47
\u2013
3
51
Other liabilities
75
(13)
8
70
Tax loss carryforwards (including tax credit
carryforwards)
73
(7)
\u2013
66
Net deferred tax assets
454
(72)
12
393
\u201cOther\u201d includes foreign currency translation differences, acquisitions and the impact of the
remeasurement of the deferred tax balances relating to post-employment benefits.
At December 31, 2023, the temporary differences associated with investments, including
potential income tax consequences on dividends for which no deferred tax liabilities are
recognized, aggregate to EUR 270 million (2022: EUR 271 million).
At December 31, 2023, net operating loss carryforwards expire as follows:
Expiry year operating loss carryforwards
Total
2024
2025
2026
2027
2028
After 2028
but not
unlimited
Unlimited
667
1
\u2013
13
1
10
30
612
Unrecognized tax losses and tax credits
At December 31, 2023, the amount of operating loss and tax credit carryforwards for which no
deferred tax assets have been recognized in the balance sheet was EUR 496 million (2022: EUR
476 million).
Out of EUR 496 million, an amount of EUR 469 million should not be limited in time, EUR 1 million
will expire by 2024, EUR 3 million will expire by 2026, EUR 1 million will expire by 2027, EUR 6
million will expire by 2028 and EUR 15 million expires after 2028, but carryforward is limited in
time.
Unrecognized deductible temporary differences
At December 31, 2023, the amount of deductible temporary differences for which no deferred
tax asset has been recognized in the balance sheet is EUR 106 million (2022: EUR 105 million).
Classification of the income tax payable and receivable is as follows:
2022
2023
Income tax receivable under other current assets
56
54
Income tax receivable under other non-current assets
1
1
Income tax payable under current liabilities
(21)
(20)
Income tax payable under non-current liabilities
(111)
(79)
Global tax developments - Pillar Two
The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive
Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to
address the tax challenges arising from the digitalization of the global economy. The
Pillar Two model rules aim to ensure that large multinational enterprises pay a minimum level of
tax on the income arising in each jurisdiction where they operate.These Pillar Two model rules
have been transposed into Pillar Two legislation that has been enacted or substantively enacted
as at December 31, 2023, in certain jurisdictions in which Signify operates.
The IASB issued amendments to IAS 12 clarifying that IAS 12 applies to income taxes arising from
tax law enacted or substantively enacted to implement the OECD/G20 BEPS Pillar Two model
rules. Signify applied the mandatory temporary exception to the requirements of IAS 12, under
which a company does not recognize or disclose information about deferred tax assets and
liabilities related to the OECD/G20 BEPS Pillar Two model rules at 31 December 2023.
The Pillar Two legislation will be effective for Signify's financial year beginning 1 January 2024.
Signify is in scope of the legislation and has performed an assessment of Signify\u2019s potential
exposure to Pillar Two income taxes. The assessment of the potential exposure to Pillar Two
income taxes is based on prior year country-by-country reporting and IFRS financial data for the
constituent entities included in the IFRS financial statements of Signify. Based on the
assessment, Signify can apply a transitional safe harbor in most of the jurisdictions it operates.
However, there are a limited number of jurisdictions where the transitional safe harbor relief
may not apply. Signify does not expect a material exposure to Pillar Two income taxes in future
years based on the assessment performed.
Tax risks
Signify is exposed to tax uncertainties for which, if deemed probable, a liability is recognized in
the income tax payable under non-current liabilities, and when tax uncertainties relate to
deferred tax assets, these are offset against each other. These uncertainties include, among
others, the following:
Transfer pricing uncertainties
Signify has issued transfer pricing directives, which are in accordance with international
guidelines, such as those of the OECD. As transfer pricing has a cross-border effect, potential
adjustments by local tax authorities on implemented transfer pricing procedures in a country
may have an impact on results in another country. In order to reduce the transfer pricing
uncertainties, monitoring procedures are carried out by Group Tax and Internal Audit to
safeguard the correct implementation of the transfer pricing directives.
Tax uncertainties on general and specific service agreements and licensing
agreements
Due to the centralization of certain activities in a limited number of countries (such as research
and development, IT, group functions and head office), costs are also centralized.
Consequently, these costs and/or revenues must be allocated to the beneficiaries, i.e. the
various Signify entities. This could lead to discussions with local tax authorities if they do not
accept these charges. For that purpose, service contracts such as intra-group service
agreements and licensing agreements are signed with Signify group entities. Tax authorities
review these intra-group service and licensing agreements and may reject the implemented
intra-group charges.
Tax uncertainties due to permanent establishments
Signify may encounter tax uncertainties because of potential permanent establishments in
countries where new operations are started or business models are altered. This could happen
when operations in a country involve a foreign Signify organization. There is a risk that tax claims
could arise on these operations in both countries.
When Signify has cross-border operations, there is a risk that tax claims will arise in all relevant
countries.
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.
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 57 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-489": { "value": "
10Earnings per share
2022
2023
Net income attributable to shareholders of Signify N.V.
523
203
Weighted average number of ordinary shares outstanding
(after deduction of treasury shares) during the year
125,004,312
125,950,998
Plus incremental shares assumed from conversions of:
\u2022 Performance shares
1,904,807
791,331
\u2022 Conditional shares
599,885
545,112
\u2022 Restricted shares
87,966
50,288
Diluted weighted average number of ordinary shares
outstanding (after deduction of treasury shares) during the
year
127,596,971
127,337,729
in EUR
\u2022 Basic
4.18
1.61
\u2022 Diluted
4.10
1.59
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-490": { "value": "
11Acquisitions and divestments
Signify completed one acquisition in 2023.
Acquisition of ILC Intelligent Lighting Controls
On March 1, 2023, Signify completed the acquisition of 100% of the equity of ILC Intelligent
Lighting Controls, Inc. (ILC), a market-leading U.S. manufacturer of wired control systems,
expanding its connected portfolio. ILC is consolidated as part of Cooper Lighting Solutions
within Digital Solutions. The acquisition is considered not material to the Consolidated financial
statements. The fair value of assets and liabilities at the acquisition date was completed in 2023
and the closing settlement procedures were finalized.
Acquisition of Fluence
Fluence Bioengineering, Inc (Fluence) was acquired on May 2, 2022. In April 2023 and within the
one-year purchase price accounting period, the fair value of assets and liabilities at acquisition
date, the final purchase price adjustments and closing settlement accounting were finalized.
The opening balance adjustments were mainly related to an indemnification asset booked as part
of the closing settlement accounting, the valuation of certain liabilities and goodwill. The
changes compared to December 31, 2022, are shown in the table below.
December 31,
2022
April 30,
2023
Goodwill
258
242
Other intangible assets
20
20
Property, plant and equipment
3
3
Net deferred tax
15
11
Trade and other receivables
10
12
Inventories
30
32
Other assets
3
11
Cash
3
3
Trade and other payables
(20)
(20)
Other liabilities
(64)
(59)
Net assets acquired
257
254
In November 2023, the closing settlement agreements were signed.
There were no divestments material to the Consolidated financial statements in 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-493": { "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.
Legal entity name
Principal country of business
Cooper Lighting Netherlands B.V.
Netherlands
Cooper Lighting, LLC
United States of America
Signify (China) Investment Co., Ltd.
China
Signify France
France
Signify GmbH
Germany
Signify Holding B.V.
Netherlands
Signify Netherlands B.V.
Netherlands
Signify North America Corporation
United States of America
Signify Poland Sp. z.o.o.
Poland
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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-491": { "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.
Legal entity name
Principal country of business
Cooper Lighting Netherlands B.V.
Netherlands
Cooper Lighting, LLC
United States of America
Signify (China) Investment Co., Ltd.
China
Signify France
France
Signify GmbH
Germany
Signify Holding B.V.
Netherlands
Signify Netherlands B.V.
Netherlands
Signify North America Corporation
United States of America
Signify Poland Sp. z.o.o.
Poland
Signify does not have subsidiaries that have non-controlling interests that are material for its
Consolidated financial statements.
27Information on remuneration
Signify considers the Board of Management and the Supervisory Board to be key management
personnel as defined in IAS 24 \"Related parties\".
In 2023, the total remuneration costs relating to the members of Key Management amounted to
EUR 6,953,570 (2022: EUR 5,113,707).
Remuneration of the Board of Management
In 2023, the total remuneration costs relating to the members of the Board of Management
amounted to EUR 6,156,545 (2022: EUR 4,379,057).
Remuneration costs of Key Management - the Board of Management, in EUR
2022
2023
Salary/Base compensation
2,187,040
2,678,188
Annual Incentive 1
180,204
1,018,899
Long Term Incentive 2
1,331,037
1,001,646
Pension allowances
492,986
552,755
Pension scheme costs
84,399
115,456
Other compensation 3
103,391
144,952
Termination benefits 4
\u2013
644,649
Total costs
4,379,057
6,156,545
1 Related to the performance in the year reported which are paid out in the subsequent year.
2 Costs 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. Costs include the forfeiture of the 2022 and 2023 grant for F.J. van Engelen Sousa
because of his termination per April 1, 2024; the Supervisory Board decided that the 2021 LTI grant will vest in full. Costs for
M.L. Mariani reflect the pro-rata forfeiture of the 2022 and 2023 LTI grants, which will vest pro-rata given the company
elected not to renew her services contract. As explained in more detail on page 80 of this annual report, there is a
disagreement between the company and Ms. Mariani about the treatment of these LTI grants.
3 Mainly 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.
4 The company elected not to renew the services contract of M.L. Mariani after the end of term in May 2024, and therefore, as
per her services contract (which is published on the company\u2019s website), she will receive a lump sum payment of one time the
annual base compensation/salary (currently estimated to be a gross amount of EUR 644,649), which is payable in June 2024.
For further information on remuneration costs, see chapter 10, Remuneration report.
Remuneration of the Supervisory Board
The remuneration of the members of the Supervisory Board amounted to EUR 797,025 (2022:
EUR 734,650).
Remuneration of Key Management - the Supervisory Board, in EUR
2022
2023
Membership 1
495,100
541,875
Committees
162,050
170,150
Other compensation 2
77,500
85,000
Total costs
734,650
797,025
1 Comparatives for 2022 were revised to exclude the fees and allowances paid during the observer period of Mr. Schot for the
amount of EUR 28,125.
2 Relates to the allowance for (inter-)continental travel.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-492": { "value": "
12Interests in entities
Signify 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-494": { "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.
Legal entity name
Principal country of business
Cooper Lighting Netherlands B.V.
Netherlands
Cooper Lighting, LLC
United States of America
Signify (China) Investment Co., Ltd.
China
Signify France
France
Signify GmbH
Germany
Signify Holding B.V.
Netherlands
Signify Netherlands B.V.
Netherlands
Signify North America Corporation
United States of America
Signify Poland Sp. z.o.o.
