sig-2023-12-31-en

We identified the following key audit
matters.

Our audit approach

Key observations

Improper revenue recognition

Revenue from the sale of goods is
recognized at the point in time that the
customer obtains control of the goods. For
standard sale of products, control generally
passes to the customer at the time the
product is delivered and accepted,
depending on the delivery conditions.
The company focuses on sales as one of the
key performance measures which could
create an incentive to recognize revenues
in the incorrect period due to the pressure
employees may feel to achieve desired
results. Further reference is made to note
2, Material accounting policies, of the
Consolidated financial statements.
We assessed that improper revenue
recognition for the sale of goods,
specifically relayed to cut-off, represents a
key audit matter.

Our Our audit procedures included:
• The assessment of the appropriateness
of the company’s revenue recognition
accounting policies;
• Obtaining an understanding of the design
of key controls in the revenue
recognition process;
• The use of data analytics to audit key risk
areas and identify exceptional or unusual
revenue streams and patterns;
• Detailed testing of significant sales
contracts;
• Performing cut-off procedures to ensure
revenue is recognized in the correct
period.

We concur with the revenue recognized in
the financial statements.


Our purpose is to unlock the extraordinary potential of light for brighter lives and a better world Signify is the world leader in lighting. We leverage over 130 years of leadership in lighting to create dynamic, innovative and human-centric projects. We provide professional customers and consumers with quality products, systems and services. Our connected lighting offerings bring light and the data they collect to devices, places and people - redefining what light can do and how people use it. Our innovations contribute to a safer, smarter and more sustainable world. In homes, offices, shops, supermarkets, sports stadiums, cities, greenhouses and factories – as well as through the Signify Foundation – our purpose is to unlock the extraordinary potential of light for brighter lives and a better world.			Signify Annual Report 2023
		Our values Our values provide our people with a common understanding of what matters to us and how we work
			“After working with Signify and its logistics team, we’ve been very pleased with delivery timescales and overall performance.” Mark Bond, Senior Street Lighting Engineer at Sefton Council "We are thrilled to be partnering with Signify, which, believing as we do in the precious values of sport such as teamwork, loyalty, solidarity and many more, has joined us in the creation of this state-of-the-art facility." Antonio (Wanny) Di Filippo, Founder and ambassador, Il Bisonte “This partnership with Signify has been a game-changer for the communities and the youth we are working with. The installation of proper lighting at the grassroots centers not only enhances safety and extends playing hours but also inspires young talent.” Abhijit Bhattacharya, Brahmaputra Volleyball League “Thanks to the efficient LED installation, energy consumption for lighting was 40% lower than the year before despite extra lighting hours." Rino Mans, Topline Gerbera Nursery
	Always act with integrity “Integrity at Signify is about consistently holding ourselves to high ethical standards, being honest and transparent in our dealings with others, and acting with courage to do the right thing, even when it's difficult.” Umut Aydogmus

Table of contents


		Forward-looking statements and risks & uncertainties Refer to chapter 21, Forward-looking statements and other information, for more information about forward looking statements, market and industry information, fair value information, IFRS basis of presentation, use of non-IFRS financial measures and statutory financial statements.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

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We are Signify

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1 Performance highlights

1.1Financial performance


	2022	2023
Comparable sales growth	1.2%	(8.3)%
Nominal sales growth	9.5%	(10.8)%
Adjusted EBITA margin	10.1%	10.0%
Net income *	532	215
Free cash flow *	445	586
Net cash provided by operating activities *	376	696

• In EUR million


Divisions	Digital Solutions	Digital Products	Conventional Products
Sales *	3,937	2,117	627
Comparable sales growth	(5.4)%	(10.5)%	(18.4)%
Nominal sales growth	(6.9)%	(14.2)%	(20.9)%
EBITA margin	9.1%	8.3%	9.9%
Adjusted EBITA margin	10.7%	9.7%	20.6%

• In EUR million

This chapter contains certain non-IFRS financial measures and ratios, such as comparable sales growth,

EBITA, Adjusted EBITA and free cash flow, and related ratios, which are not recognized measures of financial

performance or liquidity under IFRS. These measures are further discussed in chapter 5, Corporate

performance. For a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS

financial measures, see chapter 19, Reconciliation of non-IFRS financial measures.

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1.2Sustainability performance


Brighter Lives highlights	2022	2023
Brighter lives revenues	27%	31%
Women in leadership	28%	29%
Safety at work (TRC rate)	0.16	0.19
Supplier Sustainability Performance	94%	97%
Lives lit since 2017 (in million)	8.3	9.4


Better World highlights	2022	2023
Cumulative carbon reduction over value chain, in million tonnes CO 2e 1	177	334
Circular revenues	29%	33%
Carbon neutral operations	100%	100%
Total waste to landfill	<1%	<1%

1 The cumulative yearly difference between the GHG emissions of Paris Agreement 1.5°C pathway and the actual value chain

emissions of Signify.

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2 CEO message

2023 – Delivering our strategy in a

challenging market

“Our new operating model will unleash talent across the company, bringing us closer

to our customers and driving faster decision-making with greater autonomy and

ownership.” – Eric Rondolat, Signify CEO

As global conditions remained volatile and

unpredictable throughout 2023, Signify's

financial profile was significantly

strengthened. We have successfully

expanded our gross margin by 180 bps to

38.2% and delivered a healthy free cash flow

of EUR 586 million, representing 8.7% of

sales. Despite adverse market conditions, our

teams have worked particularly hard to

achieve this result and put Signify in a strong

financial position for the year ahead.

While the consumer connected segment

continued to be squeezed by the double

impact of inflation and reduced disposable

incomes, business and public customers

demonstrated readiness to invest in energy

efficiency measures that lend protection

from volatile energy markets and help them

stay in step with emissions reduction targets.

As a result, we are gaining ground in

connected professional systems and

services, with connected lighting and growth

platforms reaching 30% of sales and LED now

making up 85% of sales.

With challenging conditions set to continue

through 2024, we announced in December

that we will continue our transformation to

enable us to execute our strategy at speed

and work more closely in line with customers'

fast-changing needs. Our new operating

model will be organized around four vertically

integrated businesses. Three of these will

focus on customers: Professional, OEM, and

Consumer. The fourth will be dedicated to

conventional lighting technologies. Aligned to

this new verticalized, customer-centric

structure, we will adjust the size of our

central organization and further reduce our

structural costs. Already started in Q4 2023,

these changes will be implemented through

2024, with the majority achieved in Q2, and

are expected to generate annualized savings

in excess of EUR 200 million.

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"It is our ambition to build an inclusive culture and

work environment where people can express their

talents and grow personally and professionally in an

environment that is guided by our values."

Reinforcing our sustainable growth strategy

In the past year, the world endured

unprecedented global land and sea

temperatures, leaving the urgency of climate

measures in no doubt. Signify continued to

build on the strong foundation of our Brighter

Lives, Better World sustainability program

that addresses climate action, circularity, and

our impact on society.

In 2023, we reported our full scope Green

House Gas emissions, including the full Scope

3. We are proud to have achieved a

cumulative carbon reduction of 334 million

tonnes CO2e more than required by the Paris

Agreement 1.5°C pathway since 2019. We

received reasonable assurance for this

achievement which is an unprecedented

milestone for a multinational manufacturing

company like Signify with tens of thousands of

products in our portfolio. With accurate

emissions data at the product level, we are

driving transparency of the environmental

impact of our products, and enabling our

customers to make informed decisions on

sustainable products.

Signify has powered its operations with 100%

renewable electricity since 2020. This year,

we secured our access to renewable

electricity in Europe for the next ten years

through a Virtual Power Purchase Agreement

in partnership with Philips, HEINEKEN, and

Nobian. We surpassed our Circular revenues

target and are within one percentage point of

our Brighter Lives revenue targets, which I

encourage you to read about in detail later in

this report.

The strength of our commitment to

sustainability was recognized once again with

top independent ratings including S&P's

Global Corporate Sustainability Assessment,

the EcoVadis Platinum Medal, placing us in the

top 1% of all companies assessed, and

inclusion in the Dow Jones Sustainability

World Index for a seventh consecutive year.

Innovation beyond illumination

Innovation is in our DNA and is essential to

keep pace with the demands of this rapidly

changing world. Our intellectual property

portfolio continues to expand. Signify holds

more intellectual property with the European

Patent Office than any other lighting company

and we are in the top ten of all companies

headquartered in Europe by number of

patents.

In 2023, we invested 4.2% of our sales in

research and development, successfully

targeting key strategic technologies. We

further expanded our Ultra Efficient portfolio

which is 50-60% more energy efficient than

first-generation LED light sources. We

continued to develop our 3D printing business

under the Philips MyCreation brand, opening a

fifth facility in Australia and delivering the first

bio-circular based 3D-printed housings. For

consumers, we extended our home

connected proposition, launching deeply

integrated lighting and home monitoring

solutions under the umbrella of our trusted

Philips Hue and WiZ brands.

Our innovation team rose to the lighting

industry's ultimate challenge this year,

winning in both tracks of the Prototype Phase

of the US Department of Energy's prestigious

L-Prize competition. This accolade joins eight

Red Dot Design Awards and eight iF Awards in

2023 for excellence in design.

Prioritizing customer satisfaction

The past three years have been marked by

supply chain disruptions that impacted our

deliveries and our customers. Managing this

issue has been a top priority across our

business, to the extent that in 2023, we made

order and delivery customer satisfaction

scores part of annual incentive KPIs for

everyone in our organization. We

implemented a centrally driven program

including systemic running LEAN

improvements and Kaizens in cross-functional

teams, steadily improving our order and

delivery customer satisfaction over eight

consecutive quarters. In 2023, our

satisfaction score doubled versus 2022.

While there is more work to be done, I am

confident that we will maintain a fast rate of

progress and bring customers' order and

delivery satisfaction fully in line with the

excellence we strive to achieve in every

aspect of the customer experience.

A digital future

Our digitalization roadmap charts our

progress in creating future-ready processes,

customer interfaces, and products. Investing

in core data science competencies has

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helped us drive our Artificial Intelligence (AI)

capabilities at scale. AI is now being deployed

to enhance our customer experience and

optimize our operations. All global customer

care centers are now powered by generative

AI, which has significantly improved customer

experience. AI has also been deployed in the

design of our 3D-printed luminaires, where an

end-to-end fine-tuned text to image model

generates texture images.

On customer interfaces, we launched an

enhanced digital platform for our professional

customers that has increased our agent

engagement and enabled e-commerce in the

United States. Our global e-commerce

platform resulted in an increase in our B2B

online revenue generation.

Building an inclusive performance culture

It is our ambition to build an inclusive culture

and work environment where people can

express their talents and grow personally and

professionally in an environment that is

guided by our values. In 2023, our focus has

been on building a performance culture,

strengthening our Diversity, Equity, and

Inclusion, and developing internal talent. Our

initiatives included enhanced leadership

programs to benefit new and existing leaders,

now including focused training on inclusivity.

This focus on learning extends throughout

the organization, filling our internal talent

pipeline and creating a workplace where

people can thrive and develop. Our Inclusivity

Index, measured as part of the team survey, is

84%, which is higher than the industry

benchmark.

As we move to a new operating model that

will unleash talent across the company,

bringing us closer to our customers and

driving faster decision-making with greater

autonomy and ownership, we must also

undertake significant change. I would like to

take this opportunity to thank all our

employees who have contributed to make

Signify what it is today. I am grateful for their

unwavering professionalism and commitment

to take us through this new phase of our

development.

I would like to extend my appreciation and

gratitude to Maria Letizia Mariani, CCO and

Division Leader for Conventional Lighting, and

to Javier van Engelen, CFO, who will leave the

company in the first half of 2024. As members

of our Board of Management, their guiding

influence has played an important role in

ensuring our strong operational position

today. I wish them every success for the

future.

In the coming months, the Supervisory Board

will be evaluating candidates for the role of

Chief Financial Officer. As Signify moves to

the new operating model announced in

December, it has been agreed not to renew

the role of Chief Commercial Officer.

Toward a brighter future

Everything we achieved in 2023 was made

possible by the talent, foresight, and

diligence of our Signify teams around the

world. For this, they have my sincere

admiration and gratitude. I would also like to

thank our customers and shareholders,

whose trust in our company and brands

makes progress possible. Although we will

undoubtedly face challenges in the year

ahead, I go into it with pride in what we

continue to achieve in difficult circumstances,

and with great confidence that the

organization we are building is ready with the

smart lighting solutions the world needs for a

brighter future.

Eric Rondolat

CEO Signify

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3 Creating

sustainable long-

term value

3.1 Our strategy

Who we are

Signify, headquartered in Eindhoven, the

Netherlands, is the world market leader with

recognized expertise in the development,

manufacture and sale of innovative, energy-

efficient lighting products, systems and

services. With more than 31,900 employees, a

presence in 74 countries and sales covering a

global market, our purpose is to unlock the

extraordinary potential of light for brighter

lives and a better world.

We have pioneered many key breakthroughs

in lighting over the past 130 years and have

been a driving force behind several leading

technological innovations. Signify continues

to innovate in LED lighting and is leading the

industry’s expansion to lighting systems in

both the professional and consumer markets.

Our position as industry leader in connected

lighting, makes Signify the lighting company

for the Internet of Things (IoT).

Strategic context

The global landscape continued to evolve this

year, marked by ongoing political and

economic shifts. Building on the previous

year’s challenges, despite an easing of

resource scarcity and supply chain

normalization, higher interest rates, weaker

economic outlooks and increased geopolitical

uncertainties had a marked impact. These

factors influenced both consumer and

business spending. The trend towards

energy-efficient solutions continues to be of

importance, fueled by the desire to mitigate

rising costs and adopt sustainable practices.

Annually, Signify engages in a Strategic

Review Process, alongside a comprehensive

Sustainability Materiality Assessment

(detailed in chapter 4, Brighter Lives, Better

World). These initiatives, encompassing a

broad spectrum of internal and external

stakeholders, are instrumental in forecasting

future trends and assimilating global and local

stakeholder insights. This strategic approach

is crucial in navigating the risks and

opportunities that affect our sustainable

long-term value creation potential.

Following our 2023 review, despite a

demanding environment that necessitated

expedited actions in certain domains, our

commitment to the 5 Frontiers strategy and

the advancement of our Brighter Lives,

Better World 2025 goals remains as pertinent

as ever.

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Sustainability focus and UN SDGs	Doubling objectives

Climate action	Double the pace we achieve the 1.5°C scenario of the Paris Agreement	Better World



Circular economy	Double our Circular revenues to 32%
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Food availability Safety & security Health & well-being	Double our Brighter Lives revenues to 32%	Brighter Lives

Great place to work	Double our percentage of women in leadership to 34%

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	A colorful commute through the world’s longest purpose-built pedestrian and cycle tunnel
	Unique lighting design creates a vibrant - and safe- route through the depths of Løvstakken mountain.
	The newly opened Fyllingsdalen tunnel, a part of the Bybanen tramline in Bergen, Norway, is 3 km long and carves through Løvstakken mountain, connecting the residential areas of Fyllingsdalen with Mindemyren and Bergen city center. The municipality saw an opportunity to transform this space into a fast, efficient, and safe route for pedestrians and cyclists, furthering the city’s ambition to reduce traffic and emissions. Opened with a public celebration in Spring 2023, the 3 km tunnel is an experience in its own right. 2000 ArchiPoints and 80 ColorBurst luminaires from Color Kinetics paint the interior in vibrant, colorful light, which not only beautifies the space but also adds a sense of orientation as the colors shift from green to blue via warmer hues through the heart of the mountain. 500 TubeLine luminaires eliminate dark spaces, giving pedestrians and cyclists a sense of security, and illuminating the art installations lining the route with energy efficient LED.		A spectacular installation of color and light welcomes visitors to the center point, its sundial motif giving a playful nod to the underground location. Since the grand opening in April 2023, over 200,000 cyclists and pedestrians have used the tunnel. The unique light also enhances the blue running floor throughout the tunnel, which has become a popular location to exercise. The project is a collaboration between Bybanen Utbygging, architect AFRY, Light Bureau, LOS Elektro, and Signify Norway. “The user groups of the pedestrian and bicycle tunnel were the main focus of the project. The lighting system helps to substantiate that the tunnel is perceived as safe, clear, welcoming, and comfortable. A good collaboration between lighting designer, installation contractor, lighting supplier and client has provided good solutions, which has led to the project also receiving considerable international attention. The tunnel is widely used, both for commuting to and from work, and for fitness training for sports teams and individuals.” Svein Arvid Oppedal, Construction manager, Bybanen Utbygging

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Color Kinetics - Fyllingsdalen tunnel, Bybanen Bergen, Norway


	An elevated guest experience at Marina Bay Sands
	Singapore’s iconic hotel applies smart building technology for seamless luxury.
	With its elegant towers and gravity-defying cantilevered sky platform, Marina Bay Sands is an instantly recognizable feature of the Singapore skyline. Guests at this ultra-luxury hotel come here to enjoy exceptional comfort, stylish facilities, and world-class hospitality. The hotel’s staff works tirelessly to maintain a seamless luxury experience, from the harmonious décor to highly personalized services that create a memorable visit for each guest.		In this atmosphere, access to business intelligence and data to work smarter is vital. As part of a US$1 billion-dollar reinvestment program, the hotel worked with Signify to install the Interact control system paired with Dynalite controllers, sensors, gateways, and user interfaces to equip hotel staff with unparalleled insights into room conditions, system health, and historical data. With these insights, staff can support guests remotely, manage resources, and quickly detect and address any issues across this large-scale resort. More than 100,000 light points, HVAC, and drapery are controlled seamlessly using Interact. And within the hotel’s 2,500 rooms and suites, guests can access an instantly intuitive user interface to adjust lighting, air conditioning, curtains and more. By automating these features, the hotel can enjoy enhanced energy management, reducing energy consumption by an estimated 30%.

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Interact - Marina Bay Sands hotel, Singapore


	Smart lighting and home monitoring at your fingertips
	Philips Hue and Wiz offer a complete connected lighting and monitoring system for the home.
	Light and security go hand in hand. Now, Philips Hue and WiZ customers can make their connected lighting system work smarter with home monitoring products and features, accessed directly from their smartphone. Beyond smart lighting with Philips Hue Secure Philips Hue Secure cameras feature a clear 1080p HD video feed with night vision to help you monitor your home in real time and trigger instant motion notifications. You can help deter intruders by triggering the unique combination of Philips Hue lights and sound alarms, or you can activate two-way talk to tell a delivery person to leave the package or just say “Hi!” to a friendly face. Philips Hue cameras feature superior end-to-end encryption using keys that never leave the user's device, ensuring any video clips, snapshots, and live view remain strictly private. Specifically, the capability to recognize whether a notification is triggered by a person, a pet or a package runs on the camera itself instead of the cloud, which means end-to-end encryption is always enabled. Contact sensors trigger an alert when a window, door, cabinet, or safe opens, and can even activate lights.		The Security Center in the Philips Hue app gives access to light alarms, camera controls, presence mimicking, real-time alerts, and more. Annual subscription plans unlock advanced features like video history and the ability to divide your space into discrete zones. Accessible home monitoring from WiZ With indoor and outdoor lights that mimic presence or trigger light alarms, and cameras with night vision and motion detection, WiZ keeps an eye on your entire home. With unique SpaceSense technology, every WiZ light becomes a motion sensor. SpaceSense makes use of disturbances in Wi-Fi waves to detect a person’s presence. Cameras can be triggered with motion, sound, or the WiZ app. And by upgrading to a WiZ security subscription service, users can unlock additional camera features to detect unexpected activity, deter intruders, and keep up to date with real-time alerts. With end-to-end encryption by default, customers can be confident that content from the camera remains private.

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Top - WiZ home monitoring / bottom - Philips Hue home monitoring


	Premium partnership for Signify and Werder Bremen
	Lighting solutions extend from the stadium to the homes of fans.
	Fans of German Bundesliga football club Werder Bremen can show their support in their very own homes with a customized, 3D-printed pendant lamp from Philips MyCreation. The eye-catching luminaire features a transparent sleeve in the club’s distinct green color, embossed with the Werder diamond. Most of the materials used in the luminaire are from biocircular materials such as biomass and natural waste, which are processed into polycarbonate to be used in the 3D printing process. And as a circular lighting solution, the shade and its transparent sleeve can be recycled at the end of their useful life. This unique item is an extension of a premium partnership between Signify and Werder Bremen dating back to 2022. In the first phase of its partnership with Signify, the club installed UV-C air disinfection lighting in team areas, meeting rooms, and offices to permanently neutralize viruses and pathogens using ultraviolet light, improving health and well-being at the club. This was followed by VIP area lighting, LED aisle lighting, and e-sports room lighting. 3D-printed pendant and table lamps extend the green and white theme through the VIP areas.		"In a soccer stadium, many different requirements for modern lighting come together. We are very happy to have found a partner in Signify who was able to respond to our individual wishes and even make the hearts of our fans beat faster with a branded Werder luminaire from the 3D printer.” Klaus Filbry, CEO SV Werder Bremen GmbH & Co KG aA

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LED lighting / 3D printing - SV Werder Bremen, Germany

3.2 Our impact

Our commitments and 2023 results

Signify progressed on its strategic frontiers in 2023. The table below shows that we are on the right path to fulfill our purpose to unlock the extraordinary potential of light for brighter lives and a

better world. More information can be found throughout this report.


Our 5 strategic frontiers	Description	Our targets	Our results
1. Build a customer-centric organization.	We are building a more customer-focused, more localized operating model and driving improved process excellence.	• Steadily increase customer Net Promoter Score (NPS).	• Customer NPS increased to 53.
2. Deliver differentiated lighting offers.	We are developing and delivering differentiated lighting products through multiple distinctive brands.	• Grow tiered offering sales including B- brands, private label and ultra energy efficient offers.	• 4.2% of sales invested in R&D and 20,000 patent rights; • Double digit growth on tiered offering sales.
3. Drive growth for sustainability.	We are addressing global challenges by focusing on growth areas for sustainability: Climate action, Circular economy, Food availability, Safety & security, Health & well- being.	By the end of 2025: • Double the pace we achieve the 1.5°C scenario of the Paris Agreement; • Double our Circular revenues to 32%; • Double our Brighter Lives revenues to 32%.	• Cumulative carbon reduction of 334 million tonnes CO2e towards our ambitious goal of doubling the pace of the Paris Agreement’s 1.5ᵒC scenario; • 33% Circular revenues; • 31% Brighter Lives revenues.
4. Digitalize and transform for the future.	We are improving our digital front and back- ends and increasing our data analytics capabilities to better serve our customers.	• Increase our (B2B/B2C) online sales.	• Direct online sales remained stable at 12.7% of revenues.
5. Be a great place to work.	We are investing in our people, creating a diverse and inclusive workplace, deepening our digital and commercial competencies.	• Double the % of women in leadership to 34% by the end of 2025. • Increase digital and commercial excellence capabilities.	• 29% women in leadership positions. • Employee NPS: 26. • 63% active learners in digital and commercial teams.

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	Bright spaces to learn and grow
	The Signify Foundation has partnered with NPH to provide energy-efficient LED lights in residential homes.
	NPH (Nuestros Pequeños Hermanos) is a charitable organization that creates life– changing opportunities for disadvantaged and vulnerable children and youth living in extreme conditions. Through a comprehensive approach that embraces the whole child, NPH supports children to become independent, caring adults who give back to their communities, shaping better futures for themselves, their families, and their world. Since 2018, the Signify Foundation has supported NPH with energy efficient lighting in the homes. Following successful installations in Mexico this year, the Foundation brought lights to homes in Honduras and the Dominican Republic. The new LED lights replace existing conventional lighting in the homes, reducing electricity costs and lessening the organization’s environmental impact.		Highly suitable for retrofit projects, Philips TrueForce Core LED lights create a welcoming and inspirational environment for children to grow, learn, and fulfil their dreams. “The donation of light bulbs goes beyond providing mere illumination; it symbolizes hope, growth, and a brighter future for those in need. Signify’s unwavering support and dedication to both the well- being of the children and the sustainability of Nuestros Pequeños Hermanos makes a lasting difference.” Marlon Velásquez, National Director, NPH Honduras

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LED conversion - Central America



Illuminating a Mumbai icon Bandra-Worli Sea Link comes alive with colorful dynamic lighting, specially designed for harsh environments.		Signify brought the bridge to life at night with colorful, dynamic, programmable lights, mirrored in the water below. This is achieved with state-of-the-art Philips flood lights accentuating the pylons and 20,000 Philips RGB direct view nodes along the cable stay. The concentrated areas can be used to run media images, logos, messages, and light shows for special occasions, while the use of energy-efficient LED keeps running costs and emissions in check.	This was no simple feat. The fixtures were specially engineered for extreme conditions to withstand high wind pressure, sun rays, dust, rain, and the salty environment. All the direct view node light fixtures and accessories were specifically designed and manufactured for this project. A custom- designed track accommodates the nodes and the cables, which fits perfectly on the diameter of the cable stay to preserve the bridge’s aesthetics.
"We have used Signify's latest connected lighting technology for the Bandra-Worli Sea Link facade lighting project. We proudly dedicate this project to the spirit of Mumbaikars and expect it to light up the Mumbai skyline for residents and tourists alike, clearly marking Mumbai as the first city of India.” Mr. Bhushan Sable, Director J K Solutions (Installer)	Soaring 128 meters high above a 5.6 km stretch of the Arabian Sea, Bandra-Worli Sea Link is India’s first cable stay bridge constructed in open seas. It connects Bandra in Mumbai’s western suburbs with Worli in South Mumbai and is considered a modern day architectural and engineering marvel.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Philips RGB flood lights and direct view nodes -

Bandra-Worli Sea Link bridge, Mumbai, India


	Advancing digital equity in the City of Mesa
	Mesa’s street lighting network unlocks Wi-Fi connectivity for citizens.
	Home to half a million people, the City of Mesa is the third most populous city in the state of Arizona. The city set out to upgrade its street lighting to LED to take advantage of the substantial cost-saving benefits, but quickly identified an opportunity to advance its smart city plan and unlock greater value for its citizens. This effort aimed to deliver free Wi-Fi connectivity to citizens, enabling digital equity, supporting community safety, and complementing Dark Sky efforts. 30,000 street lights were upgraded with connectivity, and divided into four distinct zones, each with their own dimming patterns based on the area’s requirements. By strategically dimming the street lights, the city can also reduce energy use. All lights are designed to minimize upward reflection, helping to preserve the area’s famous clear desert skies. Signify’s Interact control system allowed the city to have access to diagnostic and energy data. With Interact, city managers know instantly when a light goes out, so they can efficiently deploy a maintenance team to fix it. By extending its street lighting infrastructure with connected technology, Mesa laid the foundation to unlock even more value for its city and citizens.		Mesa also saw an opportunity to advance digital equity within the city by providing reliable public Wi-Fi coverage across the 26 km sq downtown area. Signify BrightSites offered a scalable solution through which the city could install broadband communication nodes by upgrading its street lights on existing city poles, creating a wireless mesh network and enabling wireless fiber connectivity. The sleek BrightSites aesthetic blended seamlessly into the downtown area without visible wiring. The city’s wireless broadband solution also powers cameras and sensors to provide real-time smart city support. With this infrastructure in place, so much more is possible. Mesa continues to evolve its street lighting plans to meet the changing demands of a growing smart city, including sensors to monitor traffic, air quality, and noise, and further drive quality of life improvements for its people. "With Signify’s technology, our street lighting network has evolved into a multi- purpose smart city platform. It supports our sustainability efforts, has allowed us to expand broadband access into key neighborhoods, and gives us parking analytics and so much more.” Harry Meier, Deputy CIO for Innovation, City of Mesa

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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BrightSites - City of Mesa, Arizona, USA

3.3 Our sustainable value created

Through our company purpose and strategy, we aim to address global challenges and our stakeholders’ expectations, while contributing to the achievement of the United Nations Sustainable

Development Goals (UN SDGs). Our approach is to optimize long-term value through financial, environmental and social resources. Our activities impact our customers, employees, investors and

society at large. By expressing these impacts in monetary terms, stakeholders can consider the indirect economic, social, and environmental impacts of our business more effectively. For a detailed

explanation of our value creation model, indicators and trend analysis, refer to our Sustainability supplements 2023 on the reporting webpage: https://www.signify.com/global/our-company/

investors/financial-reports/annual-report



	Input		Impact

Financial	• EUR 308 million R&D investments with 88% sustainable innovation; • EUR 2,947 million total equity; • EUR 8,004 million total assets.	• EUR 6,704 million sales; • Comparable Sales Growth of -8.3%; • EUR 586 million free cash flow; • EUR 291 million paid in income taxes and dividends; • 20,000 patents rights; • 53 customer NPS.		Brighter Lives We created EUR 355 million in value for society through total shareholder returns, income taxes, and interest payments. We created EUR 1,216 million in value for society through employees’ salaries & wages and learning & development combined with the costs to society of injuries & illnesses at work. Better World Our environmental footprint caused EUR 22.9 billion in costs to society. At the same time, we created EUR 28.7 billion through CO2-equivalent (CO 2e) avoided by shifting to LED and conserving biodiversity through our offsetting projects.



Environmental	• 3,237 terajoules energy and 100% renewable electricity; • EUR 2,816 million materials; • 1,057 thousands of m3 water.	• Cumulative carbon reduction of 334 million tonnes to double the pace of the Paris Agreement’s 1.5ᵒC scenario; • 33% Circular revenues; • Zero waste to landfill, 88% recycling rate.; • Fossil-fuel based plastic free consumer packaging.



Social	• 31,920 FTE in 74 countries and over 99 nationalities; • 49% of female new hires; • EUR 3.61 million spent on training; • 157 supplier audits; • EUR 1.7 million to the Signify Foundation and CSR activities.	• 31% Brighter lives revenues; • 29% Women in leadership and 16% of employees under 30; • 0.19 total recordable case rate (TRC); • 26 employee NPS; • 63% active learners; • 97% supplier sustainability performance; • 1.1 million lives lit; • 112 entrepreneurs trained.

*Based on our sold LED lamps & luminaires replacing conventional lighting and resulting in reduced electricity consumption. Avoided emissions are calculated for the lifetime of the product.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Climate change The SDGs Stakeholders

Resource scarcity

Demographic change

Urbanization

Output


	Beautiful roses all year round at Baiyi Yinong International Flower Port
	A world-class production facility is taking China’s floriculture industry to new heights.
	Baiyi Yinong International Flower port in Linxia City, Gansu province, has worked with Signify to scale up rose production at its 20-hectare smart greenhouse. Signify’s comprehensive Philips LED horticulture solution enables year-round, low-carbon production of high-quality roses in some of the world’s best-loved varieties. With Philips GreenPower LED toplighting and the Philips GrowWise Control System, experts at the facility can use Signify’s custom light recipes to optimize light conditions for quality and yield. This way, the farm can be sure of a steady output of reliable, year-round blooms. With a daily production capacity of 200,000 roses, Signify’s powerful solution offers enough precision to scale up for periods of peak demand like Valentine’s Day and International Women’s Day. For the popular Naomi variety, production at the Flower Port grew from 160 -180 stems to 300 stems per square meter, of which 85% were Class-A flowers.		Year-round production comes with a supply of steady, local jobs for the region. And the success of Baiyi Yinong International Flower Port is not just good news for China’s rural economy, but also for the country’s dual carbon goals. This full LED solution uses at least 50% less energy than conventional HPS lighting, enhancing the sustainable development of agriculture and aligning with national efforts to mitigate greenhouse gas emissions. “We are very pleased to partner with Signify. Through Philips' advanced LED supplementary light technology, we can clearly see the important role of technology in sustainable development and rural revitalization. We look forward to further cooperating with Signify to drive regional economic development and support China in its rural revitalization and industrial development at the local level." Zetian Li, Deputy General Manager, Baiyi Yinong International Flower Port

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Philips GreenPower - Baiyi Yinong International Flower Port, China


	Next-level environmental monitoring and space management
	Advanced sensing and analysis capabilities offer building managers a competitive edge.
	Working in combination with two new state of the art sensors, Interact Space analysis is a data-driven solution that gives building owners the vital information they need to optimize working conditions for tenants and their employees. With actionable, easy- to-access data, building owners can analyze their space, environmental conditions, and occupancy more effectively to create attractive buildings for potential tenants. Environmental sensors distributed around the office space monitor temperature, humidity, carbon dioxide levels, levels of volatile organic compounds, and atmospheric pressure. People sensors count the number of people in a room or floor to avoid overcrowding and improve productivity. Combining data from both sensors helps tenants and owners adjust working conditions to create the best conditions for employees. With a full picture of how space is used, building managers can implement energy efficient measures for reduced energy costs and a lower carbon footprint.		With this intelligence on board, property managers can create human centric workplaces and healthier building environments, plus advance goals to achieve healthy building standard certification such as the WELL Building Standard, which links design, policies, and built environment strategies to health and well-being outcomes. This standard, in turn, can attract high-quality tenants and secure longer, more valuable lease contracts.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Interact Space Analysis, Global


	A hassle-free solution for Boston Convention & Exhibition Center
	Lighting retrofit brings a leading event space to life with energy-saving LED.
	Located in Boston’s popular Seaport District, Boston Convention & Exhibition Center (BCEC) is one of the largest event spaces in the Northeastern United States. The 4.6-hectare site was previously lit with 1,000-watt metal halide bulbs. The site’s managers were all too familiar with the limitations of this system. Metal halide bulbs degrade over time, creating color inconsistencies across the space. The bulbs had a 15,000-hour lifespan, so needed to be frequently replaced. With ceiling heights upwards of 30 meters in parts of the center, maintenance hours and costs quickly stacked up. And even when the system was in good repair, the lighting required a 15-minute warm-up period to get up and running and produced an audible humming sound. The building’s management knew that something had to change, but they were not yet ready to replace the center’s existing lighting controls. Working with partner Reflex Lighting, BCEC selected a retrofit solution featuring Metalux Benchmark LED High Bay fixtures from Cooper Lighting Solutions. 378 fixtures were installed in three phases so that exhibition halls could remain open while the work was underway.		Results were visible from the outset. Warm-up time and color inconsistency are a thing of the past, since the LEDs switch on immediately and bring events to life with quiet, clean, consistent lighting. The new lights are durable and longer lasting, with low maintenance needs, and consume far less electricity than the metal halide bulbs that were previously in place. And when the BCEC is ready to upgrade its lighting control system, the future-ready fixtures can be easily reconfigured to work with the new system. “We host the bar exam here for the Massachusetts lawyers. They always complained that they couldn’t focus on their test because of the noise. There are no longer any complaints about that. Many of our clients like certain light fixtures turned on over booths. With the old fixtures, we had to turn off the whole section, and now we have control to shut off individual lights. And that is not to mention the 56% energy savings. We couldn’t be happier.” Tom Finn, Electrical Foreman, BCEC

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Metalux Benchmark LED High Bay - Boston Convention & Exhibition Center, USA


	A bright passage through the hills of North Sumatra
	Solar lights address the challenge of public lighting in a dramatic landscape.
	Winding through the forested, volcanic landscape of North Sumatra, the Aek Natulo road is an essential economic route for the region’s villages, connecting rural communities and inland tourism sites with the breathtaking shores of Lake Toba. Recognizing the Toba region as an important strategic area for tourism development, the Ministry of Public Works and Public Housing wanted to ensure that the Aek Natulo road would be safe and welcoming for people and motorists by day and night. They wanted a solution that would provide high-quality lighting in areas that are difficult to reach through the electrical grid, with minimal impact on the area’s sensitive natural landscape. The solution was found in Philips Smartbright All-in-one Solar Street Light. These fully autonomous lights do not require cabling, so they could be installed easily without damaging nature or scenery. And with a lighting system that operates on 100% solar energy, there are no electricity costs or carbon emissions during the product’s use phase. With 200 of the lights in place along the 11km stretch of road, people can travel with a greater sense of security, which in turn opens up economic opportunities for local businesses. Motorists can pass safely along the route for improved distribution of local plantation products.		Signify's solar public street lighting on the Aek Natolu road not only ensures traveler safety day and night but also aligns with the government's goals for carbon neutrality by 2060 and Sustainable Development Goals by 2030. This stands as a shining example of the global 'Green Switch' campaign launched in Indonesia in the same year, urging a shift towards energy-efficient LED and connected lighting, including scaling up the use of renewables through solar street lighting, as the simplest and most often overlooked paths to reduce carbon emissions. “The Aek Natolu Road is part of the government's program to support Toba Regency as a national tourism strategic area. One of the challenges of building this road is the complex electrical installation that requires an off-grid system. Therefore, we decided to use Signify's Solar Public Street Lighting (PJUTS) solution, which is easy and fast to install. We are also excited because the LED PJUTS technology can provide maximum lighting so that it can increase safety for motorists to pass through the route without worry." Ellys Denny Loan Aruan, Field Supervisor of PPK 2.6 North Sumatra Province, Ministry of Public Works and Public Housing

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Philips SmartBright Solar Street Light - Aek Natulo Road, North Sumatra, Indonesia

3.4 Our contribution

Through our company’s strategy and sustainability programs, we directly contribute to our six priority UN SDGs. This section shows how our 2023 activities supported the achievement of these UN

Sustainable Development Goals (SDGs). For UN SDGs target reporting, refer to the Sustainability Supplements of this Annual Report.

Better World

SDG 7: Affordable and clean

energy

SDG 12: Responsible

production and consumption

SDG 13: Climate action

We deliver energy-efficient solutions through our

Climate action lighting portfolio. Our operations run

entirely on renewable electricity, and we contribute to

the transition to more sustainable electricity supply.

2023 contribution:

• 100% renewable electricity in our operations;

• Power Purchase Agreements (PPAs) enabled

generation of 139,443 MWh renewable electricity.

We aim to preserve value and minimize waste by

developing Circular lighting, sustainable packaging,

and good waste management practices. We are

plastic-free in our consumer packaging in most of our

markets.

2023 contribution:

• 33% Circular revenues;

• Sending zero waste to landfill, and 88% recycling

rate;

• Fossil-fuel based plastic free consumer packaging

We drive climate action in our operations by reducing

greenhouse gas (GHG) emissions over our value chain.

We have set approved science-based targets (1.5°C

scenario) and we will achieve the goals laid out in the

Paris Agreement 1.5°C pathway for 2031 by the end of

2025.

2023 contribution:

• EUR 22.9 billion costs to society from our own

environmental footprint;*

• Cumulative carbon reduction of 334 million tonnes

CO2e to double the pace of the Paris Agreement’s

1.5ᵒC scenario;

• EUR 28.7 billion value created to society through

CO2 avoided by shifting to LED, our carbon credit

projects and the conservation of biodiversity.*

Brighter Lives

SDG3: Health and well-being

SDG 8: Decent work and

economic growth

SDG 11: Sustainable cities and

communities

We contribute to improving health and well-being by

creating light that increases food availability and

enables people to see, feel and perform well.

2023 contribution:

• 31% Brighter Lives revenues;

• Employee NPS of 26;

• More than 45,000 Solar & LED lamps donated.

We foster decent work and economic growth by

creating a fair and inclusive workplace and

development opportunities for our employees and

suppliers. We provide training and access to finance to

lighting entrepreneurs in developing countries.

2023 contribution:

• 0.19 TRC rate and EUR 1.34 million costs to society

from injuries & illnesses at work;*

• 97% supplier sustainability performance;

• EUR 355 million value to society through total

shareholder returns, tax and interest payments, and

EUR 1,216 million through employees' salaries &

wages and learning & development.*

We enable smart and secure roads and urban areas

and enable safe and sustainable workplaces, while

accelerating the renovation rate of buildings. Through

the Signify Foundation, we provide access to light to

off-grid communities.

2023 contribution:

• 1.1 million lives lit, adding up to 9.4 million lives lit

since 2017;

• 31% Brighter Lives revenues;

• 3 humanitarian projects completed.

* For more details, refer to our Sustainability supplements 2023 for the calculation methodology downloads: https://www.signify.com/global/our-company/investors/financial-reports/annual-

report.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

4 Brighter Lives,

Better World

4.1 Approach to

sustainability

reporting

Signify’s sustainability program Brighter Lives,

Better World 2025 is embedded in our

purpose and integral to our strategy and the

way we do business. We believe we have an

important role to play in helping to achieve

the United Nations Sustainable Development

Goals (SDGs). They served as our strategic

compass in creating our Brighter Lives,

Better World 2025 program and

commitments. We report our contribution to

six SDGs where we believe we can make the

greatest impact: Good health and well-being

(3), Affordable and clean energy (7), Decent

work and economic growth (8), Sustainable

cities and communities (11), Responsible

consumption and production (12) and Climate

action (13). Through our activities, we

contribute to the achievement of these

SDGs.

Signify creates value within the financial,

environmental and social spheres, and we

have made our approach towards long-term

value creation transparent by preparing this

Annual Report with key elements of the Value

Reporting Foundation's Integrated Reporting

framework and reporting in accordance with

the GRI Sustainability Reporting Standards.

Signify is subject to E.U. Regulation (EU)

2020/852 (so called EU Taxonomy) and

disclosures can be found in section 17.5 EU

Taxonomy.

Our value creation model, presented in

chapter 3, Creating sustainable long-term

value, shows how our business activities

depend on various financial, environmental,

and social resources that are converted to

outputs. Our activities and their outputs lead

to outcomes in terms of the impact made on

our stakeholders and society at large. Since

2017, Signify communicates its impacts in

monetary terms, enabling more effective and

efficient decision making and giving a holistic

view on our most prominent risks and

opportunities. It also provides further

transparency to our stakeholders on

company performance. By publishing the

results of our analysis and being transparent

on the methodology, we strive to contribute

to developing a global standard for impact

analysis.

Our external auditor Ernst & Young

Accountants LLP (EY) has provided

reasonable assurance on our sustainability

performance and sustainability statements in

chapter 3, Creating sustainable long-term

value, sections 3.2, Our impact and 3.3, Our

sustainable value created, section 5.2,

Sustainability performance and chapter 4,

Brighter Lives, Better World. The section

Responsible tax policy as included in

subsection 4.3.5, Business ethics, the 2019

baseline assumptions and chapter 17, CSRD

disclosures are excluded from the audit

scope. To read the combined assurance

statement, refer to chapter 18, Combined

independent auditor’s report.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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4.1.1 Sustainability

governance

Signify’s Sustainability and Environment,

Health & Safety (EHS) teams are headed by

Maurice Loosschilder and Johan de Fraye,

respectively. Our teams consist of global,

regional, and local sustainability professionals

which are part of the Strategy and

Sustainability department, under the

responsibility of Alice Steenland, Chief

Strategy & Sustainability Officer.

Sustainability progress is reviewed on a

quarterly basis with the Supervisory Board,

Board of Management and the Leadership

Team. During these meetings, progress on

our strategic programs is reviewed and

corrective actions are taken when necessary.

We communicate our sustainability program

initiatives and achievements on a quarterly

basis to Signify employees and on our website

to external stakeholders.

Sustainability programs are embedded in the

Signify organization and ways of working.

Examples of departments that implement

sustainability programs include sales,

innovation, manufacturing, sourcing, and

logistics. Targets on sustainability are set at

corporate, division and market levels.

4.1.2 Program targets

Our sustainability commitments are grouped

under our sustainability program Brighter

Lives, Better World 2025. Launched in

September 2020, our doubling commitments

are set for a five-year period, until the end of

2025, with a baseline year from 2019. 2023 is

our third reporting year. For our Brighter

Lives, Better World 2025 doubling

commitments, we used best estimates for

2019 as a base.

Changes in targets, policies, definitions, or

scope are specified annually. To ensure our

efforts are in line with the targets of the Paris

Agreement, we have approved Science-

Based Targets for our GHG emissions.

4.1.3 Reporting standards

Signify aims to provide stakeholders with

complete and transparent information on our

sustainability programs, our performance and

progress against our goals, and key

challenges we see in this work. We recognize

there is a desire for standardization across

reporting frameworks, and we are continually

evaluating reporting options and listening to

stakeholder feedback to report in the most

clear and concise manner. Chapter 3 and 4 of

this report are prepared in accordance with

the Global Reporting Initiative (GRI)

Standards, for the period of January 1, 2023

to December 31, 2023. Additional company

disclosures have been included beyond the

scope of GRI. An overview of the information

on data definitions, measurements and any

uncertainties inherent to measurements can

be found in the Sustainability Supplements to

the Annual Report, available on our webpage:

https://www.signify.com/global/our-

company/investors/financial-reports/annual-

report. References to the Corporate

Sustainability Reporting Directive (CSRD)

standards are included in Chapter 17.

Our supplement to this report includes the

following indexes and additional information:

GRI Content Index, the Taskforce on Climate-

related Financial Disclosures (TCFD), our

Taskforce for Nature-related Financial

Disclosures (TNFD), and the EU Non-financial

Reporting Directive (NFRD). In 2023, Signify

re-committed to the United Nations Global

Compact to advance the ten universal

principles in the areas of human rights, labor,

the environment, and anti-corruption efforts.

This report also serves as our annual

Communication on Progress (COP) towards

abiding by these principles. We also respond

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Program 2025 targets
	Doubling objectives	Continue and strengthen
Better World	Double the pace we achieve the 1.5°C scenario of the Paris Agreement	100% renewable electricity*
Better World	Double our Circular revenues to 32%	Zero waste to landfill and sustainable packaging
Brighter Lives	Double our Brighter lives revenues to 32%	10 million lives lit through our Signify Foundation
	Double our % of women in leadership to 34%	Safe & healthy workplace with a TRC rate less than 0.30
	Double our % of women in leadership to 34%	Supplier sustainability performance of 95%
*Our previously reported climate action target has been removed due to the addition of climate change mitigation reporting under EU Taxonomy regulation. The target is representative of the same KPI, using a different calculation methodology, and therefore, we found it conflicting to report on both.


Approved Science-Based Targets - 1.5°C scenario
	Baseline	Target 2030
Carbon emissions from scope 1 and scope 2	2015	70% reduction
Carbon emissions from scope 3 use of sold products	2015	30% reduction

to the CDP Climate questionnaire and make

that disclosure publicly available.

New Signify ventures and acquisitions are

included in environmental and social

disclosures to the extent that the integration

process of these ventures has been finalized.

The normative integration period is two years.

Divestitures completed before December 31,

2023 are excluded from environmental and

social reporting.

4.1.4Materiality assessment

Our commitment to sustainability holds

significance and influence when directed

towards addressing the most relevant issues.

Long-term success hinges on a

comprehensive understanding and

consideration of our societal and

environmental impacts, recognizing the

potential effects of environmental, social, and

governance (ESG) factors on our business. It

is imperative to gauge the perspectives of

our stakeholders on these ESG issues and

align our focus accordingly. This section

outlines the approach and outcome of our

double materiality assessment that was

conducted in 2023. The gathered insights

play a pivotal role in defining our sustainability

objectives, priorities and framework; and

shape our key performance indicators,

targets, reporting and strategy.

Assessment approach

In preparation for the upcoming European

Union’s Corporate Sustainability Reporting

Directive (CSRD), our double materiality

assessment was conducted using the

guidance and interpretation of the CSRD

guidelines ESRS 1: General requirements and

ESRS 2: General disclosures (draft version

November 2022), as the full CSRD legislation

was not yet finalized at the time of this

assessment. This assessment was conducted

in partnership with an independent, external

third-party sustainability consultancy with

expertise and guidance on how to best align

with relevant standards and best practices.

Our double materiality assessment was

carried out considering the impact that

Signify’s activities have on the environment

and stakeholders (outward -impact

materiality) and the impact that the

environment, people and stakeholders have

on Signify’s business activities (inward–

financial materiality).


Overview stakeholder engagement activities (non-exhaustive)
	Stakeholder group	Stakeholder engagement processes	Examples of topics discussed
	Customers	Business development, lean value chain projects, consumer panels, Net Promoter Scores, social media, customer surveys, key account management, sustainability exchanges with customers	Energy crisis and efficiency Satisfaction rates ESG-performance
	Employees	Regular meetings, quarterly team surveys and employee development process, sustainability quarterly webcasts and engagement campaigns	Strategic alignment sessions Training & Development Diversity, equity & inclusion
	Investors and analysts	Virtual roadshows, (ESG) investor conferences, investor webcasts, investor relations website, investors' perception study	Strategic alignment sessions ESG-performance
	Suppliers	Supplier development, quality improvement projects, cooperation in industry working groups and strategic commodity management	ESG-performance Peer-learning Strategic alignment sessions
	Governments, municipalities	Annual innovation experience, research projects, advocating activities, business development, GreenSwitch and Brighten America programs' implementation	Sustainable cities Energy crisis and efficiency Sustainable innovation
	Civil society organizations	Partnerships with NGOs, cross-sector (multi-stakeholder) projects, our social investment program, the Signify Foundation	Social impact of light Sustainable operations Growth for sustainability

Identify ESG Topics

It is crucial that our materiality assessment

relies on a comprehensive list of ESG topics,

encompassing all areas potentially relevant to

Signify. As a starting point, desk research was

conducted consisting of a review of internal

and external documentation. The internal

analysis was performed by analyzing strategic

documents, previous materiality analyses and

stakeholder dialogues and linking the

contents with the 10 ESG topics and various

underlying sub-topics described in the

European Sustainability Reporting Standards

(ESRS) which form the backbone of the CSRD.

The internal analysis indicated that Signify

reports on the majority of ESG-topics, with a

primary emphasis on climate mitigation

through energy efficiency.

Next, external analysis was performed for our

peers, suppliers and customers. The external

analysis demonstrated that most external

actors are actively reporting on and engaged

in similar sustainability topics, while the

importance and focus varies slightly.

Stakeholder perspectives

We engaged with the stakeholders

considered most relevant to our company

including customers, employees, suppliers,

investors and analysts, governments, and civil

society organizations. These stakeholders

are most likely to be impacted by our

activities and have the most influence on

achieving our commitments. Internal

stakeholders were selected based on subject

matter knowledge and their ability to

represent a broader view of external

stakeholder groups.

We are Signify

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Signify Annual Report 2023

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Capturing perspectives from multiple

stakeholder groups enables us to gain

broader insights into value creation and

contribute to the definition of our future

strategy and plans. Stakeholders were

engaged namely through one- on-one

interviews and an online survey. Stakeholders

were asked to reflect on the outcomes of our

last materiality assessment, particularly

focusing on the definitions and assessment of

topics; to reflect on the list of topics included

in last year’s assessment and discussing

potential changes to be incorporated in the

new long list; and to explore the negative and

positive impacts of Signify’s own operations

and its value chains.

Using the insight from the internal analysis,

external analyses, and the interviews, our

shortlist of ESG topics was drafted. The

interviews and the survey were conclusive,

both from an impact and a financial materiality

perspective, Climate action and Circular

economy were viewed as the most material

topics.

Assessing outward and inward

impacts

As a final step, in line with the principles of

double materiality, we held workshops with

internal subject matter experts to determine

the potential impacts that our ESG topics

could have on Signify’s performance and

business overall, in terms of risks and

opportunities which could have an impact on

our ability to create value and the impact of

Signify on people, environment and society.

The assessment of materiality followed the

logic prescribed by the CSRD. For impact

materiality, the assessment was based on

‘severity;’ which looks at scale, scope and

remediability; and ‘likelihood’, stemming from

the OECD Guidelines for Multinational

Enterprises and the UN Guiding Principles on

Human Rights. For the scoring of the financial

impacts two factors were applied: financial

magnitude and likelihood.

Our materiality matrix serves as a solid

foundation on which our sustainability actions

and non-financial reporting will be shaped

going forward. We have started by identifying

the applicable standards and indicators as set

forward in the European Sustainability

Reporting Standards (ESRS), describing the

management approach of the identified

material issues, updating policies and

procedures and reviewing and setting targets

for each of the material topics. Additionally, in

the next year we will further integrate and

opportunities of the material issues into our

Enterprise Risk Management process allowing

us to manage and mitigate potential impacts,

on the business.

We plan to conduct a comprehensive

sustainability materiality assessment every

two years, however, will continue to engage

stakeholders annually on ESG topics to

ensure we remain focused on the most

material topics.

2023 Conclusions

The outcome of our double materiality

assessment confirmed that Climate action

and Circular Economy are the two most

material topics. Human Rights, Diversity,

equity and inclusion, Health & safety at work,

Talent & development, Cybersecurity and

privacy, Digitalization and Responsible mineral

sourcing are also identified as material topics

Double materiality matrix

on the basis of CSRD, and therefore included

in our strategic focus and this chapter. We

will continue to report on Business ethics, as

our Integrity code sets the standard for

business conduct of our employees and for

the company itself and underpins related

material policies. The result of the materiality

assessment has been reviewed and approved

by the Leadership Team and the Supervisory

Board.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>


l	Environmental	l	Social	l	Governance
¢	Material topic

Signify material topics – The following table outlines our material topics, their boundaries and our contribution to the UN SDGs.

CSRD Topic

Signify Topic

Definition

SDG

Boundary

Impact, risks and opportunities

Climate Change

Climate action

(climate change

mitigation)

Signify’s actions to combat climate change

and its impacts by doubling the pace of the

Paris Agreement 1.5ºC scenario. This

includes offering energy-efficient and

solar solutions to reduce the emissions of

our customers and driving carbon

reductions at our suppliers.

7.2, 7.3

13.2, 13.3

Own

operations;

Supply chain;

Use phase

Designing energy-efficient products and transforming manufacturing

to sustainable production can have a positive impact and reduce the

negative ones by reducing emissions during the use and construction

phases of the products. This transformation presents potential

financial risks due to transition costs of manufacturing processes,

market disruptions and increased supply chain costs.

Resource use

and Circular

economy

Circular economy

Signify’s efforts to reduce waste and

preserve value by aligning customers’

goals, the growth of the business, and the

future resources of the planet. This

includes developing products that can be

repaired, refurbished, reused or recycled,

and sending zero waste to landfill.

12.2, 12.5,

12.7

Own

operations;

Supply chain;

Use phase

Creating efficient installations, using leftover parts and residual

flows as raw materials can have a positive impact on the environment

by reducing waste and promoting circular economy principles. It can

also lead to savings in raw material costs and generate more

turnover from new circular business models, improving Signify's

financial performance. The remaining extraction of primary raw

materials can have negative impacts on the environment, and higher

purchasing costs of those materials or sustainable alternatives could

present a financial risk.

Own Workforce

Health and safety

at work

Signify’s actions to ensure a safe and

healthy workplace by reducing injuries and

illnesses of Signify employees and

contractors.

3.4, 3.9

8.8

Own

operations

Safety and health measures in the workplace present opportunities

to reduce accidents and mental health problems as well as increased

productivity and decreased absenteeism. It also presents risks such

as unsafe work situations and neglecting mental health, as well as

direct and indirect costs associated with safety incidents and

compliance with regulations which would impact the business

reputation.

Talent and

development

Signify’s focus on employee engagement

and development to enrich the lives and

careers of our employees, enabling

growth, engagement, and fulfillment.

8.1, 8.5, 8.6,

8.8

Own

operations

The successful roll-out of learning and development programs

coupled with a well-aligned talent strategy present opportunities to

improve employees' skills and personal growth, drive innovation and

revenue growth, enhance the global employer brand and reputation,

improve employee retention, and increase productivity. It also

presents risks due to the lack of implementation or poor execution

which would lead to lower productivity, potential lost sales, and

higher personnel and recruitment costs.

Diversity, equity

and inclusion

Signify’s commitment to diversity, equity

and inclusion in the workplace as an equal

opportunity employer. This fosters an

inclusive culture where people truly

belong, have impact and take pride in the

company we build and to drive long-term

value creation.

8.1, 8.5, 8.6,

8.8

Own

operations,

supply chain

A well-aligned diversity, equity and inclusion strategy can lead to

opportunities related to strategic market entry, increased revenue,

enhance the employer brand and reputation. A diverse workforce

can foster a sense of belonging and equal opportunity, positively

affecting mental well-being. The risk of unconscious bias leading to

discrimination and reduced social safety must be addressed and

mitigated.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

CSRD Topic

Signify Topic

Definition

SDG

Boundary

Impact, risks and opportunities

Own Workforce

& Workers in the

value chain

Human rights

Signify’s adherence to human rights

principles in its own operations as well as

social responsibility in its supply chain. This

includes topics like labor conditions and

living wages.

8.7, 8.8

Own

operations,

supply chain

Enforcing the monitoring and mitigation of human rights violations

will provide safe and compliant employment conditions for workers

and will retain their customers and investors’ trust. The risks

associated with human rights violations are that it can damage a

company's reputation, leading to decreased customer trust and

investor confidence as well as be subject to legal fines for non-

compliance and forced replacement of non-compliant suppliers.

Workers in the

value chain

Responsible

Mineral Sourcing

Signify focuses on responsible sourcing of

rare earth minerals used in products.

Through our Conflict Minerals program and

partnerships, we take actions to source

minerals that are not being mined and

extracted in conflict zone areas.

Supply chain

Implementing responsible mineral programs can lead to increasing

the enforcement of human rights standards as well as mitigating the

potential environmental damages affecting nearby communities. The

main risks are human rights abuses, environmental damage, health

risks, and increased costs which could lead to legal repercussions

and fines, and reputational damage.

Business

Conduct

Digitalization

Signify’s efforts to digitalize its go-to-

market approach and business processes

by building technology platforms that

address customer needs in a connected

world and support Signify’s growth.

8.1, 8.2

Own

operations,

Use phase

Digitalizing interfaces, processes, and offers can provide

opportunities for companies to maintain a competitive advantage,

increase sales and brand reputation as well as lower operational

costs. It often requires an investment in the necessary skills to

maintain a good position in the long-term. The uptake of digital

products such as connected lighting systems will drive energy

efficiency and contribute to the reduction of GHG emissions.

Cybersecurity and

privacy

Signify’s efforts to protect information,

products, and operations from cyber-

attacks and security breaches, protect

customer privacy, and ensure that product

development, software applications, and

ecosystems comply with security

standards and best practices.

8.1, 8.2

Own

operations,

Use phase

Continuously improving cybersecurity and privacy measures provides

opportunities for companies to protect their infrastructure and

customers from cyber attacks, ensuring business continuity and

safeguarding intellectual property. Additionally, privacy measures

can help to maintain customer trust and protect privacy data,

leading to increased sales and positive brands reputation,

contributing to long-term financial stability.

The following sustainability statements include additional sections on the topics of 'Social impact of light' and 'Business ethics'. These topics are not material, however, remain strategic for Signify

and are therefore reported on.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

4.2 Sustainable

innovation

Innovation is an important pillar of Signify's

purpose to unlock the extraordinary

potential of light for brighter lives and a

better world. Our sustainable products and

systems must demonstrate proven

measurable benefits in one or more of the

eight sustainable focal areas (SFAs)

compared to the relevant and/or regularly

updated benchmark.

Our five Better World SFAs:

• Energy & solar - increasing energy

efficiency of products, systems and

services, and solar systems and solutions.

• Circularity – optimally preserving value and

avoiding waste via serviceable luminaires,

circular components, intelligent asset

management, and circular services.

• Packaging - reducing packaging weight and

volume, increasing recycled material in the

packaging of professional products,

eliminating the use of fossil-fuel based

plastics in the packaging of consumer

products, and optimizing transportation

efficiency.

• Substances - eliminating harmful

substances.

• Weight & materials - reducing product

weight, selecting recycled and/or

renewable materials, and increasing

commonalities.

And three Brighter Lives SFAs:

• Safety & security - providing light that has

a positive effect on reducing crimes like

burglary and theft in cities and houses,

increases safety in traffic and protection

against cybercrime.

• Health & well-being - designing light to

support health, well-being, and

performance of humans, animals and

wildlife through unlocking the visual,

biological, and emotional benefits of light.

• Food availability - providing light that

enables the production of more and

better-quality food, while optimizing the

use of land, water and energy and avoiding

the use of pesticides.

Our sustainable innovations continue to

transform the lighting industry. In 2023, we

invested EUR 271 million in sustainable

innovation which represents 88% of Signify

R&D expenses (89.5% in 2022). We believe

that sustainable innovation will help create an

increasingly future-proof and purposeful

portfolio of products, systems and services.

4.3 Brighter Lives

As part of our company strategy and our

Brighter Lives, Better World 2025

sustainability program, we aim to double our

positive impact on society, creating brighter

lives by the end of 2025. We will do this by

doubling our Brighter lives revenues, which

benefit society by increasing Food availability,

Safety & security and Health & well-being.

Additionally, we commit to double the

percentage of women in leadership by the

end of 2025. We will also strengthen our

commitments to employee safety, sustainable

supply chain and access to light.

Kiran Brar,

Chief HR Officer, Signify

"In response to uncertainties in the

macroeconomic environment affecting

the talent marketplace and our

employees, we prioritized key areas to

continue a Great Place To Work. Our

2023 people strategic initiatives

centered around leveraging diversity,

equity and inclusion (DE&I) as our

competitive edge, strengthening our

performance culture, and developing

our internal talent.

We reinforced our commitment to drive

equitable and inclusive practices in the

organization and increased

representation on both on gender and

generational diversity. In 2023, we

particularly focused on hiring 400+

campus hires which is also inline with our

talent strategy to hire at the entry level

of our organization and promote from

within. We filled more than 50% of our

vacancies in all the levels of our

organization with internal talent. We

continued to focus on key

developmental interventions like our

upskilling program, Basics & Beyond, for

Commercial Leaders, and P EDGE for

our plant managers. The inclusive

leadership model has been integrated

into the iEDGE leadership program,

targeting our new people leaders. In

2023, we introduced an Inclusion Index,

incorporating it into our team survey to

gauge the level of inclusivity

experienced by our employees and

ensure every voice is heard.

We further built on Unlock Performance

practices through constructive check-

ins, feedforward, continuous learning,

and a culture of appreciation. Our

Employee Share Purchase Plan

expanded covering more than 70% of

our employees fostering ownership. Our

transformation continues with changes

in our operating model. In order to

leverage the full power of our new

operating model, we are sharpening our

definition of our values and behaviors

which will be required for us to perform

and win.

I am proud of the resilience and

adaptability of our employees in the face

of complexities and challenges. I have a

lot of confidence that we will continue

to be Greater Together in the face of

continuing business challenges in 2024."

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

4.3.1 Talent and development

Employment

The total size of the Signify workforce at the

end of 2023 was 31,920 FTEs, compared to

34,619 at year-end 2022. The data provided

in subsections 4.3.1 and 4.3.2 excludes

contingent workers and employees that have

not been fully integrated in our human

resources system which represents 28% of

our FTEs.

Approximately 57% of our employees were

employed by one of our three divisions,

focusing on manufacturing, offer

development and research and development.

28% were employed in one of our commercial

organizations, focusing on sales and

marketing. The remaining 15% worked in

corporate functions. During 2023, the overall

number of employees (in FTEs) decreased

with a majority of the reduction in the direct

workforce. This is in line with the ongoing

external workforce changes and digital

transformation, and we expect the nature of

the current workforce will continue to

evolve.

In 2023, Signify’s adjusted employee turnover

was 17% (2022: 17%). On a reported basis,

the total turnover was 37% (2022: 48%)

including the specifics of the Mexican labor

law, which prohibits contingent labor and

therefore causes a significant impact on a

consolidated basis. Signify applies high

standards in its factories around the world to

ensure its competitiveness in highly dynamic

labor markets, while continuously improving

employee satisfaction and reducing turnover.

Talent management

With close to 32,000 employees worldwide,

our people are central to the effective

execution of our strategy, and we will

continue with the implementation of our new

operating model. We believe that we will

maintain our position as the leader in lighting

by being a talent-builder, developing and

growing people from within. We want our

employees to have a challenging and

rewarding work experience; one where they

can grow and make an impact, and where

they gain new experiences and develop

themselves.

Our approach to talent is to continuously

build and develop employees’ functional and

leadership skills, whilst attracting new,

diverse talent where critical capabilities are

needed to strengthen our talent pool.

Retaining our talent remained a key priority in

the course of 2023 and we have been

focusing on fostering internal mobility by

supporting the match of our talents with

internal opportunities.

In 2023, next to our acquisitions, we

welcomed 6,878 external talents to help

bring our business vision to life, most of

whom were employed in manufacturing

functions. In line with our people philosophy

to promote talent from within the

organization, close to 60% of our senior

management and leadership roles were filled

internally.

A robust global employer brand

In 2023, we continued to build on our

Employer Value Proposition (EVP): while our

pillars remained the same, as an innovative,

sustainable industry leader with an essential

focus on continuous learning as well as on

DE&I, we laid the groundwork for

strengthening our EVP to stay relevant in the

talent marketplace.

In 2023, we received recognition for being an

employer of choice in various countries, for

example: Certification as Top Employer in

China, (Top Employer® Institute), Great Place

to work (The Great Place to Work® Institute)

in Turkey, India and Panama. In the US, the

Campus Program won the Handshake’s Early

Talent award and was recognized as a best

place to work for Gen Z, and Sabrina Madsen

received the Emerging Talent, Rising Star

award from RippleMatch Campus Recruiting

Choice Awards. Globally, Kiran Brar was

included in Mogul's list of Top 100 People

Leaders and CHRO’s.

We directed our recruitment marketing

campaigns at the most critical segments, to

drive our transformation and growth and

build talent pipelines. In 2023, we focused on

reaching diverse candidates in technology,

marketing, finance and sales with relevant

messaging, customized per region reflecting

our EVP. We activated an early careers

campaign on social media to attract new

graduates and early careers talents.

As part of our global talent acquisition

strategy, we continue to attract talent from

proven high-quality sources:

• Internal - Over the last few years we have

filled approximately 50% of our vacancies

internally.

• Employee referral – 14% of total external

hires came from employee referrals.

• Signify careers website - Via our content

strategy on social media "Humanizing our

employer brand", we saw high engagement

rates on social media driven by our

employees sharing content and our stories

on why Signify is a great place to work, in

alignment with our values and EVP.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>


Employee turnover breakdown in 2023 in %
	Staff (majority in factory)	Professional	Mid-Level Professional	Senior-Level Professional	Leadership	Grand Total
Total adjusted 1	5%	9%	2%	1%	–%	17%
Total	27%	8%	1%	1%	–%	37%
of which voluntary	16%	4%	1%	–%	–%	21%
of which involuntary	11%	5%	1%	–%	–%	16%
1 Excluding manufacturing population from Mexico


Employees in FTEs
	2021	2022	2023
Signify total	36,824	34,619	31,920

Culture

Our company culture is comprised of four

foundational elements: purpose, values,

sustainability and Diversity, Equity & Inclusion.

Our company purpose and values provide

employees with direction about why we exist,

what we value, and how we work.

We believe that our achievements are

collective, and by working closely together,

our impact is greater. Our workplace

principles were designed to foster

inspiration, cooperation, and a sense of

belonging: three essential ingredients to

achieve our purpose. The workplace

principles reinforce our commitment to

further build an inclusive work environment

that offers employees flexibility to work from

home when needed and set reasonable

boundaries for conducting the company’s

business.

Throughout 2023, we have been enhancing

our performance culture to improve

execution and ownership for a more

competitive business. This performance

culture is reinforced by our performance

practices, where both employees and people

managers take an active role, together, to

drive individual and company performance. It

starts with a steadfast commitment to

regular, open, forward-thinking performance

conversations between employees and

managers.

During these conversations, employees can

share their progress against goals and their

learning and development priorities.

Managers demonstrate support through

active listening and coaching to enable

employees to break through performance

obstacles and grow. We promote the

practice of feedforward, which is future

focused and aims to identify potential

opportunities for growth. In our latest Team

survey, quarter 4, 2023, 83% of our

employees responded positively to having

had constructive conversations with their

manager within the last three months about

their performance and development goals. In

addition, 80% of our employees responded

positively to being empowered and

supported in their professional and career

development.

As we look to 2024 and beyond, we will

continue to reinforce these practices and

enhance our processes, as we move to a new

operating model. Through coaching our

employees, strengthening feedforward and

building capability in our managers, we plan to

embed the change and further unlock

performance at Signify. To emphasize the

focus on our customers and speed in

decision-making, we will be refreshing the

behaviors that underpin our values, and root

these in the way we work.

Employee engagement & well-being

Employee engagement and well-being are

key to our competitive performance and

integral to our people vision: creating a

workplace where people belong, have impact

and take pride in the company we build

together. Engaged employees are committed

to our company. They help us to meet our

business goals and sustainability

commitments, whilst contributing to a

dynamic, high-performance workplace.

In 2023, we continued our grassroots

initiatives across the globe to create

awareness about employee engagement &

well-being:

• Coffee Corners and global webcasts, to

reinforce the connection between our

people and our leaders.

• Well-being Webinar Program (online

webinars) and activity clubs.

• Health checks in Greater China, for

employees to get personal feedback on

their health and specific suggestions on

follow up.

• Employee Assistance Program in India, with

monthly webinars offering free

teleconsultation support to all employees

and their family for any kind of wellness

query and support.

• Broaden time-off policies in the US to

focus on well-being, making specific

mention of mental and emotional health

and evaluated medical leave of absence

procedures to ensure they are inclusive

and cover mental health issues

appropriately.

Sustainability is central to our company

strategy, we have engaged our employees on

the topic of sustainability since 2019. We do

this with quarterly employee engagement

themes and challenges that help employees

reflect on and connect personal values with

the business practices of Signify.

Our Signify Team survey poses questions in

line with our company purpose and values,

and it has proven to be a positive driver of

employee engagement to increase team

effectiveness. As a result, we have continued

to run the Team survey every quarter to

monitor employee engagement and take

corrective actions when needed. In 2023, we

have updated the questions to stay on top of

the trends around employee engagement.

Furthermore, insights into the inclusivity in

teams and the impact of our managers are

provided. In 2023, 90% of our employees said

that we truly put our Customer First (2022:

92%); 88% of our employees acknowledged

that we are Greater Together (2022: 89%);

88% of our employees felt that we are a

Game Changer (2022: 86%) and 87% of our

employees agreed that we have Passion for

Results (2022: 89%). We noted that we need

to continue improving in the areas of

processes and systems. Initiatives to address

our improvement points are driven at a team

level via our Team dialogues, and we continue

to track progress on these questions during

our Quarterly Performance Reviews.

To measure employee satisfaction, the Net

Promoter Score (NPS) methodology is used

as part of our Team survey. Employees are

asked to rank how likely it is that they would

recommend our company as a great place to

work. In 2023, the Team survey had an

average employee response rate of 83%

(2022: 83%). At the end of 2023, we

recorded an average annual NPS score of 26

across the Signify population (2022: 36).

Learning & development

Learning continues to be a competitive

advantage at Signify and plays an important

role in attracting and retaining talent. In

2023, people connected virtually on our

knowledge exchange platforms to consume

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

or to share their knowledge with colleagues.

We updated our methodology to calculate

the rate of active learners only focused on

voluntary training (in 2022 mandatory

courses were included). On average in 2023,

the learning experience platform

Learning@Signify reached an active learner

rate of 63%. The average number of hours

spent on training and development per FTE

was 20.5 hours during 2023 (2022: 24).

Multiple Subject Matter Experts created

learning pathways around critical areas to

share their knowledge with others bringing

our vision “everyone is a student; everyone is

a teacher” to life.

Signify employees are 'the driver of their own

career’. This year we deployed the Learning

Week in July and October and the

#OwnYourdevelopment newsletter to

strengthen the learning agility of our

employees. In July’s edition, we focused on

self-reflection. Masterclasses on career

development, harnessing your strengths, and

empowerment were offered to our

employees. In October, the focus has been

on Future in-demand skills such as Workplace

curiosity, Agile and Problem-solving. This

initiative has been a success with over 12.500

attendees.

Upskill for greater customer impact

This year our focus remained on

strengthening our commercial skills and we

launched the "Basics & Beyond" program for

commercial leaders. The program focused on

3 skills: P&L management, Strategic thinking,

and People management. In total 129 leaders

got involved in the seven month training

program.

For a third year in a row, we delivered our

"Impact program" for Key account managers.

It introduces a consultative and innovative

approach to selling, with a greater emphasis

on relationship building and trust.

Upskill for digitalization

We continued to invest in digital reskilling and

skill assessments for skills like Robotic

process automation (RPA), Data and analytics

(AI / Machine learning / Data analytics), Cloud

computing, Information and cyber security,

Programming languages, and IT

architectures.

Leadership development

We continued to ensure that our leadership

development experiences are aligned with

our manager framework of lead, develop, and

inspire and with our talent philosophy. We

have piloted interventions to increase the

effectiveness of first-time people managers

in 2023, by covering the essentials of people

management; emotional intelligence and

situational leadership. In 2024, this will be

continued as a new, global program for all

people managers.

In 2023, the program included 105

participants. We have also launched a specific

program for 31 leaders in manufacturing. This

ensured that our people leaders continued

to get support in their roles for Signify to

build a pipeline of future-ready leaders who

can further drive excellence and sustainable

growth. In 2024, we will continue to improve

the leadership offerings ensuring our leaders

are equipped to lead, develop, and inspire

our people.

4.3.2 Diversity, equity &

inclusion

At Signify, we believe that a diverse

workforce and an inclusive work environment

are essential to a thriving innovative business

and long-term value creation. We are an

equal opportunity employer committed to

Diversity, equity & inclusion (DE&I) in the

workplace. This means we celebrate and

foster an environment in which all ideas,

perspectives, experiences and styles are

highly valued and where all individuals are

treated fairly with equal access to

opportunities and resources.

Diverse representation in our workforce is

critical for our long-term success as a

company. It enables us to understand,

connect and communicate with our

customers, end-users and stakeholders

while helping us to attract and retain people

who want to be part of our purpose to unlock

the extraordinary potential of light for

brighter lives and a better world. Our DE&I

roadmap reinforces our Greater Together

value, enabling us to make better decisions,

boost innovation, create growth, and

strengthen our culture.

In 2021, we signed the United Nations (UN)

Women Empowerment Principles, which

underpins our commitment to double the

percentage of women in leadership to 34%

by the end of 2025, and is another step

towards ensuring equal opportunities,

fairness, and impartiality for all.

In March, honoring International Woman’s

Day, colleagues from across the world

organized events celebrating the

achievements and acknowledging the

challenges within the topic #Embrace Equity.

DE&I governance practices

Our commitment to creating and sustaining

an inclusive workplace culture is evidenced in

our Diversity Committee, DE&I Champions

network, and our eight Connection Point

Groups. Empowered, employee-led and self-

governing, these employee groups continue

to champion our commitment to ensuring a

sense of belonging and well-being.

Founded in 2019, our DE&I Board continues

to drive our strategic initiatives and the

ongoing development and refinement of our

multi-year DE&I roadmap. We continued to

emphasize our existing “2+1” approach i.e.,

global focus on two specific diversity

dimensions of gender (increasing

representation of women) and generation

(increasing early career talents) with space

for markets, divisions, and functions to locally

implement additional important and relevant

initiatives.

We published our inaugural DE&I report in

2022. This report is a snapshot of our

progress, highlighting the areas where we

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

Gender diversity in % New hire diversity in % Employee per age category in %


Staff		Professional	Mid-level professional		Senior-level professional	Leadership
	Men			Women


Staff		Professional	Mid-level professional		Senior-level professional	Leadership
	Men			Women	n	Not disclosed



Under 30	30 - 50	Over 50

still need to act and telling the story of our

continued journey towards a more inclusive

and equitable workplace. In this report, we

announced we achieved gender pay equity

within Signify. Our most recent DE&I report is

available on our website: https://

www.signify.com/global/our-company/

about-us/diversity-inclusion.

In 2023, we continued to drive positive

actions to increase diversity recruitment and

internal mobility at all levels (inclusive job

posting, diverse shortlist, diverse hiring

panel). We set up plans to address gaps and

accelerate our progress, so that our talent

pipeline reflects all aspects of diversity in the

markets in which we operate. To strengthen

these efforts, we established a “licenses to

hire” training for all people managers to

enhance their skills and knowledge during

recruitment around DE&I (e.g., fairness of

process, fair decision-making, candidate

experience, equity).

In partnership with Harvard Business

Publishing, we continue to focus on ensuring

DE&I is a cornerstone of our culture through

a learning and education series available to all

Signify employees.

We focus on topics such as unconscious bias,

microaggressions, generational diversity,

psychological safety and inclusive leadership.

We have embedded the inclusive Leadership

Model into the iEDGE leadership program,

which targets our new people leaders. We

remain committed to a culture imbued with

equitable access for everyone and make the

course material available to all employees on

Learning@Signify.

In 2023, 40% of Signify employees were

women (2022: 41%) and 29% of leadership

roles (positions graded H22+ on the Hay

grading scale) across the company were held

by women (2022: 28%). We are slightly off

track to reach our 2025 target of 34%

women in leadership positions. We will

continue to focus on external hiring for

senior positions by actively pipelining and

ensuring equal slates before hiring for

positions. Additionally, we will focus on

increasing the succession health through

career development opportunities. This will

be enabled through transition toolkits and

mentoring for women moving into new roles

to enable them to succeed.

In 2023, 49% of our new hires were women

(2022: 50%). From a generational

perspective, 16% of employees were 30

years old or under (2022: 17%). We have the

ambition to attract and retain more early-

career talents to build a sustainable talent

pipeline.

As a company, we are naturally diverse,

operating in 74 countries with more than 99

nationalities represented in our workforce.

Globally, we recognize that we need a more

diverse workforce, especially in management

and executive positions. Therefore, over the

last two years, we have intensified our

efforts on increasing the representation of

women and early-career talents in our

company. We are committed to improving

diversity at all levels, attracting candidates

from more diverse pipelines, and driving

development and internal mobility to increase

representation across our company.

As part of our strategy to attract early

career talent, we expanded our campus

hiring and our internship program. We

partner with many colleges and universities

and have amplified our employer brand on a

variety of social media channels.

We are Signify

Creating value

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Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

In 2023, we were awarded #1 for

Handshake’s Top Intern Program, positioning

Signify as the #1 employer for early career

talent among 750,000 employers across 16

industries. This award recognizes Signify as

an Employer of Choice among GenZ job

seekers.

Globally, we recognize the need for a more

diverse representation in the areas of gender

and age, and we continually monitor related

data to support our aim of reaching greater

diversity representation in our organization.

We plan to further improve our generational

diversity in the future by increasing the inflow

of early career talents and campus hires.

Equal remuneration

Signify’s commitment to equity and inclusion

includes a policy for equal pay for equal, or

substantially similar, work. Signify establishes

formal pay policies and practices that govern

hiring, benefit entitlements, annual merit, and

promotional guidelines to ensure equity.

Furthermore, Signify performs regular

reviews designed to ensure compliance with

our policy of equal pay for equal work and

meet local legal requirements in countries in

which we operate. Our annual review process

includes a comprehensive statistical analysis

of pay to employees across the world. Any

statistically significant variance within any

employee group is promptly addressed. More

details can be found in our Diversity, Equity &

Inclusion Report.

Supplier Diversity

To ensure an inclusive business model, Signify

collaborates with key strategic suppliers to

drive better DE&I performance across its

value chain. In 2023, we engaged with key

suppliers to exchange best practices via a

dedicated online program and we included

the topic of DE&I in our Tritium program (see

more in subsection 4.3.3) to reward suppliers

already adopting practices promoting DE&I.

4.3.3 Human rights

Our approach

Respecting human rights is a central

foundation of the way we work. Our

commitment to respecting and promoting

human rights extends beyond our own

operations, across our wider sphere of

influence, including our supply chain. To that

end, we integrate human rights

considerations into our policies, processes,

and practices. Our Human Rights policy is

based on the International Bill of Human

Rights, the United Nations Global Compact

Ten Principles, and the International Labor

Organization’s declaration on Fundamental

Principles and Rights at work. Signify carries

out continuous research and stakeholder

engagement activities to identify the most

salient ethical and social principles that

govern our relationship with stakeholders

worldwide.

In 2023, we strengthened our process for

identification of new salient human right

issues, by introducing a quarterly review of

the cases raised through our Ethics line with

our compliance team. This allowed us to

understand if there were any issues that

were not properly covered by our policy and

how to drive corrective actions. As result of

this review, we have decided to create a

specific Anti-Discrimination and Anti-

Harassment policy in 2024.

In addition, we held a meeting with our CEO,

to gain his perspective on possible risks in

our operations, but also to ensure alignment

at the highest level of the organization on

how to drive Human Rights, in line with EU

Taxonomy Minimum Social Safeguards (MSS).

In 2023, we also held our annual Human

Rights Committee meeting, formed by senior

leaders of the company, where the objective

is to sign-off on the selection of the salient

human rights issues and agree on the

corrective actions in case of any finding

through our different assessment processes.

The table on the following page shows, in

random order, the salient issues identified

and the stakeholders they affect, as well as

references to the subsections of this report

that contain the progress Signify made in

addressing these issues.

Human rights risk assessment

Compliance with the Human Rights policy is

governed through our Integrity code

processes, combined with dedicated steps

that help ensure adherence. In 2023,

employees were requested to complete e-

learnings that helped interpret our Integrity

Code. Dedicated communication campaigns

urged everyone to speak up and report

concerns of possible violations. In those

campaigns, the availability of our Ethics

hotline was also highlighted. This initiative is

an integrated and ongoing activity we have

embedded in our business and business

principles, which we redeploy on a regular

basis and share with our new employees as

part of their on-boarding program.

Based on a country risk assessment, multiple

manufacturing locations were considered to

have an increased likelihood of policy

violations. We currently have 19 sites located

in “highest or high risk” countries. Since 2017,

these locations are requested to periodically

fill in a dedicated self-assessment on human

rights. In 2023, we made a profound revision

of our assessment, to ensure that it

reflected the latest developments on human

rights. As result, we added 20 new questions

and revised the wording of 15, to ensure we

covered as many human rights risks as

possible.

Additionally, in 2023, we ran an internal audit

regarding “Adherence to our Human Rights

policy." The onsite audit was conducted in

three locations; India, Mexico and China. The

audit focused on 2 aspects: 1) Do sampled

organizations adhere to the Human Rights

Policy? What is the control effectiveness?;

and 2) Checking the quality of the self-

assessment questionnaires and

corresponding improvement actions.

As result of the audit there were two

improvement areas identified: a) In two sites,

non-adherence to the requirement that

employees are not allowed to work more

than 6 days in a row; b) Improvement of the

process governing the Human Rights Policy,

by, for example, clarifying the roles and

responsibilities concerning the policy's

control activities towards the sites and

clarifying some questions of the self

assessment questionnaire.

As result, seven improvement actions were

identified and agreed, out of which, six have

been completed and one is still due execution

in 2024.

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Signify Annual Report 2023

<≡>

Living wage

Recognition and rewards have been identified

as an important engagement driver for our

employees and direct suppliers. By ensuring

good working conditions, Signify not only aims

to provide a fair, safe, and respectful work

environment, but also an inspiring place to

work and grow. Fair remuneration is

considered a precondition for our employees

to flourish. Signify provides total

compensation that is in line with the industry

practices in the markets in which we operate.

In addition, we are committed to providing

our employees with a living wage, ensuring

that their everyday needs are met. The

guiding principles of our pay policy include

providing competitive compensation relative

to all labor markets, ensuring equity, and

providing a living wage to our employees. As

such, to ensure compliance against our

guiding principles, Signify launched its Living

Wages program in 2017.

Regularly, Signify performs an analysis of

salaries and benefits for employees globally

with respect to a living wage, covering the

necessary living costs. We focus on

employees who have a higher risk of not

receiving a living wage by analyzing 35 regions

in 6 different countries (representing 70% of

the overall Signify population). We compare

our wages to the Wage Indicator Foundation

database.

The 2023 results show that company

standards exceed the living wage standards

in all regions examined, except four, which

together represent 1.16% of the population

analyzed in the six principal countries. We are

developing remediation actions to close the

gaps identified in these four regions. Two

new regions were identified with living wages

issues, which represent 20% and 18% of the

total employees analyzed in those regions.

One region identified during the 2022

analysis had 47% of the population not

meeting the living wage standard, while in

2023 the same region had 9% of the

population not meeting the living wage

standard due to a 20% increase in the

national minimum wage. Four other regions

identified during the 2022 analysis no longer

have employees below the living wage, due to

increases in wages.

During the 2022 analysis, it was identified

that another region had a population below

the living wage standard, with 23% of the

population not meeting this standard. In this

region, it is common practice for employees'

wages to be adjusted once they successfully

complete their probationary period.

Therefore, this is only a temporary issue for

new employees, which is resolved as they

progress beyond their probationary period.

Responsible supply chain

We have a direct business relationship with

more than 3,000 product and component

suppliers. Responsible procurement

practices and management of our supply

chain require a structured and innovative

approach due to the wide variety of

stakeholders. Signify has developed

programs over the years to prevent human

rights violations in its supply chain. These

programs cover the assessment and

development of supplier sustainability

performance (audits and training) and

responsible minerals sourcing.

As part of our Brighter Lives, Better World

2025 sustainability program, we commit to

execute an on-site audit program that covers

our high-risk, high-spend suppliers.

We track our supplier’s maturity rate through

on-site assessments against the RBA Code of

We are Signify

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Signify Annual Report 2023

<≡>


Salient human rights issues
Salient human rights issues		Rights holders covered in our programs			Reference to our disclosures
		(3rd party) employees	Direct suppliers	Indirect suppliers
1	Freedom of association and collective bargaining	•	•		4.3.5: Business ethics 4.3.3: Human Rights
2	Safe & healthy workplace	•	•		4.3.4: Safety at work 4.3.3: Human rights
3	Working hours	•	•		4.3.5: Business ethics 4.3.3: Human Rights
4	Equal employment opportunities and respect	•	•		4.3.2: Diversity, equity & inclusion 4.3.3: Human rights 4.3.5: Business ethics
5	Recognition and reward	•	•		4.3.2: Diversity, equity & inclusion 4.3.3: Human rights 4.3.5: Business ethics
6	Modern Slavery & Human Trafficking	•	•	•	4.3.3: Human rights
7	Forced and child labor		•	•	4.3.3: Human rights
8	Employee development	•			4.3.1: Talent & Development 4.3.5: Business ethics

Conduct. In 2023, 88% of our suppliers (with

a spend over 1 million Euros) are either from

low-risk countries or of high maturity (score

at least 70 initial points out of 100 points

during the audit).

Our Tritium program helps us develop a

strong supply base with best-in-class

suppliers and is based on selection and

rewards criteria against our strategic

priorities. The Tritium rating strongly drives

continuous improvement of our supplier

sustainability performance. Sustainability

maturity and initiatives on Human rights,

Working conditions, Climate action and DE&I

are rewarded in the Tritium system with

reward points. Non-compliance is penalized

and needs to be corrected or will result in

consequences for the business relation.

Our targets are periodically reviewed by

senior management. In case of deviations

from our targets, we set up corrective

measures. Through these efforts, we foster

decent work and economic growth by

improving the safety and well-being of

suppliers and directly contribute to SDG 8:

Decent work and economic growth.

Supplier sustainability performance

The core of our supplier sustainability

performance program is the Supplier

Sustainability Declaration (SSD). This

declaration forms an integral part of our

supplier contracts and can be found on our

website. We expect all Signify’s suppliers

providing products, components, parts,

subassemblies, materials, packaging,

services, or solutions to or on behalf of

Signify to comply with our Supplier

Sustainability Declaration.

The SSD is derived from the Responsible

Business Alliance (RBA) Code of Conduct and

sets out the standards and behaviors we

require from our suppliers and their

suppliers. It covers labor, health and safety,

environment, ethics and management

systems. This applies to all workers including

temporary, migrant, student, contract, direct

employees, and any other type of worker.

We continue our DE&I program in our supply

chain. Through our audit program, we have

identified that more than 33% of our

suppliers have already set DE&I targets and/

or signed a DE&I pledge. (2022: 29%).

Our audit program consists of full audits

performed by an independent audit firm for

selected suppliers in risk countries with a

spend threshold of EUR 1 million per year. The

audit program also covers new suppliers

introduced by our recent acquisitions (with a

spend threshold on anticipated spend over

100k Euro). To improve sustainable practices

in our supply chain, we want to increase the

number of our suppliers that either are low

risk or implement mature sustainability

practices and good performance. We

encourage suppliers to certify against

SA8000, ISO14000 and ISO 45001 standards

or to become member of the Responsible

Factory Initiative (RFI), a program offered by

RBA experts.

In 2022, we introduced a 1-year audit

frequency for suppliers that score below 70

points, This turned out to be very effective as

we noticed in 2023 that the suppliers in this

group made significant progress (from a

typical audit score of 40 to 82 points). For

suppliers that score well but require

corrective actions, we keep the three-year

audit cycle. Suppliers that pass the audit with

no need for corrective action will be

exempted from the audit program until a

complaint or an issue is raised by internal

stakeholders or from external sources.

At the end of 2023, 280 suppliers were part

of our audit program (66% of Signify's total

spend). Among them, 271 suppliers (97%) are

compliant by passing the audit or by resolving

identified non-conformities. 9 suppliers (3%)

were considered non-compliant, either due

to overdue corrective action plan or overdue

audit date, and are being followed up with

our consequence management process. At

the end of 2023, our compliance rate was

97%, well above our annual target of 95%. In

2023, we audited 157 suppliers (including

supplier onboarding audits) on-site and

reached close to 50,000 workers employed

at the sites audited. Most of Signify suppliers

are based in China (78%), followed by Mexico

(8%) and India (5%).

The following table shares our supplier

sustainability performance and indicates the

compliance rate from the audit prior to

supplier corrective actions. Overall, the

compliance rate is 88%, which is slightly

lower than last year due to the introduction

of many new supplies from our recent

acquisitions (Klite and LeiFei). We saw

progress in the areas of labor (young

workers, non-discrimination) and ethics

(privacy and non-retaliation). Attention

points for the coming year will be industrial

hygiene (working environment) and the

storage and handling of hazardous

substances.

In the RBA Code of Conduct and in our SSD,

special attention is given to the prevention of

human slavery as referred to in the United

Kingdom (UK) Modern Slavery Act Disclosures

and the California Transparency in Supply

Chains Act. The formal statement on these

laws can be found on our website.

The assurance of freely chosen employment

in our supply chain is a key element of our

sustainability objectives. Forced and Child

labor is considered a zero-tolerance issue

and Signify’s policy requires immediate

remediation if observed. We closely follow

the implementation of the US’s Uyghur

Forced Labor Prevention Act (UFLPA) and Bill

S-211 Fighting Against Forced Labor and

Child Labor in Supply Chains Act. Our forced

labor working group are implementing due

diligence mechanisms including inquiry of Tier

1 suppliers and putting in place upstream

traceability of raw materials at risk. In

addition, we expect our suppliers to allow all

workers the freedom to associate. This

includes channels for workers and/or their

representatives to openly communicate and

share ideas and concerns with management

regarding working conditions and

management practices without fear of

discrimination, reprisal, intimidation, or

harassment. This is verified during our RBA

audits by direct interviews with supply chain

workers; and is also aligned with our company

Integrity Code.

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<≡>

Summary of 2023 audit findings before suppliers have taken corrective actions, supplier compliance rate per category of the Supplier Sustainability Declaration.


Labor	Health & Safety	Environment	Ethics	General
Freely chosen employment 80-100%	Occupational safety 60-80%	Environmental permits and reporting 80-100%	Business integrity 80-100%	RBA code 80-100%
Child labor prohibition/ Young worker management 80-100%	Emergency preparedness 60-80%	Pollution prevention and resource reduction 80-100%	No improper advantage 80-100%
Working hours 60-80%	Occupational injury and illness 80-100%	Hazardous substances 40-60%	Disclosure of information 80-100%
Wages and benefits 80-100%	Industrial hygiene 60-80%	Solid waste 80-100%	Protection of intellectual property 80-100%
Human treatment 80-100%	Physically demanding work 80-100%	Air emissions 80-100%	Fair business, advertising and competition 80-100%
Non-discrimination 80-100%	Machine safeguarding 80-100%	Product content restrictions 80-100%	Protection of identity 80-100%
Freedom of association 80-100%	Food sanitation and housing 60-80%	Water management 80-100%	Responsible sourcing of minerals 80-100%
	Health & Safety information communication 80-100%	Energy consumption and greenhouse gas emission 60-80%	Privacy 80-100%
			Non-retaliation 80-100%

Training and development

Procurement employees and employees who

have direct contact with suppliers undergo

internal training modules on our supplier

sustainability program. In addition, since 2017,

we have organized training sessions for our

suppliers to share our learnings to support

and foster sustainable best practices. In

2023, we organized a webinar on RBA Code

of Conduct focusing on the top 20 most

frequent non-conformities found in our audit

program. 35 suppliers joined, with a total of

67 attendees.

In cooperation with our 3rd party auditor, we

also organized face-to-face training for 10

selected suppliers with development needs in

the areas of working hours and fire safety (19

attendees). We continued our Supplier

Carbon Disclosure Program with 73 suppliers

attending the training sessions.

Responsible mineral sourcing

Our commitment to sustainable development

extends to issues further down the supply

chain, to prevent human rights abuses and

financing of conflicts in the extractive sector.

Global supply chains in the lighting industry

are long and complex, typically with more

than seven tiers between the finished

product and the source of raw materials

used for manufacturing. However, we believe

that through strong multi-stakeholder

partnerships we can make a difference.

As part of the Signify Conflict Minerals

program, we implement measures in our

supply chain to ensure that our products are

not directly or indirectly funding atrocities in

the Democratic Republic of Congo (DRC). We

support and follow the OECD Due Diligence

Guidance for Responsible Supply Chains of

Minerals from Conflict-Affected and High-

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<≡>

Risk Areas. The full description of our due

diligence process and Signify’s position on

Conflict Minerals are available on our

website.

We are an active member of the Responsible

Mineral Initiative (RMI) which runs the audit

program to verify the smelters’ conflict-free

status and to identify sources of 3TG and

cobalt in our supply chain. We use the tools

and programs developed by the RMI,

especially the Conflict Minerals Reporting

Template (CMRT), the Extended Minerals

Reporting Template (EMRT) and the

Responsible Minerals Assurance Process

(RMAP). Once a year in June, we update our

list of smelters using the CMRT and/or the

EMRT information provided by our Tier 1

suppliers.

The smelters identified through this process

are included in the Signify smelter list

published in our Signify Conflict Minerals

Declaration. We increased the number of

conformant smelters to 268 in 2023. And we

successfully cooperated with 5 Tier 1

suppliers to become conflict free.

Unfortunately, we observed a reduced

interest in support for the RMI assessment

program: 11 smelters rejected participation in

the program, 27 smelters rejected re-

assessment and 6 smelters did not close

their corrective action plan. RMI had to

suspend assessments in Russia due to the

war. More details can be found on our

website in the responsible minerals section.

Cobalt is present in our battery supply chain

only for emergency lighting and remote

controls. To enhance transparency in the

cobalt supply chain, in 2018 we co-founded

the Fair Cobalt Alliance (FCA) with Fairphone,

Huayou and Impact Facility.

This multi-stakeholder action platform offers

actors across the cobalt supply chain a pre-

competitive environment for collaboration to

help strengthen and professionalize DRC’s

artisanal cobalt mining sector and contribute

to local economic development at large. For

more on the FCA program: https://

www.faircobaltalliance.org/.

4.3.4Safety at work

Health & Safety performance

The health and safety of our employees is a

top priority. We commit to provide a safe

working environment for our employees and

we contribute to the achievement of SDG 8:

Decent work and economic growth,

The total recordable cases (TRC) rate is the

central indicator through which we measure

our overall safety performance. Targets for

this indicator are set and managed at a

company-wide level, and for the individual

divisions, manufacturing sites and distribution

centers.

As part of our Brighter Lives, Better World

2025 sustainability program, we continue to

commit to a safe and healthy workplace with

a TRC target of 0.30 by the end of 2025, and

the ambition for each single site to reach it.

In 2023, we focused on increasing

Environmental Health and Safety (EHS)

capabilities at a site level by launching a

dedicated qualifications campaign with

NEBOSH International General Certificate in

Occupational Health and Safety (IGC)

courses and examinations for site EHS

managers. We continued digitalization of the

EHS reporting process that will allow deeper

and more effective analysis of workplace

hazards and related risks. In our operations,

we prioritized a standardization effort in five

domains: ergonomic safety, personal

protective equipment, equipment safety,

mobile equipment, and EHS resources.

At a corporate level, we strengthened the

management of high-risk activities by

deploying 25 global standards that describe

the minimum Signify requirements when

confronted with such risks. Our annual Safety

Week campaign was dedicated to the topic of

“Health and Well-being”. As part of this

campaign, we held a global competition for

“Health & Well-being Champions”. This

campaign was very successful with over 200

submissions from our sites across the globe.

In 2023, we continued our drive to improve

equipment safety, warehousing safety, and

behavioral safety through our cross-site

Safety Alerts process. Our injury prevention

framework has been further strengthened in

the operational Lean framework, the

Manufacturing Standards platform and the

Signify Quality System.

On our journey to a zero-injury workplace,

we faced some challenges in controlling

residual risk and maintaining an injury

prevention mindset. To counter this

challenge, we intend to re-design our

behavior observation process in 2024, to

reinforce our capability to identify and

eliminate these residual risks. Going forward,

we will continue the development of global

and local EHS competencies and the

strengthening of site adherence to our

minimum set of global EHS requirements. To

close our continuous improvement program,

we will launch our site EHS maturity

assessment process in 2024. This will not

only provide a standardized and effective

measure to identify improvement

opportunities at individual site level but will

also enable the exchange of best practices

across our manufacturing sites.

We recorded 49 TRC cases in 2023 (2022:

47) and had no fatality incidents. The TRC

rate increased to 0.19 per 100 FTEs,

compared to 0.16 in 2022. In 2023, 62% of

our reported industrial sites had no

recordable injuries. There were 18 industrial

sites that have had no recordable injuries

over the last 3 years, while 27 sites had

achieved more than 500 injury-free days.

Management system

We have reinforced our program to ensure all

Signify manufacturing sites are certified

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Signify Annual Report 2023

<≡>


Recordable cases
	2021	2022	2023
Total recordable case rate	0.17	0.16	0.19
Severe injuries	18	7	14
Severity rate	0.05	0.02	0.05
Lost workday cases rate	0.12	0.09	0.12
Fatalities	0	0	0

locally or via the Signify multi-site ISO 14001

and 45001 certifications.

At the end of 2023, 87% of our reporting

manufacturing sites were ISO 14001 certified

and 83% were ISO 45001 certified. The

remaining manufacturing sites have

procedures in place to foster compliance

with local regulations and Signify policies.

4.3.5 Business ethics

Signify's Integrity code

Our Integrity code serves as our code of

conduct. This code embodies our

commitment to always act with integrity, both

in our internal and external interactions. The

code sets the standard for business conduct

of our employees and for the company itself

and also gives more information on how to

speak up or raise concerns. Translations of

our Integrity code are available in 26

languages. For a description of Integrity code

processes and policies, refer to chapter 13,

Risk factors and risk management, section

13.1, Establish a strong risk management

environment.

In 2023, we reviewed the Integrity code and

made some minor changes. While the core

principles remain the same, we have made

some updates to reflect changes in the

organization and the outside world as well as

progress made against our priorities. The

revised Integrity code was published and

brought to the attention of employees in Q3

2023.

Training and engagement of employees

We dedicate part of the training of our

employees specifically on compliance topics.

At the end of 2023, the completion rate of

our e-learnings was 93% of the targeted

employees. Our current program covers

antitrust, anti-corruption and anti-money

laundering, privacy and data protection,

export controls and sanctions, security,

speaking up and business integrity.

Compliance risk assessments

In 2023, we performed our annual risk

assessment for the legal compliance

domains. In that assessment we analyzed the

risks related to a number of topics, such as

bribery and corruption, and used the

outcome as an input for the planned

compliance activities for the coming year.

In 2023, 274 Integrity code concerns were

captured via the Signify Ethics line and

through our network of compliance officers,

a 12% increase compared to 2022. The

number of concerns raised is substantially

higher than in the previous year. Details per

category are shown in the table below.

Most commonly reported concerns

Human resources

The most reported concerns were related to

human resources, representing 54% of the

total cases reported (53% in 2022). This

category, includes concerns that, for

example, related to equal and fair treatment,

harassment, or other human resources

related topics.

Business integrity

The second most reported type of concern

relates to business integrity. This, for

example, includes concerns relating to

conflicts of interest, fraudulent

disbursements or any other fraudulent

suspected behavior. The number of

complaints reported in this segment

represents 27% of the total cases reported

in 2023 (31% in 2022).

Security

In 2023, the number of reported cases

relating to Security, including IT increased.

This category represents 15% of the total

cases reported in 2023 (12% in 2022) and

relates, for instance, to concerns about

unauthorized use of the company’s assets,

theft, cyber security or other IT-related

concerns.

Substantiated concerns

At the start 2023, 50 cases were open.

During 2023, a total number of 274 cases

were reported. As per December 2023, 62

cases were open. That means that during

2023, we closed 262 cases. Of these 262

cases, 113 were found to be substantiated,

which represents 43% of the closed cases.

Substantiated cases are followed up with

corrective actions. Such corrective actions

can include additional measures, such as

training, strengthening of internal controls,

creation of additional policies or other

measures that aim to promote or enhance a

culture of business compliance.

Corrective actions can also take the form of

disciplinary action. In 2023, Signify applied

disciplinary actions ranging from training and

coaching to verbal and written warnings and

to termination of employment, depending on

the severity of the matter.

Responsible tax policy

Our tax principles are based on the

recognition that tax is an integral element of

our overall corporate social responsibility as

well as commitment to the United Nations

Sustainable Developments Goals.

Responsible Tax is an important topic for

Signify to report on. For us, acting with

integrity means paying the right amount of

tax, in the right place, at the right time. Being

a responsible taxpayer is aligned with our

purpose, business strategy and Integrity

code. We are committed to providing timely,

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>


Breakdown of alleged violations integrity code
	2021	2022	2023
Environment, Health, or Safety	3	3	4
Human Resources	90	130	148
Legal	11	3	6
Business Integrity	56	75	74
Security, including IT	30	30	40
Other	5	3	2
Total	195	244	274

regular, and reliable information on Signify’s

tax position, including the Group effective tax

rate, our total tax contributions, and our main

tax exposures (see chapter 15, Consolidated

financial statements, note 9, Income taxes).

We embrace the Tax Governance Code, as

published by the Confederation of

Netherlands Industry and Employers (VNO-

NCW) in 2022 and provide more information

on our Tax Principles, Tax Strategy, Tax

Organization and Tax Contributions in our Tax

Report: https://www.signify.com/global/our-

company/investors/governance.

Tax governance, control and risk

management

The responsibility for Signify’s Tax Strategy,

Tax Principles and how we manage our tax

risks, ultimately rests at our Board of

Management with the CFO. At least once a

year, the Tax Principles and Tax Strategy as

well as the Tax Risks are discussed with

Signify’s Board of Management and the Audit

Committee of the Supervisory Board. If

needed these principles and strategy are

updated and subsequently approved by our

Board of Management to ensure continuous

alignment with our purpose, business

structure and overall corporate social

responsibility.

Signify’s Tax Principles ensure compliance

with local and international tax laws and

regulations for all our group entities. These

principles govern how Signify operates with

customers, suppliers, contractors, and

employees. We aim to prepare and file all

required tax returns on time, providing

complete, accurate and timely disclosures to

all relevant tax authorities.

Signify has a Tax Control Framework in place,

to monitor and test the execution of critical

tax processes as well as for risk

management. Our Tax Controls are part of

our Business Control Framework and our

internal controls for financial reporting (ICS).

They are monitored and documented by our

Tax Organization and the dedicated ICS team.

Internal auditors regularly review our tax

controls and external auditors review our key

tax positions and our tax processes as part

of the audit of our Annual Report.

Stakeholder engagement

Signify maintains an open dialogue with our

stakeholders and we engage constructively in

national and international dialogue with

governments, business groups and civil

society to support the development of

effective tax systems, legislation and

administration. We regularly participate in

meetings of business groups, to learn from

our stakeholders and to provide our view on

tax developments.

Signify aims to build and maintain a

cooperative and healthy working relationship

with all relevant (tax) authorities. The

transparency in our tax policy is a key factor

in building mutual respect and trust with tax

authorities.

Total tax contribution

Our total tax contributions in the financial

year 2023 amounted to EUR 1,024 million.

This amount consists of both taxes borne and

taxes collected by Signify. The taxes borne

include the income tax paid, customs duties

and the employer part of the payroll taxes.

For more information on the definitions used

in this chapter, refer to chapter 20,

Definitions and abbreviations.


2023 Signify corporate income tax paid per main countries
Countries	EUR million
The Netherlands	21
China	12
India	10
Poland	6
Indonesia	5
Canada	4
France	3
Spain	2
United States of America	1
Other	17
Total	81

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

The amounts of corporate income tax paid

reflect the geographic spread of Signify’s

activities. The most significant amounts are

paid and accrued in the Netherlands, China

and India where Signify has substantial

business operations. In the United States we

used losses from prior years, resulting in

lower income tax paid.

4.3.6 Cybersecurity

Digitalization is one of our strategic frontiers

and our connected lighting offer is

expanding. We are focusing on improving our

digital front and back-ends and increasing

our data analytics capabilities to better serve

our customers. In this context, it has been

more important than ever to ensure that

access to network, IT systems and data is

assured at all times.

Signify has a dedicated Corporate Security

department which focuses on information,

product and operational security. Signify

follows the three lines of defense model. The

first line of defense is performed by IT,

Business units and Security Operations. The

second by the Corporate Security

department and the third by our internal

independent Audit team. The responsibility of

the Corporate Security Office, as a second

line of defense, is assurance and control

function that oversees security risk, sets the

security controls framework and monitors

the deployment of the controls within the

first-line of defense.

Signify’s Cybersecurity team provides threat

intelligence, guidance and assurance

services, and manufacturing cybersecurity

services. Our Threat Intelligence team has a

defined process for gathering, analyzing, and

distributing actionable intelligence on

potential threats to Signify, and proactively

alerts stakeholders. Our Guidance team is

responsible for providing security guidance

through the development of policies,

standards and process guidelines, and

establishing an enterprise security

architecture to keep our digital identities,

data and environment secure. Our Assurance

team performs independent assessments and

penetration testing activities to validate

implementation of standards and assess

residual risks and gaps. Our Operational

Technology Cybersecurity team provides

guidance and assurance services to our

manufacturing and distribution operations.

Our security operations center is responsible

for the detection, mitigation and resolution

of cybersecurity-related incidents, enabling

action to be taken in a timely manner.

Technical security measures are implemented

to support the “defense in depth” principle,

starting from the collection of information to

infrastructure controls.

Our cybersecurity requirements also apply to

our external partners and suppliers as part of

the security schedules and contracts signed

to emphasize the adherence of security

standards expected from them. Our

cybersecurity processes and measures are

based on ISO 27001 (Information security)

and ISA/IEC 62443 (Product Security)

certifications, as well as other related best

practices (such as the National Institute of

Standards and Technology (NIST), and the

Center of Internet Security (CIS)).

Our overall approach to cybersecurity and

prioritization of activities is risk-based, and

we recognize identity as the perimeter to

maintaining the required security (viz, Zero-

trust mindset). In addition to the guidance

provided as part of the security standards

and guidelines, we have set up a formal

process that extends the reach of our

cybersecurity services directly to business

and IT stakeholders and is available to clarify

their questions and doubts about

cybersecurity-related matters. Additionally,

all our employees are expected to complete

a mandatory e-learning training on security

every year, which includes a quiz to ascertain

their understanding of the topics. Webinars

are organized on topics of emerging

cybersecurity threats and best practices to

teach employees to avoid the risks of falling

prey to them. Focused trainings are also

conducted as required. Phishing simulations

are conducted monthly which include new

hires. Dedicated learning pathways are

created for those who fail the simulation

tests.

Early 2023, we completed an attack

simulation and penetration testing in order to

identify security vulnerabilities and

recommendation. The findings resulted in

updates to Risk mitigation efforts in several

areas including incident management. We also

completed an external, independent

evaluation of our Cybersecurity priorities,

roadmap and the status execution to get an

objective assessment of our current state of

Cybersecurity. With an increased focus on

continual assurance, the Cybersecurity team

implemented and operationalized ‘External

Attack Surface Management (EASM)’

platform to enable continuous vulnerability

management and monitoring of externally

exposed Signify assets. We also rolled out

and operationalized the ‘SaaS Security

Posture Management (SSPM)’ solution,

targeting multiple SaaS-based critical

applications through which we can scan

these environments for misconfigurations on

a constant basis for early detection and

mitigation of risks. Manual risk assessments

were also conducted on several critical

assets to identify and report risks and their

mitigations to the respective stakeholders.

We conducted Cyber (tabletop) drills at

eleven of our manufacturing sites. We are

constantly trying to evolve and improve our

cybersecurity guidance by regularly updating

our existing standards and publishing new

ones where we did not have one before.

Vendor assurance of one of our major

infrastructure partners was completed.

Challenges of emerging trends in Artificial

Intelligence (AI) and related cyber-attacks

are being addressed through knowledge-

sharing sessions. Revised security awareness

of topics related to Ransomware and new AI-

based phishing trends have been rolled out.

Challenges in available resource bandwidth

and budget continue to impact how much and

how fast the desired changes can be

addressed by the Cybersecurity team.

All cybersecurity activities are reported to

and monitored by the Security Board, chaired

by our Chief Executive Officer, Eric Rondolat.

Other members of the Security Board are the

Chief Financial Officer, Chief Security Officer,

and the Heads of Internal Audit, Legal and

Human Resources. The Board of Management

and the Supervisory Board are informed

regularly.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

4.3.7 Digitalization

Digitalization is a key pillar of Signify’s 5

Frontiers strategy, which equips us to seize

the opportunities and tackle the challenges

of the major global shifts that affect our

business. With a focus on becoming

customer-centric, digitalized, and

sustainable, our strategic initiative, DigITal

Foundation, is enhancing our IT capabilities to

enable Signify's digital transformation.

Signify's DigITal Foundation

This initiative focuses on improving end-user

experience, driving operational excellence,

increasing automation, improving cost

performance, and contributing to

sustainability targets. To achieve these

objectives, we are investing in upgrading our

core IT infrastructure, implementing new

tools and technologies, and developing the

skills and capabilities of our IT workforce. We

are also embracing agile methodologies to

accelerate the delivery of new digital

solutions and services to our customers.

By strengthening our core IT capabilities, we

are better positioned to drive innovation,

improve efficiency, and enhance the overall

customer experience. Moreover, the initiative

aligns with our commitment to sustainability,

by reducing our environmental footprint

through increased automation and optimized

operations.

Signify's DigITal Foundation is a key driver for

our ongoing success in the digital era and our

DigITal ambition is to elevate Signify's

standing in the lighting industry by cultivating

and sustaining a competitive edge through

the delivery of an exceptional digital

experience in the following areas:

Digitalizing customer interfaces

We are committed to providing the best-in-

class experience for our B2B partners,

making our customer interface the preferred

one-stop-shop for OEMs, wholesalers,

agents, specifiers, and installers. We aim to

achieve this by offering an easy-to-use and

intuitive digital platform that simplifies the

purchasing process. For B2C customers, we

are focused on creating a seamless and

enjoyable digital experience across all

channels, including mobile and web.

Digitalizing offers

We are dedicated to offering innovative

connected products and services in the

market and utilizing data and lighting beyond

illumination. We have introduced in the past

years brands like Interact, Philips Hue and

WiZ, which offer smart lighting solutions that

can be controlled through mobile devices.

Moreover, we are exploring new business

models by collaborating with partners in

various industries, such as horticulture and

entertainment.

Digitalizing processes and operations

We are committed to delighting customers

and partners with delivery reliability and

product availability by implementing

touchless, automated, and analytics-driven

internal processes. In addition, we are

investing in enablers such as digital

capabilities for our teams, data management

and enablement, systems architecture and

fostering an agile operating model to achieve

this objective.

Digital initiatives in these areas are enabling

our business to enhance customer

experience, increase online sales, and digitize

and automate various business processes,

which has resulted in increased efficiency,

reduced costs, and improved profitability.

Digital sustainability

Our commitment to sustainability is

unwavering, and we are seeking innovative

ways to minimize our environmental impact.

Digital technologies support our business in

measuring and tracking sustainability

progress, reducing emissions, resource

optimization and drive a more circular

economy. Enhanced connectivity and the

Internet of Things (IoT) enable innovations in

our products that reduce product use

emissions and support sustainable business

operations.

In 2023, we implemented a digital Life Cycle

Assessment (LCA) tool that enables the

quantification of product environmental

impacts throughout the full life cycle.

Through digitalization, we can generate

Environmental Product Declarations (EPDs) at

a large scale while considering standard and

location specific requirements when

required. This allows us to develop strategies

to reduce our environmental impact, identify

opportunities for sustainable innovation, and

communicate our sustainability performance

to stakeholders.

4.3.8 Social impact of light

Brighter lives revenues

We are driving change to create brighter

futures. With our lighting innovations, we

support the health and well-being of people,

sustainable food production for a growing

global population, and a safer and more

secure society. We commit to double our

Brighter lives revenues to 32% by the end of

2025, which means our revenues coming

from lighting innovations that increase food

availability, safety and security, or health and

well-being. At the end of 2023, our Brighter

lives revenues were 31% (2022: 27%).

Through our actions, we directly contribute

to the achievement of SDG 3: Good health

and well-being and SDG 11: Sustainable cities

and communities.

Health & well-being

Light is essential for life, and equally

important as food, water and air. Light allows

us to see and to experience the world around

us. It affects us visually, biologically and

emotionally, supporting comfort, well-being

and performance. Scientific evidence shows

that light has a powerful impact on our

emotions and important physiological and

biological processes in our body. Circadian

lighting in an office environment makes an

office more liveable and can enhance mood,

boost concentration and productivity.

In 2023, we continued to focus on the quality

of light in our LED portfolio meeting the

EyeComfort criteria which include factors

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

that can impact the comfort of your eyes

(such as flicker, stroboscopic or glare).

EyeComfort products have made a significant

contribution to our Brighter lives revenues

and in 2023 we expanded EyeComfort in our

LED lamps, Hue and WiZ portfolios.

Signify also advanced its professional

melanopic lighting, a part of biological light

which plays a major role in synchronizing the

internal body clock in line with non-visual

effects of light. When melanopic lighting is

properly designed in buildings, it brings the

benefits of natural daylight indoors,

enhancing visual comfort, well-being and

workplace performance.