Poland
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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-496": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-495": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-498": { "value": "
13Property, plant and equipment
Land and
buildings
Machinery
and
installations
Other
equipment
Prepayments
and
construction
in progress
Total
Book value as at January 1, 2022
450
167
59
49
724
Of which right-of-use assets
212
\u2013
18
\u2013
229
Change in book value:
Capital expenditure
61
2
15
58
136
Of which right-of-use assets
55
\u2013
10
\u2013
65
Assets available for use
19
24
14
(57)
\u2013
Acquisitions
6
1
1
1
9
Of which right-of-use assets
5
\u2013
\u2013
\u2013
5
Additions
86
27
30
1
145
Sales and disposals
(12)
(2)
(1)
\u2013
(15)
Of which right-of-use assets
(10)
\u2013
\u2013
\u2013
(10)
Divestments and transfers to
assets classified as held for sale
(4)
\u2013
\u2013
\u2013
(4)
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Depreciation
(83)
(38)
(33)
\u2013
(155)
Of which right-of-use assets
(58)
\u2013
(9)
\u2013
(67)
Impairment
(5)
(8)
(1)
\u2013
(14)
Of which right-of-use assets
(2)
\u2013
\u2013
\u2013
(2)
Reversal of impairment
1
1
\u2013
\u2013
2
Of which right-of-use assets
1
\u2013
\u2013
\u2013
1
Translation differences and other
movements
13
(7)
10
1
16
Of which right-of-use assets
8
\u2013
\u2013
\u2013
8
Total changes
(3)
(28)
5
2
(25)
Balance as at December 31, 2022
Cost
1,019
1,100
472
50
2,641
Accumulated depreciation /
impairment
(573)
(961)
(408)
\u2013
(1,942)
Book value
446
139
64
50
699
Of which right-of-use assets
211
\u2013
19
\u2013
230
Land and
buildings
Machinery
and
installations
Other
equipment
Prepayments
and
construction
in progress
Total
Book value as at January 1, 2023
446
139
64
50
699
Of which right-of-use assets
211
\u2013
19
\u2013
230
Change in book value:
Capital expenditure
34
2
22
48
106
Of which right-of-use assets
33
\u2013
18
\u2013
51
Assets available for use
11
26
19
(56)
\u2013
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Additions
45
29
41
(9)
106
Sales and disposals
(4)
\u2013
(1)
\u2013
(5)
Of which right-of-use assets
(4)
\u2013
(1)
\u2013
(4)
Divestments and transfers to
assets classified as held for sale
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Depreciation
(82)
(35)
(32)
\u2013
(148)
Of which right-of-use assets
(56)
\u2013
(10)
\u2013
(66)
Impairment
(3)
(6)
(1)
(1)
(12)
Of which right-of-use assets
(1)
\u2013
\u2013
\u2013
(1)
Reversal of impairment
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Translation differences and other
movements
(2)
(4)
(1)
(1)
(8)
Of which right-of-use assets
3
\u2013
\u2013
\u2013
3
Total changes
(45)
(17)
7
(11)
(66)
Balance as at December 31, 2023
Cost
1,020
1,041
486
39
2,586
Accumulated depreciation /
impairment
(619)
(919)
(415)
\u2013
(1,953)
Book value
401
122
71
39
633
Of which right-of-use assets
186
\u2013
26
\u2013
212
The impairment losses were mainly driven by manufacturing footprint rationalization. Additions of
right-of-use assets include new and renewed lease contracts.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-497": { "value": "
13Property, plant and equipment
Land and
buildings
Machinery
and
installations
Other
equipment
Prepayments
and
construction
in progress
Total
Book value as at January 1, 2022
450
167
59
49
724
Of which right-of-use assets
212
\u2013
18
\u2013
229
Change in book value:
Capital expenditure
61
2
15
58
136
Of which right-of-use assets
55
\u2013
10
\u2013
65
Assets available for use
19
24
14
(57)
\u2013
Acquisitions
6
1
1
1
9
Of which right-of-use assets
5
\u2013
\u2013
\u2013
5
Additions
86
27
30
1
145
Sales and disposals
(12)
(2)
(1)
\u2013
(15)
Of which right-of-use assets
(10)
\u2013
\u2013
\u2013
(10)
Divestments and transfers to
assets classified as held for sale
(4)
\u2013
\u2013
\u2013
(4)
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Depreciation
(83)
(38)
(33)
\u2013
(155)
Of which right-of-use assets
(58)
\u2013
(9)
\u2013
(67)
Impairment
(5)
(8)
(1)
\u2013
(14)
Of which right-of-use assets
(2)
\u2013
\u2013
\u2013
(2)
Reversal of impairment
1
1
\u2013
\u2013
2
Of which right-of-use assets
1
\u2013
\u2013
\u2013
1
Translation differences and other
movements
13
(7)
10
1
16
Of which right-of-use assets
8
\u2013
\u2013
\u2013
8
Total changes
(3)
(28)
5
2
(25)
Balance as at December 31, 2022
Cost
1,019
1,100
472
50
2,641
Accumulated depreciation /
impairment
(573)
(961)
(408)
\u2013
(1,942)
Book value
446
139
64
50
699
Of which right-of-use assets
211
\u2013
19
\u2013
230
Land and
buildings
Machinery
and
installations
Other
equipment
Prepayments
and
construction
in progress
Total
Book value as at January 1, 2023
446
139
64
50
699
Of which right-of-use assets
211
\u2013
19
\u2013
230
Change in book value:
Capital expenditure
34
2
22
48
106
Of which right-of-use assets
33
\u2013
18
\u2013
51
Assets available for use
11
26
19
(56)
\u2013
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Additions
45
29
41
(9)
106
Sales and disposals
(4)
\u2013
(1)
\u2013
(5)
Of which right-of-use assets
(4)
\u2013
(1)
\u2013
(4)
Divestments and transfers to
assets classified as held for sale
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Depreciation
(82)
(35)
(32)
\u2013
(148)
Of which right-of-use assets
(56)
\u2013
(10)
\u2013
(66)
Impairment
(3)
(6)
(1)
(1)
(12)
Of which right-of-use assets
(1)
\u2013
\u2013
\u2013
(1)
Reversal of impairment
\u2013
\u2013
\u2013
\u2013
\u2013
Of which right-of-use assets
\u2013
\u2013
\u2013
\u2013
\u2013
Translation differences and other
movements
(2)
(4)
(1)
(1)
(8)
Of which right-of-use assets
3
\u2013
\u2013
\u2013
3
Total changes
(45)
(17)
7
(11)
(66)
Balance as at December 31, 2023
Cost
1,020
1,041
486
39
2,586
Accumulated depreciation /
impairment
(619)
(919)
(415)
\u2013
(1,953)
Book value
401
122
71
39
633
Of which right-of-use assets
186
\u2013
26
\u2013
212
The impairment losses were mainly driven by manufacturing footprint rationalization. Additions of
right-of-use assets include new and renewed lease contracts.
15Intangible assets
Goodwill
Customer
relationships
Technology
based
Brand names
Product
development
Software
Other
Total
Balance as at January 1, 2022
Cost
3,167
1,522
413
440
163
75
10
5,790
Accumulated amortization / impairment
(703)
(1,107)
(308)
(298)
(129)
(45)
(6)
(2,597)
Book value
2,464
415
105
142
34
30
4
3,193
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
37
17
3
57
Amortization
\u2013
(88)
(23)
(12)
(17)
(9)
(3)
(152)
Acquisitions
280
15
\u2013
22
\u2013
\u2013
\u2013
317
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Translation differences and other movements
117
21
(15)
8
\u2013
\u2013
15
146
Total changes
398
(53)
(38)
18
20
8
15
368
Balance as at December 31, 2022
Cost
3,589
1,604
387
481
160
89
38
6,348
Accumulated depreciation / impairment
(728)
(1,242)
(320)
(322)
(106)
(51)
(19)
(2,787)
Book value
2,861
362
67
160
54
38
19
3,562
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
49
15
2
67
Amortization
\u2013
(48)
(17)
(12)
(20)
(12)
(4)
(113)
Acquisitions
(6)
1
4
1
\u2013
\u2013
\u2013
\u2013
Impairment
\u2013
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
(1)
Translation differences and other movements
(100)
(11)
\u2013
(5)
(2)
\u2013
\u2013
(119)
Total changes
(107)
(58)
(13)
(16)
27
3
(1)
(166)
Balance as at December 31, 2023
Cost
3,466
1,034
354
393
205
103
38
5,594
Accumulated amortization / impairment
(711)
(730)
(300)
(249)
(124)
(62)
(21)
(2,199)
Book value
2,755
304
54
144
81
41
17
3,396
Goodwill
For impairment testing, goodwill is allocated to cash-generating units, which represent the
lowest level at which the goodwill is monitored internally for management purposes. The cash-
generating units correspond to the operating segments.
Goodwill allocated to the cash-generating unit Digital Solutions is considered to be significant in
comparison to the total book value of goodwill of Signify at December 31, 2022, and December
31, 2023. The goodwill allocated to each of the cash-generating units as of December 31, 2022,
and December 31, 2023, is presented below.
2022
2023
Digital Solutions
2,482
2,387
Digital Products
317
307
Conventional Products
63
61
Book value
2,861
2,755
The basis of the recoverable amount used of the cash-generating units is the value in use. In the
annual impairment test performed in the fourth quarter of 2023, the estimated recoverable
amount of the tested cash-generating units exceeded the carrying value of the units.
Therefore, no impairment loss was recognized.
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 2024 to 2026. 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 2023 and 2022 were based on the key
assumptions included in the table below:
Key assumptions in %
Compound sales growth rate 1
Extra polation
period
Used to
calculate
terminal value
Pre-tax
discount rates
Digital Solutions 2023
2.4%
0.5%
11.8%
Digital Solutions 2022
2.8%
0.3%
11.6%
1 Compound sales growth rate is the annualized steady growth rate over the forecast period.
The company has taken into account the current macroeconomic environment and assumed a
lower growth expectation in the 2023 impairment test. In addition, 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-501": { "value": "
15Intangible assets
Goodwill
Customer
relationships
Technology
based
Brand names
Product
development
Software
Other
Total
Balance as at January 1, 2022
Cost
3,167
1,522
413
440
163
75
10
5,790
Accumulated amortization / impairment
(703)
(1,107)
(308)
(298)
(129)
(45)
(6)
(2,597)
Book value
2,464
415
105
142
34
30
4
3,193
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
37
17
3
57
Amortization
\u2013
(88)
(23)
(12)
(17)
(9)
(3)
(152)
Acquisitions
280
15
\u2013
22
\u2013
\u2013
\u2013
317
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Translation differences and other movements
117
21
(15)
8
\u2013
\u2013
15
146
Total changes
398
(53)
(38)
18
20
8
15
368
Balance as at December 31, 2022
Cost
3,589
1,604
387
481
160
89
38
6,348
Accumulated depreciation / impairment
(728)
(1,242)
(320)
(322)
(106)
(51)
(19)
(2,787)
Book value
2,861
362
67
160
54
38
19
3,562
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
49
15
2
67
Amortization
\u2013
(48)
(17)
(12)
(20)
(12)
(4)
(113)
Acquisitions
(6)
1
4
1
\u2013
\u2013
\u2013
\u2013
Impairment
\u2013
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
(1)
Translation differences and other movements
(100)
(11)
\u2013
(5)
(2)
\u2013
\u2013
(119)
Total changes
(107)
(58)
(13)
(16)
27
3
(1)
(166)
Balance as at December 31, 2023
Cost
3,466
1,034
354
393
205
103
38
5,594
Accumulated amortization / impairment
(711)
(730)
(300)
(249)
(124)
(62)
(21)
(2,199)
Book value
2,755
304
54
144
81
41
17
3,396
Other intangible assets
The additions for 2023 contain internally generated assets of EUR 49 million for product
development and EUR 15 million for software. In 2023, acquired other intangible assets are
Technology of EUR 4 million, customer relationships of EUR 1 million and brand names of EUR 1
million which relates to Intelligent Lighting Controls, Inc. (ILC) acquisition in Q1 2023.
The capitalized product development costs and software, for which amortization has not yet
commenced, amounted to EUR 62 million as of December 31, 2023 (December 31, 2022: EUR 50
million).
As of December 31, 2023, the carrying amount of the customer relationships originating from
the Cooper Lighting acquisition in 2023 was EUR 249 million (USD 276 million) with a remaining
amortization period of 16.8 years (2022: EUR 276 million, USD 294 million; 17.8 years).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-500": { "value": "
15Intangible assets
Goodwill
Customer
relationships
Technology
based
Brand names
Product
development
Software
Other
Total
Balance as at January 1, 2022
Cost
3,167
1,522
413
440
163
75
10
5,790
Accumulated amortization / impairment
(703)
(1,107)
(308)
(298)
(129)
(45)
(6)
(2,597)
Book value
2,464
415
105
142
34
30
4
3,193
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
37
17
3
57
Amortization
\u2013
(88)
(23)
(12)
(17)
(9)
(3)
(152)
Acquisitions
280
15
\u2013
22
\u2013
\u2013
\u2013
317
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Translation differences and other movements
117
21
(15)
8
\u2013
\u2013
15
146
Total changes
398
(53)
(38)
18
20
8
15
368
Balance as at December 31, 2022
Cost
3,589
1,604
387
481
160
89
38
6,348
Accumulated depreciation / impairment
(728)
(1,242)
(320)
(322)
(106)
(51)
(19)
(2,787)
Book value
2,861
362
67
160
54
38
19
3,562
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
49
15
2
67
Amortization
\u2013
(48)
(17)
(12)
(20)
(12)
(4)
(113)
Acquisitions
(6)
1
4
1
\u2013
\u2013
\u2013
\u2013
Impairment
\u2013
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
(1)
Translation differences and other movements
(100)
(11)
\u2013
(5)
(2)
\u2013
\u2013
(119)
Total changes
(107)
(58)
(13)
(16)
27
3
(1)
(166)
Balance as at December 31, 2023
Cost
3,466
1,034
354
393
205
103
38
5,594
Accumulated amortization / impairment
(711)
(730)
(300)
(249)
(124)
(62)
(21)
(2,199)
Book value
2,755
304
54
144
81
41
17
3,396
Goodwill
Goodwill as of December 31, 2023, was EUR 2,755 million. During the year ended December 31,
2023, a translation difference of EUR 100 million was mainly due to the change in the USD/EUR
rate, which impacted the goodwill denominated in USD. The acquisition in goodwill relates to the
Intelligent Lighting Controls, Inc. (ILC) acquisition, recognized in Digital Solutions, and the final
purchase price adjustments for Fluence. Refer to note 11, Acquisitions for details.
For impairment testing, goodwill is allocated to cash-generating units, which represent the
lowest level at which the goodwill is monitored internally for management purposes. The cash-
generating units correspond to the operating segments.
Goodwill allocated to the cash-generating unit Digital Solutions is considered to be significant in
comparison to the total book value of goodwill of Signify at December 31, 2022, and December
31, 2023. The goodwill allocated to each of the cash-generating units as of December 31, 2022,
and December 31, 2023, is presented below.
2022
2023
Digital Solutions
2,482
2,387
Digital Products
317
307
Conventional Products
63
61
Book value
2,861
2,755
The basis of the recoverable amount used of the cash-generating units is the value in use. In the
annual impairment test performed in the fourth quarter of 2023, the estimated recoverable
amount of the tested cash-generating units exceeded the carrying value of the units.
Therefore, no impairment loss was recognized.
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 2024 to 2026. 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 2023 and 2022 were based on the key
assumptions included in the table below:
Key assumptions in %
Compound sales growth rate 1
Extra polation
period
Used to
calculate
terminal value
Pre-tax
discount rates
Digital Solutions 2023
2.4%
0.5%
11.8%
Digital Solutions 2022
2.8%
0.3%
11.6%
1 Compound sales growth rate is the annualized steady growth rate over the forecast period.
The company has taken into account the current macroeconomic environment and assumed a
lower growth expectation in the 2023 impairment test. In addition, 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 2023 contain internally generated assets of EUR 49 million for product
development and EUR 15 million for software. In 2023, acquired other intangible assets are
Technology of EUR 4 million, customer relationships of EUR 1 million and brand names of EUR 1
million which relates to Intelligent Lighting Controls, Inc. (ILC) acquisition in Q1 2023.
The capitalized product development costs and software, for which amortization has not yet
commenced, amounted to EUR 62 million as of December 31, 2023 (December 31, 2022: EUR 50
million).
As of December 31, 2023, the carrying amount of the customer relationships originating from
the Cooper Lighting acquisition in 2023 was EUR 249 million (USD 276 million) with a remaining
amortization period of 16.8 years (2022: EUR 276 million, USD 294 million; 17.8 years).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-499": { "value": "
15Intangible assets
Goodwill
Customer
relationships
Technology
based
Brand names
Product
development
Software
Other
Total
Balance as at January 1, 2022
Cost
3,167
1,522
413
440
163
75
10
5,790
Accumulated amortization / impairment
(703)
(1,107)
(308)
(298)
(129)
(45)
(6)
(2,597)
Book value
2,464
415
105
142
34
30
4
3,193
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
37
17
3
57
Amortization
\u2013
(88)
(23)
(12)
(17)
(9)
(3)
(152)
Acquisitions
280
15
\u2013
22
\u2013
\u2013
\u2013
317
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Translation differences and other movements
117
21
(15)
8
\u2013
\u2013
15
146
Total changes
398
(53)
(38)
18
20
8
15
368
Balance as at December 31, 2022
Cost
3,589
1,604
387
481
160
89
38
6,348
Accumulated depreciation / impairment
(728)
(1,242)
(320)
(322)
(106)
(51)
(19)
(2,787)
Book value
2,861
362
67
160
54
38
19
3,562
Change in book value:
Additions
\u2013
\u2013
\u2013
\u2013
49
15
2
67
Amortization
\u2013
(48)
(17)
(12)
(20)
(12)
(4)
(113)
Acquisitions
(6)
1
4
1
\u2013
\u2013
\u2013
\u2013
Impairment
\u2013
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
(1)
Translation differences and other movements
(100)
(11)
\u2013
(5)
(2)
\u2013
\u2013
(119)
Total changes
(107)
(58)
(13)
(16)
27
3
(1)
(166)
Balance as at December 31, 2023
Cost
3,466
1,034
354
393
205
103
38
5,594
Accumulated amortization / impairment
(711)
(730)
(300)
(249)
(124)
(62)
(21)
(2,199)
Book value
2,755
304
54
144
81
41
17
3,396
Goodwill
Goodwill as of December 31, 2023, was EUR 2,755 million. During the year ended December 31,
2023, a translation difference of EUR 100 million was mainly due to the change in the USD/EUR
rate, which impacted the goodwill denominated in USD. The acquisition in goodwill relates to the
Intelligent Lighting Controls, Inc. (ILC) acquisition, recognized in Digital Solutions, and the final
purchase price adjustments for Fluence. Refer to note 11, Acquisitions for details.
For impairment testing, goodwill is allocated to cash-generating units, which represent the
lowest level at which the goodwill is monitored internally for management purposes. The cash-
generating units correspond to the operating segments.
Goodwill allocated to the cash-generating unit Digital Solutions is considered to be significant in
comparison to the total book value of goodwill of Signify at December 31, 2022, and December
31, 2023. The goodwill allocated to each of the cash-generating units as of December 31, 2022,
and December 31, 2023, is presented below.
2022
2023
Digital Solutions
2,482
2,387
Digital Products
317
307
Conventional Products
63
61
Book value
2,861
2,755
The basis of the recoverable amount used of the cash-generating units is the value in use. In the
annual impairment test performed in the fourth quarter of 2023, the estimated recoverable
amount of the tested cash-generating units exceeded the carrying value of the units.
Therefore, no impairment loss was recognized.
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 2024 to 2026. 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 2023 and 2022 were based on the key
assumptions included in the table below:
Key assumptions in %
Compound sales growth rate 1
Extra polation
period
Used to
calculate
terminal value
Pre-tax
discount rates
Digital Solutions 2023
2.4%
0.5%
11.8%
Digital Solutions 2022
2.8%
0.3%
11.6%
1 Compound sales growth rate is the annualized steady growth rate over the forecast period.
The company has taken into account the current macroeconomic environment and assumed a
lower growth expectation in the 2023 impairment test. In addition, 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-502": { "value": "
16Objectives, policies and processes for managing capital
Signify generated cash flows from operating activities of EUR 696 million in 2023. During 2023
the total cash position increased by EUR 481 million, while gross debt increased by EUR 197
million.\u00a0As of December 31, 2023, the net debt/EBITDA ratio was 1.7x (December 31, 2022: 1.3x).
In line with its commitment to maintain a robust capital structure and an investment grade credit
rating, Signify expects to further deleverage its gross debt and to reduce its US pension
liabilities in 2024.
Signify manages free cash flow performance by continuous structural working capital initiatives
and gradual costs optimization, including post-merger integration costs related to previous
acquisitions.
Signify is subject to certain debt covenants, for details refer to note 23, Debt.