We also focused on office and healthcare

applications, contributing to employees',

patients' and staff's health and well-being.

NatureConnect has been designed to mimic

natural patterns of daylight to reconnect us

to the outside world. The mimicking of the

sky and daylight and receiving enough light

especially becomes relevant when a room

does not have daylight access. Recent

studies have shown that NatureConnect has

a positive impact on the alertness and vitality

of office workers.

"I really feel like I'm outside" is the most

common reaction from customers. There are

additional melanopic benefits from the blue

enriched light which can have a positive

effect on subjective alertness, vitality and

performance.

Food availability

To meet the needs of a growing population,

we need to consume resources more

efficiently. According to the UN Food and

Agriculture Organization (FAO) global food

demand will rise by 70% by 2050, while 50%

of arable land globally is already farmed. Many

of the vegetables we consume are not

produced locally and are transported over

long distances. Approximately, 17% of the

world’s available food is either spoiled or

thrown away before it ever reaches a plate.

Overall, the world's current food production

and distribution systems contribute to

between 20% and 30% of global greenhouse

gas emissions. To address these challenges,

significant changes to our food systems are

needed to ensure enough safe, healthy,

accessible and affordable food for all in the

future.

Horticulture LED technologies can provide an

answer by realizing extremely efficient

farming with high yields, efficient use of

space and enabling local production, at least

a 90% reduction in water use, and avoiding

pollution from pesticides. With the right light

spectrum and growth recipe, our lighting

innovations give better control over climate

and crops and help to achieve high quality

and yield at the right time.

Safety & security

For the last decade, lighting has gone

through a significant technological

transformation, opening new possibilities in

using light. With increasing urbanization,

street crime and traffic accidents are a real

challenge. Interact-connected LED systems

and management software improve city

services and can help to reduce street crime

and night-time traffic accidents, while

reducing energy costs. Our connected LED

systems also have applications for outdoor

use in residences, enhancing feeling of safety

and security.

We expanded our home connected systems

by integrating smart lighting and smart home

security, incorporating new Philips Hue

Secure cameras, sensors, and app features

designed to enhance the security of your

home. The monitoring is in real time and

motion notifications are instantly received;

actions like triggering light and sound alarms

can be taken via the security center in the

Philips Hue app.

Today, more than 50 billion devices are

connected to the Internet, most of them

wirelessly. This is placing wireless

communication under increasing pressure,

and the radio spectrum is becoming

congested. In addition, there are areas

where radio frequency wireless

communication is not permitted or the best

fit. Trulifi by Signify offers a range of LiFi

systems, providing a two-way wireless

communication that is reliable, secure, and

fast. Next to this, Trulifi is immune to any

electromagnetic interference from, for

example, industrial processes.

Access to light

As a company that is committed to giving

back to society, we use our expertise and

knowledge of lighting to make a positive

social impact. We do this by supporting the

Signify Foundation, a standalone non-profit

organization.

With the ambition of lighting 10 million lives by

the end of 2025, the Foundation is making

strides through its projects within three

focus areas: Lighting Lives, Humanitarian

Lighting, and Lighting Entrepreneurs. 2023

represents a story of further progress for

the Foundation, lighting 9.4 million lives. This

figure surpasses the year’s target: 8.7 million

lives lit from a 2017 baseline.

Lighting lives

The Lighting lives program aims to create

long-lasting positive impact on people’s lives.

Lighting interventions designed in

collaboration with local groups and aid

agencies have made a positive impact on

communities, providing better access to

health care, essential services, sports, and

productivity.

The Lighting Lives program focuses on rural

community facilities such as schools and

healthcare centers.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

Schools

In schools, well-lit classrooms boost

productivity and cultivate an atmosphere of

creativity and joy, even after the sun has

gone down. Similarly, well-lit outdoor areas

are crucial for the safety and security of both

students and staff and create opportunities

for sports and socialization in the evenings.

Yet, the power of light goes beyond

illuminating spaces.

In 2023, we donated 3,000 portable Solar

Lamps to adolescent schoolgirls in rural

Mozambique, in collaboration with Pathfinder

International. These regions have been

deeply affected by conflict and civil unrest,

resulting in limited access to energy and

heightened safety concerns. Many of these

young girls are currently residing in

displacement camps, where the lamps

provide a reliable source of light in otherwise

dark and uncertain environments after

school. The Solar Lamps also enable the girls

to continue their educational pursuits after

the sun has set, ensuring that they can

complete their homework and safely enjoy

their leisure time.

Healthcare centers

In remote and rural healthcare centers

without lighting, life-saving interventions

cannot take place after dark, leaving patients

untreated or forcing them to travel long

distances to overcrowded urban healthcare

facilities. Access to light empowers workers

to operate safely and effectively at night,

providing better care to their patients. In

2023, the Foundation expanded its program

Lighting Health Centers to an additional 100

remote health centers located in the Kisumu

region of Northeast Kenya.

Humanitarian Lighting

Throughout the year, the Signify Foundation

continued to address pressing humanitarian

needs caused by disasters and conflicts. The

Foundation executed projects where lighting

played an important role in disaster

response, either by providing immediate

relief or contributing to building and

rebuilding efforts.

With a multitude of crises compounding, the

Signify Foundation prioritized disaster

support based on the scale of the disaster,

the feasibility of reaching affected

populations, and the potential for lighting to

provide relief. In immediate responses,

lighting can be installed in shelters and

provides support for aid workers during

search efforts or relocation. In rebuilding,

recovery efforts, and medium-term

development, lighting plays an important role

in building or restoring infrastructure and

peace for the affected communities.

In 2023, the Signify Foundation partnered

with GlobalMedic to respond to the

devastating earthquake in Turkey and Syria,

which claimed over 50,000 lives and

destroyed over 84,000 buildings. 12,700

emergency kits with solar lights were

distributed to families and medical centers,

thanks to the Foundation's partnerships and

the generous contributions of Signify

employees.

In refugee settlements, lights enhance

safety, reduce gender-based violence, crime,

and create livelihood opportunities for

refugees. This year, to mitigate the impact of

Gender Based Violence for internally

displaced people, the Signify Foundation

provided 10,000 Solar Lights to reproductive

health and protection services in Syria

through a partnership with the UN Population

Fund.

Lighting Entrepreneurs

The Lighting Entrepreneurs pillar is

committed to building capacity and

competency to ensure the long-term impact

of lighting lives. Young adults are given

vocational training to develop skills needed

to operate and maintain lighting installations

provided to their communities. One such

project in partnership with BRAC took place

in the Philippines. The project provided

training for 50 unemployed young women and

girls aged 16-30 from marginalized

communities in the lowest income bracket.

The project trained them as electricians and

entrepreneurs, and focused on developing

soft skills, business skills, and technical

training. This approach empowered the

women trainees to be active in a sector that

is traditionally dominated by men. In the

coming year, these proud trainees will be

linked to job opportunities and start a journey

of self-dependence.

Despite the Foundation’s successful year

ending ahead of track for the approaching

2025 target of lighting 10 million lives, much

work remains to be done. 1 in 10 people still

live without access to electricity globally. In

the face of increasing climate-related

disasters and conflicts, this challenge is

further exacerbated. 2024 will be the year

that the Foundation expects to achieve our

first milestone of lighting 10 million lives, and a

year to reflect on what is next. By increasing

our ambition level, forging broader

partnerships for collaboration and funding

opportunities, the Foundation aims to make

an even greater impact in the years to come.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

UACU5464043 GlobalMedic Distribution - Image cropped.jpg

UACU5464043 GlobalMedic Distribution - Image cropped new.jpg

$IMG-20230920-WA0101_updated.jpg$

4.4 Better World

Maurice Loosschilder

Head of Sustainability, Signify

"Throughout the hottest year in

recorded history, extreme weather and

climate events posed increasing socio-

economic challenges, impacting the

most vulnerable communities worldwide.

The year was also marked by action,

including the adoption of key global

policy commitments such as the Global

Biodiversity Framework in 2022 and the

COP 28 agreement to transition away

from fossil fuel. These commitments

reflect a growing recognition of the

urgent need to safeguard our planet’s

boundaries, address global warming and

accelerate the transition to a net-zero

world. The global focus on energy

consumption and energy efficiency

solutions has intensified, with renewable

energy sources taking center stage. As

we navigate this era of transformation,

we know our collective actions today will

shape the landscape of tomorrow.

Through our ‘Brighter Lives, Better

World 2025’ sustainability program, we

aim to double our positive impact on the

environment and society. We are on

track to reduce our emissions across

our full value chain at double the pace

required by the Paris agreement's 1.5°C

scenario and have reduced our carbon

emissions by 19% YoY. We continue to

rely on 100% renewable electricity and in

2023 invested in a new virtual Power

Purchase Agreement further supporting

the green energy transition. And we are

proud that we have surpassed our 2025

circular revenues target.

As the global leader in lighting and a

pioneer in sustainable lighting solutions,

our focus remains on innovating in

energy efficiency, connected systems,

and to further integrate circularity

principles. We are working with peers

and partners to steer the lighting sector

towards even greater transformation,

and ensuring we contribute positively to

the transition toward a sustainable

economy"

4.4.1 Climate action

Climate leadership

At Signify, we acknowledge the findings of the

Intergovernmental Panel on Climate Change

(IPCC) and believe we have an important role

to play in the transformation towards a low-

carbon economy, with deep decarbonization

across our value chain. In 2018, Signify was

one of the first companies committing to

verified Science-Based Targets in line with

the Paris Agreement's 1.5°C pathway, to cut

GHG emissions in our operations as well as in

our value chain. We commit to reduce 70% of

absolute scope 1 and 2 GHG emissions and

30% of absolute scope 3 GHG emissions from

use of sold products by 2030 (baseline 2015).

At the end of 2023, we achieved:

• 58% reduction of absolute scopes 1 and 2

GHG emissions (baseline 2015).

• 61% reduction of absolute scope 3 GHG

emissions from use of sold products

(baseline 2015).

Signify was again recognized in CDP's Climate

A list for our leadership in environmental

performance and we were included in the

Dow Jones Sustainability World and Europe

Index for the seventh consecutive year and

sixth year, respectively, for our 2022

performance. We continued to partner with

the Climate Group’s EV100 Initiative to

operate a lease fleet of hybrid and fully

electric vehicles (EVs) by 2030. We remain

engaged in the AndersReizen Dutch Business

Sustainable Mobility Pledge to further

improve the sustainability performance of our

business travel.

Through our partnership with the RE100

Initiative, we shifted to 100% renewable

electricity use since 2020. As an active

member of Clean Cargo and the WBCSD

Transforming Heavy Transport project, we

engage in cross-industry collaboration and

strive to lower the carbon footprint of our

freight transport. We renewed our

partnership with Maersk, one of our key

partners in ocean freight, and supported

them in launching vessels that operate on

zero-carbon fuels. These partnerships will

help us to scale zero carbon solutions in our

supply chain and logistics operations. Our

continuous pledge to the World Green

Building Council’s Net Zero Carbon Buildings

commitment facilitates improvement in

energy efficiency as well as reduction in

electricity consumption in our non-industrial

buildings.

In 2023, we continued to evaluate our

climate-related risks and opportunities

through our internal cross-department task

force aligned with the Task Force on Climate-

related Financial Disclosures (TCFD)

recommendations and the Corporate

Sustainability Reporting Directive (CSRD). As a

result, we refined our climate risk mitigation

and adaptation strategy. For more

information, refer to our TCFD reporting in

the Sustainability Supplement to our Annual

Report and to the CSRD section 17.

All our environmental policies and our

management framework are based on the

international ISO 14001 standard. In 2023,

87% of our manufacturing sites were ISO

14001 certified.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

Double the pace of the Paris

Agreement

In our Brighter Lives, Better World 2025

sustainability program, we commit to doubling

the pace of the Paris Agreement's 1.5°C

scenario to decarbonize our entire value

chain. This means we aim to achieve the

emission reduction goals laid out in the Paris

Agreement's 1.5°C pathway for 2031 by 2025,

six years early. By the end of 2025, we will

reduce our scope 1, 2, and 3 emissions by

40% compared to our 2019 baseline year.

We track our progress, and we report our full

Scope 1, 2, and 3 GHG emissions, shown in

table to right. We reduced 53% GHG

emissions across our full value chain at the

end of 2023, 22% year-on-year. This

reduction is mainly attributed to the

increased share of sales of energy-efficient

LED and connected LED lighting which drives

energy saving and emissions reduction for our

customers during product use. The key

contributors are our energy-efficient LED

and connected LED lighting, such as the Ultra

Energy Efficient A class product families

99% of our value-chain emissions lies in the

product use phase. By offering energy-

efficient products, we help our customers

reduce millions of tonnes of CO2e.

At the end of 2023, the total avoided

emissions achieved through our LED

technology sales (compared to Conventional

technology) was 240 million tonnes CO2e.

We are on track to deliver against our

ambitious goal of doubling the pace of the

Paris Agreement.

Decarbonizing our operations

Signify is committed to climate action, this

starts by taking accountability for our carbon

footprint. We focus on decarbonizing our own

operations and enabling our entire value

chain and society to accelerate climate

action. Signify has reduced 77% of its

absolute operational carbon footprint since

2010, and continues to do so, through

implementing initiatives in our factories,

offices, logistics, and business travel. Our

operational carbon footprint calculation

includes scope 1, scope 2, and scope 3:

business travel and logistics.

In 2023, total gross GHG emissions in our own

operations were 249 kilotonnes (2022: 252),

a 1% decrease year-on-year and a 31%

reduction compared to 2019. Our operational

emission intensity in tonnes of CO2e per

million-euro sales was 37 in 2023 (2022: 34).

As a manufacturing company, we have

unavoidable residual emissions, such as

emissions from the use of natural gas in

industrial processes. To fulfill our carbon

neutral commitment, we invest in certified

carbon credit projects, while supporting GHG

emissions mitigation beyond our own value

chain. Financing carbon credits is not part of

our emission reduction strategy, rather we

invest in high quality carbon credit projects to

balance out unavoidable residual emissions

that are not feasible to eliminate. By doing so,

we also enable actors in and out of our value

chain to act and cut their emissions.

In 2023, we invested 250 kilotonnes of CO2e

via carbon credits (2022: 252), resulting in a

net operational carbon footprint of 0 (2022:

0). All used carbon credits have been

certified by the Verra, Verra Climate,

Community, and Biodiversity (CCB) Standards

and the Clean Development Mechanism

(CDM). Verra's diligence and transparency are

underpinned by its fully publicly available

Registry System.

We are Signify

Creating value

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Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>


Signify carbon footprint in kilotonnes-CO2e
	2021	2022	2023
Scope 1	149	142	148
Scope 2 (market based)	10	13	0
Scope 2 (location based)	186	140	129
Scope 3 (indirect emission categories)
Category 1: Purchased goods and services	n.a.	696	683
Category 2: Capital goods	n.a.	5	15
Category 3: Fuel- and Energy-Related Activities. Not Included in Scope 1 or Scope 2	n.a.	29	33
Category 4: Upstream transportation and distribution, of which:	124	87	87
• Air transport	59	21	20
• Road transport	31	30	27
• Ocean transport	34	36	40
Category 5: Waste generated in operations	n.a.	8	9
Category 6: Business travel	7	10	13
Category 7: Employee commuting	n.a.	39	35
Category 8: Upstream leased assets	n.a.	n.a.	n.a.
Category 9: Downstream transportation and distribution	n.a.	n.a.	n.a.
Category 11: Use of sold products	n.a.	246,762	191,779
Category 12: End of Life treatment and sold products	n.a.	18	18
Scope 3 total	n.a.	247,653	192,673
Scope 1+2 total	159	155	148
Operational carbon footprint	290	252	249
Scope 1+2+3 total	n.a.	247,808	192,821


			Logistics

			Non-industrial operations

			Business travel

			Manufacturing

Manufacturing

In 2023, manufacturing accounted for 48% of

our operational carbon footprint and

amounted to 120 kilotonnes. This is a

decrease of 14% compared to 2022. We

continued to lead operational changes and

efficiency improvements, which resulted in

less energy intensive activities and less

energy consumption.

Non-industrial operations

GHG emissions from non-industrial operations

(offices, warehouses) represented 12% of

our total operational carbon footprint. Our

emissions from non-industrial operations

increased by 14 kilotonnes compared to 2022

due to increased energy consumption in

offices.

Logistics

In 2023, 35% of our total GHG emissions in

our operations were attributed to logistics,

and our total emissions from logistics

remained stable compared to 2022. We

continue to focus on improving sustainable

logistics operations, such as reducing

reliance on emission-intensive mode of

transport - air transport.

Business travel

Business travel accounted for 5% of our

operational carbon footprint in 2023. Our

GHG emissions from business travel increased

30% in 2023, mainly driven by an increase in

business air travel.

Energy use in operations

Signify’s total energy usage in 2023 amounted

to 3,237 terajoules (899,285 MWh). Our

operational energy intensity in terajoules per

million-euro sales was 0.48 in 2023 (132.6

MWh/million-euro sales). This is 6% more

efficient than 2022 (0.51) and is due to

operational optimization, improved energy

efficiency, less reliance on energy-intensive

activities in our factories and reduced heating

and lighting requirements.

Electricity

We continue to procure 100% of our

electricity from renewable sources. This

achievement directly contributes to SDG 7:

Clean and affordable energy. All electricity

consumed by our operations worldwide was

sourced from renewable sources or matched

with Energy Attribute Certificates (EACs).

Approximately 9% of our renewable

electricity was contracted via our energy

providers, 54% was sourced through the

procurement of renewable energy

certificates, and 37% came from our

participation in Power Purchase Agreements

(PPA). In 2023, our most recent PPA in Finland

went live and complements our other two

PPAs in Poland and the US. Our virtual PPAs

contribute to the transition to more

sustainable electricity grids and reinforce our

long-term commitment to using renewable

electricity.

Enabling carbon reduction for our

customers

Phasing out conventional lighting and

switching to energy-efficient LEDs,

introducing solar lighting, and further

enhancing energy saving with smart

connected lighting has significant

environmental benefits. As mentioned

previously, the majority of our value-chain

emissions lies in the product use phase.

Helping our customers to reduce emissions

through energy efficiency is a vital aspect of

our innovation process.

Signify is committed to reduce GHG emissions

by improving the energy efficiency of its

products, systems, and services. The

progress in our portfolio to support climate

change mitigation has been aligned with the

EU Taxonomy regulation and is reflected in

the Taxonomy specific section of this report.

The benefits include having comparable and

harmonized measures throughout the

industry.

The past year we continued to work on

developing ultra energy-efficient products

and have launched an extended ultra energy

efficient portfolio of professional indoor,

outdoor, and residential lamps as well as the

first luminaires in this category.

By delivering cleaner and more energy-

efficient solutions, we are proud to

contribute to the achievement of SDG 7:

Affordable and clean energy.



	Philips Ultra Efficient LED luminaire
	Signify’s portfolio of Ultra Efficient LED solutions expanded in 2023, with the introduction of UE indoor luminaires. Designed to allow you to immediately save up to 20% energy compared to the current best offering within the same range. Ultra Efficient luminaires also meet Signify strict Lighting for Circularity criteria. The products’ high level of energy efficiency and long lifetime dramatically reduce both waste and carbon emissions.

We are Signify

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Corporate performance

Governance

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Signify Annual Report 2023

<≡>

Enabling carbon reduction at our

suppliers

In 2023, we continued to engage with our

suppliers to reduce their carbon footprint.

Our approach is to proactively initiate,

develop and support GHG emission-reduction

activities at suppliers through our partnership

with the CDP Supply Chain program. In 2023,

we invited 491 of our strategic suppliers to

the program, of which 61% submitted their

CDP questionnaire.

In 2023, 183 suppliers reported emission

reduction activities (2022: 263). 134 suppliers

reported that their emissions decreased

compared to the previous reporting year,

26% of suppliers reported renewable energy

usage, and 28% suppliers engaged their own

suppliers to reduce emissions.

We increased the number of suppliers

committed to the Science-Based Targets

Initiative to 110 (2022: 103) and we increased

the number of suppliers that have a RE100

program from 14 in 2022 to 16 in 2023. We

are developing a more accurate method to

calculate scope 3 GHG emission in the supply

base. At the end of 2023, we estimated that

29 million metric tons carbon of CO2e were

saved in our supply base (2022: 24 million

metric tons).

Setting Science-Based

Targets in China

Signify was one of the first CDP Supply

Chain members to start engaging

Chinese suppliers on the importance to

set Science-Based Targets (SBTs) to

reduce GHG emissions. We nominated

four of our high-impact China-based

suppliers, of which two have now formally

signed the Science-Based Targets

Initiative (SBTi) commitment letter.

In a dedicated webinar to our suppliers,

we explained how science-based target

setting plays an important role in

suppliers' evaluation. Once suppliers have

formally committed to the SBTi, an

emission calculation tool was provided to

them to help the establishment of

accurate emission rates.

Our collaboration with CDP was key to

support our suppliers and monitor their

progress and progress reports were

shared at management level, to initiate

actions where needed.

4.4.2 Circular economy

Accelerating the transition to a

circular economy

At Signify, we identified five strategic areas

where we will grow our business while

furthering our contribution to a better and

more sustainable world. These growth areas

are defined based on the major trends facing

society, and on the United Nations

Sustainable Development Goals. One of these

growth areas is Circular economy.

With circular lighting solutions we can

preserve value and avoid waste. That is why,

as part of our Brighter Lives, Better World

2025 sustainability program, we have the

ambition to double our revenues from circular

products, systems, and services to 32% by

the end of 2025.

Additionally, we are committed to more

sustainable packaging, removing fossil-fuel

based plastics from all our consumer

packaging in 2023, and to sending zero waste

to landfill.

Our actions cover the entire life cycle of a

product (from production, use and re-use to

waste management) and directly contribute

to the achievement of SDG 12: Responsible

consumption and production.

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>


CDP reporters per region and topics reported
	Greater China		Rest of the world		Europe		Americas		Total
	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023
Scope 1	62%	68%	67%	84%	66%	66%	65%	63%	64%	68%
Scope 2	33%	40%	53%	69%	44%	54%	57%	57%	43%	51%
Scope 1 & 2	36%	41%	58%	78%	50%	56%	57%	57%	47%	53%
Have a reduction target	55%	56%	58%	66%	46%	54%	48%	52%	51%	56%
Have on-going reduction activities	54%	56%	62%	75%	63%	68%	52%	53%	57%	61%
Climate change opportunities	70%	76%	67%	72%	73%	79%	73%	70%	71%	75%
Climate change risks	60%	65%	44%	63%	52%	51%	56%	48%	55%	57%
Integrated climate change in risk management	31%	27%	44%	59%	38%	40%	51%	48%	38%	39%
Total amount of reporters	141	111	45	32	103	96	63	60	352	299

Lighting for Circularity portfolio

In our efforts to transition to a circular

economy, we extended our lighting for

circularity portfolio in 2023. Via well-

established sustainable design rules, Signify

continuously lowers the weight of new

product designs, resulting in less material use

and costs for our product portfolio. The

sustainable design rules are also optimized

for circularity, resulting in products that can

be upgraded, serviced, reused, refurbished,

or recycled. For more information about the

performance and benefits of our lighting for

circularity solutions, visit our website.

Our circular innovations cover four

categories: Serviceable luminaires, Circular

components, Intelligent asset management,

and Circular services.

Serviceable luminaires are fixtures that are

upgradable, serviceable, connectable,

energy-efficient, reusable, and recyclable.

In 2023, we introduced the StoreFlow retail

lighting, which enhances customer

experience with a new concept in high-

contrast aisle lighting that has great design

flexibility and product sustainability. The

product is made with bio-circular material

(re-use of a biomass waste stream) for the

housing and all key internal parts are

replaceable and allow for greater product

longevity.

In 2023, StoreFlow won two prestigious

awards for its design from iF Design and Red

Dot.

Other recently introduced luminaires meeting

Signify's Lighting for Circularity criteria

include the StoreSet evo in the retail

segment, the SlimBlend in the office segment

and the GentleSpace gen3 in the industry

segment.

Our 3D printed luminaires are another great

example of a serviceable product; designed in

a modular way and easily upgradable. 3D

printing technology also supports

sustainability by eliminating waste using

recycled and mass balanced bio-circular

materials. Supporting the reduction of CO2

emissions through local and on demand

production.

In 2023, Signify launched the Spring Oasis 3D-

printed pendant lamp, made from recycled

water jugs commonly found in offices and

homes for drinking water.

Circular components are exchangeable and

have recyclable parts, such as drivers,

controls, and LED boards.

Intelligent systems monitor serviceable

luminaires to enable preventive maintenance.

Signify connected systems tell us exactly

when and where to perform maintenance,

cutting down on waste, costs, downtime, and

manpower.

Circular services aim at prolonging lifetimes

and provide customers with services that

combine lighting design, installation and

maintenance in a single contract.

We closely monitor and report the progress

of the circular portfolio contribution, and at

the end of 2023, 33% of our revenues came

from circular products, systems or services

(2022: 29%).

Our efforts also address supply chain

improvements, such as remote serviceability

(connected lighting) and end-of-life services.

By minimizing material waste and reducing the

environmental impact, we create an

ecosystem that extends the life of our

lighting products and provides a better future

for the next generation.

4.4.3 Environmental incidents

In 2023, Signify experienced no significant

environmental incidents.

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Corporate performance

Governance

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Signify Annual Report 2023

<≡>

5 Corporate

performance


Key figures in millions of EUR unless otherwise stated
	2022	2023
Sales	7,514	6,704
Comparable sales growth 1	1.2%	(8.3)%
Gross margin	2,732	2,558
as a % of sales	36.4%	38.2%
Income from operations	718	369
Financial income and expenses	(41)	(102)
Income tax expense	(145)	(53)
Net income	532	215

Adjusted gross margin 1	2,806	2,660
Adjusted indirect costs 1	(2,171)	(2,075)
Adjusted EBITA 1	762	670
as a % of sales	10.1%	10.0%
Restructuring, acquisition and incidental items 1	82	(221)
EBITA 1	844	449

Basic earnings per share in EUR	4.18	1.61
Dividend per share in EUR 2	1.50	1.55

Shareholders’ equity	2,920	2,817
Net debt 1	1,356	1,071
Working capital 1	564	461
Net cash provided by operating activities	376	696
Free cash flow 1	445	586
as a % of sales	5.9%	8.7%
1 For a reconciliation to the most directly comparable IFRS financial measure, see chapter 19, Reconciliation of non-IFRS financial measures. 2 2023 Dividend subject to approval by the 2024 Annual General Meeting of Shareholders.

5.1 Financial

performance

5.1.1 Company performance

The business environment in 2023 saw some

notable developments.

The consumer segment remained weak

throughout the year, in particular the

connected home business which had

experienced two strong years of growth

during the COVID-19 pandemic. The indoor

professional lighting business was impacted

by higher interest rates and a more

restrictive credit environment, while Signify's

agriculture customers reduced their orders

due to high energy/operating costs. In

addition, the Chinese market remained weak

throughout the year.

As the supply chain environment improved

overall, Signify's customers continued to

reduce their inventory levels, leading to a

destocking effect that mainly impacted the

OEM business.

At the same time, Signify's gross margin

expanded through the combined effect of

lower cost of goods sold and a positive

pricing effect.

In 2023, nominal sales decreased by 10.8% to

EUR 6,704 million, a comparable sales decline

of 8.3%. The Adjusted EBITA margin was

10.0%, broadly in line with 2022. Net income

decreased to EUR 215 million. In 2022, net

income included a one-time gain of EUR 184

million on the disposal of non-strategic real

estate assets. Net cash provided by

operating activities increased to EUR 696

million, while free cash flow increased to EUR

586 million.

The nominal sales decrease of 10.8% year on

year includes a negative currency effect of

3.3%, mainly due to the depreciation of the

USD and the CNY, and a positive effect of

0.8% from the consolidation of Fluence,

Pierlite and Intelligent Lighting Controls.

Comparable sales declined by 8.3%, mainly

due to weakness in consumer, OEM and

indoor professional lighting. Outdoor

professional lighting remained resilient

throughout the year. LED-based sales were

85% of Signify's total sales (2022: 83%).

The gross margin decreased to EUR 2,558

million. The Adjusted gross margin decreased

to EUR 2,660 million. As a percentage of

sales, the Adjusted gross margin improved by

240 bps to 39.7%, mainly due to effective

COGS management, pricing, and positive sales

mix.

Indirect costs decreased by EUR 31 million to

EUR 2,191 million. Adjusted indirect costs

decreased by EUR 96 million to EUR 2,075

million. As a percentage of sales, Adjusted

indirect costs increased by 210 bps to 31.0%,

mainly due to an under-absorption of fixed

costs.

EBITA decreased to EUR 449 million. Excluding

the one-time gain on the disposal of non-

strategic real estate assets in 2022 and other

adjusted items, such as restructuring

expenses and acquisition-related charges,

Adjusted EBITA decreased by EUR 92 million

to EUR 670 million. The Adjusted EBITA margin

was 10.0%, broadly in line with 2022, as the

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Signify Annual Report 2023

<≡>

gross margin improvement was offset by an

under-absorption of fixed costs.

Income from operations decreased to EUR

369 million. This included EUR 167 million of

restructuring expenses, EUR 14 million of

acquisition-related charges and a net

negative impact of EUR 40 million related to

incidental items. These incidental items are

non-recurring items by nature and are

related to impairment and other non-cash

charges/gains related to operations in Russia

and Ukraine, a one-day FX loss from the

devaluation of the Argentine peso, separation

costs, real estate gain/loss, incidental

warranty costs, environmental provisions for

inactive sites and the discounting effect of

long-term provisions.

Net income decreased to EUR 215 million,

mainly due to lower income from operations

and higher financial expenses, partly offset by

lower income tax expense. Last year's income

from operations benefited from the one-time

gain on the disposal of non-strategic real

estate assets.

Compared to December 2022, working capital

decreased by EUR 103 million, mainly due to

lower inventories, lower receivables and

other working capital items, partly offset by

lower payables. As a percentage of last

twelve-month sales, working capital

decreased by 60 bps to 6.9%. Including last

twelve-month sales pro forma for Fluence

and Pierlite, working capital decreased by 50

bps.

Net cash provided by operating activities

increased by EUR 320 million to EUR 696

million, mainly driven by lower inventories,

which benefited from shorter lead times, and

lower receivables. In 2023, net capital

expenditures were EUR 110 million. In 2022,

net capital expenditures were positive as they

benefited from proceeds from the disposal of

non-strategic real estate assets. In 2023,

free cash flow increased to EUR 586 million,

or 8.7% of sales, mainly as a result of the

higher net cash provided by operating

activities.

Shareholders' equity decreased to EUR 2,817

million, mainly due to the dividend distribution

and currency translation results, partly offset

by net income.

Net debt decreased to EUR 1,071 million at

year-end 2023, as a higher cash position

more than offset the increase in gross debt.

The higher cash position was mainly driven by

higher free cash flow, lower purchases of

businesses and financial proceeds from debt

issuance. In Q4 2023, Signify issued long-term

debt to refinance part of the debt that will

mature in 2024. Gross debt increased as a

result of the debt issuance.

At year-end 2023, Signify had a post-

employment liability of EUR 322 million,

compared with EUR 327 million at the end of

2022. The reduction is mostly related to

benefit payments and one-off gains related

to restructurings and plan amendments,

partly offset by actuarial losses.

5.1.2 Performance by Division

Performance Digital Solutions

About Digital Solutions

Signify is the world leader in the professional

lighting market for products such as LED and

systems and services, with strong positions

across key geographies. Professional

products, systems and services are used in

multiple market segments, including offices,

commercial buildings, shops, hospitality

venues, industry, agriculture and outdoor

environments, including smart cities.

Professional lighting has experienced a rapid

shift from conventional to LED lighting and

has increasingly been integrated into broader

connected ecosystems.

Acquisitions

In the first quarter of the year, Signify

completed the acquisition of Intelligent

Lighting Controls, Inc. (ILC), a market-leading

U.S. manufacturer of wired lighting control

systems. This acquisition expanded the

connected lighting portfolio.


Key figures Digital Solutions in millions of EUR unless otherwise stated
	2022	2023
Sales	4,231	3,937
Nominal sales growth	20.1%	(6.9)%
Comparable sales growth 1	7.8%	(5.4)%
Income from operations (or EBIT)	256	285
EBITA 1	374	358
Adjusted EBITA 1	424	422
as a % of sales	10.0%	10.7%
Free cash flow 1, 2	321	458
Number of employees (in FTEs)	13,930	13,883

1 For a reconciliation to the most directly comparable IFRS

financial measure, see chapter 19, Reconciliation of non-

IFRS financial measures.

2 Excluding non-allocated free cash flow items (e.g. tax,

interest and central functions).

Strategic priorities

Digital Solutions focuses on strengthening its

global professional lighting leadership

position by further innovating in LED

products, winning in connected lighting and

unlocking the potential in businesses such as

agriculture, solar, and 3D printing. At the

same time, Digital Solutions leverages its

scale to reduce the cost of production.

Market developments

As the world leader in the professional

lighting market, Signify is well-positioned to

benefit from powerful global trends, such as

the shift to connected lighting, growing

demand for food security, and climate action.

The transition to connected lighting is driven

by economic benefits for customers, based

on total cost of ownership. At the end of

2023, the penetration of connected lighting

increased to around 7% of the installed

lighting base, showing that the connected

lighting market continues to offer significant

growth potential for Signify.

In 2023, the indoor professional lighting

market and agricultural lighting market were

impacted by short-term economic pressure.

Higher interest rates and a more restrictive

credit environment were weighing on the

indoor professional lighting market. The

agricultural lighting market was impacted by

high energy prices, due to which growers

were investing less in their businesses. At the

same time, the outdoor professional lighting

market continued to be strong, supported by

green stimulus programs in various

geographies.

Despite the weakness in the indoor

professional lighting market and the

We are Signify

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Signify Annual Report 2023

<≡>

agricultural lighting market in 2023, both

markets are expected to resume their

growth. The indoor professional lighting

market is expected to continue benefiting

from the shift to connected lighting and

growing demand for energy efficient lighting.

The agricultural lighting market is expected to

benefit from increased food needs driven by

population growth, increased customer

preference for locally grown organic foods,

and increased focus on resource efficiency.

As a world leader in agriculture lighting,

Signify is well-positioned to benefit from this

growing market through its heritage, its

unique know-how, and patented light recipes

for various crops.

2023 Business highlights

• Completion of a large-scale smart city

project in Huanggang City, China: supplying

BrightSites smart poles, Philips LED

streetlights and the Interact connected

lighting system. The BrightSites smart poles

integrate security cameras, environmental

sensors, Wi-Fi and other devices. The

installation reduces energy consumption by

about 60% and operational costs by about

50%;

• Supported Dublin Port Tunnel with a fast

route to energy efficiency: retrofitting all

1,800 light fixtures with new LED trays and

gear while reusing the old housing. The

installation generates energy savings of

60%, while also minimizing the carbon

footprint. The project is part of the Irish

government's energy efficiency plans and

was partially funded through the European

Green Deal;

• Introduction of Interact Space analysis:

Signify launched Interact Space analysis

together with two new sensors: the

Environmental sensor and the People

sensor. It is a data-driven solution that

gives building owners the information they

need to optimize working conditions.

Signify is the first lighting company to offer

this solution;

• Modernization of the lighting in more than

200 Netto stores in Poland: replacing the

old generation of LED fixtures with the

modern and energy-saving Philips Maxos

Fusion LED products resulted in 43%

energy savings. Integration of the lighting

with the Interact system will increase

energy savings by an additional 35%.

2023 Financial performance

Nominal sales decreased by 6.9% to EUR

3,937 million, including a negative currency

effect of 3.1% and a positive effect of 1.5%

from the consolidation of Fluence, Pierlite

and Intelligent Lighting Controls. Comparable

sales decreased by 5.4%, against a high base

of comparison of 7.8% growth in 2022.

Income from operations increased by 11.2% to

EUR 285 million. Adjusted EBITA was EUR 422

and excluded restructuring expenses of EUR

32 million, acquisition-related charges of EUR

15 million and a net negative impact of EUR 17

million from incidental items. The Adjusted

EBITA margin increased by 70 bps to 10.7%,

mainly driven by gross margin recovery. Free

cash flow increased by EUR 137 million to EUR

458 million.

2024 and beyond

Digital Solutions supports Signify's growth for

sustainability strategy through attractive

growth platforms such as connected lighting,

agriculture lighting, solar lighting, 3D printed

luminaires, and human-centric lighting. The

division maintains a strong financial profile

with unmatched global scale and is well-

positioned to capture growth from global

stimulus programs.

Performance Digital Products

About Digital Products

Digital Products offers a wide variety of LED

lamps and functional LED luminaires to

consumers and professional customers. In

addition, it sells LED electronic components,

consisting of LED drivers and LED modules, to

OEMs for professional luminaire applications

in the retail, office, industry and outdoor

segments. Signify is also the global market

leader in connected home lighting systems,

notably Philips Hue and WiZ, and a top-three

player in selected home luminaires markets.

Based on proprietary research, the company

believes it held the number one position in

sales in the global LED lamps and electronics

market in 2023.

Philips Hue is the global market leader in

connected lighting for consumers, with a

continuously expanding product offering.

WiZ Connected further extends the

accessibility of consumer-connected lighting,

as it provides consumers with a Wi-Fi based

connected lighting ecosystem.

Signify's combined consumer connected

lighting offer enables consumers to connect

via Wi-Fi, Bluetooth or the Philips Hue bridge.


Key figures Digital Products in millions of EUR unless otherwise stated
	2022	2023
Sales	2,469	2,117
Nominal sales growth	0.7%	(14.2)%
Comparable sales growth 1	(3.8)%	(10.5)%
Income from operations (or EBIT)	265	170
EBITA 1	272	176
Adjusted EBITA 1	297	205
as a % of sales	12.0%	9.7%
Free cash flow 1, 2	170	291
Number of employees (in FTEs)	14,264	13,486

1 For a reconciliation to the most directly comparable IFRS

financial measure, see chapter 19, Reconciliation of non-

IFRS financial measures.

2 Excluding non-allocated free cash flow items (e.g. tax,

interest and central functions).

Strategic priorities

Digital Products' strategy is focused on

capturing growth from the transition to

integrated luminaires, driven by sustainability-

led socket-base conversion and on IoT-

technology for consumer-connected lighting,

while strengthening its financial profile

through growth and innovation.

Market developments

As anticipated in Signify's strategy, traditional

LED lamps are continuing to be replaced by

higher quality, connected and more

sustainable LED lamps, such as the Philips

Ultra Efficient LED bulb, functional LED

luminaires and connected solutions. This

trend is driven by an increasingly compelling

proposition of both integrated LED luminaires

and connected solutions in particular, while

the replacement need of lamp sockets

reduces due to the longer lifetime of LEDs. In

addition, consumers and professional

We are Signify

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customers pay attention to the energy

efficiency of lighting products in their

purchase decisions.

Despite the slowdown of the consumer

market in 2023, the company expects these

long-term trends to continue for the

foreseeable future. These long-term trends

provide a solid growth path. Signify has the

ambition to drive market share gains by

raising the energy efficiency bar through

innovation and leadership in functional

luminaires and connected lighting.

While Signify expects that the LED lamps

market will decline in the next few years, the

company is well-positioned to continue to

grow market share by building on its strong

position in lighting distribution. The decline in

the LED lamps market is expected to be

compensated by the growth of integrated

LED luminaires and connected lighting.

Legislation, such as the banning of

conventional lighting technologies, is

expected to further boost LED adoption.

Despite the slowdown in the LED electronics

market in 2023, the LED electronics market is

expected to grow, particularly driven by the

shift to connected lighting and the

LEDification of (industrial) specialty segments.

The consumer connected system markets are

expected to continue to grow on the back of

the increasing global penetration of the smart

home.

2023 Business highlights

• Driving customer transition to sustainable

LED technologies: anticipating the EU ban

of CFL-ni lamps in February, and T5 and T8

linear fluorescent lamps in August, Signify

extended the range of energy-efficient

alternatives. These LED alternatives

provide energy savings between 45% and

70%;

• Introduction of new UltraEfficient A-Class

lights: launching, among others,

UltraEfficient A-Class LED outdoor lights

including easy-to-install wall lights, posts

and pedestals in both plug-in and solar

applications, and UltraEfficient A-Class

Philips LED SON-T lamps. The wall lights,

posts and pedestals can generate energy

savings of up to 50%, while the

UltraEfficient Philips LED SON-T lamps can

generate energy savings of up to 55%;

• Launch of new Philips Hue products and

features: product introductions include the

Philips Hue Sync TV app for Samsung TVs,

the new Philips Hue luster E14 bulb, Philips

Hue panels with new shapes, new and

enhanced features to the Hue app, and

Philips Hue Secure cameras, sensors and

app features to help secure consumers'

homes;

• Expansion of the WiZ portfolio: product

launches include the new Color Filament

range, the new Neon flex strip, new

outdoor lights, including a spotlight, a wall

light and a bollard, new WiZ home

monitoring technology and the WiZ A60

filament ultra-efficient smart bulb.

2023 Financial performance

Nominal sales decreased by 14.2% to EUR

2,117 million, including a negative currency

effect of 3.8%. Comparable sales decreased

by 10.5% as growth in LED lamps and

luminaires was more than offset by weakness

in the consumer connected and OEM

businesses.

Income from operations decreased to EUR

170 million. Adjusted EBITA was EUR 205

million and excluded restructuring expenses

of EUR 25 million and a net negative impact of

EUR 4 million from incidental items. The

Adjusted EBITA margin decreased by 230 bps

to 9.7%, mainly due to an under-absorption of

fixed costs. Free cash flow increased by EUR

121 million to EUR 291 million.

2024 and beyond

The Digital Products division targets market

share growth in LED lamps through

differentiation with a multi-brand offer of A-

brands, B-brands and Private Label sales.

The division also plans to grow sales of LED

luminaires by innovating and expanding its

product portfolio and by leveraging its LED

R&D and distribution strength.

It aims to further accelerate growth in its

Consumer Connected business with a two-

system offering of Philips Hue and WiZ, and by

continuing to innovate in relevant consumer

benefits, such as ambiance, well-being and

security.

Digital Products will drive growth in LED

electronics through the transition to smart

lighting, leveraging its innovation leadership in

connected components and through

dedicated offers for specialty segments.

Performance Conventional Products

About Conventional Products

Signify is the global market leader in the

conventional lighting business. Conventional

Products comprises the company’s

conventional lamps and lamp electronics

businesses. It produces and sells lamps,

based on a wide variety of non-LED based

technologies. This includes HID, TL, compact

fluorescent, halogen, incandescent, as well as

lamp electronics for conventional lamps

(electronic ballasts and drivers) and specialty

lighting, including projection lighting.

Conventional lamps are used in a wide variety

of residential and professional applications

and are bought by consumers, electrical

installers and professional end-users through

a wide range of channels. Lamp electronics

are mainly sold to luminaire manufacturers

directly and as replacement products to

electrical wholesalers. Specialty lighting

lamps and drivers are sold to the OEM market

and to specialized distributors.


Key figures Conventional Products in millions of EUR unless otherwise stated
	2022	2023
Sales	793	627
Nominal sales growth	(7.9)%	(20.9)%
Comparable sales growth 1	(12.6)%	(18.4)%
Income from operations (or EBIT)	60	62
EBITA 1	60	62
Adjusted EBITA 1	116	129
as a % of sales	14.6%	20.6%
Free cash flow 1, 2	56	99
Number of employees (in FTEs)	6,093	4,216

1 For a reconciliation to the most directly comparable IFRS

financial measure, see chapter 19, Reconciliation of non-

IFRS financial measures.

2 Excluding non-allocated free cash flow items (e.g. tax,

interest and central functions).

Strategic priorities

While the overall conventional market

continues to decline, Conventional Products’

focus is on further increasing its leading

market share. This position supports the

company's drive to lead the transition to

connected LED products. Specialty lighting

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products see a much slower conversion rate

to LED. The division continues to proactively

manage its manufacturing footprint and

reduce operational costs to optimize its

profit margin and free cash flow.

Market developments

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.

In 2023, Europe banned the production of

CFL-ni, and T5 and T8 linear fluorescent

tubes, accelerating the transition to LED

technologies.

2023 Business highlights

Signify estimates that the conventional

lighting market declined at a faster pace than

its Conventional Products division in 2023 and

thus the business continued to gain market

share for the 7th consecutive year.

2023 Financial performance

Nominal sales decreased by 20.9% to EUR 627

million, including a negative currency effect of

2.5%. Comparable sales decreased by 18.4%.

Income from operations slightly increased to

EUR 62 million. Adjusted EBITA was EUR 129

million and excluded restructuring expenses

of EUR 51 million and a net negative impact of

EUR 16 million from incidental items. The

Adjusted EBITA margin increased by 600 bps

to 20.6%, driven by gross margin recovery

and cost discipline. Free cash flow increased

by EUR 43 million to EUR 99 million.

2024 and beyond

Conventional Products will continue focusing

on optimizing market share, profit and cash, in

line with its "last company standing" strategy.

It will do so by leveraging its scale, global

footprint and lean manufacturing capabilities,

while still responding to the remaining

customer demand for conventional products.

It will intensify its focus on specialty lighting

products, which have a much slower rate of

decline.

Performance Other

"Other" represents amounts not allocated to

the operating segments and includes costs

related both to central R&D activities to drive

innovation, and to Group enabling functions.

Income from operations and EBITA were both

EUR (147) million. EBITA included restructuring

costs of EUR 59 million, and a negative impact

from incidental items and acquisition-related

charges of EUR 1 million. In 2022, EBITA

included a one-time gain of EUR 184 million

related to the disposal of non-strategic real

estate assets in Q2 2022. Adjusted EBITA was

EUR (86) million, compared with EUR (75)

million in 2022.

5.1.3 Performance by

geographic cluster

In Europe, sales declined by 9.3% to EUR

2,023 million and included a negative currency

effect of 0.6%. Comparable sales declined by

8.7%, as most markets declined.

In the Americas, sales declined by 11.6% to

EUR 2,633 million and included a negative

currency effect of 3.2% and a positive effect

of 0.5% from the consolidation of Intelligent

Lighting Controls. Comparable sales declined

by 8.9%, mainly due to the United States,

partly offset by strong growth in Latin

America.

In the Rest of the world, sales declined by

11.0% to EUR 1,522 million and included a

negative currency effect of 7.6% and a

positive effect of 1.3% from the consolidation

of Pierlite. Comparable sales declined by

4.7%, due to weakness across most markets.

Global businesses' sales declined by 11.8% to

EUR 526 million and included a negative

currency effect of 1.5% and a positive effect

of 4.1% from the consolidation of Fluence.

Comparable sales declined by 14.4%, mainly

due to Klite and Fluence.

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Sales by market in millions of EUR unless otherwise stated
	2022	2023	Change	CSG
Europe	2,230	2,023	(9.3)%	(8.7)%
Americas 1	2,978	2,633	(11.6)%	(8.9)%
Rest of the world 2	1,709	1,522	(11.0)%	(4.7)%
Global businesses 3	597	526	(11.8)%	(14.4)%
Total	7,514	6,704	(10.8)%	(8.3)%
1 Americas includes Intelligent Lighting Controls since March 1, 2023. 2 Rest of the world includes Pierlite since April 29, 2022. 3 Global businesses includes Fluence since May 2, 2022.


5.2 Sustainability performance Brighter Lives performance In 2023, our workforce decreased to 31,920 FTEs (2022: 34,619 FTEs), with 28% of leadership roles held by women (2022: 28%). Our employee Net Promoter Score (NPS) was 26 (2022: 36). Meanwhile, 31% of our revenues came from products, systems and services contributing to Food availability, Safety & security or Health & well-being (2022: 27%). Our safety performance indicator (TRC rate) was 0.19 per 100 FTEs (0.16 in 2022). We achieved a supplier performance rate of 97% (2022: 94%), and since 2017 we have lit the lives of 9.4 million people through the Signify Foundation. Better World performance We are on track to deliver against our ambitious goal of doubling the pace of the Paris Agreement’s 1.5ᵒC scenario. In line with our ambition to contribute to a more circular economy, 33% of our revenues came from our circular portfolio (2022: 29%). At the same time, we sourced 100% renewable electricity and sent zero waste to landfill.	Sustainable performance by geography

		FTEs		Manufacturing sites		% Women in leadership 1		Operational CO2e (kt)		Safety TRC rate
		2022	2023	2022	2023	2022	2023	2022	2023	2022	2023
	Europe	10,024	8,878	15	14	29%	31%	111	99	0.07	0.15
	Benelux	2,678	2,483	3	3	28%	31%	12	13	0.11	0.15
	Eastern Europe	5,214	4,198	8	7	–%	–%	77	65	0.08	0.18
	Germany, Austria and Switzerland	383	372	–	–	100%	67%	5	4	–	–
	France	353	334	–	–	50%	100%	6	7	–	–
	Iberia	629	769	2	2	–%	–%	5	4	–	0.16
	Italy, Israel and Greece	154	157	–	–	–%	–%	1	1	–	–
	Nordics	285	284	1	1	–%	–%	3	2	–	–
	UK and Ireland	328	280	1	1	n.a.	–%	2	2	–	–
	Americas	9,468	8,275	18	18	25%	21%	55	77	0.34	0.41
	Canada	643	640	2	2	–%	–%	11	5	0.24	0.69
	Latin America	5,868	4,935	8	8	–%	–%	11	14	0.13	0.28
	United States of America	2,957	2,700	8	8	28%	23%	33	58	0.83	0.66
	Rest of the world	15,128	14,767	13	12	32%	33%	86	101	0.07	0.06
	ASEAN	353	362	–	–	20%	25%	2	2	–	–
	Indonesia	174	168	–	–	–%	–%	1	1	–	–
	Greater China	10,172	9,885	9	8	50%	55%	37	30	0.07	0.08
	India	3,262	3,289	1	1	25%	20%	36	58	–	–
	Far East	75	68	–	–	n.a.	n.a.	1	2	–	–
	Middle East, Turkey, Africa and Pakistan	742	662	2	2	–%	–%	6	4	0.85	–
	Pacific	350	334	1	1	–%	–%	3	4	–	–
	1 Excludes Klite.

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5.3Proposed

distribution to

shareholders

Pursuant to Article 10 of the Articles of

Association of Signify N.V., a dividend will first

be declared on preference shares out of net

income. The remainder of the net income,

after reservations made with the approval of

the Supervisory Board, shall be available for

distribution to holders of ordinary shares

subject to shareholder approval after year-

end. As of December 31, 2023, the issued

share capital consists only of ordinary shares;

no preference shares have been issued.

Under Article 10 of the Articles of Association

of Signify N.V., the Board of Management can

determine what portion of the net income

shall be retained by way of reserve, subject to

the approval of the Supervisory Board.

Signify proposes to declare a cash dividend of

EUR 1.55 per share for 2023. The dividend

proposal will be subject to approval at the

Annual General Meeting of Shareholders

(AGM) to be held on May 14, 2024.

The balance sheet presented in this report,

as part of the company financial statements

for the period ended December 31, 2023, is

before appropriation of the result for the

financial year 2023.

5.4Outlook

For 2024, Signify expects:

• An Adjusted EBITA margin improvement of

up to 50 bps, including first benefits from

the announced restructuring program;

• Free cash flow generation of 6-7% of sales,

including an incremental and non-recurring

negative impact of around EUR 150 million

related to the restructuring program and a

reduction of US pension liabilities.

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6 Three-year overview


Three-year financial summary in millions of EUR unless otherwise stated
	2021	2022	2023
Income statement
Sales	6,860	7,514	6,704
Comparable sales growth 1	3.8%	1.2%	(8.3)%
Nominal sales growth	5.5%	9.5%	(10.8)%
Sales of LED-based products (as % of sales)	83%	83%	85%
Gross margin	2,671	2,732	2,558
as a % of sales	38.9%	36.4%	38.2%
Income from operations (or EBIT)	514	718	369
Net income (loss)	407	532	215
Adjusted EBITA 1	795	762	670
as a % of sales	11.6%	10.1%	10.0%
EBITA 1	636	844	449
Net income (loss) attributable to shareholders	397	523	203
Earnings per share in EUR	3.18	4.18	1.61
Dividend per share in EUR 2	1.45	1.50	1.55

Balance sheet
Total assets	8,256	8,286	8,004
Shareholders' equity	2,459	2,920	2,817
Net debt 1	1,156	1,356	1,071
Working capital 1	250	564	461

Investments and cash flow
Cash flow from operating activities	704	376	696
Net capital expenditure	(91)	69	(110)
Free cash flow 1	614	445	586

1 For a reconciliation to the most directly comparable IFRS financial measure, see chapter 19, Reconciliation of non-IFRS financial

measures.

2 2023 Dividend subject to approval by the 2024 Annual General Meeting of Shareholders.


Three-year sustainability summary
	2021	2022	2023
Sustainable innovation, as a % of adjusted research & development spend	93%	90%	88%
Brighter Lives revenues, as a % of total sales	25% - 27%	27%	31%
Women in leadership, as a % of total leadership roles	25%	28%	29%
Employee Net Promoter Score	30	36	26
Total recordable cases, per 100 FTEs	0.17	0.16	0.19
Lost workday injuries, per 100 FTEs	0.12	0.09	0.12
Fatalities	–	–	–
Initial and continual supplier conformance audits, number of audits	92	79	157
Supplier sustainability performance	98%	94%	97%
Lives lit, cumulative since 2017 (in million)	7.2	8.3	9.4
Cumulative carbon reduction over value chain, in million tonnes CO 2e 1	On track 2	177	334
Operational gross carbon footprint, in kilotonnes CO2 e	290	252	249
Carbon neutral, as % of total operations	100%	100%	100%
Operational CO2e intensity, in tonnes CO2e per million euro sales per year	42	34	37
Operational energy consumption, in terajoules	3,630	3,811	3,237
Operational energy intensity, in terajoules per million euro sales	0.53	0.51	0.48
Renewable electricity, as a % of total electricity usage	100%	100%	100%
Circular revenues, as a % of total sales	21% - 25%	29%	33%
Total waste to landfill, in scope of commitment	<1%	<1%	<1%
ISO 14001 certification, as a % of all reporting organizations	83%	70%	87%
ISO 45001 certification, as a % of all reporting organizations	60%	61%	83%

1 The cumulative yearly difference between the GHG emissions of Paris Agreement 1.5°C pathway and the actual value chain

emissions of Signify.

2 Based on current level of availability and accuracy of data.

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Governance

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7 Board of Management

Signify N.V.'s Board of Management is entrusted with

the management of the company.

The Board of Management is responsible for the

deployment of the company’s strategy and the achievement

of the operational and financial objectives of the company,

and is chaired by the Chief Executive Officer. The Board of Management

is accountable for its actions and decisions to the Supervisory Board

and is answerable to shareholders of the company at the Annual

General Meeting of Shareholders. The Rules of Procedure of the Board

of Management are published on the company’s website.

Corporate governance

A full description of the company’s corporate governance

structure is published in chapter 11, Corporate

governance.

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Maria Letizia Mariani *

Born 1960,

Italian

Chief Commercial Officer

Member of the Board of Management

since May 2020

Eric Rondolat

Born 1966,

Italian/French

Chief Executive Officer

Chair of the Board of Management

since May 2016

Javier van Engelen *

Born 1968,

Belgian/Portuguese

Chief Financial Officer

Member of the Board of Management

since October 2020

Harshavardhan Chitale

Born 1972

Indian

Digital Solutions Division Leader

Member of the Board of Management

since May 2023

* As announced earlier, CFO Javier van Engelen and CCO Maria Letizia Mariani will leave the company on April 1, 2024 and at the close of the shareholders meeting on May 14, 2024 respectively. An announcement on the CFO succession will follow.

8 Supervisory Board


The Supervisory Board supervises the policies, management and general affairs of Signify. It also provides advice to the Board of Management. The Supervisory Board, in the two-tier corporate structure under Dutch law, is a separate body that is independent of the Board of Management. The Rules of Procedure of the Supervisory Board are published on the company’s website. For details on the activities of the Supervisory Board in 2023 see chapter 9, Supervisory Board report, and chapter 10, Remuneration report.		$Gerard Wdesk.jpg$

	Arthur van der Poel Born 1948, Dutch	Gerard van de Aast Born 1957, Dutch	Sophie Bechu Born 1960, French/American

	Chair	Vice-Chair

	Committee(s) B,C Chair of the Corporate Governance and Nomination & Selection Committee Member of the Supervisory Board since 2016; second term expires in 2024	Committee(s) A,B Chair of the Remuneration Committee Member of the Supervisory Board since 2017; second term expires in 2025	Committee(s) D Chair of the Digital Committee Member of the Supervisory Board since 2023; first term expires 2027

	Former member of the Board of Management of Koninklijke Philips N.V.	Former CEO of Imtech and VolkerWessels, and former member of the Executive Board of Reed Elsevier (later: RELX). Currently Chair of the Supervisory Board of KPN.	Former Chief Operations Officer on the Executive Committee of Royal Philips and former Vice President, Strategic Outsourcing, North America Delivery at IBM.
	A Member of the Audit Committee. B Member of the Remuneration Committee. C Member of the Corporate Governance and Nomination & Selection Committee. D Member of the Digital Committee.