Free cash flows for the year ended December 31, 2023, and comparative information are
presented below:
2022
2023
Cash flows from operating activities
376
696
Cash flows from investing activities
(256)
(115)
Cash flows before financing activities
119
581
Cash flows from operating activities
376
696
Net capital expenditures:
\u2022\u00a0 Additions of intangible assets
(62)
(67)
\u2022\u00a0 Capital expenditures on property, plant and equipment
(70)
(51)
\u2022\u00a0 Proceeds from disposal of property, plant and equipment
201
8
Free cash flows
445
586
Working capital position as at December 31, 2023, and comparative information are presented
below:
2022
2023
Inventories
1,361
1,050
Trade and other receivables
1,102
1,012
Trade and other payables
(1,859)
(1,539)
Other working capital items
(41)
(62)
Working capital
564
461
23Debt
Term loans and revolving credit facility
During December 2023, the Company entered into a EUR 400 million long-term loan agreement
maturing in December 2026. This agreement bears interest at a variable rate based on the
relevant applicable EURIBOR plus a fixed margin of 1.30%. In December 2023, EUR 222 million
was received, the remainder EUR 178 million was received in January 2024.
In addition, as of December 31, 2023, the Company had outstanding term loans amounting to
EUR 280 million maturing in November 2024 and USD 225 million maturing in January 2025. The
EUR term loans bear 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 Term SOFR plus a margin. As of December 31, 2023, 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.
As of December 31, 2023 the Company had an undrawn revolving credit facility (RCF) of EUR 500
million which is maturing in January 2027.
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-503": { "value": "
17Inventories
2022
2023
Raw materials and components
552
443
Finished goods
809
608
Total
1,361
1,050
The write-down of inventories to net realizable value amounted to EUR 72 million for the year
ended December 31, 2023 (2022: EUR 72 million), which includes EUR 2 million (2022: EUR 16
million) related to restructuring programs.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-507": { "value": "
18Trade and other receivables
2022
2023
Trade receivables
1,037
967
Other receivables
66
46
Total receivables, net of value allowance
1,102
1,012
The aging of trade receivables, representing current and overdue, net of loss allowance, is as
follows:
2022
2023
Current
982
925
Overdue 1-30 days
23
20
Overdue 31-180 days
31
22
Overdue >180 days
\u2013
\u2013
Trade receivables, net
1,037
967
The changes in loss allowance for accounts receivable are as follows:
2022
2023
Balance as at January 1
(76)
(94)
Additions charged to expense
(11)
(4)
Utilizations
\u2013
12
Translation differences and other movements
(7)
4
Balance as at December 31
(94)
(83)
As per December 31, 2023, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 75 million (2022: EUR 85 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-506": { "value": "
18Trade and other receivables
The changes in loss allowance for accounts receivable are as follows:
2022
2023
Balance as at January 1
(76)
(94)
Additions charged to expense
(11)
(4)
Utilizations
\u2013
12
Translation differences and other movements
(7)
4
Balance as at December 31
(94)
(83)
As per December 31, 2023, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 75 million (2022: EUR 85 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-505": { "value": "
18Trade and other receivables
The changes in loss allowance for accounts receivable are as follows:
2022
2023
Balance as at January 1
(76)
(94)
Additions charged to expense
(11)
(4)
Utilizations
\u2013
12
Translation differences and other movements
(7)
4
Balance as at December 31
(94)
(83)
As per December 31, 2023, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 75 million (2022: EUR 85 million).
28Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of business: 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.
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, 2023, Signify had a ratio of fixed-
rate debt to total outstanding debt of approximately 68% (2022: 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, 2023, with all other variables held
constant, the annualized net interest expense would decrease by EUR 6 million. This impact was
based on the outstanding net floating debt position as of December 31, 2023.
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.
Payments due by period
Total
Less than
1 year
Between
1 and 5
years
Over
5 years
Debt, including bank overdrafts
1,993
972
1,021
\u2013
Interest on debt
108
52
56
\u2013
Trade and other payables
1,539
1,539
\u2013
\u2013
Lease liability
237
66
145
26
Derivative liabilities
17
17
\u2013
\u2013
Off-balance sheet commitments
164
31
93
40
Purchase obligations 1
414
162
252
\u2013
Contractual cash obligations
4,472
2,839
1,567
66
Revolving credit facility (RCF)
500
\u2013
\u2013
\u2013
1 Signify has commitments related to the ordinary course of business which in general relate to contracts and purchase order
commitments for less than 12 months. In the table, only the commitments for multiple years are presented, including their
short-term portion.
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:
2022
2023
Cash at banks and in hand
425
358
Short-term deposits
216
768
Other cash equivalents
35
33
Cash and cash equivalents
677
1,158
Bank overdrafts
(1)
\u2013
Cash and cash equivalents and bank overdrafts
676
1,158
Signify has a EUR 500 million revolving credit facility that can be used for general purposes. As of
December 31, 2023, 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:
\u2022 Transaction exposures related to anticipated sales and purchases and on-balance-sheet
receivables/payables resulting from such transactions;
\u2022 Financing exposure arising from foreign currency intercompany and external debt and
deposits;
\u2022 Translation exposure of net income in foreign entities;
\u2022 Translation exposure of foreign currency denominated equity invested in consolidated
companies;
\u2022 Translation 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 9 months in layers of 25% up to a hedge ratio of 75%, 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 as per the
hedging policy horizon:
Receivables / Sales
Payables / Purchases
Exposure
Hedges
Exposure
Hedges
Balance as at December 31
Exposure currency
CNY
27
(21)
(584)
380
PLN
47
(47)
(146)
104
USD
170
(170)
(79)
79
EUR 1
51
(51)
(31)
31
CAD
74
(45)
\u2013
\u2013
MXN
7
(7)
(24)
24
GBP
11
(11)
\u2013
\u2013
Others
57
(57)
(6)
6
Total 2023
444
(409)
(871)
625
Total 2022 2
1,621
(1,164)
(1,560)
1,098
1 EUR exposures in non-EUR denominated functional currencies.
2 2022 exposures and hedges based on the hedging policy horizon of 15 months.
As of December 31, 2023, a loss of EUR 2 million was deferred in equity as a result of these
hedges (2022: loss of EUR 27 million). The result deferred in equity will be released to earnings
mostly during 2024 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2023, EUR nil million (2022: 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, 2023, was
an unrealized liability of EUR 1 million (2022: liability EUR 14 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 19 million in the value of the derivatives. The above sensitivity analysis
includes a gain of EUR 1 million that would impact the income statement, which would partially
offset the opposite revaluation effect on the underlying accounts receivable and payable, and
the remaining loss of EUR 20 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, 2023, the fair value of
these hedges was an unrealized liability of EUR 2 million (2022: asset EUR 6 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 41 million in the value of the derivatives.
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 2023, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 250 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
2023. As at December 31, 2023, no net investment hedges were outstanding (2022: nil). 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, 2023, Signify had
EUR 22 million of commodity derivatives recognized in the Statement of financial position (2022:
EUR 44 million),which relate to Virtual Power Purchase Agreements. An increase of the energy
prices by 10% will lead to the commodity derivatives value increase by EUR 7 million (2022: EUR 9
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, 2023, Signify had country risk exposure of EUR 2.7 billion in the United States
and EUR 1.3 billion in the Netherlands. Countries where the risk exceeds EUR 200 million but was
less than EUR 500 million are Belgium (EUR 477 million), China including Hong Kong (EUR 446
million), Poland (EUR 388 million) and France (EUR 271 million). Countries where the risk
exceeded EUR 50 million but was less than EUR 200 million are Mexico, Saudi Arabia, Spain,
Canada, United Kingdom, Australia, Germany and India. 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", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-504": { "value": "
18Trade and other receivables
The changes in loss allowance for accounts receivable are as follows:
2022
2023
Balance as at January 1
(76)
(94)
Additions charged to expense
(11)
(4)
Utilizations
\u2013
12
Translation differences and other movements
(7)
4
Balance as at December 31
(94)
(83)
As per December 31, 2023, the loss allowance for accounts receivable included allowances for
individually impaired receivables of EUR 75 million (2022: EUR 85 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-508": { "value": "
19Trade and other payables
2022
2023
Payables to suppliers
1,242
950
Amounts payable to employees
151
198
Customer rebates and refunds related
220
188
Marketing and sales related
90
67
Materials and fixed assets related
47
50
Other payables
108
87
Trade and other payables
1,859
1,539
Certain Signify suppliers factor their trade receivables from Signify with third parties through
supplier finance arrangements. As of December 31, 2023, approximately EUR 134 million (2022:
EUR 172 million) of the Signify accounts payable were known to have been sold onward under
such arrangement whereby Signify confirms invoices. Signify continues to recognize these
liabilities as trade payables and will settle the liabilities in line with the original payment terms of
the related invoices.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-512": { "value": "
20Other assets
In millions of EUR
2022
2023
Contract assets
45
36
Indirect taxes
73
67
Prepayments
42
39
Other assets
42
37
Total
201
179
From which current
161
147
From which non-current
40
32
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-511": { "value": "
20Other assets
In millions of EUR
2022
2023
Contract assets
45
36
Indirect taxes
73
67
Prepayments
42
39
Other assets
42
37
Total
201
179
From which current
161
147
From which non-current
40
32
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-510": { "value": "
20Other assets
In millions of EUR
2022
2023
Contract assets
45
36
Indirect taxes
73
67
Prepayments
42
39
Other assets
42
37
Total
201
179
From which current
161
147
From which non-current
40
32
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-509": { "value": "
20Other assets
In millions of EUR
2022
2023
Contract assets
45
36
Indirect taxes
73
67
Prepayments
42
39
Other assets
42
37
Total
201
179
From which current
161
147
From which non-current
40
32
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-517": { "value": "
21Other liabilities
2022
2023
Contract liability
215
226
Other tax liabilities
78
88
Other liabilities
61
47
Total
353
360
From which current
194
206
From which non-current
160
154
Out of the total amount of EUR 215 million recognized in contract liabilities at the end of 2022
(2021: EUR 200 million), EUR 64 million has been recognized as revenue for the year ended
December 31, 2023 (2022: EUR 68 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:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-516": { "value": "
21Other liabilities
2022
2023
Contract liability
215
226
Other tax liabilities
78
88
Other liabilities
61
47
Total
353
360
From which current
194
206
From which non-current
160
154
Out of the total amount of EUR 215 million recognized in contract liabilities at the end of 2022
(2021: EUR 200 million), EUR 64 million has been recognized as revenue for the year ended
December 31, 2023 (2022: EUR 68 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:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-515": { "value": "
21Other liabilities
2022
2023
Contract liability
215
226
Other tax liabilities
78
88
Other liabilities
61
47
Total
353
360
From which current
194
206
From which non-current
160
154
Out of the total amount of EUR 215 million recognized in contract liabilities at the end of 2022
(2021: EUR 200 million), EUR 64 million has been recognized as revenue for the year ended
December 31, 2023 (2022: EUR 68 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:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-514": { "value": "
21Other liabilities
2022
2023
Contract liability
215
226
Other tax liabilities
78
88
Other liabilities
61
47
Total
353
360
From which current
194
206
From which non-current
160
154
Out of the total amount of EUR 215 million recognized in contract liabilities at the end of 2022
(2021: EUR 200 million), EUR 64 million has been recognized as revenue for the year ended
December 31, 2023 (2022: EUR 68 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:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-513": { "value": "
21Other liabilities
2022
2023
Contract liability
215
226
Other tax liabilities
78
88
Other liabilities
61
47
Total
353
360
From which current
194
206
From which non-current
160
154
Out of the total amount of EUR 215 million recognized in contract liabilities at the end of 2022
(2021: EUR 200 million), EUR 64 million has been recognized as revenue for the year ended
December 31, 2023 (2022: EUR 68 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-518": { "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, 2023, the issued and fully paid share capital consisted of 128,344,238 ordinary
shares with a nominal value of EUR 0.01 per share (2022: 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, 2023, this right had not been exercised therefore no preference shares have
been issued.