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Supervisory Board


$Pamela Wdesk.jpg$

Pamela Knapp Born 1958, German	Rita Lane Born 1962, American	Frank Lubnau Born 1969, German	Bram Schot Born 1961, Dutch

Committee(s) A,B Chair of the Audit Committee Member of the Supervisory Board since 2020; first term expires 2024	Committee(s) C,D Member of the Supervisory Board since 2016; second term expires in 2024	Committee(s) C,D Member of the Supervisory Board since 2020; first term expires 2024	Committee(s) A,D Member of the Supervisory Board since 2022; first term expires 2026
			1
Former CFO of the Power Transmission and Distribution Group of Siemens, former CFO of GfK SE. Currently member of the Supervisory Board of LANXESS and Compagnie de Saint-Gobain, and member of the German Monopolies Commission.	Former Vice President of Operations at Apple Inc. Currently member of the Board of Directors of L3Harris Technologies and Amphenol Corporation.	Former Chief Digital Officer of the industry division of Robert Bosch and Chief Technology Officer of the Customer Services Division of Siemens. Currently Head of Intelligent Industry Northern and Central Europe at Capgemini.	Former CEO of Audi Group, member of the Management Board of Volkswagen Group and Vice-Chair of Porsche Holding Salzburg. Currently non-executive member of the Board of Directors at Shell, Cognizant and Richemont, senior advisor to different companies, including Carlyle Group, and Associate Professor of Practice Corporate Strategy at Bocconi University, Italy.
A Member of the Audit Committee. B Member of the Remuneration Committee. C Member of the Corporate Governance and Nomination & Selection Committee. D Member of the Digital Committee.

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9 Supervisory Board

report

Letter from the

Chair

I am pleased to present our Supervisory

Board report for 2023.

Market conditions remained challenging in

2023. The volatility remained high, and

geopolitical tensions continued. Our financial

results were negatively affected by continued

softness in consumer, indoor professional

and OEM channels, and slower than

anticipated recovery in the Chinese markets.

Whereas comparable sales declined in 2023,

the company was able to maintain double digit

profitability margin and over-deliver against

its free cash flow guidance.

At the same time, the company is on track for

three Brighter Lives, Better World 2025

sustainability commitments, with the

percentage of circular revenues surpassing

the 2025 target this year. We see the

company being well positioned to capture

opportunities under governmental stimulus

programs promoting sustainability focused

investments in the US, Europe and other

countries, and to help our customers to save

energy and reduce their carbon footprint.

As the Supervisory Board, we have been

actively involved in refining the company's

strategic direction and the company's

response to the continued challenging

market circumstances. We extensively

discussed the intended new operating model,

and the impact on the senior leadership of

the company. We support the transition to a

new operating model and structural measures

announced in December 2023 and believe

these will strengthen the company's agility

and performance.

Arthur van der Poel

Chair of the Supervisory Board

9.1Introduction

This report provides information on how the

Supervisory Board and its committees fulfilled

their duties in 2023.

We welcomed Sophie Bechu to our

Supervisory Board, who was appointed by the

Annual General Meeting of Shareholders in

May 2023. Since then, our Supervisory Board

consists of seven members; all seven (100%)

of our Supervisory Board members are

independent.

The Supervisory Board supervises the policies

and management and the general affairs of

the company. We also provide advice to the

Board of Management.

Our four committees cover key areas in

greater detail: the Audit Committee, the

Corporate Governance and Nomination &

Selection Committee, the Remuneration

Committee, and the Digital Committee. The

charters of each of the committees are

published on the company’s website.

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9.2Key discussion

topics and

meetings in

2023

Meetings and information

Supervisory Board members are in principle

expected to attend all Supervisory Board

meetings. A Supervisory Board member shall

attend at least 85% of the Supervisory Board

meetings as scheduled annually in advance as

referred to in Article 5.1 of the Supervisory

Board Rules. If a Supervisory Board member

does not meet this minimum attendance

requirement, the Chair will review the

reasons for the absence.

The Supervisory Board held seven regular

meetings in 2023: four for the quarterly

results plus a meeting in May, September and

December. Six out of seven meetings were

held in person. The attendance rate of the

Supervisory Board meetings was 100% in

2023. The attendance record matrix in this

chapter 9.2 gives details for both the

Supervisory Board and committee meetings.

In addition to the seven regular meetings, a

combined Supervisory Board/Audit

Committee is held ahead of the publication of

the annual report each year. In 2023, the

Supervisory Board also held some ad hoc

calls, for example on the Q4 2022

performance update and the new operating

model. All of these calls were well attended.

Each of the Supervisory Board committees

regularly convened and reported back on

their activities to the full Supervisory Board.

In addition, the Chair of the Supervisory

Board and the CEO are in regular contact on

a variety of matters. Our members also

individually interacted with members of the

Board of Management and with senior

management outside the formal Supervisory

Board meetings. From time to time,

Supervisory Board members wanted to be

informed on, or discuss, a specific topic. This

was then followed-up by a member of the

Board of Management or senior management.

There were no apparent conflicts of interest

of material significance in 2023, which would

have called for one of the members not to

participate in the decision-making.

In 2023, the Supervisory Board discussed a

wide range of topics throughout the year.

Key topics and activities included the

following:

• Strategy review and strategy execution

In September 2023, we had our annual

Strategy Review meeting, dedicated to

discussing the company's strategy towards

sustainable long-term value creation. As

part of the session, we discussed macro-

environment trends and changes, the

impact on the lighting market forecast and

competitive trends. We looked at the

company's financial and sustainability

performance, customer experience, and

performance on our 2023 strategic

initiatives. We discussed the strategic

implications of the current macro-

environment, enterprise risks, and how we

will address these as part of the overall

company's 5 Frontiers strategy and

strategic initiatives for 2024.

As part of the Strategy Review in

September, we also had three strategic

deep dives: on the company's current

performance, future growth and brand

strategy. Each of these deep dives was

prepared with guidance and input of a

Supervisory Board member. As a follow-up

on the growth deep dive, management

updated the Board on how the company

builds its market forecasts.

The Strategy Review was followed by a

strategic plan discussion in December in

which management presented the

2024-2026 strategic plan, including

financial objectives. We also discussed and

approved the company’s financial targets

for 2024 within the context of its 2024

operating plan.

In addition to these meetings dedicated to

the company's strategy, management

updated us on a quarterly basis on the

We are Signify

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Corporate performance

Governance

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>


Supervisory Board and Committee attendance record
	Supervisory Board	Audit Committee	Nomination Committee	Remuneration Committee	Digital Committee
Total meetings	7	7	5	3	4
Arthur van der Poel	7 / 7		5 / 5	3 / 3
Gerard Van de Aast	7 / 7	7 / 7		3 / 3
Sophie Bechu ¹	4 / 4				2 / 2
Pamela Knapp	7 / 7	7 / 7		3 / 3
Rita Lane	7 / 7		5 / 5		4 / 4
Frank Lubnau	7 / 7		4 / 5		4 / 4
Bram Schot	7 / 7	6 / 7			3 / 4
Total attendance	100%	95%	93%	100%	93%
1 Mrs. Bechu was appointed as member of the Supervisory Board on May 16, 2023. The meetings that she attended as an observer prior to her appointment are not reflected in the table above.

progress made on the company's strategic

initiatives and targets for 2023, whereby

this year we selected four strategic

initiatives to focus on at Board level. We

continued our practice started last year, to

have a dedicated quarterly discussion on

trends and developments in the company's

competitive landscape, together with a

deep dive on a competitor.

Throughout the year, we discussed the

market trends, risks and opportunities, and

their strategic implications as part of the

market and division updates and strategic

projects.

Both on a quarterly basis and as part of the

division and market updates, we discussed

pending and potential acquisitions and

divestments contributing to the company's

strategy execution. The Board also

discussed performance and learnings from

past acquisitions, including Cooper

Lighting, Fluence and Intelligent Lighting

Controls.

We have reviewed, challenged, and advised

the Board of Management on the

company’s implementation of its strategic

plan and strategic priorities throughout

the year.

• New organization model

In December 2023, the company

announced the introduction of a new

operating model and structural measures

to enhance customer centricity, speed of

execution and reduction of structural

costs. The Supervisory Board was engaged

in discussion leading to the announcement

as from an early design phase, and has

advised management in relation hereto.

• Culture

In addition to the Board's attention to the

company's culture throughout the year, we

had our annual discussion dedicated to the

company's culture. In this discussion, we

reviewed the alignment of the company's

purpose, its values, sustainability and

diversity, equity & inclusion with how it is

embedded and fostered in the company's

strategy and organization. This year, we

focused on diversity, equity & inclusion and

on how to best reinforce values and

behaviors.

• Business performance

Each quarter, we discussed the company’s

business performance in detail. These

discussions included updates on the

company’s financial performance on key

financial metrics and factors impacting

performance and forecasts, both on a

global and on a division and market basis.

Among the factors impacting performance

were the continued higher inflation,

affecting both the company's costs and

customer demand.

We discontinued the separate detailed

quarterly reporting to the Board on

operations, which was introduced in

COVID-19 times. We did continue to

address (potential) impacts of geopolitical

tensions on the supply chain and the

company's adaptation of its operational

strategy thereto.

• Sustainability

Sustainability is an inherent part of the

company's 5 Frontiers strategy. In

pursuance thereof, the company

developed a five-year sustainability

program: Brighter Lives, Better World

2025. Throughout the year, we were

updated on the company’s targets,

progress on this program, and the

company's strategic initiatives for 2023 to

drive growth for sustainability. Also outside

meetings, there is contact on sustainability

matters between individual members of the

Supervisory Board and the Head of

Sustainability and the Chief Strategy &

Sustainability Officer.

As part of our last year's Supervisory Board

performance evaluation, we agreed that

the Supervisory Board oversight of

sustainability strategy remains a topic for

the full Board, and that sustainability

reporting best resides with the Audit

Committee.

Both the Audit Committee and the full

Supervisory Board reviewed the double

materiality assessment, adjusted this year

to the new requirements under the EU

Corporate Sustainability Reporting

Directive (CSRD). For more information,

see chapter 4, Brighter Lives Better World,

subsection 4.1.4, Materiality assessment.

In December, the Supervisory Board

engaged in an ESG program. The purpose

of the program was to further enhance the

knowledge and understanding of the

Supervisory Board on ESG, with a focus on

reporting, as such to be better equipped

to supervise and advise management on

sustainability matters. The broad part of

the program was delivered by the

University of Cambridge Institute for

Sustainability Leadership. The Head of

Sustainability thereafter provided a deep

dive on the company's sustainability

program, the company's climate transition

plan and sustainability reporting, Our

external auditor Ernst & Young, LLP

completed the program with insights into

their assurance approach and the role of

the auditor as to sustainability reporting.

• Digital delivery

At the start of the year, the full Board

reviewed and discussed the company's

digital year plan and focus in 2023 to

accelerate digitalization, together with the

governance for prioritization. The Board

was also separately updated on a key

digital customer interface project in

Europe. Throughout the year, the Board

remained updated on progress on the

company's digital roadmap through the

quarterly update on the company's global

digital strategic initiatives and via its Digital

Committee report back, see sub section

9.3.4 for more details.

• Capital allocation, financial reporting and

investor relations

We reviewed the capital allocation policy of

the company. In this context we also

discussed expectations related to cash

generation, dividend distributions,

investments in innovation and M&A, share

repurchases to cover obligations arising

from Signify’s long-term incentive and

other employee share plans, debt profile

and refinancing as well as credit ratings.

We discussed the quarterly results,

forecasts and the (semi-) annual financial

statements for 2023, including related

reports from the internal and external

auditors and sustainability information, and

related press releases.

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Consolidated financial statements

Signify Annual Report 2023

<≡>

Throughout the year, the Investor

Relations department updated us on

feedback from and interactions with

investors and analysts, developments in the

company’s share price and analyst

recommendations, as well as updates in the

shareholder base. After the publication of

each quarterly results, the Investor

Relations department updated us on the

market reaction and analyst views. A

portfolio manager was invited to allow the

Supervisory Board to ask questions on his

investor view on the company, in a

discussion facilitated by Investor Relations.

• US visit

In view of the strategic importance of the

US for the company, the Supervisory Board

had a three-day visit to the company's

North American teams in the company's

offices in Burlington (MA). The Board

discussed with management the North

America performance, market dynamics,

benchmarking versus competition, strategy

and talent. In a customer roundtable, the

Board exchanged views with, and gained

insights from, agents and customers.

Around the meetings, the Supervisory

Board had multiple interactions with the US

teams.

• Innovation and on-site visit

We held our dedicated annual discussion on

the company's innovation strategy during

our US visit. The Supervisory Board also

reviewed the company's venture and new

technology portfolio. In our Burlington

office, the company’s innovation

department gave demonstrations of recent

and future technologies being developed.

The Board had a more extensive view of the

company's dynamic architectural lighting

business of Color Kinetics, and a tour

highlighting buildings and a bridge with

Color Kinetics lighting in Boston.

• Risk management and internal controls

As part of the annual Strategy Review

session in September, we discussed the

key enterprise risks, the process resulting

in the key risks identification and

assessment, and how the company

addresses these risks. Via the Audit

Committee, the Supervisory Board is

updated on the company’s risk

management and internal controls,

including any significant changes and

improvements thereto, and on a quarterly

basis on the enterprise risk management

self-assessment on key risks identified.

In 2023, the Supervisory Board had two

sessions dedicated to developments on

cybersecurity, together with the

company's roadmap and initiatives to

address cybersecurity risks. This was

complemented by written cybersecurity

updates in the other two quarters.

For more information on the company's key

risks, risk management and the company’s

business control framework, see chapter

13, Risk factors and risk management.

• Talent management

The company’s Human Resources

department presented its annual update on

talent management, succession planning of

employees who are in key positions,

organizational design, employee Net

Promoter Score (NPS), gender and age

diversity and focus areas for the coming

period. Performance and succession of the

company's leadership team and other

people in key positions were discussed with

the Supervisory Board in more detail.

9.3Key activities

of the

Supervisory

Board

committees in

2023

9.3.1 Audit Committee

Our Audit Committee assists the Supervisory

Board in fulfilling its oversight responsibilities

for, among other matters, the quality and

integrity of the company’s financial and

sustainability reporting, the effectiveness of

the design and operation of the internal risk

management and control systems, the

internal and external audit process as well as

company's process for monitoring

compliance.

Pamela Knapp is the Chair, and Gerard van de

Aast and Bram Schot are members of the

Audit Committee.

The Audit Committee had seven regular

meetings in 2023: upon the conclusion of

each quarter, twice in February (annual

report and auditor report; second meeting

combined Supervisory Board/Audit

Committee) and in December (hard close). In

2023, an additional meeting was held for

presentations of two finalist candidate-

auditors for the period 2026-2028. The

committee reported its findings to the full

Supervisory Board after every meeting. The

CEO, CFO, Group Controller, Chief

Accountant, Head of Internal Audit, Chief

Legal Officer and external auditor (Ernst &

Young Accountants LLP) generally attend

Audit Committee meetings. At the end of

each meeting, the committee holds a private

session separately with the external auditor,

without members of management being

present. The Head of Internal Audit can be

invited to this private session from time to

time. The committee Chair also has regular

contact with the CFO, the Head of Internal

Audit and the external auditor outside of

committee meetings.

As part of its standing agenda, the Audit

Committee reviewed and discussed:

• The Company financial statements,

together with an analysis of developments

in key financials and forecasts,

sustainability results and related press

releases;

• Developments in larger legal cases

together with any related provisions as well

as material investigations;

• Fraud related risks and investigation;

• Internal audits performed and follow-up

actions taken and improvements made;

• The annual audit plan and programs for

each quarter, the internal audit charter as

well as the functioning and effectiveness of

the internal audit function. The committee

approved the internal audit plan and

internal audit charter;

• The enterprise risk management self-

assessments, together with the risk

management framework and external risk

trend;

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Signify Annual Report 2023

<≡>

• The company's annual integrity report over

the past year, and key observations as to

developments in integrity cases. For more

information, see chapter 4, Brighter Lives,

Better World, section 4.3.5, Business

ethics;

• The annual impairment test analysis;

• The company’s internal risk management

and control systems, and any significant

changes and improvements thereto, and

the effectiveness of internal control over

financial reporting.

In 2023, the Audit Committee also dedicated

time to the following matters:

• Sustainability reporting

In addition to the quarterly review of the

reporting under the company's Brighter

Lives Better World 2025 program, the

committee also reviewed progress on

reporting under the EU taxonomy, and

preparations for the company's reporting

under the EU Corporate Sustainability

Reporting Directive (CSRD). The committee

discussed the double materiality

assessment made, and the split of

sustainability information now applied in

this Annual Report between the Brighter

Lives, Better World information in chapter

4 and CSRD disclosures in chapter 17. The

committee paid attention to Scope 3 data

availability and improvements to the

company's reporting. For more information,

see chapter 4, Brighter Lives, Better

World, and chapter 17, CSRD Disclosures.

The current and upcoming ESG reporting

requirements were also part of the ESG

training program for the full Supervisory

Board in December.

• Financing and US pension de-risking

The committee addressed the turbulence

in the banking sector in the first half of

2023.

The company's liquidity overview and debt

profile, and the issuance of a long-term

debt to refinance part of the debt that will

mature in 2024 was also discussed by the

committee and the full Supervisory Board.

The committee reviewed and discussed the

possible termination of a US defined

benefit plan in order to de-risk the

company's financial exposure and to

eliminate ongoing costs and funding needs.

• Tax policy update

The committee reviewed and discussed the

company's tax policy and tax developments.

• Re-appointment external auditor

2023-2025

Following a performance assessment by

the committee and management, the

Supervisory Board decided to propose the

re-appointment of the current external

auditor for another period. In accordance

with this proposal, the 2023 Annual

General Meeting of Shareholders re-

appointed Ernst & Young Accountants LLP

for the period 2023-2025.

• Proposal external auditor 2026-2028

As EU law requires a rotation of the

external audit firm after the firm has

completed the company's statutory audit

for ten consecutive years, a new auditor

will need to be appointed for the period as

from January 2026. The committee was

engaged in the auditor tender, resulting in

the committee's recommendation to the

Supervisory Board to submit to the 2024

Annual General Meeting of Shareholders a

proposal to appoint the company's new

external auditor, starting on January 1,

2026, for a period of three years.

• Interaction with external auditor and audit

results reports

The reporting from the company's external

auditor Ernst & Young Accountants LLP

relates to the audit plan and the audit

results reports, which are shared with

management and the Audit Committee. In

the reports, the external auditor highlights

developments that are relevant for their

key audit matters, and provides details on

their audit approach, procedures and

observations in relation thereto. In the

reports, the external auditor also highlights

other areas, developments or audit

procedures performed, and their

observations and considerations on

management judgement and estimates

applied in the preparation of the financial

statements. In 2023, the committee

introduced having an additional meeting to

review the external auditor's draft year-

end audit report and final draft annual

report, ahead of the combined Audit

Committee and Supervisory Board meeting

on the annual report and audit.

In the Audit Committee meetings, the

external auditor discussed their reports

with management and the committee. The

discussions with the external auditors also

covered matters related to accounting

policies, financial risks, compliance with

accounting standards and compliance with

(financial) legal requirements. Other areas

of the Audit Committee review included the

proposed external audit scope, approach,

fees and the independence of the external

auditor. The committee reviewed the

professional fitness and good standing of

the external auditor and its engagement

partners. For information on the fees of

Ernst & Young Accountants LLP, refer to

chapter 16, Signify N.V. financial

statements, note B, Audit fees.

The audit by the external auditor, including

a discussion of the key audit matters, is

discussed in the auditor's report which is

included in chapter 18, Combined

independent auditor's report.

9.3.2 Corporate Governance

and Nomination &

Selection Committee

The Corporate Governance and Nomination &

Selection Committee assists the Supervisory

Board by preparing the selection criteria and

appointment procedure for members of the

Board of Management and the Supervisory

Board, periodically assessing the succession

planning for the individual members of these

boards and arranging interviews of potential

candidates. The committee also supervises

the policy on the selection and appointment

of certain other key management positions.

The committee is charged with reviewing the

company’s corporate governance (for more

information on corporate governance refer

to chapter 11, Corporate governance). The

performance evaluation of the Board of

Management and the Supervisory Board is led

by the committee.

Arthur van der Poel is the Chair, and Rita Lane

and Frank Lubnau are the members of this

committee.

We are Signify

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Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>

The committee held five regular meetings in

2023 and reported its findings to the full

Supervisory Board after each meeting. The

CEO and Chief Legal Officer generally attend

the committee’s meetings. The committee

Chair has regular contact with the CEO and

the Chief Legal Officer. Committee members

are regularly in contact on topics ahead of a

committee meeting, resulting in efficient

decision-making during the meetings.

As part of its standing agenda, the committee

discussed changes in key personnel positions,

succession planning and the functioning of

key personnel as well as the Supervisory

Board’s performance evaluation procedures.

In addition, the committee discussed

developments in the Dutch corporate

governance landscape and the company’s

corporate governance structure.

In 2023, the committee specifically dedicated

time to the following matters:

• Composition Board of Management

Following a review and assessment by the

committee, the Supervisory Board

proposed to re-appoint Eric Rondolat as

CEO and Chair of the Board of

Management, at the AGM to be held in May

2024, for a period of four years.

In December 2023, the company

announced that Javier van Engelen, who

joined the company as its CFO in 2020, had

decided to leave the company on April 1,

2024. The committee initiated the search

and leads the selection process of his

successor.

As the company moves to a new operating

model announced in December 2023, it has

been agreed not to renew the role of Chief

Commercial Officer, held by Maria Letizia

Mariani since her appointment in 2020.

Therefore, she will not be up for re-

appointment at the AGM to be held in May

2024.

• Composition Supervisory Board and

onboarding

Following the selection process led by the

committee, Sophie Bechu was appointed as

Supervisory Board member in May 2023.

She followed a tailor-made immersion

program to get to know the company's

industry, business, strategy and

management, and followed our cyber

security training for Supervisory Board

members.

In December 2023, the company

announced that the Chair of the

Supervisory Board, Arthur van der Poel, will

step down at the close of the AGM to be

held in May 2024. From that date, he will be

succeeded by the current Vice Chair

Gerard van de Aast, and Bram Schot will

become the Vice Chair.

In 2023, the committee prepared and led

an assessment and selection process that

resulted in the proposals by the

Supervisory Board to appoint Jeroen Drost

as a new member to our Board, and to re-

appoint Pamela Knapp and Rita Lane at the

AGM to be held on May 14, 2024.

The Supervisory Board recommends the

appointment of Jeroen Drost in view of his

wealth of experience in banking and

investment activities across numerous

industries, which will bring a thorough

investor's perspective to our Board.

Subject to his appointment by our

shareholders, Jeroen Drost will become

the new Chair of the Audit Committee.

The proposed appointment of Jeroen

Drost and re-appointment of Pamela Knapp

are for a period of four years. As Rita Lane

served for two four-year terms, and in

accordance with the Dutch corporate

governance code, her proposed re-

appointment is for a period of two years.

The Supervisory Board recommends her

re-appointment for continuity and in view

of her valuable contributions to the Board

and the company in the past two terms.

In each selection process, the committee

takes account of the desired board profile,

including its diversity policy and expertise

and experience as well as the desired

board size. For the re-appointments, the

respective performance and board

evaluations have also been taken into

consideration.

• Board size and profile, including diversity

We believe it is of strategic importance

that our Board of Management and

Supervisory Board are composed in line

with Dutch and international corporate

governance best practices and that they

have the expertise needed for a good

understanding of current affairs and

longer-term risks and opportunities

related to the company’s business, taking

into account our objectives that promote

diversity at board level. Our boards’ profile

and the Supervisory Board skills and

expertise matrix reflect the areas that the

committee and Supervisory Board regard

to be most relevant to address the

transition in the lighting industry and the

execution of the company's 5 Frontiers

strategy.

In 2023, the committee reviewed the skills

and expertise matrix and concluded that

currently no categories need to be added

nor removed. At the committee's initiative,

as from this Annual report, the number of

checks per person are limited to the most

important categories for the member

concerned. The biographies of the

Supervisory Board members maintained on

the company's website complement the

information included in the matrix.

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Signify Annual Report 2023

<≡>

The committee also reviewed the Boards

profile, including diversity, and concluded

that currently no update is required. For

the Supervisory Board members, and in line

with Dutch law, we aim that at least one-

third are men and at least one-third are

women. Our Supervisory Board currently

has 43% female and 57% male and thus

meets this objective. For the Board of

Management members, we aim at having at

least one man and at least one woman for a

board of three members, and at least two

men and at least two women for a board of

five members. Our Board of Management

currently comprises of one woman (25%)

and three men (75%) and thus meets this

objective. For more details on the profile,

including the diversity of the Board of

Management and Supervisory Board, refer

to chapter 11, Corporate governance. For

more information on diversity & inclusion in

the company, refer to chapter 4, Brighter

Lives, Better World, subsection 4.3.2,

Diversity, equity and inclusion.

As to the size of the Supervisory Board, the

committee concluded that a board of

about seven members is a good size for the

company.

The committee will continue to periodically

assess its size and composition, including

the desired diversity, and initiate searches

where indicated.

• ESG committee

We noted the suggestion from some

stakeholders to companies in general to

consider establishing an ESG committee

from among their supervisory boards to

support progress on sustainability. This

topic was also addressed in our last year's

annual performance evaluation. We

concluded that sustainability has been an

integral part of Signify's strategy for many

years. The company also publishes

extensive sustainability statements. The full

Supervisory Board is and will continue to be

engaged in the strategy, including

sustainability, whereas the review of the

sustainability reporting is within the scope

of responsibilities of the Audit Committee.

In view of this, we saw no need to establish

an ESG committee from among the

Supervisory Board. The committee

reconsidered the establishment of an ESG

committee again this year, and came to the

same conclusion. It will continue to monitor

the sustainability developments and needs

in this respect.

• Performance evaluation and findings

The committee looked after the follow-up

on findings resulting from last year's

Supervisory Board performance evaluation,

including on how we can best track the

execution of the strategy at the

Supervisory Board level, the Board's

continued attention to the company's

response to geopolitical and market

conditions and the organization of an ESG

training for the Supervisory Board.

As per our practice to engage an external

party to facilitate the performance

evaluation of the Supervisory Board and its

committees about every four years, the

committee selected an external facilitator

for the 2023 evaluation process.

• New Dutch corporate governance code

The committee discussed the new Dutch

corporate governance code that was

issued in December 2022, and reviewed

how the company embedded the updated

Code in its organization. The committee led

the review of the updates to the

Supervisory Board Rules of Procedure,

Supervisory Board committee charters and

the Board of Management Rules.

9.3.3 Remuneration

Committee

The Remuneration Committee assists the

Supervisory Board by, among other matters,

reviewing and preparing remuneration

policies for the Board of Management and

Supervisory Board, remuneration proposals

for individual members of the Board of

Management and other key management

positions, as well as proposals for targets

relevant to the variable compensation of

members of the Board of Management and

the review of their performance.

Gerard van de Aast is the Chair, and Pamela

Knapp and Arthur van der Poel are the

members of this committee. Currently, no

member of the Remuneration Committee is a

member of the executive management board

of another listed company.

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Corporate statements

Consolidated financial statements

Signify Annual Report 2023

<≡>


Supervisory Board skills and expertise matrix Fields in which the members of the Supervisory Board1 have a particular skill or expertise
Skill/experience item	Arthur van der Poel	Gerard van de Aast	Sophie Bechu	Pamela Knapp	Rita Lane	Frank Lubnau	Bram Schot
CEO role	ü	ü					ü
Industrial experience	ü	ü	ü	ü	ü	ü	ü
Finance, expert level				ü
Sustainability	ü						ü
Projects/infrastructure		ü
Business transformation		ü	ü	ü		ü	ü
Digital business processes			ü		ü	ü
IT, cybersecurity		ü
Technology/innovation	ü				ü	ü
Operations/Supply chain			ü		ü
Diversity elements: Gender identity, age, nationality	Male 75 Dutch	Male 66 Dutch	Female 63 French/ American	Female 65 German	Female 61 American	Male 54 German	Male 62 Dutch
1 Mr. Jeroen Drost, who is nominated to be appointed as Supervisory Board member at our Annual General Meeting of Shareholders to be held in May 2024, has particular skills/expertise in the following categories: CEO role, industrial experience, finance expert level, sustainability, business transformation.

In performing its duties and responsibilities,

the Remuneration Committee is assisted by

an external consultant and an in-house

remuneration expert.

The Remuneration Committee held three

regular meetings in 2023 and three additional

meetings in relation to the remuneration

policies review, and reported its findings to

the full Supervisory Board after each

meeting. The CEO, the Chief HR Officer, the

Head of Rewards and the Chief Legal Officer

generally attend the committee’s meetings.

The committee also consulted with the CEO,

the Board of Management and certain other

key management employees. Following those

consultations, the committee prepared

decisions and advised the Supervisory Board.

As part of the standing agenda, the

Remuneration Committee discussed, among

other matters, base salary levels for the

Board of Management, the target setting for

variable remuneration, the final and interim

performance results on variable

remuneration, scenario analyses, disclosure

in the remuneration report and AGM voting

results on the remuneration report.

In 2023, the Committee performed a review

of the remuneration policies for the Board of

Management and for the Supervisory Board.

The committee Chair engaged with key

stakeholders, such as shareholders,

shareholder representative groups and the

Dutch Central Works Council, to obtain

feedback on the proposed remuneration

policies, executive remuneration in general

and views on disclosure in the remuneration

report. These findings from the policy review,

feedback received from stakeholders and the

proposed updates to the remuneration policy

for the Board of the Supervisory Board were

shared and discussed with the full

Supervisory Board.

Also refer to chapter 10, Remuneration

report, for further information on the

remuneration policies review and the

implementation of the current policies in

2023.

9.3.4Digital Committee

The Digital Committee assists the Supervisory

Board by, amongst other matters, reviewing

the company’s digital strategy and roadmap,

digital objectives and performance and the

governance for deciding on digital

prioritization.

As from her appointment in May 2023, Sophie

Bechu succeeded Frank Lubnau as the Chair

of the Digital Committee. Rita Lane, Frank

Lubnau and Bram Schot are the members of

the Digital Committee.

The Digital Committee held four regular

meetings in 2023 and reported its findings to

the full Supervisory Board after each

meeting. During the Supervisory Board's US

visit, two additional sessions were held,

focusing on a US digital lighthouse project

and advanced analytics. The CFO and the

Chief Digital and Information Officer (CDIO)

generally attend the committee meetings.

The committee Chair has regular contact with

the CFO and the CDIO.

The company's digital aspiration has a

roadmap covering three focus areas:

digitalizing customer interfaces, digitalizing

processes and digitalizing offers. To enable

this roadmap, the company also has focused

activities around people, technology, data

and way of working.

Ahead of the discussion with the full Board at

the start of the year, the committee reviewed

and discussed the company's digital year plan

and focus in 2023 to accelerate digitalization,

together with the governance for

prioritization.

As part of the standing agenda throughout

2023, the committee reviewed and discussed

progress on the company's global strategic

initiatives in the digital domain, their enablers

and status of lighthouse projects. In 2023,

deep dives were held on various topics,

including lighthouse projects in the US and

Europe, the company's system & services

business, advanced analytics, and the

company's portfolio optimization and

standardization, including enterprise

resource planning (ERP) enhancement.

9.4Performance

evaluation

We evaluated the performance of the Board

of Management and of the Supervisory Board

and its committees in 2023.

The Board of Management evaluated their

team and personal targets performance, and

shared their views with the Chair and Chair of

the Remuneration Committee, which were

discussed in the Supervisory Board.

The objective of our annual Supervisory Board

self-evaluation is to gain better insight into

the functioning of the Supervisory Board, to

identify strengths that we want to keep and

to identify matters that the Supervisory

Board or the company can improve. In most

years, the evaluation of the Supervisory

Board's performance is organized internally,

led by the Nomination and Governance

Committee. About every four years, the

Supervisory Board engages an external party

to facilitate the performance evaluation. In

line herewith, the Supervisory Board engaged

an external party to facilitate its 2023

performance evaluation.

The objective of the external facilitator was

to support the Supervisory Board in

strengthening its effectiveness. They

facilitated the Board in evaluating its own

functioning, the functioning of its four

committees and its relationship with the

Board of Management and other

stakeholders. The evaluation started with a

questionnaire, followed by interviews with

each of the members of the Supervisory

Board and Board of Management as well as

the Chief Legal Officer and Deputy General

Secretary. The findings of the questionnaire

and interviews served as input for a

discussion led by the external facilitator, first

with the full Supervisory Board only and

thereafter also with the other interviewees.

The self-evaluation of the Supervisory Board

provided valuable insight of the functioning of

the Supervisory Board regarding several

topics and roles, as described in the Dutch

Corporate Governance Code.

A general conclusion is that the Supervisory

Board is a professional and well-functioning

team of highly involved experts, which are

easy to mobilize if necessary and which is

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Signify Annual Report 2023

<≡>

preceded by an experienced and effective

Chair, who will be succeeded this year.

Particularly, the steps taken to increase

involvement in strategy deep dives as part of

the long-term value creation process were

evaluated positively. To add to this, the

ambition was formulated to further balance

the focus of the Supervisory Board on short-

term performance with long-term strategic

portfolio developments. This is considered

important given the ongoing geopolitical

turbulence and uncertainties in markets.

The Supervisory Board makes use of four

committees: Audit, Remuneration, Digital and

Nomination & Governance. Their functioning

is evaluated positively. Previous actions to

define the scope and focus of the Digital

Committee more clearly, have been

successful. The entire board followed an ESG

training in 2023 and decided that

sustainability remains a key topic for the

entire board as it is deeply rooted in every

part of Signify. Specific elements, such as

regulatory changes, organization culture and

social aspects, will be reviewed in depth in

the relevant committees.

The Supervisory Board expresses the

ambition to further involve and expose

second level leadership and potentials, both

formally and informally. This is based on

positive experiences in the recent past and

considered important to maintain oversight

regarding organization development and

culture, against the background of

announced changes within the Board of

Management.

9.5Financial

statements

2023 and

dividend

Signify’s Consolidated and Company financial

statements for 2023, as prepared by the

Board of Management, have been audited by

Ernst & Young Accountants LLP as

independent external auditor appointed by

the General Meeting of Shareholders. Its

report has been included in the Combined

independent auditor’s report. We have

approved these financial statements.

We recommend to the General Meeting of

Shareholders to adopt the financial

statements for 2023.

We likewise recommend to shareholders that

they adopt the proposal by the Board of

Management to declare a cash dividend of

EUR 1.55 per ordinary share from the 2023

net income.

9.6Appreciation

Market conditions in 2023 remained

challenging. We would like to thank the Board

of Management and all Signify employees for

their continued commitment, ability to adapt

to the changing environment, and

performance throughout the year.

We would like to thank our departing CFO

Javier van Engelen and CCO Maria Letizia

Mariani for their important contributions to

the company over the years.

In May 2024, I will step down as Chair. I have

all confidence that Gerard van de Aast will be

a strong successor.

February 27, 2024

Supervisory Board

Arthur van der Poel

Gerard van de Aast

Sophie Bechu

Pamela Knapp

Rita Lane

Frank Lubnau

Bram Schot

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Signify Annual Report 2023

<≡>

10 Remuneration

report

10.1 Letter from the Remuneration

Committee Chair

On behalf of the Supervisory Board, I am pleased to present the 2023 remuneration report. This

report includes a detailed explanation of the current remuneration policies for the Board of

Management and the Supervisory Board. The effectuation of these policies in 2023 is discussed

in parts 10.2 and 10.3 of this remuneration report.

In 2023, we initiated a review of the remuneration policy for both the Board of Management and

the Supervisory Board. We continued our engagement with key stakeholders, such as

shareholders, shareholder representative groups and the Dutch Central Works Council, to

understand their views on remuneration in general and to solicit feedback on the proposed

changes for the remuneration policies. These interactions were very productive, leading to a

good dialogue and valuable feedback, particularly related to improvement opportunities that we

have included in this remuneration report as well as the policy proposals that will be on the

agenda for the Annual General Meeting of shareholders in 2024.

Signify's performance in 2023

This year was yet another volatile and unpredictable year. The dual specter of war and inflation

did not abate during 2023. While inflationary pressure was trending down, it remained at

relatively high levels, depressing consumer spending. The uncertainty in the geopolitical

environment continued and yet another conflict erupted. It was therefore another year of

adaptation for the company.

Within this environment, the Board of Management was able to strengthen Signify’s financial

profile. While comparable sales growth declined by 8.3% due to weakness in Consumer, OEM and

indoor connect lighting, gross margin expanded enabling the company to deliver a healthy free

cash flow of 8.7%. In addition, despite the sales decline, the company was able to maintain

profitability at 10%, which was broadly in line with 2022, and deliver a gross margin improvement

to 39.7%. At the same time, there was an under absorption of fixed costs due to the lower sales

volume that offset that margin improvement.

Strategically the company continued to stay the course and drive toward a differentiated

position in the market. The relevance of Signify’s strategy, products and solutions was further

heightened in 2023, as energy efficiency continues to be an urgent means to address our

collective impact on the planet. The year 2023 demonstrated a readiness by business and public

customers to invest in energy efficiency measures that lend protection from volatile energy

markets and help them remain aligned to emissions reduction targets. As a result, Signify is

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Signify Annual Report 2023

<≡>

gaining ground in connected professional systems and services, with connected lighting and

growth platforms reaching 30% of sales and LED-based sales now comprising 85% of sales.

Signify continues to lead the way in sustainability with the Brighter Lives, Better World 2025

sustainability program, and made continued progress toward achieving the goals of doubling the

positive impact on the environment and society by the end of 2025. This year was the third year

of this program, and the company is on track to reduce emissions across the entire value chain

by 40% against the 2019 baseline, driven by leadership in energy efficient and connected LED

lighting solutions which significantly reduce emissions during the use phase. Circular revenues

increased, surpassing the 2025 targets, with the main contribution coming from serviceable

luminaries, with a strong performance from both professional and consumer segments. Brighter

Lives revenue is on track to meet the 2025 targets, however women in leadership is behind the

targets to achieve the 2025 outcome.

Signify customers have reported an improved experience as the customer net promoter score

increased to 53 in Q4, continuing the positive trajectory in this area as evidenced by the

improvement over the score of 44 at the end of 2022. Significant improvement was experienced

by customers in order and delivery, which was a noted pain point. From an employee

perspective, the employee net promoter score declined to 26 at the end of 2023, down from a

score of 36 at the end of 2022. This decline was expected and attributed to the announcement

in Q4 of the need to restructure the business along customer segments and a need to reduce

costs into 2024. The announced restructuring and costs savings will set the company on a good

path to better serve customers, quickly adapt to the environment, and ensure end-to-end

accountability for delivery to customer segments.

Stakeholder engagement

The 2022 remuneration report received a 92.93% advisory vote from the shareholders, at the

Annual General Meeting of Shareholders, held on May 16, 2023.

In preparation for the 2023 Remuneration Report and the proposed changes for the

Remuneration Policies for the Board of Management and the Supervisory Board, the Supervisory

Board initiated extensive shareholder engagement. Our objective was to understand the

expectations of, and solicit feedback from, our broad and geographically diverse shareholder

base, including proxy advisors and other stakeholders. In this regard, we invited investors

representing a total of 37% of our shareholder base to meet with Signify on this topic, and

ultimately meetings were held with shareholders representing 18% of the shareholder base,

excluding passive investors.

These discussions were very constructive, and we received valuable feedback and suggestions

on how the Remuneration Report could be further improved. The following key points came from

those interactions:

• Very positive feedback on the link of strategy, ESG metrics, long-term incentives and related

disclosure;

• Expectation of increasing disclosure, particularly on the team/individual performance

measures in short-term incentives; and

• Recommendations for limiting the number of focus areas included in the team/individual

performance measure in the future.

With respect to the second item, we have significantly expanded the disclosure on the team/

individual performance for 2023 in direct response to this feedback, while the third item has

been taken for consideration for target setting for 2024.

Looking ahead to 2024

The current remuneration policies of the Board of Management and Supervisory Board were last

reviewed and included in the AGM 2020. It was therefore time for a full review of the policy in

light of Signify's evolution as an independent organization, market practices, expectations of

shareholders, and developments in corporate governance. During 2023, we undertook a

detailed review of the policies with an external remuneration expert to challenge us, bring best

practice developments, and provide overall expertise. The policy review included remuneration

structures, peer groups and potential changes to various policy clauses.

The stakeholder engagements as outlined were an important step in the development of the

final policies. Specifically, shareholders, stakeholders and the Dutch Works Council were invited

to give feedback and discuss the elements of the policy for which there were proposed

changes.

The following were the key discussion points during these stakeholder engagements:

• Limiting the potential for duplication of metrics in the short- and long-term incentive plans by

removing free cash flow (FCF) from the short-term incentive plan;

• Adapting the vesting of our long-term incentive plans at early or full retirement to reflect

what shareholders consider to be best practice with a pro-rata vesting; and

• Enabling some limited flexibility in the short-term incentive plan balance of financial and non-

financial metrics to reflect priorities in a particular year.

The first two points were proposed as changes to the policy in direct response to feedback

received from stakeholders in prior engagements. This was very much appreciated by all

stakeholders with whom we met during these engagements.

Other topics addressed included the labor market peer group, as well as the refinement of the

base salary and the clawback clauses.

We very much appreciated those discussions and we have enhanced the policy based on the

feedback received.

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Signify Annual Report 2023

<≡>

With respect to the Supervisory Board Remuneration policy, we were not proposing any

changes. While a review of this policy was conducted, the content remains largely consistent

with the policy of 2020. During the engagement sessions, feedback on this policy was very

limited. It was noted by our shareholders, however, that we may wish to consider increasing fees

for the future as they have remained as is since 2017, when Signify became an independent

company. We are not proposing to do that at this time; however, the feedback was noted for

future consideration.

The proposal for the revised Remuneration Policies for the Board of Management and the

Supervisory Board will be included in the convocation documents for the 2024 AGM.

Finally, the link between the Signify strategy, ESG metrics and remuneration overall was a key

component of all stakeholder conversations for both the Remuneration Report and Policy for

the Board of Management, as illustrated in the image below. Signify continues to be identified as

a leader in its approach to sustainability, the degree of reporting on these metrics and the

related link to the long-term incentive plan. Additional input from stakeholders related to a

desire for the inclusion of ESG metrics in the short-term incentive plan. While Signify believes

these metrics fit more readily to a longer-term time horizon, the policy change related to

enabling limited flexibility in the short-term incentive plan balance of financial and non-financial

metrics would potentially enable this to be included in the future, if appropriate, in response to

this feedback.


	Better World		Climate action

			Circular economy

	Brighter Lives		Food availability Safety & security Health & well-being

			Great place to work

We are pleased with the overall ongoing engagement with stakeholders and the degree of

feedback and dialogue experienced. As described, we have continued to evolve the 2023 report

and 2024 remuneration policies in direct response to this feedback. We trust that stakeholders

experience these changes positively and appreciate the spirit of transparency and continuous

improvement which drives them.

Gerard van de Aast

Chair of the Remuneration Committee

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Signify Annual Report 2023

<≡>

LTI

10.2 Remuneration Board of Management

Introduction

Signify has a balanced compensation policy for its employees, from our CEO and other members

of the Board of Management to all employees worldwide. Our policy aims to stimulate

sustainable short- and long-term value creation. Therefore, the performance measures used in

the variable compensation components are linked to quantitative financial, non-financial and

sustainability targets. The remuneration policy also serves a communication purpose as it clearly

stipulates and supports a common approach to deliver on the company’s strategy.


Signify’s value creation model: The value created by Signify goes beyond financial performance alone. Our approach is to optimize long-term value through financial, environmental and social resources. Our focus on environment and the societal implications of doing business is evidenced in our Brighter Lives, Better World 2025 program. This program links to our long-term incentive plan and ensures that the interests of the organization, society at large, and our impact on the environment in which we live are key elements in how Signify delivers long-term value creation to stakeholders. Our activities and our way of doing business impact customers, employees, investors and society at large. Signify expresses these impacts in monetary terms in chapter 3, Creating sustainable long-term value, section 3.3, Our value created.

The current remuneration policy for the Board of Management and for the Supervisory Board

was adopted by the Annual General Meeting of Shareholders (AGM) in 2020. The effectuation of

these policies in 2023 is discussed in parts 10.2 and 10.3 of this remuneration report.

The report included in this chapter constitutes the remuneration report within the meaning of

section 2:135b of the Dutch Civil Code.

The following principles apply for the remuneration policy of the Board of Management:

• Signify’s remuneration policy aims to attract, reward and retain qualified leaders to pursue the

company’s purpose and long-term strategic objectives, while taking the interest of all the

company’s stakeholders into account;

• Remuneration levels are to be competitive and in line with the market practice of comparable

companies and support a pay-for-performance philosophy with a significant proportion of

compensation at risk;

• Remuneration should drive long-term value creation from a financial, non-financial and

sustainability perspective;

• During the policy design and review process, stakeholder feedback and legal provisions,

including the Dutch Corporate Governance Code, are taken into consideration.

Remuneration components

The compensation package for the members of the Board of Management consists of the

following fixed and variable components:

• Base salary;

• Annual cash incentive;

• Long-term equity-based incentive;

• Pensions and other benefits.

The combination of a member’s base salary, annual cash incentive and long-term equity-based

incentive, together referred to as the “total direct compensation”, is targeted around the

median level of a representative labor market peer group and benchmarked on a regular basis.

This peer group consists of 50% Dutch cross-industry companies that are typically included in

the AEX or AMX, and 50% European sector-specific companies. The Supervisory Board reviews

the peer group on a regular basis and may adjust to ensure that the companies in the group

remain relevant peers. In 2023, the peer group was reviewed and updated to ensure relevance.

As of January 2024, the labor market peer group consists of the following 14 companies:


Labor Market Peer Group
Aalberts	DSM-Firmenich	ams OSRAM*
AkzoNobel	KPN	Prysmian
Arcadis*	Legrand	Rexel
ASMi*	Nexans	Rheinmetall Group
BAM	Nordex*

* New companies to the labor market peer group

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Summary of Remuneration


	Compensation Element	2020 Policy Summary		Application in 2023 Summary
Total direct compensation	Base salary	• The Supervisory Board determines the base salary and may, at its discretion, apply an increase; • The base salary may not be adjusted with a higher percentage than a collective labor agreement (CLA) increase agreed for the CLA population in the Netherlands.		Base salary as follows: E.H.E. Rondolat H.M. Chitale F.J. van Engelen Sousa M.L. Mariani	€ 985,223 € 644,000 € 644,649 € 644,649
	Annual cash incentive	CEO: On-target: 80% Maximum: 160% of base salary	Other BoM members: On-target: 60% Maximum: 120% of base salary	Measures: • Comparable sales growth (20%) • Adjusted EBITA (30%) • Free cash flow (30%) • Team/individual (20%)
		80% is related to financial performance measures and focuses on the realization of strategic business objectives. 20% is related to team and individual performance measures.		Actual payout: E.H.E. Rondolat H.M. Chitale F.J. van Engelen Sousa M.L. Mariani	In % of target: 55.8% 55.8% 56.8% 57.8%
	Long-term equity based incentive	CEO: Annual on-target grant value: 100% of base salary	Other BoM members: Annual on-target grant value: 80% of base salary	2023 grant: E.H.E. Rondolat H.M. Chitale F.J. van Engelen Sousa M.L. Mariani	33,052 PSUs 17,284 PSUs 17,300 PSUs 17,300 PSUs
		Key features: • Granted in performance share units (PSUs) only; • Conditionally granted annually; • Vesting of performance shares conditional upon achievement of performance conditions measured over a period of three financial years and continued employment; • Performance measured using four performance measures equally weighted: i) relative total shareholder return (25%), ii) free cash flow (25%), iii) return on capital employed (25%), and iv) sustainability (25%); • Payout per performance measure can vary between 0% and 200%; • In the case of external hires, a restricted share units (RSUs) based sign-on award can be offered.		• Holding requirement (part 10.2.7 of this remuneration report): CEO: 300% of base salary Other BoM members: 200% of base salary • Additional requirement to comply with holding requirements under the Dutch corporate governance code (total five years from grant date)

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	Compensation Element	2020 Policy Summary	Application in 2023 Summary
Other compensation	Pension benefit	• Collective defined contribution plan up to the maximum pensionable salary (2023: EUR 128,810); • Gross pension allowance of 25% of the base salary exceeding the maximum pensionable salary; • Members of the Board of Management can, on a voluntary basis, choose to participate in a net pension arrangement by investing the net (after tax) amount.	E.H.E. Rondolat H.M. Chitale F.J. van Engelen Sousa M.L. Mariani	Accumulated annual pension as of Dec 31, 2023: € 47,702 € 11,586 € 6,562 € 6,715
Other compensation	Additional benefits	Additional benefits, such as expense and relocation allowances, medical insurance, accident insurance and company car arrangements. Car allowance gross per annum (or lease car): Entertainment expense allowance net per annum: Representation allowance net per annum: Relocation allowances:	CEO: € 36,960 € 23,920 € 6,800 H.M. Chitale and F.J. van Engelen Sousa (per contractual agreement related to family relocation): Allowance international school (net):	Other BoM members: € 31,560 € 6,000 € 12,500

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Signify Annual Report 2023

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The table below reflects the total remuneration as well as the remuneration costs of each of the members of the Board of Management in 2023.


Remuneration and remuneration costs of individual members of the Board of Management in EUR
	Base compensation/ salary	Annual incentive 1	Performance shares costs 2	Restricted share rights costs 3	Pension allowances	Pension scheme costs	Other compensation 4	Termination benefits 5	Total remuneration costs
2023
E.H.E. Rondolat	985,223	439,804	570,304	–	214,103	31,834	41,536	–	2,282,804
H.M. Chitale6	403,667	135,835	121,685	–	80,732	19,954	20,735	–	782,608
F.J. van Engelen Sousa	644,649	219,696	42,968	–	128,960	31,834	33,515	–	1,101,622
M.L. Mariani	644,649	223,564	266,689	–	128,960	31,834	49,166	644,649	1,989,511
	2,678,188	1,018,899	1,001,646	–	552,755	115,456	144,952	644,649	6,156,545
2022
E.H.E. Rondolat	947,330	90,944	705,530	–	240,492	28,133	31,725	–	2,044,154
F.J. van Engelen Sousa	619,855	44,630	179,199	96,799	126,247	28,133	29,404	–	1,124,267
M.L. Mariani	619,855	44,630	349,509	–	126,247	28,133	42,262	–	1,210,636
	2,187,040	180,204	1,234,238	96,799	492,986	84,399	103,391	–	4,379,057

1 The annual incentive is related to the performance in the year reported and which is paid out in the subsequent year.

2 Costs of performance shares are based on accounting standards (IFRS) and do not reflect the value of the shares at the vesting/release date. Costs for F.J. van Engelen Sousa include the forfeiture of the 2022 and 2023 grants due to 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 below, there is a disagreement between the company and Ms. Mariani about the treatment of these LTI grants.

3 Costs of restricted shares rights are based on accounting standards (IFRS) and do not reflect the value of the shares at the vesting/release date and concerns the sign-on grant of EUR 300,000 for F.J. van Engelen Sousa that vested in 2022.

4 The stated amounts 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 or car allowance), 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.

5 As the company elected not to renew the services contract of M.L. Mariani after the end of term in May 2024, as per her services contract (which is published on the company’s 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.

6 Appointed member of the Board of Management at May 16, 2023 AGM. Remuneration costs represent the period functioning as member of the Board of Management as of May 16, 2023.

All remuneration was paid in accordance with the remuneration policy.

There is a disagreement between the company and Ms. Mariani about the treatment of the 2022

and 2023 LTI grants in the context of the termination of her services agreement on May 14,

2024. The Supervisory Board of the company holds the view that these grants should vest pro-

rata in view of the overall termination arrangement made available by the company to Ms.

Mariani, whereas Ms. Mariani holds the view that these grants should vest in full based on a

separate agreement which is contested by the company. The company and Ms. Mariani have not

been able to reach an agreement on this matter prior to the publication of this annual report.

The performance share costs for Ms. Mariani in 2023 as shown in the table above of EUR

266,689 would be increased by EUR 112,168 in case of full vesting of the 2022 and 2023 LTI

grants.

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Signify Annual Report 2023

<≡>

10.2.1 Mix of remuneration elements

To support the remuneration objectives, the policy includes significant variable components in

the form of an annual (cash) incentive and a long-term equity-based incentive of performance

shares. As a result, a significant proportion of pay is "at risk" through variable incentives. The

chart below shows the relative on-target value of fixed versus variable compensation.

The table below shows the actual remuneration mix in 2023.


	Fixed 1	Variable 2	Proportion fixed/ variable
E.H.E. Rondolat	1,272,696	1,794,604	41%/59%
H.M. Chitale 3,4	525,088	135,835	79%/21%
F.J. van Engelen Sousa 4	838,958	219,696	79%/21%
M.L. Mariani	854,609	908,712	48%/52%

1 Base compensation/salary, pension allowances, pension scheme costs, other allowances as reported in the table

"Remuneration and remuneration costs of individual members of the Board of Management" under 10.2.

2 Annual incentive realized as reported in the table "Remuneration and remuneration costs of individual members of the Board

of Management" under 10.2 and Long-term incentive value at vesting date in 2023 as reported in the table "Performance

shares 2020 - 2023" under 10.2.5.

3 Remuneration costs present the period functioning as member of the Board of Management as of May 16, 2023.

4 The variable remuneration for H.M. Chitale and F.J. van Engelen Sousa does not yet include an LTI vesting value as Board of

Management member and therefore the mix fixed/variable differs from the mix for the other Board of Management members.

Scenario analyses are prepared regularly to estimate future payout levels as input to policy

redesign, as well as to determine the IFRS costs and any hedging strategy that might be

employed. Scenarios included minimum, threshold and maximum performance all under a 0%

share price appreciation assumption. Additional scenarios included maximum performance with

both a 50% share price increase and a 100% share price increase. The scenarios considered

achievement across all metrics at below threshold, target and maximum levels of performance

and the resulting remuneration. Based on the scenario analyses performed, the Supervisory

Board has concluded that the policy supports the pay-for-performance philosophy and leads to

appropriate remuneration.

10.2.2 Base salary

The base salary compensates for the individual's experience, skills, duties, responsibilities and

the contribution of the individual within Signify. The Supervisory Board determines the base

salary and may adjust the base salary, for example following the results of benchmark studies

and to ensure alignment between members of the Board of Management. Absent any adjustment

of the base salary, it aligns with (collective and merit) increase as agreed for the CLA population

in the Netherlands. The Supervisory Board regularly reviews the total direct compensation

(including base salaries).

The annual compensation of the members of the Board of Management was reviewed at the

beginning of 2023 in line with the regular remuneration review. The Remuneration Committee

considered the input of the Board of Management members in setting their pay levels.

For 2023, the Supervisory Board decided to increase the base salary levels for all members of

the Board of Management by 4%, in line with the budgets (collective and merit increase)

allocated for the CLA population in the Netherlands.


Base salaries Board of Management in 2023 in EUR
	January 1, 2023 (+ 4%)
E.H.E. Rondolat	985,223
F.J. van Engelen Sousa	644,649
M.L. Mariani	644,649

H.M. Chitale was appointed member of the Board of Management during the AGM on May 16,

2023 and his salary was set at EUR 644,000.

In 2023, a deeper review was conducted on all remuneration components, including base salary

as part of the remuneration policy review, as detailed in 10.4.

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10.2.3 Variable remuneration

The variable remuneration of the members of the Board of Management consists of an annual

cash incentive and a long-term equity-based incentive.

The design of the incentives aims to achieve a balance between short-term objectives, long-

term value creation and sustainable performance. Variable pay is based on both financial and

non-financial performance measures. In selecting performance measures, their respective

weights and targets for a performance period, the following is considered:

• Performance measures are selected based on relevance to the company’s strategy;

• The company's strategy determines the targets and intervals for the performance measures;

• Targets are set ambitiously yet realistically, taking the company’s risk appetite into account;

• Alignment with stakeholders’ interests and expectations is essential.

The Supervisory Board determines the target for each of the performance measures of the

annual cash incentive and the long-term equity-based incentive. The target definition for these

variable remuneration components includes target intervals and correlating payout schemes,

being defined in incremental steps in performance and respective payout. In addition, a minimum

threshold for the achievement of financial performance measures applies, below which there will

be no payout. Following the end of the relevant performance period, the Supervisory Board will

assess the actual performance relative to the targets set. On that basis, the Supervisory Board

will, at its discretion, determine the achievement per performance measure and target.

10.2.4 Annual cash incentive

Members of the Board of Management are eligible for an annual cash incentive. The annual

incentive is designed to reward the achievement of annual financial and operational objectives

and personal performance. The purpose is to ensure alignment with the company’s annual

business plan setting the strategic priorities for that year, which in turn contribute to the

company’s long-term objectives.

Under the 2020 remuneration policy, the Supervisory Board can annually select two or three

financial performance measures from the following list, and determine the weighting per

performance measure: growth (such as comparable sales growth), profit (such as adjusted

EBITA or net income), cash flow (such as average working capital or free cash flow) and

investment return (such as return on capital employed).