Dividend distribution
A proposal will be submitted to the 2024 Annual General meeting of Shareholders to pay a
dividend of EUR 1.55 per ordinary share, in cash, from the 2023 net income.
In June 2023, the Company distributed a dividend of EUR 1.50 per ordinary share, representing a
total value of EUR 189 million including costs.
Treasury shares
The following table shows the movements in the outstanding number of shares over the last two
years:
Number of shares
2022
2023
Balance as at January 1
124,902,004
125,241,160
Purchase of treasury shares
(1,174,595)
(289,353)
Delivery of treasury shares
1,513,751
1,363,294
Balance as at December 31
125,241,160
126,315,101
The following table shows the share transactions to cover obligations arising from share-based
compensation plans (for further details refer to note 26, Share-based compensation):
2022
2023
Shares acquired
1,174,595
289,353
Average market price
EUR 40.89
EUR 25.59
Amount paid
EUR 48 million
EUR 7 million
Shares delivered
1,513,751
1,363,294
Average price (FIFO)
EUR 28.02
EUR 41.75
Cost of delivered shares
EUR 42 million
EUR 57 million
Total shares in treasury at year-end
3,103,078
2,029,137
Total cost
EUR 131 million
EUR 82 million
Legal reserves
In accordance with the Dutch Civil Code and statutory requirements in other countries, in
certain circumstances legal reserves need to be established. Legal reserves are not available
for distribution to the Company\u2019s shareholders. The currency translation reserve, cash flow
hedging reserve and other reserves included in retained earnings include non-distributable
amounts. If any reserve has a negative balance, distributions to shareholders are restricted to
the extent of the negative amount.
The total distributable reserves as at December 31, 2023, amounted to EUR 2,550 million (2022:
EUR 2,589 million). For further details of legal reserves, see note D, Shareholders' equity, in
chapter 16, Signify N.V. financial statements.
DShareholders\u2019 equity
The following table shows the limitations in the distribution of Shareholders' equity and the total
distributable reserves:
2022
2023
Shareholders' equity per December 31
2,920
2,817
Issued share capital
1
1
Currency translation reserve
67
\u2013
Restrictions on subsidiaries to transfer funds
to parent company
142
129
Capitalized development costs reserve
84
116
Revaluation reserve
34
18
Reserves required by Articles of Association
3
3
Limitations in the distribution of shareholders' equity
331
267
Distributable reserves of December 31
2,589
2,550
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-519": { "value": "
Share capital
On December 31, 2023, the issued and fully paid share capital consisted of 128,344,238 ordinary
shares with a nominal value of EUR 0.01 per share (2022: 128,344,238).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-520": { "value": "
Dividend distribution
A proposal will be submitted to the 2024 Annual General meeting of Shareholders to pay a
dividend of EUR 1.55 per ordinary share, in cash, from the 2023 net income.
In June 2023, the Company distributed a dividend of EUR 1.50 per ordinary share, representing a
total value of EUR 189 million including costs.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-521": { "value": "1.55", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "f-522": { "value": "1.50", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "f-523": { "value": "
Treasury shares
The following table shows the movements in the outstanding number of shares over the last two
years:
Number of shares
2022
2023
Balance as at January 1
124,902,004
125,241,160
Purchase of treasury shares
(1,174,595)
(289,353)
Delivery of treasury shares
1,513,751
1,363,294
Balance as at December 31
125,241,160
126,315,101
The following table shows the share transactions to cover obligations arising from share-based
compensation plans (for further details refer to note 26, Share-based compensation):
2022
2023
Shares acquired
1,174,595
289,353
Average market price
EUR 40.89
EUR 25.59
Amount paid
EUR 48 million
EUR 7 million
Shares delivered
1,513,751
1,363,294
Average price (FIFO)
EUR 28.02
EUR 41.75
Cost of delivered shares
EUR 42 million
EUR 57 million
Total shares in treasury at year-end
3,103,078
2,029,137
Total cost
EUR 131 million
EUR 82 million
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-524": { "value": "
Legal reserves
In accordance with the Dutch Civil Code and statutory requirements in other countries, in
certain circumstances legal reserves need to be established. Legal reserves are not available
for distribution to the Company\u2019s shareholders. The currency translation reserve, cash flow
hedging reserve and other reserves included in retained earnings include non-distributable
amounts. If any reserve has a negative balance, distributions to shareholders are restricted to
the extent of the negative amount.
The total distributable reserves as at December 31, 2023, amounted to EUR 2,550 million (2022:
EUR 2,589 million). For further details of legal reserves, see note D, Shareholders' equity, in
chapter 16, Signify N.V. financial statements.
DShareholders\u2019 equity
The following table shows the limitations in the distribution of Shareholders' equity and the total
distributable reserves:
2022
2023
Shareholders' equity per December 31
2,920
2,817
Issued share capital
1
1
Currency translation reserve
67
\u2013
Restrictions on subsidiaries to transfer funds
to parent company
142
129
Capitalized development costs reserve
84
116
Revaluation reserve
34
18
Reserves required by Articles of Association
3
3
Limitations in the distribution of shareholders' equity
331
267
Distributable reserves of December 31
2,589
2,550
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-527": { "value": "
23Debt
2022
2023
Term loan (EUR)
280
501
Term loan (USD)
211
203
Eurobonds
1,268
1,271
Lease liabilities
254
237
Other debt
19
18
Subtotal
2,032
2,229
Bank overdrafts
1
0
Gross debt
2,033
2,230
Cash and cash equivalents
(677)
(1,158)
Net debt (cash)
1,356
1,071
Total equity
3,065
2,947
Net debt and total equity
4,421
4,018
Net debt divided by net debt and total equity (in %)
31%
27%
Total equity divided by net debt and total equity (in %)
69%
73%
Movements of debt were as follows:
Term loans
Eurobonds
Lease
liabilities
Other debt
Bank
overdrafts
Total
Balance as at January 1, 2022
479
1,265
249
11
4
2,007
Acquisitions
\u2013
\u2013
5
\u2013
\u2013
5
Financing cash flows:
\u2022 New borrowings
\u2013
\u2013
\u2013
217
\u2013
217
\u2022 Repayment
\u2013
\u2013
(68)
(208)
\u2013
(276)
Translation difference
12
\u2013
2
\u2013
\u2013
14
Other movements 1
\u2013
3
66
\u2013
(3)
66
Balance as at December 31, 2022
491
1,268
254
19
1
2,033
Balance as at January 1, 2023
491
1,268
254
19
1
2,033
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Financing cash flows:
\u2022 New borrowings
222
\u2013
\u2013
12
\u2013
233
\u2022 Repayment
\u2013
\u2013
(70)
(13)
\u2013
(82)
Translation difference
(8)
\u2013
(2)
\u2013
\u2013
(11)
Other movements 1
(1)
3
55
\u2013
(1)
56
Balance as at December 31, 2023
704
1,271
237
18
\u2013
2,230
1 Other movements include additions of leases which are non-cash transactions.
Eurobonds
As of December 31, 2023, 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%.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-525": { "value": "
23Debt
2022
2023
Term loan (EUR)
280
501
Term loan (USD)
211
203
Eurobonds
1,268
1,271
Lease liabilities
254
237
Other debt
19
18
Subtotal
2,032
2,229
Bank overdrafts
1
0
Gross debt
2,033
2,230
Cash and cash equivalents
(677)
(1,158)
Net debt (cash)
1,356
1,071
Total equity
3,065
2,947
Net debt and total equity
4,421
4,018
Net debt divided by net debt and total equity (in %)
31%
27%
Total equity divided by net debt and total equity (in %)
69%
73%
Movements of debt were as follows:
Term loans
Eurobonds
Lease
liabilities
Other debt
Bank
overdrafts
Total
Balance as at January 1, 2022
479
1,265
249
11
4
2,007
Acquisitions
\u2013
\u2013
5
\u2013
\u2013
5
Financing cash flows:
\u2022 New borrowings
\u2013
\u2013
\u2013
217
\u2013
217
\u2022 Repayment
\u2013
\u2013
(68)
(208)
\u2013
(276)
Translation difference
12
\u2013
2
\u2013
\u2013
14
Other movements 1
\u2013
3
66
\u2013
(3)
66
Balance as at December 31, 2022
491
1,268
254
19
1
2,033
Balance as at January 1, 2023
491
1,268
254
19
1
2,033
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Financing cash flows:
\u2022 New borrowings
222
\u2013
\u2013
12
\u2013
233
\u2022 Repayment
\u2013
\u2013
(70)
(13)
\u2013
(82)
Translation difference
(8)
\u2013
(2)
\u2013
\u2013
(11)
Other movements 1
(1)
3
55
\u2013
(1)
56
Balance as at December 31, 2023
704
1,271
237
18
\u2013
2,230
1 Other movements include additions of leases which are non-cash transactions.
Term loans and revolving credit facility
During December 2023, the Company entered into a EUR 400 million long-term loan agreement
maturing in December 2026. This agreement bears interest at a variable rate based on the
relevant applicable EURIBOR plus a fixed margin of 1.30%. In December 2023, EUR 222 million
was received, the remainder EUR 178 million was received in January 2024.
In addition, as of December 31, 2023, the Company had outstanding term loans amounting to
EUR 280 million maturing in November 2024 and USD 225 million maturing in January 2025. The
EUR term loans bear 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 Term SOFR plus a margin. As of December 31, 2023, 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.
As of December 31, 2023 the Company had an undrawn revolving credit facility (RCF) of EUR 500
million which is maturing in January 2027.