The possibility to annually select financial performance measures from the above list gives the

Supervisory Board a certain level of flexibility to ensure continuous alignment of the

performance measures with the company’s strategy and financial objectives for the mid-term.

The financial performance measures used in the annual incentive to track performance over

2023 were comparable sales growth (measured as a percentage of sales), adjusted EBITA

(measured as a percentage of sales) and free cash flow (measured as a percentage of sales).

These measures were determined by the Supervisory Board to reflect the best alignment with

the company's strategy and financial objectives for the mid-term focusing on profitable growth,

with more weight on free cash flow and adjusted EBITA than on comparable sales growth: free

cash flow (30%), adjusted EBITA (30%) and comparable sales growth (20%),

The financial targets for 2023 were set within the context of the medium-term objectives of the

company at the beginning of the year and did not change over the course of 2023. Payout

between the financial targets is linear.

The team/individual performance measures are recommended by the CEO and discussed and

ultimately approved by the Supervisory Board. For 2023, these measures included, among

others, cultural change and people engagement, US business performance, customer

satisfaction and organization redesign, explained further in the table on the realized outcomes.

Performance achievements 2023

Performance against financial targets are reviewed on a quarterly basis. The assessment of

performance under the annual incentive plan is concluded by the Supervisory Board.

For 2023, the global environment continued to be volatile and unpredictable. Although Signify

adapted to the challenges during the year, financial performance was not as expected.

Comparable sales growth was -8.3% mainly due to weakness in Consumer, OEM and Indoor

professional lighting. As such, performance was below the threshold level of expectations and

results in a 0% payout on the metric. The adjusted EBITA result of 10% was broadly in line with

2022 but below ambitions set at the beginning of the year, as the gross margin improvement

delivered during 2023 was offset by an under absorption of fixed costs. As such the outcome on

this metric is also 0%. Despite adverse market conditions, Signify delivered a healthy free cash

flow of 8.7% of sales, mainly as a result of the higher net cash provided by operating activities.

This outcome was significantly above the threshold level of 6% expected for the year and as

such the achievement of that metric was 136%. Overall, it was a mixed financial performance for

the year, and given the results on the three metrics, the final realization on the financial metrics

was 40.8%.

For the realization of the financial measures of the annual incentive, the Supervisory Board

considered whether any adjustments or discretion should be applied. The Supervisory Board

concluded not to make any discretionary adjustments to the outcomes of the financial

measures, nor were any changes made to the original targets set for the year 2023.

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Finally, the Supervisory Board assessed the achievements of the Board of Management relative

to each of their individual goals and their collective team goals, considered as equally weighted

for 2023.

For the team objectives, the overall assessment was good but with mixed results across the

different priorities. With respect to culture change and people engagement, there were some

varied outcomes. Investment in future talent via campus hiring was strong compared to prior

years with more than 400 campus hires versus 150 in 2022, and included a very strong diversity

mix with women representing 57% of campus hires. Overall gender diversity increased by 1% with

women representing 38% of the total population in 2023. Our US business is showing

improvement, particularly with very strong cash metrics, but performance remains below

expectations.

Customer engagement is a bright spot for 2023 as the Customer Net Promoter Score has

improved to 53 versus a target of 47 and reflects a significant improvement over 2022

performance of 44. In addition, the company made significant improvements in a key customer

pain point of order and delivery, which improved by 13 points. Finally, the needed restructuring

was defined, structured and communicated, which negatively impacted the employee Net

Promoter Score with a Q4 outcome of 26 versus 36 at the end of 2022.

For the individual goals, the outcomes were modest. Cash optimization and inventory

significantly improved while quality and service levels were protected as evidenced in the

Customer Net Promoter Score and improvements in order and delivery. The Board of

Management delivered on key strategic projects, inclusive of designing and having ready for

implementation in Q1 2024 a new operating model focused on four businesses, as announced in

December 2023. Growth was not as expected, although there were definite bright spots in our

strategic frontiers, such as connected systems, solar lighting, and LiFi, while pricing discipline

improved. Overall commercial excellence improved as reflected in the improved pricing

discipline. Finally, the opportunities realized related to Green Deal revenue reflect above

expectations for the number and value of projects won, while the achievement of the Brighter

Lives, Better World 2023 outcomes relative to targets were above expectations and continue to

position Signify very well relative to the ambitious targets set for the 2025 program.

The Supervisory Board acknowledged the continued volatility and challenging year and assessed

the individual and team performance in the context of the year. The Supervisory Board assessed

performance as good. As a result, the Supervisory Board has determined that the realized

performance on this measure reflected 80% for the team objectives and 70% to 90% for the

individual objectives.

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The summarized outcomes realized on all measures are as follows:


Financials (80% weighting)	Weighting	Threshold 50%	Actual	Payout %	Weighted payout %
Comparable sales growth	20%	(3.0)%	(8.3)%	–%	–%
Adjusted EBITA	30%	10.6%	10.0%	–%	–%
Free cash flow	30%	6.0%	8.7%	136.0%	40.8%
Payout level financials				136.0%	40.8%

Non-financials (20% weighting)						Minimum	Expected		Exceptional
Team targets (10% weighting)	Description and achievements				Weighted payout %
Culture change/people engagement	Employee NPS: declined to 26 (2022 36); reflects restructuring announcements Q4 2023. Diversity (gender/generational): campus hires increased to 400 vs 150 in 2022 with women representing 57%; 1% increase in gender diversity with women representing 38% of total population.						l
US business performance	Growth below expectations; profitability stable with strong cash performance.						l
Customer satisfaction	Customer net promoter score of 53 (target 47) vs 2022 performance of 44. Order & delivery customer pain point improved by 13 points; detractor call back close loop of 92%.									l
Organization redesign	New operating model defined, structured and communicated in Q4 2023; ready for implementation in Q1 2024.							l
Payout level team targets					8%		l
	E.H.E. Rondolat	H.M. Chitale	F.J. van Engelen	M.L. Mariani
Payout level individual targets (10% weighting)	7%	7%	8%	9%			l
Payout level non-financials (20%)	15%	15%	16%	17%			l

Total payout level	55.8%	55.8%	56.8%	57.8%			l

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The multiple achieved results in the following payout for each Board of Management member:


Annual incentive realization 2023 in EUR
	Annual base		On-target % of annual base		Multiple achieved		Pro-rata factor		Realized annual incentive (in EUR)
E.H.E. Rondolat	985,223	x	80%	x	55.8%	x	1	=	439,804
H.M. Chitale 1	644,000	x	60%	x	55.8%	x	0.63	=	135,835
F.J. van Engelen Sousa	644,649	x	60%	x	56.8%	x	1	=	219,696
M.L. Mariani	644,649	x	60%	x	57.8%	x	1	=	223,564

1 The realized annual incentive reflects the pro-rata amount as of May 16, 2023.

10.2.5 Long-term equity-based incentive

Members of the Board of Management are eligible for a long-term equity-based incentive under

the Signify Long-term Incentive Plan (LTI Plan). The objective of the long-term incentive is to link

pay with long-term sustainable value creation. In addition to the Board of Management,

approximately 800 employees globally are participants in a similar long-term incentive plan.

The main characteristics of the long-term incentive plan for the Board of Management are as

follows:

• The long-term incentive is granted in performance shares only and granted annually;

• The vesting of performance shares is conditional upon the achievement of performance

conditions measured over a period of three financial years and continued Signify employment;

• Performance is measured using four performance measures in 2023: relative total

shareholder return (25%), free cash flow (25%), return on capital employed (25%) and

sustainability (25%);

• Payout per performance measure can vary between 0% and 200%.

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Relative TSR

The vesting of 25% of the shares granted is subject to a TSR condition. Relative total

shareholder return (TSR) measures the share price growth plus dividends paid over the three-

year performance period. Performance is expressed as a percentage. This percentage is

compared to the TSR performance of companies included in the peer group specifically

compiled for this purpose. The TSR performance is determined for each company in the peer

group and the performances are ranked from top to bottom. Signify’s position in the ranking,

together with the payout curve, determines the payout level.

In 2023, the peer group consisted of the following companies:


TSR Peer Group
ABB	Honeywell Int.	Panasonic
Acuity Brands	Hubbell	Signify
Eaton Corporation	Johnson Controls	Schneider Electric
Fagerhult	Legrand	Toshiba
Hitachi	MLS Co Ltd	Zumtobel Group

The peer group is reviewed on a regular basis to ensure that the companies in the group remain

relevant peers. In case a peer needs to be replaced due to a corporate event (merger,

acquisition, and so on) the Supervisory Board will ensure that the adjusted peer group remains

aligned with the strategic objectives, the geographical spread and the business characteristics

of Signify. Per January 1, 2022. Cree was replaced by MLS Co Ltd. This means that:

• For the LTI 2021 grant (vesting in 2024), TSR will be calculated on a “synthetic combination”,

i.e. Cree until January 1, 2022, and MLS as of January 1, 2022;

• As of the LTI 2022 grant (vesting in 2025 and thereafter), MLS will replace Cree in the TSR

peer group.

The Supervisory Board reviewed the TSR peer group, and replaced Toshiba with ams OSRAM due

to Toshiba's delisting at the end of 2023.


Performance-incentive zone for TSR in % of grant value
Ranking	15	14	13	12	11	10	9	8	7	6	5	4	3	2	1
Payout	0	0	0	0	0	0	0	75	100	125	150	175	200	200	200

Free cash flow

The vesting of another 25% of the annual long-term incentive grant is linked to performance

measured by a free cash flow target over the three-year performance period. The targets and

intervals around these measures are determined by the Supervisory Board, based on the

company’s strategic, multi-year plan.

Sustainability

The vesting of 25% of the annual long-term incentive grant is dependent on how well Signify

performs against the targets set with respect to the sustainability condition. The targets and

intervals around these measures are determined by the Supervisory Board, based on the

company’s strategic, multi-year plan. As targets set are usually both qualitative and quantitative,

set ambitiously and adjusted regularly, the assessment of the performance is at the discretion

of the Supervisory Board. The assessment will use tracked performance as input.

Return on capital employed

The vesting of the remaining 25% of the annual long-term incentive grant is linked to

performance measured by a return on capital employed target. The targets and intervals around

these measures are determined by the Supervisory Board, based on the company’s strategic,

multi-year plan.

In 2023, performance shares were granted to the members of the Board of Management. These

grants are governed by the Signify long-term incentive plan. The grant is made on the basis of

the average closing share price of the three months preceding the date of grant. In this way,

the Signify granting policy ensures mitigation of share price volatility.

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The following table provides an overview of the Signify shares granted and vested for the Board of Management in 2023.


Number of performance shares (holdings) in number of shares
	Grant date	Number of shares originally granted	Value at grant date (in EUR)	Vesting date1	Unvested opening balance at January 1, 2023	Number of shares granted in 2023	Number of shares vested in 2023	Value at vesting date in 2023 (in EUR)	Unvested closing balance at December 31, 2023
E.H.E. Rondolat	20.05.2020	45,932	901,703	04.05.2023	45,932	—	52,823	1,354,800	—
	19.05.2021	21,312	919,737	29.04.2024	21,312	—	—	—	21,312
	18.05.2022	23,256	947,330	01.05.2025	23,256	—	—	—	23,256
	17.05.2023	33,052	985,223	01.05.2026	—	33,052	—	—	33,052
H.M. Chitale	17.05.2023	17,284	515,200	01.05.2026	—	17,284	—	—	17,284
F.J. van Engelen Sousa2	20.05.2020	—	—	04.05.2023	—	—	—	—	—
	19.05.2021	11,156	481,440	29.04.2024	11,156	—	—	—	11,156
	18.05.2022	12,172	495,884	01.05.2025	12,172	—	—	—	12,172
	17.05.2023	17,300	515,719	01.05.2026	—	17,300	—	—	17,300
M.L. Mariani	20.05.2020	23,228	456,000	04.05.2023	23,228	—	26,713	685,148	—
	19.05.2021	11,156	481,440	29.04.2024	11,156	—	—	—	11,156
	18.05.2022	12,172	495,884	01.05.2025	12,172	—	—	—	12,172
	17.05.2023	17,300	515,719	01.05.2026	—	17,300	—	—	17,300

1 Under the long-term incentive plan terms, the vesting date is on the first business day after the publication of Signify’s first quarter results in the third anniversary year of the grant date. The dates for 2025 and beyond in this table are for illustrative purposes

only.

2 F.J. van Engelen Sousa did not participate in the long-term incentive plan in 2020; he received a EUR 300,000 sign-on grant under the restricted share rights plan in that year, which vested in 2022.

The three-year performance period for the 2020 performance share grant ended on December

31, 2022. The shares under this grant vested on May 4, 2023, with a vesting percentage of 115%.

In 2023, dividend payments on the vested long-term incentive shares held by the members of

the Board of Management were paid as cash to E.H.E. Rondolat, and as a re-investment in

shares to H.M. Chitale, for which he received 2,547 dividend shares, and for which F.J. van

Engelen Sousa received 347 dividend shares and for which M.L. Mariani received 2,378 dividend

shares.

At December 31, 2023, the members of the Board of Management held no options on Signify

shares.

10.2.6 Realization of the 2021 grant

The three-year performance period for the 2021 performance share grant ended on December

31, 2023. The shares under this grant vest on April 29, 2024. The payout results are set forth

below.

In determining the achievement of the 2021 grant, the Supervisory Board considered whether

any adjustments or discretion should be applied. No discretionary adjustments were made to the

results, nor to the original targets set for the 2021 grant.

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Relative TSR (25% weighting)

The TSR achieved by Signify during the performance period was -10%. This positioned Signify as

the 14th ranked company in the peer group as shown in the following table, resulting in an

achievement of 0%.


January 1, 2021 – December 31, 2023
Rank	Company	TSR performance
1	Hitachi	166.0%
2	Hubbell	107.9%
3	Eaton Corporation	107.4%
4	Toshiba	78.5%
5	Acuity Brands	70.0%
6	ABB	56.8%
7	Schneider Electric	51.5%
8	Panasonic	51.0%
9	Fagerhult	42.2%
10	Legrand	32.3%
11	Johnson Controls	26.3%
12	Zumtobel	19.3%
13	Honeywell	5.2%
14	Signify	(10.0)%
15	MLS	(15.5)%

Free cash flow (25% weighting)

The LTI Plan free cash flow payout and targets set at the beginning of the performance period

were as follows:


	Payout	As % of sales
Below threshold	–%	< 9.2%
Threshold	40%	9.2%
Target	100%	9.8%
Maximum	200%	10.5%

Over the three-year performance period, an amount of EUR 1,644 million free cash was

generated, representing 7.8% of sales. In light thereof, the Supervisory Board determined the

LTI Plan free cash flow achievement as 0%.

Return on Capital Employed (25% weighting)

For 2023, ROCE was based on the outcomes in the last year of the plan period (2023), excluding

pension liabilities. Based on an 7% achievement of the ROCE metric, the Supervisory Board

determined the LTI Plan ROCE achievement as 0%.


	Payout	ROCE %
Below threshold	–%	< 11.0%
Threshold	40%	11.0%
Target	100%	14.0%
Maximum	200%	17.0%

Sustainability (25% weighting)

The sustainability objectives for 2023 were based on the intent to double Signify's impact in the

areas of climate action, the circular economy, Brighter Lives revenues and women in leadership

positions by 2025. In all areas, significant progress has been made relative to the trajectory to

deliver on the ambitions by 2025. This year was the third year of this five-year program, and the

company is on track to reduce emissions across the entire value chain by 40% against the 2019

baseline, driven by leadership in energy efficient and connected LED lighting solutions which

significantly reduce emissions during the use phase. Circular revenues increased, surpassing the

2025 targets two years earlier than projected, with the main contribution from serviceable

luminaries with a strong performance from both professional and consumer segments. Brighter

Lives revenue is on track to meet the 2025 targets, overachieving relative to 2023 plan. Women

in leadership, however, is behind the targets set for 2023, despite increasing the percentage of

women in leadership positions by 12% against the 2019 baseline.

Based on the following LTI Plan sustainability measures and results over the performance period,

the Supervisory Board determined the LTI Plan sustainability achievement as 141.7%.

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			Status 1	Result 2023
Better World	Climate action	Cumulative carbon reduction, in million tonnes	On track	334
Better World	Circular economy	Circular revenues	On track	33%
Brighter Lives	Food availability Safety & security Health & well-being	Brighter lives revenues	On track	31%
Brighter Lives	Great place to work	Women in leadership positions	Off track	29%

1Status versus Brighter Lives, Better World 2025 doubling target.

In view of the above, the following performance achievement and vesting levels have been

determined by the Supervisory Board in respect of the 2021 grant of performance shares.


	Achievement	Weighting	Vesting level
TSR	–%	25%	–%
Free Cash Flow	–%	25%	–%
Return on Capital Employed	–%	25%	–%
Sustainability	141.7%	25%	35.5%
Total			35.5%

10.2.7 Share ownership guidelines and holding requirement

Under the Signify share ownership guidelines, members of the Board of Management must hold a

certain value in shares in the company. These guidelines are designed to further align the

interest of the members of the Board of Management (and certain other leaders within Signify)

with the interests of its shareholders. For the CEO, the value in Signify shares to be held is

300% of base salary and for the other members of the Board of Management it is 200% of base

salary. The guidelines require that all after-tax shares be retained until the required level is met.

In addition, members of the Board of Management shall comply with holding requirements under

the Dutch corporate governance code. This effectively means that members of the Board of

Management shall hold all after-tax shares received under the long-term incentive plan for a

period of at least five years from the date of grant.

Once the requirements under the Signify share ownership guidelines and under the Dutch

corporate governance code are met, shares may be sold, subject to insider trading rules.


Signify shares held by Board members in number of shares
	December 31, 2022	Holdings as % of base 1	December 31, 2023	Holdings as % of base 1
E.H.E. Rondolat	231,570	766.9%	259,633	733.2%
H.M. Chitale	n.a.	n.a.	78,623	339.7%
F.J. van Engelen Sousa	26,951	136.4%	27,297	117.8%
M.L. Mariani	33,484	169.5%	50,054	216.0%

1 As per the Share Ownership Guidelines, to determine the value of shares on a specific date, the shares held are multiplied by

the average of the closing prices of the shares on Euronext Amsterdam in the two months prior to that date (2023: EUR

27.82 and 2022: EUR 31.37).

10.2.8 Pensions and other benefits

The design of the pension plan for the members of the Board of Management is the same as for

all other Signify employees in the Netherlands, which is referred to as a collective defined-

contribution plan, based on career average salary.

The following pension arrangement is in place for the members of the Board of Management:

• The flex pension plan in the Netherlands, which is a collective defined-contribution plan with

a fixed contribution of 30.3% up to the maximum pensionable salary of EUR 128,810 (2023);

• Members of the Board of Management pay an employee member contribution of 2% up to the

maximum pensionable salary of EUR 128,810 (2023);

• The flex pension plan has a target retirement age of 68 (in 2023) and a target accrual rate of

1.85%;

• The members of the Board of Management receive a gross pension allowance equal to 25%

of the base compensation exceeding EUR 128,810 and can choose to participate in a net

pension arrangement by investing the net (after-tax) amount. The net pension arrangement

is in line with all other Signify employees in the Netherlands whose pensionable salary

exceeds the cap. Participation in this net pension arrangement is voluntary.

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The table below gives an overview of the accumulated annual pension entitlements and the

pension costs of the individual members of the Board of Management.


Accumulated annual pension entitlements and pension-related costs in EUR
	Age at December 31, 2023	Accumulated annual pension as of December 31, 2022 1	Total pension- related costs 2022 2	Accumulated annual pension as of December 31, 20231	Total pension- related costs 2023 2,3
E.H.E. Rondolat	57	44,672	268,625	47,702	245,937
H.M. Chitale	51	n.a.	n.a.	11,586	100,686
F.J. van Engelen Sousa	55	4,379	154,380	6,562	160,794
M.L. Mariani	63	4,528	154,380	6,715	160,794
Pension costs			577,385		668,211

1 Total of entitlements under applicable pension scheme in Signify, including - if applicable - transferred pension entitlements

under pension scheme(s) of previous employer(s).

2 Cost includes paid pension allowances as well as pension premium paid by employer to collective defined-contribution plan.

3 Costs for H.M.Chitale are disclosed for the period starting May 16, 2023.

When pension rights are granted to members of the Board of Management, necessary payments

(if insured) and all necessary provisions are made in accordance with the applicable accounting

principles. In 2023, no (additional) pension benefits were granted to former members of the

Board of Management.

Members of the Board of Management are also entitled to other benefits, such as expense and

relocation allowances, medical insurance, accident insurance and company car arrangements.

In the case of H.M. Chitale and F.J. van Engelen Sousa, to facilitate relocation to the

Netherlands, as per contractual agreement, an allowance for the international school costs of

EUR 12,500 net was paid in 2023.

10.2.9 Change of the remuneration and company performance

For the purpose of reflecting company performance, free cash flow generation and share price

have been selected as the most relevant measures. The table below reflects the annual change

of remuneration of the members of the Board of Management, the employee average

remuneration, free cash flow and Signify's closing share price at year-end. The information is

provided over the past five years.


Remuneration and company performance development in EUR unless otherwise stated
	2019	2020	2021 3	2022	2023
E.H.E. Rondolat 1	2,822,104	3,245,335	3,228,091	2,044,154	2,282,804
Change in %	10%	15%	(1)%	(37)%	12%
H.M. Chitale 1	-	-	-	-	782,608
Change in %	-	-	-	-	-
F.J. van Engelen Sousa 1	-	599,753	1,472,859	1,124,267	1,101,622
Change in %	-	-	146%	(24)%	(2)%
M.L. Mariani 1	-	1,225,491	1,727,286	1,210,636	1,344,862
Change in %	-	-	41%	(30)%	11%

Employees 2	60,601	51,780	51,337	53,766	63,623
Change in %	(1)%	(15)%	(1)%	5%	18%

Free cash flow (in millions of EUR)	529	817	614	445	585
Change in %	73%	54%	(25)%	(28)%	31%

Closing share price on last business day December	27.86	34.53	40.78	31.38	30.32
Change in %	36%	24%	18%	(23)%	(3)%

1 Remuneration is based on total compensation costs as reported in the table "Remuneration and remuneration costs of

individual members of the Board of Management" under section 10.2. For F.J. van Engelen Sousa and M.L. Mariani 2020 does

not represent a full year and for H.M. Chitale 2023 does not represent a full year. For F.J. van Engelen Sousa 2023 includes

the forfeiture of the 2022 and 2023 grant because of his termination per April 1, 2024. For M.L. Mariani 2023 excludes the

amount for termination benefits, which is payable in June 2024. The 2022 and 2023 LTI plans for M.L. Mariani will reflect a

pro-rata vesting, therefore costs in 2023 include the forfeiture of a portion of these grants. 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.

2 Employee average remuneration based on total employee benefit expenses and total employees in FTEs (third party workers

excluded) as disclosed in note 5, Employee benefit expenses.

3 Comparatives for the Board of Management members were revised to exclude the employee pension premium of EUR 1,941.

For 2023, the company performance shows a mixed outcome on the selected measures. Free

cash flow was strong relative to 2022, and thus reflects an increase of 31%, while Signify closing

share-price at year end reflects a decline of 3% from the 2022 closing share price. The total

remuneration of the Board of Management is aligned to the company performance as it reflects

a modest increase overall relative to 2022. Annual incentive for 2023 reflected a limited payout

of between 55.8% to 57.8% for Board of Management members driven by below-threshold

outcomes on two measures as detailed in subsection 10.2.4.

Employee salary adjustments and general wage increases during the year were much higher than

in prior years and are reflective of the inflationary environment. Employee average total

compensation has increased by 18% for 2023. This is primarily driven by the termination

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<≡>

provisions related to the Q4 2023 announcement of the reorganization of Signify (note 24:

Provisions and note 5: Employee benefit expenses). Excluding those termination provisions,

employee average total compensation has increased by 11%.

10.2.10 Signify's internal pay ratio

The remuneration design for the members of the Board of Management is an integral part of the

overall pay structure within the company. Signify uses the Hay system to evaluate and grade the

various positions within its organization. This means that the company uses a standardized

method for determining the appropriate benefits for each of the respective job levels within the

company. Using the Hay grading system also ensures that the remuneration of the members of

the Board of Management is aligned with and is relative to the remuneration of Signify

employees holding other positions within the company. The remuneration of senior staff within

Signify is based on the same components as the remuneration of the members of the Board of

Management.

The Corporate Governance Code requires reporting on the pay ratio. Signify’s pay ratio reflects

the average total compensation of the total global employee workforce, relative to the total

remuneration package of the CEO. This has resulted in the following outcome:


Fiscal year	CEO total remuneration 1	Average total compensation employees 2	Resulting pay ratio
2023	2,282,804	63,623	36
2022	2,044,154	53,766	38
2021 3	3,228,091	51,337	63
2020	3,245,335	51,780	63
2019	2,822,104	60,601	47

1 Remuneration is based on total compensation costs as reported in the table "Remuneration and remuneration costs of

individual members of the Board of Management" under section 10.2.

2 Employee average remuneration based on total employee benefit expenses and total employees in FTEs (third party workers

excluded) as disclosed in note 5, Employee benefit expenses.

3 Comparatives for the CEO were revised to exclude the employee pension premium of EUR 1,941.

In light of transparency and clarity, Signify applies a methodology to calculate the internal pay

ratio that is IFRS-driven (i.e. linked to Signify’s notes to the Consolidated financial statements).

For 2023, average total compensation for employees increased by 18%. This is primarily driven

by the termination provisions related to the Q4 2023 announcement of the reorganization of

Signify (note 24: Provisions and note 5: Employee benefit expenses). Excluding those termination

provisions, employee average total compensation has increased by 11%.

The CEO pay ratio has declined from 2022 to 2023, as a result of lower performance share

costs and the termination of the transitional pension allowance, offset by a higher annual

incentive award in 2023, versus the increase in average employee total compensation reflecting

predominately the termination provisions as described. Signify believes that the pay ratio over

2023 aligns with Signify’s performance for the year.

10.2.11 Claw-back and change of control

The annual cash incentive and the long-term incentive of the members of the Board of

Management are subject to adjustment and claw-back provisions. Pursuant hereto, the company

can (a) revise an incentive prior to payment if unaltered payment would be unreasonable and

unfair, (b) recover an incentive if it was granted on the basis of incorrect information on the

fulfillment of the incentive goals or the conditions for payment of the incentive, and (c) recoup

incentives in the circumstances set forth in the services contract with the member of the Board

of Management concerned.

In the event of a change of control of the company, the Supervisory Board can, at its sole

discretion, decide to accelerate the vesting of any unvested awards under the long-term

incentive, subject to the achievement of the performance conditions up to the date of the

completion of the change of control.

No variable remuneration was clawed back in 2023.

10.2.12 Additional arrangements

Unless relevant law provides otherwise, the members of the Board of Management and of the

Supervisory Board shall be reimbursed by the company for various costs and expenses, such as

reasonable costs of defending claims, as formalized in the Articles of Association. Under certain

circumstances, described in the Articles of Association, such as an action or failure to act by a

member of the Board of Management or a member of the Supervisory Board that can be

characterized as intentional (‘opzettelijk’), intentionally reckless (‘bewust roekeloos’) or

seriously culpable (‘ernstig verwijtbaar’), there will be no entitlement to this reimbursement. The

company has also provided liability insurance (Directors and Officers) for the persons

concerned.

10.2.13 Contractual arrangements

Members of the Board of Management are engaged by a service contract (‘overeenkomst van

opdracht’) with a maximum of four years ending on the date of the Annual General Meeting of

Shareholders in the fourth calendar year after the appointment. Members of the Board of

Management are appointed for a maximum period of four years, subject to re-appointment by

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<≡>

the General Meeting of Shareholders. Termination of the services contract is subject to a notice

period of six months for either party. The terms and conditions of these service agreements

have been aligned with the relevant Dutch Corporate Governance Code provisions.

10.2.14 Severance arrangements

Contractual severance arrangements of members of the Board of Management comply with the

Dutch Corporate Governance Code and provide for compensation for the loss of income

resulting from a termination of employment and are capped at one time the annual base salary.

No severance is payable in case the agreement is terminated early at the initiative of the Board

of Management member.

The Board of Management member shall not be entitled to a severance payment if the contract

is terminated for urgent cause ('dringende reden'). For the definition of urgent cause

('dringende reden'), reference is made to section 7:678 of the Dutch Civil Code and further.

10.2.15 Loans

The company does not grant loans to members of the Board of Management.

10.3 Remuneration Supervisory Board

The remuneration of the individual members of the Supervisory Board, as well as the additional

remuneration for its chair and the members of its committees, is determined by the General

Meeting. The remuneration of a member of the Supervisory Board consists of a fixed amount

depending on the member’s position on the board (chair/vice-chair/other board members), an

additional fee for the function of chair or member of committees and allowances for travel.

The remuneration of a Supervisory Board member is not dependent on the results of the

company. Shares or rights to shares shall not be granted to a Supervisory Board member. The

company does not grant loans to members of the Supervisory Board.

The fees and allowances for travel are as follows:


Remuneration Supervisory Board in EUR
Supervisory Board fixed annual fee
Chair	110,000
Vice-Chair	85,000
Member	75,000
Committee fees
Audit Committee
Chair	22,500
Member	13,000
Digital Committee
Chair	22,500
Member	13,000
Remuneration Committee
Chair	15,000
Member	10,000
Nomination Committee
Chair	15,000
Member	7,500
Allowance for travel
Intercontinental	5,000
Continental	2,500

When the activities of the Supervisory Board or other circumstances so require, the Supervisory

Board may establish an ad hoc committee formed from among its members and assign certain

tasks to such committee. In such event, the Supervisory Board may determine additional fees to

be paid to the members of the ad hoc committee. The fees will be in line with the fees for the

existing committees.

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Signify Annual Report 2023

<≡>

The following table reflects the total remuneration of each of the members of the Supervisory

Board.


Remuneration Supervisory Board in EUR (excluding VAT)
	Membership	Committees	Other compensation 1	Total
2023
A.P.M. van der Poel	110,000	25,000	5,000	140,000
G. van der Aast	85,000	28,000	5,000	118,000
S. Bechu 2	46,875	14,075	17,500	78,450
P. Knapp	75,000	32,500	17,500	125,000
R.S. Lane	75,000	20,500	17,500	113,000
F. Lubnau	75,000	24,075	17,500	116,575
B. Schot	75,000	26,000	5,000	106,000
	541,875	170,150	85,000	797,025

2022
A.P.M. van der Poel	110,000	25,000	5,000	140,000
G. van der Aast	85,000	28,000	5,000	118,000
E. Blok 3	28,225	9,800	–	38,025
P. Knapp	75,000	32,500	17,500	125,000
R.S. Lane	75,000	20,500	27,500	123,000
F. Lubnau	75,000	30,000	17,500	122,500
B. Schot 4,5	46,875	16,250	5,000	68,125
	495,100	162,050	77,500	734,650

1 The amounts mentioned under other compensation relate to the allowance for (inter-)continental travel.

2 Appointment as a member of the Supervisory Board in AGM 2023. The remuneration excludes the observer period. The fee

during that period was the same as applies for a Supervisory Board membership, excluding committee fees.

3 Stepped down as member of the Supervisory Board on May 17, 2022.

4 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.

5 Appointment as a member of the Supervisory Board in AGM 2022.

At December 31, 2023, the members of the Supervisory Board held no Signify shares, options on

Signify shares nor other Signify securities (2022: nil).

The following table reflects the annual change of remuneration of each of the members of the

Supervisory Board over the full financial years over the past five years.


Supervisory Board remuneration 2019 - 2023 in EUR (excluding VAT)
	2019	2020 3,4	2021	2022 5	2023
A.P.M. van der Poel	137,500	128,250	135,000	140,000	140,000
G. van der Aast	113,000	107,350	113,000	118,000	118,000
S. Bechu 1	-	-	-	-	78,450
P. Knapp	-	58,698	115,000	125,000	125,000
R.S. Lane	121,689	87,875	108,000	123,000	113,000
F. Lubnau	-	51,470	112,500	122,500	116,575
B. Schot 2	-	-	-	68,125	106,000

1 Appointment as a member of the Supervisory Board in AGM 2023. The remuneration excludes the observer period. The fee

during that period was the same as applies for a Supervisory Board membership, excluding committee fees.

2 Appointment as a member of the Supervisory Board in AGM 2022.

3 Includes 20% COVID-19 reduction in Q2 2020.

4 Comparatives for 2020 were revised to exclude the fees and allowances paid during the observer period of P. Knapp for the

amount of EUR 8,000 and for F. Lubnau for the amount of EUR 44,250.

5 Comparatives for 2022 were revised to exclude the fees and allowances paid during the observer period of B. Schot for the

amount of EUR 28,125.

10.4 Remuneration outlook 2024

10.4.1 Base salary

For 2024, the Supervisory Board will review and determine the base salary levels for all members

of the Board of Management once the collective labor agreement for the Netherlands

population has been finalized. Any adjustment to base salaries will be effective as of January 1,

2024.

10.4.2 Annual cash incentive

For 2024, the Supervisory Board has decided to replace the free cash flow measure with

working capital in response to feedback from stakeholders. For 2024, working capital and

adjusted EBITA will be weighted more heavily than comparable sales growth: working capital

(40%), adjusted EBITA (40%) and comparable sales growth (20%), measured as a percentage of

sales and representing 80% of the total annual incentive opportunity. Team and individual

metrics will continue to represent 20% of the total annual incentive opportunity for 2024.

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<≡>

10.4.3 Remuneration policies

In 2023, the Remuneration Committee initiated a review of the remuneration policy both for the

Board of Management and for the Supervisory Board. The Supervisory Board will propose both

policies for adoption by the shareholders at the AGM to be held in May 2024.

Changes compared to the previous Board of Management remuneration policy :

• Eliminate the potential for duplication of metrics in the short-and long-term incentive plans by

removing free cash flow (FCF) from the short-term incentive plan;

• Adapt the vesting of the long-term incentive plans at early or full retirement to reflect what

shareholders consider to be best practice with a pro-rata vesting; and

• Enable some limited flexibility in the short-term incentive plan balance of financial and non-

financial metrics to reflect priorities in a particular year.

The first two points were proposed changes to the policy in direct response to feedback

received from stakeholders in prior engagements, while the third reflects the ability to adapt

the annual incentive plan to reflect priorities in a year that may place a slightly higher weighing

than current on non-financial metrics (such as ESG inclusions).

Other topics addressed in proposed policy changes include refinement of the base salary and

the clawback clauses.

The proposed Supervisory Board remuneration policy does not reflect any material changes.

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<≡>

11 Corporate

governance

Introduction

Signify N.V., a public company with limited liability organized under Dutch law, is the

parent company of the Signify group.

Signify N.V. has a two-tier board structure

consisting of a Board of Management

responsible for the management of the

company and a Supervisory Board that

supervises and provides advice to the Board

of Management. The two boards are

independent of each other and are

accountable to the Annual General Meeting

of Shareholders (AGM) for the performance

of their duties.

The Board of Management and the

Supervisory Board are responsible for

maintaining an appropriate corporate

governance structure of the company.

Signify N.V.’s corporate governance

framework is based on the company’s Articles

of Association, the requirements of the Dutch

Civil Code, the Dutch Corporate Governance

Code 2022 (https://www.mccg.nl/english),

the Dutch Financial Markets Supervision Act

and any other applicable laws and regulations.

Additionally, the Board of Management has

implemented a code of conduct (the Integrity

code), policies, directives and authorization

schedules throughout Signify in order to

strengthen its governance framework.

In this chapter, the company addresses the

main elements of its corporate governance

structure, reports on how it applies the

principles and best practices of the Dutch

Corporate Governance Code and provides

the information required by the Dutch

governmental decrees on Corporate

Governance and Article 10 Takeover

Directive. Substantial changes in the

corporate governance structure of the

company, when deemed necessary in the

interests of the company, will be disclosed in

this chapter.

In line with the Dutch Corporate Governance

Code, other parts of the Annual Report

address and explain the strategy and culture

of Signify aimed at sustainable long-term

value creation. Signify’s strategy is described

in more detail in chapter 3, Creating

sustainable long-term value. This chapter also

provides an explanation of our value creation

model which allows our stakeholders to

consider the economic, social and

environmental impact of our business

activities.

The CEO message in chapter 2, highlights

how the company’s strategy was executed in

2023. Additionally, refer to chapter 5,

Corporate performance, and chapter 9,

Supervisory Board report, which describe

how the Supervisory Board is involved in the

company’s strategy as well as other topics

such as culture and diversity & inclusion.

As set out in chapter 4, Brighter Lives, Better

World, section 4.3, Brighter Lives, Signify’s

culture is centered around its four values:

Customer First, Game Changer, Greater

Together and Passion for Results, and

anchored by the integrity norms described in

our Integrity code. An important aspect of

our culture relates to diversity & inclusion,

which is discussed and explained in the same

chapter.

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Signify Annual Report 2023

<≡>

11.1 Signify

organization

Throughout 2023, Signify’s business is

organized and managed on a functional basis

by technology through three divisions:

Division Digital Solutions, Division Digital

Products and Division Conventional Products.

The divisions are responsible for the

development of their strategy and product

portfolio.

In addition, to manage its global sales

channels, the company’s commercial

organization is currently structured along

several geographical market clusters. These

market clusters are principally responsible

for driving and managing sales, managing

customer relationships and delivering the

commercial activities of the business across

the company’s markets, covering commercial

activities in almost all countries. The company

operates in many countries through its

subsidiaries and affiliated companies as well

as via a limited number of branch offices,

which primarily act under the Signify trade

name.

Divisions and market clusters are supported

by centralized shared services with respect

to, among other functions, legal, audit and

investigations, finance, human resources,

strategy and sustainability, innovation and

operations.

On December 1, 2023, Signify announced a

new operating model, which includes four

vertically integrated businesses: Professional,

Consumer, OEM and Conventional, and is to

be implemented during 2024.

11.2 Board of

Management

The Board of Management is entrusted with

the management of the company. The Board

of Management focuses on sustainable long-

term value creation for the company and its

business and takes the interests of relevant

stakeholders into account. In performing its

duties, the Board of Management is guided by

the interests of the company and its affiliated

enterprises, taking into consideration the

interests of its stakeholders.

Among other responsibilities, the Board of

Management drives the company’s

management agenda, defines and deploys the

strategic direction, identifies opportunities

and risks connected with its business

activities and strategy, pursues the

operational and financial objectives of the

company, and monitors sustainability matters.

The Board of Management is accountable to

the Supervisory Board for its actions and

decisions. The Chief Executive Officer and

other members of the Board of Management

have regular contact with the Chair and other

members of the Supervisory Board, attend

most parts of the Supervisory Board

meetings, and provide the Supervisory Board

with the information it needs to fulfil its

responsibilities.

Certain decisions of the Board of

Management require Supervisory Board

approval. These decisions include important

proposals for capital expenditures,

acquisitions, divestments, decisions

concerning financial and operational

objectives and strategy to achieve such

objectives, changes to corporate policies, as

well as the annual operating plan.

The functioning and decision-making within

the Board of Management are laid down in its

Rules of Procedure which can be found on

the company’s website.

Appointment

Members of the Board of Management are

appointed by the General Meeting of

Shareholders (the General Meeting) upon a

nomination drawn up by the Supervisory

Board, which nomination may be binding.

Members of the Board of Management are

appointed for a maximum term of four years,

it being understood that this term expires at

the end of the AGM to be held in the fourth

year after the year of their appointment. Re-

appointment is possible for consecutive

terms of four years or, if applicable, until a

later retirement date or other termination

date in the fourth year, unless the General

Meeting resolves otherwise. Members may be

suspended by the Supervisory Board and the

General Meeting, and dismissed by the latter.

Composition

The composition of the Board of Management

follows the board profile which aims for an

appropriate combination of knowledge and

experience among its members,

encompassing industrial, technology &

innovation, projects & infrastructure, digital &

marketing, financial, economic, IT, social &

sustainability aspects of international

business and society, in relation to the global

character of its business. This profile also

applies for the Supervisory Board, and can be

found on the company's website. The size of

the Board of Management may vary over time,

as considered appropriate to support its

profile.

11.3 Supervisory

Board

The Supervisory Board, in the two-tier board

structure under Dutch law, is a separate body

that is independent of the Board of

Management. The Supervisory Board

supervises the policies and management and

the general affairs of the company. The

Supervisory Board appoints a Chair and a

Vice-Chair from among its members. The

Chair ensures the members of the

Supervisory Board and its committees

function properly in all respects and comply

with the Supervisory Board Rules of

Procedure. The Chair is the main contact on

behalf of the Supervisory Board for the

General Meeting. The Supervisory Board also

provides advice to the Board of Management.

In performing its duties, the members of the

Supervisory Board are guided by the interests

of the company and the business of the

group, taking into consideration the interests

of its stakeholders.

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Signify Annual Report 2023

<≡>

Independence of the Supervisory

Board

The Supervisory Board is a separate

corporate body that is independent of the

Board of Management. Its independent

character is also reflected in the requirement

that members of the Supervisory Board can

be neither a member of the Board of

Management nor an employee of the

company. Each member of the Supervisory

Board meets the independence requirements

as stated in the Dutch Corporate Governance

Code.

Appointment

The members of the Supervisory Board are

appointed by the General Meeting on the

nomination of the Supervisory Board, which

nomination may be binding.

The term of appointment of a member of the

Supervisory Board will end at the closing of

the AGM to be held in the fourth year after

appointment. In line with the Dutch Corporate

Governance Code, the members of the

Supervisory Board are eligible for re-

appointment for a period of maximum four

years. Subsequent re-appointments are

possible for a period of two years, which may

be extended by a re-appointment of maximum

two years. The reasons for re-appointment of

a member of the Supervisory Board after an

eight-year term must be included in the

report of the Supervisory Board.

As from 2022, a mandatory gender quota

applies under Dutch law requiring supervisory

boards to be composed of at least one-third

men and one-third women. The Supervisory

Board meets this target for the financial year

2023. The gender quota needs to be

observed in case of a new appointment of a

member of the Supervisory Board and a re-

appointment of an acting member of the

Supervisory Board after an eight-year term.

Any new appointment or re-appointment

after an eight-year term resulting in the

composition of the Supervisory Board not

meeting this gender quota, will be null and

void. An appointment or re-appointment that

does not contribute to the gender balance

will only be allowed under certain exceptional

circumstances.

Composition

The composition of the Supervisory Board

follows the same board profile that applies to

the Board of Management, see paragraph

10.2 above.

The composition of the Supervisory Board

shall also be in accordance with the best

practice provisions on independence of the

Dutch Corporate Governance Code as well as

Dutch law restrictions on the overall number

of supervisory positions that a member of the

Supervisory Board may hold. Each member

shall be capable of assessing the broad

outline of the overall management of the

company.

The size of the Supervisory Board may vary

over time, as considered appropriate to

support its profile. Until May 16, 2023, the

Supervisory Board consisted of six and, as

from that date, of seven independent

members.

11.4 Supervisory

Board

Committees

In 2023, the Supervisory Board had four

committees: The Audit Committee, the

Corporate Governance and Nomination &

Selection Committee, the Remuneration

Committee and the Digital Committee. Each

of the committees has a preparatory and/or

advisory role to the Supervisory Board. They

report their findings to the full Supervisory

Board, which is ultimately responsible for all

decision-making. Information on the work and

composition of the committees during 2023 is

set out in chapter 9, Supervisory Board

report.

Each committee has a charter describing its

role, responsibilities and functioning. These

charters are published on the company’s

website. The responsibilities of each

Committee are described in more detail

below.

Audit Committee

The Audit Committee assists the Supervisory

Board in fulfilling its oversight responsibilities

for the integrity and quality of the company’s

financial and sustainability reporting, the

effectiveness of the design and operation of

the internal risk management and control

systems, the internal and external audit

process, the internal and external auditor’s

qualifications, its independence and its

performance, as well as the company’s

process for monitoring compliance with laws

and regulations and the Integrity code. It

reviews the company’s annual and interim

financial statements (including sustainability

information) prior to publication and

periodically discusses the company's key

risks. It maintains contact with and supervises

the external auditor and prepares the

nomination of an external auditor for

appointment by the General Meeting.

The Audit Committee meets at least once

before the publication of the quarterly and

annual accounts of the company.

Corporate Governance and

Nomination & Selection

Committee

The Corporate Governance and Nomination &

Selection Committee:

• Advises the Supervisory Board on the

selection and appointment of members of

the Supervisory Board and the members of

the Board of Management;

• Prepares the selection criteria and

appointment procedures for members of

the Supervisory Board and the members of

the Board of Management and proposing

the profile for the Supervisory Board;

• Supervises the policy on selection criteria,

and is involved in the selection and

appointment of the company's leadership

team, appointments of which are subject to

the Supervisory Board's approval;

• Periodically assesses the size and

composition of the Board of Management

and the Supervisory Board, and the

functioning of the individual members, and

proposes on appointments and re-

appointments;

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• Leads the performance evaluation of the

Board of Management and Supervisory

Board;

• Reviews the corporate governance of the

company and can make recommendations

to the Supervisory Board relating to the

corporate governance of the company at

least once a year.

The Corporate Governance and Nomination &

Selection Committee meets at least twice

every year.

Remuneration Committee

The Remuneration Committee:

• Reviews and prepares proposals for the

Supervisory Board on the remuneration

policies for the Board of Management and

Supervisory Board;

• Reviews and prepares proposals for the

Supervisory Board on the compensation

levels and individual remuneration of the

members of the Board of Management and

certain senior executives designated by

the Supervisory Board; and

• Reviews and prepares proposals for the

Supervisory Board concerning the

objectives for the variable remuneration of

members of the Board of Management, and

reviews the performance of members of

the Board of Management against these

objectives.

The Remuneration Committee prepares an

annual remuneration report, which is included

in chapter 10, Remuneration report.

The Remuneration Committee meets at least

twice per year.

Digital Committee

The Digital Committee:

• Is responsible for reviewing the company's

digital strategy, roadmap, resourcing and

any changes thereto;

• Assists the Supervisory Board in

supervising the company's policy on digital

strategies, tools and operations;

• Reviews the company's digital objectives

and performance, periodically assesses the

effectiveness and results of the digital

initiatives as well as management skills,

capabilities and training;

• Reviews the governance for deciding on

digital prioritization and spending within the

company at least once a year.

The Digital Committee meets at least four

times a year

11.5 Other

governance

matters

related to the

Board of

Management

and

Supervisory

Board

Diversity

Signify believes that a diverse workforce and

an inclusive working environment are

essential to a thriving business and long-term

value creation.

In view hereof, Signify aims that the Board of

Management and the Supervisory Board

comprise members who bring a diversity of

skills and expertise relevant for achieving the

company’s strategic and business objectives,

different views and perspectives as well as

different backgrounds: nationality,

educational, working experience or

otherwise. For the Supervisory Board

members, and in line with the Dutch law

requirement, Signify aims that at least one-

third are men and at least one-third are

women. For the Board of Management, Signify

aims at having at least one man and at least

one woman for a board with three members,

and at least two men and two women for a

board with five members.

Remuneration

The remuneration of the individual members

of the Board of Management is determined by

the Supervisory Board based on the

remuneration policy adopted by the General

Meeting. The remuneration of the individual

members of the Supervisory Board, as well as

the additional remuneration for its Chair and

the members of its committees, is determined

by the General Meeting.

Pursuant to Dutch law, the remuneration

policies must be adopted by the AGM at least

every four years. The resolution of the

general meeting to adopt the remuneration

policy requires a 75% majority of the votes

cast, unless the Articles of Association

explicitly provide otherwise, which Signify's

Articles of Association do not. The

remuneration report relating to the previous

financial year must be submitted to the AGM

on an annual basis for an advisory vote.

The current remuneration policies for Board

of Management and the Supervisory Board

were adopted by the AGM in 2020. The

composition of the remuneration of the

members of the Board of Management and

the members of the Supervisory Board and

the remuneration policies are described in

chapter 10, Remuneration report.

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Corporate performance

Governance

Corporate statements

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Signify Annual Report 2023

<≡>

Conflicts of interest

Members of the Board of Management shall

not participate in the discussions and

decision-making process on a subject or

transaction that they have a direct or indirect

personal conflict of interest or have a conflict

of interest within the meaning of the Dutch

Corporate Governance Code. Relevant

matters relating to conflicts of interests, if

any, must be approved by the Supervisory

Board and shall be mentioned in the Annual

Report for the financial year in question.

The rules for conflict of interest applicable to

the members of the Board of Management

also apply to the members of the Supervisory

Board. No conflict of interest as referred to

in this section occurred during 2023.

Outside positions

Pursuant to Dutch law, a person cannot be

appointed as a managing or executive

director of a large Dutch company if he or she

already holds a supervisory position at more

than two other large Dutch companies or if

he or she is the chair of the supervisory

board or one-tier board of another large

Dutch company. Also, a person cannot be

appointed as a supervisory director or non-

executive director of a large Dutch company

if he or she already holds a supervisory

position at five or more other large Dutch

companies, whereby the position of chair of

the supervisory board or one-tier board of

another large Dutch company counts twice.

The acceptance by a member of the Board of

Management of a position as a member of a

supervisory board or a position of non-

executive director in a one-tier board at

another company requires the approval of

the Supervisory Board. The Chair of the

Supervisory Board is required to be notified

of other important positions (to be) held by a

member of the Board of Management.

The Supervisory Board member must inform

the Chair of the Supervisory Board before

accepting a position outside the company.

All members of the Board of Management and

the Supervisory Board complied with the

restriction as set out above for the financial

year 2023.

11.6 General

Meeting of

Shareholders

The main rights of the General Meeting are

to:

• Appoint, suspend and dismiss members of

the Board of Management and the

Supervisory Board;

• Adopt the remuneration policy and approve

equity-based incentive plans for members

of the Board of Management and adopt the

remuneration of the members of the

Supervisory Board;

• Adopt the annual accounts;

• Declare dividends;

• Discharge the members of the Board of

Management and the Supervisory Board

from liability in respect of the performance

of their respective duties in the previous

financial year;

• Appoint the external auditor as required by

Dutch law;

• Adopt amendments to the Articles of

Association and proposals to dissolve or

liquidate the company;

• Issue shares or rights to shares, to restrict

or exclude preemptive rights of

shareholders and to repurchase or cancel

outstanding shares; and

• Approve other important matters, such as

major acquisitions or the sale of a

substantial part of the company, as

required by law.

The AGM is held within six months after the

end of each financial year to discuss the

annual report and decide on the adoption of

the financial statements and dividend

proposal as well as the discharge of the

members of the Board of Management and

the Supervisory Board.

The AGM can be called by the Board of

Management or the Supervisory Board. The

Board of Management is entitled to

determine the record date in accordance

with Dutch law. The agenda, explanatory

notes thereto and the procedure for

attendance are published on the company’s

website. Holders of ordinary shares in the

aggregate representing at least 3% of the

total issued share capital may submit

proposals for the AGM agenda. Such

proposals must be made in writing at least 60

days before the AGM to the Board of

Management. Any written request must

comply with the procedure stipulated by the

Board of Management, which is published on

the company’s website.

Each ordinary share confers the right to cast

one vote in the General Meeting. There are

no special statutory rights attached to the

shares of the company and no restrictions on

the voting rights of the company’s shares

exist. Subject to certain exceptions provided

by Dutch law or the Articles of Association,

resolutions of the General Meeting are

passed by an absolute majority of votes cast.

A resolution to amend the Articles of

Association requires a simple majority of the

votes cast if the resolution is adopted on a

proposal of the Board of Management.

Otherwise, such resolution requires a

majority of at least three-fourths of the

votes cast provided that the majority

represents more than half of the issued share

capital. Pursuant to Dutch law, no votes may

be cast at a General Meeting in respect of

shares which are held by the company.

Share capital and repurchase

and issue of (rights to) shares

The authorized share capital of the company

amounts to EUR 6 million, divided into 300

million ordinary shares with a nominal value of

one eurocent each and 300 million

preference shares, also with a nominal value

of one eurocent each. On December 31,

2023, the issued share capital amounted to

EUR 1.28 million, divided into 128,344,238

ordinary shares and no preference shares. All

shares are fully paid up. The shares are in

registered form. There are currently no

limitations either under Dutch law or the

company’s Articles of Association, as to the

transfer of ordinary shares in the share

capital of the company.

The Board of Management, to the extent

authorized by the General Meeting for a

specific period, may resolve to issue or

repurchase shares, subject to the approval of

the Supervisory Board. The Board of

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Signify Annual Report 2023

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Management may limit or exclude preemptive

rights if designated to do so by the General

Meeting.

At the AGM held on May 16, 2023, the General

Meeting resolved to authorize the Board of

Management for a period of 18 months,

effective as of May 16, 2023, to issue shares

or grant rights to acquire ordinary shares as

well as to restrict or exclude the preemptive

rights accruing to shareholders, in each case

up to a maximum of 10% of the issued share

capital as at May 16, 2023, and subject to

approval from the Supervisory Board. At the

same time, the Board of Management was

authorized to acquire ordinary shares on the

stock exchange or otherwise, subject to the

approval of the Supervisory Board, at a price

between the nominal value of the ordinary

shares and 110% of the market price of the

ordinary shares on Euronext Amsterdam,

provided that the maximum number of

ordinary shares the company may acquire and

hold does not exceed 10% of the issued share

capital as at May 16, 2023, plus an additional

10% of the issued capital as at that same date

in connection with the execution of share

repurchases for capital reduction purposes.

11.7 Stichting

Continuïteit

Signify

Stichting Continuïteit Signify, a foundation

('stichting') incorporated under Dutch law,

has been granted a call option right to

acquire preference shares in the share

capital of the company. The possibility of

issuing preference shares in the share capital

of the company is a defensive measure. The

foundation may resolve to exercise the call

option at its sole discretion without the

consent of the company. On the exercise of

the call option, the foundation is entitled to

acquire, and the company shall have the

unconditional obligation to issue, preference

shares up to a maximum corresponding with

100% of the issued and outstanding share

capital of the company. This shall exclude the

preference shares as issued and outstanding

immediately prior to the exercise of the call

option, less one preference share, from

which maximum any preference shares

already placed with the foundation at the

time of the exercise of the call option must

be deducted.

The call option can be exercised by the

foundation in order to, for example:

• Prevent, slow down or otherwise

complicate an unsolicited takeover bid for

and an unsolicited acquisition of shares by

means of an acquisition at the stock

market or otherwise;

• Prevent and countervail concentration of

voting rights in the General Meeting; and/

• Resist unwanted influence by and pressure

from shareholders to amend the strategy

of the company.

If the foundation exercises the call option,

the company issues such number of

preference shares as for which the

foundation exercised its call option. No

preference shares had been issued as of

December 31, 2023.

The foundation’s objects are to further the

interests of Signify N.V., the enterprises

maintained by the company and the

companies affiliated with the company in a

group. The foundation will act in such a way

that the interests of the company and of

those enterprises are optimally safeguarded

and that influences which could affect the

independence, continuity or identity of the

company, the enterprise maintained by the

company and the companies affiliated with

the company in a group in conflict with those

interests are deterred to the best of the

foundation’s ability.

The foundation has the right to file a petition

with the Enterprise Chamber of the

Amsterdam Court of Appeal to commence an

inquiry procedure within the meaning of

section 2:344 Dutch Civil Code.

As of December 31, 2023, the board of the

foundation was composed of the following

independent members: Jos Streppel (chair),

Sietze Hepkema and Jan Willem Baud.

Furthermore, it should be noted that also in

the event of (an attempt at) a hostile

takeover or other attempt to obtain (de

facto) control of the company, the Board of

Management and the Supervisory Board are

authorized to exercise in the interests of

Signify all powers vested in them.

11.8 Change of

control

The company is not a party to any material

agreement that takes effect, alters or

terminates upon a change of control of the

company following a take-over bid as

referred to in section 5:70 of the Dutch

Financial Markets Supervision Act, other than

the credit agreement entered into with a

syndicate of financial institutions which

established term loans and a revolving credit

facility, certain bi-lateral credit agreements

that have been entered into to refinance

term loans, the Eurobonds issued by the

company in 2020, certain credit agreements

entered into to refinance such Eurobonds

and the Trade Mark License Agreement

entered into with Koninklijke Philips N.V.

These credit agreements include a change of

control provision which allows the lenders to

cancel the commitment and declare any

outstanding amounts under the agreement,

immediately due and payable whereupon such

amounts will become immediately due and

payable. The provisions applicable to all

Eurobonds issued by the company in 2020

contain a "Change of Control Put Event". This

means that if the company experienced such

an event with respect to such bonds, the

company might be required to redeem or

purchase the bonds at its principal amount,

plus accrued and unpaid interest, if any.

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11.9 External

auditor

Under Dutch law, the external auditor of the

company is appointed by the General

Meeting. In accordance with the Dutch

Corporate Governance Code and Regulation

(EU) No. 537/2014, the Supervisory Board

selects and nominates an external auditor for

appointment, upon advice by the Audit

Committee. The Supervisory Board and the

Audit Committee assess the functioning of

the external auditor, taking the observations

from the Board of Management into account.

Ernst & Young Accountants LLP was first

appointed as external auditor of the company

on May 13, 2016, for the financial years 2016

through 2019. On May 16, 2023, the General

Meeting re-appointed Ernst & Young

Accountants LLP as external auditor of the

company for the financial years 2023 through

2025.

The services provided by the external auditor

are pre-approved by the Audit Committee on

the basis of the annual audit services

engagement agreed with the external

auditor. Unless general pre-approval has

been given at the beginning of the year, all

proposed services require such specific pre-

approval.

In principle, the external auditor attends all

meetings of the Audit Committee. The

findings of the external auditor, the audit

approach and the risk analysis are also

discussed at these meetings. The external

auditor attends the meeting of the

Supervisory Board at which the report of the

external auditor with respect to the audit of

the annual accounts is discussed, and at

which the annual accounts are approved. The

external auditor may also attend the Annual

General Meeting to elaborate on its audit and

auditor's report and is available for questions.

Auditor independence

The Audit Committee evaluates at least

annually the external auditor’s independence.

The lead auditor in charge of the Signify

account is changed every five years; such

change took place as of the start of the

financial year 2021. Furthermore, EU law

requires the rotation of the external audit

firm after the firm has completed the

statutory audit of the company for a period of

10 consecutive years.

Prohibition on non-audit services

The Audit Committee reviews the proposed

audit scope, approach and fees as well as

services that the external auditor provides to

the company. Dutch law requires the

separation of audit and non-audit services,

meaning the company’s external auditor is not

allowed to provide prohibited non-audit

services.

11.10 Dutch

Corporate

Governance

Code

The company fully endorses the underlying

principles of the Dutch Corporate

Governance Code, and is committed to

adhering to the best practices of the Code as

much as possible.

The company fully complies with the Code and

applies all its principles and best practice

provisions that relate to the Board of

Management or the Supervisory Board.

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12 Investor relations

12.1 Shareholder

engagement

Signify attaches great value to maintaining an

open dialog with investors and equity analysts

in order to provide transparency and receive

valuable feedback. The company conducts

extensive investor outreach throughout the

year, involving the Investor Relations

department and members of the Board of

Management, to ensure that the topics that

matter most to shareholders can be

addressed effectively.

In 2023, Signify reached over 200 unique

investment institutions through its Investor

Relations activities and covered more than

80% of its active shareholder base.

Signify has an active investor relations

approach aimed at supporting the company’s

long-term ambitions by keeping existing and

potential shareholders well-informed about

its strategy and the latest operational and

financial developments. Signify publishes its

financial results on a quarterly basis. In

addition, the company also organizes earnings

calls for research analysts and institutional

investors to discuss these results. These

earnings calls can be accessed and replayed

on Signify's Investor Relations website. The

Supervisory Board receives regular updates

on share price developments, notable

changes in Signify's shareholder base,

feedback from investors and equity analysts,

giving them a clear understanding of

shareholders’ views and other relevant

developments.

12.2 Shareholder

base

Signify has a broad base of international

shareholders, as shown in the chart below.

The information is based on an independent

shareholder identification analysis performed

in December 2023.

Geographical distribution of shares 1

1 Excluding treasury shares, prime brokerage and retail

investors.

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The Dutch Financial Markets Supervision Act

requires institutions and individuals holding a

(potential) capital and/or voting interest of

3% or more in Signify to disclose such to the

Netherlands Authority for the Financial


Signify shareholders
	% Actual interest 1	Total % registered 2
Silchester International Investors LLP	5.0%	5.0%
Amundi Asset Management	4.9%	4.9%
BlackRock Inc.	3.3%	4.0%
Dimensional Fund Advisors LP	3.0%	3.0%
Impax Asset Management Group Plc.	3.0%	3.0%
DWS Investment GmbH	2.9%	3.0%
Pictet Asset Management S.A.	3.0%	3.0%
1 The actual interest reflects the % registered interest, excluding potential interests, such as options, futures, forward-rate agreements and other derivatives contracts. 2 The total % registered includes the actual and potential interests such as options, futures, swaps, forward-rate agreements and other derivatives contracts.

Source: AFM

12.3 Annual

General

Meeting of

Shareholders

The 2024 Annual General Meeting of

Shareholders will be held on May 14, 2024.

The agenda and the explanatory notes to the

agenda will be published on the company’s

website. The record date for the 2024 Annual

General Meeting of Shareholders is April 16,

2024, after processing all settlements of that

date. People registered as shareholders in

the designated register on that date, and

who have registered for the meeting, will be

entitled to attend and vote in the meeting.

Markets (AFM). The AFM processes these

disclosures in its publicly available register,

which can be found at www.afm.nl. The table

below includes the total interests of 3% or

more registered at the AFM on December 31,

2023, and the related actual interests.

12.4 Capital

allocation

Capital allocation policy

Signify's capital allocation policy is:

• To pay an increasing annual cash dividend

per share year on year.

• To maintain a robust capital structure and

maintain an investment grade credit rating.

• To continue to invest in organic and

inorganic growth opportunities in line with

its strategic priorities.

Dividend policy

Signify's dividend policy is to pay an increasing

annual cash dividend per share year on year.

The payment of dividends, if any, and the

amounts and timing thereof depend on

several factors, including future sales,

profits, financial conditions, general

economic and business conditions and

prospects. Other factors that the Board of

Management may deem relevant, as well as

other legal and regulatory requirements,

might also impact the amount, timing and

payment of future dividends. These might be

beyond the control of the company.

Proposed dividend

The company proposes a dividend of EUR 1.55

per share, in cash, from the net income for

full-year 2023. This is in line with its dividend

policy of paying an increasing cash dividend

per share year on year.

The dividend payment is subject to approval

by the Annual General Meeting of

Shareholders on May 14, 2024. Further

details will be provided in the agenda for the

AGM. Dividend in cash is, in principle, subject

to 15% Dutch dividend withholding tax, which

will be deducted from the dividend in cash

paid to shareholders.

Dividend dates


Ex-dividend date	May 16, 2024
Dividend record date	May 17, 2024
Dividend payment date	June 3, 2024

Share repurchases for LTI

hedging

No shares were repurchased in the open

market in 2023.

12.5 Debt info

Term loan and revolving credit

facility

In December 2023, Signify entered into a EUR

400 million long-term loan agreement,

maturing in December 2026. The Company

issued long-term debt to refinance part of

the debt that will mature in 2024. 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 already received.

The remainder of EUR 178 million was received

in January 2024.

In addition, as of December 31, 2023, the

company had 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.

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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. Signify currently

has two investment grade ratings.

Eurobonds

As of December 31, 2023, Signify had 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.

More information about Signify's debt position

can be found at https://www.signify.com/

global/our-company/investors/shareholder-

info/debt-info.

12.6 Share

performance

Signify's share price underperformed the AEX

index, the S&P capital goods index and the DJ

Europe (excl. UK) technology index

throughout most of 2023. In the last quarter

of the year, Signify's share price started to

recover, mainly narrowing the gap with the

AEX index. On a full-year basis, Signify's share

price underperformed all three indices.

On a full-year basis, Signify's share price

declined by 3%, while the DJ Europe (excl.

UK) technology index increased by 38%, the

S&P capital goods index by 36% and the AEX

index by 14%.

The market capitalization at year-end 2023

was EUR 3.9 billion and Signify's free float was

98%.

12.7 Financial

calendar

Financial calendar 2024


Report/Activity	Date
Q1 2024 financial report	April 26, 2024
Annual General Meeting of Shareholders 2024	May 14, 2024
Q2 and first-half 2024 financial report	July 26, 2024
Q3 2024 financial report	October 25, 2024

Share price development (indexed)

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13 Risk factors and

risk management

Introduction

At Signify, we believe taking risks is an inherent part of entrepreneurial behavior. By deploying

a structured risk management process, management is able to take risks in a controlled

manner. The company’s risk management and controls are designed to provide reasonable

assurance that strategic and financial business objectives are met. This is done by integrating

management control into the daily operations, by ensuring compliance with legal requirements

and by safeguarding the integrity of the company’s financial reporting and its related

disclosures. The components of our risk management process are listed below.

13.1 Establish a

strong risk

management

environment

Signify’s risk management environment is

embedded in the corporate governance, the

business control framework and the Integrity

code.

Corporate governance

Corporate governance is the system by which

a company is directed and controlled. Good

corporate governance derives from, among

other things, solid internal controls and high

ethical standards.

The Board of Management is responsible for

managing the risks associated with the

company's activities and for defining the

company's risk appetite. The Board of

Management is assisted by the company's

leadership team, which participates on a

quarterly basis in audit risk and control

meetings to identify critical risks and to

review progress on the implementation of risk

responses. The Audit Committee of the

Supervisory Board provides oversight for the

system of internal business controls and risk

management. Internal and external audits are

reported to and discussed by the Audit

Committee on a quarterly basis and

management self-assessment is reported on

a yearly basis. An in-depth description of the

company's corporate governance structure

can be found in chapter 11, Corporate

governance.

Business Control Framework

The company’s Business Control Framework

(BCF) sets the standard for risk management

and business controls in the company. The

objectives of the BCF are to maintain (i)

integrated management control of the

company’s operations in order to ensure the

integrity of the financial reporting and related

disclosure, and (ii) compliance with applicable

laws and regulations. The company has

designed its BCF based on the framework

established by the Committee of Sponsoring

Organizations of the Treadway Commission

(COSO). The company regularly evaluates and

improves its BCF to align with business

dynamics and good practices.

Integrity code

Acting with integrity is the cornerstone for

the success of our business and for achieving

our purpose. It is integral to the values that

define us as a company. Acting with integrity

means making the right choices when faced

with ethical dilemmas, and holding ourselves

and each other to high standards of behavior.

The Integrity code was updated in 2023 and

has been approved and adopted by the Board

of Management. It applies to all employees of

Signify N.V. and its controlled subsidiaries.

The Integrity code formulates minimum

standards of behavior. The company has

underlying policies that form an integral part

of the Integrity code.

To increase the level of awareness and to

create global engagement, the company has

established a network of Compliance Officers

in countries where the company has a

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presence, on each significant site, and at

Division, Market Group and Functional level.

The activities and responsibilities of this

network are focused on providing expertise

and support to managers and employees on

Integrity code-related matters .

Furthermore, the Signify central privacy

office safeguards the governance of personal

data together with privacy contact points

across divisions, markets and functions.

The Integrity code is supported by

mechanisms that ensure standardized

reporting, escalation and investigation of

concerns. These mechanisms are based on

the Integrity code Reporting Policy that urges

employees and third parties to report any

concerns they may have regarding business

conduct in relation to the Integrity code,

either through a Compliance Officer or

through the Signify Ethics line. The Signify

Ethics line enables employees and third

parties to report a concern either by

telephone or online via a web intake form. All

concerns raised are consistently registered

in a single database and are investigated in

accordance with standardized investigation

procedures. An overview of the reporting

activities for 2023 is given in chapter 17, CSRD

disclosures, subsection 17.1 ESRS.

13.2 Define risk

appetite

Risk management in Signify focuses on the

following risk categories: strategic,

operational, compliance and financial risks.

The Board of Management has determined

the risk appetite and seeks to manage risk

within these boundaries. The risk appetite is

different for each of the risk categories:

Strategic risks

Strategic risks include economic and political

developments and the effects of actions

taken to anticipate and respond to market

circumstances. The company has a medium

strategic risk appetite and is prepared to

take some reasonable strategic risks,

balancing the need to capture return from

opportunities and management of the risks.

The company’s key strategic risks are

discussed in section 13.5 and include

technological change, competition, global

political and economic instability,

digitalization, acquisitions and integration,

and concentration risk.

Operational risks

Operational risks include adverse unexpected

developments resulting from internal

processes, people and systems, or from

external events that are linked to the running

of each business. The company has a low

operational risk appetite and aims to minimize

downside risks to maintain the high quality of

its products, systems and services, reliable IT

systems and sustainability commitments.

The company’s key operational risks are

discussed in section 13.5 and include supply

disruptions, innovation, cyber-attacks and

security breaches, new organizational

capabilities, and climate change.

Compliance risks

These risks cover unanticipated failures to

implement, or comply with, appropriate laws,

regulations, policies and procedures. The

company is, due to its global footprint,

exposed to risk of fraud and other

misconduct in violation of the integrity code

and/or applicable laws and regulations,

governmental investigation and legal

proceedings in relation thereto.

The company has a very low compliance risk

appetite. The company is committed to full

compliance to relevant laws, regulations and

its Integrity code and has a zero tolerance

policy towards non compliance in these areas

Financial risk

The company faces financial risks outside its

control related to treasury, accounting and

reporting, pensions, and tax. Here, the risk

appetite is low. Therefore, the company aims

to minimize the impact of financial risk, and it

follows a conservative risk management

approach in these areas. Furthermore, the

company is committed to transparent and

truthful accounting and reporting to allow

users of the financial statements to take

decisions considering these risks.

13.3 Risk

assessment

and control

In order to provide a comprehensive view of

the company’s business strategy and

activities, risks and opportunities are

identified in a structured way, combining

elements of top-down and bottom-up

approaches.

Strategic risk

The company leadership team identifies the

key risks as part of its strategic review

process. In a subsequent workshop, the

leadership team ranks the risks based on

impact, likelihood, risk criticality and control

effectiveness. As part of the strategic review

cycle, initiatives are defined to mitigate the

risks. Owners are assigned for each of the

strategic initiatives, and they are then

accountable for ensuring adequate risk

mitigation and for monitoring the

implementation of mitigation measures. Each

quarter, the key risks are discussed during

the audit and risk committee meeting

internally with key leaders. Reported risks

and opportunities are analyzed for potential

cumulative effects and are aggregated at

Division, Market cluster and company level.

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Operational risk

Risks are reported on a regular basis as part

of the business performance reviews. In

addition, on an annual basis, the top risks are

identified by company leadership. Relevant

risks, including those associated with

business opportunities, are prioritized in

terms of potential impact and likelihood,

considering quantitative and/or qualitative

aspects, and are reviewed together with the

Board of Management. On a quarterly basis,

risks and controls are reviewed with the

Divisions, Market clusters and specific

Functions in the audit risk committee.

Compliance risk

The Integrity Committee is the ultimate body

within Signify to administer the organization’s

Integrity Code Legal Compliance Program. It

does so by maintaining oversight of the

development and implementation of the

Integrity code, including the monitoring of its

effectiveness. The Integrity Committee is

chaired by the Chief Legal Officer. Its

members include the Chief Executive Officer,

Chief Financial Officer, Chief HR Officer, Head

of Internal Audit and Head of Legal

Compliance.

With an annual Integrity code self-

assessment process forming part of the

internal controls over financial reporting

(ICS), compliance to the Integrity code forms

part of management’s ICS monitoring

process. Management of each business unit

signs off on controls relating to compliance

with the Integrity code, with this confirmation

forming part of the annual certification

statement on Business Controls. Non-

compliance issues are highlighted and, if

significant, they are reported to the Board of

Management through the Certification

Statement process.

Employees are requested to state their

commitment to the Integrity code after

having completed e-learnings. In 2023,

employees were required to complete one or

more e-learnings on the Integrity code and

related legal compliance domains. Specific

target groups were required to participate in

recurring (virtual) classroom trainings. In

addition, each year, Finance and Procurement

employees are asked to sign off on the

Financial and the Procurement Codes of

Ethics, respectively. All executives are asked

to sign off on the Integrity code annually to

confirm their awareness of and compliance

with the code. Violations of the Integrity code

will result in disciplinary action, up to and

including dismissal.

Financial risk

The company has implemented a global

standard for ICS. ICS, together with the

established accounting procedures, are

designed to provide reasonable assurance

that assets are safeguarded, that the books

and records properly reflect transactions

necessary to permit preparation of financial

statements, that policies and procedures are

carried out by qualified personnel, and that

published financial statements are properly

prepared and do not contain any material

misstatements.

Internal controls are an inherent part of the

processes in our company, where the

responsibility for executing these internal

controls is with the persons that carry out

these processes. The design and

maintenance of the global standard for

internal controls is with the (global) business

process owners and the dedicated ICS team.

An ICS monitoring process exists for all

material reporting units, whereby business

process owners engaged in the key financial

processes perform self-assessments on

several key controls, document the results,

and take corrective action where necessary.

ICS supports business and functional

management in a periodic cycle of

assessment and monitoring of the control

environment.

On an annual basis, management’s

accountability for business controls is

recorded through the formal issuance of a

Certification Statement on Business Controls

and a Letter of Representation by Divisions,

reporting units and Functional management

to the Board of Management. Any

deficiencies noted in the design and

operating effectiveness of controls over

financial reporting, which were not

completely remediated, are evaluated at year

end by the Board of Management. The Board

of Management’s statement, including its

conclusions regarding the effectiveness of

internal controls over financial reporting, can

be found in chapter 14, Statement of the

Board of Management.

The global tax strategy and policy are aligned

with our business and sustainability strategies

and are published on the company’s website,

as part of our annual Signify Tax Report. The

Board of Management, enabling functions,

Divisions and Markets are advised on tax

matters by Group tax to ensure both the

needs of the business and of the tax function

are balanced. The company also participates

in national and international forums of

experts to represent its interests. In addition,

the company has corporate requirements for

the management of the company’s legal

entities in line with tax legislation. Also refer

to chapter 4.3.5, Responsible tax policy.

For further details on financial risks refer to

chapter 15, Consolidated financial

statements, note 9, Income tax, note 25,

Post-employment benefits and note 29,

Financial risk management.

13.4 Changes in

2023

In 2023, Pierlite integration in the internal

control framework was completed and key

controls for self assessment were deployed

in Fluence.

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13.5 Key risks

The key risks to achieving Signify’s 2021-2023 mid-term targets, the potential impact of each risk, the mitigation strategies, and actions deployed are described in the following table. These risks

can, separately or in combination, have a material adverse effect on Signify’s business, strategy, financial condition, results from operations, cash flow, reputation, or prospects.


Risk	Risk description	Mitigation actions
Technological change	The transition to connected LED lighting is characterized by the increasing importance of digital capabilities and technology. At present, a relatively small part of the worldwide installed base of light points is connected. A cornerstone of Signify’s strategy is to focus on and invest in its connected lighting offerings, such as its Interact offerings for the professional market and Hue, WiZ smart lighting offerings for the consumer market. Signify also aims to develop new business models, in particular through value-added service offerings. The risk is that the extent and speed of adoption of connected lighting systems and services does not develop as anticipated, or that Signify is unable to successfully implement its strategy in connected lighting.	Signify is actively developing and investing in technology platforms and software applications to bring (more advanced) connected lighting systems to the market. Part of this strategy is to strongly focus on the interoperability of its applications and to incorporate different connectivity technologies in its connected lighting portfolio, thereby addressing different needs in the market. Additionally, Signify plays a leading role in developing the market for connected lighting systems, in building awareness of the benefits of connected lighting, and in forging partnerships and alliances. Finally, in order to capture this new value opportunity, Signify’s systems and product teams are developing innovative services and flexible offers meeting differentiated customer needs from basic to advanced and responding to different regional requirements around connected lighting. The market adoption of connected technologies is captured through quarterly market analysis.
Competition	The LED lighting market has attracted many new competitors (particularly from Asia) with low-priced offerings and is at present highly competitive. This has led to increased commoditization of offerings as well as price pressure on LED products. This might impact revenues and profitability, in particular, if Signify fails to manage costs. In the area of connected lighting, the risk is that non-lighting players with broad technology platforms might enter and disrupt the lighting market.	To counter full category commoditization, Signify's strategy includes the creation of tiered offerings (e.g. B-brand and private label), and bringing renewed innovation into the commoditized LED segment (A-class LED range). Further, the company is strengthening its digital (sales) capabilities and is running saving initiatives to keep its cost base competitive. Also, Signify can make use of the Philips brand, which has a strong global reputation and brand preference to drive sales. Finally, in the connected lighting segment, the company manages to maintain a leadership position by providing a continuous stream of innovations to the market, both in hardware and software. In general, Signify has a global sales and distribution network which is difficult for any competitor to replicate. This network allows the company to quickly roll- out innovative products and services on a global scale.

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Risk	Risk description	Mitigation actions
Global political and economic instability	There continues to be significant instability in both the global economical and political landscape. Polarization and trade protectionism as well as political changes might disrupt our operations and, ultimately, our sales, profit and cash flow, as Signify has commercial activities and operations in almost every country. Adverse economic and political conditions might result in lower customer demand. In particular, the continuing Russia-Ukraine war, the conflict in the Middle East, the rise of interest rates with the resulting high level of inflation, and the slower than anticipated recovery in China post COVID, have had an adverse effect on consumer and customer spending, and hence on the company’s sales and profitability in 2023. Looking forward, uncertainty and volatility remain regarding adverse economic conditions and can impact the general lighting market.	At the macro level, Signify actively engages in global forums focused on the benefits of globalization. Signify is also committed to highly credible industry organizations globally to support the stabilization of global trade. In order to minimize the impact of instability on its business, Signify closely follows and reviews (geo)political and economic developments and takes these into account in both its short- and medium-term operational planning. To mitigate potential supply chain inefficiencies and/or tariff impacts arising from geopolitical tensions and trade protectionism, Signify leverages its global (manufacturing) footprint and makes adjustments to its sourcing base when needed. Inflation in Commodity and Energy prices is offset through a combination of cost savings and price increases.
Supply disruption	Signify depends on external suppliers and, to a large extent, on the production of components and LED products in Asian countries. The risk of this high dependency is that suppliers are not able to deliver (raw) materials, components or services in a timely manner for Signify to meet customer demand. Next to this, the production and shipping of products and components could be interrupted by conflicts, natural disasters, such as earthquakes, typhoons and floods caused by climate change, or pandemic diseases. Finally, increasing geopolitical tensions and trade protectionism, such as local manufacturing requirements, might disrupt the company’s operations. This might limit the company’s ability to leverage and draw efficiencies from its global (manufacturing) footprint. Specifically for conventional lighting, due to the decreasing demand in 2023 Signify faced a challenge to keep active dual sourcing in place, as suppliers decided to close their business. Finally, disruption of the global supply chain usually leads to increases in logistic costs, which in turn need to be offset through additional cost savings or additional pricing.	Signify has built a supplier risk plan in which atrisk suppliers are identified using criteria that take into account the geographical location of the supplier, and the technologies and processes used. In addition, Signify has enhanced regional supply capabilities to increase the share of components needed for manufacturing products for a particular region, as opposed to them being sourced from remote locations. Regular risk assessments are carried out at individual plant level, including the risks related to natural catastrophes and water scarcity. These assessments are also performed at locations of business-critical suppliers and of strategic inventories. Signify requires its sites to have robust business continuity plans for any large-scale events that can severely impact the business. These plans include sourcing from alternative suppliers, nearshoring, and increasing strategic inventories. Cost inflation due to the shortage of components, containers or labor is offset through a combination of cost savings and market price increases. The level of pricing moves is benchmarked versus key competitors.

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Risk	Risk description	Mitigation actions
Innovation	The high speed of innovation and the increasing importance of digital technology in the general lighting industry requires Signify to spend considerable resources on developing new products and solutions. It also requires developing different capabilities and competences to commercialize its innovations successfully. In particular, in the fast-changing market in which the company operates, it must continuously address the needs of local customers and introduce locally relevant new products and solutions ahead of competition. Failure to bring new products and solutions to the markets in a timely fashion and to commercialize its innovations successfully would lead to the expected benefits of these investments not being delivered and, hence, this would be detrimental to both the top and bottom line of the company.	Signify invests significantly in its R&D activities. It has dedicated R&D activities to support its divisions in developing and realizing near-term innovation roadmaps, and to develop longer-term innovations with a focus on areas such as connected lighting systems, software and digital applications. Signify adapted its business structure to enable a stronger customer focus and enhanced specialization to further increase execution speed. Finally, dedicated go-to-market channels and tailored marketing approaches are in place with the aim to successfully introduce new offerings commercially. The return on innovation investments is reviewed on a quarterly basis, including speed to market, efficiency of investment and sales development versus plan.
Cyber-attacks and security breaches	As Signify becomes more digitalized, more devices and systems are connected online. This increases cyber security risk across enterprise IT, Operational Technology (OT) and our products and solutions that are delivered with Internet of Things (IoT) capabilities and accompanying (cloud-based) software applications. Should a successful cyber-attack materialize, the processes, services and systems that allow the organization to continue to operate could be impacted resulting in operational disruption, with or without ransom demands. Further, a cyber-attack could cause a data breach where sensitive, protected, personal or confidential data held by Signify are leaked or stolen. Last but not least, the cyber risk extends to the 3rd parties that Signify does business with.	Cyber risk is reviewed by the Board of Management and the Supervisory Board on a periodic basis. A dedicated cyber security team scans external developments, identifies inherent risks, and proposes plans to limit residual risk as much as possible. The Security Board aligns on the level of acceptable residual risk. Each year mandatory security and data protection & privacy awareness trainings are conducted. A security improvement roadmap has been created and the progress is monitored by the Security Board, Supervisory Board and Audit Risk Committee. Third party risk is assessed as part of this. Security measures are in place to detect attackers and to minimize the risk of them causing damage to systems and gaining access to critical data, systems and services. Business continuity plans are in place in the event of non- availability of IT systems and manufacturing sites. These business continuity plans are tested periodically. Additionally, there is a security operations team that is supported by a managed security service provider for 24x7 vigilance of security events. This team is focused on security incident management and supports security incident monitoring and response within specified SLAs. Specifically to its products and software applications, Signify develops them in- house and secures the ecosystem in conformity to security standards and best practices (ISA/IEC62443, ISO2700x, NIST).

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Risk	Risk description	Mitigation actions
Digitalization	It is a strategic priority for Signify to digitalize its customer interfaces, its processes, and its offers. As such, digitalization is a key opportunity to provide higher customer service levels, more attractive customer offers, and to continue optimizing productivity through more efficient workflows. Failure to keep up with ongoing digitalization and to adapt to new technologies will lead to a gradual loss of both market share and earnings.	Over the past years, the company has stepped up its investment in digitalization. Signify has established a Digitalization roadmap for customer interfaces, processes and offers, aligned to its business strategy. Upgrading the underlying IT architecture, re-skilling its employees, and improving the overall data governance, have been identified as key enablers. Several key programs have been initiated, under the leadership of Chief Digital and Information Officer, in the areas of technology foundation, skills up-grading, enhancement in go-to-market and E-commerce capabilities. Progress against the established roadmap and the key programs is closely followed-up by the Digital Committee, a sub-committee of the Supervisory Board.
New organizational capabilities	Signify needs to build the capabilities and culture required to transform its business and deliver on its strategy, including the ambition to grow its connected lighting business and grow in new areas such as agricultural, solar, UV-C lighting and 3D printing. New capabilities are particularly relevant in the areas of digital, software development, marketing and consultative selling. Next to this, bringing advanced connected lighting offerings to the market requires highly specialized (technical) personnel. Failure to successfully develop these new and different capabilities may have a significant impact on the company achieving its long-term strategic goals.	Signify invests in the professional development of its employees through learning initiatives as well as through dedicated talent management programs that identify top talents early in their career. In addition, actions were launched to upscale commercial skills and capabilities in cooperation with the Learning@Signify Academy. Next, talent acquisition programs are in place to attract new employees with a specific focus on those (technical) areas where the company sees capability needs that cannot be developed internally. Finally, through M&A projects of various size, new capabilities are brought to the company, with retention programs being part of the due diligence and acquisition approval process.
Acquisitions and integrations	Selected acquisitions have been, and are, an important part of Signify’s strategy. These acquisitions are aimed at growing the business, strengthening its supply chain or acquiring complementary technologies or new capabilities. Acquisitions always entail integration risk, which in turn could result in sales and cost synergies, strategic advantages and/or economies of scale being delayed or not fully realized.	For any acquisition, Signify follows a rigid process of confirming strategic relevance, value creation, due-diligence, and post-merger integration plan. Throughout the entire process, Signify makes sure to involve the right people from the organization, considering all vital aspects of the business. Immediately after any acquisition, a multidisciplinary team with members from both organizations is put together to ensure a smooth integration of the new business, both from a top-line synergy, a cost synergy, and a cultural integration point of view.

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Risk	Risk description	Mitigation actions
Climate change	The impact of climate change generates both opportunities and challenges for Signify’s existing and future lighting products and solutions portfolio. And, with a global footprint, Signify’s manufacturing sites and supply chain are exposed to risks related to climate change. In line with that, Signify is seeing continued and increased attention to climate change from all sectors of society. This attention has led to additional regulations designed to reduce greenhouse gas (GHG) emissions and the adoption of more energy-efficient products and low carbon solutions.and support products that contribute to circularity. As lighting represents around 12% of global electricity consumption, the lighting industry will need to adapt to changing environmental regulations. The inability to meet customer expectations related to the energy efficiency potential of the company’s LED lighting products and solutions could adversely affect the company’s reputation and brand. Additionally, understanding the risks posed by climate change, and how to improve business resilience through climate change mitigation and adaptation accordingly, is imperative to secure the company’s longer-term success.	As part of its Brighter Lives, Better World 2025 sustainability program, Signify is taking measures to manage climate risks and adapt its businesses. Since 2020, Signify is carbon neutral in its operations and sources 100% renewable electricity in its own operations. Investments in purchase power agreements not only contribute to emission reduction but also hedge the fluctuation of energy prices. 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. For example, Signify continues to expand its Philips Ultra Efficient portfolio, the world's most efficient energy saving LED Lighting, thereby helping to reduce energy expenditure. Signify's lighting for circularity initiative is driving the development of products that can be reprinted, refurbished,reused or recycled to optimize resource utilization and reduce emissions. Following the recommendations and guidance of the Task Force on Climate- related Financial Disclosures, Signify conducts ongoing climate risk assessments in line with the four core elements of governance, strategy, risk management, and metrics and targets (for details, refer to the Sustainability Supplements to the Annual Report, available on our Sustainability downloads webpage: https:// www.signify.com/global/sustainability/downloads). In 2023, Signify reduced 19% and was on track to achieve its ambitious Brighter Lives, Better World 2025 commitments (for details, refer to chapter 4, Brighter Lives, Better World.

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Risk	Risk description	Mitigation actions
Concentration risk	With the acquisition of US-based Cooper Lighting (2020) and Fluence (2022), Signify's overall risk profile changed. As a result, Signify is more exposed to developments in the professional lighting market, and in particular, in the North American market. Therefore, going forward, any developments in those markets are expected to have a bigger impact on the company’s results, operations and prospects. More importantly, in case of negative developments in North America, it might have a reduced ability for offsets through its other business activities and markets in which it is active.	The increased importance of the US is recognized and taken into consideration in the annual strategic planning process and risk assessment. Resources are allocated in line with both the size of the business and the future growth potential. Not only is the company focused on getting the right talent to drive the success of the US business, but also the Divisions and Functions are expected to spend a significant amount of time and energy on ensuring a successful US business. Finally, in order to address both the importance of the US business and the higher risk of global disruption, dedicated support plans have been and are being worked out for the US.

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14 Statement of the

Board of Management

The Board of Management has prepared this

Annual Report in accordance with

International Financial Reporting Standards

(IFRS) as endorsed by the European Union

(EU), the statutory provisions of Part 9, Book

2 of the Dutch Civil Code and additional Dutch

disclosure requirements for annual reports.

To the best of our knowledge:

• The Consolidated financial statements and

Signify N.V. financial statements included

in this Annual Report give a true and fair

view of the assets, liabilities, financial

position and profit or loss of Signify N.V.

and its consolidated undertakings;

• Based on the current state of affairs and

the company's strategic plan, which

forecasts among others the company's

future cash flows, it is justified that the

financial reporting has been prepared on a

going concern basis;

• The management report included in this

Annual Report gives a true and fair view

concerning the position on the balance

sheet date and the development and

performance of the business of Signify

N.V. and the undertakings included in the

consolidation taken as a whole during the

financial year;

• The management report included in this

Annual Report describes the principal risks

and uncertainties that the company faces,

and those that are relevant to the

expectation of the company’s continuity

for the period of 12 months after the date

of publication of this Annual Report.

The Board of Management is responsible for

the establishment and adequate functioning

of a system of governance, risk management

and internal controls in the company. It

reports on and is accountable for internal risk

management and control systems to the

Supervisory Board and its Audit Committee.

The company has implemented a risk

management and internal control system

designed to provide reasonable assurance

that strategic objectives are met by creating

focus, integrating management control over

the company’s operations, ensuring

compliance with applicable laws and

regulations and by safeguarding its assets

and the reliability of its financial reporting and

its disclosures.

The company has designed its internal control

system based on the Internal Control-

Integrated Framework (2013) established by

the Committee of Sponsoring Organizations

of the Treadway Commission (COSO).

The company’s risk management approach is

embedded in its periodic business planning

and review cycle and forms an integral part of

business management. On the basis of risk

assessments, management determines the

risks and appropriate responses related to

the achievement of business objectives and

critical business processes. Risk factors and

the risk management approach are described

in more detail in chapter 13, Risk factors and

risk management. Audit results, relevant

investigative activities as well as significant

changes and improvements in the company’s

risk management and internal control system

are discussed with the Audit Committee and

the Supervisory Board.

With respect to financial reporting, a

structured self-assessment and monitoring

process is used company-wide to assess,

document, review and monitor compliance

with internal control over financial reporting.

Internal representations received from

management, regular management reviews,

reviews of the design and effectiveness of

internal controls and reviews in company and

Division, Market and Function Audit

Committees, are integral parts of the

company’s risk management approach.

On the basis of the above, we confirm that:

• The management report provides

sufficient insights into failings, if any, in the

effectiveness of the internal risk

management and control systems; and

• The internal risk management and control

systems provide a reasonable level of

assurance that the financial reporting and

tax included in this Annual Report does not

contain any errors of material importance.

It should be noted that the above does not

imply that these systems and procedures

provide certainty as to the realization of

operational and financial business objectives,

nor can they prevent all misstatements,

inaccuracies, errors, fraud and non-

compliance with rules and regulations.

February 27, 2024

Board of Management

Eric Rondolat

Javier van Engelen

Maria Letizia Mariani

Harshavardhan Chitale

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Corporate statements

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Table of contents


Corporate statements
15 Consolidated financial statements	117
15.1 Consolidated statement of income	118
15.2 Consolidated statement of comprehensive income	119
15.3 Consolidated statement of financial position	120
15.4 Consolidated statement of cash flows	122
15.5 Consolidated statement of changes in equity	124
15.6 Notes to the Consolidated financial statements	125
1 Basis of preparation	125
2 Material accounting policies	127
3 Information by segment and main country	135
4 Income from operations	136
5 Employee benefit expenses	137
6 Depreciation, amortization and impairment	137
7 Other business income and expenses	137
8 Financial income and expenses	137
9 Income taxes	138
10 Earnings per share	141
11 Acquisitions and divestments	141
12 Interests in entities	142
13 Property, plant and equipment	143
14 Leases	144
15 Intangible assets	144
16 Objectives, policies and processes for managing capital	146
17 Inventories	146
18 Trade and other receivables	146
19 Trade and other payables	147
20 Other assets	147
21 Other liabilities	147



22 Equity	147
23 Debt	148
24 Provisions	150
25 Post-employment benefits	151
26 Share-based compensation	154
27 Information on remuneration	155
28 Financial risk management	156
29 Events after the balance sheet date	160
16 Signify N.V. financial statements	161
16.1 Statement of income	162
16.2 Statement of financial position before appropriation of results	163
16.3 Statement of changes in equity	164
16.4 Notes to the Company financial statements	165
A Statement of income	165
B Audit fees	165
C Financial assets	165
D Shareholders’ equity	166
E Debt	167
F Employees	167
G Contingent liabilities not appearing in the balance sheet	167
H Events after the balance sheet date	168
17 CSRD Disclosures	169
17.1 ESRS	169
17.2 EU Taxonomy	175
18 Combined independent auditor’s report	182
19 Reconciliation of non-IFRS financial measures	197
20 Definitions and abbreviations	202
21 Forward-looking statements and other information	206

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15 Consolidated

financial

statements

Introduction

The audited Consolidated financial statements including the notes thereon have been prepared

in accordance with 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.

All standards and interpretations issued by the International Accounting Standards Board (IASB)

and the IFRS Interpretations Committee effective 2023 have been endorsed by the EU;

consequently, the accounting policies applied by Signify also comply with IFRS as issued by the

IASB.

The following chapters of this Annual Report:

• 3, Creating LT value

• 4, Brighter Lives, Better World

• 5, Corporate performance

• 7, Board of Management

• 8, Supervisory Board

• 9, Supervisory Board report, subsection 9.3.2, Corporate Governance and Nomination &

Selection Committee

• 11, Corporate governance

• 12, Investor Relations, section 12.2, Shareholder base, section 12.4, Capital allocation

• 13, Risk factors and risk management

• 14, Statement of the Board of Management

• 17, CSRD Disclosures

• 19, Reconciliation of non-IFRS financial measures

• 20, Definitions and abbreviations

• 21, Forward-looking statements and other information

form the management report within the meaning of section 2:391 of the Dutch Civil Code.

For "Additional information" within the meaning of section 2:392 of the Dutch Civil Code, refer

to chapter 5, Corporate performance, section 5.3, Proposed distribution to shareholders,

chapter 11, Corporate governance, section 11.1, Signify organization and chapter 18, Combined

independent auditor’s report.

Ernst & Young Accountants LLP has issued an independent auditor’s report on the Consolidated

financial statements and the Company financial statements, in accordance with Dutch law,

including the Dutch standards on auditing, of Signify N.V., which is set out in chapter 18,

Combined independent auditor’s report.

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15.1 Consolidated statement of income		Note	2022	2023
	Sales	3	7,514	6,704
	Cost of sales		(4,781)	(4,146)
	Gross margin		2,732	2,558
	Selling, general and administrative expenses		(1,927)	(1,882)
	Research and development expenses		(295)	(308)
	Impairment of goodwill	15	–	–
	Other business income	7	227	24
Consolidated statement of income	Other business expenses	7	(19)	(23)
in millions of EUR unless otherwise stated	Income from operations	4	718	369
For the years ended December 31	Financial income	8	47	32
	Financial expenses	8	(88)	(134)
	Results from investments in associates		–	–
	Income before taxes		678	268
	Income tax expense	9	(145)	(53)
	Net income		532	215

	Attribution of net income for the period:
	Net income (loss) attributable to shareholders of Signify N.V.		523	203
	Net income (loss) attributable to non-controlling interests		9	12

	Earnings per common share attributable to shareholders	10
	Weighted average number of ordinary shares outstanding used for calculation (in thousands):
	• Basic		125,004	125,951
	• Diluted		127,597	127,338
	Net income attributable to shareholders per ordinary share in EUR:
	• Basic		4.18	1.61
	• Diluted		4.10	1.59

The accompanying notes are an integral part of these consolidated financial statements.

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15.2 Consolidated statement of comprehensive income		2022	2023
	Net income	532	215

	Pensions and other post-employment plans:
	• Remeasurements	15	(14)
	• Income tax effect on remeasurements	(5)	2
	Total of items that will not be reclassified to the Income statement	11	(12)

Consolidated statement of	Currency translation differences:
comprehensive income in millions of EUR	• Net current period change, before tax	159	(143)
For the years ended December 31	• Income tax effect	–	–
	Net investment hedge:
	• Net current period change, before tax	(10)	(3)
	• Income tax effect	–	1
	Cash flow hedges:
	• Net current period change, before tax	(24)	25
	• Income tax effect	6	(6)
	Total of items that are or may be reclassified to the Income statement	132	(126)

	Other comprehensive income	143	(138)
	Total comprehensive income	675	77

	Total comprehensive income attributable to:
	• Shareholders of Signify N.V.	663	71
	• Non-controlling interests	12	6

The accompanying notes are an integral part of these consolidated financial statements.

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15.3 Consolidated statement of financial position		Note	2022	2023
	Non-current assets
	Property, plant and equipment	13	699	633
	Goodwill	15	2,861	2,755
	Intangible assets, other than goodwill	15	700	641
	Investments in associates	12	12	12
	Financial assets	28	165	91
	Deferred tax assets	9	418	402
Consolidated statement of	Other assets	20	40	32
financial position in millions of EUR	Total non-current assets		4,895	4,566
As at December 31
	Current assets
	Inventories	17	1,361	1,050
	Financial assets	28	–	2
	Other assets	20	161	147
	Derivative financial assets	28	34	14
	Income tax receivable	9	56	54
	Trade and other receivables	18	1,102	1,012
	Cash and cash equivalents	28	677	1,158
	Assets classified as held for sale		1	–
	Total current assets		3,391	3,438
	Total assets		8,286	8,004

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15.3 Consolidated statement of financial position (continued)			2022	2023
	Equity
	Shareholders’ equity	22	2,920	2,817
	Non-controlling interests	12	145	129
	Total equity		3,065	2,947

	Non-current liabilities
	Debt	23	1,950	1,192
	Post-employment benefits	25	327	322
	Provisions	24	283	263
	Deferred tax liabilities	9	25	20
	Income tax payable	9	111	79
	Other liabilities	21	160	154
	Total non-current liabilities		2,855	2,030

	Current liabilities
	Debt, including bank overdrafts	23	83	1,038
	Derivative financial liabilities	28	42	17
	Income tax payable	9	21	20
	Trade and other payables	19	1,859	1,539
	Provisions	24	168	206
	Other liabilities	21	194	206
	Liabilities from assets classified as held for sale		–	–
	Total current liabilities		2,367	3,027
	Total liabilities and total equity		8,286	8,004

The accompanying notes are an integral part of these consolidated financial statements.

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15.4 Consolidated statement of cash flows		Note	2022	2023
	Cash flows from operating activities
	Net income		532	215
	Adjustments to reconcile net income to net cash provided by operating activities:		451	705
	• Depreciation, amortization and impairment of non-financial assets	6	318	274
	• Impairment (reversal) of goodwill, other non-current financial assets and investments in associates		–	–
	• Result on sale of assets	7	(182)	6
Consolidated statement of	• Net interest expense on debt, borrowings and other liabilities	8	41	43
cash flows in millions of EUR	• Income tax expense	9	145	53
For the years ended December 31	• Additions to (releases of) provisions	24	110	243
	• Additions to (releases of) post-employment benefits	25	10	23
	• Other items		9	64
	Decrease (increase) in working capital:		(248)	87
	• Decrease (increase) in trade and other receivables	18	130	50
	• Decrease (increase) in inventories	17	126	267
	• Increase (decrease) in trade and other payables	19	(555)	(272)
	• Increase (decrease) in other current assets and liabilities		52	42
	Increase (decrease) in other non-current assets and liabilities		(24)	3
	Utilizations of provisions	24	(157)	(153)
	Utilizations of post-employment benefits	25	(41)	(38)
	Net interest and financing costs paid		(39)	(41)
	Income taxes paid		(99)	(81)
	Net cash provided by (used for) operating activities		376	696

	Cash flows from investing activities
	Net capital expenditures:		69	(110)
	• Additions of intangible assets	15	(62)	(67)
	• Capital expenditures on property, plant and equipment	13	(70)	(51)
	• Proceeds from disposal of property, plant and equipment		201	8
	Net proceeds from (cash used for) derivatives and other financial assets		(29)	7
	Purchases of businesses, net of cash acquired	11	(297)	(13)
	Proceeds from sale of businesses, net of cash disposed of		–	–
	Net cash provided by (used for) investing activities		(256)	(115)

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15.4 Consolidated statement of cash flows (continued)
		Note	2022	2023
	Cash flows from financing activities
	Dividend paid		(188)	(210)
	Proceeds from issuance of debt	23	217	233
	Repayment of debt	23	(276)	(83)
	Purchase of treasury shares		(48)	(7)
	Net cash provided by (used for) financing activities		(295)	(67)
	Net cash flows		(175)	514
	Effect of changes in exchange rates on cash and cash equivalents and bank overdrafts		3	(31)
	Cash and cash equivalents and bank overdrafts at the beginning of the period		847	676
	Cash and cash equivalents and bank overdrafts at the end of the period	28	676	1,158

The accompanying notes are an integral part of these consolidated financial statements.

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15.5 Consolidated statement of changes in equity
		Share capital	Share premium	Retained earnings	Currency translation differences	Cash flow hedges	Treasury shares	Total share- holders' equity	Non- controlling interests	Equity
	Balance as at January 1, 2022	1	2,174	491	(80)	(2)	(126)	2,459	138	2,597
	Net Income	–	–	523	–	–	–	523	9	532
	Other comprehensive income (loss)	–	–	11	147	(18)	–	140	3	143
	Total comprehensive income (loss)	–	–	534	147	(18)	–	663	12	675
Consolidated statement of changes in equity	Dividend distributed	–	–	(182)	–	–	–	(182)	(6)	(188)
in millions of EUR	Purchase of treasury shares	–	–	–	–	–	(48)	(48)	–	(48)
	Delivery of treasury shares	–	(59)	16	–	–	42	–	–	–
	Share-based compensation plans	–	23	–	–	–	–	23	–	23
	Hyperinflation adjustment	–	–	5	–	–	–	5	–	5
	Balance as at December 31, 2022	1	2,139	864	67	(20)	(131)	2,920	145	3,065

	Balance as at January 1, 2023	1	2,139	864	67	(20)	(131)	2,920	145	3,065
	Net Income	–	–	203	–	–	–	203	12	215
	Other comprehensive income (loss)	–	–	(12)	(139)	19	–	(132)	(7)	(138)
	Total comprehensive income (loss)	–	–	191	(139)	19	–	71	6	77
	Dividend distributed	–	–	(189)	–	–	–	(189)	(21)	(211)
	Purchase of treasury shares	–	–	–	–	–	(7)	(7)	–	(7)
	Delivery of treasury shares	–	(35)	(22)	–	–	57	–	–	–
	Share-based compensation plans	–	17	–	–	–	–	17	–	17
	Hyperinflation adjustment	–	–	6	–	–	–	6	–	6
	Balance as at December 31, 2023	1	2,120	851	(72)	(1)	(82)	2,817	129	2,947

The accompanying notes are an integral part of these consolidated financial statements.

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15.6 Notes to the Consolidated

financial statements

In millions of EUR unless otherwise stated

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. (‘the Company’) 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

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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’s 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’ 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’s 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.

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Changes in accounting policy

New and amended standards adopted

Signify has applied the following amendments for the first time to its annual reporting period

commencing January 1, 2023:

• Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single

transaction;

• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies;

• Amendments to IAS 8: Definition of Accounting estimates;

• Amendments to IAS 12: International tax reform – 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.

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:

• The fair value of the consideration transferred; plus

• The recognized amount of any non-controlling interest in the acquiree; plus

• If the business combination is achieved in stages, the fair value of the existing equity interest

in the acquiree; less

• 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’s 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

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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.

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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’s 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 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;

• 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;

• 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;

• 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:

• The rights to receive cash flows from the asset have expired; or

• 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

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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:

• The right may be limited by local law if the counterparty is subject to bankruptcy proceedings;

• 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.

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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’s provisions is as follows:

• 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;

• 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;

• 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;

• Litigation provisions – 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;

• 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.

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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’s strategic plans, the

industrial footprint of Signify and divisions and the importance of the site to Signify’s 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

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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’s 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’s 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’s 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.

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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’s 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’s 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’s 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’s 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 0.01 per share and retained earnings for the difference.

Costs including dividend withholding tax in connection with Signify’s 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.

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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’s 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’s 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’s 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.

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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						–
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						–
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

(“EBITA”).

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’s 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.

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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.

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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.

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	–	–
Prior year benefit (expense)	–	5
Deferred tax benefit (expense)	(72)	–

Signify’s 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’ 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	–%	(3)	(1)%
Changes in the liability for uncertain tax positions	7	1%	17	6%
Prior year tax benefit (expense)	3	–%	3	1%
Changes in tax rates	–	–%	–	–%
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.

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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	–	49
Provisions	48	–	48
Other liabilities	80	(22)	58
Deferred tax assets on tax attributes 1	85	–	85
Total allocations	514	(132)	382
Set-off of deferred tax	(112)	112	–
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	–	51
Provisions	51	(1)	51
Other liabilities	94	(24)	70
Deferred tax assets on tax attributes 1	66	–	66
Total allocations	554	(161)	393
Set-off of deferred tax	(136)	136	–
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’s 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	–	(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	–	3	51
Other liabilities	75	(13)	8	70
Tax loss carryforwards (including tax credit carryforwards)	73	(7)	–	66
Net deferred tax assets	454	(72)	12	393

“Other” 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).

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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	–	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’s 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.

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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.

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:
• Performance shares	1,904,807	791,331
• Conditional shares	599,885	545,112
• 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
• Basic	4.18	1.61
• Diluted	4.10	1.59

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.

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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.

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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	–	18	–	229
Change in book value:
Capital expenditure	61	2	15	58	136
Of which right-of-use assets	55	–	10	–	65
Assets available for use	19	24	14	(57)	–
Acquisitions	6	1	1	1	9
Of which right-of-use assets	5	–	–	–	5
Additions	86	27	30	1	145
Sales and disposals	(12)	(2)	(1)	–	(15)
Of which right-of-use assets	(10)	–	–	–	(10)
Divestments and transfers to assets classified as held for sale	(4)	–	–	–	(4)
Of which right-of-use assets	–	–	–	–	–
Depreciation	(83)	(38)	(33)	–	(155)
Of which right-of-use assets	(58)	–	(9)	–	(67)
Impairment	(5)	(8)	(1)	–	(14)
Of which right-of-use assets	(2)	–	–	–	(2)
Reversal of impairment	1	1	–	–	2
Of which right-of-use assets	1	–	–	–	1
Translation differences and other movements	13	(7)	10	1	16
Of which right-of-use assets	8	–	–	–	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)	–	(1,942)
Book value	446	139	64	50	699
Of which right-of-use assets	211	–	19	–	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	–	19	–	230
Change in book value:
Capital expenditure	34	2	22	48	106
Of which right-of-use assets	33	–	18	–	51
Assets available for use	11	26	19	(56)	–
Acquisitions	–	–	–	–	–
Of which right-of-use assets	–	–	–	–	–
Additions	45	29	41	(9)	106
Sales and disposals	(4)	–	(1)	–	(5)
Of which right-of-use assets	(4)	–	(1)	–	(4)
Divestments and transfers to assets classified as held for sale	–	–	–	–	–
Of which right-of-use assets	–	–	–	–	–
Depreciation	(82)	(35)	(32)	–	(148)
Of which right-of-use assets	(56)	–	(10)	–	(66)
Impairment	(3)	(6)	(1)	(1)	(12)
Of which right-of-use assets	(1)	–	–	–	(1)
Reversal of impairment	–	–	–	–	–
Of which right-of-use assets	–	–	–	–	–
Translation differences and other movements	(2)	(4)	(1)	(1)	(8)
Of which right-of-use assets	3	–	–	–	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)	–	(1,953)
Book value	401	122	71	39	633
Of which right-of-use assets	186	–	26	–	212

The impairment losses were mainly driven by manufacturing footprint rationalization. Additions of

right-of-use assets include new and renewed lease contracts.

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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)

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	–	–	–	–	37	17	3	57
Amortization	–	(88)	(23)	(12)	(17)	(9)	(3)	(152)
Acquisitions	280	15	–	22	–	–	–	317
Impairment	–	–	–	–	–	–	–	–
Translation differences and other movements	117	21	(15)	8	–	–	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	–	–	–	–	49	15	2	67
Amortization	–	(48)	(17)	(12)	(20)	(12)	(4)	(113)
Acquisitions	(6)	1	4	1	–	–	–	–
Impairment	–	–	–	–	(1)	–	–	(1)
Translation differences and other movements	(100)	(11)	–	(5)	(2)	–	–	(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

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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).

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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. As 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:
• Additions of intangible assets	(62)	(67)
• Capital expenditures on property, plant and equipment	(70)	(51)
• 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

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.

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	–	–
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	–	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).

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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.

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

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.

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 Continuïteit 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

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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’s 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.

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%

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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	–	–	5	–	–	5
Financing cash flows:
• New borrowings	–	–	–	217	–	217
• Repayment	–	–	(68)	(208)	–	(276)
Translation difference	12	–	2	–	–	14
Other movements 1	–	3	66	–	(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	–	–	–	–	–	–
Financing cash flows:
• New borrowings	222	–	–	12	–	233
• Repayment	–	–	(70)	(13)	–	(82)
Translation difference	(8)	–	(2)	–	–	(11)
Other movements 1	(1)	3	55	–	(1)	56
Balance as at December 31, 2023	704	1,271	237	18	–	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.

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24Provisions


	Restruc- turing	Environ- mental	Product warranty	Legal	Other	Total
Balance as at January 1, 2022	62	97	66	9	120	355
Acquisitions	–	–	53	–	7	60
Additions	38	17	48	108	31	242
Utilizations	(52)	(24)	(51)	(6)	(22)	(155)
Reclassifications	–	3	–	–	(17)	(14)
Releases	(13)	(6)	(1)	(2)	(7)	(28)
Changes in discount rate	–	4	–	–	(7)	(4)
Accretion	–	–	–	1	–	1
Translation differences and other movements	–	1	(1)	(6)	–	(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	–	–	(5)	–	–	(5)
Additions	158	27	48	5	26	264
Utilizations	(69)	(10)	(49)	(2)	(23)	(153)
Reclassifications	4	–	–	–	(4)	–
Releases	(8)	(5)	(2)	(55)	(10)	(79)
Changes in discount rate	–	(6)	–	–	1	(5)
Accretion	–	2	–	1	1	4
Translation differences and other movements	–	(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’s products involves complex processes and defects might occur. In

addition, it is possible that some of Signify’s 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.

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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’ 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.

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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	–	9	10	–	10
(Negative) past service cost	–	–	–	1	–	1
Admin expenses paid	–	1	1	–	1	1
Settlements	(8)	1	(8)	(1)	–	(1)
Plan amendments	(1)	–	(1)	(4)	–	(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)	–	–	–	–	–	–
• Demographic assumptions	(1)	–	(1)	1	–	1
• Financial assumptions	(165)	129	(36)	12	(7)	5
• Experience adjustment	22	–	22	9	–	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)	–	1	(1)	–
Employer contributions	–	(7)	(7)	–	(10)	(10)
Benefits paid
• Benefits paid directly by employer	(34)	–	(34)	(28)	–	(28)
• Benefits paid from plan assets	(52)	52	–	(53)	53	–
Reclassifications	–	–	–	–	–	–
Other	(86)	44	(42)	(80)	43	(38)
Balance as at December 31	741	(414)	327	705	(383)	322

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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’s pension plans at December 31 was as follows:


	2022	2023
Debt securities	310	323
Equity securities	38	–
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’s

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’s major schemes are:

• US: Base table PRI-2012 White Collar mortality table, projected forward with future mortality

improvements according to Scale MP-2021.

• 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’s major schemes. A 10% decrease in assumed mortality rates equals

improvement of life expectancy by six months to a year. Vice versa, an increase in the assumed

mortality rates equals reduction of life expectancy.

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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:

• Total shareholder return;

• Free cash flow;

• Sustainability;

• 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’ 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’s 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.

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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.

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	–	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’s 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.

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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	–	117	–	117
Unquoted equity shares	fair value (FVOCI)	3	–	3	3	3
Trade and other receivables 1	amortized cost	1,102	–	1,102	–	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	–	44	3	50
Cash and cash equivalents		677	–	677	–	677
Debt (Eurobonds)	amortized cost	(1,268)	–	(1,268)	1	(1,220)
Debt (excluding Eurobonds) 1	amortized cost	(765)	–	(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)	–	(1,856)	–	(1,856)
Contingent considerations	fair value (FVTPL)	(3)	–	(3)	3	(3)
Balance as at December 31, 2023
Non-current financial assets 1, 2	amortized cost	65	–	65	–	65
Unquoted equity shares	fair value (FVOCI)	4	–	4	3	4
Trade and other receivables 1	amortized cost	1,012	–	1,012	–	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	–	2	1	2
Non-current derivative financial assets not designated as hedging instruments	fair value (FVTPL)	22	–	22	3	27
Cash and cash equivalents		1,158	–	1,158	–	1,158
Debt (Eurobonds)	amortized cost	(1,271)	–	(1,271)	1	(1,250)
Debt (excluding Eurobonds) 1	amortized cost	(959)	–	(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)	–	(1,537)	–	(1,537)
Contingent considerations	fair value (FVTPL)	(3)	–	(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.

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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’s 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’s 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.

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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	–
Interest on debt	108	52	56	–
Trade and other payables	1,539	1,539	–	–
Lease liability	237	66	145	26
Derivative liabilities	17	17	–	–
Off-balance sheet commitments	164	31	93	40
Purchase obligations 1	414	162	252	–
Contractual cash obligations	4,472	2,839	1,567	66
Revolving credit facility (RCF)	500	–	–	–

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)	–
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:

• Transaction exposures related to anticipated sales and purchases and on-balance-sheet

receivables/payables resulting from such transactions;

• Financing exposure arising from foreign currency intercompany and external debt and

deposits;

• Translation exposure of net income in foreign entities;

• Translation exposure of foreign currency denominated equity invested in consolidated

companies;

• Translation exposure to equity interests in non-functional-currency investments in associates

and financial assets at fair value.

It is Signify’s 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’s 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.

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The following table outlines the estimated nominal value in millions of EUR for transaction

exposures and related hedges for Signify’s 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)	–	–
MXN	7	(7)	(24)	24
GBP	11	(11)	–	–
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’s 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.

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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.

29Events after the balance sheet date

No subsequent events occurred that are material to Signify.