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, 2023, 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 drawn and repaid within the same quarter, with a maturity of less than
three months, are reported on a net basis in the movement of other debt.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-526": { "value": "
23Debt
Movements of debt were as follows:
Term loans
Eurobonds
Lease
liabilities
Other debt
Bank
overdrafts
Total
Balance as at January 1, 2022
479
1,265
249
11
4
2,007
Acquisitions
\u2013
\u2013
5
\u2013
\u2013
5
Financing cash flows:
\u2022 New borrowings
\u2013
\u2013
\u2013
217
\u2013
217
\u2022 Repayment
\u2013
\u2013
(68)
(208)
\u2013
(276)
Translation difference
12
\u2013
2
\u2013
\u2013
14
Other movements 1
\u2013
3
66
\u2013
(3)
66
Balance as at December 31, 2022
491
1,268
254
19
1
2,033
Balance as at January 1, 2023
491
1,268
254
19
1
2,033
Acquisitions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Financing cash flows:
\u2022 New borrowings
222
\u2013
\u2013
12
\u2013
233
\u2022 Repayment
\u2013
\u2013
(70)
(13)
\u2013
(82)
Translation difference
(8)
\u2013
(2)
\u2013
\u2013
(11)
Other movements 1
(1)
3
55
\u2013
(1)
56
Balance as at December 31, 2023
704
1,271
237
18
\u2013
2,230
1 Other movements include additions of leases which are non-cash transactions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-529": { "value": "
24Provisions
Restruc-
turing
Environ-
mental
Product
warranty
Legal
Other
Total
Balance as at January 1,
2022
62
97
66
9
120
355
Acquisitions
\u2013
\u2013
53
\u2013
7
60
Additions
38
17
48
108
31
242
Utilizations
(52)
(24)
(51)
(6)
(22)
(155)
Reclassifications
\u2013
3
\u2013
\u2013
(17)
(14)
Releases
(13)
(6)
(1)
(2)
(7)
(28)
Changes in discount rate
\u2013
4
\u2013
\u2013
(7)
(4)
Accretion
\u2013
\u2013
\u2013
1
\u2013
1
Translation differences and
other movements
\u2013
1
(1)
(6)
\u2013
(6)
Balance as at December 31,
2022
36
92
115
103
105
451
Short-term
30
22
81
3
32
168
Long-term
6
70
34
101
73
283
Balance as at January 1,
2023
36
92
115
103
105
451
Acquisitions
\u2013
\u2013
(5)
\u2013
\u2013
(5)
Additions
158
27
48
5
26
264
Utilizations
(69)
(10)
(49)
(2)
(23)
(153)
Reclassifications
4
\u2013
\u2013
\u2013
(4)
\u2013
Releases
(8)
(5)
(2)
(55)
(10)
(79)
Changes in discount rate
\u2013
(6)
\u2013
\u2013
1
(5)
Accretion
\u2013
2
\u2013
1
1
4
Translation differences and
other movements
\u2013
(1)
(3)
(3)
(1)
(8)
Balance as at December 31,
2023
121
99
103
50
95
470
Short-term
114
26
40
2
24
206
Long-term
7
74
64
48
71
263
Restructuring
During the year ended December 31, 2023, additions to restructuring provision included both
programs in Conventional Products (mainly in Belgium), and the structural cost reduction
program.
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 and claims relating
to various matters including commercial transactions, alleged intellectual property infringement
and product liability claims for property damage and personal injury, alleged to have been
caused by failure or malfunction of Signify products. 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 a provision if payment with respect to a particular matter
is probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years. Releases from legal provisions were mainly related to the
legal case as described below.
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 the customer's employee was
injured when struck by a pallet of Signify products that was pushed off a storage rack by a
temporary worker operating a forklift at the warehouse.
In Q1 2023, Signify filed post-trial motions with the trial court challenging the jury award. On
April 26, 2023,the trial judge, issued an order reducing the jury's award to approximately USD 42
million. Signify has comprehensive global liability insurance and has confirmation that the case is
fully covered without reservations of rights, including interest and other cost. Both the legal
provision and the insurance cover asset have been adjusted in the balance sheet as per year
end without any net P&L impact. Signify continues to exercise all its rights to appeal the verdict
issued in this case. To that effect, Signify has filed its notice of appeal with the appropriate
Connecticut Appellate court to contest its liability this claim.
Other
Other provisions mainly comprise of provisions for onerous contracts, other taxes, 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
2022
2023
Obligation
Plan
assets
Net
Liability
Obligation
Plan
assets
Net
Liability
Unites States
459
(351)
108
420
(323)
97
Germany
170
(15)
155
169
(15)
154
Other countries
112
(48)
64
116
(45)
71
Total countries
741
(414)
327
705
(383)
322
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 43 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 15 million and a post-retirement welfare plan
with a net liability of EUR 38 million.
Signify reviewed the funding level of the Hourly & Salaried Pension Plan and decided to make a
contribution in 2023 of EUR 5 million. Signify decided to initiate a plan termination with the
intention to settle the plan liabilities in 2024 with an insurance company. This will mean that any
difference between the costs of settling the plan liabilities and the plan assets will need to be
funded by Signify. The financial impact on this transaction will only be known at the end of 2024
when Signify is expected to complete the buy out.
Signify expects cash outflows of EUR 7 million in 2024 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 4 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 150 million as at December 31, 2023. Signify expects cash outflows of
EUR 17 million in 2024 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 2024.
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 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
2022
2023
Obligation
Plan assets
Net Liability
Obligation
Plan assets
Net Liability
Balance as at January 1
905
(541)
363
741
(414)
327
Service cost
9
\u2013
9
10
\u2013
10
(Negative) past service cost
\u2013
\u2013
\u2013
1
\u2013
1
Admin expenses paid
\u2013
1
1
\u2013
1
1
Settlements
(8)
1
(8)
(1)
\u2013
(1)
Plan amendments
(1)
\u2013
(1)
(4)
\u2013
(4)
Recognized in employee benefit expenses
1
2
2
5
1
6
Interest (cost) / income
23
(15)
8
33
(18)
15
Included in Statements of Income
24
(13)
11
38
(18)
21
Actuarial gains / (losses)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2022 Demographic assumptions
(1)
\u2013
(1)
1
\u2013
1
\u2022 Financial assumptions
(165)
129
(36)
12
(7)
5
\u2022 Experience adjustment
22
\u2013
22
9
\u2013
9
Exchange rate differences
44
(33)
11
(15)
13
(2)
Included in Statements of comprehensive income
(101)
96
(5)
6
6
12
Employee contributions
1
(1)
\u2013
1
(1)
\u2013
Employer contributions
\u2013
(7)
(7)
\u2013
(10)
(10)
Benefits paid
\u2022 Benefits paid directly by employer
(34)
\u2013
(34)
(28)
\u2013
(28)
\u2022 Benefits paid from plan assets
(52)
52
\u2013
(53)
53
\u2013
Reclassifications
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Other
(86)
44
(42)
(80)
43
(38)
Balance as at December 31
741
(414)
327
705
(383)
322
During 2023, US interest rates dropped by some 20 bps and this has been reflected in lower
discount rates. For the Eurozone, the interest rates were some 50 bps lower at 31 December
than the year before. As such, the unfunded defined benefit plans in the US and the German
plans experienced the losses on the financial assumptions. For the funded plan in the US, this
was offset by the effect of the interest rate hedge gains.
Plan assets allocation
The asset allocation in Signify\u2019s pension plans at December 31 was as follows:
2022
2023
Debt securities
310
323
Equity securities
38
\u2013
Other
67
60
Total assets
415
383
The assets in 2023 contained 16% unquoted assets. Plan assets in 2023 do not include property
occupied by or financial instruments issued by Signify.
Some 84% of the total plan assets of the Signify pension plan are in the US and are invested in a
well-diversified portfolio. In anticipation of the earlier mentioned intended settlement of the
pension plan, the equity portfolio was sold and all assets at year-end are in the fixed income
portfolio with the interest rate sensitivity of this portfolio closely aligned to that of the plan\u2019s
pension liabilities. The remaining 16% 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:
\u2022 US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality
improvements according to Scale MP-2021.
\u2022 Germany: Richttafeln 2018 G K. Heubeck.
The weighted averages of the assumptions used to calculate the defined-benefit obligation as
of December 31, 2023, were as follows:
2022
2023
Discount rate
4.8%
4.7%
Pension cost increases
0.5%
0.5%
Healthcare cost increases
0.5%
0.5%
Wage increases
1.1%
1.1%
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 7.6
years and 7.1 years. The average discount rates for the plans in these countries are respectively
4.77% and 3.24%. 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.
2022
2023
Increase
Discount rate (1% movement)
(52)
(51)
Wage change (1% movement)
5
2
Pension indexation change (1% movement)
10
9
Longevity (see explanation)
20
23
Healthcare cost change (1% movement)
5
5
Decrease
Discount rate (1% movement)
65
59
Wage change (1% movement)
(3)
(5)
Pension indexation change (1% movement)
(8)
(8)
Longevity (see explanation)
(28)
(23)
Healthcare cost change (1% movement)
(4)
(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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-528": { "value": "
24Provisions
Restruc-
turing
Environ-
mental
Product
warranty
Legal
Other
Total
Balance as at January 1,
2022
62
97
66
9
120
355
Acquisitions
\u2013
\u2013
53
\u2013
7
60
Additions
38
17
48
108
31
242
Utilizations
(52)
(24)
(51)
(6)
(22)
(155)
Reclassifications
\u2013
3
\u2013
\u2013
(17)
(14)
Releases
(13)
(6)
(1)
(2)
(7)
(28)
Changes in discount rate
\u2013
4
\u2013
\u2013
(7)
(4)
Accretion
\u2013
\u2013
\u2013
1
\u2013
1
Translation differences and
other movements
\u2013
1
(1)
(6)
\u2013
(6)
Balance as at December 31,
2022
36
92
115
103
105
451
Short-term
30
22
81
3
32
168
Long-term
6
70
34
101
73
283
Balance as at January 1,
2023
36
92
115
103
105
451
Acquisitions
\u2013
\u2013
(5)
\u2013
\u2013
(5)
Additions
158
27
48
5
26
264
Utilizations
(69)
(10)
(49)
(2)
(23)
(153)
Reclassifications
4
\u2013
\u2013
\u2013
(4)
\u2013
Releases
(8)
(5)
(2)
(55)
(10)
(79)
Changes in discount rate
\u2013
(6)
\u2013
\u2013
1
(5)
Accretion
\u2013
2
\u2013
1
1
4
Translation differences and
other movements
\u2013
(1)
(3)
(3)
(1)
(8)
Balance as at December 31,
2023
121
99
103
50
95
470
Short-term
114
26
40
2
24
206
Long-term
7
74
64
48
71
263
Restructuring
During the year ended December 31, 2023, additions to restructuring provision included both
programs in Conventional Products (mainly in Belgium), and the structural cost reduction
program.
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 and claims relating
to various matters including commercial transactions, alleged intellectual property infringement
and product liability claims for property damage and personal injury, alleged to have been
caused by failure or malfunction of Signify products. 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 a provision if payment with respect to a particular matter
is probable and the amount can be estimated reliably. Signify expects the provision will be mainly
utilized within the next three years. Releases from legal provisions were mainly related to the
legal case as described below.
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 the customer's employee was
injured when struck by a pallet of Signify products that was pushed off a storage rack by a
temporary worker operating a forklift at the warehouse.
In Q1 2023, Signify filed post-trial motions with the trial court challenging the jury award. On
April 26, 2023,the trial judge, issued an order reducing the jury's award to approximately USD 42
million. Signify has comprehensive global liability insurance and has confirmation that the case is
fully covered without reservations of rights, including interest and other cost. Both the legal
provision and the insurance cover asset have been adjusted in the balance sheet as per year
end without any net P&L impact. Signify continues to exercise all its rights to appeal the verdict
issued in this case. To that effect, Signify has filed its notice of appeal with the appropriate
Connecticut Appellate court to contest its liability this claim.
Other
Other provisions mainly comprise of provisions for onerous contracts, other taxes, self-
insurance, decommissioning and provision for employee jubilee funds. Other provisions are
expected to be utilized mainly within the next five years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-530": { "value": "
26Share-based compensation
The total share-based compensation costs for the period ended December 31, 2023, amounted
to EUR 18 million (period ended December 31, 2022: EUR 24 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:
\u2022 Total shareholder return;
\u2022 Free cash flow;
\u2022 Sustainability;
\u2022 Return 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 %
2023
Risk-free interest rate
2.5%
Expected share price volatility
37%
The assumptions were used for these calculations only and do not necessarily represent an
indication of Signify management\u2019s expectation of future developments for other purposes.
Historic volatility was measured over the same timeframe as the simulation period (weighted
average 2.6 years).
The amount calculated as an expense for TSR shares is not adjusted for actual performance.
FCF, Sustainability, and ROCE related measurements are non-market performance conditions.
Fair value of shares granted under FCF, Sustainability, and ROCE objective conditions equals the
closing share price on the grant date, adjusted for the present value of expected dividends
during the vesting period.
The amount calculated as an expense for shares granted with a non-market performance
condition is adjusted for actual performance.
A summary of Signify performance shares movements and outstanding balance is presented
below.
Signify performance shares
2022
2023
EUR-denominated
Shares
Weighted
average
grant-date
fair value
Shares
Weighted
average
grant-date
fair value
Balance as at January 1
3,085,771
24.51
1,525,305
24.83
Granted
657,031
35.24
829,170
20.94
Vested
(1,188,103)
24.14
(995,035)
15.97
Forfeited
(112,046)
32.10
(206,024)
35.56
Performance adjustment
(917,348)
31.22
(479,314)
25.06
Balance as at December 31
1,525,305
24.83
674,102
29.68
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, 2023, estimated unrecognized costs related to non-vested performance
shares amounted to EUR 12 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
2022
2023
EUR-denominated
Shares
Weighted
average
grant-date
fair value
Shares
Weighted
average
grant-date
fair value
Balance as at January 1
811,664
25.96
777,109
29.41
Granted
260,205
32.97
341,060
21.70
Vested
(251,437)
21.87
(320,774)
16.52
Forfeited
(43,323)
29.90
(72,851)
32.64
Balance as at December 31
777,109
29.41
724,544
31.16
On December 31, 2023, estimated unrecognized costs related to non-vested conditional shares
amounted to EUR 8 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 2023, Signify granted 18,364 restricted shares with weighted average grant date fair value of
EUR 21.61.
On December 31, 2023, estimated unrecognized costs related to non-vested restricted shares
amounted to EUR 0.5 million. These costs are expected to be recognized over a weighted-
average period of 0.9 years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-531": { "value": "
27Information on remuneration
Signify considers the Board of Management and the Supervisory Board to be key management
personnel as defined in IAS 24 \"Related parties\".
In 2023, the total remuneration costs relating to the members of Key Management amounted to
EUR 6,953,570 (2022: EUR 5,113,707).
Remuneration of the Board of Management
In 2023, the total remuneration costs relating to the members of the Board of Management
amounted to EUR 6,156,545 (2022: EUR 4,379,057).
Remuneration costs of Key Management - the Board of Management, in EUR
2022
2023
Salary/Base compensation
2,187,040
2,678,188
Annual Incentive 1
180,204
1,018,899
Long Term Incentive 2
1,331,037
1,001,646
Pension allowances
492,986
552,755
Pension scheme costs
84,399
115,456
Other compensation 3
103,391
144,952
Termination benefits 4
\u2013
644,649
Total costs
4,379,057
6,156,545
1 Related to the performance in the year reported which are paid out in the subsequent year.
2 Costs 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. Costs include the forfeiture of the 2022 and 2023 grant for F.J. van Engelen Sousa
because of his termination per April 1, 2024; the Supervisory Board decided that the 2021 LTI grant will vest in full. Costs for
M.L. Mariani reflect the pro-rata forfeiture of the 2022 and 2023 LTI grants, which will vest pro-rata given the company
elected not to renew her services contract. As explained in more detail on page 80 of this annual report, there is a
disagreement between the company and Ms. Mariani about the treatment of these LTI grants.
3 Mainly 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.
4 The company elected not to renew the services contract of M.L. Mariani after the end of term in May 2024, and therefore, as
per her services contract (which is published on the company\u2019s website), she will receive a lump sum payment of one time the
annual base compensation/salary (currently estimated to be a gross amount of EUR 644,649), which is payable in June 2024.
For further information on remuneration costs, see chapter 10, Remuneration report.
Remuneration of the Supervisory Board
The remuneration of the members of the Supervisory Board amounted to EUR 797,025 (2022:
EUR 734,650).
Remuneration of Key Management - the Supervisory Board, in EUR
2022
2023
Membership 1
495,100
541,875
Committees
162,050
170,150
Other compensation 2
77,500
85,000
Total costs
734,650
797,025
1 Comparatives for 2022 were revised to exclude the fees and allowances paid during the observer period of Mr. Schot for the
amount of EUR 28,125.
2 Relates to the allowance for (inter-)continental travel.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-533": { "value": "
28Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of business: 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:
Carried at
Gross amount
recognized on the
balance sheet
Amounts not offset
on the balance
sheet, but are
subject to master
netting
arrangements
Net amount
Fair value
hierarchy level
Estimated fair
value 1
Balance as at December 31, 2022
Non-current financial assets 1
amortized cost
117
\u2013
117
\u2013
117
Unquoted equity shares
fair value (FVOCI)
3
\u2013
3
3
3
Trade and other receivables 1
amortized cost
1,102
\u2013
1,102
\u2013
1,102
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
36
(21)
15
2
36
Derivative financial assets not designated as hedging instruments
fair value (FVTPL)
44
\u2013
44
3
50
Cash and cash equivalents
677
\u2013
677
\u2013
677
Debt (Eurobonds)
amortized cost
(1,268)
\u2013
(1,268)
1
(1,220)
Debt (excluding Eurobonds) 1
amortized cost
(765)
\u2013
(765)
2
(765)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(43)
21
(22)
2
(43)
Trade and other payables 1
amortized cost
(1,856)
\u2013
(1,856)
\u2013
(1,856)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
Balance as at December 31, 2023
Non-current financial assets 1, 2
amortized cost
65
\u2013
65
\u2013
65
Unquoted equity shares
fair value (FVOCI)
4
\u2013
4
3
4
Trade and other receivables 1
amortized cost
1,012
\u2013
1,012
\u2013
1,012
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
14
(12)
3
2
14
Current derivative financial assets not designated as hedging instruments
fair value (FVTPL)
2
\u2013
2
1
2
Non-current derivative financial assets not designated as hedging
instruments
fair value (FVTPL)
22
\u2013
22
3
27
Cash and cash equivalents
1,158
\u2013
1,158
\u2013
1,158
Debt (Eurobonds)
amortized cost
(1,271)
\u2013
(1,271)
1
(1,250)
Debt (excluding Eurobonds) 1
amortized cost
(959)
\u2013
(959)
2
(959)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(17)
12
(5)
2
(17)
Trade and other payables 1
amortized cost
(1,537)
\u2013
(1,537)
\u2013
(1,537)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
1 In 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.
2 Mainly 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. For further
details, refer to note 2, Material accounting policies.
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 inflows or outflows
discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26
million gain) 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", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-532": { "value": "
28Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of business: 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:
Carried at
Gross amount
recognized on the
balance sheet
Amounts not offset
on the balance
sheet, but are
subject to master
netting
arrangements
Net amount
Fair value
hierarchy level
Estimated fair
value 1
Balance as at December 31, 2022
Non-current financial assets 1
amortized cost
117
\u2013
117
\u2013
117
Unquoted equity shares
fair value (FVOCI)
3
\u2013
3
3
3
Trade and other receivables 1
amortized cost
1,102
\u2013
1,102
\u2013
1,102
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
36
(21)
15
2
36
Derivative financial assets not designated as hedging instruments
fair value (FVTPL)
44
\u2013
44
3
50
Cash and cash equivalents
677
\u2013
677
\u2013
677
Debt (Eurobonds)
amortized cost
(1,268)
\u2013
(1,268)
1
(1,220)
Debt (excluding Eurobonds) 1
amortized cost
(765)
\u2013
(765)
2
(765)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(43)
21
(22)
2
(43)
Trade and other payables 1
amortized cost
(1,856)
\u2013
(1,856)
\u2013
(1,856)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
Balance as at December 31, 2023
Non-current financial assets 1, 2
amortized cost
65
\u2013
65
\u2013
65
Unquoted equity shares
fair value (FVOCI)
4
\u2013
4
3
4
Trade and other receivables 1
amortized cost
1,012
\u2013
1,012
\u2013
1,012
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
14
(12)
3
2
14
Current derivative financial assets not designated as hedging instruments
fair value (FVTPL)
2
\u2013
2
1
2
Non-current derivative financial assets not designated as hedging
instruments
fair value (FVTPL)
22
\u2013
22
3
27
Cash and cash equivalents
1,158
\u2013
1,158
\u2013
1,158
Debt (Eurobonds)
amortized cost
(1,271)
\u2013
(1,271)
1
(1,250)
Debt (excluding Eurobonds) 1
amortized cost
(959)
\u2013
(959)
2
(959)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(17)
12
(5)
2
(17)
Trade and other payables 1
amortized cost
(1,537)
\u2013
(1,537)
\u2013
(1,537)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
1 In 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.
2 Mainly 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. For further
details, refer to note 2, Material accounting policies.