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16 Signify N.V.

financial

statements

Introduction

Statutory financial statements

The sections Consolidated financial statements and Signify N.V. financial statements contain the

statutory financial statements of Signify N.V. (the "Company").

A description of the activities of the Company, its subsidiaries and Company structure are

included in the Consolidated financial statements. The corporate seat of the Company is in

Eindhoven, the Netherlands, and its registered office is at High Tech Campus 48, 5656 AE

Eindhoven, the Netherlands. Signify N.V. is registered in the Commercial Register of the

Chamber of Commerce under number 65220692.

A list of all Signify N.V. subsidiaries and affiliated companies, prepared in accordance with the

relevant legal requirements (Dutch Civil Code, Book 2, Sections 379 and 414), forms part of the

notes to the statutory financial statements and is deposited at the Chamber of Commerce in

Eindhoven, the Netherlands.

Accounting policies applied

The financial statements of the Company included in this section are prepared in accordance

with Part 9 of Book 2 of the Dutch Civil Code. Section 362 (8), Book 2, Dutch Civil Code, allows

companies that apply the International Financial Reporting Standards (IFRS) as endorsed by the

European Union, in their consolidated financial statements to use the same measurement

principles in their company financial statements. The Company has prepared these Company

financial statements using this provision.

The accounting policies are described in chapter 15, Consolidated financial statements, note 2,

Material accounting policies and are deemed incorporated and repeated herein by reference.

Investments in subsidiaries in the Company financial statements are accounted for using the

equity method.

The Statement of financial position included in these Company financial statements has been

prepared before the appropriation of result.

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16.1 Statement of income		Note	2022	2023
	Other income		3	–
	Financial income		14	28
	Financial expenses		(44)	(60)
Statement of income in millions of EUR For the years ended December 31	Share in results of subsidiaries		551	234
	Net income	A	523	203

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16.2 Statement of financial position before appropriation of results		Note	2022	2023
	Non-current assets
	Financial assets	C	4,823	4,580
	Total non-current assets		4,823	4,580

	Current assets
	Derivative financial assets		16	11
	Amounts due from subsidiaries		5	228
	Total current assets		21	239
	Total assets		4,844	4,819

	Shareholders’ equity	D
Statement of financial position before appropriation of results in millions of EUR As at December 31	Share Capital		1	1
	Share premium		2,139	2,120
	Legal reserve: currency translation differences		67	(72)
	Legal reserve: cash flow hedges		(20)	(1)
	Legal reserve: other		263	266
	Other reserve: treasury shares		(131)	(82)
	Other reserve: retained earnings		79	382
	Net income		523	203
	Total shareholders' equity		2,920	2,817

	Non-current liabilities
	Debt	E	1,759	1,020
	Total non-current liabilities		1,759	1,020

	Current liabilities
	Debt	E	–	954
	Provisions		1	1
	Other liabilities		1	–
	Amounts owed to subsidiaries		142	–
	Trade and other payables		22	26
	Total current liabilities		165	981
	Total liabilities and shareholders' equity		4,844	4,819

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16.3 Statement of

changes in

equity

Legal reserves

Other reserves

capital

premium

Currency

translation

differences

Cash flow

hedges

Other

Treasury

Retained

earnings

Net

income

Total

share-

holders'

equity

Balance as at January 1, 2022

2,174

(80)

(2)

213

(126)

(119)

397

2,459

Appropriation of prior year result

–

397

(397)

–

Statement of changes in equity

in millions of EUR

Net income

–

523

Net current period change

–

147

(18)

–

140

Legal reserves reclassifications

–

(50)

–

Dividend distributed

–

(182)

–

(182)

Purchase of Treasury shares

–

(48)

–

(48)

Delivery of Treasury shares

–

(59)

–

Share-based compensation plans

–

Hyperinflation adjustment

–

Balance as at December 31, 2022

2,139

(20)

263

(131)

523

2,920

Balance as at January 1, 2023

2,139

(20)

263

(131)

523

2,920

Appropriation of prior year result

–

523

(523)

–

Net income

–

203

Net current period change

–

(139)

–

(12)

–

(132)

Legal reserves reclassifications

–

(3)

–

Dividend distributed

–

(189)

–

(189)

Purchase of Treasury shares

–

(7)

–

(7)

Delivery of Treasury shares

–

(35)

–

(22)

–

Share-based compensation plans

–

Hyperinflation adjustment

–

Balance as at December 31, 2023

2,120

(72)

(1)

266

(82)

382

203

2,817

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16.4 Notes to the Company financial

statements

In millions of EUR unless otherwise stated

AStatement of income

Other income consists of remuneration costs of the directors of the Company and the

Supervisory Board which were mostly recharged to the subsidiaries of the Company.

Financial income of EUR 28 million (2022: EUR 14 million) relates mainly to interest income on a

loan of USD 500 million to one of its subsidiaries. Financial expenses of EUR 60 million (2022: 44

million) relates mainly to interest paid on Debt and related amortization of expenses.

Share in results of subsidiaries represents the share of the Company in the results of its

affiliated companies.

BAudit fees

A summary of Audit fees from Ernst & Young Accountants LLP is shown below.


	2022	2023
Audit fees 1	6.5	6.4
• consolidated financial statements	3.7	3.6
• statutory financial statements	2.8	2.8
Audit-related fees	0.4	0.5
• sustainability assurance	0.3	0.4
• other	0.1	0.1
Total 2	6.9	6.9

1 The audit fees included in 2023 represent the fees in relation to the audit of the 2023 financial statements.

2 Fees charged by the Dutch organization of EY were EUR 3.0 million (2022:EUR 3.1 million).

CFinancial assets

The Company has one directly-owned subsidiary, Signify Holding B.V. This investment is

presented as a financial asset in the Statement of financial position using the equity method.

Goodwill paid upon acquisition of investments in subsidiaries is included in the net equity value of

the investment and is not shown separately on the face of the Statement of financial position.

In 2020, the Company entered into an uncommitted revolving credit facility agreement of USD

500 million with one of its subsidiaries. The available credit facility amounted to EUR 452 million

as at December 31, 2023, (2022: EUR 470 million) and bears interest based on the relevant

applicable Term SOFR plus a margin of 0.875% per annum. The translation differences upon

revaluation to EUR for this inter-company loan are partly hedged and partly mitigated by the

revaluation impact of the USD debt. For further details refer to note E, Debt.

The translation differences in 2023 of EUR 158 million (2022: unrealized gain of EUR 174 million)

related primarily to the impact of translating US dollar-denominated investments into euros.

The following table shows the movements in Financial assets.


	Investments	Loans	Total
Balance as at January 1, 2022	3,779	442	4,221
Dividends received	(96)	–	(96)
Share in results of subsidiaries	551	–	551
Translation differences	147	27	174
Other movements	(26)	–	(26)
Balance as at December 31, 2022	4,353	470	4,823
Dividends received	(322)	–	(322)
Share in results of subsidiaries	234	–	234
Translation differences	(140)	(18)	(158)
Other movements	3	–	3
Balance as at December 31, 2023	4,128	452	4,580

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DShareholders’ equity

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 Continuïteit Signify, a foundation organized under the laws of

the Netherlands, has been granted the right to acquire preference shares in the Company. As at

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 chapter 15, Consolidated financial statements,

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’s shareholders. The currency translation reserve, cash flow

hedging reserve and other reserves include non-distributable amounts. If any reserve has a

negative balance, distributions to shareholders are restricted to the extent of the negative

amount.

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	–
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

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EDebt

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 with the remainder EUR 178 million 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.

For the movements in debt refer to the table below.


	Term loans	Eurobonds	Other debt	Total
Balance as at January 1, 2022	479	1,265	–	1,743
New borrowings	–	–	189	189
Repayments	–	–	(189)	(189)
Translation differences	12	–	–	12
Other movements	–	3	–	3
Balance as at December 31, 2022	491	1,268	–	1,759
New borrowings	222	–	–	222
Repayments	–	–	–	–
Translation differences	(8)	–	–	(8)
Other movements	(1)	3	–	3
Balance as at December 31, 2023	704	1,271	–	1,975

FEmployees

The number of persons employed by the Company at year-end 2023 was four (2022: three); all

were employed in the Netherlands. For the remuneration of past and present members of both

the Board of Management and the Supervisory Board, refer to chapter 15, Consolidated financial

statements, note 27, Information on remuneration, which is deemed incorporated and repeated

herein by reference.

GContingent liabilities not appearing in the balance sheet

General guarantees as referred to in Section 403, Book 2, of the Dutch Civil Code, have been

given by the Company on behalf of other group companies in the Netherlands. The liabilities of

these companies to third parties amounted to EUR 504 million as at December 31, 2023, (2022:

EUR 631 million).

There have been no other general guarantees or credit guarantees given on behalf of

unconsolidated companies and third-parties.

For corporate income tax purposes, the Company is the parent of a fiscal unity that contains the

most significant Dutch wholly-owned group companies. The Company is therefore jointly and

severally liable for the corporate income tax liabilities of the tax unity.

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HEvents after the balance sheet date

For the disclosure of events after the balance sheet date, reference is made in chapter 15,

Consolidated financial statements, note 29, Events after the balance sheet date, which is

deemed incorporated and repeated herein by reference.

On February 27, 2024, the Board of Management authorized the statutory financial statements

for issue. The statutory financial statements as presented in this report are subject to the

adoption by the Annual General Meeting of Shareholders, to be held on May 14, 2024.

February 27, 2024

Board of Management

Eric Rondolat

Javier van Engelen

Maria Letizia Mariani

Harshavardhan Chitale

Supervisory Board

Arthur van der Poel

Gerard van de Aast

Sophie Bechu

Pamela Knapp

Rita Lane

Frank Lubnau

Bram Schot

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17 Corporate

Sustainability

Reporting Directive

(CSRD-Directive

EU 2022/2464)

In preparation for the EU's new Corporate Sustainability Reporting Directive (CSRD),

which comes into force in 2024 to replace the current Non-Financial Reporting

Directive (NFRD) regulation, Signify has taken its first step towards compliance by

mapping the relevant chapters with the European Sustainability Reporting Standards

(ESRS) and providing additional information in this chapter 17.

This chapter includes both the disclosures on the ESRS and EU Taxonomy

requirements. The first section refers to the ESRS disclosures we currently report

on for our material topics and are indicated in brackets using the ESRS paragraph

references. In addition, a reference table can be found at the end of this section.

The information regarding the non-material topics we report against voluntarily are

included in the Sustainability Supplements. Those non-material topics include water

management, hazardous waste management and biodiversity. The second section of

the chapter covers the EU Taxonomy requirements.

17.1 European

Sustainability

Reporting

Standards

General disclosures (ESRS2)

Signify’s sustainability statements consist of

chapter 4, Brighter Lives, Better World;

chapter 17 and the Sustainability Supplements

2023. The information compiled in those

sections were based on specific scopes and

boundaries defined in 4.1 Approach to

sustainability reporting and 4.1.3 Reporting

standards as well as the standards and

frameworks applied [BP-1(3, 5b), B-2(15)].

Our material topics and double materiality

assessment are described in 4.1.4 Materiality

assessment [B-2(17a), SMB-3 (48a, 48ci,

48g)]. Specific targets and progress on

material topics are included in each specific

topical section of chapter 4, Brighter Lives,

Better World [BP-2(17b)].

All information regarding the governance-

related disclosures , is included in 7 Board of

Management, 8 Supervisory Board and 9

Supervisory Board Report [GOV-1(21, 21a,

21c, 21d, 22, 22a, 22c, 23a), GOV-2(26a)].

These cover the board composition and

diversity data, relevant expertise, and their

oversight and management role on Signify’s

sustainability program and targets as well as

the process. Details on the incentives and

remunerations are included in 10

Remuneration [GOV-3(29, 29a, 29b, 29d)].

The approach towards the integration of our

sustainability objectives and Signify’s strategy

including information on the risk and controls

management, products strategy and financial

information, are mentioned in 3.1 Creating

sustainable long-term value and 15,

Consolidated financial statements.

Climate change (E1)

Information regarding our material impact on

climate change is provided in 4.4.1 Climate

action and the disclosures on our climate-

related financial risks and opportunities can

be found in the Sustainability Supplements

2023. Our climate objectives and strategy

were defined based on the double materiality

assessment and outcomes are illustrated in

4.1.4 Materiality assessment [ESRS 2 SBM-3,

IRO-1].

Signify’s strategy related to climate risks and

resilience analysis, the description of the

types of risks, process and measures used

for the assessment, and the mitigation

approach are described in the Sustainability

Supplements 2023 [E1 SBM-3(18, 19a, 19b, AR

7b, 19c, AR 8b)]. In addition, the management

approach to our climate risks and

opportunities covers the description of the

process for identifying and managing the

physical and transitional risks according to

different scenarios covering our value chain.

The management disclosures are part of 4.4.1

Climate action as well as the Sustainability

supplements 2023 [IRO-1(20a, AR9, 20b,

AR11a, AR11b, AR11c, AR11d, 20c, 21, AR12a,

AR12c)].

Our current actions and resources are

explained in 4.4.1 Climate action and include

the list of current decarbonization lever

types, and achieved and expected GHG

emissions reductions [E1.3 (29a, 29b), E1.4

(AR30c)]. Signify’s climate-related targets

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are also explained in that section and GHG

emissions breakdown information is provided

[E1.4 (33, 33a-0)].

Signify’s long-term climate transition plan will

be published later in 2024 and will include our

approach to climate change mitigation

actions, our SBTi approved targets,

decarbonization levers, and relevant financial

planning information [E1.1 (14, 16a, 16b, 16h,

16i, 16j)]. Our relevant policies in place to

manage climate-related impact, risks and

opportunities are mentioned in 4.4.1 Climate

action [E1.2 (24, 25)].

In terms of specific sub-topics of climate

change, we included information regarding

the remuneration and leadership incentives

linked to climate in 10 Remuneration report

[GOV-3(13)]. Energy consumption, data and

specific breakdown are provided in 4.4.1

Climate Action [E1.5 (37, 37c, AR34, AR71,

37cii, 40)]. That section also includes data

and metrics related to our GHG emissions

[E1.6 (44, AR46d, AR50, AR52, 48a, 49a-b, 51,

44, 52a-b, 52a-b)]. The methodology,

definitions used and reporting boundaries for

reported GHG emissions are defined in the

Sustainability Supplements 2023 [1.6 (47,

AR39b, 42c, AR46h, AR46i]. We also report on

the use of carbon credits in 4.4.1 Climate

action, Decarbonizing our operations [E1.7

(58, 59a, AR61, AR62b, AR62c)] and explain

how it relates to our emissions reduction plan

[1.7 (61b, 61c)].

On the financial effect of climate change

specifically, we have been conducting

annually a climate risks and opportunities

assessment since 2018 which is disclosed in

the Sustainability Supplements 2023. We have

been working on expanding our current

scope of reporting for the financial effect

disclosures and will report on additional

elements in 2024 [E1.9 (66a-d, AR69a, 67a,

67e, AR76, 69b)].

Circular economy (E5)

Our policy and approach to circular economy

are defined in 4.4.2 Circular economy. It

includes references to the policy driving our

transition to a circular economy, as well as

the application of circular design rules [E5.1

(15a, 20c)]. Signify has set a Circular

revenues target which is explained in the

same section [E5.2 (AR12a), E5.3 (24a)]. We

also disclose data on weight and percentage

of recycled components used to manufacture

our products and circularity information

regarding the packaging of our products

[E5.5 (31c, 36c)]. We are further developing

our disclosures on E5 to provide additional

information in 2024.

Our waste management-related information

is not material but is included in the

Sustainability Supplements.

Own workforce (S1)

Signify’s priority topics regarding its

workforce were defined based on the double

materiality assessment and outcomes are

illustrated in 4.1.4 Double materiality [ESRS 2

SBM-3, IRO-1]. The list of policies related to

our material impacts, risks and opportunities

are listed in 4.3.2 Diversity, equity and

inclusion, in 4.3.1 Talent and development,

and in 4.3.3 Human rights [S1.1 (19, 20b), S1.2

(27a-b)]. We describe Signify’s commitment

and approach to human rights relevant to our

workforce and specifically labor rights in

4.3.3 Human rights as well [S1.1 (20, 20a-c,

21, 22)]. For health and safety topics, we

refer to our policy and management approach

in 4.3.4 Safety at work [S1.1 (23)]. Signify’s

policies and actions on elimination of

discrimination are further explained in 4.3.2

Diversity, equity and inclusion as well as

specific targets adopted [S1.1 (24a-d), S1.5

(46)].

In terms of impact management, we provide

details on how we manage concerns or needs

from our own workforce in 4.3.5 Business

ethics and refer to Signify’s Integrity Code

[S1.3 (32b, 32c, 32e, 38a, 38b, 38c), S1.17

(103b)].

Regarding quantitative metrics, we report on

a number of data breakdowns regarding our

workforce and provide details in 4.3.2

Diversity, equity and inclusion, and in 4.3.1

Talent and development [S1.6 (50a-c, 50e),

S1.7 (55a), S1.9 (66a,b), 83b]. On living wage

requirements, that is reported in 4.3.3 Human

rights [S1.10 (69,70)]. For metrics on health

and safety, we provide relevant data in 4.3.4

Safety at work [S1.14 (88b-d)].

Workers in the value chain (S2)

Our engagement with the workers in our

value chain as well as our approach regarding

our material impacts is described in 4.3.3

Human rights. It includes references to our

human rights policy commitments relevant to

value chain workers, specific activities we are

running to manage actual and potential

impact as well as our general approach to

negative impact and remedies [S2.1 (17, 17a),

S2.2 (22, 22a-b), S2.3 (27a, 27c, 27d, 28)].

We have tailored channels and programs in

place and monitor their effectiveness [S2.4

(32c)].

Based on the impact assessed, we have

defined actions and programs, including the

Tritium and Audit Programs, training and

development of key suppliers and Signify

Conflict Minerals program. These activities

and our aims for continued improvement are

further defined in the sections Responsible

supply chain and Responsible mineral sourcing

under 4.3.3 Human Rights [S2.4 (33a, AR22a,

AR28)]. Regarding specific human rights

abuses from the extractive sector, 4.3.3

Human rights, Responsible Mineral Sourcing

details our Forced Labor program and how

we follow the OECD Due Diligence Guidance

for Responsible Supply Chains of Minerals

from Conflict-Affected and High-Risk Areas.

The full description of our due diligence

process and Signify’s position on Conflict

Minerals is available on our website [SBM3

(11b)].

Business conduct (G1)

While business conduct is not part of the

most material topics for 2023, it remains a

key strategic topic for Signify against which

we are committed to voluntarily report on.

4.3.5 Business ethics specifically outlines our

approach and commitments to business

ethics which includes references to existing

mechanisms for identifying, reporting and

investigating concerns in contradictions to

our Code of Conduct, as well as trainings and

procedures to prevent, detect and address

incidents of corruption and bribery [G1.1 (10a,

10e, 10g), G1.3 (18a)].

Regarding our supply-side contractual

partners, we provide details on the social and

environmental criteria used for selection

processes in 4.3.3 Human Rights [G1.2 (15b)].

Concerning Signify political engagement and

contributions, we provide details in the

Sustainability supplements 2023 [G1.5 (29b-

d)].

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ESRS references table


ESRS	Description	Signify reference
BP1 (3)	Disclosure of general basis and scope applied for preparation of sustainability statement	Sustainability supplements 2023
BP1 (5b)	Scope of consolidation of consolidated sustainability statement is same as for financial statements	Sustainability supplements 2023
BP2 (15)	Disclosure of reference to standards and frameworks applied	4.1 Approach to sustainability reporting
BP2 (17a)	List of sustainability matters assessed to be material	4.1.4 Materiality assessment
BP2 (17b)	Description of time-bound targets set related to sustainability matters assessed to be material and progress achieved	4.1.2 Program targets
GOV1 (21)	Information about composition and diversity of members of administrative, management and supervisory bodies	7 Board of Management, 8 Supervisory Board
GOV1 (21a)	Number of executive members	7 Board of Management
GOV1 (21c)	Information about members’ experience relevant to sectors, products and geographic locations of the company	7 Board of Management, 8 Supervisory Board
GOV1 (21d)	Board gender diversity ratio	7 Board of Management, 8 Supervisory Board, 9 Supervisory Board Report
GOV1 (22)	Information about roles and responsibilities of administrative, management and supervisory bodies	7 Board of Management, 8 Supervisory Board, 9 Supervisory Board Report
GOV1 (22a)	Information on identity of administrative, management and supervisory members responsible for oversight of impacts, risks, opportunities	7 Board of Management, 8 Supervisory Board
GOV1 (22c)	Description of management role in governance process, controls and procedures used to monitor, manager and oversee impacts, risks and opportunities	4.1.1 Sustainability Governance
GOV1 (23a)	Information about sustainability-related expertise that bodies and members either directly possess or can leverage	9 Supervisory Board Report
GOV2 (26a)	Disclosure of whether, by whom and how frequently administrative, management and supervisory bodies are informed about material impacts, risks and opportunities	4.1.1 Sustainability Governance
GOV3 (29)	Incentive schemes and remuneration policies linked to sustainability matters for members of administrative, management and supervisory bodies exist	10 Remuneration Board of Management
GOV3 (29ab)	Description of key characteristics of incentive schemes and specific sustainability-related targets or impacts used to assess performance	10 Remuneration report
GOV3 (29d)	Percentage of variable remuneration dependent on sustainability-related targets and/or impacts	10 Remuneration report
GOV5 (36a)	Description of scope, main features and components of risk management and internal control processes and systems regarding sustainability	Sustainability supplements 2023
SBM1 (40)	Disclosure of information about key elements of general strategy that relate to sustainability matters	3.1 Creating sustainable long-term value
SMB1 (40ai)	Description of significant groups of products and services offered	3.3 Value created
SBM1 (40b)	Total revenue	15 Consolidated financial statements

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ESRS	Description	Signify reference
SBM3 (48a)	Description of material impacts resulting from materiality assessment	4.1.4 Materiality assessment
SBM3 (48ci)	Disclosure of how material negative and positive impacts affect or are likely to affect people and the environment	4.1.4 Materiality assessment
SBM3 (48g)	Disclosure of changes to material impacts, risks and opportunities compared to previous reporting period	4.1.4 Materiality assessment
E1 SBM3 (18)	Type of climate-related risks	Sustainability supplements 2023
E1 SBM3 (19a)	Description of scope of resilience analysis	Sustainability supplements 2023
E1 SBM3 (19b)	Process for conducting the resilience analysis and the date	Sustainability supplements 2023
E1 SBM3 (AR7b)	Time horizons applied for the resilience analysis	Sustainability supplements 2023
E1 SBM3 (19c)	Description of the results from the resilience analysis	Sustainability supplements 2023
IRO1 (20a)	Description of process for impacts on climate change	4.4.1 Climate action, section Climate leadership
IRO1 (20b)	Description of process for identifying physical risks	Sustainability supplements 2023
IRO1 (AR11a)	Climate-related hazards have been identified over short-, medium- and long-term time horizons	Sustainability supplements 2023
IRO1 (20c)	Description of process for identifying transition risks	Sustainability supplements 2023
IRO1 (21)	Explanation of how the climate scenario were used to inform the identification and assessment of physical risks	Sustainability supplements 2023
E1 (16a)	Targets compatible with limiting of global warming to 1.5 degrees Celsius	4.4.1 Climate action, section Climate leadership
E1 (16b)	Decarbonization levers	4.4.1 Climate action, section Decarbonizing our operations
E1 (16e)	Explanation of any objective or plans (CapEx, CapEx plans, OpEx) for aligning economic activities (revenues, CapEx, OpEx) with criteria established in Commission Delegated Regulation 2021/2139	17.2 EU Taxonomy
E1 (16j)	Progress in implementing the transition plan	4.4.1 Climate action, section Decarbonizing our operations
E1.3 (29b)	Achieved GHG emission reductions and expected GHG emissions reductions	4.4.1 Climate action, section Decarbonizing our operations
E1.4 (33)	Process to set GHG emissions reductions targets	4.4.1 Climate action, section Climate leadership
E1.4 (34a-b)	Table GHG emissions breakdown	4.4.1 Climate action, section Decarbonizing our operations
E1.5 (37)	Total energy consumption own operations	4.4.1 Climate action, section Energy use in operations
E1.5 (37c)	Energy consumption from renewable energy	4.4.1 Climate action, section Energy use in operations
E1.5 (AR34)	Percentage of renewable sources in total energy consumption	4.4.1 Climate action, section Electricity
E1.5 (40)	Energy intensity	4.4.1 Climate action, section Energy use in operations
E1.6 (44)	Table GHG emissions breakdown	4.4.1 Climate action, section Double the pace
E1.6 (AR39b)	Description of methodology to measure GHG emissions	Sustainability supplements 2023
E1.7 (58)	Use of removals and carbon credits	4.4.1 Climate action, section Decarbonizing our operations
E1.7 (61b)	Explanation of how carbon neutrality does not reduce the achievement of GHG emissions reduction target strategy	4.4.1 Climate action, section Decarbonizing our operations
E5.1 (20c)	Description of application of circular design	4.4.2 Circular economy, section Accelerating the transition

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ESRS	Description	Signify reference
E5.1 (AR12a)	Description of contribution to circular economy	4.4.2 Circular economy, section Accelerating the transition
E5.3 (24a)	Description of how targets relate to increase of circular design	4.4.2 Circular economy, section Accelerating the transition
S1.1 (20)	Description of relevant human rights policy commitments relevant to own workforce	4.3.3 Human rights
S1.1 (20a)	Disclosure of general approach in relation to respect for human rights including labor rights, of people in its own workforce	4.3.3 Human rights
S1.1 (20b)	Disclosure of general approach in relation to engagement with people in its own workforce	4.3.1 Talent and development, section Employee engagement
S1.1 (21)	Disclosure of whether and how policies are aligned with relevant internationally recognized instruments	4.3.3 Human rights
S1.1 (22)	Policies explicitly address trafficking in human beings, forced labor or compulsory labor and child labor	4.3.3 Human rights
S1.1 (23)	Workplace accident prevention policy or management system is in place	4.3.4 Safety at work, section Health and Safety performance
S1.1 (24a)	Specific policies aimed at elimination of discrimination are in place, see 4.3.2 Diversity, equity and inclusion	4.3.2 Diversity, equity and inclusion
S1.1 (24b)	Grounds for discrimination are specifically covered in policy, see 4.3.2 Diversity, equity and inclusion	4.3.2 Diversity, equity and inclusion
S1.1 (24d)	Disclosure of whether and how policies are implemented through specific procedures to ensure discrimination is prevented, mitigated and acted upon once detected, as well as to advance diversity and inclusion	4.3.5 Business ethics, section Substantiated concerns
S1.3 (32b,c)	Disclosure of specific channels in place for its own workforce to raise concerns or needs directly with undertaking and have them addressed	4.3.5 Business ethics, section Signify's Integrity Code
S1.3 (32e)	Disclosure of how issues raised and addressed are tracked and monitored and how effectiveness of channels is ensured	4.3.5 Business ethics, section Signify's Integrity Code
S1.6 (50a)	Employees gender breakdown	4.3.2 Diversity, equity and inclusion
S1.6 (50c)	Number and percentage of employee turnover	4.3.1 Talent and development, section Employment
S1.7 (55a)	Number of non-employees in own workforce	4.3.1 Talent and development, section Employment
S1.10 (69)	All employees are paid adequate wage, in line with applicable benchmarks	4.3.3 Human rights, section Living wage
S1.10 (70)	Percentage of employees paid below the applicable adequate wage	4.3.3 Human rights, section Living wage
S1.13 (83b)	Average number of training hours per person	4.3.1 Talent and development, section Employment
S1.14 (88b)	Number of fatalities in own workforce as result of work-related injuries and ill health	4.3.4 Safety at work, section Health and Safety performance
S1.14 (88c,d)	Number and percentage of recordable work-related accidents for own workforce	4.3.4 Safety at work, section Health and Safety performance
S1.17 (103b)	Number of complaints filed through channels for people in own workforce to raise concerns	4.3.5 Business ethics, section Signify's Integrity Code
S2.1 (17, 17a)	Description of relevant human rights policy commitments relevant to value chain workers	4.3.3 Human rights, section Responsible Supply Chain
S2.2 (22a, b)	Disclosure of how perspectives of value chain workers inform decisions or activities aimed at managing actual and potential impacts	4.3.3 Human rights, section Supplier sustainability performance
S2.3 (27a)	Disclosure of general approach to and processes for providing or contributing to remedy where undertaking has identified that it connected with a material negative impact on value chain workers	4.3.3 Human rights, section Supplier sustainability performance

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ESRS	Description	Signify reference
S2.3 (27c)	Disclosure of processes through which undertaking supports or requires availability of channels	4.3.3 Human rights, section Supplier sustainability performance
S2.3 (27c)	Disclosure of how issues raised and addressed are tracked and monitored and how effectiveness of channels is ensured	4.3.3 Human rights, section Supplier sustainability performance
S2.3 (28)	Disclosure of how it is assessed that value chain workers are aware of and trust structures or processes as way to raise their concerns or needs and have them addressed	4.3.3 Human rights, section Supplier sustainability performance
S2.3 (32c)	Description of additional initiatives or processes with primary purpose of delivering positive impacts for value chain workers	4.3.3 Human rights, section Supplier sustainability performance
S2.3 (33a)	Description of approach to identifying what action is needed and appropriate in response to particular actual or potential material negative impact on value chain workers	4.3.3 Human rights, section Trainings and development
S2.4 (AR28)	Disclosure of aims for continued improvement	4.3.3 Human rights, section Responsible supply chain
SBM3 (11b)	Disclosure of geographies or commodities for which there is significant risk of child labor, or of forced or compulsory labor, among workers in undertaking’s value chain	4.3.3 Human rights, section Responsible mineral sourcing
G1.1 (10a)	Description of the mechanisms for identifying, reporting and investigating concerns about unlawful behavior in contradiction of its code of conduct	13.1 Risk factors and risk management, Integrity Code
G1.1 (10e)	Undertaking is committed to investigate business conduct incidents promptly, independently and objectively	13.1 Risk factors and risk management, Integrity Code
G1.1 (10g)	Information about policy for training within organization on business conduct	13.1 Risk factors and risk management, Integrity Code
G1.2 (15b)	Disclosure of how social and environmental criteria are taken into account for selection of supply-side contractual partners	4.3.3 Human rights, section Responsible supply chain
G1.3 (18a)	Information about procedures in place to prevent, detect and address allegations or incidents of corruption and bribery	17. Combined independent auditor's report, Our focus on fraud and non-compliance with laws and regulations
G1.5 (29b)	Information about financial or in-kind political contributions	Sustainability supplements 2023

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17.2 EU Taxonomy

The European Commission has established

the EU Taxonomy as an important enabler to

scale up sustainable investments and make

the EU carbon neutral by 2050. At Signify, we

want to be a catalyst for change, and are

committed to doubling our positive impact on

the environment and society. We

continuously seek opportunities to increase

our portfolio of products and solutions to

contribute to a more sustainable future.

Proof of this is the evolution of the

percentage of LED-based revenues over the

last 10 years, from just 29% in 2013 to 85% in

2023. This transition has moved us away from

being a company based on conventional

lighting ,a low energy-efficient technology, to

become a LED company. This shift has been

made possible, among other things, by

continued investment in R&D dedicated to

sustainable innovation. In 2023, we invested

EUR 271 million in sustainable innovation,

representing 88% of Signify's R&D

expenditure.

Similarly, in order to achieve lighting

products, systems and services that maximize

(re)usability, serviceability and upgradeability

and minimize value destruction with the aim of

preserving value and avoiding waste, we

developed the circular revenue objective.

The goal is to ensure that 32% of total

revenues by the end of 2025 come from

products internally identified as circular (for

more information, see section 4.2 Sustainable

innovation). In addition, in 2023, Signify

launched a refurbishment service as part of

the professional portfolio with the ambition

of expanding it in the coming years.

The EU Taxonomy reporting

framework

The European Commission has developed a

catalog of economic activities to determine if

they substantially contribute towards a

sustainable economy based on criteria –

known as the EU Taxonomy. Companies must

use this classification system to assess if

their business activities are sustainable. For

its financial year 2023, Signify discloses

eligibility and alignment on the first two

environmental objectives (Climate Change

Mitigation and Climate Change Adaptation)

and also eligibility for the remaining four

objectives (Water and Marine Resources,

Transition to a Circular Economy, Pollution

Prevention and Control and Biodiversity and

Ecosystems).

Signify's economic activities

The definitions of the Taxonomy are broadly

formulated which leaves room for companies

to interpret it for their business activities. We

applied judgment, interpretations and

assumptions based on currently available

information. Future guidance could result in

more accurate definitions and other

reporting obligations, which could impact our

future Taxonomy reporting.

The analysis of Signify’s economic activities in

the context of the EU Taxonomy has revealed

the following lighting activities that

contribute to the environmental objectives:

Climate Change Mitigation

• 3.5 Manufacture of energy efficiency

equipment for buildings. We allocate

manufacturing of LED and Connected

technologies for Indoor spaces to this

economic activity;

• 3.6 Manufacture other low-carbon

technologies that result in substantial GHG

emission reductions in other sectors of the

economy. We allocate manufacturing of

LED and Connected technologies for

Outdoor spaces to this economic activity;

• 7.3 Installation, maintenance and repair of

energy efficiency equipment. We allocate

installation, maintenance and repair

activities of lighting products such as

lamps and luminaires, without controls, for

indoor spaces to this economic activity;

• 7.5 Installation, maintenance and repair of

instruments and devices for measuring,

regulation and controlling energy

performance of buildings. We allocate

installation, maintenance and repair

activities of lighting systems, such as

luminaires with control modules, for indoor

spaces to this economic activity. The

system might also include sensors,

triggers, software, on-site or cloud

connectivity.

Transition to a Circular Economy

• 1.2 Manufacture of electrical and

electronic equipment. We allocate here

manufacturing of electrical and electronic

equipment and their related activities,

mostly related to lighting, including LED

technology and also conventional lighting;

• 5.1 Repair, refurbishment and

remanufacturing. We allocate services

offered to customers to repair, refurbish

or remanufacture lighting products and

related items;

• 5.2 Sale of spare parts. We allocate

manufacturing of components aimed to

replace an existing part of a final products;

• 5.5 Product-as-a-service and other

circular use and result-oriented service

models. We allocate products and related

services that are marketed under a “Light

as a service” and other pay-per-use

business models.

The analysis has not revealed any activities

that contribute to the four other

environmental objectives namely; climate

change adaptation, water and marine

resources, pollution prevention and control

and biodiversity and ecosystems.

Signify's 2023 assessment

The EU Taxonomy defines Turnover, Capital

Expenditure (CapEx) and Operating

Expenditure (OpEx) as the key performance

indicators that must be reported on. The

financial figures relevant for Signify's EU

Taxonomy reporting are based on the IFRS

consolidated financial statements for fiscal

year 2023. Allocation formulas have been

used for CapEx and OpEx. If possible, figures

have been directly assigned to an economic

activity.

To prevent double counting on eligibility

towards the Transition to a Circular Economy

and Climate Change Mitigation objectives, we

have allocated respectively, the Turnover,

CapEx and Opex that are contributing to both

objectives to Climate Change Mitigation. By

adopting this approach, we can ensure that

none of the economic values are counted

twice.

Our data collection processes have been

improved in 2023, allowing more granularity

on the mapping of aligned products.

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Turnover

The eligible turnover is defined as the part of

the net turnover derived from products or

services, including intangibles, associated

with Taxonomy-eligible economic activities.

The following list sets out Signify’s Taxonomy-

eligible turnover, contributing to the

following environmental objectives:

Climate Change Mitigation:

• Turnover of the manufacturing of LED and

Connected technologies, for Indoor

spaces (3.5) and Outdoor spaces (3.6);

• Turnover of the installation, maintenance,

and repair of energy-efficient lighting,

without controls (7.3) and with control

modules (7.5).

Transition to a Circular Economy

• Turnover of the manufacturing of electrical

and electronic products (1.2 and 5.5),

components (5.2), and related activities

(5.1).

This resulted in EUR 6,704 million of

Taxonomy-eligible turnover (A.1+A.2, see

graph) in 2023. Of the Taxonomy-eligible

turnover, EUR 571 million met the screening

criteria used to measure the substantial

contribution to the environmental objectives

(A.1). This includes our products in the

highest two populated classes of energy

efficiency in accordance with Regulation (EU)

2017/1369; automation and controls systems

and sensors; outdoor luminaires aimed at

demonstrating substantial life-cycle GHG

emission savings quantified by an external

third party with verification due in 2024; and

the installation, maintenance and repair of

energy-efficient light sources and lighting

control systems. When data requirements for

alignment reporting are not met, the

associated revenues have not been

considered as aligned.


	Total Taxonomy-eligible Turnover (A.1+A.2)

	Total Taxonomy-eligible Turnover (A.1)

Signify uses the European Product Registry

for Energy Labelling (EPREL) as the starting

point for determining the highest two

populated classes, as required. For product

groups that are incomplete or misleading in

EPREL, we looked at our portfolio's energy

labels distribution. As a conclusion, Signify

defines the highest two populated classes as

follows:

• A & B classes for lamps and consumer

luminaires;

• C & D classes (on luminaire level) for

professional indoor luminaires;

• C & D classes for color controllable lamps.

CapEx

The Taxonomy-eligible CapEx is defined as

the capital expenditure:

• Related to assets or processes that are

associated with Taxonomy-eligible

economic activities;

• Part of a plan to expand Taxonomy-eligible

economic activities or to allow Taxonomy-

eligible economic activities to become

Taxonomy-aligned;

• Related to the purchase of output from

Taxonomy-eligible economic activities and

individual measures.

The following list sets out Signify’s Taxonomy-

eligible CapEx contributing to the

environmental objectives:

• Climate Change Mitigation: CapEx related

the manufacturing of LED and Connected

technologies, for Indoor spaces (3.5) and

Outdoor spaces (3.6), and the annual

turnover of the installation, maintenance

and repair of energy-efficient lighting,

without controls (7.3) and with control

modules (7.5);

• Transition to a Circular Economy: CapEx

related the manufacturing of electrical and

electronic products (1.2 and 5.5),

components (5.2), and related activities

(5.1);

• CapEx that is part of a plan (CapEx plan) to

expand these Taxonomy-eligible economic

activities, or expenditures that will allow

Taxonomy-eligible activities to become

Taxonomy-aligned (i.e. new production

lines and extension of production capacity

of LED, connected technologies and

product refurbishment);

• CapEx related to the purchase of output

from Taxonomy-eligible economic activities

and individual measures (i.e. freight

vehicles and company cars acquired or

taken as a lease, lease contracts for new

or renovated buildings, energy efficiency

improvement measures in buildings,

purchase of energy-efficient equipment

for buildings, solar panels installation,

maintenance and repair, and data

processing, hosting and related activities).

Of the Taxonomy-eligible capital

expenditures of EUR 180 million (A.1+A.2),

Signify used the Taxonomy-aligned turnover

proportion per business unit as allocation

formula to calculate the Taxonomy-aligned

CapEx of EUR 15.5 million (A.1).


	Total Taxonomy-eligible CapEx (A.1+A.2)

	Total Taxonomy-eligible CapEx (A.1)

OpEx

The Taxonomy-eligible OpEx is defined as the

operational expenditures:

• Related to assets or processes that are

associated with Taxonomy-eligible

economic activities;

• Part of a plan to expand Taxonomy-eligible

economic activities or to allow Taxonomy-

eligible economic activities to become

Taxonomy-aligned;

• Related to the purchase of output from

Taxonomy-eligible economic activities and

individual measures.

The following list sets out Signify’s Taxonomy-

eligible operational expenditures,

contributing to the environmental objectives:

• Climate Change Mitigation: OpEx related

the manufacturing of LED and Connected

technologies, for Indoor spaces (3.5) and

Outdoor spaces (3.6), and the annual

revenue of the installation, maintenance

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and repair of energy-efficient lighting,

without controls (7.3) and with control

modules (7.5);

• Transition to a Circular Economy: OpEx

related the manufacturing of electrical and

electronic products (1.2 and 5.5),

components (5.2), and related activities

(5.1);

• OpEx related to expand these Taxonomy-

eligible economic activities as well as

expenditures that will allow non-eligible

activities to become Taxonomy-eligible (i.e.

research in new lighting technologies,

repairability options);

• OpEx related to the purchase of output

from Taxonomy-eligible economic activities

and individual measures (i.e. day-to-day

servicing of assets of property, plant and

equipment).

Of the Taxonomy-eligible operational

expenditures of EUR 497 million (A.1+A.2),

Signify used the Taxonomy-aligned turnover

proportion per business unit as allocation

formula to calculate the Taxonomy-aligned

OpEx of EUR 36 million (A.1)

Do No Significant Harm criteria

The EU Taxonomy Regulation establishes that

an economic activity must Do No Significant

Harm (DNSH) to any of the other

environmental objectives. To conduct that

assessment, we have gathered information

about our measurements, processes and

policies for each of the DNSH criteria

covering the economic activities 3.5, 3.6, 7.3

and 7.5. The assessment confirmed that we

meet the requirements of the DNSH criteria.

DNSH to Climate Change Adaptation

We performed a climate risk and vulnerability

assessment to identify potential physical and

transition risks in our value chain (upstream

and downstream). Regarding the physical

risks, we have analyzed all the climate-

related hazards listed in appendix A from

Annex 1 of the EU Taxonomy and focused on

assessing physical risks relevant to Signify’s

manufacturing sites, warehouses and

distribution centers, namely riverine flooding,

coastal flooding, drought, tropical cyclones,

and heatwave for the short-term (2025) and

two long-term (2050) scenarios. The two

long-term scenarios cover a below 2°C or

SSP1-2.6 scenario – taking the sustainable

road, and an above 4°C or SSP5-8.5 scenario

– fossil fueled development path. In the 2023

assessment, no material risks have been

identified. For more details on our Climate

risk and vulnerability assessment, refer to our

TCFD reporting in the Sustainability

Supplements to this 2023 Annual Report.

DNSH to Sustainable use and protection

of Water and Marine Resources

For all our operations, Signify follows the

local environmental regulation and has

developed local studies about water impact

when relevant based on the sites' operation

and location. We operate in accordance with

the international standards ISO 14001 and ISO

45001, as stipulated in our EHS Policy.

In 2023, we conducted an in-depth nature

impact assessment across our value chain,

which considered water-related impact

pathways leveraging the WWF Biodiversity &

Water Risk Filters; specifically looking at

freshwater ecosystem use, marine

ecosystem use, water use, and water

pollutants. Regarding marine waters, we have

not identified any significant risks across our

operations. We identified that 1% of all sites

face potential risks regarding water pollution

and ground water abstraction. These sites

have manufacturing functions and already

have environmental impact management

processes and containment protocols for

hazardous materials in place. We plan to work

further on increasing the actions to prevent

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	Total Taxonomy-eligible OpEx (A.1+A.2)

	Total Taxonomy-eligible OpEx (A.1)


Eligibility and alignment disclosures for turnover, CapEx and Opex
	2021			2022			2023
	Turnover	CapEx	OpEx	Turnover	CapEx	OpEx	Turnover	CapEx	OpEx
Taxonomy-eligible and aligned (A.1)	n.a.	n.a.	n.a.	11%	12%	11%	8.5%	8.6%	7.2%
Climate Change Mitigation	n.a.	n.a.	n.a.	11%	12%	11%	8.5%	8.6%	7.2%
Transition to a Circular Economy	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Taxonomy-eligible but not aligned (A.2)*	n.a.	n.a.	n.a.	72%	71%	63%	91.5%	91.4%	92.8%
Climate Change Mitigation	n.a.	n.a.	n.a.	72%	71%	63%	76.4%	77.8%	70.2%
Transition to a Circular Economy	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	15.0%	13.6%	22.6%
Total Taxonomy-eligible activities (A=A.1+A.2)	83%	85%	76%	83%	83%	74%	100%	100%	100%
Climate Change Mitigation	83%	85%	76%	83%	83%	74%	85.0%	86.4%	77.4%
Transition to a Circular Economy	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	98.2%	99.3%	100.0%
Total Taxonomy-non-eligible activities (B)	17%	15%	24%	17%	17%	26%	–%	–%	–%
Total (EUR million)	6,860	213	456	7,514	238	492	6,704	180	497
* To avoid overlapping in eligibility between Circular Economy and Climate Change Mitigation, we report all shared eligibility between both objectives as Climate Change Mitigation.

potential future impacts where deemed

material.

DNSH to Transition to a Circular

Economy

Our circular economy growth area, which is

part of Signify's 5 Frontiers strategy, is

focused on developing lighting products,

systems, and services that are highly durable

and can be repaired, refurbished, reused, or

recycled. This approach helps to preserve

value and avoid waste. In fact, Signify has

been sending zero manufacturing waste to

landfill since 2020. This achievement is

reinforced by our Sustainability Policy, which

is designed to shift towards a more circular

economy, with responsible consumption and

production in mind, contributing to SDG12.

To further improve our sustainability

performance, we have implemented a

mandatory Sustainable Design Procedure for

all R&D organizations and businesses. This

procedure aims to increase the sustainability

benefits of our portfolio and promote

responsible practices.

In addition to these efforts, Signify

participates in Collection and Recycling

Service Organizations (CRSOs) to establish a

dedicated infrastructure for the collection

and recycling of conventional lamps, LEDs,

and luminaires. We also continuously extend

our serviceable luminaires portfolios and

undertake successful remanufacturing

projects, with a new remanufacturing

services offering launched.

Signify is committed to using recycled and

bio-circular materials in our products. We

have extended the use of these materials in

the professional luminaires segment and in

the 3D-printed portfolio. Furthermore, our

responsible packaging initiative saves 2,500

tonnes of plastics on a yearly basis. The

packaging requirements strongly direct us to

use at least 80% recycled paper and/or

ensure responsible renewable sources (e.g.

FSC, SFI, PEFC).

Through our commitments, procedures, and

current activities, Signify mitigates the risk of

harming the objective of transitioning to a

circular economy. For more information

about our actions towards a this topic, refer

to subsection 4.4,2 Circular Economy.

DNSH to Pollution Prevention and

Control

Signify has a strict policy regarding pollution

and prevention control. We control the use

and disposal of all raw materials necessary

for our operations, following all the local

regulations. Signify requires all its suppliers

to communicate all substances in their

components and to comply with the

stipulations that we have listed in our

Regulated Substance List (RSL). For more

information about pollution and prevention

control, refer to the Sustainability

Supplements 2023.

DNSH to Protection and restoration of

Biodiversity and Ecosystems

Regarding the protection of biodiversity and

ecosystems, all our sites follow at minimum

the local environmental regulations and all

sites located within the EU comply with

mandatory Environmental Impact

Assessments (EIAs) requirements. In 2023, as

mentioned above, we conducted an in-depth

impact assessment across the value chain

and looked specifically at impact pathways

related to biodiversity. The pathways

included terrestrial ecosystem use, soil

pollution, waste generation and wildlife

disturbance.

We identified that 2% of all sites were

located within the zone of influence to

protected areas and at risks of potentially

contributing to soil pollution and wildlife

disturbance. These risks are currently

mitigated by policies in place, such as the

Biodiversity Policy, as well as environmental

impact management processes and

containment protocols for hazardous

materials. Regarding the risks in our supply

chain, we identified our seven priority

commodities and are engaging with the key

suppliers that face potential risk of impacting

terrestrial ecosystem use. We are working on

improving the responsible sourcing policy as

well as adopting mitigation measures to

minimize the risks of impact. We are working

on developing more and better biodiversity

friendly lighting solutions and we are planning

to activate awareness of users about light

and its impact on wildlife as well as partner

with non-profit organizations to fund

conservation efforts. For more information

about biodiversity and ecosystems, refer to

the Sustainability Supplements 2023.

Minimum Social Safeguards

The Minimum Social Safeguards (MSS)

provision of the EU Taxonomy Regulation

requires companies involved in

environmentally sustainable economic

activities must also meet criteria for

responsible business conduct already

outlined in the OECD Guidelines for

Multinational Enterprises, the United Nations

Guiding Principles on Business and Human

Rights, the Fundamental Conventions of the

International Labour Organisation (ILO) and

the International Bill of Human Rights. We

assessed the coverage of our codes and

standards to the principles and policies under

the MSS of the EU Taxonomy. Based on

Signify's interpretation of the guidance on

MSS, the assessment confirmed that we meet

the requirements of the MSS criteria. In

addition, the company is committed to a

continuous improvement of its human and

labor rights performance.

Complementary information

The detailed results following the format of

the Taxonomy Regulation can be found in the

following pages. Signify understands and

appreciates the fact that the EU Taxonomy

framework is in constant evolution, and that

the company’s reporting obligations will

continue to grow and evolve over the next

years. Assessment of the 2023 results is

pending further EU Taxonomy's market

practice and comparability. Signify is

committed to increasing its taxonomy-

eligibility and taxonomy-alignment

percentages independently of regulatory

developments.

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Proportion of turnover from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic activities

CODE

Turnover

Proportion of turnover,

year 2023

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum safeguards

Proportion of Taxonomy

aligned (A.1.) or eligible

(A.2.) turnover, year 2022

Category enabling activity

Category transitional

activity

Text

EUR

million

Y; N; N/EL

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Taxonomy-eligible and aligned activities (Taxonomy-aligned)

Manufacture of energy efficiency equipment for buildings

CCM 3.5

354

5.3%

N/EL

3.0%

Manufacture other low carbon technologies that result in substantial

GHG emission reductions in other sectors of the economy

CCM 3.6

201

N/EL

7.8%

Installation, maintenance and repair of energy efficiency equipment

CCM 7.3

–%

N/EL

0.1%

Installation, maintenance and repair of instruments and devices for

measuring, regulation and controlling energy performance of buildings

CCM 7.5

0.2%

N/EL

0.1%

Total Turnover from taxonomy-eligible and aligned activities (A.1)

571

8.5%

–%

11.0%

Of which Enabling

571

8.5%

–%

11.0%

Of which Transitional

–

–%

A.2 Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities)*

EL; N/EL

Manufacture of energy efficiency equipment for buildings

CCM 3.5

3,646

54.4%

N/EL

57.10%

Manufacture other low carbon technologies that result in substantial

GHG emission reductions in other sectors of the economy

CCM 3.6

1,478

22.1%

N/EL

15.00%

Installation, maintenance and repair of energy efficiency equipment

CCM 7.3

–

–%

N/EL

Installation, maintenance and repair of instruments and devices for

measuring, regulation and controlling energy performance of buildings

CCM 7.5

–

–%

N/EL

Manufacture of electrical and electronic equipment

CE 1.2

1,008

15.0%

N/EL

n.a.

Repair, refurbishment and remanufacturing

CE 5.1

–

–%

N/EL

n.a.

Sale of spare parts

CE 5.2

0.3

–%

N/EL

n.a.

Product-as-a-service and other circular use- and result-oriented

service models

CE 5.5

–

–%

N/EL

n.a.

Turnover of Taxonomy-eligible but not environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

6,133

91.5%

76.4%

–%

98.2%

–%

72.1%

A. Turnover of Taxonomy eligible activities (A.1+A.2)

6,704

100%

85.0%

–%

98.2%

–%

83.1%

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities

—

—%

Total

6,704

100%

* To avoid overlapping in eligibility between Circular Economy and Climate Change Mitigation, we report all shared eligibility between both objectives as Climate Change Mitigation.

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Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic activities

CODE

CapEx

Proportion of CapEx, year

2023

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum safeguards

Proportion of Taxonomy

aligned (A.1.) or eligible

(A.2.) CapEx, year 2022

Category enabling activity

Category transitional

activity

Text

EUR

million

Y; N; N/EL

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Taxonomy-eligible and aligned activities (Taxonomy-aligned)

Manufacture of energy efficiency equipment for buildings

CCM 3.5

9.6

5.3%

N/EL

3.4%

Manufacture other low carbon technologies that result in substantial

GHG emission reductions in other sectors of the economy

CCM 3.6

5.5

3.0%

N/EL

8.7%

Installation, maintenance and repair of energy efficiency equipment

CCM 7.3

–

–%

N/EL

0.1%

Installation, maintenance and repair of instruments and devices for

measuring, regulation and controlling energy performance of buildings

CCM 7.5

0.4

0.2%

N/EL

0.1%

Total CapEx from taxonomy-eligible and aligned activities (A.1)

15.5

8.6%

–%

12.4%

Of which Enabling

15.5

8.6%

–%

12.4%

Of which Transitional

–

–%

A.2 Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities)*

EL; N/EL

Manufacture of energy efficiency equipment for buildings

CCM 3.5

99.8

55.4%

N/EL

56.70%

Manufacture other low carbon technologies that result in substantial

GHG emission reductions in other sectors of the economy

CCM 3.6

22.5%

N/EL

14.00%

Installation, maintenance and repair of energy efficiency equipment

CCM 7.3

–

–%

N/EL

Installation, maintenance and repair of instruments and devices for

measuring, regulation and controlling energy performance of buildings

CCM 7.5

–

–%

N/EL

Manufacture of electrical and electronic equipment

CE 1.2

13.6%

N/EL

n.a.

Repair, refurbishment and remanufacturing

CE 5.1

–

–%

N/EL

n.a.

Sale of spare parts

CE 5.2

–

–%

N/EL

n.a.

Product-as-a-service and other circular use- and result-oriented

service models

CE 5.5

–

–%

N/EL

n.a.

CapEx of Taxonomy-eligible but not environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

165

91.4%

77.8%

–%

99.3%

–%

70.8%

A. CapEx of Taxonomy eligible activities (A.1+A.2)

180

100%

86.4%

–%

99.3%

–%

83.1%

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible activities

–

–%

Total

180

100%

* To avoid overlapping in eligibility between Circular Economy and Climate Change Mitigation, we report all shared eligibility between both objectives as Climate Change Mitigation.

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Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic activities

CODE

OpEx

Proportion of OpEx, year

2023

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum safeguards

Proportion of Taxonomy

aligned (A.1.) or eligible

(A.2.) OpEx, year 2022

Category enabling activity

Category transitional

activity

Text

EUR

million

Y; N; N/EL

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Taxonomy-eligible and aligned activities (Taxonomy-aligned)

Manufacture of energy efficiency equipment for buildings

CCM 3.5

4.4%

N/EL

3.1%

Manufacture other low carbon technologies that result in substantial

GHG emission reductions in other sectors of the economy

CCM 3.6

2.5%

N/EL

7.9%

Installation, maintenance and repair of energy efficiency equipment

CCM 7.3

–%

N/EL

0.1%

Installation, maintenance and repair of instruments and devices for

measuring, regulation and controlling energy performance of buildings

CCM 7.5

0.2%

N/EL

0.1%

Total OpEx from taxonomy-eligible and aligned activities (A.1)

7.2%

–%

11.3%

Of which Enabling

7.25

7.2%

–%

11.3%

Of which Transitional

–

–%

A.2 Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities)*

EL; N/EL

Manufacture of energy efficiency equipment for buildings

CCM 3.5

248

49.9%

N/EL

50.60%

Manufacture other low carbon technologies that result in substantial

GHG emission reductions in other sectors of the economy

CCM 3.6

101

20.3%

N/EL

12.30%

Installation, maintenance and repair of energy efficiency equipment

CCM 7.3

–%

N/EL

Installation, maintenance and repair of instruments and devices for

measuring, regulation and controlling energy performance of buildings

CCM 7.5

–%

N/EL

Manufacture of electrical and electronic equipment

CE 1.2

112

22.6%

N/EL

n.a.

Repair, refurbishment and remanufacturing

CE 5.1

–%

N/EL

n.a.

Sale of spare parts

CE 5.2

–%

N/EL

n.a.

Product-as-a-service and other circular use- and result-oriented

service models

CE 5.5

–%

N/EL

n.a.

OpEx of Taxonomy-eligible but not environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

461

92.8%

70.2%

–%

100%

–%

62.9%

A. OpEx of Taxonomy eligible activities (A.1+A.2)

497

100%

77.4%

–%

100%

–%

74.1%

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible activities

–

–%

Total

497

100%

* To avoid overlapping in eligibility between Circular Economy and Climate Change Mitigation, we report all shared eligibility between both objectives as Climate Change Mitigation.

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<≡>

18 Combined

independent

auditor’s report

On the 2023 financial statements and sustainability information

To: the Annual General Meeting of Shareholders and Supervisory Board of Signify N.V.

Our opinions

Financial statements

We have audited the financial statements

2023 of Signify N.V. (hereafter: the

Company), based in Eindhoven, the

Netherlands. The financial statements

comprise the consolidated and company

financial statements.

In our opinion:

• The accompanying Consolidated financial

statements give a true and fair view of the

financial position of Signify N.V. as at

December 31, 2023, and of its result and its

cash flows for 2023 in accordance with

International Financial Reporting Standards

as adopted by the European Union (EU-

IFRSs) and with Part 9 of Book 2 of the

Dutch Civil Code;

• The accompanying Company financial

statements give a true and fair view of the

financial position of Signify N.V. as at

December 31, 2023, and of its result for

2023 in accordance with Part 9 of Book 2

of the Dutch Civil Code.

Sustainability information

We have performed a reasonable assurance

engagement on the sustainability information

in the annual report 2023 of Signify N.V.

based in Eindhoven, the Netherlands

(hereafter: the Annual Report). The scope is

described in the section “Our Scope” of our

report.

In our opinion, the sustainability information

presents fairly, in all material respects:

• The policy with regard to sustainability

matters;

• The business operations, events and

achievements in that area in 2023

in accordance with the applicable criteria as

included in the section “Criteria”.

Basis for our

opinions

Financial statements

We conducted our audit of the financial

statements in accordance with Dutch law,

including the Dutch Standards on Auditing.

Our responsibilities under those standards

are further described in the section “Our

responsibilities” of our report.

We believe the audit evidence we have

obtained is sufficient and appropriate to

provide a basis for our opinions.

Sustainability information

We have performed our reasonable

assurance engagement on the sustainability

information in accordance with Dutch law,

including Dutch Standard 3810N, ‘Assurance-

opdrachten inzake

duurzaamheidsverslaggeving’ (Assurance

engagements relating to sustainability

reporting), which is a specified Dutch

standard that is based on the International

Standard on Assurance Engagements (ISAE)

3000, “Assurance engagements other than

audits or reviews of historical financial

information”. Our responsibilities in this

regard are further described in the section

“Our responsibilities” of our report.

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We believe that the assurance evidence we

have obtained is sufficient and appropriate to

provide a basis for our opinion.

Our independence

We are independent of Signify N.V. in

accordance with the EU Regulation on

specific requirements regarding statutory

audit of public-interest entities, the ‘Wet

toezicht accountantsorganisaties’ (Wta,

Audit firms supervision act), the ‘Verordening

inzake de onafhankelijkheid van accountants

bij assurance-opdrachten' (ViO, Code of

Ethics for Professional Accountants, a

regulation with respect to independence) and

other relevant independence regulations in

the Netherlands. Furthermore, we have

complied with the ‘Verordening gedrags- en

beroepsregels accountants’ (VGBA, Dutch

Code of Ethics).

Our scope

Financial statements

The Consolidated financial statements

comprise:

• The consolidated statement of financial

position as at December 31, 2023;

• The following statements for 2023: the

consolidated statement of income,

comprehensive income, cash flows and

changes in equity;

• The notes comprising material accounting

policy information and other explanatory

information.

The Company financial statements comprise:

• The Company statement of financial

position as at December 31, 2023;

• The Company statement of income for

2023;

• The notes comprising a summary of the

accounting policies and other explanatory

information.

Sustainability information

The sustainability information is included in

sections 3.2 Our impact, 3.3 Our value

created, 5.2 Sustainability performance and

sections 4.1 to 4.4 of the Sustainability

statements of the annual report, excluding

the section Responsible Tax Policy as

included in paragraph 4.3.5 Business Ethics.

In preparation for the EU's new Corporate

Sustainability Reporting Directive (CSRD),

which will come into force in 2024 and will

replace the current Non-Financial Reporting

Directive (NFRD) regulation, Signify voluntarily

provided information on the Corporate

Sustainability Reporting Directive (CSRD) in

chapter 17 of the Annual Report. This

information is not included in our scope.

Limitations to the scope of our

assurance engagement on the

sustainability information

The sustainability information includes

prospective information, such as ambitions,

strategy, plans, forecasts, expectations and

estimates. Prospective information relates to

events and actions that have not yet

occurred and may never occur. We do not

provide assurance on the assumptions and

achievability of this prospective information.

With regards to the Company’s sustainability

information, the 2019 baseline is based on

Signify’s best estimates available at the time

of the start of the Brighter Lives, Better

World 2025 doubling commitments in 2021.

The 2019 baseline assumptions are excluded

from the scope of our reasonable assurance

engagement on the sustainability information.

We refer to chapter 4, Sustainability

statements, subsection 4.4.1 of the Annual

Report for more information.

In the sustainability information, the

calculations to determine societal impact as

included in section 3.3 of the Annual Report

are mostly based on assumptions and sources

from third parties. The assumptions and

sources used are explained in the document

“Supplements to the Annual Report 2023”

as available on the website of Signify N.V.

We have determined that these assumptions and

external sources are appropriate, but we

have not performed procedures on the

content of these assumptions and external

sources.

The references to external sources or

websites in the sustainability information are

not part of the sustainability information as

included in the scope of our assurance

engagement. We therefore do not provide

assurance on this information.

Our opinion is not modified in respect of

these matters.

Criteria

The criteria applied for the preparation of the

sustainability information are the GRI

Sustainability Reporting Standards (GRI

Standards) and the criteria supplementally

applied as disclosed in section 4.1 Approach

to sustainability reporting of the Annual

Report 2023 of Signify N.V.

The sustainability information is prepared in

accordance with the GRI Standards. The GRI

Standards used are listed in the GRI Content

Index as published on the website of Signify

N.V.

The comparability of sustainability information

between entities and over time may be

affected by the absence of a uniform practice

on which to draw, to evaluate and measure

this information. This allows for the

application of different, but acceptable,

measurement techniques.

Consequently, the sustainability information

needs to be read and understood together

with the reporting criteria applied.

Information in

support of our

opinion on the

financial

statements

We designed our procedures in the context

of our audit of the financial statements as a

whole and in forming our opinion thereon. The

following information in support of our

opinion and any findings were addressed in

this context, and we do not provide a

separate opinion or conclusion on these

matters.

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Our understanding of the

business

Signify N.V. is a global provider of lighting

solutions. The group is structured in

components and we tailored our group audit

approach accordingly. We paid specific

attention in our audit to a number of areas

driven by the operations of the group and our

risk assessment. We determined materiality

and identified and assessed the risks of

material misstatement of the financial

statements, whether due to fraud or error in

order to design audit procedures responsive

to those risks and to obtain audit evidence

that is sufficient and appropriate to provide a

basis for our opinion.

Materiality

The scope of our audit procedures is

influenced by the application of materiality.

Our audit engagement aims to provide

assurance about whether the financial

statements are free from material

misstatement. Misstatements may arise due

to error or fraud. They are considered to be

material if, individually or in the aggregate,

they could reasonably be expected to

influence the (economic) decisions of users

taken on the basis of the financial

statements. The materiality affects the

nature, timing and extent of our audit

procedures and the evaluation of the effect

of identified misstatements on our

conclusions.


Materiality	EUR 26 million
Benchmark applied	Approximately 4% of adjusted earnings before interest, tax and amortization (Adjusted EBITA)
Explanation	Based on our professional judgment we consider earnings-based measures as the most appropriate basis to determine materiality. Adjustments are made to earnings before interest, taxes and amortization for elements that are not directly related to the operational performance of the company as disclosed in chapter 19, 19. Reconciliation of non-IFRS financial measures.

We have also taken into account

misstatements and/or possible

misstatements that in our opinion are material

for the users of the financial statements for

qualitative reasons.

We agreed with the Supervisory Board that

misstatements in excess of EUR 1.3 million,

which are identified during the audit, are

reported to them, as well as smaller

misstatements that in our view must be

reported on qualitative grounds.

Scope of the group audit of the

financial statements

Signify N.V. is at the head of a group of

entities. The financial information of this

group is included in the Consolidated financial

statements.

Because we are ultimately responsible for the

opinion, we are also responsible for directing,

supervising and performing the group audit.

In this respect we have determined the

nature and extent of the audit procedures to

be carried out for group entities. Decisive

were the size and/or the risk profile of the

group entities or operations. On this basis,

we selected group entities for which an audit

or review had to be carried out on the

complete set of financial information or

specific items.

Our group audit mainly focused on significant

group entities following our assessment of

the risk of material misstatement to Signify

N.V.’s Consolidated financial statements. We

have selected two components that required

an audit of all financial information (Full Scope

Components). We have selected 26

components requiring audit procedures on

specific account balances that we considered

to have the potential for the greatest impact

on the significant accounts in the financial

statements either because of the size of

these accounts or their risk profile (Specific

Scope Components). We have:

• Performed audit procedures ourselves at

10 Specific Scope Components;

• Used the work of other EY member firms

for two Full Scope Components and 16

Specific Scope Components outside the

Netherlands;

• Centrally performed audit procedures on

accounting areas that are managed

centrally such as goodwill, acquisitions,

legal claims and treasury.

As a result of our scoping, our actual

coverage varies per account balance. In

addition, the level of detail of our audit

procedures per account balance varies

depending on our risk assessment.

Of the remaining components, we performed

risk-based data analytics procedures to

respond to potential risks of material

misstatements to the financial statements.

Accordingly, our coverage of the group’s

Revenues and Total Assets can be

summarized as follows:

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Signify Annual Report 2023

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By performing the procedures mentioned

above at components of the group, together

with additional procedures at group level, we

have been able to obtain sufficient and

appropriate audit evidence about the group’s

financial information to provide an opinion

about the Consolidated financial statements.

Teaming and use of specialists

We ensured that the audit teams both at

group and at component level included the

appropriate skills and competences that are

needed for the audit of a listed client in

Signify’s industry. We included specialists in

the areas of IT audit, forensics, treasury and

income tax and have made use of our own

experts in the areas of valuations and

actuaries.

Our focus on climate related

risks and the energy transition

Climate change and the energy transition are

high on the public agenda. Issues such as CO2

reduction impact financial reporting, as these

issues entail risks for the business operation,

the valuation of assets (stranded assets) and

provisions or the sustainability of the

business model and access to financial

markets of companies with a larger CO2

footprint. The Sustainability statements

summarize, among other topics, Signify’s

commitments and obligations and how the

company is addressing climate-related and

environmental risks.

As part of our audit of the financial

statements, we evaluated the extent to which

climate-related risks and the possible effects

of the energy transition are taken into

account in estimates and significant

assumptions, as disclosed in note 1, Basis of

preparation of the Consolidated financial

statements, as well as in the design of

relevant internal control measures by Signify

N.V. Furthermore, we read the report of the

Board of Management and considered

whether there is any material inconsistency

between the non-financial information in

chapter 4, Brighter Lives, Better World and

the financial statements.

Our focus on fraud and non-

compliance with laws and

regulations

Our responsibility

Although we are not responsible for

preventing fraud or non-compliance and we

cannot be expected to detect non-

compliance with all laws and regulations, it is

our responsibility to obtain reasonable

assurance that the financial statements,

taken as a whole, are free from material

misstatement, whether caused by fraud or

error. The risk of not detecting a material

misstatement resulting from fraud is higher

than for one resulting from error, as fraud

may involve collusion, forgery, intentional

omissions, misrepresentations, or the

override of internal control.

Our audit response related to fraud

risks

We identified and assessed the risks of

material misstatements of the financial

statements due to fraud. During our audit we

obtained an understanding of the entity and

its environment and the components of the

system of internal control, including the risk

assessment process and management’s

process for responding to the risks of fraud

and monitoring the system of internal control

and how the Supervisory Board exercises

oversight, as well as the outcomes.

We refer to chapter 13, Risk factors and risk

management, for management’s (fraud) risk

assessment and section 9.2 of the

Supervisory Board report in which the

Supervisory Board reflects on this (fraud) risk

assessment.

We evaluated the design and relevant aspects

of the system of internal control and in

particular the fraud risk assessment, as well

as the code of conduct, whistle blower-

procedures and incident registration.

We evaluated the design and the

implementation and, where considered

appropriate, tested the operating

effectiveness, of internal controls designed

to mitigate fraud risks.

As part of our process of identifying fraud

risks, we evaluated fraud risk factors with

respect to financial reporting fraud and

misappropriation of assets. As Signify N.V. is a

global company, operating in multiple

jurisdictions, we also considered the risk of

bribery and corruption. In close co-operation

with our forensic specialists we evaluated

whether these factors indicate that a risk of

material misstatement due to fraud is

present.

We incorporated elements of unpredictability

in our audit. We also considered the outcome

of our other audit procedures and evaluated

whether any findings were indicative of fraud

or non-compliance.

We addressed the risks related to

management override of controls. For these

risks we have performed procedures among

others to evaluate key accounting estimates

for management bias that may represent a

risk of material misstatement due to fraud, in

particular relating to important judgment

areas and significant accounting estimates as

disclosed in note 1, Basis of preparation of

the Consolidated financial statements. We

have also used data analysis to identify and

address high-risk journal entries and

evaluated the business rationale (or the lack

thereof) of significant extraordinary

transactions, including those with related

parties.

The following fraud risk identified did require

significant attention during our audit:

We considered available information and

made enquiries of the Board of Management

and other relevant executives, directors

(including internal audit, legal, compliance and

heads of Divisions) and the Supervisory

Board.

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<≡>


Presumed risk of fraud in revenue recognition
Fraud risk	We presumed that there are risks of fraud in revenue recognition. We evaluated that revenue from sales of goods gives rise to such risks, specifically related to cut-off. We describe the risk assessment and audit procedures responsive to the presumed risk of fraud in revenue recognition in the description of the key audit matter “Improper revenue recognition”.

The fraud risks we identified, enquiries and

other available information did not lead to

specific indications for fraud or suspected

fraud potentially materially impacting the view

of the financial statements.

Our audit response related to risks

of non-compliance with laws and

regulations

We performed audit procedures regarding

compliance with the provisions of those laws

and regulations that have a direct effect on

the determination of material amounts and

disclosures in the financial statements.

Furthermore, we assessed factors related to

the risks of non-compliance with laws and

regulations, including bribery and corruption

that could reasonably be expected to have a

material effect on the financial statements

from our general industry experience,

through discussions with management,

reading minutes, inspection of internal audit

and compliance reports, and performing

substantive tests of details of classes of

transactions, account balances or

disclosures.

We also inspected lawyers’ letters and

correspondence with regulatory authorities

and remained alert to any indication of

(suspected) non-compliance throughout the

audit. Finally we obtained written

representations from the Board of

Management and management of operating

companies that all known instances of non-

compliance with laws and regulations have

been disclosed to us.

Our audit response related to going

concern

As disclosed in note 1, Basis of preparation, of

the Consolidated financial statements, the

financial statements have been prepared on a

going concern basis. When preparing the

financial statements, management made a

specific assessment of the company’s ability

to continue as a going concern and to

continue its operations for the foreseeable

future. We discussed and evaluated the

specific assessment with management

exercising professional judgment and

maintaining professional skepticism.

We considered whether management’s going

concern assessment, based on our

knowledge and understanding obtained

through our audit of the financial statements

or otherwise, contains all relevant events or

conditions that may cast significant doubt on

the company’s ability to continue as a going

concern.

If we conclude that a material uncertainty

exists, we are required to draw attention in

our auditor’s report to the related

disclosures in the financial statements or, if

such disclosures are inadequate, to modify

our opinion.

Based on our procedures performed, we did

not identify material uncertainties about

going concern.

Our conclusions are based on the audit

evidence obtained up to the date of our

auditor’s report. However, future events or

conditions may cause a company to cease to

continue as a going concern.

Our key audit

matters

Key audit matters are those matters that, in

our professional judgment, were of most

significance in our audit of the financial

statements. We have communicated the key

audit matters to the Supervisory Board. The

key audit matters are not a comprehensive

reflection of all matters discussed.

The key audit matters were addressed in the

context of our audit procedures for the

financial statements and to conclude

thereon, and we do not provide a separate

opinion on these matters.

The following key audit matters are excluded

or new compared to the key audit matters

included in our last year’s auditor’s report:

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Key audit matter	Change	Reason for change
Valuation of inventories and related obsolescence provision	Excluded	The risk that inventories and related obsolescence provision is incorrectly valued decreased following the decline in inventory levels and softened supply chain disruptions and related uncertainties.
Valuation of goodwill	New	The risk of goodwill impairment increased following the decrease in headroom (difference between the recoverable amount and its carrying amount) in the annual impairment test.

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Information in

support of our

opinion on the

sustainability

information

Materiality

Based on our professional judgment we

determined materiality levels for each

relevant sustainability matter. When

evaluating our materiality levels, we have

considered quantitative and qualitative

aspects as well as the relevance of

information for both stakeholders and the

company.

We have agreed with the Supervisory Board

that misstatements which are identified

during the assurance engagement and which

in our view must be reported on quantitative

or qualitative grounds, would be reported to

them.

Our key assurance matters

Key assurance matters are those matters

that, in our professional judgement, were of

most significance in our assurance

engagement on the sustainability information.

We have communicated the key assurance

matters to the Supervisory Board. The key

assurance matters are not a comprehensive

reflection of all matters discussed.

These matters were addressed in the context

of our assurance engagement on the

sustainability information as a whole and in

forming our opinion thereon, and we do not

provide a separate opinion on these matters.

The following key assurance matters are

excluded or new compared to the key

assurance matters included in our last year’s

auditor’s report:

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Key assurance matter	Change	Reason for change
Scope 3 CO2e emissions	New	Signify discloses Scope 3 CO2 emissions related to the energy usage of sold products, as this is the most material element of scope 3 for the company. The number of scope 3 CO2e emissions is included in the Annual Report for the first time in 2023. Due to the complexity of calculating Scope 3 emissions for Signify’s wide range and diverse lighting products portfolio (with different estimated wattage and life time), there is a risk that the disclosed number of Scope 3 CO2e emissions is incorrect.

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Report on other

information

included in the

Annual Report

The Annual Report contains other information

in addition to the financial statements, the

sustainability information included in chapter

3 and 4 and our auditor’s reports thereon.

The other information comprises:

• The report of the Board of Management;

• The remuneration report;

• Other information required by Part 9 of

Book 2 of the Dutch Civil Code;

• Corporate Sustainability Reporting

Directive in chapter 17;

• Corporate Governance report.

Based on the following procedures

performed, we conclude that the other

information:

• Is consistent with the financial statements

and does not contain material

misstatements;

• Contains the information as required by

Part 9 of Book 2 for the report of the

Board of Management and the other

information as required by Part 9 of Book 2

of the Dutch Civil Code and as required by

sections 2:135b and 2:145 subsection 2 of

the Dutch Civil Code for the remuneration

report.

We have read the other information. Based on

our knowledge and understanding obtained

through our audit of the financial statements

or otherwise, we have considered whether

the other information contains material

misstatements. By performing these

procedures, we comply with the

requirements of Part 9 of Book 2 and section

2:135b subsection 7 of the Dutch Civil Code

and the Dutch Standard 720. The scope of

the procedures performed is substantially

less than the scope of those performed in

our audit of the financial statements.

Management is responsible for the

preparation of the other information,

including the report of the Board of

Management in accordance with Part 9 of

Book 2 of the Dutch Civil Code and other

information required by Part 9 of Book 2 of

the Dutch Civil Code. Management and the

Supervisory Board are responsible for

ensuring that the remuneration report is

drawn up and published in accordance with

sections 2:135b and 2:145 subsection 2 of the

Dutch Civil Code.

Report on other

legal and regulatory

requirements and

ESEF

Engagement

We were engaged by the Supervisory Board

as auditor of Signify N.V. (formerly: Philips

Lighting N.V.) on July 15, 2016, as of the audit

for the year 2016 and have operated as

statutory auditor ever since that date.

No prohibited non-audit services

We have not provided prohibited non-audit

services as referred to in Article 5(1) of the

EU Regulation on specific requirements

regarding statutory audit of public-interest

entities.

Other non-prohibited services

provided

Our services are only related to the audit of

the financial statements or audit related

services.

European Single Electronic

Reporting Format (ESEF)

Signify N.V. has prepared the Annual Report in

ESEF. The requirements for this are set out in

the Delegated Regulation (EU) 2019/815 with

regard to Regulatory Technical Standards on

the specification of a single electronic

reporting format (hereinafter: the RTS on

ESEF).

In our opinion the Annual Report prepared in

XHTML format, including the (partially)

marked-up consolidated financial statements

as included in the reporting package by

Signify N.V., complies in all material respects

with the RTS on ESEF.

Management is responsible for preparing the

Annual Report, including the financial

statements, in accordance with the RTS on

ESEF, whereby management combines the

various components into a single reporting

package.

Our responsibility is to obtain reasonable

assurance for our opinion whether the Annual

Report in this reporting package complies

with the RTS on ESEF.

We performed our examination in accordance

with Dutch law, including Dutch Standard

3950N ‘Assurance-opdrachten inzake het

voldoen aan de criteria voor het opstellen van

een digitaal verantwoordingsdocument'

(assurance engagements relating to

compliance with criteria for digital reporting).

Our examination included among others:

• Obtaining an understanding of Signify N.V.’s

financial reporting process, including the

preparation of the reporting package;

• Identifying and assessing the risks that the

Annual Report does not comply in all

material respects with the RTS on ESEF and

designing and performing further

assurance procedures responsive to those

risks to provide a basis for our opinion,

including:

– Obtaining the reporting package and

performing validations to determine

whether the reporting package

containing the Inline XBRL instance

document and the XBRL extension

taxonomy files, has been prepared in

accordance with the technical

specifications as included in the RTS on

ESEF;

– Examining the information related to the

consolidated financial statements in the

reporting package to determine whether

all required mark-ups have been applied

and whether these are in accordance

with the RTS on ESEF.

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Description of

responsibilities

Responsibilities of management

and the Supervisory Board

Financial statements

Management is responsible for the

preparation and fair presentation of the

financial statements in accordance with EU-

IFRSs and Part 9 of Book 2 of the Dutch Civil

Code.

As part of the preparation of the financial

statements, management is responsible for

assessing Signify N.V.’s ability to continue as

a going concern. Based on the financial

reporting frameworks mentioned,

management should prepare the financial

statements using the going concern basis of

accounting unless management either intends

to liquidate the company or to cease

operations, or has no realistic alternative but

to do so. Management should disclose events

and circumstances that may cast significant

doubt on Signify N.V.’s ability to continue as a

going concern in the financial statements.

The Supervisory Board is responsible for

overseeing Signify N.V.’s financial reporting

process.

Sustainability information

Management is responsible for the

preparation and fair presentation of the

sustainability information in accordance with

the criteria as included in the section

“Criteria”, including the identification of the

stakeholders and the definition of material

matters. Management is also responsible for

selecting and applying the criteria and for

determining that these criteria are suitable

for the legitimate information needs of

stakeholders, considering applicable law and

regulations related to reporting. The choices

made by management with respect to the

scope of the sustainability information and

the reporting policy are included in section

4.1 Approach to sustainability reporting of the

Annual Report.

Furthermore, management is responsible for

such internal control as management

determines is necessary to enable the

preparation of the financial statements and

the sustainability information that is free from

material misstatement, whether due to fraud

or error.

The Supervisory Board is responsible for

overseeing the sustainability reporting

process of Signify N.V.

Our responsibilities

Financial statements

Our objective is to plan and perform the audit

engagement in a manner that allows us to

obtain sufficient and appropriate audit

evidence for our opinion.

Our audit has been performed with a high, but

not absolute, level of assurance, which means

we may not detect all material errors and

fraud during our audit.

Misstatements can arise from fraud or error

and are considered material if, individually or

in the aggregate, they could reasonably be

expected to influence the economic

decisions of users taken on the basis of these

financial statements. The materiality affects

the nature, timing and extent of our audit

procedures and the evaluation of the effect

of identified misstatements on our opinion.

Sustainability information

Our responsibility is to plan and perform the

assurance engagement in a manner that

allows us to obtain sufficient and appropriate

assurance evidence for our opinion.

Our assurance engagement has been

performed with a high, but not absolute, level

of assurance, which means we may not have

detected all material fraud and errors during

our assurance engagement.

We apply the ‘Nadere voorschriften

kwaliteitssystemen’ (NVKS, regulations for

quality management systems) and accordingly

maintain a comprehensive system of quality

management including documented policies

and procedures regarding compliance with

ethical requirements, professional standards

and other relevant legal and regulatory

requirements.

An informative summary of the work

performed as the basis of our opinions is

included in the Annex to the combined

independent auditor’s report.

Amsterdam, February 27, 2024

Ernst & Young Accountants LLP

A.E. Wijnsma

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Annex to the

combined

independent

auditor’s report

Work performed

The sections “Information in support of our

opinion on the financial statements” and

“Information in support of our opinion on the

sustainability information” in the combined

independent auditor’s report should be read

in conjunction with the information in this

annex as the basis for our opinions.

Financial statements

Our audit to obtain reasonable assurance

about the financial statements (consolidated

and company) included amongs others:

• Performing audit procedures responsive to

the risks identified, and obtaining audit

evidence that is sufficient and appropriate

to provide a basis for our opinion.

• Obtaining an understanding of internal

control relevant to the audit in order to

design audit procedures that are

appropriate in the circumstances, but not

for the purpose of expressing an opinion

on the effectiveness of the company’s

internal control.

• Evaluating the appropriateness of

accounting policies used and the

reasonableness of accounting estimates

and related disclosures made by

management.

• Evaluating the overall presentation,

structure and content of the financial

statements, including the disclosures; and

• Evaluating whether the financial

statements represent the underlying

transactions and events in a manner that

achieves fair presentation.

Sustainability information

Our assurance engagement to obtain

reasonable assurance about the sustainability

information included amongst others:

• Performing an analysis of the external

environment and obtaining an

understanding of relevant sustainability

themes and issues, and the characteristics

of the company.

• Evaluating the appropriateness of the

criteria applied, their consistent

application and related disclosures in the

sustainability information. This includes the

evaluation of the company’s materiality

assessment and the reasonableness of

estimates made by management.

• Obtaining an understanding of the systems

and processes for collecting, reporting and

consolidating the sustainability information,

including obtaining an understanding of the

internal control environment relevant to

our assurance engagement, but not for the

purpose of expressing an opinion on the

effectiveness of the company’s internal

control.

• Identifying and assessing the risk that the

sustainability information is misleading or

unbalanced, or contains material

misstatements, whether due to fraud or

error. Designing and performing further

assurance procedures responsive to those

risks, and obtaining assurance evidence

that is sufficient and appropriate to

provide a basis for our opinion. These

procedures consisted amongst others of:

• Making inquiries of management and

relevant staff at corporate and business

level responsible for the sustainability

strategy, policy and results.

• Reading minutes of the meetings of

management, the Supervisory Board and

of other meetings that are important for

the content of the sustainability

reporting.

• Interviewing relevant staff responsible

for providing the information for,

carrying out internal control procedures

on, and consolidating the data in the

sustainability information.

• Determining the nature and extent of the

procedures to be performed for the

group components and locations. For

this, the nature, extent and/or risk

profile of these components are

decisive. Based thereon we selected the

components and locations to visit, taking

into account experience from previous

visits. The visits to production sites in

Poland and the United States are aimed

at, on a local level, validating source data

and to evaluate the design,

implementation and operation of

controls.

• Evaluating the suitability of assumptions

and sources from third parties used for

the calculation of the societal impact as

included in the section 3.3 of the annual

report and further explained in the

Methodology for societal impact

calculations.

• Obtaining assurance evidence that the

sustainability information reconciles with

underlying records of the company.

• Evaluating relevant internal and external

documentation, on a sample basis, to

determine the reliability of the

information in the sustainability

information.

• Evaluating the data and trends in the

information submitted for consolidation

at corporate level.

• Reconciling the relevant financial

information with the financial statements.

• Reading the information in the annual

report that is not included in the scope of

our assurance engagement to identify

material inconsistencies, if any, with the

sustainability information; and

• Evaluating the overall presentation,

structure and content of the sustainability

information; and

• Evaluation whether the sustainability

information as a whole, including the

sustainability matters and disclosures, is

clearly and adequately disclosed in

accordance with the criteria applied.

Communication

We communicate with the Supervisory Board

regarding, among other matters, the planned

scope and timing of the audit of the financial

statements and the assurance engagement

on the sustainability information and

significant audit or assurance findings,

including any significant findings in internal

control that we identify during our audit and

assurance engagement. In this respect we

also report to the audit committee in

accordance with Article 11 of the EU

Regulation on specific requirements

regarding statutory audit of public-interest

entities. The information included in this

additional report is consistent with our audit

opinion in this combined independent

auditor’s report.

We provide the Supervisory Board with a

statement that we have complied with

relevant ethical requirements regarding

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independence, and to communicate with

them all relationships and other matters that

might reasonably be thought to bear on our

independence, and where applicable, related

safeguards.

From the matters communicated with the

Supervisory Board, we determine the key

audit matters and key assurance matters:

those matters that were of most significance

in the audit of the financial statements and

the assurance engagement on the

sustainability information. We describe these

matters in our auditor’s report unless law or

regulation precludes public disclosure about

the matter or when, in extremely rare

circumstances, not communicating the

matter is in the public interest.

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19 Reconciliation of

non-IFRS financial

measures

Explanation of non-IFRS financial measures

Certain parts of this Annual Report contain financial measures that are not measures of financial

performance or liquidity under IFRS. These are commonly referred to as non-IFRS financial

measures and include items such as comparable sales growth, adjusted gross margin, adjusted

indirect costs, EBITA, adjusted EBITA, free cash flow and other related ratios.

Although the non-IFRS financial measures presented are not measures of financial performance

or liquidity under IFRS, the company uses these measures to monitor the underlying

performance of its business and operations. These measures have not been audited or reviewed

by the company’s external auditor. Furthermore, these measures might not be indicative of the

company’s historical operating results, nor are such measures meant to be predictive of the

company’s future results. These measures are presented in this Annual Report because the

company considers them an important supplemental measure of its performance and believes

that these and similar measures are widely used in the industry in which it operates as a means

of evaluating a company’s operating performance and liquidity.

Comparable sales growth

The company discloses comparable sales growth as a supplemental non-IFRS financial measure,

as the company believes that the presentation of comparable sales growth is a meaningful

measure for investors to evaluate the performance of the company’s business activities over

time. The company determines comparable sales growth by deducting the percentage figures

for changes from the nominal change of sales. Interaction effects between currency

movements, changes in consolidation, regulatory changes and changes in accounting standards

(second order effects) are not taken into account. The company presents comparable sales

growth on both a Division and Market basis. Comparable sales growth is also used by the

company as a key financial measure to assess the operating performance of the Divisions and

Markets.

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Sales growth composition per business in %
	Comparable growth	Currency effects	Consolidation and other changes	Nominal growth
2023 versus 2022
Digital Solutions	(5.4)	(3.1)	1.5	(6.9)
Digital Products	(10.5)	(3.8)	0.0	(14.2)
Conventional Products	(18.4)	(2.5)	0.0	(20.9)
Signify	(8.3)	(3.3)	0.8	(10.8)

2022 versus 2021
Digital Solutions	7.8	7.3	5.0	20.1
Digital Products	(3.8)	4.4	0.0	0.7
Conventional Products	(12.6)	4.6	0.0	(7.9)
Signify	1.2	6.0	2.4	9.5


Sales growth composition per market in %
	Comparable growth	Currency effects	Consolidation and other changes	Nominal growth
2023 versus 2022
Europe	(8.7)	(0.6)	—	(9.3)
Americas	(8.9)	(3.2)	0.5	(11.6)
Rest of the world	(4.7)	(7.6)	1.3	(11.0)
Global businesses	(14.4)	(1.5)	4.1	(11.8)
Signify	(8.3)	(3.3)	0.8	(10.8)

2022 versus 2021
Europe	3.9	0.4	0.4	4.7
Americas	3.2	12.2	0.0	15.4
Rest of the world	(1.5)	4.1	3.9	6.5
Global businesses	(9.2)	4.5	14.6	9.9
Signify	1.2	6.0	2.4	9.5

EBITA and Adjusted EBITA

The company discloses EBITA, Adjusted EBITA and Adjusted EBITA ratio as supplemental non-

IFRS financial measures, as the company believes these are meaningful measures to evaluate the

performance of the company’s business activities over time. The company understands that

these measures are used by analysts, rating agencies and investors in assessing the company’s

performance. The company presents EBITA, Adjusted EBITA and Adjusted EBITA ratio on a

Division basis. The company also believes that the presentation of EBITA, Adjusted EBITA and

Adjusted EBITA ratio provide useful information to investors on the development of the

company’s business and enhance the ability of investors to compare profitability across the

Divisions. In the case of EBITA, the company believes that it makes the underlying performance

of its businesses more transparent by factoring out the amortization and impairment of

acquisition-related intangible assets and goodwill, which arises when acquisitions are

consolidated by the company. In the case of Adjusted EBITA and Adjusted EBITA ratio, the

company believes that these measures make the underlying performance of its businesses more

transparent by factoring out restructuring costs, acquisition-related charges and other

incidental charges which are not directly related to the operational performance of a Division.

EBITA, Adjusted EBITA and Adjusted EBITA ratio are also used by the company as key financial

measures to assess the operating performance of the Divisions.


Adjusted EBITA to Income from operations (EBIT) in millions of EUR
	Signify	Digital Solutions	Digital Products	Conventional Products	Signify Other
2023
Adjusted EBITA	670	422	205	129	(86)
Restructuring	(167)	(32)	(25)	(51)	(59)
Acquisition-related charges	(14)	(15)	—	—	1
Incidental items	(40)	(17)	(4)	(16)	(2)
EBITA	449	358	176	62	(147)
Amortization 1	(80)	(74)	(6)	—	(1)
Income from operations (EBIT) 2	369	285	170	62	(147)

2022
Adjusted EBITA	762	424	297	116	(75)
Restructuring	(64)	(15)	(11)	(34)	(4)
Acquisition-related charges	(27)	(27)	—	—	—
Incidental items	173	(8)	(14)	(22)	217
EBITA	844	374	272	60	138
Amortization 1	(126)	(118)	(7)	—	(1)
Income from operations (EBIT) 2	718	256	265	60	137

1 Amortization and impairments of acquisition related intangible assets and goodwill.

2 For a reconciliation to income before taxes, refer to note 3, Information by segment and main country, in chapter 15,

Consolidated financial statements.

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Adjusted gross margin and Adjusted indirect costs: adjusted SG&A

costs and adjusted R&D costs

The company discloses adjusted gross margin, adjusted SG&A costs and adjusted R&D costs as a

supplemental non-IFRS financial measure. The company believes they are a meaningful measure

to evaluate the company’s gross margin, adjusted SG&A costs and adjusted R&D costs on a

comparable basis over time. The measures factor out restructuring costs, acquisition-related

charges and other incidental charges attributable to cost of sales, SG&A and R&D costs which

are not directly related to the operational performance of the company. Adjusted gross margin,

adjusted SG&A and Adjusted R&D are also used by the company as key financial measures to

assess the operating performance of the company.


Income from operations to Adjusted EBITA in millions of EUR
	Reported	Restruc- turing 2	Acquisition- related charges	Incidental items 3	Adjusted
2023
Sales	6,704	—	—	—	6,704
Cost of sales	(4,146)	62	3	36	(4,044)
Gross margin	2,558	62	3	36	2,660
Selling, general and administrative expenses	(1,882)	81	11	(1)	(1,791)
Research and development expenses	(308)	24	—	—	(284)
Indirect costs	(2,191)	105	11	(1)	(2,075)
Impairment of goodwill	—	—	—	—	—
Other business income	24	—	(2)	(11)	10
Other business expenses	(23)	—	2	16	(5)
Income from operations	369	167	14	40	590
Amortization 1	(80)	—	—	—	(80)
Income from operations excluding amortization (EBITA)	449	167	14	40	670

2022	Reporte d	Restruct uring	Acquisitio n related charges	Incidenta l items	Adjuste d
Sales	7,514	—	—	—	7,514
Cost of sales	(4,781)	43	6	25	(4,708)
Gross margin	2,732	43	6	25	2,806
Selling, general and administrative expenses	(1,927)	21	18	11	(1,877)
Research and development expenses	(295)	—	—	—	(294)
Indirect costs	(2,222)	21	19	11	(2,171)
Impairment of goodwill	—	—	—	—	—
Other business income	227	—	(1)	(218)	8
Other business expenses	(19)	—	3	10	(6)
Income from operations	718	64	27	(173)	636
Amortization 1	(126)	—	—	—	(126)
Income from operations excluding amortization (EBITA)	844	64	27	(173)	762

1 Amortization and impairments of acquisition-related intangible assets and goodwill.

2 Restructuring cost were EUR 167 million for the year ended December 31, 2023. These consisted of EUR 150 million of

employee termination benefits and EUR 18 million of other costs elated to restructuring programs.

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3 Incidental items are non-recurring items by nature and are related to impairment and other non-cash charges/gains related

to operations in Russia and Ukraine, a one day FX loss from the devaluation of the Argentine peso by the Argentinian

government, separation costs, transformation costs, real estate gain/loss, legal cases, incidental warranty costs,

environmental provisions for inactive sites and the discounting effect of long-term provisions.

Free cash flow

The company discloses free cash flow as a supplemental non-IFRS financial measure, as the

company believes it is a meaningful measure to evaluate the performance of the company’s

business activities over time. The company understands that free cash flow is broadly used by

analysts, rating agencies and investors in assessing the company’s performance. The company

also believes that the presentation of free cash flow provides useful information to investors

regarding the cash generated by the company’s operating activities after deducting cash

outflows for additions of intangible assets, capital expenditures on property, plant and

equipment and proceeds from disposal of property, plant and equipment. Therefore, the

measure gives an indication of the long-term cash generating ability of the company’s business.

In addition, because free cash flow is not impacted by purchases of businesses, it is less volatile

than the total of cash flows from operating and investing activities. Free cash flow is also used

by the company as a key financial measure to assess the operating performance of the

company.


Composition of cash flows in millions of EUR
	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:
• Additions of intangible assets	(62)	(67)
• Capital expenditures on property, plant and equipment	(70)	(51)
• Proceeds from disposal of property, plant and equipment	201	8
Free cash flows	445	586


Free cash flows in millions of EUR
	2022	2023
Digital Solutions	321	458
Digital Products	170	291
Conventional Products	56	99
Other 1	(101)	(263)
Signify total	445	586

1 Non-allocated free cash flow items (e.g. tax, interest and central functions).

Net debt

The net debt position as a percentage of the sum of the company’s equity (shareholders’ equity

and non-controlling interests) and net debt are presented to express the financial strength of

the company. The company understands that this measure is used by analysts, rating agencies

and investors in assessing the company’s performance.


Composition of net debt to total equity in millions of EUR unless otherwise stated
	2022	2023
Short-term debt	83	1,038
Long-term debt	1,950	1,192
Gross debt	2,033	2,230
Cash and cash equivalents	(677)	(1,158)
Net debt	1,356	1,071

Shareholders' equity	2,920	2,817
Non-controlling interests	145	129
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%

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Working capital

The company discloses working capital as a supplemental non-IFRS financial measure, as the

company believes it is a meaningful measure to evaluate the company’s ability to maintain a solid

balance between growth, profitability and liquidity. Working capital is broadly analyzed and

reviewed by analysts and investors in assessing the company’s performance. This measure

serves as a metric for how efficiently a company is operating and how financially stable it is in the

short term. It is an important measure of a company’s ability to pay off short-term expenses or

debts.


Working capital to total assets in millions of EUR
	2022	2023
Working capital	564	461
Eliminate liabilities comprised in WoCa:
• Trade and other payables	1,859	1,539
• Derivative financial liabilities	42	17
• Other current liabilities	194	206
Include assets not comprised in WoCa:
• Non-current assets	4,895	4,566
• Income tax receivable	56	54
• Current financial assets	–	2
• Cash and cash equivalents	677	1,158
• Assets classified as held for sale	1	–
Total assets	8,286	8,004

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20 Definitions and

abbreviations

Acquisition-related charges

Costs that are directly triggered by the

acquisition of a company, such as transaction

costs, purchase accounting related costs and

integration-related expenses.

Adjusted EBITA

EBITA excluding restructuring costs,

acquisition-related charges and other

incidental charges.

Adjusted EBITA margin

Adjusted EBITA divided by sales to third

parties (excluding intersegment).

"Operational profitability" also refers to this

metric.

Adjusted gross margin

Gross margin, excluding restructuring costs,

acquisition-related charges and other

incidental items attributable to cost of sales.

Adjusted indirect costs

Indirect costs, excluding restructuring costs,

acquisition-related charges and other

incidental items attributable to indirect costs.

Adjusted research and development (R&D)

expenses

Research and development expenses,

excluding restructuring costs, acquisition-

related charges and other incidental items

attributable to research and development

expenses.

Adjusted selling, general and administrative

(SG&A) expenses

Selling, general and administrative expenses,

excluding restructuring costs, acquisition-

related charges and other incidental items

attributable to selling, general and

administrative expenses.

Ballasts

Lamp control gear inserted between the

supply and one or more discharge lamps,

which, by means of inductance, capacitance

or a combination of inductance and

capacitance, serves mainly to limit the

current of the lamp(s) to the required value.

Brighter Lives revenues

Revenues measured as a percentage of total

revenues coming from all products, systems

and services contributing to Food availability,

Safety & security or Health & well-being.

Capital employed

The sum of equity and net debt (excluding

pension liabilities).

Carbon footprint

Carbon footprint is expressed in CO2-

equivalent or carbon dioxide equivalent,

which is a quantity that describes, for a given

mixture and amount of greenhouse gas, the

amount of CO2 that would have the same

global warming potential (GWP), when

measured over a specific timescale (generally

100 years). Signify measures its carbon

footprint over its value chain (scope 1, 2 and

3), which include emissions from industrial

sites, non-industrial sites, business travel,

logistics, purchased goods and services,

capital goods, fuel- and energy-related

activities, employee commuting, waste

generated in operations, end of life

treatment of sold products, and use of sold

products. Our carbon neutrality commitment

covers Signify operations, meaning scope 1, 2

and part of scope 3 for Business travel and

logistics. Signify net operational carbon

footprint = Signify gross operational carbon

footprint - Amount of carbon offset through

our carbon offsetting programs.

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Circular revenues

Revenues measured as a percentage of total

revenues coming from products, systems and

services designed to preserve value and avoid

waste categorized as Serviceable luminaires

(incl. 3D printing), Circular components,

Intelligent systems or Circular services.

Compact fluorescent light (CFL)

CFLs usually combine a fluorescent light with

an incandescent fixture.

Comparable sales growth

The period-on-period growth in sales

excluding the effects of currency movements

and changes in consolidation and other

changes.

Conventional lamps

Non-LED based light-emitting light sources,

including incandescent lamps, halogen lamps,

fluorescent lamps and high-intensity

discharge lamps.

Conventional luminaires

Light fixtures with a conventional socket (e.g.

a screw socket for a conventional lamp or

LED lamp).

Custom duties

Tax imposed on imports and exports of goods

charged to Signify's Consolidated Statement

of Income. Typically, these are reflected in

customs declarations and tend to be payable,

and are paid, regularly (often monthly)

throughout the year, shortly after the

submission of the declaration. These form

part of operating costs.

EBIT

Income from operations.

EBITA

Income from operations excluding

amortization and impairment of acquisition-

related intangible assets and goodwill.

EBITDA

Income from operations excluding

depreciation, amortization and impairment of

non-financial assets.

Effects of changes in consolidation and other

changes

In the event a business is acquired (or

divested), the impact of the consolidation (or

de-consolidation) on the company’s figures

are included (or excluded) in the comparable

figures. Other changes include regulatory

changes and changes originating from new

accounting standards.

Effects of currency movements

Calculated by translating the foreign

currency financials of the previous period and

the current period into euros at the same

average exchange rates.

Electronics

Units that regulate the current going through

a light source.

Employees

Employees of Signify at period end expressed

on a full-time equivalent (FTE) basis.

Employee Net Promoter Score (NPS)

The Net Promoter Score methodology is used

to measure employee engagement.

Employees are asked to rank how likely it is

that they would recommend our company as a

great place to work. The scoring for this

answer is based on a 0 to 10 scale. Those who

respond with a score of 9 to 10 are called

Promoters. Those who respond with a score

of 0 to 6 are labeled Detractors. Responses

of 7 and 8 are labeled Passives. The NPS is

calculated by subtracting the percentage of

employees who are Detractors from the

percentage of employees who are

Promoters.

Fluorescent lamp

A lamp which produces light with an electric

current conducted through an inert gas

producing ultraviolet light that is invisible to

the human eye.

Free cash flow

Net cash provided by operating activities

minus net capital expenditures. For Divisions,

Digital Solutions, Digital Products and

Conventional Products, free cash flow

excludes items not allocated to the operating

segments, such as interest paid (or received),

income taxes paid and costs (or income) for

central functions.

Global Reporting Initiative (GRI)

The Global Reporting Initiative is a network-

based organization that pioneered the

world’s most widely used sustainability

reporting framework. GRI is committed to the

framework’s continuous improvement and

application worldwide. GRI’s core goals

include the mainstreaming of disclosure on

environmental, social and governance

performance.

Gross debt

The sum of short-term debt and long-term

debt.

Gross margin

Sales minus cost of sales.

Halogen lamp

A type of incandescent lamp with a capsule

that holds a special halogen gas composition

around the heated filament to increase the

efficacy of the incandescence.

High-intensity discharge lamp (HID)

A type of conventional lamp that uses

electricity arcs between two electrodes to

create an intensely bright light where

mercury, sodium or metal halide gas act as

the conductor.

Incidental charges

Any item with an income statement impact

(loss or gain) that is deemed to be both

significant and not part of normal business

activity. Other incidental items might extend

over several quarters within the same

financial year.

Incandescent lamp

A conventional lamp that produces visible

light by heating a tungsten filament inside a

glass bulb usually filled with an inert gas.

Income tax paid

Income tax paid by Signify in tax jurisdictions,

based on income on a cash basis.

Indirect costs

The sum of Selling, general and administrative

and Research and development expenses.

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International Standardization Organization

(ISO)

The International Standardization

Organization is the world’s largest developer

and publisher of International Standards. ISO

is a network of the national standards

institutes of more than 160 countries, one

member per country, with a Central

Secretariat in Geneva, Switzerland, that

coordinates the system. ISO is a non-

governmental organization that forms a

bridge between the public and private

sectors.

LED

Light-emitting diode.

LED-based sales

Sales provided by products, systems and

services based on LED lighting technologies.

LED drivers

Lighting electronics that convert input power

into a current that remains constant despite

fluctuations in voltage.

LED lamp

A solid-state semiconductor device that

converts electrical energy directly into light.

LED luminaires

Light fixtures where LED modules are

integrated into the luminaire as a light source

and cannot be separated from the luminaire

by the user.

LED modules

Light generating units around which

luminaires are built for the purpose of

emitting distributed patterns of light.

Light-as-a-Service contract

Contracts enabling an integrated solution for

customers where customers pay for the

provision of light to their premises, while the

company plans and builds the lighting

infrastructure and ensures its performance

until the end of the contract.

Lighting services

Services offered to customers building on a

lighting system and enabled by data.

Lighting systems

The combination of luminaires, controls and

software. The automation and related

controls of lighting within a room, building or

outdoor facilities for end users.

Luminaire

Electrical devices that produce, control and

distribute light. Also called light fixtures. They

consist of one or more light sources, lamps or

sockets that connect the lamps to the

electrical power (as well as drivers in some

luminaires), and the mechanical components

required to support or attach the housing.

Net capital expenditures

Additions of intangible assets, capital

expenditures on property, plant and

equipment and proceeds from disposal of

property, plant and equipment, and intangible

assets.

Net debt

Short-term debt, long-term debt minus cash

and cash equivalents.

Net leverage ratio

The ratio of consolidated reported net debt

to consolidated reported EBITDA for the

purpose of calculating the financial covenant

for the term loans and revolving credit

facility. The financial covenant shall remain

suspended so long as Signify has either a

public or private investment grade credit

rating.

Non-governmental organization (NGO)

A non-governmental organization is any non-

profit, voluntary citizens’ group which is

organized at a local, national or international

level.

OEM

Original equipment manufacturer.

On track to deliver against our ambitious goal

of doubling the pace of the Paris Agreement’s

1.5ᵒC scenario

In our Brighter Lives, Better World 2025

sustainability program, we commit to doubling

the pace of the Paris Agreement's 1.5°C

scenario to reduce emissions over our entire

value chain by the end of 2025, comparing to

the 2019 baseline. This means we aim to

achieve the emission reduction goals laid out

in the Paris Agreement's 1.5°C scenario for

2031 by 2025, six years early. With this

scenario, the Paris Agreement suggests that

companies must reduce their emissions by

4.2% year on year. In other words, by the end

of 2025, we will reduce our scopes 1, 2, and 3

emissions by 40% compared to our baseline

year 2019. To track progress, we are

comparing Signify actual and projected

carbon footprint every year from 2021 to

2025. Based on the 80% coverage of all

Signify data from sold portfolio, we have

estimated our 2022 value chain CO2. By

extrapolating the remaining 20% within each

product family, we calculated our 100% value

chain CO2 and concluded that we are 4%

ahead on our projected carbon footprint for

2022. Comparing to the 2019 baseline, we

have already achieved 30% emissions

reduction across our value chain (vs. 40% by

the end of 2025). With an estimated a 5%

error rate for 2022 (10% in 2021), we have

achieved between 27% and 34% emissions

reduction across the value chain (vs. 40% by

the end of 2025), which means that we are on

track towards our 2025 targets.

Other taxes

Other taxes comprise environmental taxes,

property taxes and other contributions to

governments in the form of taxes. This also

includes dividend withholding tax payments on

behalf of our shareholders.

Payroll taxes

This comprises all payroll taxes including

social security contributions, both in Signify’s

capacity of employer, which form part of

operating costs, and in the form of

remittance to government on behalf of

employees. Typically, these taxes are

reflected in payroll tax returns made to

governments and tend to be payable, and are

paid, regularly (often monthly) throughout

the year, shortly after the submission of the

return.

R&D expenses

Research and development expenses.

Renewable electricity

Percentage of total electricity usage from

renewable sources.

Responsible Business Alliance (RBA)

The Responsible Business Alliance (RBA,

formerly known as Electronic Industry

Citizenship Coalition) was established in 2004

to promote a common code of conduct for

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Signify Annual Report 2023

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the electronics and information and

communications technology (ICT) industry.

The RBA now includes more than 100 global

companies and their suppliers.

Restructuring costs

The estimated costs of initiated

reorganizations that have been approved by

the company, and which generally involve the

realignment of certain parts of the

organization. Restructuring costs include

costs for employee termination benefits for

affected employees and other costs directly

attributable to the restructuring, such as

impairment of assets and inventories.

Return on capital employed

Income from operations adjusted for tax at

the effective tax rate, divided by the year-

on-year average capital employed.

SG&A expenses

Selling, general and administrative expenses.

Signify

Signify N.V. (the “Company”) and its

subsidiaries, within the meaning of Section

2:24b of the Dutch Civil Code.

SOFR

Secured overnight financing rate (SOFR)

administered by the Federal Reserve Bank of

New York (or any other person which takes

over the administration of that rate)

published by the Federal Reserve Bank of

New York (or any other person which takes

over the publication of that rate).

Supplier sustainability performance

The supplier sustainability performance rate

represents the percentage of suppliers in

risk countries with an audit score of at least

90 out of 100 points.

Sustainable innovation

All research and development activities

contributing to lighting technologies

considered for sustainable products, systems

or services. This means all products, systems,

or services that demonstrate a measurable

positive impact in one or more of the

sustainable focal areas: Energy & solar,

Circularity, Packaging, Substances, Weight &

materials, Safety & security, Health & well-

being or Food availability. Sustainable

innovation spend is the total spending of all

R&D projects contributing to sustainable

innovation.

Switch

Wall-mounted devices designed to (i) change

the electric connections among its terminals

or (ii) engage with the pins of a plug and

having terminals for the connection of cables

or cords (i.e. socket contacts).

Total Recordable Case rate

Number of injuries and illnesses sustained at

work that result in medical treatment,

restricted work, lost work-days, or fatality,

divided by 100 FTEs.

VAT

Value-added tax (VAT) including similar

indirect taxes such as Goods and Service tax

(GST) and Sales tax. The VAT contributions in

a jurisdiction is the balance between output

VAT and input VAT. These taxes form part of a

VAT tax return made to the government and

tend to become payable, and are paid,

regularly (often quarterly) throughout the

year shortly after submission of the VAT tax

returns.

Weighted average statutory income tax rate

The aggregation of the result before tax

multiplied by the applicable statutory tax rate

without adjustment for losses, divided by the

company result before tax.

Women in leadership

Percentage of women in relation to the total

population in compensation grades H22 and

above. It includes employees with or without

a defined end date, international assignees

and members of the Board of Management.

Working capital

The sum of Inventories, Trade and other

receivables, Other current assets, Derivative

financial assets minus the sum of Trade and

other payables, Derivative financial liabilities

and Other current liabilities (excluding

dividend related payables).

Zero waste to landfill

It refers to manufacturing sites diverting their

manufacturing waste to recycling or

incineration, instead of to landfill. To

determine waste to landfill in scope of our

commitment we exclude the following

categories: chemical waste, hazardous waste,

one-time waste and regulated waste. To

achieve “zero (manufacturing) waste to

landfill”, the amount of non-hazardous

manufacturing waste being disposed directly

to landfill should be <1% of total waste.

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21 Forward-looking

statements and

other information

Forward-looking statements and

risks & uncertainties

This document contains forward-looking

statements that reflect the intentions, beliefs

or current expectations and projections of

Signify N.V. together with its subsidiaries,

including statements regarding strategy,

estimates of sales growth and future

operational results.

By their nature, these statements involve

risks and uncertainties facing Signify and a

number of important factors could cause

actual results or outcomes to differ materially

from those expressed in any forward-looking

statement as a result of risks and

uncertainties. 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 war, the conflict in the

Middle East, the energy crisis in Europe, the

expected recovery trajectory of China post

COVID, component shortages, cost inflation,

rapid technological change, competition in

the general lighting market, development of

lighting systems and services, successful

implementation of business transformation

programs, impact of acquisitions and other

transactions, reputational and adverse

effects on business due to activities in

environment, health & safety, compliance

risks, ability to attract and retain talented

personnel, adverse currency effects, pension

liabilities, and exposure to international tax

laws. Refer to chapter 13, Risk factors and

risk management, for discussion of material

risks, uncertainties and other important

factors which might have a material adverse

effect on the business, results of operations,

financial condition and prospects of Signify.

Such risks, uncertainties and other important

factors should be read in conjunction with the

information included in the Annual Report.

Additional risks currently not known to Signify

or that Signify has not considered material as

of the date of this document could also prove

to be important and might have a material

adverse effect on the business, results of

operations, financial condition and prospects

of Signify or could cause the forward-looking

events discussed in this document. Signify

undertakes no duty to and will not necessarily

update any of the forward-looking

statements in light of new information or

future events, except to the extent required

by applicable law.

Market and industry information

All references to market share, market data,

industry statistics and industry forecasts in

this document consist of estimates compiled

by industry professionals, competitors,

organizations or analysts, of publicly available

information or of Signify's own assessment of

its sales and markets. Rankings are based on

sales unless otherwise stated.

Non-IFRS financial measures

Certain parts of this document contain non-

IFRS financial measures and ratios, such as

comparable sales growth, adjusted gross

margin, EBITA, Adjusted EBITA, free cash flow,

and other related ratios, that are not

recognized measures of financial

performance or liquidity under IFRS. The non-

IFRS financial measures presented are

measures used by management to monitor

the underlying performance of the Signify

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Consolidated financial statements

Signify Annual Report 2023

<≡>

business and operations and, accordingly,

they have not been audited or reviewed. Not

all companies calculate non-IFRS financial

measures in the same manner or on a

consistent basis and these measures and

ratios might not be comparable to measures

used by other companies under the same or

similar names. A reconciliation of these non-

IFRS financial measures to the most directly

comparable IFRS financial measures is

contained in this document. For further

information on non-IFRS financial measures,

see chapter 19, Reconciliation of non-IFRS

financial measures.

Fair value information

In presenting Signify’s financial position, fair

values are used for the measurement of

various items in accordance with the

applicable accounting standards. These fair

values are based on market prices, where

available, and are obtained from sources that

are deemed to be reliable. Readers are

cautioned that these values are subject to

changes over time and are only valid on the

balance sheet date. When quoted prices or

observable market values do not exist, fair

values are estimated using valuation models

that we believe are appropriate for their

purpose. They require management to make

significant assumptions with respect to

future developments that are inherently

uncertain and might therefore deviate from

actual developments.

Critical assumptions used are disclosed in the

financial statements. In certain cases,

independent valuations are obtained to

support management’s determination of fair

values.

IFRS basis of presentation

The financial information included in this

document is based on International Financial

Reporting Standards (IFRS) as endorsed by

the European Union (EU), as explained in

significant accounting policies, unless

otherwise indicated.

Statutory financial statements

Chapter 15, Consolidated financial

statements and chapter 16, Signify N.V.

financial statements, contain the statutory

financial statements of Signify N.V.

Regulated information

This document contains regulated information

within the meaning of the Dutch Financial

Markets Supervision Act.

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Corporate statements

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Signify Annual Report 2023

<≡>


We are Signify
	1	Performance highlights	5
	2	CEO message	7
	3	Creating sustainable long-term value	10
	4	Brighter Lives, Better World	26
	5	Corporate performance	53
	6	Three-year overview	60

Governance
	7	Board of Management	62
	8	Supervisory Board	63
	9	Supervisory Board report	65
	10	Remuneration report	74
	11	Corporate governance	95
	12	Investor relations	102
	13	Risk factors and risk management	105
	14	Statement of the Board of Management	114

Corporate statements
	15	Consolidated financial statements	117
	16	Signify N.V. financial statements	161
	17	CSRD disclosures	169
	18	Combined independent auditor’s report	182
	19	Reconciliation of non-IFRS financial measures	197
	20	Definitions and abbreviations	202
	21	Forward-looking statements and other information	206