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 inflows or outflows
discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26
million gain) 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", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-538": { "value": "
28Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of business: 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:
Carried at
Gross amount
recognized on the
balance sheet
Amounts not offset
on the balance
sheet, but are
subject to master
netting
arrangements
Net amount
Fair value
hierarchy level
Estimated fair
value 1
Balance as at December 31, 2022
Non-current financial assets 1
amortized cost
117
\u2013
117
\u2013
117
Unquoted equity shares
fair value (FVOCI)
3
\u2013
3
3
3
Trade and other receivables 1
amortized cost
1,102
\u2013
1,102
\u2013
1,102
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
36
(21)
15
2
36
Derivative financial assets not designated as hedging instruments
fair value (FVTPL)
44
\u2013
44
3
50
Cash and cash equivalents
677
\u2013
677
\u2013
677
Debt (Eurobonds)
amortized cost
(1,268)
\u2013
(1,268)
1
(1,220)
Debt (excluding Eurobonds) 1
amortized cost
(765)
\u2013
(765)
2
(765)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(43)
21
(22)
2
(43)
Trade and other payables 1
amortized cost
(1,856)
\u2013
(1,856)
\u2013
(1,856)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
Balance as at December 31, 2023
Non-current financial assets 1, 2
amortized cost
65
\u2013
65
\u2013
65
Unquoted equity shares
fair value (FVOCI)
4
\u2013
4
3
4
Trade and other receivables 1
amortized cost
1,012
\u2013
1,012
\u2013
1,012
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
14
(12)
3
2
14
Current derivative financial assets not designated as hedging instruments
fair value (FVTPL)
2
\u2013
2
1
2
Non-current derivative financial assets not designated as hedging
instruments
fair value (FVTPL)
22
\u2013
22
3
27
Cash and cash equivalents
1,158
\u2013
1,158
\u2013
1,158
Debt (Eurobonds)
amortized cost
(1,271)
\u2013
(1,271)
1
(1,250)
Debt (excluding Eurobonds) 1
amortized cost
(959)
\u2013
(959)
2
(959)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(17)
12
(5)
2
(17)
Trade and other payables 1
amortized cost
(1,537)
\u2013
(1,537)
\u2013
(1,537)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
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. For further
details, refer to note 2, Material accounting policies.
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 inflows or outflows
discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26
million gain) 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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-537": { "value": "
28Financial risk management
Signify is exposed to several types of financial risks, as they arise in the normal course of business: 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:
Carried at
Gross amount
recognized on the
balance sheet
Amounts not offset
on the balance
sheet, but are
subject to master
netting
arrangements
Net amount
Fair value
hierarchy level
Estimated fair
value 1
Balance as at December 31, 2022
Non-current financial assets 1
amortized cost
117
\u2013
117
\u2013
117
Unquoted equity shares
fair value (FVOCI)
3
\u2013
3
3
3
Trade and other receivables 1
amortized cost
1,102
\u2013
1,102
\u2013
1,102
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
36
(21)
15
2
36
Derivative financial assets not designated as hedging instruments
fair value (FVTPL)
44
\u2013
44
3
50
Cash and cash equivalents
677
\u2013
677
\u2013
677
Debt (Eurobonds)
amortized cost
(1,268)
\u2013
(1,268)
1
(1,220)
Debt (excluding Eurobonds) 1
amortized cost
(765)
\u2013
(765)
2
(765)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(43)
21
(22)
2
(43)
Trade and other payables 1
amortized cost
(1,856)
\u2013
(1,856)
\u2013
(1,856)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
Balance as at December 31, 2023
Non-current financial assets 1, 2
amortized cost
65
\u2013
65
\u2013
65
Unquoted equity shares
fair value (FVOCI)
4
\u2013
4
3
4
Trade and other receivables 1
amortized cost
1,012
\u2013
1,012
\u2013
1,012
Derivative financial assets designated as hedging instruments
fair value (FVTPL)
14
(12)
3
2
14
Current derivative financial assets not designated as hedging instruments
fair value (FVTPL)
2
\u2013
2
1
2
Non-current derivative financial assets not designated as hedging
instruments
fair value (FVTPL)
22
\u2013
22
3
27
Cash and cash equivalents
1,158
\u2013
1,158
\u2013
1,158
Debt (Eurobonds)
amortized cost
(1,271)
\u2013
(1,271)
1
(1,250)
Debt (excluding Eurobonds) 1
amortized cost
(959)
\u2013
(959)
2
(959)
Derivative financial liabilities designated as hedging instruments
fair value (FVTPL)
(17)
12
(5)
2
(17)
Trade and other payables 1
amortized cost
(1,537)
\u2013
(1,537)
\u2013
(1,537)
Contingent considerations
fair value (FVTPL)
(3)
\u2013
(3)
3
(3)
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. For further
details, refer to note 2, Material accounting policies.
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 inflows or outflows
discounted to the present value. The unrealized loss in fair value of EUR 22 million (2022: EUR 26
million gain) 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:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-536": { "value": "
28Financial risk management
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:
2022
2023
Cash at banks and in hand
425
358
Short-term deposits
216
768
Other cash equivalents
35
33
Cash and cash equivalents
677
1,158
Bank overdrafts
(1)
\u2013
Cash and cash equivalents and bank overdrafts
676
1,158
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-535": { "value": "
28Financial risk management
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.
Payments due by period
Total
Less than
1 year
Between
1 and 5
years
Over
5 years
Debt, including bank overdrafts
1,993
972
1,021
\u2013
Interest on debt
108
52
56
\u2013
Trade and other payables
1,539
1,539
\u2013
\u2013
Lease liability
237
66
145
26
Derivative liabilities
17
17
\u2013
\u2013
Off-balance sheet commitments
164
31
93
40
Purchase obligations 1
414
162
252
\u2013
Contractual cash obligations
4,472
2,839
1,567
66
Revolving credit facility (RCF)
500
\u2013
\u2013
\u2013
1 Signify has commitments related to the ordinary course of business which in general relate to contracts and purchase order
commitments for less than 12 months. In the table, only the commitments for multiple years are presented, including their
short-term portion.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-534": { "value": "
28Financial risk management
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.
Payments due by period
Total
Less than
1 year
Between
1 and 5
years
Over
5 years
Debt, including bank overdrafts
1,993
972
1,021
\u2013
Interest on debt
108
52
56
\u2013
Trade and other payables
1,539
1,539
\u2013
\u2013
Lease liability
237
66
145
26
Derivative liabilities
17
17
\u2013
\u2013
Off-balance sheet commitments
164
31
93
40
Purchase obligations 1
414
162
252
\u2013
Contractual cash obligations
4,472
2,839
1,567
66
Revolving credit facility (RCF)
500
\u2013
\u2013
\u2013
1 Signify has commitments related to the ordinary course of business which in general relate to contracts and purchase order
commitments for less than 12 months. In the table, only the commitments for multiple years are presented, including their
short-term portion.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-539": { "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, 2023, Signify had a ratio of fixed-
rate debt to total outstanding debt of approximately 68% (2022: 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, 2023, with all other variables held
constant, the annualized net interest expense would decrease by EUR 6 million. This impact was
based on the outstanding net floating debt position as of December 31, 2023.
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:
\u2022 Transaction exposures related to anticipated sales and purchases and on-balance-sheet
receivables/payables resulting from such transactions;
\u2022 Financing exposure arising from foreign currency intercompany and external debt and
deposits;
\u2022 Translation exposure of net income in foreign entities;
\u2022 Translation exposure of foreign currency denominated equity invested in consolidated
companies;
\u2022 Translation 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 9 months in layers of 25% up to a hedge ratio of 75%, 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 as per the
hedging policy horizon:
Receivables / Sales
Payables / Purchases
Exposure
Hedges
Exposure
Hedges
Balance as at December 31
Exposure currency
CNY
27
(21)
(584)
380
PLN
47
(47)
(146)
104
USD
170
(170)
(79)
79
EUR 1
51
(51)
(31)
31
CAD
74
(45)
\u2013
\u2013
MXN
7
(7)
(24)
24
GBP
11
(11)
\u2013
\u2013
Others
57
(57)
(6)
6
Total 2023
444
(409)
(871)
625
Total 2022 2
1,621
(1,164)
(1,560)
1,098
1 EUR exposures in non-EUR denominated functional currencies.
2 2022 exposures and hedges based on the hedging policy horizon of 15 months.
As of December 31, 2023, a loss of EUR 2 million was deferred in equity as a result of these
hedges (2022: loss of EUR 27 million). The result deferred in equity will be released to earnings
mostly during 2024 at the time when the related hedged transaction affects the Consolidated
statement of income. During 2023, EUR nil million (2022: 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, 2023, was
an unrealized liability of EUR 1 million (2022: liability EUR 14 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 19 million in the value of the derivatives. The above sensitivity analysis
includes a gain of EUR 1 million that would impact the income statement, which would partially
offset the opposite revaluation effect on the underlying accounts receivable and payable, and
the remaining loss of EUR 20 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, 2023, the fair value of
these hedges was an unrealized liability of EUR 2 million (2022: asset EUR 6 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 41 million in the value of the derivatives.
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 2023, net investment hedges consisting of foreign currency forward contracts with
nominal amount of USD 250 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
2023. As at December 31, 2023, no net investment hedges were outstanding (2022: nil). 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, 2023, Signify had
EUR 22 million of commodity derivatives recognized in the Statement of financial position (2022:
EUR 44 million),which relate to Virtual Power Purchase Agreements. An increase of the energy
prices by 10% will lead to the commodity derivatives value increase by EUR 7 million (2022: EUR 9
million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-540": { "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.
Payments due by period
Total
Less than
1 year
Between
1 and 5
years
Over
5 years
Debt, including bank overdrafts
1,993
972
1,021
\u2013
Interest on debt
108
52
56
\u2013
Trade and other payables
1,539
1,539
\u2013
\u2013
Lease liability
237
66
145
26
Derivative liabilities
17
17
\u2013
\u2013
Off-balance sheet commitments
164
31
93
40
Purchase obligations 1
414
162
252
\u2013
Contractual cash obligations
4,472
2,839
1,567
66
Revolving credit facility (RCF)
500
\u2013
\u2013
\u2013
1 Signify has commitments related to the ordinary course of business which in general relate to contracts and purchase order
commitments for less than 12 months. In the table, only the commitments for multiple years are presented, including their
short-term portion.
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:
2022
2023
Cash at banks and in hand
425
358
Short-term deposits
216
768
Other cash equivalents
35
33
Cash and cash equivalents
677
1,158
Bank overdrafts
(1)
\u2013
Cash and cash equivalents and bank overdrafts
676
1,158
Signify has a EUR 500 million revolving credit facility that can be used for general purposes. As of
December 31, 2023, Signify did not have any amounts drawn under this facility.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-541": { "value": "
29Events after the balance sheet date
No subsequent events occurred that are material to Signify.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:549300072P3J1X8NZO35", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }